Jack ma
Episode 6
Broadcast date: Monday 22 August 2017
The Moonshots Podcast discovers a new world with Alibaba Founder Jack Ma. We discuss the many strengths of his approach to creating an enormous eCommerce business.
We also find he has a unique world view, informed by his Chinese heritage.
Join us for a fascinating investigation into humility, learning and a long term perspective.
Show Notes
What are some examples of internet business models?
Reed Hastings, CEO Netflix, Culture Deck
TRANSCRIPT
Welcome to the moonshots podcast. It's August 22, 2017. And we are coming in at episode six. I am your cohost Mike pass. And once again, I am joined by my superstar cohost, mr. Chad Owen. Good morning, Mike. Hey, Andy, you a fresh back from your U S tour. What has been going on on this fabulous trip to see all parts of the U S of a.
Well first, a happy solar eclipse day two. Uh, all of you, us listeners. I hope everyone had a chance to make a pinhole, a viewing apparatus to a CD eclipse. I know Mike, unfortunately, in your part of the world, you didn't quite get it, but we had a lot of fun here at my office. Coworking space. Got up on the rooftop and, uh, had a little viewing party before we got kicked off the roof by a building management.
Nice on yet I woke this morning to all my U S friends particularly, or those in San Francisco or talking about this. I think they got, they got the full eclipse right in, in San Francisco. No, it was, uh, like Oregon and Idaho and Nebraska. Yeah. Tennessee and South Carolina. I think the full eclipse was, yeah.
So everyone was talking about like, you know, this massive temperature change that that happened and Oh, this sort of the eeriness of, of it. How was it? Was it quite eerie? I think the brightness changed a little bit here in New York, but it was only about a 70% eclipse, but I mean, it's still really cool to look up and directly at the sun with viewing glasses, of course.
Right. Um, but uh, NASA had some really cool video footage of everyone, you know, taking photos of the full, full occluded sun. Nice. Now, apart from looking at eclipses, you need to update us on this us tour that you've been doing in some of your adventures you've been having. Oh, it's, uh, I'm fortunate enough in that my work takes me all across the country to visit clients.
And I was in, let's see Ohio and Texas and Oregon for a client work, but I also attended a storytelling summit. With some fellow storytellers and a really fun time just digging into, do you know how to tell stories and learning about story structure, even doing some improv classes and a workshop with a slam poet on how to use your voices and instruments?
So, yeah, it, uh, it was, uh, been a fun couple of weeks. How about how about you, what's going on with you? Uh, let's see. So, um, it's been a pretty action packed. Couple of weeks, had a quick, uh, little European dash four for a week. And in the meantime, managed to, to break a finger, playing rugby, uh, and having all sorts of different adventures.
But I'm feeling very excited about not only getting into our innovator and entrepreneur this week, but really fascinated to hear what, what you thought about our focus for this show. So do you want to, you want to intro our innovator? Who's in the spotlight for the show. Yeah. So this week we've chosen Jack ma the Chinese founder of Alibaba, which may be a company that some of you know, and others don't.
I mean, I really just knew the name Alibaba and vaguely the company did, but I had no idea about its history, the story of its founding and really how. It's I think very set apart from most others, especially American technology companies. Yeah. I, I must say I'm I'm with you. My first memory of Alibaba was that I, if I remember it right, Yahoo was a major shareholder.
And I remember everyone used to argue that the only reason that the Yahoo stock price had any value was because it actually was a significant shareholder and Alibaba. But it, it really is for, for Westerners like ourselves, it's a sleeping giant in now in our perception. But when you actually get into it, not only is Ali Baba really remarkable.
I mean, it's valued around about $400 billion. It has very strong numbers to it. I mean, what you have to remember is that Ali Baba does over 15 billion a year in rent venue. It's not even 20 years out and it has enormous almost dominance of the biggest market in the world, obviously, which is China. And what's really interesting for me is that the story of its size and scale is complimented by it.
Just an amazing founder story from, from Jack ma what most surprised you about Jack when you started digging into it to him? Chad, but I, I have a lot of respect for him in the way that he shares his story. I feel. Like he's a little bit of a fresh, you know, voice in giant tech company, you know, founders land.
He, um, he's very in touch, kind of with his roots and his customers, uh, which I feel like goes a long ways towards explaining why they've been successful. Yeah. And if you will, any, you know, YouTube video that you look up of him, you're going, gonna find him being incredibly open about. The fact that he's filed university exams, he applied for a job at KFC and got rejected.
He's a big fan of forest Gump. So he has forest Gump wisdom at every turn in a discussion. And what's fascinating is he actually studied his career as an English teacher. And didn't really get into tech until his thirties. And actually when he was getting into tech, he had a lot of failures and he so open about it.
And he, he really brings just a very candid, almost folksy storyteller and detain a like approach to talking about yeah. Business and innovation. I found him very refreshing and very unique in style. Yeah. And just in doing the research, you know, didn't have quite enough time to read much, especially any books about him or Alibaba, but I added quite a few to my list.
So I'm definitely going to go back and dig into, into his story and Alibaba story and really just kind of China's emergence story. If I really stoked my interest and the two interviews that we pulled our clips from. This week, uh, one is with Charlie Rose, the great American interviewer in Detroit, and then another where Jack is speaking in front of us, small group at Davos, the global economic forum.
And, um, I feel like we had 20 clips that we could have played for her. Yeah. He was a little Fred Smith light from FedEx. You're like, Oh, I wonder what we're going to get here. And then you actually explore this person and you're like, Overwhelmed with the learnings and teachings. And whether you want to know how to, how to think like an entrepreneur, whether you want to think in large scale disruption, or just about how to behave every day, I felt like Jack just gives so many beautiful little vignettes and stories for us to take away.
Yeah. And especially the interview with Andrew Sorkin, the very great economic and just a great writer. He is, um, you get this global and Chinese perspective that I think most of us Westerners just don't understand, or, you know, can't really fully take that same perspective of which I just really, really enjoyed, you know, stepping out of my American.
Mindset for a while and hearing, you know, some real talk from, from someone on the other side of the world. Yeah. I think it's safe to say for the listeners in the next 50 minutes or so I think you're going to get a lot of big picture thinking, some real practices that Jack employees, uh, for innovation, how he manages people and, and most of all, Holy smoke is he customer obsessed.
So you will find parallels with Fred Smith and Jeff. For sure. But I think what you're also doing find this in very distinct Jack Mar thinking and very distinct culturally Chinese thinking, which I think is really exciting to get into. So why don't you set up the first chat, the first clip chat? It's it's a good one.
Yeah. So I decided to lead off with some great Jack Moss storytelling. And this is him describing the creation of their marketplace products kind of within the Alibaba platform. And it just really illustrates how the entrepreneurial adventure is kind of a universal story that is played out all across the world.
And it's kind of the same story we all have to repeat. So here he is talking about that experience. Year 2003. When I launched the towel bound team mall was funny. We got it. Seven founders for Tommo, Timo Taobao. I said, everybody go home, pick up a full looking for full things, that list on the website. So we will see who will come to buy how much things we can sell.
So we came, we went home. We cannot have find, everybody cannot have find a full things in the home we can sell because we were too poor. So we get their 21 products we're listed on the website. We waited a full three days, nobody come to spy. And then the next a week we got, we start to spy in a sell ourselves for the first week, all the, all the sales source amount ourself.
And then another week later, somebody started testing, sell. For almost or 30 days, everything people said by them. So of whole house of rubbish, we bought out, try to making sure that those guys who sold were able to sell, say, Oh wow, this thing really can sell things. Then while people are starting to come to sell, and then we serve better.
And that comes from there to now $550 billion. Yeah, amazing. So they went from buying their own products. They had listed to a $550 billion company and less than what is it? 15 years. Yeah. Yeah. The, the parallels of this remind me of, you know, Steven was building. Computers in Silicon Valley in the, in the, in the garage, Google, I love the fact that he's so open about even, even they just didn't have enough stuff because they weren't, they were really poor.
And I think that. What we can start to learn from these stories. And I know it's cute and, uh, it makes it very special that it all started, you know, in tough times and against all odds and all that kind of thing. But I think the biggest story in this is that those are moments when, you know, already a lot of other entrepreneurs would have given up.
There was no one bought anything and. He kept going and he kept going. He, you know, he missed, uh, I believe it's almost 20 job interviews. He missed before he came, became a teacher. He was rejected from those job interviews. This guy doesn't give up. And I think we can learn that, that not giving up really reminds me of that.
Have you heard that is, uh, one of the guys from Y Combinator talks about. Survival is victory, like just staying alive and having the courage to keep going is like 90% of the battle. And I think that's what Jack really reminded me of is having the courage to keep going. Yeah. And powering through what Seth Godin, another great writer calls the dip.
You kind of have to. You have to have that suffering to be able to come through vena victorious on the other side. And I think this was just kind of one example of doing that with kind of one product within, you know, the Alibaba ecosystem. And I think the value of bootstrapping is really kind of highlighted here.
Yeah. Yeah. And I would encourage everyone to go back to our Elon Musk. Um, show, if you want to find out where, where our hypothesis is about where the, the energy comes from to CA to have that courage and to keep going. I think it really comes from following your dreams, your passions, and knowing that you're doing something that has the potential to help.
To impact so many people in a positive way. I think this is often what gets those, those, um, those entrepreneurs through, through that dip through the Valley of darkness, as they say, now, talking, talking about other, other entrepreneurs that we've interviewed and deconstructed. Obviously Jeff Bezos comes up a lot.
It seems don't you find a chat like every, every entrepreneur and innovator we look at. It seems like Amazon comes up all the time. Right? Yeah, well, it's always great for us to compare ourselves to, you know, only one of the greatest companies on the planet right now. So of course people are going to try and draw this comparison and I, and I feel that, that it suggests to you just the impact that Amazon is having in the world.
And what's interesting is that. I think Ali Baba, from listening to this, you discover that Alibaba really comes from a very different place, plays to Amazon, and they're quite different companies. So this next clip is Jack talking about how Alibaba and Amazon, uh, really, really compare. So let's have a listen to, to where he sees the, the difference between Alibaba and Amazon.
We're not an eCommerce company. We help others to become e-commerce. We believe Eric, every company can be Amazon. The difference between Amazon and us, Amazon is more like an empire. Everything they should control themselves by an assault. And our philosophy is that we want to be an ecosystem. Our philosophy is to empower others, to sell.
Empower artists to sit to service in power, making sure the other people are more powerful than us. Making sure with our technology, our innovation, our partners, I was 10 minutes, small business sellers. They can compete with Microsoft. IBM. Our philosophy is that we, we think using internet technology, every company become Amazon.
So you couldn't get two more different points of view of the world, sort of empire thinking versus platform thinking I had never really understood that, that difference before listening to this, how did you feel when you, when you heard that, was that a bit of an aha for you? Yeah, it was that exact moment where it clicked.
And I kind of fully understood. Oh, like that's why Alibaba has been so successful so quickly. Cause it's kind of, it's testing the other business model for a company like Amazon, Amazon went the kind of control and invest in a. And a lot of assets, business model, and Alibaba took the different approach to asset, or you could say kind of the Uber, um, although Alibaba proceeded Uber businesses model.
Yeah. And I think that there is a really interesting patent that strikes me as you're, you're saying that, which is. Jack has the same clarity of mind that Amazon's Jeff Bezos and FedEx as Fred Smith, both had, he knows exactly what businesses in and the model that he is using. And I would say this is starting to become a very distinct characteristics in the people that we investigate.
The people that we learn from have this very ironclad. Crystal clear understanding of that, the business that they're in. And I think Jack demonstrates very clearly that he's not an empire building model. He is a very lean collaborative open system. And I think what's, what's interesting is when he said the word empire, this really don't know me.
Of course. Everybody talks about Amazon because Amazon gets into everybody else's business. They, they integrate vertically right through the lines. So, uh, it really is a powerful, uh, lesson for us. Like, no, Your business model. And I think it also creates great clarity here that I think the world can easily comma deck posts, Amazon in Alabama.
I don't think it's a question of either, or I think it's a question of both don't you. I do. I, I think, you know, one thing I'd like to ask you, Mike, is as this theme of knowing the business you're in has come through many of these innovators, we've talked about how can we as entrepreneurs and people striking out on our own can get closer to that truth in, you know, I'm sure that we could wait 18 years like Jack and kind of find the answer, but what are, what are some ways that you've.
Yeah. Cause I know you've worked with companies and kind of helped them find what that true core and essence is. Um, I'm just I'm I'm I'm wondering, you know, how we can, can do a little bit of that. Yeah. So I would say that, that, um, something we've touched on in previous shows really is this idea of knowing what you do, how you do it and why you do it.
I think that comes before you employ your business model or how you want to monetize it. There is also some very. Clear archetype or business models that you use can use. And so one of those would be a merchant model versus for example, an advertising model. Now, what Uber's previous CEO talked about when we were looking into, into Travis is how the advertising model really is about.
Leveraging third parties to pay for your, for your customers. Whereas the merchant model is really where your customers pay. So that's a great comparison between two different business model. There's obviously the brokerage model and that's much closer to, uh, some of the alibi, the model where they are brokering between people.
Whereas what you see Amazon is doing is both using the brokerage and the merchant model. So I would encourage people to actually. Go and just go in and Google a business model. There's quite a few of them. And I think the exercise to do is to do sure your company and it's predators or similar companies to try and find the similarities and differences in business models.
What is also interesting is we will discover later is that Jack Mars. A view of the world lends itself to very disruptive business models. He actually, his whole worldview almost makes it impossible for him to do very traditional or defensive business models. So this is very interesting. So basically he looks so longterm that he's betting on big longterm disruption and he basically.
Ignores anything that would be a horizon one business model, which is defending your core business. He, he just jumps into total disruption mode through it, through a longterm view. So, um, compare and contrast with your competitors would be the first exercise for, for working out your, your business model.
I love that I've, uh, I've got some Googling and some work to do to myself. Yes, indeed. Indeed. All right, so, so, so we've got another, another clip coming up. Uh, Chad hit us with that one. Yeah. Another thing that I loved about Jack was his focus on. People, not only his customers, but also the people that he surrounded himself with to build Alibaba and because of how much he talks about it, I really believe that people are core to his business.
So here he is really talking about how to motivate the best and the smartest people that you want to work with. I think the knowledge base to period. If you want to have a smart people work for you, the smart people need to be managed by culture, not by a ruse and a loss. So in our company, we spend a most of the time about the culture and the base of the culture is the trust.
I think that says most of it, he, he said a little earlier in the interview that his three main points or the three targets that he wants to serve in, in business is the customer first. And then the employee, and then the shareholder, which proved problematic to him when he was raising VC money. And especially when he was going public with the company, he had shareholders, tell him, well, what do you mean?
You're putting the customer and your employees ahead of us. And he said, well, If, if you don't agree with me, then don't give me your money. And he walked away from money because of that, because he was so invested in, in his people. Yeah, the, the attention to, I would argue here, he seems more attuned to culture and company then than Jeff Bezos.
Baseless appears to be very cerebral and brilliant on strategy and thinking models similar to that of Elan. Whereas, you know, Jack is much closer to Oprah on culture and the way people behave. To me, this echoes of a very famous. Presentation that's on the web by Reed Hastings, the CEO of Netflix, and it sees very famous culture, culture, deck, and Sheryl Sandberg from Facebook says, is famously quoted as saying it's like the most important business document on the internet.
And he talks about how. Culture at Netflix is about highly aligned and loosely coupled. And it's essentially the, the inverse of industrial age thinking. So at the heart of what Jack has done it's is the same thing. You don't command and control. In the age of, of, of knowledge and information, you can't use these empirical top-down approaches, they just won't work.
And what, what he really argues for is that it's about culture. Yeah. And the, and the, and the cultures self-organizing in a way. I think that's what, uh, that's what struck me is that it's a much more naturally mergence of kind of leadership inside the company, as opposed from the top down directives that he said, well, he says it, he calls it rules and laws.
Yeah. And, and, and so to me, this is very connected. The fact that. If we all take a moment to understand this shift that is happening. Uh, and I recently wrote about, uh, the shift. So we'll put a link to it in the show notes, the, the moving thing from an industrial edge to an, to a knowledge or information age means that we're moving from.
Centralized con control towards a highly aligned. So culturally values aligned organizations, which are loosely coupled, which means fast, moving agile, small little teams that, uh, using Jeff Bezos as role. If a team can't be fed by two pizzas, then it's too big. So keeping this very fast agile style of organizational structure, but I think at the essence, Of what he is saying is it's not just about culture.
It's about the act and behaviors create trust within the organization. Because if you think about it, if you want to be highly aligned and loosely coupled, which means you see eye to eye on the big issues, and you just try that someone will implement those as they see fit and that they don't require micromanagement.
For that act to happen. There has to be trust to me that was really powerful that he, he caught that one. And I would say that that's the thing that listeners should be taking out. If they're creating a company of the future and it's highly aligned loosely, coupled it's, it's really creating knowledge, products, creative products, information products, then it's really gonna come down to a culture of trust.
And it's the acts that create, trust that again, a matter. Yeah. The other thing that, that stood out to me, he told a story about how he and the 18 cofounders of Alibaba got into a room and said, okay, we're going to start this company. You know, we're going to bring the internet to China and put China on the internet.
They collectively, you know, scrapped together, every dollar they had and it amounted to about $50,000. And in that room, they solidified that. Trust to found the company. And that I feel like is where that the idea of trust and culture came from was from the very founding of the company. What I, what I felt in some of the other parts of the interviews that we haven't put in here is he went on to talk about how people not only trust each other, but they, they really buy into.
The vision, they trust the, the vision, uh, that direction of the company as well. So there's sort of this commitment in, in the very, in the boots of every single employee that are committed to, if you will, the cause the true believer reason. And I thought that was. Was really an interesting thought that he brought that.
Actually, if you focus on trust that you get this sort of longevity, uh, that, and, and this breadth of commitment throughout the organization, I'd, uh, I'd love for you to introduce this next clip. Uh, it seems like kind of along the lines of, of trust the fact that are such a large company with so much data, they have some interesting insights, not only into the account they serve, but kind of the broader economy.
Yeah. So we're going to hear him talk about the Sesame credit system that they have developed and. I want everyone to really tune into this because actually this is the proof that they have not just created, you know, innovation in terms of customer experience and the product, but they've really actually already started to achieve the biggest and the hardest, um, mountain in innovation, which is system or network wide innovation.
And so let's listen to this and then we'll break down. Yeah. Why exactly. It's so powerful. So this is Jack ma. Talking about the Sesame credit system. So how can we use an, a credit rating system based on the data? So we have to giving everybody to me a rating system that is so powerful in the past four years, because every individual, every small business, if they're being using our services, We give them a rating system.
So we're giving them in the past five years, we giving 5 million business loans. The only I bought a bottle of $5,000, three minutes. We can decide whether we should give you money, how much I'm going to give with things. One second, the money we're being account and zero people touch. So we call three, one zero.
And even today, the Sesame rating system become people dating the mother in law. Well, I'll just say, Hey, you want to date too with my daughters? Show me your radio system of the Sesame car. So I love it. So, uh, apart from being a critical part of the, uh, sort of family, uh, acceptance of weddings and dentisty continuation, what he's really plugging into here is that they.
The background's here, they needed a way to verify someone's creditworthiness and also to make sure that they bought in, in the right way, but also sold legitimate products, a sort of a counterfeit challenge with Alibaba. Okay. But what really started to happen in establish needing this to create, you know, a sort of a credit check, if you will, just for transactions within Alibaba, this number became so useful.
Not only for Ali Baba. Because obviously it learns the patterns in credit worthiness, and it's, you can see that they're issuing credits sometimes up to $5,000 to people. But on the other hand, the consumers of this number are actually stunning to take it out of the context of Alibaba. And it's becoming almost if you will, a defacto standard for how people are looking at their credit worthiness outside of Alibaba.
And it's actually gone into some social. Fabric and that people actually refer to other people's, you know, wholesomeness as being derived through yeah. Sesame credit number. And this tells us that it's becoming system-wide innovation. It's sort of becoming the defacto standard. And this is. If achieving, this is very, very rare.
This is enormously challenging, but to have this, this is like an enormous competitive advantage them. And I knew very, I was so surprised by this chat. I mean, when you, when you were hearing these stories about Sesame credit, I mean, how was, what did your mind think when you, when you realize the scale of this.
I was curious, like, what would happen if our like Uber ratings or something, or, you know, we're publicly viewable or, or something like that. Like, there's an amazing episode of black mirror. This, uh, this British produced TV show that's on Netflix that goes all into. A rating, everyone rates everyone else.
And of course, you know, it goes off the rails and it ends poorly for most people. But I, I had a hard time. Maybe you have some more experience or a wider, uh, You know, just group of companies. I couldn't think of other companies that had done something quite like this, where it kind of jumped from the digital or commerce only world to like, into the social fabric.
And there's a little bit of that with like how many Twitter followers or Instagram followers you have. But, um, but. Nothing like so practical of like, no, this person is trustworthy because they've taken a loan and paid it back. Well, one, I, uh, I mean to, to jump into a whole different space, I would equivalate this to the, uh, to the Sheila housing index.
Now the index was made. I think it was started a good, you know, years ago. And, um, basically the case Shiller home price index looks at the average price of home sales all around the U S okay. And you know, it's built by these. Two economists Robert Shiller being the, the, the very famous one. And he he's famous for predicting the ups and downs, the economic cycles and so forth.
And he gets it all from the case Shiller index. Now, what has effectively happened is this is much more than just talking about a number for the value of homes. It's, it's a key economic indicator and. There's also, you know, the, the, the conference board has an index for, for business confidence and consumer confidence that are considered to have done the same thing.
But you're absolutely right. As far as an eCommerce or even just a digital technology company. Who's who's, um, His way of doing something has catapulted outside of its original system and has become sort of ubiquitous in life, per se, in and outside of technology. I think this would tell you so much about the prospects that they have.
And, and it's so interesting that they're doing this in a market where well, over a billion people don't have any credit history in China. So they've effectively stolen the delete on all the banks. And so this gives them an enormous leverage, which is what happens when you have innovation, not only in your products, in your customer experience, but when you create these system, network-wide.
Innovations it's exactly the same as the delivery system that Amazon has built. They've augmenting the factory with 40 jumbo jets and FedEx. So they can have something to you in 24 hours or even one hour. This is that enormous leverage you get when you innovate across that spectrum. Yeah. I think the only company that I can really think of that's so interwoven into the, into us society is, is Facebook where it's kind of so much of a part of, of how people interact today.
Um, it may, maybe it's just heightened for me because I've had it, the activated Facebook account for several years now, but I feel like. You know, I definitely feel like an outsider in that regard, but it was amazing to me to hear how embedded in society the Sesame credit score was and how much of an effect it had just outside of I'm selling it good.
Or I'm buying a good from you. Yeah. So, so I think that this. Would be an indicator to me that big things are ahead for, for Alibaba because not only is their products wildly used throughout Asia, not only is a, do people send these emails of gratitude to Jack for the platform that he's built, but this third pillar of innovation of system-wide innovation, he is completely.
Playing across that, which is very rare. Only I think a few companies really do that such as Amazon and Apple. So let's, let's not underestimate Alibaba whatsoever. I think, I think big things ahead for them. So I think I'd like to take a step kind of up or back and think Mike, you have a clip that you're introducing.
From Jack where he was really embodying the outside Chinese, Eastern observer on kind of what's happened in the U S and in the West, you know, In the last decade or so. And I found it really refreshing to hear from someone that's been outside of this direct experience, that I've been a part of, you know, in the whole great recession and the financial crisis, et cetera.
Yeah. So, so this is where I think Jack gets super impressive and in, for my part, puts him on par with bayzos and mask, because I just want to contrast these clip to what we've just heard. I mean, we've heard him talking about. Bootstrapping and, and, and doing whatever takes to get the business off the ground.
He's got that great clarity on that, which businesses in he's not trying to be an Amazon. He's trying to make others into an Amazon is very clear on that business thing. He cares about his people, not only his employees, but he's very customer focused. Yes. Which is actually where he draws a great parallels with Bezos, hugely customer obsessed.
And as we just heard that, that Sesame credit shows you the span of their innovation. So already, you know, um, uh, my innovation scoreboard he's batting at a high average year. What's really impressive is he does here in this next clip, we're going to hit, he goes a little Fred Smith on us from FedEx. He goes like he demonstrates that he is a student for life.
That he's a real learner. And here we're going to hear him talk about. The last three or four decades of a U S economic history. And he's going to look at it through a Vera, very Chinese centric, point of view. And I think it's a very fresh way of thinking about some of the challenges the U S faces right now.
So let's have a listen to Jack ma talking about where all the economic gains of the last 30 or 40 years have gone. They made a tons of them and the money, the profit did make a much more than the full largest of banks in China put together the Mo China move by form China Yoda comment or whatever you name it put together.
Stew based multinational companies made more money that so their market cap grow more than 100 times in past 30 years. But where'd the money go. This is what I'm curious. Cause some, a business people, I always care about the balance of shit. Where's the money coming where money go positive 30 years, the American had 13 Wars spanning $14.2 trillion.
The money going there. What if they spent a part of the money on building up the infrastructure, helping the wider, the wider colors and blue colors, no matter how strategy good it is. You're supposed to spend the money on your own people. Okay. Yeah. This, this is very much like Fred Smith from FedEx when the, when the governor says soon.
So what's going on in the world and Fred dislike. Here's a quick economic snapshot of 15 different indicators inherit. I think it's what, what American needs to do Jack, just in the middle. Just goes, hang on a sec, guys. You've made trillions of dollars yet. Where's all the money. I don't see it. It don't see it invested in infrastructure and see it in him.
And he goes, I'll hang on a sec. Yeah. You've just been in 13 Wars and you spend a couple of trillion on defense and it's just like, Whoa. And for anyone that has been to the U S and, and, and driven around and gone to meetings and used some of the infrastructure there, he's, he's bang on. I found this, uh, as somebody who's lived in the U S this totally resonated with me, you know, I'd benefit from an outsider's point of view, but yeah, I want to know as a born and bred, um, and of the true American true American of the USA, how did it.
How was your response? It was fascinating for me. He took the idea of. And he said, I'm a businessman. I like the balance sheet, you know, the money coming in and the money going out. So there, he went and said, okay, like what's America's balance sheet. And he, he, he calculated the numbers and he's like, all the money went to these Wars and all the money went to wall street.
And no money went to the white collar and the blue collar people or infrastructure. I think what stood out to me was, and I am a firm believer in kind of cross-disciplinary and multi multidisciplinary thinking. And how does the American economy look if you treat it like a business balance sheet? And so to me, that was a fascinating.
Exercise to kind of do even on my own and be like, yeah, he's kind of right. Yeah. And, and what you start to get a sense of from, from that cliff is I think there is this dynastic thinking that comes out of Asian culture. And in particularly in China, the sense of family and dentisty is. Much higher than in traditional Western society.
What's interesting is this comes back into, into how Alibaba operates and you can, you can see that for all of the things he'll talk about on culture and bootstrapping, he has this incredibly sharp, like the numbers just don't add up. And I found that. A very good indicator of a well rounded entrepreneur, REL well-rounded innovator is not just going to be some amazing product person.
Okay. So many, many will claim, um, that a product or a company like Snapchat is, you know, Fantastic. And it's the next big thing? Well, what we've seen is that many people have characterized Evan Spiegel, the CEO of snap as a great product guy. And, and generally in the Valley, everyone's got mean as you know, one of the great product guys, uh, not, not too dissimilar to Jack Dorsey, you know, real product guy.
But the reality is that there's massive questions around their business model. Their stock prices tanked since their IPO, it's below what they went to IPO on. And I think this. Is where you can see the difference between a full fledged entrepreneur like Jack ma, if you look in the marketplace, it's not just about a good product, it's about having a great culture.
And it's actually about having true economic model that you can apply some, talk, some talk about, you know, product market fit. That's one thing. Okay. But knowing what business you're in and knowing how to make money and to us, very binary, black and white questions. Wait, like where did the money go? And what have we got back?
If America had been doing this much earlier, this enormous overspending on a defense and a huge amount of spending on healthcare that just doesn't deliver value per dollar. These are two massive factors, which I believe take up like a quarter of the GDP in the U S which doesn't leave a lot of money for everything else.
And I think that's what he's calling out. Yeah, and I, I would love to, to kind of do other thought experiments and exercises taking. Kind of going in the reverse way, you know, seeing what we can learn from politics or from other, from other industries and areas, uh, to apply to business. Um, but it was certainly fascinating to hear his story, but he actually didn't always know exactly what he was doing.
Right. My, I mean, there was a time where it. He clearly stated to the world, Oh, you know, don't worry. Like we don't have a business model. We don't know how we're going to make money, but, uh, you know, we're going to still keep doing what we're doing. Well, he, well, let's, let's differentiate, but between knowing what business you're in and knowing where to make the money, I think he builds a business.
He knew what business, his business he was in. And he was. Uh, remaining very open to where he would make his money. He was never sharing the confusion that snap, for example, he is, which has publicly said that it is a camera company, which it really is a challenging concept. When you look at, you know, people download their app and chat on it.
I think that there is this element here of, he knows what businesses in he's creating value, and then he will monetize that. And cause he has transactions. The great challenge for companies like snap is what transactions did they really have going on on their platform? And what you'll see is that the snap model is really going to become very dependent on advertising.
And we know how that looks for companies like Twitter. Before we go to this, uh, this next clip to me, what I wanted to ask you, you, Chad, is when you hear an entrepreneur, like, like Jack, who can talk everything from culture to where did the money go? What are the sort of things that you start to take away for yourself?
Like how would you think about your business differently or what new inspiration does it bring to you? When you're thinking about on one hand being very creative, And then also on the other side, you know, building economic value, making, creating value for your clients, creating revenue and profits. How, how do you take inspiration from this?
I think it's his, because he's, you know, a half generation older than me and from a Chinese society where he couldn't afford a computer and didn't get on a computer until I think he was like in his thirties, you know? He was, I think the seventh person to get internet and China that's right. And no one even believed at this thing called the internet existed.
So he had a cameraman friend of his show up with a camera and point it at this home page that he said took like several hours. Cause he had to dial up and go, you know, through Shanghai and Hong Kong, you know, to, to get to the internet. I mean, it's, it's just such a different perspective. On business for, for me.
And so I think what I don't want to do is take any of my kind of blessings and advantages for granted. Um, and really know that as a kind of young and relatively prosperous, you know, westerner entrepreneur, I do have a lot of advantages, other entrepreneurial don't, and that's why I love what he is doing so much because.
My last question was kind of a trick question. I knew that, that you, you were going to say that he knew what business he was in and really what his whole drive is to empower. Tens of millions, if not hundreds of millions, of small business owners in China and across the world to be able to be successful and prosperous.
And so everything that he's doing is in service of that. And, you know, he's, he now has found a way to monetize that and build a very successful business on top of that. But. It seems to me, like he knew from the very beginning that it was and about amassing a lot of wealth and capital for himself or his founders or Alibaba, but instead figuring out how to create this entirely new ecosystem of thriving entrepreneurs.
And it, again, it's a very refreshing, I believe. You know, rooted in kind of Eastern culture idea of, you know, a rising tide lifts all boats, and it's not this kind of cutthroat capital we have here in the West. Yeah. I think the, the rising tide came to life in this next crypt where he really in the, in the early days and still to today has this great celebration of serving others and, um, I think a lot of people who use his platform in some small way, still feel that genuine effort that the company is making to help them.
And in this next clip, he actually talks about the responses that they get from people who use their platforms. So this is Jack ma talking about customer feedback and how they have they say, thank you. The first, for the first three years of Alibaba. We had a no revenue, no business model. And I told them team forget about the money revenue today.
If you want the a long term company. The only thing I think about is customer the best of revenue for our first three, one or two years, the best revenue is what is the email of thanks. That's the best of revenue. If the customer sends you an email saying you are great. I was so happy. Early days when I went to small restaurant, people will pay my bill.
Always a small note to say, Jack, thank you very much. I know you don't know to not make money, but we made a lot of money through our website. There's a boy is in the hotel. He opened up for me. He said, Jack, thank you so much. My wife makes more money than me, only on their side. So this is the best. And I want to keep this culture in the company.
Keep on going. Yeah, such a, such a nice way to kind of stay focused on the things that matter. I found that, that a really genuine way of keeping on track. What did you think when you, when you heard that Chad. Yeah. I think the lesson that, that I took away is that there are often. Other indicators of kind of validation that you're doing the right thing or you're on the right track and in the business that you're, that you're getting off the ground, aside from money.
And Jack was able to identify that really early on and in the, in these emails that they didn't need to necessarily jump to what would make them money in the short term, because he knew as many, the great entrepreneurs that we've talked about on this show. He knew that if the customer. If their needs were being met, that the business model and the money and all that would kind of take care of itself, uh, later, very, almost like the sort of affinity people have for Oprah, how they kind of let her into their living rooms every day for 25 years.
It's sort of evocative of, of that kind of, kind of thing. But I want to tie, uh, the, the. Thanks idea to, to the next clip and where, where all of this comes from. You just touched on it. It's this concept of time. And he avoids the immediacy of trying just to do something from nothing and make it happen today.
He has this contrarian totally contrarian point of view in terms of time, which contrasts significantly with this sort of. A cycle. It feels like everything is always speeding up. He actually goes on, on reverse. And this, this, this next clip is ham talking about the time horizon that they have and the idea.
The ideas that come from that I'm much more high level, much more profound, then that of just a, an immediate market opportunity. This is profound impact and positive change on the world. So let's listen to Jack ma talking about how he comes up with these, these big ideas. Every strategic decisions we make.
We have to ask one question. This decision we made big solve society proper because we believe the biggest social problem you solve. The more successful you are. So if we do this, cannot solve any social problems. We don't do it. Second is this project is going to be succeed. Cessful in 10 years. If it's going to be successful in 10 years, let's do it.
If it's going to be successful in one year or one month now more, I would say, forget about it. Because why you can be successful in one year or one mouth. So we all have to pair it up. And five years ago, we had a big debate about 10 years ago, 20 years. What are the things this China society, the world leaf want?
So we say happiness and health, two H strategy. So he's like, ah, look today, tomorrow, next year, like he's like, forget it. I'm thinking 30 years down the track and I want to serve the highest of human human needs. Like he's particularly with happiness, he's starting to get right up there on Maslow's hierarchy of human needs.
Um, and I think water compelling. North star to guide company. Like let's bring health and happiness in it may translate a little cheesy for us Westerners on our health and happiness. But I think you can see enough evidence that he's actually already stunning to do this. Yeah. And I think the important takeaway for me was again, kind of weighing the short term opportunities and your kind of longterm vision and just being sure that.
Your true North star is that longterm vision and not get so distracted by the short term that you kind of completely missed the Mark, because it sounds, I'm sure that he's turned away many tens of millions or maybe even a hundred million dollar opportunities, because it didn't align with any of the things that you know, that he's shown and taught us as we've been, been listening to him.
I would also say that this characterize is this notion of not just having a cool widget, that does a thing, but it speaks to some of that thinking with the power of why from Simon Sinek, which, which is something we've come back to several times, but he. When you, when you look at what he's doing and helping small businesses, he talks about blue collar and white collar enabling.
I was to be Amazon like, okay, you can tell that he wants to do this. The reason why he's doing this is to bring health and happiness to people. And what's been, my experience is when companies have these big ideas, it gives them so much room to innovate and create new things. Things because then not obsessed about a narrow, short term tactic, which a is hard to get excited about.
It's hard to come in on the weekend. It's hard to stay up late for that, but yeah, more profoundly, it gives you so much more room to think creatively about what kind of business you want to be in, what kind of services you can bring in and how you can bring them about. So I think the thing we can learn is having a high emission creates is elevation.
It creates space to innovate. And I feel like this is something that we've seen in every single one of our shows so far, they all have very ambitious, lofty, really exciting high minded, high value principles on how they want to have really positive impact on the world. And I think under that, there's all this room to do great, amazing new things.
Yeah. I feel like for some of them though, they kind of, the innovators we've, we've talked about, grew in into that vision and others kind of had it from the beginning and I really feel like Jack had it from the very beginning and, and, and. It may, it may, you know, it may be from his background in his previous experience, you know, he was a professor for six years before, or he left to start Alibaba, you know, to contrast them with someone like Travis, who, who co-founded Uber, they kind of started because they wanted to be cool guys that got to ride around and black cars.
Like they, they, they discovered the empowering. You know, the gig economy and people to work on their own terms in their own hours, um, kind of later. But I really do get that since that Jack ma really understood that, that from the very beginning, he needed to make it about his customers and empowering small business owners.
And then everything he did was in service of that one thing. Yeah. Yeah. You're absolutely right. I have to pay that one. Like I think for example, Elan has always had big ideas, whereas I think may be, I would argue that when you look at Oprah, she discovered after that somewhat through her career where she made that turn between instead of television using me, I'm going to use television.
And that seems to me, her watershed moment where she was like, aha, I've got it much like Uber probably stumbled on the fact that it can be this massive transportation company and started far more humbly. I really feel that. There is a big opportunity for our, in this last clip that I'll ask you to set up.
And that is, I think this next clip actually shows us how he has done it. I think this talks about how he has behaved to unlock all of this opportunity. You know, all of this $400 billion valuation, you know, revenues of 15, 16 billion a year. Right. All of this started from a relatively poor person who didn't even have enough things to sell secondhand on a store.
I think this next and last and final clip is really a big, uh, opportunity for us to learn how he did it. Yeah. This was like the Oprah moment from Jack. For me, this was like my, Oh yeah, like I'm. So bought into what you're saying. I believe it, and it was, um, just very refreshing and inspiring to, to learn about why this kind of, you know, beginner mind teaching mindset is so important if we're trying to make a difference in other people's lives.
So I will let Jack speak for himself. And then, um, we will get to the end of our show. I was trained to be a teacher. And I benefit because I don't know, know anything about technology computing are stupid puzzle about what is software, how software can work. And I, I do not have con con you know, accounting, marketing.
I know very little about that, but the thing I learned from a BMI teacher that you, a teacher always want his students to be more successful and better than you are. So this is, I learned to be a good CEO. When I hire people. I always want to hide those people who are smarter than I am. And I, today I give a lot of advice to my colleagues where they're high people.
There's one judge, look at the young men. If you think he will be a boss who would be my boss in five years. Hi him. Do another thing do not, who was following you all the time. So I tick, yeah. As a teacher, you want to use this student become a banker. That's the, the scientist, there's a, there, you don't want this, this student, the bankrupt.
That is the jail, you know, so this is the way that I benefit. And then when it become a CU, I call myself chief education officer. And I love to talk. I love to share. Cause when I, um, as a teacher, you may not know a lot of things. The only things you learn and you're sure people may not like the way I talk and I'm not, my job is not to make people happy by job is to make people think this is the way we did.
If it is helpful for you, take it. If it's not a habit for you, just to forget it. Well, this is, I love to be with the, the, the, the entrepreneurs. Cause you guys reminds me that 18 past 18 Tufts, the years that we've got, and I believe one thing I'd give my advice to all of you as an entrepreneur today is very difficult.
And tomorrow is even more difficult, but the day of tomorrow is very beautiful. Most people die tomorrow evening. You have to work hard. You have to learn, you have to rely on your team. And that's my business. I like to be a teacher. Thank you, Jack. Yeah, that was chief education officer. I thought talk about, you know, the servant leader, the humble, the humble leader that we mentioned a lot with Fred Smith, you know, mission to just learn and then share everything that he learned.
Yeah. And he's so ready to admit, I don't know this. I don't know that actually marketing crap. It, that bookkeeping and finance, you know, not don't know much about that, but yeah. To, to expose these vulnerabilities. That's definitely Eastern and not West. Yeah. But, uh, so you get a little glimpse at the cultural difference there.
I think the, um, the, the really, the really big thing for me, Is this Steve jobs like a CEO archetype to me is, is very much of a, of a bygone era. I think it's almost industrial age in, in, in thinking I think the future is for the Jack MAs of the world who are empathetic. Not only to, to their customers, but to all the people in their community, their, their employees, their partners, everyone, and is very willing to say, Hey, I don't know this stuff, come on a journey with me.
Let's work it out. I'll teach you what I've learned. And look, you know, if you don't want to listen to what I've learned, fine, throw it away. And I think that this, this last one teaches us for our old, that that learning is key, but I think more of a. If you are leading in a larger organization that this idea of being humble and being the chief education officer and just inviting everyone into a journey of learning.
I think this is a great demonstration of like modern leadership practice. Actually saw it from a slightly different perspective. I, I still love the learn and then share what you've learned, but I saw it as like, those of us that are maybe trying to figure out how to strike out on our own and what kind of businesses could we even start?
I would urge everyone to listen to this clip again. And embody this teaching mindset, because if you can learn and teach someone what you have learned, I think that you will find a business idea in that practice and you do that enough times with enough topics and skills, then you'll find the right area of expertise inside yourself and the people that are yearning for that kind of expertise.
And then I think that you'll be able to. You know, start your own thing yourself. Oh, that's great. I love, I love the idea of start with becoming a student and a teacher and something will come from that. Is that, is that how you're sort of processing it? Yeah, I think it is what I am trying to do more and more in the work that I do and becoming an expert in story and sharing that with, with all the people that I work with, I feel like it will only produce better work.
The more that I learn and. Studies have shown and we all know that we learn best by teaching. And so I think that's kind of like the ultimate way to level up. Like you're saying as a leader is, is to teach because that forces you to know and embrace, uh, it in such a way. Um, that simply just knowing or reading, um, or saying it doesn't.
I agree. And, and it, it goes the reason why I try to write so much the why, the reason I give talks as much as I can. And in fact, I think this is why we do the show where both students have these amazing people and we're desperate to absorb every single thought here and. And, and, and employ that, uh, for ourselves and decode it and share it with others.
Right. Absolutely. Absolutely. And I'm, I'm excited at the list that you have kind of put together for, for future innovators, for us to talk about. And I believe we may be having another guest on sometimes soon, too. Right? Yeah, actually, we've got a couple of guests, uh, lined out. We've got, um, an innovation writer releasing a new book.
Uh, so we're gonna plan that one in a great expert in creative thinking. We've got a well known radio host who will be joining us. To decode innovators. So we've got tons of good things coming up in terms of, uh, special guests. I guess the big question really coming. We, we have, we're going to delay Martha.
I think we may have mentioned Martha now. Martha Stewart in our last show, we're going to wait for one of our guests to return from some travel. And then we'll do that. The Martha show, uh, we've done a very interesting segue into sort of Eastern, you know, holistic, humble thinking with Jack ma, where does your mind take you?
When you look at our list of entrepreneurs and innovators? Chad who's, who's getting you excited. When you look through it through this, they say you feeling the need to, I don't know, to head in a particular direction. I dunno. I, I loved the bayzos to Fred, to Oprah, to Jack thread. I don't know how we can follow, uh, yeah, I think we're going to need to take someone.
Maybe from the entertainment industries is how I'm starting to fill here. I'm thinking we've got a few, a few music artists, such as lady Gaga or NWA, I think could be. They could be very. Very interesting for us to do so we encourage anyone who has ideas about some creative people. I'm mostly thinking ed Catmull from Pixar studios could be another interesting one.
He's written a great book about creative thinking or. Or Bob Iger not running Disney. Yeah. Yeah. Okay. Well, listen, stay tuned. And we'll announce who we're going to do next. And I encourage everyone to send us in their ideas and their, you know, on, on who they would like us to deconstruct and what they would like us to deconstruct.
About them, Chad, before we sign off, are there any last thoughts that you want to share in terms of what was your big takeaway from, from Jack Mar and what you've discovered doing the show today? Hi, I just shared it. It was kind of the, the teaching, you know, learn and share. Uh, I feel like if we can all do that, We'll all be able to do really, really great things.
Men. I also just wanted to say thank you to all the listeners, Mike and I. Don't only do this because we have fun chatting with each other and learning from these great innovators. We do it because we're generally interested in what you are interested in. So yes, please go to moonshot study. Oh, dot IO and, um, you know, share your thoughts and feedback.
We'd love it. If you could leave us a review on iTunes, um, or just send us an email. And, um, we'd love to hear your, your thoughts and ideas on where we could take the show, who we might talk about, or even just, you know, larger topics that we could potentially crowdsource, uh, and, and talk about here.
Absolutely. And don't forget, you'll find everything we've talked about today on moonshots.io, where you'll get all the goodies from the moonshot universe. So that's moonshots dot. Aye. Uh, alright, Chad, um, it must be getting late there. Uh, what are the, what are the plans? Just a as sort of a quiet, quiet night after, after the podcast.
Yup. I'm going to walk home with the dog, fix some dinner, maybe a watch, a little bit of a YouTuber, vice news tonight and call it an evening. What's in store for you the rest of today, given given I'm on the other side of the planet and it's a kind of early morning, I'm going to. Wrap up, do some show notes and head straight down to the gym and then crack into my, into my day.
So I will be, I'll be pumping on and you'll be, you'll be consuming carbohydrates. So we'll be in different sizes. All doing different things. Indeed. Well, I can't wait until our next recording, Mike. Yeah. Sounds great. Well, Chad, it's been fantastic once again. Thank you ever so much. Thank you to our, our listeners and I'm just jazz, uh, for, for the next show and a big shout to everyone out there.
Leave us your comments, give us your feedback and ideas. And we really look forward. To speaking again on the moonshots.