What are the top ten mistakes Jack Ma made in the past 15 years?

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On September 19 last year, Alibaba was officially listed on the New York Stock Exchange with the stock code BABA. Alibaba set the record for the longest opening time of the U.S. stock market in the past 10 years. It soared 38.07% on the day and its market value reached US$231.439 billion, surpassing Facebook to become the second largest Internet company after Google. Alibaba's head Jack Ma also became China's new richest man.

Jack Ma has become a "god". His success has inspired thousands of dream chasers to worship and emulate him. But Jack Ma is not perfect. He has made many mistakes, some of which were fatal. At an award ceremony in 2013, Jack Ma said that if he were to write a book in the future, he would write "1001 Mistakes of Alibaba". He also said that Alibaba had made more than 1001 mistakes. Many of them were seen, but there was no time to pay attention to them.

Let’s take a look at the top ten mistakes Jack Ma has made in the past 15 years.

1. The ambitious plan to move the capital to Shanghai ended in failure

Time: 1999

Reason: Blind pursuit of high-end

Ending: The company's headquarters moved back to Hangzhou and never left.

In 1999, when Alibaba was just starting out, the employees' office space was Jack Ma's 150-square-meter home. After obtaining financing, Jack Ma began to get carried away and moved the company's headquarters to the United States and the domestic headquarters to Shanghai. He soon found that the local climate was not suitable and moved back to Hangzhou. Financial commentator Wu Xiaobo said that this was Jack Ma's first mistake.

Afterwards, Shanghai is home to large state-owned and foreign-funded enterprises, while Alibaba serves mostly small and medium-sized enterprises. Hangzhou is home to a large number of manufacturing and foreign trade companies that have real e-commerce needs.

When he was young, Jack Ma also made the mistake of blindly pursuing "high-end" things, and strayed away from his users and "God". This is especially worthy of warning to other founders. It is understood that for a long time, Zhejiang has been the province with the highest income for Alibaba, and was later surpassed by Guangdong.

2. Rapid expansion leads to high operating costs

Time: 2001-2003

Reason: Increased financial resources led to an out-of-control rhythm

Outcome: The company has massive layoffs and salary cuts

When it was founded in 1999, Alibaba achieved a net profit of 2.87 million yuan. Subsequently, it received investments of 5 million and 20 million US dollars from Goldman Sachs and Softbank respectively. The increase in financial strength disrupted Jack Ma's original rhythm, and Alibaba fell into chaos after receiving the money.

In 2000, Alibaba was expanding overseas madly, and its operating costs remained high. In Hong Kong, the United States, Europe, and South Korea, it needed a lot of marketing and advertising expenses, and its monthly expenses were astronomical, and it had no income at all. In January 2001, Alibaba's bank account balance was less than 10 million US dollars.

Soon, Alibaba held the historic "Zunyi Conference". The chief operating officer at the time was Guan Mingsheng, who was parachuted in from GE. He cut the US team from 40 to 3 people in one day, and successively closed offices in Hong Kong, Beijing, and Shanghai. The remaining employees had their salaries halved but their stock options doubled. Three months later, Alibaba's monthly operating expenses were reduced from 2 million US dollars to 500,000, and it survived the dangerous period.

3. Blindly believe that the airborne troops were "massively killed"

Time: 2001

Reason: Too young

Ending: 18 paratroopers were killed, 7 of them are still alive

In 1999, the 18 Alibaba employees gave up their high salaries in Beijing and followed Jack Ma back to Hangzhou to start their own business. Two years later, in a speech, Jack Ma told them not to think of getting a high position based on their qualifications, "You can only be a company commander or platoon leader. You have to find someone better to be a cadre above the regimental level." He introduced professional managers on a large scale.

In retrospect, Jack Ma admitted that he made a mistake. 15 years later, among the 28 partners listed in the United States, there are still 7 "Arhats" who are still sticking to Alibaba, such as Peng Lei, Dai Shan, Xie Shihuang, Wu Yongming... ...all of them hold important positions. The remaining 11 who left also mostly hold important positions. On the contrary, those "paratroopers" invited at that time have long been "collectively killed".

Ma Yun really underestimated those "country bumpkins" back then, and also underestimated himself. In a public speech, Ma Yun said, "I never thought that ten years later, we would become what we are today."

When should a high-growth company introduce professional managers, what role should the managers play in the entrepreneurial team and how should they play the role well? These are really difficult questions. Jack Ma has suffered losses because of this, but he has also gained "entrepreneurial managers" like Zeng Ming.

4. Yahoo China almost lost control of Alibaba

Time: 2005

Reason: Yang Zhiyuan, who was a close friend, stepped down

Ending: Gradually redeeming Yahoo shares despite the infamy

One day in 2005, Yahoo founder Jerry Yang and Jack Ma met on a golf course in the United States. Jack Ma won the game, which left a deep impression on Jerry Yang. On the way back, Yang and Jack Ma walked side by side and said, "Let's make a deal." At that time, Jerry Yang hoped to make Yahoo China as powerful as Yahoo in the United States. Unfortunately, the situation in China was slow to open up.

What are the top ten mistakes Jack Ma made in the past 15 years?

It took only three months from negotiation to signing of the agreement. Alibaba acquired all of Yahoo China's assets and received a $1 billion investment from Yahoo, which then acquired a 39% stake in Alibaba.

Jack Ma was ambitious and invited a famous director to shoot commercials for Yahoo China, but Yahoo China later became neither a portal nor a search engine. Jack Ma did almost nothing with Yahoo China, and lost the strategic opportunity period for the development of search engines that were highly relevant to small and medium-sized enterprises. Later, search engines such as Yitao were actually equivalent to the internal search engines of the Alibaba platform. This year, Alibaba packaged the entire search business to UC and established Shenma Search with the UC team as the core.

In 2007, Alibaba's Hong Kong IPO documents disclosed that starting in 2010, Yahoo would strengthen its voice in Alibaba's board of directors, with a shareholding ratio higher than 35%, and that it was possible that Jack Ma would be expelled from the board of directors. All the controversy surrounding Jack Ma's transfer of Alipay assets to Alibaba's management was the root cause of the "acquisition of Yahoo China" that year, when Yahoo sold too much Alibaba shares.

5. Failed to integrate Koubei.com and missed the opportunity of O2O

Time: 2006

Reason: Strategic mistakes widened the gap between reputation and competitors

Ending: Ali strategically invests in Meituan

In 2004, Li Zhiguo, a former employee of Alibaba, left and founded Koubei.com. It developed rapidly in the first few years, with more than 1 million users. At that time, Alibaba was just undergoing structural adjustments and establishing 2B and 2C business groups. Jack Ma hoped to integrate Koubei.com into it to strengthen the 2C side.

In 2006, Jack Ma approached Li Zhiguo and asked, "Do you want Koubei to be listed independently, or do you want to return to Alibaba to work together on 2C?" Li Zhiguo chose the latter without hesitation. That year, Alibaba made a strategic investment of US$6 million in Koubei. Two years later, Koubei was wholly acquired by Alibaba.

In the following years, Koubei.com once became the biggest competitor of Dianping.com. In 2009, Alibaba upgraded its "Big Taobao" strategy and Koubei.com was merged into Taobao. It was originally thought that Taobao could bring enough traffic to Koubei.com, but it turned out not to be the case. The gap between Koubei.com and Dianping.com and Meituan, which emerged later, became larger and larger.

In 2011, Alibaba invested 50 million USD in Meituan, a competitor of Koubei. This indicated that Koubei had been marginalized in Alibaba’s strategy. Afterwards, an industry insider lamented the deal, “If Koubei had taken off at that time, we could have saved hundreds of millions of USD now.”

The biggest consequence of the failed integration of Koubei.com is that Alibaba lost the strategic opportunity of O2O development, which made Dianping.com bigger and now an important pillar for Tencent to seize O2O. If Koubei.com could compete with Dianping.com, Alibaba would be much more relaxed in its O2O layout.

6. Failure of investment in Morning Star Express resulted in the loss of strategic opportunities for logistics development

Time: 2009

Reason: Cloud logistics concept burns too much money

Ending: Star Express went bankrupt, Alibaba's logistics strategy was several years behind schedule

The logistics company Star Express was established in 2009, and received investments of 50 million and 20 million yuan from Alibaba one year later. At that time, JD.com was still relatively small, and Alibaba had every chance to surpass JD.com in self-built logistics and self-operated B2C. Unfortunately, Alibaba only managed to expand Tmall. Alibaba handed over the practice of "cloud logistics" to Star Express, and handed over the technology of "cloud logistics" to Zhejiang Best Logistics, in which Jack Ma personally holds a stake. In 2011, Star Express hastily acquired Xinfeihong, but the integration was not smooth. In less than four months, the two sides broke up and suffered a great loss.

In addition, Star Express adopted a franchise system. In 2012, the chaos brought about by this system broke out and fell into an unprecedented crisis. Some executives were "lost". According to a text message circulated on the Internet, at that time, Star Express used up 70 million yuan from Alibaba, lost all its own 50 million yuan, and owed 16 million yuan to external parties.

In March 2012, Morning Express ceased operations. In May of that year, founder Chen Ping planned to raise RMB 100 million in Series B financing, but was rejected by Alibaba’s board of directors. Since then, there was no hope for a comeback, and Alibaba’s RMB 70 million investment went down the drain.

The failure of Star Express had a far-reaching impact on Alibaba. Alibaba's strategy of building its own logistics was delayed by several years, providing JD.com with a strategic opportunity to expand its business by building its own logistics and distribution network.

7. Taobao Mall service fee increase was too sharp, causing unrest among online merchants

Time: 2011

Reason: Dissatisfied with the sharp increase in fees

Outcome: Readjust the new rules and postpone the implementation period

In October 2011, Taobao Mall (now renamed Tmall) issued new regulations to increase the annual technical service fee from 6,000 yuan to 30,000 and 60,000 yuan, a 5- to 10-fold increase. At the same time, the merchant's breach of contract guarantee was also increased across the board, from 10,000 yuan to 50,000 yuan, 100,000 yuan, and 150,000 yuan.

This move has caused dissatisfaction among some small and medium-sized merchants, who have attacked Tmall's big sellers through malicious purchases, such as buying and paying first, then giving low reviews, and then applying for a refund. In response, Jack Ma responded strongly on Weibo, "Although I am a heretic, I will still do it my own way." Taobao Mall also publicly stated that "the police have been notified."

But the standoff did not last long. On October 17, 2011, Taobao Mall adjusted the new rules. The plan extended the implementation period of the new rules. In addition, Alibaba invested a total of 1.8 billion yuan to help Taobao Mall sellers grow.

This incident is a shock to Jack Ma's value of "making it easy to do business anywhere". On the increasingly large Alibaba platform, when Alibaba needs to generate revenue and when more and more wealthy people are investing huge amounts in Alibaba, it is difficult for small and medium-sized sellers to return to the good days of Taobao's wild days. Business is really getting harder and harder.

8. Alipay "goes solo" and Jack Ma is caught up in the contract scandal and his image falls from the altar

Time: 2010

Reason: To obtain a third-party payment license

Ending: Alipay changes from foreign capital to domestic capital

When this incident happened, Alipay was preparing to apply for a license. That year, the central bank issued a new document to implement a licensing system for third-party payment companies. There was a problem. Before June 2009, Alipay was a 100% foreign-controlled company. Jack Ma thought that if Alipay became domestically-owned, it would be much easier to get a license.

Alipay was taken over by a domestic company, Zhejiang Alibaba, to which Jack Ma transferred 70% of its shares, turning Alipay into a joint venture. In 2010, Jack Ma set up a "license group" and asked then Alipay CEO Peng Lei to lead the team to study how to obtain a license. In August of that year, Alipay transferred the remaining 30% to domestic capital.

These two equity transfers were understood by the outside world as "Alipay's solo flight." In the end, Jack Ma got what he wanted. In May 2011, Alipay obtained a license, but it brought negative impact to Jack Ma's reputation.

At that time, several shareholders of Alipay, including Yahoo's Jerry Yang and Softbank's Masayoshi Son, disagreed with the move, which meant they would lose control of Alipay. After a period of stalemate, Jack Ma still insisted on getting the license first despite the public outcry.

Emotionally, many entrepreneurs certainly support Jack Ma's transfer of Alipay to domestic capital control, but from the perspective of the spirit of commercial contract, Jack Ma should first abide by the contract. This incident is a landmark event for Jack Ma's fall from the altar.

9. Chinese suppliers defrauded Alibaba, putting it in a credibility crisis. Jack Ma fired Wei Zhe

Time: 2011

Cause: Poor management

Outcome: Senior executives resign

In 2011, Alibaba B2B CEO Wei Zhe resigned. He had been lobbied by Jack Ma for six years and finally joined Alibaba. Faced with this resignation, Jack Ma chose to approve it. Why?

It turned out that Alibaba discovered that Chinese suppliers in B2B companies had committed fraud in their contracts with clients. What was even more serious was that there were signs that the direct sales team in the company condoned and assisted in this phenomenon. After a month of investigation and evidence collection, 1,219 and 1,107 Chinese suppliers were suspected of fraud in 2009 and 2010 respectively. Subsequently, all 2,326 suppliers were closed and submitted to judicial authorities for investigation.

That year, Jack Ma learned from an insider that the theme of CCTV's "315" Gala included counterfeit goods on Taobao. Jack Ma immediately conducted a self-inspection and paid out US$1.7 million to compensate 2,249 victims.

In February of that year, Ma Yun sent an email exposing his family scandal and making all the incidents public. Ma Yun had some management faults in the above incidents, but after going through the pain, he still managed to restore some of the company's image.

10. The push for “Laiwang” failed to achieve its goal and the attack on WeChat failed

Time: 2013

Reasons: Blindly following the trend, disagreements among senior executives

Ending: Laiwang falls out of favor and Ali seeks another way out

In order to respond to and suppress the booming WeChat, Alibaba launched the social APP "Laiwang" in September 2013. Jack Ma was so confident that he said he wanted to set fire to Antarctica and even the penguins.

In October 2013, LaiWang’s user growth was slow, at about 1 million. Jack Ma personally mobilized and set hard targets for employees, offering bonuses if they could attract 100 external users. A few months later, Alibaba’s enthusiasm waned.

At the end of last year, Laiwang 4.3 was launched, which was considered to no longer compete head-on with WeChat, and to have shifted from an IM tool to a social networking tool. At the beginning of this year, the media broke the news that Alibaba's huge acquisition of Momo was rejected. In March 2014, Alibaba invested in Tango, an American chat application (similar to WeChat).

It can be seen that Jack Ma has clearly realized that Alibaba, which has no social genes, cannot make a success in IM. At most, it can only be a mobile version of Wangwang. In fact, it would be wiser for Jack Ma to make up his mind to buy Momo when he was developing Laiwang. Of course, many founders think they are better than startups, but the facts often slap these strong ones in the face.