Why did Jack Ma insist on 'solving the trust issue first' in the early days of e-commerce? Does this reflect a first-principles thinking approach?

To put it simply, this is actually very easy to understand.

Imagine this: twenty years ago, if you were asked to send money to someone you only knew online and had never met, to buy something you'd never even touched, wouldn't you feel apprehensive? What if the money was sent, and the seller didn't ship the goods? What if the item that arrived was broken or fake? Back then, there weren't the convenient return processes and consumer protections we have today.

This was the hurdle everyone involved in e-commerce faced at the time. Everyone was thinking about how to make their websites more attractive, how to attract more merchants to open stores. But Jack Ma thought a layer deeper: if buyers and sellers didn't trust each other, the foundation of "transactions" wouldn't exist, and everything built upon it would be useless. No matter how good the website looked or how many products there were, if no one dared to place an order, it amounted to nothing.

So he relentlessly tackled the "trust" issue. It's like building a skyscraper: the first thing you need to solve isn't what color the exterior walls should be or what shape the windows should take, but whether the foundation is stable. For the skyscraper of e-commerce, "trust" was that foundation.

How did he solve it? He came up with Alipay. The logic was simple: when you bought something, the money didn't go directly to the seller; instead, it was held by Alipay, the "middleman." Once the seller saw you had paid, they would ship the goods. After you received the goods, checked them, and confirmed receipt online, Alipay would then release the money to the seller. If you felt the goods weren't as described, you could apply for a refund, and the money would be returned to you.

You see, Alipay acted like an impartial referee, instantly alleviating the concerns of both buyers and sellers. This model revitalized the entire e-commerce industry in China.

Does this count as "first principles thinking"? I believe it absolutely does.

So-called "first principles thinking," to put it plainly, means cutting through layers of fog to get straight to the essence of a problem. Others were thinking, "How do we optimize an online store?" – which was imitation and improvement. But Jack Ma was thinking, "What is the most fundamental condition for a transaction to occur?" His conclusion was "trust."

He didn't imitate eBay's model at the time (because foreign credit and logistics systems were already very mature). Instead, starting from China's actual situation at the time, he broke down the concept of "transaction" to its most primitive and core element – trust, and then designed a whole set of rules and products around this core element.

Therefore, solving the trust issue first was not just a simple business strategy, but a way of thinking that went straight to the root of the problem. At that time, it was absolutely a stroke of genius.