Food delivery is not a glamorous business, it’s about doing things right, every day. Bengaluru-based food tech firm Swiggy has done just that. After raising $1.25 billion in funding in July in a round led by SoftBank, the seven-year-old firm plans to double down on its core business of food delivery, grow inorganically, and invest aggressively in newer businesses. Over the past year, Swiggy has diversified into pick-up-and-drop service, Swiggy Genie, and the e-grocery delivery segment with its Instamart offering. It also operates a subscription-based grocery delivery service, SuprDaily. Founded by Sriharsha Majety, Nandan Reddy and Rahul Jaimini (who left the company last year), Swiggy began operations in Bengaluru’s upscale neighbourhood of Koramangala with around six delivery executives and 25 restaurants on its platform. Today, it connects Indian consumers to over 1,50,000 restaurant partners and stores across 500 cities.
Sriharsha Majety: We are three cofounders — Nandan, Rahul and me. Nandan and I were working together before Swiggy, and Rahul joined us just in time for the Swiggy launch. When I came back from the U.K., I didn’t have a specific plan. I dabbled with a bunch of ideas that were going nowhere. That’s when I started talking to Nandan, who was exiting a start-up that he had done at that time. It happened to be his second start-up. We started jamming about opportunities in e-commerce. We kind of naively agreed that consumer commerce was already a taken opportunity because Amazon, Flipkart, etc were really very big.
We thought we would build a shovel for the gold rush. Logistics was a nice shovel and we kind of sketched out that idea and that became Bundl. We tried to help small-and-medium e-commerce sellers with logistics. We dabbled with that idea for about 10-11 months, before deciding to shut that down. That was probably the best decision we made over the last 10 years.
Since we were in the logistics space we started thinking about other ideas as well. We got excited about urban logistics, the formative nature of Swiggy. It didn’t start by saying food delivery was broken, let’s fix it. It was let’s build an ultra-efficient urban logistics solution and see if we can build anything on top of it.
We started on a very small scale in Koramangala (Bengaluru) with just 15-20 restaurants and five-six delivery partners. We picked only the good restaurants that didn’t deliver or had a problem with delivery. We went ahead and partnered with some and in cases where they didn’t want to partner, we just bought their food, took photos at home and listed them. For some of these guys we weren’t even charging a commission. Until April 2015, or eight-nine months of starting, we didn’t have any mobile app, it was just a website.
In the beginning, we would go out to Jyoti Nivas College road (in Koramangala, Bengaluru) — a peak restaurant area — and give pamphlets to people visiting the restaurants. It was a bit weird and it didn’t take-off too much. Luckily I had a friend in Flipkart… I requested a bunch of companies in Koramangala through connections to see if they can spread the word and put it in their internal email list. On day three, this friend put out an e-mail on an internal group in Flipkart, where people share stuff, and suddenly we had 35 people looking at our website. We were like WOW, this is big! After that some of them became repeat users and helped spread the word. Once restaurants realised we were doing a decent job in service and they were losing out this business otherwise, they started asking us for hundreds of pamphlets, and pushed it hard to their customers. That kind of drove the flywheel somehow.
Make Or Break Moment
Once we decided we were going to build an urban logistics platform —Bundl was a B2B business and we weren’t excited about B2B — it had to be consumer. And in consumer, with hyper local/super-fast delivery there were a few obvious candidates that stood out at the time — food, grocery, pharmacy. At the time Nandan and I were living the bachelor life and the problem that we faced most acutely was getting food delivered from our favourite restaurant. There were multiple issues, including the fact that a lot of restaurants didn’t have a delivery fleet. A completely different world from the one that we live in today. The one’s who could deliver would ask for a minimum order of ₹500. Even if we got past these two hoops, the delivery quality was super patchy. We couldn’t understand why life was so hard when Dominos had cracked it all. We peeled the onion and found out that it was a relatively easy problem to solve.
The Business Model
There was no way to tell it was working from day one. Today, with the wisdom we have, we may look for consumer metrics or something else. Back then, the same person ordering two-three times a week was a sign that it was working. We didn’t know it meant strong retention, but we could tell that a few dozen people were eating out of our hands.
That was very compelling for us. We heard no bad feedback from consumers and restaurants and both seemed to enjoy it. And we figured that this might be it.
For us, customer service has been really, really important. That’s who we are. It’s something that we believed in on day one and did well to hold on to through the years. With scaling comes major hiccups and then we had to puff and pant, rein it in, and get it back on track again.
Swiggy has rapidly grown from a food delivery service, catering to a small neighbourhood in Bengaluru, to a nationwide ‘convenience-as-aservice’ provider. But the journey was no walk in the park. We encountered several, diverse technical challenges, and along the way developed best practices and solutions.
We managed to get very kick-ass core team members, a lot of whom continue to work with us even today. They were all thrown into the deep end as generalists to pick up each fire and chip away at it systematically. I think we managed to do really well in hiring the first core team, and that is the most critical part of our whole story. The story would have just crumbled if it didn’t happen. What I would say I did well was let people do their job. It’s hard to let go when you are still young and trying to hold it by hand.
It is very exciting to have gotten the interest that we did as part of this round ($1.25 billion in July) and have marquee investors such as SoftBank. My pitch was about the company we were building, the opportunities we were going after. In terms of the company’s mission, categories we are going after, in terms of what Swiggy can do for consumers with the capabilities we have built and the stickiness we have.
We had strong interest from internal investors such as Prosus as well. For us, it is a validation of the work we have been doing in food delivery and the huge opportunity that exists for Swiggy to go after over the next 10-15 years as we build on the beginnings we have made on convenience.
We will allocate a good part of our fundraising to the merger & acquisition (M&A) strategy. There are a lot of exciting companies getting built and we want to dig in and see how we can partner together to drive stronger growth. We are a young company. We have our own strategy and investment plans. We want to do justice to them. Are we thinking about an initial public offering (IPO)? Yes, but there are no clear actionables at this point.
[From Swiggy founder Sriharsha Majety’s podcast with Accel Partners, Swiggy’s blog posts and other sources.]