Zoho's founder hands the CEO seat to a co-founder and returns to research

On January 27, 2025 Sridhar Vembu announced on X that he would step down as CEO of Zoho Corp, the Chennai-headquartered bootstrapped software company he co-founded in 1996 as AdventNet. 'In view of the various challenges and opportunities facing us, including recent major developments in AI, it has been decided that it is best that I should focus full time on R&D initiatives, along with pursuing my personal rural development mission,' he wrote. He became chief scientist, responsible for deep R&D.

The CEO seat went not to a professional hired from outside but to a fellow co-founder: Shailesh Kumar Davey, vice-president of engineering at ManageEngine, Zoho's IT-management division, whom Vembu introduced as the new group CEO. The rest of the executive map was reshuffled at the same time — co-founder Tony Thomas taking Zoho US, Rajesh Ganesan leading ManageEngine, and Vembu's brother Mani Vembu leading the Zoho.com division.

The move was a deliberate redistribution, not a retreat. 'The future of our company entirely depends on how well we navigate the research & development challenge,' Vembu wrote — his argument being that AI had turned research into the binding constraint, so the founder's own hours belonged there rather than in the CEO's calendar.

The founder moved to hard R&D where AI forced his attention, while co-founders already running divisions took revenue responsibility — no outside hire, no dilution.

AI moved the bottleneck: with the technology base of the business shifting under the industry, Vembu judged that the company's future depended on R&D depth more than on executive routine.

The bench was internal by design: Zoho never raised outside capital and grew its own co-founders and division heads, so succession drew on operators who already knew the machine.

The founder reframed rather than left: as chief scientist Vembu kept the research direction and the public voice, so succession did not read as the builder losing faith.

Timing on his own terms: the handover was announced at a moment of strength, from a profitable and private company, not forced by investors, a crisis or health.

Founder succession works best as a reassignment of genius, not an exit: move the visionary to what only they can do, and let the founder frame and announce the change himself.

Davey took over as group CEO with the division structure behind him, while Vembu committed his time to R&D and to his rural-development work around Tenkasi, Tamil Nadu. The New Indian Express noted Vembu's standing bet that India would become Zoho's largest revenue market within a decade — India was then its second-largest after the US. The transition drew attention as a rare case of a unicorn-scale founder stepping down while the company remained fully founder-owned, with no external investors to force or veto the choice.