Pinduoduo Founder Colin Huang Steps Down as User Number Tops Alibaba

Pinduoduo, China’s largest agriculture platform, announced that its founder Colin Huang has stepped down as chairman of the board to pursue scientific research, completing a leadership transition that began last July when he stepped back from day-to-day management.

With Huang stepping down from executive responsibilities, the 10:1 super voting rights attached to his shares will be removed, according to a letter from him to shareholders. He has further entrusted the board to exercise the voting rights on his behalf, and pledged not to sell his shares for another three years. 

Huang founded Pinduoduo in 2015, starting as a fruit seller before branching out to more product categories on its online marketplace. It has grown rapidly by offering bargains and a more interactive shopping experience that it describes as a cross between Costco and Disney.

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The company, which is headquartered in Shanghai, listed on the Nasdaq in 2018 and surpassed $200 billion in market capitalization late last year. As of the end of last year, Pinduoduo overtook Alibaba in the number of annual active buyers while its number of monthly active users topped 700 million. 

Huang, who is 41, is a rare instance among China’s internet corporate chieftains who has stepped down from the companies they founded while in their prime. His departure is also a vote of confidence in the depth of managerial talent at Pinduoduo. Huang said he will devote time to pursue fundamental research in agri-food science and the life sciences.

Taking over the baton is Chen Lei, who studied computer science with Huang at the University of Wisconsin-Madison and later worked together at several ventures before Pinduoduo. A computing prodigy, Chen represented China at the International Olympiad in Informatics in 1996 and 1997, winning a gold and bronze, respectively.

Before becoming CEO last July, Chen was Chief Technology Officer of Pinduoduo, the chief architect behind Pinduoduo’s mobile-only platform that has enabled it to seize opportunities that arose with the changing of consumer behavior due to the mobile internet. 

“2020 has vindicated our view from the get-go that the separation of the online and offline worlds is increasingly irrelevant,” Chen said on Wednesday at the release of Pinduoduo’s fourth-quarter financial results. Covid-19 accelerated this “blending” and created more opportunities for online platforms like Pinduoduo to fill in a need left by brick-and-mortar retailers, he said, citing examples of online grocery shopping. 

For the fourth quarter, Pinduoduo reported a 94% increase in total revenue, excluding revenue from merchandise sales, to 20.9 billion yuan. Non-GAAP operating loss narrowed from the same quarter a year ago.

Pinduoduo is committed to doing its part to contribute to the technological development of China’s agricultural sector, Chen said. “To help increase the resilience of the food chain and stave off the looming global food crisis, we will continue to invest in agriculture and food technology, and look into global investment opportunities in alternative proteins, food safety, and precision farming.” 

In groceries, Pinduoduo aims to bring fast and affordable groceries available to its consumers, in part by building a new agriculture-focused logistics infrastructure platform that can reduce food wastage, improve food quality and lower prices. Chen said on Wednesday he hopes Pinduoduo will become the largest grocer in the world.

Chen also said the events of 2020 have made Pinduoduo more determined than ever to promote digital inclusion of rural communities and the disadvantaged. E-commerce has created new roles and opportunities for more people, including women and the physically weak, to take part in the digital economy, he said.

“This is a win-win situation for everyone, and with our commitment to social responsibility, we definitely want to and will do more here,” Chen said. 

Huang said he had planned to step down as chairman one year after handing over his CEO duties to Chen Lei, who will now serve as chairman concurrently. The decision to bring forward the transition by a few months was prompted in part by a health scare, where a routine medical check-up at the end of last year uncovered a lung nodule and abnormal indicator. This awakened a long-held curiosity of the life sciences and strengthened his resolve to pursue his childhood aspiration to become a scientist, he said.

And even though Pinduoduo was still a young company, with a long runway and room for growth, it was time to explore long-term opportunities that can ensure the company’s quality and pace of growth in 10 years, he said. As founder, he was most suited to take on this role, he said. Lastly, a new generation of leaders had also emerged at Pinduoduo through the pandemic and business changes. It was time to let them shape the company, he said.

“When we are young, our teachers always ask what we aspire to become when we grow up. Like many others, I declared that I wanted to be a scientist,” Huang wrote in his letter. “Alas, in the blink of an eye, I am already in my forties. It is probably unlikely for me to become a true scientist. But if I work hard and combine the chemistry that I loved in high school, the computer science that I learnt in university, and the operation experiences I acquired at work, maybe I can still make something meaningful happen.”