WEBVTT - Temu: The Rise of China’s Worst Tech Giant 0:00:01.800 --> 0:00:08.400 Also media, we could happen. So wow, Okay, we're just 0:00:08.440 --> 0:00:10.040 both doing the intro, all right. 0:00:10.480 --> 0:00:12.680 I wanted to be the intro. I was saying that 0:00:12.800 --> 0:00:14.840 wokness has won the Super Bowl. 0:00:15.400 --> 0:00:20.520 Ah because yeah, okay, okay, hold on, this is my 0:00:20.680 --> 0:00:22.640 this is this is my moment. I've got the soapbox. 0:00:22.680 --> 0:00:24.919 This is it could happen here. Everyone has the Taylor 0:00:24.960 --> 0:00:28.640 Swift conspiracy wrong. Taylor Swift is completely uninvolved in the 0:00:28.760 --> 0:00:31.840 NFL's conspiracy to make sure Patrick Mahomes wins every fucking game. 0:00:32.080 --> 0:00:34.880 All of these fucking all these fucking bogged chuns or 0:00:35.080 --> 0:00:38.120 fucking Johnny come Late doesn't care about football fans. Real 0:00:38.200 --> 0:00:40.360 fans know that if you look at every fourth quarter 0:00:40.560 --> 0:00:43.600 of every fucking Chiefs game before Taylor Shift got involved, 0:00:43.600 --> 0:00:46.440 it looks exactly the same. All right, this is been 0:00:46.479 --> 0:00:48.240 It could happen here. We may or may not cut that. 0:00:48.440 --> 0:00:52.080 I can't believe that the liberal Taylor Swift, Joe Joe 0:00:52.080 --> 0:00:58.240 Biden's puppet Taylor Swift and Travis Peiser Kelsey stole the 0:00:58.280 --> 0:01:03.560 Super Bowl from the Christian people of San Francisco, the 0:01:03.680 --> 0:01:06.600 only bashtate of conservatism left in this country. 0:01:06.800 --> 0:01:10.640 It is so incredibly funny, Like, okay, so it's so 0:01:10.760 --> 0:01:13.200 credibly funny to me A that they're not mad at 0:01:13.200 --> 0:01:19.520 Patrick Mahomes and b that somehow, okay the Chiefs, like, 0:01:19.600 --> 0:01:22.759 imagine you're a Chiefs fan, right, you have been for 0:01:22.840 --> 0:01:27.479 like thirty years racist, you have been doing its called 0:01:27.720 --> 0:01:31.360 and I quote the tomahawk chop, like you are the 0:01:31.360 --> 0:01:35.280 most racist person in your entire small town. And then 0:01:35.440 --> 0:01:38.360 all of these fucking dip shits online, all these fucking 0:01:38.400 --> 0:01:41.000 right wing dipshits immediately like all of you guys are 0:01:41.080 --> 0:01:44.080 like fucking pussy woke libs. And it's just like, like, 0:01:44.160 --> 0:01:47.000 imagine being that racist for that long only to be 0:01:47.040 --> 0:01:48.480 immediately tossed aside. 0:01:49.520 --> 0:01:52.600 It is kind of baffling that, in like the country's 0:01:52.680 --> 0:01:57.880 national divorce overwokeness, somehow the liberals get to keep football 0:01:58.400 --> 0:02:01.200 like this that is that's so busy? Are that that 0:02:01.440 --> 0:02:04.120 now football is seen as like a liberal cuck thing 0:02:04.200 --> 0:02:09.880 to enjoy among the largest swaths of of Republicans, at 0:02:09.960 --> 0:02:11.960 least at least online Republicans. 0:02:12.280 --> 0:02:15.000 It's really funny, fascinating this this is how we're going 0:02:15.040 --> 0:02:17.320 to beat them in the fucking civil war, because we're 0:02:17.360 --> 0:02:19.600 going to take the college campuses, which means that we're 0:02:19.639 --> 0:02:22.480 going to have the only watchable footballs. These bastards are 0:02:22.520 --> 0:02:24.880 going to be reduced to watching fucking high school games. 0:02:25.240 --> 0:02:27.520 Like speaking speaking of watching football. 0:02:28.919 --> 0:02:31.200 Yeah, so the thing this episode is actually about is 0:02:31.400 --> 0:02:34.079 if you watch the Super Bowl or like, God help you, 0:02:34.080 --> 0:02:36.440 you've tried to use YouTube without an AD blocker, a 0:02:36.440 --> 0:02:39.680 thing I do not recommend at all. You have seen 0:02:39.760 --> 0:02:46.440 ads for Temu. W it's Timu or Temu Temu temo. Okay, yeah, 0:02:46.480 --> 0:02:58.239 it has the absolute, the absolute Oh good god, yeah, 0:02:58.280 --> 0:03:00.920 this this app this one. This one's bad, folks, This 0:03:01.040 --> 0:03:05.280 one's I I went insane and have been spiraling for 0:03:05.320 --> 0:03:09.400 like two weeks now writing this, so you know. So 0:03:09.440 --> 0:03:12.600 it has the absolutely dogshit tagline shop like a Billionaire. 0:03:13.520 --> 0:03:18.440 Wait that's its tagline. Yeah, Oh that's weird. 0:03:18.800 --> 0:03:22.680 It's funny. The everything is they only have one ad, righty, 0:03:25.480 --> 0:03:27.040 it's not just super Bowl like it's It's been on 0:03:27.080 --> 0:03:29.840 YouTube for like ages. But yeah, so this begs the 0:03:29.840 --> 0:03:33.720 obvious question, what on earth is this thing? And the 0:03:33.840 --> 0:03:36.880 answer is that Temu is the American version of a 0:03:36.960 --> 0:03:40.840 Chinese shopping gap called Pindadu. You will hear people pronouncing 0:03:40.840 --> 0:03:45.440 it pin Duo duo. That's because they're hacks and frauds. 0:03:46.400 --> 0:03:48.640 So but I'm just gonna call it so. The the company, 0:03:48.760 --> 0:03:52.000 the parent company for both Temu and Pinda Doua, changed 0:03:52.040 --> 0:03:54.040 their name to PDD, so I'm just gonna call it that. 0:03:55.480 --> 0:03:55.560 So. 0:03:56.200 --> 0:04:00.000 Yeah, PDD is China's worst tech giant. They have worked 0:04:00.120 --> 0:04:02.880 multiple of their employees to death. They probably also use 0:04:02.920 --> 0:04:08.840 slave labor. Those are unrelated stories. So today, welcome to 0:04:08.880 --> 0:04:11.240 the abyss. This is the story of Tamu. I have 0:04:11.320 --> 0:04:13.680 stared into it, and now you motherfuckers are coming with 0:04:13.720 --> 0:04:15.120 me and staring into it some more. 0:04:15.560 --> 0:04:17.800 Well, it's more like we're listening into it because it 0:04:17.800 --> 0:04:18.360 doesn't really. 0:04:18.240 --> 0:04:22.159 Have a visual No, no, you're staring into it. Okay, 0:04:22.480 --> 0:04:26.640 you will get visuals. I will say to this bullshit. 0:04:27.720 --> 0:04:28.040 I will. 0:04:28.080 --> 0:04:29.920 I will start hallucinating in my office. 0:04:30.279 --> 0:04:36.880 Yeah. So, Timoo is the American version of PDD. PDD 0:04:37.240 --> 0:04:41.240 it roughly translates to together more savings. 0:04:41.600 --> 0:04:43.159 Together, so it's like a co op. 0:04:46.360 --> 0:04:51.200 Actually, it probably sells stuff from co ops. 0:04:51.640 --> 0:04:53.320 Okay, huh. 0:04:53.440 --> 0:04:57.960 So PDD is the second largest shopping app in China 0:04:58.040 --> 0:05:02.000 behind Ali Baba. Ali Baba is is like version of Amazon. Basically, 0:05:02.120 --> 0:05:06.440 they're the second largest app. Ali Baba reportedly has eight 0:05:06.520 --> 0:05:09.640 hundred and sixty sixty three million users per year. 0:05:10.640 --> 0:05:11.800 That's a lot of users. 0:05:12.160 --> 0:05:15.719 Yeah, that's that's multiple us is. PDD has been claiming 0:05:15.720 --> 0:05:18.680 that they have seven hundred and forty million monthly users. 0:05:19.279 --> 0:05:22.640 It's unclear if that's exactly true, but it's probably around there, 0:05:22.680 --> 0:05:25.839 which again, that is twice the entire population of the US. 0:05:26.360 --> 0:05:30.560 So this is a fucking unbelievably massive company. And to 0:05:31.040 --> 0:05:34.800 understand what this what this company is, and how it 0:05:34.839 --> 0:05:37.440 became probably the worst of the Chinese tech giants, we 0:05:37.520 --> 0:05:41.120 have to go back to the very beginning. And the 0:05:41.240 --> 0:05:45.320 very beginning is this guy named Colin Huang. Huang is 0:05:45.360 --> 0:05:49.200 a weird guy. I don't know, he's he's he's he's 0:05:49.240 --> 0:05:53.760 the Chinese version of the American tech bro. So he's 0:05:54.440 --> 0:05:58.680 you know, he's he's a recognizable like asshole who started 0:05:58.680 --> 0:06:01.720 a giant company, but he's not zactly the same. So 0:06:02.560 --> 0:06:05.760 he he So he graduates from like college and China 0:06:05.839 --> 0:06:07.680 and in the early two thousands he goes to the 0:06:08.000 --> 0:06:10.920 University of Wisconsin to get a master's degree in computer science, 0:06:10.960 --> 0:06:13.240 which it like it should be illegal for anyone to 0:06:13.240 --> 0:06:17.040 get degrees in computer science. Uh, terrible stuff, zero out 0:06:17.080 --> 0:06:18.919 of time. I should know how to use computers. 0:06:19.240 --> 0:06:21.440 I can't believe you'd be believe in the status legal 0:06:21.480 --> 0:06:25.839 system to prevent people from learning fin social sanctions. 0:06:26.080 --> 0:06:28.720 We're going to make it morally illegal. We're going to 0:06:28.800 --> 0:06:30.640 get chased out by people with the rocks on the 0:06:30.680 --> 0:06:32.720 street if you try to type something, get do a computer. 0:06:33.240 --> 0:06:35.599 So okay. So he's at the University of Wisconsin, and 0:06:35.640 --> 0:06:39.479 while he's there, he basically like posts his way into 0:06:39.560 --> 0:06:43.400 becoming the pro basically the protege of Chinese tech billionaire 0:06:43.560 --> 0:06:48.719 Duan Youngping. This is an interesting relationship. Duan is like 0:06:49.760 --> 0:06:53.040 a very very influential Chinese tech tech billionaire. He gets 0:06:53.080 --> 0:06:56.800 every single article calls him the Warren Buffett of China. 0:06:57.000 --> 0:06:59.880 I don't fucking know, but like, you know, for like foreacta, 0:07:00.279 --> 0:07:02.839 like how big this guy is. Like Vivo and like 0:07:02.880 --> 0:07:04.960 the one plus company of the mixed phones those are both 0:07:05.000 --> 0:07:08.320 like spin offs of like things that he built. But yeah, 0:07:08.360 --> 0:07:10.600 so you know, so this is this is an interesting 0:07:10.680 --> 0:07:13.280 relationship for Huang because and it's also interesting because like 0:07:14.640 --> 0:07:17.720 the narrative around Huang and PDDs that they're like these 0:07:17.720 --> 0:07:20.360 like hungry upstarts like clunging their way up from nothing, 0:07:20.400 --> 0:07:22.440 and they can like go after Ali Baba and the 0:07:22.520 --> 0:07:26.120 Chinese like tech market wars because they're like they're ferocious, 0:07:26.160 --> 0:07:27.840 they have like nothing to lose. I'm like they're rich 0:07:27.840 --> 0:07:30.680 and fat Alibaba and like nah, Like this guy has 0:07:30.680 --> 0:07:33.080 had the backing of like a bunch of really powerful 0:07:33.160 --> 0:07:37.680 Chinese tech guys, like from the absolute beginning. Another part 0:07:37.720 --> 0:07:41.640 of like the Huang lore is that Duan like took 0:07:41.720 --> 0:07:45.000 him to this really famous dinner where Warren Buffett was 0:07:45.040 --> 0:07:47.600 offering if if you donated like six hundred and twenty 0:07:47.640 --> 0:07:50.120 thousand dollars to charity, he would like eat dinner with 0:07:50.160 --> 0:07:54.800 you and like talk with you about like finance stuff. 0:07:56.640 --> 0:08:00.680 And so Dwan like buys this thing to go to 0:08:00.760 --> 0:08:03.440 dinner with Warren Buffett and brings Huang with him, and 0:08:03.680 --> 0:08:09.400 he Huang who's who's Huang's the founder of PDD Again, 0:08:09.480 --> 0:08:13.120 so he gives him credit for like this this like 0:08:13.240 --> 0:08:15.920 financial wisdom that he got here. Here's just from an 0:08:15.960 --> 0:08:20.240 interview with Side Jim. This is a Chinese outlet. What 0:08:20.280 --> 0:08:22.920 Buffett said is actually very simple and can be understood 0:08:22.960 --> 0:08:25.800 by my mother. Perhaps what this meal meant most to 0:08:25.840 --> 0:08:28.240 me was that I realized the power of simplicity and 0:08:28.280 --> 0:08:32.160 common sense. Human thoughts are easily polluted. When you make 0:08:32.200 --> 0:08:34.960 a judgment on something, you need to understand the backgrounds 0:08:34.960 --> 0:08:39.320 and facts after understanding it. What you need is not wisdom, 0:08:39.440 --> 0:08:41.400 but whether you have the courage to use reason when 0:08:41.440 --> 0:08:45.320 facing facts, use common sense to judge. Common Sense is 0:08:45.320 --> 0:08:48.040 obvious and easy to understand, but our various biases and 0:08:48.120 --> 0:08:52.000 personal interests form due to growth and learning blind us. 0:08:52.520 --> 0:08:56.320 So this is like entrepreneurial bullshit. But you know this 0:08:56.360 --> 0:08:58.800 is apparently this is like a big formative like things 0:08:58.840 --> 0:09:01.440 like ah, he like got the wisdom of word Buffett 0:09:01.440 --> 0:09:05.880 and he listened to it. It's just like what. There's 0:09:06.559 --> 0:09:08.360 the thing I think is more interesting is that he 0:09:08.480 --> 0:09:11.640 talks about what in the same interview what Dwan taught him. 0:09:12.280 --> 0:09:14.720 Swan also taught me a common sense thing. In business, 0:09:14.760 --> 0:09:18.120 price fluctuates around value. The price will definitely fluctuate, but 0:09:18.160 --> 0:09:20.679 as long as your value increases, the final price will 0:09:20.720 --> 0:09:23.839 be close to the value. This common sense allows you 0:09:23.920 --> 0:09:26.640 to focus on increasing the intrinsic value of the company 0:09:26.640 --> 0:09:29.560 and not be overly concerned about price fluctuations in the 0:09:29.559 --> 0:09:34.000 capital market. And this, to me is fascinating because the 0:09:34.000 --> 0:09:37.120 first half of that is like orthodox Marxist price theory, 0:09:37.880 --> 0:09:40.480 like in like in Marxist price theory. Right, The whole 0:09:40.520 --> 0:09:42.960 thing about it is that price is determined by value. 0:09:43.240 --> 0:09:45.679 The value of a commodity is determined by like the 0:09:45.760 --> 0:09:47.880 number of the amount of labor hour is socially necessary 0:09:47.920 --> 0:09:51.640 to produce it, and eventually, like price sort of like fluctuate, 0:09:52.000 --> 0:09:54.280 the price can change. It's not price isn't like identical 0:09:54.360 --> 0:09:57.880 to like socially necessarily like labor time, but it like 0:09:57.920 --> 0:09:59.760 fluctuates around it. And so that's like the first part 0:09:59.800 --> 0:10:02.200 of it, which is the Marxist thing, except this is 0:10:02.240 --> 0:10:07.480 like China, like modern like twenty twenties China. So Marx's 0:10:07.600 --> 0:10:10.840 value theory has been degraded to like make your company 0:10:10.920 --> 0:10:14.439 valuable and don't worry about stock prices and market fluctuations. 0:10:14.440 --> 0:10:15.520 It will work out in the end. 0:10:16.000 --> 0:10:19.480 So true, so true based based. 0:10:20.200 --> 0:10:22.720 I mean, the funny thing is this is actually better, 0:10:23.520 --> 0:10:28.440 like you get the advice than like most of the 0:10:28.480 --> 0:10:34.000 shit that like American CEOs use. But it's also, oh god, 0:10:34.120 --> 0:10:38.720 what has happened to my poor value theory, my beloved, 0:10:38.760 --> 0:10:41.520 my beloved theory of how capitalism works has been turned 0:10:41.559 --> 0:10:47.840 into this weird tech bullshit tragedy. So meanwhile, back in 0:10:47.840 --> 0:10:51.280 two thousand and four, Duan convinces Hwang to turn down 0:10:51.400 --> 0:10:53.959 a bunch of these jobs. So he's he's like a 0:10:54.000 --> 0:10:57.200 computer science graduate, right, and he's being headhunted by like 0:10:57.280 --> 0:10:59.640 a bunch of the sort of like mainstream tech companies 0:10:59.679 --> 0:11:02.240 at the time, like Oracle, Microsoft, and they're giving they 0:11:02.240 --> 0:11:03.920 want to give him like an enormous amount of money, 0:11:04.400 --> 0:11:07.600 but his mentors like, no, no, no, don't take this 0:11:07.800 --> 0:11:11.040 tech job. Take the Silicon Valley tech job. Joined Google. 0:11:12.240 --> 0:11:14.600 And so he joins Google, and this is this is 0:11:14.600 --> 0:11:16.400 another like very famous thing. It's like, ah, he wanted 0:11:16.400 --> 0:11:18.760 to join the like up and coming, hungry tech startup. 0:11:18.800 --> 0:11:21.760 But here's the thing. So Google. He joins Google in 0:11:21.760 --> 0:11:23.560 two thousand and four, which is kind of early, but 0:11:23.640 --> 0:11:28.920 Google also goes public that year, so you know, this 0:11:29.000 --> 0:11:30.800 is up working really well for him because he gets 0:11:30.800 --> 0:11:33.000 a bunch of stock options that those stock options are 0:11:33.000 --> 0:11:35.600 worth millions of dollars. That's a lot of Also some 0:11:35.640 --> 0:11:37.599 of the startup capital for like the later companies he 0:11:37.679 --> 0:11:42.480 founds comes from that, and Huang really quickly like works 0:11:42.480 --> 0:11:46.320 his way up the ranks. But he so he gets 0:11:46.320 --> 0:11:49.560 put in charge of like launching Google in China, and 0:11:49.640 --> 0:11:52.800 this is a fiasco, does not work at all. Huong 0:11:52.880 --> 0:11:56.559 blames like too much oversight from people at the senior 0:11:56.600 --> 0:11:58.880 leadership at Google, which I can get, but I mean 0:11:58.920 --> 0:12:01.520 it just doesn't work at all. Like he starts as 0:12:01.520 --> 0:12:04.000 at two thousand and six, by twenty ten, Google has 0:12:04.000 --> 0:12:05.679 pulled out of trying to entirely like they're not they're 0:12:05.720 --> 0:12:08.040 not trying to push the fucking search edge because nobody 0:12:08.080 --> 0:12:13.600 uses it. So okay, Having having like unbelievably bombed out 0:12:13.800 --> 0:12:17.360 of his first tech job, he he does the like 0:12:17.480 --> 0:12:21.640 entrepreneur thing. He starts like a couple of these like 0:12:21.800 --> 0:12:25.760 shopping like online shopping companies. They do like fine, and 0:12:25.800 --> 0:12:29.520 he sells them, but they don't like do incredible and 0:12:29.760 --> 0:12:31.679 so okay. So this is the part that a lot 0:12:31.720 --> 0:12:34.040 of the accounts of him leave out, like the sort 0:12:34.080 --> 0:12:36.319 of like fawning accounts leave out. Is the next thing 0:12:36.360 --> 0:12:37.800 that he does, which is he sets up this like 0:12:38.120 --> 0:12:41.840 really shitty game studio and they make like a bunch 0:12:41.880 --> 0:12:47.120 of like absolutely unbelievably weird and horny mobile games. So 0:12:47.160 --> 0:12:51.160 they make like Mafia City, Joy Spade, Texas, Hold'm Poker. 0:12:51.960 --> 0:12:54.800 They have this game called Girl ex Battle that is 0:12:54.880 --> 0:12:57.559 like you you assemble a harem of girlfriends and then 0:12:57.559 --> 0:13:02.640 have them fight other people stuff Like absolutely. 0:13:02.440 --> 0:13:03.520 Have you played any of these? 0:13:03.800 --> 0:13:06.480 Oh no, absolutely not, I refuse. I think I've actually 0:13:06.520 --> 0:13:10.120 seen Mafia City ads before, but it's like, like it's 0:13:10.360 --> 0:13:15.680 the absolute most dog shit like bargain basement. I guess 0:13:15.679 --> 0:13:17.160 they're kind of pre gotcha games. 0:13:17.480 --> 0:13:20.600 I was just wondering how far your dedication to research 0:13:20.640 --> 0:13:21.400 went here, but. 0:13:21.400 --> 0:13:24.160 Not far enough. Look here's the thing. My dedication of 0:13:24.240 --> 0:13:27.079 research went exactly far enough that I refuse to install 0:13:27.160 --> 0:13:29.120 any of these apps for reasons that we'll get into 0:13:29.240 --> 0:13:32.880 next episode. I was like, absolutely not. In fact, this 0:13:33.160 --> 0:13:36.640 doing this research actually caused me to uninstall chaw Bus, 0:13:36.720 --> 0:13:39.200 which is like a Chinese food delivery app, because I 0:13:39.240 --> 0:13:41.720 realized that it was constantly running in the background to 0:13:41.840 --> 0:13:45.760 like to drive up. It's like user engagement metrics. 0:13:45.520 --> 0:13:48.920 That is completely fair, Although if you were even more dedicated, 0:13:49.120 --> 0:13:50.920 you could have bought a burner phone to download all 0:13:50.920 --> 0:13:52.320 these apps onto and tested on that. 0:13:52.520 --> 0:13:59.280 So that's true, but I no, I refuse to let 0:13:59.280 --> 0:14:02.679 that shit connect my internet. Like, under no circumstances. 0:14:03.080 --> 0:14:05.000 You can go to a Starbucks, you can go to 0:14:05.040 --> 0:14:07.240 his See I've just thrown out options here. 0:14:08.480 --> 0:14:12.360 I probably could have done this, but no, absolutely not. Actually, well, 0:14:12.800 --> 0:14:15.840 it's actually really hard to download the Chinese version of this, 0:14:16.000 --> 0:14:18.679 for reasons that we'll get into the next episode. All right, 0:14:18.679 --> 0:14:22.120 all right, but okay, So, like he's running this shitty 0:14:22.160 --> 0:14:26.800 game company and he has a genuinely brilliant and terrible insight, 0:14:27.600 --> 0:14:32.280 which is that she sees how addictive like mobile gaming 0:14:32.360 --> 0:14:36.360 and how addictive like micro transactions are, and he goes, 0:14:36.920 --> 0:14:39.120 oh shit, what if I put this in a shopping gap? 0:14:39.120 --> 0:14:41.320 Except that okay, so that's the reasonable way to explain it. 0:14:41.360 --> 0:14:43.440 But like, the thing he actually did was like why 0:14:43.440 --> 0:14:46.480 are Okay, his thought his actual thought process was why 0:14:46.520 --> 0:14:49.400 are we not selling game? Games are all like advertised 0:14:49.400 --> 0:14:51.440 in men, right, like these the apps that he's making 0:14:51.520 --> 0:14:55.040 are like weird, horny stuff for guys. Why are we 0:14:55.120 --> 0:14:58.040 not making games with women? Which is reasonable, But then 0:14:58.080 --> 0:15:02.920 his follow up was U, effectively women be shopping, and 0:15:02.960 --> 0:15:05.320 he was like, so trying it will make a shopping 0:15:05.400 --> 0:15:09.880 thing it's just like, we'll make we'll make we'll make 0:15:09.920 --> 0:15:12.880 an app to make shopping into a game. And so 0:15:13.360 --> 0:15:14.960 one of the things he's he's also been doing one 0:15:14.960 --> 0:15:17.480 of the like the kind of like search engine optimization scams, 0:15:18.040 --> 0:15:21.480 where like he just keeps making different shopping like shopping 0:15:21.520 --> 0:15:23.640 websites and hoping that one of them will like climb 0:15:23.640 --> 0:15:27.240 in the search rankings. But eventually he hits on a 0:15:27.520 --> 0:15:31.400 like a combination of using the like dog shit like 0:15:31.480 --> 0:15:35.680 addictive mobile gamification stuff from his mobile games in a 0:15:35.960 --> 0:15:37.520 like in an online shopping app, and he hits on 0:15:37.600 --> 0:15:40.600 that as the idea for a new shopping app. And 0:15:40.640 --> 0:15:43.400 this is what turns into PDD. Now do you know 0:15:43.440 --> 0:15:46.280 what didn't turn into PDD and is in fact better 0:15:47.760 --> 0:15:50.040 Hopefully these ads that are. 0:15:49.880 --> 0:15:54.680 Not for tebou we better not get a fucking temo ad. Hopefully, I. 0:15:56.320 --> 0:16:01.280 It's actually possible. It's oh god, well, careful what you 0:16:01.320 --> 0:16:17.280 wish for. And we're back. So PDD doesn't start in 0:16:17.360 --> 0:16:21.880 the way that normal tech app things do, which is 0:16:21.880 --> 0:16:26.840 to say that PDD starts as an online fruit vendor. Now, okay, 0:16:26.880 --> 0:16:28.080 if you know anything like a. 0:16:28.280 --> 0:16:32.480 Like a farmer's market online like what what yeah, okay, 0:16:33.000 --> 0:16:36.480 So if you know anything about how like Amazon worked, right, 0:16:36.560 --> 0:16:41.000 So Amazon goes from books to a bunch of stuff 0:16:41.320 --> 0:16:41.880 to food. 0:16:42.520 --> 0:16:46.120 PDD does this backwards. They start in food. Now, this 0:16:46.240 --> 0:16:50.000 is very weird. And the reason this works, and the 0:16:50.040 --> 0:16:53.920 reason that PDD starts as a marketplace for rural farmers 0:16:53.920 --> 0:16:56.840 and self roofs and vegetables like directly to consumers is 0:16:56.880 --> 0:17:00.000 because unfortunately of the structure of the Chinese agricultural mark, 0:17:00.160 --> 0:17:02.240 which we have to talk about a little bit. So 0:17:02.800 --> 0:17:04.560 something I talked about. God, I don't know how many 0:17:04.640 --> 0:17:07.000 years ago this was now, but like a while back 0:17:07.240 --> 0:17:10.120 I did an episode about this company that poisons like 0:17:10.680 --> 0:17:14.000 three hundred thousand babies by making poisoned milk in China, 0:17:14.440 --> 0:17:16.240 and one of the things, though that was a Bastard's episode. 0:17:16.359 --> 0:17:19.359 Of the things I talked about in that episode was 0:17:19.960 --> 0:17:25.520 how the Chinese agricultural market is incredibly fragmented. We don't 0:17:25.520 --> 0:17:29.520 have time to do a full history of rural decollectivization here, 0:17:30.000 --> 0:17:31.720 but the upshot of it is that it results in 0:17:31.760 --> 0:17:34.920 a lot of farmers working really small plots of land 0:17:34.960 --> 0:17:37.000 who are forced to sell their goods to a series 0:17:37.000 --> 0:17:39.720 of middlemen who make the actual profits. And because these 0:17:39.760 --> 0:17:42.880 farmers have like a tiny amount of land and grow 0:17:42.880 --> 0:17:46.000 stuff on or they have like two cows, right, they 0:17:46.000 --> 0:17:49.439 don't have the financial leverage to negotiate with like the middleman. 0:17:49.480 --> 0:17:51.560 The middle bank can just set prices on them. And 0:17:52.320 --> 0:17:54.719 the product of this is you have a really really 0:17:54.800 --> 0:17:57.159 fragmented market where there's just like all of these like 0:17:57.280 --> 0:18:01.240 unbelievably large numbers of these really small sellers and part 0:18:01.280 --> 0:18:03.120 of and you know, and and and this and this, 0:18:03.119 --> 0:18:05.000 this locks all of these people into the middlemen. The 0:18:05.000 --> 0:18:06.920 middle man can set the prices. The middlemen set the 0:18:06.920 --> 0:18:09.040 prices incredibly low, and they're locked in because they don't 0:18:09.040 --> 0:18:11.239 have another distribution method because the only thing they can 0:18:11.320 --> 0:18:14.760 do is sell to these like agricultural middleman companies. The 0:18:15.240 --> 0:18:17.919 companies like above them, like your grocery companies are like 0:18:17.960 --> 0:18:20.679 actual milk company who packages the milk. They love this 0:18:20.800 --> 0:18:23.199 stuff because it means that they don't have to like 0:18:23.320 --> 0:18:27.399 pay the farmers. They can just buy like the goods directly. 0:18:27.440 --> 0:18:29.000 They don't have to deal with like employment stuff, and 0:18:29.000 --> 0:18:30.840 they don't have to deal with quality control too, because 0:18:30.840 --> 0:18:33.200 they can pass that on to the middlemen. Now, something 0:18:33.280 --> 0:18:35.560 else we talked about in our anti work Lying Flat 0:18:35.600 --> 0:18:40.680 episodes like three years ago, is that China has these 0:18:40.800 --> 0:18:43.840 like far like rural influencers. That was it was like 0:18:43.880 --> 0:18:46.560 a huge wave of these people that sort of like emerge. 0:18:46.640 --> 0:18:48.680 You might actually have seen you've seen the videos of 0:18:48.760 --> 0:18:52.680 just like someone in rural China like cutting wood or something. 0:18:52.720 --> 0:18:55.200 Oh yeah, totally, totally yeah. 0:18:55.240 --> 0:19:00.920 So those those things were We're like, Okay, the US 0:19:01.080 --> 0:19:03.880 catches up the stuff on the Chinese internet like usually 0:19:03.920 --> 0:19:09.080 several years after like happened there and that makes sense. Yeah. 0:19:09.119 --> 0:19:11.840 And the next thing in line after the original sort 0:19:11.840 --> 0:19:14.120 of rural influencer waves was these like was this wave 0:19:14.160 --> 0:19:17.560 of like farmer influencers and these people they're using like 0:19:17.600 --> 0:19:20.280 a different Chinese like it's like another it's like another 0:19:20.320 --> 0:19:23.040 tick dot clone basically, and they're doing the thing that 0:19:23.040 --> 0:19:26.159 they're doing is okay. So you you know, you have 0:19:26.240 --> 0:19:29.280 your regular influencer who's trying to sell you like the 0:19:29.320 --> 0:19:32.600 image of rural life, right, and then you have the 0:19:32.600 --> 0:19:34.680 farmer influencers who are trying to sell you the image 0:19:34.720 --> 0:19:37.399 of rural life and also their potatoes. And this is 0:19:37.520 --> 0:19:39.080 this is like the marketing strategy. This is this is 0:19:39.280 --> 0:19:41.199 this is this is how you can skip the middlemen 0:19:41.320 --> 0:19:44.359 and like actually sell your fruit is by becoming an influencer. 0:19:44.960 --> 0:19:48.919 Which it's so cursed. It's so cursed. I hate it 0:19:49.040 --> 0:19:49.520 so much. 0:19:49.920 --> 0:19:52.960 That is kind of dystopian, and it's just the constant, 0:19:54.040 --> 0:19:55.200 the constant performance. 0:19:55.840 --> 0:19:57.680 Yeah. But the problem is that the alternative to it 0:19:57.840 --> 0:20:01.640 is even worse because PDD really is this. They're looking 0:20:01.720 --> 0:20:04.280 at these markets and they're like, hold on, these farmers 0:20:04.320 --> 0:20:06.760 are already selling their goods for like next to nothing. 0:20:07.119 --> 0:20:10.399 If we come in, pay them a bit better, use 0:20:10.440 --> 0:20:13.000 our text or like our tech money to ourex startup money. 0:20:13.040 --> 0:20:15.000 They have an enormous amount of tex startup money. If 0:20:15.040 --> 0:20:17.879 we use that tech startup money to give them rebates, 0:20:18.160 --> 0:20:20.080 we can do things that like you know, we can 0:20:20.160 --> 0:20:25.159 not charge them commission, right, And if we can do this, 0:20:25.240 --> 0:20:27.760 we can turn around and sell these fruits for like 0:20:28.240 --> 0:20:31.640 zero dollars a zero dollars is this l like exaggeration, 0:20:31.680 --> 0:20:33.399 but when I like, they're selling these fruits for an 0:20:33.640 --> 0:20:36.639 are unbelievably cheap, Like we are talking ten mangos for 0:20:36.680 --> 0:20:42.040 a dollar and thirty nine cents, which is like a steal, outrageous, right, 0:20:42.440 --> 0:20:46.359 And you know this is this is incredibly successful. What 0:20:46.400 --> 0:20:49.600 they're doing basically is a giant version of the Amazon gambit. Right, 0:20:49.640 --> 0:20:51.760 they're eating shit and taking losses to sell all of 0:20:51.800 --> 0:20:54.200 this stuff, although they're losing less money than you'd think, 0:20:54.760 --> 0:20:57.880 like the actual price of these goods is already so low, 0:20:57.920 --> 0:20:59.719 and we're gonna come back to that too, because that 0:20:59.720 --> 0:21:01.520 that's an aspect of what's so messed up about this 0:21:01.520 --> 0:21:03.600 whole thing. But you know, so they eat shit, it 0:21:03.640 --> 0:21:08.359 takes some losses, but they really really quickly build market share. 0:21:09.320 --> 0:21:12.400 So this is a very very short smart strategy because 0:21:12.400 --> 0:21:14.800 it's not just in the sort of real market. China 0:21:15.040 --> 0:21:17.560 has a shit ton of like small and medium sized 0:21:17.600 --> 0:21:20.520 producers that make a whole bunch of things, or like 0:21:20.640 --> 0:21:24.400 guy with one factory person doing like craft production stuff. 0:21:25.200 --> 0:21:28.200 And pdd's plan is to pull together all of these 0:21:28.240 --> 0:21:31.160 sellers like this, this whole all all of these people 0:21:31.160 --> 0:21:35.720 from different markets into just one giant, like one giant 0:21:35.760 --> 0:21:39.639 like market that they control now importantly unlike Amazon, And 0:21:39.680 --> 0:21:42.520 this is unlike ali Baba too, because Ali Baba works 0:21:42.520 --> 0:21:45.480 on a fairly similar model to well, okay, in a 0:21:45.480 --> 0:21:48.280 lot of ways, is a similar model to Amazon. It's identical, 0:21:48.359 --> 0:21:52.840 but Unlike those two companies, PDD doesn't run their own 0:21:52.920 --> 0:21:55.960 logistics network. It's all it's all third party. Like the 0:21:56.000 --> 0:21:58.000 shipping and all that shit is done by is done 0:21:58.000 --> 0:22:02.119 through third party logistics stuff. So like their shipping companies, 0:22:02.119 --> 0:22:06.040 they don't own warehouses like that stuff, you know, what 0:22:06.040 --> 0:22:08.560 they're What they do instead is they use the shipping 0:22:08.560 --> 0:22:11.000 companies and warehouses that were developed in like the earlier 0:22:11.040 --> 0:22:13.359