Zoho, Now Built From Rural India
At a day-long tete-a-tete during the launch of Zoho Desk at Tenkasi, its co-founder Sridhar Vembu uncovers the entrepreneur, the strategist, and the Buddhist in him.
As soon as I set foot into Tenkasi, while acres of green, carpeted lands and chill winds jolt me for a brief, I soon begin enquiring with the locals of the whereabouts of Mathalamparai, where one of Zoho Corp’s Southern offices is situated. And, in that typical Malayalam-blended Tamil, almost every localite unanimously responds with reports of a huge office, global company, numerous employees and such. Naturally, having been raised in a metro all my life, I imagine a Cognizant-like setup, with a large group of formally dressed employees diligently peering into their systems, only to see it go up in smoke that afternoon.
Zoho, at Tenkasi, could easily be misplaced by a rookie.Set in the middle of sprawling acres of farm lands, almost at an intersection where three lanes converge, lies the 15 acre box-shaped building, camouflaged amidst still more greenery. Inside, employees, unlike in a typical corporate setup, move around at ease in Veshti (dhoti) and Jibba (a long shirt), preparing for the launch, that evening, of Zoho’s new product, Zoho Desk. Further behind emerge churning sounds of mortar and wheeling cranes, and I’m told the office is being expanded to thrice its current size to accommodate more employees. “Many of the 150 employees here are either from Zoho University or from nearby towns. In an age where search of wealth and standard of living is driving people away from their home, thus making them lonely, we try to build a culture where employees feel at home at their workplace,” opines Sridhar Vembu, its co-founder.
That Vembu prioritises his employees and company’s culture ahead of profitability is no trade secret, as is the fact that Zoho is one of the few bootstrapped and successful companies serving global customers from India. But, why Tenkasi? I ask him and in his inimitable style he recalls a famous scene out of the 1989 American movie, Field of Dreams where the Shoeless Shoe Jackson (played by Ray Liotta), jogs across bursting fields and asks Ray Kinsella (played by Kevin Costner);Is this heaven? And says Kinsella, No it’s Iowa!
Wits apart, over the course of our conversation, surface apparent reasons for his move.Foremost being, right from its early days, Vembu has had a firm footing in India, having been raised and spent plenty a summers in Umayalpuram, a village in Thanjavur (Tamil Nadu), where he was born and raised. Furthermore, a strong belief he harboured and still does, is the alienation modern society creates, especially on people who move away from their home to work in far off regions. “When these people move to a big city, they are lost. It’s ironic how we want to achieve great things at the cost of losing ourselves,” he remarks and adds, “As much as we like to think we’re creating focussed, global citizens, that’s not what most people are. Many want to just be attached to a place they can call home.”
A second, more atypical reason for Zoho to build in rural India was to turnaround what the GEs and Citrix Systems of the world were doing; moving from suburbs to downtown, in turn drawing local talent away and making cities unaffordable. “There’s a notion that in cosmopolitan areas, pool of potential workers with relevant skillsets is sufficiently large. They also want execs to have access to high quality restaurants and hotels,” he points out. While, in this stride, the move to Tenkasi was more recent, another classic move Zoho made to disprove this theory was to setup Zoho University (earlier known as AdventNet University) in 2005.
The University recruits high-school graduates from Tier II and Tier III cities and towns, and provides them with a 24-month contextual training, later engaging them in interesting job roles. As he candidly admitted in a 2012 interview with The Smart CEO, “A vast majority of students, especially those who attend second-rung colleges, learn very little; it is a waste of time and a waste of parents’ money. We felt we could turn the college education model on its head.”
And he did. Currently, with centres in Tenkasi and Chennai, the University has trained close to 350 students, and nearly 15 per cent of the company’s staff comprises graduates from here.
Looking Within, For Development
Turning to rural India for talent not only earned Zoho employees with corresponding skill sets, but also became one of the primary reasons for Zoho Corp to build a profitable business with productivity and frugality. Take for example the pivot Vembu and his team made to tackle the dotcom recession which hit global markets in the 2000s. With over 600 engineers in India (a portion of them from Zoho University) and eight sales and marketing employees in California, Vembu hustled his teams to focus on R&D and new product development, to launch a range of new, unique yet cost-effective products; including Zoho, ManageEngine and WebNMS. While on one hand, the products replaced the suite of Microsoft Office products, productivity and collaboration applications on the cloud, on the other, they were priced at one fourth the cost their competitors’ products.For instance, at that time, Salesforce had priced its enterprise CRM product at US $125 per month per user, while Zoho offered its CRM at US $25 per month per user. “What we did different was to adopt an engineering-centric approach, with marketing spends being fairly low, while at Salesforce, the whole model was marketing and sales-driven,” he explained, during an earlier interview with The Smart CEO.
The Art of Product Development
Of course, today, the tables are turning. Zoho has now resorted to mass advertising and as Vembu adds, increased spends on marketing, partly because now he believes he can confidently tell the world; we know how to develop a good product.
While Zoho.com, WebNMS and ManageEngine remain the key business divisions at Zoho, serving a lakh customers across 122 countries, Vembu’s sights on the product development front are set higher; he wants Zoho to become the one-stop platform for all software needs (for businesses); with Zoho, on one hand, developing a suite of products to implant into a client’s business, and on the other, enabling clients to develop their own apps, as in the case of Zoho Creator, which helps Zoho partners, ISVs, IT services companies, domain experts and developers build custom applications for their business. “We’re currently fulfilling 80 per cent of our clients’ OS (operating system) needs. The goal is to cover the remaining 20 per cent,” he reveals.
The game plan to achieve this is quite precise; one, creating a combination of raw talent equipped with the right skills, and two, specialisation into specific verticals (on top of the horizontal platform), such as Zoho for manufacturing, healthcare and analytics. “We want to touch a billion users as well, which may take a little over a decade,” he estimates.
The Unseen Path to Profitability
Over the course of the day, a striking feature about Vembu was the ease with which he indulged in chatty conversations with the students at the University, as much as with the employees seated within. The response to this reveals the Buddhist side of the tech evangelist. “While leadership and decision-making is crucial to an organisation, I don’t see why we should lose the human connection,” he opines. A self-confessed Modi fan, he explains how, though Modiholds a powerful title as a Prime Minister, he doesn’t come across as an unapproachable leader. “Why take yourself so seriously and throw your weight around all the time?” he asks.
An approach as this might also be why Vembu makes the ‘art of letting go’ seem like a walk across the park. “Trying to micromanage people is not fun. If I start keeping track of what each and every employee is doing, why they are slacking and such, I won’t have time to do anything interest. It’s suffering. Once you realise that, you let go. That’s Buddhism,” he puts, candidly.
One can say, his management style and the value systems he has brought into the business is, to an extent influenced by a book titled “The Road to Serfdom” written by Austrian British Economist and Philosopher, Friedrich von Hayek. The book, said to be written between 1940 and 1943, elaborates on the danger of developing centralised goals and ‘the will of a small minority being imposed on the people’, which may result in loss of individual freedom and create an undemocratic society. Although written in the context of the Government intervention in markets, Vembu draws a parallel to Hayek’s ideology in creating a decentralised structure within his own organisation. “This book has deeply influenced how I build my company. I try not to take a decision where I don’t need to. It gives the employees the personal space to prosper with liberty and dignity,” he states.
Keeping Context at the Core
He views his company as a University, where the core idea is to learn continually and contextually. Given the pace of change the technology and software industry is witnessing today, it is an unwritten rule that in order for companies such as Zoho to stay ahead of the curve, they need to constantly ask; what is new? “Virtual reality, for example, is the in-thing today. Now, everybody is just trying to play with the tool, testing it out. But in the process, if we find something interesting, we’ll set up a team and before you know it, it becomes a mainstream product,” he explains.
As we come to the end of our discussion, I ask Vembu a last question; how do you retain your employees? And pat comes a response laced with a pinch of satire, “There’s a quote I use a lot; when a measure becomes a target, it ceases to be a measure. Meaning, if you associate something like employee happiness to a scale of one to 10, and set yearly targets for happiness, the whole purpose of the exercise is lost.”
As we wrap up the interview, there come calls from the nearby vendor, inviting us for a mound of fresh coconut water, known to be a speciality at Tenkasi.
That patience and endurance is key to the success of any product is evident from the five-year timeline that the Zoho team at Tenkasi allowed itself, before launching Zoho Desk this November. “Even though the product was ready a year ago, we spent 12 months testing it to be absolutely sure that it works,” said Sridhar Vembu, its co-founder. Zoho Desk is a context-aware helpdesk software which helps companies deliver the right solutions to customers, at the right time. Thus far, it has handled 50 million tickets for 20 million customers, and happens to be the sixth product launched this year, apart from Zoho Notebook, AppCreator, SalesInbox, Marketplace and Developer.
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