The morning sunlight broke through the blinds, casting slices of shadow across the wall. Jetlagged and disoriented, I looked around the unfamiliar room, trying to remember exactly where I was. From outside the bedroom door I heard muted voices speaking in an unfamiliar dialect, and it all came rushing back. Keen to avoid the inevitable, I pulled the covers over my head and, for the next few hours, floated in and out of sleep.
But nothing could stop the clock. The house was coming to life. First it was the banging of shower doors. Then the clanging of pots and pans. When the TV came on, blaring the Chinese news, I knew I could hide no longer. The team would be waiting. I dreaded seeing them.
I pulled on my pants, tossed on a shirt, and stumbled downstairs. In the living room I found a scattered mess of used chopsticks, dirty dishes, and crumpled pillows and blankets. Against one wall were a few flimsy card tables holding desktop computers. Next to them were half-eaten bowls of instant noodles that must have been there for days, judging by the crusty masses hardening at the bottom of the bowls. The curtains were closed, adding to the stuffiness of a room dominated by a stale cloud of morning breath.
Had I been in China, the scene would have been all too familiar. But I wasn’t in China. I was in Fremont, California. And this was the Alibaba House.
Just three days earlier I had been sitting at my desk in Hong Kong and looking forward to a weekend boat cruise. But then Joe Tsai called. We were cutting the staff for our newly opened Silicon Valley office. He wanted me to go with Jack to California to deliver the message. And, oh yeah, I’d be staying at the Alibaba House.
The Alibaba House, it turned out, was the American version of the Alibaba apartment in which the company was founded. Within the company the Alibaba apartment was already as legendary as Apple’s garage or Yahoo!’s trailer. It had also become a symbol of Alibaba’s frugal, waste-no-renminbi culture. The same culture had apparently been applied to the United States, and to save hotel costs the company had rented a house in the middle of the Fremont suburbs to accommodate team members sent over from Hangzhou. The company had rented the house in the spring of 2000, when our US expansion seemed boundless. Now, just six months later, and with many of the employees sent from China already recalled back to the China headquarters, the Alibaba House seemed haunted by their ghosts.
I looked around, wondering what my Kellogg classmates would think if they could see me in a group house with my colleagues; I was living like a foreigner in my own country. Surely my classmates were brunching on lobster in a five-star Silicon Valley hotel somewhere nearby. Meanwhile I was rummaging through the refrigerator for any food with a readable label.
Perched in front of the television set were two Chinese men wielding chopsticks and slurping bowls of noodles, catching up on the latest Chinese news. They seemed surprised to see me walk down the stairs. Apparently nobody had told them that they would have an additional housemate for the week. The awkwardness was heightened when I greeted them in English, to which they responded with puzzled looks. When I slid into Mandarin, it put them at ease.
“Hi, I’m Porter. I’m in charge of our international PR.”
“Oh, hi, we’re engineers,” one said. “We’ve been working on moving the English site to the US.”
They had been in the United States only a few weeks and were still excited about being there. Living and working in the world’s Internet epicenter was a dream few engineers in China would ever realize. The two Alibaba engineers told me that at one point the house had been crammed full of engineers from Hangzhou. During the last few weeks the numbers had shrunk, as engineers were pulled back to China. When they asked me what I was doing in the United States, I didn’t know what to say. How was I supposed to tell them that I was there to lay off their colleagues?
The doorbell saved me for the moment. It was Tony Yiu, an Alibaba founder who had arrived to drive me to the office. “You ready?” he asked. Not really, I thought, but let’s go anyway.
Stepping through the front door of the house was like leaving China and entering America. The crisp color of freshly cut lawns, fluorescent street signs, and a cloudless blue sky reminded me I was back in California. As we drove through the suburbs, I wondered how anything new was ever invented in Silicon Valley. It was so polished, so mature, with every possible convenience. Even the Jamba Juice outlets were perfectly positioned so one never had to go a stretch without a berry boost of some kind. Compared to China, which felt like one large unfinished construction site, Silicon Valley seemed finished—like everything that needed doing had been done. I wondered if one day everyone would just quit work and Rollerblade into retirement.
We drove past a few remaining dot-com billboards, turned into a small office park, and pulled up to a glossy one-story office building surrounded by a parking lot. “We’re here,” Tony said.
We walked into the office, and Tony took me around to meet the staff. There was a mix of Westerners, Chinese Americans, and Chinese nationals, most of whom had studied and lived in the United States for several years. Ordinarily meeting new staff members would be a happy affair, but I felt somewhat like the grim reaper. I wore a strained smile, knowing that in a few minutes I’d be laying off many of them.
I was taken to an office where Jack was reading his email. He was visibly concerned about the meeting ahead.
“I don’t know what to say today,” he said. “This whole time we’ve been growing, I’ve only been hiring people. This is the first time we’ve ever had to fire people. How do we do this?”
I felt bad for Jack. Although many of the foreign staff members didn’t view him as a credible manager, I knew that only his good intentions and optimism had brought us this far. For a Chinese company, opening a Silicon Valley office was a huge source of pride. For the last several months we’d been traveling around China boasting about our growing US staff, holding it up as a sign of Alibaba’s global importance.
After discussing the best way to handle it, we called the employees into a large meeting room. There was a tangible pall, as people sensed bad news was coming. Some were meeting Jack for the first time, and I hoped that the session would not become hostile.
After the seats around the table filled up, another row of colleagues formed behind them, filling the room to the walls. Once everyone was settled, we closed the door and Jack began to speak.
“I want everyone to know how much we appreciate how hard everyone is working. But I’m afraid that I’m here with some bad news. We are going to have to cut some of our staff.”
Around the room eyes dropped. Jack continued:
“A few months ago we thought it would be best to move our operations to Silicon Valley. Everyone thought that if you are going to run an English-language website, this is where you have to be. The engineers are here, the English speakers are here, and the Internet people are all here. So it really seemed like the right decision at the time.
“But since we did that, it seems we created more problems in the company than ever before. Everyone here has been working so hard on different projects, but the communication is very difficult between here and our Hangzhou office. When you guys come into the office, it is the end of the day in Hangzhou. When we come into the office, you are all leaving. It seems it’s been impossible to communicate, and I know you’ve all been frustrated when projects were started and then canceled.
“For all of us Alibaba is a dream. Everyone here has worked so hard and really believes in this dream. We want to make this a company that lasts 80 years. But if we want to make this dream happen, we have to be realistic. Right now it doesn’t make sense for us to have a big center in Silicon Valley. If we want to make the company grow again someday, we are going to have to cut back today.
“I feel really bad and sorry, for you and your families. At the end of the day the mistakes we made are my responsibility. So I’m very sorry for this. I hope that someday, when the company is healthy, we can grow again and give you another chance to join Alibaba.”
It was an emotional speech and, as was usual for Jack, straight from his heart. I looked around the room, and the hostility I feared had not materialized. People seemed to respect Jack’s candor and were resigned to the decision he had made. The only remaining question was who would be cut, and my job was to tell them.
We were laying off about half the staff, and that sent a chill through the office. Although I didn’t know the staff personally, my stomach churned each time I sat down with one of the unlucky. The company offered laid-off staff members three months of salary and allowed them to keep some of their stock options. To my surprise many were not as concerned about losing their jobs as they were sad to be leaving Alibaba. Even some of the Western staff in the office, many of whom had no personal connection to China, seemed attached to the company and its mission.
Back at the Alibaba House, I collapsed on the couch, glad to have a difficult day behind me. The company’s future was still uncertain, but at least we were taking the painful steps necessary to survive. It was also clear that if any company could subsist on a tiny budget, we could do it. After all, Alibaba’s founders had paid themselves a salary of only RMB 500 ($60) per month in the company’s early days. Compared to the employees of our global competitors, we could more easily go back to living on a shoestring budget. Our “Back to China” strategy had begun, and if we had to, the team could contract all the way back to the Alibaba apartment, cutting costs along the way. Now, if only we had a revenue model, I thought to myself, we just might have a chance.
A few days later, after Jack and I returned to China, he called me. I was surprised to hear a shaky voice on the other end of the line.
“Porter, can I ask you a question?” His voice was breaking; it sounded like he might even be crying.
“Sure, Jack. What’s wrong?”
“Am I a bad person?”
In the eight months I’d known him, I’d never seen his optimism or confidence waver.
“What do you mean?”
“I’m getting a lot of calls from staff, and they are angry with me about the layoffs. I know it was my fault that I made those decisions. And now everyone is mad at me. But do you think I’m a bad person for what I did?”
In the background I could hear Jack sniffling. I felt sad for him. Given all of the chaos and disorganization in the company, I had seen this day coming. But rather than being angry at our CEO for letting the company fall into such disarray, I was sympathetic. In my mind Jack was still just an English teacher who had reached for the stars. It was hard to blame him for overreaching.
“Jack, you did what you had to do. The company wouldn’t survive if you didn’t make those decisions.”
“Yeah, I guess you’re right. But I just feel like I let everyone down.”
We spoke for a few more minutes and then hung up. I felt even more unsettled than I had on the morning of the layoffs. If Jack lost his confidence, who would be left to encourage us?