Sridhar Vembu’s Zoho Journey

Sridhar Vembu lives in a village, Wears a lungi, and Rides a bicycle. However, running India’s most profitable startup ZOHO. Their profit is 2700 crores. 114 Unicorns have been identified in India, and 77 have lost; they have just seen a profit.

Sridhar Vembu is doing business in the village and earning much money. He has business in more than 180 countries, more than 6 Crore customers, and more than 11000 employees. He has 300 companies out of the Fortune 500: Apple, Netflix, Amazon, and Mahindra. These companies are their clients. Their revenue is 7000 crores, and Their Profit is 2700 crores. The valuation of the company is 40000 crores. He made such a big umpire without any loa and investor.

We have never heard of his name. If you want to learn all these things, How does this guy do the marketing? How does he manage his finances? How does he manage the employees? Then Come! Let’s take you on the journey. It will fold the pages of history and take out many lessons from the life of Sridhar Vembu. So, Let’s start the video!

Sridhar Vembu Early Life

Sridhar Vembu was born in a small village in Tamil Nadu. His whole family used to farm. After some time, his father shifted to Chennai, where he worked as a stenographer at the High Court. At that time, he took the JEE exam, got 27th rank in India, and reached IIT Madras. Sridhar Vembu was the first person in his family to graduate.

He chose electrical engineering and said he had to make a computer by hand. He wanted to make a machine and would either become a scientist or professor or do fundamental research in this area. Their mind seemed to be there. However, when he went through the IIT Madras syllabus, he said it was no fun. That’s different from the depth I want, so he didn’t feel good then. However, he cleared the exam anyway.

Academic Excellence: From IIT Madras to Princeton University

He studied at Princeton University, which is very high in this field. He earned a doctorate and obtained a PhD degree. Then, he also studied, but he was not enjoying it. He said that he was not having fun with it. Now, he is such an intelligent man.

Who does not enjoy reading books? Then, he decided that I would not rely on books. And would do my learning. He took books, studied independently in the library, researched, and understood things. Now, the journey of life was going on. Madras completed it, and Princeton University completed it. I got a job at a good company. The package was also good, but inside, he wanted more. He felt like he wanted to do something. Nothing happened in his studies.

However, he will do something for the country if we can. He was such an intelligent person. The company had a project; for that, C++ knowledge was necessary. That language was not known to him. He learned it by reading a book and, based on that, made such software, whose hardware also became compatible with it.

Starting a Company “AdventNet” with his Brother

In 1996, his brother proposed starting a company of their own. We will go and make it in India. So that Employment will be generated in India, and there will be the name of India. He said that he had to do something for India. He reached Chennai directly with his brother and sat in a small room; both brothers started a company called “AdventNet.”

When the business started, The first plan was to build hardware. They will make some machines which they will sell. But all the savings money was spent on making the machine; The machine was not made. They said – What to do now? And Yes, that was different from when startups used to get funding. It was not available then, And in India, it was not available at all.

Shifting Focus: From Hardware to Software

So, they worked with their own money. Then they think, let’s stop the hardware company and Make a software company. There will be less investment, and more work will be done. You can imagine a small room, two computers, and two brothers who started the company. At that time, he was a technical man With knowledge of software and IT. However, he needed to learn about the business. Once, he made a deal of 30,000 dollars with the Client. After the agreement with the Client is done, the conversation is over.

Then, the Client told him to listen. You are not capable of negotiating a $30,000 deal. Your product was so good that I bought it. However, the way you were selling it, I would not have taken it from you as soon as he realized he didn’t have business skills.

So He hired a salesperson. For two years, he travelled with him and Slowly learned sales. Then he asked who would take care of the team from behind if I was roaming the market. He hired a person for finance and one for management. When one individual is assigned to every critical function, they go to the market and think of expansion.

Turning Point for His Company

They showed their software to the public in an exhibition. Japanese customers liked that software very much. Who were all those Japanese customers? The HP Corporation—an American Company. They were its competition. So, HP was providing excellent software and was running on good software. However, that software was too expensive and was not within the reach of an ordinary man.

Then, the Japanese customer said that This software, which the big company is launching, is at a higher price. Can you provide us with the same software in a small package? Then, Sridhar Vembu said – Done! “A Software is Software.” It will be made according to you. And then, he got his first breakthrough at that time. He understood then what my competition was. This software is what big companies are making and giving to big people. I have to make and provide the same thing to small people. My business will be set. This thing became clear to him from there.

In 1998, they received a huge order, and the company’s revenue reached $1 million, or eight crores, as of today. The company started in 1996, with $1 million in two years. It’s a big thing. At that time, it was a dot-com Period. Every big company was bought at a high valuation.

Sridhar Vembu Declines a $25 Million Offer to Sell

So, when their valuation gradually reached $1 million to $2 million, they got an offer to sell their company for $25 million. And then they had a team of five members. Those five people sat and discussed, Should we sell?

All five people denied it and said why sell? They declined the offer and never showed interest in the investors. They used to earn their own money. The profit comes and is used to invest profit, make it big, and reinvest the profit. This same strategy is being followed to date.

Surviving the Dot-Com Bust

By the year 2000, they had a team of 115 people. Turnover reached above $ 10 million. This giant company can only be formed with struggle. One Dot combusted in the year 2000 NASDAQ, sitting at 5000 points. In a short time, it broke and reached 1140 points. CISCO, Intel, Oracle, and other similar companies, 80% of shares were affected.

Zoho is a small startup, and their company was not listed. It was not in the share market. However, 80% of clients were wasted overnight. Now you can imagine you have 100 clients, 80% of whom are clients. The next day in the morning, we were lost. Missing So, all that was borrowed drowned. New orders will not be received. Now, do you have to give a salary to the employees? Shridhar’s wisdom was handy then; he had kept the cash.

Smart Money Moves and New Ideas

He used to earn cash and keep some money. He did not invest in other areas and did not spread money in useless places. They have money ready, so he said until these things are sorted out, we have cash for 6-12 months and will manage everything. Thus, we will only fire people from the 115 engineer team. On the other hand, some companies say Let’s fire them as there is no business. However, they said – That today’s Year, i.e., 2000, will be called the Year of R&D “Research and Development.” You all 115 people are sitting empty and don’t have the work.

Now, let’s consider what new things could launch in the market. What new product can be developed? They said they would improve their existing product, which was already selling, while changing their ERP software. They developed a new product, “Manage Engine,” today. That product is giving the company higher revenue than it was in time. They also have a thought during that R&D: Should we go to cloud service? We will keep the primary server, And services will be provided over the cloud.

Zoho: Affordable Business Software for Everyone

At that time, “Zoho” was born. So, the company thought of making software. The name of the software is Zoho. What will happen inside Zoho? All the functions related to business, like HR, Management, Hiring, and Finance, will have applications related to them. The server will be with Zoho only. A person can easily download and use it online.

Now, he has followed the same thing that he did earlier; for today’s date, A big company that will take software from a big software company. “1 Crore Software it will be,” Zoho says – “Take mine in 1 Lakhs.” Hence, what big companies were making for big people, Zoho said, for small people, Let’s make that thing at a trim level and a cheap cost. Hence, its number of clients increased suddenly. Therefore, see – the company name is still AdventNet. Zoho is the name of their product.

Shridhar Vembu’s Business Style: Smart Finances and Keeping a Low Profile

Shridhar Vembu, from then till today, also believes that the company should have zero debt. There should be a lot of cash. The balance sheet should remain strong. Do business like this; we want to take our time! Secondly, you have yet to hear the name Shridhar Vembu. You have yet to hear of the name Zoho. As they don’t do marketing, They say – I don’t do marketing. I manage to maintain a low profile. I have a habit of experimenting more and more. As the world doesn’t know me, I am exempt from experimenting. I have yet to do some experiments. And if they flop, The New York Times or The Times of India will print them. Zoho did this and failed; no one knows Zoho.

The company’s name was AdventNet, and Zoho was its product. However, this AdventNet company was registered in the U.S. So they said One company should also be registered in India. And in 2009, they registered one company in India and named it – “Zoho Corporation.” Hence, Zoho registered in 2009 in India.

However, it was doing great work in the U.S., and after 2009, it started doing more great things. However, what was unique about this company? Because of this, it is so successful. It has some core concepts; learn this! The first concept gained success in the market because it is a low-cost provider. They used -“Classic Geoarbitrage Play.”

What is it? Take the product/service/resources from the country where they are sold at cheap prices and sell them in the country where they are sold at a high price. So, where is the most expensive tech sold? “In the United States,” where can you find the cheapest tech labor? “In India.” So, get the people of India to work and sell the products/services to the people in the U.S.

Zoho’s Strategic Advantages in the U.S. Market

In India, the salary is cheap, rent is affordable, and everything is expensive in the U.S. Hence, due to the low cost, Zoho could provide its services at a low price and, thus, sustain itself in the U.S. market. Another perfect strategy for Zoho is that they have a lot of products. On average, their team is solid, launching three new products yearly. Hence, the more products there are, the more sales there are.

They do not launch super or hi-tech products. They say Apple has made a wholly integrated system for any new product to support our old product. First, take a Mac, then an iPhone, then watches, Then take this, then take that.

Hence, their entire business model either works on a referral or they have made the customer’s channel partners like you bring the customers and take your commission. Last and more querent – the “Gap in the market” Big IT companies are selling big and complex software to big companies and making money. However, there is no company available to small business people. So, Zoho says, I am coming to protect the small businessman. He found a gap in the market and did great! Hence, these are the five fundamental business concepts.

Zoho’s Unique Way of Hiring and Training

Because of this, Zoho entered the marketplace and is now leading the market. Now, a question will come to your mind: The company has more than 11000 employees. Where do they do the hiring? Where do they get the money from? So, Sridhar Vembu says – The matter is such that In the prominent colleges, TCS comes to that place, Tech Mahindra comes, Google comes. Anyone doesn’t even ask someone like us. We don’t go to the top colleges. So, we used to bring people from small colleges who were of lower rank.

They said they knew nothing when I brought up people from the minor colleges. We all used to teach them. Then, if we have to teach them, what will college teach them when we don’t have to learn? Then how can we teach college students? They teach children in the 10th class and 12th classes. They said, Let’s apply the Indian Ancient Gurukul Method. Whatever thing a person wants to learn, Let’s teach that thing only. So, after the 10th and 12th classes, they told the children, ” Let’s come with me and complete your diploma.

Then, in 2004, they started Zoho University with six students and two professors. All the children who are hired Hired someone from 12th, Hired a college individual. In the six months, They are taught all tech-related things. They are trained to speak English. They are taught soft skills, and certificates are given after preparing the individual in 6 months. After that, if they like that person, then they do direct hiring in Zoho. No money is taken from the student, But they are given a 10000 rupee stipend.

Zoho University’s Growth and Unique Work Culture

This university has gradually become significant, so students are taken in 200-200 slot batches. There are many professors, so special attention can be paid to each child. There are 11,000 employees in Zoho, out of which 1,500 employees directly come from the school. Imagine this thing in the school: A person who was doing a job, his child, after completing the 12th, working with his father. Their guard now works as an IT officer in their company, and 15% of the engineers work in Zoho.

They do not have any formal degree. They came after completing 12th grade, learning to code, and starting work. Now, they want to increase this ratio. Zoho’s culture is like that. They keep the meetings to a minimum. They said that time is wasted doing meetings. We will meet once every two months. Now, if anyone wants to ask something, ask it and finish it.
Zoho has provided many similar conveniences to Google. For example, their offices have a playground, nap facilities, a canteen, and a sitting area.

Zoho’s COVID-19 Response and Future Goals

During COVID-19, they did not fire any of the employees. However, they made arrangements for their food and drink, and free food, free travel, and complimentary medicine were already given to all employees. Due to this, where the industry standard is 18% and 20% attrition, People leave their jobs. In the case of Zoho, it is only 7%.

This is all about what Zoho has done until now. Now, what does Zoho want to do? They said that whatever revenue comes to me, the central portion belongs to the U.S., and only 10-15% of my total revenue comes from India. They want to increase this percentage to 25% to 30% in India. It is their first target.

Secondly, they want to increase Employment in India, which is also true for the people of the village. So, what do they do? They will take a prominent place in the town. Usually, we will take a prominent place in Gurgaon, and we call the people of the village there. They opened a well-known centre in the town itself. There, they hire people and work with them. Zoho has two main rural offices: One is in Tenkasi in Tamil Nadu and one in Renigunta in Andhra Pradesh. More than 500 employees are working together.