Do the difficult things while they are easy and do the great things while they are small. A journey of a thousand miles must begin with a single step. – Lao Tzu
While returning from a restaurant which I had recently discovered through an app, out of sheer curiosity I researched about it on my way back home. What really excited me about this mighty billion dollar unicorn club Member which has its empire spread globally across 24 countries and 63 cities in India as of now and is persistently enlarging, was the necessity that Led to its birth. It has been working flawlessly well since past a decade and certainly will for decades to come ..
You got it right – I’m chronicling about Zomato !!!
THE JOURNEY BEGINS
Founded by IIT Delhi graduates – Deepinder Goyal and Pankaj Chaddah, the distinguished Zomato of today was
“foodiebay.com” back then in 2008.
The journey of foodiebay started when Deepinder observed the hours people in Delhi had to sacrifice just to recieve the menu at the food court. He made an effort to solve this problem. Deepinder along with his wife and her sister used to drive around the city, collect menus from restaurants, scan them and put them online. They would get about 25 visitors everyday, and also received occasional feedback from some of these users that foodiebay was great, and scanned menus (to order food easily) were one of the best things that ever happened to them.
Pankaj having had a glimpse of this, helped Deepinder triple the traffic to foodiebay. Since then Deepinder along with Pankaj began building foodiebay. At that time these young guys had no intention of what it was going to become eventually but they never looked back since then.
FUNDING & NATIONAL EXPANSION
Foodiebay was renamed Zomato in November 2010 and after bootstrapping for almost 2 years, raised it’s first funding from “Info edge India” worth approximately USD 16.7 million which also gave it a 57.9% stake in Zomato .
Zomato also started expanding itself nationally in Bengaluru, Pune, Chennai, Hyderabad &Ahmedabad along with smartphone applications and it’s site dedicated to foodporn, “zomato.xxx”.
TAKING ZOMATO OVERSEAS !
“Instead of being same geographically and learning new businesses, we decided to take the same business to different geographies” – Deepinder.
This decision led to Zomato’s expansion overseas by late 2012 and had expanded to almost 12 countries by 2013. It raised USD 37million in November 2013 from Sequoia Capital & Info edge (India).
Zomato’s very first acquisition deal was for Menu- mania, NZ. This was followed by many acquisitions worth millions in several other countries and cultures.
The prominent acquisition of Seattle-based food portal, Urbanspoon led to entry of Zomato in US, Canada, Australia which exposed it to the competition with Yelp, Zagat & Open Table. This made Zomato spread across innumerable cultures.
WHAT MADE ZOMATO TO BE A LEADER IN MOST OF THE GLOBAL SPACE IT’S IN?
By the year 2016 Zomato was the leader in 18 of the 23 countries it was in..!
“The fundamental model of our business is that in mature markets we should make profits and they shouldn’t need any more outside money to grow”- Deepinder
It’s a difficult task to blend into various cultures and there’s a certain way in which Zomato performs in global space. They believe in a concept of finding really great people & getting the top 1% of employees right. That being said so, they also consider their targets as moving targets and they’re always “1% done”.
Zomato’s CEO Deepinder says that he’s highly realistic & recommends entrepreneurs to rely on themselves and not solely on the funding.
‘Also One of the core ideology of Zomato is buying a monopoly in the market and turning all the traffic to Zomato’.
HOW DOES ZOMATO MAKE MONEY?
Zomato makes money through 4 revenue streams:
1) Restaurant advertising: this is the banner ads for restaurants placed on the website. This accounts for ~75% of Zomato’s revenue.
2) Event advertising: this is when specific events promote an event on Zomato – this revenue primarily comes from restaurant based advertisers. Typically, tickets for these events are also sold on Zomato. This accounts for ~5% of revenue
3) Event ticket sales: commissions on ticket sales through Zomato; primarily for restaurant venues; accounts for ~15% of revenue.
4) Consulting services: Restaurant chains ask Zomato for advice on where to open their next outlet/branch. Zomato then digs through terabytes of data to tell them where the demand lies and what’s the competition like.
So far I feel you’ve got a glimpse of how this website start-up which was intended solely so that people in Delhi can have menus on their phone flourished into a revolutionary global restaurant search and discovery portal with orders in scales of millions per month.
It’s been an honour for me to present this fascinating journey. I along with all other students & budding entrepreneurs congratulate Zomato for its success and wish it good luck for it’s future endeavours.. !
– Harsh Panchal