Wednesday, October 9, 2019

Number of the day: 6.4%

That’s the shocking percentage of Indian children under the age of two who receive a “minimum acceptable diet.” That’s according to the largest ever nutrition survey of its kind. And the disparity is wide across states—ranging from Andhra Pradesh (1.3%) and Maharashtra (2.2%) that are rock-bottom to Sikkim (35.9%) and Kerala (32.6%) at the high end. Most surprising find: a lot of states like Chhattisgarh and Jharkhand are actually higher than the national average compared to states like Tamil Nadu (4.2%) and Karnataka (3.6%). 

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The biggest news story today, explained.

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Oyo’s big-ass funding round

The Indian hotel startup made a big global splash when it raised $1.5 billion in its latest round of funding. But a closer look reveals that the glittering numbers may not be quite so golden. 

First, a bit about Oyo: The company essentially signs up hotels owners, helps them refurbish and upgrade their facilities, and then offers the rooms at highly discounted prices on its platform. Oyo takes a 25% cut of the booking revenues. Founded by a 25-year old, Ritesh Agarwal, the company represents a techie dream-come-true. Now valued at $10 billion, it is the second most valuable Indian start up. The platform offers 1.2 million rooms in over 80 countries, including 590,000 rooms in China, and 7,500 rooms in the US—where it plans its next big expansion.

Ok, tell me about the money: The company raised $1.5 billion—of which Agarwal himself put in $700 million. The other investors—including SoftBank’s Vision Fund, Lightspeed Venture Partners and Sequoia India—will contribute the remaining amount. Now, Agarwal’s contribution will triple his stake in the company from 10% to 30%—because he is also buying back shares from other investors, Sequoia and Lightspeed.  

Ah, so he wants more control? Umm, that’s what it looks like at first glance. But the details of his move raises questions about the underlying motive. And these details include the following:

  • Agarwal is paying for that $700 million via a newly created company called RA Hospitality Holdings registered in the Cayman Islands. 

  • That company in turn is borrowing the money from two Japanese banks, Nomura and Mizuho.

  • Guess who’s their top client? Softbank—Oyo’s biggest investor which has already put in $1 billion into the company in the past and owns 46-48% of the company.

  • So, in fact, Softbank is helping finance Agarwal’s share buyback—albeit in a roundabout way.

Why do that? For starters, Softbank cannot take on a larger stake in Oyo because of an agreement that limits its ownership to 49.9%. But the bigger play here has to do with valuation. Every time a company does a funding round, it undergoes a valuation. Thanks to this one, Oyo’s valuation has doubled from $5 billion to $10 billion.

And how does this help Softbank? The higher valuation of Oyo in turn raises the value of SoftBank’s Vision Fund portfolio—and shows a profit to investors in its fund. And that is important to SoftBank especially at this critical time. One of its biggest bets, Uber, had a disappointing IPO earlier this year—and is trading below its opening price. More importantly, its other big punt, WeWork, had to pull its IPO plans because its valuation fell precipitously since January. (See our explainer on the WeWork debacle and how IPOs work). SoftBank’s own shares fell by 25% over the past few months. And analysts say it will lose over $5 billion due to dips in the valuations of just those two companies. 

So it really needs a win: Yup. And it’s kind of rigging this round of Oyo’s funding to get one—at least on paper. 

The bottomline: Until now, investors were throwing obscene amounts of cash at startups which burned a lot of money without showing much profit (Oyo is no different). This in turn jacked up their valuation. However, the endgame for any investor is to ‘exit’ with a big pile of cash when a startup finally goes public—i.e. does an IPO and is publicly traded on the stock exchange. That’s when things get real—especially the company’s valuation. For example: WeWork was valued at $47 billion by its own investors, but when the time came for an IPO, its valuation fell to $10-12 billion. Oops! 

Learn more: Bloomberg has the basic deets on Oyo’s raise. We highly recommend Sumanth Raghavendra’s scathing Twitter thread on Oyo’s “selfie round.” Both Business Standard and MoneyControl do an excellent job of laying out the SoftBank-Oyo angle. Forbes covers SoftBank’s increasing global woes. Scott Galloway lays out (in blistering detail) the problem of overvalued unicorns—and our addiction to them. Oh and he includes Oyo on his list of companies that will lose 80% of their value or disappear—along with WeWork, Lyft and Tesla. A related story: in Mint on a huge backlash among hotel partners against OYO’s fee increases—which sounds a lot like the Zomato situation. 

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acing your Navratri sari style

Trump unleashes new Middle East mayhem: The US prez announced plans to withdraw all troops from Northern Syria—a decision that will leave the Kurds in Syria at the mercy of Turkish forces. 

  • Historical point to note: Kurds have long pressed for an independent homeland—and been massacred by the millions by Turks for their demand. 

  • Also: Kurds fought with the US in Syria to help defeat ISIS and are currently guarding camps with scores of ISIS soldiers. 

  • Bottomline: Trump’s action would be a total betrayal of one of America’s closest allies, leave the Kurds at the mercy of an already eager-to-strike Turkey, and potentially help revive ISIS which could stage a comeback in the ensuing chaos. 

  • But Trump is confident that no such thing will happen, as he made clear in this tweet: “As I have stated strongly before, and just to reiterate, if Turkey does anything that I, in my great and unmatched wisdom, consider to be off limits, I will totally destroy and obliterate the Economy of Turkey (I’ve done before!).”

  • But as the Guardian reports, Turkey is entirely unimpressed and is already making plans for an offensive. Axios has more on how Trump has managed to unite both Republicans and Democrats in shared outrage. The Atlantic explains why this is a gift to ISIS.

The tragic fate of Aarey forest: On Friday, the Mumbai metro authorities moved in to fell 2,185 trees in Aarey Milk Colony. The plan: to clear the area to build a metro shed. Protesters tried to block the ecocide and many were arrested. The Supreme Court stepped in to issue a stay and order the release of the protesters—but 98% of the trees have already been cut down. And to make it all worse, the police has blocked the entry of animal rescuers who want to help the precious wildlife trapped inside. For the bigger picture: Scroll explains how the government’s wilful refusal to define the word ‘forest’ has enabled the destruction of protected land across India. Times of India explains how the Delhi Metro managed to protect trees and build an excellent system of public transport.

In happier news about our environment: The government is working on not-yet-official plans to build a 1400 km ‘great green wall’ that stretches from Gujarat to Haryana—running along the Aravali range which has been destroyed by mining. Also: For the first time ever, no Durga idol was immersed in the Yamuna thanks to strict police surveillance.

Don’t blame it all on Boeing: The aircraft manufacturer has been in serious trouble ever since an Ethiopian Airlines flight—which was its 737 Max model—crashed earlier this year, killing all 157 on board. The tragedy has since revealed inbuilt problems with its safety design. However, now a former Ethiopian Airlines employee points the finger squarely at his previous employer—“alleging a pattern of corruption that included fabricating documents, signing off on shoddy repairs and even beating those who got out of line.” And more importantly, its misdeeds included altering maintenance records after the crash. Meanwhile, Boeing is being sued by pilots in the US for making “false representations” about the safety of its 737 Max. (USA TODAY)

Your Kashmir update is here: and it includes the following:

  • Everyone is talking about a front-page, top-of-the-fold story in the New York Times. It documents how the communication shutdown is literally killing Kashmiris: “Cancer patients who buy medicine online have been unable to place orders. Without cell service, doctors can’t talk to each other, find specialists or get critical information to help them in life-or-death situations. And because most Kashmiris don’t have landlines in their homes, they can’t call for help.” It is wrenching, depressing and a must-read.

  • The US House Foreign Affairs Committee took note of the Times story in a tweet: “It’s time for India to lift these restrictions and afford Kashmiris the same rights and privileges as any other Indian citizen”—and declared its intention to hold a human rights hearing on Kashmir.

  • Also: BBC reports on the devastation wreaked on the state’s economy. 

  • But the really important news: The government has officially reopened the state to tourists starting today.

Say hello to ‘faceless’ income tax assessments: You may never have to physically interact with a tax officer again thanks to a new digital system of assessment. The aim is to minimise harassment by individual tax officers (but you may well be driven mad by a badly designed, poorly functioning government website instead). The Quint explains how it will work.

No Instagram for amateur stalkers: The platform is taking away the ‘Following’ tab that let you spy on other people’s activity—likes, comments, follows etc. So you’ll now be spared TMI on your friend’s unhealthy appreciation of thirsty pics. In related tech news: Apple has killed iTunes in its latest OS update. (Buzzfeed News)

The United Nations is broke: Nope, this isn’t a joke. The global organisation will run out of money by the end of the month. The reason shared by the Secretary General in a letter to 37,000 UN employees: “Member States have paid only 70 per cent of the total amount needed for our regular budget operations in 2019. This translates into a cash shortage of $230 million at the end of September.” (NDTV)

First ever study ties e-cigarettes to cancer: in mice, at least. They were exposed to the same amount of smoke as a person who’s vaped nicotine for about three to six years. Of the lot, 22.5% developed lung cancer and 57.5% developed precancerous lesions in the bladder. (CNBC)

America’s worst serial killer revealed: Samuel Little confessed to 90 killings last year—in addition to the three he is already in jail for—and nearly half of them have been confirmed by the FBI. He is now the most prolific murderer in the nation’s history, beating Gary Ridgway, who was convicted of 49 murders and confessed to about 20 more. Little primarily targeted vulnerable women such as sex workers and drug addicts—which is also the reason his 35-year killing streak went undetected. No surprise there. (NBC News)

Martin Scorsese vs Samuel L Jackson: The two giants of Hollywood had a bit of a verbal tete-a-tete over Avengers. Marty sparked a row when he told a reporter: “Honestly, the closest I can think of them [Avenger movies], as well made as they are, with actors doing the best they can under the circumstances, is theme parks. It isn’t the cinema of human beings trying to convey emotional, psychological experiences to another human being.” Oh dear! Guardians of the Galaxy director James Gunn was “saddened” by his remarks. But superchill Jackson simply said: “I mean that’s like saying Bugs Bunny ain’t funny. Films are films. Everybody doesn’t like his stuff either… Everybody’s got an opinion, so I mean it’s okay. Ain’t going to stop nobody from making movies.”

Did Ben Stokes choke his wife? These photos published on a British website appear to show the star English cricketer getting into a violent altercation with his wife, Claire. But she vehemently denied it soon after and offered up an odd photo of her ‘choking’ Stokes as proof, saying, “Me and Ben messing about squishing up each other’s faces cos that’s how we show affection and some pap tries to twist it into a crazy story!”

China is breeding monster pigs: Swine flu has killed 25-300 million pigs across Asia—which is a big problem for the Chinese who account for half of the world’s consumption of pork. The solution: breeding pigs that weigh over 1,100 pounds—i.e. the size of polar bears. (Science Alert)

In more Greta-hating news: An effigy of Greta Thunberg was found hanging by a noose from a bridge in Rome—accompanied by a sign written in English that read 'Greta is your God'. Everyone is rightfully horrified. Timely reminder: she is sixteen years old! (Daily Mail)

Reads you might have missed: over the super-long weekend include the following:

  • Times of India ran a wonderful first-person essay on disability, desire and sex. To say more would be to ruin it. Yes, it is in TOI. 
  • Ozy on whether Modi will turn many Indian Americans into Trump voters.

  • Huffington Post has an excellent piece on re-reading Shobaa De’s 1991 pulpy (and problematic) bestseller ‘Starry Nights’ that exposed the underbelly of Bollywood.

  • ‘Femtech’ refers to products made for women—typically by women—and is poised for a massive expansion. But BBC looks at whether the label itself is marginalising or empowering. 

  • Vice reports on a new study on the most popular use of deepfake videos: porn vids ‘starring’ famous female actors and musicians.

  • The News Minute profiles the OMG OMG duo Bhargav and Nithya, Tik Tok and YouTube stars who have acquired a global following.

  • New York Times on how Extinction Rebellion—the world’s largest climate change activist movement—is taking aim at the fashion industry. 

  • Also in the New York Times: how the coolest club music right now is being composed in code. 

Your daily quota of sunshine items: include the following

  • This nine-year old Indian skateboarding sensation who is profiled in a short film in the running for an Oscar.
  • This brilliant ad for period-proof underwear.

  • The Matryoshka diamond—named after Russian nesting dolls because it has a tiny diamond encased within a larger diamond. And it’s the only one of its kind.

  • Adidas’ new ‘Gardening Club’ line: “A range of apparel, accessories and footwear that is inspired by lawn-based activities, resulting in ‘horti-couture’ that can move effortlessly from the lawn to the streets.” This stuff doesn’t even need a punch line. And yes, it’s ugly.

  • These body-inclusive male mannequins sporting the perfect Delhi Belly.

  • Forget bulls in china shops. Behold this elephant in a tea stall.

  • This gender reveal gone horribly wrong.

  • The very real and hilarious downside of having this cat as a sibling.

  • Related clip: cats being unnecessarily mean to friendly racoons.

  • Rachel, Monica and Joey had a friendly reunion—and they look lovely.

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Everything we don't know about human desire

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The not-so-fun life as a ‘cougar’

Older women with younger male partners are celebrated as daring and independent—lustily going after what they want, societal norms be damned. But as this honest first-person essay reveals, the burden of loving a younger (very nice and caring) man more often feels overwhelming.

Read: Darkness on the Edge of Cougartown | The Cut

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Meet the star daters on Tinder

The dating app’s most prolific and popular daters revealed the secrets of their success. Here are their eight tips to help you become a power-Tinder user—other than being young and very attractive, of course. 

Read: Tinder's 30 Most Popular Singles Shared Their Tips For Boosting Your Profile | Bustle 

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