Book Review: 'Alibaba: The House That Jack Ma Built'
Last week, I was at a book launch at the London School of Economics by former Morgan Stanley investment banker and founder of investment advisory firm BDA China, Duncan Clark. I've just finished reading the book that was released, 'Alibaba: The House That Jack Ma Built'. It's a book that's truly enriched by the close ties that the author had to multiple personalities within Alibaba, including Jack, right from the early days - in fact, as he said at the event and mentions in the book, he was famously offered, and then turned down, the opportunity to invest in Alibaba.
Alibaba has been in the news lately for many reasons. Actually strike that, Alibaba is always in the news these days if you're tracking it, but the most noticeable event, which I mentioned in a recent edition of the Other Valleys newsletter if you're a subscriber, is the $4.5 billion raised by Alibaba's financial subsidiary Ant Financial (a couple of newsworthy events from this week include Alibaba's partnership with Samsung for mobile payments, and their ongoing tussle with fakes as covered by the Business of Fashion; in fact the company cancelled a planned anti-counterfeit keynote as well).
So as I said, busy times for a busy company. But back to the book, which chronicles the impressive rise of Jack Ma, earlier an English teacher whose previous startup, a translation company, was not very successful. Small imprints of his fascination for literature are peppered through the current Alibaba: employees are asked to adopt a nickname, which initially were drawn from the novels of Jin Yong, a Chinese language novelist who writes martial arts fiction. Even the company's values, what they call the Six Vein Spirit Sword, is drawn from his novels.
The book covers Jack's key business relationships in detail, in a style that gives the reader the feeling of being ensconced in an armchair listening to important discussions happen in a room. Because of the fact that he had such good access to Jack and Joe Tsai (now Vice-Chairman of Alibaba Group), he throws a lot of light on Alibaba's financial dealings with investors and companies like SoftBank, Goldman Sachs (who also, probably to their regret, sold an early stake in the company way before the IPO) and Yahoo (this is the relationship that most people are familiar with, given how closely it is tied to Yahoo's ailing health).
Alibaba's steady growth compared to its competitors over the years is really fascinating to read, from Meg Whitman's struggle to establish eBay in China as her subordinates wrecked the local business without her say, just as Alibaba was taking off, to the secret launch of Taobao, the B2C e-commerce venture that Jack spun off separate from the main B2B business early on, that is really making a difference to the growth of SMEs in China today. As a co-founder of Ada's List, I was particularly gratified to hear him mention both at the event and reiterate in the book, the contribution of the many female members of Alibaba's core team; including his wife Cathy and another co-founder and CEO of Ant Financial, Lucy Peng.
But this book is about Jack Ma as much as it is about Alibaba; indeed you can't mention one without thinking of the other. He comes across as a very charismatic and empathetic leader who right from the beginning had strict priorities: customers first, employees next, and then only stakeholders. In fact, he gave up a lot of equity to his multiple co-founders and continues to give stock options to many of his employees, who now number over 35,000 globally. Alibaba is so closely tied to China's culture now that November 11th, which is celebrated as Singles' Day is one of the largest online shopping days in the world, even bigger than America's Black Friday. Another interesting phenomenon is May 10th, the day Taobao was incorporated and also the day Jack 'blesses' his recently-married employees in a mass celebration. Jack is not without his quirks though, as exemplified in his buying of a stake in a popular Chinese soccer club, reputedly when he'd had a few to drink.
As the book wraps up, you get a quick look at how the business - and Jack - are diversifying to future-proof themselves; from Alibaba Pictures, which was a key investor in the latest Mission Impossible franchise, to Jack's membership of Yunfeng Capital, a private equity fund he co-founded with other billionaires (also known as the 'billionaire boys club') and Aliyun, their cloud computing business which can be a huge profit driver for them along with Alipay, if the continued success of Amazon Web Services is anything to go by. This is the neat thing though - Jack doesn't consider Amazon competition in the traditional sense - he is focussed on getting the West to connect to Chinese merchants rather than spend time trying to be another version of it.
Alibaba has recently opened offices in the UK and US, following their November 2014 IPO on the New York Stock Exchange. The sheer volume of business they enable globally is staggering, if you track the numbers. But it is not without its challenges, especially the controversy over fakes. Any business of Alibaba's size is bound to have challenges, but if the book is anything to go by, Jack Ma can and probably will lead them through it.
All in all, for a sense of how, and how impactful China and Alibaba have become, and for a true lesson in entrepreneurship, read this book.