So, Joe, excited to have this conversation with you. I want to start in 1999. You were making $700,000 a year in a job, and you were offered to join the startup Alibaba, where you were actually going to be paid $600 a year. You did this after a mutual friend introduced you to Jack Ma, who your friend said was very smart and kind of crazy. So my question for you is: why did you pick kind of crazy?
Well, thanks Jeffrey. Before I get to your question, I want to say I'm actually very honored to be interviewed by you on this stage. You've been a mentor to me, and the one thing that you taught me is how to treat people—treat all walks of life, no matter who they are, treat them with respect. I've learned a lot from you, so thank you very much. I'm very honored to be here. So the question about kind of crazy: why did I, what kind of crazy am I talking about? This was in 1999, when I showed up in this second-story apartment in Hangzhou to visit with Jack. I had read a little bit about him, in fact in The Economist. This is before anybody got famous, but the editor of The Economist, Chris Anderson, identified Jack as the Jeff Bezos of China. And we're like, who is that? Very few people knew Jeff Bezos back then, much less the person in China. I went to his apartment. Before I went into the apartment, there were like 10 or 12 pairs of shoes in front of it—you know, you take off your shoes before you step into people's homes. So I said, well, there maybe are some 10, 12 people working in this apartment. I went in, obviously Jack being the charismatic individual that he is, and I was just mesmerized by him for about an hour. Then I had to go to the bathroom, so I said, Jack, excuse me, let me use the restroom. He said it's right over there. I went in and I saw that there are something like 12 toothbrushes on the sink, and I realized these people were just living there 24/7. They were in sleeping bags, working away. And something dawned on me: this was the garage equivalent, the HP garage of China. And the thing that really struck me wasn't really the crazy part. I mean, Jack was talking about a big vision that I didn't really quite understand. He said to do a startup, you don't really have a business plan, you just kind of go along. Those are all the crazy aspects, but that wasn't the reason that I decided to quit my current job at the time to join Alibaba. It was really the idea that he was a leader. He was leading these disciples who truly had a belief. He gave them the mission about what technology was going to do, in particular internet technology, what it was going to do to not just the company but also the whole country.
At that time, did he have a real vision for what this was?
The vision at the time was to create an internet platform so that all the small companies, manufacturers, and trading companies from China doing exports could list themselves on this platform. In fact, we called it the BBS, the bulletin board system, and that was the first website of Alibaba.com. It was an English language site, in fact, and that's because it was made for non-Chinese people that are sourcing from China to use and buy stuff from China. And we were at the cusp of China entering the WTO. So once that happened, Chinese exporters—the export-driven economy came to life, and that was sort of what propelled the early success of Alibaba.
So talk about a pivot. You're a lawyer, you're a private equity investor, to give all that up to walk away and go into a tech startup is just a huge leap. So why did you think you could do it? What gave you the courage to do it?
I've always been a curious person, someone who's not satisfied with where I am. I always wonder what happens on the other side of the fence. As a lawyer, I was doing advisory work. Lawyers rarely control the decision; they give advice to clients and then the clients make their decisions. So I decided that I wanted to go from being an adviser to someone who is in a decision-making role. I joined a private equity firm. When you're investing, you are committing capital, you have to underwrite the investment thesis, and you're making decisions. But then I realized as an investor, I was sitting on boards of companies, but you're really not involved in the actual business itself. You simply allocated capital to entrepreneurs and management teams for them to do the business. So I became curious: what's on the other side? I wanted to be in an operating company. And the confluence of factors at the time was the rise of the internet. I think companies like Yahoo, eBay had come before Alibaba two or three years prior to that, and that felt really exciting. So for me, it was an opportunity to get on the other side of the fence, to see how a company actually operates, but in an exciting business like the internet.
How old were you at the time?
I was 35, I think. Had a family. I had been married for like three years, and then my wife had our first child—our daughter—on the way. So when she was born, we called her Ali Baby.
That's an amazing roll of the dice. So as we know, 99% of all startups fail. So why and how was this the one? How did this go on to become such a, you know, really one of, if not the biggest success in all of China, certainly at the time?
I think the title of this session is called Survival and Innovation, and in fact, there's a causal relationship—those two actually go hand in hand. I think from the very early days, we didn't have a lot of capital, so everything was about surviving, surviving the little amount of cash we had left in the bank. Because Jack taught everybody: as long as you live another day, you have an opportunity to create. So we had that instinct of, we got to survive, which helped us to overcome failures. A lot of startups fail. Some of their products iterate several times, they fail, and then they decide to fold the company and do something else. But Alibaba never did that. We kept going at it. You might say necessity is the mother of invention. So out of the desire to survive and kind of hang on to our last breath came a lot of innovation. In fact, if you look at the history of Alibaba, we did everything—all of our high-growth businesses were developed organically. We weren't successful with acquisitions, but we were an organic development type of company. We had a B2B marketplace, and then we went into the consumer marketplace, that's Taobao. Then we decided that payment was important to enable transactions to happen online, so we developed Alipay organically. And then we developed the monetization engine organically, basically doing a search-based advertising system on an e-commerce marketplace. So you can imagine a way of monetizing the marketplace via sort of search-based advertising, like Google interposed on a system like eBay. That was our invention, that was our idea, and today it's very profitable. That's still the case. So we grew our cloud computing business organically. So I think the idea is that as long as you can survive and hang on to your breath for just one more day, something good may happen.
All right, so you hold your breath and 15 years later you take Alibaba public, largest IPO ever, raised $25 billion, market cap of the company is over $230 billion. And now 25 years since the founding, and now 10 years after the IPO, what's the most exciting thing on the horizon today for Alibaba and for you personally?
Every day I'm in the company, I feel excited, and that's because I get to work with young people that are smart, that are creative, that are innovative. Alibaba does have this DNA of letting young people, letting our team, do a lot of the innovation. It's not a very top-down driven type of company. We like innovation from the bottom up. So today, what's quite exciting to us, obviously the hot topic today is AI.
So before you jump into that, one thing is that there's a great quote from you, and you've been popularizing that even more in this last 18 months since you've returned to be chairman of it: 'My job is to get out of people's way.' Most chairmen don't think that way. Explain.
I've been with the company for 26 years, so I didn't feel like I need to prove to anybody that I'm in control, I'm in charge. About 18 months ago, prior to that, I was for about two or three years slowly phasing out of the business. As one of the founders, I thought the company was already very large and going on its own path. Then 18 months ago, I came back into the chairmanship because I felt, and a lot of people felt including our board, that we needed to change the management team. We put a fairly young CEO in place. The CEO of our company is 12 years younger than I am. They said, 'Joe, why don't you come back as chairman, not CEO?' Because we need an old pair of hands, if not a steady pair of hands. So the first thing I walked into the board meeting, our lawyer said, 'Joe, now you're the executive chairman of the company.' I said, 'Wait a minute, don't give me the title executive. I'm the chairman of the company. I know I'm a full-time officer of the company, so I'm an executive, but my title should not be executive chairman.' I don't agree with the British system where they have an executive chairman and a CEO. The reason is, then who's in charge? Your employees are going to be confused, external parties are going to be confused who's really in charge running the business. In our company, I'm very clear: our CEO runs the company, and I provide support to the CEO. When it comes to allocating resources, I get involved in capital allocation decisions, I get involved in HR decisions if we want to create an equity-based incentive plan. He would want to consult with me on stuff like that. It's important that as chairman of the company, you don't get into people's way. A lot of chairmen can't let go, and I don't think that's the right way to develop the next generation of leadership.
Okay, so let's pivot over to one of the biggest, most important core businesses: cloud computing. And sort of differentiated maybe from Amazon is that you have been investing in and developing your own AI capability. What gives us the state of where you are today? Where are you in Grok 3 and DeepSeek and all these different competing LLMs out there? Where does Alibaba fit in this, and what matters to you? Where do you think the value is?
Well, I think Elon has already said Grok 3 is going to be the best AI ever, for the rest of eternity. So do I need to answer this question now? No. I look, I actually use Grok because I'm on X, his Twitter app, and they provide an interface to Grok which I use very often. I'm very impressed by the results. I also use a number of other AI apps, including our own. The answer to your question, this AI race—who's better, which AI is better—the answer yesterday is going to be different from the answer tomorrow. Right now, everybody is in a fairly tight race. The next model that's going to be launched is going to be better than some but not others, and then somebody else will launch something that's better than yours. We think that's what's going to happen. But what has happened, you mentioned DeepSeek, and it's quite significant. That's because they actually demonstrated that you can use some engineering innovation to drastically lower the cost of training and inference of large language models. Up to this point, people are massively investing into these frontier models. But here's the problem: if you think about training frontier models as an endeavor to educate your kids, and you want to have the smartest kids, develop them so that they can acquire PhDs, and not just one subject matter but 15 subject matters from math to physics to biology to psychology—everything. You want to have the smartest kids. If that's the case, take that into today's AI race: there's maybe only five or six rich parents that can afford to have the smartest kids. But is that something that we're really interested in? Probably not. You have to start to ask yourself, what is the purpose, what is the goal of developing AI? Is this to have the smartest child so that they can win every single Nobel Prize, or is it something different? There are a lot of problems in the world that need to be solved. There are a lot of issues that we need to use AI to apply so that it could be useful and productive and make an economic impact. So I think people are going to start, when they look at the phenomenon of DeepSeek, shift away from 'let's stop putting hundreds of billions of dollars into compute infrastructure so that we can train the smartest PhD in everything that can win the Nobel Prize.' Let's find out what are the actual problems in the world, and let's use AI to solve them. So a lot of people are going to start putting resources into applications. I think that's number one. Number two is DeepSeek has taught us the value of open source. If today your only purpose in life is to develop a closed-source AI system that is the smartest PhD student in everything, the Nobel prize-winning kid, I personally think the value of that endeavor is approaching zero.
