Solving for Pie
Separating Pizza from Cheese, Ethereum Proof of Stake, and 10-minute Zomato Deliveries 🍕🧀⌛️
Did you know what the earliest definition of a ‘foodie’ is? It comes from an anonymous article in 1982 which said - "Foodies are foodists. They dislike and despise all non-foodies". Pretty spot on. Why this random trivia you ask? Well, there’s a lot of food in news this week. And we’re sure you’ll enjoy it if you identify as a foodie. Don’t believe us? Proof’s in the pudding. Bon Appetite ⬇️
Who moved my Cheese?
Say Cheese!
Heartbroken? Eat some Pizza. Fired from a job? Pizza. Have a party but don’t want to cook? Pizzas. Everyone agrees that the cheesy, carb-y goodness is one of the better things in life.
But this isn’t an ode to Pizzas (yet), so let’s backtrack a little.
A Haryana based company, Khera Trading Company, sells Pizza topping by the name Goodrich. You know, the kind that you dunk on top of a pizza base, before putting it in the oven and calling it dinner. It’s basically shredded cheese in a packet. In which case it makes sense to tax it at 12%, like all other cheeses, right? Well, the Haryana court doesn't think so. Their argument is that Goodrich has more vegetable oil (22%) than Mozzarella cheese (14.5%), and as such should be taxed as an ‘edible preparation’ at 18%.
This ruling was passed despite Goodrich passing the common parlance test - i.e what do consumers see this product as? Short answer - they see it as cheese.
Orega-NO!
Ever heard your mother say ‘I could’ve made this at home’ while dining outside? Well, this ruling of taxing the Pizza toppings separately from the Pizza, will give you a strong argument against her (at least while eating Pizzas).
If you order a Pizza at a restaurant you would have to pay 5% GST. If you get it delivered, you’d have to pay 18% GST because deliveries are treated as a service. If one fine day, at the stroke of the midnight hour, you decide to cook yourself, you'll pay 12% GST on the base, 18% GST on the topping, and if you’re a meat-eater, 12% GST on sausages. Eat that.
Although the current Goodrich ruling has more to do with the % of vegetable oil in the cheese, confusing tax regulations are not new. For instance, flavoured Lassi is not taxed at all, just like normal Lassi. But flavoured milk is taxed at 12%, as opposed to milk that is not taxed at all. Even ice cream is taxed differently based on whether you eat it at a restaurant (taxed as service - higher) or an ice cream parlour ( taxed as a good - lower).
Mad Tax - Fury Road
GST was pitched as an idea of one country one tax i.e no separate central and states tax. Among many things, this was supposed to simplify the complicated indirect tax regime. But clearly, even GST has a long way to go in terms of simplification. One reason for the complexity is that - when GST was being implemented, a few states’ rigid tax regimes and collection infrastructure were simply absorbed into the GST system, instead of being changed. To add to this, today, there’s growing mistrust between the centre and state governments when sitting for the GST council.
All this, and a lot more, calls for a GST reform to bring some order to this chaos.
Need for Speed
Draw me like one of your French Fries
Everyone's obsessed with speed. If you have ever felt the urge to break the TV with your bare hands, while Netflix buffers at 99%, you’d know it’s the truth. So, Zomato’s founder, Deepinder Goyal decided to leverage this. He recently announced that Zomato will do 10-minute deliveries soon via Zomato instant.
Imagine that, no more soggy french fries.
Although it is a mouth-watering proposition, what’s divided people is the fact that the company might be putting at risk the lives of the delivery personnel by putting such a time target. What’s more interesting is that Zomato is offering to lower their prices by at least 50% with this scheme. This comes at a time when they aren’t able to breakeven even with their existing prices. So, why this decision?
Need v/s Want
The food delivery business in India is a duopoly right now - i.e it has only 2 major players, Zomato and Swiggy. And are both constantly trying to stay ahead of each other. Swiggy’s Instmart was promptly met by Zomato’s acquisition of Blinkit, lest they fall behind in the instant groceries deliveries space.
While there was a demand for instant groceries, no one ever asked for 10-minute food deliveries. So why venture into this space?
Well, it’s true that Zomato and Swiggy compete with each other, but they also they are also constantly trying to make the food delivery space more difficult to enter into. In other words, they are eliminating any competition that could crop up and say they can deliver food in 10-mins.
Also, while there is currently no demand for 10-minute food delivery, would you really refuse food that comes to your doorstep within the time it takes you to set the table?
Road ahead
While restaurants chains like Dominos have successfully tried the 30-min delivery service promise, doing this across restaurants and within 10-mins seems like a mammoth task.
Although their plan of action hasn’t been revealed yet, it’s likely that they would build cloud kitchens in areas with high demand - similar to the dark stores for grocery deliveries.
Technology is also going to play a big part since Zomato recently invested $5 million in Mukunda Foods a food robotic company, that essentially designs and manufactures smart robotic equipment to automate food preparation for restaurants.
They’re also likely to have a different menu for 10-min deliveries, with hot favourites like Biriyanis and Momos. Most importantly though, Zomato has stated that the delivery partners will not be pressurised to meet the deadlines. Here’s hoping!
All Sizzle, All Stake
Ford Vs Toyota
It was probably a great feeling for the boomers to own a vintage Dodge Viper or a Ford Mustang back in the day. Both are timeless cars that have made a lasting impact on pop culture. But glitz and glamour was perhaps the only thing that they were able to achieve.
Not surprisingly, the car you see most often on the road today is a Toyota or a Maruti. Not so cool perhaps, but built for scale. These cars have made a lasting positive impact on our lives.
Cryptocurrencies have been going through a similar evolution over the last few years.
Crypto’s Kryptonite?
We’ve all heard the doomsday forecast for cryptocurrencies because they simply aren’t good for the environment. It’s a fair accusation, after all, just this year the Ethereum network spent $12.7 billion in fees to validate transactions.
And for all the NFT hype, it’s funny that sometimes the “gas” burned to buy an NFT can be more than the purchase price of the NFT itself. No person thinking rationally would make that transaction. But then again, this isn’t the 90s and nor is this the auto industry, so there is already a highly competitive race to solve this problem. Alternate networks such as Solana, Cardano, Avalanche have successfully and significantly lowered the cost of transactions. They do this by approaching the consensus mechanisms differently throughout something called “Proof of Stake”.
But, Ethereum, which is the 2nd largest token by market cap, had fallen behind in this race. You might ask, why then is Ethereum still the 2nd largest token? Aren't there better alternatives already?
Loyalty Points
The reason people don’t move out of Ethereum is the same reason why you won’t move out of LinkedIn to any XYZ social network. You’d lose your network effects. Ethereum has built a strong MOAT, as some of the best projects and technologies are being built on the Ethereum ecosystem. So these folks would rather wait for the network to evolve rather than switch to some new smaller network and waste all their time and effort. Finally, it looks like their hopes will soon be a reality.
The demo of the Ethereum Kiln test net, which is a testing environment for the new Proof of Stake version was a huge success. It is now more likely that the targeted date of mid-2022 will be a reality. This will help Ethereum achieve a much wider adoption (and it already is HUGE).
Contrary to popular belief, Ethereum and other cryptocurrencies do have a strong cash flow i.e. the fees collected for transactions. When live, this upgrade will help ETH achieve stronger cash flows and unlock value for the network.