Chapter 885: Domestic Side Story 2: Alibaba, and Foreign Capital

At this time,

Hangzhou.

The autumn wind was refreshing.

Building 16, Fengheyuan, Lakeside Garden, No. 176 Wenyi West Road.

This was Alibaba's temporary office; in the narrow space, bulky desktop computers emitted a slight heat.

In one of the "conference rooms,"

Alibaba's Eighteen Arhats sat together.

Looking back 8 months ago, which was January 1999, also in this slightly shabby room, Jack Ma passionately gave a speech for two full hours, depicting the grand blueprint of Alibaba's future, infecting everyone present.

Everyone exhausted their efforts, scraping together 500,000 yuan, each holding a different proportion of shares.

The company they founded was called Alibaba.

What did this company do?

At this time, the options for small and medium-sized enterprises in the East doing foreign trade were generally only the Canton Fair (China Import and Export Fair).

And Jack Ma, because he had experience in doing China Yellow Pages and the Ministry of Foreign Trade and Economic Cooperation, the positioning of this company after its creation was—"China Small and Medium Enterprise Trade Service Provider," providing "website design + promotion" services for small and medium-sized enterprises, which was creating the "Internet Yiwu" model.

The "Internet Yiwu" business model required enough suppliers, and suppliers would then attract buyers to come, and transaction information would thus gradually become rich.

In February 1999, the Alibaba website went online.

Then it continued to grow.

During this entrepreneurial experience, everyone only took a meager salary of 500 yuan per month, and started struggling in this simple house.

Although the conditions were difficult, everyone had no complaints.

But soon, they were slapped by reality.

With a mere 500,000 yuan, although Jack Ma led everyone to save everywhere, by the seventh or eighth month, the funds were still spent clean.

In order not to let employees work on empty stomachs, Jack Ma ran around borrowing money to pay salaries, often busy and overwhelmed.

However, Jack Ma also told his partners: Today is cruel, tomorrow is even more cruel, the day after tomorrow will be beautiful, but most people die on tomorrow night; we must persist until the day after tomorrow!

Fortunately, the persistence finally ushered in a turning point.

Starting from July, Alibaba's achievements attracted the attention of many people; in July, the number of members reached 38,000.

In September, the number of members grew to 80,000, with 200,000 pieces of inventory trading information and 800 pieces of new information daily.

So, investors successively wanted to invest in Alibaba.

However, in the subsequent negotiations, Jack Ma rejected 38 mainland investors.

Why?

Because these investors were too local, conservative, and also wanted to grab Alibaba's control.

Moreover, Alibaba needed not only funds but also partners who could bring overseas resources and help the company's long-term development.

Therefore, Jack Ma refused.

Then in August, the appearance of Gao Sheng Sachs brought a glimmer of hope to Alibaba.

Gao Sheng Sachs started paying attention to Alibaba, and after some investigation, they extended an olive branch to Alibaba, but also attached extremely harsh conditions.

Gao Sheng Sachs sought to take most of Alibaba's equity for 5 million USD, while requiring Gao Sheng Sachs to have veto power on key decisions. In addition, Gao Sheng Sachs also required the equity to have "anti-dilution rights," meaning that Gao Sheng Sachs would follow up on every subsequent round of financing for Ali to maintain its 50% equity ratio.

50% equity, plus veto power, plus anti-dilution rights...

Adding these three points together, it was absolutely riding on their heads and shitting.

(Image: Final negotiation result.)

And at this time,

Alibaba hadn't agreed to Gao Sheng Sachs' conditions yet.

Now Jack Ma was holding a meeting, discussing whether to agree to Gao Sheng Sachs' harsh requirements.

Accepting meant having to bear many restrictions.

Refusing might make it difficult to even maintain the present.

At this moment, the Eighteen Arhats in the conference room expressed their opinions.

"Gao Sheng Sachs' conditions are too overbearing; not to mention the equity being diluted, the business direction also has to be controlled by them. Wouldn't the results of our hard work be handed over to others?"

"Yes, we have gritted our teeth and persisted until now; we can't block the future path because of this temporary predicament."

Some people held the opposite opinion,

"Although the conditions are harsh, Gao Sheng Sachs is after all a world-famous investment company in the US. Accepting their investment can solve the urgent need for funds, and maybe it will be helpful for us to develop the US market. They have long-term vision and might be able to help Alibaba move towards the international stage."

Jack Ma listened quietly to everyone's discussion, and many thoughts flashed through his mind.

He remembered all the hardships since starting the business, those days of hitting walls everywhere.

At the same time, he was also looking forward to the opportunity of having a bigger stage in the future. ===== CHAPTER 886 =====