Grubstakers - Episode 56: Jack Ma

Episode Date: March 5, 2019

Here it is, the episode on Jack Ma, the man with the tiny face. He made a website or something and innovated China into a more disruptive form of communism. Seriously though, hard to write this description when I'm being distracted by that tiny little face.

All right, yeah, so I'm ready. I'm ready. Okay. Do you want to do it? I can do the intro. You want me to say what is it? This... Are we recording?

Yes. All right, wait, hold on. Hold on. All right. All right, you ready? Yeah. Okay, here we go. This week on Grubstakers, we're talking about Jack Ma,

the richest communist in world history. Hear all about the Jeff Bezos of having a fucked up ET face and all the other things that he is involved in in the surveillance dystopia that is modern China. All that and more coming up on Grubstakers. Listen, man, he's probably one of the smartest human beings on the planet Earth. That guy, you know, they think he might have invented Bitcoin. You know, I went to a tough school in Queens. They used to beat up the little Jewish boys. All right, okay.

Keep paranoid. Suck it to me. I love having the support of real billionaires. Yeah, we'll take that out in post. Hey everybody, welcome to Grubstakers. I am Andy Palmer and with you as always are my friends, Steve Jeffers, Sean P. McCarthy. And today we are talking about Jack Ma, the richest man in China. Because here at Grubstakers, you know, you might have gotten the vibe that we're kind of a little to the left politically.

But not as far to the left as our subject today. Yeah, yeah. We wanted, you know, some people might call us communists. And so we wanted to see what the true communists are up to over in the most successful communist state to date the People's Republic of China. Jack Ma is the first man to combine the immortal science of Marxist Leninist Maoism with the immortal science of being a Silicon Valley disruptor. Fusing these two ideologies and perfecting Marxism in a way that we couldn't understand, but we simply criticize. Because as anarchists, we cannot build communism.

We can only throw stones at those true communists who do. Yeah, and so we have decided to maybe take a second to study what worked, just like Mao's successors, who saw that the Great Leap forward maybe didn't have all the promise that they'd assumed um so uh unless unless you really hate sparrows in which case it was a wild success if you hate mice and sparrows i think the great leap forward was a was a wild success. What is this reference? The Four Pests campaign, where Mao had people, essentially, like, anytime they saw sparrows,

they would, like, bang drums and chase them into the air. And the idea was the sparrows would, you know, eat the crops or whatever. But what they didn't think about was the sparrows also ate, like, pests and bugs that ate the crops. So, of course, this course this like made the famine worse because these sparrows like chinese peasants would like bang the drums and chase them into the air and the sparrows would get so exhausted because they couldn't land anywhere that they would just die and so they actually did kill a lot of sparrows so that's just a lesson to people

who go around banging banging pans to get jack ma to go away, you might not realize what, well, that innovation that you're also scaring away. They disrupt it, spare us. China's first disruption. So I guess we should, we'll launch into the background of this fine fella. Jack Ma, which was not his original, his birth name. His birth name was uh ma yun

or jack ma yun you mean his cultural revolution parents didn't name him jack they did not well his parents uh weren't necessarily cultural revolution he was so he was the son, not of devoted communists, but of nationalists. And so as a child, he got bullied a bit because his family was fans of Chiang Kai-shek. And they didn't win. His family bet on the losers.

So he had a bit of a rough childhood growing up. But one thing that changed it. Fortunately, that prevented him from becoming a capitalist rotor. They bullied him into obedience to the Communist Party. Yeah, he understood the importance. The immortal science of Marxism-Leninism-Malism. And so, you know uh just as things started to get uh especially bad uh a little uh friend of china from um the great imperial satan came over

to visit uh a man by the name of richard nixon uh sean i'm gonna need you need you to get on the- Suck it to me. Came by and opened up the gates to China and opened it up to tourism. And so Jack Ma learned English basically from people coming into the Hangzhou International Hotel. And he would essentially make himself a self-appointed greeter when he was like 14 and greet people oh we should probably i should say skipped over what he actually did so jack ma um he's the creator of alibaba which is essentially um a website that is a combination of ebay paypal and Amazon, all in one in China. The Alibaba Group is one of the 10th largest companies in the world, or in the top 10.

Yeah, I would say basically take the surveillance that we talked about that Google has and that Amazon has, take that surveillance capitalism and then add the possibility that you will be interned in a forced labor camp where you are forced to make SpongeBob SquarePants exports for the next decade.

And that's basically Alibaba. Yeah, all of the sort of the scary line type narrative, like the criticism of Google, Alibaba is way past that internally to China anyway. That's also a bit of Baidu. And I think in a future episode we'll look into whoever did Baidu, which I think is more of their social media Google thing. But Alibaba does have its own credit rating agency that is...

We mentioned it obliquely in one of the last few episodes, but it's a very interesting approach to credit writing. That's their Green New Deal, is they keep millions of people from flying. Obama did literally praise it for helping combat global warming. What, the social credit system? Yeah.

He actually said that. Yeah. It's because it also tracks people's carbon footprints. Yeah, but so... He praised the one-child policy for that, too. He said they should bring it back. And it really fertilizes the rivers with all those female babies.

And then for those who don't know, Alibaba is the largest uh privately held company in china jack ma is the richest man in china forbes puts him at as of march 2019 he's worth about 39.4 billion u.s dollars and alibaba just to give some background they have a market cap of about 475 billion dollars and last year they took in about 22 billion in profits oh and uh for reference uh yogi isn't here today he is in alaska because i guess he thought winter in new york was just too fucking toasty so he decided to take a vacation to alaska yeah yogi isn't here today he told us he had to go to the india pakistan border for some reason

we're not really sure what he's up to yeah but he's been taking a lot of flying lessons so i'm sure something interesting reliance um so yes jack ma he's the head of uh not only the biggest privately owned company in china but also one of the biggest... Just like any communist would be. Just like any proud communist. Oh, what if it's like a... He's like a deep cover Chiang Kai-shek coup. Like he's a Taiwanese spy.

Okay, we're kidding. We only recognize one China at Grubstakers. Look, be sure to tweet at the Grubstakers account about how Vladimir Lenin and Karl Marx were both rich. only recognize one china grub stickers look uh be sure to tweet at the grub stickers account about how vladimir lenin and carl marx were both rich and so that makes jack ma a good communist too i don't think jack ma has like a poor friend who's always emailing him about his new theoretical papers and also to ask for money so um so jack ma he he's the top of the uh he created the largest not only largest company but largest tech company and he knows nothing about coding um or sales even though

it's uh it's a sales website and the uh he he's really a testament to the power of networking. So going back to his personal story. Wait, so one thing on that. Yeah. It just occurred to me, like Andy was saying, he's never written a line of code, and he's never made one sale to a customer, and yet he's a billionaire.

And it's like, I just remember this comedian in Seattle who was talking to us in the green room once, and he was like, you see, I'm an ideas man, and I need an execution man, and then that's how i'm gonna get rich and famous because you see like steve jobs he's an ideas man and then steve wozniak is the execution man so you just need an so when an ideas man and an execution man come together they're unstoppable what are the initials of that comedian i can't even remember oh i thought he was very very passionate about this but uh jack ma is one of the richest ideas man yeah yeah he's he's got

idea he's got idea oh was it eddie okay no it wasn't eddie uh well he the idea didn't just spring from nowhere though no no it Yeah, he took some trips. He took some trips to the United States. And actually, Jack Ma, his family was involved in local entertainment in Hangzhou. And he is credited as being one of the funniest CEOs in China. Because his family was involved in what was the equivalent of the comedy community in China because his family was involved in what was the equivalent of the comedy community

in Hangzhou. So he's got some sharp one-liners. For instance, today is terrible, tomorrow will be terrible too, but the next day will be beautiful. Except most people will die tomorrow night.

It's interesting like... And that's... Do we have a laughter and applause drop? All right, okay. Okay, good. Nice. Yeah. I mean, I was just saying it's interesting, like entertainment in that period up until the death of Mao

was basically like in the Cultural Revolution, like all entertainment that could even be like remotely considered critical of the government was uh violently purged so the only entertainment that that was left up until at least Mao's death and then uh when his wife was thrown out of power was very obsequious or just completely apolitical or supporting of the government yeah his family uh had it had it pretty rough again because of their nationalist sympathies um a lot of the culture in his um and hangs out a lot of the cultural signifiers were destroyed there were some statues that the red army destroyed um so then after uh after the gates

were opened to america it was first fuck sparrows second fuck ancient architecture yeah mao would like just demolish like all sorts because he wanted to make china a modern country First, fuck sparrows. Second, fuck ancient architecture. Yeah, Mao would just demolish all sorts, because he wanted to make China a modern country, so he demolished all sorts of ancient buildings and artifacts and these sorts of things. And then you know what else he demolished? Gender. Mao was a feminist.

Well, Jack Ma actually got the inspiration for Alibaba, like an export market, when Mao exported all of the food out of China into the Soviet Union in Eastern Germany. And Jack Ma thought, what if we put that on a website? So let's get the middle class in on this. And so eventually he went to university. He was not very good at math. And so he just memorized all the problems so that he could pass math entrance exams. And then he studied English at university and left to become an English teacher at a technical university. And at the age of 30, as basically the doors were opening up to China,

essentially after Mao died, there was kind of the neoliberalization where the country of China realized that being kind of a closed state both wouldn't make it difficult for them to upgrade their technology, and it would also make it difficult for them to basically project power in the region they needed the most modern sparrow killing technology available so but yeah deng xiaoping comes to power in 1978 and then that's kind of the uh the capitalist turn within china yeah and that's that's when they have their uh neoliberal revolution essentially where markets get opened. Suddenly people are able to actually start companies, which was basically illegal under Mao.

And so they kind of start opening up that aspect of China. And so Jack Ma realized at the age of, he decided at the age of 30 that he had to open, he had to start his own company. And so he started an english translation company called hope uh and that basically tanked um he later sold the rights to obama's presidential campaign he uh well yeah and in like 2013 ob Obama interviewed him as a sitting president. No, 2015. A sitting president interviewed a CEO. It is interesting.

I guess we'll get into it. But just something I ran into was how much Jack Ma fits the Western ideology of what we want China to be and become. And that's part of why he's been so heavily promoted in western media which in turn leads to him being promoted in chinese media because you know he's uh an example of uh china entering the 21st century or whatever right right and competing with america and actually beating it beating the case of ebay he's a huge capitalist ideologue and he'll go on panels you'll see if you type in YouTube Jack Ma panel or interview or something, you'll see a few where he's on stage with Elizabeth Holmes.

Really? Yeah, as like visionary Silicon Valley adjacent people. And he would have $5 billion more had he not met Elizabeth Holmes. Yeah, I was just thinking like between the two of them, which do you think is more overvalued? God. Well, I'll ask you this. Can you buy uranium

from Theranos? You can probably buy blood on Alibaba. Oh, yeah. Yeah. Oh, easy. Yeah. You can buy a blood test. You could buy a person full of blood on Alibaba, specifically for the person of removing the blood. I'm just imagining trying to buy a person full of blood on Alibaba, specifically for the person of removing the blood. I'm just imagining trying to buy a Soviet nuclear weapon on Alibaba and then getting some counterfeit bullshit.

Yeah. This is Ukrainian. This is motherfuckers. This is even enriched. But so after Hope. After Hope. Okay, so he has a little bit of success with hope and he eventually he meets with a um business partner who asks him to come out to meet him in california

um it's basically like an american uh tech entrepreneur who he has not said the name of in interviews since and he's kind of cagey about the details of this but apparently he went out to california to meet up um with this entrepreneur and the guy essentially locked him in a beach house and wouldn't let him go and eventually moved him to a vegas hotel where he kind of locked him in a hotel room there. Eventually, Jack Ma claims that he escaped, won $600 at the slot machines and used that money to run off to Seattle.

Seems plausible. But I do like that. I did not know that Jack Ma had been trafficked. Yeah. Well, the details of the story have kind of uh moved around a bit and he claims that he doesn't like to talk about it because he'd rather sooner forget it but yeah well yeah there's like a documentary made by a former alibaba employee it's on youtube called crocodile in the yangtze the river but but basically so the story that's told there is

that jack ma flies out to california to meet this guy and then he just says but he finds out it's a scam so he goes to stay with a friend in seattle and then there's no other elaboration there oh yeah no the that the that's that's the less good story i mean i guess it's the same story uh but less being locked in las vegas so yeah he goes out to seattle he's made to see hundreds of businessmen dressed as sparrows. It's like, I thought we destroyed this. He learned about the internet when his host put up an ad for him on Backpage.com. Hundreds of businessmen coming through his hotel room he he was um saved when an interloper at the

party he was at was asked the password not realizing that there was no password i should have known when the password was sparrow it was an ill omen and during the hollow blue he snuck out the back. So in Seattle he sees the internet. Some friend is like hey look it's the internet and he's like oh cool. And so he types in www.whatthefuck.com

So he types in www.whatthefuck.com And he finds out that there's an American version of www.whatthefuck.com And there's a German version of www.whatthefuck.com But there is no Chinese version of

www.socket2me Sean's manning the board today. we're all out of our comfort zone on this episode but you know what we're we're gonna fucking do this for 20 years so we gotta mix it up sometimes yeah we we just passed our five-year plan yeah and we have it all if you're wondering why we sound so uncomfortable it's because we're trying not to do the accent yeah we did a mistake not recording this episode with yogi here my wife i think we have exactly one one uh drop of jack ma himself be paranoid you know i was watching cloud atlas that was one that's one of his business advice and uh the Agent Smith actor,

he's got his eyes taped back so that he looks Korean. So it's like Agent Smith-son. The Wachowskis are canceled. Yeah. Hey, Dennis Leary, what do you think about Cloud Atlas? www.whatthefuck.com So he types into his computer

beer and he's like okay there's American beer, there's German beer but there's no Chinese beer. He gets all results for Brett Kavanaugh. Yeah. So then he types in www.whatthefuck.com because he realizes that there is no China

on the internet. And a little light bulb goes off in his head and he runs back to China. And basically he... He goes into an IRC chat room and types in ASL. Yeah, he types in ASL. It's like, great news, my fellow communists. I know how to connect with hot teens near me.

So he realizes that there's a big untapped potential and this is around 1995 yeah and so there's only five people with the internet yeah you should sign numbers one through five yeah so he's applying to be number six yeah and he uh did you know that yahoo started out as just a list of web pages that they were aware of and it was like a hundred anyway so he he started this page called ChinaPages.com and charged people. It started out as a list of Chinese dissidents that they were aware of.

Yeah. And he charged people to like put their names on it. This was like his second. So Hope kind of falls by the wayside. So now he opens his first website. China Pages. China Pages. And everyone thinks it's a scam because no one knows what the Internet is in China.

And they think it's, and so, and this is just something that it's curious to me. I don't know what you found, Andy. But it's actually like just the question of where he got his startup capital. Because we mentioned he went to university. He studies English. He's English teaching for a bit. And it should be noted, I think we might have mentioned it earlier, but he supposedly becomes a member of the Communist Party

while he's in university in the 1980s. But essentially just the question of like, where does his startup capital? Because that story he tells about essentially escaping from being trafficked and then winning $600 at Blackjack. I mean, that's incredibly implausible. Yeah. It was claimed that he had like $4,000 in savings.

Where he got that from being an English teacher in China? I don't know. Like he had his epiphany when he was, he said he had an epiphany as an English teacher where the dean came up to him to talk to him and the dean was riding a scooter and he realized like, oh, even if I work my whole life to become dean of this,

that's the best i can have is a scooter uh but somehow he can afford to fly all the way uh to the united states and get trafficked and then buy his way out of that tree yeah well if you saw he saw the dean eating a cliff bar and he's like that's the best i can do it does make perfect sense that like forbes magazine and the others are in love with this guy though because this is entirely what you hear from you know bezos or buffett or or whoever it's like you know or just like if you if you want to follow the alpha leaders account on instagram it's just about like uh you can make this much if you put it in a savings account but

you can make this much if you start your own business you know so it's just the usual kind of entrepreneur gavin mckinnis venerate the entrepreneur uh ideology my working theory is he got out of vegas by sucking some good dick yeah i mean that's like something that wouldn't shock me and maybe he just doesn't want to talk about and again that's totally speculative but it's like okay so we are stating on the record yes that the richest man in china escaped las vegas by sucking a bunch of dick wow the the grub stakers podcast got free tickets to beijing we get to we get to tour the labor camps that's awesome um but yeah i mean it's just like our social credits are tanking right now mine's like like 200 i started at 400 yeah but you know it's like okay so you escape from being

trafficked and then the first thing you do instead of going to the police is uh you walk into a fucking uh casino with money that you somehow have i guess maybe he had like a quarter and he went to six hundred dollars six hundred600. Because you know how slot machines are notorious for making people lots of money quickly. But yeah, so we don't really know where his startup capital comes from. According to something I saw in The Guardian, he said that himself and his wife borrowed like $.s dollars to set up the company for china pages yeah for china pages and again this is 1995 he sets up um he sets up china pages it's it's relatively low overhead and a lot of the labor that he got was uh because he was teaching english at a technical school he basically just recruited his students to help him make this website right

because like we said he never wrote a line of code. So he essentially went to Seattle, saw the internet, went back home and said, okay, you set up the internet. Yeah. And it was just a list of- Pointed at somebody. It was just a list of local businesses, but it actually got a bunch of people to the Hangzhou International Hotel.

Yeah. Because it was the only hotel in China that people from like a UN delegation could find on the internet. Do he do English translation for this? Yeah, I think that the website might have even been in English. I don't know. Like the early internet had a lot of, it was using like ASCII characters and English characters and actually early on in Alibaba

one of the alternate names for the website alibaba.com was 1688.com which is very close to 1488.com my theory is that it's 14 words followed by just kidding followed by Heil Hitler

on 1688 uh the word jews is just replaced by the word sparrows is was he a fan of the glorious revolution or 1688 what's going on here uh was that what chinese revolution no oh it was english oh the domain 1488 was already taken yeah uh it had to do with the fact that it was easy. It translated well for like Chinese characters. Like it was easy to remember and it represented something to do. And there's only five websites at that time. And there's only five websites.

But we're skipping ahead. So that was Alibaba. So China Pages, eventually it does relatively well as the Internet, as up to six whole people in China are able to access the Internet. And interestingly, as the Internet came to China, like initially they were very suspicious of it because it was developed by the American Department of Defense. And so the actually the Great Chinese Fire was developed uh concurrently with the internet so by the time china pages start to take off um which i guess was when a total of like eight people in china had access to the internet and it was only half the internet already seven of them were government employees spying on the other guy yeah

um eventually he joined up with another company and they essentially bought him out or they they bought all their uh he joined up with another company and then he well got a minority shareholding vote in the board yeah so as i understand it this is from inc inc.com um basically it's called china telecom was like a state-run company so my understanding is essentially according to this if he competes with china telecom for a year which is some state-run company maybe running the official chinese yellow pages and then um according to inc.com uh china telecom offers to invest 185 000 us dollars to do a joint venture and you know this is around 96,

uh, 97. And basically he takes it, but then they get all the board seats. So he can't do anything, but this is significant because the Chinese state dumps 185,000 US dollars into his pocket for setting up this kind of crummy website. Right. So he has capital now. Yeah.

And so he's got, he's got some money, but he, he doesn't, um, he, he gets, but he doesn't... He gets discouraged because he doesn't have any power in the company. So he leaves that company and he goes to work for the Chinese government. It's extremely rare for a businessman in China to have any connection to the government whatsoever.

Yeah. to the government whatsoever yeah he uh while he's here he's kind of he's still disappointed because the internet you know this is the mid 90s the internet is just taking off all around him and he he as he tells it later he's he's disappointed because you know he he felt like he was on the ground floor of the internet, and now a bunch of people are getting rich, and he's just working for the government. The Americans are doing so many pump and dump scams right now. Why can't I be in on that? So he gets his big break in about 98, when what happens is one of the founders of Yahoo came uh came to china to uh talk with uh you know various government officials for to discuss yahoo expanding into china was this a jerry yang i believe so yes

and so jack ma offered to show around the yahoo guy because um you know he had such good English, or relatively speaking, and he is such a charismatic extrovert that he just kind of jumped at the opportunity to show the head of Yahoo around basically the Great Wall of China. And while they were there, the details are kind of murky, but he basically worked out a deal with the guy from Yahoo. Jerry Yang locked him in a hotel room. And he had to escape. I'm going to leave for two hours.

Whatever happens in here happens. He went to the blackjack table in Macau. And then this is how he was able to get the money for Alibaba. And Jack Ma's life is a series of being trafficked and escaping but i'm sorry what were you saying oh yeah um uh so after uh winning five billion dollars at this uh slot machines he he hatched a plan basically with the yahoo people to start his own company um and he so he got a bunch of people from his department and then lied to the uh chinese government saying he was sick uh so he could just go home to hengsao province and then using some murky startup capital some of it uh potentially from yahoo

he enlists a bunch of i i do just want to say, this is one of the few stories that involves the words lies to the Chinese government and then has a happy ending. But so it's 1999 is when he founds Alibaba. So you're saying he takes the sick days from his Chinese state government company that he works at and he pilfers some employees and they start this thing? Yeah. And I guess in China, lying and saying you're sick, or if you say you're sick in China, it means like, oh, okay, you're probably going to die soon. So he goes home, he starts this company with a bunch of employees, pays them basically nothing. The earliest hires earned just about $50 a month, and they were expected to work. Listen, man, he's probably one of the smartest human beings on the planet Earth. You know that they think he might have invented Bitcoin?

They had to work seven days a week up to 16 hours, and they were required to find a place within 10 minutes from basically the apartment that they started in. I love having the support of real billionaires. So that they wouldn't waste time commuting. They just shoveled them propaganda the whole time. Yeah. Yeah.

And he, so this is like his founding myth is that in his apartment and hangs out just a few people they took a bunch of startup capital and started making alibaba well well it's a it's an interesting thing where again from this documentary crocodile in the uh yangzi uh he there's there's video of one of these early alibaba meetings in the apartment and uh it's in mandarin so i'm not going to play it but you can watch it essentially he's like giving this speech to them about how we want to be a global company we want to compete with silicon valley if you want to compete with silicon valley you have to work like

them you can't just work 8 a.m to 5 p.m we have to work much longer than that and you know again it's like you know people love this fucking 16-hour day grind shit. But, of course, what's unsaid is that the vast majority of the money is going into Jack Ma's pocket while you're working, what you said, 16-hour days for $50 a month. And what is even the ownership structure at this point? The ownership structure was he owned a fair amount of it, but he also did give stock options to his employees at the time and when he

eventually started he got Goldman involved and had them invest in it they were actually kind of shocked that he had given so much of the company away to his employees at the time so I mean he's not necessarily the worst in that regard and at the time the early company was

essentially a business to business transaction company and he gradually expanded that into um a larger company that was uh for e-commerce that that kind of branched into larger e-commerce for more like consumer level uh exchanges but uh his his philosophy when he started it was he he likes to describe himself as being like forrest gump it's his favorite movie and he says his reason is because everyone thinks forrest gump is stupid but really he knows what's going on um even though some people would argue that forrest gump is a satire of like 20th century America,

like a very fierce satire of 20th century America that like being dumb and following all the rules is how you succeed in America. The, the beginning of Alibaba was a confusing time, but if you just do it, you're told and shut up. Yeah. You'll,

you'll benefit just like out of the sixties was a confusing time. Yeah. And you just need to follow the rules. Yeah. And soon Weird Al will do a song. Uh, that's a parody of a president song about you and so his idea was he instead of focusing on getting major companies involved he was going to focus on the shrimp like forrest gump and so he got smaller companies to uh use his platform to exchange with other small companies and eventually he extended this into smaller companies exchanging with individual consumers.

And that's how he kind of arrived at the idea that eBay arrived at as well. He basically invented the Chinese eBay, where people could just buy directly from consumers. And the big appeal of Alibaba was that everything, both for the businesses and the consumers was free and then the uh larger um the the way that they would make money is then they would sell advertisements uh to companies that wanted to raise their profile on alibaba life is life is like a box of a pet food that has arsenic and heavy metals in it.

But yeah, I mean, like kind of what's unsaid about his rise and facilitating business-to-business sales in China through the web is the horrific labor practices in China, where it's like if you are selling things from one suicide net factory to another suicide net factory and then taking a percentage on it it's like okay congratulations but you know just like the veneration but he's not taking a percentage on it he's selling advertising i see so but i thought from the suicide net factory yeah and that's where he gets his money right like yeah i think it was like according to the document around 2001 or 2002 is when they finally start um oh 2001 they launched the paid service but until then it's

actually just free and they're just trying to spread on um you know uh notoriety word of mouth yeah grow their market share but uh yeah and you mentioned goldman sachs also soft bank a japanese company uh i think goldman puts in like five million soft bank puts in like $5 million. SoftBank puts in $20 million. So between $99 and $2,000, he has about $25 million, just all of this kind of capital coming in. So he's in a good position. Yeah, he's in a relatively good position. And then around that time, eBay tried to edge in and push him out. And essentially the big success of Alibaba was keeping eBay out of China.

Part of it was because of eBay's own arrogance and dysfunction. Essentially they thought that they could just like kind of walk into China and take over the market. And then Alibaba just kind of subverted them. Like the eBay was apparently a very inflexible company. Like they were kind of running on autopilot at that point. And they really, everything was so like corporatized going through all these different levels that, you know,

it was said at the time that it would take them like a year to change one word on the front page. And so they were, as the story goes, eBay was so inflexible, they died in China and Alibaba came out reigning supreme uh having a functional monopoly uh from that point on alibaba built what is known as the iron triangle yeah ebay was unsuccessful at getting the british army to intervene in this conflict so unfortunately they were defeated their their attempts to sell opium over the internet did not succeed this time. eBay Boxer Rebellion was unfortunately...

It took them too long to... They lost the bid on the gunships. And so Alibaba developed its Iron Triangle, which is essentially they have e-commerce, which is their main thing, and then they have logistics, which is they have a-commerce, which is their main thing. And then they have logistics, which is they have a way of organizing delivery because China doesn't have a very reliable postal service like the

United States does. So they have to essentially work with delivery companies to get items actually delivered. And then they also built a finance arm where they have what's called Alipay, which is essentially Chinese PayPal. It's great for giving the government the money of the bullet used to execute you. Yeah. And Alipay, they had some weird falling out with Yahoo, who was a major investor and owner of Alibaba early on right yeah so in 2005 it's very significant yahoo buys a billion dollar or pays a billion billion dollars for a 40 stake yes and this is like their first you know giant capital infusion and this is significant because this is like right in the heat of their competition with ebay yeah and they actually and they also um i

forgot to mention they managed to survive the dot-com bust. Right. Basically because they hadn't spent all their capital at once. And so Jack Ma was very happy at the bust because he was like, yeah, you know, everyone, they're out of money. But like, we were given $25 million and we've only spent $7. And so then he just went around America doing kind of a victory lap, getting a bunch of investors and stuff. There's an interesting thing in the documentary that's like around this time but it's like one of the dumber things he does is he briefly moves operations to silicon valley like because he has all this international staff so he sets up offices in silicon valley as well as china and then it's

just really dumb because the two offices are like much less able to communicate and then he has to reverse and do a bunch of layoffs. I mean, it was like, you know, just kind of like one of those self-inflicted injuries, you want to call it. Because he has all these millions in startup capital.

That's because he departed from the theories of Karl Marx. It kind of makes sense that he would do that because his ideology is just so close to that of Karl Marx. It kind of makes sense that he would do that because his ideology is just so close to that of Steve Jobs and Silicon Valley founders and investors. He set up offices in Las Vegas

because he wanted revenge. But he's constantly, I mean, you know, you said he started out his company with the idea he had to work 16 hours just like Silicon Valley coders. Yeah. In order for them to make it like, you know, you guys have to forego wages basically. Yeah. Off the dream of becoming millionaires off your stock options.

Yeah. And just took like, yeah, fully. And like his place. Yeah. His place made 50 a month. And he also bragged about how much cheaper his employees were than they were in Silicon Valley. Of course.

And so. And this just makes the Western press love him more. Oh, yeah. Because he's considered smart. Yeah, he's a visionary. Exactly. When, you know, 90% of it is being in the right place at the right time. Yes.

Like he was in China. And having the connections with the Chinese government. Yeah, yeah, certainly. Like, yeah, you can't, if you're going to have, like, a company that connects different businesses, you have to have a way of interacting with those businesses or reaching out to them and convincing them to use your service. And so it helps to have connections with the government. But so it was Taobao was the consumer to consumer one. Yes, yes. And that's the one that competes directly with eBay.

And that's the one that competes directly with eBay. Taobao is Chinese for treasure hunt. And Taobao becomes massively successful, partially because they have their own pay platform. and part of the problem at the time in china for e-commerce was that uh there was no reliable credit card usage partially because of chinese financial restrictions and so they had to create their own um pay service which ended up being wildly successful and then was also called Alipay, which was also a source of some of their split with Yahoo later on when, without telling Yahoo, Jack Ma spun Alipay off into his own company that he owned. And his claim was that it was because of Chinese regulations over companies that handle financial transactions. But the reality was he took a company that was worth billions of dollars and just pulled it out of the Alibaba group, which Yahoo had a stake in, and put it in his own private company without telling Yahoo at all. And at that point, Yahoo, this was in um i think it was

around 2010 or something and at that point yahoo was you know sun setting and so there wasn't much of anything they could do and so he would do these like press tours where people would ask like so uh are you gonna try to buy a yahoo out of alibaba and he's like yeah you know i want to buy all of yahoo just like throwing a big dick on the table and eventually he bought uh he did buy yahoo out of alibaba but he never actually bought yahoo um but at that point he he eventually he basically cemented himself as uh this monopolist for the most powerful company in china and so there is like one uh drop i wanted to play yeah yeah go for it um all right this is this is just from uh this is from around the time uh that yahoo makes the um the 40 one billion dollar investment in 2005 this is significant because jerry Yang had a lot of controversy as the CEO

of Yahoo because Yahoo had turned over the information about a Chinese journalist to Chinese officials and then this journalist was arrested. And this is a CNN interview with Jack Ma from around this time. Recently, Yahoo gave information to the government that led to a detention of a Chinese journalist named Xu Tao. If you were running Yahoo China at the time, would you have done the same thing? Yes, I will. Why? Whenever you do business, you have to follow the local rules and laws. Either you can change the law.

If you cannot change the law, follow the law. So it's the law in China. You have to follow it. Whenever you do business, this is the basic principles. So whatever you do, just follow the law. You know, if they may want you to harass

black people sitting at a counter in a segregated establishment, you just got to respect that. The law of China is the law of China. Historically flawless philosophy, as we have seen demonstrated in the Nuremberg trials. Yeah. As Adolf Eichmann attempted in his reformulation of Kant's categorical imperative that the golden rule is to follow the law as it was given by the Fuhrer. Damn, Adolf Eichmann just missed out on being able to be a billionaire train schedules entrepreneur.

If the government wants you to develop a credit score that goes beyond normal credit scores and makes it so you can't fly on planes or leave the country so that's local custom okay you can't argue with that so one of the aspects of uh um alibaba is uh sesame credit uh the social credit system and um as i said we mentioned this in an earlier episode on google on surveillance capitalism but basically it's it's a credit scoring system where instead of just taking your financial transactions alibaba and sesame credit has access to the chinese database of everybody's uh social media interactions because the chinese government uh claims a right to all data regarding uh everyone's messaging everyone's um you know their social media every aspect of their personal lives

and so that gets folded into people's credit scores yeah that's so fucked up in america we we know better and we only allow google to do that and so essentially what what ends up happening is like um we're civilized here and it only affects your ability to have shelter yes yeah here in the united states we just uh car you know we would never enter such an orwellian dystopia we would we would turn it over to private corporations mark zuckerberg and larry page one one aspect of this is that like instead of just having your credit score based on your record of paying for things because

it goes through social media as well your credit score is affected by your friends ability to pay for things so imagine it having like you know we all have a dipshit friend on Facebook I'm right here and now imagine if being friends with Sean McCarthy now makes it so you can't

get a home loan. I was going to say, that'll be sad the day Andy, where I have to apologize to you for that, uh, rant about feminism. I did. Yeah.

I'm sorry. You couldn't get a mortgage and current government that would help. Huh? Oh yes. Yeah. That government, that would help. Huh? Oh, yes. That would improve your score. Yes. Yeah. So he has that venture.

Another aspect of... This is curious to me. It's just like, so essentially the government pays him a contract to create social credit scores for the citizens? No, no. It's interesting to me that the social credit score which i think a lot of people are familiar with is privatized essentially it's like equifax it is yeah well it actually it it was created essentially by market forces like one one of the uh issues that was that was brought up in surveillance capitalism is that the chinese government is actually fairly nervous about the social credit system because it's a private company

having a lot of power that the government does not. And actually, when the government first started its neoliberal kind of reformation, they were worried about the power that capitalists would have over the country and so they tried to very gradually introduce the reforms uh in such a way that they wouldn't have the power of capital for instance like early on in the reforms they had only outside investors uh could invest in china and that's why that's why you why a lot of the earlier Chinese companies were owned by

different foreign companies. But eventually, because they discovered that in order to kind of build their power base, they had to expand and have some domestic capitalists. Eventually, you get people like Jack Ma who have more, on an individual basis, Jack Ma probably has more power than any individual in the Chinese government. And I would include like Xi Jinping from that. Like he's still limited by, you know, party restrictions. But Jack Ma has, I'd say, more personal freedom

than even Xi. Well, but Jack Ma essentially knows where his bread is buttered. Like, I think he's, like, another thing that happens is that around 2016, Jack Ma gives a speech that was reported on in the Western press. But essentially, he says, like, the Chinese government should use big data to fight crime.

And he approvingly cites, like, minority report and this kind of shit and it's just like something where it's like clearly he's like speaking to the chinese government and working with them on this because like now we have this again dystopian social credit score and we have the uighur camps where you have like a million people who've been kidnapped and they're in forced labor camps where they're like made to eat pork and do manufacturing for export. So it's just something where when Jack Ma is saying, you know, let's use big data to fight crime. I mean, he's very clearly echoing the governmental line. So it's not clear where Jack Ma ends and where the Chinese government begins. There's a lot of overlap. I also

read that the social credit score factors in municipal infractions. Really petty stuff. Like smoking. Smoking or graffiti. What do you call it? Reading Marx.

Beyond the five approved slogans. Reading original german yeah over the grundresa yeah you know very petty things that um then he'll actually post your picture on like local like uh if you run a red light it will take a picture of your car and identify that it was you and then it will post your picture and shame you basically as well as take away from your score but you know it's leftism because the chinese state has uh merged with the vampire castle and has yeah marxist leninist maoist call out culture well in their five-year plan their last five-year plan sorry two ago two of them ago. So they want to develop capitalism with Chinese features. Or not Marxist-Leninist features. And if you get quote tweeted with clap emojis, you can no longer buy a car.

Well, yes. So they lost power. So one of the interesting clashes that Jack had with the Chinese government recently was one of the big problems on Alibaba is a lot of counterfeit goods are for sale on there. For instance, you can buy a lot of products from Goosey, not Gucci, Goosey. And then you'll order it and be like, wait a second, this isn't an authentic blackface turtleneck. And so the Chinese government issued a statement, basically a report saying like, we're going to start cracking down.

This fucking Nazi uniform is made by Hugo Noss. God damn it. I should have known when it was a hindu swastika lefty lucy righty so when they started cracking down basically the the uh jack ma posted blog statements attacking the government official saying like while i respect your godlike power to crack down on me like this i wish that there were more transparency in how you made this decision and that was quick quickly like deleted but he didn't face any real repercussions for that and eventually he came to an agreement with the chinese government but like any anyone who say isn't a billionaire who made that statement oh yeah would be dead very quickly and so

essentially like even though the the chinese government tried to you know work with foreign investors to try to keep power outside of china it backfired because eventually if you want to to build up a capitalist system in your country you have to have domestic capitalists well i think it's an interesting discussion because like i read this new york times article and so basically as far as the future for jack ma goes he's said that he will resign as the executive chairman of alibaba as of september 2019 so this is supposedly going to be his last year running the thing he wants to like focus on quote-unquote philanthropy more but he'll still be involved but some speculation is that because xi jinping thought is bringing chinese business

more and more into kind of obedience with the government that maybe he's like trying to get out you know because like another thing that we'll mention here is alibaba in 2017 buys the south china morning post which is a hong kong newspaper that's like a pro-beijing propaganda rag and interestingly enough like they uh they made this big investment in like you know uh expanding and it even though it is they've stopped submitting to uh independent circulation audits so it's very clearly losing money but alibaba is making this big investment into a pro-beijing propaganda rag which is like well very clearly they're doing this to influence the government make sure that they are taken care of and you know these sorts of things so yeah yeah maybe he wants to step away from that we don't really know why he's leaving or like the fact

that they're buying that to influence to the government means that he's trying to consolidate his power over the right right yes uh in that sense uh alibaba also they've made a ton of money from China's switch, essentially around 2008 when the economy exploded. China is widely attributed as having saved the world in that sense, because they did just a massive Keynesian investment system. And in the process, they kind of transformed China into a more consumer society, which is part of what made Alibaba blow up. Steven, you can probably, you're making faces, so I. You said the word Keynesian and he got very angry.

Instantly got a semi. Well, lately, in 2017, they held a really, really big conference on a proposal China made to 65 countries called the Belt and Road Initiative. And what it would entail is doing basically the Silk Road 2.0, where they use massive infrastructure investment to create a better, reliable uh logistics framework for all of like asia yeah going in like entering into russia and also europe it's it's not to be confused with the belts and zippers initiative which is where they'll dress every citizen up like a jrpg character yeah well that's that's a separate initiative to make a JRPG where you can, when you're in character creation, you can set the face down as small as Jack Ma on his head. Oh, yeah.

Yeah, he's called E.T. in China because of his busted-ass face. Yeah, someone took the slider for face size and just put it all the way to the right. Yeah. As small as it goes. Jack Ma looks like one of those enemies you'd kill while you're leveling up to 10. Like one of those small little critters

that you have to grind before you face the first or second boss. But this initiative, which would amount to about $8 trillion, some estimates, over a decade, as you have a more efficient infrastructure it uh once again lowers their costs of like having all of their contractors yeah efficiently delivering all this all this stuff and they're massively successful in uh

russia as it turns out because russia is also transforming into a more consumerist society and so aliexpress a shoot-off of taobao uh is has become uh the number one i believe the number one seller in russia right now like a lot a lot of people like i've i read a i read a piece by a historian who calls like this this um geopolitical pivot by china the this this trillions of dollars investment, is really just to lay the foundations for a gradual shift away from U.S.-based logistics for trade, world trade, to be centered on them instead. Ah, Marxism, Milton Friedmanism. Do you know the most significant national assets the Russian government has?

Bernie Sanders. Yes. His three houses. That's what the linchpin of all... Worth $17 trillion. Let me tell you about a... The linchpin of all of this is Bernie winning. Yeah.

Let me tell you about a little Twitter user called Mr. Weeks. He's taking down Bernie Sanders, and you know he's right because he'll tell you that he's a sexual assault survivor Which gives him Plus 10 in the

Social credit score Tweet at Andy At that one if he doesn't edit it out in post You think your social credit score Goes up if you're a survivor If your face is small in relation To your head does credit score goes up if you're a survivor jesus christ if your if your face is small in relation to your head does your score go up that's a good question i'm just imagining like eating pork and then my score goes up like it's experience in a persona game or

something look all i'm saying is that in new york now there are comedy shows where the comedians are only uh assault survivors oh no and it only makes sense that if that's how you can get booked, then maybe being a survivor should also boost your social credit score. You know, if you were making bets on which one of us is going to get this podcast canceled, I'm probably the safe bet, but Andy's the dark horse. Experian, if you're listening you're sorry but yeah i mean and it should just be mentioned uh according to the national public credit information center and this is just going back to the the um the social credit score

uh chinese courts banned uh would-be travelers from buying 17.5 million flights or flying 17.5 million flights, or flying 17.5 million times. They were banned from doing so by the end of 2018. And they were also prevented, people were prevented from buying 5.5 million train tickets. And that's from The Guardian. And of course, it can also ban you from buying insurance, real estate, or other investment products, being on the board of a

corporation etc so what about real dolls what's what's unsaid there is that 90 of them had problematic takes about marvel they said representation does not matter and captain and Captain Marvel has always had a penis. If you speak out against Ip Man 2, the movie, is that also going to lower your score? I don't know what that is, but yes. Yes, it will. There was something Andy found. Maybe we'll put it at the end. It's Kevin Spacey as Frank Underwood in House of Cards

doing an ad for Alibaba. And whoever cast Kevin Spacey right before he got canceled really saw a massive dip in their social credit score. But yeah, so House of Cards is actually very popular in China. So he does this ad and there's a Chinese holiday called Singles Day, which is like it celebrates being single, but a lot of people will get married on it. But it's also a major shopping

day in China. Yes, it's November 11th, thus Singles Veterans Day. But, you know, they weren't in the trenches, so they repurposed it. It's called... You know, I went to a tough school.

The cat just walked on the keyboard. It's called Singles Day for all those widows created by world war one but uh oh yeah but so this this it's called singles day for all the male babies who weren't thrown in the river jesus uh yeah so this this kevin spacey ad it's just interesting because it ends uh with um like first of all it's weird because he keeps uh insisting that you buy a ps vita over alibaba that he has all the games for it but it it ends with him uh putting his like trench coat on and saying now if you'll excuse me i have a train to

catch which which if if the if the people of china yeah are really fans big fans of house of cards they're gonna be like this is bullshit he's in the oval office and now he's off to kill zoe barnes that killing zoe barnes was on his way to the oval office i like the idea he uh says i have a train to catch and then he checks his phone god damn it my social credit score is not good enough scratch that bus bus to catch yeah but yeah i mean it is just kind of like an interesting story where again he's something we didn't really mention but it is interesting is uh he becomes i think in around 2001 or maybe 2002 at the latest he becomes uh the first chinese entrepreneur to appear on the cover of forbes magazine since in 50 years

and so um and that's significant because that actually uh leads to him getting more and more exposure in the Chinese media. So essentially, like, he was really boosted by the Western media that wanted a certain kind of ideology to spread throughout China. Like, that's theoretically markets will come and then democracy will come. But really, they don't really give a shit about democracy. It's more about markets and entrepreneurs and billionaires what's funny is that like apparently there's a statement released by the chinese government relatively recently where they're like by 2050 we plan to have a fully socialist government with democracy we're not going to do any of that now but 2050 we think we'll finally be ready for it you know in their latest five-year plan they in the like in the

overall like their goal for their economic policy one of the items is like uh achieve modest economic well-being for across society they don't have any sort of they like they they limit it you know it's weird they sort of realize yeah they no no it's it's kind of like being really honest i think oh yeah it's like they're like you know what i mean we're still kind of shitty but we'll be sort of middle of the road on our way to socialism but it is just like it is interesting how he has become like a de facto spokesperson for china and the chinese government as well but he's like so in demand particularly with the western business press he goes to davos and speaks with charlie rose before charlie rose got canceled

oh you know what was another fun this isn't someone who was canceled but uh in the in the book i listened to the house that or alibaba the house that jack built yeah just you know uh another bootlicking book but it kind kind of gave me a wider outlook on him. But one of the things- The house that Jack booked by writing zero lines of code and selling zero products. The house that Jack had ideas for. Yes.

He's an ideas man. At one of his big events, he had Leonardo DiCaprio there. And just between that and Joe Lowe, it's so clear that Leonardo DiCaprio's later career, he's like, you know where the money is now? Asia. And he's just courting all these Asian billionaires to try to get it, just to get his foot in the door

on future movie deals. Yeah, but it is just interesting to me, like the ubiquitousness of Jack Ma's presence in the Western media where it's like, again, this kind of like fuels his rise in China. But it's also like this is what they want to present to the world. So we played that clip earlier about him saying like essentially he would turn over dissidents to the chinese government because that's the law blah blah blah but the fact that he's going to step down this year from alibaba makes me think i don't quite know he says he wants to do philanthropy but i think he might be worried about like particularly with this uighur camps i tried to like look i couldn't find him being asked about it but i think i think he's maybe worried about some of the actions of the chinese government getting dirt on his shoes and maybe he wants to step away from that i don't know that's my speculation but it is just kind of interesting where he's got his money he's a very powerful

person and i'm not sure how much he wants to be involved with the chinese government which is very much uh hand in hand with the chinese business community. Well, about the government, in that Charlie Rose interview, he says, like, be in love with them, but don't marry them. So be single. Singles Day. Buy everything on Singles Day. Apparently another Chinese capitalist made a statement where it's like, to the government, you're kind of like a cockroach.

Whenever they want to, they can just step on you though i i'd elaborate on that and say like in modern day china like if you're a capitalist maybe you're like a cockroach but in the sense that once they're enough of you they can't get rid of you you just have to fumigate the entire house that you were the idea man for building it turns out the capitalists were the sparrows all along great leap forward too all right well if you guys have any uh closing thoughts no we'll follow up i mean like another interesting thing i found is uh richard liu is a jack ma's main competitor in china is a billionaire and uh likely serial rapist so you know i mean jack ma's a bit of a shady character but i'm sure like probably not that bad so yeah he's one of the more benign people but uh any any word on

on how uh mr liu's credit score has been affected? But it is just something where it's like, again, this guy's held up as like a role model, and he's so important in the ideology of, you know, billionaires and Western capitalism. But it's like, how did he get there? He exploited people for $50 a month. And how did he maintain his position? Well, he went hand in hand with a government that's imprisoning a million Uyghurs and using the social credit score that he writes and makes money off of to fucking round people up

and punish dissidents, and then, of course, that he's still really going in on this by buying up propaganda rags like the South China Morning Post and then taking a loss just to influence the government by running propaganda for them so it's like you know jack ma is uh by any standards not a good person because uh you know he says you have to follow the law but we have very clearly learned that that defense won't save you in the grand scheme of things so we'll see what he does in the future but

everything he's done in his life up to this point has made life worse for people not better wow i'm uh gonna dock some points on your social credit score the law is the law yeah when um if you see a really fucked up knockoff Gucci bag, that will be me having made it in an internment camp that is later sold on a fucking Taibao. All right, well, thank you all for listening, and we'll see you next week. Yeah, we'll be back. Yogi will be back. They released Yogi from custody, so we'll see you next week yeah we'll be back yogi will be back they released yogi from custody so he'll be back next week found out he was the least problematic one yeah all right bye-bye all right bye good evening to the great people of china i I am the 45th President of the United States, Frank J. Underwood.

And tonight, I wanted to take a moment to say hello to all of you out there to wish you a happy Singles' Day. If this Singles' Day is the excuse you've been waiting for to spoil yourself with a little online shopping, then I must say I'm more than a little jealous. Here at the White House, there's so many firewalls blocking me from shopping online that not even the President will be able to take advantage of those amazing deals you'll see online during this holiday. In the words of your fellow countryman Jack Ma, today is hard, tomorrow will be worse, but the day after tomorrow will be sunshine.

And if I were allowed to shop on your singles day, I wonder how cheap I could get a new burner phone, for example, because one burner is never really enough, is it? I'd order ten if I were you. I'm sure there will be loads of deals on candy, too. Check T-Mall, and maybe you can find yourself a few packs of presidential M&Ms. And while you're at it, why not see if they're selling a replica of my class ring from the Sentinel, or this presidential desk? But you know what you really need to enjoy Singles' Day? It's to be dressed up in your favorite costume. Now this may not be your tradition, but whenever I go shopping, I have to dress up so I'm not recognized. And this is one of my favorites. All you need

is a pair of glasses like these. Oh, and a trench coat, sort of like this one. So I wanted to wish you all a happy singles day. Oh, and if you're lucky, you might win that trip to the United States. And if you do, please stop by the White House for a visit. Oh, I almost forgot my hat. If you'll excuse me, I have a train to catch.