Lessons from Joseph Tsai

Joseph Tsai is the co-founder and chairman of Alibaba Group.

On Entrepreneurship and Building a Business

Focus on Solving Problems, Not Just Technology. "Most start-up companies start with a technology or an idea … [and then] search for a problem to solve. It's actually exactly the opposite of how you build a long-term, long-lasting sustainable company." [1]
- Learning: Successful businesses are built by first identifying a real-world problem and then creating a solution for it, rather than starting with a technology and then looking for an application. [1]
Have a Clear Mission. "A company needs to have a mission besides making money." [2]
- Learning: A strong, shared mission is crucial for keeping a growing team aligned and focused. It provides a guiding principle beyond financial goals. [2][3]
Mission, Vision, and Values are Key. "Mission, Vision, Values - This is 3 most important things to think about as you start your business." [4]
- Learning: These three elements form the foundation of a company's culture and strategy, guiding its growth and decision-making. [4]
Be Persuasive and Have Conviction. "Successful entrepreneurs need to be persuasive and able to communicate their vision to investors and employees... The most-important thing when you want to be persuasive is that you have conviction in yourself and your product and your customer base." [5]
- Learning: The ability to effectively communicate your vision and belief in your company is a learnable and essential skill for any founder. [5]
Let Your Mission Guide You. "I don't think you should chase ideas. I think you have to go back to why you founded the business that you founded what was the mission in the first place." [6]
- Learning: In the face of new trends and opportunities, always return to your core mission to guide your decisions and ensure you stay on the right path. [6]
Don't Over-Focus on Valuation. "I think sometimes entrepreneurs care too much about valuation... if you sell your company too cheap it's too dilutive to the founders. but if dilution is not a huge issue for you uh then don't raise money on high valuations just because of pride or ego uh because you will end up disappointing your investors." [6]
- Learning: Prioritize finding the right investors and ensuring their success over achieving the highest possible valuation, which can create undue pressure and lead to disappointment. [6]
Create a Win-Win for Investors. "Alibaba has always been in our financing history we've always left money on the table all of our investors... have all made money with us uh over the history of 20 years. and I think that's a that's a winning formula." [6]
- Learning: Building a track record of success for your investors can be a powerful long-term strategy.
Innovation is Bottom-Up. "Innovation has to be bottom up... Companies don't innovate. It's people that innovate. It's the young people that are close to the market, that're close to your customer that will figure out great ideas and innovate." [4]
- Learning: Empower your employees, especially those closest to the customers, to experiment and come up with new ideas. [4]
Focus on the Customer. "Being focused on the customer is an absolute priority." [6]
- Learning: The customer should be at the center of all your business decisions.
Redefine Your Customer. In a recent shift, Tsai redefined Alibaba's customers as the users shopping on their apps, moving the focus from the merchants. [7]
- Learning: Be willing to re-evaluate and redefine who your primary customer is as your market and business evolve. [7]

On Leadership

True Leaders are Humble. "I think true leaders are humble people they have the humility to hire people that are smarter than they are." [2][3]
- Learning: A key leadership strength is recognizing your own limitations and building a team of experts who excel in areas where you do not. [2][3]
Spend More Time on People as You Scale. "As you scale your business and the bigger your business gets, the more time you should be spending on the people." [8]
- Learning: As a company grows, a leader's primary role shifts towards managing and developing talent. [8]
Articulate a Clear Vision. "Your team needs a leader who can articulate the vision. If you can't stand onstage and articulate the vision, your team is lost." [5]
- Learning: A leader must be able to clearly and compellingly communicate the company's direction to keep everyone moving towards the same goal. [5]
Leadership is a Learned Skill. "In my experience, leadership is a learned skill that requires patience, humility, and a healthy dose of self-awareness." [9]
- Learning: Leadership is not an innate trait but something that can be developed through practice and self-reflection. [9]
In a Crisis, Be a Problem-Solver. "A leader in crisis is the lowest maintenance person in the room uh you need to care about other people uh try to solve other people's problems rather than presenting the problem for other people to solve." [10]
- Learning: During a crisis, a leader's role is to stabilize the situation, focus on solutions, and unite the team against the problem, not against each other. [10]
Admit Your Mistakes. "I believe part of leadership is humility. You must be able to admit your mistakes and be able to correct them." [11]
- Learning: Great leaders have the self-awareness to acknowledge when they are wrong and the courage to change course. [11]
Give Young People Room to Flourish. "Let your young people in your organization flourish, give them the space, the room, the resource to do that." [4]
- Learning: Foster an environment where young talent is empowered to take initiative and innovate. [4]
Develop Your People. "You have to continuously develop them so that they they're more valuable every year you know to your business." [6]
- Learning: Investing in the growth and development of your employees is an investment in the future of your company. [8]
Find the Right Talent for the Right Place. "There's no best talent there's always the right talent in the right place at the right time." [6]
- Learning: Focus on finding people who are the right fit for specific roles and the company culture at a particular stage of its growth. [8]
The Biggest Challenge is People. Finding the right people is always the "biggest challenge," but also "the most rewarding" for any business. [8]
- Learning: Talent acquisition and management are among the most critical and impactful functions in a business. [8]

On Investment and Strategy

Invest in People, Not Just Ideas. "Investing is about backing people, not just ideas." [12]
- Learning: A strong and passionate founding team is often more critical to a startup's success than the initial idea itself. [12]
Take a Long-Term View. One of the core tenets of Tsai's investment philosophy is a commitment to long-term growth over short-term gains. [12]
- Learning: Sustainable success comes from patiently nurturing companies with future potential rather than chasing quick profits. [12]
Focus on Innovation. "Look for companies that are not just following trends but are creating them." [12]
- Learning: True value is created by businesses that drive innovation and shape the future of their industries. [12]
Be Adaptive to the Environment. Tsai has noted the need to be adaptive, for instance, by pausing the spinoff of Alibaba's cloud and logistics businesses due to unfavorable market conditions. [13]
- Learning: Strategic plans must be flexible and responsive to the prevailing market environment. [13]
Monetize Non-Core Assets. Alibaba has been selling off non-core assets and financial investments to sharpen its focus on its main businesses. [13]
- Learning: Regularly review your portfolio of businesses and investments, and divest those that are not central to your core strategy to unlock value and increase focus. [13]
Understand Market Dynamics. Tsai's success is partly attributed to his ability to anticipate shifts in consumer behavior and technological advancements. [12]
- Learning: Thorough market research and a deep understanding of industry trends are essential for making sound investment decisions. [12]
Embrace Calculated Risks. Tsai's investment philosophy includes embracing calculated risks as a necessary component of achieving significant returns. [12]
- Learning: While due diligence is crucial, a willingness to take well-assessed risks is key to capitalizing on high-growth opportunities. [12]
AI is a Major Focus. "We just see so much upside to AI… and that's why we're all in." [14]
- Learning: Artificial intelligence is a transformative technology that will be a significant driver of future growth and value creation. [14]
The Combination of AI and Cloud is Crucial. "We're the only company [in China] that both runs a leading cloud business and is competitive in AI... The combination of AI and cloud is important." [14]
- Learning: The synergy between AI and cloud computing is powerful, as AI applications require significant computing power, which in turn drives cloud revenue. [14]
Have a Growth Mindset. "You have to have a growth mindset when you compete and that's where we are." [14]
- Learning: A continuous focus on growth and innovation is essential to stay competitive. [14]

On Life and Career

Learn from Setbacks. "You have to go through moments like that kind of the sense of helplessness. and then you pick yourself back up and uh figure out a solution to go forward." [10]
- Learning: Experiencing and overcoming setbacks is a critical part of personal and professional growth. [10]
Develop Expertise. Tsai suggests that young people should strive to develop expertise in a specific field to become part of the top 10% in that area. [11]
- Learning: Deep knowledge and skill in a particular domain are valuable assets for career advancement. [11]
Seize the Opportunity in Front of You. Tsai advises law students "not to think too much about how to plan out your career path for the next 5 10 years uh just seize the opportunity uh look at uh what's ahead of you." [10]
- Learning: While long-term planning has its place, it's also important to be open to and take advantage of the immediate opportunities that arise. [10]
Learn How to Think Critically. "One of the most important things uh in law school is to learn... how to think critically how to ask the right questions." [10]
- Learning: The ability to analyze situations critically and ask insightful questions is a fundamental skill for success in any field.
Sports Teach Important Lessons. "Sports not only teach you discipline and hard work, but they also teach you how to get back up after a failure. If you lose a game, you have to get back up. I think that's really important." [11]
- Learning: The principles of resilience, discipline, and teamwork learned in sports are highly applicable to the business world. [11]
Transitioning from a lawyer to an investor was a pivotal experience. This move allowed him to shift from advising to driving decisions. [3]
- Learning: Don't be afraid to change career paths to find a role that better suits your skills and ambitions.
The Entrepreneurial Spirit is Inspiring. Tsai was captivated by the dedication of Jack Ma and the early team, who were living and working in a small apartment. [15]
- Learning: Passion and a shared sense of purpose can be incredibly powerful and inspiring, even in the earliest stages of a venture. [15]
Be Resilient. During a challenging phase for Alibaba, the company learned "to be resilient and to always think about living another day." [16]
- Learning: In times of crisis, the ability to endure and survive is paramount, as it gives you the chance to fight back later. [16]
Humility is Key to Learning. Reflecting on his early career, Tsai emphasizes the importance of learning from those with more experience.
- Learning: Maintain a humble attitude and be open to learning from others, regardless of your own position or achievements.
Seek Diverse Perspectives. "I don't think one single person would have all the answers. So, having that diversity of perspective, [talking] to other people that are also running businesses is really the most rewarding thing that we can do." [8]
- Learning: Actively seek out a variety of viewpoints and experiences to make more informed and well-rounded decisions. [8]

On Alibaba and the Market

Alibaba Overlooked User Experience. "Joseph Tsai admitted that the key reason for Alibaba's lagging behind in the past few years was the neglect of user experience. The focus of the group's restructuring is to refocus on user experience." [11]
- Learning: Even established giants can falter if they lose sight of the user experience, highlighting its critical importance for sustained success. [11]
Alibaba's Mission: To Make it Easy to Do Business Anywhere. This mission was established to help small and medium-sized enterprises in China reach global markets. [1]
- Learning: A powerful mission statement can be the driving force behind a company's creation and long-term strategy. [1]
Alibaba is Good for Global Trade. Tsai emphasizes that Alibaba facilitates significant trade into China from the US and Europe, positioning the company as a global trade enabler. [17]
- Learning: A successful global company can create value for multiple economies, not just its own. [17]
Confidence is Key to Boosting Consumption in China. Tsai has noted that while Chinese households have high savings rates, restoring consumer confidence is necessary to unlock their spending potential. [11]
- Learning: Macroeconomic success is heavily dependent on consumer sentiment and confidence.
Organizational Restructuring is Vital. Tsai has pointed to organizational structure and the management team as critical components of Alibaba's reorganization. [13]
- Learning: A company's internal structure must be aligned with its strategic goals to ensure effective execution.
Compliance is a Priority. "We need to ensure that we comply with laws and policies in operation around the world, so you don't clash with regulators and then attract politicians' attention." [11]
- Learning: For a global company, navigating and adhering to diverse regulatory environments is a fundamental requirement for stable operations.
Founder Confidence Matters. Tsai believes it's important that he and Jack Ma, as co-founders, demonstrate their confidence in the company through their significant shareholdings. [13]
- Learning: The actions and investments of a company's founders can send a powerful message to employees, investors, and the market.
Synergies Between Business Units are a Focus. Amidst market challenges, Alibaba is focusing on the synergies between its business units, such as cloud and e-commerce. [13]
- Learning: In a tough environment, leveraging the combined strengths of different parts of a business can create significant value and efficiency.
China's Economic Potential Remains. Tsai has expressed confidence in China's long-term economic potential, particularly the growth of its consumer market. [17]
- Learning: Despite short-term challenges, it's important to maintain a long-term perspective on the fundamental drivers of a market.
Geopolitical Unpredictability is the New Paradigm. Tsai has spoken about navigating a "new paradigm" of trade tensions and unpredictable government actions. [16]
- Learning: Businesses today must be prepared to operate in a more complex and uncertain geopolitical landscape. [16]

Learn more:

Lessons from Joseph Tsai

On Entrepreneurship and Building a Business

On Leadership

On Investment and Strategy

On Life and Career

On Alibaba and the Market

Written by Antoine Buteau

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