Jack Ma, chairman of China's Alibaba internet giant, told a Stanford audience his firm is "very interested" in acquiring Yahoo. Ma was one of the speakers at the "China 2.0" conference organized by the Stanford Program on Regions of Innovation and Entrepreneurship on Sept. 30.

STANFORD GRADUATE SCHOOL OF BUSINESS – In a wide-ranging talk, Jack Ma, chairman of China's Alibaba Group, publicly declared his interest in acquiring troubled U.S. internet giant Yahoo, while also reflecting on his 12-year journey building an internet powerhouse that has transformed commerce for small businesses and consumers in China.

The Chinese e-commerce billionaire addressed a Sept. 30 conference at the Stanford Graduate School of Business on the rise of China's internet. The gathering, China 2.0: Transforming Media and Commerce was organized by the Stanford Program on Regions of Innovation and Entrepreneurship (SPRIE). With more than 600 registered participants, the event featured talks by leading Chinese internet entrepreneurs and venture capitalists active in Asia as well as a look at ongoing Stanford research on venture investment patterns and networks in China.

Speaking without prepared notes, Ma revealed that he plans to spend the coming year in the United States. "After 12 years, I need some time to rest. This year has been so difficult for me. I'm now coming out for a year," said the Alibaba chief, whose company is based in Hangzhou, China.

Ma was asked if he wanted to acquire Yahoo, the struggling U.S. internet pioneer that owns 40% of Alibaba. "Yes. We're very interested in that. We're very interested in Yahoo because our Alibaba Group is so important to Yahoo and Yahoo is important to us. We are interested in the whole piece of Yahoo," he said, adding that Alibaba also has talked with other prospective buyers. However, a deal would be very "complicated," Ma cautioned. "I cross my fingers and say that we are very, very interested in that."

Alibaba's takeover of Yahoo would represent something of a role reversal, symbolizing how much China's internet—and to some degree, its economy—has eclipsed that of the United States'. In 2005, Ma sold a 40% stake in the fledgling Alibaba to Yahoo in exchange for $1 billion and control of Yahoo China. The Alibaba-Yahoo relationship has been strained in recent years and Ma has telegraphed his desire to reduce or buy back Yahoo's stake. "We appreciate yesterday, but are looking for a better tomorrow," Ma told the Stanford audience.

He described Jerry Yang, co-founder and board member of Yahoo, as "a good personal friend." Ma added, "Without the Yahoo investment, we wouldn't be that successful today. Yahoo is one of three companies that woke me up to the internet. Without the internet, there would be no Alibaba and no Jack Ma."

Ma downplayed recent investor concerns that Chinese regulators will clamp down on the "variable interest entity" (VIE), a vehicle that has allowed foreigners to indirectly invest in Chinese internet companies and for those firms to go public in overseas stock markets. "The VIE is a great innovation," but "we've got to make the VIE really transparent," said Ma. "I don't see that the government is going to shut it down," he added.

Ma reflected on some of his successes and failures since founding Alibaba in 1999 as an online venue for small Chinese firms to connect with overseas buyers. Visiting Silicon Valley that year, "I was rejected by so many venture capitalists. [But] I went back to China with the American Dream," he recalled.

Today, the Alibaba Group, with 23,000 employees, dominates e-commerce in China, largely through its Hong Kong-listed Alibaba.com business-to-business site, Taobao consumer-to-consumer marketplace, and Taobao Mall, a business-to-consumer site for branded items. Ma said his e-commerce enterprises have helped China's small businesses succeed and made Chinese consumers smarter about purchase decisions. "We feel proud because we're changing China," he said.

The conference took place shortly after Beijing announced that China's internet population has surpassed 500 million—about double the number in the United States. Two of the five biggest internet firms in the world, by market value, are from China. U.S. pioneers, including Yahoo, eBay, Google, and Facebook, have failed to make significant inroads in China, where the government exercises strong control over the internet and foreign ownership. In contrast, Chinese internet firms have grown rapidly, coming up with technological and business innovations for their domestic market, and seeking investors, technical know-how, and talent overseas.

"They are growing very quickly and have global aspirations. The days of thinking that's just an eBay copy is an old mindset," said Marguerite Gong Hancock, associate director of SPRIE. "The arrows are now pointing in both directions."

In a brief appearance, Stanford President John Hennessy told the audience that China and the internet "are the two most exciting things happening in the world." There are more than 1,000 students from China at Stanford, by far the largest from a single foreign country, he added.

Conference-goers heard from Joe Chen, MBA '99, founder and chief executive of Renren Inc., a social networking site popular among Chinese university students. Discussing the emergence of the social web in China, he described his company as positioned on the "bleeding edge of SoLoMo," describing the intersection of social, local, and mobile technologies coined by venture capitalist John Doerr. Chen suggested that social networking (based on relationships) has emerged as an alternative to online search (based on keywords) for obtaining and sharing information. Social networking will transform commerce, entertainment, content distribution, and communications, just as online search did, he predicted.

China's social networking and media companies have developed their own innovations, sometimes ahead of U.S. companies, said Chen.The world's first social networking farming game, for instance, was launched on Renren in 2008. Renren went public on the New York Stock Exchange in May, beating Facebook to the IPO trough.

Conference organizers described SPRIE research into venture capital investments and networks in China. Researchers analyzed data on more than 2,000 Chinese companies, nearly 800 investment firms, and more than 600 individuals, including their university and company affiliations. Using the data, they created visualizations—circular nodes with lines extending out in a web—of the relationships among companies, investors, and entrepreneurs. "This is the power of network analysis," said Hancock, showing onscreen a moving image of how China's "investment constellation" changed from 1996 to 2011. The densest venture clusters are in Beijing, Shanghai, and Shenzhen. The research identified more than 40 venture capitalists involved in China who have ties to Stanford, she said.

Venture capitalists discussed the landscape for funding internet startups that are proliferating in China. "Early stage is still quite bubblish," said Tim Chang, MBA '01, managing director of the Mayfield Fund. "There's a lot of hot money doing drive-by due diligence."

Entrepreneurs described a frenetic, hyper-competitive environment for startups. "It's brutal. There are periods I cannot sleep for a month because of the massive pressures," said Fritz Demopoulos, co-founder of Qunar.com, China's largest travel web site, which recently sold a majority stake to Chinese search giant Baidu. But "there's still so much room to grow," said Demopoulos. "The runway in China is long."

Program to enhance global reach and innovation research at business school

We are thrilled to welcome SPRIE, a catalyst for cutting-edge knowledge in this space, and a natural fit for us.
- Garth Saloner, Dean of the Stanford Graduate School of Business

STANFORD GRADUATE SCHOOL OF BUSINESS — The Stanford Program on Regions of Innovation and Entrepreneurship has joined the Graduate School of Business, where it will expand and enhance the depth and reach of global content for the school's academic programs and research.

The Stanford Program on Regions of Innovation and Entrepreneurship (SPRIE) is focused on understanding the development and practice of innovation and entrepreneurship around the world. Current research focuses on the dynamics and sustainability of Silicon Valley and high-technology areas across Europe and Asia, including those in mainland China, Taiwan, Japan, India, Korea, and their collaboration and competition in the evolving global innovation network. Specific projects focus on "Silicon Valley Transforming," the rise and implications of China's internet industry ("China 2.0"), Japanese entrepreneurship ("STAJE"), and clean energy and urbanization ("Smart Green Cities").

SPRIE's core activities include global interdisciplinary research, seminars, and conferences, as well as publications and briefings for industry and government leaders. Upcoming events this month at Stanford include a panel discussion, "Re-examining the State of Japanese Entrepreneurship," on Sept. 21 and "China 2.0: Transforming Media and Commerce in China," SPRIE's third in a series of highly successful forums. Keynotes for "China 2.0" on Sept. 30 will include investors, entrepreneurs, and founders or CEOs of billion-dollar Chinese internet firms, including Jack Ma of Alibaba and Joe Chen, MBA '99, of RenRen.

"Innovation and entrepreneurship are hallmarks of the GSB experience," said Garth Saloner, dean of the Stanford Graduate School of Business. "We are thrilled to welcome SPRIE, a catalyst for cutting-edge knowledge in this space, and a natural fit for us. SPRIE complements and augments many of our existing efforts, including the Center for Entrepreneurial Studies and the Center for Global Business and the Economy."

Previously housed at Stanford University's Freeman Spogli Institute for International Studies, SPRIE is led by faculty directors William F. Miller and Henry S. Rowen, as well as Associate Director Marguerite Gong Hancock. Miller, the former provost of Stanford University and the Herbert Hoover Professor of Public and Private Management, Emeritus, at the business school, is also a professor emeritus of computer science at the engineering school. He was CEO of SRI International, where he established a spin-out and commercialization program. Rowen is a senior fellow at the Hoover Institution and the Edward P. Rust Professor of Public Policy and Management, Emeritus, at the business school, as well as former president of the RAND Corporation. He is an expert on international security, economic development, and high-tech industries in the United States and Asia.

Hancock leads research initiatives, conferences, and publications on topics ranging from "China 2.0: The Rise of a Digital Superpower" to "Smart Green Cities." She is coeditor of books published by Stanford University Press: The Silicon Valley Edge (2000), Making IT: The Rise of Asia in High Tech (2006), and Greater China's Quest for Innovation (2008). Hancock also codirects SPRIE executive and policymaker training programs on leading innovation and entrepreneurial regions in the global economy.

"We are very pleased to join the Graduate School of Business and look forward to collaborating on international and interdisciplinary research and conferences relevant to business students, executives, and government leaders from around the world who are focused on leading innovation and creating value," said Miller.

SPRIE research focuses on the nexus of innovation and entrepreneurship in high-technology clusters, through questions such as:

• What factors enable innovative and entrepreneurial regions to advance and be sustained? What divergent models and strategies are evident in emerging regions?
• Why have some regions lagged, despite strong assets such as skilled workers or capital investments? What obstacles hinder a region's development?
• How do the flows of ideas, technology, people, and capital define new global linkages? How do these shape the emerging global high-technology system?
• With the rise of China, India, and other high-technology powerhouses, what new patterns of interaction are emerging among major players? How can companies and governments best respond to new critical challenges and opportunities?

For more information on research, executive programs, or events at SPRIE, contact Yan Mei at yanmei@stanford.edu or visit http://sprie.gsb.stanford.edu.

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For More Information Contact: Barbara Buell, Director of Communications, Stanford Graduate School of Business at buell_barbara@gsb.stanford.edu or 650-723-1771.

For Comment: Marguerite Hancock, Associate Director, Stanford Program on Regions of Innovation and Entrepreneurship at the Graduate School of Business at mhancock@stanford.edu or 650-723-4588.