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ZohoDay 2020 - Software entrepreneur reveals plan to spur rural revival

Phil Wainewright Profile picture for user pwainewright January 31, 2020
Cloud connectivity and distributed working can reverse the flight to cities and revive rural fortunes, according to Zoho co-founder Sridhar Vembu

Sridhar Vembu, CEO Zoho, speaks at ZohoDay 2020

There's a lot of angst in politics today about what are sometimes called "left-behind" communities. But this is not a topic that you expect to be top-of-mind for software entrepreneurs. Nevertheless, the keynote presentation by Zoho co-founder and CEO Sridhar Vembu at the business software company's annual analyst summit this week outlined a detailed and cogent plan to revive the fortunes of rural economies.

It's not unusual for Vembu to challenge convention. He's long railed against the heady unicorn valuations chased by other software industry entrepreneurs. Zoho's steady growth over the past two decades to become a global player serving the SMB business software market — and now larger enterprises too — has been built on a formula of delivering customer value through a combination of R&D investment, low-key marketing, modest pricing, and frugal overheads.

But after moving his home to rural southern India last year, Vembu has now come up with a plan that aims to reverse the one-way flow of talent that has left rural areas impoverished and precarious. He believes that cloud connectivity and distributed working means that companies like Zoho can encourage employees to move out of cities into the countryside, boosting the local economy with their spending and talent. He sees environmental and cultural benefits too.

Topsoil for a purpose-driven enterprise

All of this taps into Zoho's longstanding values of investing in its people and products while avoiding high input costs that would force it to raise its prices to customers. Distributing its workforce helps it avoid the high cost of property and talent in big cities, for example, while spreading them across a larger number of smaller offices can bring it closer to more of its customers. At the same time, the emphasis on reviving rural economies adds a larger sense of purpose — which interestingly aligns Zoho with emerging management trends towards purpose-driven enterprise.

Vembu uses the analogy of topsoil erosion to explain his vision. Erosion of the fertile topsoil on which agriculture relies is becoming a big problem in many areas, in part because of poor farming practices. But economic disparities are causing an even more damaging erosion of talent, as ambitious young workers leave the countryside to find their fortunes in the cities. His plan aims to solve both problems at the same time.

First of all, when Zoho encourages its employees to move out to rural areas, it brings talent back into those areas and also forestalls further talent erosion because their spending contributes to more employment and entrepreneurial opportunities in the local area. Secondly, Vembu is encouraging the creation of special interest groups among Zoho's employees to learn about farming. This is both to whet their interest in rural matters and also to equip them with organic farming skills that they can practice once there. Their talent thus becomes a knowledge resource that enriches farming in the local area and perhaps contributes to restoring the actual topsoil.

Cloud-enabled rural revival

Vembu recognizes that just Zoho doing this alone isn't going to reverse highly ingrained social trends — it needs to be more widely adopted to make a real impact. But at the same time, he believes this cloud-enabled rural revival must be built on many small steps rather than grand, centrally directed leaps. His vision is that the economic viability of smaller rural communities can be restored through the provision of effective mobile broadband and cloud technology that allows organizations to function as networks of small, geographically distributed workgroups.

A useful side-effect could be a gradual reduction in the excessively high property prices in urban areas, improving quality of life for many of those who remain in the cities. Meanwhile, distributing economic activity elsewhere enables "low-footprint living" that is less resource intensive, reducing the environmental impact, he argues.

My take

There are three assumptions underpinning Vembu's plan. The first is that we have reached 'peak city' — the increasing concentration of people and resources into cities is unsustainable and will soon have to be reversed. He points out that the cost of property and cost of living in Silicon Valley has become a huge drain on VC-funded startups, to the extent that much of their funding is actually spent on inflated property and talent values rather than on innovation.

The second assumption is that pervasive digital connectivity now allows a completely new, highly distributed approach to enterprise operations that no longer requires everyone to be concentrated in a single physical location — that in fact the enterprise can operate more cost-effectively when it is geographically distributed. Both of these assumptions have a ring of truth to them.

The third assumption is that software engineers and helpdesk technicians, among others, will want to become organic farmers in their spare time as they embrace a rural lifestyle. I think that may require a radical adjustment to the working week, along with a revival of the kind of cultural venues and activities in small towns that have been dying out for the past half-century. That may be the biggest ask, as none of this kind of change happens fast. Nevertheless, you can see how it might be possible.

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