The curious case of Temu’s U.S. ‘headquarters’

Today, I write to you about one of my journalistic obsessions: Temu, the discount shopping app that has become a favorite of millions of U.S. consumers basically overnight.

A subsidiary of Chinese e-commerce giant PDD (market cap of $167 billion), Temu only launched in the U.S. in the fall of 2022 but is already the most popular shopping app in the U.S. on both Android and Apple devices. Yes, more popular than Amazon.

Its appeal is straightforward: It sells a wide range of items with free shipping at what should be too-good-to-be-true prices—from $1.61 USB cables, to 88-cent eyeliner sets, to $38 memory foam mattresses. It keeps customers coming back by gamifying the shopping experience and offering a seemingly endless array of coupons. 

Its prices are possible through some combination of tight control over Chinese suppliers, direct-from-manufacturer shipping, an advantageous century-old trade rule known as “de minimis,” and almost certainly selling some merchandise at a loss. Proponents say its model is a long-term threat to giant U.S. retailers, including dollar store chains and maybe even Walmart and Amazon eventually. Critics contend its astronomical advertising spending and questionable product quality will eventually relegate it to a similar position as Wish.com, a discount shopping app with similar prices and customer acquisition tactics, and that was once worth more than $18 billion but recently agreed to sell for just $173 million. 

In the meantime, there’s another part of the Temu phenomenon that recently caught my attention: the claim that it was “founded” in Boston and that its corporate headquarters is located there, rather than in, say, Shanghai, the city that its wildly successful and secretive parent company calls home.

So I did a little digging.

Temu, whose official company name is WhaleCo, does in fact have office space in Boston’s Back Bay neighborhood. It leases space in the same building as a bunch of foreign consulates, including those of France, Spain, Portugal, Turkey, and Colombia.

But while its Boston office is real, its Boston staff is tiny, I’ve learned.

Multiple sources familiar with the company’s operations told me that Temu employs fewer than 20 people out of its Boston office. Most of the staff there works in legal or tax roles, these people said. On LinkedIn, a smattering of profiles claiming Temu as an employer list other work locations such as New York, Los Angeles, and Seattle, but the company is not believed to have any other U.S. offices, and sources say Temu leaders typically frown on remote work. Sources told Fortune that Temu has a much larger staff in China, including practically all of its product and technical staff, but the exact size could not be learned. PDD, owner of both Temu and China’s Pinduoduo, said in its recent annual report that the combined company employs more than 17,000 people.

As a quick aside, I’m also told that the company chose an East Coast headquarters for Temu over a West Coast one (like rival discount-shopping company Shein) because the 12-hour time difference with Shanghai allows for a few overlapping work hours for staff members that need to collaborate, while a 15-hour difference—as is the case in California, for example—would make communications more difficult. Employees at Temu work long hours in the vein of the 996 work week popular among China-based internet companies–that’s work hours of 9 am to 9 pm, 6 days a week. (I’m also told that the company chose Boston over New York City because office leases are less expensive there.)

Who actually runs Temu as the top decision-maker is another open question. Sun Qin, known as Dada, is the president of WhaleCo, and involved in big decisions, according to sources. His LinkedIn profile calls him a cofounder of Temu. But sources say that Pinduoduo executive Gu Pingping, who also goes by Dora, is also a top decision-maker.

As for why the company chose a U.S. headquarters in the first place if it was going to hire so few staff here, that’s unclear to even my sources. It’s possible it will pick up hiring here, or also that it had a change of heart. But one educated guess, according to one source familiar with the company, is that the Boston HQ was about creating a perception of a strong U.S. presence since Temu’s current largest customer base is in fact in the U.S. And certainly being linked to China isn’t necessarily a positive at the moment, as TikTok leaders well know.

“Temu still has a big pride point that they don’t want people to know how small the actual Boston office is,” this source told Fortune. “I think they are worried that if that was public, the perception of the company being a Chinese company could hurt them.”

I reached out to Temu to hopefully get some answers, but I never heard back. 

So if you’re reading this and have information or ideas to share, please contact me. I’d love to learn more.

Jason Del Rey

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The rest of today’s Data Sheet was written by David Meyer.

NEWSWORTHY

Results time. Alphabet yesterday beat analysts’ estimates with its results, lifting the company’s market cap above $2 trillion. The 10% stock pop may also have something to do with the Google parent announcing its first dividend. Meanwhile, Microsoft also benefited from demand for AI cloud services, with its share price rising 3%. But Intel’s share price fell 11% due to a weak forecast for this quarter. As CNBC reports, Intel’s contract-chip-making Foundry business saw revenue down 10% year on year.

TikTok fate latest. ByteDance would rather shutter TikTok in the U.S. than sell it, Reuters reports. Under a new U.S. law, the company has to find an American buyer for the popular app within nine months or see it effectively banned (there’s a potential three-month extension to allow a sale to go through). According to Reuters’ unnamed sources, ByteDance would be unwilling to give up TikTok’s core algorithm—though as Beijing would have to approve the algorithm’s export, it’s deeply unlikely that a sale could include that code anyway.

Darktrace gets bought. Private equity Thoma Bravo is buying the British AI cybersecurity firm Darktrace, which has been publicly traded for the last few years, for £4.3 billion ($5.4 billion). As the Financial Times reports, Thoma Bravo has previously tried to buy Darktrace but until now it hasn’t offered enough to seal an agreement. The deal will trigger a serious payday for early Darktrace backer Mike Lynch, who is currently on trial in the U.S. over alleged fraud in the sale of Autonomy, which he cofounded and ran, to HP more than a decade ago.

Another Tesla probe. The National Highway Traffic Safety Administration is investigating the adequacy of Tesla’s December recall, Bloomberg reports. The fix was supposed to make drivers pay attention even when Autopilot is engaged, but the agency’s tests of patched vehicles—and some crashes that followed the software update—apparently suggest all might not be okay.

SIGNIFICANT FIGURES

$18 billion

—The valuation at which Elon Musk’s xAI is raising $6 billion, according to TechCrunch, which says Sequoia Capital and Future Ventures are in on the round

IN CASE YOU MISSED IT

Alphabet and Microsoft’s revenue surge sends a clear message to investors: Our AI spending is paying off, by Bloomberg

FCC brings back net neutrality—’broadband is a necessity, not a luxury,’ chair says, by the Associated Press

Amazon should be forced to disclose how Jeff Bezos and others were instructed to use the Signal disappearing-message app, FTC says, by Jason Del Rey

Shares of Microsoft-backed Rubrik jump as much as 25% on first trading day, by María Soledad Davila Calero

Biden bets big on Idaho chips—of the semiconductor variety, by Dylan Sloan

SEC sued over Ethereum, crypto firm asks court to state token is not a security, by Jeff John Roberts

BEFORE YOU GO

Kaiser data breach. The U.S. health care giant Kaiser has notified members of a data breach that took place earlier this month. What kind of breach? Tracking technology that Kaiser installed on its websites and mobile apps “may have transmitted personal information to third-party vendors,” the company told TechCrunch. Some 13.4 million people are affected.