Benner on Tech: Can Alibaba Change Silicon Valley?

Katie Benner is a Bloomberg View columnist who writes about technology, innovation, and the cult and culture of Silicon Valley. She lives in San Francisco.
Read More.
a | A

People Are Talking About…

Last night I interviewed Brian Wong, one of Alibaba’s first foreign employees, for an event held by the 1990 Institute, a U.S.-China business and cultural organization. Wong, who now works with Jack Ma in the office of the chairman, moved to Hangzhou from California in 1999 and helped the company grow from a small, unknown startup into one of China’s most important Internet companies.

Wong dotted the interview with quotes from Ma – “Today is difficult, tomorrow is more difficult, but the day after tomorrow is beautiful … but most people die tomorrow.” – and he spoke widely about the company, China and his life overseas. (The whole talk will soon be online on the 1990 Institute website.)

One of his most important themes was the idea that Asia’s huge, growing population of Internet users will hopefully change the way that Silicon Valley venture capitalists and tech companies do business and think about investing. For example, the number of Internet users in China is almost double the population of the entire U.S.

As you probably remember, Silicon Valley’s VCs famously passed over Ma when they met with him in the early days of Alibaba. No one would fund him, in part because they didn’t understand that Alibaba was creating a very different product in a country with very different Internet needs. It’s no accident that Ma was able to raise early money from investors with a more global viewpoint who worked at Goldman Sachs, Softbank and Yahoo.

Wong pointed out that folks in the Valley are predominately concerned with solving first-world problems such as on-demand services, rather than the problems faced by billions of people in less developed countries. This is one reason he thinks that Chinese entrepreneurs and investors will lead in areas such as mobile financial services and data analytics. They’re not trying to break consumers of entrenched banking habits. They’re offering them entirely new services. So they think about the problem – and the size of the opportunity – very differently than their U.S. counterparts might.

Investors in the Bay Area tell me that it’s just easier to see a path toward success with startups that attack first-world problems. A company that uses software to facilitate the spending habits of upper-middle-class Americans can see lots of dollars flow through its app even if it doesn’t have all that many users. And the wealth gap is such that more affluent Americans have that much more disposable income.

This is true now, but it probably won’t be forever. And it’s the sort of thinking that led people to underestimate Alibaba. What money was there to be made in creating a service for some of the world’s poorest small business owners? What money was there to be made in creating a payment system for people with practically no net worth? The answer was, as we now all know, a lot of money. But it was impossible for a lot of investors to see back then because they were focused on solving the problems that they could see and understand.

Now Alibaba is asking and answering other questions, especially around financial services. This time around, Wong thinks that the U.S. tech community has an opportunity to think and invest differently.

** More, albeit unrelated, food for thought: Forget the pipeline problem. The Los Angeles Times ran a long feature about the fact that women are leaving the tech industry in droves. I’d love to know why you think this is happening.

Ventureland

Authy, a two-factor authentication app maker, will be acquired by the cloud software service Twilio, according to Re/code.

Roadie is a delivery startup that asks us to entrust our packages with traveling college students who can use Waffle Houses as pickup and drop-off points, the Wall Street Journal reports.

People and Personnel Moves

Charlie Ergen will become chief executive officer of Dish Network at the end of March, succeeding current CEO Joe Clayton, the Wall Street Journal reports. Ergen is currently the chairman of Dish.

Edward Snowden, Laura Poitras and Glenn Greenwald did a Reddit AMA.

Companies

Apple…

The company wants to be able to track our phones even after we turn them off, the Independent reports. It may have acquired Camel Audio, which makes music plug-ins, effects and sound libraries, according to MacRumors. Goldman Sachs says that owning Apple has helped a lot of hedge funds show positive returns, reports Bloomberg News. The stock continues to set new record highs, and the Wall Street Journal notes that Apple is now worth more than twice as much as any other publicly traded U.S. company.

Facebook…

A report by the Belgian Data Protection Authority says the company’s privacy policies violate European privacy law, the Wall Street Journal reports.

Google…

The company acquired mobile payments technology from Softcard and (perhaps more importantly) it inked deals with AT&T, T-Mobile and Verizon to preinstall the Google Wallet app on Android phones, as part of an attempt to beat Apple Pay. The company’s Blogger division is cracking down on porn.

LinkedIn…

The company settled a lawsuit over weak password protections, the New York Times reports.

Twitter…

The company is in favor of net neutrality.

Yahoo…

The company’s chief information-security officer, Alex Stamos, got into a heated back and forth with the director of the National Security Agency, Admiral Mike Rogers over whether tech companies should acquiesce to government requests to build backdoors into their systems that would facilitate spying on users, the Wall Street Journal reports.

Security Blotter

Wall Street and law firms will share more information to combat cyber-attacks, reports the New York Times.

The Lenovo Superfish mess is one of the worst computing mess-ups of all time, argues Slate.

Europeans are now lying about their personal information in order to protect their privacy, the Wall Street Journal reports.

Media Files

Major League Baseball might spin off its tech arm MLB Advanced Media, which powers MLB.TV, WWE Network and Sony's PlayStation Vue, and will soon power HBO's standalone subscription product, the Wall Street Journal reports.

Adnear, a Singapore-based marketing firm, is using drones to track mobile devices and collect wireless data, VentureBeat reports.

News and Notes

Visa Europe’s new “tokenisation” service helps consumers make secure payments with their phones, and it could further European adoption of Apple Pay and other mobile payment services, Reuters reports.

The Electronic Frontier Foundation has a plan to fix our terrible patent system.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the editor on this story:
Stacey Shick at sshick@bloomberg.net