Alibaba founder Jack Ma takes center stage

As the company prepares for a breathtakingly large IPO, the executive chairman looms large in its operations.

By MSN Money Partner May 5, 2014 2:34PM
By Paul Mozur and Juro Osawa, The Wall Street Journal

Last May, 40,000 Alibaba Group Holding Ltd. employees and customers met at a Hangzhou soccer stadium in driving rain to watch Jack Ma step down as chief executive of the Chinese e-commerce giant he founded in his apartment 15 years ago.


Before his valedictory speech, Mr. Ma belted out the Chinese pop song "I Love You, China," from the stage. The crowd roared.


"Taking over from Jack Ma is a difficult job," he said, dressed in oversize glasses and a shiny silver jacket.

The three-hour extravaganza was a testament to the central role the 49-year-old Mr. Ma played -- and continues to play -- in what is arguably the world's biggest e-commerce company. Some employees describe the charismatic Mr. Ma as Alibaba's spiritual leader.


As Alibaba prepares to submit its first major filings as early as this week in what could be one of the largest initial public offerings in U.S. history, Mr. Ma -- now executive chairman -- still looms large in the company's dealings. 


"I thought it would be easier when I stepped down from CEO, but now I'm finding out being a chairman, if you want to be a good chairman, is much busier than being a CEO," Mr. Ma told The Wall Street Journal.


Mr. Ma's success has given him celebrity status in China, where bookstore shelves stock his biographies and airports replay clips of his motivational speeches on business management.


Alibaba, the largest e-commerce company in the world's most populous country, dwarfs its U.S. counterparts. In 2013, the combined transaction volume of its Taobao e-commerce marketplace and another Alibaba-run shopping site called Tmall reached $240 billion, according to a person with knowledge of the figure. That is triple the size of eBay (EBAY), more than double the size of Amazon.com (AMZN). Alipay, Alibaba's online payment platform, last year handled more than triple the amount of mobile payments processed by PayPal.


Even after the expected multibillion-dollar IPO, Alibaba's corporate structure will allow Mr. Ma, who owns about 7 percent of the company, to have a say in nominating more than half of its board. Mr. Ma also owns 46 percent of the holding company that controls Alipay.Credit: © Imaginechina/Corbis

Caption: Jack Ma Yun, Chairman of Alibaba Group


Mr. Ma (pictured) has been at the center of Alibaba's efforts to expand beyond e-commerce. Vehicles in which Mr. Ma owns a stake have invested in Chinese finance and media companies -- in at least one case using loans from Alibaba.


Such deals may raise questions about whether Mr. Ma would ever prioritize his own investments over the interest of Alibaba shareholders, said Paul McKenzie, an analyst at Hong Kong-based brokerage CLSA. Mr. Ma didn't comment on his investments.


Even though he is no longer CEO, Mr. Ma remains the face of Alibaba. As the e-commerce company expands further into financial services, Mr. Ma has traded barbs with some of China's big banks.


In an interview with the state-run People's Daily last year, Mr. Ma said China's banks aren't lending to the country's small businesses: "I see there are 80 percent of the clients that are not covered."


At a conference last month, China Minsheng Bank Chairman Dong Wenbiao defended the current banking system and questioned Alibaba's financial ambitions. "I said to Jack Ma, 'Give up your reform efforts. You don't have the ability,' " Mr. Dong said.


Mr. Ma was born in Hangzhou, a city of 2.4 million people near Shanghai. His parents were performers of a traditional Chinese musical theater called pingtan. He came of age during China's economic flowering in the 1980s, learning English while an unpaid tour guide to foreign visitors.


After twice failing China's national university entrance exam, Mr. Ma was accepted to Hangzhou Teacher's Institute and graduated in 1988. As the economy improved in the early 1990s, Mr. Ma began looking beyond teaching for work in business. He has said he was rejected for a number of jobs, including as a manager at a Kentucky Fried Chicken.


During a 1995 trip to Seattle as a translator for a trade delegation, Mr. Ma went online for the first time. When he saw how scant information was about China, he set out to create his own company. That year, Mr. Ma started China Pages, an online directory of Chinese companies; Alibaba followed in 1999.


Colleagues say Mr. Ma -- who is married with a son and daughter -- loves performing. At Alibaba's annual "Alifest" conferences for customers and media, Mr. Ma has in past years shared the stage with former President Bill Clinton, Los Angeles Lakers basketball star Kobe Bryant and actor Arnold Schwarzenegger.


Mr. Ma has "that ability, even in a room of 600 people, to make people think [he is] talking to one person, to you," said Duncan Clark, a longtime acquaintance and tech consultant based in Beijing.


Mr. Ma's eccentric performances and his ability to motivate a crowd have helped build a cultlike following among Alibaba employees. At the company's Hangzhou headquarters, Mr. Ma has blessed hundreds of newlywed Alibaba employees in wedding attire during an annual ritual.


Mr. Ma's decisiveness and his willingness to take big risks helped the company overcome challenges, colleagues said.


When eBay Inc. entered China in 2002 by teaming up with a local shopping site, Mr. Ma developed Taobao to compete head-on with the U.S. company.


"Jack said that the best defense is offense," said Joe Tsai, Alibaba's executive vice chairman.


Mr. Ma also decided that Taobao should let merchants sell without paying listing or transaction fees, even though his first website -- Alibaba.com -- was barely breaking even. The no-fee model allowed Taobao to attract sellers quickly, and the business soon overtook eBay's Chinese market. Taobao later figured out ways to generate revenue through advertising.


In 2009, when the global financial crisis hit small Chinese merchants who were using Alibaba.com to find overseas buyers, company executives -- including David Wei, Alibaba.com's then CEO -- proposed cutting fees by as much as half.


"Jack said if merchants disappear there will be no Alibaba," Mr. Wei recalled. "Jack didn't even think for a second."


Cutting fees helped Alibaba.com weather the financial crisis and led to a jump in users, pushing up its net profit by 45 percent in 2010 over 2009.


Although Mr. Ma started Alibaba with little background in business or technology, he knew enough to pick the right people.


Several months after he launched Alibaba, Mr. Ma hired Mr. Tsai, a Taiwanese-born, Yale-educated lawyer. Mr. Tsai has played a central role in Alibaba's fundraising and acquisitions, from the first $5 million investment by Goldman Sachs (GS) in 1999 to the widely anticipated U.S. IPO.


Current and former colleagues say Mr. Ma makes decisions with gut instinct.

In late 2004, when Alibaba decided to launch Alipay, Mr. Ma flew to Guangzhou to visit Jonathan Lu, Alibaba's current chief executive, who was then the head of a regional sales team.


Mr. Lu recalled Mr. Ma asking whether he knew anything about Alipay, or about PayPal. When Mr. Lu replied that he didn't, Mr. Ma responded, "Good. You are in charge of Alipay," Mr. Lu recalled.


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