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Authors: Porter Erisman

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BOOK: Alibaba's World
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“Porter, I want to let you know about a decision that all of the senior managers in the company made together. Me, Joe, John, Savio—we all decided to cut our own salaries in
half.”

Jack had a smile on his face but also a serious look.

“So I want to let you know that you are now the highest-paid employee in the company. No one has complained about it. But I just wanted to let you know that.”

I gulped as Jack walked away. I was now being paid even more than the CEO. Many of the founders of the company were living at a level that most Americans would have viewed as poverty. Not to
mention that I had just visited sales offices where my own colleagues were crammed into spartan quarters, scrimping by on instant noodles and making only a few hundred dollars a month. It just
didn’t feel right to be paid so much more than my colleagues when the company was still not even profitable.

And of course I realized that Jack’s words were a friendly hint that my salary was unsustainable. Shortly after my conversation with Jack, at my next quarterly review with Savio, we
started talking about my future role at Alibaba. “Jack told me that I was the highest-paid person in the company, but I realize there’s not so much of a role
for marketing and PR right now,” I said.

“Well, for marketing and PR, there’s not as much work as before,” Savio responded. “One idea we had was for you to move to the Hangzhou headquarters, where you could head
operations of the international website. But it’s hard to think of what you could do based in Shanghai.”

I mulled it over. Hangzhou was a beautiful city that I loved to visit. But in the previous year I had already moved from Beijing to Hong Kong and then from Hong Kong to Shanghai. I wasn’t
quite ready for another move even further inland to a city with a tiny expat community. Plus, I had one unrelenting dream of my own that I had not yet fulfilled—to travel around the world for
a year.

“I’ve always had this dream to travel around the world,” I said. “It’s something I’ve been wanting to do since I was a kid. Why don’t I take time off,
and once I’ve finished that, we can check back in to see if there is a greater role for me?”

Savio seemed happy with the solution. It would save the company a large lump of money and would still give us the option of my coming back. He generously offered me the same severance options
he’d offered the others who’d been laid off. When I told him I’d take the three months of salary and leave the stock options on the table, he stood up from his chair and said,
“Wait here for a second—I just want to check with Jack on something,” before walking out of the office.

He came back with a smile on his face and surprised me, saying, “I checked with Jack, and we’d like to let you keep all
of your stock options, with the hope
you’ll come back to the company.”

It was a nice goodwill gesture but one I didn’t pay much attention to. I assumed that Alibaba would at most be a $10 million company, making my options worthless, well below their strike
price. To be polite I smiled and thanked him, although my hopes of becoming an Alibaba millionaire had long since been dashed. “Thanks, but don’t worry about that,” I said
somewhat dismissively. “I hadn’t even thought about the stock options.”

“No, really, we’d like you to keep them. And we hope you’ll come back.”

I rode the train back to Shanghai, staring out the window at the rice fields, waterways, and small gray factories that dotted the countryside. I was excited to finally have the chance to realize
my dream of traveling around the world. But a melancholy set in as I realized I was leaving the Alibaba dream behind. And a part of me felt I was abandoning my colleagues at a time when they needed
my support. I couldn’t help but wonder, after my travels were done, would Alibaba still be around?

LOCK UP

A
S WE ENTERED
2003, the year of the sheep didn’t come in quietly. Colorful fireworks lit up the Hangzhou skies, while the constant rat-a-tat-tat of exploding firecrackers
echoed throughout my apartment complex. With my round-the-world dream finally fulfilled, I was focused and determined to dive back into Alibaba with a renewed sense of commitment. I’d enjoyed
my travels and seen the world but was looking forward to enjoying the camaraderie of a start-up again. As opposed to when I first joined Alibaba, money was not a significant motivation the second
time around and I agreed to come back for half my previous salary. Working as one of only two Westerners in a Chinese environment would be a great way to improve my Chinese-language skills, I
figured.

After the celebrations in the street had died down, Alibaba organized an all-company gathering at a hotel to kick off the new year. I was curious to see how Alibaba had changed since I’d
left. When I arrived at the hotel, I was pleasantly surprised to hear cheers and the thumping of dance music emanating from the conference room and to see so many new faces streaming in.
The mood was 180 degrees from where it had been a year earlier. Just a few months before, the company had finally become profitable, and tonight was the night to
celebrate.

Joining in the frenzy was Savio Kwan, cheering and chanting along with the staff, most of whom were 20 years his junior. Seeing the turnaround in company morale and performance, it was
immediately clear how wrong I’d been in my first impressions of Savio’s management style. I’d come full circle to appreciate that Savio was exactly the COO that Alibaba had
needed. Savio hadn’t provided a rigid backbone for the company. Instead, he had provided an exoskeleton—outer constraints that helped keep the company from growing out of control. His
emphasis on codifying Alibaba’s values proved to be the critical formula that allowed the company to grow larger while maintaining its start-up spirit and strong team culture. It was exactly
what our young company needed to allow new leaders to emerge from the pack.

One such leader was Liqi, my new boss and the head of international operations. With the room full and the music pumping, Liqi jumped on stage, grabbed a microphone, and invited everyone to
start dancing. We swarmed the stage, jumping up and down as balloons bounced and flags waved, chanting and cheering in the euphoria of knowing that Alibaba was finally on the upswing. After a cold,
dark Internet winter, spring had arrived.

On my first day back in the office, I sat down with Liqi to discuss the year’s strategy. He was short, pudgy, and wore huge black-rimmed glasses, which made him look a bit like a Chinese
member of Run-DMC. He had a deep, raspy voice and a sharp, slightly dirty, sense of humor that kept the staff doubled over
during meetings. But behind all that, Liqi was
incredibly tough. In contrast to Jack’s open, consensus-building style, Liqi’s focused on action and results, the only things that mattered to him. Style points meant nothing.

Whereas Jack’s life experiences had made him equally comfortable among Chinese and foreigners, Liqi’s relationship with foreigners was complicated. Like a lot of Chinese, he seemed
to simultaneously admire and resent Americans. Of course some of the resentment was justified. He once described to me how he’d gone to a top Guangzhou university in the 1980s but
wasn’t allowed to enter the five-star Garden Hotel there because he was a local Chinese. Foreigners, on the other hand, could wander in and out of the hotel freely—policy at the time
when China was just opening up and it was assumed local Chinese didn’t have the means to stay at the hotel themselves. Liqi could read and understand English well but was uncomfortable
speaking it, so all our meetings were held in Chinese. It was a huge help to my language skills but made it much more difficult to argue my case in strategy discussions.

Nevertheless I admired Liqi. He had joined up with Jack in the days of China Pages, and Liqi had the true spirit of an entrepreneur. And with firmness and decisiveness, Liqi had built up
Alibaba’s national sales force, a key factor in its reaching profit-ability. A street-smart, no-nonsense manager, he was a perfect counterweight to Jack. If Jack was a budding Bill Gates,
Liqi was his Steve Ballmer. Given my own tendency to be a bit too laidback, I realized that working for someone like Liqi would be good for me.

“Porter, we haven’t worked together before, so we will have to take time to get used to each other’s style,” Liqi said directly
that first day.
“One thing I can say is that I care about results. You are going to be judged based on the numbers you deliver. And there’s one main thing you’re going to be focused
on—getting buyers to Alibaba. We’ve done a great job of signing up China Suppliers for the last year, but now we need to feed them. We finally have enough money to end our zero budget
marketing strategy. But we need a cost-effective way to attract buyers from around the world to support our sales. Until now we haven’t had a breakthrough. And you need to find that
breakthrough.”

“Yes, I understand. Buyer, buyer, buyer,” I said, sounding as confident as I could. But behind my facade of confidence I was nervous. Where was I going to find a breakthrough?

As we discussed the year ahead, we looked at the calendar. “In April the Canton Fair is going on in Guangzhou,” Liqi added. “There are going to be buyers from all around the
world there. Our sales team is going to have a huge booth there to meet with and sell to Chinese suppliers. So make sure to leave room on your calendar for that.”

I welcomed the prospect of heading to the China Import and Export Fair, also called the Canton Fair, in a couple months. As an event it could be grueling, involving long hours standing up at
booths and fighting through massive crowds. But at least it would allow me to go out and network with Alibaba’s international buyers, speak English, and have some contact with the outside
world. As much as I liked Hangzhou, I needed to come up for air from time to time.

Right around this time I began to read some unsettling reports in Western media about a mysterious new illness that was sending people in Guangzhou to the hospital. At first it seemed
to be just a strange flu that affected only a handful of people. But before long the illness had a name—SARS—and a death count.

As the illness spread from Guangzhou to densely populated Hong Kong, panic set in. The Western news programs showed scenes of hospitals, ambulances, and people wearing face masks in the hope of
protecting themselves. But the Chinese media covered up the story, afraid that reporting on it might create panic in China and hurt the economy. “There’s nothing to worry about”
was the message from the Chinese government.

As I read about the growing epidemic, I grew concerned for my own safety and the safety of our team if we continued with our plan to attend the Canton Fair. Heading to the epicenter of the SARS
outbreak with the goal of shaking hands with thousands of strangers from all over the world seemed like just about the worst possible move at the moment. I wrote a strongly worded email to Liqi and
Savio, stressing that we should reconsider our plan to attend the fair in light of the health risks to our team. Liqi’s response did not encourage me:

“The government is saying that it’s OK, so it’s OK. I’m sure if there was a risk, they would cancel the Canton Fair and let people know it wasn’t safe to come to
Guangzhou. Look, Porter, I’m going and other senior managers are going too. If we don’t go, it’s like we are sending in the rank-and-file troops but not sending our generals. We
all need to go in order to show support for our team.”

It made sense. If we were still going to participate, we couldn’t exactly stay back in Hangzhou while sending the entry-level staff. But I was disappointed with the decision. Sure, the
Canton Fair was our most important sales event, and canceling our booth would have cost us money. But in this case it seemed a dangerous call. Still, I couldn’t
blame Liqi—the national media were telling everyone in China that there was no need for widespread concern.

A few weeks later I was in Guangzhou helping run the Alibaba booth at the Canton Fair and shaking hands with buyers from Nigeria, Iran, Uzbekistan, the United States, and Latin America. If
global trade was an engine of the global economy, these guys were the mechanics working under the hood. With sleeves rolled up and dirt on their hands, they lived in a world where every penny spent
cut into their profit margin, and they had to constantly muscle their suppliers to squeeze out the best quality, at the best cost, and in the shortest amount of time. Battle weary from years of
tough travel and negotiations, they were a far cry from the pampered investment bankers and management consultants I had gone to business school with.

That year’s Canton Fair was strikingly different from those of the past. Ordinarily it’s a lively hive of activity, with thousands of buyers and sellers shaking hands and sealing
deals. But that year only one side of the equation had shown up—Chinese sellers. International buyers, for the most part, had stayed away. The divide between China’s state-censored
media and the free press of the West could not have been more apparent.

As I chatted with the few buyers who trickled in, Kitty Song from the China Supplier sales team worked alongside me, chatting with local customers. Cheery and full of energy, she managed to
greet each supplier even as she fought off a cough. With so few buyers to meet, the local exporters spent more time at the Alibaba booth exploring the Internet as a potential channel
to overseas buyers, who apparently did not to want to travel to China.

Although our team delivered a record number of sales following the Canton Fair, I was relieved to be safely back in Hangzhou the following week. We’d tempted fate and survived. The
gui
hua
(cassia) flower was in full bloom in my neighborhood, emitting a sweet fragrance that filled the air; I had a beer in one hand and a croquet mallet in the other. I was hanging out with
some Westerners I’d met in my apartment complex. A local journalist happened upon us and interviewed me about whether I was worried about SARS. (With the media blackout on the epidemic now
lifted, local news teams could finally report on it.) “No, I’m not worried about it,” I said. “I think it’s a bit overblown. In fact, I just came back from Guangzhou
and didn’t experience any problems.”

BOOK: Alibaba's World
12.63Mb size Format: txt, pdf, ePub
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