Deepinder Goyal Curated
Founder and CEO, Zomato
CURATED BY :
How do you think restaurants have changed in the last ten years with the presence of Zomato?
What is the next move of Zomato in terms of prioritising hygiene?
Is the Indian restaurant industry at par with the Global market yet?
Why do you think you get a large volume of order from the smaller cities?
How do you think Zomato is changing the world?
If you have to look back at your journey so far, where are you on the highway of entrepreneurship right now?
We know where we are going, what we want to build, we know what we have to do, and how to do those things. We now know very well that money alone doesn’t build great companies. In fact, great companies are better built without a lot of money. We have the right people in the team. Although, after the last two years, and getting so close to profitability, we just feel like that we have just gotten out of school. While deeply realising that education is a lifelong journey, and we need to keep our heads down and execute - and learn.
What made you start Zomato?
Tell us the story of how you started out. What are the challenges that you faced along the way?
What got Zomato to expand beyond the Indian boundaries?
Why was it necessary for you to quit from Bain & Company?
What are the steps taken to ensure that customers get hygienic food while ordering through Zomato?
What are your perceptions of the coming future as to whether restaurants will be given more preference over homemade food?
How challenging was it to run your business through the internet 10 years ago? How did you overcome the obstacles you faced?
How would you motivate the upcoming entrepreneurs who have started to work or are working to build their own food delivery platform?
When was the biggest change in your company’s performance and what decisions have you taken to ensure positive growth for your company?
Is your business capital intensive? Tell us about your experience entering the highly competitive foreign market.
How was your conversation with your closest competitor in New Zealand and how did you acquire his company?
Tell us something about your business operation in New Zealand. How did you position Zomato in a new foreign market?
Culture is something which is not the same in every geographical region in the world. What tactics have you utilized to cope with this important challenge?
What changes are you going to make on your Zomato platform making it more user friendly for customers while using it?
What is your perspective on the US Market?
How is Zomato’s revenue generated?
Are you feeling threathened that one day foodpanda or Swiggy might overcome your business turnover in terms of sales, customer retention and investor funding?
To gain funding from investors, how do you sell your vision to them?
There has been a word from you that there is problem in the food sector in terms of the business model. What steps would you take to make a correction out of it?
How do you find solution to problems when fake reviews come up at the Zomato site?
With India being a large market in terms of population, why haven’t you targeted the Chinese market yet?
Why do you think Zomato hasn’t been of much importance to the tourism sector?
Recommendation of dishes/restaurant in a food app is very important which is not present in the Zomato app than that of Swiggy, why?
There have been many ways to generate revenues. Why is it that you have been sticking to banner ads only?
There are newer ways to earn more profit like billboards, royalty programming, sponsorship program. Still why not utilised those methods of marketing or promotion of Zomato?
Distractions are almost everywhere in the office space. How do you avoid such disturbances when you work?
Do you like following a daily regular routine?
Do you feel that following your mentor has changed your life?
What makes Zomato different from other platforms like Foodpanda?
What made you feel that reviews from customers are important to your company?
Was the internet business an easy start for you or a tough one?
In your opinion, how will startups increase in the times ahead?
Tell us how you have maintained a healthy relationship with your investors.
With your 3 millionth mark of orders in a month, what are the challenges you still face to cover up those gap to make them your sales?
We are where we are, but there is a lot more to do. The three million mark means we did something right. I feel we have just gotten around to understand what matters and what doesn’t matter in this business. Now the chase is to make more things happen. The real challenge is that most of the meals are had at home, and restaurants have never been able to replace home-cooked meals. There’s always this perception that homemade food is better than food from outside. I agree, some part of it is true, but then affordability of cooking at home versus eating out is very different. An average household would spend about Rs 10,000 on groceries for a family of four every month. That comes down to about Rs 300-400 a day for four people for all meals. How can the restaurant industry in its current form, or some new shape, capture that? We need to find a solution to be able to deliver a nutrition rich, hygienic meal for under Rs 50 - that’s what will get us to feed a billion people in a day. Now, that’s a very hard problem to solve - we don’t have all the answers, but we have some ideas. What I am saying is - 3 million a month is a small number compared to a billion meals a day. So while we are happy that we are here, we are very focused on what needs to be done.
But don’t you think that this is something unsolvable as people will complain about the food qualities or delivery services?
Everything is solvable. You have to put your mind to it and solve it. We are searching for the right answers.
Taking consideration about the investment in your Zomato platform, is it real for not being able to raise funds due to tersm which was difficult to negotiate with?Taking consideration about the investment in your Zomato platform, is it real for not being able to raise funds due to terms which was difficult to negotiate with?
Yes, and no. We were in the market a few months ago for a brief period of time - our burn rate was low, and we didn’t really need the money for 'survival' like most other companies. We didn’t get the terms we were looking for, so we didn’t raise.
What are your considerations on a business which earns alot of profit?
I think it’s about what your business actually deserves. If you are not getting that, you should not raise funds for a while. If you are getting more than what your business deserves, you can land up in trouble.
Was it very tough for you as the chairman to write a letter to your sales team about their salary payment?
A lot of things which are right are hard. That email was taken out of context, and very negatively, by a lot of people. But six founders wrote back to me saying this was the best email to a sales team they had ever seen. One of them told me that he had taken a printout of the email, framed it, and put it behind his desk. Email is my preferred mode of communication to the entire organization. I write better than I speak. The only downside is that emails are way easier to leak than town hall videos.
Initially Zomato wasn’t able to earn profit in it’s operation than that of today being able to cover up the break even point and so being close to earn profit. What tactics have you applied to earn profit from then onward?
I think the biggest change was that we stopped spending mindlessly, not just on advertising, but everywhere. Costs flattened out and eventually came down. Also, our revenue kept going up. Our revenue per month right now is almost four times as what it was two years ago. If you have a lot of money in the bank, your answers to problems always revolve around money. You think of the easiest answers, which generally involve spending. Another way to approach all problems is to not have money as part of the solution. More often than not, you are able to find an answer. Our bank balance has been constant for the last nine months, because of the cash flow - we have focused on advanced cash collections as much as mindful spending, and focus on revenue.
Was it also because of quick expansion in abroad markets that your revenues could not be met up?
hat was two years ago and at the time, we were launching in a lot of new countries. Every two months, there was a country launch, and that added to a lot of fixed costs, payroll costs, rental costs, etc. And when the market turned, we could not sustain in the new markets that we had just launched in. We had to lay off the teams in most of the countries we launched in during 2015, i.e., a total of six countries. So the layoffs and other changes were all in the new markets - mainly North America and Europe. There was no change in India and UAE. Actually, for about a month when we laid off people, nobody said anything and food tech was going great until TinyOwl imploded. And then food tech was in trouble, and we got dragged into it. Until that time, the Indian media did not care that we had to lay off some employees in the opposite side of the world.
So does that mean when TinyOwl has imploded on your business work, your company started to have negative impression upon the customer about your organisation?
I don’t know. I have no idea. When the narrative around us started going bad, we just shut ourselves from all the noise and focused on our work. Also, of course, I am biased, but I think there’s a big perception-reality gap around Zomato. We are very often compared to Yelp, whereas I think that we are two very different businesses, run very differently, much better margins, and with a very different revenue mix dominated by transactions. I think our reality is way better than what people think about Zomato. But anyway, we are not here to win a popularity contest - the numbers speak for themselves, and we will make them even better.
Now that you have been able to get the break even point for your business and now targeting to achoeve more profit through diversified abroad markets, are you now looking to target more in other countries?
The global expansion did not fail, it just ran out of steam. Right now, we have 13 countries where we are doing really well and I can also claim that we are the largest food and restaurant search platform in the world. We need to monetize better in a lot of countries we are in, but that’s a second order problem. The rationale behind why we expanded into so many countries was the belief that we can become market leaders in traffic quickly - we have a playbook and it works. Back then, however, our financial processes were weak. What could have been achieved in a single dollar, used to cost us four dollars. Now, we have reasonably good financial checks in place to not let any of these things happen to us again.
India has been your base market with the HQ over here. And Where else you take it as your home other than India?
And UAE. We call both of them home. The competition had also increased in both of these markets.
So looking at the increase in competition, do you think Swiggy or Food Panda are your biggest rival in these two locations especially?
Not just them. That’s just the food ordering space. There are other players in other spaces as well - table reservations for example. After the competition intensified, we doubled down on our home markets - because no matter how many countries you are in, you just cannot lose the home.
With so much of work and disturbance in your office, have you ever lost the grip of focusing more in your work especially for the Indian Market?
I think we may have for three to four years because we had an absolute monopoly. During that time, we did not push the envelope when it came to services and launching new products. We were waiting for the market to grow, and our sole focus was to add more countries to gain traffic leadership in, rather than get depth in the markets we were already market leaders in.
How supportive have your investors been to the Zomato operations?
I think they have been very supportive. I have nothing to complain about - the people or the environment. Generally, I would say that they are very helpful, proactive and trustworthy. Our investors invariably bring new perspectives, which are different from mine. So, we treat them as advisors, and not as bosses. A lot of other founders I know treat their investors as bosses, not advisors or allies – and that leads to a very unhealthy relationship between founders and investors. For example, Mohit Bhatnagar of Sequoia is one of the nicest people in the investor community in India. We exchange a good number of WhatsApp messages every day on various topics. He’s straightforward, candid and a very genuine person. Overall, I have been lucky to have a great support system - during all the good as well as the bad times. During difficult days, I go to Ireena Vittal to clear my head. And of course, Sanjeev Bikhchandani is always there for us whenever we need him.
So, with your business touching the profitability path after earning the break even point, are you sure that now the steps taken for the next six months will more profitability happen?
It's not necessary that it will happen. It's our choice. About 20 percent of our cost is being focussed on new areas – experiments – we are in investment mode. We can cut down those experiments on new things and can be 20 percent positive on EBITDA today. The countries that we have shut down our offices in, in some of them we had signed a lease. There is some cost involved as there is still rental on these offices. So next year, a lot of these junk costs will get cleared too. So technically, the business is already making a decent amount of profit margin.
You have lost certain very important market in the Indian economy itself. Why is it so that you couldn’t focus more on these places?
In food delivery, there is a big first mover advantage if you have a good service. And we initially lost Hyderabad and Bangalore because of that. Everywhere else, we are better and we are winning. The other thing is that we have been here for nine years, we have 7,500 restaurants across the country that are exclusively only on Zomato. That’s 7,500 out of 25,000 restaurants which are available on Zomato Order. We don’t put in any kind of special efforts on this exclusivity. Building trust with merchants is a very long and hard process. And we have built that trust over time; we do not treat merchants as vendors but as partners. We have very few exclusive restaurants in Bangalore because the competition was already bigger there. The same goes for Hyderabad. In Delhi and Mumbai though, most good restaurants are exclusive to us. Every restaurant four plus rated on the app is only on Zomato. Anyway, I am excited about everything we are building around Zomato Order. Wait and watch. As I said, India and UAE are home, and we will do everything we can to protect and win home.
Will you still accept that Zomato is having the best in-class food ordering and delivering services in the country?
In some aspects of the product, I must admit that in the last couple of years, the quality has slipped. But I am spending 95 percent of my time on the product now - I am very excited about the work that we have put in over the last few weeks and months. A lot of it will see the light of the day over the next few weeks.
Zomato does not possess alot of infrastructure asset as it’s own. Why is it that you are not in focusing in opening your own restaurant?
At the moment it is the Cloud kitchen - ZIS. We are not opening restaurants on our own, but partnering with them, and offering space, infrastructure, know-how and marketing support. One of our key organizational principles is that is we will never open restaurants of our own, nor cook food because then we will end up competing with our own customers - restaurant owners.
You have a 25,000 restaurants tie up with you as an ordering platform, don’t you think it’s a lot for a database to be stored and to be updated daily?
We have 25,000 restaurants on our food ordering network of which 7,500 are exclusive to our platform. The total number of restaurants in the top 10 cities are 75000, but then Shanghai alone has 250000. In India, the per capita is a minuscule percentage compared to the rest of the world. Here the restaurant industry is still very nascent. And we are actually fighting hard to bring down prices and improve quality. We are even thinking of working with suppliers of fruits, vegetables, and meat so that you know what you are eating is safe. We want to make sure that consumers think and believe that restaurant food is as safe as home cooked food. Remember - top 10 cities in India - 75,000 restaurants. Shanghai alone - 250,000 restaurants. Imagine where this is going to go.
What has been the core ideology behind Zomato’s expansions abroad?
So now you are now wanting to compete with the Shanghai restaurant market in terms of market share?
Yes, if not more. The top 10 cities in India over time should have a million restaurants. The size of our cities is huge. I think the Indian market has been growing at an interesting pace in the last four-five years. But this is just a trailer. The real growth wave in our sector is yet to come, and we are just about starting to see that change. I am just glad to be in the middle of it all.
Tell us one thing,how do you monetise from your business operations?
In search, it is advertising. We have about 5,000 advertisers across the world. India would be 3,000. India is the biggest in terms of advertisers but not in terms of revenue. India is 40 percent of the revenues. So the rest of the world is bigger than India. Of the 22 countries we are in, 14 we launched ourselves. Dubai is doing very well in terms of revenue. India and Dubai are profitable for us. Philippines, South Africa, New Zealand and Indonesia are doing very well in revenue already and they will break even in the next three months. We were Rs 36 crore in March 2014. This year, we would be Rs 90 crore. Our ad sales are the core business model anyways. We will triple again next year.
You have worked in the Indian Market for a eight years especially full-time. What are your perception that will the food ordering market expand?
We never know to go in. We know that out of the 400,000 people, almost 100,000 are searching for delivery options. If you are able to convert a large chunk of them to delivery online, that's a good business to be in. The 400,000 number is growing 10 percent month on month. That's the kind of growth potential we are sitting on. The monetization here would be based on transactions. We will charge a part of the bill. Foodpanda charges about 15 percent on an average. We don't want to do that. That's way too much for restaurants. We will charge at 7.5-10 percent. This is not our core business. So we can go cheaper. This gives us incremental revenues and more satisfied customers.
How tough is it for you as to what and where should you organise your work routine?
Very high. There is a chicken and egg part. What do you bring in first? Restaurants or customers? If you don't have restaurants you can't get enough users to sign up. If you don't have enough app users, you can't get enough restaurants to sign up. Foodpanda has been at it for three years now. They are barely doing a decent job. For us, the chicken and egg doesn't exist because we already have so many people using the app.
Is there something more to Zomato you want to add in your business process?
I think that most of the journey, we have been transparent any which way – both through ups and downs. So, you want to understand what is under the skin, what is under the surface… I don’t think there is much. Whatever is there, it is (out) there. And, look at our colour palette. The logo changes but the brand manual remains the same. There are three primary colours – Red, which basically symbolises our passion for food. And, then, black and white, which stand for transparency That transparency comes at a cost… of things leaking to the press – left, right and centre. So for us, it is always a choice: whether you keep your own people in the dark to save us from (leaks to the press). There are pros and cons; there is no right answer. We have always chosen that I will tell everybody everything. And if it leaks, so be it. It is fine.
Okay, so revenue earned between one million and 100 million dollar. What has been different then and now?
All these realizations are an outcome of scale. We have a multi, multi, multi-country business. We have multiple product lines. The complexity is quite decent on the top; it is not straightforward. I think we have become much better than two years ago – in terms of having the right people on the ground and a lot of senior people having ownership towards what they need to do. They think of themselves as founders. But, the biggest difference between now and then is that I can’t move too many things at the same time; in terms of the percentage of things. I have to pick my battles, I have to prioritize really, really well rather than saying, “I will get into everything”.
With the Co-founder of the company quitting the company on March 2018, how was the experience working with him?
I think the best way to describe that experience is that it still hasn’t sunk in yet. Life is too busy right now to even reflect on it and let it sink in and I think maybe… what you feel makes you do that. I don’t know! Makes you, makes your life so busy because you don’t want to think about it. I don’t know what my mind is playing with me right now.
We found out that Zomato was formed about a decade ago. And that a 100 million mark in terms of revenue you earned up by 2017-2018. What had made it possible to come up to this level?
I think playbooks are possible but the ifs and buts are so elaborate that how will you replicate the same? It is so hard for anybody to describe those things that is why most of these business books are useless. Language, words, are basically, a tool to describe my thoughts. Right? If you could get into my thoughts, you would actually get what I am saying. I suck at words. Everybody sucks at words. Thoughts are natural to us, words are not. I think there is so much meaning and depth in all of those guys who are writing these big books for business but 99% of the people don’t even get what they are trying to say. How many people would have read the book ‘How to become a Millionaire’? A genuine question. It has sold 10 million copies or something. But did each one of them become a millionaire? Not even like 0.1% of them, I am sure. So, it is a translation issue (of thoughts) rather than possible or not possible kind of issue.
Zomato didn’t fare too well in some foreign markets. What are some of the lessons you learnt from this experience?
What is Zomato’s revenue model?
Apart from hiring the right people, how did you make Zomato succeed in specific foreign markets, in terms of culture and how people behave?
You make everything sound so deceptively simple. What is the toughest challenge you faced in your journey?
How do you deal with fake reviews and spam?
How does Zomato Marketing work?
With reference to your association with Sanjeev Bikhchandani, what are your suggestions to aspiring entrepreneurs on finding a mentor?
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