Faire enough
Didi to IPO, bets on the future, and stuff from the week before.
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Market summary: 📊
Despite a mid-week blip, turned out to be yet another positive week for India, as cases tanking breathe optimism in investors. US closed the weekend on a high too after running in circles all week.
US:
S&P 500 - up 0.19%
Nasdaq - up 0.27%
India:
Nifty 50 - up 0.39%
Sensex - up 0.66%
What’s brewing hot? ☕
✅ YouTube popularity pays—you don’t need to be a boxing fan to marvel at the economics of the Flyod Mayweather (professional boxer) vs. Logan Paul (literally a YouTuber) exhibition fight that gripped headlines all last week. 1 million pay-per-view purchases were made, attracting 4.4 million eyeballs, which puts earnings for the 3 hour bout north of $600 million! Mayweather walked with a $280 million payday, while the rest was split between Logan Paul and the organizers. Tell me again about the influencer economy...
✅ Netflix brand house—Netflix is launching an online store in collaboration with Shopify, which will sell popular-show themed merch. It’s quite a significant move because if Disney is any benchmark, media companies can make billions of dollars a year on merch of franchisable IP, selling cups and caps and shirts with logos of favorite superheroes, brands, and dialogues. Netflix has far less superhero movies under its belt, but there’s plenty of meme worthy material people would happily pay for. Not exactly the diversification investors had in mind, but sure will do.
How big can B2B commerce really get? 🤔
Faire Wholesale, the global B2B marketplace which allows boutique store owners to buy cool products in bulk, raised a $260 million round at a $7 billion valuation.
Faire was funded by YC barely 5 years ago, and has since become the default marketplace for mom-and-pop stores in the western world to procure high-quality boutique items that you wouldn’t find on Alibaba or other commodity marketplaces. Metrics are hard to come by, but valuation has 3x’ed in 8 months, which should tell you how hot the rocket ship is.
Big picture — global business to business commerce is a $15 trillion+ market by volumes, at best 5% digitized. 50% of transactions still happen manually, via phone, fax, or in person. The opportunity is SO massive, and several unicorns in India (Infra.market, OfBusiness) and others are emerging to dominate exciting verticals.
And then, Uber of China is going public 🚕
Didi Chuxing, China’s ride-hailing giant filed its IPO papers for a US listing, raising $10 billion at a mammoth $100 billion valuation.
The listing is significant for 2 reasons—its one of the largest tech-IPOs of the year, bigger than Coinbase and AirBnB, and secondly, despite being one of China’s biggest success stories, Didi is choosing US markets for a listing in the backdrop of the horrible treatment the Chinese offered to Alibaba and few of its other major giants.
Anyway, metric wise, Didi is a beast—bringing in $22 billion in bookings last year (vs. Uber’s $11 billion GLOBAL sales) with growth rates shooting past 100% in recent quarters, as China strongly recovers from the pandemic. Nearly 500 million people use the app, which is now slowly adding car sales, insurance, payments, and the entire broad menu.
Aight, that’s it for a rather sleepy week! Here’s a rundown of everything worthwhile that happened…
🤙Tata brings the big guns—after picking up BigBasket and Curefit to join its digital crusade, Tata finally pulled the trigger on 1mg, buying out 55% stake in the online pharmacy, valuing it at about $450 million. All 3 major acquisitions, across pharmacy, grocery, and health services are strategically diversified yet so synergistic, and remind us why the Tata empire and some of India’s legacy corporate houses have survived centuries worth of change.
🎮 FB unabashedly leaning into gaming—Facebook purchased yet another gaming company this week, Unit 2 games, its 8th gaming acquisition in the past 3 years. Unit 2, which competes with Roblox and Unity Software, offers a game-creation platform for developers to easily build end experiences and not worry about rewiring mundane functionality like social connections, authentication, and game discovery. All these acquisitions are beefing up Oculus as a platform, strengthening Zuck’s directional bets on the metaverse as the next frontier for social-network innovation.
🧓 SBI hedged itself—State Bank of India invested a sizable check into Cashfree, the API-first payment gateway for digital businesses, which competes against RazorPay and Stripe in India. The business has grown to serve 100K+ customers, processing $20B+ in annual volumes. While Cashfree is lured by instant access to wide distribution, SBI hopes to hedge itself against the inevitable disruption coming from the payments market. Expect a bunch of such deals from the shrewd players going forward as the laggards face their fate.
🙂Taxes are illegal—ProPublica sniffed out how much taxes the pioneering billionaires paid over the last few decades, and the numbers are dismally low. Warren Buffett, Jeff Bezos, Elon Musk were all caught pants down, on many occasions paying $0 in taxes for the year, which runs 100% counter to how much the average family pays. Now of course taxes are paid on reported “income”, not appreciation in wealth, which is what the article gets wrong, but the entire idea behind the analysis is to raise a “sentimental” question, and of that it did a pretty good job.
🔥 Emerging market—CarDekho is looking to raise $150 million at a billion dollar valuation, hoping the market for auto-sales will strongly rebound in favor of digital. India’s extremely picky vehicle consumer base has been a hard sell on used cars to date, but with demand from the new middle class at the bottom, and the ever rising prices of new cars, combined with the transparency added to the marketplace by digital sellers, the game is expected to heat up.
🤯 Bezos owns your internet now—Amazon’s super ambitious neighborhood network project called Sidewalk is linking every home’s Wifi to the other (if using an Amazon Echo device), to create a mesh-network that is capable of offering internet connectivity out on the streets to anyone. Privacy is a big issue here, but team BOZOS promises three-layered encryption that’s impossible to break. End game? Build a “networking infra layer” that delivery drones, autonomous bots, and other machines + humans can rely on while facilitating last mile services.
💰 BTC got citizenship—El Salvador, a central American nation with 7 million people and a baseball hat wearing President made Bitcoin legal tender in the country, alongside the country’s reserve currency which is the US Dollar. This means BTC won’t be taxed, can be spent on the streets, and will be backed by the sovereign’s promise… if that’s worth anything. Either the model could unfold a domino effect for other emerging economies to seriously have a look at, or the entire thing could turn out to be yet another laser-eyes scandal. Check back in a year!
😔 Paytm has a long way forward—Paytm’s annual report shows revenues down 10% YoY to ₹3,186 crores, with total losses still running staggeringly high, about 38% of total sales. Expenses dropped 22% YoY though, but that’s barely any consolation for a company that’s taking on an important task of pleasing Dalal Street buyers, and likely lighting the path for countless other India-growth narratives to hit the markets. Do better in 2021!
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