advertisement

The Alibaba success story: 5 lessons for African startups from Jack Ma

advertisement

The past 10 years wouldn't have been possible without you. Thank you!

Jack Ma Alibaba
Founder and chairman of Alibaba Jack Ma – image credit: vulcanpost.com

Last Friday Chinese e-commerce giant Alibaba raised $25 Billion through a successful initial public offering (IPO) on the New York Stock Exchange. This gave the tech startup a market capitalisation of $230 billion, a value that exceeded giants like Facebook, eBay and Amazon.

advertisement

For anyone tracking this Chinese internet business this looks like the final mark of success that Alibaba founder Jack Ma has been eyeing for fifteen years.

Alibaba has established itself as an e-commerce giant outside China, Ma is now part of the Chinese and global multi-billionaire elite and competitors like Amazon and eBay have been leapfrogged as Alibaba is now being compared to other tech mega successes like Facebook and Google.

advertisement

For good reason the Alibaba story has been played out as the typical tech startup success story. Some tech obsessed guy with brains, vision and guts creates a bankable, viable online business that eventually draws the attention of deep pocketed investors and ultimately rides off into the sunset with bucket loads of cash from Wall Street.

However the Alibaba story has a somewhat different narrative, not only because of its Chinese birth, but also because startup visionaries and dreamers in other emerging markets, Africa included, can learn a lot from Alibaba.

Without delving into a thesis of everything Alibaba has done correctly in the past one and half decades, here are some standout lessons that every Zimbabwean and African startup can take from the e-commerce giant.

Solve a problem in your backyard

This is the most obvious yet easily overlooked point for getting into business and setting up any startup. Identifying an itch in your domain has to come first, then the creation of a solution afterwards.

Jack Ma identified the problem that existed in linking the numerous Chinese businesses with potential markets, something that the internet was primed for. There was Chinese problem that he knew would require a Chinese solution, with an understanding of what his own market wanted. This approached also helped in the takeoff of Alibaba’s Taobao.

Start local but always think global

Alibaba was always meant to have a global impact, even though it had its roots firmly in the Chinese market. It’s one of the advantages of the internet, your business is accessible to everyone with internet access.

This is something that African tech startups have to hold close to heart. The growth opportunities for the continent that are always harped on by every proponent of the “Africa Rising” sentiment need to be explored by entrepreneurs that gear their businesses for more than one country. African successes like OLX and iROKO though local in nature have a global outlook.

Copied tech solutions and models aren’t always the answer

When creating a business model for a startup, copying existing examples from similar startups that offer solutions like yours in different markets might not always work. It is always better to figure out what works for your market.

In “Crocodile In The Yangtze”, the feature film that documented the Alibaba story from the beginning of Ma’s journey with internet, one aspect highlighted is how Alibaba beat eBay in China by having a business model that the Chinese market understood and took up easily.

While eBay rolled into China as an e-commerce juggernaut replicating a previously successful model focused on early monetisation from its customers, it did not take into consideration that the Chinese market would opt for a less taxing model. Alibaba’s own model, which offered free service helped the Chinese company gain more traction than eBay.

The internet is the biggest gateway to local opportunity

Alibaba had a record breaking IPO and is carrying a high valuation, something that investment analysts have attributed to its ability to offer an avenue for investment into the Chinese boom. Its the same opportunity identified by Yahoo when it bought a stake in Alibaba years ago.

This is hardly surprising as Alibaba’s ability to make Chinese commerce an online commodity is worth a tidy sum. Africa is on its own remarkable growth trajectory right now. The internet is one way that this can be translated by providing an online access to what various local businesses are producing and offering. Through the internet you can create a gateway to whatever opportunity you are exploring as a startup that is profitably solving a local problem.

Tech startup success isn’t just for programmers

Jack Ma was an English teacher who earned $20 a month. That’s hardly the kind of career that is usually tied with tech startup success. Unlike fellow Chinese techpreneur Robin Li (Baidu), Ma was not schooled in software development.

If you have an entrepreneurial solution, appreciate the internet and tech solutions,have a passion for what you want to deliver and are willing (and able) to work with others you might be Africa’s own Jack Ma.


Quick NetOne, Telecel, Africom, And Econet Airtime Recharge

If anything goes wrong, click here to enter your query.


WhatsApp Discussions

Click to join a Techzim WhatsApp group:
https://chat.whatsapp.com/DKzLTsQPM6SBd0mrKOKPai

If you find the group full, please notify us on +263 715 071 199 and we'll update the link.


8 thoughts on “The Alibaba success story: 5 lessons for African startups from Jack Ma

  1. Haa Alibaba and Ali-express are big. But bottom line is they are growing by selling FAKE products. 99% of all goods sold there are counterfeit from China and Hong kong. The New Iphone 6 released 4 days ago is there already in a counterfeit form. This website helped in a way that you should not necessarily spend big to enjoy finer things in life. Original addidas track suit cost £120, Alibaba sell it for £20. You can hardly notice the difference, if any

  2. You don’t need connections to achieve success.
    “We don’t have a rich father or a powerful uncle,” said Ma, who started Alibaba out of his apartment in Hangzhou, China. “We only have the customers that support us.”

    1. Jack Ma’s comment on connections rings so true for local and regional business. It’s hard for people to reconcile any form of success that is not backed by some powerful figure/uncle behind the scenes who signs cheques at the right time or opens the right doors. I guess he’s expressing the same sentiment that Jason Njoku shared about the new era of African tech business that isn’t dependent on political or family connections, something that is big in Nigeria and most of Africa.

  3. I’ve always wondered about the psychology of IPO’s, I mean, why would anyone want to sell a cash cow unless deep down they knew it was a Turkey, but of all the reasons I have heard for going public only two stand out as rational to me, 1. Liquidity 2. Market-based valuation. The only thing is this, if you have a cash cow, aren’t you liquid anyway and market-based valuation is only important if you want to sell, taking us right back to the why sell a cash cow narrative, so I’ve come full circle to, why on earth would anyone, with a truly great business that is, go public?

    1. It all comes down to finance for even bigger initiatives. There’s always the frustration of having decent revenue and a lot of potential to expand the scope of your business as well as targeting areas for strategic growth, but not enough cash. Even with significant intrinsic value if you do not have those funds you aren’t going to achieve full potential. Best thing to do is go to the markets.

      1. Take a look at Facebook. They ended up buying a whole string of companies to compliment their business. Google did the same. Right now, building a messenger service takes time and money plus have serious competition compared to just buying a $19bn messenger app and “everything” is sorted. Google bought DoubleClick and YouTube plus Keyhole for Google Earth. Am sure “BABA” is on the prowl and we may very much hear about its intentions

Comments are closed.