From Diljit Dosanjh’s concert ticket getting sold out in mere minutes to almost one crore people diligently waiting to get a ticket out of the total of 1,50,000, the ticketing industry has been in the spotlight for some time now. With the overlapping of food delivery companies and digital services, the competition has intensified, prompting firms like Zomato to diversify their offerings and innovate their business models to stay relevant in a rapidly changing marketplace. Zomato’s recent acquisition of Paytm Insider’s ticketing business, reportedly, marks a significant step in expanding its offerings beyond core food delivery operations.
In conversation with BrandWagon Online, Sanjeev Bikhchandani, founder, Info Edge and non-executive director, Zomato, emphasises the importance of innovation and adaptability in a competitive market. From what is understood, with a growing focus on mindful snacking, quick commerce, and sustainable practices, Zomato is set to redefine its role in modern consumerism. Bikhchandani shares insights on Zomato’s vision for the future, the challenges faced by startups, and the importance of fostering an entrepreneurial spirit in India, besides looking at the market gap to build businesses like Naukri.com, Jeevansathi.com, 99acres.com, among others.
Zomato’s revenue from operations rose 71% to Rs 12,114 crore in FY24 from Rs 7,079 crore in FY23, as per the regulatory filings. Additionally, the company’s net profit increased 136% to Rs 351 crore in FY24 from Rs -971 crore in FY23. (Edited Excerpts)
Zomato recently acquired Paytm Insider – the ticketing business. What more can they add to their core? Where do you see Zomato heading in the next five years, beyond the share price?
We don’t really focus on share price, as it fluctuates daily. My role as a non-executive director of Zomato, and previously with Info Edge, is more about running the business itself. While food delivery continues to grow year after year, quarter after quarter, there’s significant potential in expanding Zomato’s reach further. The core business alone has enough capacity to drive the company forward. However, as we grow, we’ll be moving beyond acquisitions like the ticketing business.
As far as the ticketing business is concerned, BookMyShow has been the key player in the ticketing space so far, while others have struggled to make an impact. What do you see as the real scope in the ticketing business, and why do you think most competitors have failed while BookMyShow has managed to stay relevant?
I don’t think others have failed as such. BookMyShow put the right focus on securing events, managing ticketing, and partnering with theatres and cinema halls. Zomato has already done a good job with their entry into the space. They’ve started with a few shows like Dua Lipa and Diljit Dosanjh, so it’s about sourcing and tying up with all the right venues. The acquisition of Paytm’s ticketing business gives them a solid foundation with these partnerships already in place.
Quick commerce is becoming increasingly crowded, with players like Flipkart, BigBasket, and others adding it to their platforms. Don’t you think the competition is getting too saturated, and won’t that drive up CAC (customer acquisition costs)?
Zomato, fortunately, has a very low customer acquisition cost because it already has an existing user base, which is a significant advantage. Secondly, they specialise in delivering quickly, especially since food needs to arrive within about 30 minutes. Their knowledge of logistics networks and rider routes is beneficial. Plus, they are conscious of profitability and aren’t burning cash, which is crucial. All these factors are working in their favour.
When you look at the overall quick commerce market, do you think we’re going to see a financial burn happening? As more players enter the space and set up dark warehouses, won’t the costs associated with storing products add complexity to the market?
You have to be careful about how much inventory to stock and which products to focus on. Predicting demand is crucial to avoid being stuck with dead inventory. Zomato excels in this area, benefiting from low customer acquisition costs. They choose their dark store locations strategically, analysing data from Zomato and Delhi to understand population density by pin code. If a dark store isn’t reaching viability within a certain timeframe, they’re quick to close it down. They currently have over 600 dark stores and have shut down a few in the past, continuously improving their operations.
Funding in India declined by seven percent in the first nine months of 2024, totalling $7.6 billion, as per some reports. What do you think is driving this decline—too many ‘me-too’ startups or investor jitters?
In 2021 and 2022, funding was quite abundant, but things changed when the Fed started to contract its balance sheet and raise interest rates. Suddenly, for those who were leveraged, it became more expensive, leading to a contraction in funding. This shift was largely driven by inflation concerns in the U.S., which made investors more discerning. Now, we’re seeing the typical ups and downs of the market. There’s still plenty of capital available for good companies, those with solid cash flow, a strong revenue model, sound economics, and a competent management team. However, companies that don’t meet those criteria might struggle to secure funding.
Do you now see sustainability as a strategic focus area for your investments?
There’s a lot of interest in sustainability, and many funds are being established to invest in this area. However, it’s essential to be cautious and assess whether a business will succeed and, if so, how well it will perform. For instance, we invested in an EV motorcycle company called Matter, as we believe there’s potential there. We’ve also backed a couple of differentiated battery tech companies and some e-financing firms.
When investing in a startup, what key factors do you consider? There’s been a noticeable shift in focus from valuation to profitability over the past couple of years. When assessing potential investments, do you prioritise how the startup addresses larger community problems or their overall solution?
I don’t personally prioritise a large market when investing. For example, when we launched Zomato, the market was quite small, with maybe 14,000 Internet users at the time. However, we believe in its potential for growth. With PolicyBazaar, we invested even before they had a PowerPoint presentation—it was a first-of-its-kind concept. When considering early-stage investments, the key factors for me are whether the startup addresses an unsolved problem, the strength and passion of the team, their ability to execute, and their capacity to attract talent. If those elements are in place, I approach the investment with a sense of adventure and a bit of faith.
With the growing recognition of India as an entrepreneur’s country, how do you view the distinction between SMEs and startups? Many still see SMEs as traditional manufacturing units, while startups are often viewed as newer ventures. Considering this, how does the Info Edge Center for Entrepreneurship aim to assist young entrepreneurs and college students in nurturing their ideas and fostering a spirit of entrepreneurship?
I think it’s important to get students interested in entrepreneurship early on, whether or not they plan to become entrepreneurs immediately. I quit my job after five years of working to become an entrepreneur. Deepinder Goyal worked for two years in consulting before he started Zomato, and some of the best and biggest companies were founded by people who didn’t start as entrepreneurs in college. For instance, Yash, who was from the 1996 batch at IIM, started PolicyBazaar in 2008. We’ve seen successful companies like Google and Yahoo emerge from college campuses, and even notable figures like Bill Gates and Richard Branson didn’t complete their college education. There’s no reason why this entrepreneurial spirit can’t catch on in India. There is a fund called the Campus Fund that specifically invests in student entrepreneurs, and they’ve had some successful outcomes. This shows that there is potential for students to choose entrepreneurship and succeed.
When it comes to the biggest challenges entrepreneurs face, beyond profitability, it’s often the transition from campus life to real-life business. The reality of running a business can be vastly different from what is taught in classrooms, and this shift can present significant challenges for new entrepreneurs.
What is the biggest challenge that entrepreneurs are expected to face, besides profitability? We understand the ups and downs of business, but what differences do they encounter when transitioning from campus life to real-life entrepreneurship?
One of the biggest challenges entrepreneurs face, beyond profitability, is the reality of sales. It involves going out, putting in long hours, and actively meeting customers to persuade them to pay for your product or service. Selling is tough; you might make 20 calls and only succeed once. It’s essential to face rejection without getting demoralised. You need to have the determination to walk into an office, get past the receptionist, and wait for hours just to speak to the right person. Selling is hard job but without sales, there’s no revenue, and ultimately, no business.