India’s startup ecosystem has quite a few classic rags to riches stories. Two or three friends with similar dreams come together and start a small business out of a garage. Within a few years, they raise funding, build offices in skyscrapers, onboard thousands of employees and attain the coveted unicorn status. But, that is not the story we are writing about today.
This is about a multi-billion dollar company built without any external funding, is home to 9K+ employees, boasts of zero debt and never chases IPO dreams.
Unconventional is what Zoho, one of the flag bearers of India’s SaaS industry, is made of.
The SaaS giant’s belief in building products in India that cater to the world has raised the bar for many startups in India. Since its launch in 1996, the company’s products have rivalled global products and it has also developed some of its recent world-class products from India’s villages. Its customer service software, Zoho Desk, for instance, was built in Mathalamparai, a village 650 km from Zoho’s Chennai HQ.
“My late grandmother would stress how important that I not forget our humble origin,” said Sridhar Vembu, founder and CEO, Zoho Corp in a tweet, while talking about Zoho’s recently opened office in Tamilnadu’s Ozhugacheri, around 280 Kms from Chennai. That’s the village where my great grandfather and great grandmother lived in poverty and illiteracy, he added.
The journey of Zoho and the people that have come through and influenced the company is full of such unconventional ideas. This ethos has also given wings to many entrepreneurial dreams that were born in Zoholand.
SuperOps.ai, an early stage Saas startup, is one of many startups born out of Zoho. For the startup’s cofounder and CEO Arvind Parthiban, who worked at the 24-year-old company for more than a decade, “Zoho demonstrated how to build a business in India that caters to the world, a huge advantage over companies built in the valley.”
“This is such a huge opportunity that in the last 30 years people have wanted to try and recreate this success. In fact, many of them have achieved it too. If there is one thing I admire about Vembu it is this — he always questioned the perception that the west is better than us. He was always proud of his roots and never shied away from a battle with tech giants like Salesforce or Microsoft,” the cofounder told Inc42.
Zoho Corp is one of the biggest SaaS players in the Indian startup ecosystem and has offices across seven countries including, US, Netherlands, Singapore, UAE, Japan, and China. The company has more than 50 Mn customers and more than 9K employees globally. It has more than 45 integrated online applications that support multiple business operations such as sales and marketing, finance, email and collaboration, information technology and help desk, human resources, and custom solutions like app creator and analytics.
Zoho also believes that its people are its most important asset. However, that doesn’t mean it follows a formula of hiring only from the best colleges in India or indeed the degrees one possesses. So what exactly is the Zoho formula and how does it play out? Here’s an in-depth look through the experience of the many now-founders who have come through the Zoho school.
The Making Of Zoho Schools Of Learning
The glaring mismatch between education and job skill requirements in India has always shocked Vembu, according to many of the founders who worked closely with him at the company. In 2004, curiosity had him running a poll at Zoho, which saw more than 1,000 Zoho employees voting, to find out how useful college education was for the employees and how relevant they found the ‘education’ they received at college in relation to their current job.
And, soon he realised that almost all the things “needed for the job, were learnt on the job”.
“The primary problem with college education is it is context-free, even assuming it is very good (and often it is quite bad!). We are taking an 18-year-old, and telling them “It is useful for you to learn all these things”. That message does not resonate for most youth. A single semester of a Computer Science curriculum may have courses in Operating Systems, Compilers, Machine Learning, Database Management Systems, and may be two more. All these courses are offered in the fervent hope ‘This is all necessary for you to get a good grounding in Computer Science’,” Vembu told Inc42.
Assuming that each of these are taught by the best faculty in the world (not a good assumption for the vast majority of college students!), it still leaves the problem “I have no way to appreciate why any of these are important,” he added.
Through the poll, Vembu and his team found out that there was no correlation between what they study and what they use at work.
“There were engineers doing design, designers who are doing marketing and commerce students doing programming. We also realised that we have been focussing on rote learning, marks etc,” Rajendran Dandapani, director of technology at Zoho, recalled.
Moreover, back then, Zoho was not a dream job and top colleges did not approach the company for placements, he noted. So, instead, the startup would onboard students from colleges in Tier 2, 3 cities, who were unable to start working immediately but had to be trained for many months. This made Vembu think even further about the problems in the Indian education system.
“The problem is real, it is serious and most people who have gone to college can identify with this feeling. The truth is that each of these topics they teach are important, but only in a particular context,” he said. This analysis led to the birth of Zoho University, which was rebranded as the Zoho Schools Of Learning (ZSL) in 2019.
14 years later, more than 800 graduates from ZSL are today working at Zoho.
ZSL is close to Vembu’s heart. “My dream in my youth was to become a professor. I became an accidental CEO. Zoho University allows me to indulge my passion,” he said once.
“We have ZSL graduates working in each of these areas, after a basic grounding in programming, mathematics and English for a year. When they enter a database team (as an example), they know why databases are so important. They get paid to learn and do work. That is context and motivation that cannot be matched by college,” Vembu told us.
The institute follows a no-fees model, wherein students don’t have to pay fees at all and are given a stipend of INR 10K per month. After the internship, all students are taken on the company payroll and the salary goes up to INR 25K, claims Dandapani.
“The second problem we have with college is philosophical. We are opposed to the credentialism rampant today. Universities have become mostly degree mills and that is true even in the US. As an employer, we want to take a strong stance against credentialism, which is a form of discrimination from our point of view,” said Vembu.
The Zoho Way Of Hiring
As indicated earlier, Vembu’s belief on choosing skills over degree, experience and the popularity of the college also reflects on the people they have been hiring and the Zoho mafia. According to Inc42 Plus analysis, out of 59 former Zoho employees who are now startup founders, less than three are IIT alumni and similarly few numbers are from IIM, XLRI. When looking at the macro picture, hardly any of the founders are from Ivy Leagues. In fact, the bulk of them are from leading universities in Tamil Nadu, such as Anna University, Madurai Kamaraj University and Bharathidasan University.
In fact, for most of these founders, Zoho was their first job — a whopping 44 out of the 59 founders we have identified were freshers when they joined Zoho. Talk about creating entrepreneurs from scratch!
So, what exactly drove these employees and made them such great fits to become future entrepreneurs?
For Zoho, it starts at the interview stage. The process has always focussed on the willingness to work, grow and help the organisation grow. “The first question we would ask is what have you personally created. And, we would hire only those who can answer this properly,” Dandapani said. Zoho’s culture of grow-and-let-grow and a belief in abilities and experience rather than academic background sets it apart.
Shihab Muhammed, CEO and cofounder at SurveySparrow, joined Zoho as an absolute newbie and developed his coding skills at the company. Zoho’s knowledge-sharing forums are a good resource for people to learn multiple skills ranging from coding to marketing, he revealed. Learning from these forums, Muhammed created SurveySparrow, which develops a conversational survey platform to help organisations and individuals create engaging surveys. The cloud-based customer experience platform has raised $1.4 Mn in seed funding from Prime Venture Partners.
Similarly Ranjith Kumar, founder of Bengaluru-headquartered Bevywise, also had zero experience or programming knowledge when he joined Zoho. He was a mechanical engineer by education and had worked in industrial engineering for a year before joining Zoho. Today, his bootstrapped four-year-old startup creates tools and frameworks to help businesses build any IoT or IIoT application in very minimal time.
Karthick Annamalai, cofounder of Brand Maxima, an early-stage startup that offers a Saas platform for influencer marketing, also thinks that Zoho’s unconventional processes make it a good fit for those who want to start up at a later stage.
“The day you joined Zoho was the day you started to work as well. There was no formal induction/training unlike in other organizations,” he said. Annamalai joined Zoho right out of college in 2007 and worked in two different product teams for two years.
The Art Of Creating Intrapreneurs
Intrapreneurship is something Zoho inculcates in employees from the beginning, said several former employees we spoke to. Prabhu Ramachandran, founder of Tiger Global backed-Facilio that develops an AI-driven property management software for real estate portfolios, worked at Zoho for 17 years from June 2000 to March 2017. He said, “Zoho is practically a large scale startup with its unique culture being the critical glue tying the different parts together and forming a rock-solid ship. Every team works with an entrepreneurial mindset to aim big and make outstanding products, setting the bar higher every time.” His cofounder Rajavel S also worked in Zoho during the same time period and the startup has raised a total funding of $7.4 Mn to date from Accel and Tiger Global Management.
Ramachandran also credits the startup’s success to his learnings at Zoho about extreme ownership of products, solving challenges for the global market, and making an impact in someone’s life through software. These are the anchors of his successful entrepreneurial journey, he added. According to Sadiq Sait, founder and CEO, Chennai-based uLektz, which offers a one-stop solution for higher education needs, the culture at Zoho of promoting intrapreneurship is a key reason for many Zoho employees starting their own venture. For instance, thinking on first principles, experimenting, and asking questions are the things that have helped many employees dream bigger.
“Be it building a product or improving revenue, right from the start, Zoho encourages its employees to have an intrapreneurship mindset. Each product acts like its own company. This means the head of the product has the freedom to decide what is right or wrong for the product and how that can add value to the customers,” SuperOps.ai’s Parthiban added as corroboration to Sait’s claims.
Most of the founders that were created at Zoho had access to the entire spectrum of starting, building, and running a business. Parthiban added that when one is encouraged to act like a CEO for the product they own within Zoho, they know they can repeat this success outside Zoho too. The company believes in encouraging people to be at the frontline.
“The primary way we nurture our culture is by avoiding micromanagement and avoiding drowning people in corporate-speak, metrics, processes, KPIs and so on. We do not worship metrics. We have just enough structure for us to stay organised and be productive, but not so much that people feel suffocated. I personally intensely dislike micromanaging anyone, and I transmit that to the company. This promotes a lot of autonomy, and ultimately that is what creates entrepreneurs from Zoho,” Vembu told Inc42.
Employees are also encouraged to work in different teams to understand how a business is run. Zoho also doesn’t have a rigid hierarchy or process. Anyone can go and talk to managers directly, former employees told us.
“The open work culture coupled with free internet (high-speed internet was a dream in those days) motivated me to think big. If you want to grow on your own and you are willing to put effort to succeed then Zoho is the right place for youngsters. Sridhar Vembu used to write in internal blogs on how formal processes kill creativity,” Brand Maxima’s Karthick recalled.
Troubleshooting is also something that everyone at Zoho learns on the job and something that many of the Zoho Mafia members attribute for their success outside the company. “Founders usually pull the engineers who built the feature to fix issues. Engineers end up spending most of their working hours fire fighting instead of releasing new features. I think this anecdote stayed with me like muscle memory and helped me in structuring our engineering team,” SuperOps.ai’s Parthiban added.
A Finishing School For Entrepreneurs?
On average most startup founders from the Zoho Mafia spent 3-4 years at Zoho. And, during that time they learned the tricks of the trade.
“I always wanted to be an entrepreneur. When Girish Mathrubootham first interviewed me at Zoho, I told him that I planned to stay for awhile before I do my GRE and move to the US. I thought a degree would give me the exposure I needed to become an entrepreneur. A few months in and I realised that there was more I could learn at Zoho than any college could teach me. I ended up staying for a decade,” added Parthiban.
Interestingly, before SuperOps.ai, Prathiban had founded Zarget — a marketing automation startup. Backed by investors such as Sequoia Capital, Accel Partners and Matrix Partners, Zarget was acquired by Mathrubootham’s Freshworks in 2017. Mathrubootham founded Freshworks along with a former colleague at Zoho — Shan Krishnasamy, in 2010 after leaving his Vice President – Product Management role at the company.
Today, Freshworks counts Steadview Capital, Accel, CapitalG, Sequoia Capital amongst others as its investors along with the tag of India’s first SaaS unicorn. Freshworks’ and Mathrubootham’s contribution to Indian startup ecosystem doesn’t end here. The company has acquired over a dozen startups and the founder has been one of the most active angel investors with over 20+ startup investments.
Survey Sparrow’s Muhammed also called Zoho “one of the best places to learn and grow”. He believes that the company provides workers with a makeshift family that makes them feel at home, along with some of the best mentors. He joined Zoho as a fresher and spent over 4 years at the company.
“You can talk to anyone at any level to give feedback and suggestions on everything. Being a fresher I was able to talk to the founder Mr. Sridhar Vembu quite a lot of times and even had lunch with him a few times. I don’t know if this happens in any other medium to large companies,” Vignesh S, founder, Blind Meet, a platform that enables people to meet new people in real life, told us.
In Zoho, there is a separate department for product innovation., where people keep coming in with new, innovative products and work on them. Vignesh visited the department every day, where a few of his friends worked. “It was an adventure everyday hearing the discussions there. A lot of business ideas are discussed,” he reminisced.
The highly energetic and friendly environment is something that founders recall fondly even today. “I joined Zoho when it was AdventNet back in 2001. If you are open to learning by doing, it is a good place. I joined the company when the size was less than 250. All of us were young and playful which boasted closeness and increased the energy to drive results to a greater extent,” added Bevywise’s Ranjith Kumar.
What The Zoho Mafia Learnt At Zoho
Listen to the market, don’t put all the eggs in the same basket i.e., create multiple products each complementing other, persistently improve the products and be patient, these are Vembu’s philosophies that the mafia claims to have imbibed.
“I have worked with Sridhar for the major part of my years at Zoho. His emphasis on having customers at the center of business, approaching problems with a solution for the long term, and his management style has had a huge influence on me and shaped my thought process towards customer-centricity,” said Bevywise Kumar.
Some call the place no different from a fast-paced startup. “Building and scaling business on Cloud and IoT solutions for over 17 years spurred on me the passion to solve global problems early on and build a team that is in sync with the overall vision of the company. I strongly believe in motivating teams to take ownership of their work and empower people to make decisions,” Facilio’s Ramachandran explained.
Not worrying about failures is very key for any entrepreneur and Zoho indirectly teaches that by putting the ownership on the employees. “Even though some of the projects at Zoho did not get into the products, I was always very happy about my failures. Even today, we have a few failed products within the first three or four years of Bevywise,” said Kumar.
He also added that the core idea of bootstrapping his startup is something influenced by Zoho. According to Inc42 Plus, only 14 out of 41 startups founded by former Zoho employees have raised external funding and they have collectively raised over $493.65 Mn, as per our analysis of the disclosed rounds.
Zoho Corp is not only one of the few profitable unicorns in India, it has claimed profitability since its launch in 1996. In the financial year 2019, Zoho Corp recorded INR 516 Cr in profit, representing a 26.3% hike from INR 408 Cr registered profit in FY 2018.
“Another piece of wisdom I learned at Zoho is about how to set up your marketing team. So we created individual teams to handle content marketing, digital marketing, analytics, etc. For me, Zoho demonstrated how to build a business in India that caters to the world,” uLektz’s Sait added.
A Close-Knit Ecosystem & The After-Office Learnings
As Zoho encourages and employs many fresh graduates, staying near the workplace and going for a walk or a game of tennis post work is common even today. These are the memories that former employees cherish the most even today. The after-office meetings also paved the way to learnings and newer ideas.
“Zoho is an amazing company with a culture that helps one to learn how to fly high while being grounded. The open culture of sharing knowledge and playing cricket together create a wonderful place where the employees can grow,” said SurveySparrow’s Muhammed.
The relationship built over the years moved beyond friendship and turned into business partnerships for some. The casual conversations paved the way for finding people with similar aspirations and entrepreneurial ideas. That is the reason we see many former employees joining hands to start a venture. “The ecosystem is very closely knit and we keep in touch to bounce off ideas, discuss new trends in SaaS, and help each other by lessons from success and mistakes. Some of the products that our marketing and sales depend on today are from the ecosystem,” said Facilio’s Ramachandran.
It is also not uncommon to see former employees joining companies founded by their ex-colleagues. Shihab Muhammed, who worked as a member of technical staff at Zoho from 2006 to 2009, joined Freshworks, founded by his ex-colleague Girish Mathrubootham at Zoho, in 2010 as a lead developer. Within a few years, he grew to the position of a business leader and led a Freshservice business unit with 250 people in an autonomous unit. After quitting Freshworks, he launched his own venture SurveySparrow in October 2017. “Many of the Zoho founders are good friends and people with whom I can count to have my back,” he said
Former employees also continue to support each other’s startups. Freshworks uses Chargebee, Facilio uses Freshchat, Hippo Video uses Freshdesk and more “The relationships with my ex-colleagues at Zoho extends beyond day-to-day work. In fact, I even met my wife at Zoho. We are a closely-knit community of friends and founders who have known each other right from the Zoho days. We are always ready to help each other; we exchange notes and share best practices,” added Parthiban.
He said when he was running his previous startup Zarget, he shared the office space with Facilio and Hippo Video, founders of which he had known since Zoho.
So it’s not a rivalry but a collaborative environment even after Zoho, Prathiban said.
SaaS: The Common Factor
Much of the success of these entrepreneurs can be attributed to the breed of SaaS startups from India solving global problems in the multi-billion dollar global market. And this model of software delivery, typically focusing at small and medium businesses, was embraced and established by Zoho. This has paved the path for many entrepreneurs to build successful SaaS products from India.
For instance, Brand Maxima’s Annamalai told us how Zoho (Cloud Software Suite) was just in the early days when he joined the company and the way they managed to pivot and succeeding in both was remarkable. Annamalai did the same with Brand Maxima. For edtech startup uLektz’s founder Sait, Zoho’s business model and the way its SaaS products evolved over a period of time helping SMBs leverage technology for their businesses inspired him to start something similar for higher education.
Arvind S, cofounder, Docupilot, which helps businesses automate their document workflows, also told us he learnt about SaaS businesses only after joining Zoho. “I worked in Zoho only for four years, in a short span of time I was able to learn more about how products can be built and scaled. It gave a lot of confidence to build something from scratch,” he told Inc42.
Moving Beyond Differences: How Vembu Backs The Zoho Mafia
Except for the rare differences such as Zoho suing Saas unicorn Freshworks for allegedly stealing confidential information and building a business out of it, Zoho has continued to support the founders it produces and guide them. “Sometimes ideologies don’t match. Zoho doesn’t believe in quick money. And those who want that, move on and aim for the unicorn, but they remain as friends,” said Dandapani.
Zoho’s HR team stays in touch with former employees, and many former employees refer candidates to the company as well and in some cases people come back too.
Vembu continues to teach many of them the fundamentals of running a business and also offer some tools such as Zoho invoice, wiki and writer to them at a discounted price. “We have always wished former Zoho employees well,” Vembu told us.
His one constant advice to this Zoho mafia and other entrepreneurs in India is to try to serve the underserved.
“The unserved could be a particular customer base that is ignored by other companies, it could be potential employees that are ignored by other companies, it could be potential geographies that are ignored by other companies — so the definition of “unserved” is quite broad. The reason for that advice is that when you try to serve the unserved, it creates a natural force to make you a success.”
Data Analysis by Sangam Kathiyal