Disrupting milk
Snap to the moon, Google's impressive launches, and homegrown crypto FTW.
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Market summary: 📊
We’re still in choppy waters with back to back down sessions in India after a decent start to the week. US had a rare positive day where both broad market and tech advanced.
US:
S&P 500 - up 1.06%
Nasdaq - up 1.11%
India:
Nifty 50 - down 0.83%
Sensex - down 0.68%
What’s brewing hot? ☕
✅ Surprise exit—you don’t build one of the fastest growing companies the world has EVER seen, from 0 to $300 billion in less than a decade, and then just… quit. But that’s exactly what Bytedance CEO Zhang Yiming did last night. Zhang claims he wants to take a step back from day-to-day execution and think about a broad strategy for Bytedance. His buddy and Bytedance cofounder Liang Rubo will take the baton. Weird move, and we’d imagine he’d want to enjoy at least taking the company to IPO, but can’t blame the guy considering the unique challenges TikTok has had to deal with global government’s because of its meteoric rise and ambition.
✅ Snap shooting for the moon—Evan Spiegel just disclosed that Snapchat now has 500 million monthly users, quite an admirable feat for a company that was almost written off barely a couple years ago. Obviously it's mostly under-30 somethings on the platform, which is precisely what makes the “niche” all the more exciting for advertisers. Also, Snapchat just rolled out a new version of its smart glasses too, doubling down on the AR hardware space despite previous attempts being duds. These look equally ugly, but we respect the company’s ambition in leading with AR hardware.
Is D2C here to stay? 🤔
What happened—Oatly, a global plant-based milk products company that operates in 20 countries, just IPO’ed on the New York Stock exchange, at a $10 billion valuation. Stock popped 30% on the first day alone.
What do they do—Milk, quite literally. Emerging demands of the gluten-free and avocado-toast generation (read millennials) has elevated several DTC brands as credible alternatives to traditional products of the previous generations, and Oatly leads the charge on replacing whole milk cartons in shopping mart isles.
Here’s how the business did for 2020:
$420 million in revenue, up more than 100%
$60 million in losses
Sells to 60,000+ supermarkets, 30,000+ coffee shops
Raised money from everyone including Jay Z, Oprah, and Starbucks’ Howard Schultz
Last year, the plant based dairy industry made about $18 billion in total sales, forming about 3% of the total dairy industry, so demand definitely does exist.
But the losses are making investors squeamish—typical of a popular DTC product that achieves scale by burning cash on forceful marketing. But then, defending market share, at scale, amidst shareholder pressure for profitability, or even worse, when a larger dairy company comes out with its own line up? Can that possibly work?
Why care—so far there’s little evidence that DTC companies can scale profitably, or as promised, expand into adjacent products meaningfully. Remember the plant-based meat giants, or the mattress companies?
With the DTC game heating up in India too, investors will be drawing parallels with the Oatlys and the Caspers to determine valuation and to judge if the model can ever work out.
Quick peek on Venture Avenue 💰
India based Eruditus, which offers online executive courses in partnerships with global universities, spent $200 million last night on acquiring another EdTech player ID Tech, in the first EdTech deal recently since the wave 2 mayhem began.
ID tech basically offers short-term courses to teenagers in coding, design, and game development, working with local universities to conduct these courses on campus—kinda like a summer camp. The company has been around for 2 decades, and has grown to $45 million+ revenues with 90% of those coming from the US, before making an online pivot during COVID.
Eruditus, which mostly focuses on the executive and graduate level crowd, is hoping the acquisition makes things easy for them to expand offshore operations, while building a ramp to offer more services in the K-12 segment.
Also, last year Eruditus made $185 million in revenues… selling executive remote education to folks in India. Damn EdTech!
Meanwhile, Oyo’s knocking for a lifeline...🧐
Travel recovery timelines keep getting pushed in India, and that IPO for Oyo is a very distant dream now…
Rumors are the business is out raising $600 million in loans to keep the lights on as expenses keep piling on while cash through the door dries up. Last we checked, Oyo had raised $1.5 billion at a $10 billion valuation in 2019, and we’re guessing no chance the terms are that generous this time around.
Pichai lays out his agenda 😎
Google had its annual developer conference this week, where the company announced a bunch of new features and technical updates to its software portfolio:
Quick round up the announcement:
Announced a comprehensive look change for the Android 12 OS, making it a lot sexier. Bigger buttons, more animations, better security features. It's a total step change.
Bunch of updates to Google Workspace to make the most of the remote working boom, integrating video calls with Google Docs, Sheets, and the entire productivity suite
Comprehensive wearable OS to be designed with Samsung, suited for better battery life, more features, and cross platform usage
Camera software that is more inclusive to skin tone
Here’s a complete list of all new things announced.
Key takeaway—investors were looking for big technology-led product announcements to the Google Cloud Suite, hoping to draw some shade on Microsoft and Amazon, but that party was a bit disappointed, and Google stock was hit by a few points after the event.
Closing out—Polygon gets a pat on the back 👏
Amidst all the mayhem in the crypto market, Polygon, an India founded crypto project, breached the top 20 global crypto currency rankings after a rally that saw prices more than 8x over the last month, topping $10 billion+ in market capitalization.
What do they do—Polygon is essentially building tech that makes the Ethereum blockchain more scalable and faster. When millions of users and applications interact with the Ethereum blockchain, it slows things down, which results in sluggish experiences and delayed transactions.
Polygon, in simple terms offers a sidechain aka a software that runs independent on the main blockchain, takes in all the commands, lumps them into transactions which then get combined and confirmed on the main blockchain in groups, reducing time to confirmation, and improving end user experience.
That explanation may be a super simplistic view, but if you want to nerd out, here’s a link.
Anyway, the success of the project which brought it into the main light after the recent rally is a solid vote of confidence in the local ecosystem, and could be a massive shot in the arm to other tiny projects. Who should we follow?
What else are we snackin’ 🍿
👋 Goodbye, legend - Microsoft is finally retiring the Internet Explorer browser next year after a 25 year run. Microsoft Edge will take its place, which honestly looks pretty much the same at the core. Regardless, thanks for the memes, legend.
💼 Ola beefing up UK ranks - Ola has appointed two ex strategy consultants and industry veterans to the board of the UK division, in what we’re guessing is a move to solidify ranks and appear more serious to the regulators in terms of governance and oversight.
Hit that 💚 if you liked today’s issue.
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