Earlier this week, the Chinese ecommerce sensation Pinduoduo successfully listed itself at NASDAQ. The Wechat miniprogram captured everyone’s attention with an astounding performance that has it standing with a towering valuation of USD 24 billion within two years of its inception.
What’s even more striking is that the ecommerce giant carved out its success from social selling, a concept that had already bombed badly in the west, spiced it up with group buying, another fossil from Groupon’s heyday, and pulled off a feat that left the likes of Alibaba ransacking for ideas to keep pace with it.
Clearly much of the credit of Pinduoduo’s thumping success goes to its founder and ex Google engineer Huang Zheng who returned from Silicon Valley to start his own venture in his country. Zheng imported the group buying model he learnt from Costco during his US sojourn and turned it into Pinduoduo’s biggest USP.
But social sharing may have been Zheng’s best idea. This wasn’t his trump card. That honour must go to Duan Yongping, the quiet Chinese billionaire who nixed Apple’s ambitions in China, fathered many successful companies in the country and has been Zheng’s friend, philosopher and godfather even before Zheng’s Google days.
To the world Yongping is one of Pinduoduo’s investors. To Zheng, Yongping is the man who has almost blind faith in Zheng’s ideas.
A fairytale friendship
For Zheng, Yongping has been his greatest inspiration. “Duan Yongping is my most important influence when it comes to business,” he had once famously declared. And he meant every bit of it as they go a long way back.
Their relationship is nothing short of a star-studded movie plot.
After graduating from Zhejiang University, one of China’s top schools, in 2002, Huang Zheng arrived in the US to pursue his master’s from Wisconsin University.
While in the US, Ding Lei (of NetEase fame) got him introduced to Duan and that was the beginning of an abiding friendship. Zheng, who lived close to Duan in those days, began to help Duan in his business.
In 2004, when Zheng had to choose between working for Microsoft or Google, it was Duan who suggested that Zheng work for Google, a relatively new company which was not even listed in the stock market then. He told him: “Google looks like an awesome company, you should stay at least two years there to get to know it well”. Huang took the advice and chose Google. Three years later, Google got listed and Zheng struck gold.
In 2007 Zheng returned to China to become an entrepreneur. He founded Ouku, an ecommerce platform focused on electronic appliances. This was again possible due to Duan Yongping’s help. Ouku was originally a spin-off from Bubugao, the electronics empire founded by Duan himself.
Three years later, Zheng sold Ouku to new ventures. Among them was a video game company that offered RPG video games on Wechat, an experience that would come in handy during his Pinduoduo days. These companies were all relatively successful, which allowed Zheng to build up his corpus of funds to keep exploring new fields.
In September 2015, Zheng launched Pinduoduo with an angel investment of USD 8 million. Once again, Yongping was one of the investors.
Someone had asked the billionaire why he chose to invest in an infant startup like Pinduoduo. His reply is a testament of his faith on Zheng. “I have not used Pinduoduo yet, but I have complete confidence in Huang Zheng. Give him ten years, you will all see what he is capable of.”
The godfather of the East
However, Huang Zheng is not the only entrepreneur that has found inspiration in Duan Yongping. The billionaire and philanthropist is also the godfather of OPPO CEO Chen Yongming and his Vivo counterpart Shen Wei.
Born in 1961, Youngping was among the first students to take the Gaokao (the national exam for entry into Chinese universities) when it was resumed in 1977 after the Cultural Revolution.
He later studied in Zhejiang University and Renmin University and quickly became an entrepreneur.
He developed the Xiaobawang, a gaming and study console that became extremely popular in China in the late 80’s and early 90’s, thanks to its stellar advertising campaigns featuring super star Jackie Chan.
At the apex of that success (in 1995 Xiaobawang reaped a revenue of USD 146 million) and because of discrepancies in the shareholding structure, he decided to leave the company to form his own venture, Bubugao Electronics Limited (or BBK Electronics) which gave birth to the twin giants of budget handsets—OPPO and Vivo that completely derailed Apple’s business in China.
When Yongping left Xiaobawang some of Xiaobawang’s managers joined him. Among them, were Chen Yongming and Shen Wei. In 2016, the twin brands, once mocked as cheap iPhones, topped the rankings and threw Apple out of the top three slots in China.
The mighty duo
In the new company, Duan retained the principles which he thought held the keys to success: being pragmatic, focusing on a specific field and product, prioritizing marketing and an old Chinese strategy: “gain mastery by striking only after the enemy has struck.”
Even today Yongming and Wei follow their godfather’s principles like the gospel at Oppo and Vivo. Both companies invest heavily in advertising. Just as Yongping had Jackie Chan endorse Xiaobawang in the early 90´s, OPPO made football superstar Neymar its face while basketball superstar Stephen Curry became Vivo’s. The shareholding structure in both companies follow Duan Yongping’s advice: the owner need not control the majority of the shares, it is smarter to let employees have shares. This creates a sense of belonging and motivates them to stay.
During the first years after Bubugao was founded, Duan Yongping controlled only around 17% of the shares.
In the early 2000’s, Duan Yongping moved to the US with his wife. After reading a book by Warren Buffet, he decided to become an investor. In 2006 he paid USD 600,000 to become the first Chinese to have lunch with Buffet, his hero. The feat earned the nickname “Chinese Buffet.”
Always a man with a golden heart, Yongping brought someone else to the table during the lunch--Huang Zheng.
Duan Yongping’s principal focus now are his philanthropic projects. With his Enlight Foundation, he donates mainly to education and scholarship projects and he refuses to be taken as a role model.
He also keeps a blog that is usually non-business content. Although it is not updated frequently, each entry is read by more than 10,000 people and has dozens of comments. Yongping is clearly not just a pioneer among Chinese entrepreneurs, to all the people whose life he has touched and shaped, he continues to remain a godfather with a heart of gold.