Investor Day 2016 Part 1

Jun 14, 2016

Slides

All right. So welcome everybody to Hangzhou. I'm very happy to have all of you coming to our XiXi campus. When we were thinking about holding this event, our first ever Investor Day, one of the big issues was that we want to make sure those investors who are have a lot of capital invested with us also understand our products, our services. And that's a big problem, because a lot of you who are based in the U. S, in other countries, who haven't lived day to day in China And not being able to access our products is actually a big issue for an understanding of our business. So I hope that the main takeaway from today is that you can with our demonstration of how we're delivering value to the consumers, how we are helping sellers to work on our platform, we can give you a sense that real sort of firsthand experience of the of our business. So we don't have a lot of time. I'd like to just welcome everybody and I'd like to ask Jack to come up to stage to kick off. Good morning. Good morning, everyone. Welcome to this city, and welcome to our campus. Every time when I speak to the investors, a lot of people getting nervous in the company. So I spent a very little time communicating with investors, because I remember year 1999, Joe and I went to Silicon Valley. We talked to over 13 venture capitalists. We did not get even $1 back. So I thought it's all my fault because all the investors look at me and they say, this is a crazy guy. What are you talking about? Because they don't believe and they don't the way I talk is so different from the other guys. And remember year 2003, I went to the LA and San Francisco with Joe again, because at that time we started launching the Taobao. We said we're going to compete with eBay. I remember in a very important investor office, after I talked for like 20 minutes, this guy walked away and he came back saying, if they will wait, you have no chance. So I know I'm not very good communicator with the investors, but I'm pretty good at communicating with the entrepreneurs in my heart, because when I talk, I know what they think, I know what they want, and I know how we can work in together. But after so many years, my team never disappointed me and my team never think I'm crazy. Joe, most of the time, he works like my interpreter. He tried to explain to the investor, this is not what Jack made. This is what Jack made that. So I said, 10 Joe, you in charge of the investors, let me do all the business stuff. That was our partnership. And I got a little bit sort of confusing in the past years with especially when we IPO'd. The story, is on the market people talk about always put us with Amazon, with eBay, with JD, and I said, this is not us. How can we explain ourselves better in a way that to communicate? The way we explain, the more we try to explain, the more we look like we are cutting our legs and hands to meet the other people's skin. It never worked. So finally, I think I should come out and talk myself. And just like year 2000, the Harvard Business School came to come to us and say, Jack, we want to write a case study for Alibaba. So they spent 7 days in the Company. At that time, it's not a Company, it's just like my it's a little bit big hole with like 200 people. After 7 days, they write a case study A and they say, Jack, this is your case study. So I read it. I said, no, this is not us. This is you. You do not realize that. I said, no, this is not us. After like 2 hours debating and I start to sort of think, maybe this is us. But I know this is about us, so they say they sign it. So I sign it, there's a case A, go out. And for 5 years, we have this case study in Beijing University, Tsinghua University and these schools. I was always invited sitting at the corner and they always put to us with another competitor in China, in Singapore and America. I have a competition who will win in 3 years. Every year, we will lose, the other guy will win. But every year, they all die with still survive. And we know this is not us, but we finally know that most of people in their mind, they already had a basket. They put to you inside, you belong to this category. So we believe we do not belong to that category. Now about this city, year 2003, we started competing with eBay. Nobody believed we have the chance. And eBay thought you have no chance. Year 2005, Meg Whitman met me because we almost had a deal and she said, I went to a city because to spend a whole weekend with my team, it's too late. She said, I want to know you and know your city and know your team. But later, I think it's too late for her to come to our company. This city, 1972, was the city Mao Zedong and Nixon agreed to China and American relationship. This is the city American President, Nixon, his wife visited to the city. And that day, I was somewhere like a 10, 15 minutes away from Nixon. Everybody said America's President is coming to this city. And because of that, this city was the earliest city that opened to the world. And because of that, we had a Hanzhou Hotel today called Hanzhou Shangri La Hotel. We have many, many American tourists visited this city since 1970s. And I don't know why my parents don't know anything about ABC, I start to fell in love with the language. For 9 years, every morning, I went there to learn my English by free touring for the American tourists. Today, my English is not good, but I can make myself understood. My English is not good at those people who've been well trained in the States or in the U. K, but I believe I can understand those American culture, Western culture much better than those overseas Chinese students being studied in America or in the U. K. For 20 years, because when I studied my English, I was 9 11 to 12 years old. For 9 years, I start to learn things. I find everything the tourists, the American visitors or international visitors told me are so different from the things that my parents told me, from the things my teachers told me. So my training was everything I learned, I have to think about for the second half, think about what is is it right, is it wrong? So I am 100% made in Hangzhou and this company would also like this is 100% meeting Hangzhou. I was always curious one thing. Nixon came to China. What about Mao Zedong one day? He went to America. And that in 1972, if Mao Zedong went to America, I don't know what's going to happen. Fei Xiaoping went to America. He came back to China and he thinks that he should change China in a very better reform. And I got a wonderful opportunity. 1985, I went to Australia for a summer vacation, because my pan friends invited me. There I learned the world is so different. We thought China richest country in the world. We're supposed to go there, liberate the other nations. And finally, I realized it's totally wrong. In 1995 1994 in the later that year, I went to the United States. I saw the big difference. And there I discovered the Internet. Since then, I went to U. S. A. Almost every year. I went to Silicon Valley, Seattle, New York, trying to understand the Internet, trying to understand the way American people do. I tried to understand the way the American business do. So I learned the transparency, I learned the doubles from the doubles social responsibility, I learned what value means. So we are 100% made in China, but this company, our team even at that when the team was at very little money, 18 founders, they encouraged me to go all around the world, learn great ideas, came back, discuss with them. So I remember in my apartment, by the way, everything most this company is a living documentary. Since 1999, February 24th, in my apartment, we record most of if it is not 100%, 90% of the meetings, decisions, 90% of the old big events we record by videos. We have the world largest video club as a company. We keep all the things. We believe someday maybe 20 years later, maybe 50 years later or 80 years later, people is going to study this company. What things we did right? What things we did wrong? Why we do these decisions? Because we said, one day Alibaba will be a case study for the world to learn how a Chinese company become a global company. So 1999, February 24, in my apartment, I told my team, the 18 founders, our competitors not in China. Our competitors are in the States, in the Silicon Valley. Our competitors are in Israel, in those nations, we should never think about the competitors in China, because Internet is so new. We're competing with the smartest people in the world. We are a Chinese company. We were born in China, but we're not Chinese company. We have to create a company for the future. So even at that time, in my apartment, we had the vision that we want to be a global company. We want to be the top 10 websites of the world. That time, we are ranking 100 and some millions at the wall at the bank, but we believe we will be there. We hope we will be there. I want to say one thing. Last month, when the students, I told some important guys that we Chinese people understand America better than American people understand the Chinese. If you go on the street in China, in Beijing, Shanghai or any big cities, you pick up 100 young people, you will find 80 of them can speak at least 100 English words. Go to New York, go to Washington, go to any big cities in America, pick up 100 American people and ask how many of them can speak 10 Chinese words. And go to China Internet Companies asking them or most of the top 100 Internet Companies in America, we understand their business model. We understand their CEO. We understand their history. But asking American Internet Companies, investors, how many of them understand the Chinese business Internet? They think, copycat. This is the model. Do you have this? Do you have that? And I got a little bit interesting frustrating. The only interesting thing is that, if a Chinese company go listed in America, you will they will always ask of 2 things. 1st, can you explain your company business model within one sentence? We cannot. Do you have such kind of model in America? No, we don't have. So and the third, we don't even have our service in America. So people say, Jack, are you frustrated and upset by the stock price? Yes and no. I think I can understand, because we are a company from China. We are doing something that nobody has done before in history and no very, very, very few people has used our service in America and outside China. It's understandable. It's good things always takes time. We should have patience. It's nothing could be succeed in a short time. So by talking about that, I want to explain what is Alibaba, what is this Alibaba vision. 2,003, we started launch Taobao and we said we will win and we don't know. We never know that Yibei will leave China so soon because they just are 2 or 3 years competition in that. But we said, if anybody comes to China to compete, if they lose, they can win. If we lose, we have nowhere to go. We have to be there. And from that day to now, we are last year, our sales is already bigger than GME wise, already bigger than the Walmart. And that was 7 years ago. I talked to the Walmart, one of the senior guy, the executive sitting guy in Hangzhou. We're sitting there, we're chatting and I say, in 10 years, we were big than Walmart. He's a young man, you have a very good vision. He never thought we will do it, But I said, we will make it happen. So after we go across the Walmart and what's your next goal, people are saying. Jack, so what is your future? People keep love to ask one question, what Alibaba will look like in 20 years? So I said to team, now we are bigger than Walmart. The next goal is we should be bigger than any some nations. So by end of this year, we will be the top 20 nation GDP wise. Like we are big there Sweden, right? So we hope actually in year 2020, that is Alibaba 20 year anniversary, we will be bigger than the number we will be like a top 60 nation of the world, and we will go across US1 $1,000,000,000,000 GMV, and by we will be number top 3 province. By the way, last year, our GMV, because to the GDP wise, we are the number 6 province of China and China is a new province. In 3, 4 years, we're going to be the top 3 province. Maybe if we're lucky enough, we might be the top one province bigger than when Guangdong in 4 years. But as like, I want to say that in 20 years, Alibaba tried to be and our vision is to be the number 5th economic economy of the world, number 5th, the world's largest economy of the world number 1, maybe USA number 2, China number 3, Euro Number 4 is Japan. Number 5 shouldn't be Alibaba. So as the economy, GDP is not what most important. We think as economy, you have to some other standard. The other standard we set is the 2,000,000,000 population. We want to serve 2,000,000,000 population. We want to create 100,000,000 jobs for the world and we want to support and help 10,000,000 profitable business on our economy. This is what we are visioning about. And we always said that this is the company should be driven by mission and vision. By the way, a lot of people talking about a vision and a vision, but very few companies really believe it or really think it works. For this company, I think I cannot finish my talk in half an hour by telling you how we stick to the vision and vision. But I hope this thinks you are here, spend the time talking to our people, our managers and every people and ask about our vision and vision and value. How can these things has already come into the blood of their actions? So this is what we want to do. In 20 years, we want to be the 5th largest economy of the world. In 4 years, we will be the top 3 provinces of China and we will support 2,000,000,000 population. We will create 100,000,000 jobs. We will support 10,000,000 profitable business on our economy. This is everything we are doing well. The other thing is that how can we reach that vision? How can we make this thing happening? Our strategy is like a focus on 3 things: globalization and go to the rural areas and the third is only cloud computing and big data and cloud computing. Globalization, our understanding is that global buy and global sell. How we can help small business, enable small business, enable every individual that they can sell and buy globally. So the 5th economy of the world, our vision is that with that economy, with that platform, we can enable every individual. If you have a mobile phone, you can buy and sell everywhere. If you have a car, you can be a Uber or DG, plenty anytime. If you have a land and you plant a potato, normally you can only sell to their neighbors. Today, you can sell to all of the world you want. If you have a ceiling, you can sell your solar energy to anywhere in the world. This is our vision about. People think, this sounds crazy. I've been told sounds like a craze for 17 years. 70 years ago, when we say we'll be the top 10 sites of the world, 17 years ago, we say we will be the largest e commerce of the world. Nobody believe people believe it sounds crazy. But today, we have more than 40,000 absolutely young people. We have the data, we have the technology, we have the cash, we have the support from our more than 500,000,000 people. We think it makes sense. It is much possible than 70 years ago. And by the way, a lot of people say, wow, what's your GMV? What's that like? What is the GDP? We have the world's largest retailer business, but we are not a retail business. We are a data business. This I'm going to explain later and I think Dan is going to explain later. So globalization to us means global buy and global sell. You know that, as I said, we want to serve 2,000,000,000 population, 2,000,000,000 consumers. China, we have booked, we're up to 1,400,000,000 population. If you think about it, how many people in China is going to be using our services? As the social statistic, 30% of the consumer of the people will never use your service. So even if we excuse other 700,000,000 people to 800,000,000 people in China using our platform to buy and sell. So we need another at least 1,200,000,000 population outside China to do it. So where is that? It's 1 road, 1 belt, Europe, Latin America in the future, maybe Africa. This is what we believe that is the future. And the globalization, I think the past 20 years is a wonderful success. But last 20 years globalization is more like Americanization or big company organization. It's supporting 20% of the big companies going global, but the developing nations small business does not have a chance. For us, our business, we want to help small business to go globalization. We want to support 80% of the small business of the consumers. They have never got the chance to do globalization. So we said we want to build up a EWTP, it's not an EWTO. WTO is organization, it's about a government sitting there in negotiation. If the government or the government put in the same loan negotiation, there is nothing is going to happen. It's all about debating core. This is why we see the Doha Round Group for such a long time, I'm getting 50 years old, there's still negotiation. In Taobao today, the Taobao Alibaba, we cover more than 30 provinces, every province joined the Alibaba platform. We never put all the 30 governors in the same room negotiation. We just do by business way using the market economy. So we think EWTP has got electronic world trade platform. This platform is going to enable small business, consumers to buy and sell anywhere. So we will start from building our e road. In the past, there is called a Silk Road. Now we are going to build a e road. The e road that can enable all the small guys can sell and buy globally. And this thing today stands a concept that we are working very aggressively. Tonight, I'm going to Russia. I was in Europe, in America, in Kazakhstan. Last month, for 1 month, 26 days, I was on the road. While we're there, I'm not interested in shaking hands with the President. I'm interested in doing something that's going to happen 5 years later, because Daniel and Lucy, they're great team, they're handling the business today. What I as a chair should do is doing something that we believe, doing something that our management is going to can put in a better way or much better execution 5 years later. So I'm shaking hands with all the government, talking to all the business partners and organizations and to try to build up the EWTP. We are serious about what we promised, what we want to do. And we believe that EWTP erode, remember today, 10 years later, you will love it. It's not about we talk about a concept and do something there. Somebody is doing something for today and I with my team have to do something for 5, 10 years later. The other is a rural area, the Nongchun Taobao, the village Taobao. We think China have about 700,000,000 people live in the rural areas. We were discussing years ago. Well, where can we get more population? Some people say, we should go to Indonesia, we should go to Malaysia, we should go to India. India is a great market. Malaysia is a great market. Indonesia is a great market. But I think China rural areas is even better market. We got 700,000,000 people live in the rural areas. If we cannot convince those people, if we cannot help those people, how can you help the people in India? How can you help the people in Indonesia? They are different culture, different system, so far away. So we should definitely help the people in this nation first. So today, because the mobile technology, years ago for the farmers, impossible to do business buy and sell online because PC, very few people know how to use the PC. Today, because of mobile phone, most of the farmers have a mobile phone. By the mobile phones, the chance of modernization in the rural areas is much bigger. So I think today since you have a Hangzhou, go to some village nearby and talking to the farmers, how they benefit from the Alibaba Taobao villages. And the 3rd, which is very important to us is Ali Cloud. Well, one thing I would love to tell you about is that 7 years ago, it should be 8 years ago, our CTO, today is the Chair of our Technology, Doctor. Wang Jing came to me. He interviewed to join the company. He asked me a question. Jack, what you think about Alibaba Business growing like this in 10 years? What's the view? I say, we're going to have a lot of page reviews, a lot of kick the rates, a lot of take over, a lot of transactions. About the Oracles? Oracle's serve the database, how much money you're going to spend? I say, well, that's a small money. So I said, let's calculate. After we sit down calculus, oh my god, we our company is going to bankrupt. We will spend all the money buying the servers. We will spend all the money buying license for the Oracle system. We're going to spend all the money to keep the data. This company will never work. So we say, let's sit down and discuss what is our future business. Let's sit down thinking about how we can solve this problem. So a group of people with me and our team, we've been discussing for several days, we decided we should move to the thing called cloud. And this was 7 years ago. It was such a painful decision because we have no idea what the cloud will look like. And Doctor. Wang Jin and I said, we believe that if we do not solve the problem, even if we succeed, we will never survive. We have to solve the problem. So I call this project called Moon Landing, Apollo project. We had to do that. And after 3 months later, Doctor. Wang Kim said, Jack, we should not call them Moon Landing. We should call it move forwarding. I said, what's the difference of moon landing? Moon landing is that you will be back. Move forward, you will never be back. So we say, okay, let's do it. Technology sometimes it looks like it sounds like it's like a religion for many engineers. And as the CEO, Founder of this company, I had no any idea about the engineering and technology. So it was a painful 4 years. We just hired most of the excellent database traditional IT database guys and IT guy joined the company. They are the top one because as the CEO, I had no knowledge of our technology. We try to hide the best engineering technology. So we did came here and then suddenly we are going to be using a cloud technology to replace that. It's like a religion fighting. We had a lot of fighting day and night. And especially the fight in my office, I had no idea what they're fighting about. To me, the most painful thing is those great engineers say they leave the company. Among the top data guys, database guys, experts of the company, 7 of them left the company. They said this is a wrong way. If we go in that way, the company is going to be killed. This technology nobody has tried before. If we start this, the company has no future. So this is good about a CEO has no idea as a fan has no idea about what the technology is about. My belief is that if this thing work, we will survive. If this thing does not work, we will die. If this thing work, we can support millions of small business in the future. They will rely their business on the technology. So this technology can support them. They can save their company. We should do it. Because if you don't do it, no matter how big Taobao Tmall is, we're going to die. So let's do it. So some of the videos in the future, we'll see. People even first time Alibaba always hand on the table, but I never see people through the chair say, I don't like this idea. And I was shocked because I had no idea what they're debating about. After 7 years, this company goes through that channel and we want to say today, our technology for cloud computing, our Thetis And also I want to tell you 5 years it was about 6 years ago in a very serious senior management meeting, we decide this company from this day would change our model. We say we would move our model from retailer, G and D to a data company. We call it the correct Chinese sentence is be the 21st century, the 1st data sharing platform of the world. This was 6 years ago. And people keep asking me, how are you making money by datacenter? Because security issues and privacy issues, we said, we don't know. So we worry about in next 5, 10 years, people came up as challenge us, hey, how you make money? You don't make money, why you change your company to become a data? So, in order to prevent that thing happen, we write a sentence for that memo. We don't know how to make money off the datas today, but we know nobody can live without datas in the future. So in order to making sure this company moving the direction to being a data company. So this was not the concept today. This was something we made decision 6 years ago that the company is a data company. So we said the difference between Walmart and us, Walmart sell things and they put the datas in the other nation, the standard datas in order to sell better. So we said 6 years ago, we sell things because we want to collect the data. We want to have the data from consumers. We want the data from the business. We want the data from the processing procedures, all the data we collect. We do all the and the financings because we want the data to build up the credit system of China. We do logistics because we want the datas. So all these things we're doing is that we want the datas. So making Alibaba has is the data with the capability of computing we have, we are going to say we are probably one of the luckiest company in the world. So people keep on asking me what is GMV, what is GMV? GMV is not what we want. 6 years ago, we put well, by the way, I told you one thing. I had a problem with my venture capitalist investors in the past 15, 10 years ago. They keep asking me year 2,000 and 1, 2002, they say, what is the revenue? I said, we don't have revenue. Now what is the PageView? That's why we want PageView. And what is a click rate? Because at that time, page view was the business model. And then later click rate is a business model. I said, if we compare page reviews, then we are like a CIGA, SoHo and NetEase, we're like a Yahoo! Because we are not a total. How can the VCs said, I want either revenue or page view. I said, no. And then they say, they have asked me, what is the click rate? I said, we don't want a click rate. And then finally year 2005, all right, we give you something called the GMV. We learn from the eBay. GMV is never be the standard of e commerce. But if the investors if they're at that time, they need it, we give them and later become a standard. But actually in our heart, we know this is not exactly the only index. It is the index. It is not the index. Of course, as a nation, GDP is very important. But the most important is the infrastructure of commerce. What is the Alibaba Infrastructure of Commerce? What is the infrastructure of the 5th economy of the world? The e commerce platform, the Internet Financing Infrastructure, the Logistic infrastructures, the cloud and data computing infrastructure and the cross board infrastructure. These are the key infrastructures that if you want to build up an economy, a business economy, you have to have these 5 infrastructures: e commerce, logistics, financing, data computing and cross board platform can enable sell and buy globally. So today, many of the province and government came to us. They are very interested in building up the new infrastructure system for their government, their province business community. So this called new 5 new infrastructures for the future business. So this is how we do it. Ali Cloud, the data we have, the capabilities we have and the alliance and the ecosystem we have, we are working on that, right? And the other thing is people say, Jack, we cannot understand your business model. How can you why you buy this, buy that and you're almost everywhere? Well, honestly, it is I want to say, it is I understand a lot of people cannot understand us. Just like in the past 15 years, very, very few people understands. I've been debating with my venture capital investors for 5 years. Almost every board meeting, we debate because they want us put in this category and we say, no, we are building that. They say, okay, that is fine, but we want to be here. So we've been debating that for years. My philosophy is that every business decision we do, we have to think about for 10 years, because we seriously take and Alibaba should last for 102 years. 102 years is the strongest belief of this company. And most of the the difference between I noticed one thing. The difference between the Silicon Valley and us is some company here in China. Silicon Valley, a lot of companies have found they built to sell, right? They built it and sell to somebody. For us, we want to build it to last. 102 years is a company we were born in 1999, last century we had 1 year, this century 1 100 years, next century 1 year with 100 or 2 is across 3 centuries. This is what we believe, this is what we do. So in order to realize that dream, every decision we do, we have to have a 10 year plan. I hate it. I hate to come some people came to me and say, hey, we do this next month, we'll be very successful or next year, we'll be very successful, never work. I want to tell you one thing. The day when I realized Yahoo was a problem, that was when we had a deal. I was sitting on the Board. I found nobody make decisions. And I know the Company has no direction. The other problem is that I went to office. They invited engineer, came to us talking about technology. You know what happened? The engineers spoke to us to me and my team for half an hour, 28 minutes, he's talking about how he's going to make money by this product. I think something wrong. If the engineer is telling us how exact technology is going to change a lot of people, this product is changing people's life. That's something interesting. And engineering is telling you how it's going to make you money, something wrong with it. So everything we have to do is long term. For today, people feel happy about Taobao, Tmall, Alipay. This is another business we do today. So in our own company, in our insight, we have a rule many years ago we said. Because we believe most of the infinite companies can only be 1 home in the market for 3 years. 3 years later, there are very few companies can last be prosperous for 3 years. So, we know we may not be that lucky company last fall like a Google, like Amazon or like Apple for so many years. So we said we should make every company of our Alibaba Group for good for 3 years. Alibaba Wonderful for 3 years and then Tmall top up for 3 years and then the AliPay for 3 years, then AlibabaGo and B2B should fix And then Tmall should be fixed and AliPay for 6 years 3 years. And then after AliPay, Ali Cloud show for 3 years. After AliCloud for 3 years and then Tanya show for 3 years. And then 3 years later, this B2B come back, this Tmall came back. This is the circle we designed. So internally, we said next year, right, so this should be the early end financing. And then 3 years later, year 2019, the Ali Cloud should have come up because Ali Cloud was buried the seeds year 2009. So 10 years later, we start to harvest. And Alitania should harvest on year 2023 because Alitania was found year 2013. Every business we do, we have a 10 year plan for that. And we never change that concept. The product may be different, but any big strategic things, the decision we made is for 10 years. And also, I think if you check the record of Alibaba, we had one thing that I said, if we had an idea, 90% of the people in my office, they say, this is a great idea. Normally, I will throw into the rubbish. Because if we think it's a great idea, our competitors always also think like this. Everybody think like this. This is not a good idea. We should think about something that people dare not to do, will not to do and must to be done. So this is how we make decision. And because of that philosophy for so many years, the way we do, very few people love it and agree with it and which we believe with because nobody believe how about the C2C model, B2C model, marketplace model would have worked. Nobody believed with a small business in China would have worked. Nobody believed the consumers' e commerce would have worked. We believe it and we never give it up. We improve every day back home today. Nobody believed even in Turing, Ali Cloud will survive 7 years ago for such a big debate. Nobody believed AliPay would I remember one of our key investors, he talked to me year 2006 and he said, Jack, Alipay, you can do whatever you want. This is not Alipay PayPal. This thing will never make money. Sell to anybody who want to pay it. Don't do it because this is a money losing business and we believe it. We know this is not making money that year, but in the future because of the data in the future, if you really create value for the people, it will make money. So we prove things by time. We prove things by listening to the our users. If the users love it, we love it. So, okay, I think that's all about what I want to say, but I also want to say that we can never we do not want to create a concept to please the investors. We will never make concept to please the academics or the economists or the big writers, how wonderful concept it is. We want people with a core capable with ideas. We want our Alibaba leadership has to believe we do not want make this concept this great idea. And of course, our idea sounds crazy, but we believe it. We make things happening. The 5th avenue are the 5th largest economy. It sounds crazy today, but to me, it sounds much easier than 15 years ago. And also I would like to pick Madi and Jill wants to talk about explain to you what is a double edge, The happiness and health. Now we understand you want to make the ecosystem here, right? You're buying the data and everything. Why you are on the movie industry? Why are you in the spots? It sounds like you are everywhere. We are not everywhere. We are in the world a lot of people don't understand why we are there. I keep on asking our people and myself one thing. Last century in China in the world, if a company want to be big, you have to catch 1 or 2 big opportunities. You may catch 1 opportunity losing another opportunity. But how can a company last long and how can a company be a great company? This is something 5 in the past 5 years, I've been keeping asking. And that's why I went to a lot of meetings like Davos, like what all the forums. Listen, understand. And I think 5 years later, I came back, talked to one team and which I openly internally talk about. In the Trinity Fed's 1st century, if you want a new company that is going to last long and meaningful and great, you have to solve social problem. Solve the problem the bigger problem you solve, the more value you can create, the better you will be. And this is how Alibaba did. 15 years ago, we want to help small business doing things easier. We want to start using Internet to enable small business. We are the enabler. We are not the buy the sell destroy the others. We want to enable the others. So based on that, we asked what's the problem of China? For next 10 years, our I'm very confident about Alibaba Business, Taobao Business, Tmall Business, Alipay Business, Cloud Business and Cross Board Trade. For that business, I'm comfortable. We are comfortable that it's going to keep on growing because this thing is an ecosystem, this thing is a platform, this thing nobody in this world can copy another one, because happened to be in China. And when we do it, nobody realize that. When we realize that, when people realize that, we already be that big. So we said, we are okay about this thing. What about 10 years later? So we asked him, 10 years later, what's the problem with China? The health problem. Because of the pollution, because of the air, water, food, health is going to be big problem. The other thing is Chinese people like the world today, people get rich, but people get unhappy. How can we make people happy about? Sports, we don't have sports in China. Guys, think about 1,400,000,000 people, we cannot have a soccer team join the top 5, 50 in the world. And we do not have a basketball team, even be the champion of China national team cannot soccer team cannot compete with Mel Dede. Can you imagine that? And we our basketball team cannot be even be the champion of Asia. So think about what happened because China government controlling sports in the past 60 years, they think like most people think sports like a gold Olympic gold medal competition. It's not about people. It's not about health. It's not about chain sports. It's not a competition. It's not a fight, it's not an entertainment business. So the government realized that. That's why it's the 1 400,000,000 people, the 2nd largest economy. We do not have sports in this nation. How can we make the sports, because we hired so many young people in this company, right? 90% of the young people in this company are younger than 28 years old. You know what happened? People smart, but they come in has no teamwork. Because they are one child of family. Teamwork is built when they want the kids, when they want the schools to play team sports, they can understand team sports better. So our the difference between our company and the other company is that we spend a lot of time training, developing our people, working like a team, working like a like the team sports. It's team work is the number 3 key values of the company. In America, in the rest, probably teamwork is something you have to be there. For us, this make the difference because we work like a team. We are powerful and better than most of our competitors. So this is what I want to say that sports is such a virgin land for them. But of course, it takes about 10 years. It's not about a 1 year job. Entertaining, guys, ask how many your Chinese friends watch TV in the evening? Nobody. Why the content too bad? Why people watching the video on the Internet? The content is better. So if you people do not watch TV because the content is too bad, that's the opportunity. If we can make the content better, if we can work the things the society happy, government happy, people happy, it is a huge thing and make young people happy, make young people more positive. I think our movie also industry has a big problem, a lot of problem. But now the market is there. I personally invest supported that. I believe this industry 9 years ago, I invested in White Brothers. Nobody believed it. And I put the money into White Brothers. I changed their business model, giving advice 2 hours every 3 months. White Brother is the largest movie company in China. I told White Brother to chair Daniel Wang, I said, Dennis Wang said, 10 years later, China movie industry will be big and improved. And I want to tell you, 10 years later, China movie industry will be much bigger than today, but definitely will be different than model like today. So Alibaba should support the young people, make them happy, make them healthy. Only by the people, the true population we have, how can we make people happy and healthy? That's the key. And by the way, we spend very little money for 10 years. It's going to be another wonderful business. And I want to say whether American Sports, American Entertainment brings so much economic return for the America and China also have this chance. All right. Finally, investor look at the company whether it's good or not. It's not about the product. It's not about how much it sells. It's about the people, the value, the mission. How you really how many people you have. In my apartment, year 2000, it was a sad day. We tried to hire people, nobody joined, only the 18 people. And a lot of people keep going and say, Jack, we cannot find a boyfriend, girlfriend, right? Because this is company sounds strange, Alibaba and in an apartment. And we are talking about will be the top 10 websites in the world. We are building up on our company last 400 years. So my parents think I'm crazy. And I said, let's work together. Someday, this kind of company will be proud of this city. Someday, this company will be proud of these problems. We're the proud of China and the proud of this young generation. Only by work only by believing within the Internet, only by believing that Internet is so new to everybody. And 1999, we have to work and we have to learn quickly because only we learn not from copy the scene and not copy the Sohu, not copy NetEase, not copy this model. Guys, have you thought about the numbers? Year 2006, senior's revenue, our revenue, senior's profit is much better than our revenues. Year 2006, our revenue is equals to their profit. And year 2009, we almost catch up seeing Sohu. There's I mean, the top sky there is called Tencent. Our total revenue is their quarter's profit. It was so disappointing. Everyone said, oh my god, we have been working so hard to catch up the season, so that is and then another guy is on the sky and this is so powerful. And I said, time will come if we study, keep on learning, if we hire the right people, training them in the right way and if we hire the people not with fancy idea, if we hide people with the belief like we have, we will make happen. Guys, people say, you the Tencent is always challenging us. No, we are challenged Tencent. They were year 2009, year 2011, year 2012, year 2013. They were always much bigger than us. Think about this year and next year, we are catch up. Our next goal is that we will see well, think about Apple, think about Google, think about Apple that Google put together. It depends on how you can make the world create the value. How can you solve the problem of the world? How you can hire the people and giving them the platform, they can develop their skills, they can promote and they can do things. This is what we believe. We think the most important thing is the people. So in my apartment, I said, someday, only by the boys and girls can easily find boyfriends and girlfriends. That is why year 2005, late 10th, we have start that year, we always have Ali Festival, invite all the parents coming and me as the CEO spend half an hour report to I never report to the investors, but report to the parents, boyfriends and girlfriends and husbands, What we did last year, what we're going to do. Now Daniel is the CEO. Daniel started to do this year, talk report to the parents. What we did to get the support from the families and friends, that we did. And also I have a vision in Chinese called Liangjiangzhu Cao, meinu ruyin. In Chinese, we were excellent generals as many as like ocean. And we have of excellent beautiful ladies in the company like the flying cloud in the sky. We want as many people as possible. They are great, smart, young men and smart girls. Guess what? We made it happen. Today, more than 40% of the employee of the company are women. They're beautiful. You walk on the campus. They're smart. 33% 34% of the management of the company are women and 33% of the senior management are women. We're women CEO, CFO and women COO and women President. And we also have checking one thing. Our competitors, they have famous CEO and maybe a great whatever, all right? Checking us how many great generals and marshals we have. June, no, even cannot be one of the top 10 generals. We have so many Joe, Mike and Maggie, people sitting there and you see that we have a 3rd layers. Daniel and I discussed about our 4th Daniel, the 2nd generation and 3rd generation. Daniel and I discussed the 4th generation of Alibaba leadership, who how we can spend time on them. So my job today and Joe and also Daniel, I spend at least 40% of my time finding, developing, coaching the young people. It's all about the people that make the difference. So all right. Joe is time is up. All right, I know that. So I know you have a lot of questions, especially about people say, so what is the big problem in IP, counterfeit issues? If you want to discuss about that, I can discuss 3 days without stopping 1 minute. We can discuss there's a Q and A in the afternoon. We protect IP. We are the world's leading fighters on the conflict. We are not sell and buy. We are the governor of the we are governing the marketplaces. We hate asking oneself. Social statistically, every 7 people, there's 1 guy of them. He's a bad guy. This is social statistics. You put 7 people in a room, 2 hours later, 1 guy is a bad guy. So 30% of the people normally not that good. Including us, we do 7 things, one of the things may be bad. This is social statistic, believe it or not. I mean, it works. Every 6 people, there will be 1 leader inside. So we got more than 500,000,000 people, 500,000,000 people in our platform. 10% of them are bad guys. How many bad guys we got? 50,000,000 bad guys. If 50,000,000 bad guys, 10% of them are really bad guys, we got 5,000,000. And we are the economy in the world that serves, sells more than US500 billion dollars. Where is the money? There's bad guys. So to deal with that, we don't have police, we don't have court. We only have young people using technology and fighting against them. We have more than 2,000 people fighting against them. And this thing this is a war is fighting against human instinct. Every fake products we sell, people buy from us, we are losing 5 customers. We are the victims of that, but we never stop fighting. We are today the world leading fighter for the counterfeit things. We protect IP. But also I want to tell you one thing. In China, in the world, there's a new thing comes up. Last century, there are about 5,000 branded companies control using their business model, control all their luxury brand. They're using the money, brand, quality and social state and they're using the China's control. And they do not produce. They're using a lot of OEM. China is the nation with the world's largest OEM based. This OEM at that time, they don't have a brand. They don't have the channels. Guys think about today Internet become the channel. Internet become the brand prices. So these OEMs suddenly realized, oh my God, I can spike my own products and sell online. So the problem came. The problem is that the fake products today, they make better quality, better price than the real product than the real names. They're the exact factories, the exact raw materials, but they do not use that name. So IP, we have to protect the IP. We have to do anything to stop the fake products. But those OEM, they are making the products that better service, better price. They are coming back. So we also have to think about one thing. The way of doing business has changed. So we would love to working with the branded companies. How can we have it's not the fake products, not IP destroy them. It's the new business model. It's also revolutionized the whole road. So something is happening. I don't know. We can discuss about that, but the fake products, I promise you guys counterfeit and fake products, IPs, we have more and more confidence than ever in this world that we can solve the problem. We cannot solve the problem 100 because it's the fighting against human instincts, but we can solve the problem better than any government, any organizations, any people in the world. And if you do not see, let's have a competition, pick up the 1, maybe 10,000 products on Tmall, JD and all any offline shops, you name it, lack of competition, who has more fake products and who can trace and fight and arrest these guys earlier, we do. We can make a bet on that. This is our confidence about it. And the technology is going to trace who is by, who is static, who is manufacturing. The only thing is that we need law enforcement to arrest this guy. We already put 700 people in the prison in the past years, in the past few years, which nothing like this happened in China history. And we have already confiscated, destroyed millions of shops. This thing when this is the war in our it's not the war for Alibaba, it's the war of this industry. It is the war of this Internet revolution. It is the war of e commerce. Let's do it together. This cannot stop us and it's today things change. We're getting happier. The counterfeit guys got unhappy. Years ago, they're happy. Now the war balance is changed. All right. Thank you, Joe, for signaling. And that's it. Thank you very much. Thank you so much, Jack. Our next speaker is our CEO, Daniel Zheng. We'll welcome him to the stage. Good morning. Just now, Jack spent so much time sharing with you the vision, mission of our company. And now it's my turn to share with you how we make this happen. By doing that, let's still start with from our mission. Everybody knows Alibaba mission is make it easy to do business anywhere. We set up this mission when we start this company. But we know that we are in a very fast changing world. Today, because of Internet, the way of doing business is totally changed. Today, when a young guy start up a new business, he can select Internet to create his new business and new services. Today, people who produce good products, he can set up a new channel online to sell and market his products. Today, for a marketer to promote his brands, he can select the e channel to do his promotion, to do his brand advertisement. So today we are the way of doing business is totally changed. The other thing is that second thing is that today, look at our consumer base. This year is 2016. We always said in China, we always said we are aiming to serve the young generation. We are aiming to serve the people born after 1990s. But even the people born after 1990s, they are already 26 years old. They have their 1st job. They have stable income. Most important thing is that they are a generation from very beginning is not working on Internet, it's living on Internet. So the in terms of the people's lifestyle, in terms of people's consumption pattern are totally changed. Last thing, the most important thing is that today the access points to the Internet has changed very fast. 15 years ago, when we talk about Internet, actually we use a keyboard to get access to Internet. Maybe 5 years ago, we started rolling the small screen and click. That's the way we get access to Internet. But how about future? We believe actually this disruptive change will very soon to come will change our way to get us to Internet. So all these changing fast changing things determine that we have to transform our business models, transform our service to realize to fulfill our mission to help people to continue to business easier in this fast changing world. So now I want to share with you the biggest picture, the big business picture of Alibaba Group. Just now, Jack said that Alibaba's mission is to be the 5th largest global economy. To achieve that, we want to build up the infrastructure of the new economy. We believe Commerce, Payment, Logistic, Marketing and Cloud Computing are the infrastructure of every single new business, new economy. So, Alibaba wants to build an ecosystem to first to build up to generate the business, to help our partners to generate business in each of these elements. Most important thing is for all these 5 Commerce, Payment, Marketing and Cloud Computing is our use case to generate data. Substantially, Alibaba is a data company. The way we look at how to help the business doing better is that we use the data, generate the data, but use the data to refine, to refill the operation, refill the ecosystem, to help our partners to do this better. For commerce piece, people are familiar with Taobao, with Tmall, with alibaba.com. These are actually our 1st generation business. We start with our B2B, alibov.com and alibov domestic trading. Then we have our Taobao, we have our Tmall, we have our Juhasuan, our retail platforms. In recent years, we developed our rural Taobao program. We get access to the rural areas. And we had our AliExpress. We start to sell from China to other markets. And our latest development is that we acquired Lazada in Southeast Asia because there are more than 500 1,000,000 consumers in that region. But all these business actually, they won in these marketplaces, over 90% of the services and products are physical products. But we try to roll this out, leverage the user base in this marketplace to roll this out to other categories. As Jack said, we want to achieve the double edge strategy, But how to start from now? The only way to do this is that to leverage the user base we have today to expand to new category like digital products. So that's why we acquired Youku, which very important in this mobile world where people spend a lot of time in video site and we developed our Ali Music, Ali Sports business. They are very young business. They are just in a very early stage. And we developed our smart home OTT business, which is a smart box and smart TV business. And we have our UC business, UC Web business and we develop it as a Mobile Media. So Mobile Media and Entertainment actually is the extension of our marketplaces to a new area and extension of our category to a new area. And last one actually is the local service because this local service constitutes trillions of market size and we invested through our affiliate company, Kopay, and through our investment investee company, Irma, and we developed our own Ali Trip business because travel is so important elements in the local service. So this is our big picture of Alibaba Group. But all these Commerce Business are supported by Payment, some are supported by Logistics, some supported by Marketing Services and all supported by Cloud. So that's the linkage, that's the rationale of our business landscape. And the most important thing, again, is that the data play the most important role in this ecosystem. We get the data from all these business and we use the data and we mine the data, we post the data and we create the value from the data we have, we generate and refill the operation, refill the operation not only for our own platform, but also refill the operation of the participants in the ecosystem. So let's talk about our goals. Our goals are very clear. We have a near term goal, which is in fiscal year 2020, for our Retail business, we want to Retail Platform business, we want to be a we want to have a business with over US1 $1,000,000,000,000 GMV. And we are on the right track. And we last year, we had a very important milestone, the first time our GMV in RMB exceeded RMB 3,000,000,000,000. So we have a next 3, 4 years to go to achieve our 1,000,000,000,000 goal. But how to achieve that? I think most important thing first is to continue to acquire new customers. So that's why we invest a lot in our rural areas, in urban settings, in campus, in young generations. That's why we develop new market in Southeast Asia, and that's that are all the ways for us to acquire new customers. 2nd, for second growing engine is the expansion of our categories. As I said, we start from our physical product category and we extend to our digital products and the local services. Even in physical product categories, for some category like food and groceries, like cars and luxuries and home decoration, etcetera, today for these categories, the penetration online penetration is still quite low. But having said that, the most important thing to achieve 1 trillion goal is not about the growth of the online GMV. The most important thing to achieve this 1 trillion goal is to help our off line partner to experience a successful digital transformation to transform today offline GMV about 30,000,000,000,000 to be a digital GMV. We believe with the infrastructure we have, with the data we have, we can help a lot to these partners to digitalize their business. That's the way we look at the landscape. We also have a long term goal. In 20 years, we want to be an economy to serve 2,000,000,000 consumers around the world. Today, actually we have in terms of the user base, actually we have more than actually more than 500,000,000. But in terms of active buyer, our latest disclosure actually in last quarter is about 23,000,000. And how to expand our user base? Again, we have to invest in rural, which in China actually have over half of the population in the really real rural areas. And in China, there are over 600,000 rural villages where the traditional broken motor chains cannot easily cover. We will continue to invest in the young generation and we continue to invest in the arising new market. For strategies, today, our strategies are very clear: rural, globalization, cloud computing and big data. Jack spent a lot of time elaborating this. I don't want to repeat again. We do everything every single business following our strategies, and we believe these strategies are critical for us to execute to do a very good execution to achieve our growth in the near term and in the long term. So here I want to share with you a roadmap of the business evolution in our company. Alibaba is a very interesting company. When we started at 1999, we never dreamed that we couldn't be a company like that and like an ecosystem. We start with our B2B business, then we have our Taobao, we have Tmall. But here, actually, we see that the evolution actually always happened with a great mission, but we always start from now, from what we have today to leverage what we have today to realize to fulfill our mission in the future. And we the first thing is that we try to evolve to serve the people with physical products in our retail marketplaces to the digital products and to the local services. 2nd, we try to help the e commerce platform expanded to be enlarged e commerce and media platforms. That's also one of the most important reasons for us to invest in the video site in Youku and Tudou, invest in our OTT, invest in UC, and this always all these assets give us a very good media metrics on top of the e commerce platform. And we are the only company who have the data both from the e commerce and from all these media assets and in one basket, in one pool, and we can have several merchants in this enlarged closed loop. And next one, actually day 1, when we start Alibaba, we said we'll help people to meet at Alibaba. And when we start our retail platform business, we said that we help people to trade at Alibaba. So that's Taobao and Tmall. But now actually we are working for helping people working on Alibaba. So that's the goal of our Ali Cloud, because cloud computing and big data is essential elements for all of the new business and for all of the digitalized business. And this one, as I said, actually, 7 years ago, when we started our Taobao marketing services, actually, we view this as a closed loop in our e commerce platform. We have advertisers, which are our merchants on the marketplaces, and they buy marketing services for the benefit of their sales in the marketplaces. But today, we believe that with a large platforms, e commerce plan plus video, we can help our partners, our merchants to do both branding and performance based ads and to help them not only to drive the current immediate sales, but also to help them to build the brand to establish the interaction with the customers. Last one, for Ali Cloud, day 1, we've been building our Ali Cloud business to resolve our own problem. As Jess introduced, actually, we realized overnight, we realized, oh my god, our business is growing, but we spend too much money on the infrastructure, on the hardwares, how to resolve these issues, how to help us to successfully survive in every year's November 11. So that's the original of building up the cloud service to serve our internal because our market base is big enough to be a cloud. But day 2, we realized that this could be benefit not only for ourselves, but also to serve all the business want to be a digital business. So today, we try to extend our user base not only for our merchants on our e commerce marketplace, but also a lot of 3rd party companies, a lot of small developers, even a lot of governments, because today every cities, every province are thinking of to being a smart city, smart province to monitor the a lot of function, transportation, health care, a lot of things using the digital way. The last one, I want to share with you that the synergies we can generate in our ecosystem when we develop a new business. When we start to start our globalization, for example, the first thing we think about is that how to leverage the user base we have today in China and bring more and more overseas good products and services to China. And when we think about how to generate the synergy of YouKu to Do today is that, yes, today for Video industry, everybody talked about paying number. So everybody talk about how to acquire new paying number in the paying program, in the VIP program. What we think about today is how to leverage the over 400,000,000 active users who used to consume on our platforms, who has a payment method to be a paying member for our new business for the digital service, for the local services. So we try to leverage the user base we have to help the new business to grow. 2nd, to leverage the merchant base we have today to give them new opportunity and new market channels. This is extremely important when we decide to move to the rural areas, when we decide to go to other markets. I can share with you that right after our announcement of Lazada deal, I received a lot of calls from our partners saying that, Daniel, now tell me how can you help us not only sell in China, but also help us to go to Southeast Asia. So obviously, we have a very solid merchant base, not only the brand partner, but also a lot of SMEs, OEMs are on our retail platforms, on our wholesale platforms. Today, we can help them to go to the real, real rural areas which their traditional channels cannot access. We can help them build a e road to go to other markets. So that's the synergies we want to realize when we're developing new business. Next one is for marketing. As I said, for all the marketers they want, they just do business here. Actually, they just spend trade marketing dollar on our platform to drive their e commerce business. But today, everybody think about omnichannel is the future for a digitalized business. So it's not only about the immediate sales purely online, it's about the brand building, it's about customer acquisition and retention in omnichannel. So with the enlarged e commerce and media platforms, We can help our marketers to achieve their goals, not only to drive the sales, but also for brand building and most important thing is customer management. Finally, for cloud computing, yes, our cloud computing business today is covering a lot of new areas, new industries. They are not necessarily linked to e commerce. E commerce is one vertical category in Cloud Computing Business. But with this base, we can have a scale infrastructure. Everybody knows that for cloud computing business, skill is a key. If we have enough scale, we can generate economics from the large scale. Then we leverage scale and expand to other categories to help the government, to help the SOEs, to help the small developers to make their business on the cloud. So that's the way we look at how to do our existing business and how to develop our next generation business. Finally, before I conclude my sharing, I want to share with you that how Alibaba view our business evolution and new business opportunity and how to achieve our goal in 10 and in 20 years. Yes, we always have a very visionary goal, but we always very solidly stand on the ground. We always start from now and look at what we have today and what we can rely on to develop the new business and to capture the new opportunities. So just like Joe shared in the last earnings call, actually we always look at today's business. Everybody realize that these are the main business. And actually, we don't worry about this. Actually, everybody recognize these are our main business. But the most important thing is we always invest the business which we believe will be the main business in 5 to 10 years. We have to invest and the most important thing for this new business is not about the bottom line, is not about profitability, is about can we hit the pain points of the customers. If we can hit the pain points, that means we create the value. Then at the end of day, we can find ways to generate revenue, generate profit from this business. And last and most important thing is that in our big company in our big family, we also give a lot of flexibility for our manager, for our staff to incubate very tiny business for even longer period. We still give them the flexibility to doing which they are interested. We still invest in the future. For example, today, when we talk about what's the generation what's the next generation of Internet, what's the access points of Internet, We start to invest our operating system 9 years ago. And today, actually, we see that, okay, today, when we become a approach into the IoT and everybody understand the operating system can play a very important role in this IoT times. So that's the way we look at our business and look at the evolution of our business. So finally, I would say, yes, today is beautiful. We have such a robust ecosystem, but I think if we can do the right thing and we always follow the mission we have and execute very solidly by leveraging the resources we have today, and we can have an even better future. Thank you. Thank you so