Author: Yu round
Source: Zhenghe Island
Picture: Pinduoduo's new CEO Chen Lei; Picture source: Yiou
In 1996, in the International Olympiad in Informatics held in Hungary, a team composed of four Chinese teenagers won a bumper harvest, and the participating players took all the gold medals.
The media at the time reported that these teenagers were the future of China's information revolution.
Among the four participating players, one is already well-known, Sogou CEO Wang Xiaochuan. In the group photo, another 17-year-old boy wearing black-rimmed glasses, who was slightly shy, hid behind the scenes for the next 24 years and moved forward in the technical field silently.
It wasn't until July 2020 that the boy named Chen Lei surfaced and became the new CEO of Pinduoduo from the little-known CTO.
Among the new generation heads of China's three major e-commerce companies, Chen Lei is the only head of technical background who has transformed from CTO to CEO. What everyone cares about is how will Chen Lei, who has a technical background, adapt to the changing role? What kind of transcript will it bring?
On November 12, 2020, Pinduoduo released its third-quarter financial report. The first single-quarter profit was 466 million yuan, far exceeding market expectations. At the same time, the number of users in a single quarter increased by nearly 50 million, and the number of annual active buyers reached 731 million. In the next three days, Pinduoduo’s stock price has risen by more than 35%, and its total market value has jumped to 181.1 billion US dollars, surpassing JD.com and becoming China’s fourth largest Internet company.
This is Chen Lei's financial report after his first quarter as CEO.
According to many Pinduoduo people who have been in contact with Chen Lei, in the office, you need to carefully distinguish among a bunch of programmers to find CEO Chen Lei wearing a gray polo shirt, blue jeans, and black-rimmed glasses. Suddenly encountered an amiable architect in the Matrix".
▲In the office, you need to carefully distinguish among a bunch of programmers to find CEO Chen Lei wearing a gray polo shirt, blue jeans, and black-rimmed glasses.
Five years ago, Chen Lei, who had been co-founding a business with Huang Zheng for many years, led the research and development of Pinduoduo's distributed artificial intelligence technology. This innovative technology system has now become the underlying algorithm of Pinduoduo's rapid advance.
What did this technology genius bring to this new e-commerce company? With the release of the financial report, the answer to this question seems to have gradually become clear.
The premise of "people first" is to understand people first
In the middle of this year, "Zhongguancun Talented Girl" and China's top product person Liang Ning said in a public speech that she searched for "Wuxi Spare Ribs" on Taobao, and Taobao's related recommendations are still "Wuxi Spare Ribs" and "Sanfeng Bridge". Keyword matching. But when searching for "Wuxi Spare Ribs" on Pinduoduo, Pinduoduo will recommend "Sixi Meatballs" to her in addition to linking "Wuxi Spare Ribs" and "Sanfeng Bridge".
Liang Ning believes that this shows that Taobao's algorithm is doing keyword association, while Pinduoduo is doing user understanding. It tries to understand users' search motivation and preferences.
This may be the first time a professional has publicly described the difference in user experience brought about by Pinduoduo's "people first" model. Although before and after the listing of Pinduoduo, the founder Huang Zheng explained in his first open letter to shareholders:
You can imagine it (Pinduoduo) is a multi-dimensional space that closely integrates the virtual space of the network and the real world. It will be driven by a distributed intelligent agent network (rather than the popular centralized super-brain AI system) "Costco" and "Disney" (that is, a combination of cost-effective products and entertainment). Not only does it efficiently match information, it also constantly simulates the group emotions of the people in the entire space, and tries to adjust the entire space to make the group experience more enjoyable.
The technical cornerstone of this "people first" model was created by Pinduoduo's CTO Chen Lei.
From working at Google, Yahoo, IBM, and starting a business with Huang Zheng as a B2C e-commerce and Taobao agent operating company in 2007, Chen Lei once concluded that the development of global Internet giants, especially traditional e-commerce platforms, from a technical perspective, Normalization".
He summarized it as the "Scuba model": Scene drives services, services bring users (User), users bring data (Big Data), and data is processed by AI and Computing (computing capabilities) to optimize user experience , The experience brings new user growth, forming a positive cycle.
This is the typical model followed by traditional Internet companies. Under this model, the giants unanimously want to build an omnipotent God-like central brain. It collects every user's behavior data as much as possible, then delineates the model and uses algorithms to analyze it, and recommends the results of the analysis to each user.
For companies, users are portraits composed of "tags". Netflix called this model "surveillance capitalism" in a documentary.
▲Chen Lei once concluded that the development of global Internet giants, especially traditional e-commerce platforms, is technically "all ways into one."
At the beginning of joining Pinduoduo, Chen Lei judged that this "central brain" model was not sustainable.
First, the boundary between public data and private data is blurred. The government's regulatory policies have subsequently tightened, and the Internet's channels for obtaining user information have been forced to narrow. The central brain will face data hunger, and traditional e-commerce will also fall into a flow bottleneck.
Secondly, there is still a "preference cage" in the machine learning of centralized AI. Predictions based on consumers' momentary shopping impulse tend to limit it to a tedious single preference. Consumers will become more picky and more critical. Try to guess what you like through keywords, but the more you guess, the less accurate it becomes.
If there is a technical architecture that can reflect the differences between the needs of users who purchase the same type of goods, is it more like simulating the demand interaction between users?
For example, among the people who buy Wuxi ribs, there may still be a group of people who prefer "Sixi Meatballs" at the same time. Is it possible to present the differences in the needs of different groups of people behind similar products to users, instead of simply showing different types Recommend ribs keywords to users?
Therefore, the core goal of the distributed artificial intelligence system led by Chen Lei is to understand the individual differences of each consumer through distributed algorithms based on the recommendation of social interaction, and present all algorithms, data, and AI to each user independently , So that each user has its own algorithm system to simulate and enhance the interaction between users.
He firmly believes that distributed artificial intelligence will become the "hydropower and coal" of the next decade, and become the underlying public service platform of the Internet. The overall logic cycle will also undergo tremendous changes. "Everyone can call their own cloud computing agent at will. Every month, you can receive bills for cloud computing, just like bills for water, electricity, and coal."
In Huang Zheng's second shareholder letter, Pinduoduo's path to be taken was summarized in three words: people first.
For Chen Lei and the distributed artificial intelligence system he built, "people first" means that to make technology serve users, Internet companies must try to understand users and create diverse scenarios for users.
Decomposing strategic positioning into framework technical issues, and then continuously approaching strategic goals through scenario landing, this is exactly the typical thinking of Chen Lei as a CTO in the past.
After taking charge of Pinduoduo, this set of ideas and play methods have also been implanted in Pinduoduo's daily business.
One detail is that Pinduoduo didn't turn around until this quarter's financial report, but it never stopped investing in technology research and development. Research and development expenses continued to rise, with a year-on-year increase of more than 7 times in 2018 and more than 6 times in 2019. In the third quarter of this year, Pinduoduo invested 1.8 billion yuan in research and development, an increase of 60% year-on-year.
New CEO's first battle: Going deep into the fields
According to the observation of industry professionals close to Pinduoduo, after Chen Lei took over, the biggest change of Pinduoduo is that it has become more focused on strategic goals. "The ultimate goal of all actions is to thoroughly implement Pinduoduo's new e-commerce model, find the most suitable application scenario, and then take root."
Before 2020, Pinduoduo solved the problem of "finding users", but when Chen Lei took over, the problem that Pinduoduo needed to solve became more complicated: after finding and gathering users, it was necessary to find the best scenario for the model to be implemented. The deep needs of users.
Agriculture is exactly the answer Chen Lei found.
According to public reports, Pinduoduo will continue to increase investment in the new agricultural system in 2020. Pinduoduo is continuously entering China's major agricultural production areas and establishing contacts with more farmers.
Public reports show that before September 2020, Pinduoduo has officially launched more than 205 live broadcasts of agricultural help from the city and county chiefs. This also means that on average, one official live broadcast of agricultural products is online every day.
The comparison can highlight the significance of this set of data. At the same time as the live broadcast of the e-commerce hot battle, the anchors of the major e-commerce platforms are Luo Yonghao, Wei Ya, Li Jiaqi, Simba, Liu Tao and other celebrity Internet celebrities. The major platforms have also poured precious traffic resources into these channels. A live broadcast room for celebrities with topic effect
▲Relying on the "Agricultural Land Cloud Fighting" system, in 2019, more than 1,500 agricultural products with a single product order volume of 100,000+ on the Pinduoduo platform exceeded 1,500, and more and more "small fruits" in remote areas became "big industries". (Photo by Mu Gong)
With the same traffic and the same funds, Pinduoduo has all invested in the live broadcast of agricultural products. An e-commerce leader of a domestic beauty brand laughed and said, “I really didn’t understand what Pinduoduo wanted to do at the beginning. It also has a million-level traffic. Selling more facial masks is definitely more cost-effective than selling rice. Open the live broadcast room. Even corn and soybeans can hardly have a topical effect."
The uptrend of agricultural products is the key to Pinduoduo, and after Chen Lei became CEO, the strategic position of agricultural products has been further improved. "Become heavier and deeper," an insider said. Chen Lei has repeatedly emphasized internally that Pinduoduo should go to the field to do agriculture. "Under Chen Lei's leadership, agricultural employees must follow the agricultural products again. The whole process from production to consumption will be discussed together after the observation report is formed, and what other links can be optimized by Pinduoduo. After the conclusion is reached, the project will be launched immediately."
Several agricultural-related employees confirmed that after taking over as CEO, Chen Lei himself has also been investigating in major agricultural production areas for a long time. Under the leadership of Chen Lei, within a few months, the people in the agricultural product department were all blacked out, "Going to the countryside for a business trip." Come back, everyone doesn't know much."
According to official data released by Pinduoduo, as of now, Pinduoduo has directly connected 12 million farmers.
A technical genius from Google,
Why help farmers sell apples?
Under Chen Lei, Pinduoduo's layout in the agricultural field is getting heavier and heavier, and has entered the entire field of agricultural product research and development, production, transportation and terminal distribution.
Since the beginning of this year, Pinduoduo has carried out in-depth cooperation with academicians Zhao Chunjiang, Zhu Youyong and many agricultural research institutions, and is committed to taking advantage of Pinduoduo’s capital and user scale to accelerate the transformation of scientific research results into agricultural large-scale production.
In October 2020, the National Agricultural Informatization Engineering Technology Research Center and Pinduoduo signed a strategic cooperation agreement. The two parties will jointly initiate the construction of a "Smart Agriculture Collaborative Innovation Center" to explore a new model of industry-university-research integration for poverty alleviation and agriculture.
In the logistics and transportation of agricultural products, Chen Lei led the construction and completion of Pinduoduo's new agricultural product logistics system.
It is understood that Chen Lei has transferred nearly a hundred key personnel from Pinduoduo's technical team to concentrate on research and development, and the system is currently online. Public reports show that this system reorganizes and deploys the express logistics system of agricultural products based on platform logistics information, agricultural product order information, and agricultural production area information at the front end. At the back end, it is deployed in various agricultural production areas and various agricultural production areas. Large logistics express companies cooperate to jointly set up a special train for agricultural products.
In the past, the express parcels of agricultural products were "mixed with apples and slippers." Therefore, it was difficult to guarantee the "bad fruit rate" of fruits received by urban users after purchasing agricultural products. According to the research of Pinduoduo team, the main reason was Large trucks often return to the city when they are half-empty.” Therefore, in order to optimize the user experience, Pinduoduo’s new agricultural product logistics system can enable express logistics to “send mobile phones to the countryside and transport apples back to the city” and realize special train transportation of agricultural products. Significantly improve logistics efficiency and consumer experience.
▲Since 2018, Pinduoduo has driven more than 100,000 new farmers across the country to return to their hometowns to start businesses through the "Duodu University" and other cultivation systems, stimulating endogenous motivation for poverty alleviation. (Photo by Mu Gong)
The above-mentioned insiders said that faster coverage of the agricultural product consumption scene and deeper roots in the agricultural product supply chain are the two major goals proposed by Chen Lei.
Buying a lot of vegetables is exactly considered as a strategic component of "covering more agricultural product consumption scenarios." At the just-concluded earnings conference call, Chen Lei explained to investors that Duoduo Shopping is a natural extension of Pinduoduo’s main business based on the upswing of agricultural products. The accumulated technology, inventory, and rich variety of agricultural products can satisfy consumers’ livelihoods. Huge demand in the fresh sector.
In order to cover the consumption scenarios of agricultural products that users "pick up the next day", Chen Lei also led large-scale investment in infrastructure such as regional cold chain, warehousing, and urban distribution to build a new set of distribution nodes for future agricultural products.
From the perspective of his resume, Chen Lei studied at Tsinghua University and the University of Wisconsin-Madison. After graduation, he worked at Yahoo and Google. Both have no agricultural background. However, Chen Lei has become the Internet CEO with the most focus on agricultural products. What is the reason behind it?
According to Pinduoduo insiders, on the one hand, Chen Lei was the technical person in charge of the good goods. After seeing the huge energy of good goods, he became interested in the Internet model to change the upward trend of agricultural products. On the other hand, Chen Lei I have explained internally that technology itself is not important, what is important is what technology can be used to change, and China's relatively traditional agricultural sector has just reached the critical moment when technology is urgently needed to seek change.
Agriculture is also regarded by Chen Lei as the best scenario for Pinduoduo's new e-commerce model.
Agricultural product consumption is a typical high-frequency product that is just needed, and it is also a market ignored by traditional e-commerce. The supply system of Pinduoduo is relatively backward. Pinduoduo has the first-mover advantage. If the model and technology of finding people are used to force the reform of the agricultural product industry, It is more thorough than other areas.
According to public reports, a series of regional specialty agricultural products, including Yunnan ginseng fruit, Guangxi passion fruit, and Sichuan Huili pomegranate, have all become "nationally renowned fruits" through Pinduoduo. Behind this, it is the Pinduoduo model that is being applied.
The above-mentioned people in the beauty industry also confirmed the value of agriculture to Pinduoduo from the side. "Our company is determined to focus on Pinduoduo. It is precisely because we have seen these cases of agricultural products, if a traditional industry such as agriculture can be stimulated by new e-commerce If there is potential, other industries will certainly have the opportunity to explode.”
The latest financial report data proves Chen Lei's judgment on agriculture. Benefiting from the expansion of demand for agricultural products, in the third quarter, Pinduoduo's user visit frequency, number of categories visited, and average daily usage time all increased. The peak daily order volume on the platform recently exceeded the 100 million single mark. Chen Lei believes that in the future, Duoduo will continue to cooperate with e-commerce platforms to increase the frequency and purchase rate of consumers.
▲During his studies at Tsinghua University, Pinduoduo CEO Chen Lei represented Tsinghua in the 2000 College Student ACM Programming Competition held in the United States and won the sixth place in the world. The second from the left is Chen Lei as a student. (Data map)
Launch a new brand experiment in Chinese manufacturing
In his early years, Chen Lei studied in the experimental science class of Fujian Normal University. In the three-year high school sports meeting, Chen Lei's class ranked first in total scores.
Now it seems that this is a somewhat legendary class group. Chen Lei’s classmates Zhu Long and Lin Chenxi are the founders of Yitu Technology. Today, Yitu Technology and Pinduoduo are neighbors renting in the same office building. Earlier this year, when Taobao unilaterally banned the Taobao accounts of Pinduoduo employees, it also accidentally injured Yitu Technology employees on the same building.
Fujian is a representative province of manufacturing in China, and industrial belts such as Quanzhou, Xiamen, Jinjiang, and Fuzhou are all important witnesses to the development and transformation of China's market economy.
Chen Lei, who was born in Fujian, has a more direct experience of the four Chinese characters.
Since the 2020 epidemic, Fujian's manufacturing industry, which has long relied on exports, will complete the transformation of domestic demand overnight. The above-mentioned Pinduoduo insider stated that Chen Lei said internally that the collective transformation of the manufacturing industry is the best window period for Pinduoduo to implement the new e-commerce model. Therefore, “it is necessary to develop a new brand at the bottom of the manufacturing industry. experiment".
▲ Huang Yong (left), the founder of Guanhua Stainless Steel, discussed the details of Xishi Pinduoduo's customized frying pan with the workshop director. This product is manufactured on the same production line as the top European kitchenware brand WMF. (Photo: Big Tail)
According to reports, after Chen Lei took over as CEO, he took the lead in internally adjusting his operational thinking and traffic distribution rules. In terms of operational thinking, it has changed from “inviting investment” in the past to “inviting investment + testing new brands”, requiring Pinduoduo Xiaoer to intervene in the bottom layer of platform merchants’ manufacturing, helping merchants sort out and explain Pinduoduo’s model, and become a “consumer demand data and The docking pipeline of the factory production line".
In terms of traffic, it further runs through the "people first" model, and constantly adjusts and improves the algorithm to make the algorithm the core of traffic distribution. In other words, it is necessary to thoroughly realize that after each user turns on Pinduoduo, what they see is their own. "Algorithmic Agent" tailored product page.
The above-mentioned beauty industry professionals also confirmed that after July, the docking of Pinduoduo's operation team with various factories and brands has suddenly accelerated. One of the core tasks is to try to quickly create new brands through Pinduoduo’s new model and quickly run New e-commerce model.
"The biggest feature of this model is that even if you are a mature brand, only those products that can prove to meet the needs of users can stay. Therefore, Pinduoduo has shifted the brand competition from the mutual marketing expenses to whoever can be. Lower service users are coming up," said the above-mentioned Pinduoduo person.
There are indications that in the distributed algorithm led by Chen Lei, Pinduoduo’s new e-commerce model means the greatest degree of “determining production according to demand”. It is no longer bidding ranking and marketing that determine product sales and brand recognition. It is an algorithm, and Pinduoduo's algorithm plays the role of a "consumer agent" to the greatest extent.
Therefore, for Pinduoduo, it is necessary to have a suitable path to familiarize brand owners with this new set of logic, and adapt to user needs by adapting to Pinduoduo's algorithm rules.
This is a brand new challenge for some mature brand companies, but the above-mentioned industry insiders have proved Chen Lei’s judgment that the epidemic has left everyone no time to wait and see, “from last year’s observation and waiting until this year’s running into the field” .
One publicly reported case is Jinhui Knives and Scissors. Jinhui Knives and Scissors is an OEM company for world-class kitchenware brands such as Zwilling and WMF. After the epidemic, Jinhui Knives and Scissors has shifted its focus to the domestic market.
With the support of Pinduoduo and based on the needs of domestic consumers, Jinhui Knives and Scissors have developed a "Wang Mazi" chopping and cutting kitchen knife, which is made of international brand materials and has more functions, and the price is only one-fourth of the former. This knife helped Jinhui Knives and Scissors split the domestic market and refreshed consumers' perception of "Wang Mazi". At present, the sales of "Wang Mazi" related knives and scissors on Pinduoduo alone are nearly 50 million yuan.
"They are two completely different algorithms from traditional e-commerce. Under the centralized algorithm, a new product needs to be put on the market, which requires a lot of money to drive (purchase through trains) and improve search rankings. However, after our calculations, Duoduo system, as long as a new product can capture user needs, it may explode overnight, and it will be sold out before it has time to invest in marketing.” According to reports, the company launched a new brand on Pinduoduo this year. Since its launch this month, it has quickly achieved the order of hundreds of millions of yuan. "If this product is placed in the past, it is impossible to have such a price, and it is impossible to have such a way of playing. It will explode without any advertising. ".
Firmly nailing new e-commerce companies into Chinese business
In October this year, the research team of the Xinhua News Agency’s Outlook Think Tank, after investigating dozens of Chinese industrial belts, concluded in a report that new e-commerce companies such as Pinduoduo have become an important track for the rise of domestic brands.
According to the analysis of the report, the current main consumer groups are concentrated in the post-80s and post-90s, and these people "grow up in the era of rapid economic development in China, and are more willing to spend money, but they will think carefully rather than blindly follow the crowd." Therefore, "product cost-effectiveness" , The social circle has more influence on consumer decision-making."
Simulating the decision-making process of consumers is exactly what Pinduoduo pursues at the bottom of the technology. Chen Lei explained internally that the distributed AI model can simulate the purchase behavior of similar existing brands, capture personalized needs for the interaction between users and users, and then optimize the algorithm, according to Pinduoduo. Algorithms to determine the "display" of products can enable more products that are close to the real needs of consumers to quickly scale and win the market.
It is not easy for such a new e-commerce model to land in the Chinese business environment.
The above-mentioned beauty professionals admitted that throughout 2019, the beauty industry is still in a state of "not understanding, but not afraid to watch" Pinduoduo.
He said that the business model used by beauty brands in the past was brand R&D and production-market research-pricing-marketing and packaging-sales. Among them, brand owners not only have to pay high marketing expenses, but also enjoy the "high premium" brought by these marketing expenses.
An example often cited in the industry is that the cost price of a lipstick will not exceed 10 yuan, but who can be the first to sell for 100 yuan in the industry. In order to be able to sell for 100 yuan, brand owners need to spend a lot of marketing costs, participate in marketing activities such as Double 11 on traditional e-commerce platforms, buy bidding rankings, and so on.
But after cooperating with Pinduoduo, the above-mentioned respondents found that Pinduoduo’s logic is completely the opposite: the algorithm discovers user needs-the platform collects the price that users are willing to pay for the same product-brand development-platform sales.
▲In the factory of Guangdong Zhenyan Cosmetics Co., Ltd. under the new brand plan of Pinduoduo, workers are conducting cosmetic packaging and testing. (Photo: An Shun)
The basis of this model, according to Huang Zheng's previous statement on the official account, is to "reverse capitalism."
Pinduoduo's new brand plan started in 2018 is regarded as the "vanguard" of this model. According to insiders, Chen Lei proposed in September that “to upgrade the new brand plan to fully demonstrate the characteristics of the Pinduoduo model”.
In October this year, the "New Brand Plan" announced an upgrade, which will enter 100 industrial belts to support local outstanding manufacturing companies. In November, this battle took the lead in Guangzhou. Pinduoduo announced that in the next two years, Pinduoduo will take root in China's cosmetics industry and cultivate 5 billion-level new cosmetics brands.
In the domestic beauty industry, more and more well-known brands have chosen to join Pinduoduo. "Almost all domestic first-line brands we know have already started cooperation with Pinduoduo," said a person in the listed beauty industry.
On November 2nd, Pinduoduo United Nations cosmetics leader Danzi Group jointly launched a new domestic cosmetics brand "Cuirun". This is the fifth local cosmetics giant to join Pinduoduo's new brand after Proya, Ou Shiman, Shangmei, and Pechoin. plan.
So, during the three months from July to September, what did Chen Lei bring to Pinduoduo?
A brokerage analyst said, “You can think of Pinduoduo as a set of new algorithms emerging in China’s Internet. A technology company that uses technology to understand users, represent users, and satisfy users. Chen Lei’s unique value is that no one compares He knows more about where this system comes from and where it goes. Only the designer of algorithm rules knows where to maximize the value of this system."
The above-mentioned Pinduoduo insiders also endorse this view. He said that after Chen Lei took over as CEO, “the biggest change of the company is to more thoroughly penetrate the new model into every capillary of the company, and to persevere in capturing the best time and best scenario for applying the new e-commerce model” .
In July when Chen Lei took over as CEO, the industry was worried about Pinduoduo's growth rate. The data proves that after Chen Lei took over, this new e-commerce experiment, which started from agriculture and penetrated into the manufacturing industry, made Pinduoduo's growth engine run faster and more efficient.
According to data released by QuestMobile, in the third quarter, Pinduoduo's total user time reached 531 billion minutes, a year-on-year increase of 101%, accounting for 41% of the total user time of all e-commerce service platforms in China, ranking first among the three e-commerce platforms .
"If you want to summarize the first quarter of this new CEO, my feeling is that he has found the most suitable model application scenario for Pinduoduo and firmly established this new e-commerce company in China's business." , Said the analyst.