Joe Tsai's latest 10,000-word talk about Alibaba and his personal experience

来源 | Web3天空之城

Recently, Tsai Chongxin, chairman and co-founder of Alibaba, accepted a podcast interview with investors. In the interview, he shared his upbringing and work experience at Alibaba.

As a Taiwanese immigrant, Tsai Chongxin has lived in the United States since childhood. His father had a profound influence on him. When it comes to his personal interests, he says he has always loved sports. Prior to joining Alibaba, Joe Tsai worked at Investor AB, a subsidiary of the Wallenberg family in Sweden, where he transitioned from a lawyer to an investor.

Tsai Chongxin recalled Alibaba's early days. He talked about his first meeting with Jack Ma and his understanding of the company's vision and culture. He believes that Alibaba has broad development prospects. As one of the company's leaders, he has witnessed Alibaba's growth.

Speaking about Taobao, Tsai pointed out that with the establishment of a monetization model, especially the introduction of search advertising, Taobao's business scale has achieved rapid growth. But he admits that the company has also paid the price for neglecting the user experience. To address this issue, Taobao underwent an internal restructuring, with the new CEO making improving the user experience a top priority.

In the field of technological innovation, as one of the largest cloud computing companies in China, Alibaba sees AI as an important part of its cloud business, and e-commerce is a key area for AI applications. The company is developing a number of AI-driven products and services, such as smart shopping guides, image and text generation, etc.

Tsai Chongxin said frankly that China is currently lagging behind the United States in some aspects of artificial intelligence, but it is catching up. In the field of chips and semiconductors, due to the impact of US export controls on China, Chinese companies are limited in the use of high-end chips, but China is accelerating the development of independent chip design and manufacturing capabilities.

At the end of the interview, Joe Tsai shared his thoughts on corporate culture, productivity, leadership, and work-life balance. He used Alibaba as an example to illustrate the characteristics of a good corporate culture: employees identify with the company's mission, understand the direction of development, and are willing to collaborate with colleagues. In terms of improving efficiency, he shared his experience of borrowing from athletes' interval training models, through a combination of high-intensity work and moderate rest, rather than working 10 hours in a row. In his opinion, a good leader should be good at giving feedback, have the courage to admit mistakes, and not flaunt themselves so as not to stifle innovation.

When it comes to the relationship between sports and business, sports teach not only discipline and diligence, but also how to deal with failure, and these qualities are also applicable to business competition. Tsai's decision to buy an NBA team is based on both Brooklyn's location and the league's economic benefit distribution mechanism. As for his hobbies, he said he likes to watch basketball games, spend time with his family, read spy novels, etc.

For the career development of young people, it is recommended to master one or two specialties, such as programming, specialized knowledge in specific fields, etc., so as to stand out from the crowd. Tsai cites his tax law expertise as an example of how his professional skills can help him achieve excellent results in tax planning and other areas. In his opinion, becoming an expert in a certain field is the only way to earn respect. In addition, he recommended young people to study cutting-edge disciplines such as data science and psychology, which he believes will have great prospects in the future. If young people have skills in programming, data analysis, psychology, etc., they will have a solid foundation for success in the workplace of the future.

(Full interview link: [Jingxiao] Alibaba Tsai Chongxin's latest blog interview 2024.4 [Chinese-English]-Bilibili] https://b23.tv/YISsNUE)

The following is a written and edited version of the full interview with Sky Castle

When I first arrived at Alibaba

I felt like a garage there

Presenter :

Hello everyone, today we have the pleasure of having a special guest, he is Joe Tsai, one of the largest companies in the world, Alibaba.

With more than 1 billion consumers, Alibaba is a giant in e-commerce, digital payments, cloud computing, and entertainment, and Joe Tsai is its chairman and co-founder. We hold nearly 2% of the company's shares. In case you didn't know, Joe Tsai is a huge sports fan, and he even owns a basketball team, the Brooklyn Nets.

Joe, I'm so glad you're here, we have a lot to talk about.

Joe Tsai: Thank you for having me, Nikolai, and I'm looking forward to this conversation.

Let's start at the beginning, just to get to know you better. You were born in Taiwan, but when you were 13 years old, you moved to the United States. What does this change look like?

Joe Tsai: It's an extraordinary shift. I come from a very different culture. I attended a Chinese school, so when I arrived in New Jersey at the age of 13, I barely spoke English. I went to a boarding school. I think the best way for me to be part of everybody and be friends with everybody is to play a lot of sports. I've tried a lot of teams. I was expelled from the baseball team.

You okay?

I'm not very good at baseball, but I'm pretty athletic and have some speed. I'm fast. So I tried rugby, American football. I played American football on the varsity team, lacrosse in high school, and then continued to play lacrosse in college.

Who were the people who influenced you growing up?

My father. He's one of the smartest and sharpest people I know, but he's very strong. I was afraid of my father.

Are you still afraid of him?

I'm still afraid of him. He's no longer with us.

Is he still a bit of a ghost in your life?

Still kind of like a ghost, but I think over the years, I feel like I can now, if he's alive, I can talk to him and say, hey, you know, I've also achieved some things in my life, maybe comparable to yours, but I'm still not as smart as him.

Before that, you went to Yale University and studied law, but before joining Alibaba, you also worked at Investor AB, a family in Wallenberg, Sweden. What does that look like?

It was one of the best experiences I've ever had. I went from being a lawyer to an investor. I work in an investor's office in Hong Kong with a focus on private equity, and this is really where I learned the basics of investing. I also remember they gave everybody a book, the McKinsey Corporate Finance Book on Valuation, and that's when you learned how to build a DCF model. The discipline and work ethic was incredible, and I loved that environment. I'm still in touch with him. In fact, before I came here earlier this week, I was in Stockholm and had dinner with Marcus and Jacob, and they were both actually at the same time, which is rare. I really enjoyed my time with them.

So, how did you end up at Alibaba?

I work at Investor AB and I think this is my fourth year in the industry. I started working at Investor AB in 1995. Then in 1999, a Taiwanese friend of mine, our parents were also friends, and he came to me and said, you have to go to Hangzhou to meet this person, Jack Ma. He's special. He's a little crazy, but you should meet him. So, I boarded a flight to Hangzhou. At that time, there were only two flights a week between Hong Kong and Hangzhou, on Tuesdays and Thursdays. I flew to Hangzhou to meet him. When I walked into his apartment, I found that he owned a second-floor apartment in Hangzhou, and right here, I saw several pairs of shoes outside the door, so I deduced that there were quite a few people working inside, including engineers and customer service staff.

At that time, Jack Ma created a website for small and medium-sized companies from China that were exporters who wanted to sell their products around the world. You might not believe it, but our first website on Alibaba was in English because it was geared towards Western customers. The engineers are working, and the customer service staff is busy. I still remember that they had a notebook on which they recorded every registered user on the site. There were 28,000 registered users at the time.

About an hour later, Jack Ma and I started chatting. I said, "Jack Ma, I need to go to the bathroom." "I walked into the bathroom and found about 10 toothbrushes next to the sink. I thought, oh my God, these people are living, breathing, working in this room 24 hours a day, 7 days a week. That's the beginning of culture, it's like a garage, right?

Did you join that toothbrush club?

I did join, and although I didn't bring a toothbrush, I left inspired, not only because of Jack Ma's vision and charisma, but also because there were so many people willing to follow him. At that time he had no money, and the people who worked there were his students.

Why do they want to follow him? What are the characteristics of a leader that people are willing to follow?

I think the most important thing is to let people see what the future looks like.

What kind of vision did Alibaba bring to you at that time?

Well, at that time our business was a B2B marketplace. He said that on the cusp of China's accession to the WTO, all these small and medium-sized enterprises want to do business all over the world. Alibaba's mission was to make it easy to do business in the world, and it still is. Our DNA, our culture, is to help small businesses go abroad as much as possible. That's the vision. Obviously, we've now grown into a large domestic consumer company, as well as a cloud computing company.

Over the past few years, Ali has lagged behind

When did I realize that this company was going to grow so big, you ask?

It wasn't until around 2005, six or seven years after we were founded, that I realized the scale, and Yahoo came knocking on the door and they said, we want to invest. At the same time, eBay is also considering investing in the company. We're even considering selling our little baby Taobao, which is now China's largest consumer e-commerce marketplace. Eventually, we negotiated with Yahoo, and that's the size of their investment. Not only did they invest $1.25 billion in the company, but they also acquired a number of venture capital firms in secondary transactions, and the $1.25 billion valued the company at more than $4 billion. I remember it was summer. Then I met my parents in the summer and talked about my father. When I said to my dad, "I think I've made it," it was a proud moment.

When do you see the true potential scale of the business? When do you really feel like it's taking off?

That's a good question. It wasn't until Taobao began to monetize that the scale of the business began to take off. We know that there are benefits to working with Taobao, there are buyers and sellers in the market, but we are having difficulties with monetization. Some of the efforts in 2006 and 2007 did not pay off very well. But then we ran into something. We basically monetize the market through search ads. So you can imagine that you have a Google way to monetize through the market. In eBay-like marketplaces, our model is unique and was actually pioneered by Alibaba. I remember in 2008, when our cash flow started to grow exponentially, and that's when we realized we were doing something really good.

However, you're not the only one who sees the opportunity here, and as a result, several of your businesses are now facing competition. I wonder what the toughest competition you face is.

I could name a lot of competitors that you know and you probably invested in some of them.

However, when we looked inside and reflected on what had happened over the past few years, we found that we were falling behind because we had forgotten who our real customers were. Our customers are users who shop using our app and we don't give them the best experience. So in a way, we're kind of self-defeating and don't really focus on where the value is, where we can provide it. So, as part of the restructuring, our new CEO took office. I'm the chairman, but I work with a CEO who is 12 years younger than me. He's very, very user-focused, focused on the product, the interface, and the user experience, which is the most important thing for us.

So, how did you correct it? What kind of action did you take?

The first thing we do is admit mistakes, and we admit that in the past we may not have focused on the user experience. The second thing is to restructure our people and change the organizational structure that is in line with the strategy. I think this is a very common problem in large companies. The organizational structure of large companies is fixed, and then they don't change because people don't like to change. They don't want to change jobs, they're afraid of things like being fired. Then you start to weave the direction of the company into your organizational structure, but it shouldn't be that way. It should be the other way around, you should define what the direction is and then set up the organization of the company. So we actually did a restructuring within Taobao. The CEO of our group is also the direct CEO of Taobao Tmall, and when you look at his direct report today, it is very different from his direct report. Three months ago.

What keeps you from seeing changes in the market?

I think it's human nature that people don't like to admit mistakes. A true leader and a really good manager have that feeling, have the ability to self-reflect and say, I may not have done something right. I did this wrong. I need to change. They need to change themselves. But it's human nature that they don't do it. I think we're caught in this trap, you have to eat a little bit of a humble pie. I think part of leadership is humility. You have to be able to admit your mistakes and say, okay, let's correct the direction. But it's a new vision because employees are looking for that direction. This is very, very important.

How do you see Chinese consumers now?

If you look at the Chinese economy as a whole, China accounts for about 31% of the world's production, but consumers only account for 14% of global consumption. Clearly, there is an imbalance. China is a net exporter and produces large quantities of goods. Over time, however, the importance of the Chinese consumer should gradually increase, even on par with that of developed Western markets. Currently, China's overall consumption is just over 50 percent, while developed markets account for more than 70 percent of the economy. Therefore, the Chinese market still has great potential. Although the willingness to spend has declined, the spending power is there. China's savings rate is very high, and households are still very cash-rich.

In the field of AI

U.S. companies are ahead of all others

Now, China has been the world's factory for many years. How do you see the future going?

I still think China will continue to be the world's manufacturing powerhouse. The Chinese population is still very large, and what you're seeing is that there are 600 million, 650 million production workers in the economy, which is quite a considerable mass productivity. The Chinese people are hardworking and the education system is very good. As a result, you have a well-educated and skilled workforce.

Comparatively speaking, Vietnam has a population of about 100 million, with a working population and a labor force of 60 million. China's population is more than 10 times that of Vietnam. They will never be able to replace China as the world's manufacturing center.

Now, we are in the second year of the AI revolution. How do you approach AI as a company?

We are one of the largest cloud computing companies in China, so AI is essential. It's very, very important to have a great large language model developed in-house because it helps our cloud business. If we have a great LLM that someone else or developer is building on top of, they're going to use our computing service. As a result, we believe that AI is the right hand of our cloud business.

E-commerce, on the other hand, is one of the areas where you can achieve this, and it's also the richest use case for AI. So you can develop a lot of really cool products on top of our own model or even other people's open source models. We are working on a number of developments. In these scenarios, for example, you can try using a virtual fitting room. Merchants doing business on our marketplace will be able to use AI to generate photos, product descriptions, and more on their own.

Is this because you have less GDPR and more personalized data?

I don't think it's because there are fewer GDPRs. We collect a lot of data and have a lot of consumer data. In addition, we have a lot of open source data. The whole premise of a large language model is that you can scrape the web and be able to get open-source data to train your model, whether it's in the U.S. or China. However, by leveraging our own data and knowledge of consumers and merchants, we can further leverage AI to develop vertical applications. Therefore, using AI to improve the user experience is a fantastic combination.

Where do you think China stands in terms of AI development compared to U.S. companies?

I think it's clear that an American company like OpenAI is really ahead of every other company. But China is trying to catch up.

Now, what's your situation with chips and semiconductors?

In October last year, the United States imposed very strict restrictions on the ability of companies such as Nvidia to export high-end chips to each company in China. As a result, they abandoned the Entity List method and added the whole of China to the list. I think we've really been affected. In fact, we've actually said publicly that this really impacts our cloud business and our ability to deliver high-end computing services to our customers. So in the short term, maybe in the medium term, that's a problem. But in the long run, China will develop its own capabilities to make these high-end GPUs.

And are you doing it yourself?

We've made some efforts in this area, but we're also looking for other players to get chips from other players.

So, how big of a problem is the lack of chips?

This is a big problem. It's something that everyone is trying to solve. But in the short term, I think people have stockpiled up before the restrictions are lifted. So for now, I think in the next year or 18 months, given people's inventory, the training of large language models can still continue. I think training requires more computing power than applications, which people call inference. So when it comes to reasoning, there are a variety of options. You don't need to have high-power and high-end chips like the latest models of Nvidia.

So, what difference would your business make if you had an unlimited supply of Nvidia top-of-the-line models and everything else you wanted?

I think we're going to have a much stronger cloud computing business. We will be able to have customers who want to rent computing power from us. This brings us to the geopolitical aspects of running a company like Alibaba.

Alibaba must be cautious

So, what kind of factors do you need to consider when you run a company like this?

I think the first thing to do is to understand all the regulations. We need to ensure that we comply with the laws and policies of the jurisdictions in which we operate. That's very, very important for us. I think we're one of the most robust companies in the world in terms of compliance structure, not just in China, we're also one of the most robust in the world. I think that's very, very important.

If you look at Alibaba, we do a lot of business. Trade is a two-way street, right? In Europe, about 14 billion euros of French products are sold to Chinese consumers, and 7 billion euros of German products are sold to Chinese consumers. These are great stories that people really can't understand. Alibaba has played a positive role in promoting global trade and the development of the world economy. Against this backdrop, one can understand Alibaba more deeply and not just see it as a company trying to flood the market with cheap Chinese products. I think it's very important for the world to know about that. Alibaba has always been committed to doing business globally.

In addition to price competition, are there any other geopolitical tensions that are impacting the way your business operates?

In general, as a Chinese company operating in the United States, we have to be very cautious. For example, we don't have much of a consumer-facing business in the U.S. because of concerns about issues like data privacy and cybersecurity. These are all issues that we must address in the future.

What are the current misconceptions of Westerners about the Chinese market?

I think people tend to look at China in an absolute way, when in fact, a lot of the facts fall somewhere in between. I think the discussion about whether China is worth investing in is ridiculous. We're talking about the second largest economy in the world, with a very hard-working workforce, and as I mentioned earlier, 800 million people are working hard. Therefore, I don't think it's constructive to discuss whether to withdraw from China or whether it's worth investing in China. One must realize that there is no bet that China will lose. This economy will exist for a long time, which is beneficial to the development of the world economy.

You mentioned that you can't short China, which brings me to corporate culture and work ethic. What does a strong corporate culture look like for you?

A strong culture means you identify with the company's mission, you are very clear about the direction of the company, and you enjoy working with your colleagues. You love your boss, you love your co-workers. I think that's always been the culture of Alibaba. We have a saying, work happily and live seriously. People always talk about work-life balance, but at Alibaba, we say, why do we need a work-life dialectic? When you come to work, you should be happy because you are with your friends.

Have you been working?

No, I'm not working all the time. I must admit that I've actually found ways to be more efficient, so I don't need to work all the time. I used to work more and harder. I used to have a toothbrush in the office, but now that's changed.

So, how do you improve your productivity?

I'll use some of the methods I've learned in sports and athletics. For example, training, training at high intensity for a few minutes and then resting. So on a given day, I don't want to work 10 hours a day, very, very hard. I would work for two or three hours and be very intense. I'll get some work done very efficiently, and then I'll take a break. I'll read the newspaper, take a nap, or go out for a workout. So this interval training is a concept that I learned from exercise and applied to my work.

What does it look like when you're doing high-intensity work in the office?

People are very afraid of me. I would make a lot of phone calls and ask tough questions. But I also like this fact because I am not trained as a lawyer. So I enjoyed the training at Investor AB and they taught me how to use spreadsheets. I did a lot of things on my own. If I'm working on a transaction, such as an investment project, I write a term sheet myself.

You close the door without any interference. I mean, what does your office look like? How do you function?

No one likes to be disturbed. But I rarely work in an office. I'm always traveling. I was in a hotel room. I was on the plane. Sometimes I just call and say, I'm going to stay home. For the next five hours, I just want to concentrate on something. Therefore, no one should call me. It never stays in one place. I always find those time slots that don't bother me.

Do you consider yourself a good boss?

I think I am. I don't think being a good boss doesn't mean you're going to be too lenient with people, because then you're misleading them. I think the most important thing about a good boss is to be able to give them instant feedback. Feedback cannot be quarterly or year-end evaluations, feedback must be immediate. People need to know if they're doing something not quite right, or if they're not putting in the full effort. They need to know right away.

What are some of the other leadership principles you adhere to?

Humility, I think. I've always emphasized humility. You have to be able to admit your mistakes. Another thing is that you can't always pretend to be the smartest person in the room. Sometimes people are looking for that kind of leadership. You may want to come up with a great idea or something, but you can't do it all the time because you have to give the person reporting to you the right to come up with their own ideas. Otherwise, you're killing innovation.

Advice for young people:

Master one or two basic skills

You mentioned sports. Tell me about your love for sports and why you bought a basketball team.

I've always been quite athletic and have played sports in high school and college.

However, there are a lot of people who like sports and don't buy sports clubs.

You're right. But first and foremost about sports. I think sports not only teach you discipline and hard work, but also how to deal with failure. If you fall, if you lose the game, you have to pick yourself up again. I think that's really, really important. Many of these principles apply to business.

Why should I buy a sports team? It's a coincidence. When the Brooklyn Nets were sold in 2017, I really didn't know what it was like to invest and be the owner of a sports team. But then I studied the peculiarities of the alliance, how the alliance shares economic benefits. One of the great things about the NBA is that they have a very good collective bargaining agreement that splits the financial benefits among teams, owners, and players. The players are really providing value, right? So they deserve a fair financial benefit. All of this is stipulated in the collective bargaining agreement.

Another thing about the NBA is that it doesn't matter if you're successful in the competition or not out of 30 teams. All teams, even small-market ones, have a mechanic that is both competitive and profitable. As a result, the economic distribution between the teams is quite fair. For example, television rights. Today, the NBA earns about $2.7 billion a year in national television revenue. The money is divided equally among the 30 teams. This is very different from the Premier League, for example. So I think these features are almost a bit like socialism, but it ensures that everyone who invests in the Union doesn't lose a lot of money.

The other thing is Brooklyn, right? We're in New York City. Where else, what other ways you can have the opportunity to own an asset. It's a bit like the crown jewel of a big city, a big country, with one of the most popular sports in the world?

Is it fun?

Absolutely fun. I love watching the game.

I can tell you're having a great time. What other ways do you have fun?

I will spend time with my children. One of the most rewarding things was seeing my 17-year-old son play a basketball game, just a high school game. He is the starting point guard for the basketball team. I'm very happy to see him do really well on the pitch.

Do you read?

Yes.

What do you read?

Well, I like to read spy novels. I'm a big fan of John le Carré. I remember when I was a teenager, one of the first books I read was Tinker, Tailor, Soldier, Spy. I was immediately intrigued by it. So, with all of this, I think the author Le Carré has managed to translate some of his real-life experiences into a reader's reading experience. The experience is almost desirable, and you'll wish you could be one of the characters in the book. Therefore, I thoroughly enjoyed the reading experience. In addition to that, I also read as much current news as I can. I love The Economist, although it probably doesn't count as reading.

What advice do you have for young people?

I recommend learning one or two very basic skills so that you can stand out from the rest and be in the top 10%.

For example, if you want to learn how to code, or if you want to learn a particular subject area, I think you have to develop some professional skills. My professional skill is actually tax law. I worked as a tax lawyer for three years. I know that when people talk about tax structures, I can walk into the room and at least act smart. This is still very helpful for me. We're looking at some international things where it's important to structure the right corporate entity, tax structure, and licensing structure. So, I'm very involved in it. You can't just walk into a room and expect to be a generalist in all fields. You have to be able to tell people that I'm an expert on something, and that's how you get respected.

The other thing I want to say to young people is that you need to learn a variety of things. In particular, I think data science is going to be very important in the future. You should take a data science course. It used to be called statistics, but data science is a more modern and fancy way of naming it. At the same time, you should also study psychology. I think there's something fascinating about the human mind and the way the mind works, which is very different from machines.

So, if you have some programming skills, like young people nowadays, they will learn how to program in Python or Java or other languages. Learn about data science, know a little bit about psychology, and I think you already have all the tools you need to succeed in life.

That sounds like a good plan. You will surely be very successful and we are very happy to have you on board.

Thank you so much.

(The above content is from Web3 Sky City.) The article only represents the author's point of view and does not represent the position of this journal. The individual stocks mentioned in the article are only for analysis and do not make investment advice. ）