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?

Sridhar Vembu: If you look at then and now, cloud was still mostly talk that time. Now, it’s definitely going full mainstream. It’s about getting all of the enterprises over to the cloud. There’s no question about it anymore. It’s only a question of how fast. The second big thing you see is the whole infrastructure with AWS seeing rapid migration. That was not visible in 2007. Now that’s completely taken the world by storm.

The default is becoming, more and more, public cloud services now, which is a surprise from the 2007 perspective. Then moving to the higher layer of the apps, from 2007 to about 2013, we saw an explosion of applications. There were a few thousand startups. I predicted as early as 2007 that there will be that explosion and there will be a consolidation. It certainly took a little bit longer than I thought. Now we’re seeing the consolidation.

There’s going to be a lot of standard players. There’s not enough chairs to go around. You will see a lot of failures and shotguns. That’s what you’ll see in the next two to three years. We have been building the product suite in the explosion era. Along with it, our product suite has expanded. We’ve been integrating seriously in the last two or three years. We see the consolidation coming.

We want to emerge as one of the leading players in what we call the operating system in the cloud. Business customers, particularly small to mid-sized, don’t want to split their cloud apps into 50 different vendors. They want to consolidate to fewer players. Our goal in Zoho is to emerge as one of those players that they consolidate around. Right now in the mid-market, our message is resonating very well. That’s what we are driving really hard right now.

Sramana Mitra: I agree with most of what you said. There is one thing that I would add to what you said in terms of what’s happening in the cloud startup arena. There has been a lot of venture investments in the cloud. As you know, the venture investment thesis is these hyper growth companies. My take is that not everything that VCs have invested in fit into that characteristic.

I think there have been a bit of a trying to fit a round peg in a square hole. That’s the segment where the shakeout is going to happen. You’re talking about startup failure. I think that’s where the startup failure is going to happen because these companies are not going to grow fast enough. The VCs are not going to continue to fund them if they don’t grow fast enough and they don’t become very big very quickly.

Sridhar Vembu: I totally agree with that.

This segment is part 1 in the series : Thought Leaders in Cloud Computing: Sridhar Vembu, CEO of Zoho
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