FOODIE MILLIONAIRE Deepinder Goyal of Zomato
Unlike many other Indian businessmen, Deepinder Goyal, Founder & CEO, Zomato, does not mind opening up. He is game to revealing his privately-held company’s financial figures, future strategies and even failures. Perhaps this confidence stems from the fact that he is one of the poster boys of India’s Internet-based revolution, not only within the country but now, abroad too. What makes it all the more laudable is that all this success has been achieved in only the six and half years that Zomato has been around.
During this period, the valuation of the Gurgaon-based restaurant search and discovery service company has shot up to Rs 4070 crore. It is now present in 110 cities across 18 countries and employs 750 people from 25 nationalities. More than 311,200 restaurants have been listed. And yes, like many a proverbial start-up, Zomato started off from a living room, in New Delhi this time.
It all began when Goyal and his co-founder Pankaj Chaddah were working at management consulting firm Bain and Company. The two IIT (Delhi) grads had a large collection of menu cards and colleagues would approach them during lunch hour. “A fair amount of time was wasted on a daily basis,” recalls Goyal. “Wouldn’t it be great if all these menus were up online, we thought. So, at lunch one day, we mapped out the idea of an intranet website that would help our colleagues discover places to order from in our neighborhood.”
The two friends scanned menu cards and uploaded them online so that everyone could view them at one go. Soon after creating the intranet website for Bain employees, they noticed a significant number of hits. It quickly became clear that a viable business could be built out of it. Since Zomato’s inception, for almost one-and-a-half years, Goyal was with Bain, collecting, scanning and uploading menu cards during the weekends.
But Zomato was not the original choice for a name. The founders had zeroed in on Foodiebay before having second thoughts. As Goyal explains, “We wanted to create a brand that we could take international. We also wanted to avoid any confusion with eBay, the global shopping platform. We came up with the name Zomato – it was simply tomato with a Z.” They had a few other options too but their friends unanimously loved Zomato. “We slept on it and the next day decided to go with the name. It is short, memorable, has a nice ring to it, and is now almost instantly associated with food.”
Like many other Indian startups Zomato too faced two major challenges: getting the right talent and managing them. Goyal says they have always taken a pragmatic approach in overcoming both, going beyond traditional hiring techniques to bring the best talent on board. In the initial stages of the company’s growth, the two founders used everything – from referrals, to their social networks – to find the best people.
“Today’s talent is looking for a flexible work environment, career path opportunities and a chance to do meaningful work. Sure, a good salary is an attraction but that’s not what’s most important to enjoy your work,” he elaborates. At Zomato, adds Goyal, they don’t stop at version 1.0 and that makes for an exciting environment for the learners out there. “We’re most focused on instilling a sense of ownership – for us it’s one of the most important aspects of retaining talent. There is a lot of flexibility in terms of roles at Zomato. That’s what most people thrive on when they are shaping their careers.”
The company’s workspaces are open and there’s no concept of cabins and assigned desks. So one can reach out to anyone within the organisation, including the founders, with ease. One of the central factors that has contributed to Zomato’s office culture is, yes, food. The staff eats together in a family-style dining space with tables big enough for groups of people to dine simultaneously. In addition, the staff also bonds over little bites at eating corners on every floor of the Gurgaon headoffice bulding – a mini kitchen there allows one to quickly cook eggs, noodles and toast.
Goyal calls himself the ultimate foodie and blames his Punjabi roots for his penchant towards Butter Chicken – his family hails from Muktsar in the eastern part of Punjab. Given the nature of his work, he has also become something of an expert in restaurant trends across the country. Here are his quick findings: “Chinese, North Indian and Italian are the most popular cuisines across Indian cities. From Kebabs to South Indian food, Southeast Asian to French cuisine, the Delhi restaurant scene is exploding. In Mumbai eating out is as popular as ordering in. Chinese food is extremely popular in Bangalore. Microbreweries are in great demand in Gurgaon.”
The two founders have clearly demarcated job functions and also distinct managerial styles. Chaddah has always focused on building relationships. “Believe me, it has its own rewards,” says Goyal. “You have to be adapting to be successful in running a business.” Goyal focuses on strategy and product development which requires him to be in Delhi. He travels when needed. He says his style is to always make sure that all of them live by their core culture values and function as a team based on the very same. He believes in communicating directly with his colleagues through informal meetings, calls and also sends out regular emails with updates on the latest at Zomato and what’s in the pipeline.
Even though he hails from a non-business family – his parents were academicians – Goyal says he always had an entrepreneurial streak in him and while in college was forever coming up with ideas for products that could bridge gaps in the market. “I’ve been extremely passionate about utilising technologies to help people live efficiently. When I was growing up I looked up at people like Steve Jobs and wanted to one day create something big that would change the way people live, connect and interact with one another.”
Steve Jobs has always been a source of inspiration for Goyal. “I have read and re-read many times the commencement speech delivered by Steve Jobs at Stanford University. His words were so inspiring that you cannot help but just believe in him when he says, ‘You can’t connect the dots looking forward; you can only connect them looking backwards. So you have to trust that the dots will somehow connect in your future. You have to trust in something — your gut, destiny, life, karma, whatever’. I hope that when I look back a few years from now, the dots I am connecting now will make a lot more sense.”
In the initial years, however, there were some questions with no clear answers, including the all-important one: How does one go about raising funds? Once it started showing signs of promise, Sanjeev Bikhchandani of Info Edge (India) Ltd. (Naukri.com, 99acres.com, jeevansathi.com, etc) came in as an early investor with $1 million. This money helped Zomato open operations in Mumbai, Bangalore, Kolkata and Pune. Info Edge continues to pump money into Zomato. In the last four years, Goyal’s outfit has raised a total of $113 million through external funding.
But the going has not been smooth all along. Zomato had once taken a wrong step by diversifying into an events listing and ticketing portal. However it soon decided to stick to the knitting and in pulling back, also learned some business valuable lessons. “We decided to shift gears early on in our journey and shut down the events section in 2012,” says Goyal. “I think it was a good decision to change direction and stay focused on our core product and not spread out by moving into too many verticals.”
Zomato’s porn foray
Around 2010, food porn had become extremely popular. Sharing photos of food experiences was really catching up on social networks as well as Zomato. It wasn’t long before its founders realized the untapped opportunity that they were sitting on. So they decided to create a “porn” site dedicated to showing off the most delicious food. It isn’t easy to come by xxx domains but they thought it’d be a good idea to get an xxx domain and create a food porn site. Thus was born Zomato Food Porn (http://www.zomato.xxx). The response from Zomato’s user base was overwhelming. Only photos that are uploaded by users on Zomato and receive more than 10 likes show up on Zomato.xxx.
The decision to remain focused on its core area of expertise has definitely helped Zomato. In FY 2013-14 the company touched a revenue of Rs. 31 crore (rounding off). The Indian operations reached EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) breakeven in December 2012. It had already broken even with the operational costs in Dubai in a short span of only six months since the launch there in September 2012. “Even tough markets like the UK and Turkey have started showing considerable growth in terms of traffic and user adoption,” says Goyal.
The ads placed on the Zomato website generate majority of the revenue for the company. Its business model also relies on other innovations like ads on the Zomato mobile app. Users can now see in-line ads for restaurants contextual to their search and location, appearing on search result pages. In addition, the Zomato for Business app has been built exclusively to help business owners engage with customers and drive business.
In the UK, Zomato users can make reservations easily without being directed out of the website. It has partnered with Opentable, Bookatable and ResDiary for online and mobile reservations to take table bookings to UK users. Coming soon: cashless bill settlement. Zomato will pilot it in Dubai this month and roll it out in other geographies over the course of the next two quarters. This will allow users to pay their restaurant bills through the app. For each transaction, Zomato will take a share of the bill from the restaurant.
When the company was started, there was no search and discovery service like Zomato that would help people share information about their restaurant experiences. As expected, its success has led to many me-toos mushrooming around, especially since it’s not a very difficult model to replicate. Bur Goyal is very clear about his company’s USP: “Users can find every piece of information about restaurants through our site’s menus, pictures, locations, ratings and reviews. The interface is clean and simple and works across various mediums. What sets us apart is the fact that we provide fresh and accurate information on all the restaurants in every city we cover.” The data collection teams are always on the move visiting restaurants to ensure the information is relevant for end users. In 2014, the Zomato team focused on expansion across multiple geographies and building vertical depth within the restaurant space. Its approach on the product side has been to innovate and then innovate more. There’s a lot in store in terms of the places it is going to in the coming year and the kind of product it is building for users. “We want to continue figuring out how to do more to help people search for great places to eat at, make note of memorable food experiences and raise the bar for the restaurant industry by making restaurants accountable to their customers,” says Goyal.
So where does Zomato go from here? The next big frontier to venture into will be the US, the world’s largest market for the restaurant business. Here, Zomato will clash head-on into Yelp. With a presence in 28 countries, Yelp last year earned revenues of over $232 million. “The sky’s the limit, really,” declares Goyal, without disclosing plans of a US foray.
“We’re focusing on our core product and on creating a wonderful experience for our user and restaurant community. Importantly though, I’m interested in creating a positive and productive work environment.” Therein, concludes the path-breaking entrepreneur, lies everlasting success.
