PDD (Pinduoduo)
“Costco + Disney” — Duan Yongping’s Most Important Chinese Internet Investment
🏢 Company Profile
PDD is an e-commerce platform founded by Colin Huang, and also Duan Yongping’s most important Chinese internet investment. Duan Yongping participated in Pre-IPO investing before PDD’s IPO, with the reason being “I have a high level of trust in Colin Huang.” He used “Costco + Disney” to define PDD’s business model — what he considers the most accurate description.
📅 Investment Timeline
| Time | Event | Duan Yongping’s Judgment |
|---|---|---|
| July 10, 2018 | Before PDD IPO | ”I plan to buy some more Pre-IPO” |
| July 22, 2018 | PDD listed | ”Give them 10 years and everyone will see where they excel” |
| July 28, 2018 | Added position after listing | ”I bought some Pinduoduo today… I haven’t had the desire to buy company stock for many years” |
| July 31, 2018 | Continued bullish stance | ”In the future PDD’s traffic should easily generate ¥20–30 billion (RMB) annual profit without much difficulty” |
| September 2018 | Characterized as venture investment | ”This is indeed my current view, so I’ve consistently not recommended large allocation” |
| April 2019 | Continued holding | ”Costco + Disney — this definition has some interesting meaning” |
💡 Why Duan Yongping Invested in PDD
- Trust in Colin Huang: Duan Yongping said “I haven’t even used Pinduoduo but I have a high level of trust in Colin Huang! Give them 10 years and everyone will see where they excel” — this embodies circle of competence applied to judging people.
- “Costco + Disney” business model: Duan Yongping said “Costco + Disney — this definition has some interesting meaning, and it would be hard to find a better definition” — good business model can be explained in one sentence.
- Differentiation competition: PDD serves users “outside the Fifth Ring Road” — an untapped differentiated market, consistent with Duan Yongping’s differentiation philosophy.
- Inheritance of doing the right things culture: Duan Yongping said Colin Huang “under Duan’s influence gradually built a doing-the-right-things culture: consumer orientation, differentiated competition” — inheritance of BBK’s culture.
- Power of corporate culture: Duan Yongping said “I believe in the power of corporate culture! I won’t consider selling PDD shares within 10 years, but I’ll continue buying when opportunities arise.”
💡 How Duan Yongping Characterized This Investment
Duan Yongping explicitly characterized PDD as a “venture investment,” not his usual value investing:
“By venture investment I mean: with such a group of people, such a culture, such a business model — if they continue developing like this, isn’t it possible that in 10 years they’ll split the market evenly with Taobao? If they achieve that, shareholder returns naturally will be high. Where’s the risk part? If I knew that, it wouldn’t be venture investing.” — Duan Yongping (Source: Business Logic, 2018-09-02)
This differs from his logic for investing in NetEase — for NetEase he was “very certain about gaming and very sure they’d make lots of money in the future”; for PDD he admitted “at my current level I still don’t know whether they can earn profits matching their current market cap.”
💬 Original Excerpts
“I haven’t even used Pinduoduo but I have a high level of trust in Colin Huang! Give them 10 years and everyone will see where they excel. Pinduoduo hasn’t even been established for three years yet; having some issues is normal. I think in 10 years they’ll be very impressive, assuming they have 10 years.” — Duan Yongping (Source: Business Logic, 2018-07-22)
“Costco + Disney — this definition has some interesting meaning, and it would be hard to find a better definition.” — Duan Yongping (Source: Business Logic, 2019-04-25)
“I plan to buy some more Pre-IPO. Perhaps 10 years from now people will discover that the era when you couldn’t find competitors even with a telescope has passed.” — Duan Yongping (Source: Business Logic, 2018-07-10)
“I bought some Pinduoduo today (July 28). Although I already hold quite a bit at much cheaper prices, I still wanted to buy more. I haven’t had the desire to buy company stock for many years, but if opportunities come up, I’ll buy more Pinduoduo. I believe in the power of corporate culture! I won’t consider selling Pinduoduo shares within 10 years, but I’ll continue buying when opportunities arise.” — Duan Yongping (Source: Business Logic, 2018-07-28)
“If Pinduoduo can get through its difficulties, then in the future PDD’s traffic should easily generate ¥20–30 billion (RMB) annual profit without much difficulty, right?” — Duan Yongping (Source: Business Logic, 2018-07-31)
“The only reason I feel justified making a venture investment is that under current growth conditions, I believe their good culture will ultimately have decent probability of delivering good results.” — Duan Yongping (Source: Business Logic, 2018-08-31)
“I believe their doing-the-right-things culture will lead them to find non-short-termist solutions.” — Duan Yongping (Source: Business Logic, 2018-09-05)
⚠️ Common Misconceptions
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❌ “Duan Yongping invested in PDD because he understood PDD’s business model” — Correction: Duan Yongping explicitly said “I invested in PDD because I like Colin Huang,” and characterized this investment as “venture investment,” admitting “at my current level I still don’t know whether they can earn profits matching their current market cap.” (Source: Business Logic, 2018-09-02)
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❌ “Duan Yongping recommended everyone buy PDD” — Correction: Duan Yongping explicitly said “I’ve never recommended anyone invest in Pinduoduo, and won’t recommend now either, since I don’t know how Pinduoduo will ultimately turn out, so I think at most you can only look at Pinduoduo by venture investment standards.” (Source: Business Logic, 2019-05-28)
📚 Investment Insights
- Investing in people is more important than investing in companies: The core reason Duan Yongping invested in PDD was trust in Colin Huang — “I understand him, I trust him.” This is circle of competence applied to judging people.
- Good business model can be explained in one sentence: “Costco + Disney” — exactly what Buffett said: “Great businesses can usually be explained clearly in one paragraph.”
- Long-termism perspective: Duan Yongping said “give them 10 years” — embodiment of long-termism in investing.
- Difference between venture investing and value investing: Duan Yongping characterized PDD as venture investment rather than his usual value investing — showing he has clear awareness of his circle of competence boundaries; he won’t allocate heavily to uncertain matters.
🔗 Related Notes
Related Concepts Business Model · Differentiation · Doing the Right Things · Long-termism · Circle of Competence · Corporate Culture Related People Duan Yongping · Colin Huang Related Companies Tencent · Apple · Moutai · NetEase Related Topics Criteria for Good Companies · Duan Yongping’s Classic Investment Cases