The Inspiring Story Of Zoho: A Bootstrapped Million Dollar Giant

The bootstrapped giant series is based on Velocity’s deep-rooted belief that small but viable business ideas can scale and be highly profitable without VC Funds or angel investments. Inspired by the mantra that chasing customer satisfaction is always more profitable in the long run than chasing investors, our series covers stories of entrepreneurs and their brands who made it big. 

We at Velocity celebrate heroes who build a healthy, profitable business on their own without diluting ownership. There is a lot we can learn from them, and that’s precisely why we started the bootstrapped heroes series. 

Today, we bring you the story of one of the most successful homegrown brands – Zoho and its founder Sridhar Vembu. This is a story of resilience, determination, and excellence that has inspired many! If there is one thing you read today, this must be it 🙂 Read on!

How It All Started

Most of you would have known Sridhar Vembu as the founder of Zoho Corp, but did you know he was not associated with the company from the beginning? Yes, this came as a surprise to some of us, too!

Zoho (known as AdventNet at that time) was started by Vembu’s two brothers, Kumar Vembu and Shekhar Vembu, along with Tony Thomas, in 1996. Kumar Vembu and Shekhar Vembu were working from their home in Chennai while Tony Thomas was running their US entity. 

Sridhar Vembu was not actively involved early on in the business and WAS working in the US after his Princeton PhD. It was only in 1997 when Tony, who was visiting a Las Vegas trade show, asked for help with recruiting somebody in sales that would be willing to sign on for the exposure that Sridhar stepped in.

Sridhar enthusiastically agreed to do the sales himself and went on to print some business cards as “VP of Marketing and Business Development, Advent Network Management.” As it turned out, they won multiple contracts in the event, and from there onwards, Sridhar Vembu joined Zoho as a sales personnel in the US, while their Indian branch focused on R&D and product development. 

Zoho’s journey to success was not easy, and they had their fair share of hiccups as they tried to keep the business running. Being in a highly competitive market, they knew that building new products was key to survival and growth. Zoho’s early management chose to reinvest all their revenues towards the development of Web NMS rather than pay themselves any salaries. It was only in 1998 when sales crossed $1 Million that they started paying themselves and went on to hire a sales team. In the year 2000, Sridhar Vembu officially became the CEO of Zoho Corporation. 

The clear vision and grit of Sridhar Vembu were instrumental in Zoho’s success., Zoho’s growth journey reflects Sridhar’s dream of building global products in India. While Zoho’s competitors kept raising money or acquiring small companies, Sridhar Vembu and his team were able to build new products internally, all the while ensuring healthy revenue growth.

Started as a Network Management company under the name of AdventNet, Zoho (as it is known today) now offers more than 40+ applications as a complete business operating solution. With more than 10,000+ employees, and  60 Million users Zoho achieved yet another milestone in 2021

Sridhar Vembu, famously known for turning down VC Funds, is an inspiration to all entrepreneurs who Sridhar Vembu, famously known for turning down VC Funds, is an inspiration to all entrepreneurs who aspire to build successful, bootstrapped businesses. Shridhar Vembu believed in the company’s organic growth, and by focusing on unit economics, he made sure that Zoho can generate cash flow from day one and grow organically. Here are the entrepreneurial lessons that you can learn from Zoho’s incredible journey.

What You Can Learn 

  • Believe, Bootstrap, And Grow – Being a fan of bootstrapping himself, Sridhar Vembu describes the bootstrapping journey as starting a business from year minus five rather than the year zero. In his words, “You should look at these five years as an investment towards learning and growing your business. Utilize this time in learning how to build the product, build teams, sell, and acquire customers for your business. No business school can teach you how to do business. You can only learn business by doing it in the real world.” 
  • It’s OK To Make Mistakes – Building a business requires you to make decisions at all times. Sometimes, you might end up making some bad decisions that you might regret, despite being careful. Don’t regret making these mistakes in your entrepreneurial journey. As Sridhar Vembu says, “I spent 10 to 15 Lakhs of my own money making mistakes. The very first product that I tried to launch didn’t even get off the drawing board.” 
  • Scaling Business Requires Long-Term Thinking – There are always exceptions where you read stories of a few businesses achieving great success very quickly. But that’s not the case for most companies. Most entrepreneurs learn from their experiences, and these experiences take time. Apart from revenue growth, as an entrepreneur, you need to build the right talent pool, company culture, and managerial skills along the way. Take each day as an opportunity to grow your business and yourself into the role. 
  • Your Employees Are Your Key To Success – You might have faced challenges in hiring the right people; most smart professionals want to work for global brands and might be skeptical about joining a reasonably new company. So how do you solve this lingering issue? Hire from your network and work consistently on training the employee pool. Zoho started focusing on employee training early on in their journey; in fact, the first 100 employees were trained directly under their founder – which set the foundation of their company culture. Zoho is extremely vested in its employees success, they’ve even gone as far as hiring students straight from high school and training them for software programming internally.
  • Focus On Your Niche Initially Before Diversifying – Identify the niche where you can solve the customers’ needs and start from there – entering these markets is your best bet because of the less competition. Once you start making money, diversify to build more businesses and eventually more revenue. Zoho’s first revolutionary product was WebNMS, an enterprise scale Internet of Things platform built on SNMP protocol which till date earns a couple of million dollars for the company. Only after seven years of stable business did Zoho expand and launch their subsequent division, Manage Engine. Zoho today has more than 44 products under their umbrella.
  • Control Over Your Business Is Necessary – Keeping your company bootstrapped is an intelligent way to grow your business. Rather than diluting your ownership by raising VC funds, focus on steady cash flow and grow steadily at your own pace. Zoho is a perfect example; early on in their business, they knew three things: they wanted to stay private, didn’t want to raise money, and didn’t want to sell. It was easier for them to pivot and make hard business decisions when required, as they had complete control over their company. 

“What is good for investors is not necessarily good for customers or employees’ is why we have remained private at Zoho.” – Sridhar Vembu, Founder Zoho

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  • Be Committed To Your Business –  The most crucial learning any entrepreneur can get from Sridhar Vembu’s journey is their commitment towards their business. In 2000, Zoho was approached by a VC fund with a term sheet having an exit/ liquidity clause after seven years of investment; Sridhar Vembu rejected the offer right away as he was determined to grow the business. They grew steadily till 2000, but at one point during the dot-com burst in 2001 were left with only 3 paying customers (from an initial base of 150). Without losing hope, Zoho utilized their resources to diversify their portfolio and launched their most successful product – ManageEngine. 

Zoho is a living example of how entrepreneurs can build great businesses without external funding. With this inspiring story, we bid adieu for this month. We hope you enjoyed reading it as much as we relished writing it. Stay tuned for more such inspiring stories!

Being India’s largest revenue-based financier, Velocity provides founder-friendly revenue-based financing to growing DTC businesses. If you are a D2C brand looking for funding to manage your inventory and marketing needs, apply here, and get funded within 7 days.

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