By Duncan Clark (2016)
Pages: 304, Final verdict: Should-read
With more than 15 million packages delivered every day, an e-commerce marketplace bigger than Amazon and eBay combined and a payment system 3x bigger than PayPal, Alibaba is not playing around. And with the largest IPO in the history of the NYSE in 2014, Jack Ma has put himself on the map as the face of the new China.
Along with many stories from the information revolution taking place in China, Duncan Clark's best-selling book from 2016 answers the question of how an English teacher from inner China got himself into the epicenter of the Internet revolution.
The Great (digital) Leap Forward
China is by now the most connected nation in the world. Its Internet landscape is dominated by the "Three Kingdom", Baidu - China's response to Google, Tencent - The gaming giant responsible for turning WeChat into the most powerful app of the East, and Alibaba - the B2B marketplace. Combined, these 3 Internet giants are valued in more than 500B$ dollars.
But the skyrocketing ascendance of the Internet in China did not come smoothly. The land of the dragon moved from a base of only 2 million Internet users in 1999 (compared to 100million in the US) to an active 700 million "web-citizens" today. And to understand what made that possible, Duncan does a great job of moving between the story of Alibaba and Jack Ma, and the background journey of the information revolution of China.
At the center of the plot, and as much as with anything else in China, is the Chinese communist party. And despite initial skepticism over opening the country to the information age, we learn how the Beijing government realized that the Internet would be the key enabler for the 2nd wave of the economic growth of the country (following the industrial revolution of the 80s and 90s) and move towards a new economy dominated by domestic consumption.
The impact that Internet is having in Chinese retail can be seen through a few staggering stats:
- China had a highly fragmented retail market where the top 3 grocery stores account for only 7% of all sales (vs. 37% in the US), making the internet the perfect channel for this market;
- More than 10% of retail purchases in China are made online (vs 7% in the US);
- 40% of Chinese consumers buy groceries online, vs only 10% in the US;
- Singles Days, China's online shopping holiday generated 18B$ in sales at the Alibaba marketplace alone;
At the core of this industry is the Alibaba Group and its main businesses Alibaba, the B2B marketplace, Taobao, and Tmall, the e-commerce giants where you can buy anything from Michael Kors handbags to entire islands on Fiji.
Yet, despite its relative openness to the domestic Internet business, the government continues to play a predominant role in all regulatory aspects today. The "Great Firewall of China" is still the party's weapon of choice to control what part of the international web Chinese people have access to, causing companies like Facebook or Google to stay away from conducting business in the country.
"The business schools teach a lot of skills about how to make money and how to run a business. But I want to tell people that if you want to run a business, you have to run the value first, to serve the others, to help the others – that’s the key. - Jack Ma
100% Made in China
Jack's story is sure to be added to the Chinese history books one day.
Jack Ma was not meant to be an Internet mogul. Born in a traditional Chinese family in Hangzhou, he was never a great student, neither was he passionate about technology. He did, however, have an insatiable appetite for learning and for people.
Knowing how young Jack developed into the business leader he is today is nothing short of fascinating. Among many others, the book takes us through his adventures as a young English tour guide, a first-time entrepreneur with his Chinese-English translation business and the government job that enabled him to travel to the United States, where he discovered the Internet.
The aftermath of his US trip led him to organize a meeting between 18 people - ex-colleagues and friends - in his apartment in Hangzhou, where Jack shared his dream of building the company that would bridge China's small businesses and the world. And just like that, history was being born, with the birth of Alibaba.
The book does a fantastic job at displaying just how dynamic and intense the story of Alibaba is. A lot has happened since Alibaba was founded in 1999, and the high pace of Duncan's storytelling will take you through the early investments from Goldman Sach and SoftBank, the war with eBay, the love-hate relationship with the government and the famous 1B$ investment by Yahoo. At the end, Alibaba has survived internal and external competition from both East and West and has emerged as the biggest winner of the Internet battle in China.
Through it all, it is remarkable to see how much Jack and Alibaba have stayed true to their core values, codified under the "The Six Vein Spirit Sword":
- Customer First
- Embrace Change
Embracing these principles has not come without its pains. These include the financial pressure the company faced by maintaining its no commission policy for Taobao or Alibaba (unlike the competition), the refusal to take money from the government or the fight against merchants posting counterfeit goods on their platforms.
At the end of the day, by enabling the creation of more than 14 million jobs, Alibaba has had a deep societal and economical effect in China. And yes, they can be quite "eccentric" by celebrating employees weddings on campus or going on group singing sprees after lunch. But all that just shows how committed the company (and its iconic founder) are to building and environment where people feel valued, protected, and challenged.
But Jack is not stopping here. He is diversifying the group portfolio into the media world and banking. And if he is to fullfil his mission of bulding a company that lasts 102 years (and hence 3 centuries), Alibaba is here to stay. And I'm excited to see what lies ahead.
"Today is brutal, tomorrow is more brutal, but the day after tomorrow is beautiful. However, the majority of people will die tomorrow night." - Jack Ma
Jack Ma: The House Jack Ma Built is hands down one of the best books I've read recently. I loved learning not only about the history of Alibaba, but how the "new Internet China" has brought both prosperity and turmoil to what remains one of the most mysterious countries of the world.
Very well written and filled with interesting stories from Alibaba and the Chinese information revolution, I definitely recommend this book to anyone who loves reading about businesses, technology, and iconic leaders.
History is being made in China, on the banks of the majestic west lake in Hangzhou, by a man who fought against all odds to become the Chinese emperor of the information age. Don't miss it.