Sridhar Vembu, CEO & Co-Founder of Zoho Corp, started the company with his brother Kumar with a mission to boosting India's technological development & contributing their mite towards India's growth. With zero funding and his single-minded focus on building world-class products through investments in R&D, Sridhar assiduously steered Zoho's steady growth over the last 25 years and remains steadfast in his commitment to building India's capabilities rather than his own personal wealth.
I spoke to Sridhar who now lives in Tenkasi in Tamil Nadu where he moved in 2019 from the U.S of A.
Anjana: Zoho recently completed 25 years. From a boy who grew up in Thanjavur to creating this nearly billion dollar company with 60 million customers, offices in 12 countries, zero debt, competing with the likes of Microsoft, Google, Oracle etc., surviving the dotcom bubble and economic downturns to Padmashri Sridhar Vembu. How has the journey been?
Sridhar: I am an accidental entrepreneur. I had no plans of being in business & the thought had never even occurred to me. At Princeton, I'd read about companies like Microsoft but never imagined that one day, I would be competing with them.
What really got me into business was India & my thoughts about India. I used to ruminate on why we were a poor nation and what I could do to improve the situation. Countries like South Korea, Taiwan, & Japan were all poor countries that became rich and are getting richer. By 1994-95, I realized that private sector industrial development & technology development were critically needed in India. I wondered what I was doing with my life and my talent. Around 1996, I decided to take the plunge and along with my brother Kumar, started the company. There was no business plan, no product plan, nothing.. we thought we would figure it out along the way. Slowly, we built small things here and there, and did well enough to put food on the table, and over time, we got better. However, the company would not have existed or grown without the amazing talent we have in India.
Industrial capabilities or technological know-how play a critical role in a nation's growth and it is important to have the ability to know how to do these things & not just have factories. Both Mexico & Taiwan have factories but Mexico doesn't have the proprietary know-how like Taiwan and that's why Taiwan is much richer. So, India, too, needs to attract industrial know-how on how things are done, how to make the machines, how to modify industrial processes, etc.
Anjana: Where do you think India did well and where in your view are we struggling at this point in time?
Sridhar: We went from a Soviet-style planned economy to an American-style financialised system. We are attempting to copy the American system which, by the way, is failing for America itself! I do not agree with the American system, it is not even serving America well. Our elite thinks it worked for America and it will work for us. I want our industry thinkers to realize that this path failed for America & we shouldn't be copying them. India needs to understand this, else we risk copying their failed policies of the past.
America has lost industrial & other capabilities. Forget the stock market capitalisation, a lot of people focus on that but that is a bad metric, it means nothing. They are destroying real capital & boosting fake valuation metrics. American industries, in reality, have lost competitiveness at a global scale which they once had. Some large technology players are masking the broader decline in America's industrial competitiveness & unfortunately, India has copied that system. However, America is trying to catch up now & they are making a U-turn right now. Joe Biden has proposed an investment of USD 300 Billion in R&D & capability building funds as they have realised the need for the same.
Anjana: You have invested in R&D & Zoho has grown without any funding. Startups today have revenues running into lakhs, losses into crores but have multibillion dollar valuations. What do you have to say about these companies whose valuations are spoken more about than their products?
Sridhar: People are confusing valuations with wealth creation. It is a fundamental mistake. The real wealth of a society is the capabilities of its population, the culture, the soft infrastructure, etc. The numeric value that you put in the stock market is actually just a derivative number, it should not be a measure of our success. Unfortunately, there is an obsession about valuations & as a result, companies are not building real capabilities.
Anjana: You are the poster boy of simple living & high thinking despite featuring in the global top 50 richest Indians list. What are your views on wealth creation & distribution? In a country like ours, there is so much variance with the extremely wealthy people, on the one hand & so many living in utter poverty, on the other hand. How do you think the wealthy can help?
Sridhar: Wealth creation is about building skills & capabilities in our country, that is foremost. My net worth that they calculate is really a number that has been put on the capabilities that we have built in our company, the software we built, etc. I ignore & pay no attention to that. I have enough. I am not working to accumulate more wealth, It is meaningless. We need to create jobs & build capabilities. That's why whatever we are earning goes right back into R&D & in Covid times, a lot of it is being spent on charity. I think we, the wealthy & the elite, need to be true to our spiritual roots which talks about the limitations of money; money alone cannot make us happy & I know that all too well. More money is not going to make me any happier. On the other hand, it is highly satisfying to see the gratitude on people's faces when you do something meaningful, like the school we have & the joy on the kids' faces - that is true happiness. Regarding what other people should do with their wealth, I don't like to preach to anybody on what they should do.
Anjana: You moved from the U.S. to Tenkasi in 2019 & you have been an advocate of rural migration. How do you think the government can aid reverse migration as the urban infrastructure is collapsing & it is ill-equipped to support the exponential population increase?
Sridhar: You are absolutely right, we cannot go on like this with this kind of urbanization. We have to stop this madness as we cannot ever build enough infrastructure in the cities where the population is ever-increasing as nothing is ever enough.
However, in villages, we can fix the rural roads to the last mile & can have good optical fiber connection that immediately unleashes the potential for jobs. Fiber optics creates telemedicine potential & the ability to learn online. You can have reasonably high value jobs in rural areas. The income will circulate in the rural economies & immediately boost the local economy. We are seeing this effect in Tenkasi. We have 450 employees in Tenkasi. We recently conducted a Socio Economic Impact Survey there to understand the impact of having our office there over the past decade. The survey revealed positive impact on the local community & our presence led to infrastructure development as well as skill building. The study also showed that high income jobs created by Zoho led to not just wealth creation but also wealth redistribution.
Anjana: The Zoho Schools of Learning is supposedly learning-oriented. India's education system has been more marks-based but with the new Education Policy which is more learning-oriented, you can choose say music with Physics which we couldn't do during our times. What are your views on the new policy?
Sridhar: The new policy is definitely good but we cannot have a learning-based system alongside hyper-competitive exams like JEE, NEET etc. Students may question that if learning is important , then, why do we need to crack JEE ? The moment you have hyper-competitive exams, you cannot have an emphasis on learning.
The metrics-driven system is bad because students then focus on metrics, not learning. Students are forced to excel in exams. This is a bane throughout South Asia. You mentioned doing Physics, Chemistry, Music but if I am going to do JEE next year, I will drop music as it will not get me into IIT. That's the problem & we need to face the reality & do something. At Zoho, we don't rely on grades or credentials; we practice what we preach. We look at the person holistically.
Anjana: People have been with Zoho forever. What is so unique about Zoho & its culture that makes people stick around?
Sridhar: We promote a sense of belongingness; It is not just a company with an intent to make money. Zoho is a place that values people as human beings & we are a family. Our people are not resources or a means to an end.
I hate the word "professional" that is so often used in the corporate world. Here is my interpretation of the word - you have a person with a bundle of skills but you remove all the human personal traits that make the person unique. Companies want a bloodless, soulless person with the bundle of skills minus the personal traits but when you remove the personal traits from an individual, something vital goes out of the window.
Companies that are built of so-called professionals are soulless machines. No wonder people don't want to stay in those places. Zoho is a human company & that is the reason people want to stay here despite external incentives to leave & I am grateful for it.
Anjana: How do you think we have handled the pandemic; how do you rate our preparedness to handle something of this scale? Do you think the world at large could have been better prepared considering this was portended long back by leading institutes & several leaders?
Sridhar: There is no place, including developed countries, that escaped suffering or where the virus did not spread rapidly. The reason why it is so bad is because regardless of how big your medical infrastructure is, it can never be enough to deal with these kinds of overwhelming situations. No society builds that kind of capacity. I think, most definitely, more budget should be allocated to healthcare & we must build more public healthcare facilities but having said that, this pandemic is not about all that. Even well-equipped States have borne the burnt as we were overwhelmed.
Given the circumstances, I don't think there is any country in the world that was hit hard that came out well in this. I won't beat ourselves too much on this. Unfortunately, these kinds of things become a political issue. However, the good news is the test positivity rates are falling & with increased vaccinations, we can slowly get back to normalcy over the next few months.
Anjana: You did a lot of work during COVID.
Sridhar: We are witnessing one of the toughest times in our 40-50 year history. Covid has been a war, literally. I am happy that we were in a position to help. I thank the Universe for putting us in a position to be helpful. We provided 40k meals a day in different towns & cities, procured oxygen concentrators, etc. We spent close to 30 to 40 crores & it may go up to 50 crores, & we really are very happy to spend this amount as it is important for our country, it is important for humanity. We suspended a lot of our marketing campaigns to fund this, we redirected our marketing spends as this is much more important.
We worked with the Ramakrishna Mutt to support badly hit communities like the people who play Nadaswaram in weddings and temples who were left without a source of livelihood. Similarly, we are supporting people who rely on particular festivals to earn a livelihood who, now, have no means to survive.
Anjana: After so many years, what is your driving force & what makes you get up & go to work every day?
Sridhar: I still look at our country's situation with regards to capabilities & industrial knowhow. I am focused on building this ground up.
Obviously, Zoho will be able to only scratch the surface. I am talking to several industrialists regarding the same. I want to campaign for this & we need to do what Japan, South Korea & Taiwan did. I want to make this a national mission & that is what I am hoping to achieve. That is what motivates me.
Anjana: You have always spoken about your interest in political science & economics. Any plans of entering politics?
Sridhar: I have already ruled that out but I respect politics as it is the only means in a civilized society to resolve our differences. We need politics & political debate. People who think of politics as a dirty word don't realize that the alternative would be war. Politics is essential, however ugly it may look.
Anjana: Any plans of entering politics?
Sridhar: I have a mission to build capabilities in technology & I have a lot of work in that area. Zoho also needs my leadership for the next ten years, at least. We have a long way to go before we truly become a force in the global market. So, my focus is that at the moment. Politics is ruled out for now & anytime in the near future.
Anjana: Maybe in the distant future?
Sridhar: Distant future, who knows?
Anjana: So what next, Sridhar?
Sridhar: You will see a lot of technology products flowing out of us. You will also see us campaigning for building our domestic know-how by talking to more industrial groups, industry leaders etc. to figure what their industry or company can do, how we can invest in R&D, what our learnings have been & focus on the critical need to build knowhow. Once the pandemic eases, I will be going around meeting industry groups. I also now talk to many young entrepreneurs & am part of many startup groups. All this is aimed at my mission of helping build industrial capability in India.
I see the country's situation and I feel we have to do a lot more - a lot more technical & product development, a lot more lifting people out of poverty, particularly rural poverty. So, all these tasks lie ahead.
Anjana: Padmashri Sridhar Vembu, thank you so much for your time.
Sridhar: Thank you, Anjana.