Sridhar Vembu: Silicon Valley’s Unknown Indian

Marc Benioff is afraid of him. Mike Moritz wants to invest in him.

Chances are, you have never heard of Sridhar Vembu, founder and CEO of AdventNet, the company behind newly launched productivity suite, Zoho.

Sridhar is a low-profile guy if there ever was one. He is also cheap as hell. Now, if you know anything about being an entrepreneur, you know that frugality is a virtue. A tremendous virtue.

Sridhar has stretched this virtue to extreme limits, and added layers and layers of creativity upon it.

The result? A100% bootstrapped $40 Million a year business that sends $1 Million to the bank every month in profits.

Doing what, you are wondering.

Selling network management tools, to be precise. But doing so with a unique twist. Sridhar has 600 people in Chennai, India, and 8 in Silicon Valley. Imagine what that does to the cost structure?

Not only that, in India, Sridhar’s operation does not hire engineers with high-flying IIT degrees, thereby squeezing the cost-advantage. No. “We hire young professionals whom others disregard. 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. They need to support their families. We train them, and in 9 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.”

So, with that rather unique workforce of 600 engineers, Sridhar has built not only an excellent cash-cow network tools business, he has recently launched Zoho, which is getting a lot of buzz in the Web 2.0 community.

Why?

Well, Zoho does everything that you would do with Microsoft Office. It also has a hosted Customer Relationship Management (CRM) 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, CEO of Salesforce.com, has made an acquisition offer. Marc is nervous, since Salesforce.com’s SG&A costs are high, eating up most of his earnings. Can he afford to compete, if Zoho undercuts him at such a dramatic scale?

Sridhar has turned Benioff down.

Many VCs wants to invest. Sridhar’s situation is one that every entrepreneur dreams of. You don’t need money. VCs are chasing you.

Freedom is delicious, and Sridhar knows it.

Sridhar Vembu has a very exciting opportunity ahead of him. What the Chinese have done in manufacturing, the Indians ought to do in software: undercut the American and European companies drastically.

So far, Sridhar is the only Indian entrepreneur who has been able to execute on this premise. He has a big vision, and so far, has executed flawlessly.

Watch this guy!

[Read my interview with Sridhar Vembu, an entrepreneurship case study worth understanding.]