Calm down 😌
FB’s monetization, No autonomy, and woman CEO.
Hi 👋, Tanvi here.
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Market summary: 📊
Turning out to a phenomenal week in India, with a 3rd straight day of gains. US markets took a hit, with Nasdaq down big as post-pandemic reality hurts tech stocks.
US:
S&P 500 - down 0.79%
Nasdaq 100 - down 2.51%
India:
Nifty 50 - up 1.09%
Sensex - up 1.02%
Aap monetization samajhiye 📱
Facebook is going guns blazing on the digital commerce opportunity—last week acquiring Kustomer, and now most recently adding a “carts” feature to Whatsapp, basically allowing users to include multiple products in a single cart when buying from merchants on the app.
Users will seamlessly be able to view products in a business catalog and then place order as one message to the business, instead of going back and forth with the merchants to clarify things—honestly, pretty basic stuff, but important as the platform fishes for more growth and readies itself for the next lap of monetization. Especially as the Whatsapp Pay comes into picture soon, the feature will be must have.
Facebook claims nearly 175 million people everyday interact with merchants via Whatsapp Business, and we suspect majority of these come from emerging markets. India alone registers 30 lakh views each month to business catalogs on Whatsapp.
Takeaway: as Facebook’s traditional advertising revenue lines mature, commerce will increasingly matter to management and shareholders. Thoughtful of the company to “slowly” make moves instead of surprising users with a revamp. But we’re nowhere near done, and expect most of FB’s apps to increasingly be centered around “commerce-first”.
Uber offloads autonomy 🚕
Uber finally sold off its self driving unit to a pure-play startup called Aurora—the one that’s busy making large semi trucks drive down highways without a driver in the seats, ferrying our ecommerce orders.
To remind you, Uber’s self driving initiative was hamstrung by a series of bad events including a ugly suit with Google over trade secret theft, and even the death of a pedestrian, which hurt the pace of research, and was becoming more of a cash drain than anything else—hence the move.
Nature of the deal is quite complex with Uber being paid back in stock, in addition to them investing another $400 million cash in Aurora—which kinda looks like an attempt to secure themselves against eventual disruption if ever autonomy becomes a thing. Uber will own about 26% in the startup post deal, with Aurora valued at over $10 billion.
Bottomline: Uber’s current issues demand surgical focus from management. With COVID eroding demand, and public investors demanding cost discipline, CEO Dara Khosrowshahi is walking on very thin ice. With this deal, he made sure Uber somehow stays invested in self-driving but doesn't have to directly deal with the cost headaches—and in case Aurora makes attractive technology eventually, Uber can either licence it or even buy them out.
Until then, forget about taxis driving themselves and fix existing problems. Sounds smart.
Banks join the rebels 💰
Unable to resist the fintech-feast, HDFC Bank joined in for Smallcase’s $14 million series B round, infusing an undisclosed amount for minority stake. Existing investors, DSP Group, Sequoia Capital India, and Blume Ventures bought into the round as well.
Smallcase hit the markets like a breadth of fresh air, simplifying complex financial products in a language that the average investor understands, nicely topping off Zerodha’s platform, and then slowly adding more broker partners. One of the primary problems investors deal with is discovery of ideas, and Smallcase made it super simple with these thematic baskets.
Market reception was phenomenal, and the company has been on a solid run since. COVID and “work from home” investors boosted growth even further.
The disruption hedge—obviously such offerings threaten the complex products sold by banks, along with their hidden-fee empires and cushy bonuses of the VPs. Well, then if you’re a bank, the only way to play the game and insulate yourself against eventual disruption is to join the bandits, lurk in the shadows, and probably pounce with an acquisition or two later when the market matures. Odds are, if the promised disruption plays out, your other competitors will perish as well, while you stand towering on the remains.
But that’s a long shot and so far HDFC’s involvement seems nothing more than a solid stamp of approval for this startup and the ecosystem, and the founders cheered the victory on Twitter. This should also boost other disruptive ventures in the investment tech and broader fintech arena.
Anyway, for Smallcase, so far prospects look bright with some 2 million people using the platform today, with volumes surpassing ₹5,000 crores, and consumers working from home ensuring they have a solid opportunity to become India’s answer to Robinhood.
$2 billion to calm you TF down ✋
Mindfulness app Calm that helps anxious souls calm down via soft music, vocals etc. and lets users stay on top of mental wellness has raised $75 million on a massive $2 billion valuation, as recovery from the pandemic sheds new light on the subject of mental health altogether.
Lightspeed led the round, with TPG and Insight Partners jumping in for a piece. The company’s trajectory has been nothing short of amazing—started literally 2 years after then category leader Headspace, the company scaled a $40 million revenue base on just a $1.5 million seed, to eventually overtake Headscape in 2017 to now report $200 million+ in annual revenue—growing almost 85%+ rates consistently. Management is even claiming profitability.
Changing landscape: among other surprises, 2020 has shown that in an increasingly connected world, literally everyone is struggling to sustain a productive balance amidst the constant notifications, the negativity, the distractions, the emails. Working from home for example has commonly led to overworking as boundaries vanish.
All this is driving the needle on these services with millennials and Gen Z actively seeking help, and aggressive projections for mental-health tech expect spending to cross $5B+ by 2025, and investors are pouring capital to capitalize on the opportunity.
BTW—quick look at the rejection of Calm from 2013 from an investor with a prominent venture capital house. Reminder of how sometimes even the brightest miss out on obvious winners and also that a single rejection in this game should never mean anything.
What else are we snackin’ 🍿
☕ Family coffee business - Malavika Hegde, the wife of late founder of Coffee Day Enterprises, V G Siddhartha, has been appointed as the company's Chief Executive Officer. The appointment is for five years, effective from December 31, 2020. Huge responsibility for sure, and it's good to see a woman CEO at the helm.
📈 Demand coming up - Cognizant is preparing to hire around 23k people from campuses in 2021, having hired approximately 17,000 from campuses already this year. IT companies are preparing for demand to eventually return in 2021 as industries ease up on spending.
Hit that 💚 if you liked today’s issue.
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