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  Yet Jack’s first effort to tap into Zhejiang’s entrepreneurial fizz was not a success. In 1994, his Hope Translation venture had gotten off to a troubled start. While his monthly office rent was almost $300, his first month’s income was just over $20. Hope may spring eternal, but cash is king. Jack was facing a crunch. To support his venture, Jack started peddling goods on the streets of Hangzhou, including some he sourced from Yiwu. His translation company also became a trading company. Hope Translation Agency started to sell gifts, flowers, books, and even plastic carpet, a range of items that foreshadows Taobao. Jack recalled, “We did everything. This income supported the translation agency for three years until we started to make ends meet. We believed that as long as we kept doing it, we would definitely have a future.”

  But it was becoming clear to Jack that translation services alone were not going to sate his entrepreneurial ambitions. Soon an unexpected journey, which looked at first like a disaster, was about to give Jack a lucky break.

  With his reputation as an expert English speaker growing from his popular evening classes and his Hope Translation venture, Jack was asked by the government of Tonglu County—some fifty miles to the southwest of Hangzhou and later home to the Tonglu Gang of logistic companies—to assist as an interpreter in helping resolve a dispute with an American company over the construction of a new highway.

  In 1994, the company had proposed to invest in a new highway to be built from Hangzhou to Tonglu. After a year of negotiations, no agreement had been reached, and the initial funding promised by the partner in the United States had not materialized. Jack was tapped to find out what was going on, and hopefully end the deadlock.

  First Jack traveled to Hong Kong, where he was told that the company’s funds were held in the United States, so Jack embarked on his first trip there. He would stay for a month. His mission for the Tonglu government was a failure. But the trip would give him his first exposure to the Internet, and he would return to China a changed man.

  Going to America

  His first trip to America sounds more like a plot for an Ocean’s Eleven–style crime caper than an interpreter’s business trip, at least according to the version put out five years later during the dot-com boom when media started to take an interest in Jack’s background. Upon arriving in Los Angeles, the story goes, Jack met with the unnamed boss of Tonglu’s erstwhile U.S. partner. Jack quickly figured out, as The Economist related, that the “company he was investigating did not exist, that his host was a crook, and that he himself was in serious danger.” Jack has never named the boss, later described in local media only as a “bulky Californian.” But after refusing to take a bribe, Jack recalled he was locked in a beach house in Malibu, where his captor flashed a gun. He was then taken to Las Vegas, where he was kept in a form of house arrest in a hotel room on the top floor of a casino. Jack hasn’t repeated the details of any of this in recent years. His personal assistant, Chen Wei, has written that it is an episode that Jack prefers to forget. A few years after the incident, when Alibaba was beginning to gain international prominence, Jack told a similar story to Melinda Liu, the Beijing bureau chief for Newsweek: “I flew to Hangzhou for an exclusive interview with Jack, and he spent a generous amount of time showing me around the Alibaba headquarters and talking at length about his life. He said that, on his very first trip to the USA, a former business contact (an American) had ‘virtually kidnapped’ him in a failed attempt to get Jack to work for him. At the time, Jack was pretty matter-of-fact, and the anecdote was just one of many he recounted. I later contacted him requesting more information; he indicated he didn’t want to make too much of it and declined to provide additional details.” The bizarre story ends with Jack escaping his hotel room and winning $600 on slot machines in the casino. Abandoning his belongings upstairs, he escapes the casino and buys an airline ticket for Seattle. A less colorful version of the story was detailed in an article published in September 1995 in the Hangzhou Daily,7 which says Jack had taken along $4,000 in savings and money borrowed from his wife Cathy’s mother and his brother-in-law.

  In any event, it was in Seattle that Jack first logged on to the Internet. He had heard about the Internet the previous year from a fellow English teacher in Hangzhou, called Bill Aho. Bill’s son-in-law was working on an Internet-related business, which Bill described. Jack recalled that it was Bill who first told him about the Internet, but that he “couldn’t explain it clearly either, it sounded very strange. . . . I couldn’t really understand it either.”

  In Seattle, Jack stayed at the house of Bill Aho’s relatives, Dave and Dolores Selig.

  Jack was shown around the wealthier districts of the city, including the Queen Anne neighborhood. Dolores Selig recalled to the BBC that Jack was impressed by some of the larger houses on the hill: “Jack would point at various houses and say ‘I’m going to buy that one, and that one and that one’ and we’d just laugh because they were very expensive houses. But he was impressed.” Bill Aho remembered, “At that time, he didn’t have a nickel.”

  Jack then met Bill Aho’s son-in-law, Stuart Trusty, who had set up an Internet consultancy called Virtual Broadcast Network (VBN), located in the U.S. Bank building on Fifth Avenue near Pike Street in downtown Seattle.

  “Jack came and I showed him what the Internet was,” Trusty recalled. “Back then, the Internet was largely a directory for governments and businesses, but he seemed excited.”

  For Jack the visit to Seattle was a transformative experience: “It was my first trip to the States, the first time in my life I touched a keyboard and computers, the first time in my life I connected to the Internet, and the first time I decided to leave as a teacher and start a company.”

  Jack recalled his first online session: “My friend Stuart . . . said, ‘Jack, this is Internet. You can find whatever you can find through the Internet.’ I say really? So I searched the word beer. Very simple word. I don’t know why I searched for beer. But I found American beer, Germany [sic] beer and no Chinese beer. . . . I was curious, so I searched ‘China,’ and no ‘China,’ no data.”

  Intrigued, Jack asked Stuart for help. “I talked to my friend, ‘Why don’t I make something about China?’ So we made a small, very ugly-looking page . . . [for the] translation agency I listed on there.”

  The site for Hope Translation was just text, without any images, plus a telephone number and the price for translation work.

  Jack later recalled to the journalist Charlie Rose: “It was so shocking, we launched it nine forty in the morning, twelve thirty I got a phone call from my friend. ‘Jack, you’ve got five emails.’ I said, ‘What is email?’” Three emails came from the United States, one from Japan, and one from Germany.

  Jack set about formulating the idea for a new business—helping Chinese companies find export channels online—and pitched the idea of a partnership with VBN.

  Stuart, who developed a love of tai chi from Jack—he still practices in Atlanta today—recalled Jack as intensely focused on work.

  “We’d go down to the office, we’d do our work, then we’d get something to eat, go back home maybe do more tai chi and it was just that way . . . every day. No extra curricular activities.”

  Jack’s dealings with VBN weren’t easy. Stuart asked for an upfront deposit of $200,0008 to grant Jack the exclusive right to make Web pages in China. When Jack explained that he had borrowed money to make the trip to the United States and was now penniless, Stuart signed the agreement without the deposit but on the condition that Jack pay up as soon as possible, even enlisting Bill Aho and his wife as guarantors. To get home to Hangzhou, according to a local media report, Jack had to borrow funds from a Hangzhou student in the States, then flew to Shanghai.

  For his client in Tonglu, Jack returned to China empty-handed, with no deal to finance the proposed highway. But inside his suitcase he carried back with him a computer running the Intel 486 processor: “It was the most advanced in China at that time.”

  Back
in Hangzhou he set about building his concept of an online yellow pages. He named the business China Pages. In this, his second venture, he would dive headfirst into the entrepreneurial sea, leaving his teaching days behind.

  Chapter Five

  China Is Coming On

  If traditional industry and e-commerce “successfully merge together, there will be no limit to China’s next round of economic development.”

  —Jack Ma

  Soon after returning from Seattle to Hangzhou, Jack resigned his position as a teacher at the Hangzhou Institute of Electronic Engineering. He had realized that his teaching days must end when he ran into the dean, who was riding his bicycle carrying vegetables he had just bought from the market. The dean encouraged him to keep working hard at teaching, but looking at the bicycle and the vegetables Jack realized that even if he were to become dean himself one day, this was a future he couldn’t get excited about.

  His new dream wasn’t teaching or translating. Fresh from his first contact with the Internet, he would build an online index, in English, of businesses in China seeking customers overseas.

  As Stuart Trusty had noticed back in Seattle, Jack had a tremendous work ethic. To populate China Pages with entries, he toiled away collecting information on companies, which he would translate into English, then send along with photos to VBN in Seattle for uploading to the website.

  In March 1995, Jack convened a gathering of two dozen of his night school students to present his concept and seek their advice, as well as their business. “I asked the most active and capable people from my evening classes to my home. I talked about two hours, they listened to me, obviously confused. . . . Eventually lots of people cast their votes. Twenty-three of them said it would not work out. Only one person—now he is working at Agricultural Bank of China—said to me: If you want to try, then go ahead, but if it doesn’t work out, come back as soon as you can.”

  Undeterred, he pressed ahead. Together with his friend He Yibing, a computer science teacher at the institute Jack had just left, Jack launched China Pages. The two had met the year before when He Yibing was looking for someone to help him practice his English ahead of a training trip to Singapore. There, He Yibing gained exposure to the Internet. When Jack returned from Seattle with a dream of building an Internet company, the two decided to work together.

  China Pages

  The company they registered, Hangzhou Haibo Network Consulting (HHNC), was one of the first in China devoted to the Internet. To fund his start-up Jack borrowed money from his relatives, including his sister, brother-in-law, and parents. Jack’s wife, Cathy, was the first employee.

  In April 1995, Jack and He Yibing opened the first office for China Pages in a twelve-square-meter office building at 38 Wen’er Road. To portray their business as a solid concern, Jack and He Yibing printed up several versions of their business cards, each listing different positions1 that they would use depending on whom they were meeting. During the day, the two partners went out to find clients, returning in the evening to teach an introductory training course about the “information superhighway.” This class helped generate some of China Pages’ early customers.

  On May 10, 1995, they registered the domain name chinapages.com in the United States. In July they officially launched their website, which featured a red-framed map of Asia, with China highlighted under the title “China Business Pages: The Online China Business Directory.”

  The website’s home page indicated chinapages.com was “Broadcast via Seattle, USA from Hangzhou, the Garden City.” The site featured tabs including “What’s New!,” “What’s Cool!,” “Net Search,” and “Net Directory,” and a link to Hope, his translation venture.

  China Pages started off as a family affair. Jack’s wife, Cathy, her sister Zhang Jing, and He Yibing’s girlfriend all lent a hand.

  Jack’s former students also provided a ready pool of talent for China Pages. Jane Jiang (Jiang Fang), whom Jack had taught at the institute a few years earlier, took charge of customer service. One visitor to China Pages in those early days was Cui Luhai, who ran a computer animation business. Now a lecturer at the China Academy of Art, Cui commented, “I can still remember the first scene I saw when I walked into his office. . . . It was a pretty empty space with only one desk set up in the middle of the room. There was only one very old PC desktop surrounded by a lot of people.” Cui learned that Jack had spent most of his money on registering the business, leaving little leftover for hardware or other equipment.

  China Pages badly needed customers. Cathy signed up one of the first clients, who paid them eight thousand yuan ($960). The company received a boost when Hangzhou was selected in May to hold the Formula One Powerboat World Championship later that year, the first time the event would be held in China. Jack’s venture won the contract to make the official website for the race.

  To win more clients, as with Hope Translation beforehand, Jack called on his former students to spread the word and bring in business. Two of them duly obliged.

  He Xiangyang, a former student of Jack’s, was working at the Qianjiang Law Firm. Reluctant to list the firm’s name on the Internet, he gave Jack his personal phone number instead. To his surprise, he started to receive phone calls around the clock from prospective clients, many overseas, who told him they’d got his number from China Pages. The once-skeptical lawyer started to think there might be something to Jack’s story about the Internet after all.

  Another former student was Zhou Lan, who would become Jack’s secretary. Zhou was working at the Lakeview Hotel in Hangzhou when Jack made a website for them, featuring the hotel’s brand-new fourteen-inch color TVs. Later that year, the United Nations held its Fourth World Conference on Women in Beijing, attended by more than seventeen thousand participants, including First Lady Hillary Clinton. A number of delegates traveled on to Hangzhou after the conference. Booking rooms at the Lakeview, they told the hotel management it was the only hotel in Hangzhou they could find online. By the following spring, the hotel had sold more rooms in the first three months than the previous year, another demonstration of the power of the Internet.

  Even with the help of Jack’s former students, China Pages needed more clients if it was going to survive. But demonstrating what China Pages was all about was not easy, for one very basic reason: In Hangzhou at the time it was impossible to get online.

  Instead Jack came up with an alternative approach. First, he spread the word through friends and contacts about what the Internet could do for their business. He then asked those interested to send him marketing materials to introduce their companies and products. Next Jack and his colleagues translated the materials, and sent the material by mail to VBN in Seattle. VBN then designed the websites and put them online. They then printed out screenshots of the websites and mailed them to Hangzhou. Finally, Jack took the printed materials to his friends and announced that, although they couldn’t check this themselves, their websites were now online. But without Internet access in Hangzhou it was a challenge even explaining to his customers what “online” actually meant. As sales pitches go, asking people who had never heard of the Internet to fork over 20,000 renminbi ($2,400) up front to create, design, and host a website they could never see was a challenging one. Jack worried that people thought he was defrauding them. “I was treated like a con man for three years,” he said.

  First Connection

  Finally, in the fall of 1995, Zhejiang Telecom started to provide Internet access services in Hangzhou. By the end of the year there were only 204 Internet users in the whole province. But Jack was among them and was finally able to load a website in front of his first client, the Lakeview Hotel, on the 486 computer he’d brought back from Seattle in his suitcase. “It took three and a half hours to download the front page. . . . I was so excited.”

  Starting with Deng Xiaoping’s reforms, China experienced an entrepreneurial explosion that began to replace Marx with the market, becoming a socialist country “with Chinese characterist
ics.” But this did not mean the Communist Party was going to ease up on a central pillar of its rule, the control of information. China has a long tradition of controlling information, but especially so under the rule of the Communist Party. It is surprising, therefore, that the country ever connected to the Internet at all. The fact that it did illustrates the Chinese government’s often contradictory desires to maintain control while simultaneously unlocking greater economic opportunities.

  Without the Internet, Jack’s vision of connecting entrepreneurs with global markets would have never been realized.

  On September 14, 1987, while Jack was still a university student, the very first email from China was sent by Professor Qian Tianbai at Peking University to Karlsruhe University in what was then West Germany. The email, in English and German, read, “Across the Great Wall we can reach every corner in the world.” The email was sent at 300 bits per second (bps), an impossibly slow connection by today’s typical consumer broadband speeds measured by the tens or hundreds of millions of bps. It would be another seven years before China was connected to the Internet proper.

  While the Chinese government was thinking about what to do about the Internet—wrestling with issues of ideology, control, and infrastructure—the U.S. government was pondering the wisdom of bringing a communist country online. In the end, it was not politicians but scientists,2 on both sides of the Pacific, who took the lead. After years of efforts, the Stanford Linear Accelerator Center (SLAC) in Menlo Park, California, connected3 with the Institute of High Energy Physics (IHEP), 5,800 miles away in Beijing.

  While this was just a connection between two institutions, other scientists wanted to set up their own links. Connecting SLAC-IHEP to the Internet was a much easier solution than stringing up new links from other locations in the United States to IHEP. As Dr. Les Cottrell at SLAC recalled, “We explored this only to find out that the DOD [Department of Defense], the DOE [Department of Energy], the State Department all were very concerned about this.” But eventually the U.S. government agreed, “They said okay, you can do this as long as you tell everybody who is on the Internet that China’s coming on.”