Video conferencing emerged as the solution to guarantee some semblance of business continuity during the global lockdown and Zoom grabbed the maximum eyeballs as the go-to platform. Small wonder that it was the most downloaded app on Play Store and App Store during April.
The company also faced challenges related to security and privacy as they were found to be sending user data to third parties and overstating end-to-end encryption claims. Rising incidents of “Zoombombing” by uninvited guests were also a major downer.
Despite these issues and its ban by some large enterprises in the United States, Zoom appears to be the chosen one in India. And the company knows how important this can be due to the sheer number of customers that it can garner.
Why India matters
Take the case of Facebook which boasts of the second largest customer base in India after its home territory. The same holds true for WhatsApp, which got the tag of the biggest instant messaging platform in the world thanks to its Indian audience. Even a recent entrant like TikTok is relying heavily on its Indian customers to give Facebook a challenge.
According to a report by Sensor Tower, Zoom became the most downloaded non-game application globally and India contributed 18.3% of its overall growth. And this happened despite the federal government calling out Zoom as being unsafe and issuing an advisory asking employees to refrain from using it.
So, what’s driving this growth?
For starters, the lockdown has resulted in enterprises, large and small, preferring Zoom as it requires no email or phone number to access. That Google Duo brought in a change to suit this requirement shows how effective Zoom became for first time users that also include online learning for students.
In fact, many of the new users aren’t aware that Zoom has existed in India much before it went viral. The company operates a data center each in Hyderabad and Mumbai besides a full-fledged office in the western metropolis. These two data centers are part of the 17 that the company operates across the world.
The company also had partnerships with Tata Communications and mobile operator Airtel in place. The former was created for managing the data center in Mumbai while the latter was used to enhance adoption of Zoom as a default video conferencing app for subscribers of Airtel.
The Indian connection
The India operations head Sameer Raje had waxed eloquent about how Zoom always wanted to grow as an Indian company. He spoke to wire agency IANS about the company’s plans to grow its employee base in the country and revealed that they were working with the federal and some state governments as well.
He said the immediate focus was to ensure that more and more people and businesses could stay connected and included the likes of hospitals, schools, financial institutions and even state-level administrative machinery as some of the customers who were using Zoom to keep business continuity going.
And what would be the future once the lockdown ends? The company is averse to speculating about it at this juncture but has in the recent past announced the availability of Zoom 5.0 that adds support for AES 256-bit GCM encryption to guard meeting data and prevent tampering of calls. The company has even put up a detailed White Paper on the encryption efforts on its website.
However, Abe Smith, head of International at Zoom Video Communications believes that video conferencing is here to stay even in the post lockdown world. While schools may go back to physical classrooms, enterprises may rethink the possibility of more remote workforce.
He was quoted in a report published in the Hindustan Times as saying that while the trends would be hard to tell, Zoom would make sure that it serves the requirements of customers and continuously enhance user experience and security.
Take a cue, Zoom’s Indian head Sameer Raje has even now listed out four simple steps to make calls secure on the video chat platform.
Tips to stay safe on Zoom
- Do not share your personal meeting IDs; and use only random system generated IDs for all meetings
- Create strong passwords and use a different one for each meeting. And frequently change passwords and do not have company names as password
- Be more conscious of social media and the information you share. Never put meeting ID or passwords on social media
- Use waiting rooms to block unwanted participants. The waiting room will be default with the Zoom 5.0 update
A report in the Indian Express quoted Raje as saying that Zoom had reached out to many schools to educate safety in the virtual world. “We are having online recorded training sessions and sharing these with school authorities and students,” he said.
Small wonder that Zoom continues to remain the number one video conferencing app in India. This despite the fact that the federal government had agreed to fund start-ups that can develop an indigenous equivalent to the popular app. And there is also a local product that came briefly into the limelight.
Paypal to allow users to buy, hold and sell four cryptocurrencies
“The shift to digital forms of currencies is inevitable, bringing with it clear advantages in terms of financial inclusion and access; efficiency, speed and resilience of the payments system; and the ability for governments to disburse funds to citizens quickly,” said Dan Schulman, president and CEO, PayPal.“Our global reach, digital payments expertise, two-sided network, and rigorous security and compliance controls provide us with the opportunity, and the responsibility, to help facilitate the understanding, redemption and interoperability of these new instruments of exchange. We are eager to work with central banks and regulators around the world to offer our support, and to meaningfully contribute to shaping the role that digital currencies will play in the future of global finance and commerce.”
This is great news for crypto but I’m told it shouldn’t have been entirely unexpected In June, there was a report that Paypal was working on direct crypto sales.
Nokia awarded contract to build 4G network on the moon
Nokia has been awarded a contract to establish a 4G network on the moon. The contract is one of several that NASA is awarding to companies as it plans a return to the moon.
The $14.1 million contract was given to Nokia’s US subsidiary and is a small part of the $370 million total awarded to companies such as SpaceX. The cellular service will allow astronauts, rovers, lunar landers, and habitats to communicate with one another according to Jim Reuter, the Associate Administrator for NASA’s Space.
The 4G network that Nokia will build will be miles superior to the form of communication that was used during the early missions to the moon.
This is not Nokia’s first attempt to launch an LTE network on the moon. It planned to do so in 2018 in collaboration with PTScientists, a German space firm, and Vodafone UK to launch an LTE network at the site of the Apollo 17 landing but the plan never came to fruition.
Stripe acquires Nigeria’s Paystack for $200M+ to expand into the African continent
When Stripe announced earlier this year that it had picked up another $600 million in funding, it said one big reason for the funding was to expand its API-based payments services into more geographies. Today the company is coming good on that plan in the form of some M&A.
Stripe is acquiring Paystack, a startup out of Lagos, Nigeria that, like Stripe, provides a quick way to integrate payments services into an online or offline transaction by way of an API. (We and others have referred to it in the past as “the Stripe of Africa.”)
Paystack currently has around 60,000 customers, including small businesses, larger corporates, fintechs, educational institutions and online betting companies, and the plan will be for it to continue operating independently, the companies said.
Terms of the deal are not being disclosed, but sources close to it confirm that it’s over $200 million. That makes this the biggest startup acquisition to date to come out of Nigeria, as well as Stripe’s biggest acquisition to date anywhere. (Sendwave, acquired by WorldRemit in a $500 million deal in August, is based out of Kenya.)
It’s also a notable shift in Stripe’s strategy as it continues to mature: Typically, it has only acquired smaller companies to expand its technology stack, rather than its global footprint.
The deal underscores two interesting points about Stripe, now valued at $36 billion and regularly tipped as an IPO candidate. (Note: It has never commented on those plans up to now.) First is how it is doubling down on geographic expansion: Even before this news, it had added 17 countries to its platform in the last 18 months, along with progressive feature expansion. And second is how Stripe is putting a bet on the emerging markets of Africa specifically in the future of its own growth.
“There is enormous opportunity,” said Patrick Collison, Stripe’s co-founder and CEO, in an interview with TechCrunch. “In absolute numbers, Africa may be smaller right now than other regions, but online commerce will grow about 30% every year. And even with wider global declines, online shoppers are growing twice as fast. Stripe thinks on a longer time horizon than others because we are an infrastructure company. We are thinking of what the world will look like in 2040-2050.”
For Paystack, the deal will give the company a lot more fuel (that is, investment) to build out further in Nigeria and expand to other markets, CEO Shola Akinlade said in an interview.
“Paystack was not for sale when Stripe approached us,” said Akinlade, who co-founded the company with Ezra Olubi (who is the CTO). “For us, it’s about the mission. I’m driven by the mission to accelerate payments on the continent, and I am convinced that Stripe will help us get there faster. It is a very natural move.”
Paystack had been on Stripe’s radar for some time prior to acquiring it. Like its U.S. counterpart, the Nigerian startup went through Y Combinator — that was in 2016, and it was actually the first-ever startup out of Nigeria to get into the world-famous incubator. Then, in 2018, Stripe led an $8 million funding round for Paystack, with others participating, including Visa and Tencent. (And for the record, Akinlade said that Visa and Tencent had not approached it for acquisition. Both have been regular investors in startups on the continent.)
In the last several years, Stripe has made a number of investments into startups building technology or businesses in areas where Stripe has yet to move. This year, those investments have included backing an investment in universal checkout service Fast, and backing the Philippines-based payment platform PayMongo.
Collison said that while acquiring Paystack after investing in it was a big move for the company, people also shouldn’t read too much into it in terms of Stripe’s bigger acquisition policy.
“When we invest in startups we’re not trying to tie them up with complicated strategic investments,” Collison said. “We try to understand the broader ecosystem, and keep our eyes pointed outwards and see where we can help.”
That is to say, there are no plans to acquire other regional companies or other operations simply to expand Stripe’s footprint, with the interest in Paystack being about how well they’d built the company, not just where they are located.
“A lot of companies have been, let’s say, heavily influenced by Stripe,” Collison said, raising his eyebrows a little. “But with Paystack, clearly they’ve put a lot of original thinking into how to do things better. There are some details of Stripe that we consider mistakes, but we can see that Paystack ‘gets it,’ it’s clear from the site and from the product sensibilities, and that has nothing to do with them being in Africa or African.”
Stripe, with its business firmly in the world of digital transactions, already has a strong line in the detection and prevention of fraud and other financial crimes. It has developed an extensive platform of fraud protection tools, but even with that, incidents can slip through the cracks. Just last month, Stripe was ordered to pay $120,000 in a case in Massachusetts after failing to protect users in a $15 million cryptocurrency scam.
Now, bringing on a business from Nigeria could give the company a different kind of risk exposure. Nigeria is the biggest economy in Africa, but it is also one of the more corrupt on the continent, according to research from Transparency International.
And related to that, it also has a very contentious approach to law and order. Nigeria has been embroiled in protests in the last week with demonstrators calling for the disbanding of the country’s Special Anti-Robbery Squad, after multiple accusations of brutality, including extrajudicial killings, extortion and torture. In fact, Stripe and Paystack postponed the original announcement in part because of the current situation in the country.
But while those troubles continue to be worked through (and hopefully eventually resolved, by way of government reform in response to demonstrators’ demands), Paystack’s acquisition is a notable foil to those themes. It points to how talented people in the region are identifying problems in the market and building technology to help fix them, as a way of improving how people can transact, and in turn, economic outcomes more generally.
The company got its start back when Akinlade, for fun (!) built a quick way of integrating a card transaction into a web page, and it was the simplicity of how it worked that spurred him and his co-founder to think of how to develop that into something others could use. That became the germination of the idea that eventually landed them at YC and in the scope of Stripe.
“We’re still very early in the Paystack payments ecosystem, which is super broken,” said Akinlade. The company today provides a payments API, and it makes revenue every time a transaction is made using it. He wouldn’t talk about what else is on Paystack’s radar, but when you consider Stripe’s own product trajectory as a template, there is a wide range of accounting, fraud, card, cash advance and other services to meet business needs that could be built around that to expand the business. “Most of what we will be building in Africa has not been built yet.”
Last month, at Disrupt, we interviewed another successful entrepreneur in the country, Tunde Kehinde, who wisely noted that more exits of promising startups — either by going public or getting acquired — will help lift up the whole ecosystem. In that regard, Stripe’s move is a vote of confidence not just for the potential of the region, but for those putting in the efforts to build tech and continue improving outcomes for everyone.
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