Q&A with an Entrepreneur: Max Ma of 7thOnline

A regular series at The Wang Post, where we sit down and talk with notable Asian entrepreneurs. This week, we speak with Max Ma, the CEO and co-founder of 7thonline, which is based in New York City.

Let’s start from the beginning: where were you born, and where did you grow up?

I was born and grew up in Wuhan, China, which is on the Yangtze River and a big trading hub with vibrant culture relating to its historical status as a large port city (in Chinese, 码头文化). Similar in the sense that “all roads lead to Rome”, Wuhan sits at the center of many routes and was also one of the capitals of the Republic of China (1912-1949).

wuhan

A vital port city: Wuhan, China

What are your memories from those times?

My parents were employees of state-owned enterprises. Their offices and our home was in the same building: my father’s office was on the third floor, my other’s was on first, along with the daycare. I saw them working hard, day to day. My mother was an accountant, and I’d be able to spend time sitting next to her desk: she was meticulous in her work. Books were balanced to the penny– if the books were off, even by a penny, it’d begin an investigation for corruption! My father was a Human Resources (HR) manager, and he dealt not only with business but also employees’ family disputes and issues at home.

I remember, our family would be eating dinner, and the employees would be airing out their personal issues right in the next room! From this, I realize how important it is to care for an employee’s family. The employees’ families matter: if the issues aren’t resolved, it’d affect their work. The Chinese saying is: “a good stable family is a foundation to a person’s growth at large.”

I grew up during the Cultural Revolution, and instead of studying, we’d make lots of handcrafts, including umbrellas, at school, and pick plantings in fields. For us, we never thought to go to college: the plan was to be sent to a village to work, and after two years, a job may open up in your hometown, and your family would use guanxi (connections) to maneuver you into that job. Then, you become a factory worker.

When I was thirteen, the country’s politics changed; Deng Xiaoping re-instituted colleges in China, and all of the sudden, we could take tests and apply to places! I was good in math, physics, and chemistry. In 7th grade, we were already studying chemistry, and I was the first of my class. Back then, only 5% of Chinese students went on to college. There were 60 people in my class/grade; three of us were the best and we went onto college. You see– that’s the 5%!

Tell us about your time in college. Was there a specific experience that set you apart?

I studied Electric Engineering, specifically for ships, at Wuhan University of Technology (武汉理工大学). My father told me that this university was not a top school, but if there was an opportunity to be assigned to a better job and a better city after graduation, this field would provide the best assignments. (In those days, jobs were assigned based on needs.)

When I graduated in 1985, I worked in electrical engineering on a ship, and was assigned to a company working overseas on merchant navy ships in Wuhan. As a sailor, I was exposed to success and wealth at the very beginning from people I met on my trips. I befriended people in business in Hong Kong, and I was impressed with how they carried themselves and by their acumen; I learned how to conduct business. That was the beginning of my desire to start my own business, but it was a vague idea.

My English was bad because I’d given it up to study Japanese in college. When I realized Japanese was only spoken in one country but English let you communicate all over the world, I decided my English wasn’t good enough.

When you decided that your English wasn’t at a level you liked, what did you do about it?

In 1987, I entered Huazhong Normal University to study English; our instructors were teaching fellows from the Yale-China Association. We were exposed to a lot of Western ideas in the English Department, and we were active in student political life.

tiananmen

Students protesting on Tiananmen Square, 1989.

The year 1989 was the Tiananmen Square protests. Because of my English studies, I had a short-wave radio; every night I’d put the radio out my window, and the other students would gather and listen.

During the Tiananmen Square incident, I realized that while many of us worked hard to build our futures, we saw there were extremely privileged young people who, because of family backgrounds, got ahead without working hard. We were disillusioned and aggravated. We, the students, had a legitimate demand: we were not satisfied, but not only were our dissatisfaction not dealt with, we were also brutally struck down. It was not a meritocracy, and I wanted to leave China.

How were you able to leave China?

In spring of 1990, I was to be shipped out again, on business. I remember I confessed to a friend that, most likely, I wouldn’t be coming back this time.

My father was the head official of a government agency battling corruption, and I wondered how my actions would affect him. We received a fax telling us that the ship’s destination would be the United States, and I had four weeks to think the plan through. I spent two weeks thinking on how my family would be affected, and two weeks on the logistics– not only if I should go AWOL, but how. These were the most restless four weeks of my life! I was worried, nervous, uncertain, and restless; I couldn’t share what I thought with anyone. I couldn’t sleep.

I decided my family would be okay. Then, I had to think about the situations that’d allow me to slip off the ship. On the ship, we don’t close or lock our doors, and everyone went around into each other’s cabins for drinks and snacks. I had to plan what to bring and thought about how to pack without drawing suspicions; I decided that I couldn’t have a prepared suitcase but practiced packing until the whole process took me under a minute.

What happened next?

The political officer and my peers were suspicious of my intentions, so I was accompanied by one sailor and one ship engineer at all times. They followed me everywhere.

One day, we were arriving to shore at Burnside, Louisiana; we were watching television in the entertainment room, because we were close enough to get a signal. All of the sudden, I realized I was alone in the room– everyone had disappeared! Everyone, including my watchers, had specific duties during docking; I was the only electrical engineer and did not have a set job at that time.

Preparation always pay off! I had a five-minute window, and because I’d prepared, I was ready and was able to walk off the ship.

They’d taken away my passport. I hitchhiked into town and with me, I had all of my clothes, worn in layers under my regular clothes; I had about $6000-$7000 in cash. At the New Orleans airport, I asked to buy a one-way ticket to New York City. The sales agent asked me which airport– I didn’t know there were three airports for NYC! Can you imagine, now: a strangely dressed man, with accented English, no papers, paying in cash for a one-way ticket to New York, where he’s obviously never been before?

It was sultry weather in New Orleans. The flight attendant laughed at me and said, “Look at that man! He’s put all his clothes on.”

I thought, You have no idea what I’ve done!

What happened then in New York?

I didn’t know my plans when I left the ship, but I had some friends in New York. As soon as I arrived, I called my mother and asked her to keep my jumping ship a secret from my father for six months– that’s when he would retire.

Yet, he found out before six months: he kept on going to retrieve my paychecks at the office in China, and after four months, the senior officer asked him, “Mr. Ma, are you serious or pretending?” My father asked him what he meant. The man said, “Your son’s not even on the ship anymore! He’s left!” Immediately, my father went home and asked my mother what happened to me, and she told him.

Later, I was able to ask my father how he felt when he learned I’d jumped ship. He told me, basically, “Good form!” For other people– my father’s acquaintances or friends, who were hardcore Communist members, though– our meetings were always awkward, even though they’ve known me since I was growing up.

In New York, I worked in a friend’s restaurant: washing dishes, taking orders on the phone, working as a cashier. There’s a saying about the Chinese coming to the U.S.: that all Chinese people end up doing is washing dishes.

chinatown

New York Chinatown

How did you move away from washing dishes for the rest of your life?

My friend from the Yale-China Association told me that I could go back to school, as I’d already studied Electrical Engineering. I sought political asylum and enrolled at the Polytechnic Institute of New York University. I put all my savings into a year of school, and was frugal with my expenditures.

When I graduated in the mid-1990s, my first job was as a software engineer in IT for a retail company. At that time, the retail industry was disorganized: information did not make sense. Therefore, I saw an opportunity for retail efficiency.

max-ma-7thonline

Max Ma, CEO of 7thOnline

How did you start your company?

It was an idea with friends: we were four guys and I was 35, the oldest. We tried to sell solutions to make the retail business more efficient by streamlining demand and inventory, as well as management, planning, and merchandising (all core processes of a retail company.) 1999 was the tail end of the dotcom craze, and we were able to raise funding, but we had no credibility and had to seek to build it.

We recruited advisers and a Board of Directors from established giants in the business, who’d worked at senior levels at A&S, Macy’s, Barneys. From them, we learned corporate management, and we still consult with them daily on issues facing the company. Before, there were no tools for organization like we have now; our advisers saw and liked innovation, and became personally invested.

Are there any plans to expand internationally or to Asia specifically, and how?

In the U.S., the next phase for 7thonline is downstream supply chain management.

From a team of 15 people in the early days, now we have a team of over 100. We’re growing our presence in China with a driven team. Retailers in China use processes seen thirty years ago in the U.S. There’s no planning on which goods to send to which stores: the stores receive a shipment, and if the goods aren’t sold, they’re just moved back to the warehouse. While China is in the early stage of a market economy, the retail business is still family- and enterprise-focused and does not understand what technology can do for them. Retailers should work on e-commerce, supply chain management, and inventory management, and currently, we’re the only and best solution specifically focused omnichannel or multichannel merchandise management.

What advice could you give to new entrepreneurs?

1) Be persistent.

2) It’s not about what you want– it’s about what you do.
We started in 1999, and the reason why we’re around still while so many companies have failed is because we had drive, were persistent, and slowly transformed ourselves. Our first business plan was as a exchange for merchandise, which was not sustainable. We learned to hang on and go with the ups and downs, but also to be flexible and change our business model.

3) Think outside the box for growth.
As long as you’re determined to stay in the game, there will be adjacent problems to explore even if your main area of focus doesn’t work out. People talk about staying a step or three ahead– but just half a step will work. You can’t ever let competitors catch up with you!

I can’t take all the credit. I didn’t want to work in the field of e-commerce until one of our directors pushed us to do it. My team ran with the idea and showed me prototypes; I was skeptical, but it worked out great. Don’t be afraid of innovation.