Zomato’s GenAI Bet: A Golden Nugget?

When Zomato announced that it would become Eternal, it kinda flipped a switch. The group became bigger than Zomato. It’s hard to believe that the name first came up in 2022, and has taken three years to become reality.

But this was also an opportunity for Deepinder Goyal to kickstart the next phase of evolution for Zomato, so it’s not just about a name.

If Zomato 1.0 was just Zomato, Zomato 2.0 meant Blinkit and District, Zomato 3.0 needs to be something bigger than just a rebranding. And that’s where this week’s announcement of Nugget comes in.

On the surface, it seems like Zomato testing the waters with AI agents for customer support, but this potentially be Amazon’s AWS moment for the AI world. After all, every company in some way or the other needs to answer the AI question.

So will Nugget be a big turning point for Zomato? Let’s find out, after a look at the top stories from our newsroom this week

• What’s Ahead For Instamart? Swiggy’s quick commerce arm has been trying to catch up to its rivals by aggressively expanding dark stores and SKUs to offer customers more variety. However, the expansion spree appears to have taken a toll on its unit economics.
• Life After BYJU’S: The fall of the $22 Bn behemoth took its toll on the fortunes of several startups that had looked to flourish aboard the BYJU’S ship — think WhiteHat Jr and EPIC. However, Aakash and Great Learning were the only exceptions and have made healthy progress.
• What’s Powering Shiprocket’s Growth Engine: Shiprocket has come a long way since 2017. Along the way, it has also crossed INR 1,300 Cr in revenue and is now eyeing to become profitable this fiscal. But, will the asset-light company’s growth momentum continue?

A Nugget For The Agentic AI Wave 

Agentic AI is all the rage these days and Deepinder Goyal is looking to drag Zomato into the AI age with the no-code platform to help businesses scale up their customer support operations. “No rigid workflows, just seamless automation,” Goyal said in a post on X, but Zomato declined to elaborate further on how Nugget works.

According to Nugget’s website, it offers AI agents ranging from conversational AI chatbots to co-pilots, which help in handling complex queries and streamlining support. Nugget provides features like image classification, automation of audits, voice AI agents, analytics, among others.

Goyal said Nugget was built as an internal product for Zomato over a period of three years, and now supports over 15 Mn support interactions per month for Zomato, Blinkit and Hyperpure. He also claimed that 90% of companies which’ve seen Nugget have signed up for it.

Zomato’s product train is certainly not going to stop at Nugget. “Nugget is the first product from Zomato Labs, our incubator for in-house innovations. More exciting launches coming soon,” the CEO added.

Goyal’s announcement comes in the backdrop of him announcing a desire to work with business leaders utilising AI as their “second brain”. On February 4, the CEO invited such individuals to mail to him how they were leveraging AI in their operations.

The company is entering the burgeoning AI space after a period of experimentation on the recommendation and content creation side. GenAI has clearly taken the world by storm, but so far no major Indian consumer services or tech company has pivoted into AI software as Zomato has done.

According to Inc42’s annual investor survey “The Pulse Of Tech” for 2024, about 80% of surveyed startup founders said they were looking for external help to build their AI capabilities. Instead, Zomato has decided to build it on its own. It’s of course too soon to tell whether Nugget can become something bigger, but it should not be a major cost for Zomato at this point, particularly given its large cash reserves.

Zomato In The SaaS World

Interestingly, the launch of Nugget pits Zomato against some of the largest software companies in the world, including many that have taken the turn towards AI, such as Freshworks and Zoho.

OpenAI too launched its agentic AI platform “Operator” in multiple countries, including India, for its Pro users this week. The company claims it can handle repetitive tasks like filling out forms, ordering groceries, among others.

To lure founders who have already signed a contract with a “legacy provider” for AI tech, Goyal said that Zomato will give access to Nugget for free for the remainder of their contract terms. It’s similar to what Ola Krutrim tried with the launch of its cloud computing platform.

But for Zomato to truly unlock the value of this, it has to think like a different company. For now, it’s solving something relatively small.

Gupshup founder and CEO Beerud Sheth told Inc42 that there’s a fundamental difference between handling customer queries for a single business model versus serving diverse enterprises across industries and across the globe. “Each industry has its unique compliance requirements, customer interaction patterns, and integration needs. This deep B2B expertise isn’t something you can develop overnight,” he added.

Incidentally Gupshup also launched its agentic AI platform earlier this month, but this covers multiple use-cases and industries. Sheth added, “Our biggest advantage is the training data. We’ve trained our AI agents on industry-specific conversations, making them more accurate and contextually aware. Our agents understand industry terminology, common customer issues, and appropriate resolution paths,  allowing brands to deploy them quickly and see immediate business impact.”

The company’s AI agents cater to retail, ecommerce, banking, financial services, travel and hospitality businesses. As for challenges in selling AI products and agents to customers, Sheth said AI has made customer acquisition even more complex and competitive.

Deepinder Goyal Takes A GenAI Bet 

Obviously other Indian companies have begun launching agentic AI models as well. Infosys is building over 100 GenAI agents for client applications, while Hyderabad-based startup Pulse raised $1.4 Mn last November to build its agentic AI platform aimed at SaaS product teams, Atomicwork raised $25 Mn in January as it aims to transform IT service management with its agentic AI platform.

Pranav Patil, chief data scientist at fintech startup AdvaRisk, told Inc42 earlier that early adoption of agentic AI will largely be on the customer support front because it’s less risky to target this segment. BFSI adoption is relatively slower, he added.

It’s not immediately clear what Zomato is targeting with Nugget. But it does claim to be building for enterprises. Whether Nugget stretches across key sectors or instead only focusses on areas that overlap with Zomato’s lines of businesses is unclear.

Either way, it would not be right to say that Nugget is a big bet for Zomato, but its potential success while not guaranteed could push Zomato — Eternal by then — deeper into the software world.

To extend the analogy mentioned earlier, AWS changed Amazon completely by making it a cloud company, but it began in 2002 as a free framework to link websites to Amazon’s ecommerce content. Will Nugget be this first step for Zomato?

Sunday Roundup: Startup Funding, Deals & More

• Ashneer Grover-led Third Unicorn’s fantasy cricket app CrickPe has halted operations owing to its failure to break through in the real money gaming space
• After selling Sirona back to its founders, the Good Glamm Group has now sold ScoopWhoop to marketing firm Wubba Lubba Dub Dub (WLDD)
• Between February 17 and 22, Indian startups raised $152.9 Mn across 17 deals, a 43% decline from $270.2 Mn raised across 22 deals in the preceding week.

• Uber has rolled out a subscription-based zero commission model for auto drivers across India, over a year following its rival Rapido. The company will no longer have control over the execution, completion or quality of the rides