In an exclusive interaction with Business Today, Sridhar Vembu, Co-founder and CEO of Zoho Corporation, who was recently awarded Padma Shri said that it was a "little complicated feeling" given that he has been amply rewarded by our country and the affection he has got from his employees. He spoke on a whole host of issues including start-up valuations, SaaS landscape, work culture and what to expect from Zoho's stable in 2021. Here is an edited excerpt from the conversation.
Business Today: Zoho has been at the forefront of India's SaaS ecosystem and NASSCOM expects pure-play SaaS industry to grow to $13-15 billion by 2025. How the SaaS industry is maturing in the country?
Sridhar Vembu: The global opportunity is huge. All of software is moving to SaaS model. We are talking about hundreds of billions of dollars, may be approaching a trillion dollars eventually, and we should take a good share of the market from India. Maybe 10-20 per cent is easily achievable in the short-term and longer term probably even more because we provide the engineering workforce for SaaS companies outside India. In the long-term, we need to aim to build a $50-100 billion industry out of India which can rival the software services today in term of impacts. The other thing is it also creates a deep pool of know-how which impacts other industries, because every business is now software business as Cloud is eating the world. And this deep pool of expertise also will make our other sectors much more competitive globally.
Business Today: If we are to look at the way how some companies are aggressively expanding in India fuelled by large capital infusions, what impact do you see in the short- and long-term?
Sridhar Vembu: The model of hyperscalers that we are talking here is putting a lot of steroid-driven growth, where lots of money is pumped into growth. I think the long-term impact is culture. Very few companies that can retain cultural cohesion and also growth that works. And also there is exit. You want to build something fast and exit. But for long-term companies, you need to build durable foundation. Those are also vital for Indian economy, because ours is still a developing country. We still have segments of the population, which needs to gain the know-how, skills, expertise and for that we need companies that stand the ground and stay the course.
Business Today: What does it take for SaaS companies to stand up to big tech giants of the world?
Sridhar Vembu: We have been doing that. I mean we are up against Microsoft, going up against Google. First of all, we must believe that it's possible. All these opportunities, we must seize that and then slowly build towards a bigger mission. That is what Zoho has done. It doesn't feel glamorous in the short term but it is durable in the long run.
Business Today: How do you see the whole valuation game in the Indian start-up space given that we saw quite a few additions to the unicorn club in the pandemic year?
Sridhar Vembu: In fact, the best way to look at it, is what is happening in Wall Street, because what is happening in India is an echo of what's happening in Wall Street. You may have read the latest on the WallStreetBets, the whole Reddit, it truly has become a casino. Stock markets have always had a gambling element, but now in the US, it has become almost entirely gambling, and that mindset is never good. Business is not gambling, investment is not gambling and we need long-term focus. We had a similar mania in 1999-2000 and what is happening now is much worse than that. I do fear the long term consequence of it.
Business Today: Are you seeing things change on ground for MSMEs? Do you see the much-awaited tech spend happening from them?
Sridhar Vembu: In India, of course, we saw the initial pandemic-related hit later, but my sense is that things have broadly recovered. Individual companies have had more struggle, but overall, I see recovery. Also about the pandemic itself, there's no fear on the ground in India. So I'm definitely hopeful from this recovery, the MSME sector will benefit. We are definitely seeing a good flow of business, and it is increasing as months progress.
Business Today: Social media innovation today is being looked at from the lens of Indian native languages. Do you see enterprise software also adopting this route for deeper penetration?
Sridhar Vembu: Yes, it definitely has to be. Come to a village or a small town, the percentage of English-speaking people is negligible. That is the reason companies like us have to invest in Indian languages and we are doing that. In fact, part of our consumer software initiative is also defining those. Like Arattai [a free messaging application by Zoho Corporation] would support all the new languages. But we are expanding their portfolio, all that will flow back into our business software as well.
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