Alibaba IPO: Coverage From Fast Company
Join Fast Company editors and writers for the latest news and reaction.
Wall Street, start your engines: After months of anticipation, the biggest tech IPO of the year—and perhaps of all time—has finally arrived. On Tuesday Alibaba, the Hangzhou-based e-commerce company that dwarfs rivals like Amazon and eBay, filed for an initial public offering in New York.
The event marks a tipping point for China's economy as it matures beyond manufacturing and serves as a harbinger of the increasingly global nature of the sectors in which Alibaba operates, from retail to payments. It also has significant implications for Yahoo, which has struggled to grow outside of its 24% stake.
Join us here as we compile new developments and commentary.
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A total of $248 billion was spent on Alibaba's 3 shopping sites last year, roughly the same as Finland's economy. on.wsj.com/1mzwZJH $by WSJ Tech via twitter 5/6/2014 9:50:40 PM -
From the archives, our 2007 interview with Alibaba founder Jack Ma: cnnmon.ie/RlnFLiby Fortune via twitter 5/6/2014 10:09:08 PM -
Who is Jack Ma?
Can you imagine Jeff Bezos hosting a mass wedding for Amazon employees once a year? Probably not. Alibaba founder and chairman Jack Ma, an English teacher turned billionaire, shares the competitive spirit that drives his U.S. contemporary--witness his defiant battle cry in the face of challenges brought by eBay and others--but the stylistic similarities stop there.
Back in 2012 Fast Company went behind the scenes at Alibaba, as well as China-based technology companies Youku (video) and Baidu (search). What did we find? Celebratory clappers, plastic sunflowers, and corporate values infused with Chinese sensibilities around family and teamwork. Read more about “the man who puts the ‘cult’ in Chinese corporate culture.” -
by Quartz via twitter 5/6/2014 11:38:14 PM -
I'll bet the Alibaba preliminary S-1 filing is the most popular page on sec.gov right now.
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The "risk factors" section is usually my favorite. Here's the kind of thing you'll find there: "If we are not able to continue to innovate or if we fail to adapt to changes in our industry, our business, financial condition and results of operations would be materially and adversely affected."
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As well as useful financial details like this one:
We primarily derive our revenue from online marketing services, commissions based on transaction value derived from certain of our marketplaces and fees from the sale of memberships on our wholesale marketplaces, and we have experienced significant growth in our revenue. In particular, our revenue grew 72.4% from fiscal year 2012 to fiscal year 2013, and 56.6% from the nine months ended December 31, 2012 to the nine months ended December 31, 2013.
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One unanswered question: Will Alibaba list on the New York Stock Exchange or Nasdaq? As Bloomberg's Sam Mamudi writes:
For both exchanges, there’s more at stake than the right to brag about hosting what could be the largest U.S. IPO. A victory for IntercontinentalExchange Group (ICE) Inc.’s NYSE would underscore how it’s undermined Nasdaq OMX Group (NDAQ) Inc.’s former dominance over technology company listings. Nasdaq can show it’s moved past the technical errors that plagued Facebook Inc.’s debut on that market in 2012 and contributed to Twitter Inc.’s choosing NYSE for its listing last year.
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This chart, from the filing, shows Alibaba's sweet spots compared to overall consumption in China.
Breakdown of consumption in China
(% total consumption expenditure in China, 2013)
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Alibaba processed $5.8 billion in transactions on Singles Day last year. In addition to being China's biggest online shopping day, Singles Day is literally a holiday for people who lack a steady romantic partner. The holiday's origins are mythical--one popular origin story gives special significance to numbers, as is the Chinese way:...once there were four single men, leading very boring lives. None of them were married, or had lovers, or did anything exciting. They just sat around all day and played Mahjong.One day they played Mahjong from 11 in the morning until 11 at night. During the game, no matter who won, the winning card was always the 'four columns' card (the card shows four independent, parallel columns in two lines). Even more of a coincidence, it was Nov 11, or 11/11. In order to commemorate the day, they nicknamed it Singles Day.Singles Day was first celebrated at various universities in Nanjing, capital city of Jiangsu Province during the 1990s. It got the name Singles Day because the date is comprised of four "ones". These college students have since graduated, and carried their university tradition into society. Singles Day is now a special day for all fashionable youths.Regardless of the holiday's origins, one thing is clear: Alibaba has successfully co-opted it in the name of cold, hard cash--last fall Alibaba processed a whopping 254 million orders on Singles Day. That must have warmed even the loneliest hearts at the ecommerce giant. -
The filing notes that last year "per capita retail space in China was 0.6 square meters, which was significantly lower than that in the United States, the United Kingdom, Japan and Germany, according to Euromonitor International."Alibaba says that what China lacks in powerful physical chain stores is one of the company's key market advantages. As the company writes in its filing:China’s offline retail market faces significant challenges due to few nationwide brick and mortar retailers, an underdeveloped physical retail infrastructure, limited product selection and inconsistent product quality. These challenges in China’s retail infrastructure, which we believe are particularly acute outside of tier 1 and 2 cities, are causing consumers to leapfrog the offline retail market in favor of online and mobile commerce.
China’s retailing industry, coming of age in an era of digital disruption, will probably follow a trajectory different from that of retail sectors in other markets. In developed nations, the industry typically followed a three-stage path. It began with the rise of regionally dominant players. This field then consolidated into a smaller number of national leaders. Eventually, online players challenged them, and the industry became multichannel. Some brick-and-mortar players (Tesco and Wal-Mart Stores, for instance) have embraced a multichannel strategy, while others (such as Borders in the United States and Jessops and Woolworths in the United Kingdom) have been driven from the market.China differs from these developed markets, however, because a crop of national leaders has yet to emerge in traditional retailing. Building stores across China’s considerable geography, with its many smaller cities, takes both time and high levels of investment. As a result, China’s largest brick-and-mortar retailers have captured a smaller share of the country’s overall retail market than have major players in the United States and elsewhere: the top five retailers by category hold less than 20 percent of the market—much lower than US levels of 24 to 60 percent in comparable categories.In China, the combined effects of the complexities of store expansion and a distinctive model of e-tailing could lead to a different retail dynamic: as e-tailing continues to grow, China’s industry may leapfrog the second (national) stage, passing directly from the regional to the multichannel one. In fact, China’s online ecosystem of marketplaces and agile support services has grown rapidly precisely because it can exploit the inefficiencies and higher costs of China’s existing retail market. Already, the major online companies Alibaba (which owns marketplaces such as Taobao) and 360buy.com (focusing on sales of electronics) have established a prominent national role, ranking among China’s top ten retailers. -
Why Hong Kong Lost The Battle For The Listing
The New York economy stands to gain $1.1 billion in fees related to the offering, according to financial analysts at Privco--dollars that could have gone to Hong Kong, where Alibaba.com conducted its first public offering seven years ago. (How times have changed for technology companies--that 2007 offering raised $1.7 billion, an amount in the same ballpark as this offering’s fees.)
It’s a win for Wall Street, but not everyone is declaring victory. Alibaba passed over Hong Kong because its exchange is one of the few remaining in the world that does not allow dual classes of stock. The New York exchanges, in contrast, have welcomed with open arms companies that want to give executives and other select shareholders unequal voting rights.
When everyone from Berkshire Hathaway to Facebook is playing the dual class game, surely it’s a good idea? Maybe not. This Bloomberg View editorial raises serious concerns about the trend--“unequal voting rights simply allow bad managers to avoid accountability”--and points to research and performance data that back up its argument.
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The partners who control Alibaba are anonymous and all-powerful qz.com/206943 via @qzby MaxNisen via twitter 5/7/2014 12:37:34 PM -
Yahoo plans to sell 40% of its stake in Alibaba through the IPO--and stands to gain $10 billion in cash as a result. With that cash burning a hole in her pocket, what will Yahoo CEO Marissa Mayer look to buy?
Yahoo could look at purchasing public companies including AOL Inc., which may help deliver sales growth, [BGC Partners analyst Colin] Gillis said. Mayer may also add to her string of startup acquisitions with Web companies that can generate more visitor traffic, he said.
On the startup side, other analysts have floated ideas like Pinterest and Snapchat. -
Will Alibaba Group's IPO be the biggest in history? To earn that distinction, the company would have to beat out Facebook, General Motors, Visa, and more:
Source: Bloomberg -
49-year-old Alibaba founder Jack Ma is a former English teacher. He started the company in his Hangzhou apartment 15 years ago with $60,000 his friends pooled together for him. Ma certainly has experienced his share of failure--at one point in his life, he was rejected from a job he applied to at Kentucky Fried Chicken.
In 1995, I went to Seattle...My friend said Jack, 'This is internet.' And I have never heard about the internet and never used the computer before that day. My first time in my life I used the internet, I touched on the keyboard and I find well -- this is something I believe; it is something that is going to change the world and change China.
-- Jack Ma -
Understatement of the F-1, from the "challenges" listed by Alibaba Group: "the regulatory and legal system in China is complex and developing."
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Alibaba has fast growth, but a risky corporate structure, says the NYT's Deal Professor. nyti.ms/1jb5aEbby Vindu Goel via twitter 5/7/2014 4:13:46 PM -
Alibaba in 1Q 2014: higher profits and stronger revenue growth than eBay, Amazon:
Source: The Wall Street Journal -
The SEC could stop the Alibaba IPO over an auditing issue: bv.ms/1s3ItSH via @BVby Paula Dwyer via twitter 5/7/2014 6:57:02 PM
