2024-11-11 15:20:26 :
Zoho CEO Sridhar Vembu has raised doubts about the possibility of creating a $100 billion revenue-generating technology company in India. Vembu said India needs many companies with revenue exceeding $100 billion to improve people’s living standards.
“Can we build a $100 billion (revenue, not valuation!) tech company in India?
India needs many such people if we are to uplift our people. China now has many such world champions who have grown up over the past 20 years. ” wrote Zoho CEO Sridhar Vembu on X.
He stressed the need to focus on revenue growth rather than valuation and said companies should be able to balance short-term and long-term goals.
“I’ll tell you what’s not going to get us there. We can’t endlessly focus on valuations. We’re going to be led for the long term by those visionary dreamers and builders who can balance their long-term vision while learning to pay the bills and maintain short-term viability,” Vembu said.
Vembu said equity bubbles often divert companies’ attention to short-term valuation issues. A stock bubble is a period when stock prices are determined by speculation rather than their own value.
“The equity bubble actually distracted us from our goals as the focus shifted to optimizing short-term valuations and company management became obsessed with increasing the stock price,” the Zoho CEO said.
“The extremely loose financing environment also distracts us because we never learn the discipline to pay our bills,” he added.
Goodhart’s Law
Vembu mentioned Goodhart’s Law and said technology companies should focus on long-term valuations. According to Goodhart’s Law, when a metric becomes a target, its effectiveness as a measure decreases.
“Valuation should be the long-term result of a million things that go right (and a million other things that go wrong and teach us lessons along the way!), but when that valuation metric becomes the target, it becomes nothing Usefulness (Goodhart’s Law),” he said on X.
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