Profits FTW
FB’s arrogance, old media struggles, and modern CPG plays.
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Kicking off the week ☕
✅ COVID man bacc—the uptick in India’s daily cases is worrisome as vaccination efforts start to lag a bit. Nearly 17K fresh cases were reported in the past 24 hours, up nearly 40% on average relative to the past few weeks. We’ve vaccinated about 1.5 crore frontline workers by now, and the second phase will begin on March 1 will include senior citizens and other high-risk population. But the pace of delivery has to be significantly bumped up for the massive citizen base we have to take care of. Markets will be closely watching the numbers, which could end up fanning the flame. Fingers crossed!
✅ He did it—the kidnapping and murder of revered journalist Jamal Khashoggi had shocked the free world a couple years ago. Although everyone was well aware of who did it, for the first time yesterday it was officially concluded by the US government that the order to take out Jamal actually came from the crown prince of Saudi, Mohammed Bin Salman himself. The Biden admin has now put some 75 members of the government on a visa watchlist, and will be reevaluating their relationship with the nation. It’s quite shameful, but most likely nothing much is gonna come of it, given the insulated cushion of cash the Saudi empire sits on top of.
Slap on the wrist 👎
Facebook ended up settling charges for a facial recognition lawsuit, paying out users some $650 million for storing user data and using it to train AI algorithms for its “auto-tagging” feature.
Some 1.5 million users had joined hands in the landmark lawsuit, and each of the complainants is now set to receive a life changing sum of $345.
And then the two-faced arrogance continues,
Just a day or so ago, the company made clear that its set of AR glasses will actually include a facial recognition feature that will be able to read the face of strangers and aid you in real-life social interactions. Ironically, FB execs were openly asking people if they “really” want the feature and that it opens the risk of government surveillance or “authority monitoring”.
The glasses built on the Oculus platform, and part of Facebook’s strategy to own a consumer hardware platform, are due to launch by the end of the year and will be made by Ray-Ban parent Luxottica.
Profitable as f*** 💰
Coinbase, one of the largest crypto exchanges in the world filed its docs to go public, and boy were people in for a treat! The company is not only blowing the doors off with growth, it's in fact profitable—a rarity in the venture world at this scale, and has swollen assets in the last 6 months on the back of the crypto boom.
Quick look at the numbers:
Revenues of $1.28 billion for 2020, up a massive 140% YoY
Made $322 million in profits for 2020
43 million users, 2.8 million buy coins every month
$90 billion in total consumer assets, up 432% YoY
Everybody expected growth to hold up well, but nobody was looking for anything remotely close to a 25% profit margin, for an 8 year old company that has experienced such hyper-growth, which probably justifies why the company had no problem raising at an eye-popping $100 billion valuation in a private raise barely weeks ago.
Investors are obviously smitten by fintech stocks right now, so expect nothing short of a blowout performance when the listing goes through. Leading VCs, particularly Andreessen Horowitz, are set to make bank.
What matters: the majority of the mass consumer adoption and ownership of crypto assets is still ahead of us, and Coinbase’s success despite that is truly staggering. As that demand comes through, the market leader will inevitably keep winning.
Old media is buying insurance against disruption 🤝
The group that runs Hindustan Times invested in Hubhopper, a local podcast creation and distribution platform, as old media companies try hard to keep up with the rapidly shifting media landscape. No deal size was shared.
Hubhopper basically provides makers with all the tools to create and distribute their podcasts across Spotify, Gaana, and all the leading podcast platforms in India. The company had originally started as a social networking platform before pivoting to the new game, and has so far produced nearly a million hours of content, spanning 15 languages and consumed by 12 million+ end users. Fairly early in the game, but still quite promising.
Key insight: India estimates some 200 million or so monthly active podcast consumers right now. The popularity of video somewhat devalues this channel here, but there’s ample room for growth especially with regional language content.
Closing out—bizness of scaling Amazon brands 👋
Titan Capital, the venture fund led by Snapdeal founders, has invested in a platform called Powerhouse that buys and scales successful Amazon brands.
Brands that typically make it big on Amazon easily navigate the 0 to 1, but the operational, product, and marketing genius needed to navigate 1 to 100 of scaling a D2C product becomes a huge limiting factor. Sometimes, merchants just wish to sell for a life-changing sum and walk away.
That’s where companies like Powerhouse come in, bringing access to capital, tech talent and operational expertise to fill the gaps left by these merchants to pick the most potent brands and scale them beyond these platforms. In fact the trend is one of the hottest emerging arenas in digital commerce, with many giants like Thrasio, Mohawk, attracting ungodly valuations.
Bottomline: Amazon for the last year alone reported over $400 billion worth of merch sold by 3rd party sellers, and the opportunity to structure and add some standardization here is massive.
The next Procter & Gamble will be built virtually, running goods not on shelves of supermarkets, but the limitless catalog of top ecommerce platforms.
What else are we snackin’ 🍿
🧸 The fun kinda Make in India - IKEA, the furniture retailer, is looking to increase sourcing of toys from India for its operations in New Delhi. The company currently sources only cotton-based soft toys from India, and is now exploring to expand in some other categories such as wooden toys as well. Also, over 85% of the toys sold in India are actually imported, and the government’s been struggling to change that for years, and the move naturally puts them in the good books of GOI.
Otherwise a quiet newsday with people too busy deciphering the oncoming week for the markets. Buckle up your seatbelts. Also, how TF is it March already?
Hit that 💚 if you liked today’s issue.
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