Last year, I met a tech investor in Bengaluru over coffee. This was the time Reliance JioMart — then known as ‘new commerce’ — was expected to roll out by Diwali. ‘So, what’s Reliance Jio’s ecommerce venture all about?’ this venture capitalist (VC) asked me? Many others in the tech fraternity were talking about Jio and what it was possibly putting together on the kirana front, touted as being the foundation for its ecommerce ambitions in a market where Amazon and Flipkart have been dominant players.
By early 2019, the company had two products — the Jio PoS (point of sales) terminal and MyJio app — that had been distributed to shop-owners to build an ecosystem. My coffee-sipping VC made a remark, which stayed with me: ‘Bombay is getting ahead of Bangalore,’ adding that Bengaluru founders and companies were unaware of what was going on in Mumbai. ‘They live in a bubble and aren’t able to fathom what’s going to hit them,’ he had said. On a broader level, he also mentioned how the frothy valuations of Indian startups are mostly never understood in Mumbai’s financial circles.
A year down the line, a lot of what was going on in Mumbai has come to the fore, when in April, in the thick of the Covid-19 outbreak, Facebook announced its investment of $5.7 billion for 9.99% stake in Reliance Jio Platforms. That was just the start of the rush of capital coming into Jio Platforms, culminating with Google’s $4.5 billion infusion earlier this week.
Jio Platforms is a subsidiary of Reliance Industries, which owns the telecom operator Jio and other digital businesses of the Indian conglomerate. In a span of about three months, Jio Platforms mopped up $20.4 billion — almost the valuation of Flipkart when it was acquired by Walmart two years ago and the combined value of Zomato, Swiggy, BYJU’s and Freshworks. Not surprisingly then, most Bengaluru VCs, and even founders, are shocked at how Jio successfully raised this gargantuan financing without them getting a whiff of what technology the conglomerate has actually built.
For what it’s worth, Jio isn’t the typical consumer internet company, which gets valued on vanity metrics like gross merchandise value (GMV), daily active users (DAUs) and monthly active users (MAUs). But it is the biggest telco-tech company in suburban Mumbai with no connection to Koramangla.
What stands out is how, till a few months ago, Jio was hailed by the tech community as a great pipeline offering cheap data reaching the deepest parts of India. But the local entrepreneurial ecosystem wasn’t sure if Mukesh Ambani’s efforts around Jio would translate into building digital products with the same finesse.
Many startup and VC folks were heard applauding how Jio was sheer ‘execution-propelling internet connectivity to Bharat’. On many occasions, I would ask these same people what they thought would happen if Jio started using the same pipe to push its own services and products – something that all telcos have tried, but most have failed. No one gave me a clear reply. And I suspect that’s because none knew — or knew very little — about what the Mumbai company was up to.
Many have said how Facebook, Google and a dozen financial investors have lined up for Jio Platforms to possibly move to the right side of Indian regulations and policies. Globally, big tech has been at loggerheads with antitrust regulators, governments and various agencies. Amazon, Facebook, Google and Apple are all facing regulatory and government scrutiny of some kind. So why would they not want to be in a safer zone in India? This, to many watching the events unfold, is a small price to pay.
While this may be true, who stopped Bengaluru startups from not making their policy pitches better? Why were they siloed away from business realities, other than making some noise about capital-dumping by foreign competitors and protectionism a few years ago?
Also, on the question of execution, remember, the same Jio was praised repeatedly for laying the foundation for many tech startups to flourish beyond India’s metros. To dismiss Jio’s newly formed collective and say that Google and Facebook invested in Ambani to win a policy battle is far too simplistic.
Wall Street and Silicon Valley came together, bridging the gap between New York and San Francisco, because the bankers smelt a gold rush in technology upstarts and their impending initial public offerings (IPOs). If Indian tech startups had been able to build a bunch of super-scaled businesses that could go public, it may have averted the concentration of power in a legacy company that’s likely to bring in massive returns to 14 of its investors.