About this Video

• Video Title: How Zepto Became India’s Fastest Growing Startup
• Channel: Y Combinator
• Speakers: Adit Polyca, Gary (likely Gary Tan, a Y Combinator partner, though not explicitly stated)
• Duration: 00:38:24

Introduction

This Y Combinator interview features Adit Polyca, co-founder and CEO of Zepto, a 10-minute grocery delivery service in India. The video explores Zepto's rapid growth, its unique approach to the market (customer-backward versus supply-chain-backward), the challenges faced, and its future vision.

Key Takeaways

• Customer-Backward Approach: Zepto's success is attributed to prioritizing customer needs and building a full-stack commerce model, unlike competitors who focused solely on supply chain logistics. This led to better product, lower customer acquisition costs (CAC), and improved economics.
• 10-Minute Delivery: The 10-minute delivery model, while initially seen as a convenience, proved crucial in the Indian context due to frequent small purchases, smaller household sizes, limited vehicle access, and preference for hyper-local shopping.
• "Do Things That Don't Scale": Initially, Zepto founders personally handled deliveries to understand customer experience and product needs, demonstrating the value of unscalable actions in early-stage development.
• Dark Stores: Zepto's control over its dark store network enables faster delivery, better quality control, wider selection, and more competitive pricing.
• Product-Market Fit and Growth: Zepto achieved product-market fit quickly, leading to rapid expansion and impressive growth, despite facing funding challenges and intense competition.
• Long-Term Vision: Zepto aims to become a leading internet company in India, going beyond grocery delivery to offer a wider range of products and services.
• AI Integration: Zepto leverages AI for various applications, including ad optimization, customer service, and supply chain forecasting, enhancing efficiency and the customer experience.

Zepto's initial "Kirana Cart" model, a pickup and drop service similar to Instacart, lacked customer retention. This lack of retention led to an honest assessment of the business and a realization that the model wasn't working. This crucial learning spurred the shift to a first-party, full-stack model with 10-minute delivery and control over dark stores. The founders realized that to truly solve the problem for the Indian consumer (speed, quality, selection, and price), they needed to control the entire process, resulting in the current, successful model.

Initially, Adit and his team believed their early models had achieved product-market fit. However, they received brutally honest feedback from investors and others, highlighting a lack of customer retention and challenging their initial assessment. This led to a period of self-reflection and a deeper understanding of what true product-market fit entails—building a product customers truly want long-term, not just a short-term solution. Their perspective evolved from a naive belief in early success to a more rigorous, data-driven approach, constantly evaluating retention rates and customer feedback to determine if they're building something exceptional and sustainable. Now, Adit views product-market fit as dynamic and constantly improvable through continuous innovation.