Alibaba Welcome to the History of Computing Podcast, where we explore the history of information technology. Because by understanding the past prepares us to innovate the future! Today we’re going to look at a company called Alibaba. 1964. This was the year that BASIC was written, the year Kleinrock wrote history first paper on package flow and design, the year the iconic IBM System/360 shipped, the year Ken Olson got a patent for the first magnetic core memory, the GPS (then called TRANSIT) went live. But some of the most brilliant minds of the future of computing were born that very same year. Eric Benioff the founder of Salesforce was born then. As was tech writer and editor of Fast Company and PC World Harry McCracken. Obama CTO Megan Smith, a former VP of Google, Alan Emtage of Archie, and Eric Bina an early contributor and coauthor of Netscape and Mosaic. But the Internet stork brought us two notable and ironically distinct people as well. Jeff Bezos of Amazon and Jack Ma of Alibaba. You would need to have been living under a rock for a decade or two in order to not know who Amazon is. But just how much do you know about Alibaba? But Alibaba makes nearly 400 billion dollars per year with assets of nearly a trillion dollars. Amazon has revenues of $230 billion with assets just north of $160 billion. For those of us who do most of our shopping on Amazon and tend to think of them as a behemoth, just think about that. 7 times the assets and way more sales. Alibaba is so big that when Yahoo! got into serious financial trouble, their most valuable asset was shares in Alibaba. If Alibaba is so big why is it that out of 5 Americans I asked, only 1 knew who they were? Because China. Alibaba is the Amazon of China. They have also own most of Lazada, which runs eCommerce operates sites in Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam. Like Amazon they have supermarkets, streaming services, they lease cloud services, their own online payment platform, instant messaging, a pharmaceutical commerce company, sponsor FIFA, and a couple of years after Bezos bought the Washington Post, Alibaba bought the South China Morning post for a little more than a quarter billion dollars. Oh and you can get almost anything on there, especially if you want counterfeit brands or uranium. OK, so the uranium was a one time thing… Or was it? Oh, and I’m merging a lot of the assets here that are under the Alibaba name. But keep in mind that if you combined Google, eBay, Amazon, and a few others you still wouldn’t have an Alibaba in terms of product coverage, dominance or pure revenue. All while Alibaba maintains less employees than Alphabet (the parent of Google) or Amazon. So how does a company get to the point that they’re just this stupid crazy big? I really don’t know. Ma heard about this weird thing called the internet after he got turned down for more than 30 jobs. One of those was frickin’ KFC. He flew to the US in 1995 and some friends took him on a tour of this weird web thing. There he launched chinapages.com and made just shy of a million bucks in the first few years, building sites for companies based in china. He then went to work for the Chinese government for a couple of years. He started Alibaba with a dozen and a half people in 1999, raising a crapton of money, saying no to sell assets but yes to investments. Especially Yahoo co-founder Jerry Yang, who gave them a billion bucks. And they grew, and they got more and more money, and sales, and really they just all out pwned the Chinese market, slowly becoming the Chinese eBay, the Chinese Amazon, the Chinese google, the Chinese, well, you get the picture. They even have their own Linux distro called AliOS. They own part of Lyft, part of the Chinese soccer team, and are a sponsor of the Olympic Games. Maybe he buys companies using AliGenie, the Alibaba home automation solution that resembles personal assistants built into Amazon Echo and Apple’s Siri. Ma supposedly has ties to Chinese President Xi Jinping that go way back. Apple makes less money than Alibaba but their CEO gets to go hang at the White House whenever he wants. Not that he wants to do so very often… Bezos might be richer, but he doesn’t get to hang at the White House often. Makes you wonder if there’s more there, like… Nevermind. Back to the story. When Ma bought the South China Morning Post the term “firmly discouraged” was used in multiple outlets to describe other potential bidders. Financial reports have described the same from other acquisitions. Through innovation, copy-catting, and a sprinkle of intimidation, Alibaba became a powerhouse, going public in 2014, in an IPO the raised over $25 billion dollars and made Alibaba the most valuable tech firm in the universe. Oh, Ma acts and sings. He rocked a little kung fu in 2017’s Gong Shou Dao. It was super-weird. He was really powerful in that movie. Strong arming goes a lot of different ways though. Ma was reportedly pressured to step down in late 2018, hading the company to Daniel Zhang. I guess he got a little too powerful, supposedly bribing officials in a one-party state and engaging in wonktastic account practices. He owns some vineyards, is only in his mid-50s and has plenty of time on his hands now to enjoy the grapefruits of his labor. This story is pretty fantastic. He was an English teacher in 1999. And he rose to become the richest man in China. That doesn’t happen by luck. Capitalism at its best. And this modern industrialist rose to become the 21st richest person in the world in one of the most unlikely of places. Or was it? He doesn’t write code. He didn’t have a computer until his 30s. He’s never actually sold anything to customers. Communism is beautiful. And so are you. Thank you dear listeners, for your contributions to the world in whatever way they may be. They probably haven’t put you on the Forbes list. But I hope that tuning in helps you find ways to get there. We’re so lucky to have you, have a great day!
The Friday after Thanksgiving to the Monday afterwards is a bonanza of shopping in the United States, where capitalism runs wild with reckless abandon. It’s almost a symbol of a society whose identity is as intertwined with with rampant consumerism as it is with freedom and democracy. We are free to spend all our gold pieces.
And once upon a time, we went back to work on Monday and looked for a raise or bonus to help replenish the coffers. But since fast internet connections started to show up in offices in the late 90s the commodification of holiday shopping, the very digitization of materialism.
But how did it come to be? The term Black Friday goes back to a financial crisis in 1869 after Jay Gould and Jim Fisk tried to corner the market on Gold. That backfired and led to a Wall Street crash in September of that year. As the decades rolled by, Americans in the suburbs of urban centers had more and more disposable income and flocked to city centers the day after Thanksgiving. Finally, by 1961, the term showed up in Philadelphia where turmoil over the holiday shopping extravaganza inside.
And so as economic downturns throughout the 60s and 70s gave way to the 1980s, the term spread slowly across the country until marketers, decided to use it to their advantage and run sales just on that day. Especially the big chains that were by now in cities where the term was common.
And many retailers spent the rest of the year in the red and made back all of their money over the holidays - thus they got in the black. The term went from a negative to a positive.
Stores opened earlier and earlier on Friday. Some even unlocking the doors at midnight after shoppers got a nice nap in following stuffing their faces with turkey the earlier in the day.
As the Internet exploded in the 90s and buying products online picked up steam, marketers of online e-commerce platforms wanted in on the action. See, they considered brick and mortar to be mortal competition. Most of them should have been looking over their shoulder at Amazon rising, but that’s another episode.
And so Cyber Monday was born in 2005 when the National Retail Federation launched the term to the world in a press release. And who wanted to be standing in line outside a retail store at midnight on Friday? Especially when the first Wii was released by Nintendo that year and was sold out everywhere early Friday morning. But come Cyber Monday it was all over the internet. Not only that, but one of Amazon’s top products that year was the iPod. And the DS Lite. And World of Warcraft. Oh and that was the same year Tickle Me Elmo was sold out everywhere. But available on the Internets. The online world closed the holiday out at just shy of half a billion dollars in sales. But they were just getting started.
And I’ve always thought it was kitschy. And yet I joined in with the rest of them when I started getting all those emails. Because opt-in campaigns were exploding as e-tailers honed those skills at appealing to not wanting to be the worst parent in the world. And Cyber Monday grew year over year. Even as the Great Recession came and has since grown first to a billion dollar shopping day in 2010 and as brick and mortar companies jumped in on the action, $4 billion by 2017, $6 billion in 2018, and nearly $8 billion in 2019.
As Covid-19 spread and people stayed home during the 2020 holiday shopping season, revenues from Cyber Monday grew 15% over the previous year, hitting $10.8 billion. But it came at the cost of brick and mortar sales, which fell nearly 24% over the same time a year prior. I guess it kinda’ did, but we’ll get to that in a bit.
Seeing the success of the Cyber Monday marketers, American Express launched Small Business Saturday in 2010, hoping to lure shoppers into small businesses that accepted their cards. And who doesn’t love small businesses? Politicians flocked into malls in support, including President Obama in 2011. And by 2012, spending was over $5 billion on Small Business Saturday, and grew to just shy of $20 billion in 2020. To put that into perspective, Georgia, Zimbabwe, Afghanistan, Jamaica, Niger, Armenia, Haiti, Mongolia, and dozens of other countries have smaller GDPs than just one shopping day in the US.
Brick and mortar stores are increasingly part of online shopping. Buy online, pick up curb-side. But that trend goes back to the early 2000s when Walmart was a bigger player on Cyber Monday than Amazon. That changed in 2008 and Walmart fought back with Cyber Week, stretching the field in 2009. Target said “us too” in 2010. And everyone in between hopped in. The sales start at least a week early and spread from online to retail in person with hundreds of emails flooding my inbox at this point. This year, Americans are expected to spend over $36 billion during the weekend from Black Friday to Cyber Monday. And the split between all the sales is pretty much indistinguishable. Who knows or to some degrees cares what bucket each gets placed in at this point.
Something else was happening in the decades as Black Friday spread to consume the other days around the Thanksgiving holiday: intensifying globalization. Products flooding into the US from all over the world. Some cheap, some better than what is made locally. Some awesome. Some completely unnecessary. It’s a land of plenty. And yet, does it make us happy? My kid enjoyed playing with an empty toilet paper roll just as much as a Furby. And loved the original Xbox just as much as the Switch. I personally need less and to be honest want less as I get older. And yet I still find myself getting roped into spending too much on people at the holidays.
Maybe we should create “experience Sunday” where instead of buying material goods, we facilitate free experiences for our loved ones. Because I’m pretty sure they’d rather have that than another ugly pair of holiday socks. Actually, that reminds me: I have some of those in my cart on Amazon so I should wrap this up as they can deliver it tonight if I hurry up.
So this Thanksgiving I’m thankful that I and my family are healthy and happy. I’m thankful to be able to do things I love. I’m thankful for my friends. And I’m thankful to all of you for staying with us as we turn another page into the 2022 year. I hope you have a lovely holiday season and have plenty to be thankful for as well. Because you deserve it.