Y Combinator Startup Podcast - How Zepto Became India’s Fastest Growing Startup

Episode Date: April 18, 2025

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.

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 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. 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 XYZ. I'm building so that I have the opportunity to wake up in the morning and build again.

Welcome back to another episode of How to Build the Future. Today, I'm thrilled to be joined by Audit Policha, 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. Audit, it's great to see you here today. Thanks so much for having me, Gary. Appreciate it. So when you were getting started, there were some pretty big players already in the space. Swiggy Zamedo, even Amazon was at it.

How did you approach that? 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're able to make a dent and create the scale is because a lot of the people that were in the market in the early days of grocery delivery in India, We're trying to build it supply chain backward instead of user backward or customer backward, right? And so they would build out models that were, you know, two-hour delivery, four-hour delivery, which made sense on paper and like, you know, logistically seem more feasible, economically seem more viable, instead of building it retention in 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, we're able to have a much better sense in selection on quality control. and sort of that audacious thinking put us in a position where not only we were 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 PNL

and better economics, right? So if users love the platform, your GAC 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 better than like the 2R and 4-hour models

because of how sticky the users are. So I think basically, Basically, that's the dent that we had. We were like just thinking first principles, the use of customer backward versus a lot of the big guys, the big behemots that had like sophisticated PNLs and finance teams were thinking supply chain backward. I guess if you win the consumer, you can win everything.

Yeah, and the big company sometimes lose side of that. You're 22 now, but when you were 17, you had reached out to Jared Friedman, one of our partners here at YC. Tell us about that story. So we were just actually supposed to come here, in California and study, 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-fair and I were sitting in Mumbai really had nothing to do. No sort of fancy internships at Goldman or anything like that lined up. So we just decided 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 way over the pandemic. And that slowly kept iterating as just like a fun project. 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 saw posting get 10 minutes with our YC partner and we said wow this is YC 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 and so we said wow we'd love to talk to a YC

partner and Jad was kind enough to like agree after we I think we like flooded the comment section saying that, you know, give us time, give us time. And Jared sort of 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 the US 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 YC? 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.

What was the first demo 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 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, you're going to this grocery store down the road. Why don't you also go to the butcher store? That was like the first year interaction with the customer. And we 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. And at the time, it was called Kina Kmart. And it was a pickup and drop service, similar to what Instacard is in the US. That, you know, prototype probably would have taken like 72 hours to build.

I attribute most of the heavy lifting to my co-founder KV, right? But we built it. We asked the users to move to that app, and that's how it started. There was no launch moment 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. But there was no one like boom, now you're a startup. And that never actually sort of happened until we've gone to YC, I guess.

The initial model for it was Karana cart. And then what's a Karana for some of the folks watching? Sure. No, no, Kieranah 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 Costco's and Kroga's. But in India, it's primarily these small mom and pop shops that are dominating grocery. So that's what a Kira is.

So Kina Kata cart was like corner shop delivery in a way. That's what it means. So the other thing that was very important was sort of extreme speed. So it wasn't, you know, an hour or half an hour. It was 10 minutes. How did that come about? So I think when you speak to most people in the US, they think of 10 minutes as like a convenience value proposition, but actually in India, it's very different. So 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, which is why most retail in India is hyper proximity. So unlike, let's say the big box Walmart Costco models that work in like suburban sprawls, people are used to the milk delivery guy coming to the doorstep or the fruits and vegetables guy showing up outside their house every morning or the local moment pop being 200 meters down the road. And so that's the dominant format of consumption and retail. Your 10 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 were basically 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, this is great, you know, it's COVID, but I'd much rather just go to my fruits and vegetables guy 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. And so that's when 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 insight is that it's not just important because people are used to. People are 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 low penetration of four wheelers you've got much more perishables that people buy people have 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 10 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 it was more just talking to people and like constantly saying, okay, we need to reduce it every time by 30 minutes by 30 minutes until eventually we were like, let's just be at their doorstep.

One of the things that YC we often talk about is do things that don't scale. Was this one of those things where you had to go and do those initial deliveries at 10 minutes and realized there's actually a palpable difference in that experience from the customer? 100%. So I think in the middle of the batch, we started getting a little of the batch we started getting a little lot more pushback from users where basically we're just not seeing their attention, right? In the early days when you're delivering like in an hour. And so people would 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, we have to be at their doorstep. So what KV and I did is we went to one of the stores on the platform and we basically commandeered the store ourselves, right? And we ran it for a short period of time, but we did a pilot where we said, if we are able to control the customer experience end to end, including the delivery time, what's the reaction that we get? And so I was basically like the shopkeeper for a couple of days, KV 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 hundred orders with that model, we could see that, hey, people are actually repeating at like Obviously, the data was not just sophisticated, but we could see the very early signs of, hey, these 10 people that ordered last week, a good chunk of them were still ordering this week, maybe that's a good thing. You did this unscailable 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.

For sure, and I think that it started with like the subjective intuition, just like, what are human beings telling you verbally? Over time, it became more objective, right? Which is like, what's the retention of each cohort we're seeing? Are we seeing that repeatability? And I think that rigor of testing whether we had PMF came from the grinding we had to do at YC. YC is 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. You guys also pioneered this dark store concept that now a lot of people are using. Was that also a necessary consequence of becoming a 10-minute provider? You needed control over what that experience would be like. Absolutely right. Being able to control fulfillment in logistics was critical for us to be able to get that delivery time and SLA for the customer. But more importantly than that, you know, other people think of us as like a 10-minute delivery provider here. If you go into the ground in India, we're sort of looked at more as like a hyper-local

Amazon, not just like good serviceability to the customer, but also great selection, great quality, great pricing across. And today we're doing not like, you know, 700 or 800 products. We're doing now almost 45,000 to 50,000 products that you can order in Zepro, everything from like, you know, oranges and apples, all the way to earphones and hoodies. We're basically building out an internet supermarket chain, right? Although people sort of anchor on the 10-minute piece, though 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, 50,000 products, we're able to control the entire supply chain on the back end and get better quality of produce for customers. Now at scale, we're able to cut all the inefficiencies in the back end 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, 10 minute deliveries got our foot in the door, but 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 that we had pretty early on is that like, and you know, you remember this as well,

right very early in the company's life cycle we got hit by March 22 where capital markets which is he 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 2022 2020 23 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 or e-commerce companies have globally very much early in a life cycle because it was existential right and in retrospect there 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 were 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 24 where we had gone from zero in august of 2021 to two and a half years later we had hit about a billion in GMV and the business was actually actually pretty close back then to EBIT on operating cash flow break-even. And once we were in that point, we were able to show, hey, 70% of our markets are profitable, the most mature markets are touching 4% to 5% EBITO, and they're turning profitable faster and faster, and we're still able to grow, but why don't we accelerate?

Right. Like 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 $700 billion market, right? And so if I'm in that position, we can easily build 20, 25, 30 billion of top line. We should be 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 even as a 22-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 50 different cities. Like, were there cities where the numbers didn't work out

and you had to find a new leader or, you know, do you have to react to different, like, specific things in different cities that were surprising? I would say some of the biggest roadblocks have been people and talent related. Like, the most fundamental input for our company is execution excellence. And like the most important input to execution excellence is high quality talent. And so the biggest mistakes I've made as a consequence of that are the wrong hires, in some cases or the wrong people management.

And 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 if you, those mistakes are very costly, especially in that 2022, 2020, 23 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 Valley Bank thing. If you remember that, right?

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

Yeah. Let's go a little deeper into some of the existential moments for Zepto. 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? In the very early days, I think, you know, we had 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 when we did 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 servers, we're not able to do it well. And so we thought we were dead. And like, 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. This is before the 10 minute moment. Yeah, this is before the first party stack.

And so this is before we started commandeering stores, right? And we said, here, this model is just 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 even a model that works?

And like pretty much everyone was telling us that he, grocery delivery in the world is, you know, has never worked really that well other than a few exceptions. India, there was lots of companies that came before us. There was a graveyard. And so all the feedbacks we were getting from investors and for 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 that would have been probably the highest likely a

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 22 and Ukraine war happened in that period or let's say we're about to, it's funny actually 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 fundraise 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 there were lots of places that we could have died in that, that were real like there was there was a period where we had to build a lot of financial controls right like we had to go through like y-y 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 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 just had to like push ourselves through some like really tricky moments there, but there are probably plenty more still happen, right? I'm sure.

I think the really cool part of your story is that, 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. There's an X maxim now that is, you know, you can just do things. Yeah, yeah, yeah, yeah. So I see a lot of you can just do things energy in what you're talking about here. I mean, it's a little bit of being naive and young, that helped actually. Like, you know, it's like they say, right? Like, if you knew how hard it was when you started, you wouldn't have done it, right?

Yeah, that's the Paul Graham slept blindness essay in a nutshell. Yeah. So 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 know, 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? 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 B2B logistics play, right? Like, is there like a better model? Maybe like, what if we just 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, as a market. And like, we realize that everything is so broken, right? Like, whether you go into the back end, you go to the, the store front, you go to 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 a lot of just like radical candor, right?

And I think that you don't really find a lot of that, you know, candidly in India so far, which is why obviously YC was as valuable as it was, because, you know, people were just like, you know, brutally honest. with us that hey man you want to make it you want to build it's Instacard you want to build door dash what a nice consumer at 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 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 are we building an exceptional product right 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 built 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 tolerance for iteration and pain, basically. Talk to me about that moment where you did feel like you got product and market fit. And that's when, you know, maybe you were in only in one location and then you said, okay, time for,

you know, did you do one additional location or did you say, all right, like five locations? Like, what was that like? It was actually the first location. First Darkstore we launches 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 cut out almost of like what a Darkstore looks like today. Because now Dark Sword is like, you've got proper racking. 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 then we were just delivering from there. But the experience was so well managed because we were able to, you know, curate a good selection, right, and work with a couple of people to be able to do that.

We were able to get the deliveries consistently. And so just started picking up very rapidly. And 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 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 CEDA investors, which is 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, at the right time, at the right place, we met the best. people that gave us the conviction that you know 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 200 million in run rate scale in like six months right and like I would not recommend that to anybody ever again it caught fire like people really wanted it yeah and pulling the product out of you like when are you coming to my neighborhood yeah and even like just even i mean obviously it's 2021 so it's crazy right but even from a capital perspective, we went from like effectively the 125K from YC to like a $9 million to a $50 million around to $100 million around 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 2022, we stabilized and said, okay, let's start building

a business out of this. I guess given that, like, do you consider Zepto a success? No, absolutely not. Like, I mean, not even not even close to it. I think we, 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 sitting in places like this, you get really humbled because you realize that, wow, look at the kind 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, we're able to hold our own to some of the best globally like an Amazon or a DoorDash or Macado Libre or all these other companies then I don't think we've won. 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 for the rest of the ecosystem so I think it's going to take 20 30 years to get there we are very excited to do that for the next 20 30 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. Yeah. People are always overestimating what they can do in one year and way underestimating what can happen in 10 or 20. Yeah, 100%. So you just, you once tweeted, nothing against work life balance. In fact, I recommend it to all our competitors. Yeah. You know, stupid idea. 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. Yeah, yeah, for sure. You know, I think 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 going to 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 you're really, like, accountable for real problem statements, 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 get the best

out of themselves. And it's not forever, right? You're not going to have to do this, like work so hard for many, many decades. But like you definitely need like, I think I believe portions in your life where you take yourself to the maximum, right? And really achieve a lot. 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 realist. expectation for, you know, today we've got like 3,000 plus corporate employees, right? And mainly ops folks, but like with 3,000 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 spending time on. So that's, that's, I guess, the thought process. But what I will say, though, is if you don't really have, like a mission that excites people, then you can't push them to that level to really give

them their honor. I think that like SpaceX is a good example of a company that is just able to get the maximum amount of people because it's such an inspiring mission. Obviously we're not setting rockets to space. We're delivering groceries. But I think that 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 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 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. What are some of the unique advantages and challenges you've experienced building a startup, you know, specifically in India? So I think the advantage is that the talent is incredible, right? And I initially didn't realize this deeply, but we interviewed like American engineers and obviously they're exceptional. But we said, hey, the guys that we have are as good. And I think a lot of people underestimate that.

That's why a lot of great internet startups set up offices in Bangalore, right, and hire people there. And so the big advantage is that 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. 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 2223 and there's still a lot of fear and lack of ambition in general. And I'm sure you, you know, you've seen some of that like in the post-01 kind of period, right? I'm sure 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 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 scavelia 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, take it easy, right? And just get to break even and then build a nice little company, go public, you'll do well, right? But wouldn't it be much better to go for 5x stat, 6x that? And if the opportunity is there, why not go for it? And so I think

in the US, that mindset is sort of taken from granted. Everybody has that here. Right? And it's such a special place because of that, right? But in a place like India, it's still germinating. I mean, I think you're one of the leading importers of the philosophy itself. Yeah, hopefully. We've got the talent.

We just need to get that mindset, the dynamism, basically, right? What else do you have on the plate and sort of in your vision for Zepto over the next 10, 20 years? I think from our perspective, there's a lot of areas to innovate in like Indian consumer internet. And we want to, I mean, we don't want to get distracted where we just, you know, try multiple verticals. Like, we really want to 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 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 250 square foot that's allocated for coffee tea snacks like if you've been to 7-11 in japan for example or even in the u.s you have all that amazing in japan not so good here yeah yeah yeah exactly right and so that it came from the same inspiration right can 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 100 000 orders per day and that's the beauty of all these consumer internet businesses

right when you have like 15, 20 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. 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. Yeah, it's literally in 10 minutes. Yeah, it's like the hyperlocal everything store for hyperlocal India. Right?

like 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 40 million ARR in ad revenue last year to this year we've just crossed 200 million ARR right and that's just I mean it's obviously phenomenal business and we're just innovating there in a 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, Flipcard and a few other folks have done it. But we built it really quickly and it's giving us a lot of value and that business is also scaling. So ads is another big focus. Cafes is another big focus. And it's 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. 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. So the flywheel is spinning as a result of that, where we're getting better retention

and we're getting a better PNLN 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?

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 heartening and pretty exciting for the Indian ecosystem and that there is this very powerful energy where you can just do things and it's alive and well. It's happening in the other side of the world too.

Yeah. So we're in this age of intelligence, as Sam Altman calls it. And I'm a deep believer in that. 100%. What are you seeing at Zepto? So the way that I look at it is, you know, we're like a very nascent internet native company. 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 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 code of my business? and what are the applications that would probably come out on their own and are non-coord of my business but i'll use them but are not core to my business so for example let's say non-code would be

accounting right can i make my accounting 10 times more efficient 10 times more accurate eventually 100 percent there'll be an agent that does that for me can i make my 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 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 a year from now or 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 cap not 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 and so for example let's say the ads business that I was talking about right so automated keyword suggestion for example or bidding an attribution we were able to get much better you know return on ad spend for our clients on the ad side like unilever and procton 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 search the ads businesses and out of that so that had a big impact on bottom line or for example the easiest application that even knows is customer support and now that's obviously

out but we said we need this customer support stack much quicker so we've built out like a crack team that's again training on some of the foundational models looking at all our data 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 be all those sort of customer support tickets i'm basically saying let me just train this model myself 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 50% of the tickets that are raised on Zepto, not just like a rules-based chatbot, I actually saw dynamically by a generative chatbot that's been modified for our exact

use cases. So we'll focus on these key things like search, ads, customer support, forecasting, supply chain forecasting, another core part of the business. We've built a lot of, not generative AI, but a lot of deep machine learning work that we've done there. 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 yeah yeah all of these things are actually empowered by the technology themselves and those are coming at a wrap more and more rapid pace actually maybe to uh wrap things up i guess

my favorite question often is what advice would you give the uh 17 year old version of yourself And it was not too long ago, but it feels like in founder terms, the founders live many, many lifetimes every single year. So what would you say to that person right now? When I started, I was still a little bit extrinsically motivated, but I didn't really internalize that. 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, 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 or the 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, 17-year-old version 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 XYZ or I can get ABC out of it. But I'm building

so that I have the opportunity to wake up in the morning and build again. 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 to the next problem statement. And so it's just great. Audit, thanks so much for spending time with me today. This is awesome. Yeah, likewise. Thanks, Gary. It's great talking to you.