The tech world's most anticipated initial public offering of 2014 on the New York Stock Exchange isn't from a company that calls Silicon Valley home, nor does it hail from a firm run by a former Google, Apple or Amazon executive.
No, it comes via an English teacher from China who was just trying to search for beer when he first logged on to the Internet nearly two decades ago.
Jack Ma's Alibaba Group filed for an IPO on the NYSE on May 6. Its official paperwork says the company expects to raise $1 billion, but industry observers think that the offering could post as much or more than the $16 billion Facebook raised in 2012 — currently the largest IPO for a tech company.
But if you're unfamiliar with the tech world in China, chances are you've never even heard of the Hangzhou, China-based company. What is Alibaba, and how did it grow to heights unseen by almost any retailer — bricks-and-mortar included — worldwide?
Alibaba is an e-commerce outlet that, according to Reuters, was responsible for $248 billion in transactions in 2013 and 80 percent of e-commerce activity in China. When combined with its online payments service Alipay, the Web giant has been referred to in American media as Amazon meets eBay meets Paypal — but even bigger.
To put Alibaba's size into further perspective, it is larger than Amazon and eBay combined. Mostly due to a $1 billion investment in 2005, Yahoo owns about a 23 percent share in Alibaba. Considering that Yahoo's total market capitalization is $39 billion and that Alibaba is estimated to have a market value of $168 billion, Yahoo's stake in Ma's behemoth firm may be worth more that the Sunnyvale, California, company itself.
The anchors of Alibaba's success are its Taobao Marketplace and Tmall sites. Taobao is more like the eBay or Amazon element of Alibaba's business, with millions of smaller vendors selling goods to others. Tmall is more analogous to goods sold by well-known brands on Amazon and brands' websites.
The two sites make up 60 percent of the packages sent in the Chinese postal system, according to The New York Times. Along with smaller sites hosted by Alibaba, e-commerce makes up over 85 percent of the company's revenue, per its IPO filing.
However, Alibaba's great success in the Chinese market has to be tempered with caveats about the Chinese economy, which — despite growing in leaps and bounds thanks in large part to market liberalization measures in the past generation — is still far less of a consumption-based economy than the countries pacing the world in GDP per capita.
"The company [is] predicting that China's e-commerce market will double in size by 2016," Gwynn Guilford of Quartz writes. "But it's based on assumptions about the rapid growth of Chinese consumption and the government's ability to 'rebalance' the economy — and both those prospects are pretty iffy."
Furthermore, the Chinese government has been reluctant to take such measures as liberalizing interest rates, which would promote more consumption.
The placement of Alibaba on the NYSE also begs the question of whether the company will come stateside and try to take on Amazon. For now, it has no plans to enter the U.S. market, but it has invested in Silicon Valley companies like Amazon Prime competitor ShopRunner and Lyft, a ride-sharing service.
The rise of Alibaba and its IPO is latest example of how much power the Chinese economy has in today's global marketplace. The continuation of that growth and where Jack Ma's penchant for innovation fits on the global scale has yet to be determined.
