Nothing stops a startup from building in India and selling outside. From our experience we have been doing this for last 20 years. We are proof that it can be done – Manikandan Vembu, CEO of cloud services firm Zoho.
And going by statistics, nothing has ever stopped this Chennai-based company founded by Sridhar Vembu in 1996 to go global – be it the fact that they started at a time when internet was hardly as mainstream as it is now, be it the fact that they started from Chennai and needed to train talent, be it the two economic downturns, or the fact that their products compete with global stalwarts like Microsoft and Salesforce. With over 200K customers worldwide, 40K paying customers of Zoho CRM, a 20 Mn user base, despite having 100% inbound sales, and with productivity double that of Infosys, Zoho is aiming to sign up to 1 Mn enterprises in the next three years, as it increases its focus on SMBs.
In this direction, Zoho has recently launched Zoho Developer programme, which provides independent software vendors (ISVs) and application developers the tools and resources to create extensions and build custom applications. In a first, Zoho also launched the Zoho Marketplace where users can buy extensions and custom-built applications and developers can sell them commission-free. Together, Zoho Developer and Zoho Marketplace establish a platform—the first platform being made in India — that caters to Zoho’s current and rapidly growing base of over 20 Mn users worldwide.
With Zoho Marketplace and Zoho Developer, Zoho evolves from a product suite into a platform. The idea is simple. Says Rajendran Dandapani, Director of Engineering at Zoho,
We recognise that it is practically impossible to build apps to suit everybody’s need. With this marketplace, we are offering extensions for Zoho CRM and custom applications, thus opening up our tools to those who wish to use them.
With the marketplace, the company intends to offer a complete app ecosystem so that all custom needs of businesses are met. The Zoho Marketplace offers extensions from major SaaS vendors, including MailChimp, SurveyMonkey, Zendesk, Eventbrite, DocuSign, SignEasy, Webmerge and SMS-Magic.
Interestingly, Zoho will charge no commission from Zoho marketplace sales. And why? Says Rajendran, “That is our way of giving it back to the ecosystem.”
Multichannel CRM, An Email Exclusively For Salespeople
The firm also unveiled Zoho CRM – the industry’s first multi-channel CRM which supports email, social media, live chat, and phone communications, enabling salespeople to engage their customers and prospects across all channels in real time, with SalesSignals. The Signals keep salespeople informed in real time about customer actions on various touch points like social media, satisfaction surveys and support tickets to help them act in time and make speedy sales.
Zoho believes that customers are everywhere; so the sales team needs to be prepared to engage them, no matter the medium. Through SalesSignals, one can have real-time information about how customers and prospects are engaging with one’s business such as when there is a new visitor on the website or when a returning customer opens a marketing email. So SalesSignals gives a business the details it needs to reach out in time and hence close more deals in less time.
Complementing its multichannel CRM, is the Zoho SalesInbox, an email client designed exclusively for salespeople. Using customer data in Zoho CRM, Zoho SalesInbox automatically prioritises customer conversations, ensures salespeople never miss an important email and provides full context for every email conversation. Or as says Rajendran Dandapani, “SalesInbox brings CRM into the email. It is focussed exclusively for the sales team. Same mail, same folders, but emails positioned in a more efficient way to show deals, contacts, non-CRM mails, and colleagues. Basically, one look gives you a view on what’s important, what’s hot. You can look at deal values right in front of you.”
Starting From MVP To Becoming The Operating System Of Business
Since inception, Zoho’s ambitions have always been clear-to become “the” operating system for business – a single cloud platform with all the necessary applications to run a business entirely from the cloud be it CRM, Office, Mail, Finance, HR, IT & Helpdesk, and others.
When we started Zoho, our plans were to do multiple products. Be it any market we entered, we wanted to look at it as end to end. Because we feel there is value in solving the problem end to end rather than solving a narrow problem.
And hence for startups, he advocates focusing on the MVP or the minimum viable product. He adds that their strategy has always been to focus on the MVP. And then iterate on those lines. So first they come up with a quick prototype, iterate, and then go to the market. So rather than boiling the ocean, or choosing a big product, then reiterating and trying to find out if there’s a market for it or not, Zoho prefers to go with the other approach – find the MVP first, and then build over it with the customer feedback.
No wonder more than 20 Mn users around the world across hundreds of thousands of companies rely on Zoho – be it the entire suite or a single application – every day to run their businesses – including Zoho itself. Before shipping out a product to the outside world, it is used internally at Zoho. Consequently, everything in the Zoho office from Office to mail to CRM to social is powered by Zoho products only!
And being an integrated platform for business has also worked in favour of Zoho’s competitive advantage over others. Says Mani, “This vision differentiates us from the rest. In essence, SaaS is just 15 years old and in these years what have moved towards SaaS are the corporate silos. But we believe that’s just the starting point. We believe in an integrated suite. Just like the phone and the camera were separate tools and are now in one, the same thing will happen in business software. And in this regard, we are much ahead of the competition except for few such as Microsoft and Google (which has Gmail power but not business apps).”
He adds that what is validating their story is the way competitors are moving in the similar direction. For instance, when Zoho released helpdesk software in 2011, within six to nine months, Salesforce acquired Desk.com. Similarly, when Zoho’s Campaign Manager was launched, Salesforce acquired ExactTarget. No wonder at one point Salesforce wanted to acquire Zoho as well! But Zoho resisted. Explains Mani,
What will we do after getting acquired? We enjoy what we are doing. For us it is not about quick returns. We don’t have end of quarter, there is no pressure on sales team. Because everything is inbound. Things happen. So if there’s a lead coming, the sales team is going to close. Neither do we have policies like giving discounts on end of quarter to hit targets. Because we don’t chase numbers, so we don’t offer discounts on end of quarter. So when we enjoy doing this, so then what is the point in selling and doing an exit? Hence we want to do it as long as possible.
It’s in keeping with the same philosophy that Zoho has stayed away from VC funding as well and has been bootstrapped throughout. Mani adds that Zoho enjoys its freedom and hence has stayed away from external funding. Though of course, it meant that some sacrifices needed to be made. For startup founders, as per him, it all depends on the personality of the founder, the founding team and their ambition. If they enjoy freedom, they should stay away from funding.
Rising Through Challenges, Creating Talent In-House
As compared to today’s interconnected world, in 1996, things were different. Hence Zoho’s major challenge during that time was the internet. The startup had to build products in India and then had to upload to servers in the US for customers to download. At night, the team would sit from 9 pm to 3 am to upload the products and make them available to users to download. Having grown with that kind of a challenge, the team finds all other challenges secondary!
Another challenge was finding ready-made talent in Chennai in those years. Mani remembers that at that time, there was no Indian product company to refer to, so even things such as writing manuals for help documentation became a task. The startup addressed this by creating talent in-house. So the first front office hiree was moved up to write manuals given her better command in English! Says Mani, “That also gave us the confidence that if people are given an opportunity, they will scale up. Everyone has self-motivation, we only try to find the right match. So if someone is interested in doing something, we want to create an opportunity.”
It is the same philosophy that Sridhar incorporated the Zoho University program, wherein +2 students from economically poorer backgrounds who could not afford a college education were trained to write code. Mani himself declares proudly that he was one of the first students of the university. The students were paid a stipend of INR3k during their training, which has now reached INR12K.
In their 18 month course, they are mostly taught Maths, English, and coding in Deluge – a programming language developed by Zoho Corporation. During the course of the program, the startup also starts identifying individual talents say design, in order to match them with their right interests. Currently, over 15% of engineers come from this program, and their number is now around 400. While it is being taught to students in Zoho University, the company is also in discussions with a college to offer Deluge as an elective programming language. While Deluge can be used currently only to build custom applications on Zoho products, the company intends to make open source eventually.
For Sridhar, Zoho University is also a way of giving it back to the community- just like the Zoho marketplace, from which Zoho will not have any direct revenue. It is also a way to impart a tangible skill set to students as Sridhar found out that real performance at work had no direct correlation with a college education. The University is also Zoho’s unique way of solving the problem of finding the right talent- by creating it.
Doubling Headcount, Focusing On SMBs
Zoho boasts of 300K businesses using its products worldwide and its focus now is to grow this number to 1 Mn by focusing on SMBs. Zoho CRM remains the number one selling product, with 40K paying customers, out of which 8,000 are in India. In fact, visitor traffic from India is second only to the US and the company is logging a 100% y/y growth in new customer acquisition in the country. Sample this – its 40K CRM customers generated an overall annual deal value of $200 Bn last year. While the firm does not disclose revenue figures, Vembu said about 45% of the company’s topline comes from the US while India accounts for 7-8%.
But this number is but a tiny drop of the small businesses which the company wants to tap. As per Mani, the number of 40K paying CRM users is nothing compared to numbers of SMBs that exist in the world. It is those SMBs Zoho wants to reach; hence its strategy will be to help them to find Zoho irrespective of the region they are based out of.
Consequently, the firm plans to double its headcount of 8,000 in the next 3-4 years and entering newer segments like payroll management. Currently, it has some 4,000 people on its payroll and has development centres in Chennai and Tenkasi (Tamil Nadu). The company has already invested about INR 450 Cr in its facility in Chennai and drawn up a total investment plan of INR 3,000 Cr to be spent over the next five years. Also on the anvil, are plans to strengthen its sales and marketing operations globally.
But the firm is very clear on one thing-all its solutions are built in India and that is how it will continue to be. Given that Zoho CRM was rated one of the best CRMs in 2016 by G2 crowd- the world’s leading business software review platform, this startup has shown that ‘made in India, made for the world’ is not a fancy phrase, but the underlying philosophy of its ambition to become ‘the operating system of business’ globally.
As for upcoming startups, Mani’s advice is simple
The most important thing you should focus on is the product. Without the product nothing matters. And before you start building the product, you have to identify the right market fit. If you do this, 80% of your work is done. At least from our experience, we believe that the early customers will find you. Today it’s even much easier.