The Everything Empire
Unicorn rain, FMCG problems, and wear that mask please.
Hi 👋, Tanvi here.
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Market summary: 📊
Both US and India had pretty boring sessions. Indian markets ended up landing in the green, while US receded a bit, with tech bouncing around throughout the day.
US:
S&P 500 - down 0.097%
Nasdaq 100 - down 0.14%
India:
Nifty 50 - up 0.31%
Sensex - up 0.086%
What’s brewing hot? ☕
✅ Time for the next move—Clubhouse is working with Stripe to enable in app payments, making it easy for creators to get paid directly within the platform. So far the feature is designed like an appreciative “tip” but chances are product links or even channel subscriptions could be coming. Both Stripe and Clubhouse are waiving all fees on transaction processing for now.
Meanwhile, the Twitter know-it-alls have been busy speculating that engagement on Clubhouse is fading, and Patrick Collison, the CEO of Stripe had a nice reminder about that.
Well… there’s more. We were just gettin’ ready to hit SEND on this mail when we saw Clubhouse is reportedly looking to raise a new round at a $4 billion valuation. That’s 4 Bs… for a startup founded in the middle of the lockdowns last year.
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Instadapp is a smart crypto wallet and API service that allows developers to seamlessly move their crypto holdings across protocols to earn maximum interest on their assets.
One of their most disruptive features is the Debt Bridge which allows users to easily migrate debts across protocols, specifically between Maker Vaults and Compound Finance.
Instadapp aims to be the default single-window to multiple DeFi services, offering a service well optimized for heavy-developers as well as everyday users, and recently raised a promising round from Silicon Valley biggies including Naval Ravikant and Balaji Srinivasan.
Amazon’s fledgling advertising empire 📈
Amazon’s own lil advertising empire made $15 billion in revenues for 2020, expanding more than 50% for the year—thanks to the pandemic driven boom witnessed by the e-commerce giants that made every pixel of whitespace on these platforms golden property.
The company now owns 10.3% of the total digital advertising market in the US—growing market share by almost 3%.
Ads are mostly purchased by merchants to surface their product at the top of search or other locations, and that’s in addition to the billions the company already earns on commissions from merchants.
Default product-search engine—what makes ad-placements on Amazon so attractive is the fact that ads appear sooo close to purchase decisions. For example, users go to Google with a “search and discovery” intent, often just researching products for later, but they go to Amazon purely with an immediate “purchase intent”, which makes their likelihood of buying something they see pretty high.
Significant number of shoppers already claim they start their searches on Amazon first instead of Google, which makes analysts believe Amazon’s ad business could eventually even rival Google’s in the long run.
Bottomline: this is one of the reasons that makes Amazon such a formidable business—management has painstakingly recognized such intertwined opportunities that strengthen each other, carving out massively exploitable long term markets. Advertising, Cloud, Ecommerce, Payments, Delivery and Logistics—the train is unstoppable.
Quite a day on Venture Street 💰
The highflyers had an epic day.
Kunal Shah’s baby CRED raised $215 million for its Series D round with Falcon Edge and Coatue leading the bid, setting valuation at $2.2 billion, formally landing the business in unicorn orbit. Milestone achieved in under 3 years, check!
And that’s probably the least fascinating aspect of the venture, which ran a near-perfect marketing campaign, creating buzz like no other to attract, filter out, and scale to 6 million+ of the most lucrative credit card customers in India, attacking 22%+ of all credit card payment volumes in the country.
Questions on monetization have kept the armchair analysts busy, but surprisingly the business promises ₹100 crores+ in sales for the last year, primarily driven from brand partnerships.
Bottomline: under 5% of all people in India have access to credit cards, and in that, CRED has tapped into the cream of the cream base. The options to roll out thick adjacent fintech products to this group of people is extremely lucrative.
Meanwhile, fintech ain’t the only thing pulling in dough,
Swiggy raised another $800 million at a $5 billion valuation tag, again from Falcon Edge, with Goldman Sachs, and Qatar Investment Authority and several others pitching in.
We’re guessing the round is meant to arm up the business and solidify against Zomato which raised a big round recently and is pretty close to going public. In any case, the pandemic has altered the trajectory of these businesses, turning them from a “perk” to an essential utility providing last mile logistics infrastructure services, and the room for growth is humungous.
What matters: Indian food delivery market alone is expected to top $12 billion by 2022. Add grocery, meds, ecommerce, to it and suddenly you’re addressing a HUGE part of the commerce market that everyone from Amazon to your neighborhood kirana dude is gunning for.
Mixed quarter in store for the FMCGs 🧐
Consumer goods company Marico told investors that its Q4 profit will be slightly worse than expected, owing to higher costs of raw materials and persistent supply chain and logistics disruptions during COVID.
Marico however seems quite confident that revenues will grow at a much higher pace, with volume growth for key product categories showing explosive momentum as consumer spending shows solid signs of recovery in 2021. Investors generally look up to such updates from category leaders to get a read across on the broader segment.
Key takeaway: 2020 was a mixed year for the FMCG businesses—when demand cratered during lockdowns, Indian giants utilized the moment to cut back costs and get a lot leaner.
Now as those moves were scheduled to pay dividends, the high-cost problems are weighing on prospects. Will be an interesting quarter to watch as the earnings start rolling out mid April.
Closing out—Credit Suisse chops off heads 🙌
The Archegos Capital implosion caught big banks with their pants down.
While the smart ones like Goldman and Morgan Stanley managed to limit losses, few like Credit Suisses and the CitiBank were hit hard.
Some context—the family office run by notorious billionaire Bill Hwang went down after a few concentrated bets on some stocks ended on the wrong side of the street in the recent sell off. Hwang had used a financial structure called Swaps, issued by banks that were voluntarily in bed with him, to gather positions worth $50 billion or more, while putting up assets just worth $5 billion as collateral.
Anyway, as Hwang went down over the past week or so, Credit Suisse is now sitting on a $4.5 billion loss, and boy are the banker bosses PISSED. CEO said “lessons will be learnt” and HR promptly got busy with the firing roaster.
By noon, the Chief Risk Officer was asked to pack up stuff and leave.
Meanwhile, Hollywood just got free fodder for a Margin Call 2.0 script (seriously though great movie if you’re hunting for a midweek watch).
What else are we snackin’ 🍿
😞 End of an era - Yahoo Answers, one of the oldest Q & A platforms on the internet, will be buried officially on May 4, rest in peace. Old answers will be made available in read mode though, while new submissions will be halted. Honestly, who TF cares anymore?
😷 Shit is getting real fellas - India has reported over 90K new COVID-19 cases in the last 24 hours, with Maharashtra accounting for 58% of all active cases and 34% of all covid-19 related deaths in the country. Maha CM requested the centre to open vaccinations for 25 year olds, and we are requesting you to wear a goddamn mask.
Hit that 💚 if you liked today’s issue.
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