This book was written by one of Alibaba’s early employees. Interesting to see how this company grew in a non-traditional technology city and led by someone who’s not technical.

Jack Ma in his own words

“I’m 100 percent ‘made in China.’ I learned English myself, and I know nothing about technology,” Jack explained. “One of the reasons why Alibaba survived is because I know nothing about computers. I’m like a blind man riding on the back of a blind tiger.”

Jeff Bezos is also in the e-commerce industry

Curious, I leaned over to see who was so intent on transcribing Jack’s speech. I was shocked to find it was Jeff Bezos, the founder and CEO of Amazon.

Localise leadership and understand local culture

I see a lot of US companies sending professional managers to China. They are making their boss in the US happy but not the Chinese customer.” Jack had always wanted to meet Jeff Bezos, so I leaned over, introduced myself, and gave Jeff my card.

Alibaba’s early history

And I saw a team of ordinary people come together to build a company that has fundamentally reshaped the way people do business in China and beyond.

Jack Ma is just lucky?

But I kept mum, because I didn’t see any point in debating him. Yes, Jack had been in the right place at the right time. But on paper millions of other people were more qualified to start an e-commerce business than a schoolteacher from Hangzhou who twice failed his college entrance exams. Yet Jack was the only one who seized the moment. He was the right person at the right place at the right time. So why Jack? What made him different? What motivated him?

A childhood of ridicule

Alternately described as elfish and impish by the media, Jack’s diminutive figure brought him unwanted attention and ridicule. Even within his own family he was sometimes teased as being the runt. When introducing his three kids, his dad was known to joke, “And this one we found in the garbage.”

Knowledge from outside

Through his relationship with the Australian family, Jack first traveled out of China, which he said “showed me that everything I had learned about the outside world in my Chinese textbooks was wrong.”

Jack the teacher

Most Chinese teachers required rote learning from textbooks, but Jack taught extemporaneously, straying from the texts and relying on storytelling and humor to engage his students. He incorporated in his lessons a bit of showmanship learned from his performer father, and Jack became a favorite teacher on campus.

Fail or success was not important

After fulfilling a commitment he had made to a mentor to serve as an English teacher for five years, Jack decided it was time to “jump into the sea” and start a business. “Everything I taught my students was from books,” he said. “I wanted to get some real-life experience. Whether I succeeded or failed was not important. Because I knew I could always take that experience back to share with my students.”

No Chinese company on the Internet in early 1990s!

In Seattle Jack’s friends introduced him to the Internet by sitting him down in front of a computer for the first time. “I was afraid to touch the computer, such an expensive thing. But they told me, ‘Jack—go ahead. It’s not a bomb!’ So I typed in the word beer, B-E-E-R, and I could see German beer, Japanese beer, but no Chinese beer. So I searched the word China and the response was ‘no results.’ So I said to myself, This is something interesting. If we can take companies in China and make a home page for them, this could be something big.”

Initial joint venture with Telecom

Fearing he might have to compete against a government-backed player, Jack decided the only way to survive would be to team up with Hangzhou Telecom. They formed a joint venture, but Jack soon found himself at odds with Hangzhou Telecom’s management and left in frustration.

Control vs empower

Thinking he could help pioneer e-commerce from within the government, he took charge of an organization designed to help small- and medium-sized enterprises take advantage of the Internet. But once again Jack felt stifled by the government bureaucrats ultimately responsible for the organization. “My boss wanted to use the Internet to control small businesses, but I wanted to use the Internet to empower small businesses. We had a totally different philosophy.”

Birth of Alibaba

He had learned from the ups and downs of his experiences with China Pages and the government. Jack now had a clearer vision for how e-commerce could finally take root in China. He’d chosen the name Alibaba because it was a globally recognized story and conjured up images of small businesses saying “open sesame” to new treasures and opportunities through the Internet. Thus Alibaba was born.

From 1% to huge growth

But with less than 1 percent of the country’s population online, China’s Internet industry seemed destined to languish for decades. Everything changed in the summer of 1999, with the IPO of China.com , a Hong Kong–based consumer Internet portal that styled itself as the “Yahoo! of China.”

3 clear goals!

Tonight I want to lay out our vision. From the first day we started Alibaba, we had three main goals. We want Alibaba to be one of the top ten websites in the world. We want Alibaba to be a partner to all businesspeople. And we want to build a company that lasts 80 years!”

innocence and beginners

Although the event wasn’t a slick production, the innocence of it appealed to me. Unlike a lot of the other companies I had interviewed with, Jack and his team seemed to be driven by more than just money. It seemed like a fun adventure. Shortly after the speech Jack’s assistant motioned for me to come over and sat me down with Jack.

Porter’s job with Alibaba

I guessed he hadn’t even seen my resume. We spoke for only about five minutes before he offered me a job. It was clear that Jack was someone who made decisions quickly, based on instinct and gut. But he had a sort of mischievous charm about him—I could tell that whether Alibaba failed or succeeded, working for him would be a great adventure.

The Internet industry in Beijing

When I arrived at the event, the difference struck me immediately. Beijing’s Internet industry had been built from the ground up by entrepreneurs from humble backgrounds with little business experience. Unlike the state-owned enterprises that dominated the rest of the Chinese economy, the Internet industry was a meritocracy, where good ideas, hard work, and innovation meant much more than having the right contacts.

Asia + West = Best of the both worlds!

And I thought that Asia is Asia and America is America. Asia has its own way of doing e-commerce. So our goal with Alibaba is to be the top business-to-business [B2B] marketplace in the world. We will combine Asian wisdom and Western operations.”

Optimism!

Jack said a few more words and wrapped up the evening’s events. “Just remember, everyone. We will win. We will make it. Because we are young. And we never ever give up.” It seemed so simple, even a bit naive. I looked around the room and wondered, Is this really the right team to stand up to the US Internet titans? Yet their optimism was somehow infectious. It made you want to believe.

Fast and patient

In the Internet era, he explained, “one must run as fast as a rabbit but be as patient as a turtle.” Justin ate it up. Jack sounded nothing like a CEO. But that’s what made him so fascinating.

Growing too big, too fast has challenges

With Jack constantly on the road speaking at conferences and media events, and no chief operating officer to manage the company’s day-to-day functioning, there was a leadership vacuum. The company had grown too quickly, and chaos was beginning to pull it apart.

Test a lot of things…

We tried banner ads. Revenue-sharing partnerships. Website development for small businesses. We tried everything, but nothing stuck. It was a race for revenue. And a race we were losing.

A wrong decision is better than no decision!!

And, looking at his own team in Hangzhou, even Jack must have questioned its ability to compete with Silicon Valley talent. So he announced to the team that he would move Alibaba’s English website from China to California. “That’s the decision we have to make. Maybe it’s the wrong decision. But I always remember one thing: a wrong decision is better than no decision in Internet time.”

Remote employees might be inefficient at times

The decision was portrayed to both staff and outsiders as a sign of Alibaba’s increasing globalization, but it ultimately proved to be a disaster, sending the company into a tailspin. Time, distance, and language differences made communication between teams highly inefficient. Just as the China team was waking up, the US staff was leaving the office. And before long Alibaba had grown into a two-headed monster, with each head going in a different direction.

Frugal Alibaba

Within the company the Alibaba apartment was already as legendary as Apple’s garage or Yahoo!’s trailer. It had also become a symbol of Alibaba’s frugal, waste-no-renminbi culture.

Chaos

Internal chaos was the price we were paying even as Jack boasted publicly, “Alibaba doesn’t plan.” New departments formed and disbanded so quickly that nobody had a good sense of who was doing what and who was in charge. Day-to-day decisions were difficult to make without having Jack weigh in.

Employee review

So for each employee’s review, four people will be present. The employee. The employee’s manager. The employee’s manager’s manager. And a representative from HR.

management and specialist track

“There will be a management track for people who would like to move up in the organization as managers. And a ‘specialist track’ for specialists, so that they can also advance in the company.” This was an idea that had never occurred to me, but once Savio explained it, it made perfect sense. The natural tendency for a company is to promote a high-performing specialist, such as an engineer or graphic designer, to the position of manager. Most employees would accept this because they want to see their salary and recognition increase. But not every skilled specialist makes a great manager.

Revenue model discovered that customers are willing to pay!

Sellers began to ask us for the opportunity to pay us for a sponsored listing of their products so that they could appear above Alibaba’s organic search results. It appeared that, after giving Alibaba’s services away for free for two years, we had finally reached the critical point at which customers were willing to pay.

Verification process

Buyers needed to have some assurance that the person they were dealing with was legitimate. So we launched a service called TrustPass. The only way to be certified with TrustPass was for a company to go through a third-party authentication-and-verification process that demonstrated that in fact it was a legal business and the person was authorized to represent the company in trade dealings.

Alibaba growth

Nearly everyone in the company had stock options; there was a spirit of shared sacrifice for the greater good of the company. Every penny saved would help Alibaba survive and grow to the benefit of all employees. As our road show gained momentum, our presentations became more sophisticated. In a span of a few months, our events grew from tens of customers in two-star hotel conference rooms to hundreds of customers in five-star hotels. With each road show the local media reported on the growing movement that Alibaba was creating. One by one we were convincing China’s business people to move online.

Marketing with zero budget

My first move was to cut our advertising budget to zero. One look at Alibaba’s website traffic had shown me that even without advertising support, our website had natural viral growth. So, much to the marketing team’s dismay, I told them that we had changed our strategy to “zero budget marketing” and would rely solely on word of mouth and public relations to take advantage of free media coverage. Any marketing plan would have to involve no budget.

Keeping things running despite challenges!

It was good news all around. Not only had we survived intact, but Alibaba had embraced the challenge laid in front of it. We had managed to keep the website running seamlessly in the face of disaster. In fact, traffic had skyrocketed, as the epidemic accelerated the adoption of e-commerce in China by providing a channel for buyers and sellers to connect without the need to meet face to face. If the true measure of a company is how it weathers a crisis, we had passed with flying colors. Good thing, because we were about to face our greatest challenge yet.

Birth of Taobao

“So after they signed the agreement,” Jack said, picking up his story, “I told them what the project was—to develop a consumer auction site to compete directly with Eachnet in China. And to build the site they had to go back to Alibaba’s roots—my apartment in Hupan Gardens. They worked on the site while everyone was in quarantine. They launched it a few weeks ago, and it’s really taking off.” He leaned over my computer and said, “Here, you can see it. It’s called Taobao. It means, ‘search for treasure.’ Pull up Taobao.com .”

Competition with eBay and Taobao

“We’re ready to launch Taobao. And when we do, we are going to declare war on eBay. The launch has to be a really big bomb to generate a lot of buzz in the media. I don’t want this to be a war between Taobao and Eachnet. It has to be about Taobao versus eBay. This is about Alibaba’s taking on Goliath.” It was trademark Jack. Just as Alibaba had finally become stable and profitable, he wanted to bet the whole company on yet another huge dream. There was no challenge too big for this guy.

Against all odds

He went back into the kitchen, leaving me in the room with the two sleeping engineers. I imagined eBay’s team, far away in Silicon Valley, probably working away in slick, air-conditioned headquarters with rows of servers buzzing. Meanwhile we couldn’t even manage electricity. I couldn’t help but wonder whether this team was going to beat the most powerful Internet company in the world.

Gaining trust

Taobao’s “free for three years” marketing push helped attract new users. This was particularly important in China’s low-trust environment, where people wanted to try something first before they had to pay for it.

Making money with Alibaba

We were confident that, just as we had found a way for Alibaba.com to make money from its users without transaction fees, we ultimately would find a way to make money from Taobao if its sellers were able to make money. But first it was important to build a platform that gave them more tools than they had offline rather than fewer.

Chat - building what customers need

It would be like telling a retailer in the United States that she couldn’t have a telephone and would simply have to rely on mail to communicate with her customers. So we introduced a chat product called Wang Wang, complete with cute and flashy emoticons. Buyers and sellers quickly adopted the chat software as a part of the regular way they did business.

Creating AliPay - removing barriers from customers

“The problem for online payments up until now is that there has not been any true standard for online payment to emerge in China. The reason is because each of the state-backed banks wants to create their own standard and so they are unwilling to cooperate with one another. But I’ve come up with the solution—we are going to create something called AliPay and then go out and sign up all the banks as partners.” He explained that what would make AliPay different from eBay’s PayPal is that it would not provide direct payments between buyer and seller. Rather, it would be an escrow-based payment system, which would overcome the major barrier to e-commerce in China—lack of trust between buyer and seller.

Meeting with Google

It was clear that Larry had little idea of what we did, but Jack didn’t seem to mind. He took a few minutes to walk the Google team through Alibaba’s business and history. As always, Jack beamed with excitement, but the Google team—perhaps having heard the same type of story many times over the years—seemed indifferent.

More product listing == network effect

Taobao was growing quickly on all metrics. While eBay charged for product listings, Taobao had kept its website free. The result: Taobao surpassed eBay’s product listing numbers. With more products on the site for customers to browse, Taobao’s website traffic had increased beyond eBay’s.

Innovation » Nationalism

And I’d always been proud that Alibaba’s success was based on innovation and merit rather than nationalistic rhetoric.

Localisation » Global features

Upon acquiring the rest of Eachnet, eBay’s first step—and its first colossal mistake—was to link its China platform to its US platform. eBay’s thinking was that in order to build a global marketplace, it should have every country in the world working from the same platform. To make this transition, eBay froze all local website development in order to prepare for the migration of its data and technology to the global platform. In doing so, eBay eliminated localized features and functions that Chinese Internet users enjoyed and forced them to use the same platform that had been popular in the United States and Germany.

Mistake - erasing customers previous ratings

This problem proved to be more common than eBay had anticipated, creating confusion for eBay’s PowerSellers in China, because the online ratings they had acquired over time were now reset to zero, and their loyal customers could no longer find them online. eBay’s customers in China took to its message boards to complain about what they perceived as unfair treatment.

Slow in making changes due to hierarchy

This was clear to us because of our own early mistake of moving our website operations to Silicon Valley. By making Chinese product developers report to executives in Silicon Valley, any minor bit of customization, such as changing the color of a button, required approval from California.

Localisation

On nationalism—as I mentioned it is against our policy to play any nationalism card. But there are very good business arguments for why Chinese management and a Chinese company have advantages in understanding customers on a Chinese-language website. No American Internet company is in the lead in China (although you may disagree). This has more to do with product localization and speed to market than anything—reporting back to the US usually slows things down, as you mentioned in our lunch.

Yahoo investment in Alibaba

Jack explained how the deal had come about. “A few weeks ago I was at a conference in Pebble Beach, and I started chatting with Jerry Yang. We started talking about what we could do together in China. I told him that if he really wanted Yahoo! to win in China, he should let us run it. After talking with them for a few weeks, we agreed in principle to a deal, and now we’re finalizing it. Yahoo!’s going to invest $1 billion in Alibaba and we’re going to take over Yahoo! China.”

Genuine interest is required

Why compete against search engines, Jack thought, when you can own one yourself? The decision came down to Jack’s desire to take on the bigger challenge. Nine times out of ten, an entrepreneur would have gone with eBay, just as Eachnet’s founder, Shao Yibo, had done. But to Jack joining eBay seemed almost too simple, too predictable. On the other hand, buying a search engine and entering the hottest growth area of the Internet? That was a move no one would expect. It also helped that Yahoo! gave us a partner who spoke the same language—literally. While Jack liked Meg Whitman personally, he believed she simply wanted to buy the Chinese market rather than build something that would truly benefit entrepreneurs in China over the long term.

Cultural relation

Jerry’s Taiwanese roots also helped open doors with the Chinese government. His familiarity with the culture and language provided some assurance to the government that Yahoo! would be a more accommodating partner than the average Western business. Hailing from Taiwan was not as politically correct as hailing from mainland China, but at least it seemed less foreign.

Real stakes grew!

During the next few weeks it became clear that the Yahoo! deal marked not only Alibaba’s global coming out party but also its loss of innocence. For six years we’d been the scrappy underdog, a favorite of media and industry watchers who liked the idea that a company led by an English teacher was taking on the giants. But with a billion dollars flowing in and a major global partner, real money was now at stake. We were playing on a new level, and consequently the scale of attacks on us was growing too.

Higher economy / trade == expanding freedom

Compared to my student days in Beijing in 1994, when government minders opened my mail and even a fax machine had to be registered with the government, China had become a much more open society. Sure, it was not a Western-style representative democracy. But individual liberties were expanding every day. It was just a matter of time, I thought, before the Internet, a Trojan horse, forced China to open to an even greater extent. Besides, I figured, widespread adoption of e-commerce in China meant one thing—the government could never simply pull the plug on the Internet in China.

Imitation or Innovation?

Although Baidu had a stronger understanding of the local market than eBay did, Baidu in many ways seemed an easier opponent to defeat. Founded by Robin Li, a soft-spoken entrepreneur who’d studied and worked in the US in the 1990s, Baidu had simply followed the Google script in China. Each time Google introduced a new function, Baidu quickly followed suit, offering a similar feature on its own website. Its home page was practically identical to Google’s; Baidu had become the market leader in China by simply pursuing a “fast-follower” strategy: mimicking the Google US model and providing it locally before Google had a chance to bring each feature to the local market. As a competitor Robin Li seemed better at imitation than innovation, and we thought he’d be no match for our more creative team.

Google’s focus

After managing our Google campaign and visiting the Googleplex as a customer, I had become both a student and an admirer of Google’s. I’d learned that Google’s biggest key to success was its singular focus on first building the best search technology in the world. Google had resisted all distractions, and over time Internet users had rewarded it by migrating to Google’s superior interface and search technology.

Difference between online searching and community

While I admired Jack’s insistence upon innovating in his own way, it also concerned me. We didn’t need to copy Google. But we could at least learn from them. Jack was a marketing person who knew how to mobilize millions of people to join a community to trade products online. But a search engine was a totally different animal. Searching is not a community activity. The only relationship was between the user and the search engine. People didn’t go on Baidu or Google to make friends and chat; they went to find other websites and move on.

UI > underlying technology

They discussed the importance of having the right technology in place and the best algorithms for searches. I could see Jack’s eyes glaze over. He didn’t have time or interest in these technical details. To him technology was secondary to the user experience. And he wasn’t shy about it. “People can’t tell the difference between one search engine or another,” he argued. “From the user perspective they’re all the same. The most important thing is our marketing strategy.”

Free to profitability

“Free is the right business model for China’s current conditions,” said Jack Ma. “But Taobao.com is a business, and like any serious business we have a solid plan for profitability. With Alibaba and Taobao, our theory has always been, only after our members make money using our marketplaces should we make money.”

Charging == proving value

“The business model for charging is already proven in the States. You don’t have to prove the model, you have to prove how big the market is. You have to prove that you can create value in this market, but they just did not listen. Free is still a good word for C2C [consumer to consumer] because it’s so premature in this market. Only 8 percent of Internet users here have tried online shopping.

Treating enemies

But I want everyone to keep things in perspective. In the past our competition with eBay was fierce, but I want everyone to keep in mind one proverb: “If we have no enemies in our heart, we will be invincible to the world.” We should not be ruthless to our enemies.

Business to enable others!

Not only had my colleagues changed but China had changed. The very movement that Alibaba had created had spawned a new generation of entrepreneurs, millions of whom bought and sold products online, shared ideas, and educated each other. In a country where free speech still had limits—lots of them—they had found self-expression through a singular company. As the Internet grew, the very fabric of Chinese society was changing. Despite government firewalls, ordinary Chinese were connecting to the outside world more than ever. They might not yet have Western-style political freedoms, but they had something they never would have had during the Cultural Revolution—self-determination.

Quitting a startup is hard

The only thing more difficult than deciding when to join a start-up is deciding when to leave. It’s hard to leave something you’ve put so much of your heart into. But it’s important to recognize when it’s time to take a step back and pass the baton.

Trends change

Ever the contrarian, Jack’s message was a sobering one, meant to both inspire and humble the staff. We need to be looking out ten years. In ten years people won’t be talking about “the Internet” or “e-commerce.” It will be a part of our daily lives. We have only ten years to make Alibaba great, because in ten years the infrastructure for e-commerce will already be built. After that it will be too late.

Rise and fall of heroes

So many companies rise and fall quickly. The environment changes so quickly. A few years ago Yahoo! was our hero. Who would have ever imagined that it would fall from its pedestal to be where it is today? So many of our heroes from yesterday have come and gone. In ten years, when people talk about e-commerce, we want them to be talking about Alibaba. We don’t want people to look back and say, “Alibaba was once a great company.”

Thinking big!

We need to be bigger than Walmart someday. Some of you think that is crazy. But one thing is for sure: if you don’t imagine it, it will never happen.

Preparing for the economic crisis

In 2008 Alibaba is going to lie low and prepare for a new winter. And during this winter we have to remember our goals from long ago—to be the last man standing. No matter what, we must be the last man standing.

Change

But I took comfort in the knowledge that the team still powered ahead and that Jack had not lost his fire. He’d come a long way from that first time I’d seen him give a speech on a rainy Shanghai night. Just as Alibaba had changed, Jack had changed—from a starry-eyed English teacher into a poised and confident CEO.

Deciding to write the book

“But you realize, Jack, don’t you, that even though I had a positive experience, I’m going to tell the good and the bad, the successes and the mistakes, from my own perspective?” “I know,” he said with a smile. “Alibaba has a responsibility to share our experience with others, so they can learn from us.” Most CEOs would have been paranoid about the idea that a former employee would be sharing the company’s inside story. But at his core Jack was still a teacher.

Alibaba is a platform, an ecosystem

More than just a collection of related e-commerce businesses, Alibaba has become an ecosystem in which the whole is far greater than the sum of its parts because of the synergies among its elements. Alibaba’s ecosystem is comprised of three main elements: Wholesale marketplaces Retail marketplaces Support services provided by ecosystem participants

Challenges ahead - logistics and e-commerce

But perhaps the bigger race will be between the physical delivery infrastructure and the digital infrastructure, which is growing so quickly that it is straining China’s logistics system and risks creating a short-term bottleneck for the growth of e-commerce.

Opening up will also have tiny challenges compared to the big advantages

When initiating China’s “reform and opening up” policy, Deng Xiaoping famously said, “When you open the door, some flies will come in.” The Chinese government opened the door to the Internet because of the economic benefits it can create—e-commerce is a natural fit with the government’s goals. But when the door to e-commerce opened, some flies did come in, in the form of political content and the ability of ordinary citizens to mobilize opposition that might challenge the Communist Party’s authority.

Government and Alibaba

I can safely say that at times the government created headwinds and at times it created tailwinds, but neither were strong enough to be a major factor in Alibaba’s success or failure. More important than any relationship with the government was the company’s relationship with customers. Building innovative products and services that fit the needs of entrepreneurs and their customers was what got Alibaba where it is at today. My strong conviction is that Alibaba succeeded despite the government, not because of it.

Improving SMEs in China

To understand the impact that Alibaba has had in China, look no further than the one million shops based in rural areas that are active on Taobao and Tmall, selling anything from farm produce to furniture to crafts. Although e-commerce first took root in China’s cities among the urban middle class, it has since grown to become a national phenomenon, providing grassroots employment opportunities to drivers, couriers, and web designers deep in China’s hinterlands.

Over optimism

Whenever Jack asked his managers to set goals for the company, we would provide our most optimistic projections. Jack would usually come back and triple or quadruple our goal. Despite initial resistance from managers, Jack dared them to dream: “If you don’t imagine it will happen, it will never happen,” Jack told us all.

There are no experts

Through hard work, self-education, and openness to new ideas, Jack and his cofounders grew and developed into CEOs and senior managers, surprising even themselves. This taught me that in a fast-changing environment such as the Internet, there are no experts and the first place to look for talent is in the mirror and on your existing team.

Competitions - be humble and aware, but not too scared

Just as one should never underestimate oneself, one should never overestimate a competitor.

Idea and execution

All too often entrepreneurs have the passion, the values, and the dream, but they don’t have a real core idea for a business. It seems like common sense but no amount of lofty ambition can compensate for an idea that simply doesn’t work.

Long term vs short term quarterly goals

Setting such a long-term goal changes everyone’s mind-set. Rather than working quarter to quarter, people strive to achieve the long-term vision.

Both long term and looking at day to day operations

On the one hand, they should orient their vision to the long term, like Jack’s 102-year company. But on the other hand, they need to move aggressively and quickly day-to-day.

Bring the first fallacy

Entrepreneurs often come up with an idea but are scared off when they learn that “somebody is already doing that.” But being first doesn’t always matter as much as people think. Being first to market is not as important as being the best in the market.

Free to charging

But it is sometimes essential to first give your services away for free, especially in the Internet world. This allows businesses to build a critical mass of customers while allowing the management team of the sponsoring company to learn from, and adjust a business model to, the needs of its customers.

Opportunity

Time and time again we found opportunity in crisis. Rather than being paralyzed by fear of the situation, remaining calm and looking for the opportunity was key.

Luck meets the prepared mind

From time to time I encountered people who said that Jack’s success was simply due to luck. But more than any of his contemporaries, Jack put himself in the position for luck to find him. Seeing the impact that the Internet could have on China in the long run, Jack decided to dedicate his business career to e-commerce before China was even connected to the Internet.

3 traits

Jack used to joke that if he ever wrote a book about his experience, he would call it Alibaba and the 1,001 Mistakes. From watching Jack in action, I realized that two great traits every entrepreneur should possess are resilience and amnesia. In the face of setbacks Jack was incredibly resilient. And while I sometimes stewed over mistakes, Jack was so forward looking that he often forgot about the mistakes altogether. Mistakes are a by-product of success, to be learned from but not dwelled upon.

Jack Ma dummy test! UI is important

Whenever Alibaba’s engineering team would prepare to introduce a new product, Jack would sit down for a sort of “Jack Ma dummy test.” If Jack couldn’t use it, he assumed the customer couldn’t understand it. The approach worked. By keeping our websites simple, we stayed close to our customers, many of whom were using the Internet for the first time.

Sharing equitt

But starting with how he shared the equity broadly with his 17 cofounders, Jack continued to make sure that staff at all levels of the company were granted, or at least were eligible to earn through performance, stock options. In fact, when Alibaba.com went public in 2007, the company had to rent an arena to gather all of the staff holding stock options to walk them through the process for exercising their stock shares.

Mistake » Nothing

As an MBA working in a Chinese start-up, I had to unlearn a lot of big-company tendencies, which favor analysis over action. At times I was bogged down in analyzing a strategy, and Jack would push me into action, chiding me by saying, “I won’t fault you for making a mistake, but I will fault you for doing nothing.”

Recharging is important!

A big problem in start-up companies is burnout. Staffers often work long hours and set aside personal interests for several years out of dedication to the cause. But companies should recognize that employees need time to recharge. And fast-growing companies need employees who have been a part of their early days to recharge and return to the company refreshed.

Regulation change needed

Moving into a regulatory gray area should of course be constrained by moral, legal, and ethical considerations. But laws and regulations are made by humans and often were written before the era of the Internet. So at times companies need to push the regulatory frontier in order to deliver a service that has social benefits.