WhatsApp for Business: Meta’s Cash Cow or Dead Wood?

Last week, Facebook's parent company Meta lost $250B in a single day. Consequently, Meta's shares dropped by 26% & Zuckerberg's net worth fell by $31B.

Over the years, Facebook has always seen steady growth in the number of users. Until the 4th quarter of 2021, when its daily global users fell by 1M. In the bigger scheme of things, that's just a 0.05% drop for Facebook, so why fuss about it?

Well, this drop could probably mean a beginning to continuous decline for Facebook OR it could just be a regular up & down all companies witness.

Now, one reason behind these events could be Apple's new privacy policy. According to the new policy, users have to opt in to getting tracked on their phones. Of course, over 60% of users opted out. As Facebook relies on Ad money, this was a major hit. They lost $10bn in 2021 because of the policy alone.

Additionally, apps like TikTok & YouTube are growing each day to challenge Facebook's once help lead in the social media. Even advertisers have more options to air their advertisements.

With growing competition & Apple's privacy policy, it'll be interesting to see how Facebook tackled these issues. But for now, they have placed their bets on the Metaverse.

Metaverse is a high-risk high-reward scheme and the only other major tech company operating in this space is Microsoft.

Facebook lost over $10 billion on this last year, but it's all insignificant if Facebook's bet plays out well. Of course, only time will tell if the Metaverse becomes a reality and who wins the race. For now, though, Facebook has a bumpy ride ahead.

HDFC was born in the aftermath of the economic liberalization of India in 1991. India, was suffering through an economic crisis at that time and the government had set forth a stream of reforms, with an "inclination to privatization' as the core theme.

As part of the reform, RBI was looking into licensing more private banks in the hope of introducing more healthy competition in the sector and squashing the lazy banking phenomenon.

After hearing this news, Deepak Parekh, chairman of housing finance giant, HDFC, was very intrigued. He set out to buildd his own bank and he immediately convinced Aditya Puri, to leave his Citi Bank CEO position, to run the very new HDFC Bank.

With a dream team of seasonal bankers onboarded, HDFC was ready to set sail in 1994. But, instead of building a nationwide branch network that would rival SBI's network, HDFC started small.

Now, Aditya Puri's vision for HDFC was very clear. He wanted to combine the diverse product lineup of foreign banks and branch networks of PSUs to buildd a bank that does both.

It first targeted the blue-chip corporate lending sector, which was a low-cost but super competitive space. So, HDFC's team used their networks to connect to these blue chip companies and created custom products for their specific needs. They first bagged a contract with Siemens, and then Ambani, Tata, and Birla followed.

They further transformed the entire cheque settlement process for cooperative banks and created a more efficient system for stock trading settlement.

Till this point, HDFC was doing very well, but there is only so much money a bank can make while lending to only the creamy-layer blue chip companies. So, HDFC finally decided to focus on the retail sector.

But, they approached the move with a sense of caution and rapid experimentation. Before rolling out a new product, say car loans, HDFC would run a pilot to check the intricacies of each space and understand the risk involved. Only if things went well, they would move on to a rapid rollout.

To sum it up, while HDFC's core strength lies in its brilliant execution, the bank is very much known for its super crisp balance sheet and very low default rates. And, that's all thanks to it's incredible risk management strategy.

But, even at its height, HDFC shows no sign of stopping. Aditya Puri was of the firm belief that all companies run out of leverage gained from their past innovations within 3-4 years as the market catches up. With this attitude, we can surely expect BIG things for HDFC!

Before the 1990s, underwear shopping was a hush-hush affair. The shopkeeper would hand you any random product and you simply had to trust their judgement. Moreover, underwear was a strictly functional commodity and no one remotely imagined making a fashionable brand out of it.

Enter Jockey! Founded in 1876, Jockey was wildly popular in the US for its shorts, with a Y-shaped fly.

Jockey's first attempt to enter India was through a partnership with Associated Apparels in 1962. But, it didn't go well.

Jockey only got a fraction of attention from them and in 1973, when the Indian government forced foreign companies to dilute their stake to 40% or less, Jockey left the country!

In 1991, Jockey re-entered the Indian market with their trusted partner, the Genome family, and this time they got their undivided attention.

And finally, the Genomal family had shown that they were ready to experiment & make bold moves. This was particularly critical for Jockey, given their ambitious vision of creating an aspirational underwear brand.

But, how did Jockey go from a newbie to a 50% market share in India. Well, Jockey's parent company, Page Industries, made bold moved in 4 key areas that changed the game entirely.

A) Product
1) In-house manufacturing =>Unlike Rupa and Lux, Page Industries were particular about having control over manufacturing and product quality.
2) Obsessed over quality => Page Industries placed an almost obsessive focus on product quality right from the start.
3) New products & variants => Page has constantly launched new products & variants at a rapid pace

B) Place
1) In-store advertising => Page laid excessive focus on in-store advertising, and ensured that Jockey got the bulk of the in-store promotional space.
2) Exclusive brand distributors => Jockey partnered exclusively with brand distributors who work with and push only a single brand at the stores.
3) Exclusive brand outlets => Page Industries has ~1000 exclusive Jockey outlets across India

C) Promotional or Messaging
In India, Western means Aspirational! Page played very well on this sentiment and ensured that people perceived Jockey as a premium, foreign brand.

The advertisements, posters, models, and every aspect of the brand was loudly western. In fact, they hired caucasian models for all their ads!

D) Pricing
1) Premium Pricing => The premium messaging that Page desired for Jockey, had to be reflected in the pricing as well. So, Page consciously priced their products in the sub-premium to premium range.
2) No discount policy => Additionally, Page also avoided offering any discounts on its products.

But, did this strategy really work? Well, of course it did!
1. In 2000, Rupa made a revenue of INR 100 Cr, while Jockey was at INR 21 Cr.
Fast forward to 2022, Jockey at ~INR 3725 Cr now makes 2.5x the revenue of Rupa (~INR 1474 Cr)!
2. Jockey is also completely debt-free, and has a healthy ROCE of ~64%, which is 2.2x that of Rupa (~28%).