Hi there! I go by KG, and I love studying the history of business and investing. I’ll be sharing some notes from one Investor/Shareholder letter per weekday (mostly from my compilations) here.
Today’s notes are on Jack Ma’s 2007 Alibaba.com Chairman’s Statement. This was Alibaba.com’s 8th year as a company, and their first as a public company — Please note: This is from Alibaba.com’s time as a public company. They were listed in Hong Kong from 2007-2012, before delisting and relisting (as part of Alibaba Group) in the US in 2014.
You can find this essay in my Yun (Jack) Ma ft. David Wei and Daniel Zhang Compilation under China Operators. This particular essay starts on Page 1.
Alibaba.com was founded in 1999 and it is our vision to sustain and grow our company for 102 years. Based on this vision, we were only eight years old when we became a public company in 2007. Our mission in these 102 years is: to make it easy for our users to do business anywhere. We are devoted to serving small to medium-sized enterprises (SMEs). We have so far only walked through eight short years; we are now listed and our mission will not change.
102 years is clever marketing — most companies fail within 10 years, rarely any make it 100. Saying last forever is a stretch, but by pinning a number to it (102 vs forever) there is tangible, achievable goal — also 102 is more memorable than 100 and represents 3 centuries of business (how cool is that)
Remain steadfast in your mission — even if your company changes (gets listed, you shouldn’t let public pressure/perception change your mission)
“Customer First — The interests of our community of users and paying members always remain our first priority.”
Common theme among the best companies — customers > anything else
See Michael Dell
We aim to become a provider of e-commerce infrastructure for SMEs in China and Asia and, by using Alibaba.com’s e-commerce platform, to create a global manufacturing, trading and servicing ecosystem within 10 years. We will embrace opportunities and challenges with an open mind and share prosperity together with our users.
Start with China, then Asia, then the world — interesting how China and Asia go hand-in-hand — if you can conquer China, you can conquer Asia. But if you conquer Asia, it doesn’t mean you’ve conquered China.
I like to break up Asia into 3 distinct “general entities”
Liberal Democratic Asia
Listen to your customers and let them participate in your upside
When you do well, it should because your customers are doing well
Be stingy with investors, generous with employees/customers
The world economy and trading environment will not always remain bright. Every downturn in the market, while likely posing real challenges to larger enterprises, will create opportunities for SMEs. During the SARS epidemic in 2003, a large number of SMEs used e-commerce to conduct their business and not only managed to survive the difficult times but secured new business opportunities that had been previously dominated by big companies. Recently, I participated in the World Economic Forum in Davos and the APEC Business Advisory Council (ABAC). I observed that: in Davos, the leaders of multinational corporations were very concerned about the world economic outlook and the forecast of a potential economic downturn, while in the ABAC meeting, participants were in contrast upbeat about the opportunities that SMEs may leverage on. Regardless of changes in the market, we will uphold our mission to serve SMEs in all circumstances.
This was written end of 2007 — on the brink of the American Financial Crisis — take note, at this time, Alibaba was listed in HK, not America as it is now
Lol mentioning Davos for signalling
Regardless of what happens in the market, focus on your mission — value investors know and will tell you that Mr. Market is quite temperamental and can be very, very moody
Along with other members of Alibaba Group, we believe we are well-positioned to capture opportunities arising from the growth of SMEs in the future. In its overall strategic planning, Alibaba Group has now established multiple important fronts to facilitate SMEs doing business online, such as offering platforms for international trade, domestic trade and retail trade, and providing business services related to trading, transaction financing, online marketing and management software. In 2007, members of Alibaba Group, Taobao, Alipay and Alisoft became dominant leaders in online retail, online payment and “Software as a Service” areas, respectively. Alibaba Group’s newly launched Alimama has also taken its first steps into the promising advertising market of SME websites. Leveraging on Alibaba Group’s first-mover advantages in the e-commerce business, we will work closely with other members within Alibaba Group to achieve synergies together that can benefit our B2B business.
SaaS was coined in 2005 — But we already knew that Jack was paying attention to the world and America
Alibaba’s core 3 businesses were already established in 2007 — the past decade has been building around them and moving into adjacent spaces
If you have a portfolio of companies — for heaven’s sake, please find synergies between them — this is one of the reasons Alibaba and Tencent have such successful investment portfolios — I’ve met too many VCs who don’t facilitate collaboration between portfolio companies
“We are well-positioned to capture opportunities arising from the growth of SMEs.”
When small businesses do well, Alibaba does well
At Alibaba.com, as with other members of Alibaba Group, we believe in encouraging continuous development of our senior managers. Elsewhere in this Annual Report, we discuss the substantial investment we make in our people. Recently, Alibaba Group has also completed some re-assignment of senior management as part of our long-term strategic development in human capital. We firmly believe that by strengthening our management team’s international exposure, encouraging these senior managers to continuously learn and to enhance their skills and knowledge, and placing them in different positions within Alibaba Group, Alibaba Group will be able to groom world-class business leaders for its long-term sustainable development, as well as to build further synergies among our member companies. Such a human resources development strategy for Alibaba Group will in turn support our human capital development and provide a reserve of talent for Alibaba.com in the future.
Invest in your employees — and not just in skills-training while ignoring personal growth (a la investment banks)
“We are committed to creating long-term value for our customers, our employees and our shareholders.”
Note the order — Customers then employees then shareholders
From our investment in human capital to our investment in e-commerce infrastructure, and from our business planning to our putting decisions into action, it is easy to visualize our goal of creating long-term value for our customers, our employees and our shareholders. With careful planning, we are turning vision into reality.
(Execution > Strategy) < (Execution + Strategy)
I would like to take this opportunity to welcome you as a new shareholder and express my appreciation to you for choosing to invest in Alibaba.com. Thank you for your foresight and determination, and for your trust. I also would like to extend my heartfelt gratitude to our customers, our employees and our board of directors.
Early investors in Alibaba truly did have foresight… (note to self: look up at what price BABA was when they delisted in HK and compare market cap to 2014 relisting in US)
I believe that 2008, which is our first year as a listed company, will be an exciting and successful year for all of us. We will make the most of this unique opportunity!
As always, close on a happy note :) and nod to the future
If you’ve got any thoughts, questions, or feedback, please drop me a line - I would love to chat! You can find me on twitter at @kgao1412 or my email at firstname.lastname@example.org.
Please DM or email me any time — to share non-obvious intel, views and correct or solicit mine. I appreciate your continued support and partnership :D.
All compilations here.
As many of you know, making compilations and this newsletter is a (very time consuming) passion project for me. Multiple people have reached out about how they can support me so that I continue, so I set up with a few ways: