Q1: What were the hurdles Zomato faced when they introduced their food delivery services in India? Q2: How Zomato use the “flywheel effect” to increase its customer base? Case Studyincreases switching costs for customers, imposing significant barriers to entry for new players.Network Effects: For most modem tech companies, the bigger the network, the more valuable thecompany. There are three types of network effects: direct network effects, indirect network effects,and data network effects. Tech companies like Facebook and LinkedIn benefit from direct networkeffects. Each new customer joining Facebook or LinkedIn creates value for an existing customerbecause both customers can now create direct links with each other, even if they're located indifferent places. The thousandth customer joining the network creates more vahue than the tenth,fiftieth, or hundredth customer, because the thousandth customer can create 999 new links, whilethe tenth can create just nine links. Tech companies like Netflix, Amazon, Uber, and Zomato don'thave direct network effects. If a new customer joins Zomato, they don't create a direct new linkwith current customers. Similarly, a new restaurant joining Zomato doem't create value for currentrestaurants using Zamato. However, in a two-sided platform like Zomato, there are indirectnetwork effects. The greater the number of customers, the greater the vahue for restaurants and viceversa. Now customers have more choices, restaurants have a bigger market, and the deliverynetwork can be utilized more efficiently. More important, Zomato benefits from data networkeffects. Every new customer and restaurant contributes valuable data that Zomato can use toimprove the value proposition for all existing users by enhancing the quality and depth offeedback, understanding usage habits, optimizing logistics, troubleshooting, and growing therepository of local tastes and preferences. Machine leaming keeps improving these insights.Zomato can now provide more personalized recommendations for each customer and betterconnect restaurants to their target customers based on collective leaming across its customer base.This improvement, when coupled with increases in the mumber of delivery agents and restaurantsthat get attracted to the bigger market, improves the options of products and services whilelowering costs. Zomato calls it a "flywheel effect," and every new customer and supplier joiningthe network adds to the flywheel's momentum.Ecosystems that Boost Expansion with Minimal Costs: A modem tech company can leverageits relationships with customers to deliver new lines of products and services. Companies that relyon ecosystem partners' assets can achieve this at little additional cost. Consider Apple's use of theiPhone and Amazon's use of Echo devices to sell apps, music, games, and videos produced bythird parties - and doing so using their own payment services. Apple and Amazon then take a cutfrom each dollar flowing through their systems. Similarly, Zomato can extend its offering ofrestaurant food to include pre-sorted, ready-to-cook ingredients; in fact, it's already leveraging itsrelationships with restaurants to source ingredients for them. The same concept, however, does notapply equally to Uber, Airbnb, Amazon, and Zomato. Large parts of their revenues are passed onto suppliers, such as restaurants (Zomato), car drivers (Uber), and homeowners (Airbnb). Inaddition, Amazon and Zomato must pay their delivery agents. But improvements in scale,kmowledge about suppliers, and increases in bargaining power cut those variable costs. Futuristictechnologies like drones, robotics, and autonomous vehicles can further reduce delivery costs.Increased scale improves unit economics - the profits obtained from each new unit of transaction- by improving revenues and lowering per-unit costs. Rapid growth thus becomes an inherentpart of a firm's strategy.It's noteworthy that asset-light "tech" companies that display these six characteristics havecommanded large valuations in the 21st century. As of July 2021, the combined marketcapitalization of FAANG companies (Facebook, Apple, Amazon, Netflix, and Google) plusMicrosoft stands at almost $9 trillion, which exceeds the GDPS of all nations in the world excepttwo. So Zomato's high valuation shouldn't come as a big surprise. After all, it's a proven techTitle: What Zomato's $12 Billion IPO Says about Tech Companies TodayIn mid-July, Zomato, a food delivery company, listed its shares in Indian stock markets. Itsinitial public offering (IPO) was oversubscribed 35 times, giving it a valuation of $12 billion. Whydoes a loss-making company - with no real properties or assets - command such high valuationand attract global celebrity investors like Fidelity, Morgan Stanley, Canadian Pension Fund, andthe Singapore Govermment? Despite operating a traditional food business, Zomato epitomizes amodem tech company. Like DoorDash and SkipTheDishes, it delivers ready-to-eat food to homeswithout owning farms, food stores, restaurants, warehouses, trucks, or delivery vehicles. Itsbusiness model is similar to those of other tech companies like Uber, Amazon, and Aironb, butdiffers subtly from the likes of Facebook and LinkedIn.Rapid industry transformation: Zomato aims to transform the eating habits of 1.36 billionpeople in India, where 90% of the population doesn't eat at restaurants. Compare that to China,where 58% of people routinely eat at restaurants. Previously, there were two hurdles to dining outin India. The first was sheer logistics: Just 2% of Indian households own cars (compared to almost98% of U.S. households). The second was cultural taboo: Some people would never eat foodcooked in someone else's kitchen. Zomato clears both of these hurdles. It gives a new segment ofthe population access to restaurant food by delivering it with the touch of a button. It also bringsdown cultural bariers by encouraging users to provide feedback- people will be less reluctant totry restaurant food when they see their own family members or people from their oun caste andpeer groups doing so and providing recommendations about dishes and restaurants. WWhile a food-delivery app may feel familiar to many of us, Zomato potentially transforming the eating habits ofa huge number of people is no less ambitious than what Uber or Airbnb set out to do. Uberempowers millions to get rides from strangers and now employs more cars than any taxi companyin the world. This virtual shared ownership creates value for people by improving asset utilizationand lowering the risks that come with asset ownership.Low capital costs yet extremely valuable local assets. Google Search, Airbnb, Yelp, Uber,LinkedIn, and Facebook share one common feature: They have scalable virtual models that can bemagnified exponentially with few additions to their asset bases. This is unlīke a company like, say,Ford or Target that would require land, factories, distribution centers, or warehouses to expand Putanother way, tech companies can expand their revenues and income statements with little additionto their balance sheets. Zomato, a multibillion-dollar company, doesn't even oun anoffice Nevertbeless Zomato differs from other tech giants in one important respect: Companieslike Google and Facebook can serve a foreign country without having a physical presence there. Incontrast, Zomato enters new cities only after establishing relationships with local restaurants,assessing their offerings, and working with them to improve their menus and pricing. It alsoidentifies, evaluates, and appoints local delivery agents. Zomato thus invests large amounts in localrelationships and local knowledge - soft assets that cannot be easily replicated by competitors.Customer Intimacy: Modem tech companies collect, store, organize, and analyze years of userdata. This data is virtual gold, as it enables companies to rum targeted ads and personalize thecustomer experience. The key difference between a customer walking into a Walmart supercenterand Amazon's online store is that Amazon instantaneously reorganizes the whole store (layout,displays, product offerings, etc.) in a way that's tailor made for that customer. Similarly, Zomatoor Uber Eats cam track a customer's tastes, need for discounts and preferences in tems of cuisine,delivery time, and price and combine those insights with local food trends, seasonality, andholidays and festivals to offer a customized menu instantaneously. This level of customer intimacy

Name: Q1: What were the hurdles Zomato faced when they introduced their food
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Description: Q1: What were the hurdles Zomato faced when they introduced their food delivery services in India? Q2: How Zomato use the “flywheel effect” to increase its customer base? Case Studyincreases switching costs for customers, imposing significant barrie