Alibaba CEO banned his first employees from living more than 15 minutes from work

Alibaba -- now a thriving $200 billion company -- began in 1999 as a humble start-up based in Ma's apartment in Hangzhou, China. In Alibaba: The House that Jack Ma Built , author Duncan Clark recalls the company's roots and the demanding culture that contributed to Alibaba's success.

"The earliest hires earned barely $50 per month," Clark wrote. "They worked seven days a week, often sixteen hours a day. Jack even required them to find a place to live no more than 10 minutes from the office so they wouldn't waste precious time commuting."

The revelation is a reminder of the demanding cultures common at start-ups, and the sacrifices employees must often make.

"The start-up is in a race against time," said Anil Gupta, a professor of entrepreneurship at the University of Maryland's Robert H. Smith School of Business, who believes that physical proximity between a company's premises and where employees live is crucial. "In almost every opportunity space, you can bet that there will be several start-ups, all aiming for the same customer and all funded by competing [investors]. If you slow down, you risk being overtaken."

Gupta said thi s explains why so many start-ups provide on-site meals and services to employees, which subtly encourages them to linger at work. Gupta recalled the story of a chief executive who admitted that he ordered in dinner so that employees would work till 9 p.m., not 5 or 6 p.m.

An Alibaba spokesman confirmed that in its early days Ma required new hires to move no more than 10 or 15 minutes from the office. According to the spokesman, employees worked so late that it wasn't considered safe to make a long commute. Also employees needed to be on call at all times. If anything urgent happened, everyone needed to be able to go back to the office as soon as possible. As Alibaba grew larger, the policy was phased out.

For some, adopting Alibaba's requirement to live close to work would be unwise for most start-ups. It is something that would only work in China, where there is more of a culture of deferring to authorities, according to Kochan.

"You want to imprint a culture that says we are going to recruit the best talent and recognize that young people today really want to control their work schedules," said Thomas Kochan, co-director of MIT's Sloan Institute for Work and Employment Research. "They don't want to be controlled in a bureaucratic way, that's part of the allure of start-ups that they can be more flexible."

Kochan sees Alibaba's success as an exception to the best practices that will help a start-up thrive.

While start-up life is increasingly glamorized with shows such as ABC's "Shark Tank" and HBO's "Silicon Valley," Alibaba's demanding beginnings are a reminder of a long-standing reality.