It was an idea born at the peak of the global financial crisis, but Deepinder Goyal stuck to it and served it hot with Zomato, which evolved from a mere menu + reviews platform to a full-stack food aggregator-cum-delivery company. With revenues of ₹1,994 crore in FY21, Zomato commands over 45% share of the food delivery market, and is now looking to make inroads into wholesale procurement business as well. At $14 billion, it dwarfs the very industry that it caters to many times over. The litmus test will be how the company navigates the future beyond food delivery.
Back in 2005, fresh out of IIT and long before Foodiebay (now Zomato) was born, I started working on a food delivery start-up with a few friends. We worked tirelessly to make the start-up click. It didn’t. We realised it was too early for such a service in India. In 2008, when I gave the idea another shot (this time, without food delivery, but with scanned menus and phone numbers), we ended up creating a product that thousands of other people loved. A year later, I quit my job at Bain & Company to do this full time. As we expanded our service within India, over time, we had customers calling restaurants through us even over 200,000 times every day. On top of this menu + reviews platform that we built, we introduced food delivery in 2015, which is now the largest part of our business.
I would not call anything during our early days a “struggle”. I have fun building things and solving complex problems — I usually derive a tonne of joy from my work. Having said that, when we started out, we used to work out of my apartment’s living room and manage our household expenses within ₹40,000 per month.
I remember that life of minimalism with a lot of fondness. I would happily go back there again in a heartbeat. It took almost two years for our team to move into something that resembled an office. We also changed our name from Foodiebay to Zomato. Along the way, we were able to convince some people about the method behind the madness, and were able to build an enviable team. Info Edge also invested in us, and allowed us the freedom to grow from a few cities to 10 and even look beyond India. They allowed us to dream of a Zomato that was there for our customers at all times.
Make Or Break Moment
The whole journey over the last 13 years has had several make or break moments. In the now, sometimes, even little things look like make or break moments. In hindsight, however, there are very few of them — most good stuff happens not because of a single decision; it happens because of focused execution over months and years.
The Business Model
While we started off as a search and discovery platform, we believe we have evolved with the needs of our customers, restaurants and delivery partners. Our business is built around the core idea that over time, people in India will dine more at restaurants, and cook less. We provide restaurant partners with specific marketing tools which enable them to engage and acquire customers, besides a reliable and efficient last-mile delivery service. We currently monetise our dining-out offering through advertisement sales, through which restaurant partners pay us for enhanced visibility on our platform. We also operate a one-stop procurement solution, Hyperpure, which supplies high-quality ingredients and kitchen products to restaurant partners. We started Hyperpure in 2019 and are growing rapidly — supplying to over 6,000 restaurant partners across six cities.
It was building for scale — we started with few orders a day. We were super conscious of the experience we were providing to customers. It took us a few years and lots of learning, but this year we did 4,254 orders a minute! Servicing these many orders, especially with the strain they create in our system, was overwhelming to say the least. The tech that goes into making all of this possible is phenomenal. On top of that, recreating the seamless online order journey offline with precision for each of these 4,254 orders (there were some misses, of course), which were being shipped each minute — with the support of our restaurant and delivery partners — is incredible.
They say it takes a village to raise a child, and we are no exception. Hundreds of people have selflessly played a part in making Zomato what it is today. In a growing start-up — as in any start-up — titles and job descriptions exist only to communicate what you are on the hook for. I remember a publication reached out to us around the time of our IPO, to make sense of the organisation structure at Zomato — who reports to whom. I didn’t know how to answer that question. About 500 people at Zomato don’t know who they report to. But we still produce outcomes. We are a bit of an anti-org. We don’t have bonuses. We don’t believe in “if then” reward systems, and we have made our people believe in the fairness with which we run a “now, that” reward system. For me every Zoman is an individual and in turn a collective contributor. I feel when you report to someone who checks in on you a couple of times a week, there is always a security blanket on top of your work, because you know someone more senior and experienced (and likely better at the job than you) will look at your work before it gets “shipped”. That thin, invisible security blanket is the root cause of any lack of accountability that creeps into people. We have built a culture that stands strong on the foundation of ownership. Each one of us is equally responsible to ensure that our part of the engine keeps running and doesn’t bring the ship down.
There’s a popular saying that “the colour of money is green”. I never really understood it, but I think it means that all investors are the same. I disagree. We have always had investors who passed the “beer test” for us. We have always picked investors who liked us as people (and vice versa). I always think about a fair deal that keeps both parties’ interests in mind. Sometimes investors who are used to negotiating fail to see the fairness in a deal. Sometimes they ask for a lot of data that we don’t look at during the normal course of business. At times it got to a point where you had to say: “We really don’t have the time. We have a business to run, and this is what we have. Now it’s up to you to make a decision on whether you want to invest in us or not.” Investors should want to work with you for more than just returns on their invested capital. Only when every investor’s interest is aligned to the team’s interest, can you build enduring companies which stand the test of time.
Marketing & Sales lessons
Create a great product, and marketing will take care of itself. For instance, Alex Ferguson, who managed Manchester United from 1986 to 2013, lists in his book, Leading, three of the most underrated, but most important things you can do — listening, watching and reading. Learn to be observant, listen intently, and soak up everything — doing this does not cost anything. Big companies that have been around for a while do things in a certain way for some very solid reasons. Understand what they do, change or discard what doesn’t fit your organisation’s DNA, and implement what makes sense.
When Did You Think You Had Arrived?
The thought has never crossed my mind. I think I am okay at keeping such “ego boosting” thoughts away from myself because I am sure they will only produce bad outcomes for me and everybody around me. In other words, I’d never want to ‘arrive’ — I just want to be.
Riding Through Toughest Times
We have lived through many ups and downs through the way — something not every company has the privilege of living long enough to do. The most recent and tough time for all of us has been the pandemic. The entire Zomato ecosystem, however, rose to the occasion. Our delivery partners bravely took on the responsibility of supplying essentials and food to people’s doorstep as frontline workers. At times, achieving success also involves taking hard calls — about your business, and your people. It’s easier said than done, but if you know it’s the right thing to do, bite the bullet and do what needs to be done. Even if it means hurting your short-term targets (like revenue or traffic), you should never hesitate to hit the reset button and start afresh with the right folks. And if you are doing that, remember — tough times don’t last, tough people do.
Back in 2015, only 40% restaurants did home delivery. We want to take that number up to 90% — there’s still a long way to go before we can actually say we have changed the way India eats.
Covid-19 has accelerated the growth of food delivery in India. We have street vendors, dhabas, home kitchens, five-star restaurants signing up with us to help them with the last-mile delivery and reach more customers. We have always looked forward to milestones that pave the way for greater success, visions that are larger than life and an organisation that builds a better future for generations to come. The next level is to live up to that future by building a sustainable enterprise, which is as much climate conscious as it is successful.