How Zepto Became India’s Fastest Growing Startup

Imagine ordering groceries and having them show up at your doorstep in just 10 minutes. That’s the promise of Zepto, the fastest-growing e-commerce company in India. In this episode of How To Build The Future, Garry sits down with Aadit Palicha, the co-founder and CEO of Zepto, to discuss how they got started in a Whatsapp group, what it’s like going up against incumbents like Amazon and Zomato and how the future of e-commerce is changing in the age of intelligence.

• 0:00Speaker 00

  I genuinely believe we've got a once in a generation opportunity to build a world-class internet company out of India. We just had to like push ourselves through some really tricky moments. We went from close to zero in scale to like 200 million in like six months. And I would not recommend that to anybody. Really do it for the love of building. That should be the end goal. The end goal should not be, I build so I can make X, Y, Z. I'm building so that I have the opportunity to wake up in the morning and build again.

• 0:29Speaker 01

  Welcome back to another episode of How to Build the Future. Today, I'm thrilled to be joined by Adit Palichah, the co-founder and CEO of Zepto, which delivers groceries to your door in just 10 minutes. There are up to 1.5 million orders a day across 50 cities throughout India, with over $3 billion in GMV and growing 300% a year. And they're a unicorn at a $5 billion valuation. Adit, it's great to see you here today.

• 0:58Speaker 00

  Thanks so much for having me, Gary. I appreciate it.

• 1:00Speaker 01

  So when you were getting started, there are some pretty big players already in the space. Swiggy, Zomato, even Amazon was at it. How did you approach that?

• 1:09Speaker 00

  When we started and we were very small, there was no sort of grand strategy or ambition, right? Again, most of it was bottoms up from users in the very early days. But you know, looking at it now, I think the reason why we were able to make a dent and create this scale is because a lot of the people that were in the market in the early days of grocery delivery in India, were trying to build its supply chain backward instead of user backward or customer backward, right? And so they would build out models that were 2-hour delivery, 4-hour delivery, which made sense on PayPal. And like, you know, logistically seem more feasible, economically seem more viable, instead of building it retention and consumer first. The insight was, yes, let's do 10-minute delivery, but also let's build out the full stack of commerce where we're able to run the logistics,

• 1:51Speaker 00

  we're able to have a much better sense in selection on quality control. And sort of that audacious thinking.

• 1:59Speaker 00

  Put us in a position where not only will we be able to build a better product for users, but over time and now sort of what's playing out is that if you build a better product for users, you also end up with a better P and L and a better economics, right? So if users love the platform, your CAC is lower, the throughput you're able to get into your supply chain is much higher, your costs come down and now we're basically seeing like the economics play out pretty beautifully, uh, better than like the two R and four R models because of how sticky the users are. So I think basically that's the dent that we had. We were like just thinking first principles, use of customer backward. Versus a lot of the big guys, the big behemoths that had like sophisticated P and Ls and finance teams were thinking supply chain backward.

• 2:36Speaker 01

  I guess if you win the consumer, you can win everything.

• 2:39Speaker 00

  Yeah, and the the big companies sometimes lose sight of that.

• 2:42Speaker 01

  You're twenty two now, but when you were seventeen, you had reached out to Jared Friedman, one of our partners here at Y C. Tell us about that story.

• 2:51Speaker 00

  So we were just actually supposed to come here in California and study. Uh, but the pandemic hit, so the freshman year that we were supposed to have at Stanford basically got postponed by a year. We decided to take a gap year and my co-founder and I were sitting in Mumbai, really had nothing to do, uh, no sort of fancy internships at Goldman or anything like that lined up. So we just decided to to hack around, work on a project. And it just started off as like a WhatsApp group where we were delivering groceries for our neighbors because it was a nightmare to get groceries in the first wave of the pandemic. Uh, and that slowly kept iterating as just like a fun project. And we were talking to people on on Hacker News about it and, you know, just sharing updates. And I think one day we uh saw a post saying get ten minutes with a Y C partner.

• 3:35Speaker 00

  Uh, and we said, wow, this is, you know, Y C was sort of this, you know, for two kids on the other side of the world was just sort of this mystical land, right? Where we were like, you know, this hobby of building cool stuff. People actually do it for a living somewhere in the world, right?

• 3:46Speaker 01

  Hmm.

• 3:46Speaker 00

  Uh, and so we said, wow, we'd love to talk to a Y C partner. And and Jad was kind enough to like, uh, agree after we, I think we we like flooded the comment section saying that, you know, give us time, give us time and and and got it.

• 4:00Speaker 00

  Uh, gave us the benefit. And yeah, we had a like, I think it was an eight minute call. We gave him a quick sense. He's like, hey, there's a company in, in the U S called Instacart that does something similar to what you guys are doing. Maybe this could be a business. Have you ever thought of that? We said, you know, not really. But then he said, no, this could actually be something meaningful. Have you ever thought of applying to Y C? And that's for the first time when we thought, wow, is this like, I thought this was just like a project, but actually could be something meaningful.

• 4:23Speaker 01

  What was the first demo like? How did that sort of come together?

• 4:27Speaker 00

  Yeah, I mean, the first like real interaction with the customer was basically a WhatsApp group. There was like a, an old lady down the road from where we were staying in Mumbai that was really struggling to get groceries and she stayed alone. And so we were just delivering groceries for her and you know, she would basically say, hey, uh, you're going to this grocery store down the road. Why don't, why don't you also go to the virtual store? That was like the first year interaction with the customer and you should be able to do multiple stores. And then she started adding her friends to the WhatsApp group. And so more and more people kept ordering. But that was the early days. And then I think the first real product that we built was probably, I would say, two months after the first delivery or like a month and a half, two months after the first delivery. Uh, and at the time it was called Kirana card, right? And we, it was a pick up and drop service, similar to what Instacart is in the U S.

• 5:11Speaker 00

  That, you know, prototype probably would have taken like seventy two hours to build. I attribute most of the heavy lifting to, to my co-founder, K V, right? But we built it, we asked the users to move to that app and that's how it started. There was no like launch moment, uh, per se, it was just like getting feedback from a customer on a doorstep and just cycling around. And that just like slowly iterated into something more and more meaningful day by day. Uh, but there was no like one like boom, you're now in a startup and that never actually sort of happened until we got to Y C, I guess.

• 5:43Speaker 01

  The initial model for it was Kirana card. And then what's a Kirana for, for some of the folks watching?

• 5:49Speaker 00

  Sure, no, Kirana basically is the Hindi word for mom and pop shop, right? So it's like these small mom and pop stores that exist in India. Obviously in the U S you've got more Walmarts and Coscos and Krogers. Uh, but in India, it's primarily these small mom and pop shops that, that dominate grocery. So that's what a Kirana is. So Kirana card was like corner shop delivery in a way, that's what it means.

• 6:08Speaker 01

  So the other thing that was, uh, very important was sort of, uh, extreme speed. So it wasn't, you know, an hour or half an hour, it was ten minutes. How did that come about?

• 6:18Speaker 00

  So I think when you, when you speak to most people, uh, in the U S, they think of ten minutes as like a convenience, uh, value proposition. But actually in India, it's very different, right? So, you know, if you look at. India, the overwhelming majority of consumption actually happens within four kilometers from your house, which is very different from the US, right? Like, the frequency of purchase in India is four times more for grocery than it is in the US. And so people actually just buying these small tickets multiple times a week, uh, which is why most retail in India is hyper proximity, right? So unlike, let's say, the big box Walmart, Costco models that work in like suburban sprawls, people are used to doors, the milk delivery guy coming to their doorstep, or the fruits and vegetables guy showing up outside their house every morning, or the local mom and pop being two hundred meters down the road. And so that's the dominant format of consumption and retail.

• 7:03Speaker 00

  Your ten minutes was never really like a, you know, let's do ten minute delivery for the sake of ten minute delivery. It was more, you know, customers would basically keep telling us on their doorstep, and we did a lot of the deliveries for the first few months ourselves. They would basically keep telling us that, hey, uh, this is great, you know, it's COVID, but I would much rather just go to my fruits and vegetables guy, uh, in the morning, he comes, you know, pretty much there, why do I wait for two, three hours for you guys? It's not a convenience thing, it's like, I'm just used to buying so much more frequently, so much more easier. Um, and so that's when we, we sort of gradually moved shorter and shorter delivery times to have the ability to create that doorstep-like experience. Now, obviously, at scale, the, the insight is that it's not just important because people

• 7:46Speaker 00

  are used to it, but it's just, it's a necessity because you've got a lot smaller household sizes in India, you've got a lower penetration of four-wheelers, you've got much more perishables that people buy, people have got lower disposable cash, so they don't actually have the luxury of buying in bulk. And so when you fit all of those consumer insights in, and mainly just, again, talking to people on the ground, you start realizing that, hey, this ten-minute thing is actually critical to do the way, the, the style of purchase that people like versus like a nice little convenience value prop. So, so that's how it came out, but I think, uh, it was more just, uh, just talking to people and like constantly saying, okay, we need to reduce it every time by thirty minutes, by thirty minutes, by thirty minutes, until eventually we were like, let just be at their doorstep.

• 8:29Speaker 01

  Like, one of the things at Y C we often talk about is do things that don't scale. It was just one of those things where, you know, you had to go and do those, uh, initial deliveries at ten minutes and realized there's actually a, a palpable difference in that experience from the customer.

• 8:42Speaker 00

  A hundred percent. So I think in the middle of the batch, uh, we started getting a lot more pushback from users. Or basically, we're just not seeing the retention, right? In the early days when you're delivering like in an hour. And so people didn't use the app. The next week, three, four percent of people use it again. And so that's when we started talking to people and lots of things came out like selection, pricing, quality. But this was one of the big ones. And so we said, okay, uh, we have to be at their doorstep. So what KB and I did is we went to one of the stores on the platform. And we basically commandeered the store ourselves, right? Uh, and we ran it for a short period of time, but we did a pilot where we said, if we can, if we are able to control the customer experience end to end, including the delivery time, what's the reaction that we get?

• 9:27Speaker 00

  And so we, I was basically like the, the shopkeeper for a couple of days. KB was delivering and we could basically see that, you know, at the customer's doorstep, there was a lot more delight. And that was obviously the subjective indicator. And then as we sort of got to a couple of hundred orders with that model, we could see that, hey, people are actually repeating at like, obviously the data was not as sophisticated, but we could see the very early signs of, hey, this, these like 10 people that ordered last week, a good chunk of them are still ordering this week. Maybe that's a good thing.

• 9:53Speaker 01

  You did this unscalable thing. You did it yourself. You're not running around and hiring other people to do it. You're directly experiencing it. But as a result, you came to, you sort of ran it to ground and you had this like very intuitive idea about what the product needed to become.

• 10:09Speaker 00

  For sure. And I think that it started with like the subjective intuition, just like what are human beings telling you verbally? You know, over time it became more objective, right? Which is like, what's the retention of each cohort that we're seeing? Uh, are we seeing that repeatability? And I think the, that rigor of testing whether we had PMF came from the, the, the, the grinding we had to do at YC. YC was probably that most intense period where we learned all of these frameworks very quickly. And so Jared would push us saying, okay, you know, you're getting good verbal feedback, but are people really repeating? And if that's the case, then you're building something real versus just like a hypothesis.

• 10:45Speaker 01

  You guys also, uh, you know, pioneered this dark store concept that now, you know, a lot of people are using. Was that also a necessary consequence of becoming a 10 minute provider? Like you needed control over what that experience would be like?

• 11:01Speaker 00

  Absolutely right. Like the, being able to control, uh, fulfillment logistics was critical for us to be able to get that, like that delivery time and SLA for the customer. But more importantly than that, you know, the people think of us as like a ten minute delivery provider here. If you go under the ground in India, we're sort of looked at more as like a like a hyper local Amazon, not just like good serviceability to the customer, but also great selection, great quality, great pricing across. And you know, today we're doing not like, you know, seven hundred, eight hundred products. We're doing now almost forty five thousand to fifty thousand products that you can order. And that's everything from like, you know, oranges and apples all the way to earphones and hoodies. We're basically building out an internet supermarket

• 11:43Speaker 00

  chain, right? Although people sort of anchor on the ten minute piece, the owning the full stack logistics is also pretty consequential for all the other axioms of customer experience, right? So it's speed for sure. And then there's also quality, there's also selection, and there's also price. And so all four of those pillars of customer experience improve dramatically, at least in our experience, when you're able to just like control the entire stack. So I think as a result of owning it, we're able to do, you know, fifty thousand products, we're able to control the entire supply chain on the backend and get better quality of produce for customers. Now at scale, we're able to cut all the inefficiencies in the backend and give them better prices, right? And so all of that is, at the end of the day, helpful to the customer. So the customer thinks of us, you know, ten minute delivery is what got our foot in the door. But

• 12:28Speaker 00

  now they're basically thinking of us as they're they'll go to like supermarket chain in India, or they'll go to one stop shop. One of the blessings we had pretty early on is that like, and you know, you remember this as well, right? Very early in the company's lifecycle, we got hit by March twenty twenty two, where capital markets, which basically fell off a cliff, and we couldn't raise capital. And we had two competitors that had seven times the cash on balance sheet than we had, right? And so that was like a big forcing function, right? Like, execute or die was the philosophy in twenty twenty two, twenty twenty three. We had to just create as much efficiency, create as much operating leverage as we could very quickly, maybe faster than a lot of other consumer internet e-commerce companies have globally, very much early in our lifecycle, because it was existential, right? And in retrospect,

• 13:12Speaker 00

  that was the best thing that could have ever happened to us. Because when we are now well capitalized, we're able to not only allocate that capital better, but we're able to do it more efficiently, get more growth for a lot less investment, right? And so essentially what happened is that We got to this point in March, April twenty twenty four, where we had gone from zero in August of twenty twenty one to two and a half years later, we had hit about a billion in GMV. And the business was actually pretty close back then to EBITDA and operating cash flow breakeven. And once we were in that point, we were able to show, hey, seventy percent of our markets are profitable. The most mature markets are touching four to five percent EBITDA.

• 13:50Speaker 00

  And they're turning profitable faster and faster, and we're still able to grow. But why don't we accelerate, right? Like if if the economics are working, then we should actually be accelerating into the business instead of, you know, trying to cash our chips in at just a billion of GMV, we've got an opportunity to build, you know, the largest, you know, grocery player in India, which is a seven hundred billion dollar market, right? And so if I'm in that position, we can easily build twenty, twenty five, thirty billion of of of top line. We should be accelerating today. We should be doubling down. And that's what's basically happening as we speak.

• 14:20Speaker 01

  What are some of the bumps that you hit in the road? And like, you know, even as a twenty two year old founder, how did you think about? I mean, holding teams to account, like, these are sort of the more difficult things, especially in fifty different cities. Like, were there cities where the numbers didn't work out and you had to find a new leader? Or, you know, did you have to react to different, like, specific things in different cities that were surprising?

• 14:45Speaker 00

  I would say some of the biggest roadblocks have been people and talent related, like we, like the the most fundamental input for our company is is execution excellence. And like the most important input to execution excellence is is high quality talent. And so the biggest mistakes I've made as a consequence of that are the the wrong hires in some cases or the wrong people management. So in retrospect, the setbacks have been, oh, you know, we could have done, you know, let's say finance better or marketing better or, you know, category management better or ops better. If we had had the right person and and if you, those mistakes are very costly, especially in that twenty twenty two, twenty twenty three period where it was existential for us.

• 15:23Speaker 00

  And so there were situations where we had, you know, not so much cash, you know, we almost effectively could have died in that Silicon Valley Bank thing, if you remember that, right?

• 15:32Speaker 01

  Absolutely.

• 15:32Speaker 00

  We had a lot of our cash in in that, in that period, those mistakes, some of those mistakes could have been very costly. And so, so yeah, like, I think at a high level. Just getting like the the right folks on board. We made some mistakes initially and now I think we've learned from them and that that helped us.

• 15:48Speaker 01

  Yeah, let's go a little deeper into some of the existential moments for Zep.

• 15:52Speaker 00

  Sure, sure.

• 15:53Speaker 01

  What are some other moments that, you know, gave you sort of the deepest lessons into building this company? And, you know, coming up as a CEO?

• 16:01Speaker 00

  In the very early days, I think, you know, we had plenty of existential crises that the Y C partners helped us through, right? There was like, like before we got into this whole first party thing, we were realizing when we did it like an intellectually honest assessment of the business in the early days. That, hey, there's no retention here and like in this sort of pick up and drop off service, we're not able to do it well. And so we thought we were dead and like I, there was a point in the earliest days where we just said, I mean, what are we going to do? We've tried everything, we've killed ourselves, you know, we're working like.

• 16:32Speaker 01

  This was before the 10 minute.

• 16:33Speaker 00

  Yeah, this was before the, yeah, before the first party stack. And so this is before we started commandeering stores, right? And we said, yeah, this model is not working out. You know, we thought it was going to be perfect. We'll just do this model, it's going to grow, everything's going to be great. Got a reality check after like a few months of like hitting the wall. We said, is there, is there even a model that works? And like pretty much everyone was telling us that, hey, grocery delivery in the world is, is, you know, has never worked really that well. Other than a few exceptions, India, there were lots of companies that came before us, there was a graveyard. And so all the feedbacks we were getting from, from investors and from people that seemed to know much more than we did is that you guys are essentially in a dead space. And we could see it in the data. So in the very early days, there was that like super despair period where we would have, I mean, very close to giving up, right?

• 17:17Speaker 00

  That would have been probably the highest likely or chance of death that this company had. And then obviously, as we became like a larger and larger company, there were all sorts of crises, right? I mean, I think we had a, if you've been in positions where, you know, the border raised capital and then a crisis happens, whether it's, you know, March 2022 and the Ukraine war happened in that period. Or let's say we're about to, it's funny, actually, the most of our fundraisers have coincided with some sort of crazy crisis that's happening, right? And it's, it has actually made it harder, right? Like, I think right before we raised that round in 2023, which was like, like a fundraiser from hell almost, right? Because it was like the only unicorn round in India for that year. Immediately prior to that, the Silicon Valley Bank thing happened. And so to raise that round took like eight months, seven months. Within that, I mean, like.

• 18:02Speaker 00

  There were lots of places that we could have died in that were real. Like, there was, there was a period where we had to build a lot of financial controls, right? Like, um, we had to go through like EY audits that, you know, if we didn't make it through them as tightly as we would have wanted, we would have, you know, not gotten capital, right? And when you've got competitors with over a billion dollars of cash in bank, it's existential, right? And we didn't want to sell. And so we, we just had to like push ourselves through some like really tricky moments there. But there are probably plenty more still, still to happen, right? I'm sure.

• 18:37Speaker 01

  I think the really cool part of your story is that, um, you know, you didn't look at sort of how other people were doing it and sort of accepted that as, you know, sort of ground truth.

• 18:49Speaker 00

  Yeah.

• 18:49Speaker 01

  There's a X maxim now that is, you know, you can just do things.

• 18:53Speaker 00

  Yeah, yeah, yeah, yeah.

• 18:54Speaker 01

  So I, I see a lot of, uh, you can just do things energy in what you're talking about here.

• 18:58Speaker 00

  I mean, it's a little bit of naive, uh, being naive and young that helped actually. Like, you know, it's like they, they say it, right? Like, if you, if you knew how hard it was when you started, you wouldn't have done it, right?

• 19:08Speaker 01

  Yeah. That's the Paul Graham slept blindness essay in a, in a nutshell.

• 19:14Speaker 00

  Yeah.

• 19:14Speaker 01

  So you, you've personified it. I really like how you thought about retention. Did it feel like you were just asking questions about that? And you're out of asking questions, why is retention, you know, not where it could be? Like, that sort of teased out, well, we could try this, we could try that. Like, were there a few other things you tried other than the 10 minute thing?

• 19:33Speaker 00

  Yeah, we did. We tried like, we tried to build like a SaaS model for mom and pop shops. We tried to build like a, a B two B logistics play, right? Like, is there like a better model? Maybe like, what if we just do the, do the only the delivery part? Or what if you only do the software part, right? And we just realized that like, you know, grocery in India is, you know, can be much better than it is in general as like a, uh, as a market. And like, we realized that everything is so broken, right? Like, whether you go into the backend, you go to the, the storefront, you go to the, the delivery in the last mile. If you want to build something that really solves the problem end to end for the customer, which is across like speed, quality assortment and price, then you just need to suck it up and only the whole thing. The push basically came from, uh, a lot of just like radical candor, right?

• 20:17Speaker 00

  And I think that you don't really find a lot of that, you know, candidacy in, in India so far, which is why obviously Y C was as valuable as it was because, you know, people were just like. You know brutally honest with us that hey man, you wanna make it, you wanna build, it's Instacart, you wanna build DoorDash, wanna build like a nice consumer data company. This is what the early days of those guys would have looked like. Obviously, they went through their own struggles, but you're not, you're not at a point where you can credibly claim product market fit. And then having that like really brutally honest feedback loop really helped us. And then we sort of pushed ourselves to say, okay, if you're being super honest ourselves, I'll be building an exceptional product, right?

• 20:57Speaker 00

  Sure, maybe we're getting a little bit of a pop in the early days because it's COVID, people are locked down, they have to use the app. But can I really say that build something that somebody actually wants long term? And until we had conviction that we were there, we didn't go all in. It was just like a great feedback loop and like a lot of, like a lot of tolerance for iteration and pain, basically.

• 21:18Speaker 01

  Well, talk to me about that moment where you did feel like you got a product market fit. And that's when, you know, maybe you were in only in one location and then you said, okay, time for, you did you one additional location or did you say, all right, like five locations? Like, what was that like?

• 21:33Speaker 00

  It was actually the first location, the first dark store we launched is in a neighborhood in Mumbai called Bandra. And pretty quickly, that neighborhood became bigger for us than the rest of the entire city that we were operating in. And it just sort of ballooned. And I remember going there because it was an experiment, right? And it was like, effectively, it was like a cardboard, cardboard cutout almost of like what a dark store looks like today. Cause now dark store is like, you've got proper racking and, and you know, chillers and freezers and everything all set up properly. But over there, it was just like a bunch of like stuff on the ground, basically. And we were delivering from there. But the experience was so well managed because we were able to, you know, curate a very good selection, right? And work with a couple of people to be able to do that.

• 22:12Speaker 00

  We were able to get the deliveries consistently. And so it just started picking up very rapidly. And long, long story short, I mean, I did a couple of deliveries and I was like, wow, people really have a spark in their eye when they're getting like a delivery here versus like what I'm used to, which is, oh, this is bad, this is bad. Delivery is delayed, items are not right. So yeah, I think that was like the aha moment and. That is also when we were, we got lucky to just keep getting like the right mentor at the right point of the journey. And so that's when, you know, our C D A investors, which was Nexus in India, basically came and said, hey, you know, this is real product market fit, probably, right? And we said, I mean, are you sure? Like, we were very cynical, right? That's when, I think, the right time, at the right place, we met the people that gave us the conviction that, you know,

• 22:57Speaker 00

  you can actually try this again in the second store, try this again in the third store. And that's when it started just really picking up. We went from basically like close to zero in scale to like two hundred million in run rate scale in like six months. Right? And like, I would not recommend that to anybody ever again.

• 23:13Speaker 01

  It caught fire, like people really wanted it.

• 23:16Speaker 00

  Yeah.

• 23:16Speaker 01

  They're like pulling the product out of you, like, when are you coming to my neighborhood?

• 23:19Speaker 00

  Yeah, and even like, just even, I mean, obviously it was twenty twenty one, so it's crazy, right? But even from a capital perspective, we went from like effectively the hundred twenty five K from Y C to like a nine million dollar round, to a fifty million dollar round, to a hundred million dollar round in like four months. And that was obviously crazy back then. In hindsight, it was probably the right thing, because that was like sort of the inflection point to just go all in on. And then in twenty twenty two, we stabilized and said, okay, let's start building a business out of this.

• 23:45Speaker 01

  I guess, given that, like, do you consider Zepto a success?

• 23:49Speaker 00

  No, absolutely not, like, I mean, not even, uh, not even close to it. I think we've got a couple of decades before we can realistically say that we've won. I genuinely believe we've got a once in a generation opportunity to build like a world-class internet company out of India. And, you know, sitting in places like this, you get really humbled because you realize that, wow, like, look at the kinds of quality of companies that have been built in the U S and in other parts of the world. And I don't think we're there yet. And until we can credibly come in and say that, hey, uh, we're able to hold our own to some of the best, globally, like an Amazon or a DoorDash or a MercadoLibre or all these other companies, then I don't think we've won.

• 24:29Speaker 00

  I also think that the ambition is less about like, oh, this valuation, this, that. Like, it's now come to a point where you just really want to build something. Exceptional, that can be like a benchmark for the rest of the ecosystem. So I think it's gonna take twenty, thirty years to get there. We are very excited to do that for the next twenty, thirty years, minimum, and then much more. And we just have to execute like crazy to make that happen. So that's what, that's what we're trying to do.

• 24:54Speaker 01

  Yeah, people are always overestimating what they can do in one year and way underestimating what can happen in ten or twenty.

• 25:02Speaker 00

  Yeah, a hundred percent, a hundred percent.

• 25:03Speaker 01

  So you just, you once tweeted, nothing against work-life balance. In fact, I recommend it to all our competitors.

• 25:10Speaker 00

  Yeah, stupid idea.

• 25:12Speaker 01

  I think about that often. I mean, I think it is possible to have balance, but you know, you can also do, you can run your work like a really good marathon.

• 25:21Speaker 00

  Yeah, yeah, oh, for sure. And I think the, for the people that like work at a company like Zepto, I'd say that, you know, join here if you're really looking to do the best work of your life, right? And like, this is the place that is gonna get that out of you, right? Because it is a very execution-focused culture. Everyone is really deep into the game. When you're just like in these super execution-focused cultures, then, and you're really like accountable for real problem statements every day, you can actually just become like the best version of yourself. And I think the, it's not for everybody, right? That sort of mindset and thought process. But it is for like the super ambitious, the super capable that really want to, to get the best out of themselves. And it's not forever, right? You're not gonna have to do this, like, work so hard for many, many decades.

• 26:02Speaker 00

  But like, you definitely need like, I think, I believe, portions in your life where you take yourself to the maximum, right? And, and really achieve a lot. And I think Zepto is sort of that place. It doesn't feel like work, at least for me. And I know that that's not a realistic expectation for, you know, today we've got like three thousand plus corporate employees, right? And mainly ops folks, but like with three thousand people. And it's not realistic for me to tell everyone that, hey, you know, love what you do, work seven days a week. It's not realistic, right? But at least for KV and I, I mean, just, it feels like the journey of a lifetime, right? And like, there's nothing more exciting than this to be, to be spending time on. So that's, that's, I guess, the thought process. But what I, what I will say though is, if you don't really have like a, a mission that excites people, right?

• 26:44Speaker 00

  Then you can't push them to that, to that level to really give them their all. And I think that like SpaceX is a good example of a company that is just able to like get the maximum out of people because it's such an inspiring mission. Obviously, we're not sending rockets to, to, to space, we're delivering groceries. But I think that the, the mission that at least I like to. Try to bring out is that guys, let's build like a truly great internet company in India and let's like kick off the internet revolution in India that should have been much bigger than it is today. I mean, I think we can, I think we can create 10x more value for the country than we have so far. I think, I mean, if you look at even like places like China, right? The, the dynamism came from the internet companies and then that spread everywhere, right? So maybe we can play a small part in that, that would be great.

• 27:27Speaker 01

  What are some of the unique advantages and challenges you've experienced building a startup, you know, specifically in, in India?

• 27:35Speaker 00

  So I think the advantage is that the talent is incredible, right? And I initially didn't realize this deeply, but you know, we, we interviewed like American engineers and obviously they're exceptional, but we said, hey, the guys we have are, is good, right? And I think a lot of people underestimate that. That's why, you know, a lot of great internet startups set up offices in Bangalore, right? And, and hire people there. And so the big advantage is you just have such an incredible talent base. And really, although it's very competitive, it's still a lot less competitive to get such high quality talent than it would be sitting in San Francisco, I'm sure. Uh, I think some of the hurdles are, as an ecosystem, I think we're like very much like post 2001 right now, because we had like a big reality check in 22, 23.

• 28:19Speaker 00

  And there's still a lot of fear and, and lack of ambition in general. And I'm sure you, you know, you, you've seen some of that, like in the post 01 kind of period, right? I'm sure, uh, where people were less ambitious, right, than they could have been. So we're sort of coming out of that and saying, you know, guys, why we, you know, if we execute well, we should go, we should swing for the big leagues. And so I think the, the challenge is like, whether it's hiring a senior, senior executive, whether it's, you know, bringing on board a new board member. I feel sometimes, and sort of scavalier, like a little bit in the minority camp where we're saying, it's very easy to be at like three, four billion of GMV and just take it, uh, take it easy, right? And just get to break even and then build a nice little company, go public, you'll, you'll do well, right? But wouldn't it be much better to go for? Five X that, six X that, and if the opportunity is there, why not go for it?

• 29:03Speaker 00

  And so I think in the US, that mindset is sort of taken for granted. Everybody has that here.

• 29:07Speaker 01

  Yeah.

• 29:08Speaker 00

  Right? It's such a special place because of that, right? But in a place like India, it's still germinating.

• 29:13Speaker 01

  I mean, I think you're one of the leading importers of the philosophy itself.

• 29:17Speaker 00

  Yeah, hopefully. We've got the talent. We just need to get that mindset, the dynamism, basically, right?

• 29:22Speaker 01

  What else do you have on the plate and sort of in your vision for Zepto over the next ten, twenty years?

• 29:28Speaker 00

  I think from our perspective, there's a lot of areas to innovate in like Indian consumer internet. And we wanna, I mean, we don't wanna get distracted where we just, you know, try multiple verticals. Like, we really wanna just go deep into the compounding flywheel that we have a product market fit and say, how do we just keep improving our product market fit? I believe that PMF is like, it's a, it's not static, it's dynamic, right? You can keep improving it over time if you keep innovating. And so there are like a few exciting innovations we're working on. So for example, there's Zepto Cafe, which is basically first-party food delivery that we've now started to build into our dark stores where in like a three and a half thousand square foot facility, we have two fifty square foot that's allocated for coffee, tea, snacks. Like, if you've been to Seven Eleven in Japan, for example, or even in the US, you have all that.

• 30:14Speaker 01

  Amazing in Japan, not so good here.

• 30:16Speaker 00

  Yeah, yeah, yeah, exactly, right? And so that it came from the same inspiration, right? And then we build that out there and that's doing phenomenally well. So we've scaled that effectively starting last year. And we've gone from zero to over a hundred thousand orders per day. And that's the beauty of all these consumer internet businesses, right? When you have like fifteen, twenty million of people opening your app every week and then you add like a new little use case for them, you can just funnel hundreds of thousands of people just by moving pixels around. That's like the super exciting thing about this business. That's why I love it so much.

• 30:45Speaker 01

  Sounds like it's the true everything store, but it's not only just the everything store that will come to you tomorrow or maybe later next week.

• 30:53Speaker 00

  Yeah.

• 30:53Speaker 01

  It's literally in ten minutes.

• 30:54Speaker 00

  Yeah, it's like the, you know, hyper-local everything store for hyper-local India, right? Like, that's the, that's the idea. But there's a lot of other cool stuff. I mean, even if you look at our advertising business, right? Like, similar to like the other really successful e-commerce companies, we've gone from like a forty million ARR in ad revenue last year to this year, we've just crossed two hundred million ARR, right? And that's just, I mean, it's. Obviously phenomenal business and we're just innovating there in an exciting fashion. We built out like our search stack in-house, the entire relevance engine, bidding, attribution, campaign management, automated keyword suggestions. I think we've built out a really high-quality performance ad stack out of India. For one of the first players to have actually been able to do that, obviously Flipkart and a

• 31:37Speaker 00

  few of the folks have done it, but we built it really quickly and it's giving us a lot of value in that business also scaling. So ads is another big focus, cafes are another big focus and all sorts of other stuff. And we're, you know, we're starting to get into, you know, electronics as a category, general merchandise and apparel, cosmetics. So we're just getting more and more into as many use cases as we can find and all of it is user backward, right? And so I basically spent time with the team looking at, hey, what are people searching for that we're not able to give them? And then let's start adding those use cases. So when people started searching for coffee, we said, let's put in Zepto Cafe. When people started searching for lipstick, we said, let's start adding cosmetics. And so that's, the flywheel is spinning as a result of that, where we're getting better

• 32:20Speaker 00

  retention and we're getting a better P and L N state as a result of that. And there's a lot more to push on that. So very early, but I think we could, you know, maybe we'll be talking, hopefully if we execute well, it's a big if, but if we execute well, a few years from now, we'll be talking about a new form of e-commerce that we've sort of invented out of India. And I think, you know, the Chinese guys were able to invent new forms of e-commerce too, right? So why can't we?

• 32:42Speaker 01

  You know, going through your description of how Zepto works in India, it actually sounds way more awesome than what Amazon is doing. You know, Amazon tried to do some of these, you know, faster delivery type things. They scaled them back, like we sort of don't know if we'll ever actually even see them. If anything, it's, you know, it's heartening and pretty exciting for the Indian ecosystem in that there is this very powerful energy where you can just do things and it's alive and well.

• 33:11Speaker 00

  It's happening in the other side of the world too.

• 33:12Speaker 01

  Yeah, so we're in this age of intelligence, as Sam Altman calls it, and I'm a deep believer in that.

• 33:19Speaker 00

  Hundred percent.

• 33:20Speaker 01

  What are you seeing at Zepto?

• 33:21Speaker 00

  So the way that I look at it is, you know, we're like a very nascent internet native company and, and we, I was actually talking to someone senior at Microsoft yesterday and he gave us, gave me a really good framework, which is. On the, we're basically the application side of, of the AI acceleration, right? And if I have to figure out what applications I need to prioritize. Because in the end, all the applications are going to be, you know, fully fleshed out. Either through agents or something else that I don't know, right? But my job right now as CEO is to say, okay, what are the applications that I need to expedite? That I need today, that are core to my business? And what are the applications that would probably come out on their own? And, and are non-core to my business, but I'll use them, but are non-core to my business? So for example, let's say non-core would be accounting, right?

• 34:04Speaker 00

  Can I make my accounting 10 times more efficient, 10 times more accurate? Eventually, 100%, there'll be an agent that does that for me. Can I make my, uh, my legal contract work that I do at scale? Can I make that, you know, much more efficient? Absolutely, I can, right? And we'll, we have a, a lot of that stuff that we have to do in India, right? But those are not really core. And someone is going to solve that for me later and I'll, I'll pick up an agent. Or whatever is, you know, much more than I do, right? Uh, a year from now, nine months from now, and I'll solve that problem. But today, what I'm focused on, on the application side is what are the things that are super core that I need today? And I will build some of that, I'll build some of the capability in-house. To be able to apply that as soon as possible to my business as an internet native company.

• 34:47Speaker 00

  And so, for example, let's say the ads business that I was talking about, right? So automated keyword suggestion, for example, or bidding and attribution. We were able to get much better, you know, return on ad spend for our clients. Uh, on the ad side, like Unilever and Procter and Gamble and Coca-Cola. We were able to do that because we started training on Llama. To try to build out a better, I mean, to basically build out the relevance engine in-house. And that gave us much better results and we were able to surge the ads businesses out of that. So that had a big impact on bottom line. Or for example, the easiest application that everyone knows is customer support. And now that's obviously playing out, but we said we need this customer support stack much quicker. So we've built out like a, a crack team that's again, training on some of the foundational models, looking at all our data.

• 35:30Speaker 00

  Let's say like rotten bananas, for example, because we do one and a half million orders per day. So there'll be rotten banana, there'll be delayed order, or there'll be all those sort of customer support tickets. I'm basically saying, let me just train this model myself. Uh, or whatever, let me use what exists out there and give them my data. And build out an application for myself and start automating every ticket. And so today. You know, greater than fifty percent of the tickets that are raised on Zepto, not just like a rules-based chatbot, are actually solved dynamically by a generative chatbot that's been modified for our exact use cases, right? So we're focused on these key things like search, ads, customer support, forecasting, supply chain forecasting, another core part of the business.

• 36:10Speaker 00

  We built a lot of, not generative AI, but a lot of deep machine learning work that we've done there.

• 36:16Speaker 01

  That's exciting. I mean, I think one of the observations is that basically these are not solved problems yet, and that's actually exciting. And/or even this idea that you could do the everything store across every category and you can, you know, basically snap your fingers and add almost any new category.

• 36:34Speaker 00

  Yeah, yeah.

• 36:35Speaker 01

  It's all of these things are actually empowered by the technology themselves, and those are coming at a more and more rapid pace, actually. Maybe to wrap things up, I guess my favorite question often is, what advice would you give the seventeen-year-old version of yourself? And it was not too long ago, but it feels like in founder terms, you know, the founders live many, many lifetimes every single year.

• 37:00Speaker 00

  Yeah.

• 37:01Speaker 01

  What would you say to that person right now?

• 37:03Speaker 00

  When I started, I was still a little bit extrinsically motivated, but I didn't really internalize that, or like, I'm doing this just purely for the love of building. And then that is sort of the maturity journey that I've been on when I think the first year or two years or three years of the company, when everything was breaking and we were going to die multiple times, right? At that point, you just basically have a gut check where you're like, what are you really doing this for? And if you're doing it for, you know, money or like, you know, or fame or all this other nonsense, then there are far easier ways to do that. And I joke with my team, like, you know, there's far easier ways to make a buck than to build this crazy contraption, right? But yeah, so I would basically tell them that, you know, seventeen-year-old version

• 37:48Speaker 00

  or whoever else watching this, that like, you really do it for the love of building. That should be the end goal. The end goal should not be, I build so I can make X, Y, Z, or I can get A, B, C out of it. But I'm building so that I have the opportunity to wake up in the morning and build again. Right? And that's basically the mindset that I'm in right now. Every day I just wake up and I'm like, wow. I'm so excited with the next problem statement. And so it's just great.

• 38:11Speaker 01

  Adit, thanks so much for spending time with me today. This is awesome.

• 38:14Speaker 00

  Yeah, likewise. Thanks, Gary. It was great talking to you.