Jack Ma: “WeChat has played a good hand badly”

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On the day Alibaba went public, September 19, 2014, Jack Ma and his friends became the protagonists of New York City. The New York Stock Exchange was covered with the Alibaba logo from inside to outside, and a name called Jack Ma (Jack Ma's English name) was spread on newspapers and websites. This thin Chinese man occupied major American TV networks and was also mentioned by some black people selling hot dogs on the streets of New York.

This is a pinnacle in Jack Ma’s entrepreneurship and life.

In fact, looking back at 2014, Alibaba started with tension and anxiety.

The excitement of WeChat red envelopes

Due to the rapid development of WeChat, users accelerated their migration to the mobile Internet in the second half of 2013. "The pattern changed very quickly, and the BAT pattern evolved into a relatively chaotic state. Alibaba originally recognized that the next 3 to 5 years would be relatively clear, but now it is unclear again." An Alibaba executive told me. This "uncertainty" gradually evolved into a sense of insecurity until Jack Ma clearly expressed his sense of crisis internally at the end of the year. In 2014, a group of product managers at Tencent embedded the red envelope product into the Spring Festival, a festival with a population of 1.3 billion, and quietly changed the way many people send red envelopes during the Spring Festival, creating a huge payment scenario centered on WeChat. Throughout the Spring Festival, red envelopes were flying everywhere, enough to overshadow the shopping spree on Double Eleven. Some rumors claim that the number of WeChat payment users has exceeded 100 million, easily beating Alipay's mobile wallet. Although Ma Huateng denied "binding 100 million bank accounts a day" through WeChat, it was the scene of everyone participating in the red envelope that once made Alibaba a little panic. "People talk about Alibaba as if we are going to die!" Jack Ma joked.

Alibaba's management team returned to work three days ahead of schedule for the 2014 Spring Festival, but Alibaba adjusted back only two weeks later. Jack Ma said: "In fact, Tencent can also feel that WeChat is not omnipotent, and Alibaba is not that bad." After reviewing the past, Alibaba has strengthened its technology and product strategies, cloud computing and big data, which were formulated four or five years ago. In the second half of the year, Alibaba launched a series of acquisitions around the mobile Internet, especially the full acquisition of the most popular smartphone web browser UC Youshi, which helped Alibaba to reach a 35.8% share of GMV (gross merchandise volume) from mobile terminals in the third quarter of 2014, and the number of monthly active users on mobile terminals increased by 138.5%. At the same time, Ant Financial, which was separated from Alibaba, has made an increasingly obvious financial contribution to Alibaba. According to the agreement, Ant Financial will pay 37.5% of its gross profit to Alibaba in the form of technical services and copyright fees. Although Alibaba believes that Ant Financial's financial contribution is still in a very early stage, in the third quarter, this contribution reached 430 million yuan, accounting for nearly 10% of Alibaba's gross profit, an increase of 110% over the same period last year. This series of data strongly supports investors' valuation of Alibaba.

Alibaba is adding, Tencent is subtracting. If Alibaba and Tencent are playing a game of chess, Alibaba is better at conquering cities, strangling in the middle game, local tricks and even robbery, while Tencent is more focused on gaining momentum and maneuvering, and may even abandon pieces, but it may unknowingly erode its opponent. Tencent has accumulated a strong position in the two major applications of WeChat and QQ, and chose to give up e-commerce and search, and instead invested in JD.com and Sogou to expand into other fields. In 2014, Tencent's strategy became clear, that is, to use its absolute advantage in the mobile and social fields to sink deeper into the bottom layer and become a mobile operating system that connects everything as much as possible, connecting people with people, people with things, and people with services, that is, IOT technology (Internet of Things) and O2O (online to offline). While the growth of games slowed down, Tencent also expanded into the fields of entertainment, payment and finance.

WeChat poses no threat in the short term, but there are challenges in the long term

This situation made Alibaba temporarily relieved before its IPO. Alibaba was not afraid of JD.com, which was listed first and still losing money. Jack Ma seemed to be glad that he did not face any real challenges. "I think WeChat is a good hand, but it was played badly. It's the same as playing cards. You can't just hit the opponent when he plays a 4. You must hit the opponent's vital parts."

Wu Ying, an old friend of Jack Ma, founder of UTStarcom and chairman of Zhongze Jiameng Investment Fund, is still optimistic about Alibaba's prospects and believes that Alibaba may become the company with the largest market value in the world. There is still huge room for the "Internetization" of China's economy, and it will surpass the United States in scale. This is an "unprecedented opportunity" for China. For Alibaba, it means continuing to stand at the forefront of the Internetization of China's economy. However, the way to play in the next 15 years may be completely different from the previous 15 years.

The layout around mobile is still the most important part for Alibaba, and the e-commerce gameplay on the mobile side is very different from that on the PC side. Wu Ying believes that Jack Ma is just "not very afraid" of WeChat now, but WeChat's challenge to Alibaba will exist for a long time. "WeChat is equivalent to playing the cards that others can understand first, that is, playing the cards that are sure to win first, and also playing the things it is not good at, such as not being so strong in e-commerce, so it will be thrown to JD.com." But in terms of payment, it is hard to say who will laugh last between WeChat and Alipay. Wu Ying believes that WeChat's payment is actually more convenient than Alipay. WeChat's stickiness, activity, and seemingly all-connected capabilities are actually what Alibaba lacks in the current mobile Internet. "What is the core of mobile Internet? It is activity. WeChat can create monthly, daily, and hourly active users. Jack Ma said that WeChat did not play the cards well, but it was obviously too early to say that, and it is not the time to show the cards yet."

Technology: Jack Ma’s limitations?

In the future development direction of Alibaba, the choice of technology and products is often of strategic significance. Whether an Internet company needs a founder who understands technology has a subversive effect on Jack Ma, who studied foreign languages ​​and worked as a teacher. Xue Cunhe, the managing partner of Softbank China Investment, which invested in Alibaba the earliest, believes that Internet companies actually need relatively limited technology, and that investing in Jack Ma was investing in the team. But Wu Ying believes that although Jack Ma is the most successful entrepreneur in the Internet, "technology is Jack Ma's limitation. He does not shy away from this. He is just very keen on the business opportunities that technology may bring." Wu Ying, who has a background in Bell Labs, believes that if there is no partner with strong technology in the team, Jack Ma will not be able to accurately judge some technologies. According to media reports, it was Google that forced Acer to give up its cooperation with Alibaba on cloud smartphones.

But Alibaba's genes are not that of a technology company. Jack Ma insists that it is precisely because Alibaba does not expand the boundaries of technology, but looks for ready-made technologies to expand the boundaries of business that it has achieved today's success. "Google has technology to find a direction, and of course it has found the right one, while we have a direction to find technology. This is a question of male and female. Do you think the male is better or the female is better?" Jack Ma takes the attitude of "practice is the only criterion for testing truth" towards technology. "There are many people who fool us with technology, but we know whether this person's heart and this person's thoughts are the future we want, whether they expand the boundaries of business to help small businesses grow, and then we listen to the truth he has to say." The needs of business and competition have forced Alibaba to develop the best e-commerce technology in the world, such as related cloud computing technology and big data technology. Jack Ma said that it currently has the ability to process 30,000 transactions per second, and the system can defend against 10 billion attacks every day. These technologies may be "unmatched" in the world. Peng Lei revealed that in addition to Alibaba's unrivaled ability to handle huge amounts of transactions in an instant, Ant Financial's security technology will also be the best in the world because of its large number of users, large number of transactions, and complex market and technical environment.

Challenges to startup culture

Even though Alibaba has carefully designed a corporate governance structure based on the partnership system, Alibaba has become an elephant after going public, and its team culture will still face a series of challenges. Wu Ying believes that how newcomers can integrate into the founding 18 Arhats; Alibaba needs to constantly absorb fresh blood and accommodate newcomers; "When a company grows bigger, there will definitely be internal bureaucracy and politics. No matter how much you hate these, it will definitely be a challenge." Wu Ying believes that so far, Alibaba's team culture has been maintained well. "In the founding team of 18 people, Jack Ma's speech does not mean that others are not allowed to challenge, and different opinions can still be raised internally." In fact, Jack Ma and Peng Lei both talked about their quarrels with each other because of work. The intensive media publicity gives people the impression that Jack Ma seems to be deified. Some entrepreneurs claim that they have been "enlightened" by Jack Ma because of a few words of advice from Jack Ma. But in the eyes of most employees within Alibaba, Jack Ma is still the same as before. "Fortunately, he has not lost his mind." Wu Ying said.

How can Alibaba maintain its entrepreneurial culture? How can its innovation be sustainable? Jack Ma admitted that Alibaba is far from Google because Google still maintains its innovation ability after so many years of listing. "We are only innovative today. If we are still as innovative as we are today after seven or eight years of listing, we will be considered as advanced." In the past two years, many Alibaba people have been immersed in the dream of listing. Now that the listing has been a great success, Alibaba has created a group of millionaires, tens of millions, and hundreds of millions of yuan. The average age of these people is about 30 years old. Peng Lei believes that it is inevitable that some people will cash out and leave. Next, how to let those who have lost their fighting spirit leave and how to continue to motivate key employees, especially the new generation born in the 1990s, will be a big test. But Jack Ma seems to be fully prepared and confident for this.

"I think most of our Alibaba employees are the most efficient in China. People say Baidu is a good search engine, and some say Tencent is good for social products, but we are still confident in our management system and culture. I won't compete with you in other aspects, but I can compete with you in this aspect, and everyone can see it. This is what we have worked hard for over the years."

The biggest challenge comes from the government

Many long-term observers of Alibaba believe that Alibaba's biggest challenge may come from the government. With Alibaba's current size, it provides a kind of "infrastructure-level" business service. Entering any field or any region is of strategic significance to the local area. Alibaba wants to become a global company. How to coordinate the rapid, massive, long-tail, and personalized e-commerce, including cross-border e-commerce, with the existing country-based global trade system established in the industrial era is the next challenge that Alibaba will face along with e-commerce giants such as Amazon.

If Tencent has already played its best cards, Alibaba faces the same problem. Over the past 15 years, Alibaba has used the Internet and free services to most efficiently reap China's demographic dividend and realize platform value. As far as e-commerce itself is concerned, Alibaba has completed the front-end work in the past 15 years, and Alibaba's market and marketing have contributed greatly. The future development of e-commerce will shift more to back-end support capabilities, especially efficient supply chain operations, which may be more difficult. Alibaba's Double Eleven had a daily transaction volume of 57.1 billion yuan, which has taken the market and marketing to the extreme, but behind this data may be that users have been unable to receive the goods and the return rate has risen, affecting the user experience. Alibaba is preparing to optimize the supply chain for Double Eleven in 2015 through big data technology. COO Zhang Yong said:

"In the past six years, we have helped our merchants to calculate how much goods they sold in a day, which is selling goods online. (In the future) we will help merchants to prepare goods more scientifically based on big data, and finally ensure a suitable sell-out rate. This is a profound change in the way the supply chain is organized."

Whether it is healthcare, financial services, or culture and entertainment, they are all areas of government supervision. Xue Cunhe, Alibaba's earliest investor, believes that "whether the government will cause trouble for him, not for now, but it is hard to say in the long run." Alibaba and Jack Ma are engaging in deeper dealings with the government and forming alliances with state-owned enterprises, rather than just "if the banks don't change, we will change the banks." Alibaba's next development depends on whether the government promotes reforms in many areas and the pace of the reforms. Alibaba wants to build an ecosystem to make growth more flexible and avoid a company's control and influence being too exposed. In such a complex system, Jack Ma's energy is more important in reflecting the wisdom of seeking synergy.

In Xue Cunhe's view, investing in Alibaba means investing in Jack Ma and his team. In the past 15 years, he has never wavered in his confidence in Jack Ma and his team. "In fact, in 2003, we already saw that Jack Ma led an international team. In 2006, I publicly proposed this, but no one agreed at that time. Now no one will question me on this point anymore." With such persistence, Xue Cunhe's investment in SoftBank China has received a return of more than 1,000 times. He believes that Alibaba's past success is to mobilize people to establish "our common interests, so that it is difficult for you to destroy it." In the past 15 years, Alibaba has been able to continuously solve the inefficient links in the economy in the form of e-commerce. Alibaba's future development will rely more on big data and cloud technology. At present, more and more competitors are also using this method to build ecosystems. In an exclusive interview with Forbes Asia, Lei Jun has already proposed that the data obtained based on Xiaomi hardware and user services has surpassed Alibaba in some aspects. Xue Cunhe believes that "Since Alibaba has been relatively optimized, others want to be more optimized. This depends on whether your transaction costs are lower. You only have a chance if you destroy its optimization system."

---------------The following is Zhou Jiangong's interview with Jack Ma after Alibaba's IPO---------------

Forbes: After the IPO, do you and Alibaba have any different feelings?

Jack Ma: Our mentality has not changed, otherwise we would be under a lot of pressure. In fact, if the whole mentality changes because of the listing, it will not be good at all, especially for young people. It's like having a meal during the Chinese New Year, and then doing what you need to do. It depends on our determination. Look at the pressure that Peng Lei faced last year. For 15 years, others have always underestimated our ability to withstand blows. In fact, the most powerful thing about Alibaba is that we have been stabbed many times. We look glamorous on the outside, but in fact we have a lot of internal injuries.

On the first night of Alibaba’s IPO, our partners were together. After dinner and drinks, they all wanted to get to work. This is responsibility.

Actually, objectively speaking, we didn't expect to get to where we are today. We weren't prepared to get to where we are today. We weren't mentally prepared. We shouldn't have gotten to where we are today. Our abilities have been stretched. It's not that you, Jack Ma, are awesome. We were forced to be like this. You've already reached this point, and you have no choice. Some people say that Alibaba is very patient and has persisted for 15 years. That's not patience, it's lack of choice. It's not the last laugh. Objectively speaking, (listing) is just Alibaba's first milestone. There are still many invisible troubles, or things that you can see that are not glamorous.

“WeChat was a good hand, but it was played badly”

Forbes: Has WeChat caused Alibaba a lot of trouble in the past year?

Jack Ma: I think WeChat is a good hand, but it was played badly. It’s the same as playing cards. If you have a good hand, you can’t just hit it when the opponent plays a 4. You must hit the opponent’s vital parts.

We came back three days before the Spring Festival. After the Spring Festival, we had thought everything through. In fact, we were just confused for a while. The reason we were confused was that overnight, it seemed that everyone in the world was... It seemed like we were going to die (laughter).

We went back and reviewed the strategic decisions and choices we made six years ago. Today, we are more certain that we did not take the wrong path. It is just that the outside world has changed, just like today (Alibaba's listing). It is not us who have changed, but the outside world's view of us has changed. We should still follow our own path. It is just that we did not change. When the outside world began to change, Tencent started to make bad moves.

In fact, all Tencent's acquisitions are understandable to ordinary people, which is wrong. Strategy is like buying stocks. If even old ladies start buying stocks, there must be something wrong. If old ladies tell you to buy this or that, then there is a problem. Why do people understand what we have done in the past 15 years, but not our acquisitions? The problem is that after they launched WeChat, we all know what they want to do with all their acquisitions and mergers, which is wrong. Maybe we should understand, but ordinary people should not.

The other party had such a good hand, so of course we also had good cards. In fact, today's situation was determined four or five years ago. If I had a choice four or five years ago, APP, wireless, and cloud computing would have come out. What would I bet on? I would bet on cloud computing. So what if WeChat came out? I would still bet on cloud computing. It was just that when WeChat came out, we were nervous for a while, and then we adjusted. This is the path we want to take, and there is no need to be nervous. We (adjusted) back two weeks after the Spring Festival. In fact, Tencent can also feel that WeChat is not omnipotent, and Alibaba is not that bad.

"Google is a technology company that expands the boundaries of technology. We use technology to expand the boundaries of business."

Forbes: Is there a conflict in values ​​between the Western view of companies and the Chinese view of companies? Does Alibaba's listing in the United States mean that it is willing to accept the value system of Western companies and capital?

Jack Ma: It should not be called a conflict, but a difference in level. People have different views on corporate governance. In fact, the American view on corporate governance is completely different from what is spread online. They are worried about national policies and organizational structures. They look at corporate governance, transparency, and long-term strategies. This is the weak point of Chinese companies. They are not transparent, and the boss has the final say on everything.

I am not willing to accept it, I have to accept it. If your company wants to survive for a long time, it is like drinking water. If you want to drink this water without diarrhea, the water you drink must be clean. Because it is not just you who is drinking it, your employees and your customers are also drinking it. If you are not transparent, your employees will be confused. If what you say is different from what you do, who will listen to you? Therefore, companies need governance, transparency, culture and talents. Today, many Chinese companies are still thinking, I will take a piece of land here today, and apply these things here and there.

Forbes: In the past few years, Chinese stocks have encountered great problems and even crises in terms of transparency. Do you think Alibaba can set an example and play the role of a big brother by listing in the United States?

Jack Ma: This is our responsibility. We cannot represent all companies. We only represent ourselves. Why is there such a huge demand for our stocks? Because Wall Street does not consider us as a Chinese company at all. At lunch today, the American bosses said that we only saw companies with world-class business leaders in India, such as the CEOs of Pepsi and Microsoft, who were all Indians, but no Chinese. Today you have changed our impression. China can also produce world-class companies, and it already has. There is no difference between us and them. The values ​​and ideas that people think at the same level are the same.

It is our responsibility to change China's concept stocks, but it does not mean that China's concept stocks will be good if Alibaba changes. We just want to prove a point. I also told them today that there are also bastard companies in the United States and excellent companies in China. We cannot say that all the companies listed in China are garbage. They said that we have never seen good ones. Now they say that we have seen them, and we believe them. CNBC prepared very "tricky" questions, but we have nothing to hide. I think this is trust. Raising so much money today is actually trust. Think about it, if you don't trust him, will you pay him money? And man, it opened at 90 US dollars! Can your concept stocks be conceptual? This is a company at the level of 300 billion US dollars. How can there be such a big concept?

"If I, Jack Ma, leave this company, the impact will be about 30-20%"

Forbes: In China, Alibaba is always referred to as BAT. Now the company's market value is close to 300 billion US dollars. The benchmark company will change. For example, Google?

Jack Ma: We think there is a gap between us and Google. The gap is that I think they are more mature than us. They are in a mature market and in an environment where capitalism is well developed. I have said before that Steve Jobs would have died on the road in China. He was killed before he came out. But if we come to the United States, we may not die, but we may not live long.

Google is a transparent company around the world. Google is a technology company that expands the boundaries of technology. We use technology to expand the boundaries of business. This is the difference between our two companies.

But I have to admit that Google still maintains its innovation ability after so many years of listing. We are only innovative today. If we are still as innovative as we are today after seven or eight years of listing, then we are at the same level. So I think there is a gap between us, but I think there is no difference in our concepts. For so many years, China has seen us as a bunch of "liars", "crazy people" and weird talkers, but they have never thought that I am weird.

Yesterday I came back to the hotel from Soros's house. Because the road was too congested, I said I would walk. On the road, someone shouted "Jack! Jack!" I turned around and found that it was Jack Welch (former CEO of General Electric - Editor's note). I said, what a coincidence. Jack Welch discussed issues with me five or six years ago, and we both had the same views. He had just stepped down at that time. He told me that everyone said that Jack Welch's thinking about values ​​could only be done at GE (General Electric), and other American companies could not do it, not to mention high-tech companies and Chinese companies. I said, Jack, we are both Jack, I want to prove to you that values ​​can be achieved in China.

I don't think there is any difference between us and Google in terms of philosophy, future vision and openness, but we have the overall talent, structure and resilience. They have more than 400 billion US dollars. They are more global, but they are not global in China. They are stupid enough to withdraw, which shows that they don't have experience. We just haven't started yet, but they have started for many years.

Forbes: Alibaba went public, and a group of young local tycoons emerged. Will they be willful? Will it affect Alibaba's fighting spirit?

Jack Ma: There will definitely be people like this. But I don’t think that all the people in Alibaba are like this. A corporate leader said that he didn’t want to go public because he was afraid that young people would become bad after getting rich. You won’t become bad after getting rich, but others will become bad after getting rich?! This is the result of their labor and luck. We just need to tell them not to regard this money as their own wealth, but as a responsibility.

But will there be problems today? There will definitely be problems. We have more than 20,000 employees who are all aware of this. This is impossible. It’s just a matter of how long our antibodies can last. Google is not as innovative as it was seven years ago. We have 25,000 employees. I think most of our Alibaba employees are the most efficient in China.

People say that Baidu is a good search engine, and some say that Tencent is good for social products, but we think we are still a little confident in terms of management mechanism and culture. I won't compete with you in other aspects, but I can compete with you in this aspect, and everyone can see it. This is what we have worked hard for over the years.

Forbes: Alibaba is now listed. Some international investors may ask you how you can lead a Chinese Internet giant to compete with Silicon Valley giants without knowing technology? How can you compete with Google?

Jack Ma: Peng Lei and I don’t understand technology, but we know who understands technology better than us and who really understands technology. There are many people who fool us into believing they understand technology, but we know whether this person’s heart and this person’s thoughts are what we want for the future, that is, to expand the business boundaries and help small businesses grow. Then he can explain the reason, and then you will look for such a person. It is not because we have technology that we look for direction, but because we have direction that we look for technology. We are different from Google. Google looks for direction with technology, and of course it finds the right direction, while we look for technology with direction. This is a question of male and female. Which do you think is better, male or female?

Baidu's technology has rivals. Google is better than it, right? Tencent's technology is not worse than Facebook's. Alibaba's e-commerce technology and payment technology, find me a second one in the world! In the field of cloud technology, we have won the gold medal in the world, but Amazon is in the United States, where there are many IT people, and everyone knows it. China has few IT people and has not realized it yet. Take your time. This guy plays basketball, how about his shooting? Compare his shooting with his shooting, and his shooting with his shooting. In the field of e-commerce, find me a second person in the world who can complete 30,000 transactions in one second. If you find another one, there will be no one! And the distance is not ordinary. Compare the search engine with Google.

I personally think that without technology, it is definitely not possible. Technology and service are two things that cannot be boasted. They are your secret weapons. If you say I don’t have a gun, there is no need for me to run out and say I have a big gun. People have already been on guard against you. When has Alibaba ever boasted about its technology? But ask the industry and Tencent people, do we have technology? We admire those who understand technology and give them ample space to play. They are two companies that understand technology, but compared with Alibaba, these are two different cultures.

When we see people who understand technology, we should not blindly give orders. As long as they are moving in the direction we want, it will be fine. As for how to do it, they will ask you how to do it. Today, I can confidently say that the technology of our companies is different from that of the other two. So far, we are the most advanced in the world. Moreover, for us, if you stop trading for ten seconds, try it. If their search engine stops for two minutes, there will be no problem at all. Suddenly, WeChat crashes in two minutes. Do you think there is a problem? Try to stop Alipay for two minutes and show me. (Peng Lei: Today, we are doing e-commerce, payment, and Internet finance. In fact, I believe that we are the best in China in terms of security system technology. But this is our secret, and we never tell it.) I tell you, I will never tell you Alibaba's secret in this regard. We are attacked more than 10 billion times a day. These small businesses are on the cloud, and we help them to bear all the attacks.

Forbes: Alibaba's achievements today have brought you unprecedented reputation. How do you re-evaluate your role in Alibaba and the leadership and future of Alibaba?

Jack Ma: If I, Jack Ma, leave this company, the impact will be about 30-20%. If Robin Li leaves, Baidu will be affected by 70%, and Pony Ma by 50-60%. If there is no reaction at all if I leave today, it means I have lived in vain. The flavor of Alibaba today is here. We think earlier than others and prepare successors, so we have a partnership system. Because we don’t want one person, but a group of people.

So many things happened this year. Step down from CEO to take a new position of Chairman. It is actually very difficult to be a good Chairman. I am learning to be a Chairman. Lu Zhaoxi is learning to be a CEO. So we are in a period of transition. I used to be a CEO, and now I am learning to be a Chairman. Lu was not a CEO before, but now he is learning to be one. After becoming a Chairman, I found that a Chairman has so many responsibilities.