One unicorn’s trash may be another unicorn’s treasure.

Reports of talks emerged over the weekend between Paytm and Zomato, with the former looking to sell its movie ticketing and events business to the latter. 

• Both companies confirmed the deal talks

What does this deal mean for both parties? Let’s find out.

Paytm trying to get leaner: For Paytm, it's all about sharpening its focus. Its advertising and ticketing business has been a drag, with fewer clients and seasonal dips. 

• Ditching this distraction allows it to streamline operations and prioritise its core strengths: payments and financial services.

Founder Vijay Shekhar Sharma made it clear during the FY24 earnings call: “It is important to know that we are looking at our cost structures or the business line items so that we can prune our non-core assets and create a leaner organisation focused on profitability.”

• This includes cutting staff costs, becoming a distribution-only loan provider, and streamlining its insurance plans

Zomato beefs up "going-out": For Zomato, this is a strategic move to fuel its fastest-growing segment – "going-out" (though from a smaller base).

• Currently, "going-out" includes live events and restaurant table reservations

• Movie ticketing will add heft to the segment as a more high-frequency use-case

The segment’s sales crossed Rs 1,000 crore for the first time in the March quarter. It clocked a revenue of Rs 257 crore in FY24.

ICYMI

Key stories you might have missed

• Upgrad founder Ronnie Screwvala said the edtech sector will grow regardless of VC funding, and argued that another billion dollars in investment would negatively impact the industry. He said "solid companies are being built" right now and doesn't want to see the sector spoiled again. Upgrad itself has raised $600 million to date, according to data from Tracxn.

• Indian National Space Promotion and Authorisation Centre (IN-SPACe) has launched a pre-incubation entrepreneurship development programme, a pioneering initiative designed to support and nurture early-stage space startups. The pre-incubation entrepreneurship (PIE) programme will cultivate and empower the next generation of space tech innovators, providing them with the tools and guidance necessary to transform their space dreams into reality.
• Large language models, like Google Gemini and ChatGPT, can sometimes provide strange answers because they're trained on data that isn't always reliable, according to former IT minister Rajeev Chandrasekhar. He compared the situation to the programming saying "garbage in, garbage out," suggesting that scraping the internet for training data can lead to inaccurate outputs from these AI chatbots.
• The budget for the fiscal year 2024-25 is likely to be presented in Parliament during the latter half of July. Finance Minister Nirmala Sitharaman is expected to engage in pre-budget discussions with industry chambers around June 20, according to sources. Prior to the consultations with Sitharaman, industry sources mentioned a meeting with Revenue Secretary Sanjay Malhotra scheduled for June 18.

This is a short version of the MCTech3 newsletter. Sign up here to get the full edition in your inbox every evening on weekdays.