On May 6th, Alibaba one of China’s first internet businesses filed papers to go public in the United States, in what may become one of the largest IPO’s in American history – with analyst estimating the e-commerce giant to be valued over $200 billion.
Alibaba started off as B2B portal to connect Chinese manufacturers with international buyers and now offers a selection of other services such as Taobao (China’s largest consumer-to-consumer online shopping platform) and Tmall (an online retail platform)
To put things into perspective, we’ve gathered a few statistics from Alibaba’s filing to the Securities and Exchange Commission:
- $248 billion total gross merchandise volume on China’s retail marketplaces
- 11.3 billion annual orders
- 231 million annual active buyers
- 5 billion packages delivered by Alibaba’s logistics partners in 2013
- Total payment volume of Alipay at $519 billion
- Taobao Marketplace had over 100 million average daily visitors in December 2013
So how did a Chinese e-commerce website – who first operated out of an apartment – reach those impressive numbers?
Earlier this month we had the chance to meet up with Porter Erisman – one Alibaba’s first western employees and former vice presidents. He is now director of Crocodile in the Yangtze – a documentary film taking us through the rise of Alibaba and also held a screening at the Technical University Munich.
We sat down with Porter to ask him a couple of questions about ecommerce, entrepreneurship and his experience in China. Below you’ll find the full interview, plus some interesting insights from somebody who worked directly with Jack Ma (Co-founder of Alibaba).
Interview with former Alibaba VP Porter Erisman
Can you tell us how you joined Alibaba?
Porter Erisman: I was working in Beijing for an advertising and PR firm, but my dream was always to join a startup. So a friend told me that there was an English teacher who had started a global e-commerce company from his apartment in Hangzhou, sounded like a fun challenge so I went to Shanghai, met the team and then joined Alibaba.
What were the five things that contributed to Alibaba’s success?
- Focusing on the customer
- Being innovative
- Having a strong team culture to achieve that
- Being ready to break a successful business model in order to make way for the future business model
- Embracing change, that was one of the big value, as the company developed as the internet developed
What are the mistakes businesses make when entering the Chinese market?
Porter Erisman: The number one mistake they make is that first they should really understand the local customer and shouldn’t assume that their model from the US or Germany is going to work perfectly in China. Forget everything you know about your home country, and just focus on China, look at the customer – and work backwards from that when building your model
What opportunities are there in China?
Porter Erisman: Right now I think a great opportunity is in e-commerce, so Alibaba has helped build this eco-system, but if you’re selling anything that might be successful in China , people should go online and try to sell those products in China. So e-commerce is really great opportunity for brands that are selling things online
Can you tell us something we don’t already know about Alibaba?
Porter Erisman: This is one the things I realised overtime is that Jack Ma and the team of founders are very influenced by martial arts. So Jack Ma is a big fan Jin Yong novels, he’s a martial arts novelist in China and a lot of our strategy kind of came from martial arts tactics actually and the staff who all founded Taobao each took on a nickname from some of these martial arts novels within the company. So that’s a big part of Alibaba’s culture.
What was it like in the early days of Alibaba?
Porter Erisman: For me it was exciting. I always wanted to be a part of something that was going to have a huge potential impact. And so when I joined, we had a lot of dreams to build this global e-commerce company.
To be honest, I didn’t necessarily know we were the team to do it. I probably underestimated our team, but I also felt it was an exciting time, we were chasing a dream, trying to build an e-commerce company that connected people all around the world and so, every day there was a sense of excitement – of being a part of something that could potentially change the way people do business.
Why did you think you underestimated the team?
Porter Erisman: We didn’t really have any all stars on our team. We just had ordinary people and it was hard for us to imagine that from China – especially from a city like Hangzhou which is a second tier city – that we could build an e-commerce company. Because there was no precedent for that.
So one of the lessons I learnt from that experience is that in the internet era, it doesn’t matter where your headquarters are. You can be in Hangzhou, you can be in Munich, you can be in Lagos Nigeria – it doesn’t matter! You can build something for the global market, and you should never assume just because your home country or home city doesn’t have a market leader it can’t create – someone has to pioneer that.
What does the future hold for Alibaba after its IPO?
Porter Erisman: I think they’ll continue to grow in China. They’re just getting started and there are a lot of new areas they can move into like media and entertainment, financial services, and telecommunication – because China is deregulating, there are new areas opening up. And it’s a great place for internet companies to go in and innovate. Whereas the state owned enterprises might have been, not necessarily serving their customers as well as they could have.
Could you describe the Chinese startup scene?
Porter Erisman: It’s just a very raw form of entrepreneurship. I found entrepreneurs in China, move more quickly, take more chances, they invent news ideas even faster than in the US or what I’ve seen in Europe. That’s just because China, is still such in the early days of coming out of a communist planned economy that there’s just room for a lot of experimenting room; room for a lot of new ideas. So I found people work really hard.
On the one hand it is a Chinese way of having a Silicon Valley spirit. So the culture is different within the company, but the basic things that sort of make an entrepreneur in China an entrepreneur are the same things you’d see in Germany or Silicon Valley.
To find out more about Porter’s time in China and working for Alibaba – you might be interested in checking out the trailer for his documentary Crocodile in the Yangtze.