Zoho CEO Sridhar Vembu has scaled a company with humility, a focus on giving back to smaller communities and playing the long game when it comes to technology, people and customer value.

Vembu's approach is refreshing and effective--not to mention a touch quirky compared to many CEOs we encounter.

At Zoho Day 2024, Constellation Research CEO Ray Wang caught up with Zoho CEO Sridhar Vembu (right) to talk about how to approach business and social good, innovation and focusing on customers. Here's are some of the takeaways from the conversation.

Transnational localism. "It's really about getting closer to the customers at one level, and just talking about business first. But beyond that, it's also putting back into communities that income needed from technology, create good jobs, in smaller communities, which people are not doing enough," said Vembu.

The approach to giving back to smaller communities is a bit part of Zoho's strategy. Zoho has offices in Chennai, India; McAllen, TX; and a bevy of other locations in UK, US, India, Egypt, Nigeria, Kenya to name a few.

"You can operate out of smaller towns and create high impact R&D. And that helps the customer from smaller places and creates opportunities for people who didn't have it before," said Vembu.  

McAllen, Texas. Zoho has built out its operations in McAllen, Texas. Vembu explained why McAllen was chosen.

"We looked around for communities that are small, but not too small and there are enough people that are similar to our value system, and the demographic where we can recruit and train people and there's a low cost of living and affordable housing. We want this for our employees because we want to keep them forever. If our employee can buy a home and build families, they're more contented. They're more likely to be satisfied employees, which will lead to more satisfied customers. McAllen checked all the boxes, and then we sent an email to the Mayor's office and got an instant response."

Taking a long-term view. Vembu said Zoho is running its own schools, which is about giving back but also building a talent base for the years ahead. "That requires us to take a long-term view that you cannot just go hire for today and then be productive two weeks later," said Vembu. "40% to 50% of hires don't actually work out. In an interview process, you really cannot tell culture fit and a lot of things that go into making someone successful at work. We believe that first we have to nurture the talent and that automatically brings in good people to us over time."

Jobs, automation and AI. Wang asked Vembu about the future of meaningful work, AI and automation and what a long-term view looks like. Vembu said there has to be a way to balance automation and human work as well as wealth.

"We have to balance this out if we want a sustainable society so there isn't a civil war. We have to balance things out. We cannot just create all the wealth in one place. Income as a percentage of GDP is at all-time lows or near all-time lows. Profit as a percentage of GDP is near all-time highs. This can't go on forever. This has run this for 20, 30, 40 years now, but the bills are coming due. We have to think differently. This is not a political statement. I actually believe that the solutions aren't in the political arena today. We have to try new experiments like a scientist trying new things."

Zoho's technology investments. Vembu said the company's strategy has been evolving rapidly from building individual products to complete platforms that appeal to large companies with more complex requirements. Zoho is also infusing artificial intelligence throughout the platform.

"We are particularly very happy with smaller domain specific models, which are also cheaper to run," explained Vembu. "We're getting good payoff from the approach where we have a mix of smaller models, not one chain model."

Vembu said Zoho has long-run experiments on raising developer productivity with smaller models that ensure the correctness of code that will build future products.

Giving customers choice. Vembu said that software as a service should be about freedom of choice and simple payment plans. He said:

"We actually believe in two cardinal virtues as a company to keep ourselves grounded. One is humility. The customer always comes first. Their needs take precedence over immediate revenue. The second is contentment. We have to stay contented because there are times where you end up chasing growth for its own sake. And companies get in trouble when they do that. These two principles we practice which is why we say that if you don't need all of this just buy the stuff you need."

Zoho offers a monthly plan but doesn't force customers to pay annually. In other words, Zoho has reached hit scale with $50 a month as other vendors have gone from that sum to $500 today and priced companies out.

Enterprise class software for SMBs. "SMB software is relegated to a niche where it is not as powerful and doesn't scale," said Vembu. "We deliver so you can go from two employees to 200 to 20,000 to 200,000. We will scale with you."

Wang noted that one large services firm asked whether Zoho could scale to a 500,000 to 1 million user organization. Vembu said Zoho has won a deal that size but hasn't announced it yet. "We will show you if you give us the opportunity," he said. "We will not say give us the money. Give us the opportunity. We'll show you."

Perils of the hard sell. Vembu said Zoho isn't into the hard sell and pushing limits for sales. "We let the customer slowly figure us out and understand us. I want to sleep at night. I don't want to piss off customers by pushing hard. A lot of people do that and the result of it is employee burnout," said Vembu. "Not a lot of CEOs can't do this job for a long period. I've done this for nearly 27 years now. I'm still going strong. I say okay, we can win this customer next year. Let's not push this hard if you're not ready."

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Business Research Themes

Next-Generation Customer Experience, Data to Decisions

Roles

Chief Executive Officer, Chief Information Officer

Tags

Zoho, leadership, thought leadership