Startup founders must brace for economic slowdown: Zoho's Sridhar Vembu

"The economic conditions have darkened and we face another burst bubble [like 2008]," Zoho's Sridhar Vembu said.

New Delhi: Startup founders have to realise that the funding winter is here and it is time to brace for the worst with controlling cash burn and investing only in meaningful activities, says Sridhar Vembu, CEO and co-founder of tech company Zoho Corporation. As startups face the wrath of global macro-economic factors like the Russia-Ukraine war, high inflation, rising interest rates and Chinese lockdowns with laying off the workforce and shutting divisions, the "course correction is coming to India and the founders must prepare themselves for a long-haul innings to survive the slowdown," Vembu told IANS.

"The economic conditions have darkened and we face another burst bubble [like 2008]," he added.

The global macro-economic conditions have hit the stock markets worldwide and startups are also not immune to those factors.

"The startup founders have to cut down on unnecessary expenses and focus on conserving cash for a turbulent phase," said Vembu, who was honoured with Padma Shri last year.

"Startups must also look at empowering rural populations and skill the youth there so that they can be part of the mainstream and create world-class products from here," he added.

Vembu, who says Zoho is "a state-of-the-art tech company with a very old-fashioned approach to company building", was mentioned by Prime Minister Narendra Modi in his `Mann Ki Baat` programme on Sunday.

Modi mentioned Vembu who is encouraging the rural youth to be innovative and create for the world while staying in the village itself.

"Thank you @narendramodi and @startupindia for the honour of mentioning me in the @mannkibaat. On behalf of our employees, rural students and well-wishers, I am deeply grateful," tweeted Vembu.

He said that he will now work on an aggressive, rural-centred manufacturing renaissance programme focused on household goods production and a strong R&D effort to obtain know-how in critical production technologies, processes and capital goods.

"The talent drain away from manufacturing makes our manufacturing more uncompetitive & also leads to fewer factory jobs in manufacturing. Our vast rural labour has no alternative to agriculture which depresses rural wages. Together these increase domestic inequality further," he added.

He admitted that the manufacturing industry in India has seen a sudden slow down in new orders in the past 3-4 weeks.

"We have seen a slow down in new order flow in the past few weeks in Zoho as well from global customers," he said in another tweet.

Zoho Corporation is best known for the online office suite offering Zoho Office Suite.

Headquartered in Chennai, the company was founded in 1996 by Vembu and Tony Thomas. Its US headquarters was in Pleasanton, California, until it was moved to Del Valle, Texas, in 2019.

Vembu was born in 1968 in a middle class Tamil family from a village in Thanjavur district, Tamil Nadu.

He graduated with a bachelor`s degree in electrical engineering from the Indian Institute of Technology, Madras, in 1989, and earned his MS and PhD degrees from the Princeton University in New Jersey, the US.