The Early Days

　　Dressed casually in canvas shoes and a white windbreaker, Mr. Ma recounted for the audiencehis childhood in Hangzhou, a major city in China's Yangtze River delta. He was, he said, a fanof wu xia (martial arts) novels, and often got into fistfights as a young boy. He picked upEnglish on his own by acting as a tour guide for foreign visitors in exchange for languagelessons, but because he had difficulty with math, he twice failed his general college entranceexams. On the third try, he was admitted to the languages program at the local university,after which he began a career teaching high school English.

　　But along the way, the entrepreneurial bug bit. He launched a translation service and washired by an American businessman, who was bankrolling construction of a local highway, totranslate negotiations with Chinese municipal authorities. Part of the deal-making called for himto travel to Las Vegas to meet some investors, and it was there, in 1995, that he first heard theword "Internet." He then travelled on his own to Seattle to visit , a small Internet serviceprovider with five employees. There he got his first look at the technology that would, within adecade, make him one of the most influential entrepreneurs in the world.

　　Fee or Free?

　　A key to his success, Mr. Ma said, was having a business model so simple that any customercould instantly understand it. Unlike eBay, which has a sliding scale of fees, plus commissionif the item sells, Alibaba.com charges nothing for up to 50 product listings. "Chinese SMEs[small and medium enterprises] want to sell their products abroad," he said. "We help themcreate revenue." But what about Alibaba's revenue? That comes largely from annualmembership fees that sellers pay to upgrade to "Gold Supplier" status, which gives themaccess to more buyers and an online storefront.

　　"A membership fee is something all SMEs understand," he said. "If you talk about transaction[charges], our P/E [price to earnings ratio] would go up, but customers wouldn't understandus. Our business model should be simple and easy enough for customers to understand."Taobao, meanwhile, has also steadfastly adhered to the "no transaction fee" philosophy, whichcaused it to leak money for several years. Recently, though, it began selling ad space on thesite. Revenues have been high enough to push Taobao into the black, Mr. Ma said.

　　For the first five years of Alibaba.com, Mr. Ma was the site's chief quality control officer. Everyfeature of the site was put to one test: if he couldn't figure out how to use on his own, withoutexplanations or manuals, it didn't get implemented. "I'm not a high-tech guy," he said. "Mywife bought me an iPad and I still don't know how to use it." The site's design is deliberatelyno-frills: Clicking on the "categories" tab, for example, pulls up an easy-to-scan alphabeticallist of items for sale, everything from fresh garlic to pipe fittings. New requests from buyers areprominently displayed and constantly updated. And for buyers who cringe at the thought ofracking up a phone bill, there's a list of Chinese suppliers with toll-free numbers.

　　What's ahead for the Alibaba Group? Don't expect a foray into online gaming any time soon. "Idon't believe in online gaming," he said, noting that his son and his friends spend hours afterschool glued to a computer screen. "We could make a lot of money on gaming, but I just don'twant my kids to be focused online," he said. Instead, he said, the next big thing in China will beB2C commerce.

　　“The world is changing,” he said. “With so many consumers, they can say ‘I want my productstailor-made.’ This will fundamentally change the Internet.”

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