‘We are feeling liberated’: Zomato CEO Deepinder Goyal

Will India’s stock markets accept a loss-making company going public, and learn to value tech companies like private investors do? This question was emphatically answered with 13-year-old food tech start-up Zomato’s blockbuster IPO last month. The stock, which listed at Rs76 apiece, rose on listing and closed on Monday at Rs138.45. The listing appears to have opened the floodgates of tech IPOs as a number of start-ups are now lining up listings.

In his first interview since the landmark IPO, Zomato founder and CEO Deepinder Goyal, who started the company in 2008 as a menu listings platform and grew it to a $13 billion publicly traded food delivery company in 13 years, spoke to Sruthijith KK on a range of themes, including the IPO, competition, company culture, tackling mental health challenges, and plans for his wealth. Edited excerpts:

In retrospect, do you feel you could have raised more money from the public markets?

I think we raised the right amount of money. We only have plans for the amount of money we raised. And I think in the future if we need to raise more money, being a public company makes it easier.

How do you react to the response to the Zomato IPO? Was it expected?

It was not expected at all. We spent zero dollars on marketing the IPO. So, we were sort of scared whether we would make it. Users love us, customers love us, so we were all banking on customer love for the IPO. And it turned out great. We were sort of overwhelmed with the 360-degree love we got over the last couple of months. I think the first day of the three-day window when people subscribed for the IPO, we were getting so much love. All founders, competition, VCs who backed competition, everybody was sending us love. And that night I was scrolling through Whatsapp and I had 400 unread messages. That just never happens. The only person who would feel that much or more love than what we felt during those periods, can only be Sachin walking out to bat at the Wankhede Stadium in Mumbai. That’s the only thing that can come close. Nothing else. And I was like, leave all this money and valuations aside. People should be building start-ups for this.

You have talked about being nervous pre-IPO. Can you speak more about that? Were there, say within the company, people who doubted if you were doing the right thing? If the pricing was right? Were there a lot of debates about the pricing?

It was a very smooth process. There were no debates on pricing. We were not worried about it. Because we knew that we had priced it right. And when we say right, we want to be an investor-friendly company. So, we didn’t want to price it high. We wanted to keep enough money on the table so that everybody who comes in also has an upside. So, we were very confident that we did everything right.

What does this mean for running the company? You have always been particular about running the company on your own terms and not letting investors dictate terms. Now there are quarterly results and the pressures of running a public company. How are you going to not let that pressure influence your decision making?

I think there are two aspects to this pressure. One is whether you really care about the short-term stock price or not. The second is what do you really have to do on a day-to-day basis. Now, we are clear that we don’t care about the short-term stock price. Actually, I haven’t looked at the stock price since the day of the listing. It’s only when somebody is talking around, that’s when we get to know. Friday was the listing. Monday morning I’d forgotten that we are a listed company. It’s like back to work. Zero recollection that this is also something that’s going on there. So, I think we are not going to worry about stock price. So, that leaves the fear aside. And on a day-to-day basis… see, earlier we used to run the company on a month-to-month basis. Now, we run the business on a quarter-to-quarter basis. There is much more room for thinking and doing long-term stuff than month-to-month because companies like ours are always raising money. So, when we are private and raising money all the time, every month matters. Because VCs and investors ask for monthly P&Ls.

So, actually, it has become easier?

It has actually become way easier.

Is that a good thing?

That’s a great thing. I think earlier we would spend 50% of the time on long-term stuff. Now, you can spend 70% of the time on long-term stuff. So, those tweaks, those little degrees of freedom that you get, helps you take more right calls than wrong. We are feeling very free and liberated by being public. It doesn’t feel like a constraint to us. And I think it’s a combination of reality as well as the mindset that we have forced ourselves to have.

You have created a lot of wealth for Zomato employees. What are your thoughts about wealth generation within the company and among employees?

I don’t have thoughts about that. Those guys worked hard, they made money. Great. I can’t take credit for it. I think it’s the other way round. These guys have worked so hard to make me money.

In recent years, there has been a lot of focus on being having positive unit economics in as many markets as possible.

That’s good business. That’s our everyday job.

But isn’t there a trade-off between chasing growth and turning positive at a unit economics level?

There’s always a trade-off, but the greatest companies are able to manoeuvre the trade-off and do both the things well. And I am not saying we are great, but at least we want to be great. So, we are not going to accept an answer that X only always comes at the cost of Y or vice versa. We are going to try to do both the things. We will see how it goes.

And it will continue to be a market-to-market strategy?

It’s always hyperlocal. Even Delhi has some 50 different things being done at different locations.

Does being a listed company change your competitive position vis-à-vis Swiggy in any way?

No, we don’t think about competition at all. It has been a while since we haven’t. That has helped us, so we don’t see a reason to change anything now.

Are you saying that you don’t really have to worry about competition?

No, I think we stopped worrying about competition during our worst times. We like to focus on the customer and do great work. That’s the only way you are going to win. Money doesn’t matter, which in hindsight we have proven right. So, all those things and the rationale here is that if a frugal customer-centric strategy worked for us when we had one-fifth of the money in the bank, why should we change that when we have more money than somebody else.

Are you saying you are not focused on gaining more market share?

No, we are not. We don’t even know how much market share we have. I know an industry report said we are slightly ahead, but we have no idea.

No part of your company has targets to gain market share?

No part of the company has targets.

Surely, your sales team must have?

Some sales teams on the frontline do. But I don’t have an agreement with my business heads that this is what they are going to do next quarter in terms of numbers.

So, the culture is that you do the best you can? How do you evaluate performance?

The quality of work that comes out or doesn’t, that shows right?

But doesn’t that introduce an element of subjectivity?

Objectivity is for people who don’t want to shoot for the upside. Subjectivity is where you come up with new ideas, take risks. Objectivity makes you risk averse. Certainty and upside are two opposite ends of the spectrum. Certainty means you will only do that much. But here we are saying, guys do way more with way less. Continue seeking answers.

Conventional management principles dictates that you should measure, measure, measure.

We have been like this forever. People always used to associate the way we run the company with our failures and say see this is why things go wrong. But I think now it’s more acceptable to talk about this.

Now that you have nothing to prove?

Not that we have nothing to prove. We have been able to prove something. To have some data behind that yes, this works. This works in some context. You can’t make this work with everyone. So, you have to have really good people. You have to be able to trust them. They should be able to trust you. Because if my business heads don’t trust me, then even that doesn’t work. So, it’s a two-way trust equation that makes such a thing work.

What would you say have been your key failings both as a leader and as a company?

Failures are temporary. I think I don’t fixate myself on the past. If you ask me for learnings, I would have a better answer. But I don’t know about failures.

Tell me the learnings then. Or takeaways from this journey that might be valuable to others who are trying to undertake a similar journey?

I think one of the biggest things is there’s this dialogue from the Netflix series Star Trek: Discovery that says ‘Universal law is for lackeys. Context is for kings’. Leave aside the sexism in kings as opposed to queens, this is one of my biggest learnings from, I’d say, my series of failures. People say I did this, I made a mistake, I will not do these things again. That’s a terrible way of thinking. You failed because you did this in a certain context. So, the combination of your actions and that context led to your failure. So, the same actions, in a different context, might actually work. So, extending this, I think the big learning is that nothing is true or false. Nothing is right or wrong. There is no framework in which if you operate, you are bound to do well. You have to be thinking fresh and thinking first principles all the time.

What about tactical advice on, say, hiring or talent, dealing with fundraising and investors, dealing with lean phases in your journey…

On hiring, I have discovered something new which has been working for us. We have been experimenting with it for the last six months. It doesn’t translate to every role in the organization, but especially for senior roles, let’s say for ₹50 lakh-plus salary roles. We don’t have a role in mind when we are having a conversation, and we make an offer without a role or a title in mind. Even if people ask us we want this or that you need to give me some clarity as to what I will be doing, we say no. We say come for the organization, not for the role. If you are coming for the role, you will find hundreds of better roles everywhere else as well. What is actually unique to us is that roles are temporary. Whatever you come in to do might not be there 15 days from now because we discovered it’s not making sense anymore. If you associate yourself to that thing and it goes away, then we don’t want to lose you as well. So, we sort of try to get people into the culture of Zomato, into what we are trying to build. Obviously if we are paying you Rs75 lakh, we will expect 100x value out of you. So, you are going to get great roles, but what’s it going to be, we don’t know. So that’s what we have been doing and we have been getting really good people, who don’t have baggage of the past, who think of themselves more than a role.

When you operate in that manner, how do you deal with conflict or turf wars?

We don’t have turfs, so we don’t have turf wars.

You have invested in Grofers. You are reportedly investing more in Grofers. Is there a potential integration in future or a merger in future? What is your overall play in groceries?

We want to deliver groceries. Last week we launched it for a small customer base in Delhi. We are doing it on our own. We have also invested in Grofers, these are two different models, we don’t really compete. Even if we do, we are okay with that. It’s a separate company. We are a small 10% shareholder, it is not big a deal.

But clearly, you have invested with a strategic intent, right?

Not so far. We are like, let’s just get close to the company as a financial investor, then we will see what they do with this money, then we will decide.

Do you see groceries becoming a significant part of Zomato’s overall business?

I don’t know right now. I think the theoretical opportunity there is huge. Whether we will have product market fit to be able to grab a sizeable chunk of it, I have no idea. We are certainly going to try.

There’s a lot of dissatisfaction among at least some groups of restaurant owners about the sheer power that platforms like yours hold. And there are active efforts to try and disintermediate these platforms. There are now companies that are helping restaurants do that. Is there disruptive potential in any of these efforts?

Disruption is always in hindsight, so all of these could disrupt us, I don’t know. We are watching, we are doing our work, our restaurant partner NPS (net promoter score) is at an all-time high. It’s improving every week and we are doing our job. So, I think largely 95%-plus restaurant owners are super happy with us. Because of the negative voices you have heard, it’s hard for them to say they actually love us.

What about delivery partners? There’s a view that your delivery partners could be better compensated, that they get a raw deal. Is there anything that you are looking to do to get them better financial outcomes?

Everyone seeks better financial outcomes. You do as well, I do as well, there’s no end to “better”. We do what we can do, and we still make losses. We use tech to make sure their earnings per hour keep going up, but there’s nothing overnight that we can do. This is a money-in money-out business. We can’t have more money going out of the business than the money coming inside the business. Our rider NPS is so high. They say look I have a I have a job, I’m able to feed my family, I make more money than I was being a driver, I make more money than I was as a restaurant waiter, this is really good, thank you. That’s the general sentiment. In terms of working conditions, we provide insurance, we do training, we do grooming… At the end of the day, it’s about whether you are getting a fair wage for your effort. The narrative of more—I understand and respect the sentiment, but it’s not possible. All we have to do is try to be fair. People come here to work with us because this is a better income-earning opportunity than anything else out there. Then I don’t get why we are being crucified here. It’s their choice. To all the people who complain about this, I would urge them to create a platform where they can create better jobs for these 200,000 people. We will send these guys to those platforms so that they can get better terms and we will find a different part of the society to be able to empower them to do better than they are doing right now. That’s how it should work. I think the team is doing a great job. We are always focused on doing more for them, doing better for them.

Does anything change for the delivery partners now that you are a public company?

Nothing.

You said you have about 200,000 delivery partners right now. Do you have any sense of what is their average earnings?

Differs from city to city. Around ₹20,000 per month. There are people who make Rs50,000 as well.

How do you feel about the fact that after you listed, Zomato is now valued more than some of our long-standing, industrial main-stays such as Mahindra and Mahindra or Tata Motors?

I don't understand valuation science. I don’t know how this works. I think we are building something valuable. Those guys also have built something extremely valuable. Their customers love their products. I’m a happy customer of these companies. You should ask these funds how they value. It’s not a question I understand.

What’s your view of the addressable market that Zomato has?

I think under-penetration is there in India in terms of the number of restaurants per capita; the number of meals we have outside of home per capita are lower than pretty much any other country out there. The last couple of years have shown us that things are growing really fast. All valuations are about hope. We have to execute on that hope.

What about the competition for tech talent? We have seen companies giving BMW motorcycles and Mercedes cars to engineers. Has it become more challenging in recent months to retain tech talent?

The best talent comes to you for the quality of work. What they will be able to do with the size of the platform, the colleagues that they will work with. We focus on building those things than BMWs and Mercs. I’m happy for those guys but I don’t want those people who go to those companies for those things. I’m happy that they are making sure that we actually interview less people.

Evidently, there is a cost escalation in that department and probably may go higher as everything is getting digitized. What is the long-term view? Is your wage bill going to get significantly inflated?

We haven’t felt anything so far. I have heard stories. I think we are at a point where the brand and the scale and the quality of work, quality of people is just compounding. So, we are not having issues so far. If people don’t want to join you, if people don’t think of you as a tech company, then you have to give out BMWs, Mercedes or whatever. We fairly compensate people. In terms of compensation, we have been very, very ahead of the curve for the last 2-3 years. Even during our worst times, we are very, very employee-friendly in terms of how much we pay. As you can see, employees have made close to $500 million in the IPO. Vested stock is worth about $500-700 million.

Your IPO represents several milestones. You are the first among the new wave of consumer internet companies to go public. You are a loss-making company that went public. It opens up the doors for a lot of other start-ups. It increases the flow of investments into Indian start-ups because exits are now easier. What are the most satisfying things for you that Zomato helped accomplish for the ecosystem?

I have got a ton of emails saying: ‘I too will start a startup.’ I think that was good to hear. Because we need change. We need more startups coming up, creating value. One other thing that I heard was I will domicile in India and I will go public in India. I don’t have a nationalistic reason. For me, if we are trying to build long-term companies, we need to have our customers participate in the ‘wealth accumulating’ period. How else are we going to make money for the country at large if we are not going to let our customers participate in the opportunity? And you have to be incorporated in India. You have to be listing in India for that cycle to come back and, like, literally put all companies like ours on an accelerated path of growth. That’s my long-term view. Twenty years out, this country is only going to grow if companies like ours list, domicile here and list here. Everybody needs to make money. Companies like ours are responsible for making sure everybody has that opportunity.

You took the decision (of going public in India), while many people found it far less cumbersome and far more convenient to domicile (elsewhere?).

They see it in the short term as more cumbersome to list, to domicile here. But if you are building your company for 50 years out, accumulate all the taxes, it’s always going to be more cumbersome to have a company based out of some other country than where you operate. I would say if somebody’s domiciled outside, you have a short-term view. So, 50 years out, why should you deal with potential regulatory risks of businesses there? Be here, be part of the system, try to change it towards the better. Running away is never an answer.

So, being domiciled here and also to list here instead of say the US--all of this is a conscious decision, but not from a nationalistic point of view?

We actually evaluated everything, down to the T. Evaluated all the cons and pros. Everything was roughly the same. We didn’t see much of a difference (between the two kinds of listings). There was an extra point on the listing in India, that our customers will be able to buy the stock. That tipped the balance (in favour of listing in India), everything else was the same already.

So, you are not of the view that it is a lot of hassle to be subject to Indian laws and be domiciled here and to list here?

No, I am not of that view. Maybe it will take you three extra days to compile some things, but how does that really change the future of your company? If founders get irritated by these things, they shouldn’t be starting a company in India.

There were regulatory changes that ultimately enabled you to list here. Did you work behind the scenes with regulators, did they consult you? Did you make representations to make these changes happen?

No. A lot of the groundwork was already done, nearly half of it. We were the first ones to raise a lot of new questions. It was a joy working with the regulators, to be honest. They were very receptive to feedback, to changes, to alterations, to context.

So you made representations to Sebi and said these are the things you want changed?

It was an ongoing process. We were a private company and we had 30-40 things to raise. They used to hear us out, sometimes give us answers that no, we were thinking of it in the wrong way and explain the intent behind this, tell us this is how you should do this. Sometimes they noted our feedback, sometimes told us that for now, do this and we will change it later for everybody else. Sometimes we got waiver and exceptions on some of the things. So, they were very cooperative, Sebi wanted to get this (listing) done in the right way, which is right for everybody. We didn’t push, we didn’t cut corners. It was smooth. That’s why it took some time to get here. But we were very sure that we wanted to do this nicely.

So, in this whole tech IPO boom, do you think Sebi’s role has been underappreciated?

Absolutely. It was almost like working with a private company or a start-up. It was really good working with them.

How do you respond to people who argue that the Zomato stock is highly overpriced?

Why would I argue? If somebody says a price is high or low, it is their view. Everybody values different things in different ways. When you are private, even then you used to hear things, when you are public, even then you used to hear things. Then, where’s the truth?

Right, there’s only context.

There is only conflict for some people. You can’t pay attention to them.

You have dealt with your share of critics during your entire journey. So, now that you have listed and there’s been a public recognition or public discovery of value, do you feel vindicated?

No, I think all of this is temporary. Every good thing that comes our way, all the love, it’s all temporary. It’s a butterfly effect. Something somewhere will happen and everybody will be up in arms against us. We would actually have nothing to do with what happened, so all this just happens. There’s no vindication. You just have to remain centered and keep doing your work.

Through all your experiences of ups and downs, did you ever come close to giving up in all these 12-odd years?

About a couple of times every week?

You can’t be serious.

There were some low moments every week, when you kick your chair and say, why did you do this, or how did this happen.

But did you seriously ever consider quitting?

(Long pause) Quitting, no. Giving up, yes. There’s a difference. Quitting is the last mile of your depression cycle. Giving up is somewhere in the middle, I have thought about it so many times.

Do you deal with mental health challenges?

I think I’m depressed all the time.

But it is one thing to think you are depressed, and another to be diagnosed as such by a psychiatrist.

The psychiatrist has diagnosed me with multiple things. Let’s not even go there. (Laughs)

Have you sought therapy or medication?

Yes and no. I have had those things. But you have to have sensible friends with whom you can talk about these things. That’s also a kind of therapy. Therapy doesn’t always have to come from professionals. I think if we have got a good, trusted bunch of people who love each other quite a lot, so that’s therapy here. That lifts you up.

And that has been your coping mechanism?

I have multiple coping mechanisms. I’m not a formulaic person. If I’m feeling low at a point, I will try to resolve it at that time. I will do something about it.

So, you were saying you have come close to giving up. But…

Quitting for me is the last stage of giving up, when you are over the fence, now you are not going to come back. Whenever there’s a margin to come back, it’s not quitting. For me that’s just part of giving up, it is temporary in nature.

But you would say the number of occasions over the last decade that you have come close to giving up are numerous.

Yes, quite a lot. But it is not about how many times you get depressed. It is about how fast you can pick yourself up and get back. I don’t worry too much about how many times I get frustrated. Twice a week, I get frustrated and want to give up. That is not a problem for me. What is a problem for me is if I stay there for more than an hour or so. I have to quickly recycle those thoughts and get past that.

Did you ever think that look I’m going to stop doing this. I’m going to find x or y person to run this company.

That’s my forever thing. I want to be doing what I want to do here. But there should be multiple CEOs to do this. To a very large extent, my CEO tag is actually just a title, which more often than not just comes in the way of work.

Really?

Yes. In any company, it should be about what is being said, rather than who is saying what’s being said. That’s quality conversation. The CEO thing is a tag, I don’t like it. If the world would accept it, then Zomato would be a completely title-less organization. And you can’t make it title-less if your CEO has a title. It needs to start from there. But I don’t think anybody is ready for that yet. The other thing is, not all companies can get there. And I actually might be a fool to think we are there. There’s a good deal of trust between people here. And titles, more often than not, actually only come in the way.

Do you see at any point in the future, you would much rather hand over most of the responsibilities of running the company to somebody else even with the title of a CEO?

There’s no somebody, that’s not how we work. It’s a team. There’s no role, there’s no CEO role. I am more of a chief product guy than a CEO. Akshant (Goyal) and GG (Gaurav Gupta) do most of the CEO stuff visible from the outside and the inside as well. You can think of our team as a team of CEOs rather than one single CEO.

But is that because you recognize that the most important part of the work that can be done in the company is the product-related work? Or is it because you recognize that this is what you are good at and that the most value you can add to the company is from this area?

The latter. We are like a football team. Everyone has strengths. Why should I even kill myself trying to learn what GG is already so good at? What’s the point? That’s not the best use of anybody’s time. GG does everything that he is good at, I do everything I’m good at. Let’s build depth rather than build breadth.

I recently chanced upon an excerpt about Apple and its design philosophy. It said Apple doesn’t do A/B testing. They say that we optimize for experience and what is pleasing, even if that means that particular shade of blue is not the one that gets the most number of clicks. What is your product philosophy in this context?

There are a lot of companies that are data-driven. They use data to make decisions. Data decides it for them rather. For us, we see data as just one of the inputs. It has to be there, it should be there. Beyond that, we bring in intuition. Most of what comes out comes out from the intuition. Data is the first step. We look at everything, we connect dots and say this will work. You won’t be able to make an obvious connection between what you saw in the data and what finally got made.

When we talked a few years ago, you said you find it difficult to spend more than ₹2 lakh a month. Has that changed? What are your plans for the substantial wealth you now have?

In my head, I haven’t made wealth. I am still the same. I don’t know. My self-image has to change first, before I think of these things. Even these valuations, they are all temporary. They are all based on hope. We have to deliver on these yet. It’s not done yet.

But that will always be a moving target, right? From what you started to now, you have built a multi-billion dollar company.

Yes, that’s fine. I’m not going to definitely do anything with that (personal wealth). Finally, everything I have earned is going to charity. Where else will it go? There’s no other path.

Your daughter can inherit?

She should make her own money. Why will she need all this?

So, you plan to give most of your wealth to charity?

I hope so.