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Meet Musk the tyrant
Also in today’s edition: TikTok charts comeback plan; SPAC to face the axe?; Lido leans on Reliance; Shanghai breathes easy
Good morning! The Spanish government may soon get rid of wait times for customer service calls and pesky chatbots. The draft bill requires companies to be greeted by a person. The call time can wait no longer than three minutes. Those failing to do so will be slapped with a fine. Lord, we see what you've done for others and we are ready to receive.
🎧We pay tribute to Bollywood singer KK who's been a mainstay on every '90s playlist. Former Housing.com founder Rahul Yadav is back in the news for all the right reasons. This time, it's for his latest venture, a prop-tech startup. Will this be his comeback story?
The Market Signal*
Stocks: June started on a volatile note for equities. Zomato’s market cap surged to ₹62,000 crore on Wednesday. The stock had hit its all-time low on May 11. Bata India shares slipped 1% after promoters sold 2.8% stake in the company for ₹316 crore. US equities too trended downwards. Global markets would likely breathe easy after Saudi Arabia promised to step in if Russian oil supplies sink.
Early Asia: The Nifty was up 0.03% in Singapore at 7:30 am India time. Hong Kong's Hang Seng and Nikkei 225 were swimming in red.
TikTok Plots A Winning India Comeback
Nearly two years after it was banned, TikTok is said to be plotting its way back to India. This time, though, with a partner. An unlikely one at that: property developer Hiranandani Group, the Economic Times reported.
But how? Hiranandani has a data centre business called Yotta Infrastructure Solutions and a new consumer-facing services venture, Tez Platforms. The group is looking to invest ₹3,500 crore in Tez, with a focus on social media, gaming and e-commerce. On the face of it, while Yotta could help store TikTok data locally, Tez could offer content moderation services to the short-video app.
Should I be excited? Not yet. This, if anything, could be the latest round of speculations about TikTok’s India comeback. For anything to move though, given the sensitive China angle, ByteDance, TikTok’s parent, needs government clearance. The Economic Times report says that the government has been briefed on the plans. It’ll make quite the comeback story!
SPACtacular Failures Attract Regulatory Whip
American senator Elizabeth Warren is planning the SPAC Accountability Act of 2022 to codify blank cheque deals into law. Hers is the second attempt—after the US SEC—to expand the legal liabilities of parties involved in such transactions. The SEC wants to give SPAC investors the same protections as IPO investors.
101: SPACs or blank cheque companies are publicly-traded shell firms that raise money to acquire private companies. They were the darlings of the tech world because they circumvent the regulations and due diligence of traditional IPOs. Then came the mountain of flops. No wonder Forbes scrapped its SPAC plans.
Why this matters: Wall Street bankers JPMorgan, Citi, Credit Suisse, and Morgan Stanley made a killing by playing dual roles as underwriters (for SPAC listings) and advisors (to private companies looking for SPAC mergers). Even as they laughed all the way to the bank, retail investors lost nearly $5 billion between 2020 and -2022.
The Meat Around India’s Edtech Churn
Lido Learning seems to have found its guardian angel. The Mumbai-based edtech startup is in talks with Reliance for fresh funding. The deal may even turn into an acquisition.
Backdrop: Lido made headlines earlier this year after it fired over 1,200 employees who are yet to get their dues. But it wasn’t the only edtech company that landed in a soup. Vedantu, Unacademy (whose IPO plans are on hold) and Udayy also had layoffs. When Byju’s asked WhiteHat Jr staff to report to the office, 800 people resigned.
2020-2022 were gilded years for edtech. But everything that’s gilded almost always corrodes. Schools have reopened and teachers are back in action, marking a demand shift from online-only to hybrid classes. Market volatility, inflation, and VCs restructuring investment portfolios have also landed a triple blow.
Edtech companies, like most startups, prioritised hypergrowth over profits. As Unacademy chief Gaurav Munjal stated in a letter to employees, the focus now has to be on “profitability at all costs”. Hence a potential Reliance acquisition being a welcome reprieve for Lido Learning.
As for Reliance, its interest in Lido comes as no surprise. Jio’s AI-powered learning platform Embibe, which focuses on enhancing learning outcomes, would synergise in some way with the platform. But Embibe and Lido are only the tip of the iceberg that’s Reliance Jio’s edtech ambitions.
A Jerk @ Work
Tesla CEO Elon Musk has told colleagues they can take a hike if they do not show up at the office and put in at least 40 hours a week.
No WFH fan: Musk has never been a fan of remote work and even defied California lockdowns to get workers to the Tesla assembly line. The EV maker’s Shanghai workers slept on the shop floor to avoid shutdowns.
Musk once took off on a group of interns milling around a coffee machine and threatened to sack them if they ever did it again. He also installed cameras pointed at the coffee machine.
Science says: MIT research shows that innovative companies often delivered outstanding results but had toxic work cultures and faced the most attrition. Tesla and SpaceX were among the three that topped the attrition charts. The other was Nvidia.
Shanghai Returns To Life
Shanghai residents welcomed the end of a tough two-month lockdown by heading out onto the streets. The Covid-19 restrictions were so draconian that residents were often scrambling for food.
Some relief: Schools, malls and stores will open gradually but at operate at 75% of capacity. The government’s revival plans include tax cuts for businesses, subsidies for buyers of electric cars and measures to stabilise supply chain issues. It also aims to revive the property market with cheaper mortgages for first-time home buyers.
But, but: Some market experts are sceptical as Beijing still remains broadly committed to tough anti-pandemic policies. Several companies such as Tesla and Volkswagen plan to remain isolated till next week. Many others will refrain from a full restart due to the supply chain issues.
💰in the bank: Fintech Slice raised $50 million in a new funding round led by existing investor Tiger Global and Japan’s GMO Ventures, while SaaS startup MoEngage netted $77 million in its Series E round.
Going big: Binance Labs, the venture capital arm of cryptocurrency exchange Binance, raised $500 million in a round led by DST Global and Breyer Capital among others. Binance will use the funds to invest in crypto and Web3 projects.
Fresh frontiers: US investment fund RedBird Capital will acquire Italian football club AC Milan from Elliott Management for €1.2 billion. RedBird is also a shareholder in Liverpool Football Club and IPL franchise Rajasthan Royals, among others.
More play: Reliance Brands will acquire a 40% stake in Italian toymaker Plastic Legno SPA’s India manufacturing business. The deal also includes a joint venture between the companies.
Not going home: Sri Lanka president Gotabaya Rajapaksa is unlikely to step down soon, according to the country’s justice minister. Rajapaksa, has, however, agreed to reduce his powers.
Rolling it up: The Aditya Birla Group launched a Thrasio-style company named Tmrw to incubate 30-plus fashion and lifestyle brands over three years.
Pull back: Google has halted RCS ads—text messages that support images, videos, GIFs—in India after users complained about being bombarded with spammy ads and promotional content.
Elvis has left the building: Las Vegas weddings and Elvis Presley impersonators go hand-in-hand. It could soon be a thing of the past. The licensing company that owns Presley's IP has instructed Sin City chapels to do away with lookalikes. The wedding industry is miffed since Elvis-themed nuptials and a night at the casinos were the city’s main draw.
Plantasaur: The big daddy of plants is here. The largest-known plant on Earth–a seagrass roughly three times the size of Manhattan–has been discovered off the coast of Australia. Scientists stumbled upon it when they assumed they were collecting samples of multiple plant specimens 180 km away. Turns out, it was the same plant. It is believed to have spread from a single seed over 4,500 years ago.
No more hard time for hard drugs: …In Canada's British Columbia at least. The province will decriminalise possession of small amounts of hard drugs such as cocaine, meth, and MDMA as part of a three-year trial programme. Why? Officials want to weed out OD deaths by encouraging users to access medical help. Montreal and Toronto are also mulling similar exemptions. In related news, Canada is making handguns illegal.
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