Zomato: An Indian Startup acquiring the world

INTRODUCTION
Zomato is a restaurant search and discovery service founded in 2008 by Deepinder Goyal and
Pankaj Chaddah. It currently operates in 23 countries, including India, Australia and the United
States. It features restaurant information such as scanned menus and photos sourced by local
street teams, as well as user reviews and ratings.

The company also provides cashless payment, online ordering, white-label apps, table
reservation, and point-of-sale systems.

Zomato was initially named as Foodiebay. It is a restaurant searching platform providing in-
depth details with autonomous reviews and ratings. Foodiebay,
the initial name was changed to Zomato in November 2010 to increase their reach among people.
Zomato is a restaurant discovery platform providing comprehensive menus, reviews and contact
details for restaurants. Territories include India, USA, United Arab Emirates, Sri Lanka, Qatar,
the Philippines, South Africa and now London. Founded in New Delhi in 2008, Zomato employs
approximately 1000 staff over the globe.
To differentiate themselves from their competitors, Zomato concentrated on adding approx
18,000 new places to eat from. Along with they also decorated many special features, such as
pointed to particular dishes or opening times”.

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 Type Private
Founded July 2008
Headquarters New Delhi, Delhi, India

India, Australia, United States, Canada, Chile, Czech Republic,

Indonesia, Ireland, Italy, Lebanon, New Zealand, the
Area served Philippines, Poland, Portugal, Qatar, Slovakia, South Africa, Sri
Lanka, Brazil, Turkey, United Arab Emirates, United Kingdom,
Malaysia

Founder(s) Deepinder Goyal, Pankaj Chaddah

CEO Deepinder Goyal

 Surobhi Das (COO)

Key people
 Gunjan Patidar (CTO)

Industry Consumer Services

Restaurant Search & Discovery, Online Ordering, Table

Services
Reservations & Management, Whitelabel Apps, POS Systems

Employees 2000+
Website zomato.com
Type of site Online restaurant search and discovery service
Advertising Yes
Registration Optional on the website
Users 19 million visits monthly
English, Turkish, Portuguese, Indonesian, Spanish, Czech,
Available in
Slovak, Polish, Italian
Current status Online
Native
iOS, watchOS, Android, Windows, Windows Phone
client(s) on

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 THREE PROBLEMS THAT WERE AT ZOMATO
- By Pankaj Chaddah
-
Our engineering team is always cranking to improve our services and make your food hunt
easier. As a small update, here is what’s keeping us awake at night these days:

1. Building a dish database :

Wouldn’t it be great if we could search for restaurants serving a specific dish? For example, it
would be great to be able to find the best places that serve a Tenderloin Steak. The only way to
make this happen is if we have structured data for every dish served in a restaurant. We’ve
already made some effort in this direction the manual way - by typing out a few thousand menu
cards in every city that we are in. However, given the churn rate of the restaurant industry (about
25% restaurants shut down every quarter), it is getting difficult for us to manually keep pace with
all the new menu cards that come our way. We are trying to create intelligent OCR systems to
supplement our existing dish ontology. Misspellings (in the menus) and from the OCR
mechanism just make it all the more complicated.

2. Spam control :
Two years ago, this wasn’t a problem. Why? Very simply, a restaurant’s rating Zomato didn’t
make or break its business back then. Nowadays, it does make a difference, to a certain extent.
Since a lot of restaurant owners also realise this, they try to game the system by planting fake
reviews on the platform. We have, over time, learnt how to identify most of these cases, but some
intelligent spam tactics skip our automated filters. Our filters currently range from simple data
analysis and pattern matching to user behaviour mapping over a few months. However, we
realise that we constantly have to keep track of what is making its way onto the platform to help
maintain its neutrality and usefulness to our users. Also, we need to evolve these systems to
outsmart everyone who tries to game the system (despite following the rules). It’s an ongoing
effort, and I don’t think we will ever be able to say this problem has been solved for good.

3. Lower server latency for our geographically widespread traffic :

This isn’t something new, and a few companies have already done this very efficiently. Most
companies our size don’t even care about this. However, we want to serve all our traffic (in the
Philippines, as well as in London) from servers that sit close to our users’ physical locations.
Lower server latency = users get to food faster. Replicating all our infrastructure in various
locations on a master-slave basis and then keeping everything in sync is not easy for us as of
now, and this is something we are trying to address over the very short term itself.

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 ZOMATO SUCCESS STORY SEEING TROUBLE ?

In the Indian startup industry which is still largely in the nascent phase, Zomato is one success
story that every Indian entrepreneur wanted to emulate. Investors too, who are otherwise
mesmerized by the e-commerce startups, look at Zomato as a company that has the ability to
scale globally and create a world class product. The company also keeps making it to headlines
due to the aggressive growth route taken by its founders by embarking on a shopping spree.

Started in 2008 by Deepinder Goyal and Pankaj Chaddah, the company today is valued at
$1billion i.e. it has hit the unicorn status. Lately, Zomato has been in news again due to the
trouble the company has gotten into.

In this article, we take a look at Zomato journey so far and try to contemplate at what the future
might look like for this company.

 Behind The Making of Zomato :

Zomato is an online restaurant search and discovery service which provides information on home
delivery, cafes, and restaurants along with menus, photos, reviews and contact details for
credibility. It was started by two Indian Institute of Technology, Delhi alumni Deepinder Goyal
and Pankaj Chaddah in the year 2008 as Foodiebay.com.

Deepinder was born and brought up in Punjab and fits perfectly into ‘You can take food away
from a Punjabi but you cannot take a Punjabi away from food’. He recalls how the idea of
Zomato originated from him waiting daily for the free-delivery menu cards at lunch time. It was
burning down a substantial part of their free time daily. It was then when it occurred to
Deepinder to why not to avert off all the trouble by providing everything online. He named it as
Foodiebay.com and in initial phase, it was just a website which displayed menus of restaurant,
reviews and recommendations. In November 2010, Foodiebay.com was renamed as
Zomato.com (interestingly, only because it rhymes with tomato!). However, the website was
drawing very less traction probably because it was not possible for people to browse the website
for menus while they are waiting in queue. The next step was to make the website more
accessible. Then, Deepinder took the decision to come up with a Smartphone based application
and Zomato application was developed and launched for Google’s Android operating system.

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  Funding and Acquisition Spree :
Now, there was a need of money in order to expand the business. One of the major sources of
income is to raise funds from Angel Investors.

 In August 2010 in its first round of funding, Zomato raised US$1 million from Info Edge
(India).

 In September 2011 in its second round of funding, Zomato raised of US$3.5million from
the same investor.

 In year 2012 in its third round of funding, Zomato raised another US$2.5 million.

 In early 2013 through its fourth round of funding, Zomato raised worth US$10 million
from Info Edge. With this, Info Edge was holding a stake of 57.9% in Zomato.

 In November 2013 in yet another round of funding, Zomato raised US$37 million
from Sequoia Capital and Info Edge.

 In November 2014, Zomato received a fresh round of funding of US$60 million jointly
led by Info Edge (India) Limited and Vy Capital and Sequoia Capital.

 In April 2015, Zomato raised yet another round of funding worth $50 million from Info
Edge and Vy Capital.

 In September 2015, Zomato was able to raise funds again Temasek Holdings worth $60
million.

By now, Zomato has raised a total funding worth US$224 million.

Simultaneously, company was focusing on expansion plans. It was running successfully in Delhi
NCR, Mumbai, Bangalore and Pune. Zomato launched coverage in other three major cities of
India Chennai, Hyderabad and Ahmedabad by 2011. Also, Zomato launched applications
for iOS, Windows Phone and BlackBerry devices. Zomato went international in September 2012
when it launched its services in Dubai, UAE. This triggered a series of expansions into Sri
Lanka, Qatar, United Kingdom, Philippines, South Africa, New Zealand, and Turkey.

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Subsequently, Zomato made its first acquisition by buying New Zealand’s ‘Menu-mania’ in July
2014. Succeeding, the company started growing its base in Europe and acquired online restaurant
firms ‘Lunchtime.cz’ from the Czech Republic and ‘Obedovat.sk’ from Slovakia for a combined
$3.25 million. More recently, Zomato acquired Seattle-based food portal ‘Urbanspoon’ in
January 2015. On January 29, 2015, Zomato acquired Turkey’s popular eatery search
service Mekanist. Zomato acquired NexTable, a U.S.-based restaurant reservations and table-
management platform.

Within 7 year of Zomato’s envision, company has marked its presence in 22 countries and covers
more than 1 million restaurants spread across 10,000 cities. Undoubtedly, Zomato has evolved
itself to be India’s first global application and yet does not wish to sit back and relax.

Apart from being an online restaurant search and discovery platform, Zomato has expanded its
services to provide cashless payment, online ordering, white-label apps, table reservation, and
point-of-sale systems.

FOOD TECH HAS PROBLEMS, BUT DON'T CALL IT A BUBBLE!

After a few months of effusively praising every single piece of funding to take place in the so-
called food-tech space, the conversation has taken a quick 180-degree turn as people are going
out of their way to declare a bubble, and state that e-commerce in general is going to burst soon.

Which is, frankly, alarmist and tends to miss the point about the ups and downs that are taking
place in front of us. The most talked about issue right now is of course, the trouble with
TinyOwl.The food ordering platform was recently in the news when mass layoffs were followed
by a dharna by former employees, who held the firm's co-founder hostage.The company didn't
help matters by issuing a tone deaf statement that talks in the vaguest of terms about difficult
steps towards a big dream. It's a good dream for the founders, certainly, as the company gets
funded for a large sum of money, but for the hundreds of people laid off, it's not a difficult step
but a life changing nightmare.

What the TinyOwl story proves, more than anything else, is that the model adopted by delivery
companies - which is what the bulk of the food "tech" startups are - is not necessarily
sustainable. Margins are thin, total order value is fairly low, and customer acquisition is
expensive. In other words, these companies make money if customers keep coming back and
placing orders - without discounts. Unfortunately, few - if any - of the companies in this space
were actually delivering anything beyond VC funded discounts, and so customers just keep
moving from platform to platform, chasing the best deals.

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Making matters worse is the rampant fraud - that is an unfortunate characteristic of doing
business in India, as most e-commerce firms here discover. Things were particularly bad in the
case of Foodpanda, a company which has seen recurrent leadership changes, and was allegedly
being mismanaged, according to a report by Mint.

But these issues are around individual companies, and must be recognised as such. Food delivery
is definitely a space that needs to be better organised, and there's still a lot of scope for growth
and improvement. But when the bubble talk starts up, people immediately start making
connections that are perhaps not entirely justified.

So, when Zomato laid off a number of employees (mostly in the US), followed by the
announcement that it's closing its Zomato Cashless payments system, people started saying that
it's preparing to self-destruct. Things weren't helped when a letter by Goyal to the employees,
talking about how the sales goals have not been reached by the company - for the first time in
five years - was leaked, fuelling speculation about the health of the company and whether or not
it's going to close up soon.

That there are some issues with Zomato is no secret. It's work culture isn't one that most people
can fit into - the company is apparently incredibly demanding, and doesn't seem to have a
concept of work-life balance, according to former employees who have spoken to us off the
record on this matter. That's certainly something that Zomato should attempt to address, but it
doesn't exactly mean that the company is closing down.

There have also been a number of high profile exits from the company in recent times, but our
sources place the blame not on Zomato's business, but on the personality of the people in charge.
Again, if true, then this is certainly something Zomato needs to introspect about, and should
attempt to address. But it is also not an indicator by itself of a company in trouble.

What about Goyal's letter? If you go beyond the hype, and read the actual letter - published by
Business Insider, you don't see evidence of a bubble, but rather an attempt to bring about
efficiency, instead of raking in big bucks and then spending wildly, as you would expect from
companies in the midst of a tech-bubble.If you want to raise questions about Zomato, we should
be asking them about the apparent flip-flops the company has made in recent times. Goyal in
particularly had frequently talked about why entering the food delivery business in India is a bad
idea - and the difficulties being borne by companies like Foodpanda and TinyOwl seem to attest
to this. Yet, Zomato also entered the same business with Zomato Order.

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He also frequently talked about not wanting to enter the US market, as Zomato didn't have a true
differentiator for the market there. Yet, with the Urbanspoon expansion, Zomato became a huge
player in the market. Zomato co-founder Pankaj Chaddah called the acquisition unplanned,
saying the decision was tactical, once the opportunity came up.

Zomato also frequently stressed the importance of cashless payments, until it was shut down just
last month, although this is something that the company doesn't seem to have fully given up on,
as it wants to bring this back along with point of sale and table booking systems. Even with these
missteps, Zomato's overall arc looks positive so far.

It becomes clear that there are a variety of different problems that food tech companies are
facing, and will have to solve, or they will die. This is true for all the companies in this space,
whether you're talking about TinyOwl, Foodpanda, or Zomato. But that's not the same as a
funding bubble that's bringing bad ideas up, and will lead to a market-wide correction, that sees
thousands of people losing their jobs as a host of companies goes bankrupt.

Even TinyOwl - the one with the most troubled story on this list - isn't going out of business just
yet as it raises even more funds; it's new "operational efficiency" will no doubt help it in looking
even more appealing to investors. So don't call it a bubble, because that's missing the point, and
more importantly, letting some people off the hook for gross mismanagement.

TINYOWL AND ZOMATO ARE PROOF THAT SOMETHING IS

ROTTEN IN INDIA’S FOOD TECH STARTUPS

At the beginning of 2015, many investors had predicted that food technology startups would be
the new stars of the Indian ecosystem. The prophecy stood true for most part of the year, but now
the world seems to be falling apart for two of the biggest food startups in the country.

Gaurav Choudhary, co-founder of food-ordering startup TinyOwl, spent two days held hostage
inside the company’s Pune office by employees who were laid off earlier this week. And
Deepinder Goyal, founder of restaurant search portal Zomato, shot off an angry email to his sales
staff about the company missing its sales targets, which got leaked to the media and made
headlines. This comes less than a month after Zomato laid off roughly 10% of its workforce—
around 300 employees—in order to focus on areas that are more profitable.

“It’s hard for us to comment on what is happening at other startups within this space or
otherwise. Our restructuring was a business call,” the Zomato spokesperson said. But it is
unlikely that they have missed the writing on the wall.

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“Food technology is a perfect example of how bubbles had started coming up in the Indian
startup ecosystem, but they are now getting self-corrected,” Pankaj Jain, partner at venture
capital firm 500 Startups.

“In the first half of the year, every day there were food delivery or grocery delivery companies
that were getting funded, and in many cases they were raising very large amounts of money. I
think everyone has now come to realise that those are fundamentally flawed businesses,” he
added.

Jain recollects a “mad rush” to invest in the food technology space earlier this year. “It was like
‘hey, they invested in a food tech company; we don’t have one in our portfolio, we must get one
in our portfolio, too.'”

Since January 2015, food technology startups in India have raised a total of $172.9 million
(Rs1,138.4 crore), according to research firm Tracxn. This includes Rs. 100 crore raised by
TinyOwl in February, and $60 million (Rs395 crore) raised by Zomato in September. Bengaluru-
based Swiggy also raised $16.5 million in a series B round in June—just five months after it had
snapped up $2 million in series A funding.

The table below shows a monthly breakup of funds raised by food technology startups during
2015, according to Tracxn:

Month Funding ($ million)

January 0.26

February 17.9

March 0.5

April 53

May 1.5

June 19.9

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 Month Funding ($ million)

July 0.77

August 4.3

September 63.2

October 11

November* 0.35

* As of Nov. 5.

Besides overfunding, another reason that is causing trouble in the food technology space in India
is overcrowding, Anand Sanwal, CEO of New York-based research firm CB Insights.

“It is one of those sexy spaces where people think ‘everybody needs to eat and so this must be a
trillion-dollar market’. But they don’t realise how difficult it is to crack the code here,” Sanwal
said. “You and I could put up a website; somebody will order and we can run around and make
the first deliveries ourselves if need be. In the beginning, it can be a technology-light business
but eventually it needs to be pretty rigorous and significant.”

o More bad news :

Developments at larger companies—Zomato and TinyOwl—are making headlines now. But in
early October, a small food technology firm, Dazo, had announced its plans to wind up
operations less than a year after its inception. “We were scaling up and were looking to get into
more cities, but were short on capital. At some point we felt we were lagging behind other
players and decided to quit,” Shashaank Singhal, former CEO of Dazo, reportedly said.

And there will be more casualties. “There is going to be a lot of pain in this space, both in the US
and in India,” Sanwal of CB Insights said. “Most of the companies are going to fail.”

While the media celebrated a lot of these startups, most of them had no real business models, and
investors will begin to take action soon.

“There is going to be consolidation, there are going to be shutdowns, and there are going to be
layoffs,” 500 Startups’ Jain said. “The sector got overfunded and now it’s all getting pulled
back.”

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The saving grace, however, could be that the downfall of the food technology startups is unlikely
to spoil the party for the ecosystem at large, Jain said.

Zomato shuts operations in 4 cities - January 12, 2016, Tuesday

Exits Lucknow, Kochi, Indore and Coimbatore markets

Barely a week after hyperlocal grocery delivery app Grofers had shut operations in nine
cities, Gurgaon-based restaurant discovery and food ordering app Zomato said on
Monday it was closing down its online ordering service in Lucknow, Kochi, Indore, and
Coimbatore.

Pankaj Chaddah, co-founder of Zomato, who is leading the online ordering business for
Zomato, said: “The size of the market in these cities is small right now and is growing
with time. We will re-launch when the time is right.’’

ZOMATO BATTLES REVENUE CRUNCH & BLAMES IT ALL

ON SALES TEAM ; MIGHT FALL SHORT OF ITS PROMISES
TO INVESTORS
Deepinder Tries To Ease The Concerns Of The Agitated Sales Team And Urges The Whole Team
To Do A “Bloody Good Job”

The chaos in the food-tech sector seems to have breached the front gates of the mighty Zomato
empire. After firing some 300 employees – 10% of its team – Zomato seems to fighting a
revenue crunch, as well. In a mail that Deepinder Goyal, cofounder and CEO of Zomato, sent to
all his employees, it was mentioned that the company’s revenue hasn’t kept up with the growth
of its sales team.

He mentioned that the company’s sales team has been constantly underperforming and not
meeting its target. He is also deeply worried that the company, for the first time in five years,

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might not be able to live up to its investors’ expectations and may fall short of its promises. In
this mail, he asked all his employees to pull up their sleeves and do a “bloody good job from now
onwards”. “Sales is the #1 priority for the entire organisation right now,” averred Deepinder.

Here are the snapshots of the mail:

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According to Deepinder, the issue of the sales team revolves around motivation and training.

Therefore, in order to offer them the “perspective and kick” required to do a good job, he tried to
answer the some of the concerns raised by the sales team. These concerns, however, depicts
insecurity and serious lack of motivation in the team – something that seems to be triggered
by the recent layoffs. Here are some of the concerns raised by the team and Deepinder’s response
to them:

“I am just a number in a spreadsheet (i.e. “I don’t know how important my job is”).”

I want to give you an analogy here. That of a picture and a pixel.

The picture we are talking about is Zomato. And the pixel we are talking about is you. Each one
of us is a pixel, and all these pixels together, make up the picture. When someone fails to
perform their role up to expectations, that pixel stops shining brightly, and as a result, the picture
starts looking faded.

We owe it to each one of us to perform at our best, and look at it from the point of view that we
are all contributing to the picture. Some of us may think that since we have grown so much, an
individual pixel doesn’t matter. That couldn’t be further from the truth. Every dimly lit pixel
hurts us, questions our existence, and makes the viability of our business weaker.

Also, your job is as important as you want it to be. If you try hard, there is so much opportunity
at Zomato. If you don’t, you will indeed be one of the hundreds of pixels. You will still be
important, but the viewer only looks at the brightest of the pixels. Everything else becomes the
background. The background is important too, but well, it is the background nonetheless.

“Some of my buddies here at Zomato were fired for no reason at all. I am insecure and feel
temporary, and am therefore not invested enough to give my best to Zomato.”

Some of you already know this, but most of you don’t – that there is always another side to the
story. A lot of friends tell you that they were never given any feedback before they were asked to

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go. That is never true. The fact is that a lot of people don’t take feedback seriously, and they keep
under-performing consistently. A lot of people are let go on ethical grounds – we never make the
reality about such people public, because if we did, it would ruin their careers.

If you have any questions about any of your buddies being asked to go unfairly, ask someone for
a clarification. These questions are always fair, and you deserve answers to this. But do not hold
a grudge against your team members for something, because it’s not worth it.

Also, look around you and think about this – some of your buddies feel very secure and
permanent at Zomato, and they give it all that they have. What makes them different?

“I am constantly worried about being fired for performance. It creates so much pressure
for me during sales meetings that it leads to a lot of demotivation and depression.”

When you are worried about an outcome, it never happens. Here, we are talking about success as
an outcome. Do not worry about success (or failure). Just give it your best, stay natural, and good
things will happen. Worrying never helped anybody build anything.

“In the past, we have been promised some rewards which weren’t eventually given to us. I feel
un-appreciated, and don’t fully trust what my managers say anymore. I just don’t feel like giving
it my best anymore.”

As much as I know about Zomato, if any promised reward hasn’t been given to you or your
team, I don’t think it is intentional. It must be purely a communication issue. In such cases, it
doesn’t hurt to tell your manager that in a nice way. Something along the lines of “Hey dude,
there was this thing that the team was promised, and I don’t think what was eventually given out
met the team’s expectations. Could you please look into this? Leaving this unattended could hit
the morale of the team significantly.”

I am sure that this will be looked into right away. If it still doesn’t, talk to someone else. Email
Pankaj about this. Or email me. Promises should always be kept, and communication should not
come in the way.

“I have some feedback for my manager. Whom should I talk to?”

First, show some flair and talk to your manager directly and tell her/ him what you think. In
general, managers should be open to any kind of feedback from the people they work with. They
should be able to take any kind of constructive feedback from you positively. If they react to
your feedback in a personally negative way, you should tell someone else. Tell your manager’s
manager, or even email me in such cases. It is important for us to be real and candid with
everyone around us. Zomans who cannot process feedback in the right spirit need intervention.

“I have an important question. I don’t know whom to ask.”

I agree that we don’t have a structured way to be able to ask questions. But in general, that
shouldn’t hold you from asking questions. Start with asking someone. Anyone. Ask your city

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head. Ask your business head. Ask Surobhi. Ask Pankaj. Ask me. Anyone. And get your
questions answered. No point hanging around with unanswered questions – you deserve
satisfactory answers to all your questions.

“I have a lot of questions, but I am afraid to ask them because I might be judged by my
managers/ peers.”

Let’s say you ask your questions. There are three ways it can go:

Everybody appreciates the questions = you win.

The reaction is neutral = you get your answers (or not) and nobody cares.

The reaction is negative. In case it is, it will either be for the wrong reasons, or the right reasons.
If it is for the wrong reasons, you don’t have to worry about it – you can easily find help to
manage that somewhere in the organisation (read: ‘I have some feedback for my manager. Whom
do I talk to?’). If it is for the right reasons, it becomes tricky. It indicates a fundamental lack of
culture fit of that person in the organisation. In that case, you found the wrong organisation, and
no matter if you ask your questions now or later, the lack of cultural fit will eventually make you
go on your own. So in the interest of your own time, and life, ask your questions and have
nothing to fear.

“I joined a startup expecting fast growth, but I was given a five-year career path. This isn’t
motivating enough for me to put in my best.”

Okay. Let me tell you something. The 5-year career path was created so that the people who ask
this question do not speak to their managers every 7 days about when they are going to get
promoted. Because apparently, at a startup, you should naturally expect to see some personal
growth after every 7 days.

Startups are a marathon, not a sprint. There’s only one thing that you should focus on – giving it
the best you have, and not worrying about the short-term outcomes. The moment you stop
worrying about the outcome, the outcomes have a way of happening anyway. Nobody ever got
anything by worrying or obsessing over it. But you can get everything you want if you work hard
for it.

The best people at Zomato do not worry about titles, compensation, responsibilities, or the type
of work that will do. All they care about is adding value. Zomato adds a lot of value back to such
people – including supercharged growth. Also, take an objective look at our organisation. We are
so short of good people at the ASM levels (or even more senior than that). If we had people
within our team who could perform the role, we would have moved them irrespective of where
in the 5-year career path they are right now.

That leads to the next big complaint I have heard…

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“Why are we hiring ASMs laterally? Why can’t you give me a shot at performing the
role?”

To give this role to someone who hasn’t already demonstrated the ability to perform in this role
puts a lot at risk. The business can’t afford to do that. Also, if we believed you have the maturity
and skills required to do the ASM’s job, you would be doing that job.

Don’t fall into the trap of thinking that you can only learn the ASM’s job once you have it. You
will have to learn how to become a great ASM while you are still an SM/ KAM. So that we
know that once you start performing that role, you will be good at it from Day 1.

If we don’t think we have anyone at Zomato who can do the ASM role well, we do the next best
thing. Get good people from outside the organisation. These are the people we think will be able
to do the role. We are not always right, but we think it poses less of a risk to the organisation. Yet
to be proven wrong or right.

“I have not been trained to do my job.”

Then train yourself. The people who first started selling at Zomato didn’t even have clarity on
what they were selling. Nobody trained them. But they kicked ass. They used to train themselves,
sit for mock pitches with each other for hours to hone their skills over the weekends. And they
grew incredibly fast – as individuals, and at Zomato.

Stop reciting problems. Think of how you can get to the answers you want for yourself. And do
everything in your power to get those answers, including training yourself on everything that you
need to.

“I am not learning. Isn’t that the organisation’s problem?”

To train you, the organisation can do two things –

Classroom coaching – we have plenty of these. I don’t understand why, though. Nobody listens
during the classroom coaching sessions anyway.

Have great people around you from whom you can learn – we have plenty of great people at
Zomato, and at a higher density than pretty much any other organisation around us.

You might be thinking that if the organisation is doing everything it is doing, what is eventually
going wrong? Why do you feel that you are not learning?

Let me give you my thoughts on that. There are two types of people in this world: Rocks and
Sponges.

Rocks are the people who just don’t absorb anything at all. No matter what is thrown at them,
they reject everything. Sponges, on the other hand, absorb almost everything around them.

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People in our Sales teams meet business owners every day – successful, and struggling. There is
a wealth of knowledge out there with your clients which you can learn from. Be a sponge, not a
rock. And you know what? Honestly, I would kill for your job – I don’t think anyone at Zomato
has more opportunity to learn than our sales people.

Personally, some of the most important learnings of my life have come through listening into
conversations I wasn’t even a part of. For example, “the best way to get things done is to give it
to a busy person” was a part of a conversation between my dad and my brother when I was 12.

There is always so much to learn and so much to do – it all just comes down to you. Nobody will
gift you your growth and learning. You have to put in an effort to do that.

“My team lead does not go to meetings with me. Whom should I learn from?”

First, I would like to reiterate my answer to the question above. Having said that, we very
recently realised that ASMs and City/ Country Heads do not go for many sales meetings
anymore. We have been communicating to the group to actively accompany their team to sales
meetings, and also take an active role in the meetings for closure/ retention so that everybody
learns to do their job faster.

“Why are we hiring people at ASM levels without prior field sales experience? We never
get the right answers from them. How are we supposed to do our job well?”

Hiring anyone is a risk. You never know when someone works out or not. Most of the people in
our sales team are doing sales for the first time in their life. They still kick ass. We hire these
ASMs with the hope that they will learn quickly, and be able to contribute significantly to
Zomato.

However, it’s been a hard journey for some of our ASMs hired directly into those roles. The team
working with them is generally so uncooperative, that only the really strong-hearted are able to
make it work. This needs to change. All of us are responsible to make sure that we help them as
much as we can to get up to speed as soon as possible.

Remember the pixel vs. picture. While every pixel needs to work hard on its own to shine, some
light from the pixels around it when it’s just learning its way around really helps a lot.

“Our office is not nice and cosy. Zomato doesn’t treat us well. Why should I give my best
back?”

Some offices deserve to be nice and cosy. These offices are the ones who pay their own bills. i.e.
they make enough money to cover all the local cost easily. Such offices have the privilege to
spend on luxuries like nice offices.

Offices which are not yet profitable should not be nice and cosy. In spite of that, some of our new
offices are super nice – even though they shouldn’t be. Back in 2011, the Pune team used to work
out of a cafe, and we had set a goal of $5000 monthly revenue for them to be able to get an office

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worth $1000 per month. The Pune team kicked ass, got a nice office for themselves and stayed
there for three years. Most of the team which made that happen is still with us at Zomato, and
they proudly tell this story to someone new almost every other week.

While you are here, have a very clear sense of your privileges and entitlements. Privileges are
earned, and entitlements are poisonous. There is no end to entitlements, and they almost always
lead to whining. And whining is like a drugs – it makes you ineffective. Build something, and
you will get to live in it day in and day out.

“I don’t get paid enough. Our incentives suck. Zomato doesn’t treat us well. Why should I
give my best back?”

We have done a whole lot of salary benchmarking in various countries recently. The fact is that
you get paid very well. However, if you are comparing yourself to that one friend of yours who
makes more money than you, well, suck it up. No matter how much money you make, there will
always be that one friend who makes way more money than you. You should stop using money
to measure your success in life. Because if you do, you will always fall short of your own
expectations.

“I don’t have stock in the company. Why should I feel ownership towards my job or
Zomato?”

17% of the people at Zomato have stock at Zomato. That’s a very large number compared to a lot
of startups I know of.

The reason you don’t have stock in Zomato yet, is probably because you haven’t consistently
made a point that Zomato needs you badly for the next 4 years. For us, stock is not a part of
compensation and perk-based motivation. For us, stock is a gesture that we want these folks to be
at Zomato for a long time to come. And you will have to prove the point that Zomato needs you
for the long haul, and you will be a strong growth driver for our organisation in the years to
come.

“We get our targets from Delhi, while the local reality is very different. We just can’t
achieve what we set out to achieve. Why should we even try hard?”

Let me tell you the reality. You can achieve whatever is thrown at you. You just don’t know it
yet. Whenever we hit a team with very high targets there is a percentage of the sales people who
meet those targets. What’s stopping the rest of them?

In general, targets are what we need to do as a team. An organisation needs to pay its people, and
make money to be able to pay those people and spend on other things which are necessary. Our
sales people are the ones who are responsible for making money. The revenue you bring in is not
an arbitrary number in an excel sheet – the revenue is used to pay you and me and everyone at
Zomato. If we don’t get our act together on revenue, we will all fail.

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Whenever the Delhi teams sends you your targets, rather than saying “this is not possible”, you
should say “okay cool, let’s try our best, and let’s do it for the sake of Zomato”. After all, trying
our best is the best we can do.

“Our clients don’t get ROI. How am I supposed to believe in what I am selling? It directly
affects my performance.”

Not all clients will get ROI. Zomato cannot sell a bad product (people will not click on a bad
banner). In general, on an average, it is safe to assume 8x incremental ROI for our clients. Some
cities generate a lot more, some cities a little less.

Our pricing models are based on the ROI clients get on an average. Here, it is important to
understand what average means. When we say 8x incremental ROI is the average, it means that
around half of our clients get less than 8x. The other half get more than 8x. Some clients will get
less than 1x, some will get more than 20x. That’s how averages work.

I understand that you get a hammering at the hands of our clients who do not get enough ROI.
The fact of the matter is that it is not our fault. If you replaced that client with a product (client)
which can sell, it will get ROI.

We should stop being defensive about this and think about ways in which we can drive ROI for
our clients. Understand their target audience for them, and help them create targeted banners for
that audience. Hopefully, that should work. If it doesn’t, try something else.

These concerns clearly illustrate that Zomato’s sales team is visibly shaken and is not happy with
their jobs. The recent layoff episode has affected the employees deeply and they seem to be
operating under the fear of losing their jobs; something that does not breed results. Under such
situations, the company needs to calm them down and make them feel safe and wanted. One can
only wonder how this mail from Deepinder will get the job done; especially because the news of
the company battling revenue crunch, and the sales team being blamed for it, might only
intensify their fears and insecurities.

The recent layoff was mostly focused on the US and the content team – the employees who
collect data from restaurants listed on the Zomato platform and the core of the company’s
original “feet on the street” approach.

ZOMATO BLACKLISTED FROM IIT

PLACEMENTS AFTER DEEPINDER GOYAL’S
OUTBURST

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Zomato CEO Deepinder Goyal can’t seem to get his foot out of his mouth. Last year he’d done a
Reddit AMA, hoping to receive some fawning praise and promote Zomato’s food delivery
business.

Earlier, a bitter email that he wrote to his sales team went viral, and was his approach was
roundly criticized for being immature. And now a series of tweets from May is back to haunt
him.

Goyal was referring to Zomato being denied a day one slot as a recruiter as its salary offers (with
ESOPs) amounting to a total of Rs 26 lakh was too low. Day One slots at IIT are highly coveted,
with the best companies turning up with lucrative offers.

Now it was revealed that Zomato has been blacklisted from conducting placements at all IITs this
year. “No company should take the IIT system for granted,” said the placements head at one of
the top IITs. At least six IITs Delhi, Bombay, Kharagpur, Madras, Guwahati and Kanpur
confirmed the blacklisting. Goyal’s outburst has played a large part in the ban, sources told
Economic Times. Complaints of Zomato’s highhandedness at other IITs and alleged ego issues
also added to the problem.

Zomato has an infamously rigourous work culture that the company proudly promotes. This
includes long working hours, a hire-fast-fire-fast policy, and countdown clocks in the bays.
Though it is valued at over $1 billion. Zomato’s facing a hard working environment of late,
having fired 10% of its staff last month.

ZOMATO-BACKED PICKINGO SEEMS TO BE IN TROUBLE,

HALTS HYPERLOCAL DELIVERY

After Localbanya and Townrush, hyperlocal B2B logistics startup Pickingo appears to be in
trouble. The Gurgaon-based company has halted hyperlocal logistics services for retailers and
restaurants. We spoke incognito to Pickingo executive inquiring possible partnership for
restaurant delivery, however, the executive said the startup had stopped hyperlocal deliveries.

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According to the executive, the company continues to ensure deliveries for e-commerce players.
Zomato had invested a small amount in Pickingo in September last year. According to sources,
Zomato infused some cash against five percent equity in the company.

Pickingo raised $1.3 million led by Rehan Yar Khan of Orios Venture Partners along with
participation from Zishaan Hayath in August last year. Sources tried reaching Rahul Gill, Co-
founder, Pickingo, over the phone but his number is out of service.

Launched in December 2014 by IIT-IIM graduates, Pickingo started with reverse-pickups for e-
commerce players such as Jabong, Snapdeal, Shopclues, and Paytm among other across six
cities. The company entered the on-demand hyperlocal delivery segment and claimed to power
delivery of 300 restaurants, groceries, and pharmacies.

The company was handling deliveries for Grofers as well. Grofers confirmed that it had stopped
working with Pickingo almost three months ago. The 11 month-old-startup is possibly pulling
out from hyperlocal space in the wake of high burn rate and to improve its bottom line.

Prior to Pickingo, Townrush and Localbanya shut their operations after they failed to raise
follow-on rounds. The unprecedented appetite for foodtech and hyperlocal startups from
investors seems to have passed its crest on the pretext of scale and projected growth.

CONCLUSION

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Startups who compromised on fundamentals to focus on scale, growth, future projections, and
over-hiring are feeling the heat even as a cold front (winter) appears to be setting in.

Experts say figuring out unit economics in hyperlocal logistics is very tough. Customers in India
typically don’t pay an additional amount for delivery and at those price-points, offering a
delivery service for restaurants/retailers doesn’t translate into viable unit economics for foodtech
and hyperlocal startups.

With Pickingo pulling out of hyperlocal delivery, Zomato can look into writing off its investment
in the company. Zomato had invested in Pickingo and Mumbai-based Grab to streamline its
home delivery part. On the lines of foodtech, hyperlocal is on its way towards consolidation and
it would be interesting to track how overall hyperlocal evolves in the times to come.

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