Welcome to the 104th edition of the GrowthX Newsletter. Every Tuesday & Thursday I write a piece on startups & business growth. Todayās piece is going to 94,400+ operators & leaders from startups like Google, Stripe, Swiggy, Razorpay, CRED & more
2017 : Netflix says āSleep is our competitionā š“
2022 : Mercedes says āSIPs is oursā š°
Hereās why the are saying āthe truthā ā¬ļø
Quick context š
In the last 24 hours, the incoming CEO of Mercedes India made a statement, reworded the gist, āIf the flow of SIPs from our target customers goes towards luxury car EMIs, the market will explodeā. 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 ā¹65 lacs, Down payment (ā¹ 6L) & 5 year EMI (ā¹ 1.33L), you will end up with a cash outflow of ā¹86 Lacs. Assume you sell the car for ā¹10 L after 5 years, net spend is ā¹76 Lacs.
Imagine, you invested this amount in SIPs.
ā¹6L one time & ā¹1.33L/month for 5 yrs in Nifty 50 index fund, you could end up with ā¹1.26 Cr, provided Nifty performs similar to how it did for last few years. Seems like good math to me.
But isnāt every product in the same boat?
UPI apps donāt compete with each other but with cash. Bisleri doesnāt compete with Aquafina but places with access to clean water.
Fundamentally itās 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 itās a replacement it will compete for itās share of time & money. If itās 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, itās sleep and social time. So it solves for āwatching togetherā & converts individual watching time into a social event. It shows up in how it promotes larger TV screen subscription or itās family sharing plan. Spotifyās 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.
Itās 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, thatās changing fast & thatās why the Merc CEO statement is validation towards that direction.
That was the Mercedes vs SIP breakdown āØ
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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 š
i love your insights! the only newsletter i read nowadays. its short & action-packed.