STEVE PIECZENIK TALKS

Alibaba: The Chinese E-Commerce Company will be worth Close to $540 Billion  Greater than all the E-commerce in U.SA. + U.K. + Japan + Germany+ France combined! Congratulations Mr Ma, Yahoo, Soft Bank and, of course, China.
It finally happened.  I have tracked Alibaba for over a year, waiting anxiously to start buying the stock of this amazing e-commerce company,  I found out that as a retail buyer, I could buy none! Such is the paradox of world economics and the IPO business.  As a former Managing Director of a Investment Banking Firm on Wall Street, I knew a little about Initial Public Offering [IPO].  If the IPO is oversubscribed as Alibaba was,  then the ordinary folks like you and me, would have to buy the stock after the initial ‘strike price’ plus ‘green shoe’ plus the ‘pop’.  We retail buyers do not get not sloppy seconds but rather sloppy thirds, fourths and fifths.

This is how the process goes:

The owners of the company;  Mr Ma, the employees and the major investors Yahoo and Soft Bank [Japanese telecommunications company]; had/have the right to commoditize their equity at any given point.  If they need cash initially they can sell the stock privately.  If they waited and held on in order to receive a greater price before the IPO, they could sell the stock as many of the Chinese employees did and created new start-up companies in Huangzhou—province outside of Shanghai.

Next there is the IPO phase, which has a ‘strike price’, in this case, around $60 agreed upon by major worldwide investors and underwriters like Credit Suisse, Goldman Sachs and JP Morgan etc.  Is it fair that retail buyers like me and you who basically allow the IPO markets to exist because we support Federal Regulations and American Stock Exchanges [NasDaq, NYSE,] to receive the short end of the stick?  No, but who says that capitalism is fair?  Don’t believe these media pundits who claim that the markets are pure, and determine the true value of a company or asset.
  Let me explain my attitude, both positive and negative regarding this phenomenon called Alibaba.

This IPO demonstrates for once and for all that China, suis generis, is a free market system, despite all the right wing nonsense from the Republican Party that it is a Communist System.  The Chinese have proven to be more market-oriented and entrepreneurial than America has.

Take Al Gore, ‘the inventor of the Internet’,  counter-sued by Al Jazeera as a clear example of the ‘political cronyism, indigenous in our American entrepreneurial system even in the pure ‘start-up capital of Silicon Valley’.   Al Gore, George Bush jr [Houston Baseball Team] and Bill Clinton [Worldwide Initiatives] are all examples of men who use their self-aggrandizement and powers of intimidation to extract out money from various financial institutions and corporations. Collectively, be they Democrat or Republican, they are not capable of starting up a company from ground zero with nothing but an idea and ‘sweat equity’ as did Mr Ma of Alibaba. This is the American Dilemma of Distorted Capitalism.  We allow famous and infamous people to garner huge sums of money without having to create or start a business. 

Thanks Jack Ma and Alibaba for setting a good example for the rest of us.  Putin and Russia can learn a very important lesson from Alibaba.  Instead of ‘privatizing’ valuable national assets like telecommunications, oil, gas, and other resources then alloting them to Putin’s KGB cronies, who in their wildest dreams could not run a hot dog stand without cheating the public, it would behoove Putin to stop his ‘incursions.’  Allow the brilliant youth of Russia to create ‘start-ups’ without wasting valuable time and resources of the Russian Federation.

In our own country, Obama has shown little if any leadership in fostering small business growth,  allowing young people to start companies without the burdens of over regulation, complex tax structures and overwhelming baggage of student debt.  Forget gun control!  Forget terrorists!  Lets make some business!  Use federal dollars to support a new cyber-infrastructure that will foster economic growth.  Allow hard working citizens a crack at being business owners.