Zoho as fast follower
Zoli Erdos asks the question Would You Rather Be First to Market or Better? in reference to the early history of Zoho, when we were attacked as copy-cats (OK, it was really one guy who raised a ruckus, a competitor, no link love for him!)
To be honest, we never thought of ourselves as fast followers. The history of Zoho dates back to the telecom/dotcom nuclear winter. In the late 1990’s AdventNet emerged as a key supplier to the telecom equipment industry, a position we proudly hold today. Along with that status came the pain during the downturn. Being a prudent company, we never were at risk of going out of business or anything like that, but it was definitely painful. And we found ourselves with a lot of free time too.
It was sometime in 2003 that a couple of engineers asked me “Why not do something different, like an online office suite?” I said “Come on guys, tell me something more obvious”. They were persistent. Finally I gave in, and we started a small project. We had some false starts, with yours truly implicated in some key technical decisions that proved, ahem, a bit unwieldy - never trust your CEO to make technical decisions 
- particularly if you want to ship a product. But our engineers being smart, they recovered, and we ended up shipping Zoho applications eventually.
Actually only one of the Zoho products, Zoho Planner was inspired by the competitor-I-won’t-name. It started out as a fun project, in response to the take-it-or-leave-it attidue they exhibit (to this day), and the explicit challenge “If you don’t like our attitude, go build your own”. We come from a different philosophical approach to business, where Customer-is-God, so we decided to build our own - that was the real story behind the copy-cat label. By the way, customers seem to love our alternative-without-the-attitude.
In hindsight, it is obvious that the idea of online office applications occurred to a lot of other people, and some of them even got to market ahead of us. That meant we did seem like fast followers, but I wish we could follow that fast!
About the copy-cat label? Initially I was a bit defensive about it, but later just developed a thick skin. If Zoho is a copy-cat, we are in some glorious company, as Zoli points out. What matters to customers is how good the overall product is and how it is priced. We are focused on delivering great products at affordable prices. Everything else will take care of itself.
Thanks, Zoli!
Zoho Writer was reviewed in NY Times last week (june 17th) as part of their article “Now, free ways to do desktop work on the web”. Congratulations. Zoho was put ahead of Google in this article.
It’s been a while since I browsed Sridhar’s blog. As I have come to see by now, there’s something interesting whenever I pop in ! Just one question on this blog entry: from what I read it almost seems that copying an idea (or “fast following” if you will) is not a bad thing. I don’t know if I can agree with it fully. The question goes deeper. At what level is an idea a “copy” versus “extending what was there before”. Not sure if this is the right comparison but I vaguely recall reading the verdict from “The Da Vinci Code” copyright case in UK few months back. If something is generally available as a truth (to the point that it’s not an individual entity’s own “product̶
and if you extend it or add your own view to it maybe it is not a “copy” is what I recall. Does that apply here too ? As a customer, I want a seller that is delivering me a product also to live up to some standards - ends do not justify the means always. There may be others like us who think it’s better (in fact correct) to shell out a few more bucks as long as it is worth it and done the right way.
m2c
whoami,
Copyright does not extend to protect an idea itself, only the particular expression of an idea. Of course, as you can instantly recognize, such questions are formally undecidable, which means from here to eternity lawyers will mint money on “helping” us mere mortals with such questions. Note that patents are a very different animal.
So let’s say if the idea of developing a super-duper software package to help lawyers make more money when fighting copyright cases occurs to you. You implement it, enter the market, and start minting money from lawyers [yeah, dream on!]. A competitor discovers it, and comes up with an alternative that is cheaper, so lawyers can save money while making even more money [welcome to reality!]. You think “there must be a law against it”. But as long as the expression of the idea is different, it is legitimate competition and not copyright violation.
So you want to contest whether the competitor’s expression of the idea is sufficiently different from yours. Your lawyers now use your software package to “help” you fight the case, and assuming your software lives up to your marketing, make themselves even more money in the process. Hmm, what was my original point?
Sridhar
Note to self: never use self-referential “humor”.
Sridhar
I am also an IIT-M alumni and have been working as a Venture Capitalist for a few years. Having looked at a number of start-ups companies both successes and failures, I actually have developed hypothesis that it is often better for start-ups. Large incumbent vendors definitely can create a market through their positioning and deep pockets. But a number of times, given their size have lacked the focus and have failed to deliver a product that caters to customer requirements only for a start-up company to win that market.
I think in a number of areas of the IT industry a fast follower strategy is often times better than being the first mover and let’s not forget that Microsoft, probably the most successful software company ever, has always been a fast follower.
Gautam
Gautam,
Good point. Among the multitude of risks a start-up faces, one of the big ones is to end up trying to serve a non-existent market need. This is why the traditional VC question “Who is your competition” is so important. If the answer is “There is no competition to this”, then either a) the entrepreneur is not looking hard enough (70% probability) or b) there is no market which explains the lack of competition (29.99% probability). There may exist those exceptionally, exceptionally rare cases where a market need exists and there is truly no competition but I haven’t come across one, and if I were to come across one, I am not going to blog about it
Sridhar