consumer internet unicorn to list on Indian bourses last month, will continue to chase growth and build a long-term business, undeterred by questions about its lack of profitability and eye-popping valuation, cofounder and chief executive Deepinder Goyal told ET in an interview.
spoke to ET’s Digbijay Mishra and Samidha Sharma on life after Zomato’s IPO, stiff competition, and new businesses such as grocery delivery. Edited excerpts:
Zomato is the first major consumer internet company to list in India. How have the last few weeks been? Did you expect it to be such a successful listing?
Deepinder Goyal (DG): Generally we keep our expectations low for most things, so we did not think much. We were surprised with everything we got. Actually, it was beyond anyone’s expectations.
But has the listing put a lot of pressure on sustaining momentum? Are you tracking things like the stock price?
DG: We continue to do the same things and, as I told you, there is no pressure. I am not looking at the share price right now and have not looked at it for the past five days. So there is absolutely no pressure.
Why did you think now was the best time to go public? And what will be the impact of this on the wider tech and startup ecosystem?
DG: The business was doing very well, the markets were ready, and this was the natural next step for us. We could not find any specific reason for not doing the IPO. We are in the ‘why not now’ kind of mindset. There were no external factors that made us decide to go public.
How is life different from when Zomato was a private company? How significant is the valuation/market capitalisation metric?
DG: We will continue to focus on our work. As you know in the private tech market, the scrutiny was monthly ( by all the stakeholders). Now it is quarter-on-quarter so this is a much better life, really.
So you are not affected by the narrative that Zomato is overpriced?
DG: I have not looked at any of these things. We all have cut ourselves away from the noise and are focussed on work. Nothing has changed.
What do you think of Zomato’s expansion beyond the food-delivery segment? Grocery is a category which is seeing a lot of action. You announced an investment in Grofers recently — how does it tie up with your ambitions in this space? Also, are there any synergies you will bring about by using the supply chain of Hyper Pure (which provides fresh ingredients and supplies to restaurants)?
DG: We do not have much of an idea ourselves, so we are not sure if we want to do it in the long-term. But it is a big space and we are trying. The
investment in Grofers is separate and we have our own grocery offering (Zomato Market) which is a marketplace model and sources from local stores. It went live in Delhi NCR a few days ago. This is not on the back of the Grofers investment. For now we are not drawing any synergies from Grofers..It is the same for Hyperpure. There is nothing planned right now, it is still a long shot.
So, what drove you to invest $100 million in Grofers?
DG: It was the last independent grocery company left. So we wanted to put in money there and see if we could do something in the future. We do not have any rights or anything so the investment is purely financial in nature.
As a public company, there is always a risk of becoming conservative in your approach and not being able to chase growth like you typically would do as a venture capital-funded startup. Is that a concern for you?
DG: As of now it does not feel like that but I don’t how we will feel like in a week from now. Today we are focussed on work and nothing changes for us.
Akshant Goyal, Zomato’s CFO, told us that discounting will remain a core part of Zomato’s strategy. Can you elaborate? How aggressive will you be on that front?
DG: We don’t know. We are in a very dynamic business, and take weekly or sometimes daily calls on our discounting strategy. The pressure of being a public company is not weighing on us. We have been focussed on doing the right things since the start. We have spent almost one-third the amount of money compared to competition to get here, and have been very efficient. Why should we change what has been working for us?
What’s happening in the non-food delivery businesses. What’s your outlook?
DG: They are all at a very early stage, so we don’t know what’s going to happen. Some of them don’t even have a product-market fit yet. We will see.
Delivery partners have expressed recently on social media about their pay and the fact that they aren’t part of the wealth creation from the IPO. How important is the delivery fleet, and the pay and incentives they draw, for your future growth?
DG: Our delivery partner NPS (net promoter score, which indicates loyalty to a platform) is very high. So, largely, people are very happy with us. I would say this is financial empowerment for two lakh people. We are not trying to exploit them — they make a healthy Rs 20,000 a month. As for the resentment you spoke about, people need to dig into the facts to see whether there is something wrong we are doing or not. If two lakh people were unhappy with us then why would they be working with us? They are the backbone of our business.
You changed incentives for your delivery staff recently…
DG: That’s an ongoing process. We continue doing it and must have done it 20 times in the past year. Our NPS has improved a lot in the past 12 months.
DG: It’s a one-sided spat. We don’t have a spat with anyone. Even restaurants are largely happy. In the second wave, we were hiring 40,000 riders a week — that was how quickly we were scaling, and there were no jobs back then. Restaurants were unable to cater to that volume. We actually fuelled growth for the restaurant sector, jobs for riders, and growth for ourselves while catering to customers. We can’t over-index on a handful of people who might have vested interests or something. No matter what you do, you can’t make everyone happy.
Does NRAI asking India’s antitrust body for a probe bother you?
DG: No, it doesn’t bother me.
Swiggy recently announced a feature similar to ‘order direct’ for restaurants. Is that something you are considering?
DG: Every company has their own strategy. They do their own thing, we do our own thing. We have our own plans. We don’t necessarily look at anybody else or what they are doing.
Has the IPO changed anything for Zomato’s employees?
DG: I spoke to a lot of people. I think they are still very focused on work. We have been reiterating to people that [the IPO] is just a thing on the side and doesn’t affect our lives. That’s largely the narrative within the organisation. I didn’t hear the term IPO in the past week.
You tweeted on the day of the listing that a lot of people are calling it a “historic moment” and it should not be called that.
DG: It’s a fact. How can you call something history in the present moment?
Other founders now feel they can plan an IPO here in India. Is that perhaps why people think Zomato’s IPO was a seminal moment?
DG: It’s good. We should have more IPOs and we should create more wealth in India so that people make more money and companies like ours grow faster. That’s great.
What is it that made you consider an IPO in India? Traditionally, the US has been an option for Indian tech firms.
DG: We evaluated everything. There were pros and cons of all these options — a SPAC, a US listing and an India listing. I think the biggest thing in favour of the India listing was that we could let our customers own a part of us. It tilted the scale in favour of an India listing. Everything else was sort of equal.
Was it a smooth ride, working with regulators like Sebi?
DG: Smooth is a very subjective word. We got here and that’s what matters. Startups go through ups and downs, good times and bad times.
How Zomato executed its IPO plan
Your IPO has set the ground rules for a lot of Indian startups looking to go public.
DG: Others will have it easier than us for sure, as they have a template to work with. But whether it’s easy or hard depends on the team and the business you are taking public. It is going to be different for everybody. Context is the key.
How has India’s internet ecosystem evolved since you founded Zomato, and what do you expect in the next five years? What keeps you bullish?
DG: India is growing very quickly and we can feel it. There is a huge change in terms of digital adoption. I have no idea how long it will last but if it continues for the next 10 years, we will all be in a very different place.
Are you chasing profitability as a public company?
DG: No, we are chasing growth. We want to be a large, successful company over the long term. That’s what we are optimising for.