Making Money on Money Not Progress: Zoho’s Sridhar Vembu Fires a Dharma Missile After Piyush Goyal’s Wake-Up Call to Startups

Union Minister Piyush Goyal recently ignited a significant debate by questioning whether India’s startup ecosystem is reaching for sufficiently lofty goals. A few days after his remarks, Zoho founder Sridhar Vembu offered his insights on how societies respond to widening wealth gaps, sparking further discussion about the correlation between wealth, employment, and the societal duties of the affluent.

Sridhar Vembu underscored the risks associated with wealth that does not lead to job creation. He outlined five ways societies typically address income inequality, stressing that only two of these methods offer social stability. Vembu’s message indirectly connects to the concerns raised by Goyal regarding the startup ecosystem.

Addressing an industry gathering, Goyal pondered whether startups should direct their innovations towards sectors like food delivery and boutique brands or refocus on tackling larger, more pressing challenges. He provocatively asked, “Should we aspire to be delivery boys and girls?” and questioned further, “Do we only want to make ice cream or chips? Are we content just running shops?”

The minister called for startups to expand their vision beyond smaller, consumer-centric ideas to make significant strides in high-tech domains where India has the potential to be a global leader. He indicated this shift as crucial for the nation’s sustained growth and international competitiveness.

In response, Sridhar Vembu shared a series of thoughts on the societal impact of concentrated wealth. Without referring directly to India or the startup landscape, he tweeted about the choices societies make when wealth is unevenly distributed. He stated, “When a few people have a lot of wealth and lots of people have nothing, these are the 5 choices societies make, and we see examples of these around the world.”

Vembu detailed the five choices as follows:

• “The people with wealth create employment and develop skills in the broader population.”
• “The people with wealth donate to causes that indirectly create employment.”
• “Governments tax the wealthy and redistribute to the needy, with varying degrees of corruption or leakages along the way.”
• “Extortion networks arise that extort from the wealthy and they find enough people willing to do this work…”
• “The wealthy employ vast security forces to resist being extorted.”

According to Vembu, “Dharma dictates 1 and 2, with 1 preferable to 2. This is also the Biblical injunction to teach a man how to fish.”

He criticized the trend of “financialism,” which, he argued, allows wealth to increase independently of employment creation. “What financialism does is to separate wealth from employment, through various schemes of monetary alchemy,” Vembu explained. He reflected on how ancient Indian society instinctively understood and sought to prevent this issue by disapproving of usury and schemes that focus on making money from money.

Vembu cautioned against over-reliance on taxation and government redistribution, warning that it could result in societal instability. “I suspect 3 leads to 4 and 5 over time, so 3 is an unstable equilibrium,” he noted, emphasizing that only employment creation and job-supporting donations (options 1 and 2) offer true societal stability.

He concluded with a more profound observation: “The nature and character of wealth determine and, in turn, are determined by the nature of society — yes, it is a self-reinforcing feedback loop.”

This discussion, ignited by Goyal and fueled by Vembu’s reflections, challenges India’s entrepreneurs to broaden their focus and consider the broader implications of their business endeavors. It raises crucial questions about not just the growth of wealth, but its distribution and the responsibilities that come with accumulated riches.