Dissolve the team and go all in on Pinduoduo? The agricultural truth experienced by entrepreneurs

A veteran entrepreneur with over 10 years of experience, after diving deep into agricultural ventures, disbanded his team and invested the funds into Pinduoduo stocks.

—— "Reassessing Pinduoduo's Agricultural Value" Series 2

$PDD(PDD.US) 

Mr. Z is the most unique Pinduoduo shareholder I know.

Coming from the internet industry, he bought Pinduoduo stocks at a low point in mid-2022, when TEMU didn’t even exist, and has held them ever since.

He doesn’t scrutinize financial reports, chase high-frequency data, or fuss over valuation models. His confidence in Pinduoduo stems entirely from his own entrepreneurial experience in agriculture. After personally navigating numerous pitfalls, Mr. Z realized:

Agriculture has too many challenges; individual entrepreneurs can hardly make a difference.

Pinduoduo’s model for transforming agriculture is viable, and Pinduoduo is the only one genuinely committed to agriculture.

1、

In 2019, Mr. Z started an agricultural service platform.

Without delving into details, the core idea was to shorten distribution chains, reduce costs, and provide digital tools and scientific farming services, charging membership fees—essentially the same as what Pinduoduo and Costco are doing now. Back then, reducing middlemen was a key focus in internet entrepreneurship, and agriculture offered vast industry potential. Mr. Z quickly secured funding, built a team, and embarked on his entrepreneurial journey with great momentum.

After touring farming regions nationwide, Mr. Z chose Guangxi’s dragon fruit industry for collaboration. His innovative approach attracted many farmers, and he soon secured partnerships for 10,000 acres of dragon fruit. During a price uptrend, the project progressed smoothly.

The next year, an unexpected shock hit. Due to policy changes, Southeast Asian fruit imports were liberalized, impacting local Guangxi production, leading to oversupply and plummeting prices. Farmers stopped making profits and became reluctant to pay membership fees.

This was Mr. Z’s first lesson: If agricultural products don’t sell well, further cooperation becomes nearly impossible.

2、

Then, Mr. Z started thinking: he needed to help farmers sell their products first.

At the time, live-streaming e-commerce was just taking off. Mr. Z asked a friend to find a host, and on the first day of streaming, they sold 30,000 orders—far exceeding expectations. Before Mr. Z could celebrate, he realized he was about to lose money.

The issue wasn’t the host’s high commission but an unforeseen problem. Mr. Z had prepared three sizes of dragon fruit—large, medium, and small—5 kg per order, 50,000 kg each, totaling 150,000 kg. The orchard had about 200,000 kg, which seemed sufficient. But of the 30,000 orders, half were for large fruit—80,000 kg—while his orchard could only supply 50,000–60,000 kg.

To fulfill the orders, he had to buy additional fruit at higher market prices. In the end, he lost money.

The core issue was the inability to precisely match orders with production capacity. The exact quantities of large, medium, and small fruit couldn’t be determined until after harvesting, relying mostly on experience. Mr. Z even considered using technology for identification but ultimately abandoned the idea.

After this second lesson, Mr. Z realized that supply and demand matching requires massive scale—tens of thousands of acres simply aren’t enough.

3、

Scaling up supply wasn’t something he could control overnight. So, could he focus on high-quality dragon fruit and build a brand?

Mr. Z began exploring ways to improve and stabilize quality.

But agriculture is an industry at the mercy of weather and human labor. Even the best plans struggle against unpredictable weather and temperature changes. At this stage, manual intervention and timely management are crucial. Ultimately, the quality of the fruit depends on people. Standardization is incredibly hard to implement.

To Mr. Z’s surprise, the uncontrollable quality issue traced back to land ownership systems.

We know fruits rarely have brands because it’s hard to ensure consistent taste across batches. Zespri is one of the few successes. Mr. Z researched Zespri and found that stable quality requires tight upstream partnerships, and the key to growing premium varieties lies in the soil. Zespri’s overseas farms have permanent land rights, allowing farmers to let the soil recover fertility by not planting for a year. For them, good products and good land are legacies to pass down.

But in China, many upstream farms (over 100 acres) lease land from smallholders (2–3 acres) through land transfers, typically for 5–10 years. With uncertain market conditions and leases expiring soon, what can they do? Most prioritize yield over quality, even overusing fertilizers and pesticides, making it impossible to improve soil as required.

This was Mr. Z’s third lesson: Stable quality in agricultural products is extremely difficult to achieve.

4、

Mr. Z wondered: How do people in the agricultural trade make money in this environment?

He visited several major wholesale markets, like Beijing’s Xinfadi, and noticed a strange phenomenon: Most stalls are run by husband-wife teams—the wife sells at the stall while the husband sources from farms but doesn’t disclose purchase prices.
 

Agricultural products are non-standardized; the quality of each batch heavily depends on the buyer. Even if an orchard produces large fruit, the buyer can swap it out during picking or packing. Trust is key, leading to the husband-wife partnership model.

Stalls don’t know purchase prices for two reasons: real-time price fluctuations and supply-demand mismatches. For example, if Xinfadi receives 10 truckloads of dragon fruit but only needs 8, buyers will push prices down. If you don’t sell, it becomes inventory, incurring storage and handling costs. In the market, you can’t consider costs—only market prices—and profits are calculated annually. Sometimes, sudden shortages drive prices up, earning a year’s profit in days.

Mr. Z asked a veteran Xinfadi merchant with over a decade of experience, "What’s the secret to making money?" The answer:

Forget about costs.

This is a classic example of the agricultural trade’s rough-and-tumble nature.

Mr. Z came to another stark realization: Agricultural prices are also uncontrollable.

5、

Uncontrollable quality, prices, and supply-demand dynamics—the challenges exceeded expectations.

Factories can standardize production; from factory to consumer, a shirt is a shirt, and size L is size L. But agriculture doesn’t work that way. The supply chain is too long, and the final product quality depends on every participant. You can’t guarantee everyone’s reliability.

After so many setbacks, Mr. Z began considering quitting.

Then, during discussions with friends in the tech industry, he noticed Pinduoduo.

First, the platform’s order volume is massive. Pinduoduo aggregates supply and demand nationwide, enabling efficient matching at scale. This isn’t something a single startup team can achieve—only a platform model, connecting multiple production areas, can do it. If you can sell tens of thousands of orders daily, farmers will cooperate. Talk is cheap.

Second, agricultural products lack brands, resembling white-label goods—perfect for Pinduoduo’s model.

Most crucially, Pinduoduo designed a model where it doesn’t intervene directly but delegates benefits and responsibilities to participants. With too many human variables in the supply chain, control is impossible. Pinduoduo lets merchants decide quality. If customers are dissatisfied, they get refunds—costs borne by the merchant. If satisfied, the platform sends more orders. This motivates merchants while imposing strict demands, aligning their interests with customer needs.

Pinduoduo’s model unexpectedly solved Mr. Z’s key challenges in agriculture, especially the persistent human factor.

Later, Mr. Z gradually wound down his project and converted his funds into Pinduoduo stock.

At the end of the story, I asked Mr. Z a few questions.

1. Pinduoduo’s user benefits are undeniable. How do you view merchants in its ecosystem, like those pressured on pricing?

I know some question whether this is fair, but if you’ve been deep in the industry, you’d understand this model necessitates it. The real offline industry is complex, especially in 下沉 markets and people-driven businesses. You can’t operate on trust—only strict rules work. This business requires a strong hand.

2. From your observations over the past few years, has Pinduoduo genuinely advanced agriculture? Any examples?

I’ve seen positive changes. For instance, in Shandong’s Yantai and Weifang (fruit-growing regions), when we visited in 2019, only 60-year-olds were harvesting—no young people. They knew nothing about online stores, selling only to wholesalers, who then distributed to retailers. Now, more young people are returning to run online shops, involving their households and selling via e-commerce, cutting out many middlemen. That’s progress.

Some farmers I know have seen shipment volumes grow steadily—from maybe 1,000 orders/day to 10,000 now. Faster price feedback at the production end is an advantage.

Pinduoduo has the potential to solve some agricultural issues, though it’s not there yet.

3. What’s your deepest takeaway about Pinduoduo as a company?

Remarkable strategic consistency. I’ve read many of Huang Zheng’s speeches. Comparing them with Pinduoduo’s actions over the years, the alignment is striking. For any company navigating growth, temptations and competition abound. Maintaining strategic consistency reflects deep conviction in what you’re doing.

With that foundation, a simple culture, and continuous iteration of organizational and operational capabilities, it’s hard to imagine failure.