The ₹8,000 Cr. profitable SaaS story 💸
Zoho - the poster boy of India SaaS.
But before we get into it, I have something super-special for you. A free pass to witness the mecca of growth - the 20th Edition of the GrowthX Demo Day (next Sunday). It’s online & open to newsletter subscribers for $0 cost. A place where you’d witness GrowthX members diving deep into real business problems to scale the “Dhandha” of few interesting hand-picked companies 💫
Coming back to Zoho’s story.
Zoho makes more money than Ola, Groww, and Lenskart “combined”. With ₹8,700 crores in revenue and ₹2,800 crores in profits, the startup has never raised a single rupee of funding in 28 years.
And it is not being run from Bangalore, Delhi, or Mumbai, but from “villages of Bharat”. Started by Sridhar Vembu - someone who left the shiny world of Silicon Valley and took a bet on the Indian story. Let’s dig —
But, how did it start?
The company didn’t start with Sridhar as a founder, nor did it start with the name “Zoho”. Btw, Sridhar is a PhD from Princeton University and an IItian who joined the company as a salesman in 1996. Back then, the company had a different name “AdventNet”. But, Sridhar got the CEO seat after 4 years and created history by making Zoho a global name later.
So what did Zoho crack?
Swiss Knife Approach.
Well, if you’re still wondering what Zoho does. It’s a proper B2B SaaS (Software-as-a-service) — a collection of tools for multiple use cases like HR, finance, accounting, CRM, and so forth. An unsexy boring tech business.
Zoho knows its ICPs (target customers) too well. They focus on SMBs (companies with < $25M sales and < 25 employees), who prioritise cost over polish. Bundle of 50+ tools for multiple functions at a cheap price, great integration and the convenience of one vendor. Fun fact: one of their bundle offerings “Zoho One” made ~50% of their revenues in FY22.
Also, we thought, why not go ahead and check the price difference ourselves? — Hubspot 3X more expensive than Zoho👇
Innovation Philosophy.
Zoho spends 60% of its revenues on R&D - almost 2X of what Salesforce does today. Of course, Salesforce is a giant and it’s not an apple-to-apple comparison but still shows the focus of this desi startup that is competing with the biggest software giants. Their innovation obsession—
Making own version for every 3rd party software like Zoom, Slack, Google docs in-house — zero external dependance. Making loads of deep-tech investments (looking 10 years ahead)
Drones: Yali Aerospace
B2C: Whatsapp competitor
EVs: Ultraviolette Automative
Semiconductors: $700M in a plant
Rural Hiring Insight.
Sridhar Vembu isn’t hiring from top colleges or big cities. Instead, he's tackling India's up-skilling & unemployment problem. Aiming to do 85% of their hiring from rural regions in the next years.
13 years back, Zoho started Zoho Schools - a program to train & upskill folks who’ve completed Class 12th and eventually hire them. The logic is simple: Create Opportunities → Uplift People → Earn Loyalty & Passion. Zoho’s aim is to 2,000 people from rural areas—14% of their current workforce.
They use a unique Hub & Spoke model where the main HQ is in a big city and the small offices are in villages so that employees can stay with families and come to main offices for big events like trainings, townhalls etc.
Fun fact: Rural kids are also paid a stipend of ₹10,000 to incentivise learning. Masterstroke? Indeed!
That’s not all, we launched a new episode of GrowthX Wireframe, where we cover the Zoho Story in-depth.
Thanks for supporting this newsletter, do explore our membership experience if you’re a product, marketing, business leader, or a founder trying to nail the first $10M revenue journey.
If you’ve enjoyed this piece, do consider referring our newsletter to a friend. For your first referral, we’ll send you our Infographics ebook — a collection of growth & business infographics that generated 1 Million + impressions on socials.
