7 Lessons I Learned From Alibaba’s Jack Ma

The following are some of the lessons written by Porter Erisman in his book Alibaba’s World: How a Remarkable Chinese Company is Changing The Face of Global Business. Porter Erisman worked from 2000–2008 as a vice president at Alibaba.com and Alibaba Group, at various times leading the company’s international website operations, international marketing, and corporate affairs as one fo the company’s first American employees.

1. Never Underestimate Yourself: When Porter first joined Alibaba, Jack Ma was regularly telling the world that he would resign in four years. “I was trained to be an english teacher, not a CEO,” he would say, stressing that he would have to make way for a professional CEO to take over the company. At the same time he had told his cofounders that they should not expect to be senior managers in the company, since they had no business experience. Through hard work, self education, and openess to new ideas, Jack and his cofounders grew and developed into CEOs and senior managers, surprising even themselves. This taught Porter that in a fast changing enviornment 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.
2. Never Overestimate Your Competitor: When we started Taobao in Jack’s apartment, it would have been easy to be intimidated by your might competitor, eBay. It was the market leader and media darling, and it had way more resources. But while large companies like to project an image of stregth and dominance, on the inside they typically are much weaker than they look. Just as one should never underestimate oneself, one should never overestimate a copmetitor.
3. Don’t Change Rabbits: Another of Jack’s favorite saying is, “if you are a wolf chasing rabbits, focus on one rabbit. Change yourself to catch the rabbit, but don’t change rabbits” companies quickly lose their way when they lose track of their central mission. Despite changing business models and expanding into entirely new areas, Alibaba never lost its focus on its central missions- to make doing business easy.
4. Be As Fast as a Rabbit but Patient as a Turtle: Entrpreneurs need to work on two different tracks as the same time. One 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. The two tracks help keep the company balanced between the long term vision and short term vision.
5. Free Is, Sometimes, a Business Model: When Taobao announced it would be free, eBay was quick to publicly decide the move, arguing that “free is not a business model.” 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. Think of the great internet companies of today- almost all started as a free service. Google searches are free. Using Facebook is free.
6. In the Spring Prepare for the Winter: Alibaba’s history is one of bursts of euphoria followed by crisis. Whether it was raising $24 million in financing before the Internet bubble burst, doing a billion dollar deal with Yahoo! or having its IPO in Hong King, each new milestone precipitated a crisis. Alibaba’s story arc is not singular- the same thing happened to Google, Facebook, Apple, and Microsoft. David is always a hero until he becomes a Goliath. The time to mentally prepare for the winter is when you are still in the spring.
7. Leapfrog: In the past, people observed that China’s consumers were leap frogging from devices such as a landline phone straight to a mobile phone without having to build out the costly infrastructure of landlines. Alibaba’s experience has shown that entire economic systems can leapfrog ahead, especially in developing countries. Whereas the US and Western Europe spent the last several hundred years developing a retail infrastructure, China’s commercial infrastructure was able to leapfrog directly online without retailers first building out an extensive offline retail infrastructure.