Home > Notes > Sridhar Vembu – Zoho

Sridhar Vembu – Zoho

Sridhar Vembu is the co-founder of Zoho, Corp. The company is organized around 3 major divisions: Zoho.com, ManageEngine, & WebNMS. He was tagged as “The Smartest Unknown Indian Entrepreneur” by Forbes Magazine.


Before Business

  • Sridhar graduated from Princeton
  • he went to work as an engineer for Qualcomm, because he wanted to design algorithms for a living
  • Sridhar’s background is in DSP (digital signal processing), not in software

Entrepreneurial Start

  • Sridhar found himself unemployed along with his brother and their close friend
  • they all decided to launch a business together, to be able to provide for their families
  • they began by launching a series of products

1st Product

  • SNMP API (simple network management protocol) was their first product
  • they launched this without even having an idea about a potential target market
  • their first customers (java developers) found them, through message boards
  • large companies soon got interested and became customers
  • this product still sells to this day

Move To CEO

  • Sridhar became the salesman of the product since he was the only founder located in Silicon Valley, where their customer base was
  • they chose Sridhar to become CEO because they felt he was the most business savvy, due to his experience
  • and because everyone else was busy building code

Sales Experience

  • Sridhar had problems making cold calls
  • he had to learn to ask potential customers for money, and then learn to ask for more money
  • realizing his problems, they decided to hire the salesman of another company who was trying to acquire them
  • he still works for him as VP

Setbacks

  • in 2000, the business was very profitable and successful; they had a large number of companies purchasing from them
  • then from 2001-02, after the bubble burst, most of the companies they were selling to vanished
  • revenue went down 30%, from $10 million to $7 million
  • the other 2 co-founders left the company
  • Sridhar had to let go a majority of their sales people
  • he had thoughts of quitting and questioned if running a company was for him; he just wanted to sell the company and leave

Recovery

  • Sridhar stayed and persevered
  • they expanded their product portfolio in order to capture a broader market
  • they started to focus more on product development and engineering, and less on sales and marketing, because they had no customers
  • their next product, ManageEngine, was a success

ManageEngine

  • ManageEngine allows enterprise IT organizations better manage their networks, servers and infrastructure
  • they built this because they knew there was a market and they already had the network managing software
  • due to ManageEngine’s success, his engineers got more confident and wanted to dream and build bigger

Zoho

  • Zoho provides a comprehensive suite of applications for businesses – from on-line productivity to CRM and custom applications
  • Zoho came about because they were using salesforce and webex and felt they were being overcharged, so they decided to build a better, cheaper alternative
  • they converted their products from a downloaded format to solely online web applications
  • their customer base grew through word of mouth

Competing With Google

  • almost half of Zoho applications compete directly with Google’s applications
  • Zoho focuses more on the depth of functionality than Google
  • Sridhar feels their products are more fully-featured that Google’s apps; they have more features in every application they compete with Google against
  • Zoho has many apps that Google doesn’t have
  • Sridhar is fine if Google does $10 billion in revenue, and Zoho only does $500 million, because Zoho is a private company

Private vs. Public Companies

  • being private allows them the flexibility to build so many products and stay on top of them all
  • being private gives them more freedom
  • public companies have quarterly and annually revenue pressures
  • it’s hard for public companies to sacrifice short-term profits for long-term goals

Future of Zoho

  • today Zoho is only 10% of their overall business, but it is also the fastest growing
  • Zoho is projected to be 40% of their business in 2-3 years
  • they are focusing on creating platforms for non-tech/programming savvy business people to create applications

Tips On Building Web Apps

  • your app must be the “best of breed” in its category
  • put your passion and soul into your product, your customers will notice it
  • make the customers’ experience easier
  • people are willing to pay for really good apps
  • the market is big enough for everybody, especially small players

Advice

  • Before there is business, there has to be trust.”
  • Before there is trust, there has to be history.”

Side Notes

  • after Sridhar closed a deal with a customer for the first time, the customer told him he would have paid 10x what he paid, if Sridhar had asked
  • Sridhar is self-proclaimed “cheap” and focuses more on preserving money than doing what’s “hot”
  • one reason he doesn’t want to go public is because he doesn’t want to deal with companies like Goldman Sachs
  • humility is a value at Zoho
  • Sridhar was featured in Forbes as, “The Smartest Unknown Indian Entrepreneur”
  • Forbes described Zoho as 100% bootstrapped, have $40 million annual revenue, and $1 million in monthly profits

Connect With Sridhar

Forbes on Sridhar

Zoho

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  1. Leanna Sharma
    March 11, 2010 at 9:26 am

    “Sridhar was featured in Forbes as, “The Smartest Unknown Indian Entrepreneur””

    Since, he’s known now, I guess this quote is now meant for me.

    • Rothstein
      March 11, 2010 at 9:27 am

      It may be! Go and prove it to them!

  2. Susy Q
    March 12, 2010 at 3:26 pm

    Sounds like a useful service!

  3. twetalevaRame
    March 17, 2010 at 3:18 am

    This is one of the best articles I read about the creation of ZOHO.

  4. Skilamaklen
    March 21, 2010 at 5:28 am

    I just connected with him. I love your guest connect! 🙂

  5. April 20, 2010 at 9:30 am

    I just connected with him. I love your guest connect! 🙂

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