For people who don't know who he is, please give us an introduction to Joe Tsai. He's the owner of the Nets and he's now chairman of Alibaba. Ladies and gentlemen, please welcome Joe Tsai.
Hey, my man. Good to see you.
Brooklyn Nets. And the New York Liberty.
It's not easy at all, because a basketball, any professional team, is both a business and also it's an institution. You need to keep the fan base happy. So there's sort of this church and state element.
Caitlin Clark definitely had an effect on the WNBA. All the metrics went up. This was last season, right, when she first came into the league from college. And we've seen all of our metrics from viewership, ticket sales, sponsorship, everything went up almost 4x. So the economic impact that she's made to the league is extraordinary. Undeniable. But because of who she is, she's a different kind of player. She's a point guard, she's a smaller player. The knock on her was: was she going to be able to withstand all the physicality of the league? And she's proven that she's able to do that. Unfortunately, I think it's always good to have rivalries. She has this rivalry with Angel Reese that dated back to college. But some people would like to pit it as a kind of racial thing. I think we need to look past that and just look at the skill set that's being brought into the league. Now we have so many great college players. The rookie of the year potential candidate is Sonia Citron. Have you ever heard of her before she came into the league? I think she just broke the record for the highest three-point shooting percentage in the league. You see a tremendous amount of talent. I think it's a confluence of good things coming into the league.
The one thing that's really changed is prior to the Caitlin Clark season, your average fan base that watches ESPN basically were not watching women's basketball. Maybe some follow college but certainly not the WNBA. But now your average ESPN fan base, they are watching.
I have an observation about this and you and I are old school basketball heads, having watched the '80s and '90s, Patrick Ewing and Charles Barkley. It's more physical. They're tougher in the WNBA. And every time LeBron goes up and gets fouled, he's flopping all the time. So maybe you could comment on that, or just generally the NBA product.
The NBA product is great. I don't think it's fair to compare whether the men's league is more or less physical than the women's league. They're both very physical. If you are sitting there on the floor, you are watching physicality. And also athleticism, right? But the game has — the NBA has this committee called the competition committee. So I got put on the competition committee. They call me and say, "Joe, we want you on the competition committee. It's about rules — like what is this transition take foul?" So the committee every season makes tweaks and changes. They make changes to reffing to make the product better. When I got the call, I'm like, you want me to sit on the committee with Jason Kidd, Chris Paul, and Coach K? Like, what do I know about basketball that can be smarter than them? But what I've seen is — I said the competition committee should be called the product committee, because that is the product the fans see on the floor. If you change, let's say, the three-point line, that is a product decision.
I think it's a great product because there are 18 different ways you can throw up 43 threes in a game.
I was just mesmerized by Jack's personality. People see the public side of Jack, which is very charismatic, but what I saw was he was able to instill faith in people. When I walked into his apartment, there were like 12 to 15 sort of very young people, roughly students that were just coming out of college, and Jack was kind of the teacher that's 10 years older. He's able to communicate, he's able to paint a very strong vision. That was the part that I really signed on to. His ability to lead is an amazing ability. He's a teacher by training — he taught at Hangzhou Normal University, he taught English. Teachers in a way make natural leaders because you have to communicate well, and you can identify talent. A lot of teachers love to see their students and say, "Oh, this kid is gonna do really well," so they write a recommendation. And also teachers have enough humility that they're very happy if their students go off and become more successful than they are. And in building a company, you need to be able to accommodate all sorts of people that are smarter than you are. And that's really important.
Alibaba has been around for 26 years. I would say the first 15 years were a complete free market kind of growth. We built a lot of business organically, and then we went into a phase where there was extreme competition. Everybody wanted to do e-commerce — because if you have traffic online, e-commerce was the best way to monetize your traffic. And today in today's market we have five very strong competitors, including the parent company of TikTok, ByteDance. They are doing e-commerce — they're not known as an e-commerce company, but they are one of our fiercest competitors. So there's a period of extreme competition, and then the government felt that this sector has gotten out of line a little bit. First there's too much competition, and then there are some platforms that have exhibited monopolistic behavior. So then there was — you know, people may call it a crackdown, whatever — more regulations came in. Some of the regulations are very good actually. They protected privacy, anti-monopoly type regulation. And now we kind of are in a new normal where we believe that the regulatory environment is more predictable. We know what the red lines are. We know where to go and where not to go. And it's actually made a better operating environment because of the predictability of it.
I don't agree with that view of the world.
I think I could understand why sitting here in America you look at the rise of China over the last 20, 25 years. China has become strong in terms of manufacturing — that's why it's such an export juggernaut. China has become a technology juggernaut as well. And the fear is: all that economic strength and technology strength is going to flow into military strength, and that becomes a national security issue. I understand that. I get it. But I think these are the two largest economies in the world, and I think you just need to take a step back and say, well, on the one hand we should compete with China — that's fine, the hyperscalers compete with the Chinese internet companies globally. But then on the other hand there are just so many trouble spots in the world. What did President Trump say — that he stopped seven wars? Okay. Well, China didn't start any of them. China has not started a war in the last how many years? 30 years, 40 years. China was part of the Korean War, maybe the Vietnam War, but that was a long time ago in history. So in a way, if you observe the behavior of the Chinese people and the Chinese state, it's a very peaceful nation. China cares about its own economic development. They care about the well-being of its citizens. And I think there's a lot of friction in the course of competition where China feels that the United States is trying to contain China and stop the rise of China economically.
One of the core products, TikTok, it's a fundamentally different product here than in China. And because of that regulation and a focus on the welfare of its citizens, there's strict rules in terms of the content and the curation and the algorithms. Whereas here, it's like cat videos and all kinds of nonsense. Although now I noticed that TikTok put a STEM section inside of TikTok in the American product.
Well, first education. You have an extremely highly educated population. You talk to every Chinese parent, they want their kids to take the college entrance exam and get into the best universities. If they want to send their kids away to school, they want to go to the Ivy League or Stanford. So I think the emphasis on education — I think there are some structural issues here in the United States, like the teachers union that is getting in the way, but there are no teachers unions in China.
I think it's really important that as a patriotic American, you want America to win. But I think when it comes to AI, there's no such thing as winning the race. I think it's a long marathon. And you can just see by these model companies — every week there's a model that's leading, but then the next week another model overtakes them. And the other thing is, AI is one of those — we haven't figured out what the business model is. But in our business, in e-commerce, we have a marketplace model with network dynamics, but I'm not sure if the development of models has those network effects that means winner take all. So I don't think AI is a winner-take-all field. My definition of winning is not who comes up with the strongest AI model, but who can adopt it faster. And I think people here in the United States — a lot of resources should go into adoption and diffusion of the technology as opposed to just plowing billions. I mean, literally each of the hyperscaler companies is investing something like $80 billion a year. But I think if you look at China, a couple of things are going on. Number one, China has espoused open-source. And second, a lot of the companies, including ourselves, have launched models that are smaller — not the trillion-parameter models, but we have a model that's 1.7 billion parameters, another that's 4 billion, another that's 8 billion for mobile devices and laptops. So with these types of developments, I think it's more conducive to faster adoption. You want AI to proliferate. Now you look at China — I'm not saying China technologically is winning in the model war. But in terms of the actual application and people benefiting from AI, it has made a lot of development. I've seen a survey of Chinese firms — last year only 8% were using AI in their business. Now that number is approaching half, 50%. So the adoption rate has been fairly fast. And I think the two countries — AI is such an important element of life. It's almost like air. Why would any one country say we have a sole claim to air? There's so many things that AI can do — in medicine, in biology. I think there's a lot of room for cooperation.
It has definitely made our operations more efficient. So we actually don't have to hire as many people. I'm still on this mission to write our quarterly earnings release with AI and maybe just have a model. And also put AI on the analyst conference call — see if people can tell the difference. But anyway, the biggest impact AI has made is we incorporate AI into all of our consumer-facing apps. So we're in e-commerce, we're in maps, we have a food delivery business. Once you infuse AI, the consumer has a massively better experience, and that generates more user base for us. So we're seeing the impact from the uplift on the revenue side. We haven't announced any layoffs because of AI, but I keep asking our engineering leads about how much of the code is written by AI today. I think the answer I get is all over the map depending on which department you ask, but I think it's maybe 30% at this point already.
Focus. So I came into the chair — I was sort of kind of phasing out, I was focused on the Brooklyn Nets. Then about a year and a half ago, I came back into the chairmanship of the company. The first thing I said is we can't talk about our company as being in six different businesses. It's just too confusing. We're in two businesses: e-commerce and cloud computing, with an AI element in it. Those are our two businesses, core businesses. And so having that focus was absolutely crucial to get our people, our teams, to focus and execute.
Well, we're in a rebuilding year. We have a very young team. We just spent all of our draft picks — we picked five draft picks this past summer. We have one pick in 2026, and we hope to get a good pick. So you can predict what kind of strategy we will use for the season.
I think the government is all in, embracing it. In fact, the government just a few weeks ago launched a kind of AI Plus policy, and they say in 2030, which is five years from now, they want to see 90% penetration of AI agents and devices and things like that in society. That's what the government has publicly officially said. Just all-in. There's really not a lot of talk about AI replacing human jobs. Maybe there's isolated incidents, but in general there is an anxiety about jobs. China graduates about 10 million college graduates every year. And today if you look at the youth unemployment rate, which is age between 16 and 24, including graduates — it's 18%. It's actually quite high. So there's a lot of anxiety about that. It's partly because the economy — even though the overall conditions of the Chinese economy are pretty good in terms of infrastructure, access to energy and all those things — but there is still a malaise right now because China has gone through the last four or five years of a property slump. Everybody's average home prices are down like 30%. So there's a very negative wealth effect and that's still lingering.
People in government don't talk about it too much because they believe that they could control it better — maybe better than in a society here in the US. But there's some lingering fears. I was just listening to Dario — he's predicting 5 to 10 years, but if he's saying 5 to 10 years, I think AGI is probably 20 years from now. And it's because the emphasis is on the word "general." Your AI has to be able to generalize and apply principles to scenarios that you've never seen before.
