Why 'Zepto' almost collapsed?
wrong hiring to be blamed?
Hey everyone!
Today, we are decoding another business strategy or the survival story of an Indian startup that changed lives.
We are talking about Zepto, the 10-minute grocery delivery startup that, when it was born, seemed like another ambitious startup aiming to revolutionize India’s e-commerce space.
But like others, Zepto was on the brink of failure — until one thing shifted: its mindset.
Aadit Palicha, the 22-year-old CEO, reflected on what went wrong and why his company struggled in the early days.
The turning point? Ambition. Or rather, the lack of it in India's startup ecosystem.
Let’s take a closer look at how Zepto survived and thrived, with key lessons on why they succeeded where others might have faltered.
So, what’s about the mindset shift that happened at Zepto?
It all started with a deep introspection about the mindset that plagues many Indian entrepreneurs. Aadit Palicha has been vocal about a critical flaw in the ecosystem — lack of ambition.
In an interview with Y Combinator’s Garry Tan, Palicha stated,
“As an ecosystem, we are very much post-2001 right now, where people were less ambitious. And there is still a lot of fear and lack of ambition in general (in India).”
He believes that many entrepreneurs in India celebrate early-stage successes rather than pushing toward bold, category-defining outcomes.
Zepto, in its early days, grappled with this very issue.
However, once the founders recognized the gap between their ambitions and their reality, they turned the ship around by doubling down on the long-term vision.
“It is very easy to be at $3-4 billion in GMV, get to breakeven, go public, and just take it easy,” Palicha admitted. Instead, they chose to “go 5x or 6x that” and aimed to be more than just another player in the market.
But, there was another issue…
📌 Wrong hiring
One of the key reasons why Zepto was teetering on the edge of failure was poor hiring decisions. For any startup, assembling the right team is crucial. When Zepto was just starting, they struggled to find people who were not only qualified but also aligned with their ambitious vision.
Palicha’s leadership team wasn’t fully optimized for the level of execution needed to drive the company forward. “We weren’t hiring people who were the right fit for the culture we wanted to create,” Palicha reflected.
Hiring the wrong people at the start can stifle creativity and slow down progress, something Zepto learned the hard way.
It wasn’t until the team made a conscious effort to “hire for the super ambitious, the super capable” that they saw real growth.
This cultural shift helped them build a team that could execute at the scale required to compete with the bigger players in the market.
But hiring the right people wasn’t the only fix.
With the team in place and a clear mission guiding them, Zepto’s strategy was no longer about simply reaching modest milestones. It was about aiming for exponential growth, and the numbers speak for themselves.
In just one year, Zepto’s advertisement revenue exploded from $40 million in ARR to $200 million.
Meanwhile, the company’s Gross Order Value (GOV) surged by 300% year-on-year, and they managed to cut their EBITDA burn by 50%.
This combination of strategic growth and financial prudence allowed Zepto to position itself for long-term success.
What can you learn from Zepto's journey?
Whether you’re a budding entrepreneur or someone looking to scale your business, Zepto’s story offers some vital lessons that can be applied to any business. Here are three key takeaways that will resonate with anyone trying to build something big:
📌 Don’t celebrate too early
One of the most significant mistakes startups make is getting caught up in celebrating early traction. While small victories are important, they can sometimes limit a business’s true potential. Zepto recognized this early on and decided to aim for global impact.
A great example of this strategy in action is Zepto’s marketing approach. While many companies might settle for a basic ad campaign or local influencer partnerships, Zepto chose to go big, targeting ambitious goals.
They focused on building a brand identity that resonated with India’s fast-growing internet-savvy population, setting themselves up for long-term growth rather than just immediate profits.
For instance, they didn’t stop after reaching their initial user base; instead, they continually expanded their services and product offerings, emphasizing their vision of an "internet revolution" in India. This long-term thinking led to exponential growth in both user acquisition and revenue.
📌 The power of hiring the right people
Hiring is everything. Zepto's struggles with hiring in its early days proved that even a great idea can fail if it’s not backed by the right talent.
Zepto eventually made the right hires by focusing on people who not only had the necessary skills but who were also aligned with their ambitious mission. This is something that’s particularly important when you’re scaling fast.
Take, for example, their marketing team.
When Zepto expanded, they didn’t just look for marketers who could manage ad spends and SEO. They sought out visionaries who could push the boundaries of traditional marketing.
The result?
Zepto’s advertising revenue soared from $40 million to $200 million in just one year.A well-chosen team can help your business scale in ways that you can’t predict, so invest time in building a team that’s as committed to the long-term vision as you are.
📌 The ability to pivot
Zepto’s quick pivot from a standard delivery model to a more ambitious, fast-paced approach is another crucial takeaway. One of the most significant hurdles startups face is the fear of pivoting or changing course when things aren’t working.
But Zepto did just that and reaped the benefits.
Look at their decision to raise massive funding rounds. Instead of staying comfortable with their initial funding, they went all in and secured $1.35 billion in just five months, all while adjusting their brand strategy and raising capital domestically to avoid regulatory issues.
Similarly, if your marketing or product strategy isn’t hitting the mark, don’t be afraid to pivot.
Some of the most successful businesses, from Netflix’s transition from DVD rental to streaming to Instagram’s evolution from a photo-sharing app to a full social media platform, became industry giants because they embraced change rather than sticking rigidly to their original plan.
The key here is to stay agile and be open to change.
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See ya 👋
