The Birth of Magnificent “BABA”

馬雲

After graduating from high school, he failed two times in college entry tests at China and finally made into a college in his third try. In his twenties, he worked as a secretary, a porter, a tri-cycle taxi driver, an English teacher, an English translator, etc.. While he was working through those jobs, he met his wife and started a family. The experience in various fields honed his willpower and enriched his EQ as well. However, the most important lesson he learned was: never give up.

In 1995, the local government of his hometown entrusted him to recover some debts at US. Even though his trip was filled with thrilling experiences as being kidnapped and robbed by gangsters, he got to know the concept of Internet, which was then still at the stage of infancy in China. He not only immediately fell for this new concept, but also made his mind to step into Internet – related fields at China.

In spring of 1995, he returned to his hometown and quitted his job as an English teacher. He jointed his wife and one of their friends, together with 20,000 RMB ($2,500 at that time), to build an online search tool – “China Yellow Page”. The initial mode of their business was to provide business related information through online interactions with the users, also to help business build their homepages. They generated revenue stream by charging 20,000 RMB per unit of 3000 Characters plus a picture.

At that time most people didn’t understand the goal of his “China Yellow Page” and misunderstood his business as something to steal money out of people’s pocket. His “China Yellow Page” was not profitable until the end of 1997. But his attempt to collaborate with one of the government organizations failed unfortunately, then he decided to stop his “China Yellow Page”.

After “China Yellow Page”, he and his team was invited to develop some government owned websites to promote online trading of Chinese merchandises with foreign companies. While executing his responsibilities with the government, he also formed an ambition to build and operate his own B2B websites.

His career under government control was not that enjoyable. After realizing the lack of opportunities for an entrepreneur under the bureaucracy, he decided to move out of the shade under any government systems. As an idealist, he was never satisfied by the wealth coming with materials. He would seize any opportunities presenting in front of him to pursue his great dreams.

On January 15 1999, he went back to his hometown. On February 20 he invited his 17 friends into a meeting room in the apartment complex he was residing. The room was simply equipped with only one couch, most of them had to sit on the floor. In two hour he demonstrated his enthusiasm to form a largest Internet company in the world.

Being excited by his “Grand Blueprint”, those 17 young people agreed to join his adventure – a new Internet company. Their initial mission was “to help businesses at China seek partners overseas; to serve middle or small businesses to pursue global trading opportunities.”

Their start – up capital was 500,000 RMB ($62,500 at that time), from each of 18 people’s pocket. On a piece of page, he hand – wrote the amount of ownerships for each person based on the amount of his / her contribution. He then suggested each of his partners put this piece of page away for now. “If we look at it everyday, we can’t focus on our future work,” he said.

On April 15 1999, his Internet company was launched. Before long another person joined his effort and started to playing one of the critical roles in his new entrepreneurship. At the first few months collecting more capital for growth was harder than he expected before. But finally on October 29 1999 Goldman Sachs invested $5 millions; and on January 2000 an amount of $20 millions was invested by a private investor. His was on his road to build his B2B empire.

At that time he only believed that B2B was the best to bring different business entities together for learning, sharing and trading. He was fairly pessimistic on B2C and C2C and he thought that the amounts from those two have no chance to grow nearly as big as B2B.

In the year of 2000, China became a member of WTO. The country’s economy took off in a great speed, largely due to its integration with other countries. China not only served as a global source of manufacturing but also evolved into a strong trading partner with many countries. Under this main trend, his business was growing rapidly without any hurdles of competition. His company became profitable in the same year, and then he took a break from his business routines to create a strategic plan to grow more, much more.

During his strategic planning period, he discovered the huge potential of C2C from the success of ebay at US, eachnet (易趣) at China and Yahoo at Japan. He estimated that the market value of C2C at China would surpass that at US in not too distant future. He set his mind into this area, which gave the birth of “TaoBao (淘寶)” in 2003.

On the same year, his company introduced “AllPay (支付寶)” to assist payments of online shopping. In 2005 his company acquired Yahoo China, which brought his business with a huge online search capability as well as popularity on Chinese market.

November 2005 while the market value of Google rose over $100 billion, which was double of eBay or Yahoo, he was inspired by the gradual replacement of B2B with online searching.

He decided to test the water in online searching not because it was “hot” but because it was a potential support to the growth of his electronic commerce. However his acquisition of Yahoo China came with a great risk due to the fact of combining two different cultures.

After going through re-organization and re – structure, he spun off the B2B arm. November 6 2007, the new entity of his B2B arm was traded at Hong Kong, and immediately approached the highest market value among all Chinese Internet companies. However its stock price was going down during following few years, finally on June 20 2012 it was delisted from Hong Kong Exchanges due to its poor performance.

After spinning off his B2B business, he focused on remaining B2C and C2C platforms. In 2008 he invested 2 billions RMB more on “TaoBa ”. As he expected, the C2C business through “TaoBao” grew 131% in the same year in spite of slow global economy. In the following years, “TaoBao” became a monopoly in C2C market at China. Supported by the huge traffic through “TaoBao”, a B2C platform, “TaoBao Mall (淘寶商城)”, was formed. In 2012 its name was changed into “TianMao Mall (天貓商城)”, by then almost half of B2C business at China was done through “TianMao Mall”.

November 11 (also call “double 11”) at China was equivalent to “Black Friday” at US. On “double 11” of 2013, the revenue from “TaoBao” and “TianMao” reached to 35 billion RMB.

Since 2010 the conflict between Yahoo and his company surfaced more and more. In September 2010, he intended to buy back the equity of his business owned by Yahoo. However Yahoo’s then CEO, Carol Bartz, was strongly against his decision. Instead Yahoo added more seats on the board of directors. This made the ownership of Yahoo raised to 39% while his voting power dropped to 31.7%.

At that time, he determined to strip “AllPay” off from his company in order to gain permission of payments through China Central Bank. Even though the decision was in disagreement with Yahoo’s top executives and other stakeholders, he went in his way even with the risk of his reputation. “It was difficult decision, imperfect but correct,” as he explained later.

January 10 2013 he announced company – wide re-structure by dividing 7 original units into 25 independent divisions, each of them was managed by its general manager.

Five day later, he announced his retirement at the age of 48. Even after retirement he remained active in Internet business at China, and the retirement gave him a chance to dream even bigger.

September 8 2014, two days before his 50th birthday, he again landed at the east coast of US and started roadshow. He led a team of his long – time partners, with a sole mission to take their company to the world by going IPO at New York Stock Exchange.

During last 20 years, he witnessed how Internet business at China has been flourishing from a small bud to its peak, just as high as any developed nations. His own experience through this era has been accompanied by a rough road on which a very ordinary young person has created something extraordinary.

“After almost 20 years, I am back here again. This time I want more money from you than last time,” he said, with pride, on the morning of September 19 2014 when he ringed the bell of stock exchange.

His name is Ma Yun (馬雲), and his Internet empire is listed as “BABA”.

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