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How Zepto Became India’s Fastest Growing Startup
26 segments available
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. Apply to Y Combinator: https://ycombinator.com/apply Work at a startup: https:/workatastartup.com Chapters (Powered by https://chapterme.co/) - 00:00 - Intro 01:33 - Customer Backward 03:02 - Jared Friedman 06:03 - Kirana 08:58 - Do Things That Don't Scale 11:05 - Dark Store 14:51 - Bumps 19:36 - Other Options 21:38 - Product Market Fit 24:06 - Is Zepto A Success? 27:58 - Unique Advantages 29:53 - Vision 33:43 - AI 37:02 - Advice
Segments Timeline
Seizing a Generation Opportunity
Aadit Palicha, co-founder of Zepto, shares his belief in the unique opportunity to build a world-class internet company in India. He reflects on the rapid growth of Zepto, achieving $200 million in scale within six months, and emphasizes the importance of passion in entrepreneurship over financial gain.
"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 fr..."
User-First Approach to Grocery Delivery
Aadit discusses how Zepto differentiated itself from competitors like Swiggy and Amazon by focusing on a user-first approach. He explains that while others built supply chains backward, Zepto prioritized customer needs, leading to a successful 10-minute delivery model that improved user retention and economics.
"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 ..."
The Spark of an Idea
Aadit recounts how he and his co-founder initially started Zepto during the pandemic by delivering groceries to neighbors via a WhatsApp group. This grassroots effort evolved into a business idea after they connected with Y Combinator partner Jared Friedman, who encouraged them to consider their project as a viable business.
"decided to take a gap year. and my co-founder and I was 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..."
From WhatsApp to Kirana Cart
Aadit explains the transition from informal grocery deliveries to developing a structured service called Kirana Cart. He describes the early interactions with customers and how feedback led to the creation of a more formalized product that catered to local needs.
"like? How did that sort of come together? 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 he was st..."
Understanding Kirana and Speed
Aadit defines 'Kirana' as the Hindi term for mom-and-pop shops, which dominate the Indian grocery market. He emphasizes the necessity of 10-minute delivery in India, driven by consumer habits and the need for quick access to groceries, contrasting it with Western retail models.
"basically is the Hindi word for mom and pop shop, right? Uh so it's like these small mom and pop stores that exist in India. Obviously in the US you've got more Walmarts and Costos and Kroger's. Uh bu..."
The Necessity of 10-Minute Delivery
Aadit elaborates on why 10-minute delivery is critical in India, highlighting consumer behavior and the frequency of grocery purchases. He shares insights from customer interactions that shaped Zepto's delivery model, emphasizing the importance of adapting to local shopping habits.
"minutes was never really like a you know let's do 10-minute delivery for the sake of 10-minute delivery. It was more you know customers would basically keep telling us on on their doorstep and we did ..."
Doing What Doesn't Scale
Aadit reflects on the early days of Zepto, where he and his co-founder personally handled deliveries to understand customer experiences. This hands-on approach revealed the importance of delivery speed and customer satisfaction, leading to improved retention rates.
"the things at YC we often talk about is do things that don't scale. Was this one of those things where you know you had to go and do those uh initial deliveries at 10 minutes and realized there's actu..."
Pioneering the Dark Store Concept
Aadit discusses the innovative 'dark store' model that Zepto adopted to ensure efficient logistics and fulfillment. He explains how this model was crucial for maintaining their promise of 10-minute deliveries and how it positioned Zepto as a hyper-local alternative to larger competitors like Amazon.
"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. For sure. And I think that it started with like the subjective intui..."
Building a Comprehensive Product Offering
Aadit elaborates on Zepto's evolution from a quick delivery service to a comprehensive grocery provider, now offering a wide range of products. He emphasizes the importance of controlling the entire supply chain to enhance customer experience through better quality, selection, and pricing.
"now you know a lot of people are using. Was that also uh a necessary consequence of becoming a 10-minute provider? like you needed control over what that experience would be like. Absolutely right. Li..."
Navigating Financial Challenges
Aadit recounts the financial hurdles Zepto faced during the capital market downturn in March 2022. He explains how these challenges forced the company to become more efficient and leverage their resources wisely, ultimately leading to significant growth and profitability.
"you know, 10-minute delivery is what got our foot in the door. But now they're basically thinking of us as their their go-to like supermarket chain in India or their go-to one-stop shop. One of the bl..."
Seizing Growth Opportunities
In this segment, Aadit discusses how Zepto capitalized on its early successes to accelerate growth in the grocery market. He highlights the potential of the Indian grocery sector and the strategic decisions made to expand Zepto's market presence amidst competition.
"essentially what happened is that uh we got to this point in March, April 2024 uh where we had gone from zero in August of 2021 to 2 and a half years later, we had hit about a billion in GMV. uh and t..."
Overcoming Talent Challenges
Aadit reflects on the importance of hiring the right talent for Zepto's success. He shares lessons learned from past hiring mistakes and emphasizes the critical role of execution excellence in navigating the company's growth and operational challenges.
"accelerating today we should be doubling down and that's what's basically happening as we speak what are some of the bumps that you hit in the road and like you know even as a 22-year-old founder how ..."
Facing Existential Crises
Aadit shares the existential challenges Zepto faced in its early days, including doubts about the viability of their business model. He recounts the pivotal moments that tested their resolve and the support they received from Y Combinator to pivot and refine their approach.
"especially in that 2022 2023 period where it was existential for us 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 V..."
Facing Existential Crises
In this segment, Aadit shares the critical moments when Zepto faced potential failure due to low customer retention and the challenges of the grocery delivery model. He recounts the discouraging feedback from investors and the realization that many previous attempts at grocery delivery in India had failed.
"early days I think you know we had uh plenty of existential crises that the YC partners helped us through right there was like like before we got into this whole first party thing we were realizing wh..."
Navigating Funding Challenges
Aadit discusses the difficulties Zepto encountered while trying to raise capital amidst global crises, including the Ukraine war and the Silicon Valley Bank collapse. He emphasizes the importance of financial controls and the pressure of competing against well-funded rivals.
"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 that would have been probably the highest likelihood chance of death that th..."
The Power of Naivety
Aadit reflects on the benefits of youthful naivety in entrepreneurship, suggesting that not knowing the challenges ahead can sometimes lead to greater innovation. He discusses how this mindset helped Zepto explore various models and ultimately find its niche.
"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 I th..."
Understanding Market Needs
In this segment, Aadit explains how Zepto's team realized the grocery market in India was broken and needed a comprehensive solution. He discusses the importance of owning the entire delivery process to ensure quality and speed for customers.
"thought about retention. Did it feel like you were just asking questions about that and you know out of asking questions why is retention you not where it could be? Like that sort of teased out, well ..."
Achieving Product-Market Fit
Aadit recounts the pivotal moment when Zepto found product-market fit in Bandra, Mumbai. He describes the initial success of their dark store model and how positive customer experiences fueled rapid growth and validation from investors.
"whole thing. The push basically came from uh a lot of just like radical candle, right? And I think that you don't really find a lot of that you know candidly in in India so far which is why obviously ..."
Scaling Rapidly
Aadit shares the explosive growth Zepto experienced after achieving product-market fit, detailing how they scaled from zero to significant revenue in just six months. He emphasizes the importance of timing and mentorship during this critical phase.
"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. Yeah. What uh talk to me about that moment where you did feel like ..."
Defining Success
In this segment, Aadit discusses his perspective on success for Zepto, stating that they are far from achieving their goals. He expresses the ambition to build a world-class internet company from India and the long-term vision required to reach that level.
"India basically came in 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 at the right time at th..."
Long-Term Vision
Aadit emphasizes the importance of patience in entrepreneurship, noting that while many overestimate what can be achieved in a year, they often underestimate the potential of a decade or more. He reflects on the commitment needed to build something exceptional.
"and we just have to execute like crazy to make that happen. So that's what that's what that's what we're trying to do. Yeah. People are always uh overestimating what they can do in one year and way un..."
Harnessing Talent in India
Aadit Palicha shares insights on the unique advantages and challenges of building a startup in India. He praises the incredible talent pool available, comparing it favorably to American engineers. However, he also notes the lingering fear and lack of ambition in the Indian startup ecosystem, advocating for a mindset shift towards aiming for greater achievements.
"and I know that that's not a realistic expectation for you know today we've got like 3,000 plus corporate employees right uh and mainly ops folks but like with 3,000 people I know it's not realistic f..."
Vision for the Future
Palicha outlines his vision for Zepto over the next 10 to 20 years, focusing on deepening product-market fit and innovation in the Indian consumer internet space. He discusses the introduction of new services like Zeppto Cafe and the growth of their advertising business, emphasizing a user-centric approach to expanding their offerings.
"great. What are some of the unique uh advantages and challenges you've experienced building a startup you know specifically in in India. So I think the advantage is that the talent is incredible right..."
Revolutionizing E-commerce in India
In this segment, Aadit Palicha elaborates on Zepto's innovative strategies to redefine e-commerce in India. He highlights the rapid scaling of their services, including food delivery and advertising, and the importance of responding to user demands. Palicha expresses optimism about creating a new form of e-commerce that could emerge from India, inspired by successful models from China.
"so I think in in the US that mindset is sort of taken for granted. Everybody has that here. Yeah. Right. It's and it's such a special place because of that. Right. But in a place like India it's still..."
Harnessing AI for Business Efficiency
In this segment, Aadit explains how Zepto leverages AI to enhance various aspects of their business, from customer support to supply chain forecasting. He details the importance of focusing on core applications of AI that directly impact their operations, such as improving ad performance and automating customer service tasks.
"It's happening in the other side of the world too. Yeah. So uh we're in this age of intelligence as Sam Alman calls it and I'm a deep believer in that%. Um what are you seeing at Zeppto? So the way th..."
Building for the Love of It
Aadit reflects on his entrepreneurial journey, emphasizing the importance of intrinsic motivation in building a startup. He advises aspiring founders to focus on the joy of creating rather than external rewards, sharing his personal growth and the mindset that drives him to tackle new challenges every day.
"as an internet native company. 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 uh we were able to..."