Million Stanford Dropout Startup Could Be Bharat Tech Unicorn

“When we started this 12 months ago, every conversation we had was, ‘You’re completely out of your mind, this is never going to work,'” said Kishor CEO Adit Palicha.

Still, Palicha’s company has managed to prove those skeptics wrong – it’s now closer to unicorn status and one of India’s fastest growing instant commerce apps. A unicorn is a startup that is worth more than $1 billion.

Zepto is a startup that promises to deliver groceries in less than 10 minutes. Despite being one of many businesses to join instant business Wave, it has already caught the eye of investors.

Its latest cash injection of $200 million in May 2022 valued the business at $900 million, just nine months after its launch.

We thought it was a more exciting opportunity than studying at an elite university.

Adit Palicha

Co-Founder and CEO, Zepto

The two fueling its meteoric growth are 19-year-olds Palicha and Kaivalya Vohra, who left Stanford University to pursue their entrepreneurial dreams.

“At the time, we had already grown to a few million dollars in annual revenue. We said that there is an opportunity to raise a huge amount of capital here, it’s a clear product market fit,” explained Palicha. CNBC Make It,

“How many people get the opportunity to build the company of a potential generation in their lifetime? We thought it was a much more exciting opportunity than studying at an elite university.”

45 to 10 minutes

The idea for Zepto came in July 2021 – when childhood friends were stuck in their homes in Mumbai, right in the middle of covid-19 pandemic And a nationwide lockdown,

those days, Increased demand for delivery services As long as you stay at home.

,online groceries [would] Delivery takes six, seven days, offline options were practically closed or unavailable. It was incredibly difficult for us to get groceries,” said Palicha, who is the CEO of Zepto.

“We had a similar conversation with our neighbors complaining about almost the same problem. That’s when we said… why don’t we try to create a solution for the people in our neighborhood?”

If you look at all the other major categories of e-commerce… you take them all and combine them, they are a fraction of the grocery market.

Adit Palicha

Co-Founder and CEO, Zepto

But Palicha and Vohra were no strangers to the instant grocery delivery business. In 2020 – at the age of just 17 – he started Kiranakart, which he said delivered groceries to Mumbai in less than 45 minutes.

“Some people were having deliveries [within] Time limit of 10-15 minutes,” Vohra said.

“In terms of their retention, how much they liked the platform and how often they were mentioning their friends, [it] significantly higher for those who had delivered within that time frame.”

“That’s why we said, ‘Look, maybe there’s some value in exploring that.'”

Zepto isn’t the only instant commerce startup in India, and competition is heating up domestically and globally. According to Redseer, the country’s online grocery market is set to be worth around $24 billion by 2025.

zepto

They weren’t wrong. According to research by consulting firm Redseer, online grocery market of india Palicha said it could be worth up to $25 billion by 2025 and was an opportunity that was “very compelling”.

“If you look at all the other major categories of e-commerce – electronics, apparel, you take them all and mix them, they are a fraction of the grocery market,” he said.

building trust and credibility

The duo set up a network of dark stores, or microdistribution hubs, to fulfill grocery orders in less than 10 minutes across cities.

Dark stores are closed to the public, housing items to be ordered online only.

“We design our network across the city to ensure that our points of pickup are very close to the population groups in a specific neighborhood,” Palicha said.

To fulfill grocery orders in less than 10 minutes, the duo set up a network of dark stores in cities, such as the one above.

zepto

“What is happening is that our average delivery distance is so short, we are able to deliver consistently in 10 minutes.”

The startup said its average delivery distance is between 1.7 to 2 kms. Other forms of hyperlocal delivery, it said, “may take 2 to 2.5 times longer than this.”

Today, Zepto says, it operates hundreds of dark stores in 10 cities in India, employing tens of thousands of delivery drivers. Palicha said she is currently delivering “90 to 95%” of her orders in between five and 20 minutes.

But speed isn’t Zepto’s only secret for retaining customers and building loyalty. The startup, whose name comes from the zeptosecond – the smallest unit of time – claimed it was adding 100,000 new users daily.

Vohra, who is also the Chief Technology Officer, said, “To really retain customers for a long time, you really need to build trust and credibility. Reliability comes in many ways.”

“Yes, we deliver on time, but also in terms of reliability – if I ordered 10 things, I get those 10 exact things. And if I order fruits and vegetables, [they’re] The highest quality possible.”

keep cash burn low

Investors are also excited about the popularity of Zepto.

To date, the company had attracted $360 million dollars from investors, including y combinator, US health-care consortium Kaiser Permanente and Nexus Venture Partners. Its latest funding round potentially puts the company at a valuation of $1 billion.

Palicha said a key driver of Zepto’s investment success is its “operating discipline.”

“When we went to investors this time, we showed a very, very clear path to profitability. We went from $0 in revenue about a year ago to today, we’re doing hundreds of millions of dollars in annual revenue,” he said. Told.

“We’re still talking in terms of multiples, not percentages when it comes to our growth rate, and that’s something we’re excited about.”

From day one, we … are forcing ourselves to be efficient in order to make every dollar last.

Adit Palicha

Co-Founder and CEO, Zepto

Zepto claims that it has managed to reduce its cash burn rate by 5x on a per-order basis, while achieving 800% quarter-on-quarter revenue growth.

still the days easy money For Cash Burning Tech Companies gone, like increase in interest rates And Investors demand higher results, Still, the young founders remain astonished.

“We’re in a position where, you look at the size of our balance sheet, we’ve got the capital to effectively last for several years in the context of this downturn,” Palicha said.

“From day one, we … are forcing ourselves to be efficient in order to make every dollar last. We are able to order more with the same amount of cash, we are able to order more customers with the same amount of cash.” able to obtain.”

The founders of Zepto may be young, but their faith in their product is unwavering. “Whether it is in front of an investor, a senior executive, any government stakeholder and regulator, you realize that what you are creating is on the right side of what the customers want,” said Adit Palicha (right).

zepto

Both said keeping costs low compared to their competitors in the high-growth tech segment gave them an edge.

“It just puts us in a position where we are able to continue growing, where other people are forced to… layoffEssentially pull back development plans and contracts to survive in such a market,” Palicha said.

Touching the ‘Billion Mark’?

Due to that difficult environment, Palicha and Vohra are not resting on their laurels, while Zepto has fresh money in its bag.

“The main focus now is just to build the incremental scale that we need to break even in key markets. Once we have a balance sheet that is now operating at break even, we can move forward with a lot more confidence and clarity. We can start expanding to new cities together.” Palicha said.

it was previously reported That Zepto is making $200 million to $400 million in annual revenue and the founders are now hoping to “touch the billion mark.”

Palicha continued: “[Zepto] Kaivalya and . emerged as a private project between [me] To see if we can solve a problem in our neighborhood on a smaller scale.”

“It eventually evolved into the company we are today, for which we are incredibly grateful.”

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