Rags to Riches – How Joseph Tsai Achieved Alibaba and Now the NBA + Crypto as a new asset class with Paul

Joseph Tsai, co-founder and the executive vice chairman of Alibaba Group and Paul Veradittakit, Partner at Pantera Capital

Joseph Tsai (Alibaba Group) - From Alibaba to the NBA

(May 6, 2020 - 46 minutes)

Joseph Tsai, co-founder and the executive vice chairman of Alibaba Group
Entrepreneurial Thought Leaders - Informed leaders share the secrets and setbacks encountered on their journey to entrepreneurial success in the Stanford video and podcast series.

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ALIBABA’S 18 CO-FOUNDERS

One of the many values of Jack Ma was that he is a very inclusive person. When he initially started Alibaba, it was with his batch of students. Despite them being just students, Jack insisted that they were made co-founders and were given quite a bit of equity as well.

JUMPING INTO ALIBABA

Back then, there were few who appreciated the internet. However, what piqued his interest in this opportunity was how operations could be done in China. While he's already gained experience in investing, he mentions that you never really see the real picture of the business despite being on the board level.

CHINA’S ENTREPRENEURIAL INDUSTRY

When in business, the first thing you always look at is to evaluate the market size. China being as big as it is, will always provide that opportunity for you to dream no matter the era you're in. So it's very common for entrepreneurs to emerge in China's economy.

ALIBABA VS TODAY’S STARTUPS

Compared to most startups now, Alibaba was not conceived by top college graduates. There weren't any elite people in the organization and it was just a normal group of people who were working together to achieve a very defined mission.

HOW ALIBABA SCALED

One of the most important things to scaling a business early is to retain a lot of flexibility, and to delegate responsibility to your frontline managers. You need to constantly keep a synergy within your team. Early on, it's good to let your team run as fast as they can, but once you get larger, it's important to incorporate more coordination in order to maintain that synergy.

A MEMORABLE DECISION

There was a time where the team had a heated, 3-hour long debate on whether they should develop proprietary technology. Instead of pursuing just one path, Jack decided for the team to create that tech while keeping their open source efforts as a fallback. In hindsight, this was a wise decision as things scale so fast in the industry, the largest mistake you can ever have is opportunity costs.

ENTREPRENEURSHIP VS LEADERSHIP

Joseph believes that good entrepreneurs eventually develop into good leaders. A good entrepreneur is all about being creative, and eventually learning how to apply a combination of logic and persuasion to have people achieve your goals; which is what makes a good leader as well.

JOSEPH AND INVESTING IN SPORTS

Though initially skeptical, the more he looked into it, the more it seemed like a good idea. Besides the league level wealth, the backstop of league level economics that all owners share the wealth equally would mean that you get the same split of the league level revenues irregardless of your team's standing.

TRANSFERABLE SKILLS & BEHAVIORS

The difference in both industries is that with the internet business, it's kind of direct to the consumer whereas in the sports industry, it's more about making deals. However, the principles of leadership and people management could be applied to both–you need to ensure that your employees show up because of their love for the culture and not just for a paycheck.

HOW TO STAY HOPEFUL

If you look at our history, there have been countless wars, pandemics, and unfortunate events but the nature of the human race is that we always bounce back. While things may look grim now, Joseph is positive that new business models and opportunities will emerge and economically we will recover.

PIVOTING CAREERS - TO PLAN OR TO TAKE RISKS?

What Joseph has learnt in life is that you can never plan your career. You can plan a business and everything else but you will come across opportunities throughout your life that you'll never expect. You will need to have the sense, judgement, and optimism to seize those opportunities–which means taking a risk and a leap of faith.

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[Investor Talk] Crypto as a new asset class with Paul Veradittakit from Pantera Capital

Paul Veradittakit, Partner at Pantera Capital

BEYOND UNICORN is a biweekly podcast hosted by Widelia Liu — tailored contents created with private investors in mind. Through in-depth conversations with founders, investors and experts, it highlights thought frameworks to assess value, deep-dive into company’s value drivers and actionable strategies around topical investment themes.

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THE CRYPTOCURRENCY BANDWAGON

It was through working in business development departments within early stage startups that led to Paul integrating himself into the VC landscape and learning more about both Bitcoin and Blockchain. Despite initial presumptions about their complexities, he grew interested in their operations and how they could better contribute in the future. As such, he was able to wholly immerse himself into the Bitcoin scene with Pantera Capital (Pantera) and endeavours to improve its existing ecosystem.

TIME AT PANTERA CAPITAL

Paul’s first project was a Bitcoin fund that enabled users to access Bitcoin more conveniently and securely. He proceeded to work for a venture fund and was tasked to strategize, source as well as execute investments to portfolio management. Changes that Paul experienced during his time at Pantera include the gradual structural shifts, increasing fund types and growth of the team size. 

PANTERA’S FUNDS STRATEGIES & SYNERGIES

Pantera keenly observes the life cycle of interested companies and the various tools utilised to increase their capital. Once these companies enter the secondary market, Pantera is able to actively trade with them until they wish to exit out, sell said company to a much larger enterprise or decide to go IPO. Additionally, being users of the interested business or platform ensures the company’s smooth investment due to an existing relationship, business knowledge and usage of the product.

INVESTMENT THESIS & VALUATION GUIDELINES

When it concerns venture funds, the distinction between public and private states will firstly be determined. Should it be public, there would be more delineation between the investment team members. Pantera also strives to participate in the Series A phase frequently with a target of 15% to build its repertoire as the first institutional capital. Once Series A begins, the company targets an estimated 10% of these companies depending on the size of the fund. To ensure that expected returns could be generated, it considers opportunities to further add other partners to aid geographically and or strategically.

EVOLUTION OF FUNDS

A few noticeable changes could be noted from the first to third funds with the third being the largest of the three. The first fund consisted of mostly internal capital of $12 million whereas the second fund was a seed fund worth $25 million. Ultimately, the substantial changes in the fund size are attributed to the growing industry, investment team size and experiential knowledge from when they first began the first fund.

CRYPTOCURRENCY - THE NEW ASSET CLASS?

Paul agrees that cryptocurrency will be a new asset class due to the increasing frequency of pitches made to institutional investors, technological improvements and exposure into the mainstream. Its transition will be a challenging one due to its unpredictable behaviour and recurrence of scammers following its introduction. However, should portfolios continue to diversify within this asset, it will generate exorbitant returns of their investors. It is advisable that now would be a good time as any to learn about this asset and develop a long-term perspective for its eventual uses.

A SAFE HAVEN ASSET

Bitcoin was meant to develop into that of a safe haven asset following its network effect and branding in its early integration within the ecosystem. Its ability to be an easily divisible monetary supply without a point of contact and rigid protocols were designed as key strengths to satisfy users which should in turn, elevate its status. Although it is a market opportunity and ideally requires more utilities, Bitcoin will undoubtedly see more growth in the near future.

CRYPTOCURRENCY IMPACTS ON THE VC INDUSTRY

The emergence of cryptocurrencies have primarily contributed to the decentralisation of participants in private financing through the use of other platforms. Moreover, laws have changed to increase the regular CF offering from one to $5 million. Lowered entry barriers for retail investors to participate, increased products available on Blockchain and accelerated money movement could also be anticipated in due time.

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