If you remove all constraints and you just remove all the laws of physics and you just think from first principles, what's the most extreme positive customer experience you can give and you start from there and then you work backwards from how can I make that possible.
So Aadit, everyone in this room knows Zepto, almost everyone uses the product, many of them probably every day. I don't know how many people know the true story of how Zepto got started. So I thought we'd start there. How did you end up starting this incredible company?
Well, firstly, you know, Jared, thanks for having me and it's a privilege to be here at YC Startup School. I mean, you know, we started our journey, Kaivalya and I watching Startup School videos in my bedroom and at home and so it's a wonderful privilege to be here. I think the thought process of starting this company at the beginning was we didn't really start with the intention of building a company. We were two kids.
We started I think working on it when we were 17. Kaivalya and I loved building when we were kids, we've been friends for quite some time and around 15, 16 we said people in Silicon Valley are doing this for a living, building out cool products for a living. So why don't we explore doing that? And so when we were 17 we applied to study in California. We were lucky enough to get into a good school there. And then COVID happened and once COVID happened we found ourselves back in Mumbai, which is where we're originally from. And at that point we really had nothing to do because we were not in person in Silicon Valley which is where we wanted to be and so we said there's no point doing college online learning. And so we took a year off from college and said, 'Let's just work on a project.' And that's how it started. And I think really the big problem at the time, first wave of the pandemic was people couldn't get groceries in their regular neighborhoods. The small mom and pop stores had issues with labor. The big guys that were delivering next day were all backlogged. And so we just started a WhatsApp group chat where we used to deliver for our neighbors in Mumbai. And that slowly kept evolving until we made it into an app. And the first rendition of the app was called Kiranakart. And then it kept going from there. And then that's when we stumbled onto YC.
And I remember the first time I met you, Aadit. This is a story that I don't think has been told very often. You were just about to start as an undergraduate at Stanford. You'd gotten into Stanford, amazing school, and you were going to leave India, go to Palo Alto, and start at Stanford. This is just a couple months probably before you really...
Two, three months before matriculation.
Yeah. Like two or three months before you started the company that was then originally called Kiranakart. And I remember you asked me basically should I go to Stanford or should I drop out and start this company. Maybe for anyone in this room who's maybe thinking through sort of a similar question in their own minds. How did you think about it? How did you end up deciding to start Zepto rather than going to Stanford?
Yeah. That's true, Jared. And by the way, for everyone here, Jared has been pretty instrumental in getting us off the ground. He was our group partner on YC and he's been...
Really the only thing I did was convince him to not go to Stanford. Everything else he's done.
No, no, he did a lot more than that. But yeah, I mean, I think in the early days, really a lot of people ask me this question that you dropped out of college, should I drop out of college and do the same thing? I mean, actually, I have a less heroic answer, which is that we thought of it a little bit more tactfully. We said okay obviously it's a risk because going to college is a good opportunity etc etc so I think we took a year and in that period of the year we did a lot of work to be able to get to some level of PMF. I mean we got to maybe a very early sign of PMF I think 8 months into the journey and that's when we started saying okay there's retention there's compounding in the business and only up until we got to the point where we started doing about 10,000 orders per day I remember that point but that's when we said okay this is a real business and this is a once in a lifetime opportunity and we should go for it. So we took our time before we took the big leap. And so that's usually what I tell folks is that you should have some product market fit. You should have a real product that's working and you shouldn't take the risk before you have the proof of concept of something that's actually working. And in our case we got to like a decent 60-70 crore revenue run rate or GMV run rate scale before we said wow we should go for this business opportunity and also we were lucky enough to get investor interest at that point when we got to that scale so we said okay we've got a term sheet we've got a business that's working customers are liking it we should go for it.
One thing that's interesting to me about the Zepto story that I think might lead to a good lesson for everyone in this room is when you started Kiranakart originally grocery delivery was not like some new idea in India there were already what two or three billion dollar companies doing grocery delivery in India at huge scale. What made you think so what I'm just going to do this anyway what made you feel like it was worth launching something that competed with them? I feel like a lot of people in this room would look at a market like that and say like it's too late I missed it.
No I think it's fair. So I think we started this company in 2020 or we started working on it in 2020 and at that point there were multiple different models that existed in this space of grocery delivery because grocery as an opportunity in India to digitize grocery to build like an organized player is a very large opportunity and people have been chasing it not just for 3-4 years they've been chasing it for 20 years even in the offline world. And so there were some large players out there nobody really had the model that we were doing there were some players that were doing sort of doorstep delivery from other stores there were some players that were doing next day delivery but we didn't really think about it as oh we'll try a different model that was not really the thought process. What gave us conviction that we should do it was just bottoms up. When we started that WhatsApp group in Andheri in Mumbai and most of the deliveries Kaivalya and I used to do ourselves and in that process we would talk to a lot of customers at their doorstep organically we would give them a pack of groceries and say hey you have 2 minutes to chat and then we would talk to them and say okay why did you use us why don't you use ABC or why don't you just do it yourself and that's when we learned a lot that when you spoke to the end customer, they were not satisfied. There was no real compelling player or compelling model that really was hitting their needs including us at that time by the way. So that first rendition of Kiranakart we had not nailed the product market fit and so customers had they said okay you don't have all the selection your pricing is too high the delivery times are not in our control at that point and so we would just speak to customers and say okay what do customers really care about at the end of the day they care about speed quality selection and price right and so how do we push the bar on all four of those things and that's when we started for the first time trying to do these mini warehouses or mini dark stores and that's when the customer experience significantly improved and that's when we saw product market fit.
Yeah, let's talk about this because a lot of people probably don't know that Zepto is really a pivot from what you started with which even had a different name. You even changed the name of the company when you changed the model. So all during YC you were working on this thing called Kiranakart. Maybe explain to people what the original idea was.
For sure. So look, I think from our lens like I mentioned, we never started with a thought process of building a company. We started from a thought process of just solving a problem for like the 30 aunties in our neighborhood. And that's why we started initially with the easiest solution was just a WhatsApp group chat where we used to deliver from existing stores. And so we would just go around the neighborhood, deliver to people's doors when they asked us for it and we would pick it up locally. But then eventually we made this meaningful pivot I think early 2021 where we said look if you're just doing doorstep delivery from like a mom and pop shop to the customer you've got no control on the customer experience no control on the delivery times you can't really and you can't solve the problems that people were telling us at their doorstep. So that's when Kaivalya and I basically picked up a bunch of stock and we put it into his apartment and then that was the first mini warehouse in a way.
Oh, your co-founder's apartment was the first dark store.
Yeah. Yeah, it was. So, we started from there and but what we noticed is that okay, in this small area where we could control the customer experience, the response was phenomenal. And that's when we took it to the next level where we said, okay, let's try to do like a mini cardboard version of a warehouse. And we did that in Juhu if you're familiar with that. And then finally, we actually launched a proper warehouse. And then we saw the pivot point for us was that controlling the customer experience we thought okay you improve the delivery times incrementally you improve the speed, the quality incrementally the selection incrementally the pricing incrementally there'll be like a little bit of an improvement here or there but we saw 10x. The one neighborhood where we were doing a dark store versus all the other neighborhoods that we were doing just mom and pop shop delivery the one area where we were doing it from a dark store had three, four times the volume of the rest of the city for us and so we said wow there's really like a lot of customer demand here. And so that's when we made the pivot saying that we need to control the customer experience and so that's when we started going into these mini warehouses. So that was a thought process and at that time the idea of doing these mini warehouses and delivering to people's doorstep at least back then obviously now it's fairly common place but back then didn't really exist. So we didn't come in from a lens saying okay you know XYZ player is doing it like this I'm going to try doing it like this or this guy's going to do it like this and I'll do it like this and we'll see. It was more like okay customer is not satisfied and we would just obsess over what can we do physically to get that customer satisfaction up and then that led us to this mini warehouse model which by the way when we started a lot of people said oh no this is not the right way to do it this not the right way to do it but the customer was telling us that yes this makes sense but all the pundits were not in a way.
When people were telling you that it was the wrong move to build your own dark stores what were their reasons?
A lot of people were building I mean in our business people were building the business initially backwards from a supply chain or from financial goals right which obviously makes sense to do and that's what we do day-to-day but really the starting point of any business has to be the customer. So what people were saying is that okay this is the model that's viable and this is what I'm going to give to the customer this is the best that I can do and this is what the customer is going to get. We started from the opposite. We said what is the most extreme that the customer wants and that's why this concept of 10-minute delivery.
