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Happily Bootstrapping: Zoho CEO Sridhar Vembu (Part 5)

Posted on Saturday, Jul 14th 2007

Interesting comparisons here by Sridhar between the Zoho CRM and the SalesForce CRM products; while SalesForce has a high focus on sales teams (and one of the best telesales teams anywhere in the world), Zoho is simply looking to take a competitive advantage in terms of pricing. According to Sridhar this shows in the construct of the companies – Zoho has more engineers than any other type of employee, while SalesForce has more.. well, sales force!

SM: How can you say SalesForce does not have enough engineers? SV: You can check their R&D and their spending reports. They have 2000 employees, but only 100 are engineers. That in itself is an interesting phenomena, it tells you a lot about their business model. All of these guys have become too marketing-oriented, and not enough engineering-focused.

SM: I will push back on that and say that the mid-market is a place where the channel is the big differentiator rather than engineering. That has historically been a market which is very difficult to reach. Today it is becoming easier to reach as you have pointed out. SV: With Manage Engine we have already seen some of this – we faced companies 10 or 50 times our size, but we have built our profitability around capability. An online oriented strategy lets us compete. If you look at the Manage Engine product you can see this.

SM: Yes, but Manage Engine is an IT product. You are now moving to an office suit – that is hard-core consumer capability. It is a prosumer product. This is not the same game. SV: There are different sides to this. The prosumer side is that people are savvy and are spending their money and time online. The second is that we are already reaching the IT departments of the mid-business marketplace through Manage Engine. We know we are reaching IT directors in those mid-market companies. On the consumer front, we will reach the ones who are savvy. Zoho CRM is a good example. We have signed up 50,000 subscribers with no advertising at all.

SM: What do you price that at? SV: It is $12 per month per user. SalesForces is $65 per month per user. We get most of our customers because the first users are free, so most of our 50,000 are free users, but it is gaining momentum at an extremely rapid pace right now. We have a lot of SalesForce conversions there as well. People are converting because of the price, they sign up for the free account, try it for 6 months, and feel confident migrating over.

This segment is part 5 in the series : Happily Bootstrapping: Zoho CEO Sridhar Vembu
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