Alibaba, the enormous Chinese e-commerce company, is expected to begin trading on the New York Stock Exchange this Friday.
But one of the most crucial time periods in the company’s history came in the early 2000s, when the still-new Alibaba battled out with the behemoth eBay to gain e-commerce dominance in China.
Porter Erisman, in his incredible documentary “Crocodile in the Yangtze,” captures the thrilling rise of the company through real footage and photos. Erisman worked there throughout its critical years (though he had left the company by the time he started making the documentary).
The entire film is entertaining, suspenseful, and more than worth a watch, but Erisman gave us permission to use scenes from his film to tell the story of Alibaba’s rise, as he saw it through his own eyes.
This quote, from founder Jack Ma, has become emblematic of the half-decade battle between eBay and Alibaba.
Every morning for nine years, a young Jack would go to a local hotel in his home of Hangzhou, China to befriend foreign tourists and learn English.
He eventually became an English teacher, making about $US12 a month at a local university. During China's export boom, he started a translation company.
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In 1995, he traveled to the U.S. to do a translation project. The project ended up being a scam, but Ma's time in the U.S. still played an important role: He discovered the Internet.
There was no Chinese content online at that time, and Ma started China's first Internet company, called China Pages. He tried to get the Chinese government excited about the Internet, too.
The government wasn't interested. Customers weren't interested. 1995 was too early for an Internet company in China.
Ma was working in the e-commerce division of a government ministry when the 1999 Internet bubble hit Wall Street. He decided that he needed to give his plan for an internet business another shot.
He gathered 17 friends into his apartment and they built their own online business marketplace, calling it Alibaba.
From the very beginning, Ma positioned it as a global website and predicted it would join the ranks of U.S. tech titans.
Alibaba.com -- which let exporters post product listings that buyers could browse -- started to attract members from all around the world. By October 1999, the company raised $US5 million from Goldman Sachs and $US20 million from SoftBank.
The company started getting more press. Reporters called the scrappy, animated Ma 'Crazy Jack.' Things were looking good.
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Ma set off on a media tour in London and tried to combat the increasingly sceptical attitude people had toward internet companies at the time.
In July 2000, Forbes put him on the cover of the magazine. He was the first mainland Chinese entrepreneur to ever appear on its cover.
High off its own success, the company started expanding quickly. Ma moved the engineering and production aspects of its English site to Silicon Valley.
But Alibaba hadn't made any revenue yet and was burning through cash. Ma decided to close the U.S. office, laying off dozens of employees. In 2001, Alibaba had to lay off the rest of its international staff, too.
Humbled, Alibaba hired a COO and doubled down on its mission and values. Ma realised that people would pay hefty sums to have their product listings appear higher in search and launched a paid service.
By the end of the year, more than five years after launch, Alibaba officially became profitable. Employees celebrated by going crazy with Silly String.
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Everything was on the right track, until disaster struck. In 2002, an Alibaba employee was diagnosed with the deadly virus SARS and the whole staff had to be quarantined.
Employees lugged computers back to their apartments so that the company could remain up and running.
Meanwhile, eBay's presence in China was growing fast. It had bought a stake in Eachnet, a Chinese eBay clone, and Ma knew it would start stealing his customers.
A small team snuck off to the apartment where Alibaba was founded to start creating Taobao, Alibaba's consumer-to-consumer sales site. They did handstands on breaks to keep up their energy levels.
The launch of Taobao coincided almost exactly with eBay's decision to buy the rest of Each.net and invest $US150 million into the business.
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eBay's CEO Meg Whitman was confident in the company's future e-commerce dominance of China. Through its investment, it controlled at least 85% of the market.
In response, Alibaba invested 1 million yuan into Taobao. Ma said that Taobao would be better suited to the Chinese market than eBay's Chinese site.
Alibaba 'declared war' on eBay, launching a huge, army-themed publicity stunt to win Taobao some free press.
But Ma and his team knew the Chinese market better than Whitman. While eBay slashed features that Chinese users liked, Taobao made its site flashy and personable.
The company won over China's optimistic youth. More people started to switch from eBay's site to Taobao.
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