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Market summary: 📊
Turning out to be another disastrous week—India gave away previous day’s gains, while US stocks slumped even further, dragging down tech high-flyers big time.
US:
S&P 500 - down 1.34%
Nasdaq 100 - down 1.73%
India:
Nifty 50 - down 1.08%
Sensex - down 1.16%
Hottest from the oven ☕
✅ What else do you wish?—after shoving a decade’s worth of product roadmap down investors’ throats in one night, Twitter still has plans for more. The company is pushing a shoppable tweets feature, making it easy for advertisers to directly connect ecommerce product catalogues to tweets, allowing users to buy anything they want directly through the app in a few clicks. User data and payment information will be stored during the first transaction, so that repeat transactions are carried through in a few clicks without ever leaving the website. Couple options are being tested.
✅ Netflix wielding its power—are you even in the digital media game if you don’t copy TikTok? Netflix is the latest to join the gamble, rolling out an app called “Fast Laughs'', that will curate and showcase funny short clips from popular films, TV shows, and standup content that Netflix owns. Years of spending billions on making its own content is offering Netflix a deep self-owned content library, which basically empowers all of their ability to experiment with format and monetization, while other OTT platforms are bogged down by complex licensing agreements. If comedy sticks, chances are more categories will follow.
Peak in the leaks 👀
An embarrassing security flaw in a portal run by the government of West Bengal exposed COVID-19 test results and personal identifying information of millions of citizens, until a citizen hacker alerted the authorities.
Once a COVID-19 test result is ready, the government would send the tester a text message containing a link to the website holding their results. However, the link containing the patient’s unique test identification number was basically scrambled with base64 encoding, with id numbers incrementally sequenced, which can easily be decoded using free online tools, to construct new sets of URLs and sniff out others’ test results. Digitization FTW.
Change is coming 💪
Google finally confirmed its plans of abandoning third party cookies on Chrome browsers, changing forever the way online platforms would mine users’ information to serve laser precise ads.
Google had in fact made the decision a while ago, and the move will finally be enforced by 2022, but what’s new is the fact that the company won’t be replacing Cookies with another alternative, but instead will take a step back, and instead of tracking individual users, will track groups of anonymized users with similar characteristics and then serve that data via APIs or some other way to advertisers.
The move is basically aimed at shredding the image that Google is profiteering from people’s personal information, while pacifying increasingly disgruntled regulators.
The layer of abstraction is definitely going to make Google’s targeting abilities weaker, and is likely going to cost Google lots of money, because advertisers won’t be willing to pay the same old rates for results that obviously won’t be suuupper precise.
Bottomline: its hard to understand how bad the impact will be on their revenue base, but the markets take comfort in the fact that the company is trying to make up for any shortfall firing on all cylinders in other business verticals—in cloud, healthcare, autonomy, and others. Sucks to be Pichai right now though.
Warming up for Round 2 😎
Meanwhile, the privacy-first platforms are winning. Ivan Spiegel thinks Snapchat revenues could keep growing at 50%+ rates for years, without even adding more users, because the company’s figured out native targeting soooo well.
Snapchat’s fortunes are slowly changing, as aggressive investments in building a new ad targeting engine and in improving the UX on the platform have begun paying large dividends. Gen Z and other young users find the format less annoying and more personal compared to Insta, FB, Whatsapp, which is driving a ton of engagement.
On the other hand, the company benefits from advertisers who are obviously seeking out niche platforms for lower ad prices, low crowdedness, and higher ROI. All this helped the stock pop nearly 5x since last year, while the company saw its daily active users rise to 265 million and revenues touch $911 million in Q4.
Finally, the renewed popularity couldn’t be substantiated anywhere other than India. For the month of Feb 2021, nearly 20 million people downloaded the app here, and active users crossed 60 million last month.
Bottomline: although social media may seem like it's consolidating around Facebook, the emerging sub-$100B services (Snap, Pinterest, Twitter, as well as Clubhouse, Nextdoor) have suddenly regained a lot of mojo. Round 2 of social is just beginning.
Okta makes fans unhappy 🙁
Okta, which basically sells identity management APIs that make it easy for developers to include authentication services into their web apps (like the features allowing you to login with google or email), went out and acquired a competitor Auth0 for $6.5 billion. Wall Street wasn’t pleased.
Some context—there’s very few companies out there that symbolize perfection in business execution. Okta was one such—the company rode the cloud security boom into a blockbuster IPO and then grew market value like 10x over 3 years, delivering a perfect quarter after a perfect quarter of business performance. Until yesterday.
This time growth kinda softened a bit, and the company wasn’t too excited about numbers improving next quarter either, despite broad cybersecurity and cloud authentication services demand being SIZZLING hot. Then there’s the expensive acquisition when valuations are so high.
The hastiness of the transaction, the risk of it getting blocked by regulators, combined with the “back to normal” rhetoric, is throwing alarms on whether the cloud and SaaS rally is finally meeting reality, and if its time to finally bail. If so, the ripple effects will be seen all throughout the ecosystem, including venture markets.
Key takeaway: global spending on identity and access management SaaS tools is estimated to cross over $25 billion by 2025, growing at nearly 20% rates for the next 5 years. OKTA is playing for dominance, but people were hoping they’d spend money on pursuing some crazy innovative ideas.
FYI, Okta has a primary B2B enterprise focus, while Auth0 focuses mostly on selling to everyday developers building for the web, so there’s sufficient differentiation.
Closing out—Dorsey, the mysterious of all 👌
Jack Dorsey’s payments company Square finally announced a $300 million deal for Tidal, the streaming platform owned by pop star Jay Z.
A lagging streaming platform (which was trying to give independent artists a voice), being bought out by a company that’s at the forefront of disruption in payments and consumer ownership of crypto—well, the synergies aren’t apparent but the scope for eye-popping innovation is ample.
Square could use its ecommerce platform to help artists roll out merch, or take bookings, sell concert tickets and such. While tipping and subscriptions via Bitcoin or via Cash App, or selling NFT based exclusive music is another option.
The speculations are rife, but expect something kick-ass coming out from the duo, who had just recently joined hands to start a Bitcoin Trust to foment crypto innovation in India and Nigeria. Its gotta be about crypto.
What else are we Snackin’ 🍿
🖥️ You Zoom much? - Whatsapp is rolling out voice and video calling for its desktop app, taking on Zoom, Slack, Teams, Hangouts, and everything else you got lined up for your communications—especially in the emerging markets. The new feature will only support one on one calls for now but will be expanded to include group voice and video calls in the future.
💉 Big tech doing its part - Tata Consultancy Services is launching a comprehensive Covid-19 testing and management suite to streamline all stages of the end-to-end testing and vaccination process. As employees look to return back to work in hordes, the large workplaces are preparing for a complex logistical exercise.
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