Sridhar Vembu is the founder and CEO of AdventNet, the company behind Zoho. Forbes calls him The Smartest Unknown Indian Entrepreneur:
The result? A 100%, bootstrapped, $40-million-a-year revenue business that sends $1 million to the bank every month in profits.Doing what? you might wonder.
Selling network management tools, to be precise. But with a unique twist. Vembu employs 600 people in Chennai, India, and a mere eight in Silicon Valley. Imagine what that does to his cost structure!
That cost advantage isn’t as great as it used to be. Labor arbitrage can only go on so long — which is why Vembu looks for bargains within the Indian labor market:
Not only that, in India Vembu’s operation does not hire engineers with highflying degrees from one of the prestigious India Institutes of Technology, thereby squeezing his cost advantage.“We hire young professionals whom others disregard,” Vembu says. “We don’t look at colleges, degrees or grades. Not everyone in India comes from a socio-economic background to get the opportunity to go to a top-ranking engineering school, but many are really smart regardless.
“We even go to poor high schools, and hire those kids who are bright but are not going to college due to pressure to start making money right away,” Vembu continues. “They need to support their families. We train them, and in nine months, they produce at the level of college grads. Their resumes are not as marketable, but I tell you, these kids can code just as well as the rest. Often, better.”
If you’re not familiar with Zoho, it is a Web 2.0 alternative to Microsoft Office — with an extra piece:
It also has a hosted customer relationship management service that is free for very small companies and only costs $10 per user per month for larger ones. It competes with Salesforce.com, which charges $65 per user per month.Marc Benioff, chief executive of Salesforce.com, has made an offer to buy Zoho for an undisclosed amount. Benioff seems appropriately nervous, since Salesforce.com’s sales and administration costs are high, eating up most of his earnings. Can he afford to compete if Zoho undercuts him at such a dramatic scale?
Vembu has turned Benioff down.