Zoho and the importance of the SMB Market

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Raju Vegesna is currently the Chief Evangelist at Zoho and is one of the foremost thought leaders in the SaaS revolution. Raju is one of the key people responsible for developing the strategic direction of the Zoho Suite, focusing on the SMB market.

Zoho is one of the most well-known companies building products out of India. Although it’s headquartered in the USA, a large part of operations of Zoho is based out of India. The company always takes a long term view when managing the company and its products.

India has a huge amount of talent available that needs to be tapped into and managed well. Every company in India should think about grooming the talent for the long term. About 15%of employees of Zoho do not have a college degree. Zoho picks up talented kids from schools who cannot afford to go to college and grooms them at Zoho University. The company has been doing this for over 10 years now. Taking such an approach has helped Zoho tackle the recruitment challenge and retain employees for the long term. Product managers in Zohohave been with the company for an average of 10 years.

 

You were one of the key people responsible for developing the strategic direction of the Zoho Suite, focusing on the SMB market. What was the inspiration behind that?

When we develop our applications, one thing we evaluate is if we use our own applications that we create. That’s essentially how each of these applications started. For example, we needed CRM so at that point in time; other solutions were unusable or expensive. Fast forward 15 years, we have 40+ applications. We currently have about 7000 employees at Zoho but the entire business runs on our suite.

 

How important is the SMB market in your opinion? Why focus on it?

The name Zoho itself was termed from Soho (Small Office Home Office Market). That was the core target market at the beginning. Large corporations have the resources needed to knit together the software when you have much larger budgets. We said to ourselves: what if we take the enterprise level software, and offer it to SME businesses at consumer prices. No other vendors provide that and that’s how we can differentiate ourselves. SME businesses don’t have the time, budget, and resources to deliver and create the software they need to achieve the required level of productivity.

 

What does a Chief Evangelist do exactly? What are your main responsibilities?

Getting the word out there is one of my main responsibilities. At Zoho, we believe that we have a very significant suite of applications and a lot of people don’t know that we exist. So the challenge is not being as well-known as some of the same companies in our space. Part of it is a belief system where we believe in certain things in our company and how software has to be bought. For example, we believe that SMEs should often partner with a single tech provider and work with them for all their needs.

 

Zoho is known for having its products built in India and managing a majority part of its operations within India as well. What are the benefits of running the business mostly out of India?

There is an excellent talent pool in India. The median age of the country is around 27. There’s a lot of young talent out there. Furthermore, India produces 1.2 million engineers every year. That’s more than the US and China combined. Therefore, the education pool is phenomenal in India. Also, most of this pool is English speaking which is also a major benefit. India is evolving from a production center into a market, and one of the world’s fastest growing markets. It’s a combination of all of these things that allow us to get great benefit out of running the business mostly out of India.

Zoho prides itself on not having investor money which gives them the freedom to launch products without the constraints of investors. Do you believe that given the chance, all business owners should run their company without investors?

Absolutely! There are some companies and types of companies where that may not be an option. But given a choice, we highly recommend that businesses go without investors. When somebody makes an investment, there is an expectation of return. For many SME owners, it’s beyond ROI – it is their life’s work. Investors such as Private equity are purely businessmen and businesswomen hedging their bets to achieve a financial return.

There is an inherent conflict between the two and the priorities will be different. There is the freedom that a business owner has which is extremely essential, rather than decisions coming from investors. Several entrepreneurs that I know have raised money in their first venture and sold their company and the next time around decided to not seek investors.

Going public is another way where you’re constantly answering to your investors and not your customers. You should be responsible for your customers and your employees. But when you have a lot of investors, you are forced to be responsible for them and they are prioritized over customer and employees. That breaks the culture of the company.

 

You have created yourself a strong reputation as a Silicon Valley entrepreneur through the several IT companies you’ve founded. How important do you believe technology is today for entrepreneurs to succeed? Do you believe it plays a crucial role in the success of businesses?

Technology plays a crucial role and if someone doesn’t adopt technology, they are falling behind. This is true across many industries.

Let’s take a look at Amazon – a tech company in the retail space. Or Netflix – a tech company, not a production studio. Or Uber- a tech company disrupting the transportation industry.

It is tech companies that are disrupting the traditional businesses, and not the other way around. Unless the business becomes a technology first company, they will probably be disrupted.

 

Having several years of experience in founding and managing technology companies, in your expert opinion, what is the number one challenge that IT companies face when it comes to growing their business successfully?

The number one challenge is setting the culture of the company. Culture should become the number one priority of a company. Culture of a company is what character is to an individual. These are the fundamental values of the company and typically the founders set those values which base a foundation. If the employees appreciate the values of the company, they will stick around and be motivated to achieve success. Once you have the right people and the right values, you will succeed. If you don’t see success in one industry, you can pivot with your team.

 

If you could give advice to SME owners who are looking to launch technology companies, what would it be?

I would say building a strong foundation with culture and values. Technology keeps changing on a weekly basis, but the foundational blocks of your business won’t change. It’s also important to understand and differentiate between the short term and long term technology in order to achieve long term success.

 

On a final note, given your strong background in technology, was it something you were always interested in growing up? What made you decide to go into this line of work?

I’ve always been interested in tech. I was a 7th grader when I wrote my first code. Technology and programming always fascinated me. I always wanted to be the first person on day one to have a new gadget.
If you are passionate about a specific area, you’re automatically pulled into that. I believe in technology and it’s the market that is now dominating in every industry. When something changes the entire dynamics of every industry, it’s great to be a part of it. A fast-paced industry always keeps you excited and interested on a weekly basis.

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