🎯 China is taking on Alibaba and Jack Ma


December 28, 2020

PLUS: Greatest investments ever.
December 28, 2020
The Hustle
TOGETHER WITH
eToro

Over the weekend, 3k+ people listened to a live performance of The Lion King musical on the Clubhouse app.
On a very related note: The Hustle team just added “Live performance of 2 Fast 2 Furious on Clubhouse” to our 2021 to-do list. Hold tight!

The Big Idea
kung fu gif

Jack Ma, the kung fu master (Source: Gong Shou Dao Film)

Why is the Chinese government going after Jack Ma, the country’s richest man?

For the past 2 decades, being a Chinese billionaire has been a dangerous job. Whether it was a short life expectancy or threat of arrest for corruption, being uber-rich in China has not ended well for many.

Jack Ma — the 56-year-old founder of Alibaba and China’s richest man (worth $57B+, but frequently swapping the top spot with Tencent’s Pony Ma) — has mostly avoided a bad outcome…

… until this year

As reported by the New York Times, the Chinese government has been clamping down on Ma:

  • In November, it held up the listing of Alibaba’s fintech arm Ant Group, which was supposed to raise $34.5B, the biggest IPO ever.

The cancellation came after Ma criticized the country’s financial
regulators for stifling innovation and called China’s bank
“pawnshops.”

  • Last week, China launched an antitrust investigation into Alibaba itself, charging that the ecommerce giant forces merchants to sell exclusively on its platform.

Ma is perhaps China’s greatest entrepreneurial success story

Born in Hangzhou, China, Ma spent his youth learning English by spending time around tourists before studying the language in college.

Ma learned about the internet on a 1995 trip to the US. Upon his return to China, he launched numerous websites before co-founding Alibaba with 18 friends in 1999. 

Today, Alibaba Group — which includes ecommerce leaders Taobao and Tmall — does $70B+ in annual revenue and is the “closest thing Amazon has to a peer and rival,” writes the NYT

The diminutive tech titan has happily cultivated a superstar persona, even starring as a kung fu master in a short film. 

Why is the crackdown happening now? 

Under President Xi Jinping, the Chinese state has imposed a tighter grip over the economy, which puts Alibaba and its rival Tencent — both worth $600B+ — squarely in the crosshairs.

The clampdowns also come at a time of rising economic inequality: China has more billionaires than India and the US combined but also has 600m citizens earning less than $150 a month, per the NYT.

Jack Ma is becoming the posterboy for this wealth gap — perhaps the only job in China that’s more dangerous than “billionaire.”

Share on Facebook Share on Twitter Send as email to a friend View on our website
Snippets
  • Dodged that one: Businesses were expecting a wave of COVID-19 lawsuits, but “personal-injury claims over infections are either too hard to prove or get funneled into the workers’ compensation system.”
  • Value destruction: The oil and gas industry had to write down a mind-boggling $145B in the first 3 quarters of 2020, equivalent to ~10% of the industry’s market value.
  • We out: Facebook is winding down a number of its Irish holding companies. The social network was using these offices to hold intellectual property, which allowed it to pay less taxes than if it was domiciled elsewhere.
  • Chatroulette — the app that paired strangers in video chat — was the hottest thing in 2010 until a proliferation of nudity took it down. Now, it’s back with AI technology to filter… well, you know what it’s filtering.
  • Green revolution: Japan’s government wants to phase out gasoline-powered cars by the mid-2030s.
 
Magic 8-ball
5G gif

Souce: Team Hewin

Some predictions that didn’t… work out

It’s prediction season… but we’re not making any today.

Below are some business predictions that really went awry.

We’re not trying to dunk on the predictors. Rather, we want to show that experts don’t have a monopoly on seeing the future and that there can never be enough new ideas and fresh thinking.

Microsoft’s former CEO Steve Ballmer on the iPhone in 2007

“[Apple’s iPhone] is the most expensive phone in the world, and it doesn’t appeal to business customers because it doesn’t have a keyboard, which makes it not a very good email machine…”

What one anonymous publisher thought about Harry Potter in 1996

“Children just aren’t interested in witches and wizards anymore.”

A Yale professor on Fred Smith’s term paper that became FedEx

“The concept is interesting and well-formed, but in order to earn better than a ‘C,’ the idea must be feasible.”

IBM tells Xerox its prediction for photocopiers in 1959

“The world potential market for copying machines is 5,000, at most.”

Business Week on the prospect of Japanese cars in the US in 1968

“With over 50 foreign cars already on sale here, the Japanese auto industry isn’t likely to carve out a big slice of the U.S. market.”

SPONSORED
Create your eToro account →

FINE-ISH PRINT: eToro USA LLC; Investments are subject to market risk, including the possible loss of principal. T&Cs apply.

The Highest Bidder Is…
5G ad

A 5G ad from Three UK, which explains literally nothing about 5G

The FCC’s 5G auctions are out of control: ~$70B and counting

Why is it that every network carrier can’t STFU about their 5G service?

It’s probably because they’re spending obscene amounts of money to win spectrum licences from the Federal Communications Commission (FCC).

According to the Wall Street Journal, the latest 5G auctions have already brought in $69.8B, topping the record $44.9B raised in 2015 (for 4G enhancements).

The auction process is done in secret to prevent collusion

But analysts believe the big bidders are AT&T and Verizon, which need to match the license assets T-Mobile scooped up when it acquired Sprint in February.

Investment firms, cable providers, and satellite companies are also bidding up prices.

Whoever wins will have to spend $13B more to upgrade equipment, and customers might not see new 5G coverage — which promises to speed up data flows — until 2023.

The FCC used to assign spectra through hearings and lotteries

It wasn’t until 1994 that the competitive bidding process was implemented; there have been 80+ auctions since, with the US Treasury receiving $60B+. (Auction proceeds also cover administrative costs and fund future auction programs.)

With borrowing costs so low and stable revenue (e.g., our obnoxious monthly cellphone bills), the bids could get crazier until the deadline, Jan. 4, 2021.

In sum: the “We have 5G” ads aren’t going away anytime soon.

Share on Facebook Share on Twitter Send as email to a friend View on our website
SPONSORED
Gift yourself Revtowns →
“Greatest investment ever” of the day
Eduardo Saverin

Eduardo Saverin, maybe checking his Facebook (Source: VentureBeat)

In 2000, SoftBank invested $20m into Alibaba. Masayoshi Son’s famous investment is now worth ~$100B, making it an outrageous return of 5000x.

This outcome is right up there with the greatest investments ever that netted at least $1B.

Here is an unofficial list of other outrageously good bets:

  • Eduardo Saverin made a $15k deposit into a bank account to partner with Mark Zuckerberg in the early days of Facebook. Saverin owned 2% of Facebook at its IPO and the majority of his $14B+ net worth comes from this stake, a return of 933,333x.
  • Jackie and Mike Bezos invested $250k into their son’s startup (some guy named Jeff and some company named Amazon). Working off of Bloomberg estimates from 2018, this investment could be up to 240,000x today.
  • Naspers — a South African internet company — made a $32m investment into Tencent in 2001. Its 31% stake in the company is worth $200B+, a casual 6250x return.
  • John and Cathy Phillips are a pair of Canadian angel investors. Between 2007 and 2009, they invested $750k into Shopify, and their stake today is worth $4.4B+, a 6000x return.
  • Susquehanna International Group (SIG) — a Pennsylvania investment group — made a $5m investment in ByteDance (TikTok’s parent) in 2012. This stake is worth $15B+, a return of 3000x.
SHARE THE HUSTLE
Hustle Cons Greatest Hits ebook

Over the years, we’ve learned… secrets.

The business secrets, tips, and tricks that have helped founders go from zero to millions — and even billions — of dollars.

Want to see ‘em? Just refer {3-referral_count} more friends to The Hustle and we’ll send you our curated set of interviews with founders from brands like Zola, AWAY, Vungle, Bonobos, and more.

Here’s a message you can you can use to share with your friends:

Hey! Do you read The Hustle? It’s the best daily business newsletter out there — only takes 5 minutes to read and you’ll sound like the smartest person in the room. Sign up here, it’s free: {referral_url}

P.S. You can always check your referral count here.

Share The Hustle →
SHARE THE HUSTLE
Ambassador Rewards

Laptop lookin’ sparse? Water bottle lookin’… clear?

You’re only {5-referral_count} referrals away from your first Hustle swag, Sam’s Stickers. Slap a few of these bad boys on the ol’ laptop and let everyone in the coffee shop know that you know. You know?

Here’s a message you can you can use to share with your friends:

Hey! Do you read The Hustle? It’s the best daily business newsletter out there — only takes 5 minutes to read and you’ll sound like the smartest person in the room. Sign up here, it’s free: {referral_url}

P.S. You can always check your referral count here.

Share The Hustle →
SHARE THE HUSTLE
Ambassador Rewards

Look at you, smarty pants. You’ve already shared The Hustle with {referral_count} friends and enemies.

But hey, just because you’re a business nerd doesn’t mean you can’t look fresh to death. Get {10-referral_count} more referrals and we’ll send you a pair of our signature skate socks — you’ll look good on the streets or in the sheets. Well, maybe.

Anyway, here’s a message you can you can use to share with your friends:

Hey! Do you read The Hustle? It’s the best daily business newsletter out there — only takes 5 minutes to read and you’ll sound like the smartest person in the room. Sign up here, it’s free: {referral_url}

P.S. You can always check your referral count here.

Share The Hustle →
SHARE THE HUSTLE
Ambassador Rewards

Look, we know the skate socks aren’t for everyone. Know what is though? Dad hats, baybeee.

And you’re only {15-referral_count} referrals away from earning our signature dad hat meant for ladies, gents, and dads alike to show folks they’re in the club.

Here’s a message you can you can use to share with your friends:

Hey! Do you read The Hustle? It’s the best daily business newsletter out there — only takes 5 minutes to read and you’ll sound like the smartest person in the room. Sign up here, it’s free: {referral_url}

P.S. You can always check your referral count here.

Share The Hustle →
SHARE THE HUSTLE
Ambassador Rewards

You’re close to the most coveted item in Hustle-land: The Always Be Hustlin Tee.

The fabric? Luxurious. The cut? Relaxed, yet refined. The message? Indisputable.

Share this link with {25 – referral_count} more of your friends to get the goods:

{referral_url}

P.S. You can always check your referral count here.

Share The Hustle →
SHARE THE HUSTLE
Ambassador Rewards

Damn, you’re on a roll. You’ve got the socks. You’ve got the hat. It’s time to complete your collection, don’t you think?

Get {50 – referral_count} more referrals and we’ll send you our favorite piece of Hustle swag: The Startup Sweatshirt. Slipping into this piece of fleece might just transport you to Silicon Valley (or maybe somewhere better, your pick).

Share this link to get the goods:

{referral_url}

P.S. You can always check your referral count here.

Share The Hustle →
SHARE THE HUSTLE
Ambassador Rewards

Hey, we see you. You’re out their spreading the gospel of The Hustle like it’s nobody’s business. Seems like you might be ready for a little more…

Get {100 – referral_count} more referrals and we’ll slide you a free subscription to Trends.

And no, this ain’t an ad. We just think you’re the kinda person who would thrive in our top-tier community (it’s usually $299) full of founders, investors, and builders (AKA ambitious, no B.S. business folks like you — and enjoy our premium research and content.

Share this link with {100 – referral_count} more of your friends to get the goods:

{referral_url}

P.S. You can always check your referral count here.

Share The Hustle →
SHARE THE HUSTLE
Ambassador Rewards

If you love us so much why don’t you just marry us?

Get {1000 – referral_count} more referrals and we’ll fly you to The Hustle HQ in beautiful, downtown eastern Austin, Texas. Round-trip flight, 2 nights in a hotel downtown, and some wining and dining with The Hustle fam.

Heck, you practically work here anyway. Copy & paste this link to share:

{referral_url}

P.S. You can always check your referral count here.

Share The Hustle →
How did you like today’s email?

hate it

meh

love it

Join 1.5m+ professionals getting The Hustle daily news brief

Business and tech news in 5 minutes or less

100% free, no ads or spam, unsubscribe anytime

Psst

How'd Bezos build a billion dollar empire?

In 1994, Jeff Bezos discovered a shocking stat: Internet usage grew 2,300% per year.

Data shows where markets are headed.

And that’s why we built Trends — to show you up-and-coming market opportunities about to explode. Interested?

Join us, it's free.

Look, you came to this site because you saw something cool. But here’s the deal. This site is actually a daily email that covers the important news in business, tech, and culture.

So, if you like what you’re reading, give the email a try.

If you don’t like it, unsubscribe any time. Privacy policy.