The food-tech sector appears to be imploding. TinyOwl is scaling down, Bangalore-based Dazo shut operations while SpoonJoy, another start-up in Bangalore, merged into hyper-local grocery and fresh food delivery company, Grofers. The biggest of them all, Zomato, recently fired 300 employees, shut down its cashless business in Dubai, and restructured its operations. Zomato co-founder and CEO Deepinder Goyal talks about the restructuring, what worked and what didn't for India's only food-tech unicorn, a company which is worth over $1billion.
Q. From the discovery side, is advertising slowing down?
Goyal: If this is in reference to my (leaked) email to the sales team, well, every sales team needs pressure to work and the email that I sent out was an internal communication that is part of regular conversation that we all have with our teams. There was a lot of context behind that email which was missing in what the people read. What leaked to the media was one dimensional and was taken out of context. Internally, people (at Zomato) got it. They were actually quite kicked at reading that email and there have been a lot of positive conversations around that email. We have a plan in place, and if we execute well, we will meet our revenue targets. This is true in the case of every company at any point in time, you have to execute well to meet your revenue targets and that email was just a nudge in that direction. It was to tell our people that we must keep working hard and these are the things you should not be worried about.
Q. What's the update on Zomato's business and numbers.
Goyal: We are present in 23 countries and are the market leaders in 18 of them. In 12 of these markets we have very high levels of traffic. Recently, we split our markets into two parts - full stack markets and enterprise markets. Full stack markets are the ones (the 12 markets) where our traffic levels are very high and we are looking to monetise them through ad sales as of now. The enterprise markets are those where the traffic is not adequate to achieve high levels of monetisation through advertising (banner ad sales). We are now taking a B2B2C approach for those markets. We have raised around $225 million. We get over 80 million user sessions on our mobile and web platforms across the world, and are well on course to achieve good revenue growth. We will achieve more than double our revenue (from last year) this year as well.
Q. Did all of Zomato's acquisitions work out well?
Goyal: We have organically launched and grown our businesses in 16 countries. In the remaining seven countries where we are present, we acquired local leaders in our space to eventually move all their traffic over to Zomato to become the number-one player. On the product front, we acquired a table-reservations company NextTable and a point-of-sales product company MaplePOS. Both have been integrated into Zomato and are now live as Zomato Book and Zomato Base. Zomato Book has already been piloted at restaurants in the US, India and Dubai, and we will soon monetise it in all our full stack as well as enterprise markets. The point-of-sale system for restaurants (Zomato Base) is at a very early stage, although we have started deploying it in some places. I think about 40-odd restaurant locations are live on our point-of-sale system and we are learning a lot more about how the system should operate. I think by January-end, we will be able to go big on selling it to restaurants as well.
Q. Almost 300 people were laid off in the US. Was it about cost restructuring?
Goyal: Along the way, we are getting smarter about our business. In the past one year, we have got rid of lots of things which were not making long-term sense for the business. Shutting down our cashless business was one big decision for us in that direction. We have shifted our focus to what really matters and what works. We are getting smarter with the effort that we put into our content operations. 40 per cent of the restaurants on Zomato account for over 90 per cent of our traffic. In that light we have had to rethink our processes to make sure that the frequency of our data updates goes up in multiples for the top 40 per cent of restaurants. This led to a cut in about 60 per cent of our content teams across the world. It wasn't about the cost - we moved a lot of people from our content teams to various other functions, but we couldn't find roles for everyone within the organisation. There were about 150 people impacted in the US, more so, because there were more restaurants there (the US alone has over 700,000 restaurants out of the total 1.4 million restaurants listed on Zomato; in comparison, India only has 80,000 listings, Australia 60,000 and the UK 20,000. Thus, the US had almost half of our global content team. The cuts in other countries have not been a large number, given the size of those markets. The sales teams across the world have not been affected by this restructuring. We will continue to focus on building a product that our users love. We are also new in the transactions business and have been doing very well. We are going to push the envelope on online ordering in India. We are working hard to ensure restaurants around the world are able to accept table reservations through Zomato - almost half of our sales teams in various countries have shifted focus to this product for the near future (especially in our enterprise markets).
Q. What can the food-tech industry learn from the TinyOwl incident (scaling down and the hostage crisis)? Also, in terms of repercussions, do you see funding slowing down for premature start-ups?
Goyal: It's hard for us to comment on what is happening at other start-ups. I don't think that funding can ever slow down for good companies - the price could change, but raising money for fundamentally good companies is generally never a problem.