I had met Deepinder Goyal over two years ago, on February 2, 2015, to be precise. Zomato was on a roll. It had just acquired Urbanspoon, a big-time player in Canada and Australia, and was going places (it was expanding across geographies). There was an unmistakable air of pride in his gait as he walked up to me and shook hands.

“Wow, what confidence,” I had thought to myself as Deepinder approached me. The CEO and Co-founder of Zomato was dressed casually in a t-shirt and jeans looking debonair and unaffected by the winter chill (in more ways than one) that still hung over Delhi.

He took each of my questions and hit it for a six. When asked about his “rumored’ strategy to hire people, he laughed at my question and said, “What’s wrong with poaching people? I am very shameless about it. If someone wants to leave his/her company, why should it be my problem? If you want to call people at Zomato, please go ahead and call.”

When I met Deepinder again last week nothing much had changed. And yet so much had changed. He was leaner, and if I dare say, meaner, and certainly more hungry to conquer the world.

Shradha Sharma (L) and Deepinder Goyal (R)

In these two years, he had gone down and risen again. The long days and longer nights that he had lived in those two years had left their mark. There was a certain kind of reflective poise that comes with an intense journey lived with some missteps and miscalculations, and a lot of relentless work.

As I waited in the coffee lounge of Le Meridien in Gurgaon shielding myself from the punishing humidity of Delhi’s monsoon, he messaged me saying he was running late.

But he arrived soon.

Over chamomile tea (for him) and black coffee (for me), we settled down to talk about Zomato and how he had managed a turnaround.

Zomato’s is an interesting story. I have seen it become the poster boy of startups and hogging the headlines on the front page of business dailies. Everyone had sat up and taken notice back then. Zomato had arrived and in style. It showed spunk and a lot of funny creatives. In a way, it was an iconoclastic startup with a devil-may-care founder living the scene when the startup ecosystem in India was most heady in 2014/2015.

But just as suddenly, tongues began to wag. At the end of 2015, we started hearing the murmurs. The cool startup suddenly seemed to head towards trouble. Everywhere in startup circles, people were talking about Zomato, and for all the wrong reasons. Over smoke breaks and by water coolers, people discussed how Zomato was finding it difficult to raise money and how new competitors were giving it a tough time.

So, when I got a chance to meet him after two years, I was excited not because he had become this larger-than-life persona, but because I remembered him as someone you could have a normal conversation with.

Zomato has taken significant steps towards growing revenue and reducing costs. As per numbers reported by Info Edge (Naukri.com) which holds a significant minority in Zomato, Zomato's revenues shot up by 80 percent to Rs 333 crores for the financial year March 2017. The loss number for the year is Rs 389 crores - and the company is inching towards profitability. Dig a little deeper and you will realise that profitability is a reasonable target for Zomato. The operating burn in FY 2017 was around Rs 77 crores, the balance Rs 312 crores being one off items, non-cash items, and non-operating expenses. Monthly operating burn in FY 2018 is expected to further reduce (more on the reasons below).

Looking as boyish as ever in his black T-shirt and jeans, Deepinder does not shy away from speaking his heart out. Here are some excerpts from a freewheeling conversation.





Shradha Sharma: Congratulations on achieving the "three million mark" for orders in a month. How does it feel right now?

Deepinder Goyal: 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.

SS: That seems unsolvable because people will always complain about the food, won’t they?

DG: Everything is solvable. You have to put your mind to it and solve it. We are searching for the right answers.

SS: If you have to look back at your journey so far, where are you on the highway of entrepreneurship right now?

DG: 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.

SS: You were the poster boy of startups. But the last two years have been difficult. After all the love, a lot of negativity came your way. People went on and on about Zomato’s decline, your arrogance, etc. The narrative changed. You have seen both sides, how do you feel about it?

DG: I think, I haven’t changed. Except the fact that I stopped talking to the media. And on my so-called ‘blunt’ talk, or as you call it, “arrogance”, I feel at times when I say something, people don’t see it in the same light. So my sense of humor doesn't work with most people who don’t know me well. (Smiles)

Listen, I am from Punjab. I don’t know how to mince words. I will tell you what I am thinking without disclaimers, and I am willing to be proven wrong.

SS: Heard from some investors too that you are hard to deal with...

DG: I know why some of them say that. I think it’s because I don’t negotiate. Not because I think I am always in a position to not need to negotiate. Just that I hate to negotiate and I suck at it. The way I work is that I think about a fair deal - something keeping both parties’ interests in mind. And I propose a deal - which I think is fair. Some investors who are used to negotiating anything and everything fail to see the fairness in the deal, and think that this the “first offer”, so they try to negotiate. But that switches me off.

Most of the times, whenever we have raised money, it’s been inbound interest. And sometimes, investors ask for a lot of data. Some of which even we don’t look at during the normal course of business. We refuse to give them this data because we don’t have it. Or that we don’t have the bandwidth to put it together. It almost gets to the point where I have 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.”

Reflecting upon what I just said, I can see how this can look like I am hard to deal with. Hmmm. Food for thought.

SS: One of the rumours doing the rounds was Zomato was out in the market for the longest time, but was not able to raise funds. Another big point was about the valuations. Is there some amount of truth to that?

DG: 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.

SS: Do you think high valuations create problems?

DG: 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.

SS: I admire the letter you had written to the sales team. It must have been a hard decision as a CEO…

DG: 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 organisation. I write better than I speak. The only downside is that emails are way easier to leak than town hall videos.

SS: Profitability would have meant a lot of things in the last two years. How have you brought Zomato close to profitability? What have you done right?

DG: 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.

SS: Were you spending so much that you had to cut down on it?

DG: That 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.

SS: Do you think the implosion in TinyOwl and other funded food-tech businesses impacted the perception around your business also?

DG: 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.

SS: You dreamed big, you thought big. If you were able to secure more funding in the second half of 2015, would you have continued with the global expansion?

DG: 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.

SS: Following which, you upped your game in India…

DG: And UAE. We call both of them home. The competition had also increased in both of these markets.

SS: Would that be Swiggy?

DG: 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 home.

SS: Did you ever lose focus in the home market?

DG: 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.

SS: Do you think what worked for you was your honesty and direct way of communication?

DG: I think everything has its own pros and cons. I think that being honest has helped us a lot in hiring in particular. A lot of people don’t like what we say, so they think we are not worth working with - that saves us a lot of time.

The people who like what we say, they think that this is one of the few organisations which is being honest about what’s going on. They think we are the people who call a spade a spade. Such people write to us in earnest, saying that they would love to work with a team like ours. This makes our recruitment team’s job very easy.

SS: What kind of role have investors played in the journey, especially in the last two years?

DG: 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.

SS: Did you take a beating in the boardroom?

DG: There is no such thing as beating. Everything is a reality, right? So, if somebody explains what the reality is, in this case, the investors, it’s not a beating. The board should be there to show you what’s real, and point out the mistakes you may be making. Whether you agree or not, it makes sense to give a careful thought to what they are saying. They are on your side after all.

SS: So it’s a great turnaround story that you are scripting right now. But will profitability happen?

DG: 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.

SS: I am being unbiased here but I find Swiggy more accessible in Bangalore. It could be because of the area I live in. Do you think Swiggy posed a competition in a certain way from a product standpoint? What are you doing differently? Did you not focus in cities like Bangalore because Delhi and NCR is a huge market in itself?

DG: 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.

SS: Do you agree perception plays a big role?

DG: Perception of your size in the delivery business also comes from the delivery fleet wearing your brand colored t-shirts out on the roads. Now, let’s say that in Delhi, the competition which has brand colored delivery boys on the road might be one tenth of our size here in the city. But you will think we have not done much here - because there are no red t-shirts delivering food to you in Delhi. Also, just saying, we are very close to the competition in Bangalore.

We are going to solve this soon. And we will do this in a sustainable way, where unlike our competition, we don’t lose money on every single order.

SS: How are you going to do it?

DG: If I tell you, I’ll have to kill you. Hahaha.

SS: Can Zomato still take pride in having the best product in the market?

DG: 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.

SS: What will some of your moon shots be?

DG: I am going to give you a very lame answer to this one. Right now, the focus is on making sure that our core business thrives, we out innovate everyone on product, and win. Apart from that, we are going to scale our infrastructure services business and make deep investments in technology (which might or might not eventually work). We have a few moon shots which excite us, but today may not be the right time for those things.

SS: What are the infrastructure services you are looking at?

DG: 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, knowhow and marketing support.

One of our key organisational 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.

SS: But you came out in support of the competition when the Swiggy whistle-blowing episode happened recently.

DG: I did. But I was not commenting on the what was said by the whistle blowers. I was just saying that these things happen because of the organisation’s size. If you grow too fast, you end up having a lot of employees and some of them are going to be disgruntled. Also at that scale, you can’t always hire the right people. At scale, some pissed employees writing something about you which may or may not be correct is not too hard to imagine. I think as an organisation, we have had our fair share of leaks, and disgruntled employees, as well as social rants. But honesty and transparency almost always overcome such unnecessary troubles.

SS: Twenty-five thousand restaurants on your ordering platform is a big milestone, what next?

DG: 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.

SS: So can this number of 75,000 go up to 2,50,000?

DG: 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.