Happily Bootstrapping: Zoho CEO Sridhar Vembu (Part 3)

During the downturn after the bubble burst, many companies took significant hits. Here, it is revealing to notice there was really only one tough year for Adventnet, which could actually be described as an R&D year. That could have taken place anytime in the company’s history. The bubble burst did not destroy the company, they simply reacted positively to the change and moved in the right direction.

SM: Did you have to take a revenue hit between 2000 – 2003? SV: In 2001, due to the legacy of software we had fielded, we still experienced growth. In 2002 we took a hit. By 2003, although a lot of the startups were gone, we had successfully transitioned the core of our business to well established companies. By 2004 and 2005 this network management software had really taken off. Of course, we had a head start – we already had the technology.

SM: What is the Manage Engine? SV: It competes with the likes of HP OpenView, and Computer Associates companies like them. The main difference is that it is geared towards the mid-level markets, not the high-end enterprise segment.

SM: How were you selling into the mid-market? SV: This is a very interesting development. By 2004, the Google advertising model had taken off. We found we could reach customers directly. Today we have thousands of new customers per month, most of them through the Internet. Resellers also – maybe 50% of our sales are from re-sellers. That market has also changed. It has become much easier to supply companies directly. The Internet is allowing us to reach all of these customers.

SM: You have Manage Engine on one side and Zoho on the other side. What is the revenue split? SV: Zoho is new, so it has not yet contributed any revenue. Our OEM model is reviving as well. Interestingly enough, optical networking products revived in the 2004 timeframe, which really struggled in 2002. Things like wireless, WiMax, have taken over from optical some as well.

Plus, it is built on a stronger foundation because there are not so many shaky startup companies. The players now are business-model focused companies. The market has stronger companies, it has recovered and we are doing good business. Not a hot business, but a good business. Manage Engine is doing really well in its market environment. Zoho is invested in the on-demand future model.

This segment is part 3 in the series : Happily Bootstrapping: Zoho CEO Sridhar Vembu
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