India needs tech companies that have $100B in revenue, not valuation: Zoho’s Sridhar Vembu

Sridhar Vembu, CEO of Zoho Corporation, has reiterated the need for India to develop technology companies focused on achieving $100 billion in revenue, rather than valuation.

In a post on X, Vembu argued that India requires such companies to steer economic upliftment, pointing to the rise of many global tech firms in China over the last two decades.

“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. China has such world champions in plenty now, and they grew up in the last 20 years,” Vembu said. 

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

“What will take us there are visionary dreamers and builders who are in it for the long haul and are able to balance their long term vision while learning to pay the bills and keep the lights on short term,” Vembu added. 

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According to Vembu, excessive focus on valuation can detract companies from long-term vision. He urged entrepreneurs to concentrate on revenue growth.

He further warned that stock bubbles and easy funding can distract companies from growth. 

“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."

Although he did not name the company, Vembu’s comments come days after Freshworks slashed around 13% of its global headcount, impacting 660 employees, out of its 5,000-strong workforce.

The Nasdaq-listed company also announced that its board of directors has approved a stock repurchase programme, authorising the buyback of up to $400 million in outstanding Class A common stock.

“Valuation should be the long-term outcome of a million things done right (along with a million other things that went wrong and taught us lessons along the way!) but when that valuation metric becomes the target, it becomes useless (Goodhart's Law),” Vembu said.