Sridhar Vembu: The billionaire who gave up the CEO office to focus on R&D

Vembu's decision to step down as Zoho CEO comes at a critical moment, one when artificial intelligence (AI) is rapidly changing the computing landscape

A billionaire who left a comfortable life in the United States to settle down in a village called Govindaperi, around a 40-minute drive from Tenkasi in Tamil Nadu. That's the first thing that everyone mentions when they talk about Sridhar Vembu, the poster boy of India’s software-as-a-solution (SaaS) ecosystem.

 

So it came as no surprise when Vembu decided to step down as the chief executive officer of Zoho and take charge as the chief scientist of the company, overseeing the research and development division. His co-founder, Shailesh Kumar Davey, will take over as the new group CEO.

 

Vembu's decision comes at a critical moment, one when artificial intelligence (AI) is rapidly changing the computing landscape. He himself admits that the next challenge will be R&D. "The future of our company entirely depends on how well we navigate the R&D challenge," he said in his post on X.

 

However, Vembu's story is much more than just Zoho. Vembu was born in 1968 in Tamil Nadu’s Thanjavur. His father worked as a stenographer in Chennai’s High Court, and his mother was a homemaker. Despite his modest beginnings, it was his academic prowess that helped him scale the heights he did. He secured an impressive 27th rank in the prestigious IIT-JEE and completed his degree in electrical engineering from IIT Madras in 1989. After earning a Ph.D from Princeton, he joined Qualcomm as a wireless systems engineer. “I tried to build hardware on my own in Silicon Valley and spent $20,000-$30,000 on it, but that was the first failure. It taught me that I should stick to software," he said in an interview with Business Standard.

 

It was at this time, in 1996, that he started AdventNet along with his family and his friend Tony Thomas. By 1998, AdventNet got its first major client, Cisco, and sales soon crossed the Rs 50 crore mark. However, the dot-com crash in 2001 hit the firm hard, and its client base reportedly crashed from 150 to just three. This was when Vembu’s resilience stood out as he declined offers from potential buyers. It was during this time that the launch of ManageEngine, an information technology (IT) management tool for mid-sized companies, helped him turn around the fortunes of AdventNet.

 

Following this, the launch of Zoho CRM in 2005 helped the company gain momentum and attracted more than a million users by 2008.

 

The company name was also changed to Zoho, a derivative of ‘small office/home office (SOHO).’ The formal rebranding to Zoho Corporation happened in 2009, and the company expanded its product offerings significantly. According to Vembu, the ‘z’ made it a “cooler name” and was the contribution of Zoho’s Chief Evangelist, Raju Vegesna.

 

Revenue in FY23 stood at Rs 8,703 crore, up 30 per cent from the preceding year's Rs 6,710.8 crore, according to RoC filings by the company and sourced from Tofler. The growth at Zoho comes even as the demand for IT services and products has been affected due to macro uncertainty. Vembu always wanted to keep Zoho independent, targeting long-term growth. As per the 2024 Forbes list, Vembu and his siblings have a net worth of $5.8 billion. Vembu and his two siblings own a majority stake in Zoho.

 

The company is now on a rural expansion drive using a hub-and-spoke model. Zoho decided to adopt this model of offices in 2020 to cater to a distributed workforce and as part of its 'transnational localism' strategy during COVID — being locally rooted while staying globally connected. The hub offices are ones that can accommodate 1,000 or more employees, while the spoke offices are smaller, with up to 100 employees.

 

The company currently has hub offices in several locations like Chennai, Tenkasi (where it opened shop 11 years ago), Renigunta, Tiruppur, and Trichy, in addition to several spoke offices.

 

Vembu is also planning to establish semiconductor manufacturing units, with plans to set up such units in Tamil Nadu, Karnataka, and Odisha, according to reports. The government conferred the Padma Shri, one the highest civilian honours in the country, on Vembu in 2021.