No, Alibaba was not the character voiced by Robin Williams in the Disney movie Aladdin.
Alibaba is the China-based company that yesterday had the largest ever initial public offering on the New York Stock Exchange, raising over $21.8 billion in capital and vaulting its founder into the top ranks of the richest people in the world.
Think of them as a wholesale Ebay or Amazon for business. Founded in 1999 in an apartment in China by Jack Ma, it now accounts for 80% of online sales in China. It’s not a business for consumers, but rather more of a clearinghouse for buying in bulk.
For example, if you want to figure out the cheapest place to source a thousand – or ten thousand – patio chairs/paper boxes/hammers/radios/coffee mugs/widgets, simply entering the details of that requirement into Alibaba’s website will yield dozens of bids.
This matters for 3 reasons:
- It shows that capitalism is still relevant – and necessary. Its initial investors, including Japan’s Softbank and Yahoo, yielded a massive return on their seed money. This risk was massively rewarded and is now unlocked to pursue other opportunities. It’s beautiful. And according to Ma, the whole motivation of the company is to serve small businesses and make them more competitive.
- It makes businesses more efficient, saving them money and helping them set lower prices. By acting as a transparent platform for pricing bids and product requirements, the marketplace cuts out middlemen and encourages competition. The transfer of knowledge is immediate and can American companies make better decisions.
- It is coming to our shores. The founder has been very clear that his next sights are on the U.S. market, which is a big reason they held their IPO on the New York Stock Exchange. The vast majority of their business is based and sourced in China, and the potential for impacting America is massive.
As inspiring as the story is, and who doesn’t love a rags-to-riches tale that results in huge success, the potential impact of this company is still in the future. Lowering costs, improving efficiency, and increasing global inter-connectedness cannot help but improve the lives of every American.