Jack Ma on the origins of Alipay and learning to say no

Late last month, Red Flag Publishing released a book called Jack Ma’s Internal Speeches: Trust in Tomorrow. Many of the speeches have never been shared publicly before, so I’m translating a few interesting excerpts from them. Already published:

• How Jack Ma sees his company’s success
• Jack Ma’s views on education and what it takes to be a successful entrepreneur
• Jack Ma on flattery, arrogance, and why his face looks weird

In this latest translation from the book, Jack Ma explains how Alibaba payment subsidiary Alipay came to be.

How did Alipay come about? At that time, I went to a bank, and the bank said ‘we can’t do that [online] because it’s a financial product.’ But if a Chinese company didn’t get into payments, some international company would come do it and we’d end up the victims. When I was at Davos, I went to hear Clinton speak on the power of leadership. I suddenly understood what that meant: boldly doing something you believe in, something that won’t hurt your country or your customers. So I decided to do it, and threw everything into it. If Mr. Zhang went to buy something from Mr. Li but Mr. Li didn’t ship the product, Mr. Zhang could pay the money through Alipay and if he was duped out of RMB 1 million we’d reimburse him RMB 1 million. People thought I was bluffing, but I really had the money there ready for reimbursement. We got the system set up nice and clean, and I wasn’t taking a penny, so it could be inspected whenever. That way, the government would think: well, if you don’t do this, who will?

Leaders are critical in the development process of companies. I am Alibaba’s leader and I needed to be a Chinese ecommerce pioneer. I needed to think clearly about what I was doing, what I should be doing, and what I was preparing to do.

There are three “blocks” to the internet, and the first is information/ideology. This one is really hard to do, and I don’t see the whole world ever unifying in terms of ideology, so I don’t do it. But Sina and Sohu do a good job of this, so let them do it.

The second is entertainment, like games, and Tencent does this part very well. I always thought that games couldn’t change the internet industry because people can’t always play games. Commerce is a game that people all over the world play. So I decided to do the internet’s third block: ecommerce. And our clients would be SMEs and entrepreneurs, that was the vision I had for Alibaba. If a big company came, in principle we didn’t do that. But when SMEs came to Alibaba they might be only 3-5 million RMB in scale, but then over time they’d become 10 million or 100 million – they should go find someone else, I only do SMEs. You can’t teach middle school, and then also teach high school, and also teach all the way through college. By thinking clearly about who our clients are we want to lock down the market and then go do what we ought to do.

In the face of profit and enticement, you’ve got to learn to say ‘No, I don’t do that.’