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Crocodile in the Yangtze
Alibaba, the enormous Chinese e-commerce company, is about to file for an IPO in the U.S.
2014-04-15
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, which will be released at the end of May, is entertaining, suspenseful, and more than worth a watch. Until then, Erisman has given us permission to use scenes from his film to tell Alibaba's story, 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.
He eventually became an English teacher, making about $12 a month at a local university. During China's export boom, he started a translation company.
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.
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.
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 $5 million from Goldman Sachs and $20 million from SoftBank.
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 realized 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.
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.
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 $150 million into the business.
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.
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.
Whitman knew that eBay had to win China, but its numbers weren't good. She brought Ma to the company's headquarters in the U.S. to discuss a partnership.
Ma didn't want to work with Whitman and eBay. He sensed she just wanted to buy the market to please U.S. investors. Plus, he had another card up his sleeve...
The mood at Alibaba was euphoric, but it didn't last long. Years before, Yahoo had helped China's government prosecute a journalist. Ma was constantly put on the hot seat about whether he thought Yahoo did the right thing.
It was a bold move and eBay didn't match it by making its own service free, saying that "Free is not a business model." Alibaba believed that because it could make Taobao's service free, it proved how strong the company was.
At that point, Ma directed the company to switch gears and stop focusing on the competition with eBay. "If we have no enemy in our hearts, we will be invincible," he said.
Addressing his employees after the IPO, Ma said that working for Alibaba was so much more than just a job. He believed that the company played a crucial role in shaping the Internet era in China.
After that, Alibaba continued to grow and launched new businesses. Of course, it had its ups and downs, bad times and good ones. Throughout it all, Crazy Jack remained Crazy Jack. Here he is dressed as a rock-star at the company's 10 year anniversary celebration.
In 2012, the company bought back its shares of Alibaba.com. It is poised to stage another IPO in the U.S. this year. It chose the U.S. over Hong Kong to help make it a more global company and because of issues it had with some of Hong Kong's governance policies.
Jillian was most recently an enterprise technology editor based in San Francisco. She started at Insider as an intern on the technology desk in 2013 and rose to a senior reporter position, covering Alphabet, Facebook, and ecommerce. After three years at the site, she left to spend time freelance writing abroad, before taking reporting positions at CNBC and then at Forbes, where she covered Alphabet, Silicon Valley culture, and artificial intelligence. She returned to Insider in March 2020 and worked on the enterprise technology desk until August 2021. Jillian graduated from Syracuse University's S.I. Newhouse School of Public Communications with a degree in magazine journalism and information management and technology.
