Zoho has been one of the fastest growing Indian cloud-based businesses. In a conversation with Sushila Ravindranath, Zoho’s co-founder and CEO discusses the growth of the company beyond borders and the integration of AI and IoT with cloud-based services
I am meeting Sridhar Vembu, co-founder and CEO of Zoho, a rising Indian IT superstar which makes cloud-based business software, in his sprawling 45-acre complex outside Chennai for lunch. I have been trying to get him to come to one of the city restaurants. It is not working out as he just cannot find the time. We go to the Zoho cafeteria for an early lunch before it starts getting crowded. We pick up our food from the vegetarian buffet which is open to all the employees. Food is served round the clock. “We have non-vegetarian food on Tuesdays and you must see the queues,” says Vembu. More variety will be introduced soon. Food is available on the campus as well. “Productivity increases if you take care of basic needs.”
Zoho provides a single cloud platform with all the applications needed to run a business entirely from the cloud. Businesses can acquire and manage customers using Zoho’s marketing, sales and customer support applications—Campaigns, CRM and Desk—and then empower employees to create, store and distribute content on the cloud with Zoho’s productivity and collaboration applications—Office, Mail and Docs.
More than 25 million users around the world, across hundreds of thousands of companies, rely on Zoho every day to run their businesses—including Zoho itself. Zoho is a division of Zoho Corp, a privately held and consistently profitable company with more than 4,000 employees. Its headquarter is in Silicon Valley, with international headquarters in Chennai. Vembu, based in California which is Zoho’s sales hub, comes to Chennai every quarter.
Zoho was the only Asian company to appear on Forbes magazine’s list of the top 100 closely held cloud companies in 2016. Vembu’s thinking has been contrarian ever since he set up AdventNet which later became Zoho. A PhD from Princeton, he joined product development at Qualcomm in 1994. He left after two years, to start AdventNet with friends and family.
Zoho does not release figures. Vembu does not believe in seeking funding or going for an IPO. “How will he end 2017,” I ask him as we are starting on roties, vegetables, salad and a sambar version of dal. “Will it be around $500 million?”, I quiz him. “May be,” he grins. As Zoho is growing at a fast pace (cloud market is exploding) is he likely to change his mind? He says he will stick to what has worked for him. “Our model allows us to think long-term.”
Almost 50% of Zoho’s clients are from the US, mostly small businesses. Europe is the other big market. In the last three years, Vembu has started looking at the Indian market seriously. Zoho has introduced a whole lot of cloud-based products one after the other for India. A few weeks ago, Zoho launched its GST-compliant finance suite, Zoho Finance Plus. Zoho’s finance suite will help businesses make a smooth transition to GST without worry. At a basic level, it is available for `2,999 per organisation per month, which includes 10 users and access to services which will facilitate transition including of GST returns. “We want a large number of users. Every one wants the latest technology. They will have access to it if priced right. We will make it up on scale.”
We get more of the same food and return to the table. Vembu tells me why he has started intensely focusing on the Indian market. “The global market is demographically challenged. It is also severely indebted. Look at Japan. Both population and GDP growth are so low. Countries like Germany and France are getting to be like Japan. They need immigrants to grow. Today, India is an attractive investment- ready country. We really are by and large, a peaceful, law-abiding place. We are also one large unified country which will become the largest market for e-commerce. Although we have shifted our focus to India, we will continue to play globally.”
I ask Vembu why he chose to focus on products. “Revenue per employee is much higher in products than in services, Microsoft makes $600,000 per employee while TCS does $45,000. Product business is a better business to be in, although it is more difficult. In 1997, we didn’t compete with Microsoft. Now we do so aggressively”. He is optimistic about India. “It will be good if Indians stay here and develop the country. We are free to move anywhere we want. You find workers from Jharkhand working in Tamil Nadu. You find staff from the Northeast serving in restaurants in remote corners of the state. We take so many things for granted. We have progressed a lot without mass killing. The world is seeing it. Jeff Bezos sees it. Bill Gates comes here more often than most people do.”
We both get some curd rice with pickles. How are concepts like artificial intelligence, Internet of Things (Zoho is in both) going to impact the industry, its growth. “AI will be part of every product, system and solution. Everybody is working on self-driving cars, robots which cook and concepts like these. Software is getting smarter. IoT is a network which enables everything”. On people’s fear of losing jobs, he has this to say. “With technology changing so fast, we may not have traditional factories. We will, however, be marketing all kinds of services like babysitting, catering. Cyber security will become big business. There is no limit to human ingenuity. I don’t see jobs going away. Technology expands jobs. Automation makes things cheaper to produce. So why is it a calamity?”
Although Vembu is a PhD from Princeton, he does not believe in formal grades. “Why do we sanctify marks? We are forever branded by marks.” Zoho hires students from second- and third-tier engineering colleges. Vembu has set up Zoho University for students who finish their 12th standard and learn on-the-job. There is an entrance exam that tests maths and analytical skills. After a year in the university, they are offered on-the-job training in their area of interest or expertise—be it coding or testing or quality. “There is a kid who worked in our cafeteria. An employee found him and put him in our school. Most young people come from low-income families. Ten years down the line, they are on par with the best.”
As we finish lunch with some machine-brewed coffee, he tells me about the campus in Tenkasi at the foothills of Western Ghats in Tamil Nadu. How does he attract talent there? “Chennai has grown. We are adding people and we had to do something about it. We are bringing 80% of the staff from outside. Most people are looking for jobs, not discos. The campus is in a scenic location which is one of the best kept secrets of Tamil Nadu,” he says, as he sees me out.