Currents:Book Review—A Taleof Two Entrepreneurs GILL IAN RICE

Branson, Richard. Business Stripped Bare: Adven-tures of a Global Entrepreneur, Virgin Books,2008. 352 pp. ISBN: 978-1-9052-6442-1 (hard-cover) $26.95.

Shiying, Lui, and Avery, Martha. Alibaba: The In-side Story Behind Jack Ma and the Creation ofthe World’s Biggest Online Marketplace, CollinsBusiness, 2009. 240 pp. ISBN: 978-0-0616-7219-4(hardcover) $25.99.

Before putting into place the strategy he used againsteBay, Chinese entrepreneur Jack Ma was fond ofsaying, “eBay may be a shark in the ocean, but weare a crocodile in the Yangtze River. We will be de-feated if we fight out on the open seas. If we fighthere in the river, there’s no chance they are going towin.” According to Lui Shiying and Martha Avery,Ma is astute: in terms of local support, nobody hasa stronger position than Jack Ma. eBay sought suc-cess in China as a vital step in its globalization. Incontrast, Jack Ma decided that his own consumer-to-consumer (C2C) Web site, Taobao, should relyon extreme localization and on the resources of itsnative country. Jack Ma loves a good fight, and thetougher the fight, the more he enjoys it. The harderthe work, the happier he becomes. Ma says of him-self: “I was scrawny when I was young but I was aterrific fighter.”

According to economist Joseph Schumpeter, in his1911 classic, The Theory of Economic Develop-ment, entrepreneurs feel “the will to conquer: theimpulse to fight, to prove oneself superior to others,to succeed for the sake, not of the fruits of success,but of success itself . . . . There is the joy of creating,

of getting things done, or simply of exercising one’senergy and ingenuity.” Thomas McCraw (2007),Schumpeter’s biographer, observes that Schumpeterwas the first economist to analyze the psychology ofentrepreneurs and to note that they were not mo-tivated purely by a wish to grow rich or by any“motivation of the hedonist kind.”

Jack Ma and Richard Branson both depictthe essence of Schumpeter’s observations of en-trepreneurs. Business Stripped Bare, by British en-trepreneur Branson, is the third book in which herelates his philosophy and practices as head of theVirgin Group; the book’s subtitle, “Adventures of aGlobal Entrepreneur,” speaks to his attitude aboutlife. The back cover declares in Branson’s scrawl,“the brave may not live forever—but the cautiousdo not live at all!” Across the globe, Chinese en-trepreneur Ma, creator of Alibaba.com, the world’slargest business-to-business (B2B) Web site, lives bya maxim written by Louis Cha (who writes mar-tial arts novels under the pen name “Jin Yang”):“Rather than stand idly by the pond, longing for fish,far better to go out and make a net.” In May 2009,Time named Ma as one of the Time 100—one ofthe world’s most influential people. Shiying and Av-ery emphasize Ma’s healthy attitude toward failure;he redefines it as success: “success lies not in howmuch you have accomplished, but in the fact thatyou have done something, experienced the process,and begun to learn something.” Similarly, Bransonopines, “failure is not giving things a go in the firstplace.” He also doggedly keeps going, moving onto the next project. He advises: “if you’re hurt, lickyour wounds and get up again. If you’ve given ityour absolute best, it’s time to move forward.”

c© 2009 Wiley Per iodicals , Inc .Publ ished onl ine in Wi ley InterScience (www.interscience.wi ley .com)

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Both Business Stripped Bare and Alibaba are ener-gizing reads. As so often is the case with exceed-ingly successful entrepreneurs, Branson’s and Ma’sare good stories because their earlier lives give lit-tle hint of what is to come. As a child, Ma struggledthrough China’s Cultural Revolution; his family wason the wrong side of political correctness because hisgrandfather had been affiliated with the Kuomintang(the side that had lost during China’s Communistversus Kuomintang civil war). As well as strugglingin this social sense, Ma did poorly at school, exceptfor his outstanding English ability. His personablegeography teacher encouraged her students to studyEnglish so they could tell foreigners about China. In-spired, at just 12 years old, Ma bought a radio andlistened to the English broadcast daily. As the policyof opening and reform had not yet begun in Chinaand nobody knew what would happen politically,learning English as a young person then was a bril-liant decision. To practice, Ma sought out foreign-ers at Hangzhou’s famous West Lake and in hotels.Despite not being able to pass the college entranceexam until the third time, Ma eventually became anEnglish teacher, organized Hangzhou’s first EnglishCorner, and set up a translation agency. His workas a translator for the Hangzhou municipal govern-ment provided him an opportunity to travel to theUnited States for a month in 1995. In Las Vegas, hegambled $25 and won $600. He used this sum totravel to Seattle; because he was curious about theInternet, he met there with a small Internet serviceprovider. Excited and enthusiastic, he had an idea togather information on Chinese enterprises, put it ona Web site, and broadcast it to the world. Startingwith money from his friends and family, he arrangedto have Web pages for his China Yellow Pages devel-oped in the United States, because prior to July 1995in China there was almost no access to the Internet.The small and medium-sized businesses targeted byJack Ma, a “nobody” who was not from an elitefamily or an elite college, viewed him as a trickster,but Ma had a keen sense of the market and was ex-tremely persistent. As Internet usage grew in Chinaand competition for the China Yellow Pages became

severe, Ma partnered with Hangzhou Telecom. Dif-ferences quickly led to a split, and Ma and his teamleft to work with the Ministry of Foreign EconomicRelations and Trade. An entrepreneurial personalitydoes not sit well in such an environment, and Maleft after 14 months. In 1999, followed by his team,he quietly began his new business, a business-to-business (B2B) online marketplace called Alibaba,in a sleepy residential neighborhood in Hangzhou.Ma behaved according to an ancient Chinese say-ing: “the most accomplished are those who keeptheir cutting edge concealed, for only then can aman reach the ideal state of being.” Shiying and Av-ery describe Ma during Alibaba’s preparatory pe-riod “as silent as a rabbit.” He disappeared frompublic view. A local Hangzhou publication titled anarticle, “Alibaba Refuses Visitors, While Wantingto Be a Global Trade Marketplace.” Ma’s reticencewas extremely effective in spurring both the Chineseand global media to great curiosity. Investors soonfollowed.

Branson left school at 15 to start a student maga-zine. When asked by Bob Schieffer, the former CBSNews anchorman, at the Aspen Ideas Festival in2007 why he had “gone into business,” Bransonstared at him, then said he had never been interestedin business; rather, he was interested in “creatingthings.” In each new company, he tries to create theatmosphere, excitement, and enthusiasm of Virgin’searly years. Branson has frequently been criticized inthe business press for investing in too many appar-ently unrelated sectors (airlines, trains, health clubs,finance, music festivals, mobile phones, and so on)but responds that the Virgin brand is about “enjoy-ing life to the full.” No surprise that the brand is soclosely identified with its instigator. In contrast withMa’s clever quietness with the media, Branson hasa reputation for outlandish PR stunts. He does keephis “cutting edge concealed” till the appropriate mo-ment, however! Branson jokes that if Virgin hadn’tdiversified and had stuck with the record and musicindustry, which faces challenges today from digi-tal downloads, Virgin might well have disappeared.

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Branson agrees with conventional wisdom taught inbusiness schools that one should focus on a corebusiness and what one knows. That Virgin is an ex-ception appears to derive from the way customersand investors relate to it: as an idea or a philoso-phy, rather than as a company. Perhaps, Bransonwonders, Virgin has grown up to be one model ofwhat a modern company should be. By making thecustomer the focus of each of its businesses, andtherefore by giving customer service a brand name,Branson believes Virgin has created something gen-uinely new in the business world—something forfuture generations to emulate and build upon. Dur-ing the development and cross-fertilization of hisvarious Internet businesses over the past ten years,Jack Ma has also made an attitude of total customerservice central. Introduced successfully in China bythe Haier appliance company, this attitude by theChinese is known as the “one piece of fabric” con-cept. When Haier’s service people first started goinginto homes to install an air conditioner or refriger-ator, they would bring with them a piece of fabricwith which they would wipe away their tracks be-fore leaving. This simple gesture of respect madecustomers so happy that it became an effective salestool. Ma declares: “Only through conscientious ser-vice can one win a customer’s satisfaction and trust.This is the path to growth for any enterprise.”

Branson is very annoyed by business leaders whoseek, in their writings and in interviews, to turntheir industries into complex puzzles or subtle chessgames. An underlying business model is always fairlysimple, he contends, and points to his own experi-ence in learning how to enter the transatlantic air-line business in just four months. He acknowledgesthat the process to start Virgin America took fouryears because of lobbying and blocking tactics by anumber of airlines; ironically, these did not includethose he considers to be his most direct competi-tors: Jet Blue and Southwest. Branson often entersindustries as a late mover and purposely disrupts thestatus quo in order to simplify things for consumers.Virgin’s mobile phone entry in the United Kingdom

is a clear case. When demand for mobile phoneswas skyrocketing in Europe in the late 1990s, theindustry deliberately shrouded itself in complexityto fool customers. Customers signed up for longcontracts and paid for a certain number of min-utes and text messages. If they used more than this,they were charged more per minute, not less, as agood customer might expect. Branson entered theprepay market and rewarded those who were loyaland heavier users with a lower charge per minute.The huge success of Virgin Mobile in the UnitedKingdom led to rollout of the concept in othercountries.

Branson’s philosophy is that someone should bein business to deliver change. He acknowledges thatbeing well funded provides a huge advantage, sobig businesses have the capability to enter new mar-kets. However, he notes that the good news for smallbusiness is that big ones rarely bother to use their ad-vantage to its maximum. Why? Branson’s answer:“Because they’ve forgotten how to think like en-trepreneurs. Worse still: many of them have forgot-ten how entrepreneurs feel.” He stresses that there isa fundamental difference between an entrepreneurand a manager. They are, indeed, usually differ-ent people. Entrepreneurs view the world differentlyfrom other people, create the opportunity that oth-ers don’t necessarily see, and have the dynamism toget it started. Yet, and here, recognizing his ownweakness, Branson explains that an entrepreneur isnot always good at the nuts and bolts of the day-to-day running of the business. The business creator’sjob, says Branson, is to find someone with the ex-pertise who understands the vision and is preparedto follow the path.

To achieve this successfully, Branson offers thefollowing two pieces of advice to emerging en-trepreneurs. The first is to sign all checks that go out.Even in the Virgin Group, he sits down now and thenand does this, and encourages his senior managersto do the same. Then, one can appreciate wherethe money is going and can cut out unnecessary

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expenditures quite dramatically. The second is tolearn the ins and outs of every department. Employ-ees coming with problems will be surprised at theadvice one can offer, and this is how business lead-ership is achieved. Branson refers to Brett Godfrey,who took the lead in starting the very successfulVirgin Blue in Australia. He insists that all seniormanagers spend time doing the manual jobs like lug-gage loading. As a business gets bigger, a managerialpersonality can stay with it and help it grow. An en-trepreneurial personality will find a manager, moveon, and enjoy setting up the next enterprise.

By 2004, Alibaba.com was the world’s largest B2Be-commerce site. Just as Richard Branson intends tokeep his business models simple, so Jack Ma aimedfor simplicity. Listing on the site is free and easy.Ma recognizes that a full package of value-addedservices is the key to Alibaba’s revenue generation:the TrustPass initiative (with International Trust-Pass and China TrustPass membership), which al-lows buyers to purchase with more security; the Ali-pay unique payment system; Gold Supplier status;TradePass software to increase the ease of doingbusiness; and the China Suppliers Club. Focusingon the small businesses that make up 85 percentof business is a profitable business model. To edu-cate policymakers and bring together a critical massof Internet entrepreneurs in a lobbying force, Macreated a series of conferences known as the Al-ifest, which has attracted industry leaders such asWal-Mart, Samsung, NEC, and Ingersoll Rand. Inidentifying the business opportunity of Alibaba in1999, Ma saw clearly that there were two parts ofthe value chain: the overseas buyers and the Chi-nese suppliers. At the time, most business modelsfocused only on the overseas buyers. Chinese stu-dents returning from overseas in particular focusedon these, because this is where they received theirsalaries. In contrast, Ma focused on the many smallsuppliers in China for his revenue. As he traveled toinform people about Alibaba, he hardly dared tellpeople that it was a Chinese company, because Chi-nese companies were not highly regarded then. This

is one of the reasons he chose the name Alibaba—itwas neither East nor West and familiar to all. Toreach buyers, Alibaba had to be global very quickly.Within a year, it became a multinational with em-ployees in 13 countries and, just as Branson stressesthat management of a newly created company is key,so Ma had to hire an experienced executive from GEto whom he delegated the managerial task.

Alibaba continues to maintain a flat hierarchy, anddespite lower than market-rate salaries, attractspeople on the basis of its corporate culture. Maencourages a happy, joyful work culture. He isthe son of dramatic communicators—professionalstorytellers—and Shiying and Avery contend thatMa’s personal vigor and motivational speeches arepart of what have propelled the company forward.To reinforce the idea that Alibaba is a team with astrong corporate culture, Ma has hung behind hisdesk a photograph of all its employees above thestatement: “We created Alibaba.”

In typical entrepreneurial style, Ma essentially mort-gaged Alibaba to bring his next idea into being—Taobao, the consumer-to-consumer (C2C) auctionmarketplace—investing the largest sum by a Chi-nese company in Internet activity since the burstingof the dot-com bubble. Also, behaving similarly toRichard Branson when he takes Virgin into a newindustry to shake things up a little, without warn-ing, Ma decided to allow users on Taobao to con-duct business free for at least the first year. Com-petitor eBay-EachNet’s user fees were the cause ofconsumer complaints and the Achilles’ heel for eBayin China. Ma also declared that no profits wouldbe expected for three years. He often says, “If aperson’s mind is always counting money, worriedabout money, he will never be able to satisfy thereal needs of customers. He won’t be putting the cus-tomer first.” As with Alibaba, Ma emphasizes thatthe first five dollars in a Taobao member’s pocketshould stay there and help him make 50 dollars.Only then should Taobao reach in and ask for five.Ma has also encouraged cross-fertilization between

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Alibaba and Taobao, leading Alibaba’s buyers andsellers over to Taobao and encouraging Taobao sell-ers to put product on Alibaba. In 2006, eBay shutdown its site in China.

Both Branson and Ma are not averse to formingstrategic cooperation and investment agreementswith partners. For each entrepreneur, being able toachieve a particular vision is the key. As Schumpeterwrote, they are driven by “the joy of creating, ofgetting things done, or simply of exercising one’senergy and ingenuity.” Ma specifically challengesthe conventional attitude toward money. “A lot ofpeople understand how to make money,” he says,“and there are plenty of people in the world whocan make money. There are not many who caninfluence the world, push society to make itselfbetter. To make a great company, that’s what youhave to do.” Ma is known for his appreciation ofWinston Churchill and he particularly likesChurchill’s famous words in his address of 1941:“Never give in—never, never, never, in nothing greator small, large or petty.” Richard Branson holdsgreat admiration for Nelson Mandela and has set upa group of Global Elders of which Mandela is one.Virgin facilitates periodic meetings of these Eldersin order to help others learn from their wisdom.

Branson argues that one of the greatest skills anentrepreneur can have is the ability to listen. A secretto success in any new sector can be watchfulness,

he suggests, usually over a period of many years.Both Branson and Ma have persisted in the faceof numerous setbacks. Ma believes that success isa state of mind, an attitude that is a function ofindividual choice. In this context, Branson quotesa story from Starfish, a charity that focuses on theAIDS orphan crisis in South Africa: “A girl walksalong a beach, throwing starfish back into the sea,when she meets an old man. The man asks the girlwhy she is throwing starfish into the ocean. She says:‘The sun is up and the tide is going out, if I don’tthrow them back they will all die.’ The old man says,‘But there’s a whole beach and it runs on for miles.You can’t possibly make a difference.’ The girl picksup a starfish and throws it back into the sea. ‘It madea difference to that one.”’

Reference

McCraw, T. K. (2007, August). Guest speaker: Mapping theentrepreneurial psyche. Inc Magazine. Retrieved May 21,2009, from http://www.inc.com/magazine/20070801/guest-speaker-mapping-the-entrepreneurial-psyche.html

Gillian Rice is Professor Emerita at Thunderbird School ofGlobal Management and was a Fulbright Senior Scholar atthe University of Bahrain in 1996–1997. She holds a PhDfrom the University of Bradford. Dr. Rice’s research in-terests include environmentally related consumer behavior,the fair trade movement, and models of employee creativ-ity and organizational innovation. She can be contacted atgillian.rice@thunderbird.edu.

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