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I was a VP at Alibaba during the SARS crisis in 2003. Here's what Jack Ma did to unite our team, accelerate revenue, and launch a new business amid the uncertainty of a pandemic.

I was a VP at Alibaba during the SARS crisis in 2003. Here's what Jack Ma did to unite our team, accelerate revenue, and launch a new business amid the uncertainty of a pandemic.
How Alibaba survived the 2003 SARS crisis under Jack Ma's leadership - Business Insider

"The door to my home was chained shut, a guard was stationed in my apartment building lobby, and I and 400 Alibaba colleagues were forced to run the company from our homes for 10 days."

Porter Erisman and Jack Ma at Taobao Press Conference after SARSPorter Erisman and Jack Ma at Taobao Press Conference after SARS
Alibaba cofounder Jack Ma and Porter Erisman at a press conference for Taobao after the SARS crisis.
Courtesy of Porter Erisman

Better Capitalism

  • Porter Erisman was working in China as vice president of the Alibaba Group in 2003 when the SARS pandemic struck, and he and 400 colleagues were quarantined at home.
  • But instead of being paralyzed by fear and panic, Alibaba thrived during the SARS crisis: Their team became more united, revenues accelerated, and they launched a new business, Taobao.
  • The lessons of how Alibaba weathered the storm can offer guidance to entrepreneurs who are facing similar challenges during the COVID-19 crisis today.
  • Accept your new reality, don't delay tough decisions, and keep the team united, advises Erisman — and above all, keep your employees safe.
  • This article is part of Business Insider's ongoing series on Better Capitalism.
  • Visit Business Insider's homepage for more stories.

In spring of 2003, while I was working as a vice president at the Hangzhou, China headquarters of Alibaba Group, I received an unexpected phone call from the company's HR head.  "Porter, you don't need to come to work tomorrow," he said. "You and the rest of the colleagues in our headquarters are being quarantined for exposure to SARS."  

It turned out that a colleague I had worked alongside at a trade show in Guangzhou — the SARS epicenter — had been hospitalized upon returning from our business trip and was showing symptoms of SARS. The next morning, the door to my home was chained shut, a guard was stationed in my apartment building lobby, and I and 400 Alibaba colleagues were forced to run the company from our homes for 10 days.

Our first concern was for the health of our colleagues and families. But our next concern was for the survival of our company. It was a crisis which, if handled poorly, could have destroyed Alibaba. At the time, I wondered how we'd respond to the challenge. Would business dry up as our customers lost money? With everyone quarantined at home with their families, would the team be distracted and spin out of control? 

While it would have been easy to be paralyzed by fear and panic, instead, Alibaba not only survived, but thrived during the SARS crisis. Our team emerged stronger and more united than ever. Our revenues accelerated. And we launched a new business — Taobao — which went on to become the most valuable business unit of Alibaba's vast $400 billion+ e-commerce empire. And fortunately, everyone in the company — including the suspected SARS victim — emerged healthy.

My hope is that the lessons of how Alibaba survived the SARS crisis can provide inspiration to entrepreneurs who are facing similar challenges today. There is no doubt that, economically, some of the hardest-hit victims of coronavirus will be entrepreneurs, small businesses and their employees. But when this crisis passes, it will also be these entrepreneurs and their teams who will need to rebuild their companies and economies around the world. With that in mind, here are the five lessons I learned from how Alibaba survived — and thrived — during the SARS crisis.

Lesson 1: Keep your team safe

Alibaba Employees Take Computers Home 2
Alibaba employees were able to take home their computers for the quarantine.
Courtesy of Porter Erisman

While Alibaba's SARS crisis ended well, it started poorly with a foolish gamble that put our colleagues at risk. As reports of a mysterious new virus popped up in the western media, we were planning to attend the Guangzhou Fair, a large annual trade show with thousands of attendees from around the world. Alibaba had only recently become cash flow positive and this was our greatest marketing investment yet. Cancelling would mean losing a lot of money and set us off track for the year. After some internal debate, we decided to attend the Guangzhou Fair, and one of our colleagues working at our booth returned to Alibaba's headquarters with SARS symptoms.

It should be the most obvious lesson, but in watching how many businesses are reacting to the coronavirus, I'd argue it is not being followed enough: keep your team safe. Anyone who can work from home should work from home. And for those on the front lines, such as cashiers, shop clerks, delivery people and others, companies need to invest in protecting their teams as much as possible. When in doubt, choose health and safety over money. It's not just morally right, but good business sense. If one of your colleagues gets sick, others will likely get sick, and the people next to them will be quarantined, shutting down your operation.

Lesson 2: Accept the new reality

Alibaba Team Chatting online During Quarantine
The Alibaba team chatting online during quarantine.
Courtesy of Porter Erisman

You had the perfect business plan for 2020 that is now unworkable? You had a deal to sell a business that is now falling through? Your customers are cancelling your service?  Over the last few weeks in talking with fellow entrepreneurs, these stories are universal, with no one, including myself, spared from the pain. Entrepreneurs who once prided themselves on being disruptors are now being disrupted.

But I learned from my experience at Alibaba that the faster entrepreneurs can accept the new reality, the sooner we can begin to look ahead to new opportunities. As my old boss and Alibaba founder Jack Ma likes to say, "Change is the only constant."  Dwelling on opportunities lost and the discarded plans of the past will not help entrepreneurs plan for the future. When SARS hit, Jack Ma wasted no time dwelling on opportunities lost. Instead he instantly jumped to action and focused on finding solutions to the new challenge.

In the midst of this unfolding tragedy, entrepreneurs need to take a deep breath and accept the new reality. Entrepreneurs don't complain about problems, they solve them. You still have the creative potential you always had and when new problems arise you can find new solutions.

Lesson 3: Make the tough decisions now… with a heart

Alibaba employees taking home their work computers
Alibaba employees preparing to work from home during the SARS pandemic.
Courtesy of Porter Erisman

Beyond keeping your employees and families safe, your main goal needs to be keeping the company alive. This may mean making some tough decisions, such as closing down business units or layoffs. While Alibaba was able to survive SARS without any layoffs, that is looking much more difficult for many businesses today in the face of long-term lockdowns.

Before laying anyone off, business should be creative about finding ways to keep their team employed and exhaust all the alternatives. But if creative ways to keep staff can't solve the problem, it's better to make the tough decision of layoffs early, rather than late.

Two years prior to SARS, during the dot.com bubble, Alibaba made the mistake of delaying painful cuts to business units too late in the game. As a result, we burned through nearly all our cash and nearly went out of business. 

When we ultimately made the inevitable decision to lay staff off, we did it with heart. We paid them well, told staff we hoped to stay in touch and that when we survived the storm, we would do our best to hire them back. And indeed, as Alibaba grew and became profitable, many of them were rehired. Even most of those that were laid off left Alibaba with a warm affection for the company, participated in Alibaba alumni groups and, last September, many of them attended Alibaba's 20th anniversary party, held in a stadium full of 70,000 employees.

My point is not that layoffs or cuts are necessary. They should be avoided if at all possible. But the lesson we learned at Alibaba is that leaders in times of crisis embrace — rather than run away from — tough decisions. It does no one any good to postpone tough decisions when a delay might imperil the company's very survival. And when the company is healthy and grows again, you can hire your team back.

Lesson 4: Unite the team

Jack Ma Addresses Team During Sars
Alibaba cofounder Jack Ma addresses the company during the SARS crisis.
Courtesy of Porter Erisman

One of the most remarkable lessons I learned from working with Jack Ma was how he responded to a crisis. While other business leaders might have been paralyzed with panic, he always seemed to be even more motivated. Whether it was the entry in China of a giant new competitor (eBay), the dot com bubble bursting, or our team being locked up in quarantine, he always viewed these events as a challenge that could unite the team.

When we first learned our team would be quarantined, Jack immediately jumped into action and had the team lug their heavy desktop computers home, re-routed customer phone calls to home landlines, and set up a virtual operation — not an easy feat in China in 2003. We even got the families involved, so that grandma and grandpa would answer the home phone saying "Hello, Alibaba" before handing the phone over to the company employee. The virtual operation was so seamless that our customers never knew the difference and were surprised to later find we had been in quarantine.

Jack provided constant communication to the management and all the employees. He moderated staff discussions on the company intranet and made sure we kept the human part of our company culture alive. He urged us to think not only about our employees but about the higher goal of helping keep the company alive to serve the millions of small businesses that depended on us to make a living.

Employees even made sure to have fun in the face of crisis, holding online karaoke competitions and handstand contests with each other. Rather than tearing our company apart, the experience brought us together. And the experience became an important part of our company history and an example to new employees about what the company had been through.

Looking back I realize that the old adage is true. Leaders aren't truly tested in good times. They are tested in a crisis. And how you respond as a leader will determine whether your team rallies to the challenge or falls apart.

Lesson 5: Find new opportunities in crisis

Alibaba Team SARS
The Alibaba team working during the SARS crisis.
Courtesy of Porter Erisman

It's become a bit of a business cliché on the speaking circuit that the Chinese word for "crisis," weiji, combines the Chinese characters meaning "danger" and "opportunity."  But it's a cliché because the lesson rings true: every crisis presents an opportunity.

In many ways we were fortunate to be in a line of business — e-commerce — that provided a solution to the problem of businesspeople not being able to meet face to face. If they couldn't meet offline, we could help them meet online. Once out of quarantine, we partnered with the government to organize a roadshow to train China's small-and medium-sized businesses how to do business online in the SARS era. This helped lead to a major inflection point in the growth of e-commerce in China, and the country's traditional businesses moved online, never looking back.

The most important opportunity we jumped on during the SARS era was to launch a new website — Taobao — which focused on consumer e-commerce in China. While the majority of our staff was quarantined at their homes, the founding team of Taobao were quarantined in Jack Ma's old apartment— where Alibaba Group was first founded.  The team secretly worked day and night on the website, doing handstands during breaks to stay fresh and keep their spirits up. On May 10, 2003, we officially launched Taobao which went on to beat eBay in China and spark a consumer e-commerce revolution in emerging markets ranging from China to Africa. And to this day, Alibaba still celebrates "AliDay" on May 10 to commemorate the day that Taobao was launched in the face of an existential crisis.

The time to begin the process of rebuilding is now

Porter Erisman on Apartment Balcony while Quarantined during Sars
The author, Porter Erisman, on his apartment balcony while quarantined during SARS.
Courtesy of Porter Erisman

It's important for entrepreneurs to take a deep breath, face the new reality, and realize that they are uniquely positioned to help the world emerge from this crisis. Just as doctors and nurses on the front lines will lead our recovery from the health crisis, entrepreneurs and small businesses will help us recover from the economic crisis. At a time when things seem most dark, it's not only okay, but essential that entrepreneurs begin to look ahead to new opportunities. With great danger comes great opportunity.  

I have no doubt that, in 10 years, when we look back at this time, we will see the emergence of a new generation of strong global companies founded by idealistic entrepreneurs who found solutions to the problems of today's crisis and helped rebuild our economies.

Disclosure: I do not own stock in either Alibaba or eBay (both of which are mentioned in this article).

Porter Erisman is a former vice-president at Alibaba Group and the author of Alibaba's World: How a Remarkable Chinese Company is Changing the Face of Global Business.

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