Chapter 3 Why Jack Ma moved his headquarters out of Shanghai soon

Next, we are going to talk about Alibaba's brilliant entrepreneurial deeds, the first mistake Jack Ma made since starting his business.What mistake did Jack Ma make? —— Jack Ma moved his international headquarters to the United States, and his Chinese headquarters to Shanghai. We know that in the early days of his business, Jack Ma worked from his home in the suburban area of ​​Hangzhou.And after he had 25 million US dollars in funds, he moved his Chinese headquarters to Shanghai, the largest commercial city in China, and to Huaihai Road, the most prosperous street in Shanghai.Ma Yun rented a large floor there, because he felt that he would soon be a world-class entrepreneur, and Alibaba would also become a world-class enterprise.However, this was his first mistake.

Later Ma Yun said this: "I used to put Alibaba's headquarters in Shanghai, and rented a large office on Huaihai Road, which was beautifully decorated. As a result, the time of that year was very tiring. We couldn’t recruit people, and many Shanghainese asked, where is Alibaba’s company? Almost no one paid attention to us. In the end, we decided to evacuate from Shanghai. First we chose Beijing, but finally we thought it would be better to go back to Hangzhou.” This was a "headquarters crisis" that occurred in Alibaba when he started his business for more than a year. Why did such a "headquarters crisis" occur?

We analyze it from three aspects: the first is the weather, the second is the geographical location, and the third is the harmony of people. Let's talk about the time first.It was at the end of 1999 and the beginning of 2000 when Ma Yunrong reached 25 million US dollars; when he moved his headquarters from Hangzhou to Huaihai Road, it was also a major moment when the global Internet bubble burst.The most important "concentration camp" of global Internet companies is Nasdaq in the United States. The stock index of Nasdaq was only 500 points in April 1991. Compared with the New York Stock Exchange, it is not a particularly important market; By July 1999, it broke through 2,000 points; by March 9, 2000, it broke through 5,000 points.When the stock index breaks through 5,000 points, all the newspapers in the world are talking about one thing - a new century is about to begin, and the Internet is about to rule the world.

At this point in time, Ma Yunrong reached 25 million US dollars.And almost at the same time, the three important news portals in China at that time——China, like other countries in the world, was in the portal era—Sina was listed on April 13, 2000, and NetEase was listed on July 5 of the same year. A week later , On July 12, Sohu went public.Three portals, listed on Nasdaq within one quarter.This is a seemingly very exciting time. But at the same time, another thing happened at this point in time: from the second week of April 2000, the Nasdaq index fell from 5,000 points, falling by 40% within half a year.This is a major stock market crash moment in the Internet field. What does 40% mean?It means that in the North American capital market, the market value of the entire Internet company has evaporated by 8.5 trillion US dollars.Many stock indexes changed from 10 billion US dollars to 1 billion US dollars with a "boom". 8.5 trillion U.S. dollars—except for the United States, no country in the world had a GDP exceeding this figure, and now China’s GDP is only this figure—all evaporated within half a year.This point in time is a major moment for the Internet around the world.

The reason why these companies in China can survive, including Alibaba and Tencent, is that they all raised funds before the second quarter of 2000: the three major portals raised funds through listing, and Tencent sold their shares to MIH has raised funds, and Alibaba has also raised $25 million. Alibaba was originally a start-up company with a core, but at this time of a major stock market crash and "heavy snowfall", it wanted to move its international headquarters to the United States and its Chinese headquarters to Shanghai. This is contrary to the general trend.Operating costs are constantly increasing, and the entire industry is experiencing an avalanche of crisis-this is why Ma Yun found out that he had made a major mistake a year after moving the headquarters.

The second is geographical advantage.Ma Yun moved his headquarters in China to Shanghai, but what kind of city is Shanghai?Shanghai is a city where two types of capital are very concentrated: firstly, state-owned capital. Up to now, Shanghai’s state-owned enterprises are very powerful, and private enterprises are basically in a state of massive oppression; secondly, foreign capital, Shanghai is China’s opening to the outside world. The window, it welcomes some capital such as the world's top 500, the world's largest investment banks or banks.In 2013, Lujiazui had a very proud statistic: Lujiazui had 27 buildings, and each building paid 1 billion yuan in tax each year, a total of 27 billion yuan, equivalent to the annual tax revenue of many prefecture-level cities in China. .

There is a natural conflict between a city that likes big capital and an Internet company that must focus on destruction and innovation.So in this sense, Shanghai is a city without internet genes.Shanghai finally had an Internet company called Shanda Games.At that time, Chen Tianqiao founded Shanda Games in Shanghai with 500,000 RMB, and introduced a game product from South Korea, called .Through the passage, Chen Tianqiao became the richest man in China within two or three years, and Shanda also became the largest online game company in China.But what next?All of Shanda's innovations in Shanghai have encountered various resistances. By 2014, Shanda's ranking among Chinese online game companies has been ranked fourth and fifth.The whole Shanda has lost its way, and Shanda is basically "kidney deficient" - its advantages are slowly disappearing.

In the past two years, Yu Zhengsheng, the former secretary of the Shanghai Municipal Party Committee, raised the same question many times at municipal meetings: Why can’t Shanghai keep Jack Ma?But up to now, Shanghai has not given an answer.If you must give an answer, it is: this is a city without Internet genes at all. The third one is Renhe.We know that Alibaba was founded in 1999, and Ma Yun was soon discovered by Forbes and appeared on the cover of Forbes.why?Because since 1998, the central government has allowed private enterprises to conduct free foreign trade.There is a term called "MADE IN A", which appeared in 1999.When these millions of private enterprises in China started to do foreign trade, there was a problem: 99% of these bosses did not understand English, and most of the foreign enterprises who came to China to purchase goods did not understand English. understand Chinese.This is where a trading platform is needed.Therefore, the emergence of Alibaba in 1999 actually complied with the general trend of "MADE IN A".Therefore, Alibaba's ALEXA (global website ranking) ranking is very high, which is also an important reason why Jack Ma was discovered by Forbes half a year after starting his business. It can be said that he is a lucky man during China's macroeconomic reform period.

Under the general trend of "MADE IN A", where are these millions of private manufacturing and foreign trade enterprises appearing?Appeared in Shanghai?No.Show up in Beijing?No.Mainly appear in Zhejiang, Jiangsu and Guangdong.At that time, there were two well-known companies engaged in e-commerce in China. One was Alibaba in Hangzhou, and the other was Huicong.com in Beijing.But two years later, the size of Alibaba is many times that of HC.com.What is the reason for this?Ma Yun would like to thank his father for giving birth to him in Hangzhou. The basic market of China's entire "MADE IN A" is in Jiangsu, Zhejiang and Guangdong, so Ma Yun founded Alibaba in Hangzhou in 1999, which is more grounded.And once the headquarters is moved to Shanghai, it becomes "tall" and less down-to-earth-this is the so-called harmony.Relocating the headquarters does not seem like a big deal. The distance from Hangzhou to Shanghai is only 190 kilometers, but such a small distance will make a huge difference.

The timing, location, and harmony of people caused Jack Ma to make such a mistake. The biggest advantage of grassroots entrepreneurship is to "stick to the grassroots" and pursue "tallness", which is one of the most common mistakes entrepreneurs make.