TOKYO — Jack Ma, executive chairman and founder of Chinese e-commerce giant Alibaba Group, is known for thinking big and attendees at a business conference here got a sense of just how audacious his ambitions are: He wants to be bigger than Wal-Mart Stores Inc.
“I remember seven or eight years ago, maybe six years ago, I was drinking and chatting with a senior executive of Wal-Mart. I said that in 10 years, Alibaba’s sales revenues will surpass Wal-Mart’s. He said, ‘Young man, you have a vision, but take it slow. It will probably take at least 50 years.’ Today, we are getting closer and closer,” Ma said, speaking at a conference organized by Japanese telecom and technology company SoftBank Corp., which is also a significant Alibaba shareholder.
Alibaba, a company that values itself at $130 billion, is gearing up for a stock market listing in New York later this year that could raise as much as $20 billion, making it one of the biggest initial public offerings in history. Its revenues for the year ended March 31 grew 52 percent to $8.44 billion (with profit of $3.6 billion). Wal-Mart, the world’s largest retailer, saw its sales for the year ended Jan. 31 grow 1.6 percent to $473.1 billion.
“I did not expect that today we have the similar scale as Wal-Mart. But think about it, in the next 10 years, there will be one company in the world whose gross merchandise volume will first surpass $1 trillion. In the past, people did not expect Wal-Mart’s sales revenue could reach $500 billion. It is scary. [Wal-Mart’s] $500 billion would require several million staff. It’s huge. Alibaba probably only needs 30,000 employees to create sales revenue as big as Wal-Mart’s. In order to have 10,000 more customers, they need to buy a big piece of land and buy a lot of equipment and stuff. We only need three more servers,” he told the crowd assembled at SoftBank World 2014.
Alibaba’s model is distinct from other digital powerhouses, including Amazon, eBay and Twitter. It controls a series of companies that play an important role in the Chinese digital consumer’s life, yet it has no physical infrastructure, unlike Amazon. It doesn’t own any inventory, warehouses or manage shipments, but it connects consumers with brands via its various subsidiaries, Taobao, Tmall.com and microblogging site Weibo. It also has its own payment system, Alipay. The company’s cash flow comes predominantly from advertising.
Ma, who addressed the crowd in Chinese, stressed the importance of not being afraid to think big and take risks. He recalled the struggles he faced in the early days of founding his own company.
“When I visited Silicon Valley, I met with about 30 venture capitalists. All of them rejected me. They thought I was crazy. Many of them also thought I was a liar. Up until today, the media still say: ‘Jack Ma, you are crazy. You are a liar….’ Only 1 percent of the people are using all the technologies that human beings have today,” he said. “People who wake up early will have the opportunity. However, waking up early does not necessarily mean you will have the opportunity, but if you wake up late, you will definitely lose the opportunity.”
Ma alluded to the disclosure limitations of the IPO process at the conference, limiting his speech to general comments on his business philosophy and the history of the company the former English teacher built.
“I recall 15 years ago when I just started Alibaba, I did not expect that Alibaba would have grown this big today. To be honest, some people say, ‘Jack Ma, you really had a good vision to see e-commerce 15 years ago.’ I did not see anything 15 years ago. I just wanted to survive. It grows bigger and bigger until today,” said Ma, who reasoned that the company’s success had more to do with spotting an opportunity in the marketplace rather than talent or even hard work.
“When I look back now, what made us grow so big? It is not because of how hardworking we are. There are a lot of people in this world who are more hardworking than us. It is not because we are smart. There are a lot more people smarter than us. In China, people know that I tried three times to get into a college and I was very poor in math,” said the executive. “One of the reasons [Alibaba succeeded] is that China’s business environment in the past was very bad. So e-commerce as a new business idea and technology could reach a rapid development in China. Just because the business environment in China was very bad, we became good.”
He also attributed the success of his company to his practice of putting the needs of customers first, employees second and shareholders third. Without naming names, Ma said foreign Internet companies have failed in China because they thought purely in financial terms.
“Someone asked me why all the American Internet companies are not successful in China. The answer is simple. Many multinational corporations when they do business in other countries, they think about profit [as the key performance indicator] and how to realize their own company’s strategy, instead of how to help the local companies grow as entrepreneurs. I find in many multinational corporations in China, their senior executives’ job is not to make their customers happier, but make their boss happier,” Ma said. “I do not listen to investors much. The first thing I listen to is what my customers are doing.”
Alibaba’s leader also challenged manufacturers to rethink their strategies, warning that it no longer makes sense to think in terms of competing on cost alone, a problem that exists in both China and Japan.
“In the future, the assembly line is not about making 10,000 pieces of clothing in one minute, but making 10,000 pieces of different clothing in 10 minutes. This is the competition in manufacturing in the future,” he said.
Ma stressed the importance of thinking about the future, particularly in terms of staying ahead of the technological curve, a key theme of the conference. Before Ma took the floor, SoftBank chief executive officer Masayoshi Son showed off his company’s new personal robot named Pepper and claimed that similar machines are the solution to Japan’s labor shortage problem and economic decline. Still, Ma cautioned that it’s impossible to predict the future completely.
“Every 10 or 15 years in the history of human beings, there will be new enterprises emerging. So I always believe in the future. No matter how much you complain today or how upset you are today, in 10 years’ time, there will definitely be more rich people than today. In 10 years, there will be more successful enterprises than today. The enterprises that are successful today including Alibaba, Masayoshi Son’s SoftBank and Yahoo Japan might face the disaster of extinction. So no one can predict in 10 years who will be here, who will be speaking to the world. So I think the most important thing for everyone is to do your best for today,” he said.
Separately, Alibaba revealed Tuesday it has linked up with film and television studio Lions Gate Entertainment World to launch a subscription streaming service for Mainland China through Alibaba’s latest generation of set-top box. The company has inked a series of entertainment-related deals of late. Earlier this year, it invested in Youku Tudou Inc., China’s largest Internet television company, as well as television and film production firm ChinaVision Media Group Ltd.
So far this year, the company has acquired or taken stakes in a variety of businesses, including New York-based luxury e-commerce site 1stDibs, Sina Corp.’s Weibo and Intime Retail Group, a Chinese department store chain.