Duncan Clark, a shortlisted finalist for the 2016 Financial Times & McKinsey Business Book of the Year Award, is the author of Alibaba: The House That Jack Ma Built, an insider’s account of the rise of Chinese e-commerce giant Alibaba under the leadership of Jack Ma. As the founder of investment advisory firm BDA China and a Visiting Senior Fellow at the Institute of Global Affairs at the London School of Economics, Duncan is known as a leading advisor on China’s technology and consumer sectors. He recently joined Andrew Hill, management editor of the Financial Times, for a Heleo Conversation on Jack Ma’s enigmatic leadership style, the desire for mythology-building, and the implications of one man’s becoming the personification of a company.
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Andrew: Your book is based on your personal experience of knowing Jack Ma. What’s he like? How would you describe him as a leader, manager, and person?
Duncan: His ambition’s always been very big. Yet, somehow, his personal charm, sense of humor, and self-deprecation made him different from the others who talk big, but were clearly just showing off and trying to out-talk the next guy.
It’s an unusual combination of ambition and humility, and it draws on his background as a performer—his parents were stand up performers—and also his background as an English teacher and a tour guide.
It’s funny to see him now in these huge events. I just saw him on Thursday, actually. He’s been on stage with David Beckham and Victoria Beckham and Scarlett Johansson…
Andrew: Does he seem be more at ease on the big stage? Or is he equally at ease both on stage and one-on-one?
Duncan: He’s very relaxed. Arianna Huffington was talking about how Jack had invested in her new venture, which is all about balance and lifestyle. She was telling me that he sought her out. She thought it was going to be about publishing in HuffPo, and he’s like, “No, it’s about work-life balance.” Also in his family, in his circle of friends, there’s been a growing awareness of the downside of China’s industrialization in terms of pollution, the incidences of cancer, the stress levels. He’s one of the first in China to talk about that.
I think he views celebrity as a means to an end. He understands the importance of marketing to his mission. If you look at it, Alibaba is not the classic tech company. First, he doesn’t have a particular background in math and science. But also, if you compare them to Tencent, the other biggest Chinese internet company, there are far more salesmen and marketing people in Alibaba than Tencent. Much like you would compare Facebook with Google. Google is more a tech/engineering company. Whereas Alibaba does a lot of sales. He’s very comfortable doing that. He is a salesman at heart.
Andrew: Work-life balance rings a bit oddly, because what comes through very clearly is the way he and the people around him worked incredibly hard to make sure that this business succeeded. Against all the odds and the previous businesses that didn’t succeed.
Andrew: Is it paradoxical that he’s looking back and saying, “The work-life balance, I should get that right?” There’s presumably a number of Alibaba employees, current and former, rolling their eyes at that and thinking about how hard they had to work.
Duncan: I did seek out people who’d left the company, including one who was fired from the company, David Wei. It’s strange—they don’t have harsh words to say about him. In some cases, Jack will stay in touch even with people he had to lay off during the early downturn after the dot-com crash. You’re right, he expects people to work hard. But he injects a lot of whimsy and fun into the culture. You get that impression when you visit. They have vegetable shops on campus where you can take fresh veggies home.
He tries to make it a community. Also, he doesn’t expect people to work for him forever. He’s created opportunities for people to effectively cash out. He’s said you should buy a flat, take care of your family, shouldn’t be there forever and ever. He’s trying to create the opportunities for people to build up their life and move on if they need to. He’s always talking about the team. He loves to be underestimated and likes to emphasize how important other people are.
Andrew: One of the other things that comes across very strongly is this sense of humor, but also the rather martial vocabulary that he uses to inspire people, even talking about long march culture, which seems to have both a light and a rather dark side. Are these paradoxes or actually all part of the same atmosphere?
Duncan: He’s a performer and he knows his audience. One American executive said, “Sometimes he’ll talk to me about George Washington and the cherry tree and the next minute he’s talking about Mao to a group of Chinese executives.” He would say, “I know what will resonate most.” So, in a sense, he’s a chameleon.
“He’s very inspired by that mainstream U.S. business stuff, mainstream Hollywood culture, Chinese martial arts/pulp fiction. This is not the rarefied intellectual stuff. He likes to bash Harvard. He seems himself a man of the people. He taps into people he sees have this appeal and this message.”
Sometimes I’ll be in a room, and I like to turn around and look at the faces of the people looking at him, trying to figure out what it is about Jack that is pulling people in. I remember when he and Bill Clinton were on the same stage together back in 2005—they were peas in a pod. This ability to think that they are talking to you, and you alone, in the room. He has a rare charisma.
It would be naïve to say it’s all altruistic. There’s a utility behind it. He has that gift of communication but he knows how to get what he wants out of people.
Andrew: It’s a Chinese version of the cult-like culture that Jim Collins and Jerry Porras talked about in Built to Last.
Andrew: From the outside, it has a strong Chinese feel to it. But I was surprised when you were writing about the mission statement, called the ‘Six Vein Spirit Sword’—although it sounds like something out of a video game, that’s actually built on Jack Welch’s way of running General Electric.
Duncan: He’s very inspired by that mainstream U.S. business stuff, mainstream Hollywood culture, Chinese martial arts/pulp fiction. This is not the rarefied intellectual stuff. He likes to bash Harvard. He seems himself a man of the people. He taps into people he sees have this appeal and this message. He mashes them up and so he is a product as much of West as East.
The very fact that the business model, the inspiration, the capital came from outside China, and his personal icons include people overseas, makes him different.
Andrew: One of the things I’ve been pondering for a while is whether we’re going to see a Chinese style of management emerging. A lot of the companies that I’ve looked at in China have very clearly used western management consultants and Chinese gurus to advise them. Is this a Chinese style of management that Jack Ma is evolving?
Duncan: I think it’s a combination. The Zhejiang model, the networking of entrepreneurs, that’s how he’s able to do this logistics business, which the SEC is still investigating. Can these really be considered separate off-balance sheets for Alibaba?
There’s this web. It’s almost like 3-D capitalism and the SEC is looking at it with 2-D glasses, is one way to think about it. There’s a cultural disconnect. How can a company work through all these affiliates and friends and co-investments? It’s a dense web. In a sense that’s reflecting the nature of capitalism in Zhejiang, which is a long way from Beijing and is famous for being independent and self-reliant. We have to understand that Zhejiang flavor of Chinese capitalism, which is very different from his rivals.
Andrew: Maybe it’s not even valid to talk about Chinese style of management, maybe it’s regional specialties.
Duncan: There was a traditional style of Chinese management, which is frankly why I found him so interesting: the boss, in a very large office typically. I once described visiting one who had this James Bond-style fish tank in the middle of the conference room table and Trump-esque, gold Rolls Royce in the lobby. There’s that brash showing off, cowering acolytes and everything. Yet, Jack turned it on its head. When he brought in the chap from GE, he said, “You take half my office, so people can see.”
“Increasingly, you see companies essentially producing their own hardback version of their history. Companies want to build their mythology. They need a founder myth.”
That really woke people up. Even things like punch cards, you still see that in Chinese companies. People need to know where you are at all times. You have different flavors of that in the west. Bloomberg employees supposedly are tracked when they go to the bathroom!
With the people there [at Alibaba], there’s a lot of counseling and sharing of ideas and looking at problems together. It’s very different from its rival Tencent, which is much more of an engineering-driven company. They take small steps, tweaking products, enhancing them. Whereas Alibaba is, “We’re going to climb that mountain together. Let’s attack.” There’s a range of flavors in this Chinese corporate kitchen. It’s replacing something that was really quite stale, the bossy boss kind of guy.
Andrew: Yes, I’ve noticed that, increasingly, you see companies essentially producing their own hardback version of their history. Companies want to build their mythology. They need a founder myth. That’s not unusual in Chinese companies. Is that true of Jack Ma that he wants to retell these stories about the founder myth of Alibaba?
Duncan: It’s interesting, my book is one of now 300 [about Jack Ma] in Chinese. (The Chinese version came out in August). There’s a whole section of bookshops in China called Success Studies—mostly Chinese, but also a lot of Western business and leaders. The Jack Ma section is the biggest. In English, there aren’t that many, and that’s what I saw as my opportunity. He’s been saying himself he will write his own book called A Thousand and One Mistakes. Part of his faux self-deprecation thing.
He actually doesn’t like a lot of them: most of the 300 Chinese books, if you read them, are what the Chinese call kiss-ass, ingratiating things. I don’t think he covets that, but he does tell the story. We went back through all of the speeches he had given in Chinese and English, and there was a remarkable consistency. We literally have a spreadsheet with “theme” down one side and “talk” across the top. We realized he’s basically just using the same nuggets, that’s why I mentioned he’s kind of like a stand-up comedian. He has his shtick. He draws on it but always updates in different ways and customizes for his audiences.
I don’t think it was that comfortable for him to have other people do it. In the end I got the thumbs up from his assistant saying he liked it. But I didn’t write it for him. I think he was nervous about my going into his family situation. I decided not to go into much detail about that. He tries to keep his privacy. He’s been saying recently that, “The worst decision I ever made was to found Alibaba.”
Andrew: The ultimate self-deprecation when you think of his success.
Duncan: Exactly. He has a narrative within the company. I’m not sure he’s comfortable when other people take it up.
Andrew: You came out net positive about him and the company.
Duncan: I’ll admit that.
Andrew: What are his key weaknesses?
Duncan: In a weird sense, his generosity and equity. How much he gave away, initially to Goldman then to Softbank. He was quite generous giving away stuff. Even the 18 co-founders, he felt they rode on his coattails and he had taken all the hard stuff. I never got clear answers from everybody around him, but there’s an element there maybe Jack regretted. Perhaps his initial generosity and his focus on the team left him feeling a little frustrated. Frustration that they couldn’t give more equity to key people in the company. That Softbank had blocked that.
Andrew: It sounds like a weakness you might select if you were trying to show how great you are. “My best weakness is being over-generous.”
Duncan: Yes, “people tell me I work too hard.”
Andrew: Too nice to people, et cetera.
Duncan: Also, he says he doesn’t want to be the face of the company. He stepped down as CEO, but nobody really talks about Daniel Zhang, the second CEO. As Steve Jobs is identified with Apple, Jack perhaps even more is the embodiment of Alibaba.
Andrew: You say at one point he’s the ultimate personification of the company. He is trying to distance himself or, rather, to take a step into another area with the philanthropy. That seems to be contradicted by the structure that he’s put into place to maintain elements of control over the group in the IPO. Is it actually realistic to think of him stepping away? What if he can’t? Might that be yet another example of a company that finds itself so embedded in the behavior of its founder that it can’t evolve?
Duncan: Private companies in China today are beginning to bump up against a ceiling imposed by the state. Particularly as Alibaba moves into entertainment and finance. To some extent I feel like Jack’s primary role now is to create the space for the company to grow in those areas. He’s almost too dominant in e-commerce. Recently, he started saying, “Alibaba is not really an e-commerce company.” Which is ridiculous, but he’s saying, “We’re increasingly a data company, an entertainment company.”
Honestly, 60% or 70% of his time is dealing with Chinese government agencies. 40,000 government agencies visited the company last year. How far can a Chinese company go in a global market? If you look at the work he’s doing, courting heads of state, now with this new EWPT thing, he’s trying to be the flag carrier for globalization at a time when it’s becoming increasingly unpopular, by saying this is going to create jobs for small and medium-sized enterprises.
He’s focusing on anticipating some of the problems that come from scale and impinging on the state, particularly as we saw in finance. We’ve seen his frustration, when he’s saying state banks should get out of the business if they can’t reform themselves. That creates problems for him and his PR team.
His mission is, by going into areas like environment and health care and philanthropy and entertainment, helping in a way the communist party was not very good at. He is pushing into areas which can be controversial and he needs to push into other areas which are supportive of the government’s headaches, helping them resolve their headaches.
Andrew: Are you resigned to the fact that you’re going to be the world Alibaba expert from now on, or are you working on the next project, another company, another Chinese entrepreneur?
“We need to stop treating China as this one monolithic country. Stories that come out of cities like Shenzhen and the resurgence of Zhejiang—these are things we need to understand to give us a view beyond Beijing and Shanghai.”
Duncan: Obviously, I think the most other consequential company would be Tencent. I’ve known them for a long time, but they’re very different in terms of the founder being very low-key. Tencent’s interesting, but it doesn’t quite have Jack’s personality to pull it all together. I like the fact that there are a range of other companies coming in different flavors. Perhaps that’s the next thing, that there isn’t just one Chinese company. Alibaba is fairly unique given the character of the founder.
If you look geographically, it’s just as interesting. As much as I wrote about Zhejiang through this book, I think Shenzhen is very interesting. You have Tencent, you have DJI, the drone company, and a number of others in this boom-town city.
We need to stop treating China as this one monolithic country. It’s hard because often it’s hard to pronounce the places or understand. Stories that come out of cities like Shenzhen and the resurgence of Zhejiang—these are things we need to understand to give us a view beyond Beijing and Shanghai.
This conversation has been edited and condensed.