Lipstick makers have a ball

Also in today's edition: PS5 sales on the up, Aditya Ghosh joins Akasa, and it pays to have babies in China

Good morning! Let’s call it what it is. Used sneaker platform SODA raised $56.4 million in a round led by SoftBank and is valued at $218 million. Over 2.5 million people want to buy shoes once worn by others. Strange things happen out in Japan. On an unrelated note, athletes competing in the 2020 Olympics are fainting from the extreme heat. Headscratchers both, aren’t they?

Anyway, here are the stories for today:

  1. Beauty business in India has a strong game.

  2. Facebook and the metaverse of madness.

  3. Walmart wants to be a tech company.

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Nykaa Clears The Highway

Nykaa’s IPO will likely value the company at over $4 billion. While it is a success story for the company and its founder, Falguni Nayar, it is also a signal of brimming aspiration in non-metro India.

You can’t make it up: Nykaa’s IPO is also a proof of concept for investors that India is a market where large exits can be forthcoming. And Nykaa is not a lone example. Nykaa’s rival Purplle raised $45 million in March of this year and its early backer, IvyCap, managed to make an exit, reportedly at 22x when it first purchased equity in the company. 

There’s a rush: MyGlamm has raised equity twice this year. MamaEarth, a beauty company, too managed to raise capital at a $730 million valuation.

Why: Beauty products in the Indian market are mostly premium or value-for-money. There are few in the middle. The new-age, venture-funded companies target that segment: brand-savvy yet cost-conscious consumers.

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Is Crypto’s Comeback Credible?

Over the past few days, when many thought Bitcoin would collapse after dropping below $30,000 a token, it registered its longest winning run of the year. The biggest trigger was rumours of Amazon accepting payments in cryptocurrencies, which it denied.

Big hitters on board: But Tesla CEO Elon Musk recently said the company might start accepting Bitcoin again. Cathie Wood’s Ark Investment has filed an application to create a Bitcoin exchange-traded-fund. Twitter and Square CEO Jack Dorsey is creating a platform for developing Bitcoin-based decentralised finance applications.

Going green: Bitcoin tumbled from its highs on environmental concerns. Following China’s crackdown on Bitcoin mining, miners are now reportedly shifting to green energy.

But: The US Senate is looking to tax cryptocurrency trades to offset the costs of its bipartisan infrastructure deal. That might be a speed bump along the road.

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Zuckerberg Marks Out Metaverse

If there’s a buzzword that has Silicon Valley hooked today, it’s gotta be ‘metaverse’. Even Zuck’s into it bigly. Not only did he hail the metaverse, but Facebook also elevated Instagram VP Vishal Shah to oversee its metaverse group. And heck, Zuck referenced the metaverse in Facebook’s earnings call, calling it the “next chapter” for the company.

What is it? Last year, the influential investor Matthew Ball introduced the ‘metaverse’ in an essay, laying out some of its core attributes”. He wrote that the metaverse will “Be an experience that spans both the digital and physical worlds, private and public networks/experiences, and open and closed platforms”, besides being “a business”, “offer unprecedented interoperability”, and be populated by “content” and “experiences”. Straight out of sci-fi, you’d think. Here’s more.

So who's already in it? Gaming platforms like Roblox, and Fortnite, which allow players to “create their own worlds.” This, the NYTreckons, has “metaverse tendencies”. So do owners of NFTs and crypto. Atari wants to launch a blockchain-based “virtual world”. This has led to what's called the “virtual economy”, where people are buying digital versions of a Gucci bag on Roblox for real money.

The Signal

During its trial against Apple, Epic Games CEO Tim Sweeney outlined his vision for Fortnite: “To build something like a metaverse from science fiction.” That might well be turning into a business reality, as some of these publishers break away from big tech’s clutches. The pandemic has played its part — virtual meetings on Zoom, video games getting bigger with their respective “worlds” has only helped hasten this leap. Other tailwinds include the emergence of a growing creator economy, besides the crypto/NFT boom. It's only a matter of time before brands follow and join the metaverse. And we all know where that goes with Facebook.

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Walmart Flexes Its Tech Muscle

Fourteen years after Amazon launched AWS and gave the company its newest CEO Andy Jassy, rival Walmart is now selling software.

The retail behemoth has partnered with Adobe to sell its technology to small and medium-sized retailers. Walmart developed software to let shoppers buy online and pick up at its stores. Social distancing during the pandemic ensured that up to 22% of all retail orders were fulfilled this way, up from 7% in January 2018.

Beyond retail: Walmart’s SaaS entry is in line with CEO Doug McMillon’s ambitions of expanding the company’s revenue streams beyond its core retail business. It’s opportune as more old-style businesses are adopting digitisation and the company can leverage its scale. About 90% of the US population live within 10 miles of a Walmart store.

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ICYMI

Buying right: Unless you’ve been living under a rock, you would’ve noticed that ed-tech firm Byju’s has been on an acquisition spree. From American company Epic to Indian rival Toppr, there have been six acquisitions so far in 2021 alone. If you’ve ever wondered who is behind the strategy, meet Anita Kishore, the driving force behind the player’s big buys.

Back from the dead: Single malts are making a splash again! There are distilleries across the world that had fallen ‘silent’ but are now hitting the high notes. Read about the ghost distilleries of Scotland to Japan.

Get-set-go: Tiger Global Management is an eye-catcher in the VC world. Yet, its go-getter attitude, cowboy moves, and wild valuations are grabbing more attention as well as ruffling some feathers in Silicon Valley. Here’s a glimpse into the firm’s strategy and why it’s so quick on the draw.

The new celebrities: After social media influencers, there is now a new breed of celebrities: VTubers. These virtual figures with autonomous personalities of their own who are functional, responsive, and can put on concerts – the whole shebang. Unsurprisingly, it’s all happening in Japan, with its VTubers becoming popular enough to make real money from real people.

Xi-nternet: At The Signal, we’ve kept a hawk’s eye on China’s big tech crackdown. But what’s behind it? Noah Smith, in this post, argues that there is a growing tension between China’s geopolitical ambitions and its consumer internet sector. That’s the weeds of it. But was it long overdue? Perhaps, with the government asserting more control over these fast-growing businesses. If anything, it could be a redrawing of rules.

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What Else Made The Signal? 

Gimme chicken: McDonald’s new chicken sandwich and its association with K-pop band BTS drove up sales figures in the US. The fast-food chain raked in revenues worth $5.89 billion vs. an expectation of $5.6 billion.

Scoring high: Japanese conglomerate Sony has sold over 10 million PS5 consoles, up from its previous figure of 7.8 million. This console is the company’s fastest-selling console ever.

Have more babies: The government of Panzhihua city in China is promising $77 per month to families if they have second or third children until the kids turn three. This is to encourage childbirth as China is currently struggling with an ageing population.

New boy on board: Aditya Ghosh, former President of Indigo, will join Rakesh Jhunjhunwala and Vinay Dube as a co-founder of the country’s newest airline, Akasa. He is likely to own less than 10% of the company.

Distinction all around:FacebookSpotifyShopifySamsung, and McDonald’s all beat market expectations with their results for the April - June quarter.

Sharing is caring: Ola has announced that it’s expanding its ESOP to INR 30 billion and giving employees additional stocks worth INR 4 billion in the run-up to its IPO.

That’s it from us this week. Have a good weekend.

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