Alibaba Opens the Door to Online Riches
Jack Ma is China’s richest man, with a net worth that has reached $36 billion. He can thank the Internet and the e-commerce company he started in 1999, Alibaba. The company became a global high-flyer when Ma took it public in September 2014, selling $25 billion worth of shares on the New York Stock Exchange in the biggest initial public offering in history. Neither a tech whiz like Mark Zuckerberg nor a product genius like Steve Jobs, the 52-year-old Ma is a former English teacher who used opportunism and passion to morph some big foreign ideas into bigger Chinese ones. A devotee of the Chinese martial art of tai chi, Ma hasn’t shied away from combat. He tussled with Yahoo! and drove EBay out of China. He’s also a showman, once donning a glam rock outfit complete with spiked wig to belt out “Can You Feel the Love Tonight” to a stadium filled with employees. With his wealth and reach, he’s a celebrity in China, drawing more than 21 million followers on the Twitter-like service, Weibo, and gaining an audience with U.S. President Donald Trump.
Ma met with Trump in January to discuss how Alibaba could help create 1 million U.S. jobs; the president-elect predicted the pair would “do some great things together.” Ma was already focusing on expansion in the U.S. and other parts of the globe, hoping to position Alibaba as a platform through which China’s growing middle class can buy from the rest of the world. Ahead of the IPO, Ma said that he considered the interest of customers first, employees second and shareholders third, and Alibaba’s rapidly rising compensation costs showed him putting the idea into action. Ma’s climb to the top rung of China’s wealth ladder was made possible by gutsy bets on the spending power of the burgeoning middle class — a power his companies have helped increase. Alibaba accounted for more than three-quarters of the nation’s online retail sales in 2015 and has helped create 15 million jobs. Think of farmers selling silkworms online, coders making the sites run, and deliverymen riding motorbikes stacked with parcels. After achieving dominance in China in the businesses of Amazon.com, EBay and PayPal, Ma is spreading into entertainment, finance, media, soccer, and even offline retail. His burgeoning interest in environmentalism has Alibaba donating water-testing kits to workers and posting the results online. China’s economic woes weighed on Alibaba’s stock price and Ma’s net worth in 2015 before both rallied last year.
Ma traces his inspiration to create an Internet company to his first trip to the U.S., in 1995. While at a friend’s house in Seattle, he typed the word “beer” into a search engine but couldn’t find any information in Chinese. Deciding China needed to be connected to the World Wide Web, he registered a website, China Pages, a Yellow Pages-like online directory. After the venture failed to take off, Ma joined the Ministry of Commerce and helped the agency set up a website. In Beijing he met Jerry Yang, the co-founder of Yahoo, who eventually invested $1 billion to obtain 40 percent of Alibaba. By 1999, with the Internet stock boom gripping Wall Street, Ma returned to his home city, Hangzhou. He started Alibaba with his wife and 16 other co-founders in his living room, which doubled as the company office. He called the company Alibaba to evoke the phrase “Open Sesame,” the magic words of entry to the treasure cave of Arabian Nights legend. In his telling, the company’s platforms “open a doorway to fortune for small businesses.”
Ma developed a brash persona as a visionary unbound by concerns about his reputation and willing to take big risks. He acquired app makers, a movie studio and part of a Chinese soccer team after a night of drinking with the owner. Now he must convince investors that his buying spree will help Alibaba stake out space on mobile phones and in overseas markets, including the U.S. Ma, who has benefited from government policies, is also at their mercy. China could alter Alibaba’s contract with U.S. shareholders, tighten censorship of the company’s platforms or restrict the payment service that’s vital to its business — any of which could affect its value to investors. Being a high-profile billionaire in China also attracts scrutiny, as evidenced by criminal convictions of tycoons in recent years.
The Reference Shelf
- Profiles of Ma have appeared in Bloomberg News, The New York Times and Business Insider. Bloomberg Businessweek published one in 2012.
- The Financial Times proclaimed Ma “Person of the Year” in 2013.
- A Canadian who worked for eight years at Alibaba, Porter Erisman, chronicled the experience in a documentary film, “Crocodile in the Yangtze.”
- Bloomberg has QuickTakes on Alibaba and the corporate structure used for Chinese Internet IPOs.
Sheridan Prasso contributed to the original version of this article.
First published Sept. 4, 2014