I had recently done a poll where I asked people if they had ever used MagicPin, or know someone who does.
I wanted to check if my circle is especially ignorant about MagicPin. This company (customer facing) has raised over $100 Million over the course of 7 years. Their app has over 10 Million+ downloads on Android alone. How come I've not seen a single person ever use it? Am I on Mars?
Turns out, I'm not. Over 210 people participated in the poll on Linkedin & Twitter, and out of them, over 82.5% said "No". They admitted of firstly having never used Magicpin, and then also not knowing anyone who does. This is strange. Magicpin had ads on TV with Vijay Raaz recently. And a good 82% doesn't even know anyone who uses it? Okay.
MagicPin is in the offline rewards business. People, if making transactions via the app get future discounts, while the company gets commissions from the retailer. Other companies in this game were folks like Nearbuy, Crownit, etc. None of them are thriving any more. This business model never "worked", so to speak.
The on-ground promotional drives for Magicpin had hard working Feet-on-street folks placed right outside malls/markets, convincing people to kindly upload the pictures of their bills on the app, so they can get future discounts. Some nice people gave in, but never used the app again. The FOS then essentially stayed on the toes, ready to catch new folks (and also remind the old) to use the app on a transaction they were already going to make. This is very much like Real Estate Agents catching customers who are already in the DLF compound (ready to buy); just so they can earn a commission.
There's no semblance of any organic virality here. No word of mouth. No "Product Market Fit". No nothing. It's just staying on course with something that's clearly not showing anything except spouting off a vanity metric like GMV. As if an affiliate marketing company has any role to play in it.
The financials are also not too bright. As of FY 21, the company has made a net loss of over INR 240 Crores ($30 Million) on a total revenue of INR 440 Crores ($54 Million). Over the period of 7 years. This is like selling a INR 50 note for INR 20, and even then 82% people not knowing about you.
Now comes the learning. Despite everything I've told you, MagicPin has managed to raise $100 Million. That's INR 800 Crores. Out of this, over $40 Million has come from Lightspeed India, $50 Million from Zomato, and rest from others. Now people from Lightspeed India are well known for tweeting gyaan about PMF, GTM, Churn, Burn, TAM, SAM, SOM, OM Namah Shivaay, amongst other things. Yet they did this?
The answer lies in relationships. A co-founder of Magicpin is Ex Lightspeed. They put in the first buck before the co. even got its foot out of the door, and then repeatedly pitched in before Zomato finally entered the scene. Interestingly, all co-founders also worked at Bain at the same time as Deepinder Goyal.
Relationships. Never forget that.
Annexure: But your circle is not their TG!
In response to my last post on Magicpin - a $150 Million discount deals company having raised $100 Million (but not used by anyone I know) - a tiny but vocal minority raised a concern:
My Ln/Tw network isn't apt for judging Magicpin's scene. I should survey GenZs instead. They're the real TG.
Following their advise, we did a fresh poll, this time restricted to 17-23 year olds from NCR. And out of 200 people:
1. About 60% said they had never used Magicpin, and didn't know anyone who does
2. 25% said they'd never used it, but know someone who does, and
3. 15% said that they had used Magicpin themselves
This time, we went a step further and talked to folks #3. We asked if they still used Magicpin and how was it. Guess how many people said Yes? ZERO.
Freaking ZILCH! All our people who had used Magicpin at some point had bailed out. NONE were using it anymore. They said they used it 2-3 times a while ago, but didn't stick for different reasons. One guy said he still used it and wasn't happy, but it was later found that he was talking about MagicBricks.
This was a bit surprising, even for me. This company has managed to raise $100 Million. It got funded at the idea stage and has been working for 7 years. This is its state amongst the youth in NCR? It seems like the only "network effects" working for it are in the VC circuit, which is great news! Because the last $60 Million was raised only a year ago. They can probably make a fresh start. Best wishes!
Moving on, a good question is why I'm talking about Magicpin in the first place. What incentive do I have? I have better things to do than sharing research on random companies, then what is all this all about?
Bottom line: I care for entrepreneurs. I've seen entrepreneurs without pedigree (or connections) start from scratch, building products, working on marketing, and rubbing their ass against a million sandpapers. Only to hear some vague version of "You're too early", or "This doesn't align with our thesis" from a VC, who they later find has put money on something like MagicPin. An average VC, who most likely doesn't have any real entrepreneurial experience whatsoever, doesn't even bother to download your app so he can atleast have a sincere conversation. Yet he doesn't shy away from sharing totally unrelated gyaan about how you need to reach that "critical mass".
I tell this to entrepreneurs who seek my mentorship, and I'd write this here as well: Do not get discouraged if you're not getting love from the VC community. Getting funded isn't indicative of a good business model, and conversely, not getting funded isn't indicative of anything wrong. Funding decisions are extremely subjective and network driven, and if your product isn't getting it, it's not the product alone. It's you. And your relationships (or the lack of them).
P.S. I wish you great success built on the back of beautiful products and deep relationships. If you're an underdog, I'm rooting for you. Godspeed.
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