More Than Just Money - A Lesson From China

Alibaba Pictures is the film division of Alibaba - the giant marketing and merchandising conglomerate owned by Chinese entrepreneur, Jack Ma. If you're not familiar with the company, it's somewhat like Amazon. The film division was formed in order to invest a part of the company's wealth in the motion picture industry.

After showing a loss of $139 million in 2016, Alibaba Pictures' CEO, Yu Yongfu, announced at the Shanghai International Film Festival that going forward, his company would focus on providing data for the entire Chinese film industry. He told the rest of the industry to think of Alibaba Pictures as a partner rather than as a competitor. We can all learn from this.

Money is fungible. Having money by itself does not create a sustainable competitive advantage. One person's money is no better than anyone else's. When you have money to invest, you have some bargaining power with the person who needs the money until another investor shows up. At that point, your advantage is substantially diminished. This means that, in the absence of any other factors, the most attractive investments will go to the investor who is willing to take the most risk and/or accept a lesser return on investment.

Alibaba Pictures is attempting to shift the playing field by using its own competitive advantage - data. Alibaba has over 500 million monthly users and the company knows a lot about the buying habits and behavior of those people. This allowed Alibaba to partner with Steven Spielberg's Amblin Pictures on the film A Dog's Life to raise the Chinese box office performance from around an expected $12 million to actual sales of $88 million. With this type of marketing power, Alibaba is in a position to participate in the best projects from every studio and distributor and make great returns on its investments, as well as being paid for its marketing services. A much better strategy than just funding its own films.

All of us are good at something - probably several things. We all have unique assets and qualities that we can use to help others succeed. If we bring real value, then we are in a position to get paid real money.

We do this in our law practice by using our knowledge and experience and contacts in the entertainment industry. When we represent an investor, we work with the producers to control risk, solve problems and create a better production. Everyone benefits from that. It also means that when our clients invest, the producers get more than just money - they get a partner and support to help the project succeed. That gives our clients a competitive advantage over other investors while controlling their own risk and increasing the possiblility for substantial returns.

What's your sustainable competitive advantage? How do you deliver extra value to the people and companies you serve? As always, we would love to hear your thoughts.

​Roger Goff