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    Lessons in Excellence with the Chinese internet tycoon Jack Ma

    Lessons in Excellence with the Chinese internet tycoon Jack Ma

    Lessons in Excellence with the Chinese internet tycoon Jack Ma
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    By Shereen Bhan   IST (Updated)

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    Jack Ma, the charismatic co-founder of China’s largest e-commerce firm Alibaba Group Holding Ltd, has decided to step down as chairman on Sept. 10, 2019.

    He calls himself a blind man riding on the back of a blind tiger. He has gone on to create one of China's fastest growing business empires and an IPO that's second to only Google.
    He is Jack Ma, the charismatic co-founder of China’s largest e-commerce firm Alibaba Group Holding Ltd, who has decided to step down as chairman on Sept. 10, 2019.
    Here's an interview of Jack Ma with CNBC-TV18's Shereen Bhan that aired in 2015:
    Let me start by asking you about that quote of yours, you borrowed USD 2,000, I believe this was in about 1995, you knew nothing about personal computers or emails and yet today you are the hottest Chinese internet tycoon. How does this actually happen?
    It's just lucky you have a great team and right time and right internet time. I think I am still worried but still thinking about some day if I go back whether this thing will happen again because I was trained to be a high school English teacher. I learn English by myself when I was a kid and I think internet was so new to everybody so why not learn from the beginning because if you want to learn, if you want to focus, if you have a great team and you will make it happen. So I have a more confidence enough for the future because 10 years ago when I started Alibaba.com I just saw so mute everybody, why don't we start from beginning and learn.
    I am going to ask you this to sort of expand because there are a lot of entrepreneurs who are going to be watching this show to understand how they take forward a business that they know nothing about, they don't understand the basics of it, they don't understand the principles of it. What was it to your mind that actually worked in your favour? Was it intuition, was it your gut. What was telling you that this was something that you could capitalise and monetise on?
    I said Internet is going to change the world but nobody believed it. So I said Bill Gates said internet is going to change.
    And then they believed you.
    Then believed. At that time Bill Gates do not agree internet is going to change the world but the people used to my quotes that Bill Gates said internet is going to change the world but I know it's I said that. Second is that one of the reasons why we survive for the first two-five-ten years was three reasons which I said in Harvard Business School. People asked me why you survived after ten years. The first, we did not have money. Second, we didn’t had noted technology. Third, we never planned and these are three principles which all against a Harvard
    Business thinking…
    That's why they say you shouldn't go and get yourself an MBA?
    I applied for Harvard ten times, they rejected me. So I say well.
    They are going to be kicking themselves at this point.
    Yeah. But the first we didn’t have money. I borrowed US$2000 so every cent we should use we were very careful because we know that if we are not careful we will die tomorrow. We find that a lot of internet companies died not because they don't have money because they have too much money and even today we have so much cash; billions of dollars of cash we still use for every cent very carefully because we know if business will only rely on cash, on money then they don't need entrepreneurs.
    Do you think this is what went wrong in the last couple of years when everybody was becoming part of this global party in that sense launching companies, raising money. Do you think this is what really went wrong that money became the objective as opposed to the means to an end?
    Absolutely. One of the key reasons why this financial crisis happened I believe is the value system; business people forget about the customer. They focus on cash, focus on capital market, they focus on raising more money. Why you raise money? Running business and raising money is just like put gasoline in the car. We you have enough gasoline you have to run, but people forget.
    I saw a lot of people waiting for the IPO market. I think they are just like so many people waiting at the gas station and when they get the gas they don't know where to go. So business you always focus on the customers so first I say the money is not important to the real entrepreneur; you have to always think different and second is that we do not know anything but technology because I do not know anything about technology. I respect the people who know technology. We hire the best engineers to work in the company; listen to them. My engineers -- and I remember in the past 10 years we never quarrel because we don't know how to quarrel. When they say this I believe it.
    You listen.
    I listen because they listen to me that the key is where the business should go and I told them 80% of the people in this world, unlike me, think technology is dummy. We love technology but we are scared.
    Do you continue to be scared of technology though?
    Me too. Till today the only thing I can use -- my computer sends and receive email and browser that's it. I believe 80% of people there. So whenever, whatever the software my engineers’ team make, I will be the first person and the last person to test the products. I don't want to read the manual book. I want to click and get it. If the technology is good but I cannot use it, forget it. I think 80% of people cannot use it. So we try to make our technology very simple easy to use like make 80 percent of people to understand the Alibaba.
    I remember you said that Alibaba is a thousand-and-one mistakes; we expanded too fast and then in the dot-com bubble we had to have layoffs but by 2002 we only had enough cash to survive for 18 months. What is the dilemma of growing too fast too quickly, how you balance growth with being judicious about it?
    Today they are about more than ten books writing about why Alibaba is successful, why this and why that and how great Jack Ma and his team are but none of them I receive any interviews and none of them we authorized the right. They just guessed but I think one of the books - if there were only one book I want to write about this Alibaba 1001 mistakes. We made a lot of mistakes but for example one of the mistakes we made in year 2000 when we raised USD 5 million we thought we are rich. Now we are going to hire great people, have a beautiful office building and we stayed like any startups; you have money you start making mistakes. So I called myself at that time like we are a poor tractor but we hire some great people to join the company just like we are a tractor but we try to get the Boeing 747 engine putting into tractor does not help the tractor, make the tractor split into pieces. When we had only USD 5 million we moved to USA, we made a budget for over USD 12 million marketing because the people we hired were all professionals, they all graduated from MBAs, they talk regularly; they only talk. I mean when they say this is a strategy, this is where you go. When are you listening you feel excited yes, this is where Alibaba should go, but we do always wrong. So like any startups we made a lot of mistakes but later we think you have to survive, to survive you have to be focused, you have the right people not the best people; the right people for you. Second things is that no matter how tough the chase is you always have the dream, you always have the first day dream which I call first day love. It's always beautiful. When tough day comes think about the first day dream. When the wonderful days come think about first day dream because this is the dream you want to go not the day.
    What's the number one mistake that most startups make to your mind?
    I think most of the startups the number one mistake they have that they always say I don't have money. If I have money I am going to solve this problem.
    It comes back to that, isn’t it?
    But I think this work we are never no lack of money. We lack up the people have the dreams and would die for their lives for this dream and it’s difficult to find the team who believe dream work together on this and execute one little-by-little everyday-by-everyday. So people always have complaints; people who lose, who always have a lot of excuses - I don't have money, I don't have people, I don't have technology.
    People were thinking that this party was going to continue. People were still raising money, the markets were booming. You at that point in time said stop, rethink because I think things are going to go down from hereon. What gave you the intuition what made you think that the party was actually headed to going burst?
    I think human being easily forget the mistakes. It’s always easy to forget about the terrible days. When things going good they always think that it will be better. Last year with the data that Alibaba got, we find a lot of data’s import export from China is declining and second is that I met a lot of my customers, SMEs. They said Jack we made a lot of money last year. I said how did you made your money. Stock market. And then we when I had a lot of meetings, conference you see most the speakers they are the bankers. They are telling people the IPO, they are telling people raising more money, you are telling how much PE you are going to make. Something wrong because they leave the basic track of the business. Nobody tell us about create value for the customers, nobody tell us how they should think about improving their products. Everybody is talking about valuation and one of the thing hit me was that one day there is a Chinese real estate company went public in Hong
    Kong and everybody said this company is going to be huge because they own that much of land and if each piece of land x profit x PE means the valuation.
    We saw that happen in India as well.
    That reminds me year 2001-2002 when Yahoo IPO and everybody said Yahoo is a great company and their each page view x HSN of us x 40% of PE it’s going to be that the marketcap and then that was the start of bubble burst again and also when Alibaba go public our stock -- we wanted to raise like USD 1.7 billion but over USD 180 billion just want to get the shares and over 550 billion Hong Kong dollars ready for buy the shares and our stock go from US 13.5 to USD 40 within three days without any reasons and I know something wrong because people do not care where the substance of the business. They care about whether the stock will go up. People just think about the money. So we know something is wrong. So we tell the people, tell our team, get ready for that. The second disaster is coming after internet bubble even worse.
    Are you seeing signs of any sort of a recovery at this point of time or do you think things are going to get a lot worse before they start to get better because there is hope, everybody is talking about greenshoot at this point in time. Are you seeing any greenshoots. Are they visible to you at all?
    In December I visited one of restaurant and the owner of the restaurant is Alibaba member and she asked me, Jack you saw the crisis coming and now tell us how long the crisis is going to last and I told six months. She said six months it’s going to shut. I said yes, because you will get used to it. We all have to get used to it, this kind of environment and now I see the economies coming back because I strongly believe that last year when crisis come every government, all the business, all the consumers will be united, will worry about it. If this road too much traffic accident, the government there, police there, everybody will be careful, it will be fine. So I think in the next two to three years the world economy will be peaceful. Why the financial crisis came so seriously because nobody cared, last two years nobody cared. Money, money, money always talk about money and no customer, no market, not the right things. I was a little bit disappointed early this year when I see most of the American people watch TV, waiting for Mr. Obama what are you going to do for us. It reminds us like 30 years ago Chinese people listen to the radio and said what the government is going to do for us. I think they are losing American dreams. We need an American dreams, we need the Indian dreams, China dreams. We are lucky at this time. I always believe we are lucky people when we are only 30 years old-40 years old and we see this disaster. We are still young, we know how to overcome it. If we overcome it we get another chance. I try and believe ten years later there will be better, more successful people, much more successful companies will exist after this financial crisis. It’s a great opportunity.
    Just before the break we were talking about one email that you have sent out to your employees warning them about the disaster and the financial crisis that was waiting to happen. The other thing that you actually did was also tell small and medium enterprises in China to focus on the domestic market as opposed to focusing on the export market. This has been one of the things that has driven the Chinese economy so far but now you are actually asking them to look inwards as opposed to looking out. This is something that we are grappling with in India as well. What is the strategy, what is your message, what do you think needs to be done at this point in time to really capitalize on the domestic demand and how should it be done?
    I think in this world there are two big markets. One is China and other is India and in China all the businesses in the past ten years they just rely on outside market, they just want to rely on that. So I think it is time to think about domestic market, it is time to think about all the business no matter you are small or big, you have to think about the bolstering export import and the domestic trading. We found many companies in dying because of this financial crisis because they just do not know how to manufacture, they do not have the sales channel outside the world. So when the order from outside China is dying they are dying because they don't know how to sell. So we encourage them to think about to sell into domestic market only when they know how to do business, how to do marketing and how to source channels otherwise it’s just a factory but those companies who are doing domestic trading they have to think about global markets. If they do not do the global market they do not do the global trend. What's the competition outside China? So this is what we said those companies only do exporting please think about domestic because this is the essence of China economy.
    The other thing that SMEs in India as well as in China really bank on is the price advantage. So while small is beautiful, cheap is even more beautiful but in that sense how long can you actually hold on to that pricing edge. Do you not have to work up the value chain, do you not have to innovate. How much weightage would you give to innovation for an SME at this point in time as opposed to the price advantage now?
    I think that the price advantage - people think about it traditionally the cheaper the better and SME love especially manufacturer love to compete on prices. I think that's silly, that’s killing ourselves. Never ever compete on the prices. We should compete on the services, compete on innovation because of the internet, because of e-commerce I think the world is going to moving from traditional b2c business to consumer to business that means most of the manufacturer in IT should design for consumers. Last century IT designed for manufacturer. This century IT is designed for consumers. So what we believe is in the next 10 years is -- because all the SME has to use the technology to tailor-made their products to the consumers.
    From a small start-up to a medium enterprise and then to actually go public and yours was an IPO that was only second to Google. How does it change the complexion, how does it change the character, how does it change the philosophy of a startup when you finally go to the IPO market what is your advice, what should the lessons actually be for startups who are looking at the IPO market and the IPO route?
    I always believe your first day dream and second learn from the other people's mistakes instead of learning from other people’s success.
    A 1001 in your case.
    Yes. I think most of the people in this world when they fail, they almost have the same reasons why they fail, but for those people who success, there are various kinds of reasons to be successful. You learn this maybe there is another secret sauce there you never know. So I think we should learn from the other companies how these sell.
    What about actually dealing with a much bigger player than yours. In your case Yahoo. Very different cultures, very different worldviews, very different in size. How do you deal with doing a deal with someone who is five-ten times bigger than you and this will be something that a lot of SMEs will be grappling with. How do you retain your own independent identity, your own culture and yet do business with the big boys?
    When Alibaba was small we never talked to business, the big business because you are too small. If you want to do business with big boss let's make yourself either good or strong. I don't like word ‘big’ because I hate the big.
    You are getting there, aren’t you? You are pretty big yourself now.
    We are small. If the one book I want to write is Alibaba 1001 mistake. The other book in the future if I want to write, if I could write is - how to make your company smaller.
    As a believer, as a gatekeeper with the vision and the mission what is the mission at this point in time and what is the vision. Where do you hope to take Alibaba from where it is? You have just completed ten years. Where do you hope to go?
    Last ten years we proved internet, we proved e-commerce working in China. Next ten years we want to tell the people that business society is also a very important factor to improve the society. We are not the company only care for profit, we are not the people just to care for the interested problem. Business should be a part of the world; improve the world, take the responsibility by using internet. Be more open, transparent, sharing, responsible globalization.
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