Jack Ma, Chairman and CEO of Alibaba Group, delivered the closing keynote address at the conference “China 2.0: Transforming Media and Commerce”, hosted by the Stanford Program on Regions of Innovation and Entrepreneurship (SPRIE) at the Stanford Graduate School of Business, on Sept. 30, 2011. Below is the Edited transcript of the full speech, so entertaining, so true, so enlightening…
Introducing Speaker: It’s a great pleasure for us to give a warm welcome to Jack Ma. Thank you.
Jack Ma – Chairman and CEO of Alibaba Group (2011)
Thank you. It’s my great honor. And I was invited about months ago. And it’s — I did not expect people said this is a very sensitive time for me to talk, because about Yahoo!, about Alibaba about this and that. But a promise is a promise I come.
Today any questions you have. I will answer every question you have.
All right, so I’ve been here for 15 days and I plan to spend one year here. And nobody knows, my company did not know, that I’m going to spend a year here. Guess people ask, why you’re here? Are you ready for getting Yahoo!? No.
Everybody was very sensitive when I said I’m going to spend one year there. And I just come here, I’m tired. Too tired, in the past 16 years, I start my business. When I started in 1994, found the internet, and I got crazy about the internet, and give up my job in the teaching, and like, I call myself like a blind man, riding on the back of blind tigers, jumping around still kicking, and still surviving, and then join the government organization for 16 miles, and not successful, start Ali Baba 1999.
And we built up the Alibaba. We’re lucky enough to have the Taobao. We have the Alipay. We have Ali Cloud Computing. And so many things after 12 years, I say, I need some time to rest. Especially this year, was so difficult for me. I do not expect I prepare for twelve year, what’s in China called (Chinese), this is our 12th year for Alibaba. At the beginning of the year we have the moving for the Alibaba to be CEO because of the custom cheating things. And then we have the Alipay about the VIES, I still don’t know what the VIE is, right?
And then we have the Ali Taobao separated into four parts. So many things that really make me feel tired. And I said, well, why not give up one year. Because next year is my personal [Chinese] which is, could be much more difficult.
This year was very tough and difficult. I believe next year is going to be tougher and more difficult and more complex. So I got ready for that. And I think I need a rest, so in order to, for another three, four years how to work it. Because this three years is not my job. If something wrong, criticize this president of Taobao, CEO of Alibaba and Alipay, it’s their fault. Because three years, their fault.
Three years later, something wrong, my fault. So, I come here and I will spend most of my time in the States. And then thinking, relaxing and just two days ago, I picked up on my golf, and here, and just relax. So nothing about, the things people think about.
So, we are a very lucky company. And there is no chance that we survived. I don’t have any sort of backgrounds, a rich father, or strong uncles or and I remember 1999, I came to Silicon Valley looking for venture capitalists. I talked to a lot of venture capitalists and I remember few days when I drove by the Menlo Park, right? I was rejected by so many venture capitalists. When I talked about Alibaba start-up, they looked at me strange. What? Alibaba, what are you talking about?
Right I went back to China with nothing, no money, nobody invested in me. But I’d full of confidence, I saw the American dreams. At that time 1999, I walked on the high express way, and on the high express way every evening full of cars and in the parks of the companies, and some weekends full of cars. And people working day and night, and now, this is something I believe is going to happening in China.
Without getting any venture capitalists, but I think I went back China with the American dreams. And we started the business there, and after 12 years, you know, a lot of things happened. We built up the B2B and nobody believed the B2B would work, because the B2B at that time was good, but Ariba, I don’t know if still there. Yeah, Ariba, ariba.com, [inaudible] and commerce One, and these are very famous B2B companies. People say, how can you do B2B in China? Because B2B in the US is the focus of big companies. They focus on buyers. And we believe there’s no big companies in China. And I don’t see there are big companies, in the short term that China would have a lot of big companies. Because big companies only SOE. SOE they do not need e-commerce. They need is government policy, right?
So we focus a small business. We believe, China, the small business, the private sectors are the future. So we’re focused on that. And the B2B in the U S they focus on buyers, they want to help the buyers to save the cost, to save the time. We believe don’t teach the SME, don’t teach the small business how to save the cost because, they know much better than you do. You should help them how to make money.
So we focus on helping small business. We focus on helping them to make money, to sell things abroad. Very difficult to do business at that time. But after 12 years we got more than 58 million small business around the world, using our services. That model is not very sexy compared to Tencent, Baidu we do not make that much money, like online gamings. But we can sleep well in the evening, because the money we make not online gamings. The money we make, is helping small business to survive, to get business opportunities, which I feel very proud of that.
And today, as always, I never feel proud of how much money we make. I feel proud how much impact we can help the others, especially small business. Before the history of internet, no company can help over 50 million SMEs. Today, we are trying. And I feel proud of that. This is the first company. And people say, Jack, if you make Alibaba successful, that means you, you are pulling a million tons of ship on the top of the Himalayas. And I say yes, we will carry that thing down. And we did.
The second company is called the Taobao. And everybody say, oh, my God you are competing with eBay. I said, why not? China needs an e-commerce site. And builder of the China market takes efforts, takes time. And takes great effort, if you really want to build up something. So at that time, people say, there’s no chance. Well, if you never try, don’t, how do you know there’s no chance? So we tried, and I said, we — if eBay are the sharks in the ocean, we are the crocodiles in the Yangtze river. Never fight in the ocean. Let’s fight the Yangtze river. It was difficult. It was a lot of fun. And we survived. They got a 90% market share at that time, today for C2B is what, we’re like a 90% market share and lucky. Just lucky.
There are lot of things [that] can be discussed in the future. Today, people always write about the successful stories about Alibaba. And I really don’t think we are so smart. We made so many mistakes. We were so stupid that time. So I think some day the book I personally really want to write about as I said is Alibaba 1001 Mistakes, these are the things people should remember, people should learn.
If you want to learn how the people, other people succeed it is very difficult. There are a lot of lucky things right there. But if you want to learn, if you learn how people fail, you will benefit a lot. And I always rely to read those books, talking about how people fail. Because, look, if you look into it, any company that failed, the reasons why they failed almost the same. And that really matters.
So, Taobao succeed and then we have the Alipay because everybody says China oh no credit system, banking is terrible, logistics terrible and how can you do e-commerce? I never tell, it was just like today I come here with no, without a PPT, without my business. I’m not coming here to sell your business, sell my business because I don’t have stock to sell to you guys.
But I think because China is not good at logistic, not good at credit system, not good at a banking system. That’s why we need entrepreneurship. That’s why we go, we should go and build them up. So, I believe if there is no, you build it up, later this becomes the standard of China. And I believe China needs that.
I remember six years ago I came to the states, I told the USA audience, I believe five years later China will have more internet users than the USA. People said no. I said, well you have only 300 million population. China 1.3 billion, right, for you guys to have 400 million internet users, without anybody dying, keep on having babies you’ll take 50 years. We need five years. It’s just the timing issues, right. So let’s wait and see.
Today, we have more users. And today people say, wow, your buying capability is low. Let’s see about five years later. Five years later, today people buy, only spend 200 RMB per day, per month. Five years later, these guys will spend 2,000. And we have patience. We are young. You know, I’m old. But my people only 26 average age. They are young. Let’s wait for the future.
So Alipay was just a very – that time people say it’s stupid escrow services, right? John wants to buy things from Stephen, John doesn’t want to wire the money, and Steve does not want to give the products, so we open an account and say, wire it to us. If you’re happy, we wire the money. 4If you’re not happy, return products, return the money. People say, how stupid the model is. Well, we don’t care whether it’s stupid or not stupid, we care whether the customer wants it or not. Whether we really meet the need of the customers. It is stupid, but after 7 years, we have more than 600 million users, registered users in China using that.
So, stupid things, if you improve it every day, it’s going to be very smart. And we believe that. So today it is good, and is growing, and it’s like a PayPal, but we are bigger than PayPal right now on transaction wise.
And the last and most important, is Ali cloud computing. And not like the other companies, they talk about Ali — they talk about cloud computing, they want to sell you the hardware, softwares. We have nothing to sell you. We just want computing our own datas because the datas we have from the SMEs, because the datas we have the consumers from Taobao, datas from Alipay so we want — we believe in the future the world is going to be the data processing world. How we can share the datas with the others in a great way. Right? So, that’s the thing, that’s the business about. It’s not that, good yet, but it is very profitable. The whole company looks healthy, so we are very appreciate. We are the company full of thanks, there’s no chance we can win, now we survive.
I think, we always ask our own question, why we’re still working so hard? I talked to my colleague one day and he said, Jack, I never know that in my life, I can do that much; second I never know that the things I’m doing are that meaningful to the society. And third, I never know that life is damn set hard. We work day and night, even now. We work day and night. I get so thinner, and strange, and — I understand, life is not easy. We feel proud. Because we are changing China. It’s not how much money you make. When you see, I think — 10 years ago, when I walked on the street, people thanked me, because my Alibaba B2B, helped them to get orders across the ocean.
Today, when I walk on the street, the young people say, Jack, thank you very much. My wife and I opened a small shop on Taobao. We made a surviving, we had a great income and you know, this is meaningful thing. We make the credit means money.
Years ago, if you have a great record of credit, trust, but you’re not, you’re not rich. Today if you have a good record on Taubau, you get rich because people do business with those people who has good record. We’re teaching consumers to be smart. People say, Jack I bought something so cheap on Taobao. Is that a fake product? Yes, we do. Fake products are everywhere but we spend most of the efforts in China. 50% of the people in Taobao, they’re focusing on checking the intellectual property issues.
But there’s a bottle of wine that cost us only nine dollars but people are buying it in the street, it’s 300 dollars. Why is that? The channels, the advertisement, the TV shows. Why consumers should pay that much? So we cut that and we make things changing so tell the consumers say this T-shirt you buy on Taobao maybe $30 or $15. You buy in the shop, $150. Not because Taobao is selling cheaper. Because that shop sells too expensive. We should teach the consumers to be smart.
And the third, very important. We saw so many factories in China, especially in Canton. They’re not a company. They’re not even a factory. They just, oh yeah, they just sell things – they’re just a manufacturer. 9They don’t know who are selling for them and they don’t know who are the customers. So anything come, they’re all in trouble. So we should tell the manufacturers, you have to contact the consumers yourself. You have to sell yourselves. Serve yourself. Then this is a real business; otherwise, it’s just a workshop.
Now we’re changing that, and aren’t you proud? And we are honored. It’s not about money. Because we believe, when you have one million RMB or one million U.S. dollars, you are a rich man. When you have 10 million U.S. dollars you are in trouble. You worry about increasing RMB, and you know, you start to invest, you get into trouble.
When you have one billion, that’s not your money. It’s the societies trust, the shareholder. The people believe you can spend this money smarter than the government. You can spend money than the others. So they give you their trust. How can you do this trust? How can you, you know, treat this trust well? And I think we are facing this challenge.
And the product for Alibaba is not the people. It’s not the service. It’s the people, the employees, the colleagues. The average age of the company is 26 years old, and we are facing so many challenges guys. I never realized that. One of the key government officers of another country visited and they say Jack oh my God, you have 300 million users on Taubau and the population is much bigger than my country. I said, yeah, it is difficult; any policy we’re making we get into big trouble. Because people say “this is pretty good.” If some people complain, it’s just like a government policy making. And those people who are making policies, their average age is 26. We have never met this kind of things, if we change like the search engine. The normal search engine, who pays better, who looks on the top. We believed we should have put the trust record, the credible record on that.
And then, when we put that, lot of people say, we will demonstrate. 200 people last year came to our company, demonstrate, say, Jack, you changed the policy, you got to pay. And I say, if it is right, let’s do it. And, this is the world we’re changing. And, now today, what we need is not pure programs, not service people, and product manager. What we need is sociologists, economists and those guy who make the principles and the policies. So we’re facing a lot of challenges. But we feel proud, because I believe in the 21st century, if you want to be a successful company, you have to learn how to solve a problem of the society, instead of catching one or two opportunities.
It is so easy to catch opportunities, and I’m not bragging, I think today, after 12 years of jumping around, I find that making money is very simple. But, making sustainable money, and responsible to the society, improve the world, meanwhile making a lot of money, is very difficult. And this is what we are trying, and we think China, because of internet, is improving.
And three years later, I’m preparing for that. Today, people say, uh, China stock. Internet stock going down, that because of the VIE, because of what – no, I think look at the US economy. They’re facing big challenges. Europe, probably going nowhere. All right? China. Anything that happens today in the US and Europe is going to happen in China three years later. China is going to face some big challenge in three, four years later. If you know something bad is coming, get ready for it instead of screaming now. Instead of complaining.
And as internet companies, we have to take a responsibility. And my job. I’m not politician, I’m not speaking for the government, I speak for myself, for our own business, speak for my customers. 50 million SMEs and 8 million Taobao power sellers, how they should survive 3 years later. This is something, I want to come here in the States, learn how Obama, say I’m going to create the jobs. How he did that? Any mistake we should learn from it and three years later let’s solve it our way. This why I’m here.
So, I think you all have a lot of questions and I’m ready to answer any questions you have because I don’t know what, what to talk about later. Because I’m just here. It’s just a free talk right?
Thank you very much, any questions you have?
Female Audience: Well, Mr. Ma, you brought it up first so I’m going to make you answer your own questions and be honest about it. Are you going to buy Yahoo!?
Jack Ma: Good question. Yes, we are very interested in that. We are very interested in Yahoo! Because our asset Alibaba Group is so important to Yahoo! And Yahoo! asset also very very important to us. To the internet users and to the industries. So, yeah, we are interested and also all the peers and all the serious buyers, they already talked to us, and they should talk to us more.
Female Audience: Have you made the initial approach to them about — have you made the initial approach to them about buying them?
Jack Ma: I just assure you that we are very interested in right now.
Male Audience: Actually, I’m not going to ask that tough question. I was actually encouraged by Joe this morning. And, he said that anything about CineMode and VIE mode just ask Jack and he will be the right person to answer all these questions. And okay, seriously this is a question that I know that PRC government has adopted the national security review system against the M&A merge and acquire their PRC company by the foreign companies. So my question is, how do you view the impact of the scrutiny by the PRC government and specifically, do you think that’s going to adversely impact for the PRC company go offshore IPO like, get finance from abroad?
Jack Ma: Okay, yeah. Probably I’m sorry for those — I will answer this question in Chinese. Which, probably more specific, any English translation probably, you know, people can help. Because so many people talk about VIE. I got confused, I spend a lot of time these days to understand, what the hell is that?
Okay, English, right. Just be fair, English. First, VIE is a great innovation. And I believe it’s a great innovation. 10 years ago, I’ve seen the model. It’s great. It helped China grow, on the internet, and all the other high tech industries. Which we, Alibaba also benefit a lot. And I don’t see the government is going to take that thing down. I never feel that and I don’t know why people worry so much about that. But some sensitive areas, some industry, some sectors, like finance, like, I don’t know, what else. These things the government have concerns about a VIE structure which I understand that we should support.
For example, if anybody want to get a bank, banking license in China like 20%, 25% foreign capital owned. If you run across that any nation, we’re against it. So VIE structure, I did not see any government say well I’m going to shut that thing down. What worry about? We should put this thing on the — few days ago I read an article about a show [Chinese language] We got to make this VIE really legal, transparent. This is the power of internet. Making sure, if it is good after ten years testing, it is good. Why not open? If any tiny sensitive area, that if you’re not comfortable, join us, discuss about that. So I don’t know, people say, well something wrong with the Alipay. Oh, I’m honored. Right because of that we open VIE. Because tell the truth, when government, the PBOC – do you – Alipay has foreign capital? I have to tell the truth guys. Do you agree? If the government say do you have foreign capital? I say, no, but I have. This, this won’t work, because we are getting bigger, right?
Just like today if I come to say I want to buy the PayPal, do you think the US does not have any proof? No, they won’t, even with Yahoo! right? So we have to be fair, it’s not that a big issue. It’s gesture, it’s gesture. Let’s face it, open it, discuss it, and I don’t see the government is going to shut that down. All right? I hope I answered your question.
Female Audience: Hi Jack. I think we haven’t been, seen each other for more than ten years.
Jack Ma: Oh yeah?
Female Audience: And you look terrific today. So I’m very happy.
Jack Ma: Thank you.
Female Audience: I believe you went through a lot of difficult things in past ten years. So, you also mentioned that one day you will write a book. So my question is would you like to share just one thing with us first? And you would do differently for something, one thing.
Jack Ma: Okay. All right, thank you Michelle, right? Michelle Tan. Thank you. We know — not see for ten years. Yeah, we’ve gone through a lot of tough days. If today, when something’s smooth, I just feel uncomfortable. That’s true. In the US they call it very paranoid. I am, yeah. But, the mistake we made a lot for Yahoo China, I think, when we acquired Yahoo China, if people ask me whether we would do it again, yes I will. But, whether we would do it in this way, no I won’t. We would do a much better smart way because we had no any experience of acquisition. Especially acquire an internet company. And we’ve made a lot of mistakes there, and that helped us today.
So, when you ask me about whether I’m interested in Yahoo!, yes of course. I think we are probably one of the very few companies really understand Yahoo USA very well, because of that. And people say, whoa Yahoo China is terrible, how could you still talk about that? I mean, terrible running. No it’s not terrible running. We solved problems four years ago, so we cut Yahoo China. If we did not we would have died today. So, we would share these mistakes. How we acquired, how we treat the culture things, how we fire people. We should fire some people earlier, we should keep some people. You know, these are a lot of detailed things. I believe any companies in the future will learn. And, and I think today I’m not talking about Yahoo USA. But we think about how internet companies in the USA and China should learn from Yahoo! We all face the same challenge. If we do not learn the mistakes the other people make. So that’s I think, I want to share with the mistakes. Thank you.
Male Audience: Hi, Jack. I had three quick questions. The first is, Taobao has been incredibly successful. How do you manage and prevent it from the being the victim of its own success? How do you stay nimble? You know, eBay itself has sort of stagnated as it got this large? Second is, given the competitive landscape with companies like 360Buy, will you be forced to do more on the logistics side, take title?
Jack Ma: Will be forced to what?
Male Audience: Forced to build out your own logistics, take title, and therefore that change model. And last is, I’ve read a lot of things about your account of what went on with Alipay. It’d be interesting to hear it, if you could do, do it over again. What would you have hoped Masa and Jerry would have said to you, how would you have wished that dialog would have gone as opposed to the way it actually went?
Jack Ma: Okay, the first Taobao yeah, Taobao grows so fast and will grow even faster in the future. Big challenge is we have never grown such a huge company and I don’t believe the internet tenders empire thinking. I hate the empire. Empire thinking means join me or I kill you, and I don’t like that model. I believe the ecosystem. I’m the board member for TNC, The Nature Conservancy. I believe the everybody should be connected to each other, help each other as a ecosystem. So Taobao becomes so big so fast. And I worry about that, I should giving the industry some opportunity, give competitors some opportunities. So in June, we separated Taobao into four paths because people talk to me they say Jack, you’ve been there for nine years. We think it’s very different to compete with you because you are already so big. Okay, I will become smaller, you compete.
If ten years later, I’m still bigger than that. I will put another three pieces, each. Making sure we run big company like a small company. Giving the people the young people opportunities to run the business. Because it’s their business. Taobao like Facebook, like Google, like Tencent, they are not Chinese companies. They do not belong to China. They do not belong to USA. They belong to this time, 21st Century. You have to using a different way to run this company. Honestly say, what is the best methodology? What is the best mental thinking to run that company? I don’t know. We are testing, and we are ready to take mistakes. So, we believe the ecosystem. We do not believe the empire thinking. So, that’s why we’re testing every way we could.
And, second question is, leaving the competition. 360Buy? Yeah, well, we would change our model? I think they should change their model. It’s not about — it’s not about I don’t feel anything wrong with Taobao model. We are growing, we can make money very easily. And, we can support more people. So, I don’t know if we should change our model and I don’t buy this story about the buy things and the selling online. This is really stupid model of the internet, and I don’t like that. And logistic things, I tell you, last year, the total China packs delivered on the street is 2.1 billion packages delivered. Taobao created nearly 1.1 billion. And this year, we will probably create 3 billion package delivered on the street. That we do not want have our own logistic system. China probably needs 10 million people, delivering on the street. How can we run a company with 10 million employees? Right, 20,000 people. Today we have, we have 23,000 people. It’s already a big headache to me. So 10 million, crazy, nobody can do that.
So we should support logistic companies, to serve well, to deliver well, to treat their employees well and the customers well. This is what we want to do. Not, we do not want to have our own logistic companies. Never ever. So we have the money, we have the inference, we have the orders, how we can improve the society?
This is – and to Alipay Masa and Jerry, I think I have answered that many times, but I can answer you again. They are good friends, they’re good partners. And, I understand, in the beginning said Jack, how could you — that, even today the VAs took for about it. But I got clear message you see. Yes, and no. So I told them, I think today they’re happy. Now I’m not happy because I’m getting such a big burden for Alipay, because today Alipay grow very fast. But it is not a big, nice model yet. You cannot make money out of it, but we are supposed to pay that much money at the end to the company. And I say challenge is a challenge young guys let’s create a good model for that. So, I think it’s a very healthy discussion between Jerry, Masa, and us. But unfortunately, the rumor was out that I’d moved the company out without the board meeting, without notice. I tell the truth. They know and we discussed together, and today, the problems solved. They’re happy. I’m half burned. But it’s a challenge. Michelle, I’m facing a lot of tough days. This is one of the tough things I have to face because it’s easy for other guys, that, wow, you should do this you should do that. When you know if Alipay die, Taobao die; if Taobao die, then 8 million power sellers in trouble. And I cannot do that, and if I do not follow China law, I will drink coffee in Beijing every week.
Everybody wanted me to sit in there and drinking coffee, and they say Jack, where you’re getting bigger, you’re in trouble. Be transparent. Today, 21st century. Everything should be transparent. Otherwise, why we should work so hard for? So, that’s what I’m telling. I think there’s no other way where I can zig around. I just say, this is the reality. We have to face it. I hope we answered your question. Thank you.
Female Audience: Thanks, thanks very much for a wonderful speech. My question is how Taobao evaluate international collaborations in technology. Because I heard Taobao now is still not open API for foreign countries. I mean, non-Chinese countries. So, that means non-Chinese countries not able to launch their products based on Taobao platform. So I want to hear your opinion about this. Thanks.
Jack Ma: Okay, I love to. We’d love to open the API for the non-Chinese country, unfortunately it’s about the payment. It’s very difficult. I have, you know, when I travel around, I see so many overseas Chinese. They say Taobao is wonderful. Can we buy things outside China, sell things. And a lot of foreign. We are trying our best, and we think that if the payment problem is solved things could be moved much faster. And Taobao will never stay alone in China. I said Taobao does not belong to China, it comes from China, it belongs to the whole world. It belongs to this generation. Let’s make sure, in the future it can help more people, because, things really cool on Taobao. Thank you.
Female Audience: Hi, Jack, actually my question is kind of similar with hers, but –
Jack Ma: You want to buy things from here — from Taobao?
Female Audience: No, but — of course I want to, right? So cheap and thank you Taobao, you improved my life. Okay, so, my question is that you have said there is no difficult business in the world. But the truth is for a lot of foreign companies really difficult to do business in China. And we have a lot of clients they want to go to China and actually – luckily Taobao, Ali Group can provide the whole solution for — actually from the high China from Alipay from everything. But it’s hard for them to know, there is a choice and it’s hard for them to kind of crowd the policy part, or government part. So what’s you — do you have any plan to help those foreign companies? Because Chinese still has a need for the foreign products.
Jack Ma: Okay, thank you very much. I think doing business is difficult anywhere in the world. Foreign companies go to China, find problems. And I think, and I believe, Chinese company come to U.S. doing business, also face some big problems. I don’t see any very successful Chinese companies in USA. I mean, you know, that we come here in the USA. Are there any famous Chinese companies that come to USA or Europe that is very good?
Jack Ma: Alibaba? Not yet, not yet, right. Lenovo? Do you call that successful? All right. My thinking was that, in China, we do have some successful foreign companies, right? Microsoft is not bad. IBM is not bad. And we have Oracle and a lot of great companies. The foreign companies in China very successful. Guys going anywhere doing business takes time. I think my friend [Careb] asking me about questions in the D conference. No market welcomes gamblers. You go there, create a value for local people, have time, it will have chance. So, I believe, that doing business, today in everywhere in the world is difficult. China is –my wife and I was debating yesterday morning while driving. She think, oh no, so difficult to do business in the USA because they have a Wal-Mart chain, whatever chain, everything is a chain. Even the coffee is a chain. She said, how can you have a small business?
And I said, well, in U.S. it’s easy for small business to do just that. So, there’s a professor sitting next to us say we should have a big debate. Which country is easier to do business, U.S.A. or China? And I think, China, today, if you still think about we should follow the government policy, you know, guanxi, forget it. I have said again and again, in the past 12 years, every time I speak of China, if you meet somebody come to you say, I have a strong guanxi with that mayor, forget about this guy. The only guanxi is the guanxi with the customer. If the customer love you, the government would bitterly love you. Trust me. They need the tax. The need the jobs.
But if you want to pick the wrong, you know? You’re in trouble. So I don’t, I don’t believe that, because my relationship with the government in the past 12 years as always in love with them, don’t marry them. Always. I love them. Every time they come, I tell them the truth. I do everything they tell me. Yeah, okay. Right, let’s communicate. But do business, sorry. My friend does business with government, not me. In this way you get respect from them. If it’s that serious about Alipay just listen to them because it’s a law, it’s not government guanxi. So I give this advice. It’s always. Scared, looking far away. Oh my God, this is a difficult place. Go there, test. Jump into it. You never learn to swim until you are in the water. China is not that bad. But, people ask me why China has no Apple. USA have capitalism for more than 200 years, right? That thick fertilizers, people company die, grow, die grow that’s a fertilizer. China only 30 years after reform, been shopping, 30 years have company like TenCent, Baidu, Alibaba, see, not bad, right? So let’s wait for another six, 30 years. We will have them.
And that is not China, that belongs to world, because it belongs to Internet at the time. Belongs to the young people who were born 1990s. And 1980s. Your 2000s. These are the people going to change the world, and especially most of the students here. And they are the future. I believe that.
Female Audience: I used to work at eBay and PayPal, I know how much challenge you have. Back to 2000 I don’t know, do you remember you have the TV advertisement in Australia that is two months before Senior Olympics. I have a business trip there. So, at that time, Alibaba just have two years out, so you have the ambition to have globalization at that time. So now, after ten, twelve years, right, Alibaba has some more power to have globalization. What is your future plan for global growing strategy and I think that’s it.
Jack Ma: Okay, thank you, yeah, you’re right. When we have money, we start to make mistakes. When we have money, we have a beautiful office, we hire people with MBA degree, we hire with the VP of multinational companies, and when we have a little bit money, only have five minutes, we start to think about globalization. Jesus! And then, we said let’s back to basic B to C, Back to China. Year 2002 — I remember we called that time, called it B to C, Back to China, Back to Beijing, back to base, all right, back to Central China. The coast area, back to coast area. Because we told ourself global vision, local win. No matter how wonderful you think you have to step 0on the ground, and do the things to try to work everyday. So, so many years past, twelve years past, we still believe global vision, local win, but, we start — we tested in Japan. We tested Indian. We tested European. And, we tested also in for the past 12 year, we never shut down the U.S. office. I’m now coming out, for one year. I want to learn one thing. And I wanted to ask you this thing to everyone here, here.
Fortune 500 CEOs in the world, they all believe China is a big interesting market. But nobody really give up things and come to China, to spend one year there. Because if you really want to know China, you got to spend some time, and me too, and I’m asking U.S.A., Europe is going to be a big market for us, and I just want to put down everything, spend time in USA for one year. Get feeling, how we can help the USA SME. How we can help the U.S., what’s the difference we can do between Amazon, eBay and us? What’s the real value we can create? When you think about that clearly, let’s start to do it. Because we cannot have — we never should finish a 20 year program in two years. Life is short. Life is long, you cannot say I want to finish that in two years. We have time. I’m that old, but I am still young, I am. I have time. Yeah. So, we will go step by step, not asking about how much revenue we can bring out of China, we will ask, what value, we really can bring to local people. And we have already more than 15 million small business, outside China, using our services. And we do not charge them. And freedom, free is always the best. We will, we will work on that. Thank you.
Male Audience: [Chinese Language] I just welcomed Jack to the U.S. and said I hope he can have a good rest while he’s here. So my question for you is, what do you think is the biggest misunderstanding, that America has about China? And conversely, what do you think is the biggest misunderstanding that China has about America?
Jack Ma: Honestly I don’t know that question. I think there are a lot of misunderstanding but I was thinking about few days ago, writing something on my whiteboard. Everybody believed that I know the world, I know China completely inside out. No, you don’t, [inaudible] did not know, Mao Zedong did not know, nobody know China. And everybody say, I know USA inside out, no you don’t know. Obama doesn’t know, otherwise he would turn US out. What? George Bush did not know, it’s very difficult to know the outside, but you know yourself what do you need? What do you want? What will you give up?
If I know myself better, I can change myself to meet the outside. There’s always misunderstanding between China and the USA, just like there’s always misunderstanding between Hunan people and Chinese. Right? Our job is not to solve the misunderstanding. Our job is to change ourselves to suit the others. So, I don’t know, but, that’s why this is a good question. I’m coming here, because I see so many American company, people finger point at China, and they have never been to China. A lot of Chinese people can criticize U.S., they’ve never been to the States.
So, if we do not learn to appreciate each other, to look at the outsider and the more I spend at States, the more I love USA, and the more I come to China I say wow, you know, it’s communication, so political-wise, it’s political, it’s very difficult. But there’s only one thing that I think, I would be very happy to do. Business. I don’t like online gamings. I think, I believe the best gaming on the world is to make money. Helping small business cross the ocean. Doing business, make them understand each other. My grandfather know news by reading newspaper. My father know news by listening to the radio. Our generation know the world, by watching TV, our kids know the world by the internet, they say, I want to involve. And I believe, this is the time let’s build up the internet. Anything happen in the USA, we know in China immediately. Anything happen in China, most of the things, you know very quickly.
Well, let’s, don’t laugh. Let’s appreciate, most of the things. Let’s appreciate that. Doing things step by step is important, instead of get everything one night. Thank you. Last one.
Male Audience: Jack, you mentioned that you spent some time here, in the early days of Alibaba, and that you were rejected by a lot of venture capitalists who you met with. But there was one investor here in Silicon Valley, who played a big role in Alibaba’s success, which was Jerry Yang, and Yahoo who invested, I believe, a billion dollars into Alibaba in 2005. Can you talk about your relationship with Jerry, how that investment came about, and what your relationship is like with him now, and how integral that investment has been to Alibaba’s growth and success?
Jack Ma: Okay first, Jerry is a very good friend of mine, personal friend, lifetime long-term friend, we have families, also are good friends. And but, it’s nothing personal, it’s all about business, right? Yahoo! invested us year 2005. I think it benefited both sides. Without Yahoo USA’s investment, we would not be that successful today. Because we need, we not need a cash to solve our problem. We need that cash to solve the venture capital problem. They did not see Alibaba has a future, they want a cash out. So they have put that not on the business side, mainly. And without Yahoo deal we would never learn how to partner with a big company, what’s the big company’s problem? How we can improve our own culture and things?
But, in the future, if it was today’s situation we do not change, we will not have a bright future. We have to do something. So, I think, fairly speaking, we appreciate yesterday, but we’re looking for a better tomorrow. Every company should do that. And today, and Jerry, and, you know, we’re still pretty close friends, and we talk, we chat, we play golf, baby. In the future, the same, and we like, we like Yahoo! I think this is, Yahoo is the company, at least one of the three companies, that awaked, waked me up, about internet, and I appreciate, that all my life. Without internet, there will be no Jack Ma and there will be no Alibaba Taobao, so, that’s what my answer is.
Thank you very much.
Male Speaker: We have time — I think Kara has a question from All Things Digital.
Kara Swisher (All Things Digital): Yeah, it’s your, it’s your friend Kara Swisher.
Jack Ma: Yes.
Kara Swisher (All Things Digital): How are you doing? So, two quick questions so, you talked about, you’re interested in buying Yahoo! One, have you visited Yahoo! on this trip? And two, how are you going to buy Yahoo!? I’m interested in buying Yahoo! –
Jack Ma: No, I answer my question in a very honest way.
Kara Swisher (All Things Digital): Well I hope so.
Jack Ma: First question no. I’ve been here for 15 days. And most of time sleeping and reading. No, I don’t have time. Two, I think sleeping is more important now than — because there’s going to be tough long way to go.
Second, your question is about How. We are interested in, getting the whole. Whole piece.
Kara Swisher (All Things Digital): Of your, of your Yahoo! China stake, or the whole piece of all of Yahoo!?
Jack Ma: Whole piece of Yahoo! Yahoo! China is already ours, right? It’s already in my pocket.
Kara Swisher (All Things Digital): Well I get it, the only thing I got to say is thank you in all this confusion for the first crystal clear answer about Yahoo!, about the company. I appreciate it, as a reporter. So, when’s that going to happen?
Jack Ma: I don’t know. Honestly, I don’t know, because it’s more complicated than we thought. And there are so many people interested in that. And we are also talking to them, they are talking to us. And we think that it’s — I was told it’s so difficult, it’s not about money issues, it’s about political issues, inside issue, you know. So, I cross my fingers just to say, we are very, very interested in that.
Kara Swisher (All Things Digital): Okay. Perfect. Thanks, Jack.
Jack Ma: Thank you.