PROFILE OF AN ENTREPRENEUR

Table of Contents
Initial Life:................................................................................................................................... 2
Rejections:.................................................................................................................................. 2
Trigger: ....................................................................................................................................... 2
Innovation: ................................................................................................................................. 2
Implementation: ........................................................................................................................ 3
Growth & Development:............................................................................................................ 3
Synergies: ................................................................................................................................... 4
Challenges: ................................................................................................................................. 5
Takeaways for an Entrepreneur: ............................................................................................... 5
References: ................................................................................................................................ 7

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 JACK MA – An Entrepreneur and an Inspiration

The story of the life of a man who has impacted the entire economy and internet industry of
China almost single-handedly, Jack Ma.

Initial Life:
Born on 15 Oct 1964 in Hangzhou, Zhejiang, China. With an interest in English, Jack became
an English lecturer at Hangzhou Dianzi University.

Rejections:
Jack Ma applied for 30 different jobs and was rejected by all.
When KFC came to china, 24 people went for a job there, 23 people were selected and Jack
was the only one coming out without a job. He was also rejected in a police job and was
rejected 10 times for Harvard Business School (HBS).

Trigger:
Jack had an opportunity to visit to the United States in 1995 as a translator, Ma became aware
of the internet. Jack wrote “beer” in the internet and found the beer from different countries,
but he was shocked to learn that there were no representatives from China online. Back
home, he tried to set up a kind of Chinese yellow pages and failed. He went to work for the
government and got assigned to take an American visitor to see the Great Wall—none other
than Yahoo’s co-founder Jerry Yang, with whom he struck up a lasting friendship. By 1999
he had seen enough to found Alibaba, with 17 other people, raising $60,000 on the vague
notion of helping Chinese companies connect with the world. Ma immediately saw the
potential business opportunities of the internet and how it could facilitate the way small and
medium Chinese enterprises could do business with the rest of the world.

Innovation:
Jack was sitting in a coffee shop in San Francisco and thought of the name Alibaba and asked
13 people from 13 different parts of the world of they are aware of this name, all knew about
Alibaba. He decided to give this name to his firm. According to Jack, “This naming strategy
is without question the most powerful one of all”. He came up with this name because e-
commerce is global, so he needed a name that was globally recognized.

He describes an innovative entrepreneur as being someone who always sets their sights on the
future:

"Being innovative means you look at today from a viewpoint of tomorrow. We need to look
at today's China from a viewpoint of the world, and look at ourselves from the viewpoint of
those outside this industry. When you think this way, you will do things in a different way,"
Ma noted.

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The group has adopted a modern and innovative way to exploit the funds it raised, shifting
from defining itself as an e-commerce platform into what the group now calls an
“infrastructure for e-commerce.”

The semantic change is light, but the underlying strategy is dramatically different. The group
is moving from trying to master a specific core activity (e-commerce) into creating,
organizing and animating a whole ecosystem. This requires a whole new type of corporate
organization, moving away from the traditional hierarchical tree-like structure toward a
network-based one.

The attractiveness and potential of the company’s business model was never in doubt. In the
first two years of its birth, it was successful in raising USD 25 million in funding from
SoftBank, investment bank Goldman Sachs and a host of institutional investors. The
company’s vision, as outlined on its website, clearly centred around the power and potential
of the Internet as a medium for trade and business. The exact wording reads “from the outset,
the company’s founders shared a belief that the Internet would level the playing field by
enabling small enterprises to leverage innovation and technology to grow and compete more
effectively in the domestic and global economies”. Right from the very beginning to now, it
has done just that by providing the Internet platform for facilitating trade between small and
medium sized traders across the world.

Implementation:
Jack gathered a group of potential investors at his home and sold them on his dream to found
Alibaba with the goal of facilitating international trade for small and medium ventures based
in China. Alibaba was born out of Ma’s unfulfilled dream of using the internet to facilitate
business activities for Chinese SMEs. In the earlier case, his idea to use the internet as a
means to facilitate the trade of Chinese-made products in the international market was
repeatedly rejected. Alibaba, on the other hand, allowed exporters to post listings for products
for direct purchase by customers.

In the earliest days, when Alibaba.com was first forming, he was giving equity to all of the
high school students who were working with him. He was bringing everyone along.

In the early stages of the Alibaba, Ma attempted to raise funds in Silicon Valley. He was
generally unsuccessful, receiving criticism of his business model at the time. By late 1999,
however, Ma had succeeded in enticing Goldman Sachs and SoftBank to invest $5 million
and $20 Million in Alibaba, respectively.

Growth & Development:

After Ma and Alibaba reorganized their operations and made their mark by successfully
overtaking eBay in the Chinese market, and with the help of Jerry Yang, Ma successfully
convinced Yahoo to invest $1 billion in exchange for a 40% stake in Alibaba in
2005. Besides securing crucial funds necessary to help Alibaba execute its international
growth strategy, that investment earned Alibaba a valuation of $2.5 billion at just six years of

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age. The gamble paid off for Yahoo as well; the American internet company earned about
$10 billion during Alibaba’s IPO.
In 2013, Ma stepped down from his post as CEO of Alibaba, although he retained his position
as executive chairman. The company went public on September 19, 2014. The IPO earned
$150 billion, the largest offering for a U.S.-listed company in the history of the NYSE.
Instantly, Ma became the richest man in China, with a net worth of about $25 billion. By
November of 2017, Alibaba’s market cap was more than $486 billion, making it one of the 10
largest companies in the world. It enjoys 550 million active monthly users across its various
platforms.

In 2003, still unprofitable with Alibaba, Ma and his team lunched an online auction site
named “Taobao.com.” Taobao charged zero commission, aiming to take on multinational e-
commerce giant eBay, which already had the lion’s share of the Chinese online auction
market. Determined to win against eBay, Taobao remained a commission-free marketplace
for millions of online traders, putting the fledgling Alibaba under significant financial
strain. To stay afloat while maintaining the platform's commission-free policy, Ma and his
team began offering peripheral value-added support services (such as custom webpages for
online merchants) for a small fee. Taobao eventually gained traction in the Chinese market,
and eBay subsequently withdrew from China. Ma reflected on this challenging period later
on, suggesting that “if eBay are the sharks in the ocean, we are the crocodiles in the Yangtze
River.” Taobao was the first successful subsidiary of Alibaba, with many additional offshoots
to follow in subsequent years.

As the dotcom boom came to an end after 2000, Alibaba faced serious challenges due to its
aggressive expansion into international markets. Jack Ma successfully reorganized the
company's operations, including closing many international branches and focusing on
strengthening Alibaba's position in the Chinese market. Thereafter, Ma expanded the services
of Alibaba and reengaged its international expansion strategy.

Also, Alibaba’s success has a lot to do with how Ma managed his employees, and how
Alibaba managed to cater to the tastes of its audience by taking a different route from
Western companies.

Jack was great at putting together a team and finding ways to encourage them to work
together, so ordinary people could do extraordinary things.

Synergies:
All of Alibaba’s services are heavily interlinked, with one very obvious hub: Alipay. By
connecting to the e-payment app, one can access a wide variety of Alibaba’s services from
the app main menu: Koubei, Alitrip, Taobao, Didi Kuaidi, etc. Then most of these apps rely
on Alipay for payment. The underlying strategy is obvious: They rely on a two-sided
business model where all those apps need to reach a critical mass of users to become
attractive from both sides (sellers and buyers on Taobao or Tmall for example). Linking
services together enables an increase in the number of users of those services, therefore
making the threshold easier to reach for any newly added service. Obviously, if the objective
is to increase the number of users, seducing them through a large variety of services is a
critical objective. This is why Alibaba will seek to offer an extensive diversity of services

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from traditionally very diverse industries like food-delivery, flight tickets, retail, online
videos, social networks or e-commerce.

The synergies are, at first sight, not obvious though. Market knowledge in particular is
drastically different from one industry to another. Synergies have to be found elsewhere—in
the total number of reachable users as well as in the data collected on them. Because Alibaba
is operating in such a large number of different industries, it cannot easily centralize decision-
making and resources. It has to rely on a decentralized network of companies that need to
have much more freedom in their operations than what a usual business unit, or even a
subsidiary, could have. Those companies need to be able to build their own market
knowledge by themselves, often relying on tighter user feedback, as well as quickly reacting
to any novelty—especially with the current digitalization trend. In such conditions, they have
to operate as start-ups—something deliberately desired by Alibaba Director Jack Ma.

Challenges:
Government structural control over internet pipes: Alibaba noted that ‘almost all access
to the Internet is maintained through state-owned telecommunication operators’ and under
ministry regulatory control. This means it does not have access to any alternative networks in
the event of disruptions, failures or other problems with China’s Internet infrastructure
The challenge of monetizing mobile traffic: As access via mobile to Alibaba’s services
increases, it will need to be able to monetize the platform as effectively as it does over the
desktop. In the interim, this could be a tough transition which even Facebook is grappling
with.
Tighter regulations over Alipay: Alibaba currently relies heavily on Alipay to conduct
payment processing and escrow services in its marketplaces. The risk is that Alipay’s
business is highly regulated, so any further clampdown could disrupt the business or increase
costs.
E-commerce tax compliance and enforcement: E-commerce in China still developing,
therefore sellers on its platform may find themselves subject to new tax obligations as rules
get clarified. The risk is that the more stringent compliance requirements could deter sellers
from using Alibaba’s service.
Uncertainty with interpretation and enforcement of Chinese laws: China has not
developed a fully integrated legal system, and recently enacted laws, rules and regulations
may not sufficiently cover all aspects of economic activities in China or may be subject to
significant degrees of interpretation by PRC regulatory agencies’, said Alibaba.

Takeaways for an Entrepreneur:

1. A great entrepreneur is always optimistic
Jack Ma said, “Ask yourself why you can do better than everyone else trying the same thing,
Ma added”

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 2. Know that you will have to make sacrifices
Ma warns. “Do not think ‘what I will get’. You have to ask ‘what I will give’. Will I win in
three years or 10 years? If you have a great idea, prepare for 10 years. You’re lucky if you
win in one year - but most people will not have this opportunity.”
3. Don’t focus on things that are hot
According to Jack Ma: “E-commerce was so cold. Nobody believed in it, but we believed in
it. We didn’t care what other people said. We thought it had a future, we thought it would
help people, so we started.
4. Don’t wait for everything to be ready for you
“Don’t wait for the environment to be ready. Don’t wait for the policy to be ready. When
everything’s ready, there’s no opportunity for you,” Jack suggests.
5. Dare to compete

"I had always wished that I was born in a period of war. I could have been a general. I
thought about what I could have achieved in war."
6. Be ambitious enough to hope to lift his whole country:
Just as the internet is revolutionising retail,” Mr Ma wrote, “we at Alibaba believe it will
eventually do the same to fundamentally information-driven industries such as finance,
education and healthcare. Once this change happens – once we are all connected – I believe
the spirit of equality and transparency at the heart of the internet will make it possible for
Chinese society to leapfrog in its development of a stronger institutional and social
infrastructure. Our water has become undrinkable, our food inedible, our milk poisonous and
worst of all the air in our cities is so polluted that we often cannot see the sun,” he wrote.
“Twenty years ago, people in China were focusing on economic survival. Now, people have
better living conditions and big dreams for the future. But these dreams will be hollow if we
cannot see the sun.”

“Today is hard, Tomorrow will be worse, but day after

tomorrow will be Sunshine” – Jack Ma

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References:
1. South China Morning Post. (2018). 5 of Jack Ma’s top tips for entrepreneurs. [online]
Available at: http://www.scmp.com/tech/leaders-founders/article/2121081/alibaba-
founder-jack-mas-5-top-tips-entrepreneurs [Accessed 6 May 2018].
2. Hong, K. (2018). Jack Ma's Journey to Build Alibaba Was Full of Crazy. [online] The
Next Web. Available at: https://thenextweb.com/asia/2014/07/08/this-is-how-much-
crazy-jack-ma-needed-to-turn-alibaba-into-a-multi-billion-dollar-giant/ [Accessed 6
May 2018].
3. Fortune. (2018). Alibaba’s muddled growth strategy. [online] Available at:
http://fortune.com/2014/09/19/alibaba-growth-challenges/ [Accessed 6 May 2018].
4. https://www.linkedin.com/pulse/jack-ma-the-journey-failed-entrepreneur-world-
fortune-jafarson-a/ [Accessed 6 May 2018].