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Philosophy, Conviction, and Culture – The Distinctive Edge of Zoho – Six Five On the Road

Philosophy, Conviction, and Culture - The Distinctive Edge of Zoho

On this episode of the Six Five On the Road, dive into the unique business model and cultural ethos that gives Zoho its competitive edge. Join our hosts at Zoholics in Austin, Texas– The Futurum Group’s Lisa Martin and Cory Johnson, with Moor Insights & Strategy’s Melody Brue–to explore the foundational principles that have shaped Zoho into a standout company in the tech landscape.

Their discussion covers:

  • The core philosophies that drive Zoho’s business strategies
  • How conviction in their values shapes Zoho’s product development and customer relations
  • The impact of Zoho’s company culture on its global success
  • Strategies Zoho employs to innovate while staying true to its roots
  • The role of leadership in fostering a unique workplace environment at Zoho

Learn more at Zoho.

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Transcript

Cory Johnson: And we’re back in Austin, Texas, for Six Five On the Road, which as I mentioned is weird, because Six Five’s based in Austin.

But we’re here at the Austin Convention Center at Zoholics Conference looking at this really, really interesting, really big, really important, really private software company, with just the right person.

Lisa Martin: We have Mel Brue here who is the Vice President and Principal Analyst at Moor Insights & Strategy. Mel, we’re new to Zoholics and Zoho, but you’ve been covering them for a while.

Melody Brue: Yes.

Lisa Martin: I heard yesterday on the flight here, I was sitting next to an analyst who said, “This is a very different conference.” So she set my expectations. And this morning in the media and analysts session, then in the keynote, I immediately heard and felt the difference with this organization; the philosophy, the conviction, the culture.

You’ve been covering them for a long time. Walk us through some of the things that you’ve seen over the years as it’s evolved.

Melody Brue: It’s funny that it has evolved. You can see just from a product standpoint, it’s grown. And I think when I first saw the growth of Zoho, it concerned me a little bit. I was like, “Wow, they might be trying to do a little too much.”

I think from my perspective, it hasn’t been too much and the customers continue to ask for more and they’ve been able to spread the goodness around and they’ve been able to really deliver on all of those promises. That’s the one thing that’s changed.

The one thing that hasn’t changed is the philosophy that they are a small company that has gotten really big, and they haven’t changed.

Cory Johnson: That’s an interesting way for you to look at it. I can see why you see it that way. I walked into the morning session and there were thousands of people here, maybe.

Lisa Martin: Yeah, a couple thousand.

Cory Johnson: It was a really big crowd. That was impressive, as you would expect from a really big, well-known software. If we’d walked into an Oracle conference, I’d be like, “Oh yeah, sure.” But this was Zoho and it was just a giant crowd.

Lisa Martin: Yeah.

Melody Brue: Yeah, and they call it Zoholics, and it is really when you talk to their customers, you understand why.

Lisa Martin: Yes.

Melody Brue: The customers are like, “We need our Zoho.” I don’t know if you saw in the keynote this morning, it’s like, “Raise your hand if you use one Zoho product.”

Cory Johnson: Yeah.

Melody Brue: And then 10, and then 20, and then 30. And people still have their hands up. I think they do such a good job of creating this environment where you use one and then the next one is familiar, and then you’re on a platform where everything works together.
You can collaborate within the platform. But then also you can use… They have a CRM. But if you’re not on their CRM, you can integrate in there-

Lisa Martin: That’s impressive.

Melody Brue: And you’re not just, have all this disparate data that you’re just lost within it.

Cory Johnson: It also seems like the low-code customization lets people really feel connected with-

Lisa Martin: Totally.

Cory Johnson: … their Zoho as you pointed.

Melody Brue: Yes.

Cory Johnson: In the same way, one of the people who’s setting your iPhone screen. But that, because you’re the one that set it up that way, it’s your personal personalization. And that’s what makes the difference.

Melody Brue: Yeah. I talked to two different customers today. One that grew on Zoho and one that started on Zoho. It was really an interesting conversation because, one, just knew that it didn’t want to start on spreadsheets, and so they started with Zoho. And so my question to him was-

Cory Johnson: But this person couldn’t use Excel, they used Zoho?

Melody Brue: Well, they didn’t want to.

Cory Johnson: Interesting.

Melody Brue: Just said, “I knew that that was not the way to go.” And so they started with Zoho. And so my question to him was, “Were you smart or were you lucky?” He was like, “Maybe a little of both.”

But then other customers who grew with Zoho or migrated from another. I’m not sure if you’ve heard the numbers, but I think a massive amount of their growth, maybe some 80% of their growth right now is migration from competition.

Lisa Martin: I saw that. And that number was so big.

Cory Johnson: Really?

Melody Brue: Yeah.

Lisa Martin: Oh, yeah.

Cory Johnson: So, people who are using other CRM…

Melody Brue: People who are using other software are migrating to Zoho because their product…

Cory Johnson: What do you think? Who is losing business to Zoho?

Melody Brue: I would say Microsoft is, probably. I asked that question on a panel and they said, “Well, we don’t want to really give-”

Cory Johnson: No one wanted to say?

Melody Brue: “I don’t really want to give you the reasons why customers are telling us.”
So I said, “Well, what are the reasons for the big wins?” And they went, “Well, we don’t really want to give you that either.”

Lisa Martin: Yeah.

Cory Johnson: Could Salesforce be another one?

Melody Brue: I would guess, yeah.

Cory Johnson: And we’ve seen a really dramatic slowdown in Salesforce core software sales. A slowdown in the growth rate, I should say.

It’s a super impressive company. Mark, don’t get mad at me. But we’ve also seen lots of full-time acquisitions have boosted the growth.

Lisa Martin: That’s a good point.

Cory Johnson: Those have done quite well. These guys haven’t done that.

Lisa Martin: They grow organically. I don’t think I’ve ever seen that.

Melody Brue: Right. It is a lot of word of mouth. You don’t see Zoho marketing, you don’t see a lot of advertising. And they do some really interesting things that I think will keep customers happy and keep them around.

I use a couple of Zoho products, and there are some that maybe have sat dormant for a little while. They will actually send me an email and say, “Hey, we see you haven’t used this. You probably shouldn’t be paying for it.”

Lisa Martin: They’re proactives.

Melody Brue: That’s not a typical software maneuver, right?

Lisa Martin: Oh, no. No.

Melody Brue: It’s usually like, “Hey, use it. Did you know we have this feature? Do you know…?”
It’s like, “Don’t pay for something you’re not using.”

Lisa Martin: Yeah.

Cory Johnson: Yeah. That’s not the emails I get from Adobe.

Melody Brue: Right?

Lisa Martin: No.

Cory Johnson: It’s a different approach.

Melody Brue: Well, use it.

Lisa Martin: It’s like what Sridhar was talking about. I read, I think it was a tweet from him or it was on his LinkedIn profile, one of the two. Where he was talking about the growth of the organization, the organic growth, but also that they don’t call themselves a software company. They call themselves specifically a technology company.

And I thought the other day, I wonder what they describe as the difference. And he showed a slide this morning. I think the number was 32% of software that’s sitting out there that’s not used. So to your point, they’re actually proactively going out to their customers saying either, “Hey, great new things here.” Or, “Let’s cancel.” You just don’t see that.

Melody Brue: Yeah, don’t use it. If you’re not using it, don’t…

Lisa Martin: It’s shelfware on his money for companies.

Melody Brue: Right. And I think they look really closely at how their customers are using products.

One of the questions that, when I did a panel today, they said, “Ask what they don’t like.” They want to know that, and they’re not afraid to talk about it in front of the other customers. It’s like that…

Cory Johnson: It’s different. It’s really different.

Melody Brue: … that feedback.

Lisa Martin: Well, they did the Q&A this morning in front of the entire audience. And normally that is a select few press and analysts that get invited to hear that. It’s under NDA.

Melody Brue: Yes.

Cory Johnson: Not least of which, they don’t want to tank the stock price by saying something accidental. It’s not an issue for a private company.

Lisa Martin: True. It’s not. And that was something that I hadn’t considered, so that was refreshing to me to see it.

Cory Johnson: I don’t want you to have to start thinking like me. It’s not pretty in here, it’s not a good place.

Lisa Martin: I’m sure it’s not.

Cory Johnson: I don’t want to get into the pricing details, but a number of the people who talk to customers talk to me. They’d drop a line: “Oh yeah, and the pricing was good.” It sounds like their software is a lot less per seat than competitors.

Melody Brue: Yes. I think that that’s true. It’s packaging. Depending on what they have, I’ve heard some people say that they wish they could have one thing. They only have one thing. So I think it’s packaging and I think yes, price per seat. Dependent on customers. It would be great just to see that publicly, just to, you know–

Cory Johnson: We’re never going to see it. We’d love to see it.

Melody Brue: We’re not going to see it.

Lisa Martin: And there goes the CEO right now. You said you were talking to customers today, or… No, no, no. I’m sorry. In the keynote, he asked people, “Raise your hand if you’re using 10, 20, 30.”

Melody Brue: Yes.

Lisa Martin: They’ve got 55, what? 55 plus?

Melody Brue: Yes.

Lisa Martin: Applications now. And are you seeing the majority of customers that are using a pretty good amount of the suite?

Melody Brue: There were a lot of them today that had hands raised for 30 plus, but Zoho One is just a comprehensive. And I think there’s a lot of customers who are on Zoho One. I’ve actually heard a lot of them say, “I want to be,” if they’re not.

Lisa Martin: FOMO.

Melody Brue: Yeah.

Lisa Martin: FOMO is real. Mel, last 30 seconds. What would be a couple of words that you would use to describe Zoho and the trajectory that it’s on, from your analyst lens?

Melody Brue: Oh, that’s a great question. I would describe Zoho as really customer-centric. I think building a future for innovation, but not for innovation’s sake.

Lisa Martin: No.

Melody Brue: I think for, really, the customer in mind. Collaboration in mind, interoperability in mind. And just solving problems and not really caring about what the rest of the world is doing and shareholders. It’s just actually getting out and executing and not being afraid to make a mistake and pivoting.

Lisa Martin: Exactly. Awesome, Mel. Thank you so much for sharing your insights about what you’ve seen the last couple days. We appreciate it.

Melody Brue: Yeah, thank you.

Cory Johnson: All right, coming up next. One last look at Zoho with some of our other analysts. We’ve got an interesting take on what this company’s up to here at Zoholics Austin, with Six Five On the Road.

Author Information

Lisa Martin is a Silicon Valley-based technology correspondent that has been covering technologies like enterprise iPaaS, integration, automation, infrastructure, cloud, storage, and more for nearly 20 years. She has interviewed nearly 1,000 tech executives, like Michael Dell and Pat Gelsinger, on camera over many years as a correspondent.

Cory Johnson is the Futurum’s Chief Market Strategist and the host of the Drill Down podcast.

His peripatetic career has seen him in prominent roles as a hedge fund portfolio manager and investor, technology journalist and broadcaster. Fundamentally he’s an entrepreneur -- helping to start media companies such as TheStreet.com, the Industry Standard, Slam (the world’s best-selling basketball magazine) and Vibe. He was CNBC’s first Silicon Valley correspondent and later helped create the TV show Bloomberg West for Bloomberg TV and the radio show and podcast Bloomberg Advantage. He was a senior executive at the blockchain startup Ripple, a portfolio manager for Kingsford Capital and a principal at the Forensic Research Group.

Johnson is also an advisor to Braintrust, C3.ai, Prolly AI, Provenance Bio, Stringr and serves as a delegate to the Episcopal Diocese of California.

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