Zomato Battles Revenue Crunch & Blames It All On Sales Team; Might Fall Short Of Its Promises To Investors

The chaos in the food-tech sector seems to have breached the front gates of the mighty Zomato empire. After firing some 300 employees – 10% of its team – Zomato seems to fighting a revenue crunch, as well. In a mail that Deepinder Goyal, cofounder and CEO of Zomato, sent to all his employees, it was mentioned that the company’s revenue hasn’t kept up with the growth of its sales team.

He mentioned that the company’s sales team has been constantly underperforming and not meeting its target. He is also deeply worried that the company, for the first time in five years, might not be able to live up to its investors’ expectations and may fall short of its promises. In this mail, he asked all his employees to pull up their sleeves and do a “bloody good job from now onwards”. “Sales is the #1 priority for the entire organisation right now,” averred Deepinder.

Should a company’s revenue crunch only be the fault of its sales team? A ship’s captain is the one who usually takes the blame for the ship going astray, rather than blaming it all on his crew, isn’t it? Zomato’s inability to bring in the revenue can be the result of several factors, therefore, is it a wise move on Zomato’s part to blame it all on the underperformance of its sales team? Blaming it all on them might only further demotivate them.

Here are the snapshots of the mail:

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According to Deepinder, the issue of the sales team revolves around motivation and training.

Therefore, in order to offer them the “perspective and kick” required to do a good job, he tried to answer the some of the concerns raised by the sales team. These concerns, however, depicts insecurity and serious lack of motivation in the team – something that seems to be triggered by the recent layoffs. Here are some of the concerns raised by the team and Deepinder’s response to them:

“I am just a number in a spreadsheet (i.e. “I don’t know how important my job is”).”

I want to give you an analogy here. That of a picture and a pixel.

The picture we are talking about is Zomato. And the pixel we are talking about is you. Each one of us is a pixel, and all these pixels together, make up the picture. When someone fails to perform their role up to expectations, that pixel stops shining brightly, and as a result, the picture starts looking faded.

We owe it to each one of us to perform at our best, and look at it from the point of view that we are all contributing to the picture. Some of us may think that since we have grown so much, an individual pixel doesn’t matter. That couldn’t be further from the truth. Every dimly lit pixel hurts us, questions our existence, and makes the viability of our business weaker.

Also, your job is as important as you want it to be. If you try hard, there is so much opportunity at Zomato. If you don’t, you will indeed be one of the hundreds of pixels. You will still be important, but the viewer only looks at the brightest of the pixels. Everything else becomes the background. The background is important too, but well, it is the background nonetheless.

“Some of my buddies here at Zomato were fired for no reason at all. I am insecure and feel temporary, and am therefore not invested enough to give my best to Zomato.”

Some of you already know this, but most of you don’t – that there is always another side to the story. A lot of friends tell you that they were never given any feedback before they were asked to go. That is never true. The fact is that a lot of people don’t take feedback seriously, and they keep under-performing consistently. A lot of people are let go on ethical grounds – we never make the reality about such people public, because if we did, it would ruin their careers.

If you have any questions about any of your buddies being asked to go unfairly, ask someone for a clarification. These questions are always fair, and you deserve answers to this. But do not hold a grudge against your team members for something, because it’s not worth it.

Also, look around you and think about this – some of your buddies feel very secure and permanent at Zomato, and they give it all that they have. What makes them different?

“I am constantly worried about being fired for performance. It creates so much pressure for me during sales meetings that it leads to a lot of demotivation and depression.”

When you are worried about an outcome, it never happens. Here, we are talking about success as an outcome. Do not worry about success (or failure). Just give it your best, stay natural, and good things will happen. Worrying never helped anybody build anything.

“In the past, we have been promised some rewards which weren’t eventually given to us. I feel un-appreciated, and don’t fully trust what my managers say anymore. I just don’t feel like giving it my best anymore.”

As much as I know about Zomato, if any promised reward hasn’t been given to you or your team, I don’t think it is intentional. It must be purely a communication issue. In such cases, it doesn’t hurt to tell your manager that in a nice way. Something along the lines of “Hey dude, there was this thing that the team was promised, and I don’t think what was eventually given out met the team’s expectations. Could you please look into this? Leaving this unattended could hit the morale of the team significantly.”

I am sure that this will be looked into right away. If it still doesn’t, talk to someone else. Email Pankaj about this. Or email me. Promises should always be kept, and communication should not come in the way.

“I have some feedback for my manager. Whom should I talk to?”

First, show some flair and talk to your manager directly and tell her/ him what you think. In general, managers should be open to any kind of feedback from the people they work with. They should be able to take any kind of constructive feedback from you positively. If they react to your feedback in a personally negative way, you should tell someone else. Tell your manager’s manager, or even email me in such cases. It is important for us to be real and candid with everyone around us. Zomans who cannot process feedback in the right spirit need intervention.

“I have an important question. I don’t know whom to ask.”

I agree that we don’t have a structured way to be able to ask questions. But in general, that shouldn’t hold you from asking questions. Start with asking someone. Anyone. Ask your city head. Ask your business head. Ask Surobhi. Ask Pankaj. Ask me. Anyone. And get your questions answered. No point hanging around with unanswered questions – you deserve satisfactory answers to all your questions.

“I have a lot of questions, but I am afraid to ask them because I might be judged by my managers/ peers.”

Let’s say you ask your questions. There are three ways it can go:

Everybody appreciates the questions = you win.

The reaction is neutral = you get your answers (or not) and nobody cares.

The reaction is negative. In case it is, it will either be for the wrong reasons, or the right reasons. If it is for the wrong reasons, you don’t have to worry about it – you can easily find help to manage that somewhere in the organisation (read: ‘I have some feedback for my manager. Whom do I talk to?’). If it is for the right reasons, it becomes tricky. It indicates a fundamental lack of culture fit of that person in the organisation. In that case, you found the wrong organisation, and no matter if you ask your questions now or later, the lack of cultural fit will eventually make you go on your own. So in the interest of your own time, and life, ask your questions and have nothing to fear.

“I joined a startup expecting fast growth, but I was given a five-year career path. This isn’t motivating enough for me to put in my best.”

Okay. Let me tell you something. The 5-year career path was created so that the people who ask this question do not speak to their managers every 7 days about when they are going to get promoted. Because apparently, at a startup, you should naturally expect to see some personal growth after every 7 days.

Startups are a marathon, not a sprint. There’s only one thing that you should focus on – giving it the best you have, and not worrying about the short-term outcomes. The moment you stop worrying about the outcome, the outcomes have a way of happening anyway. Nobody ever got anything by worrying or obsessing over it. But you can get everything you want if you work hard for it.

The best people at Zomato do not worry about titles, compensation, responsibilities, or the type of work that will do. All they care about is adding value. Zomato adds a lot of value back to such people – including supercharged growth. Also, take an objective look at our organisation. We are so short of good people at the ASM levels (or even more senior than that). If we had people within our team who could perform the role, we would have moved them irrespective of where in the 5-year career path they are right now.

That leads to the next big complaint I have heard…

“Why are we hiring ASMs laterally? Why can’t you give me a shot at performing the role?”

To give this role to someone who hasn’t already demonstrated the ability to perform in this role puts a lot at risk. The business can’t afford to do that. Also, if we believed you have the maturity and skills required to do the ASM’s job, you would be doing that job.

Don’t fall into the trap of thinking that you can only learn the ASM’s job once you have it. You will have to learn how to become a great ASM while you are still an SM/ KAM. So that we know that once you start performing that role, you will be good at it from Day 1.

If we don’t think we have anyone at Zomato who can do the ASM role well, we do the next best thing. Get good people from outside the organisation. These are the people we think will be able to do the role. We are not always right, but we think it poses less of a risk to the organisation. Yet to be proven wrong or right.

“I have not been trained to do my job.”

Then train yourself. The people who first started selling at Zomato didn’t even have clarity on what they were selling. Nobody trained them. But they kicked ass. They used to train themselves, sit for mock pitches with each other for hours to hone their skills over the weekends. And they grew incredibly fast – as individuals, and at Zomato.

Stop reciting problems. Think of how you can get to the answers you want for yourself. And do everything in your power to get those answers, including training yourself on everything that you need to.

“I am not learning. Isn’t that the organisation’s problem?”

To train you, the organisation can do two things –

Classroom coaching – we have plenty of these. I don’t understand why, though. Nobody listens during the classroom coaching sessions anyway.

Have great people around you from whom you can learn – we have plenty of great people at Zomato, and at a higher density than pretty much any other organisation around us.

You might be thinking that if the organisation is doing everything it is doing, what is eventually going wrong? Why do you feel that you are not learning?

Let me give you my thoughts on that. There are two types of people in this world: Rocks and Sponges.

Rocks are the people who just don’t absorb anything at all. No matter what is thrown at them, they reject everything. Sponges, on the other hand, absorb almost everything around them.

People in our Sales teams meet business owners every day – successful, and struggling. There is a wealth of knowledge out there with your clients which you can learn from. Be a sponge, not a rock. And you know what? Honestly, I would kill for your job – I don’t think anyone at Zomato has more opportunity to learn than our sales people.

Personally, some of the most important learnings of my life have come through listening into conversations I wasn’t even a part of. For example, “the best way to get things done is to give it to a busy person” was a part of a conversation between my dad and my brother when I was 12.

There is always so much to learn and so much to do – it all just comes down to you. Nobody will gift you your growth and learning. You have to put in an effort to do that.

“My team lead does not go to meetings with me. Whom should I learn from?”

First, I would like to reiterate my answer to the question above. Having said that, we very recently realised that ASMs and City/ Country Heads do not go for many sales meetings anymore. We have been communicating to the group to actively accompany their team to sales meetings, and also take an active role in the meetings for closure/ retention so that everybody learns to do their job faster.

“Why are we hiring people at ASM levels without prior field sales experience? We never get the right answers from them. How are we supposed to do our job well?”

Hiring anyone is a risk. You never know when someone works out or not. Most of the people in our sales team are doing sales for the first time in their life. They still kick ass. We hire these ASMs with the hope that they will learn quickly, and be able to contribute significantly to Zomato.

However, it’s been a hard journey for some of our ASMs hired directly into those roles. The team working with them is generally so uncooperative, that only the really strong-hearted are able to make it work. This needs to change. All of us are responsible to make sure that we help them as much as we can to get up to speed as soon as possible.

Remember the pixel vs. picture. While every pixel needs to work hard on its own to shine, some light from the pixels around it when it’s just learning its way around really helps a lot.

“Our office is not nice and cosy. Zomato doesn’t treat us well. Why should I give my best back?”

Some offices deserve to be nice and cosy. These offices are the ones who pay their own bills. i.e. they make enough money to cover all the local cost easily. Such offices have the privilege to spend on luxuries like nice offices.

Offices which are not yet profitable should not be nice and cosy. In spite of that, some of our new offices are super nice – even though they shouldn’t be. Back in 2011, the Pune team used to work out of a cafe, and we had set a goal of $5000 monthly revenue for them to be able to get an office worth $1000 per month. The Pune team kicked ass, got a nice office for themselves and stayed there for three years. Most of the team which made that happen is still with us at Zomato, and they proudly tell this story to someone new almost every other week.

While you are here, have a very clear sense of your privileges and entitlements. Privileges are earned, and entitlements are poisonous. There is no end to entitlements, and they almost always lead to whining. And whining is like a drugs – it makes you ineffective. Build something, and you will get to live in it day in and day out.

“I don’t get paid enough. Our incentives suck. Zomato doesn’t treat us well. Why should I give my best back?”

We have done a whole lot of salary benchmarking in various countries recently. The fact is that you get paid very well. However, if you are comparing yourself to that one friend of yours who makes more money than you, well, suck it up. No matter how much money you make, there will always be that one friend who makes way more money than you. You should stop using money to measure your success in life. Because if you do, you will always fall short of your own expectations.

“I don’t have stock in the company. Why should I feel ownership towards my job or Zomato?”

17% of the people at Zomato have stock at Zomato. That’s a very large number compared to a lot of startups I know of.

The reason you don’t have stock in Zomato yet, is probably because you haven’t consistently made a point that Zomato needs you badly for the next 4 years. For us, stock is not a part of compensation and perk-based motivation. For us, stock is a gesture that we want these folks to be at Zomato for a long time to come. And you will have to prove the point that Zomato needs you for the long haul, and you will be a strong growth driver for our organisation in the years to come.

“We get our targets from Delhi, while the local reality is very different. We just can’t achieve what we set out to achieve. Why should we even try hard?”

Let me tell you the reality. You can achieve whatever is thrown at you. You just don’t know it yet. Whenever we hit a team with very high targets there is a percentage of the sales people who meet those targets. What’s stopping the rest of them?

In general, targets are what we need to do as a team. An organisation needs to pay its people, and make money to be able to pay those people and spend on other things which are necessary. Our sales people are the ones who are responsible for making money. The revenue you bring in is not an arbitrary number in an excel sheet – the revenue is used to pay you and me and everyone at Zomato. If we don’t get our act together on revenue, we will all fail.

Whenever the Delhi teams sends you your targets, rather than saying “this is not possible”, you should say “okay cool, let’s try our best, and let’s do it for the sake of Zomato”. After all, trying our best is the best we can do.

“Our clients don’t get ROI. How am I supposed to believe in what I am selling? It directly affects my performance.”

Not all clients will get ROI. Zomato cannot sell a bad product (people will not click on a bad banner). In general, on an average, it is safe to assume 8x incremental ROI for our clients. Some cities generate a lot more, some cities a little less.

Our pricing models are based on the ROI clients get on an average. Here, it is important to understand what average means. When we say 8x incremental ROI is the average, it means that around half of our clients get less than 8x. The other half get more than 8x. Some clients will get less than 1x, some will get more than 20x. That’s how averages work.

I understand that you get a hammering at the hands of our clients who do not get enough ROI. The fact of the matter is that it is not our fault. If you replaced that client with a product (client) which can sell, it will get ROI.

We should stop being defensive about this and think about ways in which we can drive ROI for our clients. Understand their target audience for them, and help them create targeted banners for that audience. Hopefully, that should work. If it doesn’t, try something else.

These concerns clearly illustrate that Zomato’s sales team is visibly shaken and is not happy with their jobs. The recent layoff episode has affected the employees deeply and they seem to be operating under the fear of losing their jobs; something that does not breed results. Under such situations, the company needs to calm them down and make them feel safe and wanted. One can only wonder how this mail from Deepinder will get the job done; especially because the news of the company battling revenue crunch, and the sales team being blamed for it, might only intensify their fears and insecurities.

The recent layoff was mostly focused on the US and the content team – the employees who collect data from restaurants listed on the Zomato platform and the core of the company’s original “feet on the street” approach.