Today's episode of Two by Two is about Zepto’s decision to pause its IPO and how things will play out next.
For years, Zepto has told one story — about its potential: for growth, for profitability, for making money for everyone from investors to employees. And to be fair, Zepto executed at a blistering pace. But the story always ran on momentum, on a sense of inevitability. And the reason why Zepto told that story again and again, with bluster, is because the company always knew the truth: there was exactly one destination.
For Zepto, going public wasn't a milestone. It was the endgame. And it came within inches of pulling it off.
Now, Zepto and everyone in and around its massive orbit — shareholders, vendors, delivery partners, employees — will acutely feel the gravitational pull of the same momentum that propelled it up. And the way down, like the way up, will be driven by narrative. Except it'll be a counter-narrative this time, and perhaps just as irrational. The confidence narrative has two sides: thus far, Zepto has been climbing ladders, and now it's going to encounter snakes one after another.
This episode is a bit different from Praveen reading out the special newsletter edition he published last week, with some help from Snigdha, who co-hosts Daybreak, The Ken's daily news podcast.
In this episode, Praveen plays out what the way down looks like — why India's largest mutual fund houses took one look at Zepto's valuation and financials and passed, why brands and creditors will become a lot more unreasonable, and the three outcomes from here, all of which look tricky. And after he published the newsletter, he got a wave of theories from subscribers — founders, leaders and executives among them. He reads some of them out.
The market has learned. Now we find out whether Zepto can.