Dashing IPO 😎

VI’s problems, Vaccine progress, and IT moves.

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Market summary: 📊 

This week is off to a good start with hopes of a vaccine giving investors some near term visibility and confidence. Tech stocks that gained in the pandemic’s aftermath are taking beating. 

US:

  • S&P 500 - up 1.61%

  • Nasdaq 100 - up 0.63%

India:

  • Nifty 50 - up 0.70%

  • Sensex - up 0.65%


To start your day—

1️⃣ Vaccine progress—another pharma giant, Moderna, claimed that their coronavirus vaccine is nearly 94.5% effective against the virus. Moderna’s trial included 30,000 participants, 50% got a placebo, while the rest got the vaccine. 

The group that got the placebo, saw 90 people contract COVID-19, with 11 catching a severe case. Of the group that got the vaccine, 5 developed COVID-19, with 0 serious cases. Boom, vacc 1, virus 0. Scientists laud the truly “magnificent” results, and markets are cheering!

This nightmare of a year may be ending on a good note after all, man. 

2️⃣ Inflation soaringwholesale price inflation continued its upward climb, with prices rising for the month of October to 1.48%, as manufactured products turned costlier because supply chain disruptions, raw materials prices, mass migration of labor etc. etc. all “added” to net costs. Sep 2020 stood at 1.32%, while inflation was at 0% last October. Odds are, these numbers we cool off as supply side disruptions are ironed out over the next few months.

3️⃣ Kya bhav hai—LIC’s much anticipated IPO is slowly humming along and the finance ministry has now invited bids from actuarial firms for valuing the company. GOI has already made SBI and Deloitte its capital advisors for the transaction and the government’s budget for this fiscal year as well as next is counting on cash raised from selling PSUs to pay its bills. 


Shooting oneself in the leg 🗼

Vodafone (or VI), taking assault from all directions, is torn between pleasing investors and wooing consumers, and for now the company’s management thinks its better to stop the investors from abandoning ship.

The telco announced plans to gradually increase its prices by ~20% by year end or early next year to help stop that revenue decline and profit erosion. 

Some context—when Jio relentlessly drove telco prices to the bottom in India, competitors tried to follow through as well, but now it's becoming hard for them to keep doing that forever and balance growth. Jio raised outside money and used RIL’s deep pockets to fund its shenanigans, but the others are now struggling to pay their bills.

Furthermore, VI’s problems also include high consumer churn, failure to appeal to emerging India, and a lacking digital portfolio. For example—VI lost 8 million subscribers last quarter, while Jio added 7 million and Airtel another 15 million. Basically, no money = no honey and breaking free from that cycle is becoming impossible. 

So VI is betting the best course of action is to increase prices and fix cash drain. Then perhaps use that incremental revenue to drive a growth agenda. Also, VI is counting that Airtel joins it in doing the same considering Airtel management had echoed a similar sentiment a while ago. 

Sure sounds reasonable, but will your price conscious user base care or will they abandon you more, because now you are expensive? Chicken-egg.

Bottomline: raising prices will drive some $$ in the door short term, which could help fund growth initiatives and beef up assault, but odds are price conscious consumers are likely to abandon the company in favor of Jio and others. Also, crazy how Jio boxed these guys in.

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Consultants making hard cloud shift ☁️

We’ve written a couple times in the past about how consulting companies are suddenly spending on acquiring startups to tune themselves up for a cloud future. Latest to take their checkbook out is EY India, buying out SpotMentor Technologies for an undisclosed amount. 

Spotmentor operates an end-to-end skilling platform to help enterprises identify broad skill deficiency, and create plans for upskilling talent at scale. One of the major impacts of digital transformation is that laggard enterprises are struggling to rewire their IT talent to suit the modern demands and fill gaps, and such tools that leverage data to accelerate training and skilling, play an important role. 

EY could possibly use the platform for their own needs and then bundle and sell the service to clients as well. 

While we’re on SaaS and deal activity, 

Mindtickle has finally closed on its $100 million round from Softbank’s Vision Fund 2, in a combination of equity and debt raise. Existing investors Norwest Venture Partners, Canaan, NewView Capital, and Qualcomm Ventures also pitched in.

Pune and SF based MindTickle provides sales training and enablement, helping enterprises improve the efficiency of their sales staff through data-driven coaching and upskilling—a value proposition that shines today as sales staff working remotely, minus their work-trips and fancy dinners, struggle to sell effectively to enterprise clients. 

In addition to seeing business boom in COVID, Mindtickle could add a lot of synergistic value to Softbank and other investors’ existing portfolio of SaaS ventures. Mindtickle plans on using the fresh capital to accelerate its go-to-market activities and expansion of global operations while advancing investments in product innovation.

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Dashing IPO 😎

Those rigorously keeping tabs on Silicon Valley may already be aware, but Doordash, the Swiggy of the US, dropped their S-1 announcing plans to go public over the weekend.

Started as PaloAltoDelivery.com, by 4 Stanford graduates who began delivering food as a part-time job, the YC-backed company quickly rose to prominence, displacing the likes of Uber, GrubHub and other biggies to dominate the market by share!

Analysts and pundits have been dumbfounded by their speed and efficacy, but it appears their secret sauce was doing 1 thing and just 1 thing correctly—food delivery, while others struggled chasing multiple angles in the game. 

Some highlights from the S-1:

  • Largest food delivery company with 50% market share in the US; UberEats comes at 26%, while grandpa GrubHub limping at 16%

  • COVID gave a huge boost—from Jan to Sep 2020, for those 9 months, the company raked in $1.9 billion in revenue, up 3x YoY

  • Total order volume $16 billion this year, with 18 million customers ordering and 1 million delivery partners

  • Obviously loses money, but significantly improving cost structure—having lost just $149 million so far in 2020, on the two billion revenue

Overall, when you compare them to Uber, and other cash burning machines that have made investors cry, DoorDash looks much more polished and optimized. There’s zero doubt this is going to be a HIT IPO and now the bar is set higher for AirBnb.

Honorary mention: 2020 is looking like a good year for YC’s bank account.


What else are we snackin’ 🍿

🚀 Musk does it again - SpaceX yesterday, successfully launched four astronauts into space for NASA. The astronauts, Mike Hopkins, Shannon Walker, and Victor Glover of NASA, along with Soichi Noguchi are bound for the ISS and are set to live on the space station for 6 months. 

💉 Towards the finish line - Hyderabad based pharma giant’s COVID-19 vaccine candidate has entered phase 3 trials after getting an approval from DGCI. The results of this clinical trial are expected to be available by February 2021.


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