4 things we learned from the Alibaba documentary

August 13, 2014, 3:10 PM UTC
Alibaba Group Holdings Ltd. and Founder Jack Ma As Company Files for U.S. Initial Public Offering of E-Commerce Giant
Photo by Nelson Ching/Bloomberg—Getty Images

Alibaba, the Chinese e-commerce giant partially owned by Yahoo and valued at $150 billion, is aiming for an initial public offering on the New York Stock Exchange sometime in the next few months (the exact date has yet to be determined). Expected to raise more than $20 billion, the IPO could be the biggest yet on a U.S. exchange and potentially in world history. A recently released documentary by Alibaba’s former vice president Porter Erisman, an American who has spent the past several years working on the film, depicts the company’s journey since it was founded by Jack Ma 15 years ago. Here are some of the most surprising takeaways from “Crocodile in the Yangtze.”

1. Alibaba was born amid grueling working conditions

Similar to tech start-ups like Apple and Facebook, Alibaba started out in a tiny apartment in Hangzhou that belonged to  Jack Ma, a former English teacher who quit his job to follow dreams of entrepreneurship. After a few failed business ventures, including a phone book-inspired “China Pages” website, Ma decided to pursue the e-commerce trend that was sweeping America in the late '90s. In 1999, Ma and 17 friends crowded into his apartment and built Alibaba.com, a name they hoped would draw small businesses “to say ‘Open Sesame!’ to global trade,” Erisman narrates in the film. Sitting on chairs and couches around Ma, the 17 co-founders are shown listening to Ma’s motivational speeches. “We need to learn the hardworking spirit of the Silicon Valley,” Ma explains, implying that he expected staff to work longer days than most people. “If we have that kind of 8 am to 5 pm spirit, then we should just go and do something else.” The team plugged away in Ma’s apartment for seven months, trying to stay off competitors’ radar and reduce costs, until new investments from Goldman Sachs and SoftBank, a Japanese telecom company, led Alibaba to organize a public launch in 2000.

2. Alibaba has a love-hate relationship with the Chinese government

Ma first ran into problems with the Chinese government with his China Pages effort, when trying to deal with strict regulations on private information. Ma explained to officials, “We are working on promoting China on the information superhighway,” but the internet was such a new concept that it was hard to get government support, and China Pages fizzled. Insistent on giving China a web presence, Ma switched gears and pursued e-commerce. “If we are a good team and know what we want to do, one of us can defeat ten of them. We can beat government agencies and big government companies because of our innovative spirit,” Ma says in the film. Eventually, Alibaba received government support as local officials began viewing the company as a job creator, Erisman explains in the film. Still, each time Alibaba wanted to accept a new investment—such as when Yahoo bought a 40% stake in 2005 for $1 billion – it had to be approved by the government.

3. Alibaba’s archenemy is eBay

As eBay pushed further into the Chinese market during Alibaba’s early years, Ma felt threatened. In 2003 eBay acquired EachNet, a China-based auction site with a similar business model to its own. "[Ma] told me to be prepared for Alibaba's biggest challenge yet," Erisman explains. "We were going to war with eBay." To fend off eBay, Alibaba launched a new website called Taobao, a marketplace for consumer-to-consumer selling rather than business-to-business. Ma then upped the ante by waiving Taobao’s transaction fees for the first three years, while eBay kept charging. Ma hoped that by offering customers a better deal on Taobao than on eBay, his competitor would have to match it, cutting into eBay’s margins, or lose business—and back out of China altogether, according to Erisman. With the move, Alibaba “publicly declare[d] war on eBay,” Erisman narrates. For the sake of good sportsmanship, though, Ma made a ground rule that nobody was to launch any personal attacks against Meg Whitman, eBay’s CEO at the time. Within a few years, eBay, after belatedly cutting fees on EachNet, ended its business in China.

4. Alibaba founder Jack Ma is a rock star in China

If you think Americans treat Apple founder Steve Jobs as a celebrity, that’s nothing compared to how the Chinese venerate Alibaba founder Jack Ma, who addresses stadiums filled with fans in several scenes in the film. At a party to celebrate Alibaba’s tenth anniversary, instead of taking the stage in a his usual suit-and-tie, Ma emerged singing “Can You Feel the Love Tonight?” dressed like a rock star in a studded red and black leather jacket, nose earring and long blond wig. Ma is also known for delivering inspirational speeches, several of which are captured in the so-called “docu-memoir.” From pick-me-up speeches in the small apartment to presentations in front of crowds of journalists and investors, Ma continues to trumpet Alibaba’s potential—even as investors initially expressed concern about Alibaba’s low profits in its early days, and questioned its viability. “They called him crazy Jack,” Erisman says. “Yes, he seemed a bit crazy. But at least it seemed he was enjoying the ride.” Next stop on that ride: A huge, and possibly record-breaking, IPO.

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