Start-ups lose money, not least in China

For a company that demands its employees travel economy class, Pinduoduo is profligate when it comes to wooing customers, spending $1.50 for every dollar of sales in the last quarter of 2018. Start-ups lose money, not least in China. But Shanghai-based Pinduoduo, which allows shoppers to team up with friends to save a few renminbi on toilet rolls and groceries, has taken spending to new levels. Hailed as the fastest-growing company in the history of China when it listed in September, Pinduoduo secured a valuation of $20 billion and handed Colin Huang, its founder and a former Google engineer, a paper worth of almost $10 billion. But the company returned to tap the capital markets barely six months after listing, and its annual results tell a story of monumental cash burn and revenue growth that is unable to keep pace. At the same time, Pinduoduo employees describe a fast-paced work culture that combines a parsimonious streak with generous salaries and long hours for some. In the last three months of 2018, sales and marketing expenses alone rose eightfold year on year to Rmb6 billion ($876 million), wiping out the Rmb5.65 billion the company generated in revenues… Pinduoduo runs as a platform, allowing merchants to sell their goods on the site, rather than stocking its own products. 
Louise Lucas