Bengaluru: Online food ordering and delivery startup Swiggy is among the few survivors of the last funding bubble burst. In the years since 2014, co-founder and chief executive Sriharsha Majety and his team have worked to maintain the company’s market leadership and chase growth at all costs.
Recently, Swiggy hired Vivek Sunder as its chief operating officer, among other top recruitments. In their first media interaction, Majety and Sunder spoke about the funding boom in the food-tech space, the battle against Zomato, Uber Eats and Ola; the company’s burn rates and discounting; and new leadership hiring, among others. Edited excerpts from an interview:
How is the current boom in food tech different from what we saw back in 2014-15?
Majety: There are similarities and differences. Similarities in the sense that there are some in the market who degrade fundamentals to buy growth. Differences are that it’s all happening at a larger scale, in the sense that there are companies that have gone through the cycle. It’s not a bubble in the sense that we know now that the demand for the category is limitless, going by consumer demand. It was largely untested in 2015.
How much room is there for more than one player to survive in the business of food delivery? Do you think it’s a winner-takes-all business?
Majety: Actually, there is no market in India where the winner has taken all. If you compare it with e-commerce and cabs, there are two players. In this case also, there will be a few leaders who will have a disproportionate share of the market and some others who may not be as relevant in the long term.
Definitely it’s a very large market, so it can accommodate a few players. There will still be a concentration of power, and not a bunch of equally-sized companies.
A lot of the expansion of the online food ordering business has been driven by discounting. How sustainable is the discount-driven model?
Majety: We are being fairly measured about our own dependence on these things (discounting) to drive business and it’s super important to keep building a real long-term, sustainable business. We will react in ways to be competitive, but it’s not our focus area to figure out ways to spend on discounts. For us, it is well under control and probably a few quarters of such behaviour is to be expected because of new players who are trying to win market share suddenly.
What are some of the steps you have taken to ensure burn rates don’t spiral out of control?
Majety: I think the burn rates (for the market) go very high because of two reasons primarily—either you’re paying too many subsidies to consumers or you’re paying too many subsidies to delivery guys or to the restaurants. We are not doing much of any of that—that’s the reason why we’ll have our burn rates under control, which is the reason why the business will keep growing at a sustainable rate and a sustainable pace, financially.
You spoke about having a path to profitability. Is profitability a near term goal?
Majety: Not right now. Sitting where we are, we are just scratching the surface of this category. And it may not be the right time, right now to have a short-term goal on that. Growth is absolutely the priority.
Sunder: Solving different types of issues is the priority and if you solve it better than other people, then growth is a natural outcome of that. And it’s a slight nuanced difference. If you go after growth, you’ll say any growth is good growth.
What are 2-3 of your most immediate priorities as COO?
Sunder: We have to think about how to structure the company differently, how to operate the company differently, how to give levers of control, what’s the balance between local autonomy, speed and quick decision-making, versus the power of scale and sophistication that comes from doing things. All of that stuff has to be done well.
You have bolstered your top management team with a number of new hires. What are some other positions you are looking to fill?
Majety: We are obviously looking for people with a strong tech and product background. So, we may hire a head of data science or a head of product, something like that.