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Chapter 2634 Difficult Negotiations

For multiple reasons, Jack Ma has now sold China Yellow Pages.

Actually, this deal wasn't easy to make.

If we exclude the translation agency, this was indeed his first entrepreneurial project.

So China Yellow Pages is the first child that Jack Ma raised single-handedly. It started from a small apartment in Hangzhou, riding a bicycle all over the streets to sell it, and was kicked out by countless people who thought he was a swindler.

After finally establishing itself as the first internet information publishing company in China, it was ultimately taken over by the relevant authorities.

But Jack Ma didn't have much time for reflection, because he was already planning something bigger: to create an e-commerce platform for Chinese people.

Furthermore, they registered a new company called Alibaba.

The first thing to do after registering a company is to find funding.

Jack Ma traveled all over Beijing, Shanghai, Guangzhou, and Shenzhen, meeting with countless investors.

Most investors frown when Jack Ma mentions "B2B," as few people in China know what B2B is at that time.

After listening politely to Jack Ma's explanation, one of the locals said dismissively, "We'll study it further."

Then there is no more.

Some people were even more direct, asking, "Mr. Ma, what's the difference between this and selling things at a street stall?"

"There's a huge difference. Street vendors can only sell to passersby, while Alibaba can sell your products to the whole world."

The other person smiled, stood up, and shook hands with him. "Excuse me, Mr. Ma, I have an important meeting coming up."

"..."

Some people, after listening to his business plan, barely suppressed their disdain and gave a comment: "Mr. Ma, your idea is too big, too big to be true."

……

After hitting walls everywhere, Jack Ma still thought of Suning.

The last time I came to Beijing to meet with Suning was to promote China Yellow Pages.

That time, Suning gave him a small order, making Tianchao Auto one of the earliest companies in China to have an official website on the Internet.

The two became acquainted from that point on.

Later, Tianchao Capital was established and invested in Tencent, a rising star in the internet industry.

When Jack Ma saw the news in the newspaper, he was intrigued, but he hadn't decided what to do next, so he didn't rush to contact Suning.

This time it's different.

Alibaba's blueprint had already taken shape in his mind, and he was certain that what was needed was not a small order, but capital that would allow the company to truly take off.

So Jack Ma called Suning and, without beating around the bush, said directly, "Mr. Suning, I have a big plan that I'd like to hear about."

Suning said on the other end of the phone, "Come to Tianchao Group and we'll talk in person."

"Ok!"

After hanging up the phone, Jack Ma took a deep breath, naturally understanding the significance of Suning's words.

Suning was willing to give him time; among all the domestic investors, Suning was the only one who agreed to meet in person without even reading his business plan.

……

When Jack Ma flew from Hangzhou to Beijing, he was a completely different person from when he last came to promote China Yellow Pages.

His inexhaustible energy remained unchanged, and his eyes still shone like two flames.

But besides that, Jack Ma possesses something else: a confidence that comes from real struggles on the entrepreneurial path.

Entering the headquarters building of Tianchao Group.

The young woman at the front desk recognized Jack Ma as soon as she saw him, after all, Suning's assistant Zhuang Zhuang had given her instructions beforehand.

The receptionist immediately made an internal call to Zhuangzhuang, then personally led Ma Yun to the elevator and pressed the floor button for him.

Zhuangzhuang was already waiting at the elevator entrance. When she saw Ma Yun walk out of the elevator, she immediately smiled and went up to him, saying, "Mr. Ma, Ms. Su is waiting for you in her office."

Jack Ma shook hands with Zhuang Zhuang and said, "Assistant Zhuang, we meet again."

Zhuangzhuang smiled and said, "Yes! The last time Mr. Ma came was the year before last."

Then Zhuangzhuang led Ma Yun into the Suning office, opened the door, and stepped aside to let him pass.

Su Ning stood up from behind his desk, walked over and shook hands with Jack Ma. "Mr. Ma, welcome."

"President Su, we meet again."

"Yes! Your China Yellow Pages was doing very well. I heard you recently sold it?"

"Sold, so it's like being taken over." Jack Ma smiled, a smile that held no regret, only a sense of relief that a chapter had been turned.

"Sit down." Su Ning gestured for Ma Yun to sit on the sofa next to him, then turned to Zhuang Zhuang and said, "Zhuang Zhuang, make us a pot of coffee."

"Okay, Mr. Su." Zhuang Zhuang turned and left, closing the door behind her.

Jack Ma sat down on the sofa, placed his briefcase on his lap, unzipped it, took out a thick business plan, and handed it to Suning with both hands.

The cover of the business plan had three large characters printed on it—Alibaba.

"Mr. Su, I've sold China Yellow Pages. What I'm going to do next is a hundred times bigger than China Yellow Pages."

Suning closed the report he was looking at and put it aside, then picked up the business plan and opened it.

Suning flipped through a few pages and skimmed through the core framework.

Jack Ma's plan was written with great passion, using long paragraphs of parallel sentences and exclamation marks in some places, and the format still retained his unique, unrestrained style.

Some financial forecasts are overly optimistic: the first year is expected to achieve a certain transaction volume, and the second year is expected to cover a certain number of industries.

In some places, the business model description is not clear enough, and the monetization path is somewhat vague.

But the overall logic is sound... connecting Chinese SMEs with global buyers through the internet, making it easy to do business anywhere in the world.

This sentence was printed on the first page of the business plan, in large, bold font, as if to prevent readers from missing it. "E-commerce platform." Su Ning placed the business plan on the table, looking at Ma Yun, "How do you plan to launch this? Which segment will you start with?"

Jack Ma sat on the sofa, leaning forward, gesturing with his hands, speaking rapidly like a machine gun.

Once he starts talking, he can't stop: "Let's start with B2B. China has tens of millions of small and medium-sized enterprises (SMEs) with strong production capabilities, but they lack channels to sell their products abroad. The Canton Fair is only held twice a year, and the booth fees are outrageously expensive, making it impossible for SMEs to participate. What Alibaba aims to do is bring Chinese suppliers and overseas buyers together on the same platform to facilitate transactions. Companies can open shops on our platform to showcase their products, while overseas buyers can search, inquire, and place orders. We don't handle the transaction process; we only facilitate information exchange. First, we help buyers and sellers find each other. Once they get used to doing business on our platform, we can gradually integrate the transaction, logistics, and payment processes."

He paused, took a sip of the coffee Zhuangzhuang had just brought in, and continued, "Once B2B is running smoothly, there will be B2C, and then C2C. Mr. Su, no one in China has truly done e-commerce. There are very few people buying things online now, but that's okay, the market can be cultivated. Ten years ago, who chatted online? Now QQ has over ten million users. What Alibaba needs to do is not wait for the wind to come, but create the wind. I'm here today to invite you to join me in creating this wind."

Suning leaned back in his chair; of course he knew what Alibaba was all about.

In another time and space, this short man in front of me spent twenty years building Alibaba into one of the world's largest e-commerce platforms, encompassing B2B, B2C, C2C, payment, logistics, and cloud computing, with its market value once ranking among the top ten in the world.

Now this person is sitting in front of him, with a look of sincerity and stubbornness, asking him to spend money to do this together.

That thin face held an expression that Suning had seen more than once, one that Tencent's Ma Huateng had also shown when signing contracts.

That's the expression on a person's face after they've thought about something over and over again in their mind countless times, and are absolutely certain that they can accomplish it.

After Jack Ma finished speaking, and the coffee had gone cold, the speaker said, "Mr. Ma, I agree with your direction. E-commerce is one of the ultimate forms of internet commercialization, and this sector will explode sooner or later. China Capital can invest."

Su Ning paused for a moment, then laid out his conditions, "But I have two requirements. First, China Capital must hold a controlling stake in Alibaba. Second, Alibaba cannot introduce foreign investment. These two conditions are the same as when we invested in Tencent."

Jack Ma's smile vanished. He remained silent for a few seconds, then shook his head.

His attitude was completely different from when Ma Huateng first heard that he wanted to take control of the company.

Ma Huateng's hesitation stems from a lack of clear direction and future, and a willingness to abandon ship and flee at any moment.

Jack Ma's hesitation, however, carries a deeper kind of persistence, the kind of persistence that only someone with an absolutely clear sense of direction about what they want to do would have.

"Mr. Su, controlling a stake is impossible," Jack Ma said bluntly, without any beating around the bush. "Alibaba must develop independently. I can let Tianchao Capital become the largest shareholder, but I cannot allow any company or individual to control Alibaba. This company does not belong to me alone, nor to Tianchao Group. Alibaba's mission is to serve small and medium-sized enterprises (SMEs) throughout China and even the world, and its equity structure must serve this mission. If it is controlled by a company, and one day the interests of the controlling shareholder conflict with the interests of SMEs, which side should Alibaba stand on? I don't want to face this problem now, so I want to block it from the very beginning."

“Continue!” Su Ning was neither angry nor interrupted him; instead, she gestured for him to continue.

“Tianchao Capital will contribute 160 million RMB, and Alibaba will relinquish 35% of its shares,” Jack Ma continued, looking into Suning’s eyes. “This is my current level of sincerity, and also my limit. Tianchao Capital is a strategic investor in Alibaba, not a controlling shareholder. The company’s strategic direction, daily operations, and personnel appointments and dismissals are decided by Alibaba’s founding team. Mr. Su, to be honest with you… I’ve traveled all over the country, and you are the only investor who understands what e-commerce is all about without me having to explain it. I hope to work with you on this, but Alibaba must remain independent.”

"One hundred and sixty million, thirty-five percent?" Su Ning's face remained expressionless, but he was calculating an even bigger figure in his mind.

A 35% stake for 160 million would give Alibaba a current valuation of around 450 million.

For a startup team with only a business plan, a newly registered shell company, and a few people, this valuation is naturally outrageously high.

If the investment team of Tianchao Capital were to submit this project to the accreditation committee, it would most likely be rejected.

Investing hundreds of millions of RMB in a company that doesn't even have a product prototype seems completely contrary to normal investment discipline.

But Suning knows where Alibaba's future ceiling is, so this deal is absolutely worth it without even needing to be calculated.

In another time and space, this company's future market value would be thousands of times greater than this figure.

"Regarding foreign investment, I still maintain that Alibaba cannot introduce foreign capital. Internet infrastructure cannot be controlled by foreign capital; this is my bottom line. I set this rule for Tencent and QQ, and the same applies to Alibaba."

Jack Ma was equally uncompromising, saying, "Mr. Su, if Alibaba doesn't list on NASDAQ in the future, its internationalization will lose a crucial pillar. Think about it, Alibaba is involved in cross-border trade. Overseas buyers have a completely different level of trust in you because you're a NASDAQ-listed company compared to when you're listed on a domestic exchange. Moreover, domestic investment institutions don't really understand the internet yet. Do you know who else in China, besides you, is willing to invest 160 million yuan in an internet company?"

That's a very true statement.

In 1998, the domestic investment community was generally cautious about the internet. Even those few who were willing to invest could not possibly come up with a sum of 160 million yuan.

Jack Ma has traveled all over Beijing, Shanghai, Guangzhou, and Shenzhen, and met countless investors, most of whom couldn't even understand what he meant by B2B.

After listening to his business plan, the investor politely saw him out, then turned around and told his colleague that he had encountered a pyramid scheme operator.

Suning is the only person who understands what he's doing without needing an explanation, and also the only one capable of coming up with the money.

Jack Ma knew very well that if he couldn't open this door today, he might not be able to open a second door of the same size for a long time afterward.

Suning did not respond to Jack Ma immediately, but instead began to consider it, after all, Jack Ma's stubbornness was expected.

“160 million, 40% of the shares.” Su Ning looked at Ma Yun and presented the new conditions. “In addition, I will not interfere with Alibaba’s daily operations. You will decide the strategic direction, you will have a majority of seats on the board of directors, and you will be the CEO.”

Jack Ma's lips moved, about to speak, but Su Ning raised his hand to stop him and continued, "As for foreign investment, I can be flexible... Alibaba can accept foreign investment in the future, but the total shareholding of foreign capital in Alibaba can never exceed 30%. This is the bottom line, there's no room for negotiation. You have to write it down in black and white in the shareholders' agreement."

Jack Ma lowered his head. Forty percent, five percentage points more than the thirty-five percent he had mentioned.

In other words, Suning acquired an additional five percent of the equity without retaining control.

Looking up at Suning, I wondered if the ratio could be lowered even further.

But Su Ning sat there with a calm expression on his face, the kind of calm that comes from sitting on a leash.

Based on Jack Ma's experience dealing with Suning, what Suning is saying now is their final condition; any further negotiation would be a waste of time.

“Okay! I agree to all these conditions.” Jack Ma nodded.

"It's a pleasure to cooperate with you." Su Ning smiled, stood up, and shook hands with Jack Ma.

"Pleasant to work with."

For Suning, this investment is not something they need to worry about.

He knew perfectly well how large Alibaba had become in later generations, even better than Jack Ma himself.

If you invest 160 million now, it's possible that it will multiply by tens or even hundreds of times in the future.

More importantly, whether or not a company has a controlling stake is not actually that important for a company the size of Alibaba.

Alibaba's DNA is platform-based, not manufacturing-based. Its core competitiveness lies in its ecosystem and network effects, not in a single technology or product.

Jack Ma's drive to make something happen is more valuable than that of most entrepreneurs he has ever met.

This person, in another time and space, single-handedly built Alibaba from scratch into a top ten global company. Now, with the support of Tianchao Group's resources, Alibaba's development speed will only be faster.

Just then, Zhuangzhuang came in carrying a freshly brewed coffee pot and saw the two of them holding hands and smiling.

She placed the coffee pot on the coffee table and asked with a smile, "Mr. Su, Mr. Ma, did you two reach an agreement?"

Jack Ma released his grip, turned to Zhuang Zhuang, and gestured, "Assistant Zhuang, your CEO Su is too difficult to talk to. He's the most difficult investor I've ever talked to, bar none. Next time I come, you have to pour me a cup of tea, not coffee, so I can have a cup to calm down."

Zhuangzhuang smiled and said, "Okay, Mr. Ma, I'll brew you West Lake Longjing tea next time."

...(End of this chapter)