
Why We Compete with Google - timr
http://blogs.zoho.com/uncategorized/why-we-compete-with-google/
======
sridharvembu
I will respond to Matt Maroon's argument directly: revenue per employee is one
of the most important metrics in a software company, which is about as pure
human labor as you can get. The eventual business goal of _every_ such effort,
including Y Combinator (if you define "revenue" to include the proceeds of an
exit, which is accurate when you consider that Y Combinator itself is an
ongoing business entity) is to maximize revenue per person.

So Google's management, having tons of cash to invest in growth, faces this
question "What do our next 5000 employees do?"

My argument is that even with a monopoly in two areas, Microsoft is
underachieving Google in that metric today. A new competitor to Office,
Exchange, Sharepoint etc. will, by definition, not be a monopoly (at least at
first, perhaps for a long long time), so their revenue/profit numbers will
have to be lower than the monopoly's numbers.

Then there are markets like CRM etc. where very successful incumbents make a
lot less than what Google makes today.

Put all these together, and the conclusion is obvious.

(I will ignore the irrelevant tangent on English - I have nothing to prove).

------
ordinaryman
" _I am saying support staff is absolutely vital to succeed in the business
software market. That is one of the reasons revenue/employee numbers are
lower._ "

Google does want to reap money from such low-margin, support-intensive
"business software markets" too. But not directly. It enables 3rd parties to
build such applications over it's platform (GAE). Such suites will soon show
up to compete with the likes of Zoho/Salesforce/Intuit/SAP.

A quote from "Fear the Right Things" section in
<http://www.paulgraham.com/startuplessons.html>

" _What you should fear, as a startup, is not the established players, but
other startups you don't know exist yet. They're way more dangerous than
Google because, like you, they're cornered animals.

Looking just at existing competitors can give you a false sense of security.
You should compete against what someone else could be doing, not just what you
can see people doing. A corollary is that you shouldn't relax just because you
have no visible competitors yet. No matter what your idea, there's someone
else out there working on the same thing.

That's the downside of it being easier to start a startup: more people are
doing it._"

Google makes starting such startups easier and it becomes a mass market again,
with apps competing against each other, running on its platform.

Whoever wins/loses, Google ends up making better revenue.

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senthil_rajasek
From the comment on the original post by the author.

"But a company like Google that has such sky-high margins today will find it
hard to stomach to adjust to lower margins. That is my real point."

As far as I know financial statements don't reveal how many people are
allocated per business unit ... curious how the author arrived at these
numbers for the profit margins. How does Zoho plan to adjust to its own
decreasing profit margins? Does Zoho believe that the off shore development
cost advantage will last forever?

------
daveambrose
"Now it is clear why we compete with Google. Google is perhaps the most
stunning technology success story ever, but we simply don’t believe Google has
the rational business incentive to get too deep into the business/IT software
category. The lower revenue and profit per employee figures would be tolerable
if there were huge growth opportunities there, but when very successful
companies like Adobe and Intuit pull in revenues well shy of a Yahoo, when
even the enterprise software leader SAP is smaller, and slower growing than
Google (Google makes nearly as much in profit per employee as SAP or Oracle
Salesforce make in revenue per employee), it is fairly clear this market is
not going to make a material contribution to Google’s growth and profitability
objectives. So what is Google’s plan here? It is fairly obvious they are in it
to put Microsoft on the defensive on its home turf, so that Microsoft’s
offensive capability in the internet is diminished. It is also perfectly clear
why Microsoft wants to be an internet player - as Google has shown, it is a
higher margin business even than its monopoly-profit core business."

------
markbao
That spreadsheet FROZE my browser as it loaded.

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13ren
Who cares about employee count when you can have profitability? Using their
spreadsheet (which I like, but not all the shortcuts work in the browser):

    
    
            profit/revenue as %
      MS    29%
      ORCL  25%
      GOOG  25%

------
samataro
wtf! am i lost or does this blog post make absolutely no sense?

------
burp
When daggers are pointed at innocent hearts And muskets are ready to fire When
tyrants ride high and govern with fear As the forces of evil conspire Then
from out of the night a hero must rise With courage that even a mask won't
disguise They turn to . . . the man called Zoho One who's larger than life and
defender of all Is this man who the people acclaim He's the one who strikes
back for the poor and oppressed A hero . . . whose name is Zoho His name is
Zoho

------
mattmaroon
That is the worst logic I've ever seen. Loosely translated:

"Microsoft makes hit tons of money, both per employee and overall, a huge
chunk of which comes from their Office products. Google makes slightly more
money per employee, but far less overall, none of which comes from their
Office products.

Therefore, Google would not want to succeed in the Office space. Why? Because
Adobe doesn't make all that much."

Huh? I'm just going to assume, since the poster's name is Sridhar, that he
actually just doesn't speak English well enough to express his thoughts
coherently, because it is either that or he doesn't have them.

~~~
sutro
The logic is that Google, whose Internet cash cow probably has more milk left
in it than Microsoft's Office/OS cash cow, is already more profitable per
employee than Microsoft, so its incursion into the Office space is not a
serious quest for higher margins but rather a tactical move made primarily to
put Microsoft on the defensive. It makes perfect sense.

Not knowing anything about you or your startup, I will nevertheless go out on
a limb and guess that Sridhar Vembu's English is better than your Hindi, and
that his fully bootstrapped startup's $40 million in revenues and $12 million
in profits [1] puts it in better financial condition than your business.

Try to open your mind and learn something from the man behind one of the most
successful fully bootstrapped tech businesses in the game today. Most
entrepreneurs wouldn't consider going up against both Microsoft and Google
with no investment backing, but Vembu saw an opportunity, took a big risk, and
is now in a position to reap sizable and well-deserved rewards.

[1] [http://www.forbes.com/technology/2008/02/22/mitra-zoho-
india...](http://www.forbes.com/technology/2008/02/22/mitra-zoho-india-tech-
inter-cx_sm_0222mitra.html)

~~~
mattmaroon
It doesn't make sense. Office is a very high margin business. Surely Google
won't achieve the profit margins MS has even if they take it over, but it will
still be substantial.

Revenue per employee is largely an arbitrary number as well, hence I object to
its being used as evidence for anything. You could just as well use revenue
per unit of cheese consumed in the cafeteria on Tuesdays to prove your point.

I didn't write a babbling incoherent article in Hindi, but if I do than that
observation would make sense. He, however, wrote one in English.

Also, his startup success (or mine) doesn't have anything to do with whether
or not that article is logically coherent.

~~~
netcan
I don't think the argument is about (or entirely about) attractiveness (or
lack thereof) of high margin sectors. It's about being able to thrive in that
kind of environment.

For example, Apple cannot thrive in the same kind of environment as Dell.
Apple's corporate culture, habits & history would put it at a disadvantage in
a world where margins are thin because it has not evolved or been optimised
for that environment. In a world where competitively driving down costs via
stock turnaround times & cheap production determine success Dell has the upper
hand.

Similarly, in a world where revenue per employee is low, a company such as
Google might be ill equipped.

I am not agreeing or disagreeing with this position (I don't really know
enough to). I'm sure you could argue other forces at play might be more
significant or that his assumptions about Google's tactics are incorrect. But
it's not nonsensical.

What I did find unclear was which category he places himself in: SMB software
or enterprise. But that's a limitation of the medium (personal blogs). Some
background is assumed. I'm willing to take that as it means writers don't have
to start from scratch.

