CEOMAG.in interview with Sridhar Vembu, Founder of ZoHo.com

CEOMAG are pleased to interview Sridhar Vembu, Founder of Zoho.com who shares his vision for Zoho, the journey and other insights which has helped Zoho become a highly successful company.

About Zoho

Zoho is a comprehensive suite of award-winning online productivity, collaboration and business applications for small and medium-sized businesses. Over four million direct users rely on Zoho for their Business, Productivity & Collaboration needs and actively connect via Forums and Blogs. To date, Zoho has launched 26 different applications which include several online office applications such as Writer, Sheet, Show, and Mail along with a host of business applications ranging from CRM to Projects, Invoice and Meeting. These applications are offered directly via Zoho.com or through hundreds of partners in the Zoho Alliance Partner Program, which brings in millions of additional Zoho users. For more information about Zoho, please visit www.zoho.com.

Zoho is a division of ZOHO Corp., a privately-held and profitable company, which also provides (ManageEngine with 50,000 customers) and a Network Management Suite (WebNMS with 25,000 Tier 1 carrier deployments). With headquarters in Pleasanton, CA and offices in Austin, New Jersey, Chennai, London, Tokyo and Beijing, ZOHO Corp. serves the technology needs of millions of customers worldwide.

Q.1. Sridhar, Congrats on the super success of Zoho Corporation over the years. Can you share more about your journey, your vision and beliefs when you started, how did you pivot over time and when did you hit the critical mass ?
First, while we have been successful as a company, but there are still lots of things we want to do, and our goal is to be one of the major players in the software industry, so by no means would I say we have “arrived”! There is still a lot to do. That captures the vision: Zoho intends to be a major player in the software business.
Our early focus, around 1996-97 was survival, to simply be around to fight another day. To win, we must first survive. Our initial focus was on the serving network equipment vendors, a relatively small market. Once our survival was ensured, we started to focus on bigger markets and bigger opportunities. Between 2003 and 2005, we completely reinvented ourselves, at first offering a suite of applications that could be used by any company; then with the advent of Zoho, we started to focus on applications that could be used by anyone anywhere. The Zoho suite of applications, because of their broad appeal, brought visibility to the entire company.
The path we took also reflects the progress our people made in terms of acquiring new skills and capabilities. This is a particular challenge in India, because as an emerging economy, enhancing the skills and capabilities of our people is a major challenge across the economy.
Q.2. Of the several offerings Zoho has, which are the most popular applications and why ?

Initially, Zoho was known for the online office suite. Today, Zoho has broadened its appeal beyond the office suite, and Zoho CRM, Zoho Mail, Zoho Creator and Zoho Projects are some of the other popular applications. Our goal is to enable a small and mid-sized business customer to run their business on Zoho. The goal is coming closer.

Q.3. Love your 90:10 promise , 90% of the features of the Big 4 at 10% of the Price, What inspired you towards such a big bold commitment ? And while it is a great offer to your customers, how do you look at it from your own profitability dynamics ?
This is a promise we make in our ManageEngine division, where traditional “enterprise” products are known for bloat and extremely high prices. Those high prices also reflect bloated business models, where companies spend 5 times, sometimes even 10 times on sales and marketing as they spend on R&D.  We figured if we cut that business model bloat, be a lot more efficient, we can lower the cost to the customer and still make money. It is gratifying to see that belief validated in the success of ManageEngine in the marketplace.
Q4. I understand ZOHO brand was inspired by SOHO i.e. Small Office – Home Office, but you are also aiming to build Enterprise class functionality with your 90:10 promise, Which side do you see a bigger traction in adoption and how do you anticipate the future demand ?
I am a great believer in the bottom-up evolution model. Before we solve a big problem, we have to solve smaller problems. This is the path all the great companies took. And great companies also don’t forget their roots. At Zoho, our small and mid-sized customers are our bread and butter, and we are focused on serving them well, by offering really well designed products at great prices. That same focus also attracts larger companies to us, and we are happy to serve them, while being very clear where our roots are. We do not want to be a bloated enterprise player, because that is the path to cultural death.
Q5. You seem to have loads of independent applications and I believe you are also inter connecting them. How are you able to visualize so many applications and manage the complexity of their inter-connectedness ?
I have described our strategy as “depth-first” – offer compelling individual applications that stand on their own, and then integrate them. We want to offer the best CRM in the market, period. Once our core CRM functionality was mature and sufficient depth was attained, we started to integrate our CRM with Email, Chat and so on.

We have a long list of interesting integration ideas, both generated internally and through customer requests. We prioritize them based on resources and go about them.

Q6. What are the critical parameters you consider before giving a go ahead for investing into product development ? What kind of risks are involved and if you can share your  ratio of success and failure with us ?

There is no magic formula, there is no secret. Our focus on Zoho is serving the needs of small and mid-sized businesses. We look at their application needs, and that serves as a product road map. The execution itself depends on the availability of resources – do we have people to lead the charge in a specific area (for example mobile apps) and we decide to move forward as we identify the resources. In some cases, we end up taking longer than we would like, because of resource limitations, but that is just part of the game. We have also had outright failures, for example we had to reboot ourselves in Zoho Mail from being an installed product to an online service, which delayed us a couple of years. If you have no failures at all, you are not trying hard enough. We simply take failures in our stride and keep moving.
Q7. You have been a Maverick to have recruited high school students and converting them into Ace Programmers. What is your advise to small and large companies who always complain that 75% of the engineers and graduates are un-employable and those who are good have already been picked up by other organizations ?
The education system can only impart very basic skills. Highly specialized skills have to be learned on the job. Americans and Germans and Japanese learn their world-class skills from the world-class companies that are present in these countries. Japanese universities are not teaching engineers how to design world-class cars, Japanese companies like Honda do.  The absence of skills in India simply reflects the absence of world-class companies, the absence of opportunities for young Indians to learn on the job.
So my advice to companies which complain about the skills shortage in India is to understand that it is an essential challenge of operating in India and focus on skill development as a core activity of your company. This is the guiding philosophy of Zoho.
Q8. There seems to be a mad rush of applications for web and mobile by small and large companies. What do you think will be the difference between winners, losers and also-ran ?
Mobile and cloud computing are the two biggest opportunities in all of technology, so it is no surprise there is a gold rush. The entire computing landscape is set for fundamental change and companies that embrace this change quickly will be the winners. The losers will be companies that cling to their legacy platforms and application suites. We are already seeing leadership transition happen.
Q9.  Can you share some insights on your Marketing Strategies and what can other companies learn from that ? And how do you think Marketing will change over time ?
Our belief in Zoho is that the best marketing starts with having the best product. If our product is no good, no amount of marketing can rescue it. A lot of our marketing is focused online, from search engines to social media, organic as well as paid ads. We believe this reflects the way things are going – marketing budgets are moving steadily online, because that is where the audience is.

Q10. Having had a dream run so far, what is the next peak you are aiming to achieve ? What are some of the challenges you are encountering towards that ?

I would like to correct you here – we haven’t achieved enough to call it a “dream run”! There are a lot more things to achieve. We aim to be one of the leading software companies in the world. The challenge really is building our skills and capabilities, particularly in the Indian context where so much of the talent is raw and new.

Q11. Can you share something about your CSR, Green IT initiatives and any other interesting initiatives with your customers and employees ?
Our Zoho University initiative brings high school students and we then train them to be engineers at our expense. This helps solve our skills challenge and it also helps our students. We have a charitable foundation that supports school students from poor backgrounds.

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