
Zoho: Why We Haven't Taken Venture Capital - rajuvegesna
https://blogs.zoho.com/general/why-we-haven-t-taken-venture-capital
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rmorrison
_Ultimately it comes down to the question of "exit". As a founder, I have no
interest in exit or liquidity. I am in business to run a business, not to run
away from it. Or as Warren Buffet puts it: Our favorite holding period is
forever._

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.

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all_elements
Fully agree.

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.

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TomOfTTB
Zoho had the good fortune (and foresight) to venture into an area that no one
took seriously. Namely Web Apps. Because of that they’ve had time to slowly
build, not take VC money and experiment. But I don’t think that’s true of
every company and to be honest I don’t think it will be true of Zoho for much
longer.

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.

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sridharvembu
Tom, thanks for your kind words.

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.

~~~
TomOfTTB
It was HIPAA compliance and apparently you are working on it but I'm in LA
County where there's already a pilot program. And for the record you did not
lose my personal business for what it's worth.

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.

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rms
Google Docs is HIPAA compliant?

~~~
mahmud
No it isn't:

[http://www.google.com/support/forum/p/Google+Docs/thread?tid...](http://www.google.com/support/forum/p/Google+Docs/thread?tid=2081da0c8991bf22)

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corruption
I thought zoho was started by a company with 9 figure revenue already? It's
not like they started zoho out of a bedroom.

I.e. they are the same people behind www.manageengine.com www.webnms.com etc.

~~~
sridharvembu
Yes, it is the same people, and it is the same company which used to be called
AdventNet until about a year ago, when the popularity of the Zoho brand made
us change the name to Zoho Corp to avoid confusion. AdventNet itself was
bootstrapped, started in a bedroom, never took any outside capital.
ManageEngine and Web NMS are our other divisions.

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rokhayakebe
_As a founder, I have no interest in exit or liquidity. I am in business to
run a business, not to run away from it_

Great line.

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aditya
Sridhar - what would you have done had you been in Tony Hsieh's shoes?

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...

~~~
sridharvembu
Honestly, I don't know what I would have done; I agree their situation is
quite different. I probably would have done what he had to do. Amazon is a
great company that I respect.

~~~
aditya
Thanks and I am totally rooting for Zoho, you're building an amazing company
and culture quite like Apple, Zappos and Netflix.

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iworkforthem
It's strange how VCs always want to try their luck to hit up startup who are
already doing well. They an't stupid too, no way they are going to sell out
now. Why not be an angel instead? So much easier, stuffs like video, mobile
and advertising will definitely be huge in the years to come still. Go out do
some homework and approach those founders instead. Or even better, with all
your VCs funding, start your own labs. U have no idea how many smart people
are there in USA for hire still.

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sutro
Sridhar, thanks for being an inspiration to those of us trying to follow in
your footsteps.

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redorb
I would have guessed with 90% "assurance" that they have; guess it goes to
show how much I think they've done without any funding. Very Impressive.

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rfugger
Reminds me a little of craigslist.

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jheriko
kudos.

its nice to see this attitude. :)

