Joseph Tsai, The Billionaire Steering Alibaba Through Turbulent Time?

Joseph Tsai, the billionaire cofounder of Alibaba Group and owner of the Brooklyn Nets, is taking over as chairman of the e-commerce titan to revive growth as it faces rising competition amid China’s sluggish post-pandemic recovery.

As part of a surprise management shake-up announced yesterday, the 59-year-old Tsai is replacing Daniel Zhang as chairman of the board. Eddie Wu, another cofounder, will be taking over as CEO from Zhang when he steps down in September.

The outgoing Zhang will focus on leading Alibaba’s cloud computing business as the unit prepares for an initial public offering that may happen as early as next year, according to recent Alibaba announcements. Cofounder Jack Ma, who is currently the country’s seventh-richest person with a net worth of $24 billion, made an appearance yesterday at the cloud computing arm’s Hangzhou office, according to a person with knowledge of the matter. He stepped down from Alibaba’s helm in 2019, and has been focusing more of his time on education and philanthropy since then.

Analysts say Tsai, who is a longtime confidante of Ma’s, will likely seek to fend off competition from the likes of Pinduoduo by executing a strategy the mogul outlined in a recent meeting. As the country’s economic recovery loses steam, Alibaba may sacrifice margins by charging less from merchants and selling more low-cost products to entice users, according to Charlie Chai, an analyst at Shanghai-based 86 Research.

Taiwan-born Tsai, who holds a Canadian passport, also maintains a relatively hands-off management approach, and may let mid-level managers make more of their own decisions, says Shawn Yang, a Shenzhen-based managing director at Blue Lotus Capital Advisors. But investors are taking a wait-and-see attitude—with Alibaba’s New York-listed shares down 4.5% overnight.

The current $230 billion company, in fact, has lost more than 70% of its value since peaking in late 2020, as Beijing’s crackdown on the entire internet industry has caused investors to reassess Alibaba’s outlook. Meanwhile, competition has been tougher than ever. In addition to the fast-growing Pinduoduo, short video platform Douyin has also been trying to sell products that appear in some of its streams.

While Ma spent years lying low and traveling abroad after his 2020 criticism of the country’s banking system drew Beijing’s ire, Tsai had stayed on as executive vice chairman. He is a member of Alibaba’s founding team, having given up a Hong Kong-based private equity investment job at Investor AB, which is the main investment vehicle of Sweden’s Wallenberg family, to join the e-commerce firm in Hangzhou in 1999 for a monthly salary of $50.

In later years, he became chief financial officer, a position he held until 2013. He then started the executive vice chairman role, responsible in part for the e-commerce titan’s financing activities and strategic investments. But the mogul has also been diversifying his wealth, with plans to sell about $260 million worth of Alibaba shares that was disclosed to the market towards the end of 2022.

Today, Tsai still derives part of his $7.7 billion net worth from a 1.3% stake in Alibaba. But he has also built a sports and entertainment empire. Tsai took full control of the Brooklyn Nets in a $2.35 billion deal in 2019 after first acquiring a 49% stake from Russian billionaire Mikhail Prokhorov two years earlier. And his other sports franchises include ownership of the New York Liberty from the Women’s National Basketball Association, and two lacrosse teams, the San Diego Seals and Las Vegas Desert Dogs.

The billionaire’s passion for sports can be traced back to as early as high school. He played football and lacrosse at the elite Lawrenceville School in New Jersey, before being admitted to Yale University. Tsai, who holds a bachelor’s degree in economics and East Asian Studies from Yale College and a juris doctor degree from Yale Law School, played for the university’s lacrosse team as well. His early career experience includes an associate attorney job at New York-based law firm Sullivan & Cromwell LLP, and general counsel of New York-based buyout firm Rosecliff, Inc.

These days, a significant portion of the mogul’s wealth is managed through his Hong Kong-based family office Blue Pool Capital, which holds stocks, venture capital investments and Tsai’s sports assets. The firm also emerged in 2021 as the buyer that paid $188 million for a New York penthouse previously owned by hedge fund billionaire Dan Och.

Blue Pool, in the meantime, is among the backers of now collapsed cryptocurrency exchange FTX, according to the South China Morning Post, a newspaper owned by Alibaba. Tsai has made through Blue Pool other blockchain and crypto-related investments as well, including stakes in Web3 company Artifact Labs and blockchain exchange Aver.