Thought Leaders in Cloud Computing: Sridhar Vembu, CEO of Zoho (Part 4)

Sramana Mitra: Tell me a bit about the metrics that you are willing to share.

Sridhar Vembu: We have 4,000 employees now and more than 20 million users on Zoho. We have one million new users per month. We still don’t disclose revenues. The company continues to be profitable. We have never taken any outside capital and we don’t intend to. We are bigger than most of the companies who have gone public in the last couple of years.

Sramana Mitra: Last time we spoke, you said you were just over $300 million. You also said that, by 2018, you’re going to hit $1 billion in revenue.

Sridhar Vembu: We are definitely marching towards there. We will get there in due course. We are focused on the long term. We have no exit plans. One of the things that we keep in mind is you want to keep the culture of the company. All that is important to us. Customers appreciate it. Maybe five or seven years >>>

Thought Leaders in Cloud Computing: Sridhar Vembu, CEO of Zoho (Part 3)

Sramana Mitra: How are you going to inform the market that such an option exists?

Sridhar Vembu: There are two things to it. One, of course, is a good deal of traffic. Zoho is almost at the rate of a million new users per month. It’s at an increasing pace. Our horizontal line of applications are growing very rapidly in terms of user base. That is what we are planning to use to funnel into. Some applications don’t change depending on what your vertical is. Email and a lot of those things don’t change. Something like CRM is very specific.

Sramana Mitra: You’re expecting to be able to identify in the Zoho customer base.

Sridhar Vembu: That is how we bring leads to partners. On the other side, we have partners who are experts in their local markets. We could get very specific. It could be somebody who specializes in East Bay car dealerships. You really know the East Bay dealership. You know what their needs are. You know >>>

Thought Leaders in Cloud Computing: Sridhar Vembu, CEO of Zoho (Part 2)

Sramana Mitra: However, there is also another type of cloud business that has come together that follows more your mode. You’ve bootstrapped your company to scale at this point. You’ve taken your time. You haven’t done it at a VC pace necessarily. I think there are lots of niches from a cloud computing point of view. There are thousands of niches where you can build $2 million, $3 million, and $5 million companies that will not grow at an exponential pace. It doesn’t fit the characteristic of billion-dollar TAM. These are going to be fine. They’re just going to operate for a long time.

Sridhar Vembu: That’s right. We are looking at how we are structuring our own strategy. We are looking at a lot of missed markets to emerge. Part of this operating system strategy is to enable a lot of these companies. The operating system is a horizontal play that applies across every business. Then there are vertical, highly-specialized, domain-specific, or geographic-specific operating systems. >>>

Thought Leaders in Cloud Computing: Sridhar Vembu, CEO of Zoho (Part 1)

Zoho has been a tremendous success story in the cloud. In this interview, Sridhar Vembu discusses his strategy for the next phase of growth, and his general observations about the dysfunctions in the cloud ecosystem. Compelling conversation, must read.

Sramana Mitra: It’s been a while that we haven’t talked. We first did your story back in 2007, was it?

Sridhar Vembu: Yes.

Sramana Mitra: Right when you were getting going. Over the years, we’ve talked many times. Where I want to start today is how do you see the evolution of cloud computing and how are you steering the hole in that context? >>>

Bootstrap First to Exit, Bootstrap Again, Then Raise VC Money ALL from St. Louis: Stephanie Leffler, CEO of OneSpace (Part 7)

Sramana Mitra: As I’m listening to you, I’m thinking that last year, you did over $10 million with 50 customers. I can see that business model going to $40 million to $50 million in the next three years. You’ve told me that you’re switching business models, and your focus is going to be on the SaaS business.

Deal sizes are not going to be of scale. You’re selling software, so your average sales price is going to be a lot lower. The number of customers that you have to acquire is way larger, and people are not searching for freelance workforce management software. You have to find these customers somehow. How do you reconcile that?

Stephanie Leffler: The first thing is, from a price standpoint, I definitely recognize that a lot of SaaS platforms are relatively inexpensive. We have a slightly higher price point for our software because of the value that it does deliver. A customer who subscribes will be paying, at least, $100,000 for our entry-level >>>

Bootstrap First to Exit, Bootstrap Again, Then Raise VC Money ALL from St. Louis: Stephanie Leffler, CEO of OneSpace (Part 6)

Sramana Mitra: It’s, effectively, becoming a competitor to Mechanical Turk and UpWork.

Stephanie Leffler: Absolutely. UpWork also happens to be our partner. We’re fully integrated with UpWork and have an API integration. If you’re hiring freelancers there and you want to scale your project, people will often use OneSpace. UpWork provides people but they don’t provide a software that lets you manage them at scale.

Sramana Mitra: In this mode, what are the metrics of the business? How did the services business ramp up? How many customers and what kind of revenue? Once you switched a few months ago, what are the early metrics of the new format of the business?

Stephanie Leffler: We are so early with the new format that I don’t even have metrics that I can provide you. Our software went into beta two months ago. Our >>>

Bootstrap First to Exit, Bootstrap Again, Then Raise VC Money ALL from St. Louis: Stephanie Leffler, CEO of OneSpace (Part 5)

Sramana Mitra: How long have you sold the service?

Stephanie Leffler: We started in January 2011 – about five years.

Sramana Mitra: Tell me a little bit more about how this services business ramped up. Amazon was sending you people. You were managing their larger Mechanical Turk project using your platform. Did all leads come from Amazon or did you start marketing yourself?

Stephanie Leffler: In the beginning, all leads came from Amazon. We did start marketing ourselves. It’s funny. Thinking through the entrepreneurial journey, we found ourselves in a position where we never understood how good we had it in our first business with people searching online, finding exactly >>>

Bootstrap First to Exit, Bootstrap Again, Then Raise VC Money ALL from St. Louis: Stephanie Leffler, CEO of OneSpace (Part 4)

Stephanie Leffler: I remember Amazon called us about a year into this project and said, “How are you pushing so much work through Mechanical Turk?” We said, “We built this software platform to manage it, so it’s really easy for us to push a lot of work out there.” They asked us to come out and demo it for them. They were very impressed and said, “We’re trying to build a partner channel for this product. We need software providers like this to make our product more usable. Have you guys ever thought about going into business and selling the software?”

At that time we were like, “No, we’ve done the software thing. We’re in this thing now where you can just make money through advertising revenue. You don’t need to have any customers.” Two to three months later, we couldn’t get it out of our head. As our product got better and better, we thought that this is something that could actually impact the future of work. >>>