Behind Michaud’s dump; Indian startups SVB transferred funds to Gift City and other countries

Until early 2022, e-commerce startup Meesho was burning about $40 million a month in cash while competing with larger rivals Amazon India and Walmart-owned Flipkart. As the retailer cuts its spending, growth slows. Today, we’ll take a closer look at the company’s numbers and analyze its strategy. This and more in today’s ETtech Morning Dispatch.

Also in this letter:
■ Startup employees bear the brunt of funding in winter
■ Experts alarmed by surge in fake ChatGPT domains and extensions.
■ Chris Cellia of OCI on advancing AI, cloud computing and more


Inside the Meesho reboot: to cut costs, prepare for slowdown

E-Commerce Platform Meesho Branded Products

Hello Digbijay from Bangalore. Today, my colleague Pranav Balakrishnan and I take a closer look at what’s going on with e-commerce upstart Meesho, who rose to prominence during the Covid years.

We got our hands on the company’s internal sales figures and spoke to several people to sort through the numbers. Here’s what we found..

Growth vs Burning: A SoftBank-backed e-commerce competitor that first began to control its money losses sometime last year. accelerated efforts amid clear signs of a prolonged funding winter.

Michaud slide1

Sees Atri, co-founder and CEO of Meesho, spoke to us and said that he aims to bring costs down to zero by September. It’s ambitious, but Etry told us the firm has already slashed its monthly spending to around $5 million from a peak of $40 million just ahead of last year’s IPL.

In numbers: The company is currently operating with an annual gross merchandise value (GMV) of $4.7 billion, but about 40% of that GMV is returned in revenue, according to Meesho’s internal financials we reviewed. This means that his net worth of merchandise, or NMV, is around $3 billion. Meesho has also focused on revenue and expects to reach $750 million by the end of the year.

Michaud2

Most of the revenue comes from providing fulfillment services to merchants, but Atri wants to increase ad revenue due to higher gross margins. These estimates are based on Meesho’s July-December 2022 monthly financial statements and its February figures and include RTO (Return to Origin), Cancellations and Refunds.

Atri said that the company does not incur any costs for RTO, and also that competitors in the industry have a similar or even greater gap between their GMV and NMV.

Yes, but: We spoke to e-commerce analysts who said there is a consensus among them that it would be tedious for merchants to pay for higher profits—regardless of the channel through which it occurs. Over the past few months, sellers have told us that canceling and returning a large number of orders has become an irritant for them.

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To quote without quotes: “Meesho’s customers are in the low to middle income category. Their spending growth will be slow. They will take time and cannot shop 36 times a year,” said Satish Mina, senior e-commerce analyst. He also said that the limitations of segments such as fashion and home decor are the reason why Michaud is looking to expand his grocery business.


Indian startups transfer dollars to Gift City, other countries from SVB
SVB collapse

After the collapse of Silicon Valley Bank (SVB) in banking divisions The International Financial Services Center (IFSC) in Gujarat’s Gift City has become one of several options for startups and technology companies. whose funds were temporarily frozen at the beleaguered financial services provider.

US banks rush to the rescue: In addition to Gift City, startups also transferred their funds to banks in the US, India, and overseas branches of Indian lenders based on their customer and supplier presence, several startup and banking ecosystem executives said.

Read also | The collapse of the Silicon Valley bank and how it affected Indian startups: all the top stories

Primarily, tech startups with little presence of customers or suppliers in the US moved their money from the US to bank accounts in India through transfer pricing. However, those who need US dollar bank accounts to make or collect payments are those who have opted for US bank accounts or Gift City accounts.

To quote without quotes: “We have opened more than 40 companies and sent funds to Gift City accounts. We know that startups have transferred between $30 million and $40 million,” said Harsheel Mathur, chief executive officer of fintech company Razorpay.

Catch up fast: On April 3, a parliamentary group called on senior officials from the Ministry of Finance and the Reserve Bank of India (RBI) discuss the impact on the Indian startup ecosystem.

We previously reported that RBL Bank, ICICI Bank, Kotak Mahindra Bank, Axis Bank and HSBC were working with startups and investors to open accounts in the Gift City of Gujarat.


Startup employees bear the brunt of winter funding, cost cuts
run

As funding dries up and job losses pile up, employees of troubled startups begin to crack under pressure. With unattainable goals, an increasingly toxic work environment, and a constant fear of job cuts looming over their heads, the startup stardust has long since dissipated, leaving many desperate to find a way out.

“Winter Impact Financing”: Employees at several startups, now facing the heat of a funding winter and pressure from investors to curb spending, have seen colleagues shown the door; some have been fired themselves or are on the brink of burnout.

Some say that their families cannot cope with their working hours – both at home and at work, things are not going well. Some of them are now publicly posting the #opentowork hashtag on their LinkedIn profiles, although they haven’t quit yet.

Mounting pressure: An employee who works in sales at another ed-tech unicorn, which has also seen layoffs, said there was enormous pressure on the target. He works crazy hours every single day and his co-workers are constantly arguing with each other.

“I’m on the verge of a breakdown, but I’m the only breadwinner. I tell myself, “I have to go through this until something better comes along,” he said.

Another employee at a transportation company with a notoriously toxic culture said people should attend meetings sometimes at 1-2 am.

Expert talk: “Most startups are experiencing a churn right now as the ecosystem struggles with slowing funding. Sectors such as cryptocurrency and educational technology have been struggling for some time now. exacerbated by the Silicon Valley bank turmoil and the ongoing global recession,” said Anshuman Das, managing partner at Longhouse Consulting.


Beware! Experts warn against fake ChatGPT domains and extensions
ChatGPT will play a very big role in shaping public opinion

A new study warns against distribution of fake ChatGPT domains and extensions, which he says are used to either steal personal information or hack into user devices.

Details: A few weeks after launching ChatGPT, the company defined a domain called “Chat GpT for Windows” by asking users to download the executable. It was malware designed to steal data from Windows devices.

He also stumbled upon another Google Chrome extension that, once installed, worked as a browser data thief, said Nandakishore Harkumar, CEO of Technisanct.

This means it can steal information such as login credentials as well as other data, he said.

“ChatGPT’s popularity is being exploited”: Security firm last week CloudSEK said at least 13 Facebook accounts with over 500,000 followers have been compromised. and were used to spread malware through Facebook ads, making it look like a link to an Open AI page.

AI generative boost: Companies even development of own tools that allow you to use its capabilities for greater efficiency and make the user experience seamless.

Air India, owned by Tata, wants to deploy generative AI to work more efficiently. The airline is looking to use generative AI to summarize briefings, extract and guide pilots to the most important elements ahead of long-haul flights. According to co-founder Rohan Nayak, Pocket FM is also building generative AI tools to create real value. Read more here

Read also | ETtech Opinion: The Real Meaning of ChatGPT

Tweet of the day


Oracle Cloud Infra Registers 125% India Market Growth in H1 Fiscal Year 23
Chris Chelia

Oracle Cloud Infrastructure (OCI) business grew 125% in the Indian market. in the first half of 2022-2023 compared to last year, said Chris Cellia, senior vice president of technology and customer strategy, Japan and Asia Pacific. The company has also shown rapid growth in the public sector through the implementation of programs such as NITI Aayog, PM Gati Shakti and ONDC, he told us.

To quote without quotes: “We are seeing demand and consumption growth across industries driven by the need for personalized services,” Celia said.

He said the cloud computing and software company sees a lot of demand for AI-based solutions in its offerings, especially in supply chain solutions.

Surge in Cloud Consumption: According to him, OCI showed growth of consumption of cloud solutions to 125% year on year in the first half of 2022-2023.

“We have seen significant growth opportunities in the Indian SME market from digital natives (start-ups) and mid-range companies, including education and fintech companies, cooperative banks,” Chelia added.


Other top stories from our reporters
financing

Avanti receives $24 million from Rabobank Arm and others | Avanti Finance, a high-tech non-bank financial company, said on Monday that it raised $24 million from Rabo Partnerships and IDH Farmfit Fund, among others. While Rabo Partnerships, a subsidiary of the Dutch bank Rabobank Group, is focused on financial inclusion and rural development, the IDH Farmfit Fund is focused on small farmers.

Elon Musk called San Francisco the city of “The Walking Dead” | This was stated by the CEO of Twitter Elon Musk. deserted view in San Francisco, considered the heart of Silicon Valley, has the look that one could “literally film an episode of The Walking Dead without editing in downtown San Francisco.”


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