Episode 2 - JioMart launch, home delivery of alcohol, Khata Book and Bulbul

  
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Weeks of May 17 - June 1

In this episode, I cover the follow stories:

  1. JioMart launch

  2. Zomato and Swiggy launching home delivery of alcohol

  3. Ola Electric's acquisition of Etergo

  4. Aarogya Setu going open source

  5. Zomato elevating its food delivery head to co-founder

Funding news covered:

  1. Reliance Jio

  2. Khata Book

  3. LendingKart

Company in focus - Bulbul

You can email me at - rahool@techbuzzindia.in

My bio - https://www.linkedin.com/in/rahoolgadkari/

Full Transcript

Hi Folks, Welcome to Tech Buzz India, a podcast that helps you stay in touch with what's happening in the startup world in India. I'm your host Rahool Gadkari. I've spent the last six years building products, both in India and the US. I'm passionate about technology and India's tech ecosystem.

Thank you so much for your comments and feedback on the last episode. I hope I can keep improving the experience for all you listeners as we move along. Keep the comments coming in, I love to hear from you.  We’ve got an action packed agenda today - starting off with some updates from last fortnight, we’ll then talk about Jio, look at what Swiggy and Zomato have been upto and discuss one of Ola’s subsidiaries that’s been in the news. Exciting funding updates starting with what’s fast becoming india’s most talked about tech company - Reliance Jio. The company in focus today is one i’m super excited about - bulbul. So let's dive right in.

We start with some followups from last time. If you remember, I'd covered a story about Uber potentially laying off employees and startups kind of taking their time to understand the true impact of COVID to their business. Unfortunately, the last fortnight's been pretty tough on the startup ecosystem.There have been a ton of layoffs starting with Swiggy, Ola which have laid off over a thousand employees. Uber laid off 600 employees in India and an additional 3000 globally. Others including, MakeMyTrip Sharechat, LendingKart, LivSpace, BookMyShow, Meesho and a few others have also unfortunately laid off employees. Hopefully this is pretty much the tail-end of the layoffs and the ecosystem starts to consolidate itself as we get into the second half of the year.

Onto stories over the last fortnight. Our first story is about JioMart. It has finally launched and in true Jio fashion, it's larger than life. It's in 200 cities at that, and you know, I guess we can trust Jio to not do anything small. JioMart for now is available as a mobile and desktop website, but not as an app. as I mentioned last time, it's widely expected to be available through WhatsApp in the near future. So let's look out for that For now, go to JioMart, check it out. Enjoy a minimum of 5% of MRP. My Twitter feed a few days ago, blew up with comments on people's first experience of using the product. If you'd like to give it a try or have already done. So I'd love to hear your feedback. So send me a DM on Twitter or an email. My Twitter handle and email ID are in the description. So regardless of how this man goes for JioMart, it's only going to be upwards and onwards from here. The grocery segment is definitely hot, it's an essential service and it's been growing.

Our second story is about Swiggy and Zomato starting the home delivery of alcohol. This is pretty big because a lot of companies have wanted to do this for a long period of time but regulation prohibited the home delivery of alcohol. And Dunzo had done in briefly in Bangalore, but ran into some issues with, with the regulators. Liquor sales during the lockdown, if you follow the news, led to some chaotic scenes with long queues overcrowding and plenty of, COVID infection fears. Alcohol sales are really important to state governments as there is a ton of excise duty they collect on alcohol, which accounts for about 10 to 15% of the seats on income tax or tax revenue collection. So it's a big chunk of revenue that pretty much came to a grinding halt because of the lockdown. And so starting off with Odisha and Jharkhand under the National Disaster Mnagement Act, both Zomato and Swiggy have launched home delivery of alcohol. Unsurprisingly liquor retailers in states like don't want food delivery apps entering the highly state centric and excise regulated liquor space. Retailers are upset about this as the industry operates on very low margins and is subject to a great deal of regulation, which I mentioned earlier as well. Startups definitely got a foot in the door at this point of time. Liquor delivery or alcohol delivery might be operationally intensive, but if they can prove, and by they I mean Zomato and Swiggy and others that follow can prove that selling online can increase our sales and inturn tax revenue to the state coffers there might be a strong chance that this might continue post a lockdown. I know there are plenty of other states that are mulling either allowing Zomato and Swiggy to deliver alcohol or contemplating other forms of online delivery to at least ease the consumer pain around ordering alcohol. So, I hope that this is the creation of a new segment because it's definitely a lot of value add to consumers, but expect it to get stuck in some kind of legalise with States fighting over, control taxation, and, perhaps, even, trying to appease a lot of the retailer associations.

I told stories about Ola, and specifically its acquisition of a Dutch two wheeler manufacturer called Etergo. This is really all our subsidiary Ola Electric that's made the acquisition and Etergo is a EV or electric vehicle manufacturer that's well known for a scooter called the AppScooter. The product or the school has won a number of awards in Europe and claims to have a range in excess of 200 kilometers, which is kind of phenomenal for any EV. The deal size has not been disclosed, but it was rumoured that the company was bought for a significant loss to its last valuation of around $90 million. Ola Electric will now own the intellectual property design and engineering capabilities of Etergo, which is a pretty great strategic move from Ola’s standpoint, because it has been working ardently towards launching its own line of e-scooters coders. So this obviously helps Ola accelerate, those plans and hopefully sometime next year we see all a Ola two wheeler. Two wheeler mobility players are expected to see an uptake in the times of COVID. So the likes of Bounce, Yulu, Vogo are actually talking to regulators right now to reduce the GST levied because they actually providing an essential service. A lot of people can't take, back public transportation because of capacity limitations. And so, reasonable, clean energy options, like two wheeler shares are maybe the need of the hour. And so my take on this is that if Ola can commercialise the scooters well it can be a big player internationally as a manufacturer as long as it keeps costs that reasonable, which it could if it manufactures in India, and domestically, both as a manufacturer and a rideshare player, which is kind of what we know Ola for. Ola owns a 16% stake in an app base tubular rental company called Vogo, which could stand to benefit from having Ola as its in house supplier. Ola is of course, very well capitalized on the whole and specifically Ola Electric has raised $300 million already from SoftBank, Tiger Global and Matrix Partners. It's going to be great times for urban mobility specifically two wheelers.

Our next story is about Aarogya Setu - the COVID tracking or contact tracing app launched by the government of India. In a bid to fight the privacy pundits and expand the talent pool at the same time, the government has actually gone ahead and in an unprecedented move released the source code of the Aarogya Setu apps, for now it's the Android app the others will follow soon. This is huge because the government in conjunction with this has also announced a big bounty program where they've agreed to pay up to four lakh rupees in cash prizes, to people who find bugs in the app, or suggest improvements that get incorporated. The program is live till June 26th so go ahead check it out, see if you can find bugs and there's some money to be made. They're also looking to make improvements to the apps, overall performance limit battery usage, and reduce memory and bandwidth usage. So all great things in terms of the intent of the government has not released, the code for the server side of the app, meaning that there might still be some privacy vulnerabilities that people may not test. I think there's a push to make that open source as well hopefully the government goes ahead and complies. My take on this is really that this is a great step that is going to keep the conversation focused on the problem being solved, which is contact tracing and less on theories about the governments intent behind collection of all this data, which is really been front and centre in the news.

Our last story of the fortnight is about Zomato elevating its food delivery business head to cofounder status. Mohit Gupta, joined Zomato in 2018 from MakeMyTrip where he served as the CEO. His elevation to cofounder status follows the elevation of Zomato’s chief operating officer Gaurav Gupta, who was given the title less than a year ago. A very interesting debate sparking up in the tech community around whether you can hand out the co-founder or the founder title. So there are some examples, it's not like this is unprecedented. Tesla's Elon Musk actually didn't start Tesla, back in India, we have Anant Narayanan, who was the CEO of Myntra, went and joined MedLife as a cofounder, even though he actually started the company and also Umang Bedi who heads Dailyhunt and has the founder title. The jury's very split on what it means to be given a cofounder title and not actually found the company. My take is - I kind of get why the companies do this. It helps people feel more invested, gives them an even greater sense of ownership. However, I wouldn't do it myself , I feel like there's a different kind of sweat equity or there's a different risk appetite you bring to the table as a founder. Which maybe doesn't come from, you know, being elevated to the status of a founder. So while these folks must be rockstars, they've all held, great positions are doing good work, calling them CEOs of business lines might be more appropriate. But hey, what's in a name? I think as long as they do great work and the company feels like this is the right thing to do, all of us can sit and debate all we want.

That's a wrap for the new stories of the past fortnight. Let's dive right into funding. And, once again, as I mentioned earlier, our, our favourite startup or tech company, whatever you might call it, Reliance Jio makes another appearance. So on the back of raising eight and a half billion dollars as of two weeks ago, Jio has gone ahead and raised 1.5 billion from private equity from KKR for a 2.3% stake. And this has been KKRs, which is a US-based private equity firm, largest deal in Asia so far and takes Jio’s, total fundraising to over $10 billion with a valuation of 65 billion. There's rumors that the state fund of Abu Dhabi is also planning to invest another billion dollars in Jio. It's going to be interesting. We'll see what Jio is up to next week.

The next, funding update comes from a startup called Khata Book, which has raised $60 million led by B capital group, which is a VC fund founded by the former founder of Facebook - Eduardo Saverin. The app helped small merchants and kirana store owners manage their digital ledger or khata. They claimed to have about 8 million merchants are using the platform already. It's created quite a buzz in the startup ecosystem. the round has valued the company somewhere between, $275 to $300 million, and comes on the back off for $25 million series a round that, that they raised less than a year ago in October, 2019. Khata Book, the book is of course well-capitalised, well positioned. They compete with PayTM in this space and with the fundraise hopefully have enough of a runway to actually continue on building the business.

Our final funding update comes from LendingKart, which is Ahmedabad based FinTech company that raised a $27 million series D round. Firstly, kudos to do this.I'd actually didn't know that there were any big companies based out of Ahmedabad. So it's great to see that there's at least success stories from outside of the two or three Metro cities. The company, to come back to the story, is into lending and plans to use the funds, to expand their base of customers, which is a largely just MSME - small and medium enterprises. The COVID pandemic has seen a number of MSMEs shut shop due to liquidity issues and the need for LendingKart’s product seems quite apparent. However, LendingKart does compete with Sequoia and Ribbit Capital backed Capital Float, which has also raised close to 20 million this year and heavyweights such as Muthoot finance and Bajaj FinServ. I'd love to do an in depth study on this lending market in India. It's got a number of players and a lot of depth, but maybe that's a feature for another episode.

Our next section focuses on covering interesting startups that I think are on the path to having disproportionate impact in their respective sectors. In this episode, I cover a company called Bulbul. Bulbul is a live streaming video eCommerce platform. The company enables hosts, sellers and consumers to use Bulbul as a platform to create videos on go live and then sell products and services to consumers who then, consume the content of these videos and then make a decision to purchase from the app or not

They stream in English and Hindi at the moment. Bulbul was part of Sequoia's Surge program's inaugural cohort and actually went on to raise 15 million from Sequoia in October last year. The company is based out of Delhi, but also has interestingly an office in China. It was founded by Sachin Bhatia who co founded Truly Madly - the dating app and also MakeMyTrip, Atit Jain who co founded a company called GigStart, and Sichen Liu, who was the founder of Hawa - a lifestyle platform for Indonesian women and a short video app as well.

Social commerce is an exciting growth area are likely to grow into a multibillion dollar business over the next five or ten years. In China with players like Taobao Live and TMall it has grown rapidly over the last few years and now accounts for 15% of all online retail sales. It's growing at 2X, the date of the overall retail sectors, so it's actually growing much faster. Bulbul falls under the social commerce or video commerce space. And so while social commerce is really young in India, it's already a reasonably crowded space with, not just Bulbul, but companies like Akanek, WMall, Sim Sim having raised significant amounts of capital from marquee VCs. However, the biggest social commerce platform in the country is actually WhatsApp. And there's a very interesting YourStory article about social commerce and its growth that I think you will enjoy reading. And I'll include a link to that in the episode description.

Onto why I think Bulbul is poised to do well. Firstly, think back to the days of tele shopping networks on TV, people dialing a number, ordering a product and a few weeks later, it showed up at your doorstep. Secondly, think about your favorite influencer or celebrity or artist promoting a product and your sort of desire to buy it as a result of it. Bulbul combine these two experiences into its app. It has live shows, featuring influencers, selling products that are not just affordable, but also desirable. This is especially important for beauty and household products, where a great product demo and a known face makes a big difference in your decision making.

I think Bulbul has a clear understanding of its market. It's heads down focused on tier two, tier three cities where online buying behavior is still being formed, and even companies like Flipkart are working hard to get people to get more used to buying online. So as they add more languages, introduce social features to promote group and bulk buying and likely improve the delivery experience, the delivery time they're going to see the product adoption expand. There's a small chance that they might actually make shopping fun. You know, I, I actually hate online shopping, but a great video, a group experience might actually, stimulate, a offline shopping experience emotion which, people, might really enjoy. So I think they're onto something. They'll of course, need to figure out their unit economics or drive down the acquisition costs of acquiring customers and improve all value and retention. But I'm assuming they already know this and they're working towards it. I'm however, very optimistic given Bulbul’s solid team, the great traction has got initially, and it's marquee investors, and, and believe that they do have a genuine shot at success.

So with the next fortnight, don't forget to try JioMart, send me your feedback on the experience. I'd love to hear from you. Enjoy home delivered alcohol from your favourite delivery apps. And don't be surprised if you read about Reliance Jio raising even more money. Stay safe and healthy, wherever you are.

That's all for this episode. If you enjoyed it, please do share the podcast with your friends and family and leave a review on the podcasting platform of your choice. Also, if you have any feedback on the episode today or suggestions for the next one, please don't hesitate to reach out to me at rahool@techbuzzindia.in. I'm also looking for a research analyst to help me with this podcast. If you're interested, do reach out to me as well. I hope to see you all in two weeks until then, stay safe and thank you for tuning in.

Music credits

Opening /closing sequence: Jungle Juice by Wataboi, Creative Commons —

In-track: Twenties by Peyruis

Attribution 3.0 Unported — CC BY 3.0