MC Interview: Food delivery will have to change, 10-minute deliveries can be a gamechanger, says Zomato’s Deepinder Goyal

Deepinder Goyal, co-founder and Group CEO, Zomato

March 2020 would probably go down as one of the worst periods in food delivery startup Zomato’s 16-year history. Covid-19 struck the world, India declared a nationwide lockdown for 21 days, Zomato lost nearly 90 percent of its business and had money to survive for two months, at best.

Its founder and CEO Deepinder Goyal was in a state of panic, and asked his investors for $5 million to save his startup. They refused.

One of his early investors, InfoEdge founder Sanjeev Bikhchandani, advised him that while he would be willing to give him the money, it would barely move the needle, pushing Goyal to look for a long-term solution.

Over the next few months, Gurugram-based Zomato clawed back its business, cut costs and raised over a billion dollars in a successful IPO in 2021.

In the last two years, it has moved beyond food delivery and doubled down on verticals such as quick commerce (Blinkit), B2B sourcing (Hyperpure) and going out/events (District), building multiple growth engines via acquisitions. Its stock is on a tear, with its market cap nearing $30 billion in recent weeks as it continues  to widen the gap with its nearest rival Swiggy.

“We just stuck to our jobs and continued moving forward day by day. Nothing else. I can't see anything special we have done, to be very honest. We are always late to the party”, Goyal told Moneycontrol over the course of an hour-long conversation in Bengaluru.

Goyal, one of India’s most successful internet entrepreneurs is candid but tends to be concise and sparing in his use of words. He nearly scoffed when we asked him about his leadership playbook, stating that he takes things “day by day” and relies on “gut feel” to make decisions on new products and offerings.

In a rare interview, he also spoke about the quick commerce market, food delivery’s new frontier, why navigating public markets is easier and his views on arch rival Swiggy’s upcoming IPO.

Edited excerpts: 

In March 2020, you were trying to raise $5 million but couldn’t. From there to a nearly $30 billion market capitalisation, market leadership in food delivery and quick commerce. What did you do right?

We just stuck to our jobs and continued moving forward day by day. Nothing else. I can't see anything special we have done, to be very honest. The organisation matured a little and rather than focusing on competition, fundraising etc, we just focused on customers and customer love. That led to growth and profitability.

How did going public change you as an entrepreneur?

Investors are the same, the questions and expectations are also the same. (But) public markets are slightly easier than private ones.

Why is that?

You have to give weekly data to VCs and they ask questions on a weekly basis and they can come to your office and sit down with you at any point in time. So you can't really think longer term, you have to make every week work. But when you're a public company, you do quarterly reviews and do the right things, which is way more long-term.

Private investors just like digging because they want to look for something, according to them, which is wrong with the organisation or the startup. While there's nothing, it's all seasonality and all those things.

You have four businesses, Food delivery, quick commerce, Hyperpure and Going Out. Where do you spend most of your time and what takes most of your bandwidth?

I spend time on whatever is the most important thing that day. So my focus changes daily and I take it day by day. I'm also the HR guy in the organisation and that takes most of the time. HR, top level, building the top layer, or even the bottom layer. So, I am always recruiting, mentoring people and coaching people.

It must be really difficult now to hire people because several quick commerce companies are all fighting for the same talent pool?

We're only mainly hiring at the frontline levels. So entry level sales, entry level tech kind of roles. So, I still hire for those roles. So my recruitment time goes there. At senior levels, we’re not hiring even mid-level, we're not hiring much because we have a huge talent pipeline from within the organisation now.

Blinkit existed as Grofers for a long time but the turnaround came only after Zomato acquired it. People credit your execution chops but in your opinion, what has changed? How many people from Zomato are there at Blinkit?

It was a pretty half Grofers and half Zomato kind of thing. It was more about who, amongst the people, believed in the vision that we were trying to chase. Some of them did believe in the idea and actually stayed on. And there were some who didn't think the shift to quick commerce would work so they left.

What is your playbook like? How do you sort of go about identifying and anticipating growth engines for the next four years?

For me, it's a day by day thing. one day at a time, whatever it takes. So I don't know what to call that, a playbook or not.

We don’t anticipate much anyway. We're always late to the party. We were not the first in food delivery, we were not the first in quick commerce, we're not the first in events and live events or even at Hyperpure, we're not the first. We're not the first anywhere. So, we’re always late to the party.

 …but you have managed to make recent acquisitions work.

We've done acquisitions which have not worked as well. So sometimes it works and other times it does not. Yeah, the recent ones have worked more than the first few ones. But I think M&As are tough, hard and long. I don't think any organisation, or at least we can pull off anything more than once every two to three years because you have to build a team, you have to have enough bandwidth, bandwidth to be able to pull this off as well. Blinkit was hard. Paytm (Paytm insider- the events and ticketing business) one is going to be hard, so we're busy.

Your day to day approach can come with trade offs. What is the main one in your view?

Predictability is really low in our business. We are a community run organisation, we don't even have targets or goals for anybody. Rakesh Ranjan (Zomato Food delivery CEO), Albinder Dhindsa (Blinkit CEO), Rishi Arora (Hyperpure CEO), no one has any quarterly targets. So it's all up to them, on a best effort basis.

I would say that this kind of an approach instils ownership in them and leads to outcomes which are better than if I give them goals.

You are building super brands as opposed to Swiggy’s approach of building a super app. Tell us why you think it is the right way to do it? 

I don’t know. We just know how to make super brands and specialised apps better. We know how to make them function better. Maybe there will be a team which knows how to make super apps better and make them function better, and they will also win. So, it's not only about what can work better, it's also about what the team can kind of pull off and what strategy fits.

We have never nudged customers or pushed them to buy from our other platforms. So every brand is on their own and everybody sort of stands, runs and dies on their own. So effectively, they're all operating like entrepreneurs within that, they have the full ownership of their businesses.

What’s your view on 10-minute food delivery (Swiggy unveiled a 10-minute offering Bolt last week)? You had launched  Zomato Instant earlier but how do you see it now?

Zomato Instant was not the right product market fit (PMF). The Zomato Everyday, which is 10-minute deliveries, has a slightly better model. The jury is still out on 10-minute food deliveries. We're not marketing it as 10-minute because back then, before we changed the brand name (from Instant to Everyday), there was so much noise that we’re making the riders run/ride faster for 10 minutes. We also changed the menu, (and) you mostly get Everyday orders in 10 minutes.

We're adding some canteen type food to that (Zomato Everyday). Simple samosas, puffs, cream rolls and others which can be delivered in 1o minutes.

Is 10-minute the future of food delivery?

10-minute food can change the game if we get it right. I don't know who gets it right first, but if anybody gets it right first, we'll also be able to get it right.

So, 10-minutes is a serious business. Zomato Everyday is doing well but scaling it is very hard, because we have to find enough partners. We don't want to cook food on our own, we're very clear about that.

Do you think consumer expectations have changed? Do they want faster food deliveries also because of quick commerce?

For sure. Blinkit is fast, but that has made Zomato seem slow. In some areas, we take 40 minutes to deliver and 40 minutes is very, very slow.

So customer expectation is moving, and food delivery will have to change. More restaurants will open up close to customer locations, or a 10 minute food format, some canteen food kind of format, will come up to meet customer expectations.

Think samosas, patties, sandwiches, chai, coffee, nimbu paani (lime water) etc, being delivered in 10 minutes, could be the next frontier which restaurants haven't even attacked yet. This is canteen type food but in an organised fashion. It's an interesting space. So, this could be the next big thing and this is canteen food for people who don't do and eat canteen right now, so it will be a whole new market and additional demand being created.

That could be the next big growth engine for restaurants.

What’s your view on Swiggy’s IPO?

It’s good for the sectors to have multiple companies. But I do not know anything else, we really focus on our own job. We don't care about anything else. What's going on out there, nothing.

Have you tried ordering food on ONDC? Or any other app?

No, I have not ordered food outside of Zomato. Never ever. Never ordered on Swiggy, nor opened anybody else’s app.

What’s your view on quick commerce, whose share is the sector eating into?

We're just taking away from the growth rate of e-commerce and also sort of eating into the modern retail share in the larger cities, the premium supermarkets etc. We are not growing at the cost of kiranas but. Kiranas work on the khata book system, and their stock keeping units (SKUs) are very different from ours. So, we're not competing with them or the likes of DMart.

What will the quick commerce industry eventually look like? Is there space for six to seven players?

Retail always has space for a lot of players. I don't know whether quick commerce will turn out to be different or not. We don't understand quick commerce that well yet to confidently say that it's going to be a winner takes all kind of a game.

It will likely be a winner takes it all at store level, or at a hyperlocal level. So different areas will have a different winner.

What’s your view on quick commerce (QC) in non-metro cities?

The nature of QC is very different (in smaller cities) from the nature of QC that you see here (in metros). It's actually the gourmet assortments that work better in smaller cities because they don't actually get access to different types of bread, chocolate, cheese, chocolates, fish etc. It's a very tailored approach.

So, we're just looking for consumption gaps and filling them with aspirational things a customer wants in these regions. We're not taking away anything from anyone there, we're just generally increasing consumption by figuring out gaps and plugging them.

What will your focus be for the next one or two years?

Execution quality. Right now, our hands are very full. Six months ago, we used to say we have 3.5 business arms. Zomato, Blinkit, Hyperpure and we used to say dining out. But now that 3.5 has become 4 (after the planned Paytm Insider acquisition) so we have a lot on our plate.

How big can your going out and events business be? Is there enough demand?

I don't know why, but everything in the events and concert ticketing business is taking off for some reason nowadays, which is something we can add on to. It was always boring here in India but we can make it fun. But there are constraints like physical infrastructure.

We were the number three player in the game even earlier. Now, we become number two (behind BookMyShow). We’ll gun to be number one at some point and hope that Swiggy doesn’t buy BookMyShow (laughs).

...so how will you solve that? Will Zomato build out stadiums in the future?

We’ll have to (build stadiums) at some point. Otherwise, the song, the artists, the work and experience will not really be worthwhile.

We won’t build like a Zomato stadium but we will partner with someone and propose to upgrade the infrastructure and give the stadium a facelift. We can take care of the capex, and in exchange ask for like 40 rental free days in a year for the next 10-20 years, or something like that.

This is only an idea in my head, it’s not definite that we will do this because we still have to figure out the logistics, the constraints and everything else.