Dispo stinks 💩
Year of streaming, IPO heat, and the government makes it boozy.
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Market summary: 📊
India had a meh opening to the week with fresh COVID cases weighing on sentiment. US saw a good day with tech showing some life.
US:
S&P 500 - up 0.70%
Nasdaq 100 - up 1.71%
India:
Nifty 50 - down 0.052%
Sensex - down 0.17%
Today’s shot of espresso ☕
✅ Out with the oldies—oil giant Saudi Aramco is no longer the world’s most profitable business, thanks to the oil market crashing last year followed by depressed demand for global Travel services. The company was displaced by…. drum roll, Apple. Tim Cook’s company ended 2020 with $300 billion in revenues, up 9% thanks to record work-from-home device demand, with profits of $59 billion, easily trumping Aramco’s $49 bills! Screams a new world more than anything.
✅ When streaming went mainstream—if you’ve gotta thank somebody for saving lives this pandemic, its front-line workers and the creators of streaming video technology. As of 2020, 1.1 billion people across the world have become subscribers of online video, with total global subs growing 26% this year. The industry’s total revenues still lag that of the global cable industry though, which shows how early we’re still in the game and that there’s plenty room for further price increases by leaders Netflix, Disney, Prime Video. All music to ears if you’re a stockholder.
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Dispo and the Dobrik-gang lays a huge turd 💩
This one’s straight out of a movie. Barely weeks ago, Spark Capital made a HUGE splash leading a round in YouTuber and GenZ influencer David Dobrik’s much-hyped photo app Dispo. The ink had barely dried before Spark publicly decided to cut all ties with David and his startup.
Reason? Sexual abuse accusations against close members of Dobrik’s team.
Some backstory—Dobrik runs a popular YouTube channel that is a hit among teenagers in the west. The group orchestrates funny skits—sometimes impromptu, sometimes scripted, breaking stuff up, running social experiments, house parties, that kinda stuff. Turns out the monsters running it aren’t so friendly after all…
In 2018, the plot of the script demanded random women to visit Dobrik’s apartment for a party. One of the dudes hanging out with Dobrik essentially forced himself on a woman while she was too intoxicated to offer consent, and then posted an non-explicit video of that episode on YouTube, gathering over 5 million views, before it was demanded taken down by the woman.
Insider broke the story, Dobrik apologized within hours, and a few hours after that came the tweet storm from Spark. And boycott Dispo is now the trend.
What does this mean—the bigger business question here is whether traditional institutions and capital are ready for the brashness of the individual maker, and his flaws?
Crime is crime, and it's inexcusable, but corporations are designed to operate in a way that the impact of abhorrent behavior by one employee rarely ends up taking down the entire business. However, single person brands and creators will always be prone to the character flaws of the leading faces, like in this case.
The $20 million that Spark had invested in Dispo was a landmark moment for the creator economy, and the outcome of this case will likely set the tone for deals like this happening in the future. So freaking shameful!
Fintech fires reach IPO street 🔥
Those waiting around for the PayTM IPO can make a pitstop by the MobiKwik stall. The digital wallet company’s $250 million public raise is expected to take off as early as September 2021.
MobiKwik’s modest fintech super-app processes over a million transactions everyday, with 100+ million users and a network of 3 million+ merchants, serving services from mobile top-ups to utility bill payments. Competition in this game is fierce, but there’s plenty of low hanging fruit especially in non-urban India that presents an attractive opportunity in the long run.
Anyway, a pre-IPO fundraise is being baked, which will value the company at a “sweet” $700 mills, and deliver some fuel to streamline ops.
While we’re on Fintech lane,
Lending platform KreditBee scooped up another $70 million for its Series C round from TPG’s NewQuest Capital Partners and Motilal Oswal’s PE arm, barely months after raising $75 million from big name buyers. This would be one of the largest funding rounds for a lending player since COVID.
Couple of Chinese firms that had backed the company early on booked an exit—folding to changing sentiment, as well as GOI’s increasing scrutiny of foreign owned lending services in India. KreditBee serves nearly 25 million individuals and small businesses nationwide, and plans on using the capital for adjacent product launches.
Onwards...
Quick peek at the auto industry 🚗
Gone are the days of the 800. Maruti will raise prices for all its models once again, barely months after a sizable bump earlier this year. The reason is simple—pandemic jolted supply chains are taking longer than expected to straighten out, raising prices of input material.
That, in addition to labor disruptions and other operational issues is making raw material and parts expensive, all of which is hurting Maruti’s profitability. Now obviously the company could eat the losses itself, but then you gotta deal with angry shareholders. Might as well pass it on to the consumer…
Bottomline: demand for new cars is very strong, and the last couple of quarters have been outstanding for companies here. Very likely that Maruti’s aggression will force the rest of the ecosystem to follow suit as well, given the input costs increases affects literally every player in the industry. Why leave money on the table....
Closing out—the buffet spread 🍱
Barbeque Nation took the nation by storm with its unlimited buffet fare, riding an explosive decade in India’s hospitality sector, driven by the rise of the middle class, and record strength in consumer disposable income. The success has propelled the company to a hot date with Dalal Street.
Quick look at the IPO that opens tomorrow:
Raising ₹180 crores in fresh money
Made about ₹850 crores in revenues last year, losing about ₹30 crores, thanks to COVID, and new restaurant expansion on war footing
Operates nearly 147 locations nationwide, with 6 more overseas, and some 11 odd Italian restaurants under multiple names
Owes about ₹150 crores in debt, which is pretty standard for retail establishments, but will be paid off using IPO money
Remainder of the capital will go to open new locations.
Taking the temperature—COVID is obviously making things hard right now. But generally, full scale restaurants are expensive to manage, and the continued rise of food delivery platforms combined with cloud kitchens will be a long term overhang on the industry overall.
However, India’s ever expanding consumer class, rising disposable income levels, and the taste of the urban middle class for all things quasi-luxury reads extremely positively for well recognized brands like BQ that serve the market with a distinct appeal. If they keep executing, the growth trajectory is going to be extremely attractive.
What else are we snackin’ 🍿
🍻 Making it boozy - it’s time to throw em fake IDs away. Delhi is making it easy to buy alcohol, lowering the legal drinking age from 25 to 21 (not that anyone cared), and the government will also be modifying the Excise Policy that restricts opening of liquor shops in the national capital, while the government itself plans on exiting all retail liquor facilities it runs. God bless!
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