Zoho IPO unlikely soon, hints Sridhar Vembu; focus on R&D initiatives

Zoho founder Sridhar Vembu said the company will not seek an IPO soon, citing the success of Arattai and its focus on Bharat-specific research and development projects

The success of Arattai, a messaging app developed by Zoho Corporation, indicates why the company will not go for an initial public offering (IPO) in the near future. In the last three days, Arattai’s traffic zoomed 100-fold, with sign-ups rising from 3,500 to 350,000 per day.

 

"We understand the push for Zoho to go public. But let me state the reality: Arattai would very likely not have been built by a public company that faces quarter-to-quarter financial pressure," its Founder Sridhar Vembu posted on X, calling it a “hopelessly foolish” project, as even its employees had expressed concerns regarding traction. "We built it because we felt we need that kind of engineering capability in Bharat. Imagine saying all that to Wall Street or Dalal Street!" Vembu added.

 

The company is adding infrastructure on an emergency basis for another potential 100 times surge, he said. “That is how exponentials work.”

 

Zoho has several other research and development projects planned for the future, including compilers, databases, operating system, security, hardware, chip design, robotics, and AI among others. "In addition, we have invested in many R&D-intensive companies that we know won't make money soon," he added.

 

Vembu said that Zoho is kind of an industrial research lab that also makes money to fund itself. "We essentially ignore short-term profits, as long as we don't lose money. And we have a culture of founders and senior executives living frugally, like how good scientists and engineers in ISRO would live. To us, that is the essence of Bharat. Japan operated that way when it was developing," he added.

 

The company had planned a big release of Arattai by November, with a lot of features, huge capacity addition and marketing push. "As we add a lot more infrastructure, we are also fine-tuning and updating the code to fix issues as they arise. We have all-hands-on-deck working flat out," he said.

 

Last week, Union Education Minister Dharmendra Pradhan had urged citizens to adopt homegrown digital solutions and batted for Arattai. The name Arattai roughly translates to “casual chat” in Tamil. The application includes group chats, voice and video calls, stories, and broadcast channels. Union Minister for Electronics and Information Technology Ashwini Vaishnaw had also asked people to switch to Zoho’s platform in a push towards “Swadeshi” adoption.

 

Zoho is particular about the privacy and security of its users, versus the trend of trading user data for advertising profits by several industry players. It pledges not to monetise any personal information.