Are Alibaba’s Best Days Ahead or Behind It?

2 minute read

This week’s record-setting IPO of the Chinese Internet firm Alibaba makes it feel like it’s 1999 all over again (a year I remember with some regret — I joined a “B to C” dotcom company that folded 18 months later).

But I have been feeling for some time that America’s IPO market is booming, but broken. I’ve been reading a lot of research recently, including this fascinating NBER paper looking at how much more robust innovation and investment is in private firms, rather than public ones. Particularly for tech companies, their best days as innovators and creators tend to be before they go public, rather than after. Once they are in the public markets, they become beholden to the quarter, and it’s more difficult to justify long-term investment and strategies that won’t yield fruit quickly (this is all the more true with the rise of “activist” investors).

It will be interesting to see whether Alibaba proves to be the exception or the rule to this.

For more on the subject, listen to New York Times columnist Joe Nocera and me debate it on this week’s WNYC Money Talking.

5 Quirky Things You Didn't Know About Alibaba's Jack Ma

Stephen Chow and Jack Ma Hold Dialogue in Beijing
Ma doesn't mind practicing Tai Chi in public. Here he and Hong Kong comedian Stephen Chow enjoy the ancient martial art at the Communication University of China in Beijing in January, 2013.Li Xueshi—ColorChina/AP
Jack Ma, chairman and founder of Alibaba
Jack Ma really likes performing on stage, and the more outlandish the clothing, the better. Here, Ma performs at an evening party in Hangzhou, east China on September 10, 2009, to celebrate his company's 10th anniversary—while looking a little like Bjork, if she were 20 years older and a practicing Wiccan. STR/AFP/Getty Images
John Donahoe Visits Hngzhou
He's apparently a fan of the Terminator franchise. In 2010 he met then-California Gov. Arnold Schwarzenegger, who presented him with a leather jacket and black sunglasses during a trip to China to represent the "Terminator" outfit. If Ma knew his company would have an IPO in the U.S. four years later, he'd probably have said "I'll be back."ChinaFotoPress/Getty Images
PA pensions rising health premiums taxes
Holding a crystal ball-like orb is a good way to introduce a new software product, if you ask Ma. Here, he and Alibaba.com Vice President Oliver Wang touch a device to signify the launch of the ALISOFT software during a news conference in 2007 in Shanghai, China.Eugene Hoshik—AP
CHINA-INTERNET-RETAIL-ALIBABA-AUTONAVI
Yes, Ma really does love to sing. His onstage attire was a little less flamboyant by the time this 2013 photo was taken on the 10th anniversary of China's popular Taobao online marketplace, but he is still wearing a silver jacket and what looks like a Kangol. Peter Parks—AFP/Getty Images

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