(Repeats article first published on Sunday. No changes to
By Paul Carsten and Stephen Aldred
BEIJING/HONG KONG, June 8 When Jack Ma and his
colleagues sat down in 2001 to lay out Alibaba's defining
values, they named them after a martial arts technique drawn
from Ma's love of kung fu novels and their heroic themes.
But the corporate culture of China's biggest e-commerce
company also draws heavily from Western values in a mix of East
and West that Ma dubbed 'Hupan culture' after the apartment
block in Hangzhou where he set up his business.
These core values, now named the 'Six Vein Spirit Sword' -
customer first, teamwork, embrace change, integrity, passion and
commitment - shaped Alibaba Group Holding, which
began as an online bulletin board for companies in Ma's Hupan
Huayuan apartment complex in eastern China.
Alibaba's aspirations helped it grow from just 18 employees
to more than 20,000 today. Along the way, it knocked eBay Inc
out of China and is now preparing for a U.S. stock
listing that could be the biggest tech IPO to date.
But its romanticism - and even cultishness - has sometimes
sidelined the business reality, almost bankrupting Alibaba in
its early years and more recently denying Ma his preferred Hong
Kong stock listing.
"Alibaba is not like a Chinese company, it's a blend of the
good parts of East and West," said Andrew Teoh, a former Alibaba
executive and founder and managing partner at Ameba Capital.
"It's grown huge, but they maintain a start-up culture. Alibaba
is a flat structure, bureaucracy is a pet hate there."
Crucial to this was Savio Kwan, a former General Electric
executive, who lifted from the U.S. conglomerate's
playbook to introduce a reward system that was new to China at
the time. Half an employee's annual appraisal was to be based on
their performance. The other half depended on how well they
embodied Alibaba's core 'kung fu' values.
"We wanted to make sure that even in a company of 10,000
people it had this Hupan culture, a start-up culture," said
Porter Erisman, a former vice president at Alibaba and director
of "Crocodile in the Yangtze", a documentary on Alibaba's first
decade. "We didn't want to lose the sense of innovation and
teamwork, so those were the systems Savio helped introduce."
Kwan, who joined Alibaba as chief operating officer in 2001
and left the company in 2012, did not respond to e-mail and
phone requests for comment.
REBELS AND RELIGION
From day one, Alibaba lacked nothing in ambition.
"Our core mission was, and is still, to make it easy to do
business anywhere," Joe Tsai, Alibaba's executive vice chair,
told Reuters in March. "The mission ... is our religion."
Armed with that quasi-religious fervour, Alibaba grew from a
simple business-to-business website hooking up overseas
companies with their Chinese suppliers.
"Savio came and said he would change us from a rough bunch
of rebels into a regular army," recalls Li Zhiguo, a former
Alibaba employee and now CEO of accounting site Wacai.com.
By 2003, Alibaba began work on its first major departure
from business-to-business e-commerce. Ma summoned a small group
of employees, giving them the option to carry on with their
normal work or sign a document and begin a secret project, said
Shou Yuan, a former employee who took that second option.
The group gathered in the original Alibaba apartment to
create Taobao, the consumer-to-consumer e-commerce site that was
launched in 2003 and faced off against eBay, which that year
bought rival Chinese site EachNet for $180 million.
At 4 p.m. every day, the Taobao project group would break
from work to swim, do handstands and play video games. "We were
just a group of country bumpkins, and our competitor was eBay,"
By 2006, eBay effectively conceded defeat, shutting down its
EachNet site. Today, Alibaba dwarfs its U.S. rival, with the
Chinese group's estimated value of around $150 billion more than
double that of eBay, and the goods traded over its sites are
worth more than eBay's and Amazon.com Inc's combined.
Driven by Ma's force of personality, Alibaba was able to
tilt at windmills, said Duncan Clark, managing director of
Beijing-based tech advisory BDA and a former consultant for
Alibaba. "He likes to win. They're the company that humbled eBay
PUTTING THE CULT IN CULTURE
Alibaba goes a long way to embracing its employees.
Days after the company filed for its U.S. IPO last month, Ma
presided over the company's ninth corporate mass wedding,
blessing 102 couples who performed "wedding rituals of ancient
times" clad in traditional scarlet and black robes from a 2,000
year-old Chinese dynasty, state media reported.
The company's annual 'Alifest' is now a stadium-sized event,
packed with tens of thousands of employees, families and
friends, where workers sing, dance and perform skits. In one
act, Ma sported a red and black leather punk rock costume with a
long bleached white wig and oversized mohawk to serenade Joe
Tsai, Alibaba's financial mastermind.
Workers sometimes become known by their stage names. One
employee was called 'cunzhang', or 'village chief', after he
performed sketches as the bumbling head of a rural village.
All of which has prompted some, including those close to the
company, to say it's 'cultish'.
"I really loved Alibaba, but others weren't able to make
sense of it, they didn't know if I was mad," said Shou, one of
the Taobao creators.
CLOSE TO THE EDGE
Yet Alibaba's romanticized notion of itself and its
aspirations have sometimes worked against it.
From 2000 to 2001, Alibaba's confidence had seen it expand
too rapidly. Having almost burned through its money just after
the dotcom bubble burst, the company was close to bankruptcy.
Senior managers targeted potential investors, pitching a vision
of a global network of small- and medium-sized enterprises doing
business - with Alibaba as the middle-man.
"More than a handful of Silicon Valley venture capital firms
turned down Alibaba for investment," said David Chao, co-founder
and general partner of venture capital firm DCM. "The whole
industry went through a nuclear winter after the Internet bubble
popped. It was a period where people were just not betting on
models that weren't making money or companies that didn't have a
clear business model."
Alibaba was forced to strip down its business, getting rid
of international staff and focusing on building a core market in
China - a strategy it dubbed 'Back 2 China' or 'B2C'.
More recently, Alibaba's emphasis on its values has trumped
more practical goals. The company was denied entry on to the
Hong Kong Stock Exchange after Ma refused to budge on Alibaba's
controversial partnership structure that would see an unelected
group of 28 people nominate board members. Hong Kong authorities
insisted this violated its one-share-one-vote policy, and kept
its doors closed to an IPO.
Alibaba's weighty U.S. listing prospectus mentioned the
company's culture and values more than 30 times.
"If we are not able to maintain our culture, or if our
culture fails to deliver the long-term results we expect to
achieve, our business, financial condition, results of
operations and prospects could be materially and adversely
affected," it said.
(Additional reporting by Beijing Newsroom; Editing by Ian