INSIDE ZOHO'S NEW ORDER & PLAYBOOK

How the disruption caused by DeepSeek in the AI landscape became a major trigger for Zoho Corp co-founder Sridhar Vembu to effect key leadership changes at the SaaS giant, including stepping down as its CEO to helm the focus on research and AI

- Rohit Chintapali

THE WALL STREET has seen a two-and-a-half-year rally of staggering proportions, with Nvidia clearly emerging as the poster child of this financial spectacle. The chipmaker’s rise from a $400-billion enterprise to a $3-trillion behemoth by 2024 mirrored the explosive enthusiasm for artificial intelligence (AI) catalysed by ChatGPT’s debut in late 2022. But in January this year, came the sobering counterpoint — DeepSeek’s step into the AI spotlight triggered a $1-trillion market correction as investors confronted an uncomfortable reality: if DeepSeek could deliver AI capabilities at substantially lower costs, perhaps the massive capital expenditures by tech giants and hyperscalers were strategically flawed. Since then, there has been a fundamental reassessment of AI across industries and how it is done around the world.

The realisation seemed to have hit Sridhar Vembu, the famed co-founder of SaaS giant Zoho Corp, even harder as he decided to step down from his CEO role by late-January to focus on research and AI. In February, during a company’s event hosted for analysts in Austin, Texas, Vembu articulated his fresh thoughts on AI. He declared the current state of AI as the “AD (After DeepSeek)” era, suggesting a fundamental disruption to established industry paradigms. He drew a sharp contrast between the previous “BC (Big CapEx)” period - defined by massive infrastructure investments from Microsoft, Amazon and Google - and the new reality following DeepSeek’s breakthrough.

“Over a single weekend, virtually all previous assumptions collapsed,” Vembu told the analysts. He argued that DeepSeek’s emergence, alongside upcoming Chinese AI models, exposed fundamental flaws in Big Tech's investment strategy. He specifically criticised major companies for their overdependence on innovations from AI companies such as OpenAI and Anthropic rather than developing diverse approaches.