Alibaba's World

by Porter Erisman

  “Welcome aboard,” said Todd, shaking my hand before leading me through the office. “We’ve already got a lot of big things brewing, and we’re happy you are here to get started on them.” Working for Todd was one of the reasons I’d joined Alibaba. Unlike the dictatorial managers I’d encountered in my interviews at Chinese Internet start-ups, Todd was down to earth, friendly, and seemed willing to include me in the marketing team’s strategic decisions. Before joining Alibaba he had worked at American Express, and I saw him as having a lot of experience, someone I could learn from.

  After chatting with Todd, I was introduced to the newly hired executive team, made up of international managers with a dazzling mix of pedigrees from the world’s top universities, consulting firms, and investment banks. It was clear that Jack Ma had assembled his dream team, and I had no doubt that the management section of our IPO prospectus would be attractive to any investor.

  I took my seat in a cluster of cubicles in the office’s interior, a sort of kids’ table for the senior and middle managers. It was perfectly fine—this hodgepodge group seemed like a lot of fun. There was David Oliver, a former New Zealand sheep farmer who had somehow found his way into China’s tech scene, working for a start-up in Beijing before joining Alibaba in its Hangzhou apartment as one of the company’s first Westerners. Then there was Brian Wong, a Chinese American who’d been working as an assistant to San Francisco mayor Willie Brown before joining Alibaba as a business development manager. And Brian’s good friend and former classmate, Emily Fong Mitchell, a Hawaiian with a sunny personality and sharp wit who worked with me on the marketing team. While our kids’ table lacked professional experience, we quickly formed a common bond over the hardship and adventure of having previously studied and lived in mainland China.

  After settling in, I sat down for a meeting with Todd. “So what’s the status of the IPO?” I asked, wondering if it was still on track. “Things have changed,” Todd said. “It doesn’t look like we’ll be having an IPO any time soon. Not in this market.”

  With these words I realized I’d have to recalibrate my expectations. Many things had attracted me to Alibaba. The adventure. The possibility of changing the world. The chance to pioneer something new. But if I’m totally honest with myself, the idea of becoming a millionaire didn’t hurt. Now that my “Countdown to Millionaire” timeline had been extended indefinitely, I’d have to get my motivation from these other goals.

  It was nice to meet the people I’d be working with in Hong Kong, but I was also curious about the team on the mainland. “So when are we going up to Hangzhou to see the headquarters and meet the team up there?” I asked Todd.

  “To be honest I don’t see much point in going up there anymore. Since I joined the company, the marketing team there has kind of stopped listening to us here in Hong Kong, and they’ve started to do their own thing. Look, this is what they’re coming up with for ads,” he said, pointing to an online banner ad. Typical of Chinese websites at the time, it had a bunch of flashy animations and lacked the familiar minimalist qualities of Western sites like Yahoo!.

  I had to admit that the ad looked amateurish. But more discouraging than the unprofessionalism of the ad was how Todd responded to my question. It seemed a divide already was forming between the Hangzhou and international management teams. And rather than trying to address it, Todd seemed to already be giving up.

  Because I had spent several years working in China, I knew just how important it was to gain the friendship and trust of one’s local colleagues. In my first job after business school I learned this lesson the hard way. I had been put in charge of marketing a children’s candy line at a multinational company in Beijing, and it had been a disaster. I focused plenty of time on developing a great marketing strategy but not enough time on winning the confidence and support of my local colleagues. Eight months later I left the company because I had failed to fit in with management. In a Chinese company, I’d learned, the informal structure was just as important as the organizational chart. And before you could focus on strategy, it was important to get to know your teammates.

  “Okay, it sounds like the situation might be a bit frustrating right now,” I said, “but at some point I’d like to get to Hangzhou to get to know the team a bit.”

  “I don’t think that’s really the priority right now,” he said. “But if you have a business reason to go up there, then it would make sense.”

  Later that week David Oliver gave me a heads-up that Jack was coming to Hong Kong. “Porter, now that you’re running Alibaba’s PR, I should let you know that there’s a big event arranged for Jack later this week here in Hong Kong. It should be huge, with a lot of media.”

  I was new to the Hong Kong Internet scene and curious to see how it compared to Beijing’s. 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. (Especially since it was so new that you hardly knew who the right contacts were.)

  However, Hong Kong’s “new economy” seemed to be dominated by the sons and daughters of a handful of established tycoons. As I walked around the room exchanging cards, people chatted less about their company’s vision or business models and more about which tycoon was backing it or how much money they’d just raised. With cocktails flowing and people dressed in expensive suits and party dresses, it felt more like a movie premiere than a gathering of tech start-ups.

  Nevertheless Jack Ma’s first speaking event in Hong Kong had attracted a huge audience. In a city where money talks, Alibaba’s having raised $25 million from leading investors was enough to bring out the Internet industry in full force. Dressed more casually than most of the other partygoers, Jack arrived and slowly worked his way through the crowd, set apart by his diminutive figure and elfin features. After being introduced by the event’s organizer, Jack took the stage:

  It is exciting to be here in Hong Kong because we are growing our international office here a lot and putting together a really great management team. Hong Kong is great because there are so many professional managers. And almost all my cofounders back in Hangzhou have no business experience. So I told my founders that they shouldn’t expect to be the senior managers in the company. We need to find those experts who have real business experience to take the company to the next level. You see, I was trained as an English teacher. So I know nothing about running a company. And after four years I will resign as CEO and hand over the company to a new generation of managers.

  It seemed a mature point of view—he recognized his limitations and those of his cofounders and knew when to pass the baton. Jack continued: “So what is Alibaba? I remember I gave a talk in Singapore, and the topic was e-commerce in Asia. And I looked around the panel, and all of the speakers were from the USA. 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.”

  The crowd clapped, both inspired and entertained. People were starting to warm up to Jack.

  “Business-to-business websites in the West go after the big companies, the whales. But in Asia commerce is dominated by the shrimp. So we are going after the shrimp. It’s easy to catch a shrimp. But if you try to catch a whale, you might get hurt.”

  The crowd laughed. A hand went up in the audience. It belonged to an analyst from a major investment bank.

  “That’s great, Jack, but what’s your revenue model?”

  “Well, there are a lot of ways we can make money someday. But right now our website is totally free, because we want to at
tract new members. Once our members make money, we will make money.”

  “But you didn’t answer my question,” the analyst followed up. “How will you make money?”

  “If I told you, I’d have to kill you,” Jack joked. Both laughter and snickering followed his remark. Yes, Jack was funny. But he was trying to convince an audience full of investors and bankers that they shouldn’t be thinking about making a profit at this point.

  “We will make lots of money someday,” Jack continued. “But right now we are running too fast for revenues.”

  The day after the event my colleagues in the Hong Kong office passed along an article that appeared on a leading industry news site, Internet.com: “Alibaba Running Too Fast for Revenues, Says CEO Ma.” In an era when dot-coms were coming under increasing pressure to generate revenues, the highly critical article was not well received. And as the head of PR I was the first to hear about it.

  “Porter, what is this?” one of the newly hired directors asked. She had just left a major investment bank and generous compensation package to join Alibaba and didn’t seem amused by her new boss’ style. “We really need to move beyond the Jack Ma story. He was a great founder, but we really can’t have him talking the way he does. No one will ever take us seriously. We’re supposed to be a business-to-business marketplace.”

  Another manager pulled me aside. “It’s really time for Alibaba to get Jack out of the spotlight and get the focus on our other, more seasoned, managers. Jack is totally off-message.” There seemed to be a growing consensus among many of the newly hired Hong Kong executives that our own CEO was bad for our image. I thought it strange, but not too surprising, that some of the expat staff wanted to take charge and have the management handed over to them sooner rather than later. They had always worked for multinationals and were used to managing the local staff, not the other way around. But in this case people seemed to be forgetting who had hired whom.

  The comments from my colleagues were the second sign of a small fracture between the Hong Kong senior managers and the founding team in Hangzhou—a fracture that could easily become a chasm. I decided I needed to get to the Hangzhou headquarters as soon as possible to meet the team in China. If the Alibaba iceberg began to calve off Hong Kong, I didn’t want to drift off to sea.

  Later that week I received a fax that offered me the welcome excuse to travel to Hangzhou. It was an inquiry from Justin Doebele, a journalist for Forbes who had just been assigned a story about Alibaba for an edition of the magazine set to focus on B2B websites. He wanted to travel to the company’s headquarters to meet Jack and the other founders and get a sense of the company. So I invited him to travel with me to the mainland, where the company had organized a retreat for the Hangzhou-based staff. I prayed the situation on the mainland would be much less dysfunctional than what I’d seen in Hong Kong so far.

  Alibaba’s Cave

  Brian Wong and I paced around the arrival area of the Shanghai airport, killing time as we waited for Justin Doebele’s plane to arrive.

  “Yo, Dawg, you’re lucky you joined the company when you did,” Brian said. “At least the Hangzhou team finally moved into a new office last month. I spent the whole winter working in the Alibaba apartment. It was so cold we had to wear gloves while we worked.”

  In the short time we’d worked together Brian and I had already developed a brotherly rivalry. Hence his ribbing about having been at the company back in the “tough times,” before life at Alibaba had become more comfortable.

  “Yeah, it must have been a lot tougher than living with your parents in Palo Alto,” I jabbed back. “You must have been jonesin’ all winter for a Starbucks frappuccino.” Brian chuckled.

  We picked up Justin and began the two-hour drive to Nanbei Lake, a lakeside resort area between Shanghai and Hangzhou. Justin, who is tall, skinny, and slightly bookish, had just been named the Asia bureau chief for Forbes magazine. He was based in Singapore and had traveled to Shanghai to write about Jack Ma and Alibaba.

  For me, as the company’s new PR person, it was a bit of a gamble to bring the Asia bureau chief of a major business magazine along on my first trip to the Alibaba headquarters, as I had no idea what the company was actually like. It was like bringing a restaurant customer into the kitchen. And it didn’t help that, because of a shortage of rooms, Justin had been assigned to share one of the resort’s cabins with me, a notorious snorer. But I figured that, for a start-up company, any publicity was good publicity, and it was better to err on the side of openness.

  We arrived at Nanbei Lake and found Alibaba staff members, about 100 young men and women, excitedly buzzing between the resort’s small cabins. This was the company’s first off-site retreat and an opportunity for the company to catch its breath after growing so quickly without a break. None of the expats had made the trip up from Hong Kong to attend the retreat, which I thought was strange for an all-hands outing, as I felt they were missing an important opportunity to bond with their local counterparts.

  First we headed to dinner in a large dining hall with round tables. Filled with excitement and anticipation, people settled in for a long meal, laughing and chatting while course after course of local dishes was set on the table. Lazy Susans spun, and staffers picked off delicious local food with chopsticks while clinking their beer glasses at toast after toast.

  I was struck by the warmth of the gathering. It didn’t feel like a typical company. It felt much more like a family. Justin and I were invited to join a table full of my new colleagues. They were almost all in their mid-twenties and came from a range of backgrounds. The sons and daughters of farmers, factory workers, and businesspeople, most had joined the company in the four weeks since I’d signed my contract.

  As I chatted with the staff, I was struck by how much all this meant for them. Several years earlier, even Chinese with college degrees would have been assigned to jobs by the government, with little choice about their future. The options for young people were terribly limited. The best they could hope for was to get a job in a state-owned enterprise, with the government, or—if they really dreamed big—with a multinational company. Compared to the opportunities available to the expat staff in Hong Kong, few places in China allowed young people to forge their own paths. Alibaba represented hope for them.

  Thinking about all this made me feel a little guilty. Here I was, an expat making nearly 50 times more than many of the local colleagues who had hired me. Yet they were welcoming me with open arms. My earlier concern about money began to melt away as the full significance of Alibaba’s mission dawned on me. If we could make Alibaba a true success story, it could reshape the future for this bright young team.

  After dinner we were sent into a dance hall, its drabness dressed in velvet drapes and sparkling with multicolored disco lights. The room was at full capacity, and the walls were lined with chairs. We sat along the perimeter facing each other. Jack took the stage and addressed us over the strong reverb of the karaoke machine.

  “Wow, when we started Alibaba, I never imagined we would someday have this many people. It’s hard to believe how quickly we’ve grown. I’m so happy with our progress so far. Alibaba has got about 200,000 registered members and businesses joining us from almost every country now. That’s a good start, but it is really only the beginning of our dream. I know people think it is crazy, but we need to do everything we can to reach our goal of having one million Alibaba users from around the world by the end of the year.”

  The crowd applauded.

  “We’ve all been working very hard these days, and so I’m really happy that we finally have our first staff outing,” Jack went on. “We’ve now got an office in London, Hong Kong, Silicon Valley, and so many great new managers and staff from all around the world joining Alibaba every day. They couldn’t all come today, but we do have a couple laowai [foreigners] here in attendance. So why don’t we invite Porter, w
ho is heading our company’s international PR, to the stage to say a few words. Porter?”

  The crowd grew silent and stared as I walked toward the stage. For Jack Ma the English teacher, interacting with Westerners was natural. But most of the staff had never worked with a foreigner, and I was pretty sure that many had never even spoken to one. So I felt a bit of pressure to set the right tone and bridge the gap.

  In my less-than-perfect Chinese I reached into my limited quiver of jokes to break the ice. “I apologize, as my Chinese is not great and there may be some people here who don’t understand what I’m saying. But let me reassure you, this is normal. Even I don’t understand what I’m saying.”

  The crowd broke into laugher and applauded. Whew, I thought, ice broken. I went on.

  “On behalf of all the foreigners who just joined the company, I want to say that we are really looking forward to being a part of the team. We are chasing the biggest dream of all—building a global company from China. I and the other foreigners on the team really look forward to working together with everyone.”

  The crowd gave a warm round of applause. Even though my Chinese wasn’t perfect, I’d always found that just making the effort went a long way in building rapport. My words were well received. But in the back of my mind I couldn’t help but worry a bit about the sizable gap between the expats in Hong Kong and the staff in mainland China.

  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.”