TikTok Finale 😎

Digital portfolio, IPO slump, and some venture deals.

Sep 19, 2020

Hi 👋, Tanvi here.

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Market summary: 📊

India ended the week kinda where it started, with Friday ringing in another soft end. US markets performed similarly, especially technology stocks, despite high-flying IPOs hitting the street during the week.

US:

S&P 500 - down 1.12%
Nasdaq 100 - down 1.30%

India:

Nifty 50 - down 0.097%
Sensex - down 0.34%

First things first, some closure please…. 🎵

The TikTok saga may finally be entering its final episode. White House has negotiated hard and a deal is finally on Trump's table for review. As part of the deal, Oracle will be Bytedance’s US tech partner (whatever that means), details will be worked on how TikTok’s IP and data will be handled (this is still being negotiated apparently), a board seat and some stake will go to Walmart, a new CEO search will begin immediately, and TikTok will IPO in the US within a year.

Meanwhile, to turn up the pressure, White House has reaffirmed its ban on TikTok and WeChat, barring users from downloading the app in the US post Sep 20th.

The wackiest news however was this — TikTok approached the founder and ex-CEO of Instagram, Kevin Systrome, for the CEO role. Nothing has been finalized yet, but if Kevin does take the job, it would probably be the biggest “in-yo-face” anyone has ever given to Zuckerberg. Good luck, Reels!

While we’re discussing bans ✋

India’s most popular finance app, PayTM, used by millions in India on a daily basis, was briefly taken down by the Google Play Store for apparently violating the store’s gambling policies, after PayTM promoted fantasy sports betting within its app. “Google doesn’t promote online casinos or any unregulated gambling” was the justification offered, and the company labeled PayTM a repeat offender.

What complicates the matter further is that Google has competing products in the payments space and when you block a competitor’s service, this takes a whole new “working to kill competition” turn. Our bet is PayTM won’t rest easy.

And well, Google has been throwing Filter Coffee’s emails into promotions, so you know which side we’re on. Might even start a GoFundMe, brb. 🙄

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T-Series lights a Chinagri 🔥

Homegrown short video-sharing platform Chingari has signed a music licensing agreement with T-Series, allowing Chingari users across India, West Asia and SAARC countries to access T-Series music.

These deals are generally expensive for short video players, as they have to payout sizable commissions and maybe even a fixed amount out to music-labels for using their content. But such details are essential to keep users engaged and limit churn. For music labels on the other hand, it's easy money.

However, T-Series may be dancing with the devil —

Music labels who always had better control over distribution and licensing of their content in the old world, are kinda slowly losing influence over digital distribution in the future. First, we saw how streaming platforms like Spotify destroyed the strength of big labels.

Now short video apps, by adding a visual angle and by keeping song playback “bite-sized”, are proving more effective in distributing songs much more widely. Take TikTok for example — the company has been single handedly deciding what songs become a hit in the US.

So what will be next for short video apps? Will they sign their own artists? Will they produce their own songs in the future, like how Netflix did with movies? The media landscape is honestly changing soooooo damn fast that you can barely keep up and T-Series better have a plan to continue wielding its influence.

Bottomline: short video apps could start making their own music by signing artists (like how Netflix did with movies) eventually weakening the market position of music labels.

Who’s raising 💰

Ed-tech’s march continues unhindered. Latest to raise is Bengaluru based B2B player Classplus, scoping up $10 million from Alpha Wave Incubation with existing investors RTP Global and Blume Ventures pitching in.

The company sells a Shopify-styled class management software product, allowing teachers to conduct their own classrooms with auxiliary features. The deal values the company at about 550 crore in this transaction, registering an 80% increase in valuation in just the last 5 months alone.

While we’re on the subject,

Byju’s has acquired lab-like virtual simulation platform LabInApp for an undisclosed amount, in hopes that the product will bolster its offerings for the K-12 segment. Started in 2015, LabInApp enables virtual simulation of lab equipment and experiments without requiring an expensive laboratory setup. About 5,000 schools across the country use them.

OK, geniuses… 💉

Early reports suggest that nearly 14% of the recipients of the Russian Sputnik V vaccine in Russia have experienced side-effects, including sore muscles, pains, weakness and occasional increase in body temperatures. Some 300 volunteers who got the dosage of the 40,000 that signed up recorded their responses.

However, the symptoms apparently receded by the next day, and the health minister claims that it's part of the process of healing. Okay, sure, but how does that help alleviate public anxiety when your vaccine is literally being accused of bypassing basic regulatory scrutiny? The “volunteers” will soon get a second shot.

Takeaway: the news development renews the world medical community’s continued skepticism over Russia’s approval practices and adequacy of research for Sputnik. It also puts a question mark in front of the decision of the Indian government to jump on board to conduct Sputnik tests widely in India. Not another man-made pandemic please!

Dead IPO market shows some heartbeat 👀

India’s IPO market had gone lukewarm in 2020, thanks to a generational economic slump and uncertainty in the markets. Bloomberg reports a little over $2 billion has been raised so far in IPOs in India, somewhere at par to 2016 levels by this time then, and nearly 50% below 2018 levels.

A slew of high-flying IPOs in the past month however give investors a lot of hope. Happiest Minds, the IT services company, had its bid oversubscribed by 150 times, making it one of the most successful raises of this decade. Then communications infra vendor Route Mobile had another blockbuster round, oversubscribed some 73 times.

Not to forget, the promise of PayTM, Zomato, and other startups aiming for a 2021 run up will help boost sentiment a great deal. If internet IPOs in the US are any comparison, expect blowout runs here. Read more.

Accelerating digital reach 🗞️

It is truly awe-inspiring how the Times Group, India’s largest news publishing house, quietly built a strong digital services portfolio, while its traditional-news peers all over the world struggled to maintain relevance in the increasingly digital world (looking at the crumbling NYT and others).

Happy with its taste of success and with confidence in its sails, the Times Internet segment, a subsidiary of the Times Group, is now seeking broader reach, looking to expand its portfolio over the next few years. There is little clarity on what the company is tinkering with but management outlines it’ll be around the intersection of “media” and “technology”.

The company has already sown quite a lot of seeds here with investments in close to 47 startups including Instamojo, Gaana, MxPlayer etc. spanning ecommerce, online gaming, payments, streaming — you name it.

With more in-house products this time, Times hopes to boost total revenue outside of just news to over $1 billion by 2025, and enticed by the success of Jio Platforms, the company may also consider selling upto a 10% of stake in Times Internet to strategic foreign investors to help them get there.

What else are we snackin’ 🍿

🔌 Getting ready - Domestic EV maker Ather Energy is planning to install close to 200 charging points in the coming few years as demand for EV looks promising in market recovery. The company plans on installing 50% of the quota by early next year.

🍎 Digital first - Apple is set to launch its own online shop in India next Wednesday. With this, Apple will be one of the few foreign companies to open its webstore in the country before opening any company owned physical outlet.

🧐 Can’t stop, won’t stop - Facebook is again being sued for allegedly spying on Instagram users, this time through phone cameras. This lawsuit comes after media reports in July stated that Instagram was accessing iphone cameras even when they were not actively being used.

👏 Banking hiring spree - Citigroup is planning to hire 6,000 fresh recruits in Asia in the next 3 years and is also offering job training opportunities for youth below the age of 24 across its retail and institutional business in the region.

🪑 India expansion continues - Furniture retail chain IKEA will open a new global office from the Karle special economic zone in Bengaluru. IKEA opened its first store in Hyderabad in 2018 and its second offline store is in the works in Mumbai.

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