Introduction: The Call for Change in India’s Tech Landscape

In a thought-provoking post on X (formerly Twitter), Sridhar Vembu, the CEO of Zoho, called on Indian tech companies to rethink their priorities. Vembu, who has built a successful business with Zoho, urged Indian firms to focus on building sustainable revenue rather than chasing inflated valuations. His words have sparked a significant conversation about the future of India’s tech industry and what it takes to build world-class companies.

The Revenue vs. Valuation Debate

Vembu’s challenge is simple yet profound: can India create tech companies with $100 billion in revenue, not just inflated valuations? While many tech startups today focus on boosting their valuations to attract investors, Vembu argues that true success lies in long-term revenue growth. His point is clear—Indian companies should aim to build businesses that can stand the test of time, not just those that look good on paper.

“India needs a lot of $100 billion revenue companies to truly lift our people up,” he wrote. This comment highlights Vembu’s vision for India’s future: a tech ecosystem driven by solid, sustainable business models instead of speculative value swings.

Why Focusing on Valuation Doesn’t Work

The obsession with valuation, Vembu argues, can be harmful. It diverts companies’ attention from long-term goals, like consistent revenue growth, towards short-term stock price surges and market speculation. In his view, this mindset leads to unhealthy business practices, like over-spending to boost valuations or inflating company performance to attract investors.

“Stock bubbles distract us from the goal,” he said. “The focus shifts to optimising the stock price, which is often disconnected from the actual value a company brings.”

The result? Companies that may look impressive at first glance but lack the solid financial foundation to weather economic downturns. By focusing on revenue instead of valuation, Vembu believes Indian companies can build businesses that are not only valuable but also resilient.

Learning from Global Giants

Vembu also pointed out how companies in countries like China have succeeded by focusing on sustainable revenue and long-term vision rather than the stock market hype. These companies didn’t get sidetracked by short-term valuation boosts; instead, they built businesses that could scale and thrive in the long run.

For example, Chinese tech giants like Alibaba and Tencent didn’t build their empires by aiming to become the next “unicorn” (a startup valued at over $1 billion). They focused on solving real problems, generating consistent revenue, and scaling effectively. Vembu believes India must take a similar approach if it wants to produce tech companies that are globally competitive.

The Indian Model: Bigger, Diverse Companies or Many Small Ones?

One of the most interesting points Vembu raised was the idea of whether India should focus on creating one or two tech giants worth $100 billion, or whether it should aim to build thousands of smaller companies. While a $100 billion company sounds impressive, Vembu emphasized that much of the value in such a company is often concentrated among a few top individuals or investors. Instead, he suggested that India would be better off creating large, diverse companies that could offer a range of products and services—much like Apple.

For instance, Apple is not just a phone maker; it’s involved in chip design, cloud computing, software development, and much more. Vembu believes that India should strive to build similar diversified companies with unique capabilities, rather than merely following the global trend of creating a “one-trick pony.”

This approach would help India create more job opportunities, encourage innovation across different sectors, and reduce the country’s reliance on a few big players. It would also ensure that the growth of India’s tech industry is more inclusive and sustainable.

The Importance of Sustainable Business Practices

Vembu’s comments also highlight the importance of good business practices. In an environment where easy funding and inflated stock prices can tempt companies to take shortcuts, Vembu stresses the need for discipline. He believes that companies must learn to “pay the bills” and practice sound financial management, which means building a strong revenue base and not relying on outside investments to stay afloat.

In other words, while innovation is key, companies must also be able to manage their finances prudently to ensure long-term survival.

A New Vision for Indian Tech

Vembu’s challenge calls for a shift in the way Indian companies approach growth. Instead of chasing quick valuations and immediate market gains, Indian tech firms must focus on building solid revenue streams, diversifying their business models, and ensuring that their operations are sustainable in the long run.

But Vembu’s perspective also raises an important question: Can India really avoid the pitfalls of short-term thinking and develop a growth model that balances revenue generation with human dignity and environmental responsibility?

In contrast to China’s often top-down, rapid growth model, India has the opportunity to create its own path—one that is more inclusive, sustainable, and empowering for the workforce. India’s tech sector doesn’t have to mimic China’s growth story; it can carve out a new path that reflects its values and aspirations.

Conclusion: Moving Beyond the Hype

Sridhar Vembu’s post has resonated with many in the tech world and sparked a much-needed conversation about the future of Indian tech companies. The question remains: can Indian companies shift their focus from valuation to revenue and build businesses that will thrive in the long term?

If Indian tech companies follow Vembu’s advice, they could create a more resilient, sustainable, and globally competitive tech ecosystem that benefits not only investors but also workers, consumers, and the country as a whole.

It’s time for India’s tech industry to embrace a new mindset—one that values real growth over short-term gains.