Content is king 👑

Brokerage wars, Port traffic, and IMF guides lower.

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Market summary: 📊

Indian markets held up okay, ending relatively flat while investors rejoiced gains from the last 5 days. US indices gave away some ground as stimulus talks faced a gridlock.

US:

  • S&P 500 - down 0.63%

  • Nasdaq 100 - down 0.041%

India:

  • Nifty 50 - up 0.03%

  • Sensex - up 0.078%


First things first… ☝️

Couple of notable updates from Dalal Street yesterday:

1️⃣ IMF’s GDP guidance—the International Monetary Fund dampened the market’s mood a bit, guiding for 10.3% contraction in India’s GDP for the current fiscal year, painting a slightly weaker picture than the markets were projecting for. But the IMF sounded quite upbeat of a resounding recovery here on out, setting eyes for an 8.8% GDP expansion coming out of the pandemic in the next fiscal year

In the second quarter, India’s GDP had contracted nearly 23.9%, the worst among G20 nations, and with all said and done these new estimates appear far far better.

2️⃣ In its quarterly earnings print, Wipro did not let shareholders down. The company managed to beat on revenue expectations and reported profits in line with estimates while expanding margins by a tiny amount. The icing on the cake was a solid ₹9,500 crore share buyback that the company announced, consistent with TCS last week, despite IT giants hurting badly from the pandemic.


Brokerage wars 🔥

Latest data shows that Upstox is apparently the second largest brokerage in India, after the company managed to double its user base in the last 6 months to some 1.2 million! Despite that, Zerodha will hold the title for the leader, with users hovering around 3 million on its platform.

Known as RKSV in the past, Upstox had rebranded itself hoping to add some digital oomph to its name, and so far the move has worked like a charm. That, combined with a meteoric rise in India’s top indices this year—up nearly 55% from March bottoms, further combined with an aging millennial population that is earning and saving more, Upstox and its peer group have managed to clinch some serious home runs in 2020.

Estimates suggest, this fiscal year, brokerages rake in about $3.2 billion in revenue from equity trading—marking a 12% growth in revenue, with discount brokerage operations projecting significantly higher growth rates. 

The real losers are traditional brokerage services offered by banks, who despite trying hard to wear a digital skin, are mostly struggling to appeal to India’s millennials.

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Ports gasping for a breath 🚢

What’s happening—in the first half of the current fiscal year, with total volumes of about 300 million tons, cargo traffic at top 12 Indian ports dropped a sizable 14.3% relative to the previous year. These ports manage about 60% of India’s cargo volume, and they’ve recorded their 6th straight month of year-over-year decline.

The fact that we’re closing in on the holiday season and the numbers still remain stubbornly low, adds an entirely new context to the situation. Declines have been consistent across cargo types as well—including containers, coal, petroleum and lubricants, etc., all falling short. Read more.

The impact of this weakness will hold the noose tight on quite a few sectors—including shipping and logistics, seafarer employment, economy of port towns, and such. However, with domestic production ticking up and transportation gridlocks opening, things are expected to improve over the next few months. Fingers crossed. 🤞


Content is king 👑

Consumer attention is scarce today and text-based content plays a more central role to brand identities than ever before. At least that’s what Pepper Content’s $4.2 million Series-A raise from Lightspeed and several notable angels like Balaji Srinivasan and Gaurav Munjal, highlights. Umm… or perhaps it shows that marketplaces are cool, dunno, let's stick with content is king for now coz it makes us happy. 

The company runs a marketplace dedicated to content creation, supplying big brands as well as smaller companies across the board, with vetted, talented writers who can capture consumer attention. Founded in the BITS Pilani dorm room by then students, the company has grown to serve over 30,000 content writers, creating 100,000 pieces of work earning more than $400,000 in payouts. Wow!👏

Turning heads to a Robotics raise, 🤖

In the era of edtechs and fintechs, robotics has taken the backseat, but a company called Miko is making waves by selling bots that help toddlers learn. In a splashy pre-series B raise, they have scooped up ₹23 crores from Stride Ventures and existing investors to fuel expansion abroad.

Started by 3 IIT Bombay graduates, the simple toy robot comes equipped with sensing, listening, and talking features, basically elevating a toy into an interactive platform for kids, who then with a hand held device are able to learn and do basic math and such with the device. Sounds creepy AF and we’d root for kids to play with other human kids instead, but we’d take a Miko over a WhiteHatJr Wolf any day. Times we live in!

Anyway, so far the company has scaled to over 90 countries and is growing some 20% each month, with 70M+ interactions with its devices recorded. Funds will be used towards further market share expansion.


Better late than never 🎡

Last night Disney management came out with what sounds like music to shareholder ears—the company will reorganize its entire media and entertainment franchise to put an outsized focus on streaming from here on out, basically running content production, purchase, ad sales, distribution businesses keeping streaming first in mind, just like Netflix.

Some backstory: Disney was on its way to record over $70 billion in sales for 2020, but then COVID came calling, rocking all of their franchises, some of which are unlikely to make a recovery anytime soon. Movie production stalled, all theme parks were frozen and an already ailing TV empire continues to bleed profusely because nobody watches cable anymore.

The only respite was Disney’s last moment haphazard turnaround with its own streaming service in 2019, Disney+, which the company had managed to grow to 65 million+ users in no time with partnerships and freebies. Also, strategic investments in Hotstar in India and other markets helped the company save face in-front of livid shareholders.

But now with the pandemic not ending, management has been forced to do some hard thinking and they’ve finally woken up to their senses. Shareholders and analysts are cheering at the strategy update, who for ages have been warning the company of Netflix's incursion, yet adamant management had been stubborn to see the enemy crawling up behind the bushes.

Anyway, as part of this reorganization, several heads have been moved, new heads have been appointed, and Disney’s phenomenal creative engine has been consolidated under one group to keep churning out content in Sports, General Entertainment, and Movies. Can’t wait to see Mickey Mouse in his new look.

Bottomline: a lot rides on execution now. Disney surely has some of the best management in the world, so a decent success is well assured. But, for Streaming, a less than $1 billion business right now, to assume the mantle of a $70 billion ailing empire, we would need some magic tricks coming out of management’s pockets.

Also, not to forget, Netflix has had a multi-decade head start in this new field and a head-on battle will not be easy. 


Closing thoughts…. 

Apple’s held its flagship launch event last night—bringing out a slate of new 5G equipped phones. Fans weren’t disappointed either, especially with the 12 rocking the old school iPhone look. Quick highlights of the major stuff:

  • 5G iPhone 12 with smaller option as well

  • iPhone 12 Pro Max - their biggest phone to date with a freaking LiDAR 

  • Low-cost smart speaker 

  • No more wired headphones or wall chargers will be sold with phones 🙄

Here’s a thorough coverage from Verge. Apple may not be first to market sometimes, but they sure have the best marketing machinery that flawlessly ensures trends are set into motion when the company announces something new.


What else are we Snackin’

😱 400 million subscribers - Reliance Jio has become the first mobile service provider to cross the 40 crore customer mark in India after it added around 35 lakh subscribers for the month of July. Jio literally dominates India's mobile market now with 35%+ market share. We see no reason why that won’t continue to tread up.

📱 Instant payouts - Paytm will launch same day payment facility for all kinds of transfers on its platform. This will help people to receive and settle money transfers in their bank account on the same day without waiting for the next day. The feature can be accessed from Paytm Merchant Dashboard or Paytm for Business app. 

💉 Vaccine snafu - Johnson and Johnson has paused its coronavirus vaccine trials after a participant had an unexpected illness. A similar setback was faced by British drug maker AstraZeneca where the trial was paused after a participant faced a potential adverse reaction. Reviews are being conducted.

🚨 When tech platforms become the police - FB has decided to outright ban posts which deny or distort the Holocaust and will start directing people to credible sources if they are looking for information regarding the Nazi Genocide. Sounds fair, but who decides where the boundaries between “open internet” and “idealism” are drawn.


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