Thought Leaders in Cloud Computing: Sridhar Vembu, CEO of Zoho (Part 2)

Sramana Mitra: However, there is also another type of cloud business that has come together that follows more your mode. You’ve bootstrapped your company to scale at this point. You’ve taken your time. You haven’t done it at a VC pace necessarily. I think there are lots of niches from a cloud computing point of view. There are thousands of niches where you can build $2 million, $3 million, and $5 million companies that will not grow at an exponential pace. It doesn’t fit the characteristic of billion-dollar TAM. These are going to be fine. They’re just going to operate for a long time.

Sridhar Vembu: That’s right. We are looking at how we are structuring our own strategy. We are looking at a lot of missed markets to emerge. Part of this operating system strategy is to enable a lot of these companies. The operating system is a horizontal play that applies across every business. Then there are vertical, highly-specialized, domain-specific, or geographic-specific operating systems.

Let’s consider the Australian insurance market CRM or the Malaysian petrol chemical CRM. We have an automotive shops CRM. Its doesn’t look like a CRM at all. It’s actually more of a auto garage flow. That market is going to be $1 million or $2 million. That’s not very interesting to VCs, but this is actually an interesting emerging category. The Platform-as-a-Service basically gives you a computer in the cloud and all the bandwidth. Here, we give you a much more highly-tuned set of horizontal modules on which you build these personalized verticals.

Why would a partner do this? It’s a lot faster. You can get to market in a couple of months. What we are seeing is partners who have that specific domain expertise, specific geographic knowledge, and specific customer reach. That is what they bring to the table. That’s an easy $1 million or $2 million market in which they don’t need to have a lot of development experience. They’ll bring a lot of the business and domain expertise.

Sramana Mitra: Very interesting. I completely agree with that strategy. It’s sort of what Salesforce did with their Platform-as-a-Service strategy. They did very well with that strategy. A lot of very substantial companies have spawned out of that strategy for them. If you can take it down to much smaller companies…

Sridhar Vembu: That’s what we are planning. We’re planning to take it to much smaller companies.

Sramana Mitra: Have you started this?

Sridhar Vembu: This is what we launched as part of our CRM platform two weeks ago. This was actually one of the things we launched. Along with it, we launched this vertical market strategy where we rely on partners to take it to this micro-segmented market. Geographic is one strategy, and, of course, we have a domain-specific strategy. We are now actively recruiting partners. We have about 25 or so partners who are on the system. We are planning to launch a marketplace over the next month or two. Again discovery. How do customers find these things?

This segment is part 2 in the series : Thought Leaders in Cloud Computing: Sridhar Vembu, CEO of Zoho
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