How Alibaba Survived 2(Two) Economic Recessions
Start-up ecosystem is suddenly drying up. It can be seen across the globe as investors are looking for sustainable growth & profitability. Startups are firing people as well as reproaching their strategy to turn to profitability. By reading this article, https://ow.ly/OQxa3006fit, I realized that this change has started impacting the society.
I was looking for some help, and then I got a chance of reading the book “Alibaba — The house that Jack Ma built” by Duncan Clark. I realize thatAlibaba is the giant who not only survived two economic crisis i.e. 2000–2001 & 2008–09 but also successfully launched USD 25 billion IPO, which is one of the largest global IPO in history.
Below are some of my thoughts from the reading which may be useful for the startups sailing through the current times.
1) Last Man Standing Approach:
Jack always wanted to build a company with the last man standing approach. He wanted to develop a business which can be there for 100 years. I believe this method works as it helps one to take the decision from a long-term perspective.
2) Wise Money Spending:
When the world was going through the rough time in 2000–01, Alibaba got saved because they didn’t touch their second round of funding by Softbank by that time i.e. USD 25 million. It was sufficient for them to run for two more years. Jack Ma is an astute money spender & made sure that he gets the right RoI for every penny spent.
3) Customer First, Employee Second, Shareholders last:
This is the success mantra of Jack Ma. He always wanted to serve the customer from long-term perspective & not short term profits. In one of the instance, when Alibaba got listed, Jack called up the CEO to roll back the website changes i.e. downgrading a discussion forum set up for traders to chat with one another. He did this because he always knew that the strength of his business is the traders community. He can’t afford to change the customer experience for short-term capital market gains.
Even on the employee side, Jack didn’t hold stock options exercise date for employees and encouraged his employees to sell as soon as it got listed to meet their financial goals.
That is the reason; Jack built a loyal merchant & employee base.
4) Stakeholder Management:
Jack was a smart business man. Though his business was 70% owned by theYahoo & Softbank, he always made sure that he made decisions. There were differences of Jack with the investor like People management approach withSoftbank. But Jack ensured that the issue should not percolate through the mind of the other investor & hence providing Jack a free run in decision making.
5) Top Management Driven PR:
Jack was a PR machine, and he was even called as a Sound Bite machine when Alibaba was not even in the primary race. Jack always made sure to appear for public appearances & share his philosophical thoughts to bind the audience. Jack did it throughout the Alibaba journey and have been able to do it now also. He always made sure the he is the first man standing in front of the world for any troubles with Alibaba
6) Eyeing Competition:
He always considered competition as fun & never underestimated any of the contest. For example, Jack launched Taobao because he can see that key strength of Alibaba i.e. Small Traders can move to eBay. He always approached the competitor strategically & not tactically. This approach helped him not only beat eBay but also beat Amazon from the Chinese market
And at the end, I will agree with the quote from Chinese entrepreneur
“Most people think of Alibaba as a story. It’s not just a story, it’s a strategy.”