Food delivery is as good as Airline Business

Zomato and the Airline Business have a lot in common.

Let me explain.

You will agree to the fact that Zomato is really valuable.

I am not talking about the valuations, I am talking about the real value it creates for us, the restaurants, and delivery partners. The whole ecosystem benefits from it. Housewives and Bachelors alike.

Why I am even comparing it to the airline business?

Private Airlines create immense value for us, the government, and airports. Air travel gives us 10x comfort and convenience for 2x-3x money we might spend on other alternatives (bus, train, etc)

But pick any airline company and they are always in a bloodbath. Undercutting, suffering, wafer-thin margins.

So what’s happening?

Peter Thiel explained this concept in his book 0 to 1

If you fail to capture the value you create, you fail as a business.

Amazon creates immense value for the whole ecosystem but how much value does it really capture? Only recently it has turned profitable.

In contrast, Google and Apple capture huge value.

Coming back to Zomato.

As I write this, Zomato is valued at 60000Cr still insane. A couple of months back it was valued at around 1 lac crore.

It hardly generates 1000 Cr of revenues per year. To make that 1000 Cr it spends 1500 Cr.

By Peter Thiel’s logic, Zomato is not able to capture any value that it is creating.

Applies to individuals as well. You might do all the hard work and create immense value but how much are you really capturing?

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