Published: 6/5/2020


And we’re back to Monday y’all.

Apologies in advance, I have a huge headache, so the newsletter might not be super insightful today. News has also been pretty light over the weekend, someone just dropped (literally an hour ago) a piece dissecting the reported Facebook x Jio deal, unfortunately the piece is behind a paywall but I got y’all with a summary. And found an interesting piece (in a new format) on the taxpayers of India.

  • https://bit.ly/2XtIgm4 (The Morning Context but paywall): FB x Jio. What does this mean
  • ➡️ Ashish K. Mishra did a great of summarizing on how this deal probably came about and what it means for both sides.

    ➡️ So apparently Reliance hired Morgan Stanley to generate financial interest in Jio, and Grimes (also known as the Silicon Valley Whisperer- https://dealbook.nytimes.com/2012/05/08/morgan-stanleys-michael-grimes-is-where-money-and-tech-meet/) could be the deabroker.

    ➡️ So what’s in this for Reliance? Well they have a consolidated net debt & liabilities of over $45B, and are looking for investments in some of their businesses (including the Aramco deal in the Oil & Petrochemical businesses). Reliance is also packaging a couple of their businesses to create a “platform” for Jio. The problem is that most of the Jio ecosystem applications don’t have much traction, so the business at it’s core is still a telecom company,

    ➡️ And what about Facebook? Well this one is a little iffy. So Facebook doesn’t have the best reputation in the country (compared to a Google or Amazon) due to the whole Free Basics fiasco and the countless WhatsApp controversies that keep popping up. And Facebook has invested in a couple of growing Indian startups (Meesho & Unacademy), so maybe this another attempt to get into the good graces of the Indian consumer base.

    ➡️ All in all, both companies are dealing with several other issues independently (could covid affect the Aramco deal for Reliance & Facebook is working hard to roll out WhatsApp Pay to a wider consumer base), but Mukesh and Reliance are probably quite happy to take Facebook’s investment.

  • https://bit.ly/3b5ysTi (Instagram): How much do Indians earn
  • ➡️ So I also came across this interesting Instagram post by Dharmesh Ba (who also heads D91 Labs) doing a data-driven analysis of the Indian taxpayer.

    ➡️ I really love this anecdote from Ankur Warikoo- “How many of you belong to the middle class. Everyone raises their hands. Well, FUCK YOU! You are fucking rich!” A lot of people think they’re the “middle class” in India (esp the type who live in Tier 1/2 cities and probably own a vehicle or two), when they’re actually in the top decile or top 5 percentile in the country.

    ➡️ So first off, only 4% of Indians file taxes (compared to 45%+ in the US) in the first place. A couple key things this misses out is the Indian population below working age and those who have already retired (would be a couple hundred million). And secondly, the unorganized sector is largely paid directly in cash and if their income falls below 2.5L/yr, they are exempted from taxes.

    ➡️ A couple other statistics that I found interesting were that ~2% of all taxpayers (0.1% of the population) earns about ~19% of the total income in the country (of what is reported), which just shows the immense income inequality in the nation. And if an individual is earning ₹10L/yr, they are already a 1%er.

    ➡️ The last stat I’m gonna leave you all with to ponder is that if a company is targeting people who earn ₹40k+ a month, their total addressable user base is only 20M individuals (roughly akin to India 1α) which seems very very tiny in a nation of over 1 Billion people.

    Feedback & ❤️ always appreciated

    More tomorrow :) BONUS (Tweet of the day): https://twitter.com/drthomasisaac/status/1249375065155592192