In just three and half years, Chinese e-commerce platform Pinduoduo grew from a burgeoning direct-to-consumer delivery service into a multibillion-dollar company with a successful IPO under its belt. When the Shanghai-based startup went public in late July, its stock soared to nearly $27 a share — 41% higher than the company originally anticipated — making Pinduoduo worth nearly $24 billion.
Its remarkable growth is the result of a confluence of factors, says Ron Cao, partner of Shanghai-based venture firm Sky9 Capital. Cao has helped oversee much of Pinduoduo’s growth since his firm led the e-commerce platform’s Series B funding round in 2015.
At the time of Sky9’s investment, Cao said Pinduoduo was a fast growing e-commerce platform primarily focused on selling affordable, perishable fruits.
But with a fresh cash injection of $110 million from a number of investors including Lightspeed, Sequoia, and Tencent, Pinduoduo rapidly expanded its purview: Now, the site sells nearly every product imaginable ( breast enhancement cream, smartphones, mangoes, toilet paper, and men’s loafers to name only a few) along with fashion goods, sports items, books, and electronics.
Pinduoduo’s CEO, former Google engineer Colin Huang, has described his company as “a combination of Disneyland and Costco” that sells low-cost products to shoppers through bulk suppliers. Once a group of people opt in to buy an item, the platform ships it out directly from the supplier at a competitive price.
In an interview with Business Insider, Cao broke down how Pinduoduo became such an instant success: