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Home > News> Big Story > Sridhar Vembu’s village lab

Sridhar Vembu’s village lab

The Zoho Corp. CEO and co-founder talks about running a social, cultural and economic ‘ashram’ in rural Tamil Nadu, the advantages of bootstrapping, and building a WhatsApp competitor

Sridhar Vembu, CEO and co-founder of Zoho Corp
Sridhar Vembu, CEO and co-founder of Zoho Corp (Illustration by Priya Kuriyan)

On 16 March, with the company celebrating 25 years of its existence, Zoho Corp. CEO and co-founder Sridhar Vembu did something rather unusual: In a blog post that revealed hitherto unknown details about the web-based enterprise software solutions company’s journey, he confessed he didn’t really know when Zoho was born. “All we know about Zoho Corp is that we were born sometime between late 1995 and early 1996 and we acquired the Zoho.com domain sometime in 2002 and changed ourselves to Zoho Corp in 2009. We have definitely completed 25 years in business, but we cannot be sure when we were exactly born!” wrote Vembu.

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This is an unusual admission—tech founders are usually extremely clear about their origin stories; it forms a large part of their narrative-building around themselves, the timelines are clearly delineated and often mythologised. But Zoho, clearly, doesn’t care much about that sort of thing—for one, it is much more obsessed with the future than the past, and for another, its philosophy is rooted in the kind of earthy wisdom Vembu, 53, finds himself surrounded by in the village where he now lives and works. “Yesterday, I met a lady in our village. I asked her how old she was,” he writes. “She gave me the village answer, ‘Who knows all that? No one kept track of all that here.’ I nodded in agreement because that is how bootstrapped companies often are too!”

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The much talked about move in October 2019 to Mathalamparai village in Tamil Nadu’s Tenkasi district, where the company had been running an office for almost a decade, was not a whim on Vembu’s part. It is, in fact, part of an ambitious plan for a large-scale rural revival in India that Zoho believes it is laying the foundation for through initiatives such as the Zoho Schools of Learning. This in-house training programme, with centres in Chennai and Tenkasi, trains school graduates and high school diploma holders in various skills over an 18-month period before Zoho absorbs them.

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The company has also announced that in five years, 50% of its over 10,000 employees will be working from smaller, rural centres like the 20-plus centres it already has across Tamil Nadu, Andhra Pradesh and Kerala, staying rooted in their towns and villages while working in world-class jobs. This may sound familiar in the post-pandemic world, when moving back to your home town or village is not unusual, but Zoho thought of this a decade ago.

And the firm’s bottom line shows these initiatives don’t hurt profitability: Zoho Corp. earned a yearly consolidated profit of 801 crore, a 55.2% increase over the previous financial year, in the one ending March 2020 as per media reports (Zoho did not confirm these figures; as an unlisted company they are not obliged to do so).

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During the pandemic-triggered lockdown this year, Vembu also started a primary school in the village, often doing hands-on teaching there. Is he basically running a large economic, social and cultural lab in Tenkasi? Vembu laughs out loud, like he has been caught out. “It is, it is…you can think of it like a lab or some kind of an economic, cultural and technology ashram if you will…because we need to solve this holistically. In India, you cannot solve these problems piecemeal. You cannot solve agriculture without solving manufacturing or skilling problem and you can’t solve those without solving the education problem or the healthcare problem. These have to be solved in a rural context, and together,” he says.

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And Vembu is very clear that you can’t parachute in and solve these problems. His own move to Tenkasi in October 2019—prescient, as it turns out—was a way to really understand, first-hand, the challenges he was trying to address. By no means is this a sort of semi-retirement or Vembu cutting himself off from the company’s day-to-day operations, as some initially assumed. He remains as involved as ever. His day begins early, at 4.30-5am, when he puts in “an hour, hour and a half of solid work; all my deep thinking and reading”. Then he has calls with US colleagues and clients for about an hour. By 6.30am, he is out in the village, walking and swimming in the local pond and taking a look at how his farms are doing—he says he is passionate about this. “After that, the rest of my ‘India day’ begins. I have calls in the morning and the afternoon is usually reserved for external calls, like this one,” says Vembu, pointing out a few times during our chat that we are using the in-house video-calling software, Zoho Meeting, which is now part of Zoho’s suite of enterprise offerings.

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Mornings are when Vembu takes a walk around the village and does his deep thinking
Mornings are when Vembu takes a walk around the village and does his deep thinking (Zoho)

The pandemic has also made the company think seriously about personal-use software, says Vembu. While its mainstream products like Zoho CRM, a top-rated customer relationship management (CRM) platform used by over 250,000 businesses in 180 countries, have so far been largely enterprise-focused, the time may be right to start thinking about reaching out to individual users.

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One step in this direction was the launch of its cross-platform messaging app, Arattai, in January 2020, and although Zoho has not gone on a publicity blitzkrieg with this yet, it is fairly serious about the product. ‘Arattai’ is the Tamil word for ‘chitchat’, and the app was in use by employees for internal communication before being released on app stores “almost accidentally”. “It’s our answer to WhatsApp. We are cooking up more features for it, so in the next three-six months you will hear a lot more about it,” he says with a secretive smile. It is a crowded category, he agrees, “but we are calculating that there is space for a made-in-India offering, with data hosted in India”.

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Zoho’s—and Vembu’s—beginnings were not extraordinary. Zoho started life as many tech startups do, as a “bedroom operation” in Silicon Valley in the late 1990s. At the time, Vembu was working as a wireless engineer with Qualcomm in San Diego, California, having graduated from the Indian Institute of Technology, Madras and getting both a master of science degree (MS) and a PhD from Princeton. When Zoho’s co-founder, Tony Thomas, asked him if he knew anyone who would help him sell the Simple Network Management Protocol (SNMP) software he was building, Vembu said yes, despite not knowing much about marketing and sales. He printed up a bunch of business cards for $10 at Office Depot that said ‘VP of Marketing and Business Development, Advent Network Management’.

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The rest is history, and a Wikipedia page, but what has been extraordinary about Zoho’s journey is that it is, famously, bootstrapped. It never took external funding. Even today, Vembu doesn’t believe in the validation of high valuations and the seemingly all-important “unicorn” status.

“When we were starting out, Microsoft had pretty much locked up the software market. A lot of people asked us why we were getting into the enterprise software market but we did it successfully, so the question is absurd. It’s like asking if there is a child born today, will that child have any opportunities at all in 25 years? Won’t everything already be taken up? It is absurd because of a simple reason—however great companies are, however great leaders are, people die eventually. So that means that new people are going to take their place,” he says.

It’s just that they may not exactly follow somebody else’s playbook, he adds, predicting that a great software or technology company will come out of an Uttar Pradesh (UP) or a Bihar someday soon. “Maybe it’s already born, you just have to go look carefully,” he says. “You will only hear about them after they hit the big league, like Zoho was in the background for at least the first 15 years. And I actually liked being unknown. I often think back to the time we were unknown and time was unlimited and I didn’t have to respond to so many calls.”

The company—a beacon for bootstrapped startups in the world—did it the long, hard way of creating products, selling them, and using the profits to grow. But would this be possible in today’s environment of pushy venture capitalists and the allure of fame that funding brings with it, which many founders find hard to resist? “It’s not easy to resist—it wasn’t easy to resist even in 1999 or 2000. In fact, in 2000 we got a term sheet, where we were offered $10 million (around 74 crore now) at $200 million valuation for a company that was maybe at $6-8 million in revenue at that time. So it was a huge valuation for a tiny company at that time—and we rejected it,” he recalls. “So yes, it’s not easy but there will always be a few people who will do it. And they are sitting quietly, somewhere in Rajahmundry or in UP, doing something interesting, and as a mediaperson, you should look for these hallmarks and find these companies.”

In many ways, this view goes completely against the received wisdom of the tech startup world, which believes in “hubs”—there are many lists that come out every year glorifying certain urban areas as places where talent and money concentrates, following the Silicon Valley model. But what Vembu is essentially trying to do with his rural offices (even its offices around the globe, like in the Netherlands or Japan, are not located in overcrowded cities), his rural training centres, and the things he is dabbling in, from small-scale manufacturing to his primary schooling initiative in Tenkasi, is to try and break that notion.

That, he says, is what he wants his legacy to be. “I would like to have an impact building a lasting technology company and also making a difference to where we build it, in terms of lifting up lives and levelling the playing field between urban and rural India, and doing it holistically. So take one district, say Thanjavur, where I was born, these districts are still very poor. The population is about the size of a country like Estonia, about 1.5 million people. Could we take them to an Estonia level of GDP in 20 years? What will it take? Those are the kind of things I think about.”

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