'Can India Build $100 billion Revenue Tech Companies?': Zoho's CEO Sridhar Vembu On Why Valuations Won’t Lead The Way

India’s tech industry with each passing year has witnessed a rapid growth with emerging startups attracting large investments. Sridhar Vembu, CEO of Zoho, voiced a message for Indian tech companies in a recent tweet that sent ripples through India's tech ecosystem.

India Needs $100 Billion Revenue Companies

Taking to the social media platform X, formerly Twitter, the Zoho CEO urged Indian companies to strive for revenue, not inflated valuations.

"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.

He pointed to China’s success in nurturing tech giants like Alibaba and Tencent, which grew into multi-billion-dollar powerhouses in the past two decades. India, according to Vembu, 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.

"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," he added.

Furthermore, he did not mince words when discussing what he sees as the real risk facing India's tech industry today: the overemphasis on valuations. "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,” he wrote.

He pointed out, "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)."

Netizens Reaction

Vembu's post received a huge response from netizens reacting to it.

An X user commended, "Should we try to build one $100B company or 100,000 $1M companies? I think in any $100B company, 90% of the upside goes to the top 100 people, while in $1M companies, it's more evenly distributed. Did I get it wrong?"

Responding to it, Vembu wrote, "Some class of problems require a diverse and large set of capabilities in many different areas, brought together. Think of how many things Apple does well, from chip design to cloud databases. Not all of them can be purchased from the "market"."

Another user wrote, "As a traditional businessman, we value actual profits – the bottom line, not just the top line. China’s growth is rooted in wealth creation, not inflated valuations. They focus on sustainable businesses rather than chasing top-line numbers that never lead to a positive bottom line. Real growth needs solid fundamentals."