Zomato's Journey: The Company That Changed The Way India Eats
Zomato started with a ready-made PMF and created a need no one knew they needed. If foodtech has revolutionised lives, we have Zomato to thank for it.
It all started with scanning a few restaurant menus to simplify the lives of Bain & Company employees. This is from a time when ordering in wasn’t the culture, and those who did, called the restaurant, placed the order and hoped that the person taking it heard it correctly. The food revolution was still a few years away.
At Bain, there was a takeout menu catalogue with menus of all restaurants in the neighbourhood, shared between the employees. This made ordering food challenging. Deepinder Goyal was fresh out of IIT Delhi, and working with the company. He decided to scan all the menus and upload them on the company’s intranet. It gave all the employees access to the menus and made ordering easy. Conceptually.
This is where the seeds of—then called FoodieBay—were sown. “There was enough product-market fit, we had seen that at Bain already,” says Deepinder. But he still didn’t start working on his idea for about six months after he uploaded the menus. It was when he was in-between projects at Bain that he had a 10-day break and decided to take his already-tested idea to all of Delhi. The year was 2008.
Today, you know all about Zomato. It isn’t just a household name any more—it is so ubiquitous that it’s become a verb. “Oh, I’ll Zomato it,” is fairly common usage now. What began as a website with scanned menus is now a publicly listed company; India’s first unicorn to go public. It has invested in as many as 15 startups and has subsidiaries like. And it has captured 45% of the food delivery market in India. With over 1.4 million listed restaurants, 12,000 restaurant partners, and 285,000 delivery partners with a presence in over 1,000 cities, Zomato’s story is unlike any.
On July 23, 2021, Zomato got listed at a valuation of over $13.3 billion, with an issue price of Rs 76 apiece. After Zomato’s rather successful IPO, which was oversubscribed a total of 38 times, the company experienced a fall in stock prices. On November 16 that year, the company’s share price skyrocketed to an all-time high of Rs 169.10 apiece on the Bombay Stock Exchange. However, the high was short-lived and by the end of the year, the stock price experienced a decline and closed at Rs 137.45.
You can point out that Zomato isn’t a profit-making company yet, but that’s not something that bothers its founder too much right now. “Everything is ‘an upside’ for me. I am not in it for the money,” he says. Zomato entered an uncharted market 15 years ago, captured it, and changed the way people think about food. The market today is completely different, and Zomato has competitors in the category it created. But that doesn’t bother Deepinder, who knows Zomato is in it for the long haul. Small hiccups—and there have been many—don’t unsettle major businesses, after all.
How does a Zomato get built?
Companies like Zomato aren’t built on balance sheets and profit margins. They require a vision, a mad belief in your work, and a revolutionary zeal to change things. But while the company has shown nothing less than great foresight, it’s not how things actually began. There are a few people who work with such single-minded focus on what they are doing, they forget about the world around them.
This is something that Deepinder can be ‘accused’ of too. After two-and-a-half years of running a bootstrapped company, Zomato was finally looking to raise funding. It should have meant that the founder and his team would be on guard at all times. But Deepinder says he lives in his own world all the time. How the company managed to get its first round of funding is a unique story.
Deepinder got an email from Sanjeev Bikhchandani, the founder of Info Edge, which owns Naukri.com. But he didn't almost respond to the mail. “I used to get a lot of marketing emails from Naukri, I just assumed this was one of them, and it went into my archives,” he says, indicating that he did not know who Sanjeev was. “Sanjeev hadn’t signed off his mail as anything. He probably thought everyone knew him.”
He finally got around to responding to Sanjeev’s email after four days and agreed to meet him. But Deepinder ended up missing the first meeting. Sajeev had invited him for a breakfast meeting, and Deepinder slept right through it. When the meeting was rearranged, he met with an accident on the way. “I was driving a Chevy Aveo, and I bumped into an Accord. While my car was unscathed, the bumper of the Acord came off,” he shares. What could have been a potential situation, though, turned out to be just another serendipitous moment on Zomato’s journey. When the Accord owner saw the bumper he said, “I will never buy a Japanese car ever.” And asked Deepinder to go.
The meeting with Sanjeev transpired into the first-ever funding of $1 million, with Info Edge getting a 33% equity in the company. But Deepinder had gone there to ask for half a million dollars for a 25% stake. And this deal took a total of eight minutes to get finalised. If you are wondering how, Deepinder has the answer: “Someone was offering me a million dollars. 25% and 33% aren’t that different and this company was worthless”. The mental mathematics took a few minutes, and the deal was done.
“The stars were really aligned for me that day,” says Deepinder about his first meeting with Sanjeev. The “worthless company” today has a market cap of close to $8 billion.
It’s all in the culture
Any company is as great as its people and Zomato has managed to pick some of the greatest. People who work with a sense of ownership and are dedicated to improving, innovating, and building like it’s their company. This doesn’t come from setting small agendas, it comes from culture. Building a company is no different from the act of nation-building.
It takes a lot of people with similar goals of growth, improvement, joy-making, and change. No one person can do it, and at Zomato, there are some 5,000-odd people doing it every day.
“Many people who work with us don’t say they are going to the office, they say they are going to school,” says Deepinder, because every day there is something new to learn. The words “Deepi said so,” have been banned in the organisation because there is an understanding that each person is an expert in their domain and therefore knows better and has to take ownership. The lack of a ‘Yes Man’ culture makes the work culture supportive, encouraging, open, and fun. This is why the bosses at Zomato have been so against setting rigid work processes. There’s no one way of doing anything. “Culture can easily beat process. Processes can make an organisation sluggish. I am very anti-process,” says Deepinder. They work on building a culture, and that keeps the company agile and ready for any challenges.
In Zomato’s life cycle, radical changes have happened in moments. When Sequoia Capital wanted to set up a meeting with Zomato, its founder was dismissive, not out of arrogance, but as he himself says, ignorance. When they started out, Deepinder and his team didn’t know what a publicly-listed company even meant. They didn’t know how big Naukri was when Sajeev put money in Zomato and they didn’t know what Sequoia was when Mohit Bhatnagar, managing director, Sequoia, wanted to set up a meeting. But this was because their focus was on their work and it is how the company even functions today.
The company doesn’t believe in dangling the carrots of incentives and bonuses. “We want our employees to keep greatness as their baseline, and we compensate them well,” says Deepinder. It perhaps could be seen as counterintuitive because prevalent work cultures have taught people differently. Every company offers incentives to keep their employees motivated. But Zomato isn’t every company.
When Zomato entered the arena, there wasn’t such a thing as a startup culture. They were the new kids on a new block. And they looked after their work with one thing as their baseline: greatness. They listened to their employees, kept everyone on their toes, kept working hard, and set harder and harder targets. Zomato is often touted as the company that changed the way India eats. Changing the habits of a whole nation is no mean feat. And it wasn’t, but they just ‘Zomatoed’ it.