Why Mercedes battles with SIPs & Netflix with sleep? 🤯

The game of time & wallet share.

Welcome to the 104th edition of the GrowthX Newsletter. Every Tuesday & Thursday I write a piece on startups & business growth. Today’s piece is going to 94,400+ operators & leaders from startups like Google, Stripe, Swiggy, Razorpay, CRED & more

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2017 : Netflix says “Sleep is our competition” 😴
2022 : Mercedes says “SIPs is ours” 💰
Here’s why the are saying “the truth” ⬇️

Quick context 🗓
In the last 24 hours, the incoming CEO of Mercedes India made a statement, reworded the gist, “If the flow of SIPs from our target customers goes towards luxury car EMIs, the market will explode”. There is some truth and a lot more exaggeration but I think we get the point he is making.

Does Mercedes vs Mutual fund SIPs make sense?
Ashish (Founder | IndMoney) & someone I respect for the insight he brings into money business, made a napkin math - a Mercedes C class base model is at ₹65 lacs, Down payment (₹ 6L) & 5 year EMI (₹ 1.33L), you will end up with a cash outflow of ₹86 Lacs. Assume you sell the car for ₹10 L after 5 years, net spend is ₹76 Lacs.

Imagine, you invested this amount in SIPs.
₹6L one time & ₹1.33L/month for 5 yrs in Nifty 50 index fund, you could end up with ₹1.26 Cr, provided Nifty performs similar to how it did for last few years. Seems like good math to me.

But isn’t every product in the same boat?
UPI apps don’t compete with each other but with cash. Bisleri doesn’t compete with Aquafina but places with access to clean water.

Fundamentally it’s additive / substitue product game.
Every product, competes for time & wallet share. And each of them will have to take an active call - is the product a replacement to existing solutions or an additional layer of solution? If it’s a replacement it will compete for it’s share of time & money. If it’s an addition, it will have to solve for return on time/money investment.

So what are the rules of the money / time game?

The Netflix & Spotify rule of time share.
For Netflix, it’s sleep and social time. So it solves for “watching together” & converts individual watching time into a social event. It shows up in how it promotes larger TV screen subscription or it’s family sharing plan. Spotify’s advantage of being a simultaneous product - listening to audio is something you will do in conjunction with other activities.

The Rolex & Mercedes rule of showing ROI.
It’s easy to show ROI of luxury products in status driven society - Rolex & Merc are classic examples. Most folks I know own a Rolex for the sole purpose of bragging in-front of their clients during a sale. Most folks I know buy a Merc to show-off in their family/office circles than anything. But, that’s changing fast & that’s why the Merc CEO statement is validation towards that direction.

That was the Mercedes vs SIP breakdown ✨
If you found value in this issue, share this with your growth team & let them take an informed call on if your product is additive or a substitute. Oh, and if you loved the issue, click here to give us a shoutout.

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Thank you friends for sending me so many suggestions around places to visit in Rajasthan. Me & my wife (Rewa) are truly grateful 💙

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