Everybody wants to know the secret behind a successful business. Nowadays, it seems pretty simple to come up with an idea for an online business. However, back in the 90s, things were not so easy. The internet itself was an unchartered territory with very few willing to take the leap into the unknown.
Jack Ma was one of the few brave men who dreamed big and used new technology to launch his online company which would go on to become one of the largest in China. Just how did this teacher succeed with no business background? Well, let’s find out.
In this book summary readers will discover:
- How to start a successful business
- Finding your advantages when things go wrong
- Why competition is good
- The right leader and the right team are important for success
Key lesson one: How to start a successful business
Many people dream of becoming entrepreneurs but are scared to take a risk. The truth is that there is no quick fix. You can’t expect to come up with an idea and sit back and make money. It takes hard work and resilience. The thought of the struggles you might have is enough to put you off. But every entrepreneur has to face challenges and the only sure way to succeed is to keep trying.
Jack Ma knows this firsthand. When he started Alibaba in 1999, he was in unchartered territory. He had no previous background in business and he took a leap and founded an online business when barely one per cent of China used the internet. Jack was determined to make his business succeed and he was in it for the long haul. He worked hard and now Alibaba can boast almost 80 per cent of China’s e-commerce market. Jack set out with a clear goal, he didn’t want a business that just lasted for a few months. In fact, he was bold enough to set a goal at the very start of Alibaba saying that the company had to last 80 years! This clear goal helped him stay on course and had an impact on every decision he made regarding the business.
Jack’s focus was on sustainable business and one that is true to its culture. No matter what pressure he was faced with, he continued to stick to his core values. For example, in 2005 Alibaba was busy negotiating their buyout of Yahoo! China. The deal was almost done but Yahoo! Made one last demand to rename their venture as Alibaba-Yahoo!. This did not sit well with Jack as he did not his customers feel as if they were selling out. He continued to negotiate and only finalized the deal once Yahoo! let the name go.
Holding onto your business’s culture is not the only thing you can do to build a successful business. Alibaba secured its business by gaining valuable customer insight that allowed them to strengthen its approach. They discovered that the reason customers were hesitant when it came to e-commerce is that they couldn’t fathom trusting someone they had never met. So, to deal with this, Alibaba developed a way that companies would be authenticated. Thus, customers were able to see that the company they were buying from had been verified as legitimate. In addition, they offered a live chat option on their site Taobao that allowed customers and vendors could interact on thus building trust.
Alibaba always puts their customer first and this has greatly contributed to its success. They offer free basic services to their customers before they decide to commit to them. This was done because Jack and his team understood that the Chinese market would be more likely to commit if they could try something out first. In this manner, Alibaba was able to build a loyal customer base.
Key lesson two: Finding your advantages when things go wrong
No business venture is without its difficulties. The difference between businesses that succeed and those that don’t is how they handle these difficulties. You cannot let challenges discourage you. In fact, you should take them as an opportunity to learn and grow. If you learn to look at them with this perspective you may even be able to turn them into advantages.
Jack Ma and Alibaba are known for their resilience in the face of challenges. When Alibaba first launched, there were not many people who used the internet – or trust it for that matter. But Jack saw the potential that it had. In China, local laws made attempts by foreign companies like Google and eBay to break into the Chinese market difficult even though they also saw the potential of the market. Jack had ambitions to take his business international but he knew he had to succeed in his local market first. So, he focused on making his business the best it could be so that it could provide jobs and be seen as a positive in the grand scheme of things. This made law officials reconsider their restrictions on internet usage.
Another example where Alibaba didn’t let a crisis hold them back was when the SARS epidemic occurred in 2003. After an employee got sick with the virus, the rest of the team had to quarantine at home but they didn’t let it stop their work. They kept the site running while at home and it worked to their advantage. The rest of the country was also stuck at home or too scared to venture out to buy stuff so they opted to shop online. This not only boosted business for Alibaba but they were also able to gain more customers.
So, when it comes to business, setbacks may actually provide an advantage. You just have to be able to see the opportunity that it presents.
Key lesson three: Why competition is good
The mistake that many businesses make when they start out is by imitating another business they admire. The true way to succeed is to set yourself apart from the competition and not try to follow in their footsteps. This is why when eBay tried to make its way into the Chinese market, Alibaba formed Taobao as a direct competitor. But Jack and his team did not want Taobao to be a simple copy of eBay. They used their knowledge of Chinese culture to their advantage. Taobao included a live chat option that allowed customers to haggle with vendors to get a better price. This was something that eBay did not have. In addition, people were more inclined to use the local site as opposed to a foreign one which is why eBay lost its battle to Alibaba.
Competition should be seen as a way to improve. eBay looked at their competitors as opponents. Imagine how successful eBay would have been if it teamed up with Alibaba instead of trying to dominate the market on its own? Instead, they focused on rivalry, even being petty and pranking the Taobao team. However, when they finally realized they would do better if they teamed up with Alibaba, it was too late as Alibaba was already in negotiations with Yahoo!.
Key lesson four: The right leader and the right team are important for success
As any business grows, the challenges it faces also grows. A good leader has to have the strength to deal with this. In addition, they have to be able to lead their team with confidence, inspiring them to persevere when things are hard and thrive when they are succeeding. Leaders also have to be able to make difficult decisions when needed. Unlike employees who prefer to take the path of least resistance, leaders have to sometimes go against the grain.
Alibaba’s journey to success is one bold decision after another. Jack Ma made many of these strategic decisions to ensure that they never lost their culture and that the company would succeed in the long run. Alibaba began when 99 per cent of China did not even use the internet, they offered a free service when everyone else was charging and postponed public trading. Each of these decisions played a role in contributing to their success. Jack also found himself having to make the difficult decision of laying off half his US staff when the company went through difficult times in 2000. It went against everything he believed in at the time but he knew it was the only way the company would survive. A good leader has to be able to navigate these decisions and in doing so, build trust among their employees.
Along with a competent leader, a strong team of employees is also important for the success of the business. Therefore it is crucial that you hire the right people for the job. Try not to be distracted by their qualifications and instead evaluate how they would fit into the team. A business cannot succeed if people do not work together to make it happen. Alibaba also ensures that their employees were personally invested in the company and had stock options. This meant that they were even more motivated to see the company succeed. They came up with ways to cut costs and worked extra hours just to see the company do well. The company also was adamant about team building and ensures that all employees shared the company’s core values.
The key takeaway from Alibaba’s World is:
The story of how Alibaba came into being is one that can inspire and budding entrepreneurs. Jack Ma and his team were determined to succeed. They had a clear goal at the outset – the company would have to last at least 80 years. This meant that there was no quitting. They followed their goals and hung onto their values putting the company and their customers above everything else. Their journey shows that your business can also succeed if you have the determination to do so.
How can Implement the lessons learned in Alibaba’s World:
Don’t let fear stand in the way of your dreams. Many entrepreneurs have a tendency to give up as soon as things get hard. They either fear failure or the work that lies ahead seems too hard for them. A business is never easy. You have to be prepared to work hard and make hard decisions. Therefore, you cannot let fear block your success. Determination and hard work will lead you to success. Just keep going with your end goal in sight. Just like Jack Ma did, dream big!
