Two of India's most prominent startup tech giants are in deep trouble Two of India's tech leaders, both of which have been widely hailed as exemplars of local entrepreneurialism, are in deep trouble. Let's start with Paytm, a payment service that accounts for over 45 percent of transfers made using India's Unified Payments Interface. For hundreds of millions of Indian citizens, and tens of …
Ahhh the vagaries of lets call it "New Finance" companies. It's easy to be profitable and take a good share of the market when you don't follow the rules everyone else has to play by. And when the authorities finally get around to cracking down, they make lots of noise about big, bad regulators, trying to kill off "our home grown markets". Playing by the rules is expensive, it might endanger the bonuses of the C-suite! Good work on the central bank cracking down on them...
As for Byju - who in their right mind would ever think that an online tutoring company would/could be worth $20 billion. Sorry, even in India with its massive population, that level of value was never going to be obtained.
On the other hand ‘old finance’ seem happy to be pushing interest rates ever up, against the direction of current level or downward travel and institutionally fucking customers over.
Consumption driving interest rates to choke off demand, was never going to do anything other than impoverish the masses, increase government debt at the expense of lining banker and commodity trader/speculator war profiteering during the recent producer led inflation spike. All artificial.
"It's easy to be profitable and take a good share of the market when you don't follow the rules everyone else has to play by. "
Yes, but it's also easier as a startup to get all the 'know your client' data directly at first signup rather than have to get them for existing customers as legacy banks had to do. And being able to operate almost exclusively with IT infrastructure and a help/call center, without having any physical branches or cash handling, is a great reduction in costs. My point is, it's easy to both follow the rules everyone else has to play by AND be profitable if the incumbents are overcharging, rent-seeking monoliths and/or totally incompetent in business processes and/or technology.
'overcharging' in this sense isn't account fees, it's charging 5-10% interest on loans on money that the bank is borrowing at 1%. The (very big) margin on that spread is what allows them to offer free consumer banking. For the online banks I'm familiar with, they do indeed make money on premium consumer banking (with base tiers being free), since they don't actually offer loans. Not sure what teh situation in India is (with, for example, taking microloans to finance home business)
The "kill competition, then take over the market" strategy only works if you a) flood the market too cheap long enough and b) really kill the competition. Otherwise it is just a pyramid scheme that costs giga bucks and redistributes wealth to the wealthy(*).
(*) Seems to work as intended.
One of the most effective AML / anti-corruption tools (which is why it is unpopular with politicians of all stripes) is unexplained wealth orders.
If a politician on a £50k a year salary, or a business owner declaring £100k annual profits are buying a £10M mansion or £500k yacht, that should be raising red flags.... and if you can't prove the wealth is legitimately arrived at, it gets confiscated. It's just one step in a chain, of course
Byju's looks like a great idea that was never going to be profitable enough to justify the VC spend. Not unusual.
Paytm may be the collision between nationalist state control freakery and tech that works. If tech is secure, the state can't spy on it. If it has to be broken/hobbled to suit the state, it might as well be shut down.
The latter problem is already global. From social media to adult sites and e-tail, people want them, enjoy them and the economy needs them. But governments want to 'take back control'. The question is, will governments replicate Brexit online and break everything to take full control of the net. At which point it will resemble Prestel, and the global economy will start to look and feel like the collapsing British economy, post-Brexit - hyper inflation (especially retail inflation), shortages of everything, services closing down, long waits for everything, life getting crappier.
but when a company starts to "buy" sponsorship of footbrawl or other big commercial sports teams I start looking for other firms to buy from if possible. Without fail the board and CEO will be getting bonuses and salary packaging utterly unconnected to their competence or lack thereof. Decades ago the equivalent was buying a corporate jet was a sign of company deathwish. Now its branding exercises
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