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'Indian tech companies need to focus on revenue, not valuation,' says Zoho CEO Vembu

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Jaya Vishwakarma
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Sridhar Vembu

Zoho CEO Sridhar Vembu

Zoho CEO Sridhar Vembu, in a recent post on X (formerly Twitter), urged Indian companies to focus on revenue, not inflated valuations. Vembu posed a challenge, questioning whether India could produce $100 billion tech companies in revenue rather than valuation.

"Can we build $100 billion (revenue, not valuation!) tech companies from India? India needs a lot of them if we have to lift our people up," he wrote on X.

"I will tell you what won't get us there. What won't get us there is endless focus on valuation," he said.

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He highlighted that successful companies in countries like China built their value by focusing on long-term vision and revenue, suggesting India must do the same.

According to Vembu, India could achieve similar success if it shifts its focus to building companies that generate real, sustainable revenue rather than being obsessed with stock prices and market speculation.

He argued that an overemphasis on short-term stock price can distract companies from sustainable growth. Instead, he recommended a balanced approach of innovation and disciplined cash management to ensure that companies "pay the bills and keep the lights on."

"Stock bubbles actually distract us from the goal because the focus shifts to optimising the valuation short term - and company managements start to obsess about getting the stock price up. An extremely loose funding environment also distracts us because we never learn the discipline of paying the bills."

"Valuation should be the long-term outcome of many things done right," Vembu said, adding that "when that valuation metric becomes the target, it becomes useless (Goodhart's Law)."

Netizens reaction

The post has since gained significant traction, crossing over 184,000 views and receiving more than 3,800 likes.

Many people took to the comment section to share their thoughts, sparking a discussion on how to build strong Indian tech companies.

"Should we try to build one $100B company or 100,000 $1M companies?" He suggested that in any $100B company, much of the value is concentrated among a few top individuals.

Vembu responded by emphasizing the importance of building large companies with diverse capabilities. "Think of how many things Apple does well, from chip design to cloud databases. Not all of them can be purchased from the 'market," he replied

"Doesn't it depend on the competitive advantage. Only niche companies can remain small and still compete. Else they won't survive. Anycase these are not mutually exclusive cases. Both can coexist so long as they are strategically unique," another said. 

"India should not mimic China’s growth story, and instead should carve its own based on a value system that is empowering for the workforce. China has often relied on a top-down approach with limited focus on worker rights, environmental sustainability, and social equity. India, on the other hand, has the opportunity to create a growth model that balances economic development with human dignity and environmental responsibility," a third noted.

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