Startup Sunday Season 3 Episode 14(Alibaba Group – Jack Ma’s Exit)

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The Alibaba Group, commonly referred to as Alibaba, is a conglomerate consisting of multiple companies, which provide a variety of internet features. Alibaba is often seen as the combination of Amazon, eBay, and PayPal; however, it offers much more. Alibaba primarily focuses on its function as an e-commerce marketplace but is also involved in adjacent markets, such as cloud computing, mobile chatting, and personal financing. The journey of Alibaba, led by its founder Jack Ma is often celebrated as an example of how the vision of social inclusion can build a small startup into one of the highest valued companies of the globe. Recently Jack Ma has announced that he is going to retire as the Executive Chairman of Alibaba Group in exactly one year from now. This news has led to the speculation as to how the company will perform once its most influential personality takes a backseat and hands over the reins to a new individual, Mr.Daniel Zhang, Alibaba’s financial whiz.

This week’s Startup Sunday sheds light on the emergence of Alibaba as a conglomerate, discusses its business model and value proposition and speculates the future of the Group, with its charismatic leader making an exit from the role of the Executive Chairman.

The Rise of Alibaba Group

Alibaba Business

1999: Alibaba Group is established by its 18 founders, led by Jack Ma, working out of Jack Ma’s apartment in Hangzhou. Its first website is English-language Alibaba.com, a global wholesale marketplace.

2002: Alibaba Group successfully becomes a cash flow positive company for the year.

2003: Online shopping website Taobao Marketplace is founded, again in Jack Ma’s apartment.

2004: Alibaba Group organizes its first Entrepreneur Summit, a gathering of Internet entrepreneurs, and honours the first 10 Entrepreneurs of the Year.

2007: Alibaba.com completes its initial public offering on the Main Board of the Hong Kong Stock Exchange.

2008: Alibaba Group establishes an R&D institute, a big milestone that shows the growing size and operations of the company.

2009: Alibaba.com announces the acquisition of HiChina, China’s leading Internet infrastructure service provider.

2010: Alibaba.com announces the acquisition of One-Touch, a provider of one-stop services for exporters in China.

2011: Alibaba Group establishes the Alibaba Foundation with a sizeable fund dedicated to social causes.

2013: Alibaba Group officially launches its mobile social networking app, Laiwang (currently known as DianDianChong).

2014: Alibaba Group starts offering mobile virtual network operators (MVNO) services in China under the Ali Telecom brand.

2015: Alibaba Group and Suning enter a strategic alliance to build on synergies in e-commerce, logistics and O2O Initiatives.

2016: Alibaba Group announces the formal establishment of the Alibaba Digital Media & Entertainment Group.

2017: Alibaba Group officially launches Tmall World, an initiative to serve the 100 million-strong overseas Chinese market worldwide.

2018: Jack Ma announces retirement. In the letter entitled “Happy Teachers’ Day,” Ma said he would retire as the chairman of the board on Sept. 10, 2019, Alibaba’s 20th anniversary.

Business Model

Alibaba Revenue

Alibaba

It is a business-to-business trading platform, connecting manufacturers from countries such as China, India, Pakistan, the United States, and Thailand with international buyers. Merchants can list their products for free on Alibaba.com but also have the option to pay for a range of benefits such as greater exposure on the site and unlimited product listings.

Taobao

In Chinese, Taobao means “search for treasure.” Taobao.com has grown to become China’s largest shopping website and is ranked the ninth most popular website in the world by Alexa.com. Launched in 2003, Taobao lists hundreds of millions of products and services from millions of sellers. Taobao doesn’t charge transaction fees and the site is free to join for merchants, a policy which helped the site gain its enormous user base in China.

While Alibaba.com is business-to-business, Taobao is business-to-consumer or consumer-to-consumer focused, enabling small businesses and individuals to open online stores.

Merchants have the option to buy advertising and other services to help them stand out on the website and boost sales. Advertisers can choose between pay-for-performance and display marketing. These ads are the primary means through which Alibaba makes money from Taobao.

Tmall

Tmall.com, launched in 2008, offers a wide selection of branded products oriented towards China’s growing middle class. Tmall is focused on larger companies, including multinational brands such as Nike, Inc. (NKE) Apple Inc. (AAPL). Tmall has grown to host over 50,000 merchants selling to over 180 million active users.

Tmall charges merchants a deposit, an annual fee, and a commission fee on transactions. In this way, it bears some resemblance to eBay Inc. (EBAY) and Amazon, which also collect transaction fees from third-party merchants. Sellers on Tmall have access to analytic tools showing the number of visitors, page views, and customer ratings, which serve to help guide their business decisions.

Software vs. Warehouses

Unlike Amazon, Alibaba Group holds no inventory. Rather, Alibaba has created software platforms that facilitate the exchange of goods and services. While Alibaba’s revenues are only a fraction of Amazon’s, it has higher operating margins and profit margins. The reason for this at large is that Amazon has to manage the expensive and complex logistics of developing and maintaining a network of warehouses to ship products directly to shoppers. In short, software is easier to scale than warehouses.

Investments

Alibaba Group has made major investments in Sina Weibo, a Chinese micro-blogging website similar to Twitter Inc. (TWTR), and YoukuTudou, China’s answer to YouTube. Alibaba has also invested in several US startups, including video messaging application Snapchat and Lyft, a peer-to-peer ridesharing application. In 2014 it even bought a 50 per cent share of Guangzhou Evergrande Football Club for $192 million.

Value Proposition

Alibaba provides a platform for buyers and sellers, proposes news, analysis and timely price lists, development team works on the research of new technologies and functions to support their website which helps to enhance their services and reduce operating costs and gain large profits.

Its business model aims to create an efficient, flexible and responsive structure in front of a demanding customer and information society opportunities. Its business model entails its network of partners for creating, marketing and delivering value and relationship capital to one or several segments of customers under B2B to generate profitable and sustainable revenue streams.

The Future, without Jack Ma?

Jack ma

The founder, Jack Ma, has been a charismatic leader for the company and a champion for Chinese industry, connecting businesses and consumers at home and abroad with merchants of all sizes through Alibaba’s different e-commerce marketplaces, including Taobao, Tmall and Aliexpress. The company’s stock has risen 87% over his tenure and Alibaba now has a market value of about $420 billion, eclipsing WeChat operator Tencent Holdings Ltd.

Mr.Ma said in the open letter that he wants to return to education, which gives him excitement and blessings. He said he has prepared a 10-year succession plan to develop a system of corporate governance based on culture and mechanism for developing consistent talent and successors.

Alibaba and Mr.Ma portrayed the succession plan as a sign that the company isn’t dependent on one person. Mr.Ma’s involvement in the company isn’t likely to end with his resignation. He has a stake of more than 6 per cent in the company’s shares. Crucially, he will also have considerable sway in the company and its affiliates.

Much remains unclear about the structure in the new era. Alibaba was unable to say, for example, if Mr Ma has or will retain control of Ant Financial, the payments affiliate which is undergoing an ownership restructuring that will see Alibaba swap its profit-sharing agreement for a 33 per cent stake in the company.

All this being said, we look forward as to how things really shape up after Jack Ma retires next year and hands over the reins of Alibaba to his successor, Mr.Daniel Zhang, in a business environment that is very much different from what it was 20 years ago. Only time will bear witness to the journey of the Chinese business giant in the years to come.

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Startup Sunday Season 3 Episode 13(Binashree – The Skyrocketing 3D Printers)

Many are successful, but only a few are achievers. What differentiates these two is the courage to take the road less travelled. It requires lots of courage to enter an industry which is still developing and moreover when you don’t possess any expertise in that sector.

Today’s Startup Sunday brings to you the story of such enthusiastic and dynamic young brothers, Sitendu, an Electrical and Electronics Engineer and Somarendu, a Chemical Engineer, who left their 9-5 desk job for making an impact in Indian Tech market with their brand-new Start-up called Binashree.

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With a vision of meet their customer demand with proficient technology with constant innovation, Binashree has already established itself among the top 20 3D Printing Service Providers, 2018 by Magazine Silicon India. And guess what it took only 11 months for them to achieve this feat.

About Binashree

A Bangalore based startup, Binashree is known to deliver high-quality products and services across:

  • 3D printing: Its line of 3D Systems’ printers make way for you to instantly realize clients’ instant solution.
  • Vacuum Casting: They offer a complete turnkey solution for creating master patterns and cast copies based on clients’ CAD designs. They not only make high-quality moulds but also offer a full line of finishing services including painting, sanding, pad printing and more.
  • Injection Moulding: They can manufacture the component parts or finished products or provide a partial project management injection moulding service from 3D part/technical drawing to production part.

Binashree serves different industries and processes

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A dive into the interesting journey

Binashree’s journey started with a basic idea of both the brothers’ desire for their own startup which can contribute to Indian Technological and Manufacturing Industry at par with the Chinese market. “Why are we dependent on China for manufacturing and not doing it in our own country?” is the question which hit Sitendu’s mind. With this objective, he started Binashree with a production team of 15+years’ experience, who are experts in providing high-quality parts and finishing to end-use products according to their clients’ needs and requirements.

Nothing can be a better teacher than a fresh struggle story. The passion with which Binashree is heading towards being public next five years, can be a source of inspiration for the budding entrepreneurs. Like every startup, Binashree has also faced loads of challenges like funding and entering into a market which was pre-occupied by giant players. But Binashree has never looked back and rose with every failure. Even in such technology and machinery based startup, Binashree didn’t get funding from anywhere but still managed not only to survive but to grow as well at a commendable rate. “Passion and optimism are something that can keep you struggling in the market no matter what,” says the founder.

Binashree Stats

Binashree’s Clientele Base

Within 11 months of its establishment, Binashree has already completed 50+ projects serving 25+ clients. Firms engaged in research and development forms their clientele base. When asked about the challenges as a new entrant in this industry, Sitendu says that it’s the quality delivered by Binashree which makes it compete with the existing market leaders. He doesn’t believe in advertising as he says that a manufacturing company’s advertisement is the quality of products that it provides which can outperform the existing ones. Word of mouth is the basic advertising strategy followed by Binashree.

Binashree follows an open work culture with no rigid hierarchy. People work cross verticals with the prime objective of taking the budding startup to new heights of success. According to the founder, the manufacturing sector cannot expect an exponential growth like other industries. So if you are targeting that sector, you must have the perseverance to keep on going without being affected by initial slow growth and sometimes even losses.

Words by the founder for the budding entrepreneurs

 “For surviving and succeeding in this competitive environment, you need to be very strong. You may face a lot of challenges but if your vision and goal setting are clear, you can easily overcome those keeping your head high. It actually requires a die-hard attitude to make your dreams come true. For that, you yourself should be able to see your own vision and dream down the line. Never start a startup for the sake of money making. Never try to be someone else. For me, I want Binashree to be Binashree in next coming years, not any other established brand. You can give a better competition to yourself than anyone else. Live your dream and keep on moving towards your goal. Success will chase you.”

Startup Sunday Season 3 Episode 12(Google- Fostering Innovation and Nurturing Startups)

We all talk about start-ups and new businesses that recreate the business models time and again. But the startup that changed the course of this millennium was Google. Today a company with a market capitalization of billion US dollars was once a startup in the year 1996. Two Stanford Ph.D. students, Sergey Brin and Larry Page had the idea of ‘BackRub’, a revolutionary technology that would rank web pages based on how many other web pages linked back to them. A disrupting idea in itself, the two co-founders worked to make their idea a success. And thanks to the world of internet, Google slowly created a buzz that took the entire world by storm.

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The Early Days of Google

After Google.com domain was registered on 5th September 1997, Google started draining too much of bandwidth of Stanford University itself. This led to Larry and Brin relocating to the garage of future Google employee Susan Wojcicki, the current head of YouTube. It was around the same time that Brin and Larry got a seed investment of $100,000 from Sun Microsystems founder Andy Bechtolsheim. After being nearly acquired by Excite, a leading search engine at that time in 1999, Sergey and Larry decided to make Google a business after all. They moved to its first-ever office in 165 University Avenue in Palo Alto- the same office building that housed companies like PayPal and Logitech. Google eventually raised $25 million from Sequoia Capital and it started its operations on a larger scale. Google debuted its Adword products in late 2000, enabling businesses to buy ads on search terms. By then Google had already started establishing itself as a search engine and it survived the dot-com bust that ended up consuming lots of new such start-ups.

Google slowly became the tech rockstar in a world where everyone was failing. And this was due to its commitment to innovation and intention to do good things for the world. It believed that a long vision over seeking short-term gains would serve their purpose, which happened in due course of time. On August 19th,2004, Google had its Initial Public Offering on the stock market priced at $85. Today a share in the Google parent company Alphabet costs about $800. Be it developing new products, the revenue model or the employee experience, Google has always innovated and every time it has come up with something new. But according to Susan Wojcicki, Google’s Senior Vice President in Advertising, innovation is a continuous process and doesn’t happen instantly. She has also mentioned a number of times that the spirit of the company remains the same as it was when she joined it in its early start-up days. Although Google faces the investor’s dilemma on whether to expand in newer products or developing the existing one, Google believes in doing both.

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Google started a revolution with its search engine concept that gave its user links to a number of websites as per his required choice on the same page at a time. The concept was not new but how Google offered it, definitely was. With time Google was developing even newer products to offer to its users. It started expanding beyond the search engine and started gobbling up newer start-ups to offer products like G-Mail, Google Docs, Google Chrome and Google Maps which are still very much relevant today. In 2005 Google bought a tiny startup that was making an operating system for digital cameras. It was called Android and was led by Andy Rubin. In late 2008 when Smartphones hit the market users got a taste of the OS, and today Android has the largest user base around the globe. In 2006 Google acquired YouTube for $1.65 billion from a bunch of ex-PayPal employees and revolutionized the On Demand video viewing industry. Google by that time was getting bigger and bigger. In 2006 it opened up its fully owned and designed data centre in Dallas, Oregon, on the banks of the Columbia river. It has a history of generating maximum efficacy from its data centers. Google is now coming up with driverless cars, or Artificial Intelligence-based IoT which is sure to change the course of the world in the coming future.

Innovation at its Heart

Apart from the number of innovative and easy to use products, Google also keeps innovating and experimenting with its revenue model. The company’s annual report succinctly puts it, “We generate revenue primarily by delivering relevant, cost-effective online advertising.” The company has a unique value proposition in terms of customer payment options. Unlike the traditional advertising media, which doesn’t segregate the actual prospective user from the mass, Google does it in a much better manner as the user with a specific choice will be advertised by the offering of the vendor himself. This allows a better targeting strategy when it comes to marketing products via an online media like Google. Also coupled with it, customers pay for ads on a cost per click basis, meaning that an advertiser can place an ad with zero obligation. If no one clicks on the ad, the customer doesn’t pay a dime. From the perspective of Google’s shareholders, it gets even better. This is all based via auction. Would-be buyers of AdWords bid for the right to use a particular ad, or phrase, overpay, and Google enjoys a high markup. Underbid, and you risk losing the auction to a more motivated seller.

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Google also believes that nurturing new start-ups can help it learn and grow from them. This is the sole reason that Google offers a range of products starting from infrastructure to AI-based tools and software and best practices to grow one’s startup. Google through its featured programmes help prospective start-ups from raising funds, hiring the right team and building new products. It also acts as a potential influencer helping such start-ups grow through digital marketing. All in all, it gives a launch pad for new age start-ups to work and make use of Google’s state of art tools and platforms to come up with even more revolutionary products and business models. The story doesn’t end here. Besides acting as an incubator to start-ups Google also looks at the positive growth of its employees. It offers its 26,000 employees with a variety of campus styles and free meals, which creates a sense of pride among its employees. Googles co-founders have gone on record to mention that they continuously learn from their employees and their organizational structure is such that most of the problems are solved in a lesser amount of time owing to sharing of information and ideas. A problem can be posted by a techie on the reader boards and another set of employees start solving the problems. This, in turn, brings out the problem-solving skills of the employees and creates a sense of entrepreneurship within them.

Business Roles in Google

Business Roles

The bottom line is that Google not only innovates itself but at the same time helps others to innovate creating an environment for new businesses to grow. It acts as an accelerator, an incubator, an advertising medium, and influencer and an organization promoting entrepreneurship. These principles of Google have let it grow exponentially without going irrelevant in today’s age of rapid change.

Startup Sunday Season 3 Episode 10 (ATTENTIVE AI)

Artificial Intelligence is the hot topic everyone is talking about today. But what is Artificial Intelligence? Artificial Intelligence is a part of computer science that aims to create intelligent machines. But there is much more to it than meets the eye.

“A year spent in artificial intelligence is enough to make one believe in God.” —Alan Perlis

Attentive AI is one such entrepreneurial venture which using their own AI aim to meet the needs of the remote sensing industry to generate actionable insights on a daily basis. Getting confused, let’s simplify it. Remote sensing is the science of obtaining information about object or areas using aircraft or satellite-based sensor technologies. So according to the people at Attentive AI there are trillions of pixels of raw data that exists out there waiting to be processed. Even if the population of the entire planet was to analyze this data it would take an eternity. But processing this data and extracting insights from it requires a human-like accuracy. Attentive AI was founded on this premise developing Artificial Intelligence Systems that made it possible to analyze petabytes of remote sensing data, converting it into accurate insights with minimal human effort. They create geospatial data which is data that gives information about a physical object in the form of numerical values on a geographic coordinate system like roadmaps for their clients.

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Startup Sunday Season 2 Episode 31 (Post-Budget Analysis)

We always don’t get what we want, but we do move closer to the goal. Likewise the budget wasn’t the ideal for startups but will provide a better ecosystem that what we had last year. Last year, startups took a real beating with the inefficient rollout of the goods and services tax (GST), a return of the angel tax bogey and demonetisation, even though some ventures benefited immensely. While some major concerns remain unaddressed, there was some cause for cheer.

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Startup Sunday Season 2 Episode 30 (Pre-Budget Series)

Finance Minister Mr. Arun Jaitley is all buckled up to present the Union Budget 2018 of India for the fiscal year 2018-19 on February 1. This is going to be the last full-fledged budget presented by the Modi Government before the 2019 General Elections.

Looking at the current landscape of the startup industry, we present to our readers a pre-budget series providing a comprehensive analysis of the general state of affairs of key sectors in India including agriculture, eCommerce, logistics, health, education and real estate from the lens of the startup ecosystem. This series also comes with the expectations of different stakeholders in the Indian startup landscape from the upcoming budget 2018.

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Startup Sunday Season 2 Episode 29 (#LikeaBoss Simply with Suparnaa)

“Curiosity is the wick in the candle of learning.”

Suparnaa an author, artiste & an entrepreneur, just as curious about the startup world as she is about leadership traits and the dots in between. For over 17 years she experimented with different mediums including Radio, TV, Print, Events and now the World Wide Web. She also founded an initiative to promote Gender Equity named womanendangered.org that is partnered with leanin.org, Facebook COO, Sheryl Sandberg’s brainchild.

Today with her startup “#LikeaBoss Simply with Suparnaa” she is sharing stories of startup founders & leaders alike.

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Startup Sunday Season 2 Episode 26 (Qrius)

Qrius earlier started as  ‘The Indian Economist’ back in January of 2013 is a leading digital magazine that focuses on publishing high quality articles and opinion pieces on business & economics, policy, politics, culture, foreign affairs and more.

With a broad range of In House Analysts, Contributors from around the globe, and over 100 content sharing partnerships with organisations from across the world, they aim to present to the reader a unique perspective on the most important issues of the day in various fields. Their Moto is ‘For the curious Mind’ as they developed Qrius into forum where curious minds meet and discuss a diverse range of subject areas that affect business, politics and society in general.

Entrepreneurship Cell got an opportunity to interview Mr Manan Vyas founder of Qrius, and brings to you the story of Qrius this Sunday


Qrius

 

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Startup Sunday Season 2 Episode 23 (Sonia Swaroop Choksi)

An entrepreneur is not the one who owns a business, but someone who make things happen. This Sunday Entrepreneurship Cell brings to you the story of Sonia Swaroop Choksi, a dynamic and versatile personality, and her take on Entrepreneurship.

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