Swiggy IPO: For a brand as visible as Swiggy is, its senior management is very discreet. The unicorn IPO is scheduled to begin on November 6. It is already a name in the food delivery and fast food industries.

Sriharsha Majety, 38, its CEO and co-founder of the group, Swiggy, spoke to Business today on issues ranging from the business model to the big opportunities in India and, more importantly, the path to profitability.

Edited excerpts from an interaction with Sourav Majumdar, Palak Agarwal and Krishna Gopalan:

How did you come up with the name Swiggy? How did the first phase of creating the company go?

It was over two good beers at Arbor Brewing (a craft brewery in Bangalore)! Nandan (Nandan Reddy, co-founder of Swiggy) and I came up with a simple logic that it should be short and catchy. We were really throwing darts with names and Swiggy came along. I think it’s a fun name and one that worked.

The first day there were no orders. The first arrived the next day. I had a friend at Flipkart and I asked him to spread the word within the company. So we had about 30 people looking at it and eventually there were two or three orders. Initially, we anticipated demand only during the weekend, but now people were using it as something convenient. In the US or UK you just go out and have a salad or sushi. In India, with delivery, we saw more repeat orders and that was an eye-opener. In terms of frequency, people used it as often as they did a toothbrush.

We must not forget that there were no applications at the time. Our technology was rudimentary but functional. Delivery partners had to make a missed call to one of four numbers and each had a certain task. Then a text message was sent to the consumer and it was a great joy for him because he had never seen anything like this before.

Did you spend a lot of time calculating the business?

Luckily we didn’t! We just thought the idea would work. Food delivery had better gross margins than logistics (an earlier business foray) at just 5 percent. Overall, the model is just to pass the order, but this version has also proven to be profitable. We were also a late entrant: Tasty Khana, Food Panda, Tiny Owl were all there, and Zomato came before us. We made this decision after deciding that there was no joy in creating a marketplace, even if it is extremely profitable. This was the beginning of the gig economy and it started to grow from there.

We now have 400,000 delivery partners and one of our great joys is simply the web. India has made remarkable progress in digital matters and this is one factor that makes it incredibly exciting. Then there is the part about creating jobs or simply growth for partner restaurants.

Today, capturing consumer ownership is a big deal. How do you see this opportunity given where your businesses are located?

It is important that a business plan is flexible and robust. The fact is that things are generally very difficult to predict. Food delivery is coming of age, but in fast-paced commerce, anything can happen. Here, potential market opportunity is determined, among other things, by everyone’s right to earn, unlocking consumer opportunity, and which categories lend themselves to rapid commerce.

Just looking at the present moment convinces me that this is India’s decade. In the United States, restaurant sales exceeded grocery sales in 2015. In India, we expect grocery to be 25 times that of the restaurant industry. We like this increase in discretionary spending. Next, we need to look at how Indian cities are being built with ultra-large technology parks, leading to increased discretionary spending and more dining out. Retail and fast food restaurants will attract more consumers. Over the next three years, out of the 10 things we do, if we do the one that can capture the imagination on a large scale, it can lead to something big. Instamart will experience higher growth rates than we see in food delivery, simply because of the margin available.

Swiggy is still in the red. What is the path to profitability?

Our food delivery became profitable at Ebitda level in FY23. Instamart is on a path where growth and profitability are both important and I feel good about that path. We need to look at these exciting opportunities and continually invest in them. Additionally, it is necessary to track the ebb and flow of categories. For example, food delivery in the early years was different because penetration levels were low. Look at Instamart today: it’s growing like a weed.

Reports are emerging of a potential deal for Amazon to take a stake in Instamart. What is the status and is there a chance that Swiggy itself will be acquired?

Conversations are still ongoing but we don’t have anything significant to share. I would like to clarify that there is no question of selling Swiggy. We’re having so much fun! You have to consider, for example, the entire restaurant sector in India. It’s $60 to $65 billion, 40 percent of which is organized. This share will increase for a long time in adolescents and food delivery will increase more quickly.

How much will signing up with Swiggy change your life, especially when it comes to doing business on instinct and instinct?

We are in the middle of a dynamic landscape and instinct is important. I will say that we are excited to leverage these strengths and explore ideas with passion.

(This interview was conducted before details of Swiggy’s IPO were made public)