Alibaba, The 101st Airborne, and Mining for Coin
Alibaba
In 1964 Yun Ma was born. When Yun was growing up he learned English while giving tours to Americans. The tourists told him Yun was not an English name so Yun adopted the name, Jack. Famously, Jack was rejected by Hangzhou Teachers College twice because he was not good enough at math. After graduating Jack tried to get a job at many different places but he was rejected by them all. Jack even applied to KFC with twenty-three other people. All twenty-three were given jobs but him. Jack eventually became an English teacher and somewhere along the line started a communications company to serve as translators for businesses. A Chinese district had commissioned a highway from an American company and wanted to find out why they had not started work on it after a year had passed. The district hired Jack to go to America and find out what was going with the company. It is unclear exactly what happened next, but it turns out the American company was a complete scam, and to ensure that Jack did not report that fact, they held him in a Las Vegas hotel room. Jack escaped and went to Seattle to stay with some of his friends.
Jack was exposed to the internet during his short stay in America and already had an inkling of what he hoped to accomplish in the future with the yet-to-be-founded Alibaba. In 1997 Jerry Yang, founder, and CEO of Yahoo! was visiting China and Jack was selected to be Yang’s tour guide. Jack and Yang visited The Great Wall of China and discussed the web. A few months after Yang’s visit Jack founded Alibaba with seventeen of his friends in a now-famous apartment in Hangzhou, China. Alibaba began as a bulletin board for businesses with a built-in chat capability between buyers and businesses. In 1999 Joe Tsai who was working in Hong Kong for Yahoo! and receiving a $700,000 annual salary left to go work for Jack Ma at Alibaba as the COO and CFO for $600 a year.
In 1999 Goldman Sachs made the first investment in Alibaba. Originally, Shirley Lin the head of Goldman’s investing group in China wanted to invest $5 million for 50% of Alibaba, but Goldman headquarters thought it was too much for a seed round investment. Instead, they used the same valuation metric but only invested $3.3 million for 33% of Alibaba. Around the same time, Masayoshi Son, founder of Softbank, invested $20 million for a 20% stake in Alibaba. Now that Alibaba was flush with cash they hired John Wu away from Yahoo! to be Alibaba’s CTO. Alibaba continued to expand its services and became a dominant player in China. Alibaba was a one-stop-shop Google and Amazon all rolled into one. Searching began on their platform and Alibaba monetized the way Google did by having third-party sellers pay to be listed first on their site. Buyers and businesses were all attracted to the Amazon-esque platform and transacted on it.
In 2003 Jack formed a team to create a new platform called Taobao to compete with eBay. Jack brought the team back to the original apartment in Hangzhou where he had founded Alibaba. Taobao was a secret project known only to Jack and the team. While the team was creating Taobao they needed a way to test the platform, but since it was a secret project they could not use any usual methods. Instead, Jack ordered everyone to find four things to sell on the platform. By transacting with each other the team tested Taobao. Slowly the team leaked the existence of Taobao (although not that it was a subsidiary of Alibaba) and the platform began to grow rapidly. Some employees at Alibaba expressed their concern about Taobao being a threat to Alibaba as they did not yet know that Taobao was a part of Alibaba. Finally, Jack announced that Taobao was in fact owned by Alibaba effectively starting a war with eBay. Early on Taobao performed well and because of this early success, eBay moved its management team to China to squash the new competition. Goldman, concerned about eBay sold its shares of Alibaba for $22 million. If Goldman had held those shares until the present the shares would be worth more than Goldman itself. Alibaba needed more capital to compete with eBay so Yahoo! invested $1 billion for 40% of Alibaba. Shortly after Yahoo!’s investment, eBay in China collapsed.
Later, Alibaba had a $25 billion IPO in 2014 the largest IPO to date. Jack Ma and Alibaba have a fascinating history and there is only so much I can include here. Jack Ma despite not being great at math and buying his first computer at age 33 managed to found the most successful company China has ever seen. Never be scared to dream big.
Easy Company
I was watching a miniseries, The Band of Brothers when I discovered this story about Lt. Speirs.
In January 1945, when Easy Company's initial attack on the German-occupied town of Foy bogged down…. Speirs successfully took over the assault and led Easy Company to victory. During this battle, Lt. Dike had ordered a platoon to go on a flanking mission around the rear of the town. To countermand this order, Speirs himself ran through the town and German lines (as this platoon had no radio), linked up with the Item Company soldiers and relayed the order. Having completed this, he then ran back through the German-occupied town. He was reassigned as commanding officer of Easy Company and remained in that position for the rest of the war. Of the officers who commanded Easy Company during the war, Speirs commanded the longest.
It blew me away when I read that not only did Spiers run through the occupied town to relay the message, but instead of staying with Item Company ran right back across.
For anyone interested in WWII I highly recommend The Band of Brothers it is extremely accurate in its portrayal of the 101st Airborne during WWII.
Work and Mining
The “proof of work” idea plays into Bitcoin as it is the reason for trusting Bitcoin. The owner of Bitcoin trusts wherever the most “work” was put in. Bitcoin is a distributed ledger meaning that all owners of Bitcoin are recording every transaction on the Bitcoin network. The way to know which ledgers to trust to update your own ledger are the ones with the most “work” in them. In this way, all “work” that continues to be done adds to the security of the whole network making it harder and harder to hack with every additional piece of “work” done. Why would anyone want to do the work in the first place to secure the network? Bitcoin’s solution to this is called mining. Mining means someone does a lot of “work” to secure the network and for doing all that “work” is rewarded bitcoin. The next idea is how the block in blockchain technology and how a block is a way of organizing a certain amount of “work.”