Wealth Issue 2017: Comeback Kids

Deepinder Goyal, 34, Founder & CEO, Zomato

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‘Good things happen even during the worst days,’ says Deepinder Goyal

Have you watched the American comedy series Silicon Valley? Set around a group of young men and their attempts to found a company, the show immerses viewers in the start-up world of California. It is a universe of striped T-shirts and sneakers, big ideas and great struggle, many failures and the one big breakthrough. Walking into Zomato’s Chattarpur office feels akin to that. Cars line the driveway of this office, located on the southern extremities of Delhi. The office/farmhouse is said to contain a gym, a swimming pool and an outhouse. Wrists and fists, more attuned to the keyboard than the boxing ring, try their luck at a punching bag suspended at the entrance of the building. The building itself, one must mention, is not the glass and steel archetype. It is more like the shell of a Kabhi Khushi Kabhie Gham bungalow. An imperial staircase ascends and descends from the middle of the foyer. Techies of all shapes and sizes (all young) fix coffee at the machine in a nook, help themselves to samosas, pore over computer screens and tap away on their phones. But the man of the moment is clearly Deepinder Goyal, the founder and chief executive officer of Zomato.

When we meet, the 34-year-old is amiable, warm, but preoccupied with tasks that don’t involve entertaining the media. It has been a busy time for Zomato, clear from the news alerts that ping away on one’s computer screen. In the last month itself, the headlines around it ranged from ‘Zomato waives off reservation fee for restaurants as it looks to widen its restaurant base’ to ‘Zomato acquires stake in home chef aggregator TinMen’ to ‘Zomato announces Runnr acquisition in all stock deal’ to ‘Nomura bullish on Zomato, pegs valuation at $1.4 billion’. Today, Goyal might have plenty to smile about. But since its founding in 2008, the company has seen plenty of ups and downs. Goyal, who founded the company with Pankaj Chaddah, has been both the darling of the media and the Icarus who rose too high and too fast.

The year 2015-16 was particularly hard for the Indian food-delivery and discovery platform, which had previously been hailed as an Indian unicorn (a startup company valued at over $1 billion). In October 2015, the headlines told an altogether different story, as Zomato, which had operations in 22 countries, readied to dismiss 250-300 employees (which would affect about 10 per cent of its workforce), many of them in the US, as part of a global restructuring exercise. While it has repeatedly been hailed as one of India’s rare start-up successes, 2015-16 proved just how fickle the bubble of success could be. As Quartz reported in May 2016, ‘From devaluation to layoffs, the online restaurant discovery portal seems to have lurched from one PR disaster to another over the last few months. On May 25th, Zomato again made news for the wrong reasons when its annual earnings were reported. Losses at the Gurgaon-based company widened four times in the fiscal year of 2016, further underscoring the tenuous condition of India’s food technology startups.’

The usually gung-ho CEO himself turned circumspect. Using the Zomato blog as his mouthpiece, he reflected on the hardships of 2015 in early January 2016. The IIT Delhi graduate who had worked at Bain and Company as a senior associate consultant before starting, which was renamed Zomato in 2010, had had much to ponder. As he wrote on Zomato’s blog: ‘2015 was truly our year of learning. We learned while doing things we had been doing for a while, and we learned while venturing into uncharted, unfamiliar territory.’ The year had taught him crucial life lessons: don’t scale too fast; don’t pick a fight with everyone; never take your eye off the revenue figures; you can only improve what you can measure; tough times don’t last, tough people do; learn from others; and more importantly, don’t try to reinvent the wheel.

Less than two years later, Goyal seems to exude equanimity. How did he deal with the hard times? He says, “There is no such thing as good times or hard times. Every day is a mix of both. In here, you are used to that. Even during the worst days, there are good things that happen every day.”

The ease with which he says this reveals not only a confidence, but also betrays a glibness. He uses his entries on the Zomato blog as his ‘mann ki baat’; the rest of it is just spiel.

In May this year, Zomato faced one of its biggest challenges, with 17 million user records being stolen from its database. Even while reassuring clients that payment information was absolutely safe, and there’s no need to panic, Zomato knew it had a crisis on its hands and hunkered down to fix the problem. The team reached out to the hacker that had put its user data up for sale. According to Zomato, ‘The hacker has been very cooperative with us. He/she wanted us to acknowledge security vulnerabilities in our system and work with the ethical hacker community to plug the gaps. His/her key request was that we run a healthy bug bounty program for security researchers.’

There is no such thing as good times or hard times. Every day is a mix of both

The crisis is behind him now, but what was Goyal’s response the day it broke? Playing with his iPhone, he replies with measured words, “What can you do? You stay calm and solve that problem at hand. Matlab, kyaa karoge? First of all, it was ‘Everybody calm down. Go have a Coke or a drink. Don’t talk about it for five minutes. We will all come back and see what happened.’ That is how it worked. Because if you start talking about it immediately, you don’t get time to collect your thoughts and it all goes wrong.”

Successful businesspeople know what the middlings don’t: success is not a constant. When bumpy times assail a company, others—be it the media or investors—rush to write its epitaph. In April 2016, analysts at HSBC valued Zomato at $500 million, only about half of what it was valued at in its funding round in September 2015. Doomsday notices were issued soon enough, ranging from ‘bubble trouble’ to ‘unicorn to unicorpse’.

In May 2016, Goyal wrote an impassioned (and peevish) defence of Zomato on the blog, the gist of it being, ‘Nobody who knows our business has marked down our valuations. In fact, our existing investors are bullish about us, and are willing to back us further, if needed.’

So how do these negative stories impact him? “We just don’t read it,” he says with fervour, “Matlab, we don’t read it. Negative publicity—friends read it, employees do, their parents certainly do. But you get through it. There is no choice. Good or bad I don’t read anything about Zomato. I don’t even flip through it. It doesn’t exist for me.”

IN 2008, ZOMATO seemed like a surprisingly simple idea. While working at Bain and Company, Delhi, Goyal and his co- founder Chaddah realised that during lunch hour, their colleagues were scrambling for takeaway lunch menus. The duo chanced upon an easy solution that would eliminate the need for these bits and bobs of paper. They scanned the menu cards and uploaded them on the Bain intranet portal. Noticing how well the solution worked in office, they decided to venture further afield and collect the menu cards of different restaurants in the Capital. They scanned these and uploaded them on a website, along with the contact details of the restaurants. Today, that blueprint of Foodiebay has grown into Zomato, which is no longer a storehouse of menus. It is a company with a mission to ‘ensure that nobody has a bad meal’. (Goyal says he would not eat at a restaurant that rates below 4.2 stars.) In September 2012, Zomato entered its first market outside India, Dubai. The 2,000-member Zomato team now works in 24 countries, with 1.2 million restaurants and 120 million foodies every month. Customers from Canada to Poland to New Zealand use Zomato.

While we all love a startup success story where a single idea can lead to growth and change, the hardships of entrepreneurship are neglected. All that outsiders see is the glamour of proprietorship and the pursuit of passion. What they overlook is the daily grind and the endless pressure of ‘making it’ day after day. Back in 2013, Goyal had told Mint about the struggles of being a startup in India: “It’s a new concept here and when we started in 2008, early stage and angel investors didn’t even exist. In 2008, people were turning us down because we had zero revenue, even though we had a model in place. We won’t get a Google or a Facebook here because no one would fund them. People are starting to get comfortable with proven ideas only now.”

While Zomato’s red might radiate outward to the distant corners of the map, it is not as if the ecosystem has significantly changed. Even today, running a company in India is challenging. Turning serious, Goyal explains, “It is not easy at all. A lot of people I know started their startups because they were too stressed out in their current jobs.” He chuckles knowingly, and adds, “Trying to avoid stress is not the best reason to start something on your own. This is the opposite, and then you’ve nobody to turn to. You have to learn to manage the stress all by yourself.”

CEOs of companies often say that the most important and difficult part of their job is hiring the right people. So how does Goyal identify the best workers? “Analogy deta hoon aapko,” he says, “In a car, there are two people. One is driving. The other is in the passenger seat. Toh we always look for those in the driver seat. Passengers, you can pick up on any ride.” Well, that sound obvious enough, but how does he identify potential drivers? This he admits is very hard. He says, “Half the time you are wrong. Because interviews don’t tell you anything. It is a guessing game. In an interview set up, people are not being honest. They know the right answer. They want to land a job. It is not that they want to land a job because they really want the job. It is because they don’t want to fail at getting a job. Once they have it, they take it and then it all turns to nothing. It is just egos at play.”

It is still a 50-50 game? Breaking into a big grin, he says, “I think half right, half wrong is a great improvement.”

Benchmark companies are not those which simply tinker with a system, but those which re-imagine a future. Goyal wants to create a kitchenless future. He says, “It is fairly simple, ki at the end of the day, we should not need to cook at home.” But wouldn’t that be a pity, one asks. He adds, “It is not sad. If you want to, you should. But you should not need to. The key word is need, not want. Technically speaking, restaurant food should ideally be cheaper than what you actually cook at home. But that is not true. India mein toh, it is not true. If you go to Europe, Australia, in these places restaurant food is cheaper.” In developed countries, physical at- home kitchens still exist, but they are not being used as often as they were 25 years ago, since restaurants have taken over much of the cooking. In India, he wants to see restaurant food become cheaper and of better quality.

Another project of Zomato is its ‘food court for delivery’. Goyal explains, “Restaurants pay a lot of rentals for their own spaces. Affordability ka game hai. We say there are five brands that can cook in the same space; so that there is only one security guard, etcetera. [Capital expenditure] is kept low. So the end price for the customer is 15-20 per cent lower. Leads to more demand. We pick the right brands so it is higher quality food at the right price.”

Given its global presence, one can assume that Zomato has an inside track on one of the most fundamental aspects of human life and nature: how we eat and what we eat. But the revelations are rather expected. For example, in countries with a developed restaurant business, eating out is a daily occurrence. Whereas, in India, with a nascent restaurant business, eating out is more occasion based. Speaking of the restaurant food available in Delhi (the market that Zomato knows best), Goyal says, “The quality of food in Delhi is good, but it’s not good for you to have it every day. We haven’t gotten to an everyday consumption restaurant industry as yet. That is a matter of time. Food needs to get cheaper.” He says that if the “industry grows at x rate, we grow at 3x rate”. The biggest chunk of Zomato’s advertising revenue comes from new restaurants.

But at the end of the day, Goyal portrays himself as one of those Silicon Valley characters—geeks who happened to become tycoons. As he says, “I am a techie and I am in the wrong job. The right job is doing tech and product only. Not talking to the media. Not doing this. Unfortunately, I have to be the face of this.”