Because while I still consider Google’s products inferior that gap is closing quickly. The drive for profit often runs hand-in-hand with innovation and companies whose competitors innovate quicker than they do tend to die.
I’m someone who has always been a fan of both Zoho the company and their products. So much so that I actually sent a fairly embarrassing e-mail pleading with Zoho to implement a feature I needed so I could steer my company in their direction.
But instead I’m planning to role out Google Docs to a first round of users next month. The feature I needed was reasonably obscure so I don’t think this spells doom for Zoho but it’s still alarming when one of their most ardent supporters is pushed into the hands of their competitors for lack of features. It makes me wonder whether they could have implemented that feature if they’d taken VC money.
I am sorry we lost your business. Do you remember what the feature was?
Now to address your broader point, we are at a stage in Zoho (over 1200 people in the company Zoho Corp, check zohocorp.com, with Zoho.com division alone having around 400 people) where venture capital would not make a difference to the way we operate (except that we would necessarily have to worry about an exit for the VCs). So I can say with confidence it was not lack of financial resources that led to us not adding the feature. It is most likely due to competing priorities in our product teams, and the fact that you simply cannot keep adding people (however qualified), bloat a team, and still expect results.
On the point I clearly hope Zoho continues to thrive but if you do I think it will be because of a lack of skill on the side of your competitors. Because while I have no doubt a privately funded company can beat a badly run competitor my point is just to say if you take two equally skilled competitors than the one with more money is going to win out in the end.
So if Zoho is managed better than Google Docs or Microsoft's Office than you'll win but it will be because you had so much skill that you managed to overcome the fact that they have more money.
Try telling that to Linus Torvalds, Richard Stallmann or even Steve Jobs who faomusly said: Being the richest man in the cemetery doesn't matter to me ... Going to bed at night saying we've done something wonderful... that's what matters to me.
So even if the smaller company fills more obscure gaps at first the bigger company will continue to gain steam and continue to need growth. That need for growth will eventually lead them back around to the obscure customers once they’ve gained all the mainstream customers they think they can. When that happens the company with the VC money will have grown much larger than the private company and will be able to put more resources into getting those obscure customers.
In my case Google (the ultimate example of a company that grew off VC money) actually sent a representative out to our company to sell us on Google Docs. Having the money to send someone out to an obscure little agency like mine is exactly what I mean by “more resources”
Also, it is a bit easier for you since you're SaaS business and so don't need VC or a line of credit to maintain inventory like Zappos did...
I often get the impression that many people in the tech industry have not internalized that it's possible to make a successful business (and a lot of money) without taking investment. Or that it may be desirable to run and grow a business over a long time period like decades.
While I don't have hard facts on this, I would expect that more entrepreneur wealth has been created through running businesses instead of exiting. Of the wealthy people that I personally know, this statement holds. But it seems reinforced regularly, for example with Gabriel's post yesterday analyzing how an entrepreneur would go about pocketing $5 million pre-tax on an exit.
I wonder if the McDonald's Vs. the local restaurant model applies here. To me it seems like quite a few local restaurateurs are wealthy and they don't have to scale massively to become millionaires. If you are just interested in running a small business and to serve a small section of the society you could still become wealthy, no? And the Web 2.0 (and the accompanying lower barrier of entry) brings perfect opportunities to follow this scheme. I know at least one friend who has a regular income from the App store following this model. But he is not a millionaire by any means. I am curious if there are really people out there who are wealthy simply by serving 20-50K people on the web with no potential/plan to scale.
PS: This is not to say zoho follows this model by any means.
I.e. they are the same people behind www.manageengine.com www.webnms.com etc.
Great line.
its nice to see this attitude. :)
