Here at this time on facebook day. We will see how alibaba turns out. There are so me great reasons to host a show at this time. This has to be near the top of the list. There are so many expectations. Almost 168ed at billion and it hasnt even traded yet. Lets take you down to the floor of the Stock Exchange. Just ended an interview with the man of the hour. Emily, tell us about jack ma. He is incredibly excited, as you might expect. I got myself the with jack mom. That has been 15 years in the making for him. He started the company in 1999, and the internet rarely existed. People thought he was crazy. He got 17 cofounders who believed in his vision. A third of those cofounders were women. Onre was a lot of excitement the floor of the New York Stock Exchange. He had alibaba customers in town visiting from china. They are the ones who rang the bell. He did not ring the bell himself. That is a pretty humble. He knows there is a lot of work to do. We talked about u. S. Expansion and a timeline for that. We talked about challenges of working with the Chinese Government. We talked about what he is going to do with all of this capital, will he buy yahoo . It is not going to be going in that direction. He and Marissa Mayer do talk. Workinghave a relationship. Yahoo is a major shareholder in alibaba. We are going to see how this day will play out. Did you detect any anxiety partps, misgivings on his about how the stock is going to trade . Everybody who bought in on the ipo and everybody who is going to buy after the first trade wants to know how well it is going to do. It is the New York Stock Exchange going to screw up the way the nasdaq did . Going to manage the buyers and sellers so that it opens cleanly and everybody feels good . Did he reveal any of that to you . That jack momense is very relaxed. He has been doing this for a long time. He has been to this rodeo before. He took them public in 2000 seven. 2007. He is a big fan of tai chi. Is how he fosters his and mentality and zen spirit. He is very relaxed. A lucky number in china. I think he thinks that luck is on his side. Amounts to a great deal of money. I know youre coming back to us a little bit later. Emily chang is on the floor of the New York Stock Exchange. We are going to be watching for their first trade all morning. We have two great guests. He served on the board of yahoo from 1996 to 2011. He was there when it made its investment in ali baba. This is one of the best investments of all time. David kirkpatrick is here. He is a bloomberg contributing editor. From the getgo, why was alibaba interesting then and wire the interesting now . We had to have a partner in china. Alone and to do it did not work out. They were declining in market share in the needed a partner. They were introduced to jack mom jack ma. Mom yahoo wound up becoming a partner with them. That 1 billion. Thatwere not the alibaba we know today. They were not the dominant Ecommerce Company in china. What did amount to at that time . Was it a hedge . You couldnt see what alibaba would become. What did seem at the time that it would become . It did seem that it was going to be a very Strong Player in the ecommerce world. They were fighting ebay. Ebay china disappeared. Jack said in the interview on bloomberg tv that he had a dream. It we believed in the dream. How has your opinion of alibaba evolved over time . Have visited their offices. I have seen jack speak. I was blown away. Wire you bought away . I had never seen such adulation of a business figure anywhere ever. There is an open adulation of jack ma in china. I had never seen it. This is the woodstock of the ali baba ecosystem. Foriew has changed that years ago it was important. There was not any talk of expanding outside of china. Naturempressed with the of chinese ecommerce. It was already becoming more sophisticated than in the United States. China. O primitive in ecommerce has been their way out. Middle of an the dominant country of the way the chinese economy wants to grow, which is with ecommerce. I think that is a very big deal. What does being public do for alibaba . You have been involved with many public companies. Is beauty of Capital Markets it puts a price on what you are. That can be a curse as much as a blessing. Aboutof how we would talk. Och industries were public if we dont because they are not public. It is a blessing and a curse. Is blessing is alibaba littleknown in the United States. It is making a huge arrival on the scene. They will be a force to reckon with here in the u. S. And europe. They do business in a different fashion. A are very profitable. They are very profitable. The curse is they need to be more transparent. That has always been one of the issues with alibaba. You are what your stock prices. You are good or you are bad. I would make a big contrast with facebook. Mark zuckerberg never really wanted to go public. To this day he wishes he didnt have to. A choice. Really have your investors demanded. Jack ma always wanted to be the global figure he is becoming. Play thatsuited to role. Zuckerberg is more of a public person. Jack ma loves the spotlight. He handles it brilliantly. How does that make him a different executive than a Mark Zuckerberg . There is a similarity and that they are incredibly inspirational to their employees and to their customers. They are different. Zuckerberg is never going to wear a mohawk costume. Has donehat jack ma that among other things that he does. Jack ma is more intelligently imageconscious than zuckerberg. That is important for a company that has so much intersection with government. Engageg does not openly enough with the regulatory policy. Jack ma is a super public eye. Lets talk about why everyone is buying this deal today. If you ask a large amount of investment people out there, it seems that alibaba is the newest drug and they are feeding it. You have hypergrowth. People will always by hypergrowth. The numbers are staggering. We can pull them up. They putbase amazon to shame. 43 margins. Profit lastn net quarter alone. They do 80 of all ecommerce in china. These numbers are staggering. Do you truly trust all of these numbers coming out of china . They raise an eyebrow. I would not say i truly trust these numbers. You cant be sure because they dont have the same margins. There is a lot to that. A lot of people say this is extraordinary gusto. There is a lot of other frothy stuff going on. People are so unquestioning about alibaba. Hasink the Company Extraordinary numbers. It has an extraordinary business. Isre is no question that it a brilliantly managed company that is doing well financially. Are they comfortable that the risk is worth taking at 68 . That is a great way to put it. Share,ve got 80 market people will take a flyer on you. They are to put those regulatory issues of uncertainty to the back of their minds. I think the numbers are probably not that wrong. They did go through some due diligence. The bankers that a lot of due diligence. The numbers have to be there pretty much. There are many, Many American ifpanies that are as guilty not more so because we dont , of earningsibaba management. You are much more financially savvy than me. I dont know about money. What do you think about the structure where what you are buying when you buy alibaba is a holding company. Oh it is not the assets of the company. Does that worry you at all . It does long term. Think the investors have decided they are not even going to try to understand the structure. It is very opaque. The next not affect year or two or three. Longterm and mike. What are going to look up long term investing is because we havent seen in quite some time. There are 20 of questions about their Corporate Structure and. Cory johnson will be here. Yahoo is cashing in on a big chunk of its alibaba stake. Now Marissa Mayer has to put to work. Welcome back. T is ipo day for alibaba i am Erik Schatzker here with stephanie ruhle. We are waiting for the first trades. This is the biggest u. S. Ipo in history. The share is riced at 68. The company is valued at 100 city 7 billion. The stock is going to be worth a whole lot more. There is plenty of excitement behind this offering. As you are aware by now, some cautionary signs. We dont want to gloss over them , including a very confusing Corporate Structure. Torre johnson has that part of the story. An interesting deal the way this is set up. You dont see Many Companies with such confusing Corporate Structures where the are not just because it is in china. Is from the sec filing. I was trying to simple five the structure. This is what they have got. You have got Holding Companies in the Cayman Islands. Companies hold other companies in china where they dont have direct control of. There are other contractual arrangements that jack ma owns 90 of. This is a very complicated structure. What would you a set of ownership . Proxy, maybe . Hope . Investors hope that jack ma will have their interests in mind. It is low said that on his list of priorities. He has proven that. There was the case of alibaba. Com which was public before. It is part of the offering today. Ofalipay. He example the government would not let them be part of the company. They took it away. I am going to interrupt you for one moment. We are waiting for that first trade. We are getting the first indication from the New York Stock Exchange at the opening shares will bea between 80 and 83. There is no certainty that the stock will open at this price. Areman sachs and barclays working together with the New York Stock Exchange trying to match buyers and sellers and come up with a price that can stick. Indicationing the that the stock is going to open between 80 and 83. That is a 15 pop on a 68 ipo. That is more than 10 . That is quite a bit of money. That is about 40 times earnings. For a company that is growing at a decent clip, that is probably about right. Valuationt a market that makes it one of the most valuable companies in the public markets. That is an extraordinary thing. That makes it better than intel and citigroup. A 200 billion market cap would be very impressive. What do you guys think . I am not surprised. Wanted to learn from the fiasco that was alibaba. Com. The price plunged after opening. Nobody wants to repeat the fiasco with facebook. The number to end up higher. Considering they have operating margins that are so much higher than other Internet Companies, they were pricing it said theylly almost were insisting that have this kind of pop. Would trade higher than 80. Points go back to the that cory was making. Shareholding shareholders are buying into . Trust jack ma to do the right thing . He has already told us that the shareholder comes third. Isnt that ok . This is directly from the filing. Customer is first, employee a second, and investor is third. I know that some people will find this hard to understand. If you are a shareholder, maybe you like that. If the customer comes first then more dollars are coming in the door. That is the longterm view. Thank you very much. That is no different than google or facebook. They dont give the shareholders priority. Heres the difference. This is not an aggregate. We know what he knows when he says that. He thinks it is best for the customers to take assets away from shoulders shareholders, i have done it before and i will do it again. Saying he will take assets away from shareholders if it is in the best interest of my company. One of the things i get in trouble for saying is that he really does believe facebook is changing the world. I think gates was motivated by that kind of thinking. I think jack ma is motivated by that kind of thinking. He wants to help the chinese economy. He is expanding globally and thinks he can be a key part of global commerce. That is more important to him that his personal wealth or the wealth of his shareholders in the short term. Whatever aggregation of pieces it might be. We might see some strange behavior. Why did he buy into a soccer team . Whited he buy into a movie studio that had bad accounting . He wanted to be cool. , isnt that the classic really successful guys who make a ton of money by things. It is the nature of the chinese internet. Chinesecompanies in the internet are more broad in their self conception than the american Internet Companies. They believe they can do almost anything. From their point of view, it is not crazy to buy a soccer team. There are all kinds of things like that that will not happen in the u. S. That happens in china. You are right. These the kinds of things we have to get used to or had to get used to with facebook and google. A do create attention between a tension. Ate jeff bezos never seems to have to answer to anyone. Investors, they dont exist. Short termors have a view. They dont care about governance. They do want to be focused on the bottom line. Jack ma loses sight of the bottom line. Everyone is in trouble. Investorsyou think wont cut him the break they cut jeff bezos . Im not saying they wont. He has to take 42. 5 away. The chinese internet are a third of the largest 20 companies. They behave very differently. The Business Model is different. In the u. S. , we should be concerned about this. They have thinking that is out of left field. They are going to do disruptive things. We are very complacent and arab businesses. I think we should be very careful. The chinese are coming. , when they come to the u. S. They will play by a different playbook than we see in our Internet Companies who are more polite. These companies do not operate politely. Is that a different Business Culture . I would say it is. Becoming the Signature Companies of the entire chinese economy. I think that is the way the chinese leadership looks at them increasingly. Replacing him . Oil companies. Who cares. Look what happened to the train network. Are the Signature Companies of the economy, theyll license to do almost anything they want. Now that is a thought. I do with the point out that we have opening indications on alibaba shares. And 85. Between 82 that is an opening pop and a half. When we come back, yahoos 1 billion bet on alibaba pays off. Alibaba will trade this morning and the indication that we are getting from the New York Stock Exchange is that the stock andoing to open between 84 80 seven dollars. The first indication we got about 40 minutes ago was it would open between 80 and 83. It is remarkable that the stock the opening trade is being managed by Goldman Sachs and barclays. They were the underwriters of this offering. They are working with the New York Stock Exchange right now. Some of this is happening on the floor. A there is still a human factor. Happenct that this will before noon. All bets are off in some respects. The New York Stock Exchanges is being very, very careful in light of the bitter memories over the face book facebook offerings. That happened at the nasdaq. It hangs over any Public Offering of this size and scale. We need to make this conversation a bit broader. Weve got to talk about yahoo . He served on the board of the yahoo until 2011. He was there when they made that extraordinary investment in alibaba, one of the best investments of all time. Lets not forget about andrew frank. Lets start with you. When you look at yahoo right ss yahoo . Libabale they have a massive infusion of cash. They will be under pressure to do something with that. There is some disillusionment in their core business, which is valued it negatively relative to. Heir investment in alibaba there will be pressure to do something dramatic with this cash. A holeou think will burn in number is a myers pocket . Something like that. She is sitting on it though already. I wouldnt call it tumbler extraordinary. They paid a lot of money for it. Withat still leaves her 48 billion, or whatever the number is. The coreo fix business. If she does not fix the core business, she should think kiss the whole thing goodbye. Their technology is antiquated. Her mobile offerings are lacking. Bolster that. She can make acquisitions to bolster that. That should be her only focus. The best way to fix that is with acquisitions. I would assume. The you agree with that . Acquisitions that drive advertising. Advertising technology, which is what they lack. That anyd say longterm battle between the vision of god who as a Technology Company and ruvell as a Media Company, the Media Company is going to win. This is buying content and distribution. If you agree successful media companies, they are diversified. They dont have one specific site or offering that there depended on. In the modern world, there should be no distinction. I think that is why google has done so well. That is why facebook is doing so well. Between technology and media, you dont have to make a choice. You have to do it with smart software. I dont know. The problem that yahoo has is there was always this tension. We have to be a tech company. We are offering media offerings. Based onwere picked being a tech ceo or immediate ceo. They have to be driven by technology with great content. All of thewhy Newspaper Companies have gone down like a lead balloon. They did not develop tech. They have been bypassed by Silicon Valley by companies that did not think of themselves as media companies. Isnt this a happy accident . Yahoo was contemplating getting rid of all of its asian assets. Add them together today and we are talking about if the stock really opens that 87,