I have had a few days to reflect on the Zoho Analyst Summit. There were so many varied perspectives but a few things really jumped out as I looked at my notes
Productivity
From last year's analyst day, I had written how Zoho takes seriously what I called the "Amazon vector"
"The Zoho team is preparing for the day when Amazon decides to become an enterprise software, not just an infrastructure, player. The Bezos motto of “your margin is my opportunity” puts the margin rich software industry at risk."
This year, we saw over and over how Zoho executes to that threat
Sridhar Vembu, CEO presented on how Zoho avoids what he calls "costly inputs"
- "Our business code is that our customers should not find us to be a costly input."
- "Public cloud is a costly input (those AWS bills add up!)" - and therefore Zoho has been building its own data centers around the globe
- "Customer acquisition is a very costly input ($50-75 a click is "normal")" - and as he says it is often cheaper to invite a prospect to lunch. "Feed people, not bots" he said
- "A college degree is a costly input for employees (and hence employers)" - and so Zoho has a very different recruiting and training model
- "Healthcare has become a costly input" - Zoho now has in-house doctors on its payroll
- "Location is a costly input." - Zoho has been setting up shop in secondary and tertiary cities around the world
- "People are happier, more productive in small workgroups." - efficiency at smaller scale is allowing Zoho to go global using a different model, train machines more efficiently even with its relatively smaller datasets
Nothing made Sridhar's point about small teams with big ambitions better than the session where Dylan Mahood & Victoria Jones presented (under NDA) a wide set of AI/ML use cases. Who needs Google or Microsoft or Amazon or IBM scale?
Raju Vegesna, Chief Evangelist presented under NDA new apps and features coming in the next year and punctuated that by repeatedly popping up the slide below. More and more value at the same price. Yes we hear that around chips or storage, but how often in enterprise software?
Vijay Sundaram, Chief Strategy Officer presented on the increasingly global reach of Zoho's events and data centers - many in countries few other software vendors even bother to look at. And following the 'no costly input' adage, Zoho follows guidance from inbound web traffic and high impact events to build its presence in markets. Most other vendors depend on expensive sales teams and resellers when they globalize.
Mike Sigvaldason, a customer executive at Arctic Spa ended his presentation at the Zoho analyst day with a slide which said "The bitterness of poor quality remains long after the sweetness of low price is forgotten." If you had not seen the whole presentation you would have thought Mike, who represents a company which makes premium priced hot tubs and pools for extreme climates, was throwing shade at a cheaper competitor. Or something competitors might say about Zoho. But Mike's previous slides were about getting so much value for so little. His slides had bullets like "Customer purchases product, happiness ensues" " Users were actually using it!" " It was just a great experience." " One day we were CRM Plus, the next we were Zoho One." and the truly joyful "HOT TUB PARTY!" he repeated on several slides which led me to jokingly ask if that was a feature of the Zoho product.
I tweeted from the event that Zoho's philosophy on costly inputs is forcing a rethink of enterprise software economics.
Can Zoho sustain these principles as it moves up-market and expands into new geographies and verticals? That's to be seen but when you have a humble CEO who avoids Davos and presents in blue jeans and a full beard, your chances are that much higher.
Purpose
I have criticized Salesforce and others for making their events too political, and I am generally wary of vendors taking on moral stands. To me (and what I advise clients) 90% of customer decisions are made based on functionality, architecture and economics. 10% can be based on other intangibles. Vendors who take too much time on moral issues risk not putting their best foot forward on the 90% which matter.
At Zoho Day, Sridhar talked about Rural Revival in India which made a few analysts uncomfortable. I personally found it spiritual and spent an hour with him afterwards - a fuller post is coming on that conversation.
Another session focused on Zoho's stand on privacy. They are taking very strong positions:
- "We are not going to let surveillance companies track users on our properties" - they had logos of Google, Facebook, Twitter among others
- "B2B companies allow surveillance companies to track their users on their properties" - they showed screenshots from websites of several enterprise software companies
- "We don't run on public clouds, so they can't track our users' behavior, data"
There was loud cheering from many analysts during this session. I was one of the few who said I admired their position but I have a nuanced view on the topic.
To me, modern digital advertising and related tracking goes back to David Ogilvy's (the famous ad man) 1963 book "Confessions of an Advertising Man". He wrote "As Lord Leverhulme (and John Wanamaker after him) complained, `Half the money I spend on advertising is wasted, and the trouble is I don't know which half."
Google and others are just the front, you need to criticize every CMO who wants to build profiles of each of us so they can optimize their marketing spend and not waste 50% of their advertising spend. CRM vendors like to posture they are purer than their competitors but they haven't taken a stand against TV ads, spam email or robocalls. There is plenty of unethical behavior in those channels, often using their software. Regulators have not done much against those channels, why do we think they will magically be able to regulate privacy?
I am sure the strong privacy stand will bring Zoho new business, but they also risk being seen as taking opportunistic advantage of the backlash against Big Tech - see Alan Alper's comments from Davos. BTW I have many other thoughts on the subject I will put in a broader, non-Zoho centric post.
On Balance
There was way more "productivity" than "purpose" talk during the event - did not break my 90/10 rule above.
Set on the banks of the Lower Colorado river, just outside Austin, TX the event featured longhorn cattle, cowboys hats and belts, barbecue and nature trails. Sandy Lo who heads Analyst Relations did an outstanding job keeping everyone on schedule and keeping it fun.
Lots to savor. And lots for competitors to worry about.
