Pinduoduo

**David Rosenthal** (0:00)
We'll see you next time. Ooh, let me retake that. That might be our teaser quote.

**Ben Gilbert** (0:21)
Welcome to season seven, episode one of Acquired, the podcast about great technology companies and the stories behind them. I'm Ben Gilbert.

**David Rosenthal** (0:30)
I'm David Rosenthal.

**Ben Gilbert** (0:32)
And we are your hosts. Today, we are talking about, and I quote from their IPO prospectus, an exemplification of a multi-dimensional space, seamlessly integrating cyberspace and the physical space, a combination of Costco and Disneyland, driven by a distributed network of intelligence agents.

**David Rosenthal** (0:52)
Ben, it's like you're reading from my history and facts there.

**Ben Gilbert** (0:57)
I figured you would have pulled that too. Unbelievable, like absolutely unfathomable. At first, I thought Costco and Disneyland was going to be the hook. And then I realized all the stuff around it is actually far more absurd. So listeners, of course, we are talking about the Chinese e-commerce company Pinduoduo. Now, why is this a fascinating company? Well, first off, it's only five years old. And they went public on the NASDAQ two years ago in 2018, three years into their existence. They are the fastest company ever to $100 billion market cap. And they've nearly tripled in value since the coronavirus spiked globally mid-March. So almost all of that market cap or, you know, two-thirds of that market cap created in the last few months.

**David Rosenthal** (1:38)
I think it must be the distributed network of intelligence agents that are doing that.

**Ben Gilbert** (1:42)
It's certainly the intelligence agents, yes. So now, you might be saying, well, Chinese e-commerce, I thought that was already sort of a subtle frontier. I've heard of Alibaba. Or at least...

**David Rosenthal** (1:51)
Maybe even JD.

**Ben Gilbert** (1:52)
Yeah. And we haven't covered JD yet on the show, but also an e-commerce powerhouse in China. Well, apparently, there was an opportunity remaining. There was a missing segment that was not being addressed by either of those two companies, and it is enormous. This episode felt very timely, not just because of that $100 billion milestone for Pinduoduo, but also because e-commerce in general is having a moment, as they say. So the global pandemic has massively accelerated the shift from offline to online commerce, as I'm sure all of you are experiencing in one way, shape or form, at least as consumers. Yeah.

**David Rosenthal** (2:29)
Hopefully, you're Amazon shareholders.

**Ben Gilbert** (2:32)
Yeah. No kidding. Or Seattle residents and benefiting from all the side effects of that. And of course, China, once behind the US in their e-commerce penetration, I think it was only 6% of retail was done online in 2012, is now already at 24% of the total retail spend. A lot of that accelerated here in the last few months, much like the US penetration, which is really driving this crazy run up in valuation for Pinduoduo. So I do want to give a shout out to Ho Nam in the Slack, who inspired us to do the episode with this comment.
$100 billion market cap in 5 years from a standing start. This is just nuts. It took Microsoft 25 years, Google and Facebook more than 12 years, and even for their closest competitor, Alibaba, it took 14 years. And so it just felt like the stars were aligning to this episode. The more I dug into it, the more I was frankly shook by what this company looks like. Really all I knew about this before was their name. It's been fun spending the week kind of doing research and learning what is this beast.

**David Rosenthal** (3:41)
Like every story we tell here on Acquired, like you start thinking it's one thing and then you dig a little deeper and you're like, oh man, wow, there are so many layers to this onion.

**Ben Gilbert** (3:49)
Well, a few announcements before we get to it. So a huge thank you to everyone who took our survey at the end of the last season. So entries are now closed. As for the winners, we emailed you if you are one of the lucky 10 to win the year subscription to the LP program. And the winner of our AirPods is Amy L. From the Bay Area. So congratulations, Amy. And we will also be sending you an email to follow up after this. As always, if you love Acquired and want more, you should become an Acquired limited partner. Our most recent episode was with benchmark general partner Sarah Taville, part of our VC Fundamentals series. And she joined us to talk about the fundamentals of consumer investing. If you want to join, you can get access to that additional content plus our book club and our monthly LP calls on Zoom.