Trends shaping business: Lessons for entrepreneurs from an unlikely billionaire

During his visit to Kenya last week, billionaire Jack Ma – China’s richest man and the founder of Internet giant Alibaba – held an open session with entrepreneurs at Nairobi’s Nailab, an incubation hub.

We look at some of the questions he fielded from young entrepreneurs, and the key messages he shared with them in his first trip to the continent.

How does one recognise a good business opportunity, and how do you go about making business sense out of it?

Opportunity always lies where people complain; if you solve the complaint, you have an opportunity.

I have never had any knowledge of business, finance or computers my whole life, and even today, I don’t know much about how computers work, so people often ask how I managed to build such a big e-commerce company given these facts.

The answer is that I’ve studied people. I know what they want and what they do not want. You do not need a lot of technical know-how if you have this instinct.

Oftentimes, those who do have the know-how don’t want to do it, so it falls on entrepreneurs to do it.

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You start with a dream and a hope, and then you build on it.

Once you have an idea of what you want to do, how do you go about making it a reality?

It is important to make sure your dream is achievable, and that there is tangible progress at least each week.

It is very difficult to be an entrepreneur, so failure is part of the deal.

I failed from 1995 when I started out building my first Internet company, which did not work out. I joined the government and worked for two-and-a-half years as a telecommunications contractor, but that also didn’t work out. In 1999, I started Alibaba.com in my apartment.

I was confident of it and assured my 18 co-founders that we cannot entirely fail because the Internet – particularly e-commerce – is the future, and 80-90 per cent of businesses in the world in the next 30 years will be online, so the best way to serve the world is through the Internet.

In making Alibaba work, I was also trying to prove that if I can succeed, then 80 per cent of young people can also succeed – we didn’t have money, connections or rich parents and relatives to cushion us.

On the issue of finding finances, how do you make banks and venture capitalists believe in and fund your start-up?

The chances of your being rejected by banks and venture capitalists are more likely than those of your receiving financing.

There are many entrepreneurs like yourself looking for finances, and there is no special reason why you should be funded and not the next guy.

You need to earn the credit and the reputation, and you do this not by words but by deed.

To start off, you can source financing from your friends and family, and if they cannot lend you money, then that’s a problem because it means you have trust issues.

The little you can scrap together from those around you should tell you that you have some form of support backing you up, and this becomes the seed – not just in terms of money, but also in terms of trust.

Most enterprises fail in the early stages; how did Alibaba survive this period?

In our first meeting, I told our 18 co-founders to put all our money on the table, and we gathered $50,000 (Sh5.2 million at current exchange rates). No one was allowed to go to their parents or friends to borrow from their pension or savings.

We then set aside 10 months’ living expenses with the implicit understanding that if we failed to make it in 10 months, we’d all go out in search of employment.

To our surprise, we exhausted this amount in three months, even with my partners living a five-minute walk away from my apartment, and all of us trying to save up on every cent we had.

Entrepreneurs do not wait for infrastructure; entrepreneurs build infrastructure. For the first two weeks, nobody came to sell on Alibaba, so we had to list our own products, and when no one came to buy, we bought them ourselves.

The first month, nothing was being bought on the site and we bought everything ourselves and filled up a whole house with junk. We’ve come from selling virtually nothing to selling products worth $550 billion (Sh57 trillion) last year, and in less than 10 years.

How do you build a team that believes and shares in your vision?

In 1995, I visited the US for 29 days and I discovered the Internet.

I went back to China and said I want to do something called the Internet. But no one had heard about it, and even the government would not let me register a company called ‘Internet’.

It takes some time to convince people of your vision, and you do this by your actions. You need a team that will help you chart your long-term vision and all the milestones along the way.

You can tell a good company by listening more to young employees than to the CEO. If they believe in the vision, then everyone will believe him and trust him, and the company has hope. The young people in a company are an indicator of where the company is going, and if they can describe its vision for you, then that’s the hallmark of good leadership.

What does an entrepreneur need to do to ensure he or she becomes a good leader?

Leadership does not have a specific style, and any entrepreneur can be a good leader as long as they have a vision.

When other people get disappointed, you should be able to see ahead and recognise the opportunity, and when everybody is excited, you should be able to see the disaster ahead.

As the CEO of Alibaba, my job is to see the problems ahead and nip them in the bud. A good leader should inspire a team and also discipline a team. Make sure your employees believe in the dream, are happy and your customers are happy.

Do not spend so much time with your shareholders, but rather with your customers, employees and even competitors.

Leadership is also about ensuring you create value for the people who join your company so that if they leave your company three years later, for example, they should be different people. If the people do not change, then the products will not change.