Long before Zomato became a billion-dollar public company, it was spotted by lone investor and founder of Info Edge, Sanjeev Bikhchandani. One could very well say that the ‘rest is history’ but it is one of perseverance and of taking chances. From taking off as a fledgling startup called Foodiebay and facing existential crisis to transforming the fortunes of its investors, Zomato has grown by leaps and bounds. Early investor Bikhchandani speaks to Business Today’s Aabha Bakaya on Zomato’s journey.
What is the significance of the Zomato IPO for the start-up ecosystem?
The Zomato IPO is significant in many ways. The obvious ones have all been talked about – record subscription, busting the myth that Indian start-ups need to domicile and list overseas, provides proof that Indian markets have depth and can give valuations that compare with markets in the West and so on. However the greatest significance lies in the fact that Zomato provides clear evidence that India offers an environment where young people from regular middle class families can dare to dream big and if they work hard enough and are smart enough they can achieve great things.
When a TCS and a Wipro are founded and they succeed it is great – a whole new industry takes birth, giant companies are formed, wealth is created, people get jobs, India earns foreign exchange and so on. However these were established business houses that diversified. But when Deepinder Goyal, Pankaj Chaddah and Gunjan Patidar start a Zomato and they are joined by other talented people – GG, Mohit, Akriti, Akshant and all the others at Zomato it is different. These are ordinary people who aren’t from wealthy families who made it happen.
Take – Deepinder’s case. He was born in Muktsar – a small town in Punjab in 1983. His father was a teacher in a government school. For the first ten years of his life the family lived in the fear of terrorists. Ever heard of a Goyal named Deepinder? It is a Sikh name. As a child he was tutored by his parents that if the terrorists ever came he should tell them that his name was Deepinder and he was a Sikh. That way they would spare his life even if they killed his parents. Thankfully the terrorists never came.
When he was fifteen his parents sent him to Chandigarh to study for the last two years in school. He lived in a hostel – ragging was tough but he survived. Academically he was totally out of his depth initially since the standard of study was far higher than he had ever encountered. But he tried hard and managed to clear the IIT entrance examination. From IIT he went to Bain and then launched Foodiebay which became Zomato later on. The rest of his history is well documented. The great thing about this story is that India offers opportunities where the son of a school teacher in Muktsar can go on to found a company that becomes a decacorn. This is inspirational. A hundred million young people in India will believe that if Deepinder can do it, so can I. Perhaps ten million will actually try. And perhaps one million start-ups will succeed. And the success of these one million will transform India. And Zomato is not the only one. Very many of the dozens of start-ups that are likely to go public in the next three years have been started by ordinary folk. The success of Indian start-ups is the success of India.
An aside – when Zomato began to deliver food in hundreds of the smaller towns of India, Deepinder called me up and told me that they are now delivering in Muktsar. There was a sense of quiet pride in his voice. I did not say anything – I simply let him savour the moment.
How did you first meet the Zomato founding team and why did you decide to invest?
Hitesh (Managing Director & CEO Hitesh Oberoi) and I were both using Zomato (then called Foodiebay) and we loved it. It was the only site with the menu cards of restaurants. It was Hitesh who suggested that we should look at Zomato for investment. I searched the Internet and found Deepinder's email id and sent him a cold email. Deepinder didn’t respond at first thinking I was a Naukri sales person and wanted to sell him our services. It took him a couple of days to figure out that I was reaching out for something else and he responded.
We met and we hit it off instantly. Hitesh and Ambarish also really liked him. We shook hands in 72 hours of meeting. We loved the clarity of thought, the customer insight and the natural traction the site was getting. We simply knew that this team would do something good. We went solo in the first four rounds of investment. The team inspired so much confidence in us – they were so so good.
What had you thought would become of the company when you first invested?
We knew that they would succeed however we did not know they would become this big. Nobody could have imagined this scale of success back in 2010 when we first invested. The secret of early stage investing is to invest behind companies that will succeed anyway – with you or without you. The trick is to spot that talent and recognise it for what it is. And if great teams let you invest, you are lucky. And then you support them and be patient and stay invested for a decade or more.
Did Info Edge alter Zomato’s fortunes or had Zomato altered Info Edge’s fortunes?
In the beginning Info Edge altered Zomato’s fortunes – we invested the capital that they needed and supported them through many rounds of investment. We also had plenty of conversations with them about the business - I am not sure how much they benefited from or listened to our advice. You see great entrepreneurs have a mind of their own and they march to the beat of their own drummer. But today with so much success the truth is that they have altered Info Edge’s fortunes. It is reciprocal symbiosis.
How has Deepinder evolved as a leader and a person over the last decade that you have known him?
Deepinder was twenty-eight when we met him. He has evolved and matured in two major ways over the last eleven years. The first is as a strategic thinker – he was always very good here but he has become even better. The greatest change however has come in his people leadership skills. Over the last five years he has put together and retained a great team and it is this team that has delivered the results that are there for everyone to see.
Were there any near death experiences that Zomato faced over the years?
There were several times in the last decade when Zomato faced existential challenges – most of these related to competition, the need for ever greater capital to survive the onslaught of well-funded competition and the challenges posed by the first lockdown during Covid. Each time Deepinder and his team led the company through these crises with cool heads and with aplomb. He was often stressed but he never showed it.
There was a point in time when over 60% of your portfolio at cost was invested in Zomato. Was that prudent?
It probably wasn’t. But we did what we did and because of that foolishness we have won so big today.
Why would founders prefer Info Edge as an investor over venture capital firms?
There are founders who prefer us and there are founders who don’t. Those who prefer us like us for several reasons. One of them is the fact that we are probably the most founder friendly investors in the game – we have been entrepreneurs ourselves and we understand the lonely journey of the entrepreneur – the risks, the pressures, the fears, the apprehensions and so we are more empathetic. Then we are very patient capital – we didn’t raise a fund where we needed to return someone else the money in a few years. So we don’t get nervous about an exit after seven or eight years. Even now when we have raised a fund – it has a long life of twelve plus two years. And there are only two LPs – Info Edge and Temasek. Both the LPs have prop money and have a long term view on India. Yashish Dahiya of Policybazaar once told me something very simple yet profound “Sanjeev – I am running a marathon. Many financial investors are running a sprint. I need time to build a great company. I am glad that Info Edge is staying the distance.”
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