TIME Silicon Valley

In Silicon Valley, You Can Forget Aging Gracefully

HP CEO Meg Whitman Visits China
ChinaFotoPress—ChinaFotoPress via Getty Images

Getting old isn't easy, especially in tech

Nature abhors the old, Emerson said. In 2014, we can add: so do technology investors. Because in the tech sector, where innovation and growth are worshipped and rewarded with obscene valuations, the esteemed companies that helped establish Silicon Valley and shape the Internet are not being allowed to age gracefully.

HP is breaking into two, despite years of its CEO saying this wouldn’t happen. eBay’s spinning off PayPal, after its CEO insisted this made no sense. Both companies knuckled under shareholder pressure. Now Yahoo is facing pressure to cash out of Alibaba and merge with AOL. That follows Dell going private and IBM ditching its low-end servers. There are even investor rumblings that Microsoft would be better broken into pieces.

Spinoffs, breakups, LBOs and shotgun marriages aren’t uncommon among aging, troubled companies. But the wave of events hitting companies once considered blue-chip tech firms is unprecedented. Only a decade ago, most of these companies were at the top of their games. Even today, many are so profitable they annually pay out billions, if not tens of billions, to shareholders through dividends and buybacks. And while many of these companies have been undervalued by investors for years, they are now being treated as if they are entering a period of advanced decay.

In sectors like utilities or retail, slow growth is tolerated as long as a healthy profit margin is maintained. But in tech, profits aren’t enough without growth. And there is plenty of growth among the younger generation of tech giants like Google, Facebook, and LinkedIn. The gap between long-in-the-tooth tech giants and lithe, growing companies is getting wider by the year. While the latter are driven by innovation the former are pushed around by shareholder demands.

Tech investors have always been growth-oriented, but now it’s becoming an obsession. And why not? As the network effects long promised in the early years of the Internet finally kick in, growth at a successful startup can mushroom from seed round into large cap in a few years. Airbnb, Uber and WhatsApp were all founded about five years ago and today are valued at $10 billion, $18 billion and $22 billion, respectively.

Often, the new generation of successful startups push to stay out of public markets as long as possible to avoid the public scrutiny, quarterly earnings parades and exposure to shareholder activists that are plaguing the likes of HP, eBay and Yahoo. The world of secondary markets and venture investing have evolved to accommodate them, allowing institutional investors who can afford substantial stakes to become investors while the startups remain private.

Yet there’s a cautionary lesson here that startup founders should consider: The same forces that are accelerating tech growth curves are also accelerating the time to maturity. Grow big enough and companies will need to draw on public markets for financing. To meet quarterly targets, they need to maintain billion-dollar businesses even when they stop growing. That limits the ability to find new, financially risky areas of innovation. Soon enough, dividend and buyback programs are rolled out to placate antsy investors. That, as we are seeing this year, only placates them for so long.

No one is demanding a dividend from Google, or calling for Facebook to spin off Instagram. Both are delivering growth that often surpasses investor expectations and rewarded with rising stock prices. Others like Netflix and Amazon are getting a pass by investing profits into future growth. But as much as HP talks about, say, developing a mass-market 3D printer, investors only look with disappointment at the slow-growth business of PCs and IT services.

There are a few companies founded before the dot-com boom, notably Apple and Amazon, that have so far been able to buck the trend. But they may not be able to stay ahead of the curve for long. The campaign to pressure Apple for more dividends has halted because Tim Cook keeps promising new product categories like the Apple Watch. Amazon has lost nearly a quarter of its value in the last nine months amid concerns its spending is outpacing its promised growth.

For now, Apple and Amazon are anomalies among companies more than 20 years old that are promising more growth in coming years. That’s leaving their CEOs independent enough to pursue blue-sky innovations. But age catches up to all companies. And these days, companies in the tech sector are growing old faster than ever.

TIME Video Games

Is This Video Game Collection Worth $164,000?

Forget all that mad money, where the heck do you stash over 5,700 video games?

How do you value over 5,700 video games, more than 50 game systems, complete Nintendo and Sega game sets, and the ever-indefinite extension in such taglines “more”?

I have no idea. I collect rare books and I still haven’t the faintest. But someone has to try, and this Wyoming-based eBay seller’s come up with a round number for his apparently vast and immaculately groomed lot: $164,000.

$164,000 sounds like a figure arrived at carefully. Not $150,000, not $160,000, but $164,000. That has to be the result of an additive calculation, an item-by-item tabulation, not some ballpark figure plucked from the ether in multiples of ten- or fifty-thousand bucks.

More than 4,000 of the games are Nintendo-related, says seller reel.big.fish, with the majority from the 1980s and 1990s (he calls this period “the golden age” of gaming, which, just forget all the problems with such nostalgic labels, identifies the demographic the eBay sale’s targeting). The collection includes “multiple complete sets from Nintendo and Sega,” and “arguably” every retail game Nintendo put out from 1985 to 2000 (in the video below, the seller notes he’s only missing Stadium Events, though he has a reproduction cart). Other systems represented in the software mix include Atari, PlayStation, Sega, TurboGrafx and Xbox.

Want every Nintendo 64 console color variant? Custom hand-built and painted shelves (yes, shelves)? Complete-in-box Mario and Zelda sets? Eighty-one variant carts sorted by the number of screws (I had no idea this was a thing)? All 14 Virtual Boy games plus a 15th “bonus import”? Rare development carts? Dust covers for every single NES game? (I don’t, but maybe you do, and the sale currently has over 3,700 watchers, over 950 views per hour and over 50 inquiries so far.)

If you want to see the complete list, the seller’s put up a Google Doc spreadsheet with everything here (warning: it’s godawful slow to scroll, at least on a 13-inch Retina MacBook Pro). The seller says there’s no breaking this thing up, though I’d wager a gazillion people are going to ask for the privilege anyway. And note that $164,000 is just the asking price: he’s taking offers.

And if you want a tour of this fellow’s video game room–over 11 minutes of wall-to-wall game rubbernecking!–your wish is granted.

MONEY stocks

Why Companies Have to Listen to Carl Icahn

WALL STREET, Michael Douglas (standing), Saul Rubinek (head, right) 1987.
No raiders here. Today, Gordon Gekko would call himself an "activist." 20th Century Fox—Courtesy Everett Collection

Apple's noisiest shareholder is often called an "activist investor." What does that actually mean?

Updated: October 9

Investors have been pushing for—and often winning—big changes at companies. Billionaire investor Carl Icahn has fired off a letter to Apple APPLE INC. AAPL 0.5075% , of which he owns 53 million shares, urging the company to move forward on a plan to buy back its own shares. Last week, Ebay EBAY INC. EBAY -1.4353% split off its PayPal division, a plan Icahn pushed. Meanwhile, the hedge fund Starboard Value has been calling for another big tech deal: a merger of Yahoo YAHOO! INC. YHOO 4.5296% and AOL AOL INC AOL -0.221% .

Icahn and Starboard are usually described as activist investors, a fresh bit of Wall Street jargon that may leave you scratching your head. Here’s what you need to know about this not-really-new breed of financial power players. They may be shaking up a company you invest in—or work for—next.

What is an “activist investor”?

Ownership of a company’s shares usually comes with voting rights of one vote per share. Whereas most investors simply hold a stock and seek no direct role in management decisions, activists use their voting rights—and those of other investors they can rally to their side—to push for changes in how companies are run.

Activist shareholders can include big pension funds and mutual funds. But the most prominent activists these days are hedge funds, including Bill Ackman’s Pershing Square, Starboard Value, and funds run by Icahn.

The label “activist” itself is a bit of a public relations coup. Back in the 1980s, investors like Icahn used to be better known as “corporate raiders.” Gordon Gekko, the charismatic villain in Oliver Stone’s film Wall Street, is someone who today might be described as an activist. (He was also an illegal insider trader, but that’s different from being an activist or raider.) In his iconic “greed is good” speech, Gekko is at a shareholder meeting berating “Teldar Paper” managers for their fat salaries and poor performance. He wants control of the company. If there’s a distinction between then and now—that is, between corporate raiders and activist investors—it’s that activists today seem less inclined to mount a full-fledged hostile takeover and instead use their stakes and public pronouncements to exert pressure on the existing management and boards.

“Activism” calls to mind the image of idealistic political activists, but only a tiny slice of activist investors have political or social goals, like trying to get companies to reduce their carbon footprint. Most activists just want a higher share price, and tend to cash out once the price pops up.

What do activists want companies to do?

Sometimes activist investors are interested in changing day-to-day operations. In one notorious example, Ackman pushed JC Penney J.C. PENNEY JCP -1.8349% to appoint Ron Johnson of Apple as its CEO. Johnson tried to transform Penney’s into something more Apple-like, remodeling the stores and promising always-fair prices instead of constant discount sales. Bargain-hunting customers hated it. Revenues tanked, and Ackman later admitted he made a mistake.

More recently, Starboard Value drew a lot of (amused) attention with a 294-slide presentation on Darden DARDEN RESTAURANTS INC. DRI 0.2023% , owner of the Olive Garden restaurant chain, criticizing, among other things, the generous breadstick servings and a decision not to salt the pasta-cooking water.

But activists are often focused on one-time financial restructuring moves. As David Dayen at Salon pointed out, most people missed another thing Starboard wants Darden to do: sell or spin off the real estate its restaurants sit on. That generates cash for shareholders now, or creates a new real-estate stock that might be worth more outside of Darden. It may not be so great for Darden, though, if the restaurant side of the business later hits a slump.

Some other things activist investors like companies to do: get acquired by another firm for a higher price. Buy up other companies the activist happens to also own. Take on debt, which can amp up near-term profits. Or pull cash out of the company and give it to shareholders via dividends or stock buybacks. Apple’s already been doing that, thanks in part to pressure from Icahn and the fund Greenlight Capital. Icahn’s latest letter may speed that up.

Why are activist investors getting so much attention these days?

This may be an echo effect of the 2008 crisis. Activists looking for opportunities will often look for stocks that are cheap, so they can scoop up lots of shares and (they hope) engineer a large price gain. The crash created lots of opportunities. And as companies recovered, Time‘s Rana Foroohar says, many were still nervous about the economy, so they built up big reserves of cash. That cash is a fat target for activists.

The recent rise of hedge funds has something to do with it, too. Mutual funds and pensions have to be highly diversified, so they have limited ability to build up big share blocks, and less incentive to get involved in specific fights. But in a recent paper UCLA law professors Iman Anabtawi and Lynn Stout observe that lightly regulated hedge funds, which are only available to institutions and wealthy investors, can focus their assets on just a handful of stocks.

So what’s the verdict: Are activists good guys or bad guys?

Economics blogger James Kwak puts it this way: “In finance, there are rarely battles between good and evil. Instead, you have battles of, say, greedy and corrupt versus greedy and ruthless.” CEOs in these battles want to keep their jobs and control, and shareholders want a better return for themselves.

Critics of activists say they are too focused on short-term goals. The cash a company pays out as special dividend today can’t be plowed into R&D; the debt that finances a restructuring could later drive the firm into bankruptcy. Some companies, like Google GOOGLE INC. GOOG 1.1718% , have set up multiple share classes, some without voting rights, to insulate management from investor demands. The wild success of Google both as a stock and as a business shows that a company can do just fine without nagging from hedgies.

One influential study looks at what happened to 2,000 companies targeted by activists over a number of years. It concluded that activism worked out fine for investors, even over a period as long as five years. And “operating performance relative to peers improves consistently,” writes co-author Lucian Bebchuk, an economist at Harvard. This was true even for companies that took on debt or cut capital spending. But another recent study is less upbeat, finding little impact on growth and profit margins.

Even if share prices do rise, this doesn’t mean activists are good for the flesh-and-blood people who work for the corporation, or for that company’s customers, or for society or the economy as a whole, UCLA’s Stout has argued. By forcing top managers to be relentlessly focused on share price, activists make it even less likely that companies will take into account, say, their impact on the environment, or the interests of their workers. Think companies based in America shouldn’t move headquarters abroad just to save money on U.S. taxes? Talk to the hand, say the activists.

In the 1980s, the early heyday of corporate raiding, after Icahn’s takeover of TWA led to significant pay cuts and layoffs, economists Adrei Shleifer and (future Treasury secretary) Lawrence Summers described the gains from Icahn’s activism this way: “essentially a transfer of wealth from existing flight attendants… to Icahn.”

One thing a real-life Gordon Gekko probably wouldn’t have done: cut the salary of the next CEO of Teldar Paper. Although activists are supposed to be tough disciplinarians for managers, their focus on “shareholder value” helped push more companies to pay the C-suite largely in stock incentives instead of fixed salaries. CEO pay exploded.

TIME Tech

The 7 Most Important Tech CEOs You Wouldn’t Recognize

In the tech world, a few key players hog the spotlight. These eight are not household names but they are shaping the world you live in.

TIME Companies

Everything You Need to Know About Alibaba and its Mega-IPO

Chinese online retail giant Alibaba CEO Jack Ma (center) waves as he arrives at the New York Stock Exchange in New York City on Sept. 19, 2014.
Chinese online retail giant Alibaba's executive chairman and founder Jack Ma (center) waves as he arrives at the New York Stock Exchange in New York City on Sept. 19, 2014. Jewel Samad—AFP/Getty Images

What you need to know about the Chinese Internet firm's massive U.S. IPO

The Wall Street hype machine is in full swing for the Chinese online retail giant Alibaba’s initial public offering. The company, which operates a series of vast online marketplaces in China, raised $21.8 billion when it priced its IPO at $68 per share Thursday night, making it the largest offering in U.S. history. But that was just the beginning of the investor craze—shares began trading just before noon on the New York Stock Exchange Friday at $92.70, a 36% jump from the IPO price. That opening price puts Alibaba’s overall valuation at almost $230 billion, more than Amazon and eBay’s valuations combined.

Alibaba has already been called so many things–the Amazon of China, the biggest IPO of all time, the harbinger of a new Internet era—that it can be hard to pin down exactly what Alibaba does and how it makes money. TIME has assembled this helpful primer for the uninitiated to understand the hottest public offering of the year. Here’s what you need to know about Alibaba:

What is Alibaba?

Alibaba Group is a Chinese Internet corporation involved in a variety of Web businesses. Its most important elements are its online retail sites: Taobao Marketplace, a large eBay-like commerce site; Tmall, an online marketplace for name-brand retailers like Apple; and Juhuasuan, a daily deals site similar to Groupon.

The company is also affiliated with a PayPal-like mobile payments service called AliPay, and it has investments in online video, mobile messaging and cloud computing, among other businesses.

So is Alibaba the “Amazon of China” or not?

Not exactly. Unlike Amazon, Alibaba itself does not sell and ship items to customers. Instead, it acts as a kind of online bazaar where merchants as small as local vendors and as large as Nike can hawk their wares. Alibaba makes money mainly by convincing these sellers to place search ads on its website to reach more potential customers through keywords (like Google) or by charging a commission on some transactions (like eBay).

The company also makes money by selling premium memberships, cloud computing services and access to analytics data — so there are some comparisons to be made to Amazon.

Why is Wall Street so obsessed with Alibaba?

Two big reasons.

First, Alibaba processes a lot of sales and makes a ton of money doing it. Alibaba generated $248 billion in transactions on its three biggest marketplaces last year. By comparison, eBay generated $83 billion.

More staggering is the profit the Chinese giant reaps from these sales: Alibaba made about $2 billion in profit in the most recent quarter, tripling its earnings from a year ago. EBay, on the other hand, made $676 million and Amazon lost $126 million. Alibaba keeps costs low by hiring fewer employees than its closest American competitors and, unlike Amazon, avoiding the costly expense of operating fulfillment centers to ship products to customers.

Investors are also excited because Alibaba offers the most direct way to own a piece of China’s booming tech scene. The Internet population in the country is expected to reach 800 million by next year, according to government estimates, making it the largest market of online users by far. Tencent, another Chinese tech giant, offers many services that compete with Alibaba’s, but it’s traded on Hong Kong’s stock exchange. With Alibaba on the New York Stock Exchange, it will be easier for U.S. residents to invest in the company.

Who’s the mastermind behind Alibaba?

That would be Jack Ma, a former English teacher who founded Alibaba out of his Hangzhou apartment in 1999. Ma is not your average tech executive. He didn’t start using the Internet until 1995 and still doesn’t know how to code. He’s an eccentric character who once donned a blonde wig and black lipstick to sing “Can You Feel the Love Tonight?” at a 10th anniversary celebration for his company.

But he’s also a ruthless businessman who effectively ran eBay out of China in the early 2000s and maintains significant influence over Alibaba’s activities even though he’s no longer the CEO.

Who are the other key players at the company?

Yahoo, which owns about one-fifth of Alibaba, stands to make a windfall when it sells more than 120 million of its shares during the IPO, reaping as much as $8.3 billion before taxes. Yahoo will still have a 16.3% stake in Alibaba after the IPO and its stock price will likely continue to be buoyed by Alibaba’s rapid growth. However, Softbank, the Japanese tech firm that owns Sprint, is Alibaba’s biggest shareholder. Softbank will have a 32.4% stake following the IPO.

Despite their large stakes, these companies have relatively little say in the operational activities of Alibaba. They have ceded much of their shareholder influence to a group of executives called the Alibaba Partnership.

What is the Alibaba Partnership?

It’s a group of longtime of Alibaba employees, including Ma and his right-hand man Joe Tsai, who exert incredible control over the company’s activities. Alibaba also has a board of directors, but the Alibaba partnership reserves the right to nominate the majority of the board members, meaning the Partnership essentially controls the activities of the company by proxy without the need for input from other shareholders.

Should investors be concerned about this structure?

Well, it is highly unusual. The Partnership structure was rejected by the Hong Kong Stock Exchange, which is how Alibaba ended up on Wall Street in the first place. Though members of the Partnership must have a “meaningful” equity stake in Alibaba, according to the company prospectus, it’s not spelled out how large the stake must be. As Harvard Law School professor Lucian Bebchuk points out, partners could choose to later pare down their stakes in Alibaba and attempt to influence the company in ways that are not beneficial to other shareholders (remember, Yahoo and Softbank have basically handed their votes to the Partnership).

The ability of Alibaba’s executives to act unilaterally has already caused concerns before. Jack Ma spun off the fast-growing payments platform Alipay to another company he owns in 2011, which angered Yahoo.

Forget the risks! How do I get in on this IPO?

You don’t, unless you’re really rich. The banks underwriting Alibaba’s IPO will sell shares to mutual funds, hedge funds, and large-scale individual investors. The Average Joe’s first chance to get a piece of the company will likely be Friday morning, once the stock is publicly trading. But those shares could come at a significantly higher price than the IPO price range of $66 to $68. Twitter, for instance, started trading above $45 back in November even though its IPO price was just $26, due to extremely high demand for its stock. Unless you’re well-connected, it would be almost impossible to game the IPO to turn a quick buck. You should either plan to buy in as a long-term investor after carefully studying Alibaba’s prospectus or just relax and watch the chaos unfold without worrying about making or losing money.

What’s next for Alibaba?

The company’s breakneck growth in China shows no signs of abating, and Alibaba also has plans to compete on U.S. shores. Over the summer, the company launched 11 Main, an Etsy-like platform that connects shoppers with boutiques and other small vendors. And during Alibaba’s road show pitching the IPO to potential investors, Ma made his most direct statements yet about his already-massive company’s global ambitions.

“After we go public in the U.S., we will expand strongly in Europe and America,” Ma said. “Because after all we’re not a company from China, we are an Internet company that happens to be in China.”

MONEY tech stocks

No, Alibaba Is Not the Next Facebook (and 4 Other Myths About This Mega-IPO Debunked)

An employee is seen behind a glass wall with the logo of Alibaba at the company's headquarters on the outskirts of Hangzhou, Zhejiang
Chance Chan—Reuters

A reality check on this e-commerce giant, in advance of the Chinese tech stock's much anticipated initial public offering.

Everything about Alibaba, the Chinese e-commerce giant, seems larger than life.

Its initial public offering, slated for Sept. 19, is expected to be the biggest IPO in U.S. history, raising possibly $25 billion.

The company is also China’s largest retailer, not to mention the biggest e-commerce player in the world, dwarfing U.S. companies like eBay EBAY INC. EBAY -1.4353% and Amazon.com AMAZON.COM INC. AMZN -0.7484% . Indeed, in the media, Alibaba has been described as China’s eBay, Amazon, and Google all rolled into one. Wow.

Of course, whenever there’s a convergence of three of the market’s favorite topics — tech investing, Chinese stocks, and IPOs — hyperbole has a way of creeping in.

So here’s a realistic look at the biggest myths about Alibaba that will help you put the stock in perspective.

Myth #1: Alibaba will be the most important stock to hit the market since Facebook.

Reality: Alibaba’s IPO may be bigger than Facebook’s, but its shares will have far less impact on the broader market.

Even though Alibaba is going public on the New York Stock Exchange, it’s technically not an American company. And that means the stock is not eligible for inclusion in the S&P 500 index, says Howard Silverblatt, senior index analyst with S&P Indices.

That, in turn, means that funds that track the major U.S. indexes will not be allowed to buy the stock, so the shares will have far less impact on how the broad market performs.

Plus, Alibaba is likely to be more volatile than other big tech stocks, as it won’t be included in those index funds that are required to hold all the stocks in their respective benchmarks in good times and bad. As Kevin Landis, chairman and president of the Firsthand Funds recently told Reuters: “There is a pretty strong argument that index inclusion equals stability.”

Reuters points out that by choosing to list on the NYSE rather than the Nasdaq, Alibaba gave up the possibility of being included in another well-tracked index: the Nasdaq 100.

Myth #2: Alibaba is like Amazon, eBay, and Google all rolled into one.

Reality: Alibaba isn’t China’s only Amazon, eBay or Google.

If you just read the headlines, you’d think that Alibaba is like the Borg — an intimidating collective that methodically goes from market to market devouring everything in its path. Yet the truth of the matter is that Alibaba, despite its size, faces stiff competition even in its home market.

Take the Google GOOGLE INC. GOOGL 0.8661% comparison. Alibaba is often described as the Google of China not because it runs a search engine, but because it leverages its consumer website for online advertising revenue.

But you know who else does that? Baidu.com BAIDU INC. BIDU -1.3897% , which is the Google of China because it runs the leading search engine and uses it as a source of online ad revenues. Baidu is a $75 billion company that trades on the Nasdaq and can be found in some of the leading U.S. growth stock funds, such as T. Rowe Price Blue Chip Growth.

As for the Amazon comparisons, don’t forget that there is already an Amazon of China, which is listed on the Nasdaq: It’s called JD.com JD.COM INC ADS EA REPR 2 COM 'A' SHS JD 0.1575% , a $40 billion company that went public in the U.S. earlier this year. JD.com is a retailer that sells directly to consumers, but it also runs an online marketplace where other sellers can find consumers — much like Amazon as well as Alibaba’s Tmall.

Alibaba is actually closest in structure to eBay, as it runs a consumer-to-consumer online auction site in addition to an electronic payment service called Alipay that’s a lot like eBay’s Paypal.

Here too, though, there’s stiff competition. Tencent Holdings TENCENT HOLDINGS LTD. TCEHY 0.3971% , a Chinese Internet and media company, operates Tenpay. Baidu offers Baidu Wallet, and there there are scores of Chinese banks that are getting in on the e-pay game.

Myth #3: You will own the most important Chinese company through this IPO.

Reality: Actually, this IPO won’t give you any ownership stake in the company at all.

Alibaba’s offering is being portrayed as an opportunity to own the most important company in China. Technically, the shares you buy won’t give you any ownership stake in this company. That’s because the Chinese government restricts foreign ownership of key strategic assets.

To get around this, Chinese companies that list abroad have come up with a complex structure called a “variable interest entity.” In Alibaba’s case, the VIE is based in the Cayman Islands and is entitled to the profits that Alibaba in China generates.

This may sound like a distinction without a difference, but it can lead to major complications. For instance, even though many Chinese companies including Baidu have gone public using VIE’s, the Chinese government has not ruled on the full legality of such a structure, the New York Times has reported.

Plus, disputes over transparency are bound to rise as foreign owners have no say in the actual operation of the underlying company. In a famous case in 2011, Yahoo, a long-standing investor in Alibaba, got into a dispute with co-founders Jack Ma and Simon Xie, claiming that they had improperly moved the Alipay bill-paying unit out of the the part of Alibaba that Yahoo partially owned an interest in.

The dispute was eventually resolved, but because the shareholders of the company (in the 2011 case, Yahoo; but going forward the public) don’t actually own and control the underlying company that generates the profits, disputes like this are bound to arise.

Myth #4: CEO Jack Ma is the Jeff Bezos of China.

Reality: Jack Ma is more like Jack Welch than Jeff Bezos.

Because Alibaba is a big player in e-commerce like Amazon.com, founder and CEO Jack Ma is often compared with Amazon founder and CEO Jeff Bezos.

But while Bezos is a consummate disrupter who is leveraging technology to change the way we consume, Ma seems to have none of these types of ambitions. Instead, there’s a growing sense in management circles that Ma is simply like an old-school head of a conglomerate who just wants to dominate every business his company is involved in.

“Alibaba doesn’t look much like Facebook, Google, or even Amazon,” Walter Frick recently argued in the Harvard Business Review. “Instead, it operates more like GE.”

Frick went on to cite this passage from a 2010 Harvard Business School case study on Alibaba written by professor Julie Wulf:

By his own admission, Ma was a fan of Jack Welch, so it was only natural that his organization came to resemble that of GE in some regards. Just as Welch did not dictate an overall theme or strategy for GE, Ma preferred not to set one agenda from Alibaba’s corporate center, but rather to have each subsidiary set its own strategy. Much like Welch’s famed “#1 or #2” objective for each of these businesses, Alibaba’s governance inspired its subsidiaries to be the leaders of their respective industries. Ma explained, “Business unit presidents must have the freedom to do what is right for their business. I want business units to compete with each other…and focus on being the best in their businesses.

This would explain why the company is involved not just in online retail, but in wholesale supply, logistics, computer services, cloud computing, media, marketing, and finance.

Myth #5: Alibaba threatens U.S. tech and e-commerce companies.

Reality: Alibaba’s growth lies in China, not in the U.S. .

There’s a stat floating around that says Alibaba controls some 80% of all Chinese e-commerce. That makes it sound like Alibaba is done conquering its home market and is looking abroad because that’s the only way to grow.

In reality, Alibaba is a big player in what is still a developing marketplace in China for online sales. By sheer numbers, China is a huge market, but less than half its households are online, and consumer spending makes up only around a third of its economic activity (compared with two thirds in the U.S.).

So future growth will be attained by making sure that it continues to control a large swath of the Chinese market as more and more consumers get online and as consumer spending there becomes a bigger and bigger part of the country’s larger economy.

In the U.S., the company has launched small efforts, including its 11 Main marketplace. But as MONEY’s Kristen Bellstrom recently noted, “At least in its current form, 11 Main is no match for America’s current online retail kingpins.”

Just as U.S. firms ranging from Wal-Mart to Netflix have run into cultural difficulties and stiff competition abroad, Alibaba has to figure out the nuances of American consumers and tastes before it can even try to conquer this market.

More likely, Alibaba’s goal at this point is limited to attracting Western investors and — as Greg Besinger pointed out in the Wall Street Journal — establishing a foothold in the U.S. so it can start selling more American-made goods to its Chinese customers.

So American e-commerce companies should relax — at least for the moment.

TIME celebrity

Receipt With 20-Cent Tip from Eagles Running Back Is Blowing Up on eBay

Bidding had surpassed $80,000 as of 3 p.m. ET on Monday

A receipt from the Philadelphia restaurant PYT featuring a 20-cent tip (on a $61.56 bill) from Philadelphia Eagles running back LeSean “Shady” McCoy is now going for more than $80,000 on eBay, the restaurant confirmed to TIME.

Last week, McCoy said he left the unusually small tip because the waiter was “being rude and disrespectful.” Now, the current owner of the receipt is trying to turn the stiffing into a force for good by giving the money back to the restaurant.

The user behind the auction says the money from the final bid will be given as a massive tip to all the restaurant’s employees to thank them “for their hard work and dedication.”

“The only thing we would like to ask on your end is for the winner to write a personalized note or card to the PYT staff, which we give to the staff along with the winning bid/tip,” the description reads.

According to a manager at the restaurant that TIME spoke with, the restaurant’s owner gave the receipt to a friend before it wound up on eBay.

McCoy signed a $45 million, five-year contract back in 2012.

MONEY Bitcoin

Uber, Airbnb, and Others May Soon Accept Bitcoin

Bitcoin
Lucy Nicholson—Reuters

Customers may soon be able to use bitcoin for a variety of web services if a new deal involving an Ebay-owned payment processor goes through.

Bitcoin fans, rejoice. A new deal between a Paypal subsidiary and digital currency companies may soon allow customers to pay for Uber, Airbnb, Opentable, and other services with digital currency.

The Wall Street Journal reports that Braintree, a payment processor Ebay acquired last year, is in negotiations with businesses like Coinbase that allow consumers to store, buy, and send bitcoin, a digital currency that can be either “mined” using computing power or purchased with dollars. Braintree is currently part of Ebay’s Paypal unit. If these negotiations are successful, Braintree’s clients would be able to accept bitcoin payments.

If Braintree does enable clients to start taking bitcoin, they would not be the first to do so. Overstock.com was the first large company to accept bitocoin payments; and Dell, technology retailer Newegg, and satellite TV provider Dish Network, have all followed suit. Most of these services have also partnered with Coinbase.

While the currency has seen increased adoption, not all developments have been positive. In July, New York’s Department of Financial Services proposed new rules for virtual currency businesses that sought to reduce illegal activity—which bitcoin has previously facilitated—and increase consumer protections for the currency’s users. While some have lauded the rules as an important first step toward making bitcoin a viable currency, other bitcoin advocates slammed the regulations for eliminating bitcoin’s anonymity and their arduous requirements on certain businesses.

Bitcoin has also not fared well in terms of price. After the value of one bitcoin (BTC) peaked at over $1,100 in late 2013, its price has come crashing back to earth. As of today, one BTC is worth $512; down from $747 at the beginning of this year.

TIME Tech

eBay’s Surprising Diversity Figures

The eBay headquarters seen in San Jose, Calif., in 2011.
The eBay headquarters seen in San Jose, Calif., in 2011 David Paul Morris—Bloomberg/Getty Images

The online-auction site employs more women than its Silicon Valley peers. But men still dominate in technical and leadership positions

The tech industry is notoriously dominated by white and Asian men. But eBay’s first diversity report shows that it employs more women, blacks and Hispanics than its peers.

Forty-two percent of eBay’s staff of 33,000 workers is female, beating out LinkedIn’s 39%, Yahoo’s 37%, Facebook’s 31%, Twitter’s 30% and Google’s 30%.

eBay also reported that 7% of its U.S. employees are black and 5% are Hispanic.

But even though eBay as a whole may be more diverse than many other tech companies — it also had a female CEO, Meg Whitman, from 1998 through 2008 — there is still a huge gender gap in terms of tech jobs and leadership roles: only 24% of eBay’s tech workers are women.

And even though eBay says it has doubled the number of women promoted to leadership positions in the past three years, just 28% of those in leadership at eBay are women. (For comparison, 17% of Google’s engineers are women, and 21% of leaders are women.)

The same holds true for race. Of those working tech jobs, only 2% are black, 2% are Hispanic and 1% are multiracial. Meanwhile, 40% of those holding tech jobs are white, and 55% are Asian.

Similarly, only 5% of those in leadership positions are black, Hispanic or multiracial. A whopping 72% of the company’s leaders are white, and only 23% are Asian.

MONEY Food & Drink

The Market Says This Bag of Potato Chips Is Worth $49

Bag of potato chips
Fuat Kose—Getty Images

Some junk food is going for big bucks on the secondary market. How much would you shell out for your favorite snack?

Lay’s newest potato chip flavors, Bacon Mac & Cheese, Wasabi Ginger, Mango Salsa, and, yes, Cappuccino, hit stores today. These chips, which have already received myriad mixed reviews, are part of the company’s “Do Us a Flavor” contest. The winner will stick around, while the other three will eventually vanish from shelves.

If you can’t immediately track them down in your local store, however, don’t despair—just open a web browser. Last week, even before the chips officially went on sale, they were fairly easy to track down on the secondary market. On Friday, single bags were listed on eBay for a $11 a pop, plus $6 shipping (the suggested retail price is $4.29). Amazon also showed some options, including a four-pack of the Cappuccino chips for $24. And as the snacks become easier to find in retail stores, the rules of supply and demand should kick in, dropping prices.

Dig a little further into this snack food grey market, though, and you find plenty of options that won’t be popping up on shelves any time soon. One optimistic eBay seller lists a $49 bag of Lay’s Chicken & Waffles flavored chips, one of last year’s “Do Us a Flavor” contest runners-up, which has since been discontinued. You’ll also find other snack chip rarities, such as a $40 bag of Doritos Jacked Test Flavor 404, which one review described as tasting like “oniony vinegar” or “dry cat food,” and Pringles Pecan Pie, a seasonal special from the 2013 holidays, listed at $20.50 for two cans.

If chips aren’t your thing, you might be more interested in a $15 pack of Root Beer Float-flavored Oreos (a new variety that’s reportedly beginning to appear in stores), or $15 bottle of Coca-Cola Blak, a coffee-flavored cola put out of its misery way back in 2008. Marvin Nitta, editor of food review blog TheImpulsiveBuy.com, says that when the limited editon Lebron James Mix 6 Sprite soda came out earlier this year, he saw online sellers listing it for “four or five times the regular price.” (Currently, you can pick up a can on eBay for a cool $12.)

Eric Huang, who writes about snacks on his blog, Junkfoodguy.com, says he thinks the secondary snack food market is driven, in part, by companies’ recent attempts to try out more bold and attention-provoking flavors. Wacky flavors make the news, and adventurous eaters want to sample them, even if that means paying a premium. The fact that they’ll eventually vanish only makes them more enticing. In fact, Huang has his own “white whale”: a Doritos flavor called Wild White Nacho. He says he tried the chips once back in 2007, when they were briefly on the market as part of a contest, and “I’ve been searching ever since.”

International snacks are another thing that drive curious eaters to buy pre-owned junk food, says Huang. American foodies are understandably curious about foreign fare like Lay’s Lobster Hot Pot (3 bags for $25 on Amazon) or Canada’s uber-spicy Doritos Roulette (on eBay listed at $21 a bag).

There are some clear downsides to buying secondhand snacks. Between the mark-ups and shipping costs, you’ll pay more than you ever imagined for junk food. Many of the rarest discontinued products are well past their sell-by dates, though some food scientists say we shouldn’t get too worked up about that. There’s also the squashing and crumbling factor: Not surprisingly, many Amazon shoppers complained that their chips were nothing more than florescent orange dust by the time the snacks arrived on their doorsteps. Then there’s the unpredictability factor. Nitta recalls buying some fried chicken-flavor Doritos from a seller in Japan that were confiscated by customs because they contained an ingredient that’s illegal to bring into the country. Plus, he says, “in the back of my head, it makes me feel weird to buy food from some random person on the internet.”

If the groundswell of eaters chasing a product gets large enough, it can occasionally help put the items back on the market. Earlier this July Hostess announced the return of the Chocodile, a chocolate-covered Twinkie that was discontinued in the late 90s. In a statement, the company said the elusive snack had “inspired a black market following,” while NPR reported that the creme-filled sugar bombs have been listed on eBay for as much as $90 a box.

Still haven’t seen any flavor tempting enough to prompt you to buy some gently used junk food? Just wait: The winning submissions to “Do us a flavour,” the Canadian version of the Lay’s contest, will be announced in August.

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