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Foodtech a hard space to execute and build a business: Zomato founder Deepinder Goyal

The valuation of Zomato in the last round in 2015 was $960 million. We never hit a billion. We fell short by $40 million, said Deepinder Goyal.

ET Bureau|
Jul 23, 2017, 12.01 AM IST
Edited excerpts from an interview with Zomato founder Deepinder Goyal:

On the HSBC valuation markdown
We got badgered because of somebody saying that ‘they don’t see value in Zomato’. Well, even my driver thinks so. HSBC doesn’t even know our business, and they are not our investors. But media carried the headline: Unicorn to unicorpse. Well, I accept that hype cycle is both positive and negative, and we rode the positive cycle as well and benefited from it. But when the negative hit us, it hit us really hard and bad, and we found it difficult to get out of it. What mattered was what our investors thought, and they knew our value. Valuation, really speaking, doesn’t matter now. It’s one of the metrics people have come up with to judge a company.

On the unicorn valuation
The valuation of Zomato in the last round in 2015 was $960 million. We never hit a billion. We fell short by $40 million. But everybody rounded it off, and got it wrong. It was the benefit of the positive hype cycle that I spoke about. We were never a unicorn. Becoming a unicorn is not a goal. In fact, it was never a goal. That’s a wrong number to be going after. The definition of unicorn is wrong. It must be billion dollars of revenue, not valuation, which is so artificial. Unicorn tag shouldn’t be a success metric.

On not raising funds for the last two years
Zomato is nine years old and is doing well. We hit profitability in certain countries 18 months ago, the food ordering business too has been doing well. Fundraising is not a need, unlike for other startups. Our bank balance has been stable for the last eight months, and we have not been burning cash as we used to. Another reason for not raising money is that we were not dying for cash. We wanted to raise money at our terms and valuation ($1.5 billion), which was not happening. So we didn't raise. No point showing haste. We have enough money in the bank. We will wait for the right time and value. A lot of companies in our space need to have cash to survive and pay salaries. We don't have such problems. Our payroll cost is now 62% of our revenue. So we are not dying. We actually operate the best when there is no money (laughs).

On foodtech becoming a graveyard of startups
It's simple maths. If 400 startups get funded, only two or three will survive. So the bad news will be there. There is nothing wrong with foodtech. It's just that it's a hard space to execute and build a business. It's as simple as survival of the fittest, and this is what has played out over the last 18 months.

On the fight from UberEats
Food is so pervasive that everybody wants to get into it. UberEats has been competing against us for over a year in Dubai. Nothing to worry. We do 20,000 orders per day as compared to 800 by UberEats in Dubai. And our single biggest advantage over them is that we are nice people. We have been around for a long time and industry trusts us. Out of over 3,000 restaurants in Dubai that deliver food, 1,400 are exclusive partners with us. So, no point worrying.

On turning angel investor
I invested in Grofers, Bira and HyperTrack as an angel. I am very close to all three of them. It's not about making money. They are my friends and I want to be part of their journey.

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