{"id":7617,"date":"2022-12-06T19:15:35","date_gmt":"2022-12-06T15:45:35","guid":{"rendered":"https:\/\/irvc.ir\/%d8%a2%d9%86%da%86%d9%87-%d8%a7%d8%b2-%d8%b9%d8%b1%d8%b6%d9%87-%d8%a7%d9%88%d9%84%db%8c%d9%87-%db%b1%db%b2-%d9%85%db%8c%d9%84%db%8c%d8%a7%d8%b1%d8%af-%d8%af%d9%84%d8%a7%d8%b1%db%8c-%d8%b4%d8%b1%da%a9\/"},"modified":"2025-05-16T10:46:33","modified_gmt":"2025-05-16T06:16:33","slug":"what-we-can-learn-from-zomatos-12-billion-ipo","status":"publish","type":"post","link":"https:\/\/irvc.ir\/en\/what-we-can-learn-from-zomatos-12-billion-ipo\/","title":{"rendered":"What We Can Learn from Zomato’s $12 Billion IPO"},"content":{"rendered":"\t\t
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Zomato, a food delivery company, aims to change the dietary habits of over 1.36 billion people in India.
In mid-July, Zomato was valued at $12 billion during its IPO, marking a major milestone in India\u2019s capital markets. While traditional food businesses continue to operate, Zomato exemplifies what a modern technology company looks like\u2014and its successful listing offers valuable insights into how such firms operate, scale, and create value with minimal capital investment.<\/p>

The company attracted prominent global investors, including Fidelity, Morgan Stanley, Canada Pension Plan Investment Board, and the Government of Singapore, despite owning no physical assets like restaurants or delivery fleets.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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Zomato vs. Traditional Food Businesses<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Like DoorDash and SkipTheDishes, Zomato delivers restaurant food without owning real estate, restaurants, storage, or delivery vehicles. Its business model mirrors that of Uber, Amazon, and Airbnb\u2014but is structurally different from companies like Facebook or LinkedIn.<\/p>

In a previous Harvard Business Review article, the authors argued that WeWork did not qualify as a tech company despite its self-labeling. The contrast between WeWork\u2019s failed IPO and Zomato\u2019s success offers a clear case study in what makes a true technology company.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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\nAccording to the authors, a successful tech company must:<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Transform its industry<\/p>

Scale rapidly<\/p>

Generate significant profit with limited capital expenditure<\/p>

Zomato possesses six key characteristics that typify a modern tech company.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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1. Industry Disruption at Scale<\/h3>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Zomato is aiming to redefine how 1.36 billion Indians eat\u2014in a country where nearly 90% of people don\u2019t regularly dine out (compared to 58% in China).
The barriers were:<\/p>

Limited access to personal transportation (only 2% of Indian households own a car)<\/p>

Cultural reluctance to eat food prepared outside the home<\/p>

Zomato overcame both. It introduced fast, reliable delivery services and built trust through features like reviews and ratings, gradually changing mindsets and normalizing food delivery.<\/p>

Just as Uber got millions to ride with strangers and Airbnb made sleeping in others\u2019 homes mainstream, Zomato is doing the same for food.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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2. Low Capital Costs, High Local Value<\/h4>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Unlike global platforms like Google or Facebook, Zomato must build local networks in every city it enters. It invests in restaurant partnerships, curates menus, and evaluates delivery feasibility. These soft assets are not easily replicable and form a competitive moat.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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3. Deep Customer Intimacy<\/h4>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Zomato collects and analyzes years of user data to personalize promotions, adjust pricing, and optimize delivery. This allows for targeted marketing and highly tailored customer experiences, increasing switching costs and reducing churn.<\/p>

Just as Amazon reorganizes its entire interface around user preferences, Zomato fine-tunes offerings based on seasonality, local trends, and individual behaviors.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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4. Network Effects<\/h4>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Modern tech firms benefit from network effects:<\/p>

Direct: (e.g., Facebook, LinkedIn): each new user adds value to all others<\/p>

Indirect: (e.g., Zomato, Uber): more users attract more restaurants or drivers<\/p>

Data Network Effects: Every transaction adds insights that improve service delivery and personalization<\/p>

Zomato uses what it calls a \u201cflywheel effect\u201d\u2014each new customer or restaurant enriches the platform and amplifies its efficiency and scale.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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5. Ecosystem Expansion at Low Marginal Cost<\/h4>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Tech companies extend offerings through existing ecosystems.<\/p>

Uber expanded from rides to food delivery (Uber Eats)<\/p>

Amazon leverages Echo devices to sell music, video, and more<\/p>

Apple monetizes content through the iPhone<\/p>

Similarly, Zomato can offer semi-prepared meals, restaurant supplies, table bookings, and more\u2014leveraging its platform without major new capital.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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6. Variable Costs and Scalable Margins<\/h4>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Unlike pure software firms like Google or Microsoft, Zomato’s cost structure includes physical logistics\u2014delivery drivers, restaurant partners, etc. But as scale grows:<\/p>

Operational efficiencies improve<\/p>

Supplier relationships deepen<\/p>

Negotiation power increases<\/p>

Future technologies like drones, robotics, and autonomous vehicles may further lower costs, enhancing profitability.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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The Big Picture<\/h3>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Modern tech companies with asset-light models and these six characteristics are among the most valuable entities of the 21st century. As of July 2021, the combined market cap of FAANG+M (Facebook, Apple, Amazon, Netflix, Google, Microsoft) was over $9 trillion\u2014exceeding the GDP of every country except two.<\/p>

Zomato\u2019s high valuation is not surprising. It’s a verified tech company poised to reshape the food habits of over a billion people.<\/p>

Today\u2019s tech giants rival the industrial titans of the 20th century\u2014Ford, GE, and others\u2014who reshaped societies with heavy infrastructure. The new giants, however, build intangible, data-driven ecosystems that are nearly impossible to replicate.
As the authors put it: “How easy would it be to rebuild the trust and engagement of 1.5 billion Facebook users?”<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"

Zomato, a food delivery company, aims to change the dietary habits of over … <\/i>Read more<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":6246,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[226],"tags":[],"class_list":["post-7617","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-articles"],"_links":{"self":[{"href":"https:\/\/irvc.ir\/en\/wp-json\/wp\/v2\/posts\/7617","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/irvc.ir\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/irvc.ir\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/irvc.ir\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/irvc.ir\/en\/wp-json\/wp\/v2\/comments?post=7617"}],"version-history":[{"count":4,"href":"https:\/\/irvc.ir\/en\/wp-json\/wp\/v2\/posts\/7617\/revisions"}],"predecessor-version":[{"id":7621,"href":"https:\/\/irvc.ir\/en\/wp-json\/wp\/v2\/posts\/7617\/revisions\/7621"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/irvc.ir\/en\/wp-json\/wp\/v2\/media\/6246"}],"wp:attachment":[{"href":"https:\/\/irvc.ir\/en\/wp-json\/wp\/v2\/media?parent=7617"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/irvc.ir\/en\/wp-json\/wp\/v2\/categories?post=7617"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/irvc.ir\/en\/wp-json\/wp\/v2\/tags?post=7617"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}