Namaste, Sat Sri Akaal, and Salaam. 🫡

Thoroughly enjoyed watching Rohit Sharma’s bat work wonders once more. The boys in blue have their work cut out for the finals, sab shubh shubh bolo…

Today we’re diving into -
- BYJU’s latest boardroom brawl,
- Flipkart’s choice to launch an Amazon Prime-like product,
- and Rare Rabbit’s push to raise again.

Our read time is 4 minutes and 52 seconds - faster than England’s batsmen collapsed at the hands of Kulcha and Bapu… 🏏

Let's dive in. 👇

Market Vibe Check

BYJU’s investors get mad at management. 😡

TLDR -
- BYJU’s investors ripped management a new one at their shareholder meeting this week.
- They spoke about their financial recklessness, lack of runway, and operational goof-ups.
- The company also made it’s $1 BILLION loss public.

BYJU’s investors are angry for three big reasons.

1 - Financial recklessness. Lots of it.

BYJU’s faced a consolidated loss of over $1 billion last year. This is a crazy number, and it stings even more when you consider that their largest investors have pegged the company’s valuation at $3 billion.

Of this $1 billion loss, around $520 million is a direct cash loss due to horrible operation, and the rest $480 million is a write-off of their most controversial acquisition, scandal-struck WhiteHat Jr.

The only silver lining (if you can even call it that) was the fact that their revenue 2X’ed from the previous year, going from $275mn to $500mn.

But this too missed their own internal targets by 50%. 🙈

2 - A lack of trust in the guys running the show.

From reports of what went down at the meeting, it looked like most investors didn’t care about what was going on, and were treating BYJU’s like a write-off themselves. They abstained from voting on key decisions, instead of their regular thumbs up/thumbs down.

Many of their biggest shareholders sent management a barrage of questions regarding -
- cash management and account reconciliation
- internal controls
- resource allocation and ‘suspicious’ fund movement
- and so much more

3 - Funding and runway (a serious need for both)

Right now, cash is above all else.

BYJU’s needs a $120-130mn check to keep itself alive for the next 3 months, and none of their current investors are too keen to get bitten twice.

One talking point was genuinely whether Byju himself (the founder) should sell a few of his Dubai homes or his personal stake in a few other companies to pay for the company’s expenses.

PS - they still haven’t found the funds which went to a hedge fund in Miami, used to buy a Mansory-specced Lambo, a Rolls, and a Ferrari… 🙈

Crazy stuff.

Flipkart takes a page out of Amazon’s book. 🚚

TLDR -
- Flipkart is launching an Amazon Prime-like product with free delivery, cashbacks, sales, etc.
- Their single goal is to find users who impulse-buy a LOT and then retain them.
- They’ve been struggling a little due to Amazon’s dominance in T1 cities/metros.

Flipkart is the undisputed king of e-commerce in India, and they’re quickly realising that keeping the crown might be a difficult job.

The only way to build a generational e-com business is through 2 methods -
- bump up the quantity of users who buy from you (more orders, slim margins)
- bump up the quality of users who buy from you (higher avg. order values, fat margins)

Flipkart’s strategy was always to look for customers which fit the 1st archetype, but now they’re slowly moving toward the 2nd - to attract and retain high-quality users with an Amazon Prime-like product.

It will have all the usual jazz -
- free one-day delivery
- 1-5% cashbacks
- access to “Prime Day” sales

But there’s still one key piece of the puzzle that Flipkart seems to be missing.

They’ve always been chasing customer choice - not high-ticket orders. In other words, Flipkart has the biggest range of products by far, but the most high value customers still prefer Amazon.

This is precisely why they’ve fallen behind in metro cities, since their experience is not as “convenient”.

Amazon can offer faster delivery, music & video, and easier returns. And since convenience is a hardcore commodity for Gen Z/Millennial consumers, Amazon’s offering is just that much easier of a sell.

Flipkart’s plan is solid… but as usual, devil is in the details!

Rare Rabbit hunts for more institutional funding.

Ever since the first Rare Rabbit store made it’s home in Bangalore, many millions of people wondered if the founders were crazy.

Taking on the Zara’s, H&M’s and Uniqlo’s of the world was gonna be no easy feat.

15 years later, they’re still alive - and they’re hunting for venture capital to blitz-scale their business.

Rare Rabbit is hunting for money at a valuation between $300-320mn- they saw revenues of $27mn with a profit of $2.5mn.

This is right after they raised 500 crore from private equity funds at a 2200 crore valuation - just over $260mn.

While the price tag is pretty high, investors are keen to get a slice of companies which own the ENTIRE backend.

Most apparel companies today are all just wrappers of different manufacturers, just mashed together. But a player like Rare Rabbit owns the entire backend - from the product sourcing, manufacturing, (part of) shipping, and all the way to the customer’s hands.

Investors are keen to get a bite on India’s fast fashion wave - cheap clothes by quality and price, but just-right for the flirtatious and broke Gen-Z market.

Time will tell where this bunny hops…

In other news… ☕

EY’s new CEO tells their 400k employees that they won’t split the company (FT)

Sila Nanotechnologies raises $375mn to construct a US battery factory (TC)

JPMorgan debuts India with highest possible weight in their EM bond index (BBG)

Consultants win big from AI FOMO (NYT)

Jio hikes prices by 12.5% (Mint)

And that’s the tea the chai for today.

Thanks for reading, and we hope you enjoyed it.

Lots of ❤️,

Team CC