Why Zepto's Aadit Palicha Turned Down Stanford to Deliver Groceries
In a Nutshell
Aadit Palicha and Kaivalya founded Zepto by starting with a simple WhatsApp grocery delivery service in Mumbai during COVID, then pivoted to the dark store model after realizing customers wanted 10-minute delivery, full selection, and competitive pricing. They rejected Stanford to scale the business once they saw strong retention and product-market fit at around 10,000 orders per day and a 60-70 crore run rate. Zepto now operates as a massive logistics and supply chain company with AI-driven forecasting, hundreds of millions in ad revenue, and millions of daily deliveries, aiming to build India's urban grocery infrastructure.
These notes were generated by AI and may contain inaccuracies.
If you remove all constraints and remove all the laws of physics and think from first principles, you can determine the most extreme positive customer experience possible, then work backwards to figure out how to make that possible.
Aadit Palicha and Kaivalya (KB) started working on Zepto when they were 17 years old. They had been friends for some time and loved building things as kids. Around age 15 or 16, they noticed people in Silicon Valley building cool products for a living and decided to explore doing the same. They applied to study in California and got into a good school.
When COVID happened, they found themselves back in Mumbai. With nothing to do and no interest in online college, they took a year off and decided to work on a project. The big problem at the time was that people couldn't get groceries in their neighborhoods. Small mom-and-pop stores had labor issues, and larger players doing next-day delivery were backlogged.
They started a WhatsApp group chat delivering groceries for neighbors in Mumbai. This evolved into an app originally called Kiranakart.
Aadit had been accepted to Stanford and was planning to leave India for Palo Alto. This was two or three months before matriculation. He asked Jared whether he should go to Stanford or drop out and start the company. Jared convinced him not to go to Stanford.
Many people ask Aadit whether they should drop out of college. His answer is less heroic than it appears. He and Kaivalya took a year to work on the idea and reached early signs of product-market fit around eight months in. They saw retention and compounding in the business. Only when they reached about 10,000 orders per day did they decide it was a real business and a once-in-a-lifetime opportunity.
They reached a 60-70 crore revenue or GMV run rate before committing fully. They also secured investor interest and a term sheet at that scale. The advice Aadit gives is to have some product-market fit and proof of concept before taking the big risk.
Grocery delivery was not a new idea in India when they started in 2020. There were already multiple billion-dollar companies operating at scale. Grocery digitization had been pursued for 20 years. Existing players used different models such as doorstep delivery from other stores or next-day delivery.
Aadit and Kaivalya did not start with the intention of trying a different model. Their conviction came from the bottom up. They delivered themselves in Andheri, Mumbai, and spoke directly to customers at their doorsteps. Customers told them they were not satisfied. There was no compelling player hitting their needs.
Customers said the first version of Kiranakart lacked full selection, had high pricing, and had delivery times that were not in their control. From these conversations, Aadit and Kaivalya learned that customers ultimately care about speed, quality, selection, and price.
They never started with the goal of building a company. They began by solving a problem for about 30 neighbors in their area using a WhatsApp group chat, delivering from existing mom-and-pop stores. They eventually made a meaningful pivot in early 2021.
They realized that doing doorstep delivery from mom-and-pop shops gave them no control over customer experience or delivery times. They could not solve the problems customers had described. Aadit and Kaivalya picked up stock and put it into Kaivalya's apartment, creating the first mini warehouse, which was also the first dark store.
In the small area where they could control the customer experience, the response was phenomenal. They then tried a mini cardboard version of a warehouse in Juhu and eventually launched a proper warehouse. One neighborhood using the dark store model generated three to four times the volume of the rest of the city. This demonstrated significant customer demand and led them to fully commit to the mini-warehouse model.
Many people were building businesses backwards from supply chain or financial goals. They started by determining what was viable and then offered that to the customer. Aadit and Kaivalya started from the opposite direction: what is the most extreme experience the customer wants.
This led to the concept of 10-minute delivery, which was a crazy idea at the time. They drew inspiration from Brian Chesky's Airbnb approach of imagining a five-star or seven-star experience. They asked what the most unbelievable customer experience would be if all constraints and laws of physics were removed, then worked backwards to achieve it at scale.
By nailing the customer experience of 10-minute delivery, the right selection, and the right pricing through the mini-warehouse model, they achieved far more throughput and volume than expected. High volume in the same mini warehouse naturally lowered costs. People did not imagine that level of demand because they had not started from the customer experience.
Aadit emphasizes that it is impossible to build a financially viable, profitable business without customer delight. Customer delight is where financial value starts.
Aadit and Kaivalya were constantly trying things and experimenting. The first dark store being Kaivalya's apartment encapsulates their iterative approach. They started with a WhatsApp group, delivered groceries themselves, and kept tweaking the model based on what they observed on the ground.
They did not have a grand insight or strategy. The advantage of being young and naive was that they did not know how difficult building a company actually was, nor all the complex ways others had tried and failed. Being locked down during COVID cut out the noise of startups, VCs, and conventional advice. Their only goal was getting the 30 to 40 customers around them to order from them.
This singular focus was advantageous. YC also kept them accountable. They created an insulated environment where there was only them and the customer, with nowhere to hide if a customer was unhappy.
YC advice emphasizes making 100 users really love your product rather than trying to get thousands of users immediately. Aadit and Kaivalya focused on those early users. Those users were not happy enough with Kiranakart, which revealed that the model was not right and pushed them toward the Zepto model.
Most people experience Zepto as a digital app, but the founders see it fundamentally as a logistics, supply chain, and traditional retail company. If you remove all the software, tech, and dark stores, they are fundamentally an atta-dal-sabji-doodh company selling day-to-day groceries.
Customers still think of them as the place where they get their atta and rice, not as a grand software company. There is significant depth beyond the front-end app. Within the dark stores, there are hundreds of minute design decisions around selection, store orientation, infrastructure, replenishment algorithms, trucking, and task management.
Zepto now employs north of 200,000 people including delivery partners, pickers, packers, and truck drivers. They have built industrial-grade automation on the backend supply chain to move products from suppliers like Unilever, Procter & Gamble, and Coca-Cola through the system with minimal people and ship to dark stores as fast as possible.
A decent portion of the tech team now works on hardware and robotics. The reason for all this depth in the supply chain is that every rupee of cost saved can be passed to the customer or invested in better selection and faster delivery times.
Zepto sells millions of units per day of fruits and vegetables plus all sorts of other products. At 23 years old, Aadit is the largest seller of fruits and vegetables in all of India on the platform. They have a customer base in the crores of monthly transacting users, with millions of people ordering every day and millions of deliveries per day.
They have scaled to tens of thousands of crores of topline or billions of dollars. They run one of India's largest fruits and vegetable supply chains, sourcing millions of units per week from farmers across the country, including from Mahabaleshwar for strawberries and outskirts of Karnataka and Bangalore for coconuts.
They also have a meaningful advertising business where top brands like Coca-Cola, Pepsi, and Nestle bid on search keywords, generating hundreds of millions of ARR in ad revenue.
The goal is to build an urban grocery platform and urban grocery infrastructure for the country. Every major country has its own form of grocery infrastructure or logistics and supply chain and retail infrastructure for day-to-day goods. People in the US and Europe buy more sophisticatedly with lower costs and better quality control.
Zepto sees itself as an organizing force in the grocery supply chain in India. Over the next four to five years, the aim is to be a large grocer in the top 40-50 cities. If successful, they can build India's homegrown version of Amazon or any other e-commerce platform.
Zepto aims to build an e-commerce platform that's unique to India. No one has successfully created a hyper local e-commerce format anywhere in the world. The model works particularly well in India and represents the right approach for the market. If they crack this model, they can build a very large outcome while also helping grow other businesses alongside them.
Zepto and other quick commerce platforms serve as a platform for startups to build their own consumer brands. The goal is to create ten more large outcomes in day-to-day consumer brands. This mirrors what happened in the US 40 years ago with Walmart, Costco, and similar players. The company is still at the beginning of that journey and wants to be part of building India's infrastructure in this space.
Scaling the business creates more employment on the ground. Many investors have told Zepto that they are creating lots of jobs in the country. The company views itself as helping build a small part of India's infrastructure through the employment and operations they generate.
Zepto got started before the AI boom but is now deeply involved in implementing AI across operations. The company has transformed internal operations with AI on both the customer side and supply chain side.
A machine learning algorithm now runs forecasts for millions of units per day without humans in the loop. Previously, a team of people would manually forecast the entire supply chain over multiple days. This has made the supply chain more agile, enabling faster dispatch and higher throughput in the same physical space. The improved forecast accuracy allows for faster and more precise planning.
AI has driven significant growth in Zepto's ads business over the past two years. Brands can generate keywords on the search platform, and a model helps predict which keywords will deliver the best return on ad spend. Brands see objective improvements in advertising efficiency, which has resulted in a huge bump in advertising revenue. Building out the search stack of advertising with GenAI tools has been a major driver of this growth.
Internally, Zepto has achieved significantly more output with the same headcount. The engineering team builds substantially more with a smaller team than before. The company has cut almost all software spends to zero and reduced managed services spends. Manual tasks and inefficiencies have been automated. The corporate office now uses many more automated tools with no outsourced tools remaining, resulting in savings of hundreds of thousands of dollars in costs.
Zepto has approximately 500 engineers and another 150 people working in data science, analytics, product management, and design. The company is actively hiring and seeking the best talent. They consider themselves an early-stage startup rather than a large, slow-moving company. Candidates excited about working in a startup environment are encouraged to apply.
Aadit Palicha started Zepto at age 17 and now manages a massive cold storage supply chain with trucks, warehouses, physical sorting machines, and 250,000 employees. He acknowledges that Zepto still feels small compared to what companies like Uber, DoorDash, and Airbnb have accomplished, and that there is a long way to go.
The biggest factor in his development has been surrounding himself with exceptional people since the earliest stages. This includes group partners at Y Combinator like Tim and Seri, as well as the management team. Key leaders who joined early include the CFO, Chief Operating Officer, CTO, head of growth and marketing, Chief Business Officer, and product function leader. These individuals had decades of experience but joined despite being more senior in tenure than the founders.
Aadit wakes up every morning knowing he is working alongside exceptional leaders in finance and operations, which motivates him to learn from them. He recommends surrounding yourself with people smarter than you and learning from them shamelessly. He continues to ask basic questions about accounting policy and how hardware and software work. Though he and his co-founder have looked very stupid internally at times, this approach has allowed them to aggregate information from many people and grow continuously.
"Surround yourself with people that are smarter than you and learn from them shamelessly as simple as that."
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