There may not be a barrier to start, but there are too many barriers to scale: Foodpanda India CEO

Food-tech giant Foodpanda was recently in the news for faltering on execution. Among other things, some consumers started taking advantage of its refund policy. Saurabh Kochhar, CEO India of Foodpanda, talks about the problems and their solutions, and the lessons to be learnt from the TinyOwl incident in Pune, where one of the founders was held hostage for 48 hours by fired employees.

Q. What do you think of the TinyOwl incident in Pune? Is e-commerce facing similar problems as the manufacturing sector does -- with its mix of blue-collar and white-collar workers?

A. The Pune office had content guys, designers, call centre agents - not really a blue-collar job environment. There were a few flying tempers. It can never be a good sign. It shouldn't happen to anyone. I am sure there are reasons for the temper. But it never justifies what's going on. At the end of the day, these guys (TinyOwl founders) are kids. They will make mistakes. I had been in situations where I had to fire people…

Q. How would you have handled it?

A. As an organisation, if you are letting 100 people go, you are also keeping 500. It's a sensitive time. If you let 100 go, you would know that another 150 would start looking for jobs. You have to manage the message on what happened and what went wrong, and what lies ahead. It has to be a story on where we stand. I did one round of downsizing for PrintVenue two years ago (he founded the company). We also made sure to get everybody a job. We said we are going to pitch you in these five organisations by function. At the end of the day, it's livelihood.

Q. Do food tech and e-com companies need to be more careful about hiring?

A. Yes. It has to be for good reason. One, we must not throw people at problems, but throw tech at problems. Two, getting money doesn't mean you hire 500 more people. All said and done, there would be experiments that fail. Maturity of the model comes when you start small pilots, understand what's happening and then scale it up. When you need to restructure, you need to be sensitive, cautious and humane - all at the same time.

Q. Is there a bubble in food tech?

A. One problem is when you are building the business for funding. That's a generic problem with start-ups. Second, it is 'me-too'. What is it you are doing different? If it's just a different style of button in my app, that's not going to work. We are clearly seeing that. There may not be a barrier to start, but there are too many barriers to scale-up. Foodpanda has been doing this for many years. We have matured in our products and processes, and people. It takes effort. It is very difficult to come to an answer on what's the best way for a restaurant to accept an order. This simple question takes years. Because its iterations, more iterations, handholding, and coaching.

Q. Is 'me-too' the biggest problem in the food-tech world?

A. Right now, yes.

Q. India is a large country. Is it possible to have a large number of sub-scale businesses?

A. If that were true, people wouldn't be shutting down.

Q. Where else is the fault-line? Have people underestimated logistics?

A. Clearly. But answer me one question: what's the best way to push an order in the restaurant without manual intervention? It is complexity of operations at multiple levels. If I have to re-order, it should not take more than 30 seconds. Food is always half and half. I am either in the mood of my comfort food or I need something new. At an aggregate level, it is an equal probability. Which means, half the time, you will order the same thing. On the other side, you will either find a new dish or a restaurant. We want to make sure that the first is 30 seconds. What is the optimum level to do this? All this needs time, research, and analytics. Yes, it is complexity - not only of the last-mile, but also of technology, and of partnerships. Partners have to be coached in the right fashion, and hand-held to manage the scale.  

Q. Talk about the new Foodpanda. What went wrong in the first place?

A. Nothing went wrong. Our job is to solve problems. When you are going up a mountain, some blocks fall. Those blocks falling through are not "things going wrong". It is about knowing that (while trekking around) these parts I need to be cautious - whether it be orders, or people taking advantage of our refund policy. Why does India not have a refund policy in traditional retail that the entire US enjoys? I call it unfortunate. Yes, we have been creating and we will create more checks and balances to make sure that some people do not misuse it. But for that half a per cent of the total traffic, is it okay for you to not get a refund if something goes wrong?

Q. Was that the only issue?

No. There were more. We will keep finding more issues. We have solved many.

Q. Was it a product problem, an engineering problem, or a people problem?

A. To find the right solutions, it has to be a mix of people, processes, and products. Even if one pillar is not functioning, you will run into trouble. But can you start with the perfect product? We are a start-up. We laid our foundation three years go. When we started, the first version of Foodpanda app did not even know when the customer was on page A, or page B. But we had to roll out the product because the problem we wanted to solve was much larger - the easiest way to order food. Do we have the perfect product today? Please tell me one company which has a perfect product. We can inch towards perfection. That's the best we can do. We have improved by leaps and bounds compared to what Foodpanda was three months ago.

Q. What are the changes you ushered in?

A. We do it in three buckets - people, processes, products. There have been advancements and improvements across all three verticals. The last nine months have been about getting the best streamlining and putting the best foot forward.

Q. Did you let people go?

A. There was no downsizing.

Q. Competition in food ordering has increased. There is lot of discounting. Do the smaller guys undercut you?

We have been able to distance ourselves because of the scale and maturity, and even operational efficiency. There is hardly one in 100 orders we have issues with. That shows. With scale and maturity, there is dependability and reliability. Discounting is a separate ball game. Discounting is a marketing tool, used from time to time. Undercutting happens when people go to different partners and say we can give things for free, etc. But we want to be sustainable and are not fly-by-night operators.