Pinduoduo announced that its founder, Colin Huang, has stepped down from the board of directors effective today to pursue research in the food and life sciences, disciplines where breakthroughs could drive the future of China’s largest agriculture platform.
Huang was succeeded as Chairman by Chen Lei, who will also continue to serve as Chief Executive Officer. In a related move, Huang entrusted the Board to exercise his voting rights as a shareholder and pledged not to sell his shares for a further three years. The 1:10 voting rights attached to Huang’s shares have also been removed as he no longer has executive responsibilities at the company.
Huang is handing over the reins as Pinduoduo cements its position as the operator of the largest agriculture platform in China, serving more than 788.4 million users. The value of agriculture-related orders on Pinduoduo doubled to more than 270 billion yuan ($42 billion) last year as the pandemic pushed more consumers to buy more groceries online.
The two-step leadership transition began with Huang turning over the CEO role to Chen on July 1, 2020. Huang said then that he was stepping back from day-to-day management to work on the company’s long-term strategy and devote more time to fundamental research.
In a letter to shareholders published today, Huang said that now was the time to explore future growth drivers if the company wanted to ensure the same quality and pace of growth in 10 years.
He noted that while Pinduoduo has created greater income for farmers and savings for consumers by improving efficiencies in the supply chain and in the matching of supply and demand more efficiently, those contributions to agriculture lay mainly in downstream distribution and improving midstream supply chain efficiency.
“However, improved efficiency in distribution and sales still does not fundamentally add value to agricultural products, nor inherently improve our health significantly,” he wrote. “What can we do if we were to take a step further and go beyond efficiency improvements?”
“As the founder of this company, I am probably the most suitable person to take on this task by stepping out of the business and the comfort zone to embark on a journey of exploration. It would be all the better if the journey is also aligned with my personal interests.”
Huang said that while the original plan was to step down as Chairman one year after handing over his CEO duties, several factors had prompted him to bring forward the transition by a few months.
First, in order for Pinduoduo to rise above competing through scale and efficiency, which had its “inevitable limitations,” the company must dive into deeper and more fundamental issues and seek answers from core technologies and the fundamental theories that underpin them.
Second, the pandemic had accelerated both external and internal changes, and it was time to let the new generation of leaders and managers that had emerged through the crisis take the reins and shape the company.
Comparing Pinduoduo to an elementary school pupil at the time of its 2018 IPO, Huang said that the company has “become a youth entering adolescence” in just three years.
“Observing its rapid transformation and growth, I’m both joyful and anxious. Pinduoduo will have its own growth journey regardless of whether I am nervous, excited, or frightened as its guardian,” he wrote. “I hope that my stepping down as Chairman of the Board will aid this young person into independent adulthood.”