GEOFF YANG: Hi everybody Welcome. I want to welcome everybody here in the audience and everybody online to the 2015 Encore Award presentation. I’m Geoff Yang and I’m the chair to the selection committee. And on behalf of the Graduate School of Business, we are very grateful for your coming to this evening to honor this year’s winner, the Alibaba Group.
The Peninsula Chapter of the Stanford Business School Alumni Association created the Entrepreneur of the Year Award in 1977 to recognize the entrepreneurial spirit of companies springing up in Silicon Valley in the late 70’s. The first honor was given to the CEO of Rome Corporation, Ken Ashman, in 1977 after five years of honoring CEOs of innovative company, the award was changed to the Entrepreneurial Company of the Year Award, and since then 37 companies have received this award. Apple actually won it twice, first in 1981 and then second time in 2005.
And tonight Alibaba Group will be the 38th recipient award winner and the first international winner of the award, so congratulations.
I’d actually like to take a moment to recognize some of the past winners of this award who are in the audience tonight or around campus. Jerry Yang of course who was going to be speaking tonight. The founder of our 9th — Founder of Yahoo, winner 1998; Chuck Schwab, founder of Charles Schwab and Company, winner in 1999; Reed Hoffman, founder of the 2012 winner LinkedIn, and Reed Hastings, Founder of Netflix, last year’s winner. Thank you.
Before we get started I just want to thank a few people for supporting this event, in addition to all of you who have come here tonight, and that is Catalyst Partners, Benchmark Capital, Evercore Partners, General Atlantic, Red Point Ventures and Sierra Ventures. Thank you for your support.
And then finally on the thanks I want to thank the selection committee that worked tirelessly to help with this selection: Peter Fenton at Benchmarks, Stu Francis at Evercore, Chuck Halloway from the Stanford GSB Faculty, Jeff Jordan from Andreessen Horrowitz; Steve Jurvetson from Draper Fisher Jurvetson; Joe Lacob of Kleiner, Perkins and the Warriors; Frank Quattrone of Qatalyst; Dave Sze at Greylock and Peter Wendell at Sierra. Thank you for your help.
Now onto tonight’s program and tonight’s winner.
Let me tell you a little bit about how we select winners and let me tell you about why we selected Alibaba. So each year the company picks a company which has distinguished itself in creating and fostering entrepreneurial spirit beyond all others. We look for companies that invent and reinvent themselves and industries. We look for global leaders in important spaces that shape landscapes. And we look for leadership teams where founders continue to drive achievement and our entrepreneurial spirit. And we think Alibaba does all that and more.
Alibaba group was founded in 1999 and headquartered in Hangzhou, China; is the world’s largest online and mobile commerce company. Its mission is to make it easy to do business anywhere and it’s certainly done that and on a massive scale.
As you’ll hear Alibaba has 10 million active sellers on the platform and 367 million active buyers which is more than the population of the US and Canada combined. In the last fiscal year, the GMV in Alibaba was almost $400 billion, up 46% from the year prior, and a fun few facts that I recently learned: 86% of all goods purchased on mobile phones in China were done on Alibaba. They created Singles Day which is celebrated on November 11th, 1-1-1-1, which is now the world’s largest shopping day. In a single 24 hour period, Alibaba saw 9.3 billion in sales which is more than 3.5 times the total E-commerce sales in the US on Black Friday and Cyber Monday combined.
On an average day, 30 million Alibaba packages are delivered which is more than the largest day the United States Postal Service ever experienced, and last September the company debuted the largest IPO in the world at $25 billion. So there’s a lot of largest and biggest which is pretty impressive for a company that is still very young and innovative.
And finally, its founder, Jack Ma, is widely considered one of the most innovative and thoughtful entrepreneurs in the world today or possibly ever. So why do we pick Alibaba? That’s why.
Tonight we’re very fortunate to have Jack interviewed by our mutual good friend and renowned internet entrepreneur Jerry Yang. Jerry needs little introduction but deserves this and much more. He’s a Stanford BS and MS grad and co-founded Yahoo in 1995 while working on his PhD at Stanford and we wonder, along with his mother, if he’ll ever finish. He served in various management roles, including CEO and Chief Yahoo and as a board member until 2012. Among other things, he also led Yahoo’s investment, now famous investment Alibaba, which I hope he’ll discuss at some point tonight. Jerry has served as a Director of Yahoo and Cisco, and currently serves on the boards of Workday, Lenovo, and Alibaba. He and his wife Akiko are well known philanthropists and generous benefactors to Stanford where he recently retired from the board of directors and as vice chair.
Jerry and I have been friends for more than 20 years, and if I had a dollar for every time someone called me Jerry, I too would donate a building to Stanford. Please join me in welcoming Jerry Yang.
JERRY YANG: Thank you Jeff. It’s my honor to be here and to introduce the founder and executive chairman of Alibaba Group, my friend Jack Ma. As Jack likes to say himself, he’s 100% made in China. But his story embodies very much the American dream. An English teacher with little means and no connections, Jack built Alibaba from the ground up. He was born in Hangzhou, the Chinese city that was made famous by Nixon’s visit in 1972. And he learned English by riding his bike to a hotel, I didn’t know this, every day for nine years and volunteering as a tour guide practicing with tourists.
Then on his first trip to the US, 20 years ago in 1995, Jack first saw the internet and realized the potential to connect people within and outside of China. He founded Alibaba with a group of friends in his apartment in 1999. From the beginning Jack and his co-founders shared a focus on the small business and entrepreneurial community. It was their collective belief that by leveraging technology it will bring small businesses across China into the global economy.
Now Jack is an unlikely tech entrepreneur in that he openly admits he’s never written a line of code, but he is a visionary in every sense of the word. In just fifteen years, Alibaba has become the largest online and mobile commerce company, as Jeff mentioned. And not even Jack could have predicted the change he would bring to China, creating jobs and prosperity for millions in the urban and rural China, empowering millions of entrepreneurs and changing the way that people live. Not only live, but shop and work online in China.
And before I bring Jack up, we’re going to run a brief video. Can we roll the video please?
[Video clip: (voiceover) Alibaba was created in China, and founded on a simple belief that small businesses are the bedrock of a prosperous society. And that everyone who wants to do business should have the chance to succeed. We built what has become the world’s largest online marketplace where millions of small businesses can connect with their consumers. And where everything they need to start, run and grow their business is only a click away. We helped entrepreneurs thrive in China, brought millions of people into the economy, and transformed how people shop, work, and live. Our efforts help to create jobs, spur innovation, and drive the growth of a new middle class.
Although Alibaba was born in China, it was created for the world. And now, we’re ready to help small businesses prosper in every corner of the globe. We’re building the infrastructure of commerce for the future using technology to break down barriers, and expand the boundaries of what’s possible. So that some day anyone who wants to do business anywhere will be able to connect with people everywhere. – Video ends]
Please join me in giving a very warm Stanford welcome to my friend, Jack Ma.
So, we’ll go to about 30, 35 minutes where I have some questions that I prepared for Jack. He hasn’t seen them. So hopefully, we’ll make it somewhat entertaining. And then, Alicia, where is Alicia? She’ll wave at me, and then we’ll do some Q and A. We have mics set up, and I’ll talk about that when we get to it. And it is a fireside chat.
JACK MA: Where is my fire?
JERRY YANG: Fireside chat. So the GSB is nice enough to provide a little picture of a fire. Although with 95 degrees out there, I’m not sure we needed any fire. Jack? We were both in Seattle. I’m not reading my email, I’m reading my notes here. We were both in Seattle last couple of days, and you were part of the delegation that traveled with President Xi. And there were many interesting things that were discussed. And you were on a panel Tuesday morning that included, entrepreneurs that were selling sausages and brewed coffee. And what common themes with President Xi, what common themes did you all explore both on the Chinese side and what did you hear on the US side?
JACK MA: Well, first I would like to thank Stanford for giving me this great honor. I never thought I can have the privilege to get this award. Remember 20 years ago when Seattle discovered Internet, and 19 years ago, first trip to come to the Silicon Valley and I was so excited by people, especially, in the evening, all the roads, traffic jam, I’m excited about that, especially, Sunday and Saturday weekends, all the parking lots, there is no place to park your car. I think this is so exciting; China should have that. And I go back and, that’s right, now we have a traffic jam.
So we went back to start the business. Well, and I never know I would be able to survive for 20 years. So I call myself like a blind man riding on the back of blind tigers. And for 20 years, survived to today, still surviving. We want to make this company last 102 years. So we’ve finished only 16 years, there are 86 years to go. So I hope that 86 years later.
JERRY YANG: Explain why 102, so you started in 1999.
JACK MA: Yeah, because in China, everybody want to be big company for last 100 years. This become a slogan. Nobody takes it seriously. So if you want to give the KPI to your people, it should be very specific. Then people know this is serious. 102 years, that a little boy in 1999, Alibaba, so last century we had one year, and this century we want to have 100 years, next century 1 year, 102 across three centuries. So very specific, so in our company we never talk you’re successful or not, because we think there are 86 years, next 86 years. There are many chances that you will fail. So that’s why we say don’t talk about you’re successful. 86 years later we’ll talk about it.
Well, I think the Seattle trip was very good, and we heard what the American entrepreneurs and business leaders worry about. And I think the American business leaders also hear what we worry about, what we need. But I think that in the essence, all the entrepreneurs and the business leaders in the world are the same. We want to create values for the others. But there is a lot of a misunderstanding between us. And my suggestion is that US and China should not like chicken talks to ducks. Everybody want to tell, nobody listen.
We need a common language between chick and ducks, right? People talk the same language, we have the same standard. And I think this kind of dialog’s pretty effective and useful. And I suggested that we should have a US and China business dialog talk annually, every year. Once in America, once in China, get the government leaders sitting there, and how can improve the business environment. Normally government leaders have a lot of a dispute argue, but business people, we talk a lot. If we don’t talk, will be problems. So I think the Seattle trip is good.
JERRY YANG: Yeah. Good, I’m surprised you even answered my question. That’s good. Usually he’ll just talk about whatever he wants to talk about. So thank you.
JACK MA: I try to talk the ducks language, you know?
JERRY YANG: The Chinese economy has been on everybody’s mind I mean and people are worried here that the slowdown in China will affect global economy. How are you seeing things? I mean, obviously, the stock market has been kind of a symbol of something that’s a bubble. But what is going on in China from your viewpoint, what’s your perspective? I mean, you’re not an economist, but you see so much going on there.
JACK MA: Yeah, well, first, I think people in the States and the west worry about China. I think it’s a good thing, because every time when west worry about China, China go up. And when people in the western think, wow, Chinese has a good future and Chinese has a problem and the west has been suspect Chinese growth for past 30 years, so that is fine. It takes time for both side to understand each other.
China I think keep on growing for 10, 11, 12% for so many years. I don’t think can last long and it’s impossible like a side effect, it’s like a human body when you are 1.2, 1.8 meters tall, you cannot keep growing at that pace all the time. You have to keep growing your quality, the brain not the body size. And especially today, I don’t think first, it’s impossible to keep 10, 15, 11% of growth annually.
Second is that China needed to be slowed down, it had to learn to be slowed down because when you see the water, when you see the air, when you see all the resources we use, it’s impossible and it’s ridiculous and we don’t want China making a lot of money and we spend the money on the medicine and spend the money on the hospital, this cannot work.
So on the other side, people like me, I think China is slowing down for 7%. Good and but the thing, even 7%, think about, we are still the fastest growth economy in the year. With the 7% of the total GDP, think about it guys, this is lots of money. We should use the money in a better way, we need quality not quantity. 30 years ago, we needed a lot of quantity, but now it’s quality. So, I think in the west have a high expectation that China should have quality, China should control the air and the pollution and this and that. When we really start to do it, people start to worry, which is fine, but this is slowing down.
On the other thing is that I think China economy is not that bad. There are two things. There are three called three marks, horse, carriages — carriages, investment infrastructure, exporting, domestic consumptions. These are the three things that China’s always proud of, that these are the three engines that put China economy grow.
But the investment of infrastructure, slowing down. And exporting, slowing down. These are the two things government is very good at, they love to do it, because they have the power to exporting and investment. But there’s one thing they could not do it in a good way is the consumptions, because consumption is not determined by government, consumption is determined by entrepreneurship and market economy. So I think people, like us have to create opportunity. Now it’s our turn, not government’s turn.
After 30 years, government pushed the economy in their way. And now, it’s our way. So I considered this as opportunity for real market economy. And the next thing I said yesterday on a conference to the dialogue, there are a lot of misunderstanding culture difference between American and Chinese. When Americans think about economies slowing down, that means people don’t have money to spend. Guys it’s different, you guys know how to spend tomorrow’s money, future’s money or other people’s money.
But we Chinese, our habit is to save money. We always keep the money in the banks. China has been poor for so many years. So we worry, when we have money, we put it in the bank. When we have money, we put it in the bank, because we know tough days are coming. So you see, China has the largest banking deposit in the whole world. We also deposit a lot of money in the States. When we know when the tough day comes, we start to pay, we start to buy.
Now the tough day comes, people still start to buy. With our numbers shows on our website, we are the largest 12% the total China retailer. The consumption is still going up healthy and aggressively, especially the economy’s bad people start to buy online because it’s cheaper. The other difference, my grandmother has only one shirt in her robe. My mother has three, my daughter’s generation, 50. And 48% of them should never wear it. This is called domestic consumption.
And we have to build up this kind of behavior and make people start to spend money and this is something the government is not good at, we know how to make this thing happen. So I think generally, I’m positive. But next two or three years, maybe have problems. People say, well, anti-corruption, but think about anti-corruption and rule by law is laying a great foundation for the market economy. You don’t want to go do business by bribery, you don’t want to have an unfair environment in China. So market economy is by rule by law and market economy is about clear, transparent and fair. And I think this year, last year, bad, but this is why we need entrepreneurship. This is why we need that the businesses drive the economy. So I’m a positive and when people worry, I’m happy. When people too happy I start to worry. And I don’t worry about the things the president is worried about, worry about the things that nobody worry about and this is the opportunity. So I’m positive, because I’m positive, but I’m not stupid. I know that we have problems, but we have to solve the problems little by little and that’s it.
JERRY YANG: I think you’re right in that for a consumption and a service economy to take off and drive China as the third engine. It is going to require more businesses rather than governmental policies. So I do think that’s an opportunity for not just Alibaba, but you’re right in the middle of it, but everybody.
JACK MA: Oh, by the way, the other thing is the new economy. You see the traditional business is going down, but the new economy is growing up tremendously. So not only the VAT, we have so many wonderful startups today coming up and that is the rising star and this is what China should go, not keep those things. Yeah, nobody can go back to yesterday and even if you want to go back to yesterday – even if you can go back to yesterday, you don’t want to. So, I think we are –
JERRY YANG: Well, I mean, my perspective from being there yesterday is that I think both the government leadership and especially the business communities are emphasizing that our differences are not that big in the grand scheme of things in that the US and China are going to have to be key partners to solve the world’s problems in the next 30 years. So it is largely a collaborative effort. And I think Jack –
JACK MA: Yeah, if we collaborate, we can a lot of American dreams and Chinese dreams and world dreams. If we don’t collaborate, then we do not —
JERRY YANG: Well let’s turn and, you are here tonight because of the entrepreneurial spirit of you and your founders. And obviously when Alibaba started it was no such thing as e-commerce. But before if, I may get, before we get to Alibaba, you were kind of a serial entrepreneur. In fact, you also know about government because when I first met you in 1997, you were in a government in between startups, I guess. And you always dreamed of creating something, and maybe you can talk a little bit about what did you see when you were at the government. You were coming off of another start up. Everybody is very familiar with your story, but I think that part of it was very important to you because then you went back to Hangzhou and started Alibaba. So maybe talk about that, and then talk about what did you end up seeing in 1999 that make you decide that Alibaba was it.
JACK MA: Yeah, okay, good. Jerry knows me so well, and by the way, Jerry not only the entrepreneur and he’s a wonderful investor. Probably one of the investors right?
JERRY YANG: I’ll give you my version.
JACK MA: He’s sitting on my board because very few people see the real stuff that’s in his heart. He’s so smart. I remember the day when we negotiated with Yahoo, buying the Yahoo, and getting $1 billion. Today, people think it’s a good deal, but at that time, it was a big risk. It’s not easy. That year, that many years ago put $1 billion inside. And we are almost a separate carcass, we are not happy about this and that and at that time he wasn’t the CEO, right. And then he said, we are almost just separate then he said call me, Jack can you come and tonight we have our drink?” For final effort.
JERRY YANG: You can’t drink that much back then.
JACK MA: And then I say okay. So he took me to small, tiny Japanese restaurant, bought me big glass of Saki. And we drink and try to convince me how wonderful Yahoo is. And after drink we say, okay let’s keep on talking good. The most expensive Saki I’ve ever had in my life. I’m pretty sensitive about a Saki now.
JERRY YANG: I know, I was going to invite you to some Saki after this but I guess I better — I think that –
JACK MA: I will continue answer your question. I went back to China with the Seattle dream of Internet. I believe this thing is going to change the world. I believe this thing will be big, but whether Jack Marr and his team can be successful, I don’t know. I told the team somebody will be successful, but not us. May not be us. We have to work very hard.
So, tough days in China, year 1996, 1997, and then go nowhere, because we, only, I borrowed $2,000 from my friends and families and relatives together. So we compete with the China Telecom. They have money, they have the SOE, they’re state owned business. They’re competing with us. Finally, they cannot kill us because we want to survive. And we of course cannot kill China Telecom. So we had a joint venture, they have 70%, we have 30%. And I was so stupid I think they really love us but they got us, because they want to kill us. Seven ball seats they got a five, two everything without even say our idea. They say they don’t like it.
So I say maybe I should go into Beijing. Go to Beijing, join the government, maybe they can help us in promoting the Internet. So we went to Beijing, joined the Minister of Foreign Trade, as part time job, contract for 14 months. Working side of government can never, ever promote the, or make Internet business. Because the philosophy of Internet is try to develop, how to make other people develop the business. But the government, they want control at that time. So it’s totally different philosophy. They are smart. They are good people, but they think how can I make it using Internet to manage and control? But we think we should make not control, making other people develop. So different philosophy, I think it won’t work are left and during these days I met Jerry Yang, all right.
And then I think well, no chance in the government, no chance in — I believe we should not give up. So I was in a desperate and think a lot, I should, let’s go do it again. So we went back to Hangzhou, I invited 18 of my students, and friends in my apartment, year 1999 February 21st. We took the video, I was talking about the future. People looked at me this guy is crazy. But most people cannot find jobs. So say well, if you have an idea let’s do it.
And then a good thing is that we keep all the video. Our company probably kept the most of the videos. And most of the — every meeting, we had in the past 16 years we videotaped, because we know everything with every mistake we made. Every decision made in the future will give our young people to study us. We’re going to open in every ten years what happened, why we make this decision. Even discussing with Yahoo, why we make joined with Yahoo. All videotaped. So, some day we will open it. So 1999 we started the business. And people ask, why not a Beijing and why Hangzhou?
JERRY YANG: I know Hangzhou is this hub of entrepreneurs and startups in tech, but back then.
JACK MA: Back then Hangzhou is nowhere, and I think at that time Nokia was so good, at that time. And I say, guys where’s Nokia? Is a thin layer of some small island headquarters there. It’s not where you are; I don’t see, it’s where your heart is, where your vision is. So we said Beijing they love SOE, state-owned business. Shanghai, they love multinational companies IBM, Microsoft, they embrace you. Startup, entrepreneur, forget it, right?
So, I said if in Beijing we’re nobody. In Shanghai we’re nobody. If we go back to Hangzhou, we’re the only child of the local family.
JERRY YANG: Yeah, and local children are very much prized and well taken care of, and I think Hangzhou has benefited greatly by Alibaba, but I also think Hangzhou has always been very entrepreneurial, in fostering what you guys have done, so I have to rebut your story, because, and maybe there’s a video somewhere but I think that one of the reasons we at Yahoo at the time, and it was ten years ago, so this is ten years of that deal. But it was clear to me that, we at Yahoo, could not have built a China business. And we were — we had a product at the time that was competing with the Alibaba Taobao auction, and we were very successful in Japan, Yahoo Japan had built a really great commerce product, and so we thought we could use the same idea to build something in China.
And then, in that time eBay was also there, and we were there, and we were competing and we were just getting killed by this local company. And I said, what is this local company? It’s, like, called Taobao. And I was like, who’s behind this? It’s a guy named Jack Ma. And I remember saying, wow, is it the same Jack Ma I met years ago, and it sure was.
Well, and that was exactly, and so the real, everybody can say, oh well, what is great inside, and you put the money in, but we really picked the person that we felt like, you know, if you can’t beat them, you might as well join them. So we were very fortunate to join up with Alibaba and with you, Jack.
So I think everybody here knows the brand of Alibaba, but because many of us in the States don’t actually use your products and don’t, you know, we hear these numbers. What is Alibaba for the western audience? How is it different from Amazon, eBay? Is it similar? Is it different? Give us a definition of Alibaba from your perspective.
JACK MA: Yeah, this is our fault because we don’t have services here that serve the American users. But I believe that most of Chinese guys here know about us. Have you ever used, anybody using our service, Chinese guys? Oh, thank you very much.
JERRY YANG: There’s only 380 million of them, so, you know.
JACK MA: Let’s that question later, I go to the China, a lot of Chinese government organizations invited me to talk, and when I say, how many people use them, very few, but every family using. So our strategy from year 2003 and 2004, we say, it’s so difficult to change a successful people, because they say, no, this won’t work. But it’s good, let’s help those people who want to be successful, so we focus on the young people.
At that time, in ancient history China, if you make the parents agree, the kids agree. If you want us married, you have to convince the parents, not the kids. Today different, if you convince the kids, you change the parents. So we focused on the young people that year. But by answering that question is that, people say, Alibaba like American Amazon? No. eBay? No. Okay. This is the very traditional USA thinking. If there’s no such model in America, they either don’t understand, they don’t like it, or they’re not buying it. Right? So any model they want to find a one
So at the first day, so who are you? Yeah, we are eBay. Is that eBay? Okay, yeah, so we understand. But we are not eBay. We are not e-commerce company, although we have the largest e-commerce probably business in the world. We’re not a eBay. We do not buy and sell. What we help, people become e-commerce company. We enable other companies to do e-commerce. This is the difference between us and Amazon. We believe every company should be a Amazon. Amazon is a traditional business happened to have a website. Which we believe, whether right or wrong, we think every manufacturer, everybody should sell online. Right? Why you buy and sell to complicate it? Why you want to buy, and sell, and deliver? Even more complicated!
So we think, we should be making sure everybody using the e-commerce, using the payment, using the marketplaces, using the logistic system, using the datas, to build up their own business. So who are we? Yeah, we have the largest payment in the world. You probably don’t know we are 11 times bigger than PayPal. We are bigger than eBay plus Amazon together on the sales, and we deliver 30 million packages, and more than that, per day in China. What does that mean? Total USA package delivered today put together less than 30 million. So we have big business, but people consider us an e-commerce. Who we are, we are infrastructure of business in China. If you want to find buyers and sellers, our marketplace will help you, Taobao, Timo, Alibaba.
If you want to have a payment financial service, Ali Ant Financial help you. If you need a data service, AliCloud Data Service will help you. By the way, people only know about Cloud data here, the Amazon, soon you will know us. And a third logistic, we got too many people deliver products for us. So people in the States always question, how can you deliver things, and why don’t you have your own delivery guys? Guys, the difference between USA and China is that, you have UPS, Federal Express, wonderful system, the traditional e-commerce company in the States that they still do some supplementary to that.
China, about 40 million packages per day. How many people you need? We believe in ten years, every day China will deliver 300 million packages per day. On 11/11 day last year, we delivered 270 million packages per day 11/11, we could sell more things. Why? We control the traffic, we control the selling. The reason is that, we’re worried about delivery. If the snow comes, November, and the winter comes, the whole China traffic will be jammed. This is something that we’re worried about. So we believe in ten years China will have at least ten million people deliver things on the street. So even if you hire one million people to deliver things for you, you only have 10% market share.
And I don’t think we can manage ten — one million people on the street delivery people, because every day you have so many car accidents, you make it. So we should encourage other people, enable other people to do it. So we are building up the infrastructure that we believe in ten years, we hope — this is our mission, helping doing business easier. Any business maybe 80 or 70 business in China, if we want to do business finding customers, we help you. Financial services, we help you. Delivery services, we help you. Logistic, we help you and marketing, we help you and the other thing is status, we help you. So we are like a company building on that, which is totally different, that people say, oh, how many GMV you have? Oh, how many package? This is only small part of our business, our vision is bigger.
We just think that we don’t want to be, we might be bigger than Walmart this year or next year. And I remember seven years ago, the senior management that like a vice chairman or something come to Hangzhou, we have a warm up, we have a drink and no saki. A drink and I said, sir, in ten years we will be bigger than Walmart globally. He looked at me said, young man, very good vision. I said –
JERRY YANG: But you’ve always had this relentless focus around SMBs as your core constituency, if you will. I mean, you obviously care about consumers and blah, blah, blah. But your enabling of these businesses on your platform being their infrastructure, that’s always been your focus all along.
JACK MA: That’s right. That has not changed. That’s why my answer is that we will be bigger than Walmart this year, but does not mean that, because the world has another company who is very able to sell things. We don’t think we should buy sell, we should enable. So now there are 10 million small business, power sellers in our site. We give them traffic, we give them the knowledge, we give them data. We help them deliver using third party, so that is, the 10 million small business combined together, they are the most powerful economy in the world and we never change. I think we love small business, we love young people, we love women.
JERRY YANG: Talk about that. Why don’t you talk about the women?
JACK MA: I never know before the — there is America media, big media came to us say, Jack, why so many women in your company? I say, anything wrong? because we never notice something wrong and then we find more than 52% of our colleagues are women.
JERRY YANG: Your senior management team.
JACK MA: As senior management, 33% of the management are women and 24% of the senior management are women. We have a woman CEO, woman CFO, woman chief people officer, we feel proud, and by the way, 60% of our youth is a woman. So we would love — we are so excited, because this century — the difference between this century and that century, last century is competition of muscle. This century’s competition of the brain. So brain, I think women and men are same and the other issue is that this century has tried to use a friendliness. Care others more than care yourself, this is the difference between IT and DT time. So we find women care others more than men care others for others.
Well, women have to care for husband, the children. I’m telling the truth. And that is why — we are supported, because we find most of families, women make the decision what to buy. These are the most important decisions and so we are happy about that.
JERRY YANG: Yes, can’t argue with that. Great. That sounds, I mean, I think that vision of Alibaba albeit very consistent from day one is something I think is reaching an incredible scale. When is that coming to the US, what’s your global, not just US, but globally talk about what is that? Is it the same vision you rolled out in the global sense? What is your, what can you tell us about Alibaba’s international plan?
JACK MA: Yeah, I think at least the day when I retire or the day that at least I can see the company, I don’t want the company changed the mission that helping doing business easy for small business. But we never say, we’re helping Chinese small business doing business easier, helping globally. This is our vision and our mission that we will never change that, but maybe 60 years or so later I don’t know whether I will be there, but they probably go sky rocket, whatever.
But the day when I see it, I don’t want a company to change that mission and our global strategy is probably different from the American ways. In the past 20 years, globalization is more like Americanization. Helping big companies going, oh, does not mean bad. Contribute the world a lot, the past globalization, helping big companies going global. But I think because of the internet, next 30 years globalization should help small business going globally.
For China, because of us, last year, we created at least 14 million jobs for China by helping small business, by enabling small business with the technology we have, with the resources we gather together. So if we can help more small business in the world, we can help millions and millions of people create jobs innovations. So we would never change it. So, our global strategy is that we want to build up EWTO, that helping small business sell buy across the board, helping consumers, help American consumers, helping the African consumers, to buy online within 72 hours, they can receive the products. We want to help the agriculture products, small business in America sell to China, so our different.
In the past 20 or 30 years, China is selling. China is exporting and I’m trying to convince the government and they accepted that. And I said, next 10, 20 years, China should buy things from the world. Now we have 300 million middle class people now in China, think about it. In 10 to 15 years, we are going to have half billion people in China become middle class. They need high quality products, they need good services, which I don’t think today China’s land water can provide that. So we can have more importing from America, importing from Europe and big companies are already almost everywhere in China. Let’s help the small guys, this is our strategy.
So we are not coming here to America to do business competing with — when you talk about business here, people always ask, where are you going to compete with Amazon? Why are you compete eBay? But the world is so big, why you must always think about a competition? Think about helping the small guys to go to China. So our strategy is the same, helping small business of the world, helping them to go to China and I feel excited about that and then I will be more welcome here. People say, you guys come here to sell? No, I come here to buy.
JERRY YANG: Before we open it up to questions, if you have questions, I think the mic is getting passed around. Is that right? Let me just ask one more topic, and if you can keep it somewhat contained, we’ll get to the questions. Which is on the subject of philanthropy because I know you have taken a leadership role in issues around the environment in China, you personally started a foundation. Just talk about both your personal progress in terms of thinking and doing philanthropy and also, how is philanthropy going in China, in general?
JACK MA: Okay, thank you. Well, honestly, I’m a lucky guy, I would say whether I’m the luckiest guy or unluckiest guy in the world. Unluckiest because I go nowhere, I don’t have privacy, I never thought I could be like that. And people say ugly looking but I think I’m a unique looking person. People remember me –
JERRY YANG: Nobody will call you handsome, I know that.
JACK MA: You have a terrible view. With my background, my family background, with my education background, I would be like a minus two or minus three, if this is zero. Honestly, because I know who I am, from my father, my mother and my ancestors, nobody in my family that have, it’s like a government officer, a business leader, that is why the past 20 years, we never got even one cent from government, one cent from the China banks. You don’t have — so you just have to do it from scratches and we smile like that.
So, no matter how hard I work, I probably get two or three if there’s a ten, two or three, that’s my top. But today, I’m a six, so the four difference, that does not belong to me. That’s not me. People think, Jack you’re so good! No, I’m not that good. But people say, you’re bad. No, I’m not that bad. Especially at the IPO, people say, wow you’re so smart! Wow, that happens to us, we’re lucky. But I know when I said to myself, when you have $2 or $3 million, that money belongs to you. But when you have $20 million, trouble comes to you because you don’t know the RMB or US dollars valuation up, devalued, into the banks, or stock market, or in the buy bulk, headaches.
But when you have the $1 billion dollars, remember that is not your money. That is the people’s expectation on you. People put their hope on you because people believe you can manage this money resources better than the others. If you think this is your money, you will be in trouble. So I never think the money I got, people say, Jack, you’re one of the richest guys in China. No, I’m not; I’m helping others to manage the money. So I think how can I spend money better? What I worry about, what I want to do, I want to do education because I was trained to be a teacher. I feel guilty for only taught school for six years. I feel guilty about that, so that’s why I’m talking everywhere, I think of myself CEO, chief education officer. Try my best to communicate.
I think China education system, people say have problem, China education is teaching, is knowledge, is so good. So good. Teaching we’re the best, one of the best in the world. Go to any universities, Chinese students take exams are the best, in the Stanford, I think. They’re pretty good, they’re very good but in the culture, team work, these are terrible. We got to put more efforts on that. This is something I want to help.
And second, environment, I worry about the air pollution, the water, all these things, so that’s why I joined the Nature Conservancy. The other thing, the infrastructure of the philanthropy. Bill Gates tried to convince me, with Warren Buffet, years ago, came to China, we should donate every money. I asked them, how old are you, Warren? He said, 80. I said, when I’m 80, I would donate my money. I’m only 40. What is my philanthropy? China, go to Beijing, Shanghai they are rich places but they are only small part of China. Go to eastern, the western part of China, so many poor, terrible places. As a business guy, create jobs, build more business. Making sure people have jobs, making sure people have life good conditions. This is the key.
And the second, you can donate money to Bill Gates. Who should I donate money to? Red Cross? Who should I give money to? Because spending money is more difficult than making money. Especially, for philanthropy. When you have a good heart, you should also have good knowledge and good capability to spend the money, otherwise you are doing good thing with good heart in a terrible way. I think what we will be doing is to train people who can do philanthropy properly, so that’s why we will work with the Beijing University. Have the first master degree for philanthropy. Training people, develop people, how to manage the money, how to manage the project, how to do things better.
I think we also have to work with the government to make a good policy program, so when we build up this infrastructure, talents and the policy, and I think they’re coming. China philanthropy is coming but the key is; we need good infrastructure. In China, business is good but if the infrastructure is not ready, it goes up and down and up and down. It goes nowhere. So the money, which I put in education, environment, health, I worry about the health conditions because the environment situation is going to cause China, in ten years, health issues.
If we don’t start to prepare now, we are going to have a huge problem. These are the areas I’m doing that but unfortunately, I don’t have plenty of time. So we’re forming a team, and I think for philanthropy, the easiest thing is about donating money. The most difficult, valuable thing is about time and action. This is something that we put 0.3% of the total Alibaba revenue every year into the environment protection, water protection. This is probably pretty unique, it’s not profit, revenue. If there any shareholders here, I already wrote on our IP book and we think this is right, if the community is good. If the people healthy, the business will be healthy. This is what we believe.
JERRY YANG: We even see that Jack has — You have the same passion and vision for philanthropy as you do for your business. That’s great.
Okay, let’s go to questions. I don’t know how much time we have. I know we’re running a little bit late. Where’s the mic, Alicia? Somebody?
JACK MA: Any question will be okay. Whatever.
JERRY YANG: Jane, why don’t you pick one, and –
AUDIENCE: Hello, my name is Emily Ma. I’m a lecturer here at the GSB, so I love the fact that you are fighting for the small guys. But there are over 400 million people in China who are not yet online. There’s 4 billion people on earth who are not yet online. Do you have some thoughts around that?
JACK MA: Okay, yeah. First, the good thing is that we have 1.4 billion people in the world online, and they were born in 1980s. This is our hope. Make these people successful. Make these people good, and then they will attract more people going up. If the people who are online are poor, then nobody would go to it. I don’t like Chinese movie. All the movies, Chinese movies, the heroes always die. Nobody want to be the hero. In American movies, all the heroes survive. That’s why people want to be a hero. Right?
So, my philosophy is that making those people using Internet successful. They’re like, those small business using Internet, if they’re successful, our business will be successful, more people moving online. So, the other thing is that, we should be working with the government and lower — more infrastructure, lower the cost of the using the broadband. I mean, there are a lot of things that can be done, but good thing is that 1.4 billion people born in 1980s, these are our hope. These people will change the world. My grandfather know the news by reading newspaper. My father know the news by radio. My generation know the news by watch TV. My children, they’re using internet. They say, I want to get involved. This is the hope. Make these people online good, and they will help more people.
AUDIENCE: Hi, I’m from Egypt. My name’s Ali. So, one day I’d hoped to have children that would call me Alibaba. But why, why is that the name of your company? That’s the first part. Why is it called Alibaba? Why is your business called Alibaba? The second question is if you had to name the top three markets, other than China, where you think that your business model is most applicable? Can you list those?
JACK MA: Okay, thank you. Why we choose the name Alibaba? Because we learned the name from Yahoo. We say, why does Yahoo have a strange name? It sounds interesting. Then I was thinking about, if we want to build up an internet company that can help the small business, I mean, a lot, I was walking around, I got this near me in San Francisco downtown. I was thinking about what the best name, and then suddenly I think, Alibaba will be interesting. So I was thinking about, there was a waitress came, have a dinner, and I asked, do you know about Alibaba? She said, yeah. I said, how do you know about it? What do you know about it? She said, open sesame. I said yeah, that’s the name. So, I walk on the street asking a lot of people, do you know about Alibaba? They said yeah, and then we just said this would be open sesame online for small business.
But unfortunately, the Alibaba name was already, domain name was registered by the others. So, we’re using the Alibaba Online. We think this is called AOL. Because American Online, it will be impossible to have that domain name as servers in China. Is that right? Or Egypt? America Online. People, no. That Alibaba Online, everybody agree that. So, later we bargained, we got the name from a Canadian guy. But I love that name, so now we also register Alimama.com.
Well, our motto helps those nations has small business. Which if you have a lot of small business, if you have a poor infrastructure of commerce, the reason why China e commerce grow faster than America because the American infrastructure of commerce was so good. You have a Walmart, A Mart, whatever mart, everywhere, because they don’t need it. But for us, we don’t have that. So, when internet comes, we become the main infrastructure. And so I said, in America, e-commerce is a dessert. We in China, we’re main course, and this is why those nations, if your commerce infrastructure is bad, internet e-commerce would be good. And for internet financing, same thing. America, you don’t have internet financing guys. You don’t. We, China, have. Why? Because our financial system in China is too bad. Where it is too bad, is the opportunity.
Now China, rural areas, we go to the rural, help the villages. Villages, 10 years ago, no chance, because people don’t use PC, too complicated to use PC. Today, everybody have a mobile phone. So villages, e-commerce internet grow so fast. So, this is why, maybe Indian, country like Egypt, those with good population, poor infrastructure, young people. Your nation has a great young people, a lot of – it’s great opportunity. We have young people, it’s growth. But it don’t mean old people bad. But, young people, they are the changers. They’re the shapers of tomorrow.
JERRY YANG: We’re getting old fast, so we’d better start. Why don’t we take the last question from up on the top there?
AUDIENCE: Hi, Jack, I’m going to talk to you. I’m actually from China. I’m from Peking University, for undergrad I’m now a PhD in Stanford. I’m curious about like what’s your vision and especially globally, Chinese people are trying to do business not only in China but also in the States and also all over the world because people want to invest overseas. Do you think, like [Meiting], we can help with capital flow globally?
JACK MA: Yeah, thank you. So probably here, a lot of people don’t know about the [Meiting], the Ali Ant financing. How many people know about Ant financing? Okay. One day, everybody will know, because you will use it. Ali Ant financing was coming from AliPay. It’s a payment system, because this was, we found this company year 2004, because people in China talk on the e-commerce. They negotiate, they talk, but they don’t buy, because they worry about the money. Give him, and this guy run away, or this guy say, well I sent you things I don’t get the money. So I went to all the banks and I tried to convince the banks, can you help me with the payment? The banks say, your business too small, we don’t want it.
So we have to — we built up a very stupid service called Alipay, it’s escrow services. If you want to buy things from me, you wire the money to Jerry and Jerry will let me know, I got a product, got money. So, I send products. If you’re happy, pay me. Not happy, return the money, return products. People say, year 2003, they say, this is the most stupid idea I’ve ever heard, because why you don’t use credit card? Guys, we don’t have credit cards. So we made that.
Well, remember, today registered users I mean, just registered users, close one billion people using that. And active, I don’t tell the number — we’re so big today on that. And later, becomes the standard payment for China, and then based on that, we’ll have all the datas. We have the datas, we have to build up the credit system for each individual.
How much you buy? What you buy? Is that you pay the money in time and then you sell? All the system. So what my agenda for the first is try to build up a credit system for China, a trust system. Without that, small business cannot do business, so today my agenda — oh my god it’s a private company. It’s so big It’s almost, if not big then Alibaba, the same size and I’m happy, because this thing is changing China financial system and we are also applying for licensing in the states. We are going to a career, Japan and the Indian and we think this is going to help millions of people in the world. By the way, I’ll give you one example how powerful it is.
We got a small loan license four years ago, giving loans. We don’t have deposit, giving loans. Within four years, we have given 1.5 million small business loans and average borrow only $5,000. We make decision, whether we should give you money or not, lend you money within three minutes. You can borrow $0.01, borrow for one minute, which all the banks got scared about that, because the cost is so low and how many people work for their loan department? 200 people. So 200 people giving loans for 1.5 million business. And this thing, I think in the future is going to help millions of small businesses get a loan online based on credit and the credit system we built up called Sesame Credit. You buy, you sell, the credit, all the things you get it and the Sesame Credit today, good thing is a lot of government are giving visas to Chinese based on Sesame Credit. And if you’re in to rent a house, people check your Sesame Credit. And the funny thing is last month, people finding boys and girls. See your Sesame Credit. And this something will change in China, I feel proud for that, but we will definitely be in Thailand. Yeah, this is what we want.
JERRY YANG: Jack, on behalf of the Stanford Graduate School of Business Alumni Association, we want to congratulate you and present you the award for the Entrepreneurial Company of the Year.
JACK MA: Thank you so much.