Namaste, Sat Sri Akaal, and Salaam. 🫡

Happy morning folks. Hope you had a solid weekend. Today we’re diving into -
- Third Wave’s decision to downsize a little bit,
- Paytm’s merchant lending push after regulatory hell,
- and Jio Financial’s first proper push into finances.

Our read time today is 3 minutes and 53 seconds - faster than Starc got slapped around… 🔥

Let's dive in. 👇

Market Vibe Check

Third Wave downsizes a little after their mammoth check. 🤔

TLDR -
- Third Wave Coffee just picked up a $35mn Series C to grow their coffee business as if it’s a tech startup.
- There is insane competition in the cafe business - lots of deep-pocketed companies have entered and are growing like CRAZY.
- A small portion of India is spending billions/year on premium products and it’s buoying aspirational brands.

Young India is spending BIG bucks on “aspirational” products.

And the latest winner from this growing trend of spending - a coffee shop called Third Wave that’s growing like a tech startup.

A couple quarters back, they picked up $35mn to build an airtight brand and put up locations all across India.

The cafe business is no rocket science - but it it is SUPER difficult to compete.

You have legacy players like Starbucks who come with their drones of hooked fans, and then you have players like Reliance-backed Pret - who have virtually limitless pockets.

This is taking a little bit of a toll on Third Wave who seem to have expanded a tad bit too quickly for their size - and they just fired 120 or so employees to keep themselves lean and mean.

The bottom line is, these so-called aspirational brands have been THRIVING -
- Apple India has been having bumper revenue jumps every month
- Niche clothing stores are popping up in Uttam Nagar
- India’s Rolex market is getting overpriced

As a result, anyone bridging that gap between aspiration and affordability is KILLING it. Stellar stuff. 🤯

Paytm pushes on with it’s merchant lending dreams despite regulatory hell. 😰

TLDR -
- Paytm’s merchant base went up 15% last quarter, from 8m → 9.2m
- Their goal is to build a wide network of stores, then cross-sell them targeted financial products.
- Good to see them fighting this hard despite competition from Jio/Google and the likes.

Despite the entry of Jio Financial, Google Pay, and many more heavyweights, Paytm is unfazed.

They’re going full steam ahead with their plan to become the merchant lending king of India.

A quick refresher on what Paytm’s dreams are -
- Get lots of merchants/shop-owners/stores to use their payment machines
- Track all their transaction history, revenues, volumes, etc
- Use this data to sell them tailored loans
- Sit back and enjoy the wonders of compounding

And they’re walking the talk like no one else is.

Last quarter alone, they added over 1.2 million new stores to their merchant base - a jump of 15% from the quarter before.

They currently have a merchant base of 9.2 million, growing quicker and quicker each day.

If they dominate the acquiring-side dhandha, then they’re virtually set, since that business will generate all the cash needed to make other bold bets that they can’t make otherwise.

Crazy stuff.

Jio Financial steams on with their first proper product. 🔥

- Jio Financials just launched a personal + consumer durable loan product.
- They have a user-base of 450 million people who can be cross-sold anything with targeted ads.
- They’ve also managed to get a UPI license… sign of things to come?

After a $20 billion split, Jio Financials is here with it’s first dhamaka.

They’ve introduced a personal loan product and a consumer durable loan product.

The consumer durables product is super interesting - offering short-term, high interest rate loans to families who want to buy appliances like TVs and washing machines.

Bajaj Finance used this same strategy to scale their business quickly and cross-sell other financial products depending on credit history.

But here’s the kicker: Jio already has a user base of 450 million across the India - 450 million people which can be cross-sold a fintech product at the flick of a switch.

And that’s literally what happened, Jio’s new loan products are now available on the Jio app, almost overnight.

JioFS also has a license to use UPI (India’s real-time payments system) and has data on the telco transaction history of all their clients.

Data like that lets them sell targeted financial products to every type of consumer.

Scale is an INSANE thing…

In other news… ☕

Cocoa prices double over the last 2 months (BBG)

DeepMind founder wants of “AI grift” (FT)

AT&T resets passwords of over 70 million users over data leak (TC)

Alphabet and Apple get in the EU’s crosshairs (Mint)

Fed’s favorite PCE inflation metric still hovers above target (NYT)

And that’s the tea the chai for today.

Thanks for reading, and we hope you enjoyed it.

Lots of ❤️,

Team CC