Lounge
Swiggy co-founder Phani Kishan Addepalli talks IPO, and the journey so far
Summary
- Ahead of a much-discussed initial public offering, Swiggy’s newest co-founder talks about landmark moments from the bellwether startup’s last decade, thinking in terms of ‘we’ instead of ‘I’, and passing the toothbrush test
The pronoun “I" doesn’t come easy to Swiggy co-founder Phani Kishan Addepalli. Over an almost two-hour conversation in two parts, the boyish 34-year-old Phani, as he likes to be called, almost exclusively uses “we" while speaking of the 10-year-old online food ordering and delivery company Swiggy, one of India’s biggest unicorns and the latest to head towards an IPO. Reports say Swiggy made a confidential filing with the Securities and Exchange Board of India (SEBI) recently, targeting a valuation of around $15 billion (around ₹1.26 trillion) to raise $1-1.2 billion, and is waiting for the regulatory nod to go ahead with the IPO.
The imminent announcement is creating justified buzz in the market given the fact that only a handful of Indian startups, including close rival Zomato, have gone public so far. The atmosphere at the Swiggy headquarters, nestled inside the inevitable tech park in Bengaluru and a stone’s throw from Flipkart HQ, is quiet and hushed, though, as we walk into a bare-bones meeting room to talk to Phani. “The question has always been when, not if," he says. “We are obligated to our investors and it is the right thing to do in the course of business. Our core focus has always been how many customers we are delighting, what is the impact we are creating...because that is what gives us the energy to do what we do, but an IPO is a momentous occasion. Very crudely, there is a feeling of coming of age."
The natural state of any startup is to die, says Phani pragmatically. “More startups die than live—to be surviving 10 years into our journey is a big enough thing. Getting to a place where we are part of the India growth story, taking people along on this story…. I don’t think the feeling’s fully set in," he adds with a grin, revealing that the company has been preparing to go public for the past two-three years. “Independent directors have been there for two years. There has been a lot of internal prep for getting the governance in place, getting the right advisers in place, preparing for having the right amount of transparency, conducting ourselves in the way a public company should—all these have been in the works. That part is not new for us. We feel good, business is doing good."
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The plural comes naturally to Phani as he talks about the company he has been with for nine years. Although it’s difficult to pin him down on his individual achievements, it’s obvious that they have been considerable: starting out as an employee in 2015, Phani was elevated to the position of co-founder in July 2021 by OG co-founders Sriharsha Majety and Nandan Reddy. “I’ve always been amazed by Phani’s ability to take on very new charters and operate from first principles, to go out and do a stellar job. His approach to building new and enduring organisational capabilities (read superpowers) has always been a force multiplier for us, and I can’t wait to see him go on and take new challenges to build even more superpowers in the years to come," wrote Majety, CEO of Swiggy, in a blog post announcing the change.
Although Phani was heading Swiggy’s quick commerce vertical Instamart at the time of our meeting on 31 July, very soon after, he was given his latest role: that of chief growth officer. Catching up on this over a quick phone call last week, Phani explains what his job will be and how it will continue to intersect with his work heading Instamart. “In its simplest form, growth for us is about acquiring and retaining customers. It’s understanding the next 100 million users and their barriers to trial, which could be simple things like cash on delivery, or concerns about quality, or it could be about navigating the app—there’s that famous story about how the search icon on Amazon was taken for a table tennis bat by many early users in India," says Phani.
He also feels that quick commerce has a tremendous potential to grow in India—an assertion borne out by the fact that competition in the sector, already red hot and primarily between Zomato’s BlinkIt, Zepto, and Swiggy’s Instamart, is slated to become even bigger with Amazon and Flipkart entering the category; in fact, Flipkart’s quick commerce vertical Minutes went live in a few pincodes in Bengaluru last month, while Amazon is reported to be readying its tech for launch in early 2025 amid occasional rumours that it is eyeing Instamart (Phani laughs this off).
“Fundamentally, we think the grocery opportunity is orders of magnitude higher than the food delivery opportunity. It is simply a much larger tank of potential users—take my mom for instance, she doesn’t use Swiggy for food delivery but she orders groceries on Instamart," he says. According to him, food delivery in India is still a want, not a need, and for most people, it happens around occasions—friends coming over, celebrating an anniversary. “Grocery is a $600 billion industry in India," he says, and it is clear that the quick commerce segment is looking hungrily at that pie.
The evolution of Phani’s role in Swiggy tracks with the journey of the company itself. Both were young and wet behind the ears when he joined Swiggy in March 2015—a mere few months after the company was born in August 2014 in Bengaluru. “Our office then was in a small villa behind Prost brewpub in Koramangala, and we were a few streets away from Flipkart’s first office—in fact, they were some of our earliest customers," Phani recalls.
Swiggy was a brash newbie looking to disrupt the difficult food ordering/delivery market already crowded with well-established names like Food Panda. But there was a fundamental difference: while the others were digitising restaurant menus and facilitating order placement, Swiggy boldly announced that it would handle everything end to end, including delivery. “Although we were late to the restaurant aggregation business, our unique insight was basically this: can we control the last-mile delivery from the restaurant to the consumer to provide an extremely reliable experience every time? Can we remove the anxiety induced by those famous words ‘ladka nikal gaya hai’ (the boy has left)?," he says, laughing, referring to a popular and often misleading phrase used by restaurant managers to reassure irate and hungry customers that their food is on the way.
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“If I remember, I said, ‘can we build a layer of Domino’s over every restaurant?’ Domino’s never claimed to have the best pizza, but it did guarantee delivery within a certain time limit. Also, many restaurants, including some of the most popular ones, like Corner House and Meghana Foods, hadn’t joined any of the aggregators. We said we would get them all on board, and we said there would be no minimum order," says Phani.
It is indeed easy to forget that these practices, now standard in the food delivery business and taken for granted by people like us, were first introduced by Swiggy, permanently changing urban India’s relationship with food. “I don’t know if we ever published it outside, but ‘changing the way India eats’ was our internal slogan. As was ‘no customer goes hungry’," says Phani.
The IIT Madras and IIM Calcutta graduate, who grew up in a BHEL township outside Hyderabad, was itching to join India’s blossoming startup ecosystem after finishing his management degree in 2013, though he gave in to conventionality for a while by working as a senior associate with Boston Consulting Group in Mumbai for just over a year. “I definitely learned a lot of things at BCG, but by 2014, which I think was a seminal year for Indian e-commerce—Flipkart raised $1 billion, Snapdeal was in the news in a big way, Uber and Ola were picking up—it was evident that this is going to become very large. And I had tremendous FOMO—I felt there is something happening and I am not part of this. It’s not like I was super clear about what I wanted to do at that time, I just felt that sitting in an AC room in a bank consulting for them is not going to get me closer to figuring out what I want to do," he recalls. He started reaching out to friends in the startup ecosystem and a meeting with Majety, his senior from IIM Calcutta, sealed the deal—he moved to Bengaluru and joined Swiggy.
One of his first jobs was managing the company’s growing catalogue—this included figuring out fine details: whether “idli" is spelt with an “i or a y" and “paneer mein kitne n hote hain" (how many n’s in paneer). “When I joined, I didn’t really have a designated role and it was true of other people as well because we were growing and there were a bunch of things to be done. Then we were raising series B—so I did a bit of investor relations," Phani says, adding modestly that he “knew a bit of Excel and PPT". Swiggy didn’t have a head of finance at the time, so Majety asked him to manage finance for a couple of months till they found someone. Doing investor relations meant knowing the data inside out, so he set up the analytics team. Eventually, as the company grew, there were cross-functional projects, and he started bringing various teams, from marketing to supply, together. “If you ask me what role I played, it would be difficult for me to say I did this for X amount of time…they started to blend. For the first three years, it was basically setting up a business unit, running it till a time we found someone more capable, and then getting out of it," he says.
There are three moments he remembers distinctly that fundamentally shaped his experience, which he recalls ahead of the IPO. One was very early on, a few months after starting, when the company started getting complaints about poor customer experience as the business (essentially the number of orders) doubled over a few weeks. “We took a call saying we are not going to serve any customers, we will shut the business down for a day or two to fix tech issues. I was very new—being willing to forego business for customer experience was a huge learning for me, and gave me deeper understanding of the culture," recalls Phani. Then, in 2018, as they were celebrating becoming a unicorn, he remembers chatting with Sriharsha and Nandan about the fact that they were doing 500,000 orders a day. “And it hit me—how far we had come," says Phani. Today, that number as per reports is over 1.5 million orders a day across verticals.
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The third moment is from a few days ago. Speaking at a conference, it hit Phani that Indian startups were now global leaders, especially in the quick commerce category, which has proven difficult to crack the world over (e-com giant Amazon shut down its two-hour delivery service Prime Now a few years ago). Indian startups have been through three phases, belives Phani: the first was replicating Silicon Valley ideas in India, like Flipkart with Amazon or Ola with Uber; the second, when they started keeping pace with ideas developing concurrently in the US and in India, such as with food delivery; and the third phase is now, when ideas incubated in India are being adopted globally.
Google co-founder Larry Page came up with a metric to decide whether he would buy or invest in a company: he called it the “toothbrush test", asking himself if he would use the product once or twice a day, and if it made his life better. Phani says that has been an inspiration for Swiggy: “For us, our ambition has always been 100 million people using us 15 times a month. And we are starting to feel it—starting to feel that it is possible."
