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Alibaba Experiences: How to Find the Right Entrepreneurial Direction?

By ESC Editorial Team, over 5 years ago People
Alibaba Experiences: How to Find the Right Entrepreneurial Direction?

During the "Thousand Talents Program" entrepreneurship competition, Mr. Zhe Wei, who is the former vice president of Alibaba Group and one of the contest judges, gave a speech about ‘How to Learn from Alibaba to Become Surviving Entrepreneurs’. Below is the transcript of his speech.

To Find Direction - Take the initiative to find a small direction, but do not pursue all-sided direction.

"Today there are representatives from Softbank in the auditorium, I was fortunate to read the business plan written by Ma to Softbank in 2001. Today, the other business models and business strategies have all changed except for the phrase "To make it easy to do business anywhere". The successful entrepreneurial direction is the same, but the small direction of how to achieve the general direction is often changed or even needs to be changed.

The China's supplier system is Alibaba's first money-making products. This product is now almost 17 years old. But before its success, Alibaba has tried 23 different directions, only the 24th let Alibaba survive. "To make it easy to do business anywhere", the famous Alibaba’s slogan has always been there, but the concrete way of surviving could not survive 23 times and will not survive until the 24th attempt.

Why did Alibaba have the chance to try 24 times? Many companies may not even try twice and give up. Because Alibaba's team has always been guaranteed that money will always be on their account, we can do two or three different attempts again and again. Many founders make their transformation when they get into trouble, but Alibaba is building the roof even when it is sunny. This is the initiative transformation.

On the other hand, to be honest, every failure has certainly hit the founders and startups. In the face of such a blow, we must rely on a sense of value, a sense of life team. As mentioned earlier, Guan Ming Sheng played such a role. We often see that once a business transforms, the team's heart fails to turn, then the business has failed.

The second thing to find a direction is that too many companies did not figure out whether their own business model needs to be expanded quickly to the country or even the worl. There may be many investors who encourage your nationwide or even global expansion, but not all models need development between cities. Alibaba had made such a mistake. After financing, the branch business expanded in 1999 and 2000to more than 50 cities across the country and 10 cities across the world. Then came a global contraction and when it went public in 2007, 75% of Alibaba's revenue and 85% of its profits came from only two provinces, Zhejiang and Guangdong, which at that time supported a $25 billion market company.

In China, there are stories that one or two provinces can contribute to one or two billion companies. Is a nationwide expansion necessary for your start-up company today? When I joined Alibaba, it took me three months to visited 70 branches. Many people said that I worked so hard. But in fact it was very easy. I could go to four branches within a day. The prerequisite is high density and high distribution, which keeps the management radius small, so it is particularly efficient.

I would like to share four words with entrepreneurs - "broad, deep, high and fast". If you want to do all these four words, then you will surely die. You can’t do well in breadth and depth at the same time, in this moment you will have to ask yourself that which one is more important for my business to do first. This is also the direction.

For the development strategy, it is "broad, deep, high and fast", for the user experience, it is "more, fast, good, economical”. Similarly difficult is it if you want to provide users with four experiences at the same time. Because they are sometimes contradictory: convenience stores do "fast" and "good," Costco in the United States does "economical" and "good", convenience stores sacrifice "economical," Costco sacrifices The "more" and "fast". Turn to the e-commerce supplier, Taobao, it relies on "more" and "economical" to win, is it good or bad? That depends on your luck. How can JD keep up with Taobao? Since you account for "more" and "economical", I focus on "good" and "fast". JD suggested "three days delivery", then "next day delivery", then "same day delivery". So, for these four words, if you focus on one word, you are unbeaten; concentrate on two words, you can win; if you want to do three words, you will die; one step to do four words, dead.

Finding people, finding money, finding direction, the order has not changed, founders have to obey them and continue to do these three things themselves. Finding people will always be the first. But don’t forget to look for money and direction while looking for people. Entrepreneurship is indeed very difficult and the success rate is very low. Today, I shared some “growing” stories with you. It is difficult for us to change the death rate of more than 99% of start-ups in the world, but we hope that the survival rate of entrepreneurs who have participated in this activity will be much higher than 1%. Let us be rare winners and have the opportunity to enjoy poetry and traveling worldwide, thank you all."

Related Articles:
Part 1 - Alibaba's Experiences: How to Define and Hire the Right People for A Company?
Part 2 - Alibaba's Experiences: How to Handle the Capital?

Book Recommended:
More business philosophy from the Alibaba founder, Jack Ma in Never Say Never

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