August 6th, 2008
Zoho's millions
It’s not often I get excited by adoption numbers but the fact Zoho has passed the million user landmark represents an outstanding achievement and a cause for celebration. Zoli Erdos, chief hand waver and Irregular chum has all the details. I was more interested in the paying accounts but as Zoli says:
Zoho’s story has been that Adventnet, the parent company with “boring” but reliable, cash-cow network management products is financing the “Zoho experience”. Well, here’s an update to that story: the Zoho brand itself has been self-sustaining for a while now. While Zoho does not disclose numbers - it’s their prerogative, being a closely held private company - they apparently have paying users.
My understanding is that Zoho expects to reach profit ‘within the next year’ at which point they will talk about the registered user to payer ratio. This is a key metric and one that no freemium service can ignore.
What is MUCH more interesting to me is that Zoho has achieved a credible level of business traction with almost zero marketing and sales resource. Instead, it has concentrated on engineering which, as Zoli quipped to me IS the New Marketing. The company currently has 250 engineers working on the Zoho range. This level of achievement also underscores fellow Irregular Bob Warfield’s contention that much of the current analysis around saas business models is bunk. A view with which I thoroughly agree.
I’m also interested in the way the company has gained traction. The spike in May occurred when the company announced its tie into Google and Yahoo. Apart from demonstrating the incredible gravitational pull these vendors generate, it also provides proof positive (at least for now) that there doesn’t have to be a winner takes all Power Law in the cloud computing space. I hope Microsoft is taking note, even if Zoho’s numbers represent a fleabite on the enterprise office landscape.
Given my curmudgeonly leaning, what makes Zoho such an attractive company? I could think of many reasons but fairly high on the list is the way in which they work with people like me. They don’t deluge me with meaningless, legalese driven PR BS. Instead they concentrate on the facts. When things go wrong, they respond. But I think Vinnie Mirchandani gave one of the best reasons when he said to me that in a world where we are so used to testosterone driven managment styles, “Zoho comes across as relatively humble.” I hope that as they grow, they don’t forget their roots.
Dennis Howlett has been providing comment and analysis on enterprise software since 1991. See his full profile and disclosure of his industry affiliations.
