Unforgotten Brands – Zoho
Zoho Corp. stands as a testament to the power of perseverance and the impact of strategic pivoting in response to market demands.
Zoho Corp. (in an earlier avatar) emerged sometime between 1995 and 1996.
Founding Years and Initial Struggles
1995 saw the launch of two bootstrapped businesses, one in the United States and one in India. In East Tambaram, Chennai, Shailesh Kumar (now the head of Engineering and Zoho Labs), Sekar Vembu (now the founder of Vembu Technologies), and Kumar Vembu (founder of GoFrugal and now involved in Zoho Corp.) began a bootstrapped business at home. After just a year in the US, Kumar returned and found contract software development employment in the telecom software area.
Advent Network Management
Tony Thomas recruited vTiger’s current CEO, Sreenivas Kanumuru, and launched a bedroom operation in New Jersey in 1995. His older brother, Joy Thomas, provided Tony with a personal loan. Tony had begun the process of developing a Java library for the SNMP API protocol.
Despite being from IIT and introduced to Sridhar Vembu by a mutual acquaintance, Sridhar Vembu did not know Tony. Tony was three years Sridhar’s senior. After that, Sridhar brought Tony to meet his brothers. In the middle to late 1996, they began collaborating.
After relocating to Silicon Valley in April 1996, Sridhar struggled to find a way to support himself. He first dabbled with making hardware. He lost his whole life savings because he was utterly ill-prepared. To pay the bills, he worked as a contract programmer for a few different companies. Cisco bought an ATM switch software company, where he worked as a bug fixer. In the lab, he would spend numerous evenings trying to decipher pre-ANSI C code for its elusive flaws. That was the real test for this Princeton PhD, and he had already decided he didn’t want to utilise his degree to acquire a job; instead, he wanted to be a software engineer. Therefore, the bug-fixing position was perfect for him since it gave him hands-on experience with programming.
In May 1997, Sridhar joined the group—not formally, though. He had recently spent ten dollars at Office Depot printing a stack of business cards that said “VP of Marketing and Business Development, Advent Network Management,” which was Tony’s company.
The most pressing reason he needed the contact information was that Tony had approached him for assistance in staffing a 10×10 booth that he had booked at the prestigious Las Vegas trade event, Networld + Interop.
The fact that Sridhar was able to make some sales at that gathering surprised even Tony. Although he admitted he was not very good at selling, Tony was much worse, so Sridhar ended up becoming the salesperson simply by default. Tony was more like a sales engineer—excellent at explaining the programme but forgetful when it came time to ask for money!
Not that Sridhar was a great salesman either; many of Sridhar’s customers expressed that they would have paid ten times as much for his software, much to Sridhar’s chagrin.
After that, he went full-time because he had saved up enough. They made over $350,000 in sales in 1997, but they did not pay themselves because they reinvested the money into research and development for their next product, Web NMS.
The company in India was still involved in product research and development, while the one in the US was in sales. Both firms continued to function independently.
Sales surpassed $1 million in 1998, but it wasn’t until the middle of that year that they began receiving a small salary. In 1999, revenues more than quadrupled thanks to Web NMS.
Sridhar continued to use his “VP of Marketing and Business Development” title until 1999, when Tony began to exert pressure on him to succeed him as CEO. He assured him that the company required someone with his business acumen and vision to lead it. For a full year, Sridhar was opposed to the idea. He cautioned Tony against having the CEO serve as the initial point of contact for customers, saying that this would give the impression that the firm does not have any salesmen on staff.
At that point, they hired a professional salesperson, and by doubling their revenue in 2000, they were well on their way to $10 million in revenue. Finally, Tony convinced Sridhar that he should take over as CEO.
Dot Com Bubble Crash
After refocusing its efforts on small and medium-sized enterprises and expanding its operations in Japan by June 2001, the company took a major hit when the dot-com bubble crash in 2001. AdventNet persevered through a significant decrease in its clientele by 2002. They knew it was time to pivot after this since they had mastered product development and sales, but then a new issue arose, and their WebNMS product hit market saturation. By 2003, they had finished developing their next product, Manage Engine, which would aid businesses in overseeing all aspects of their information technology operations. Many businesses started using the software, and 60% made it to the Fortune 500 list.
Rebranding
After rebranding in 2009, the name became Zoho Corp. Originally focusing on serving home offices and smaller businesses, AdventNet opted to retain the domain name “SOHO” for Soho.com during their 2009 rebranding, only to find the domain name already taken. As a result, they settled on Zoho, which is how they became known. The acquisition of the domain Zoho.com occurred around 2002. They also established Manage Engine, WebNMS, and Zoho University as divisions of work.
Product Development and Market Competition
They focused on product development and released Zoho Writer, Zoho Sheets, and Zoho Docs. However, the same year, Google entered the market with Google Docs and Sheets. Realising they would have a hard time competing, Zoho shifted its focus to CRM and launched Zoho CRM. Additionally, in 2005, they launched Zoho Schools, where they paid students to study but now have more than 1400 graduates. Previously, they offered free training.
Conclusion
Zoho Corp.’s journey from a modest start to a major software player underscores the importance of adaptability, innovation, and a commitment to ethical business practices. Sridhar Vembu’s leadership and vision played a crucial role in steering the company through various challenges, including market competition and economic downturns. Today, Zoho Corp. stands as a testament to the power of perseverance and the impact of strategic pivoting in response to market demands.
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