Raise and Fall of Alibaba. What can we learn as founders.

“When we have money, we start making mistakes,” mused Jack Ma, the visionary behind Alibaba. Once a behemoth valued at a staggering $850 billion, Alibaba now stares at an 80% erosion of its worth in just four years. The question that looms large in the business world is: What went wrong?

As Alibaba ambitiously expanded into diverse verticals and markets, an unforeseen consequence awaited. They didn't just venture into new territories; they inadvertently started losing their stronghold back home.

In the realm of user traffic, Alibaba found itself outpaced by the vibrant and pulsating world of TikTok. When it came to pricing, PDD emerged as a formidable contender, winning over customers with unbeatable deals. Quality, once a bastion of Alibaba's promise, saw a new champion in JD. Even Meituan, a relatively lesser-known name, began chipping away at Alibaba's market share in lower-tier cities.

Rewind ten years, and the mere suggestion of Alibaba losing its crown as the e-commerce giant in China, perhaps even Asia, would have been met with incredulous stares. Yet, the winds of change are relentless. This was starkly evident a few days ago when Lazada, a subsidiary of Alibaba, announced a round of retrenchments.

This tale of corporate rise and stumble sends a clear message: In today's fast-evolving business landscape, no company is too big to fail, and conversely, no entity is too small to succeed.

So, what crucial lessons can aspiring titans and fledgling startups glean from this saga?

Firstly, the power of laser focus cannot be overstated.

TikTok, with its unwavering commitment to social media, PDD with its shrewd emphasis on price and volume, and JD, pouring its soul into building an in-house fulfilment center to guarantee service quality, all stand as testaments to this truth.

Secondly, understanding your audience is key.

One of Alibaba’s pivotal missteps was shifting its focus from the SMEs in China to larger, more established brands. This strategic detour opened the floodgates for PDD and TikTok to swoop in and captivate a market segment Alibaba once held firmly.

Lastly, Remember ones root.

Even Charlie Munger pointed out Jack Ma's brashness in underestimating the Chinese government. The old adage, “Never bite the hand that feeds you,” rings particularly true here.

In conclusion, Alibaba’s journey, marked by both unprecedented success and unforeseen challenges, serves as a compelling case study. It underscores the ever-relevant business principles of focus, market understanding, and humility. For those navigating the tumultuous seas of business, these lessons are not just valuable; they are vital.