Sramana Mitra: What are the trends in your space that what you are doing highlights? It sounds like you are doing this for small to medium businesses. What trends are you seeing?
Daniel Saks: There are three main trends or drivers. The first is that the number of applications available for small businesses have grown exponentially over the last couple of years. Whereas a few years ago, there may have been a dozen cloud services that were relevant to businesses, now many of them are brand names like Boxd and Ecosign.
Now there’re thousands of software-specific applications on the cloud. That could be for a specific department or across a specific industry or geography. What we found is, for example, in Switzerland, there are accounting services designed for media professionals specifically in the Swiss region. There has been this proliferation of applications that is driving more and more apps being consumed by businesses.
The second trend is that businesses have challenges in selecting which applications are relevant and then managing them in a secure way. How do they have one password for all apps? How do they manage the data across the apps?
The third trend is that because of the proliferation of apps and the complexity to manage them, all businesses want one trusted provider to buy the apps and support those apps. We are seeing an emergence of the cloud reseller where people are focused on enabling a specific business to access the relevant apps that they like, help them with curating the ones that are going to be most impactful, and helping them sell, secure, provision, and manage them.
Sramana Mitra: There are some businesses that are trying to do it not as an aggregated suite. They’re trying to provide multiple apps within their portfolio. The example that comes to my mind is Zoho. They want to be the operating system for small businesses. They’re providing apps in all different silos. Your point is well-taken that businesses want to buy from one trusted provider.
There’s another way that that trend is being interpreted where people are trying to take advantage of that and bring all of that within one brand. We have a portfolio company called FreshWorks. It started in the customer support cloud service point of view catering to small businesses and has now broadened and has the intention of broadening further aligning exactly with the trend that you are talking about as well.
It’s interesting that we are seeing it from other directions as well. What do you think is the trajectory of the evolution of small businesses using cloud services?
Daniel Saks: On the point of people buying suites versus going to specific best-in-breeds, we did a small business survey. It surveyed thousands of small businesses trying to understand the way that they consume software. What they found was that 60% of vendors found that it was a waste of time to go to multiple vendors. They also found that 73% are overwhelmed by the selection. What we also found is that businesses do want the best-of-breed providers.
While the Zoho model is effective in providing a generic suite and in some cases, it works for an entry level capability, as businesses grow they need to be able to plug and play the best-of-breed solutions that they need. Your observation is accurate that businesses want to go to one place. That could start as a simplified platform that has multiple products. That eventually evolves into needing more specialized specific applications for their vertical and geography. That’s where we see the demand to buy multiple services from different service providers in one place.