Mumbai: When Swiggy Ltd lists on the stock exchanges on Wednesday, it will mark the culmination of a short journey for Sriharsha Majety, the company’s co-founder. Majety, who began his startup journey a little over a decade ago by launching a logistics platform, quickly grew bored and shut that business. But having learnt some lessons along the way, he decided to focus on building a tech platform for hyperlocal delivery, launching Swiggy. From there till the upcoming listing, it’s been a roller coaster ride with many ups and downs.
Today, Swiggy uses technology to offer several services, including food delivery, quick commerce (Instamart), out-of-home restaurant reservations (Dineout), event bookings (SteppinOut), and product pick-up or drop-off services (Genie). But it was not easy convincing Swiggy’s investors to get on board. Outside observers were also sceptical.
For instance, in 2014, when Swiggy launched as a food-delivery platform, many in the industry had reservations, because the startup planned to have its own fleet. At the time, most other foodtech startups were online ordering platforms and used other service providers for delivery.
Indeed, Deepinder Goyal, founder of Swiggy rival Zomato, wrote in a blog post in June 2016 that managing an in-house delivery fleet was not cost-effective (Zomato used Delhivery and Grab for its deliveries). “...If we were to do this ourselves (and we’ve had the urge to do it multiple times), we would end up ruining the unit economics for the entire company in one shot,” Goyal wrote. “...you will lose more money than you can ever imagine recovering in any way possible,” he concluded in the post, which was later deleted, but not before tech-focused information site MediaNama had captured it.
Majety, an ‘ideas man’ renowned among his peers for being able to absorb vast amounts of information and come up with out-of-the-box solutions, took a different approach. By then, the face of Swiggy as chief executive officer, he decided that in addition to the tech platform enabling the ordering of food, it made sense to own the fleet that would deliver the food. Swiggy chose to control the entire journey from ordering the food to delivery. And in the early years, this helped it become the market leader.
As co-founder Nandan Reddy and Majety would later pitch to investors, the idea was to build a Domino’s model for restaurants. If Domino’s (owned in India by Jubilant Foodworks, whose promoters also run HT Media, the parent of Mint) could figure out 30-minute delivery, why couldn’t other restaurants do so as well? By 2018, it looked like Swiggy could do nothing wrong, with some analysts pegging its share of the food delivery market at close to 60%.
After Swiggy’s initial success, its rivals would figure the need for similar backward integration and have their own delivery fleet. By 2017, Zomato had acquired on-demand delivery FleetRunnr. Having taken a leaf out of Swiggy’s book, it would eventually surpass the leader. Others, such as the food-delivery services from cab-hailing platforms Ola and Uber, would fall by the wayside or be acquired.
In 2019, Majety wanted to broaden the convenience offerings from Swiggy and deliver groceries and meat in 30-40 minutes. The sceptics again had many questions. Was it the right capital call? Would it take the focus away from food delivery? How would it impact unit economics?
Much like food delivery, Majety and his team eventually managed to bring the investors around within two quarters and raise fresh capital months later. The quick commerce numbers were far too convincing. And so was Majety, whose conviction that his ideas would succeed swayed investors.
During the initial public offering (IPO) press conference on 31 October, Rohit Kapoor, CEO of Swiggy’s food delivery arm, alluded to Majety’s constant ideation and pursuit of perfection. Talking about Bolt, Swiggy’s latest service, which promises 10-minute delivery of food orders, he said, half in jest, that Majety would keep asking him: “Why can’t I get my Starbucks coffee in 10 minutes?”
What gave Majety, a fairly young entrepreneur, the conviction to go against conventional logic? Perhaps the fact that he had a safety net, thanks to his parents being well-off, gave him the courage necessary to be a risk-taker, say some observers. Majety hails from Vijayawada, a coastal town in Andhra Pradesh. His father, Surendra Majety, is the managing director of Minerva Coffee Shop in Vijayawada; his mother, Madhavi Majety is a paediatrician.
Majety pursued ideas even during his years of study, building a solid academic grounding in multiple disciplines. He earned a dual degree at BITS Pilani, where he got a Bachelor’s degree in Electronics and Electrical Engineering and also a Master’s degree in Physics. He picked BITS over other institutions because of its “flexible” approach, which made allowances for class attendance and encouraged “unstructured learning”.
Unlike most of his classmates, Majety didn’t bother with the placements at BITS, because he didn’t find anything that interested him. Instead, he pursued a Chartered Financial Analyst (CFA) certification up to level 2. Thereafter, he decided to study at the Indian Institute of Management–Calcutta (IIM-C). Even though he had secured admission at other IIMs, he chose IIM-C because it was slightly more “chilled”.
Unlike many others, Majety didn’t immediately jump into a job or startup after completing his course. When he eventually took up a placement offer for a job with Nomura in London, it was to serve a latent dream of working abroad and in finance. But it was short-lived as Majety quit within a year.
It was 2011, and Majety, who was around 25 at the time, decided to go on a six-month cycling tour across Europe instead. It was a journey he has described in many interviews as a pivotal moment in his life. In a podcast during the pandemic (October 2020) with Anand Daniel, managing partner of venture capital firm Accel (an early Swiggy investor), Majety said, “If you have survived being chased by sheepdogs cycling downhill, how much worse can it get?” Later, he would also embark on a backpacking trip through Europe on public transport.
Majety characterized the 4,000-km cycling trip from Portugal to Turkey as punishing and said he was tempted to give up after a few days. But he pushed on and endured. It would be a memory he would lean on for resilience when things got tough later in the world of business.
The next year Majety got together with Swiggy co-founder Reddy in Bengaluru and the two started figuring out what they wanted to do. Soon enough, Bundl Technologies, Swiggy’s parent, was born.
This was the time when Flipkart and Snapdeal were emerging as upstarts in the startup ecosystem. Pretty much everyone was setting up an e-commerce shop. Majety and Reddy felt they had missed the bus on consumer e-commerce. They decided instead that they would build the “shovel for the gold rush”.
This would be a tech platform that would help small businesses ship their products across India. The platform connected businesses to other delivery firms. Within a year, however, the partners decided to shut the shop. Reddy and Majety figured they were less suited to building for enterprises as there was no spark. Even if they scaled the logistics business, it would be small in size.
Although they decided to shut down, there were some lessons. A key one was why not build an intra-city logistics platform? At that point, no one had cracked hyper-local delivery. Even if a customer used a courier service such as Blue Dart to deliver a parcel across the city, it would take a day at least to come through and would be routed through the courier’s network warehouses, often at the edge of the city.
After Majety and Reddy zeroed in on urban convenience logistics, they toyed with options such as food, groceries and medicines. This would become more relevant in the later years as Swiggy would enter all of these verticals.
But back in 2014, in what has now become Swiggy lore, Reddy and Majety, who were then living the bachelor life, chose to direct their focus on their biggest pain point, which was getting food delivered home reliably from their favourite restaurants. It also helped that food delivery had the highest target addressable market at the time.
Thus, at the height of the foodtech boom, when there were already scores of other foodtech startups in the segment, Swiggy launched a business to solve food delivery.
Majety’s ability to go against the grain would once again play out with Instamart. Swiggy was the first to launch a quick-delivery service for groceries, once again upending the market and triggering a consolidation of peers down the line.
At the time, Swiggy was running a pilot dark store network and promising 40-45 minute delivery. This was around the time Amazon and Big Basket were offering to deliver groceries in two-hour designated slots. Flipkart had also launched Flipkart Quick, which it would later wind up.
Still, Majety needed to convince his investors. One of them was Prosus Ventures, which went on to acquire a 31% stake in Swiggy over time. Back in 2017, Swiggy was an early-stage investment for Prosus, which was keen to invest in Indian consumer stories. One of the selling features of Swiggy was Majety and his “genuineness” as a founder. “What you see is what you get,” said Ashutosh Sharma, head of India for Prosus Ventures.
Even so, a few years later, when Swiggy wanted to do instant grocery delivery, Sharma was not initially convinced. “I used to talk to people at home (Bareilly, a small town in Uttar Pradesh) about quick commerce as a concept and ask them if they could pay ₹25-30 extra to get this delivered at home... most would say no, there is no need, we can just go down the road. I was coloured by a product that was not for that target audience. Harsha was right in the end,” he said, of his early discussions with Majety on the viability of quick commerce.
Prosus sold a small part of its holding in Swiggy in the IPO, which will fetch the firm around $500 million. Post the dilution, it will still retain a stake of around 25% in the company.
In 2019, other Swiggy investors also initially resisted the idea of quick commerce. This was when the company had been experimenting with Swiggy stores for groceries and meat. Would the unit economics work out for a further investment in quick commerce, they wondered.
The concern did play out. Despite being the first mover, Swiggy would end up losing market share in quick commerce a few years down the line to Zomato’s Blinkit, and even to new entrant Zepto, in some markets.
This initial scepticism against quick commerce was not unique to Swiggy. Two years later, Zomato acquired Blinkit in an over- ₹4,500 crore deal in 2022. Founder Deepinder Goyal would call the acquisition a matter of survival for Zomato. However, at the time, the acquisition was viewed unfavourably by analysts. After Zomato acquired Blinkit, investors punished the stock and Zomato ended up losing 20% in six trading sessions.
Majety has also made many missteps along the way. For instance, Swiggy could have hired a chief financial officer (CFO) much earlier in its journey, the founders have said in previous interviews. Without a CFO, the company did not have a line of sight on how much it was spending until two months after it was done. “Swiggy was a bit of the wild west in the initial days. Could have used a little less of it,” Majety admitted to Accel’s Daniel in the 2020 podcast.
The company is yet to turn profitable a decade after starting up. At a consolidated level, it suffered a loss of ₹2,350 crore in FY24, although this was down from ₹4,179 crore in FY23. On the quick commerce front, while Instamart more than doubled its revenue to ₹978.5 crore in FY24 from a year earlier, it was way behind Blinkit’s ₹2,301 crore. While Zepto’s revenue figure for FY24 is not available, it had recorded revenue of ₹2,024 crore in FY23.
One of the critiques of Majety by those who have worked with him is that his collaborative approach to decision making also makes him a tad slow. Every decision had to be deliberated on in great detail.
While there has been much praise for Majety’s collaborative leadership style, Swiggy has suffered from a spate of high-level departures in recent years.
Those who left include Vivek Sundar, the chief operating officer; Karan Arora, vice president and head of supply chain management at Instamart; Sidharth Satpathy, VP of Instamart; Ashish Lingamneni, VP of brand, product marketing, and sustainability; Nishad Kenkre, VP and head of revenue and growth at Instamart; Anuj Rathi, senior VP of revenue and growth; Karthik Gurumurthy, senior VP of Instamart; and Dale Vaz, chief technology officer. Some left to join other companies, while others chose to pursue their own startup dreams.
The departures have had an impact. Majety’s execution team today is fairly new. For instance, it was only in August that Swiggy roped in Flipkart hand Amitesh Jha as its new chief executive officer for Instamart (Phani Kishan Addepalli, who was overseeing Instamart, was given a different role). Swiggy’s food delivery CEO has been in the role for less than two years. Zomato, on the other hand, has had the benefit of an established founding team for Blinkit from the get-go.
All this has meant that Swiggy has gone public at a time when it is not leading either in food delivery or in quick commerce, an unthinkable reversal from where it was. Insiders, however, assert that all this is part of a startup’s journey. In Majety, they add, they have a sure-handed skipper who will steer the ship through these waters.
