This story appears in the March 2017 issue of Forbes Asia.Subscribe to Forbes Asia
Humanist at heart: “I believe you should build a lot of slack and not control every hour,” says CEO Sridhar Vembu. Credit: Eric Millette for Forbes

"Made in India. Made for the world," sounds these days like a manufacturing motto, but it's the tagline of Zoho, an Indian maker of cloud-based business software that competes internationally with the likes of giant Salesforce.
As if to underscore the point, Zoho's 48-year-old cofounder and CEO, Sridhar Vembu, sits in its sales hub in Silicon Valley, running the $310 million (estimated revenue for the fiscal year ending in March) company even as most of its 4,000 developers and other staff are at international headquarters on a 45-acre campus in Chennai.
They hone a platform whose apps handle tasks ranging from customer acquisition and management to sales and customer support. Alone in Asia, Zoho appeared on Forbes' list of the top 100 closely held cloud companies in 2016.U.S. clients, mostly small businesses, account for nearly half of the company's sales, while Europe is Zoho's other top market.
Revenue likely more than tripled over the past five years as the global cloud market exploded. Zoho wants a bigger piece of a pie that should grow to $175 billion by 2020, from $56 billion in 2013, and India is in its sights at the customer end too.
The company doesn't release its own numbers. But financials obtained from the ministry of corporate affairs in Chennai underscore its profitability: According to the most recent results available, Zoho was already netting $70 million on a $220 million top line two years ago.
For Vembu, who with his family has a majority stake, this performance equates to an estimated net worth of $1.1 billion. (Smaller stakes are held by nonfamily cofounders.) And he means to keep ownership close, assiduously avoiding external funding. Chatting easily during one of his quarterly stops at headquarters, he recounts rebuffing an early takeover attempt by Salesforce chairman Marc Benioff. (A Salesforce spokeswoman said, "We don't comment on market rumors and speculation.")
"Sridhar is one of the most important entrepreneurs to have risen in the ecosystem in recent years," emails Sramana Mitra, founder of One Million by One Million, a Silicon Valley virtual accelerator, that’s looking to help a million entrepreneurs reach a million dollars each in annual revenue. "His thought process is completely contrarian to the Silicon Valley philosophy of entrepreneurship = financing. He believes that entrepreneur = customers + revenues + profits."
While Zoho's employees in India create the product suite, Vembu lives near the sales hub, on a 5-acre ranch in Pleasanton, California, with his wife, son and some goats. (His 17-year-old is autistic, and California offers better treatment options.)
Sridhar was the first of five children of a government employee. He attended both Tamil and public schools and got into the premier IIT Madras, earning a degree in electrical engineering. A Ph.D. at Princeton followed, but he spurned academia to take up product development at Qualcomm in 1994.
He quit after two years, teaming up with Tony Thomas, an ex-AT&T Bell Labs engineer, to start AdventNet (which later became Zoho) along with Vembu's brothers Kumar and Sekar and two other friends. "The goal was to put India on the product map and build a great software company out of India," says 52-year-old Thomas, who holds a stake in Zoho but now runs his own education startup.
AdventNet was profitable from the get-go--thanks in part to frugality. "We'd go to product conferences in Las Vegas and stay at the cheapest motel in a godforsaken place far away from the strip," recalls Sekar, 45, who now runs a data-center backup and disaster-recovery company out of Chennai. "Lunch would be Subway sandwiches, and Sridhar wouldn't allow any money for gambling--not even personal money."
He also insisted on maintaining cash reserves for any eventuality. "If sales drop to zero, how many months can we survive?--that's what Sridhar would ask," says Kumar, 47, who now runs a software company catering to retailers. "He'd set aside money for six months to a year."
That caution paid off when AdventNet encountered rough weather in the early 2000s. "After [the 9/11 terror attacks], business stood still for almost a year," Sridhar recalls.
Some sales employees were laid off. That's when AdventNet got into low-cost products. In 2005 the company turned to the cloud for small and medium businesses, officially becoming Zoho in 2009. "Sridhar's ambition was always world domination," Sekar says. "Even when we were making half a million dollars in revenues he'd talk about killing a giant."
(After the initial years of AdventNet, the three founding brothers parted amicably. "There can be only one boss in a business--and we all like our freedom," Sekar says. Today, two other siblings are Zoho executives in India.)
The industry's behemoth, Salesforce, expects to reach $8.4 billion in revenues for fiscal 2017. But Vembu is quick to note that it is still not profitable by GAAP standards. In 2015 Zoho even had ads in a Bay Area train station that said, "Dear Salesforce--sorry for your losses in 2015." (Salesforce expects to be profitable for fiscal 2017.)
Meanwhile, Vembu doesn't want to be held to any targets or timelines. "I'll probably get an F in B school, but I give B schools an F too," he says, laughing. "Numbers are important, but you cannot reduce performance to a set of metrics--it's counterproductive and inhuman."
The Chennai campus embodies his philosophy of managing work--not people. Employees come and go. The canteen serves free food all day. Headquarters has areas for play, and a satellite developer site in Tenkasi is positively rustic.
"Free people can produce a lot more interesting things and live more interesting lives," he says. "I believe you should build a lot of slack and not control every hour."
The employees are also motivated with annual cash bonuses.
The Zoho culture has spawned entrepreneurs. Alumni have gone on to start companies like Freshdesk (a cloud-based customer-support platform that competes with Zoho), Voonik.com (an online fashion retailer) and Zarget (Web optimization software).
Vembu works on strategy and keeps tabs on a favored metric, customer response. "Today the feedback loop is instantaneous," he says, "so you know if you are on the right track or not."
Additional reporting by Alex Konrad.