Alibaba

00:00Yeah, that. Here we go. Google suggested search. What happened to Yahoo stake in Alibaba? Oh, wait, I forgot about Altaba. Oh, God. The remaining company is Altaba, which is a holding company of everything that wasn't Yahoo. Altaba is worth 10 times more than what Verizon paid for Yahoo itself. Right. Oh, they have a website. Look at this. Company profile. Independent. This is on their website. Altaba Inc. is an independent, publicly traded, non-diversified, closed-end management investment company registered under the 1940 Act. Wow, what a mess. Welcome to Season 3, Episode 5 of Acquired, the show about technology acquisitions and IPOs. I'm Ben Gilbert. I'm David Rosenthal. And we are your hosts. Today, we are continuing our quest to more deeply understand China tech with Alibaba. So before we dive in, a few fun facts about Alibaba.

01:07They had the largest US-based IPO of all time. Alibaba is China's biggest tech company. Alibaba's market cap, even at their current scale, doubled in the last year, and they were valued at over half a trillion dollars earlier this year. So you think about Only a few companies are racing up to a trillion, and that's gotten all the news cycle. Alibaba, halfway there, growing very quickly. We may see a new trillion-dollar company here in the next year or two. They're the number one retailer worldwide in front of Amazon or Walmart. Holy crap. I don't think I knew that before researching this episode. And yet, through all this, they're a bit of an enigma. Founder Jack Ma says that we are not an e-commerce company. We enable others to become e-commerce, but they themselves don't feel that it's fair to have a direct comparison between them and Amazon.

02:00And if only there were like somewhere you could go to get a really good story and understand the history and facts of how all of this came to be. Yes. It's interesting for me. Alibaba, I think before we started doing the research, was of the big Chinese tech companies, the one that I felt like I understood the least. I'm pumped to have sort of a little bit more of my hands around who the company is and and how they came to be So super excited to dive into that today one of the hardest as you say big chinese tech companies to understand and yet Arguably the most important one. So here we go. Here we go. Well, if you're new to the show You can check out our slack at acquired.fm It's the place where david myself and over 1600 of our favorite listeners discuss episodes right right after we release them along with real-time hot takes and the biggest tech news of the day.

02:50By the way, if you guys haven't clicked the link in the show notes from the Recode episode and watched Kara's interview with Stuart Butterfield when Slack was tiny spec makers of Glitch and watched her video interview, it's amazing. Let's just say the world is better off that they pivoted into Slack. Oh my. Probably. All right, listeners, now is a great time to tell you about longtime friend of the show, Vanta. So David, I want to paint a picture that many founders listening will recognize. You're about to close your biggest customer yet. The product team has hit a bunch of milestones. The sales team built this fantastic relationship. Everyone of the potential customer is fired up. Your legal team has the contract done, but then an email comes in from the security team. Ah, yes. It's usually a very polite email asking something like, before proceeding, could you share your SOC 2 report?

03:52Or do you mind sharing your ISO 27001? If you don't have one, that deal just went from closing this month to closing next quarter, maybe. Now you have to go find an auditor, go through every system, write the policies, and then prove that you follow them. Right. Or you could just use Vanta. They are the leading agentic trust platform, which means that you can connect it to your systems at your company, and it automatically pulls all the relevant data. And it tells you exactly what's missing for a SOC 2 and ISO 27001, or whichever framework your customer asked for. Vanta gets you through the audit, and then it keeps going. It watches your controls every day afterwards. So the report that you hand of the next customer is still true. Yep. And even more impressive is the Vanta agent. It continues to run in the background so it can find the issues and draft the fixes. This is the work that eats

04:44weeks of an engineer's time before an audit. And now it mostly just gets done before anyone has to ask. And the results are super impressive. A recent industry report says that Vanta's customers see a 526% return over three years and that it pays for itself within the first three months. If you've ever had one of these security emails stall a deal, you know exactly how that math works. More than 16,000 companies now run on Vanta. 16,000. Listeners, there were 2,000 when David and I started working with Vanta. That's incredible what they've accomplished. And these are companies from large enterprises like Atlassian and Snowflake to the NewGuard, like Ramp and Cursor. We've been fans of Vanta for years and hundreds, like literally hundreds, maybe even at this point, thousands of acquired listeners have become Vanta customers over that time. If you want $1,000 off, check out Vanta.com slash acquired.

05:39That's V-A-N-T-A dot com slash acquired. And just tell them that Ben and David sent you. All right, David, you want to take us in? Yes, let's do it. Two quick notes before we do. One, we're going to do our best and listeners, you will be the judge in this episode. but we don't have Hans and Zara with us or anybody who really knows the history of Alibaba besides ourselves. And that's Hans and Zara from the 996 podcast by GGV Capital, which joined us for the Xiaomi episode. Exactly, exactly. And GGV, as we will see along, was actually investors in Alibaba at one point in time. So we'll do our best. But certainly, I would expect our audience in China might be more familiar with Alibaba's history than us. So anything we get wrong, hit us up in the slack and we will correct later. Second note, almost all of the history of facts does come from

06:30a fantastic English language book about the history of Alibaba called Alibaba, the house that Jack Ma built by Duncan Clark, who is an investor and a former consultant and investment banker based in Asia, who actually was an advisor to the company. So he's not just an author or journalist who came in, he actually had worked with the company and then wrote this great book that came out in 2016. So if you want to even more deep dive, go read the book. But with that, let's start the story. You know, my research starts in 99 when the company's founded. In my head, I was thinking like, okay, well, like, we'll start in 99, you know, we'll take it over the next 19 years. I'm guessing where you're going to start is a little bit before 99. A little bit before I was debating going back like, how many thousands of years to go back,

07:17but I'm going to save that for the carve out. So, uh, I promise we will go back thousands of years, but not until the carve out. Perfect. We are actually going to start in 1964 when a young boy named Ma Yun is born in Hangzhou, China, uh, which is a city about a two hour drive from Shanghai. Until recently, it was a, uh, in a sort of new government classification of, of cities in China, a tier two city. It is now a tier one city, thanks to Alibaba, which is headquartered there. But at the time, it was nothing like it is today. This was right before the beginning of the Cultural Revolution, which is obviously a time of great, great turmoil in China. It lasted from the mid-60s to the mid-70s. And actually, Ma Yun's grandparents, not his parents, were persecuted during the Cultural Revolution. So there's a lot of turmoil going on. But when Ma is about 10 years

08:16old, something pretty important happens. And that is that Richard Nixon makes his famous trip to China, opening up China to the West. And that's really one of the beginning moments of the Chinese government and society kind of becoming more open and evolving and towards the form of government that they have today. One of the cities that Nixon visits on his trip to China is Hangzhou. It's an incredibly beautiful city. People back in the West kind of see this and see the video coverage of his trip there. It becomes a tourist destination. And so lots of Americans and other English speaking people are now coming to China, visiting Hangzhou. And Ma, for some reason, he becomes obsessed with English. He's never been outside of Hangzhou. His parents are like super lower middle class. He becomes obsessed with English. He wants to, he wants to learn it.

09:05So what he does, he, he starts pretty much every day bicycling from his house to the hotel where Nixon had stayed in Hangzhou, which becomes a tourist destination. And he just hangs out at the hotel and he starts chatting up English speaking tourists who are there and offering to take them on free tours. And, and he does all this just because he wants to learn to speak English. pretty amazing he does this for like basically all of his like middle and high school career and while he's doing this one tourist who he's uh chatting with and and you know showing around the city says you know you're given name uh yun uh ma's his last name uh but which comes first in chinese you're given a newman it's kind of hard to remember and pronounce for for english speakers you need an english name and ma's like okay like what do you suggest and this tourist woman is

09:53like, well, you know, my husband's name is Jack and our son's name is Jack. So how about Jack? And Ma's like, great, I'm now Jack. And that is how Jack Ma is born. Very, very creative of her. Very, very creative. Jack, also very creative, as we've seen here. Unfortunately, not very good at math. So the college entrance exams, the nationalized college entrance exams in China to place a large priority, a high priority on math. Jack is not good at math. And still to this day, you know, he gives these interviews. He's very self-effacing, but he gives these interviews. He's like, I don't really understand technology. Like, you know, all this coding stuff is, you know, Greek to me. And it's totally up front, by the way. He fails his college entrance exams twice because he can't score high enough on math. He scores like the lowest percentile possible on

10:45math. He's great at everything else. He fails twice. He finally tries a third time. He passes, he gets a high enough grade. He gets into the Hangzhou Teachers Institute for college. This is not a very good college. But he goes there, he learns, he studies English there. He trains to become an English teacher. Then he graduates. He has to get a job. It turns out he loves telling this story. Kentucky Fried Chicken, KFC, had just come to China. Ben's lab. I'm sure you saw this story yeah amazing story kfc had just come to china they're opening up kfcs all over they're hiring people to work in you know as cash you know registers or you know cooks and in kfc uh they're just hiring like anybody with a pulse basically they come to hangzhou they have 23 open positions 24 people interview for this position including fresh graduate jack ma and

11:37he's the only person who is not hired by KFC. They hire all 23 other applicants for the KFC and Hangzhou. Jack gets rejected. And this is the moment where Jack files that away and says, when I'm on stage at Davos and telling my story, this is going to be, you too can make it if you pull yourself by your bootstraps. Yeah. When I am one of the richest people in the world and I retire to uh uh to beat bill gates at his own game well we're jumping ahead of ourselves if there's one thing that he is um is his superpower is he is never disheartened or discouraged he he gets a job anyway working as an english teacher uh in hangzhou he's making 12 a month at this point in time this is the the 80s now kind of like mid 80s into late 80s early 90s china though you know through all this is slowly introducing capitalism and entrepreneurship uh back into

12:38society because during the cultural revolution like entrepreneurs were persecuted uh anything that looked like capitalism was definitely a no-no but the government is transitioning so finally in 1994 he's like confident enough that the business environment has evolved in china and it's now safe to be an entrepreneur he's always wanted to start a company uh he pledges to himself he's 29 years old he pledges to himself that now is the right time he is going to start a company before he turns 30 within the year so he starts his first company the hangzhou haibao translation agency haibo means hope in in chinese and it's a translation company they're focused on helping local companies you know kind of do business overseas with particularly with english-speaking countries and at first it's kind of a side business he starts he starts the company but

13:28He keeps his job as a teacher and he's working on the side and something kind of amazing happens. So he's in Hangzhou and there's another county just just south of Hangzhou called Tonglu. And Tonglu, the county had entered into this contract with an American company to build a highway that was going to connect the county and the city of Hangzhou. And they'd hired this company about a year ago. Nothing had happened. and so they're like we need to send somebody over to america and just like meet with this company and like figure out what is going on so they hire the uh the hybo translation agency and jack and they send him over to america jack arrives in california so details of those parts here jack actively says he does not he prefers not to talk about this it's that it was as we will see very traumatic turns out that the company and the guy behind it were basically a fraud and criminal like

14:23there was no company. They had just signed this contract with Tonglu, the county of Tonglu to build this highway, but there was no construction company. Jack shows up. He, unclear if he gets kidnapped or held hostage or something. The guy behind this company, he's like, I don't, you know, you can't go back to, you can't go back to China and like tell them that, you know, you've discovered that I'm a fraud. He ends up getting held hostage, quote unquote, in a hotel in Las Vegas. Yeah. And he manages to escape from the hotel in Las Vegas and somehow get himself out of the city. And he's trying to get back to China and he gets to Seattle. He has friends who are also English teachers in Seattle. This is now 1995. He's his first time. He speaks great English. He's an amazing orator, as we'll link to, I'm sure, in the show notes, several of his talks.

15:14He's escaped. He's on the run. He finds himself in Seattle. And while he's staying in Seattle, he's trying to find a way to get back to China and back to Hangzhou. A friend of the people he's staying with is working, this is 1995, working for an internet consultancy business in downtown Seattle. Because, you know, it's 1995. Like, hey, Amazon is like there. You know, this is the go-go years, the internet. The friend of the friend takes Jack one day to the office in the U.S. Bank building in downtown Seattle, right there, and shows him, you know, what he's working on, shows him the internet. Jack's never seen the internet before. and he's like oh my god uh it uh it is a life-changing moment so the first thing he does the first thing you can think of he he searches on the internet for beer and jack's like you still

16:03when he talks about this he's like i don't know why i searched beer i don't even drink beer but uh beer was the first thing that came to mind and he notices he searches beer he sees all these results for american beer mexican beer german beer uh but there's no chinese beer and he's like oh well i'll search china and see like what comes up basically nothing comes up for china and he's like i wonder how he's searching in yeah yeah so i wasn't able to figure that out either like i mean there were search engines right yeah yeah yeah sort of are we pre yahoo yahoo existed right huh yeah yahoo definitely existed yeah and exciting uh maybe altavista was around then yeah um this has whisperings of our previous episode with kara where she was like i saw the internet and just instantly got it like this was going to change the world and i think jack had that sort

16:50of similar insight of like i don't know why anybody's doing anything else this kind of like basically directly leads to alibaba here although we're gonna you're gonna have to sit through another 20 minutes of history and facts before we get there but but he searches he searches and he's like all right well nothing shows up huh i should just like make a page for for hope translation agency you know like this is this is great people search for china and then they'll find my translation firm. So on the spot, he's in the office of this internet consultancy. He just hacks together like he has them like, you know, he's like, oh, yeah, put like my info up there. They create a website for for Hybo Translation Agency. And there's there's only text has the name and a phone number. And there was an email address. It must have gone to the internet

17:33consulting firm or something. Later that day, they get five emails for translation business requests three from the u.s one from japan one from germany and so his friend the friend of the friend is like uh hey jack um you've got some like business requests coming in and he's like business or like what this is not so like this is probably more business than they've done in like a year and uh so he's like okay now i see the opportunity i need to like forget making this translation agency i'm gonna need to go back and i'm gonna build a whole company to help chinese businesses list themselves online like this generated so much demand for me like imagine all these other businesses in china do you know what else he uh he saw and vowed while he was visiting seattle to crush amazon he uh apparently looked he was like over on uh queen anne queen

18:24anne hills a neighborhood in seattle and like looked around and saw a bunch of big houses and vowed one day i will be rich enough to buy one of these houses and it's so i mean literally while this is happening like i'm sure so i i looked this up amazon was not yet in there uh i think it was their second or third headquarters was in downtown seattle i think they were still down in soto i'm sure jeff bezos and shell kaplan and everybody were like just a mile down the road working on amazon at this very moment it's crazy about totally crazy before he flies home to china jack does he does deal with this internet consulting firm because like as far as he knows like they are the internet you know they're the gateway to the internet uh he flies home to china and he brings a a computer with him he gets back and he creates a company uh there's a deal with

19:14internet seattle firm uh it calls it china pages and he's gonna do exactly you know what what he said he's gonna start building websites for chinese businesses so he starts going around hangzhou and talking to all these companies that produce things or you know offer services and like hey we can get you business we'll put you on the internet the one problem is that the internet doesn't exist yet in China. I mean, you can get on the internet in China, but like maybe only the government can like definitely nobody in Hangzhou is on the internet, like, and definitely not these small businesses. So they're like, are you trying to scam me? Like, what are you talking about? It doesn't go super well, like you get some customers, but it's not a wild success. At the same time, I mean, the government sees the power of the internet, they are starting to push

20:01the internet and technology through the state-owned enterprises as like a way of the future and something China wants to get involved in. Turns out that there was a state-owned, an SOE, a state-owned enterprise-backed company that was also doing sort of the same thing. They end up acquiring China Pages and rolling it up into this quasi-government, quasi-private entity. Jack moves to Beijing. That's not like, when we think about it, that's not like life-changing for Jack in any way. Unclear what the economics were here. I mean, basically like the government acquired the business. Certainly, certainly not life changing. And as a result, Jack moves to Beijing because that's where the government is. He ends up leaving the company. He's kind of disillusioned at this point. Well, he's not easily disillusioned, but he's disillusioned with

20:43this company. He goes to work for another government agency that's working on another initiative for bringing the internet to China called InfoShare. And he's really interested in this. He thinks, OK, this is like great. This is the government is now going to push what I was trying to do with China Pages and InfoShare launches the China Market site. And what the China Market site, the goal was to allow producers of commodities, so soybeans, rice, whatever commodities, nails, parts, whatever, to list their goods for sale on this site and for buyers to contact them. And all of the discussion is going to happen in these secure chat rooms on the site. And this is essentially what Alibaba would become. But because it's a government agency, you have to go through both buyers and sellers have to go through an insane amount of bureaucracy

21:33just to get onto the site they got to go to like the local government agency they got to register they got to wait for all this stuff they got to talk to you know a thousand ministers so jack is like this is it like this is the this is what is gonna work but like there's all this friction all these barriers to entry he's like oh what's gonna happen at the same time yahoo which we referenced earlier has just gone public they are like the world you know internet darling everybody in america is crazy about yahoo at this point people in china are figuring out oh this portal thing like and and it wasn't searched at the time it was directories this is like the key to unlocking the internet for consumers so there are three companies that sprout up in china sina sohu and netties so they've all they've all popped up and jack of

22:23course sees all this happening and he's like okay this is really interesting yahoo this is pretty interesting 1997 rolls around jack's been doing this with the government for a little while and uh turns out who comes over to visit china and visit beijing and the government jerry yang even better than richard nixon even better than richard nixon exactly uh not ceo at the time but but founder and chairman of yahoo jerry comes to beijing and and the government is like all right well we need some you know we need someone who like is both a government employee and gets this like internet thing to kind of show jerry around and uh and who does that end up being jack ma pretty cool i didn't realize until uh digging into this a little bit that that was you know long before alibaba that they started this relationship well not that long before alibaba

23:18as we'll see uh but uh but yes before alibaba it's when uh jack's jack's a minister in the in the government and uh and he's the envoy assigned to jerry and so he goes there are these great pictures of jack and jerry and some other yahoo executives you know on the great wall of china doing all these you know tourist sites and jack's there with him the whole time so as he as he gets to know jerry he realizes that like okay my vision here if there's any chance i'm going to realize it like it's not going to happen in a within the government uh here i need to i need to go become an entrepreneur and do this so he leaves the government he moves back he leaves beijing moves back to hangzhou and he brings a bunch of his colleagues from the china market initiative within the government he brings a bunch of them back with him to hangzhou

24:06and he decides that they're going to start a company so jack and his wife rent an apartment very famous apartment that we will see at building 16 one lakeside gardens in hangzhou they start the company there with all these people there are 18 co-founders of this company it's amazing when you look at like the the founding photo like you expect to see like a few people in a dorm room or a few people in a garage or this must have been like maybe a year into the company or something but like nope it's all 18 people they're all co-founders they're all piled into this apartment yeah i mean what was it when we did the xiaomi episode it was like there's seven or eight co-founders of xiaomi's or something like that like yeah 18 co-founders it's kind of amazing it's like it's the tech theme a little bit but like think about if you

24:54can actually stay organized what an accelerant to a business if you have that many people from day one instead of you know biting and scratching for every person you're going to bring on especially if you've all worked together before totally yeah that's exactly what i was going to say not only is this like the team is fully formed but they've all built this already within the government like this is an airlift here they just airlifted the team from Beijing to Hangzhou so Jack's trying to figure out what he wants to call the company he doesn't want this to be just a Chinese company because remember this is this is all about international trade and he wants these businesses you know commodity suppliers and other businesses to be able to do business with with companies anywhere around the world. You know, on the first day of the website for his company, he had requests

25:40from the US, from Germany, from Japan. He wants a name that'll work in any language. He also wants a name that starts with the letter A. So he settles on Alibaba. He's inspired by the term Open Sesame. It was something like he thought of the name and then I think he even, he was like at a cafe and then asked the server when i say alibaba what does that mean to you or what does that invoke to you and the server says open sesame and he grins and he's like perfect and he goes and he like asks like 18 people on the street the same thing and then there he gets like some significant number also said open sesame and he was like perfect perfect yes exactly he starts walking or wandering around hangzhou asking all these people english speakers chinese speakers everybody and everybody's like yeah open sesame and that's he wants like alibaba to be the the

26:32magic word to opening business opportunities so and and that's of course from the what's the classic story the arabian nights uh yeah 1001 arabian nights yeah yeah yeah yep yeah so he he starts the company turns out alibaba.com is owned by a canadian guy it takes them i think it takes them about a year to negotiate buying the domain name uh from them uh but they they do buy Alibaba.com for something like $4,000 or something from a Canadian businessman. Domain names just keep showing up unacquired. I know. Boy, if there's one thing that's constant among a bunch of our companies, it's long drawn out domain name acquisitions. Seriously. So they start the company and it's exactly what, as we've said, what they were doing with China Market. It's a bulletin board for businesses that you're going to, businesses are going to be able to find demand for their products or services

27:25and then be able to chat with potential customers and facilitate transactions. This may be apocryphal, but Jack talks about this now. He kind of takes inspiration from his favorite movie, which is Forrest Gump. And the Bubba Gump Shrimp Company in Forrest Gump, where the shrimp company, like they made their money, they turned into a big business by harvesting shrimp, like tiny shrimp, like not like big swordfish or whales or whatever, like all these other businesses and so he's like we're gonna do the same thing we're gonna harvest the shrimp and then invest in apple like that's exactly slightly different uh yeah so he's like we're not gonna focus on big businesses we're gonna focus on really really small businesses the shrimp and it was like okay so they get going and they start signing up these small businesses

28:15as they're getting going a pretty unlikely person with a very different background somehow hears about this new company alibaba guy named joe sai who is a hong kong-based private equity investor and joe's pretty interesting so joe grew up in taiwan and again remember like jack grew up during the cultural revolution and you know taiwan splitting friends jack's grandparents were persecuted but jack's family stayed in china they became communists so there's a little bit of a like culture clash there joe grows in taiwan he ends up going coming to the u.s he goes to the lawrenceville school he goes to prep boarding school uh lawrenceville in new jersey right down the road from princeton he ends up going to yale for college he goes right into yale law school he then works for i believe sullivan and cromwell super white shoe law firm in new york and then he

29:06gets into private equity and then he comes back to asia and he's working in hong kong as a private equity investor so like completely different background and he hears about jack and alibaba he's like i gotta go visit this guy so he goes over to hangzhou he visits them in the apartment and he's like this is crazy like jack is completely nuts like this guy is like crazy but he has these 17 other people that are with him and he and he decides like you know if one person is saying has this crazy idea like he's probably crazy but if you've got 18 people it's probably a movement we will definitely link to this in the show notes dave and i were i messaging about it uh last night there is a wildly cool video from this time period of jack ma sort of rallying the troops he's getting everyone fired up and he's pacing around the apartment and it's you know 1990 what

29:591999 actually it's it's a little later so this is when they launched taobao uh a couple years later so the apartment's going to come back it looks like it's about 18 people i mean it really the team doesn't seem significantly i think it's like seven or eight people that launched that launched Taobao. But basically the same thing had happened with the original Alibaba. The takeaway from this video is a fewfold. One, he's sort of lecturing on the verdict of hard work and of the virtue of hard work. And he said, look, if we're an eight to five culture, then we shall go get different jobs. There's other things for us to do here. This is, we're going to be round the clock. This is all in. The only way we'll win is by doing this. And the second interesting point is he looks and says, I have been to Silicon Valley and I have seen the way those companies work.

30:46And he's, I mean, alluding to Jerry Yang, of course. And he says, we need to be more like them. And we need to go and have that work ethic, not the work ethic that we're used to here. And hearing that from 99 is totally fascinating because that is in many ways completely flipped now. I mean, heck, the 996 podcast is called 996 for 99 hours a week, six days a week. The Chinese work ethic is near unmatched when we look at the... Well, this is really the beginning of it. And the other important point he makes is that our competitors are Yahoo, are eBay, are Amazon. They're not the other companies in China. And nobody else was really thinking this way at the time. And so Joe is like, he's smitten. He goes back to Hong Kong. He tells his wife, he's like, I want to go join these guys. And his wife's like, how about we both go visit them? So Joe, he's making over $700,000 a year.

31:44This is 1999, making over $700,000 a year doing PE in China. He brings his wife over, convinces her that like, no, this is going to be a thing. They moved to Hangzhou and he accepts the role. He's the COO and CFO of this newly formed company, Alibaba, for a salary of $600 per year. it's jobsian yeah unreal well i mean it paid off so probably maybe at maybe at the insistence of joe's wife uh joe's like we need to go raise some money for this company so he's like i got this like you know he's remember he's super white too he knows all this stuff he's working in private equity he's like we'll do this we're gonna go over to the we're gonna go over to california we're gonna go over to the u.s we're gonna go to sandhill road we're gonna go pitch all the vcs like this is great like we'll raise money let's just like put together a pitch deck and like it's

32:341999 we'll raise money no problem jack is like i don't do pitch decks i just tell the story and joe's like no i really think we should have a pitch deck it's very rec room like nick like yeah if you want to yeah you can come and hang out in vr if you want to hear our story but i'm not going to like send you a powerpoint yeah and that worked in 2016 that doesn't work in 1999 so they come over everybody at sandals like who are you guys you're in china like you're doing what like yeah send me your deck like anyway it doesn't work they come back they haven't raised any money but there is something that happens shortly thereafter which is a company called china.com goes public and this is the dot-com boom nobody even knows what china.com does it may or may not do anything but all of a sudden it has a multi-billion dollar market cap and

33:27everybody's like China, the internet, big opportunity. So Goldman Sachs, of course, has an office in Hong Kong as well. And there's an investor there named Shirley Lin. And she knows Joe and she's looking now for Chinese internet investments. And she sees that Joe has like gone to move to Hangzhou and joined Alibaba. She's like, I'm gonna go see what's up. So she comes over, she comes to the apartment, building 16 one lakeside gardens in Hangzhou. And she's like, how about I buy your company for Goldman? And Jack and Joe are like, oh, well, you know, we don't really want to sell like a majority share to you. And Shirley offered $5 million for a majority share of the company. They negotiate her down to 50%. They're going to sell 50% of the company to Goldman for $5 million, $10 million valuation. Boy, that is a dilutive little seed

34:17round there. I mean, large seed round, very dilutive. Shirley brings it back to Goldman investment committee and she's like that's five million dollars like this isn't gonna be a big deal and goldman's like i don't know about this like this seems crazy like let's can we like reduce our stake down and syndicate some of it so they do goldman invests 3.3 million dollars they get a 33 stake they syndicate out the rest of it and they raise five million bucks so they start growing a couple weeks later shirley's like she really likes these guys she's taken by joe taken by jack she starts talking them up she talks them up to another goldman client masayoshi san over at soft bank in japan unfreaking believable uh totally unbelievable so remember jack has already met jerry yang fortuitously uh through his government job now goldman has invested in in alibaba owns

35:0933 of the company they're talking it up to masa and they're like yeah you should just just come meet like uh come meet this guy jack masa meets jack in hong kong within five minutes masa's like i like this guy i want to invest typical masa conviction based investor and uh i don't recall exactly but i believe his initial offer is he's like he wants to buy a lot of the company he's like how about i invest 40 million dollars in the company for a 40 stake so remember they were just revalued a couple weeks ago at 10 million dollars goldman bought we're gonna buy half of it they got cold feet they you know like their scooter company or something seriously a couple weeks later nothing has really changed masa's like 100 million dollar valuation i'm gonna buy 40 so again jack and joe they're like i don't know how about how about half of that 20 million dollars for a 20 stake same

36:05hundred million dollar valuation masa apparently evils them back like within minutes and he's like go ahead. I'll have my people see to it. Within weeks, they go to Sand Hill, they strike out. Now they've got $25 million. They're valued at $100 million. They've sold a lot of the company, unfortunately, though, as we will see. So they have all these resources. What do they do? They go back to Silicon Valley and they hire a senior engineer away from Yahoo named John Wu to become CTO of the company. And they're going to build the technical team in Silicon Valley. yeah very very bold so this is all you know year 2000 now unfortunately though the bubble bursts and all of this behavior you know the tide goes out and and everybody who's you know not wearing swim shrunks uh gets exposed alibaba is of course part of this fortunately though they had not spent

37:02that much of the money when the bubble popped they still had 20 million dollars in the bank but they've got this crazy structure where they've got a silicon valley tech team they still have no business model by the way they're they're listing businesses they don't take a take rate on the transactions so they have zero revenue just to make sure we hammer it home because i think it's like important to be explicit about this they're a b2b marketplace like they are helping small medium-sized businesses find other small and medium-sized businesses doing international commerce there's some structured some unstructured so they're sort of discussion boards for unstructured sort of commerce or negotiation. And then there's the structured, you know, Amazon style, I'm going to click this button and buy this many things. But it's really...

37:42And I think at this point, it's really just all unstructured. Like, it's just a bulletin board. Maybe there's some of the structured stuff, but they're only beginning to build that. Yeah, I think it's important to sort of anchor on, okay, that this business doesn't really look anything like Amazon. They're not a first party seller. They don't have a formalized third party seller ecosystem. It's, hey, if you want to do commerce, you should come here and we'll loosely help facilitate that. Money can flow through our platform. Exactly. But they don't take any of the money. All right, listeners. Now is a great time to thank our longtime friend of the show, ServiceNow. So, David, here's a question that I do not think most enterprise CIOs or CEOs could actually answer today if they were asked. How many agents actually run inside your business?

38:30Yes, I don't think anybody really knows. And of course, then there's the harder questions like, what can they access? And who gave them that access? And is any of this paying for itself? ServiceNow has an answer to all those questions. The super intelligence control tower. As friend of the show, CEO Bill McDermott says, it's the one place to see, secure, measure, and help govern your agents, models, and workflows across your entire business, no matter who built it. Yep. So, for example, it finds the agent that someone in procurement spun up on their own and then tracks what it's doing and its ongoing cost. when the CFO inevitably asks whether any of this is working and if there's ROI, you'll be ready with the number. And importantly, if something goes wrong, it can detect and revoke access immediately. There's even a kill switch built into the product.

39:25And ServiceNow is uniquely positioned for this because they've spent the last 20 years building the operating backbone of the enterprise from IT to HR, sales, service, and cybersecurity. They know how work gets done, helping support over 100 billion workflows a year across more than 90% of the Fortune 500. The world's most complicated businesses, like many that we've covered here on Acquired, already run on ServiceNow. And now they're running their AI there too. If you're trying to turn AI ambition into real outcomes, just go to servicenow.com slash acquired and just tell them that Ben and David sent you. so the bubbles burst it's now 2001 and fortunately they have the 20 million in the bank but they have kind of no prospects and no business model they hire a guy from ge savio kwan to come over as coo and kind of be the adult in the room here jack ends up giving half of his office to savio he

40:23scales savio's like you have this silicon valley tech office this makes no sense let's shut that down that's gone they cut monthly burn by half and they kind of write it out and they figure out the business model and the business model that they land on they're kind of inspired by remember that you know the meeting with with jerry yang and yahoo and yahoo really working they figure out that like the taking a take rate of transactions doesn't make a lot of sense in china because it's such a like that's orthogonal to the way things work there people are coming online for the first time they don't understand like why they would give a cut of their business to somebody else what does work is sort of what yahoo does and what google does is getting these smbs get them more business have them they're totally willing to pay for more business and so what they land on

41:12is essentially an advertising based model where anybody can join alibaba lists their services in the marketplace. But if you want to get featured in the marketplace and have more prominent placement, you can buy placement. And to get paid to promote, kind of like how eBay let you in the old days, I'm sure they still do something similar, put a purple box around and appear first in search results. And you can either pay on a SaaS basis or pay on a per-transaction basis, or I'm sorry, a per-listing basis to sort of bump up your likelihood of being the selected supplier. Totally. or or like AdWords right like you know people are searching for things you can get the organic results but like there's also the featured AdWords at the top and so kind of as a result of this Alibaba essentially becomes like if you imagine Amazon and Google all in one like imagine Amazon

42:05without Google where everybody is searching like the place where you start your search for something is Alibaba and the place where you transact is Alibaba turns out that's a pretty good business model. Yeah. And it's important to point out too, you mentioned it doesn't make as much sense in China for a business to just say, oh yeah, you can have a cut of the revenue because that's sort of the expectation that there's all these pieces of infrastructure and we give a little cut of revenue to each one and we're able to preserve some amount of margin and then that's our business. In China, even today, the e-commerce ecosystem is so much less developed. The sort of delivery system and the payment processing and all, you know, it's, I think we take for granted in the U.S. all this sort of trusted infrastructure that exists that make it really easy. If you want to

42:54just become your own e-commerce site, you can. I mean, Shopify makes it easy. The payment processors make it easy. All these things make it easy. In China, it's ludicrously difficult to start your own e-commerce company. And so it makes tons and tons of sense to go do it on another platform. it's not painfully obvious right away when you're like oh yeah they'll just take a cut of revenue that that's the way that these things work well you got to remember too like in the u.s pretty much everybody at this point knows what the internet is you know now we're into the early 2000s like businesses understand like oh yes the commerce platform like and this is not the case in china like people don't know what it is and so alibaba actually they develop and still have an extremely large sales force. These are like people that are going and knocking on doors of

43:41physical, small and medium sized businesses throughout the country in the provinces all over and being like, hey, we can get you more business via this thing called the internet. Don't even worry about what the internet is. I mean, at this point, everybody knows what the internet is. But back then it was like, you know, hey, we'll just get you business. You know, it's a super different like education and value prop sales proposition. It's interesting thinking about outbound sales to do education around you should have your business on the Internet. Totally. I mean, like U.S.-based Internet marketplaces, like, you know, the saying is this is actually not true in practice. But the belief is like, oh, yeah, you don't like spend money on acquiring supply. Like supply comes to the platform because like, you know, your eBay or your Airbnb or whatever.

44:25And people are like, oh, I can make money doing this. Like, of course, I'll join the platform and make money and then give the platform a cut of the money. that's that's not how it works in China at least at this time so it starts working really well 2003 comes around though and they've got a challenge which is eBay has decided that they want to be a global company so Meg Whitman is now CEO of eBay eBay has gone public there we know one of these darling internet stocks even though you know they've kind of made it through the crash uh yahoo is in shambles ebay is is the new silicon valley star they decide they're going to go global they're going to come to china and how are they going to do it they end up acquiring a company that was a competitor to alibaba called each net but they're focused on consumers now now the the

45:18line in china between consumers at this point and the very small businesses that alibaba is going after is pretty blurry. And so there's, you know, while Alibaba, as we've said, is always a B2B marketplace, like it's actually not that. I mean, some of these are very, very small businesses run by individual people offering goods and services on the platform. It's not that much of a stretch to say like, oh, this kind of looks like eBay in a lot of ways. Jack is now pretty worried that eBay and Eachnet are going to start coming after them and competing with them. He decides he needs to do something about it. But the main Alibaba platform, he doesn't think is the right way to go about it because it's all the marketing and all the positioning is focused on on B2B. So what does he do? He creates a skunkworks team. This is where the video comes in of the top people within the

46:09company. And he's like, we're going to go somewhere. We're going to start a new product within Alibaba. Where are we going to go? We're going to go back to the apartment. oh okay that starts to come together it comes back to the episode building 16-1 very like steve jobs and the mcintosh told him they're gonna fly the pirate flag in the apartment complex i believe there were seven people who started taobao what would become taobao within alibaba in this apartment he gives this amazing speech and there's a documentary being made uh and that's why the video is there uh we'll link to i think it's called the crocodile in the yang sea or or something like that we'll link to it and he's like we need to build a official b2c you know marketplace here in china to compete with ebay they decide that they're going to call it taobao

46:55which literally means treasure hunt and it's completely secret totally clandestine nobody at alibaba knows that this is happening except for jack and and this this skunkworks team so they uh they start building it and then to test it they were like well we can't let anybody know we're doing this why don't we just like start buying and selling stuff on the platform ourselves so jack gives he gives needed he's like everybody's got to go home find four things that they want to sell on the platform bring it back and then like we'll list them for sale so they list they list they find a bunch of stuff they list for sale then they're just buying and selling stuff themselves uh and then they start telling a couple people and then slowly third-party demand comes on the platform they're still just selling their own stuff that's kind of like a snowball rolling

47:46down a hill it just starts building and building and building to the point where people start hearing about this new this new site called taobao people are talking about it in hangzhou alibaba employees start coming to jack and they're like jack like we've got a new competitor totally totally and he's like you know people are getting really you all have shares in that competitor so he does he finally does a big uh a big corporate event does an announcement brings the team on stage and uh announces that taobao is alibaba and apparently like people go nuts totally awesome totally awesome so they start now competing against ebay and like they they start winning so the other important thing about taobao is just like alibaba they don't have a take rate so they're not taking a cut of the transaction 100 of the money goes from the buyer to the seller

48:42it's a pretty good way to grow pretty good way to grow and ebay of course takes uh you know has a cut and they're yeah if meg wetwin's there they're either about to be or are a public company right now they have pressure to definitely public company have margin here you know they're taking a take rate and they're having fees because that's ebay's business model and you know tau says we're not doing any of that at least for now yep yep not doing it and and indeed they like ebay goes on a total offensive because because taobao starts taking market share ebay had basically 100 market share of b2c you know of an ebay like product in in china it drops to 50 within a year taobao is taking share ebay meg whitman and a whole bunch of the senior executives at ebay they actually move to china for several months because they're like this is so strategically

49:31important that we are going to go all in and turn this around there's an amazing there's an hbs case study about this of like ebay's complete fiasco in china and they're pummeling alibaba and the press they're like this isn't a business this is like you know you're selling dollars for 50 cents and like we have a real business in the meantime meg comes over to hangzhou and meets with uh meets with jack and and tries to buy alibaba and offers 150 million for alibaba remember they're already valued at 100 million several years ago from from SoftBank and Masa. Jack and Joe are like, no. No, but but we may use you as a stocking horse. Well, that will that will come around in just a sec. Yes, no, but no, no to you, but maybe to somebody else. Externally, in all of their earnings releases, eBay's talking up like how great they're doing in China. But internally,

50:27like they're they're super super worried so after this meeting jack and joe are like okay ebay is like literally meg whitman is now living in china we need to do something we don't have we haven't raised any more money since the soft bank round we need a lot more resources to compete with ebay for for taobao so they go over to who else jack's old friend jerry yang hey remember when we were checking out the great wall together yeah exactly exactly so they meet with jerry uh jerry's pretty excited about what's going on jerry offers a billion dollars for a 40 stake in alibaba the fundraising history of this company is is insane in terms of valuation it's kind of like today insane in terms of valuations but like they are selling just huge huge chunks of the company they do the deal so they sell another 40 of the company to yahoo and yahoo had already tried to

51:24invest in some of the other portals uh in china and they'd realized just like jack had come to the realization that like a portal slash you know search engine type business doesn't make as much in china what makes sense is this fully bundled you know ebay you know an amazon plus google model here google yahoo and softbank was already a major shareholder in yahoo through the yahoo Japan partnership. So Jerry's like, okay, great. Let's do this. I'm going to make a big bet. Jack is super inclined to do this because he trusts Jerry. He thinks Jerry's going to be around for a long time. I'm really doing this deal, you know, as a person to person deal. Indeed. And I mean, Jerry, like this is huge conviction. I can't remember, recall exactly, but Yahoo only has like 3 billion of cash at this point and they've gotten pummeled

52:11in the bubble bursting. And so they're only just coming out the other side here. And as we'll see, they're about to get into a whole world of hurt in the next couple of years. This is like a super high conviction bet. They're investing like essentially a third of Yahoo's cash into this Chinese company that's fighting eBay. So they do it. They raise the billion dollars. Turns out they probably didn't even really need to raise the billion dollars because eBay China just kind of like it's a house of cards and collapses under its own weight and mismanagement. And eBay that this point then goes off and buys skype potentially in part to just cover up the disaster that was china like hey look over here which we didn't get into on our skype episode but uh it's a fun fun side note here so they do that taobao wins in china they are now the dominant and only player

53:00in b2c and of course they've got the legacy alibaba b2b marketplace business as well the company is just growing like crazy. So on the back of all this, a couple of years later, in November 2007, they decide, you know, Taobao is growing like crazy. It's still young. Jack and Joe decide, what if we want to go public? We want to raise some more capital, but Taobao is still young. What if we list just the legacy, the B2B Alibaba business? So they do that. Which is interesting. We should take a quick second here to look at that. Lots of businesses go public when they have a legacy business and a new growth business. And a lot of times what they'll wait to do is wait a few quarters into the new growth business. So there's some predictability there. So they're able to forecast earnings. I was racking my brain when I was reading this of businesses that took the

53:52opposite approach of saying, eh, somehow we will only IPO the legacy business line and keep the new growth business line private. I mean, that's at least in sort of my, the small number of US based IPOs that I'm aware of, that is not something I don't even know how you would structurally do it. Like you create a holding company, you know, you IPO one business, the holding company owns a bunch of the IPO company and the new small company. But anyway, it's super messy. It is super messy. The other interesting thing to remember here, and you know, impossible to know but like the cap table for alibaba is pretty crazy at this point you know jack and joe and all the other co-founders and employees the other co-founders got serious equity by the way like this was super not normal of jack like it wasn't like they're just token

54:45co-founders like they had a lot of equity they own such a small percentage of business at this point right and then there's goldman there's softbank and there's yahoo what year are we in right now. So we're now in 2007. One thing worth pointing out, and it's almost just like a point, finger, and laugh. In 2004, Goldman decided that they should exit the business. And so Goldman managed to turn their $3.3 million on a $10 million valuation of Alibaba into a magnanimous $22 million in 2004 when they exited the business. Unbelievable. this is unbelievable so what happened was shirley lynn who is the champion for goldman she had left goldman and this is the point uh i meant to say this earlier ebay is is now competing very vocally and on the world stage in china talking about how they're going to crush alibaba everybody else at

55:38goldman is like we better get out of this dog and so the the goldman partnership decides to to unload this investment they sell it off to an investor group of which a large part of was ggv And that's how GGB ended up becoming a shareholder in Alibaba. Yeah, that was before, obviously, the Jerry Yang deal. So that happens literally within a year. Yahoo invests a billion dollars in the company. eBay completely collapses and Goldman makes, uncharacteristically for them, probably the worst financial decision maybe in history. Private company investing is a whole different ballgame. It's hard. It's thrashy, you know. Yeah, I mean, this is pretty bad. This is a pretty bad decision. because like what's the downside for goldman to just keeping this like why not you know but anyway so we're now in 2007 they've decided they're going to ipo the legacy alibaba business

56:29they do that it goes public on the hong kong stock exchange november 2007 valued at nine billion dollars at the ipo closes day one of trading at 26 billion dollars but again taobao you know is not part of this nor is the other big part of the business that they developed probably really through and learned through their fight with eBay, they have this even newer business called Alipay. And Alipay started as the Alibaba version of PayPal. You know, as they're now competing in with eBay and doing B2C in China, they realized that people in China, like a big barrier to them adopting this platform is they don't have credit cards or credit or any way of transacting online and so they they need to have a platform like this so they create they essentially copy paypal create alipay and it starts growing hugely so much so to the point that like you could

57:26start to see now uh start to see at this point and certainly now alipay is is like the largest financial institution in china uh because all of these masses of of chinese consumers coming online for the first time. They don't have bank accounts, but they're now transacting online. They need Alipay and it becomes essentially their financial institution. It's probably worth a little bit of a detour at this point to talk about the ownership structure of Alibaba itself. So Alibaba has taken all this investment from Yahoo and others for a variety of reasons. It is tricky to directly invest into a Chinese entity. So a Chinese entity cannot be owned by a foreign ownership group, especially to the tune of, you know, 40% of the business. There's something called a variable interest entity or a VIE that is set up in the

58:16Cayman Islands. That is the entity that Yahoo and others actually own. And then there are contractual business relationships between the Cayman Islands entity and, you know, Alibaba proper that is actually owned by Josai and Jack Ma. So it's important as we sort of finish here the the story of Alipay to understand exactly what Yahoo owns equity in and exactly how that structure works and why it was set up. And this all comes to a head pretty much immediately. So the capital that they raised at legacy Alibaba goes back up to the new Alibaba group and is going to be used to fund continuing to build out Taobao and Alipay. Very, very shortly thereafter, in the beginning of 2008 yahoo's going through all sorts of struggles microsoft offers to buy yahoo uh very publicly and this is you know all plays out in the press and uh probably most of our listeners are aware

59:10we'll have to do a episode someday and in fact kara swisher does the best coverage of this of anybody really part of part of what you know kind of makes the the act two of her career jack and joe though they're like oh no like if if yahoo sells to yahoo owns 40 percent of Alibaba group. Like if Yahoo sells to Microsoft, then what's going to happen? Then all of a sudden Microsoft is going to own 40% of Alibaba. They start freaking out and they start talking to Jerry and trying to find ways to buy back the stake that just two years earlier, Yahoo had invested in Alibaba. Fortunately for Alibaba, and I got to imagine perhaps as part of this, jerry yang rejects the offer from microsoft to buy yahoo but shareholders are like getting out the pitchforks uh they demand jerry yang's resignation because like yahoo itself was way

60:10overvalued by microsoft in this acquisition offer but people didn't quite realize how special alibaba was yet and how much yahoo owned of it so yang gets forced out and new ceo carol bartz comes into Yahoo and she and Jack do not get along. Like there is serious, serious bad blood here because Carol's brought in to be like champion of shareholders and like realize shareholder value at Yahoo. And now people are realizing through all this, like, Ooh, a big part of Yahoo's value is this Alibaba stake. And Jack and Joe are like, I'm trying to build a company here. So this does not, does not go well. And this is where the drama with Alipay really starts. so as this is going on in china remember there are no big consumer banks like they're banks yes but like most people in the country do not have traditional consumer bank accounts and it becomes

61:02pretty clear that alipay or any of its competitors like these new paypal like entities are going to be the way that the majority of chinese people bank the government freaks out about this so the government. And remember now, Alibaba Group is owned mostly by foreign national people and corporations. You know, you've got SoftBank in Japan, you've got Yahoo in the US, you had Goldman Sachs, who then sold their stake to GGB and others. The Chinese government is like, this isn't going to fly. So they start talking about passing new regulation that all financial entities have to be owned 100% by Chinese nationals, both entities and persons. Which of course, Alipay technically is, but sort of spiritually isn't, since they have all these contracts in place to do profit sharing with the ownership group of the Cayman entity. Right, right, exactly. It was not gonna fly there.

61:59So while this is happening, and of course, Jack Ma is bickering with Yahoo and Carol Bartz, jack transfers alipay outside of alibaba group into a new entity that uh he and joe and other other chinese nationals control and they transfer it for a value of 51 million dollars by any measure probably not a uh accurate reflection of the true value of alipay which again is now the biggest bank in china essentially and it only sort of comes out in like a footnote of like a quarterly update the next quarter that that they did this and they use some phrase like i don't have it exactly in front of me but like we've uh unintegrated alipay from the entity or something like that well remember alibaba is uh this isn't an issue for alibaba.com which is public in on the hong kong stock exchange it's a major issue for softbank and yahoo and so

62:57it's unclear whether jack and alibaba told softbank and yahoo that they were going to do this even if they did yahoo and softbank did not disclose this in their financial reporting like what they should have done is immediately issued 8ks to their shareholders and said that this is happening they didn't and so this triggers like all sorts of investor unrest sec investigations all sorts of stuff because this is massive value that shareholders of Yahoo and SoftBank aren't getting this information. It's worth just because we won't cover this too much later. It's worth flashing forward to today. Alipay becomes Ant Financial. Ant Financial is close to an IPO. I think it's like the largest financial institution in the world or on its way to be. I know it's bigger than Goldman Sachs. This story is crazy. We've done as much work as we can to figure it

63:49all out. Again, listeners, if you know more than us, let us know. And we're trying to keep these episodes shorter, which is going phenomenally well right now, isn't it? Yeah, phenomenally well. Anyway, finally, in 2012, Alibaba settles the situation with Yahoo. They agree that after years of bickering that Alibaba is going to buy back half of Yahoo's stake, so 20% Alibaba for $7.1 billion, plus an agreement that another 25% of the stake Yahoo will exit either in an IPO or sell back directly to Alibaba. Which Yahoo, I think, does do. They sell 27% at the IPO. They do. But that's not all of Yahoo's stake, as we'll see in just a sec. But at least it's voting rights. So now, once that's happened, between SoftBank and Yahoo, they no longer control majority ownership in Alibaba. This paves the way for Alibaba Group to file to go public,

64:49which they do in 2014. Alibaba Group buys back all of the Alibaba.com shares, so it pulls that off the Hong Kong exchange so that they can IPO the whole thing on the US exchange, on the New York Stock Exchange. Notably, not the NASDAQ, which tech stocks typically go out on. But Alibaba group cites to bankers, we did not trust the stability of the NASDAQ platform after the Facebook debacle, since we're going to be doing a significantly larger IPO and trading was halted for four hours or whatever when Facebook went out. So totally. And trading still gets halted when Alibaba comes out, but it wasn't as bad. $25 billion IPO in 2014, still the largest IPO in history, closes up anywhere. Yeah, period. Full stop. And just to put that in some context, Visa in 2008 was $18 billion. Facebook was $16 billion. GM in 2010, when the government re-IPO'd it, was only $16 billion.

65:52Goldman Sachs, just to give a—because they're a big part of this episode. In May of 99, they IPO'd for $3.7 billion. So to give you a sense of the true scale of this, there's four IPOs ever above $15 billion. And then they quickly go down into the 3, 4, 5, 6 range after that. So yeah, they end the first day up 25% at a market cap of just under $240 billion, which at the time is larger than Amazon and eBay combined, which is crazy. And again, I remember this happening. like most people, you know, in the US, even in tech, they're like, oh, Alibaba, like what? That's like the Amazon of China again, right? Like, you know, people didn't really understand this, but the institutional community was like, this was the hottest IPO of all time. And finally, unwinding this whole crazy structure and getting access to investors

66:46in this is incredible. Yeah. And I've got some good acquired IPO trivia here. So the guidance was 60 to 66 per share at price to 68. The stock actually opened at 92 and then went up from there. Like everything about this was crazy. Alibaba's underwriters announced that they had exercised a green shoe option to sell 15% more shares than originally planned, boosting the total IPO to 25 billion from the originally planned 21.8 billion. David, do you know what a green shoe option is and why it is called that? I did actually used to know the answer to both of those questions. I think I recall, but please elucidate. Basically, it's when the underwriters are allowed to support the share price after the offering without putting their own capital at risk. So they're basically allowed to sell more to support the share price. The reason it's called

67:40a green shoe option was the first company to ever do it and have this written in as a term with their underwriters was green shoe manufacturing, which is now StrideWrite. Ah, what do you know? There you go. There's your trivia for the day. I always thought it was like, uh, same as like the white shoe law firms of like, you know, I thought that too. Yeah. Yeah. I guess it was green shoes. Cause you know, they're bankers. They make so much more money than the lawyers who only have the white shoes. Uh, good to know. Good to know. In this IPO, when Yahoo sold their stake, that that was a casual 9.4 billion in cash flowing into an entity that has no cash and no growth, which is just fascinating to think about and how rare that is. Well, let's come back to that. So the IPO happens. There's some ups and downs that

68:28we'll just gloss over here as a public company. But a year later, they're actually trading under the IPO price. Things aren't going well. There's some drama with the Chinese government about piracy on the platform. That all gets settled. As a result, though, Jack had already stepped back into the chairman role of Alibaba Group. He was no longer CEO of either Alibaba or he was never CEO of Taobao or Tmall or Alipay. The CEO of Alibaba Group, though, Jeffrey Liu, gets replaced by the COO, Daniel Zhang, who's now still the CEO of Alibaba Group. Anyway, though, 2017, Yahoo gets acquired by Verizon. So now what is Verizon going to own? Because Yahoo still owns 15% of Alibaba. Which is crazy, right? They sold 9.4 billion and they still own 15% of the public company. Right. So what's going to happen to this? Is a US telecom company now going to own 15% of

69:20Alibaba? No. Yeah. So as it turns out, and I remembered reading this at the time, but had completely forgotten about it, what Verizon actually bought was not Yahoo Inc, but was Yahoo's internet presence and their website and their brand and the whole Yahoo business. But they did not buy Yahoo Japan or the stake in Alibaba, which were then transferred to a separate entity, sort of all the remaining pieces of Yahoo that are not Yahoo that went to Verizon. And that separate entity is called Altaba. I think this is actually like the best part of the whole story for all the crazy stuff. Yeah. And the length of this is the best part of the story. so altaba is a publicly traded company based out of new york that owns two things actually i think they're about to own one thing because it sounds like they're divesting yahoo japan they own a

70:12series of of other things actually including some of seat geeks some of eastman kodak some of paperless some of horton works like they're they're doing some investing they owned like a six percent stake in snap at one point like yeah yeah yeah that which they they sold in september 2017 for $70 million. So Altaba is this thing that is worth a bunch because it owns 15% of Alibaba. It's a publicly traded thing with a market cap of $38 billion that, by looking around LinkedIn, has 10 employees, all of which are finance and operations. And the CFO is based in Omaha, Nebraska. Yes, yes. Every employee is in New York and San Francisco except for the CFO in Omaha. Crazy that this entity exists. Yeah, $38 billion market cap for Altaba, which, yeah, okay, that's crazy. 10 people at this company have a $38 billion market cap. The crazier thing is that 15%

71:11of Alibaba, like the value of their stake in Alibaba, is over $80 billion. Like Alibaba is now a 420 something billion market cap company well altaba's market cap is is like 38 39 billion so i don't know uh right yeah no it's trading at a significant discount to the value of their oh interesting like because they can't get liquid on it yeah i think it's that the market thinks like this is crazy like a jack ma and alibaba probably hate this uh and so they'll do anything as they have done in the past to like transfer alipay so it could be like share tenders for lower prices Yeah, who knows what's going to like there's just risk here of like what's going to happen. But like that's a serious, serious discount to the value of the shares that they have. It's a good way to get some potentially high risk exposure to the Alibaba upside. Indeed, indeed. Or you could just buy Alibaba stock.

72:03The end of the story here, I promise, is just this week. Alibaba announced, Jack Ma announced that he is going to fully retire. one year from September 10th. So September 10th, 2019, he is going to fully remove himself from the company. He will no longer be chairman. Daniel Zhang, the current CEO, is going to also assume the chairman title. And he's going to turn himself full time to philanthropy, you know, similar to Bill and Melinda Gates. Pretty cool. Pretty cool. It's amazing. Now that you know his story, listeners, he is a just absolute icon and hero in China. I mean, if you think Bezos and Gates and Elon Musk kind of combined, he's inspired the masses. Well, and what's so cool, his story is so unique. I mean, he was born right before the Cultural Revolution happened in a tier two city in China and didn't start his first company until he was 29 years old,

73:01was terrible at math, you know, like still jokes he doesn't get technology. But like, from that, he has become, you know, arguably like, you know, I mean, up for debate, but you could make an argument that Alibaba is the most important technology company in the world right now, has turned it into, you know, half a trillion dollars in market cap. All right, listeners, now is a great time to talk about one of our favorite companies, Lagora, the agentic operating system for legal work. Yes, most of you have dropped a contract into a chatbot by now. But as a lawyer, how far can that really take you? It's never seen your firm's precedents. It doesn't respect confidentiality. And you can't check where its answer came from. So Lagora's founders approached this the way that great founders do.

73:47Early on, the team moved into the office of a big law firm in Stockholm and learned, for months, how the work actually gets done. A couple of thousands of enterprise customers and 100,000 users later, they still work that way. They employ 100 legal engineers on staff. These are lawyers sitting inside of firms and legal departments to deploy Lagora onto live situations like the deal closing this week or the policy review due Friday. The product has gotten very powerful in a short period of time. A year ago, the goal was a good answer from a chatbot. With the Lagora agent, you hand it the work and it comes back with a plan. Tasks like running diligence on a data room or reviewing a new vendor contract get completed inside the tool you use every day like Microsoft Word and against your own precedents and playbooks. Every finding is sourced.

74:40The lawyer directs the work and signs off before the system executes any steps. Every legal team can get access to the same AI models. So the models themselves do not give you an edge. What you can do with your own data, people, playbooks, that's the whole game. Today, over 100,000 legal professionals at more than 1,800 law firms and in-house legal teams in over 50 markets use Lagora. And when Lagora goes head-to-head with its top competitor in a pilot, it wins 70% of the time. A demo is one thing, but what matters most is an associate who reaches for it at 2 in the morning during a closing, or whether a general counsel trusts what it says before the board meeting. So if your legal team wants to check it out, whether you're at a firm or in-house, go to lagora.com slash acquired and be sure to tell them that Ben and David sent you.

75:30If you're listening to this episode, it's worthwhile to walk away with a little bit of an understanding of the shape of the current Alibaba business because they have a lot of different brands. And I think I was pretty confused coming into this before doing the research. So I sort of try to consolidate a little bit of an understanding of what all their properties are and what their strategy is. So we talked about Alibaba.com. We've talked about Taobao, which is their consumer to consumer marketplace, which is the most popular consumer to consumer marketplace in the world. And the phrase is, if it's not available on Taobao, it's not available anywhere in China or probably anywhere in the world. They've launched a new site, 1688.com, since, you know, somewhere along the lines, I don't have great dates here, but that is like

76:12Alibaba, but instead of being international, it's a domestic B2B trade site in China. They also have Tmall.com, which is B2C. It's an online marketplace for quality brand name goods that competes with JD.com. It's similar to Amazon.com. Think third-party sellers selling to consumers. That's Tmall. They've got AliExpress, which is also B2C, like Tmall, except in sort of quality brand name goods, it's small businesses in China that can sell anywhere internationally. So you can buy, you know, it's actually pretty fun to go to AliExpress and just see what kind of crazy stuff you can buy. It often will take like three to nine weeks to ship to you in the US and it may or may not come. And you have really no idea who you're buying from or any sort of quality standards, but like stuff is crazy cheap and it's super eccentric and you

77:05can find wild stuff and it may be like how it's pictured. It may be not, but I bought some stuff and it's super fun to see what you can find on AliExpress. They also have eTao, which is a shopping search engine. Obviously, Alipay, which they've spun out. And then Alibaba Cloud Computing is sort of their big bet on the future. And when you look at their financials today, cloud computing represents 6% of revenue. The China commerce is 70%, international commerce is 8%. But 6% coming from cloud computing, 7% coming from what they call digital media, which is interesting to juxtapose against an Amazon. You know, we keep hearing AWS, AWS, AWS. It's a super high margin business relative to the rest of their business. AWS, their quarterly revenue last quarter was 11%. So you sort of look at these high growth, high margin things inside of these companies,

77:57Microsoft, Amazon, Alibaba, their cloud computing division. They're sort of, you know, right in that same ballpark. I think AWS looks to be about twice as big, but I think AWS may include some of what Alibaba I would call digital media and innovation efforts. So when you kind of squint, you can see that both of these businesses are trying to make cloud computing a real higher margin part of their business at sort of at the same time and using the same strategy there. So and then of course, the other piece, which as we discussed is not part of Alibaba Group, but is part of this business, which is like Goldman Sachs plus Bank of America plus PayPal all in one, which is Alipay. Yep, absolutely. And might end up being bigger than all of this combined. So that's sort of the sense of what the revenue streams and the properties owned by Alibaba are.

78:47And I wanted to finish with a quote from Jack Ma that really sort of sums up, it's a little bit of a block quote here, from 2015. We'll include a link in the show notes to a talk that he gave. But he frequently has asked this question, what is the difference between Amazon and Alibaba? And he said, the difference is we do not buy and we do not sell, but we help small businesses to buy and sell. This is 2015 numbers, but we have 10 million small businesses on our site that buy and sell every day We do not deliver packages ourselves though We have more than 2 million people who help to deliver our 30 million packages per day. We do not own warehouses But we manage tens of thousands of other small and medium-sized delivery companies. We do not own any inventory But we have more than 350 million buyers 120 million buyers coming to shop with us every day

79:32our global revenue is 390 billion, possibly bigger than Walmart globally. Here in America, e-commerce is e-commerce. In China, e-commerce is a lifestyle. It's like Starbucks. It's not about how much people like coffee. It's about the lifestyle of going to Starbucks. So it's fascinating thinking about sort of the shape of the business, the fact that it's super low asset. Like it's a very asset light business relative to amazon that has warehouses and delivery trucks they just bought like 20 000 more delivery trucks or something alibaba has none of that yeah none of it super asset light jack also talks about like his um you know i think he means this as like his vision but but also the business model of the company like they support entrepreneurs he was an entrepreneur in china multiple times before starting alibaba so how did they make all that work there are

80:24thousands of entrepreneurs who have logistics companies that operate on the platform. There are thousands of entrepreneurs who are sellers on the platform. They just provide the platform for everybody. As you say, I mean, it's kind of like we were talking about earlier. It's like this, it's like Amazon plus Google, you know, like it's Amazon with the capital attributes, intensity attributes of Google. It's a great way to phrase it. Yeah. Super cool. So that's, uh, in an hour and a half or less. The history and facts of Alibaba. Should we move on? Yeah. Yeah. I mean, we do narratives on the show. So we're switching our narratives theme to be specific to what's the bull case, what's the bear case. I think we've made a lot of it along the way here. The bull case is easy. When they were getting ready to IPO, they had 280 million customers

81:13spending 300 billion a year on everything. It was the dominant way that people bought things on the internet in the largest emerging economy in the world. They handle 86% of online retail sales in China. How bananas is that? That's a bunch of bananas. I don't know. I don't know the share price, but it's not hard to believe that this is going to be a juggernaut for a long time. Or I guess I don't know how to look at how much is priced in, but the bull case is, come on, guys, how could you not believe in this? There's a few reasons to be a bear. people, one was that the IPO price people believe was too high because they do have a large growth multiple. I mean, the company is sort of expected to continue growing at this crazy rate that it's been growing. And of course, we're talking in terms of 2014 here, but it's already a huge

82:03company. Like it's already doing 86% of e-commerce in China. So how could it possibly keep growing at the rate that it needs to in order to fulfill the market cap. The other bear case is people basically saying, look, I don't trust the structure. I'm not directly buying a share in the thing that creates the value. I'm buying shares in a thing that has an agreement with a thing that creates value. I think this was probably the biggest knock against the company and the IPO. And the risk is like, what is going on with Alipay? Right, right. And not to mention, And whenever you're buying a Chinese IPO, there's the factor of I don't know how risky things that the government could do will be.

82:43Like forcing, potentially forced, I mean, it's unclear why they did it, but probably because, at least in part because of the government, forcing this business to transfer its most promising, potentially largest future business outside of the company. Yeah, that's the sort of barren bull case. if you look at where it IPO'd in 2014, the market cap was... Just under $240 billion. Okay. So, you know, has approximately doubled since then. It was up in the low 500s earlier this year. It's now down around 400. But, you know, over, what, four years, they've managed to double their market cap. They obviously generated a ton of cash and continue to reinvest that. Well, we're bleeding into tech names, so I might as well just say it. I mean, like, I can't think of, you know, we haven't covered the B and the T yet of BAT in China. It's Baidu and Tencent. Yes.

83:37So I may revise this statement after doing that, but I don't think so. I think you could make an argument that there is no entrepreneur and no company that has ridden a bigger wave better than Alibaba has. And that wave is the consumerization of China and the rise of middle class in China from nothing. And if you think about Alibaba, it went from like, you know, they just timed this perfectly. They went from capitalizing on businesses being started in China. So entrepreneurs, you know, the beginning of this is the beginning of Made in China. Alibaba was there for that and helped facilitate Made in China getting distributed around the world. then they were there with taobao to bought in china you know what all the entrepreneurs and people who started businesses and people who work in these businesses who's now who've now made money

84:30they want to producing things now they want to consume alibaba rode that better than anybody and beat ebay at its own game now what's next is like what happens to all that wealth in china like who manages it like you know where are these people going to keep their money how are they going to manage it? How are they going to grow it? Who's best positioned to do that? Alibaba and Alipay. You know, it's incredible. It really is the ultimate marketplace business. I mean, I think you think about like the ultimate sort of, uh, well, there's a, my bleeding into mine on page 139 of the F1, which is sort of the foreign filing of the S1. Um, they have a slide that's the network effect on and across our marketplaces. And there are a Disney like amount of arrows that between all these different properties and how it all fuels each other. And David, not only did

85:19they ride the wave well, but they created it just incredible number of moats around their business and around, um, um, how it's, it's absolutely a no brainer for everyone in the ecosystem to use their infrastructure. Totally. Totally. I mean, I'm so excited that Jack Ma's retiring because we're going to have to call him up at wave and, uh, ask, you know, we can back his new business. Yeah. Oh, I'm sorry. Yeah. I mean, he's the best marketplace entrepreneur of all time. I mean, you know, we'll take Bezos, but like, uh, I think head to head, I would have to choose Jack here. Wow. Bold. Another one that I've got is, uh, just as customer obsessed as Amazon. Jack regularly says, uh, the, the priorities of our business are that the customer is number one, employees are number two, and the shareholders are number three. And a big part of, of why he

86:06talks about that is, you know, when things have gone rocky for our business, shareholders have gone away. And capital hasn't always been there for us and certainly hasn't been incredibly supportive. And our employees stick with us, but it's really always about the customer. A lot of people say that, you know, it's easy to say, but when you prioritize things, the important bit that you're saying is not what you're calling the first priority. It's what you're calling not the first priority and being willing to commit to being consistent in saying that that other thing is not the highest priority for us. And so I think in doing a lot of crazy things to satisfy the customer, they're often giving up margin, but it's been a 20 year bet, much like Amazon to do that. Well, it's about trade-offs, right? I mean, like, and you've seen it in the history, right?

86:52Like they, Jack was willing to be incredibly generous, perhaps to the point of ludicrously so with the company's equity not only in equity for employees but you know the the investments he took and and how you know how much he was willing to give up to shareholders but it comes from a mindset of like what do i need to do to build the base to have the employees who can serve the customers like i need that capital like so okay i'll sell 40 of the company like because that's going to help me have the employees and the infrastructure to serve the customers the best my other tech team that i think this story like illustrates really well and this is subtle and hard to get in the investing world and hard to get right but like jack does this so well and the company if you've got a if you're in a market that is you think is going to grow rapidly

87:46in the future like small businesses in china like consumers in china like wealth in china what matters is not who has the most market share of that market today what matters is who is going to have the most market share tomorrow and and this is like i mean that sounds obvious right but like look at um i think you can apply this framework to food delivery in the u.s right like food delivery you know was a super quote-unquote over-invested category a few years ago you had doordash you have postmates you've got caviar you've got you know amazon prime now and all this stuff and people like why are people throwing money at this and like why does it matter and you know isn't this category done well no it was just getting started right like and so now you know doordash is what like a five billion dollar company right and like people thought it was crazy to

88:33invest in that uh but what mattered wasn't like who was winning at the time what mattered was who was going to win in two or three years when the market was much much bigger it's a great point Yeah, I think you and I were having a conversation around a separate topic last week. And actually, this is what we're thinking about. We were thinking about acquired sponsorship stuff. And we were like, great, we have this pile of money from sponsorship. How much should we plow into growth? And you said, well, do you still think there's growth ahead of us? And I was like, well, absolutely. And you're like, well, then all of it. In fact, more. How do we go, you know, like, where can we go borrow to be able to invest even harder? And so it's such an interesting framework for thinking about a business that it's like to the extent that you believe there's growth

89:16ahead of you you should invest 110 and to the extent where you feel like you've had all the growth you can that's that's when you start harvesting yeah totally or like um you know google dropbox are both great examples of this before google there were lots of search engines right google you know altavista or yahoo or whatever had so much more market share but like the question was in the totality of the search market where it like most consumers have not yet come online and so like there was still an opportunity to win those future consumers same in storage like there were tons of storage companies before dropbox and box right but like the vast majority of the market hadn't happened yet and so they could win that future market well shall we move on to grading let's do it so normally the way that we grade ipos is for the

90:05post-IPO shareholders of the entity was, or just say the shareholders of the entity, was IPO-ing a good idea and did it allow them to do value creating activities with the cash that they generated? That's also relative to their other options. Alibaba is such an outlier in every way that I can't point my finger to one thing that having that cash allowed them to do that if they did an IPO, they wouldn't have been able to do. I can't point my finger to like one reason why they needed to go public, but like it was the inevitable thing. They did it in a phenomenal way. They've grown really well since then. It's hard to not see this be an A and it kind of breaks a lot of our criteria. Yeah. Well, even just think about this, right? Like the stock has doubled since the IPO four-ish years ago. Okay. Sounds fine, right? Like that

91:01sounds like not bad performance but not amazing but what does that mean the stock has doubled that means that at ipo it was a 240 billion dollar market cap company they have created 240 billion dollars of market value creation basis rather than a relative one it's like yeah exactly like that's insanity where else can you go park 200 billion to turn it into 400 billion one of like apple or amazon a few years ago no well they don't have the same growth anywhere close to the same growth rates no they do that amazon is definitely amazon was a better investment yeah yeah amazon was a better investment in terms of just market cap creation but what's interesting about this i'll get to grading i promise is um what has happened is so clear like doing this episode doing this research to me is now so clearly i see where the vision fund came from

91:51because like masa and soft bank parked you know a long time ago a small amount of money but like when this was the largest ipo ever right and in four years has doubled in size and thus created 250 call it billion dollars of market cap i think he saw that and was like oh these these huge huge tech companies and huge categories can still create like it's it's is your value creation ahead of you or behind you. It took Alibaba 19 years to get to a $240 billion market cap. It took them four years to create another $240 billion of market cap. You can invest these huge, huge sums of capital and still get massive dollar returns on it. So you look at that and then you look at like through that lens and you look at what they've done with ride sharing, with Uber, with Grab, with Didi, with all the other ride sharing companies they've invested in other

92:46stuff that they're doing i think it's just i think it's informed by this insight right yeah that's a really good i mean he had a front row seat to all of it so he has a lot of reason to believe that it's possible and can can happen again yep now of course you're like gonna be wrong on this uh but that's why it's a fund well then that's why it's fun right but like that's what that's what's interesting here is like if something works it's almost like venture capital dynamics like you you 2x a huge investment but you just 2x like that's 250 billion dollars a market cap there like that can pay for a lot of losers it can yeah so uh great this was for sure an a because otherwise like this value creation a wouldn't have happened in the public markets but b i think it's unlocked like a whole new way of thinking about technology investing and we may look back on this in a few years and be like

93:50man what were we smoking back then but i think if you look at the fundamentals of alibaba and the business just like we've been talking about it's like it's real you know like they're gonna be the largest financial institution in china they already are they're gonna be the largest financial institution in the world. That's incredible. Yeah, for sure. Well, Ant Financial episode will have to come soon. Yeah, coming soon. All right. All right. Carveouts? Carveouts. All right. Mine is the Origins podcast by the guys over at Notation Capital, which is a great podcast all around. But on episode 33, they had Mike Maples Jr. from Floodgate Capital on. And Floodgate was really one of the first seed funds in 2005, 0405 in the Valley. And Mike is brilliant and a visionary and knows what he's talking about. And he's got some numbers to prove it.

94:43So he revealed on the podcast, they invested $750,000 in Lyft at 5.5 million post. They were in Twitch at a 3 million pre. They were in Weebly at a 2.1 million pre. I mean, they've just had some awesome, awesome investments over the years. this podcast is so interesting because so the origins podcast is a podcast for lps and sort of about the relationship between vcs and lps there's sort of no one who's thought more deeply about that than than mike over the years and one of the really interesting points that that he talks about is how your fun size is your strategy and a lot of people set out with a strategy and then raise a different fun size because they were targeting something and didn't hit it, or they were oversubscribed and decided to open it up more, or in some ways, somehow their fund size ended up being discongruent from their strategy because they were aiming on a set of

95:37things where there was only a finite number of companies, but they were very successful. So now they have a freaking huge fund and they have to figure out what to do about that. I haven't been this enlightened on sort of thinking about the venture landscape in a while. And I think that if you're interested in why venture is hard and what competencies it takes to be a venture investor, it's really, really interesting. And I can't suggest it highly enough. So Mike Maples Jr. on the Origins podcast. Super good. I love the Origins guys. And Mike was just great on this podcast. So definitely, definitely recommend. And it's been this has been my life for the past two years is figuring out our strategy at Wave and our fund size and aligning all that. And, uh, it's actually a lot harder than you might think. And we've had to do a lot of, uh,

96:25a lot of thinking and planning around that and are still doing so even, you know, after we've raised the fund and are making investments. So super great. Anybody who cares about the business adventure, um, we will love this podcast. Mine is, uh, very relevant to this episode. So way back, I can't remember what episode, maybe it was snap. Uh, we did as I think I did as a carve out the Sun Tzu's The Art of War, which is fantastic. Always worth rereading. Sort of inspired by that and some other stuff and this mini series on China that we're doing, I just finished reading The Romance of the Three Kingdoms, which is another ancient Chinese text. And it's kind of like, this is a super bastardization of it, but like in general, you could think of this as like a very extended novelized version of the concepts in The Art of

97:14war. It's super cool. It was written in the 14th century about like the second century, the three kingdoms era of China and battles between them and famous generals and warlords. And it's super cool. It's historical fiction. Like all of these things happened. They definitely didn't happen as described in the novel. Like there's magic and all sorts of stuff, but it's like a novelized version of history and really fun to read. It gives a lot more insight into the very short stuff in The Art of War. Like, oh, that's what he's talking about. Huh. Cool. I got to add to the list. It's a long list. If you've got a couple months to get through thousands of pages of translated Chinese text, highly recommend it. Perfect. All right, listeners. Now is a great time to talk about one of our favorite companies, Statsig. Yes. There is a reason why the best product teams

98:13rely on Statsig, whether they are iterating on their core product features or shipping AI-powered experiences at scale. Yep. In the crazy speed of today's AI world, shipping fast is just table stakes now. It's basically trivial to build and deploy your app constantly. The real advantage is how quickly you learn what changes actually created value for customers and how fast you can use that signal to guide what you ship next. This is where Statsig comes in. It brings experimentation, feature flags, and product analytics into one unified system so teams can ship safely, test rigorously, and directly link what they changed to how users actually behaved. So if you want to make learning your competitive advantage, whether you're building new AI experiences or just evolving your existing core product, go to statsig.com slash acquired to get started. All right, listeners, that's going to do it for today.

99:06Thanks for going on another journey with us. Uh, if you like the show, tell your friends, uh, scream it on the internet. However, your, uh, your favorite way to do so, or leave us a review on Apple podcasts. Indeed. We'll see you next time.