Leading A Public Company A Lot Harder Than Running A Private One: Zoho’s Sridhar Vembu

SaaS giant Zoho’s cofounder Sridhar Vembu believes that leading a public company is a “lot lot” harder than running a private company. 

In a post on X, he termed helming a listed company akin to being on the treadmill all the time, adding that a private entity can invest in long-term research and development (R&D) and infrastructure without worrying about quarterly numbers.

His comments came in the backdrop of Girish Mathrubootham stepping down as the CEO of Nasdaq-listed SaaS company Freshworks. Prior to founding Freshworks, Mathrubootham served as the vice president of product management at Zoho for 12 years and worked closely with Vembu. 

The Zoho CEO also said that the “pressure” of managing the stock price of a public company could potentially be relentlessly brutal and could eventually lead to employee burnout and attrition.

“Personally, as a public company CEO, I won’t be able to live in a remote village and work on my own deep tech projects along with the school, the farm and rural works – the pressure to manage the stock price would be brutal and then I would have to transmit that pressure to everyone else in the company. That relentless pressure leads to employee burnout and attrition,” said Vembu in the post on X.

The Zoho CEO concluded the post by saying that the SaaS firm continues to remain private because he wants to work with people on long-term critical projects. 

In response to a question about how remaining a private company could serve the appetite for growth, Vembu said it is “much harder” for a listed company to grow people without pushing its employees too hard. 

“We are growing and promoting people as we grow, without pushing people so hard they burn out. We can afford that balanced attitude as a private company. Much harder as a public company,” responded Vembu. 

Responding to the post, founder and CEO of Capitalmind, Deepak Shenoy, opined that the move to list on bourses are “more about” raising funds, creating value for employees and to use “stock as a currency to acquire”. 

He added, “The downside is constant price feedback, but even Amazon, a very forward thinker, saw stock price plummet 90% once. Markets eventually reward long term thinking, but you should also ignore short term prices”.

The comments also came at a time when Indian new-age tech stocks continue to be on an upswing after the bloodbath of 2022, which saw stocks of many startups tank by half. However, things have been on the mend since the latter half of 2023 as more and more companies turned profitable or aggressively cut down their losses.

Meanwhile, Zoho continues to be a profitable bootstrapped venture. Its net profit rose 3% year-on-year (YoY) to 2,836 Cr in FY23, while operating revenue jumped to INR 8,703.6 Cr in the year ended March 2023 as against INR 6,710.7 Cr in the previous fiscal year.

In September last year, Zoho became the first bootstrapped company to cross the 100 Mn user mark. Additionally, Vembu recently unveiled his new venture Karuvi, a power tools manufacturing company, while Zoho launched a new business division, Zakya, in the country to cater to the retail businesses.