Self-Fund Through Profits

Sridhar Vembu describes a self-funded growth model where a company starts small in niche markets and uses profits to progressively expand into larger markets, avoiding external funding.

Key Points:

• Initial Phase:

  • Target small, specific market niche
  • Grow to $10M revenue over 7 years
  • Focus on profitability and cash flow

• Second Phase:

  • Use profits from first business as self-funding
  • Target larger market segments
  • Avoid competing with heavily VC-funded companies
  • Reached $100M revenue level

• Third Phase (Zoho.com):

  • Leveraged success of first two ventures
  • Expanded to largest market yet
  • Target market includes all businesses
  • Achieved scale to compete with VC-backed companies

• Growth Strategy:

  • Start with manageable market segments
  • Reinvest profits into bigger opportunities
  • Maintain independence through self-funding
  • Progressive expansion based on proven success
  • Build capital reserves before entering larger markets

• Timeline Expectations:

  • 20-year journey rather than typical 10-year startup timeline
  • Start mental countdown from year -5 to manage expectations
  • First $1M revenue marks legitimate business validation