Customer-Employee-Shareholder Priority Stack
Rank stakeholders explicitly, then let the ranking dictate trade-offs.
- Difficulty
- Easy
- Time to result
- ~ongoing to results
- Steps
- 5
- Confidence
- 75%
Jack Ma publicly ranks stakeholders in a fixed order — customers first, employees second, shareholders third — and uses that ordering to make real trade-off decisions, not just as a slogan. The framework's power isn't in naming the top priority (most companies claim 'customer first'); it's in explicitly naming what is NOT the top priority and being willing to consistently sacrifice it. Alibaba applied this by giving up significant margin and equity (free transactions, generous founder/employee equity, large dilutive fundraises) in order to build the team and infrastructure needed to serve customers, even when it meant frustrating shareholders like Yahoo and SoftBank during periods of conflict.
Origin
Extracted from Acquired
Core principles
- 01Naming your last priority is more meaningful than naming your first
- 02Consistency under pressure is what makes a stated priority credible
- 03Employee investment is a means to the end of serving customers
- 04Short-term shareholder friction can be an acceptable cost of long-term customer value
How to run it
- 1
Explicitly rank all three stakeholder groups
Publicly state the order: customers, then employees, then shareholders — not just that customers matter.
- 2
Identify the trade-off moments
Watch for decisions where satisfying shareholders (e.g., taking a transaction cut) would come at the expense of customer trust or adoption.
- 3
Default to the top of the stack under pressure
When forced to choose, resolve in favor of the higher-ranked group, even if it costs margin or dilutes ownership.
Watch out This will create real, sometimes public, conflict with shareholders — be prepared for it.
- 4
Invest in employees to serve the top priority
Use capital and equity to build the team and infrastructure required to deliver on the customer promise.
- 5
Communicate the ranking consistently over time
Repeat the stated priority order publicly so investors and employees calibrate expectations correctly.
In the wild
Alibaba and Taobao chose not to take a cut of transactions, unlike eBay, prioritizing customer/seller adoption over near-term shareholder revenue.
→ This customer-first, revenue-second choice helped Taobao displace eBay as the dominant marketplace in China.
Jack Ma gave meaningful equity to all 18 co-founders and repeatedly raised large, dilutive rounds to build out the team.
→ The well-resourced team was able to out-execute better-funded competitors like eBay.
Common mistakes
Treating the stated priority as a slogan
Saying 'customers first' without ever naming and sticking to what's ranked last makes the statement meaningless.
Caving to shareholder pressure in the moment
Reversing the ranking when investors push back (as nearly happened in the Yahoo conflict) undermines the credibility of the framework.
Is it for you?
Best for
Founders building long-horizon, trust-dependent platforms who can tolerate near-term shareholder friction.
Not ideal for
Businesses with fiduciary structures or investor agreements that require strict shareholder-value maximization in the near term.
From the transcript
“the priorities of our business are that the customer is number one, employees are number two, and the shareholders are number three.”
“when you prioritize things, the important bit that you're saying is not what you're calling the first priority, it's what you're calling not the first…”
From the episode
Alibaba