India’s startup moment is now: Kumar Vembu on innovation and brain drain

Kumar Vembu, co-founder of SaaS giant Zoho Corp, who also founded investment firm Mudhal Partners, believes India’s startup story is entering a defining phase—driven not by capital or scale alone, but by resilience, frugal innovation, and the courage to try without a fear of failure.

In an exclusive conversation with The Federal, Vembu—who once described the H-1B visa as a “golden cage” on his blog Medium—spoke about reversing brain drain, America’s shifting stance on immigrant talents, and why India’s momentum in technology and entrepreneurship is finally tilting the balance. Edited excerpts:

I read your blog where you called the H-1B a ‘golden cage’ that limited freedom. You chose to return to India, start Zoho with your family, and the rest is history. But many techies in India still see the US as the ultimate land of opportunity. From your vantage point, how do you see the tech landscape in the US today compared to what’s unfolding in India?

First of all, I think the idea that the US is a land of opportunities is still true, because it has a very mature ecosystem. If someone has a strong idea, there is an enabling environment for that idea to be nurtured and grown into a successful business.

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Now, if you look at India today, it’s very different from 1995. The environment has matured significantly. Many people here have seen and participated in that growth. With the internet, the speed at which information, knowledge, and lessons are available to Indian entrepreneurs has improved enormously. The ecosystem advantage the US once had is reducing. Thanks to the internet and the media available, the same lessons are accessible from India as they are from anywhere else in the world.

Today, with tools such as ChatGPT, Claude, and Gemini, geography is no longer a barrier. You can tap into the best advisers and the best environment from wherever you are.

India also offers several competitive advantages: easier access to skilled manpower, a strong sense of ambition and aspiration, and more people eager to grow and achieve. There is a very positive mindset and attitude among people here, and that’s what makes the difference today.

Also read: Can Tamil Nadu be India's Silicon Valley? Why Mudal VC thinks yes

So, more than the idea itself, what matters is my attitude, my aspiration, my sense of purpose, and my commitment. If those qualities are present, the environment is no longer the decisive factor it once was.

US President Donald Trump has now proposed a $100,000 fee for the H-1B visa, which has jolted the students/young professionals Indian community there. Do you see this as a political move, or do you think it reflects a deeper shift in how America wants to deal with the immigrant talent?

I think whether it is $100,000 or the number of H-1B visas, it will certainly affect individual plans. For someone whose dream or life’s mission is to settle in the US, this may cause some disruption. But in the overall scheme of things, it is quite small and insignificant. In my opinion, the psychological effect of these measures is much greater than the actual financial, industrial, or economic impact.

India’s startup mortality rate is probably lower than America’s, but that is because too many people still worry about the stigma of failure, so fewer people try it in the first place. If we want more innovation, we must encourage more people to try, regardless of outcome.

Even the $100,000 H-1B fee is a one-time cost. Since the tenure of an H-1B is six years, and if during that time a green-card application is filed, the same visa can be used for longer. Even if you assume an average professional works only six years on an H-1B, the additional cost works out to about $16,000–17,000 per year. That is negligible compared to the overall expense of employing someone in the US.

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Secondly, if you look at the American workforce, even within high-tech, the H-1B holders make up only about 4-5 per cent. If that number were to drop to zero, it would still be insignificant when you consider the overall employment pool. In fact, many companies have already laid off 5-10 percent of their workforce over the past year. So, while there will certainly be personal loss of opportunity and income for some individuals, in the larger context, it is a small issue.

From America’s point of view, in an age when artificial intelligence (AI) is beginning to replace human jobs, this kind of protectionist step may even be necessary. We can’t comment on that. But from India’s point of view, what matters is the opportunity created by this decision. That is what interests me.

If we look back to 1995, India’s best talents went to the US for higher studies, if they could afford it or secure scholarships. The next tier of top talents often joined premier research organisations such as the DRDO or ISRO or took jobs with multinational companies setting up operations in India. For us, between 1995 and 2000, almost everyone who joined our company came because they hadn’t been hired elsewhere. We were not a preferred employer.

Also read: Mr Piyush Goyal, what Indian startups have achieved is despite the system

But I was actually happy with that. These people had hunger. I could relate to them because I too did not get placed directly out of college. In 1990, very few companies came to our campus, and I spent six months at home before getting my first job. That experience gave me the resolve to make the most of every opportunity. Similarly, the people we hired in those early years were determined to prove they were as good as anyone. That is why we could build what we did.

By contrast, between 2010 and 2015, large US corporations became the top employers, offering very high salaries and recruiting talent straight from colleges. Indian companies solving for India often could not attract the best of talents. Attrition was not because people disliked the work, but because they were offered double or triple the pay elsewhere, or the lure of overseas opportunities.

This created distractions. For Indian product companies, progress was slower because they had to fight constantly to retain talent. But if such distractions reduce, it is better in the long term. People will stay, build meaningful products, solve real problems, develop deep skills, and feel respected. It will help in building more companies and strengthening the economy.

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So, I see this as a huge win for us. More Indian talent will now focus on solving India’s own problems across different sectors.

You often speak of brain drain and the need to reverse it. But isn’t it equally true that many Indian startups succeed because their founders were first exposed to Silicon Valley culture, networks, and capital? In a way, doesn’t brain drain also seed India’s startup success?

For me, going to America and working there for a year was a big learning experience and an inflection point. You are no longer a frog in the well—you see different cultures and different people. That helps you understand who you are, what you value, what you miss, and why you may want to return. Exposure of that kind is very important.

But that was true in 1995. If you look at 2025, the context is very different. It is a new India. For instance, earlier, many large companies operated on a command-and-control model where subordinates rarely challenged their managers. Today, in many younger companies, the emphasis is on individual effort, brilliance, skill, and opinion.

Also read: After fee hike, US proposes new H-1B visa selection system

This shift is partly because thousands of American companies have already set up operations in India, and tens of thousands of startups are led by founders with direct work experience in the US. They brought that culture into their companies. As a result, respect for individual creativity and initiative has replaced the old “do what I say, I am your boss” mindset. Employees expect respect, and workplaces increasingly provide it.

In 2025, I don’t see the need for anyone to go to the US just to gain exposure. You can get that here in India itself.

There is also strong momentum in the startup ecosystem—angel investment platforms, incubators, and venture capital networks have flourished. Many American venture capitalists (VCs) have set up shop in India because it is seen as a land of opportunities. That means today, if you are in Chennai or Bengaluru, you can still do deals with the world’s best VCs, provided you have the right idea, progress, and business model.

Also read: Amid H-1B visa row, two American companies appoint Indian-origin CEOs

So, in 2025, I don’t see the need for anyone to go to the US just to gain exposure. You can get that here in India itself.

You’ve said Indian engineers are hungrier and that India’s startup ecosystem is thriving. But critics argue that most innovations here are still reverse engineering, while truly original innovation continues to happen in the US. Is this one reason why many Indians still aspire to go there?

When we enrol a child in school, we don’t start them on advanced mathematics. We still begin with the basics—teaching them in Tamil, teaching them A, B, C, D, or one plus one equals two. Every child has to take those baby steps. In the same way, every ecosystem goes through a journey of gradual progress. Every three to five years, it takes a step forward.

The first wave of Indian products largely solved the same problems as in the US, but at lower cost and tailored for India. From there, companies began to evolve. Take Zomato, for instance. When it started, I thought of it simply as a food-delivery company. But today, if you look at the investments they are making and the new products they have launched, it is inspiring.

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For example, they built their own in-house help-desk system, which is now available as a product for external customers. Looking at the scale it handles and the way it is designed, it reminds me of Amazon’s journey—from e-commerce to launching AWS (Amazon Web Services) and a range of other technology products. One could argue Zomato is copying Amazon, but the point is that they are building serious technology products and will likely launch many more. That is evolution.

More than the idea itself, what matters is my attitude, my aspiration, my sense of purpose, and my commitment. If those qualities are present, the environment is no longer the decisive factor it once was.

Too often, “innovation” is an abused word. For me, innovation means doing something for the first time myself and doing it well. Why should it matter whether someone else has done it already? If I can build a product, find customers, deliver value, and run it profitably, I am innovating.

If my customer has a problem and I can solve it within their budget, keeping both sides happy, that is innovation. If we keep approaching it this way—solving customer problems profitably and sustainably—then after 10 years, when we look back, we will see that we have innovated a lot.

Also read: Sridhar Vembu asks Indians to ‘return home, rebuild lives’ amid chaos over H-1B visa fee

So, we should not treat innovation as some grand or mystical idea. It is about doing the basics—our ABCD—properly. Read the words, form the sentences, and steadily we will get there.

India is celebrated as the world’s third-largest startup ecosystem. But we’ve also seen many high-profile shutdowns, layoffs, and governance scandals. Do you think we confuse scale with sustainability?

It is well-known that most startups don’t succeed. Many of them shut down at different stages in their journey. To create a success story, a lot of things have to go right—and at each stage, what needs to go right is different. That’s why we should celebrate the fact that so many people are trying, rather than prejudging the outcome.

When people fail, the important thing is how society responds. America is America because people can fail there without stigma. Our society needs to shed the stigma around failure. The more we stigmatise it, the less people will attempt new things.

Also read: A USD 100,000 visa fee and a failed friendship: India’s H-1B reckoning

In management, this is called "psychological safety". When people know that failure will not be held against them—that there will be a tomorrow, another chance—they are more motivated to try. If we start respecting failure, valuing it, and appreciating the lessons learned rather than only the outcome, then people who fail will have the energy and confidence to try again.

We should encourage those who failed to speak openly and share their lessons. That is one reason America is such an innovative economy: failure is not branded onto the person. If we want India to become an innovative country, we must adopt the same attitude.

In fact, my view is that India’s startup mortality rate is probably lower than America’s, but that is not necessarily a good thing. It is because too many people still worry about the stigma of failure, so fewer people try in the first place. If we want more innovation, we must encourage more people to try, regardless of the outcome.

If you look at India’s startup ecosystem, the outlook is very optimistic. But when you examine the numbers, India’s R&D spending is just 0.23 per cent of its GDP, compared to about 2.6 per cent in China and 2.5 per cent in the US—both far larger economies. In India, it is largely the government that undertakes R&D spending, not private companies. Don’t you think these concerns also need to be addressed?

Even in the private sector, there are strong R&D examples—AgniKul, the e-plane company, Backyard Creators working on bionic ears, and Symbionic developing a bionic arm. We are speaking here at the Immersive Technology Entrepreneurship Labs, run by Professor Ashok Jhunjhunwala, which is funded by leading achievers in the Indian ecosystem to incubate deep-tech startups.

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What has surprised me—pleasantly—is how much Central government support these startups receive. For instance, some of the companies working on bionic ears and other deep-tech solutions have secured significant central government grants even before approaching private investors. Agencies such as MeitY (Ministry of Electronics and Information Technology) have been able to identify and fund them at an early stage.

That’s why I don’t look only at the size of the R&D budget. India has a tradition of frugal innovation. It is in our DNA. Look at space technology, look at UPI in fintech. UPI is such a major innovation, and yet it costs me nothing to use it 10 times a day. Similarly, ONDC (Open Network for Digital Commerce) is another breakthrough. For the public good, India has been innovating on a low budget. We should celebrate that.

I keep saying: let us not dwell on what we don’t have or don’t do. Instead, let us celebrate what we do and what we have. Let us dream, set ambitious visions, and work towards them. Often, money doesn’t solve problems—it can even distract. What truly solves problems is commitment and sustained effort.

These days, my work involves meeting entrepreneurs daily, listening to what they are building. Just in the past 10 days at Startup Singam, I met dozens of founders. Every evening, I go home with great respect for them. The kind of ideas they are pursuing, the problems they are solving—I could talk for 15 minutes about each one.

So much is happening, and the momentum is clearly in our favour. In my view, it doesn’t matter where we stand today; what matters is the speed at which we are moving forward. And the momentum is with us. We will do great things.