Alibaba's IPO architect lays out blueprint

'WeChat dominant'

Successful as it has been, Alibaba faces its first serious challenges to future growth.

As more than 80 percent of China's Internet users go online using mobile devices, rival Tencent, China's biggest Internet company by revenue, dominates smartphone usage through its WeChat app. On WeChat, users can update social network profiles, play games, book a taxi, shop and, as with Alipay, invest in a wealth management product.

"WeChat has won China," said Ben Thompson, who writes about technology at stratechery.com in Taipei. "It's going to be the dominant application."

Tsai disagrees. "They have never been successful in e-commerce," he said. "A chat app? We don't think that's important at all. If people want to shop they will use the (Alibaba) Taobao app."

Alibaba's independent financial services arm also faces a battle. The company's foothold in banking and fund management has irked China's big state-owned banks and attracted increased scrutiny and regulation from watchdogs.

"There are a lot of vested interests that have been disrupted, and a lot of large banks are not happy," said Tsai.

Banks are worried about the wide popularity of online wealth management products, which Alipay pioneered only last year. In nine months, its Yu'e Bao platform is now home to China's biggest money market fund by offering interest rates almost double the amount China's traditional banks are allowed to offer on one-year deposits.

China's biggest state banks have responded by cutting how much their customers can spend on online payment services, while the country's central bank is discussing draft regulations to tighten restrictions on Internet banking.

Winning habit

Tsai is used to making things work.

Two years ago, his skills were tested when Alibaba needed to raise about $10 billion in private funding to buy back shares from Yahoo and delist Alibaba.com, a business-to-business e-commerce unit then traded in Hong Kong, as the first step on the path to Alibaba's IPO.

However, the fundraising coincided with the troubled Facebook IPO, when shares slumped on their debut.

"We had planned on going on the road to start to raise capital (for a bank syndicated loan) for the transaction, and then the Facebook IPO happened," said Tsai. "Literally overnight, because of the Facebook experience, most of the institutional investors were turned off by Internet companies."

Alibaba eventually raised the capital from lenders - just two days before the deadline. "That was pretty hairy," Tsai said.

Now, Tsai is joining other Chinese Internet companies in listing in the US E-commerce rival JD.com plans a $1.5 billion IPO, while Weibo Corp, 18 percent-owned by Alibaba, is seeking a $500 million listing.

Though important, the IPO won't distract Alibaba from its core mission, Tsai said.

"When you look at Alibaba you really should think of us as one of the largest technology companies in the world. And technology companies innovate."

Alibaba confirms IPO in US	Alibaba investing in US messaging startup Tango