Zoho has become a recognizable alternative to companies such as Salesforce.com. Learn how Zoho's CEO built this enterprise software suite without venture capital funding.

Sridhar Vembu is the co-founder and CEO of Zoho Corp. He is known for his unconventional choices. Sridhar started a product company in India when the service sector was all the rage in the IT sector. In 2005, he began the Zoho University programme with six high school students, who were trained for two years in computer science and eventually absorbed in the company. Currently, 15% of Zoho's workforce is made of ZU graduates. Instead of opening new offices in metros, he prefers smaller towns or suburbs. In 2016, the Tenkasi office located in rural India launched Zoho Desk, a product that was developed there.

Transcript

Michael Krigsman: We're talking with the founder and CEO of Zoho, a different kind of species of software company, and I mean that in the best way. I want to introduce Sridhar Vembu. He is the CEO and the founder of Zoho. Sridhar, how are you? Welcome to CXOTalk.

Sridhar Vembu: Thank you for having me, Michael. I'm really happy to be here today.

About Zoho

Michael Krigsman: Please tell us about Zoho.

Sridhar Vembu: Well, you said an interesting, different species of a software company. That's exactly right. Zoho, we are a cloud software company at one level, and we call ourselves the operating system for business. Really, what's different about Zoho is that we provide an end-to-end suite of software covering all aspects of business to our enterprise customers. That is really the end-to-end focus on that.

Along the way, we also have built a company in a very different way. Just one aspect of it, it's bootstrapped, entirely bootstrapped, no outside money, no outside investor. It's still private after 23 years. That has some interesting implications that we will talk about today.

Michael Krigsman: I will also mention that I have been using Zoho for a while now. You have an extraordinary number of modules. You're a very, very large suite of software.

Sridhar Vembu: Yes.

Michael Krigsman: The number of modules that you have is pretty amazing. Tell us. How do you organize or how do you think about that broad set of modules? You're covering a lot of territory.

Sridhar Vembu: That's one of the more unusual things about Zoho, as you mention. Really, these were all organically built over the last 15 or 16 years of the products' existence now. It didn't come all overnight. This has taken a long-term effort and commitment to R&D, and that is how these products were born. Now, the Zoho suite, if you go to Zoho.com, you will see over 40 individual applications. Then, out of that, maybe about 60 or 70 mobile apps along the way, so it's a full suite covering all aspects from sales and marketing, customer experience, internal collaboration productivity, HR and finance, analytics, all of it. That's what really distinguishes Zoho from everyone else.

Michael Krigsman: Also, the modules cover a combination of, can we say, back-end processes like finance or HR, as well as extremely customer facing front-end processes, like you said, CRM, marketing, things like that.

Sridhar Vembu: In fact, we flip it around and say it gives you a customer-centered … (indiscernible, 00:02:58) revolve everything around the customer and then we build out the internal processes around all of this, so that's also what is special. It is enterprise software built to the customer first and then everything to support the customer, all the internal processes around it.

Michael Krigsman: I want to remind everybody that we're speaking with Sridhar Vembu, who is the CEO and founder of Zoho. Sridhar, you've been describing; we've been talking about the scope of coverage, the broad scope of applications, modules that Zoho includes. How did you start?

Zoho's Mission and Purpose

I'm hesitating here. I'm trying to think, how is the best way to ask the question. Why did you start Zoho but, more importantly, what is the mission? You haven't accepted VC money. The company is worth a lot of money as a result of the growth. Why? [Laughter]

Sridhar Vembu: In the beginning, if you go back to the beginning of the company, we saw an opportunity to build a new kind of software, and that's the initial. We had nothing. We just started writing code, and there wasn't a big vision of where we were going to get to, but there was a mission. I'll distinguish the two.

The mission was to be a good company, try to do good by both employees and customers, and stay long-term. That was actually there from the very beginning. From almost day one, I said that the company's real mission was to treat employees well, customers well, and stay in business long-term.

We didn't have a vision of what we were going to build and that came in the process of building it. The vision itself got established over a period of time. As we built more and more software, we saw more opportunities to integrate them. We saw opportunities to solve problems we didn't think of in the beginning. That is how the whole software suite evolved.

Michael Krigsman: One of the things that struck me when I first started using Zoho, I think a lot of people think about Zoho as being primarily a CRM. Obviously, that's very important to you. I was really, again, struck by the extent of the coverage that you have. I cannot think of any other software company outside of really large ones like Oracle or SAP that even approach the kind of coverage that you include.

Sridhar Vembu: That is absolutely true. In fact, we have about 7,000 employees and, at our size, I think it's safe to say no one else has that level of breadth and depth.

The Meaning of Success

Michael Krigsman: I'd like to talk about that mission that you were just describing. You talk about doing good and being a good company, but let's face it; in Silicon Valley, every company says, "We are going to change the world and we're going to do great things for the world." A lot of times, frankly, as we all know, it's just nonsense.

For you, how do you evaluate your own efforts to that metric? How do you know that you're accomplishing that goal, doing good and being a good company?

Sridhar Vembu: This actually goes back to, in the beginning, obviously, for every company the first existential question is, why should we exist? Do we need to exist? Does the market want us to exist? That is that initial existence question translated as, how do we put food on the table?

Once you get past that stage, you achieve a measure of success. I define that as being self-sustaining. We are profitable enough to keep going.

People achieve a level of success. Then the question of the mission starts to dawn on you. What is it all for? Now that I have reached here, where do we go? Why do we exist still?

In fact, people who are very success-focused, they have financial metrics like we want to achieve $100 million in sales or $1 billion in sales or whatever. Then they tend to never think about the mission question. Then what happens is, once they reach that goal, suddenly, they become purposeless in a way, goal-less.

At some point, for anybody, even the most financially minded people, it turns out that the money alone cannot motivate you. It loses that whole ability to motivate. Then it just dawns on people, "Oh, my God! I've gotten here, but I don't know where I go from here." That is actually something that I understood early on in our existence that I felt that unless we had a mission, this whole thing is not worth doing.

Money alone cannot motivate you long-haul. I do mean long-haul here. We've been in business now 33 years, now, and we still keep going.

To keep going that way, you have to have something bigger than only money. This is not to say money is not important. Obviously, we are a business. We have to keep the doors open. We have to pay our employees. We have to take care of customers. All that requires money. But money alone cannot be the purpose and that is where it brings the mission question.

Company and Personal Success: Internal and External Metrics

Michael Krigsman: For you, then, what is that purpose?

Sridhar Vembu: We actually have defined it in two ways. There is an internal and there is an external in this. Externally, we want to be a company that customers really love and they feel we are part of their success and want to stay on long-term with us. We take care of them so well that they really take us for granted. We want to be there as part of their daily work.

In fact, our website, we say, "Your life's work powered by our life's work." We really do mean it, so we have done our life's work to be able to power our customers' life's work. That is the external focus.

Internally, I also have a goal that we want to treat people well and provide well-paying jobs that people can live on well and stay with us long-term. That is important to me in two ways. One is, I look at the company as kind of an extended family in a way that I don't look at people as resources that are temporarily there to do something for us and then that thing is over and they move on. I look at people as, we want to hire people so that we can keep them. We have done a good job long-term on this. Our attrition rate is actually quite low and I'm really proud of it.

This plays into both ways. People who stay with us long-term go on to serve customers long-term, and the customers stay with us long-term, so it actually becomes, over time, something more than a company. It becomes a community. There is a human element that comes.

It's not only about the bottom line, the quarterly statements, and all of that. That's something that a lot of people say it, but don't deliver it. To be able to deliver it, you have to have that long-term focus. That is the mission part here. We have to take care of people well.

Along the way, do something good for the world and a small mission of good that we can do. That is where our initiatives like Zoho University come in where we provide an alternative educational model. That's the third leg of it. There are employees, there are customers, and there is a broader community.

Michael Krigsman: What you're describing is in stark contrast to the typical Silicon Valley way of doing things, which is, let's raise money from VCs. Let's sell as much stuff as we can as fast as we can possibly do it. Then let's flip the company, like real estate.

Why? Why do you have this? It's obviously a personal thing. Why? Why not do it the standard way?

Sridhar Vembu: At some point, actually, we had to face that question ourselves a long time ago. This was actually very early on in our history. There was a company that came to acquire us. This was around, I'm talking about, the previous bubble, the 1999, 2000, that bubble.

We got offered, at that time, what seems like lots of money. We had to face that existential question, why not sell? Why do we stay in business? We can take the money and run, right?

I actually posed this question to my cofounders. I asked the question. We can now sell, make lots of money, and we can move on. Who wants to do that? Actually, nobody wanted to do that.

I asked, so I'll never ask this question again because we are now committing for life here and let's just agree to this, right? And no regrets. Our people, my cofounders all wanted, yes, this is what we want to do, then it's like a one-time decision and we never looked back at the question again. We made up our minds and that's it. We are going all the way now.

Michael Krigsman: You're committed for life?

Sridhar Vembu: Yeah. [Laughter] That's how I think about it, committed for life.

Michael Krigsman: [Laughter]

Sridhar Vembu: I mean it's funny when you think that way, but then the company itself is evolving with life goals. Think of it that way. The company is part of the life process. It's not separate from you in that sense.

Whatever life things that are interesting, you know, like Zoho University came later. I have an interest in education, so Zoho University became part of the company's mission.

In other words, whatever interests then become part of a company's mission, and this we can afford because it's a private company. We have no external shareholders. No one controls our destiny. Then it's our life missions, life objectives become part of the company's mission too.

Michael Krigsman: In fairness, I have to also mention that you've been described as a billionaire. Apparently, the financial part has kind of worked out okay as well.

Sridhar Vembu: Well, I know I think of myself that way because I separate myself from the company as well in that sense. Actually, that's a true answer.

Where I come from in India, Mahatma Gandhi made this point. Mahatma Gandhi is an interesting person, right? He as never a socialist. He never had any interest in it. But he also advised the capitalists, "Think of your company as something you hold in trust for a future generation." That's what he said. "You are really a trustee of whatever things you own, in the world you own, because that way you think of it as an organic, long-term living entity rather than some exploitable resource." That's what Gandhi said. Actually, this part about Gandhi is not well-known.

I actually have come to accept that as my own goal, not that I started out that way. I never thought about these things, but now I realize there is a lot of wisdom in what Gandhi said about this.

Michael Krigsman: Are you a meditator?

Sridhar Vembu: Somewhat. I wouldn't say I'm a serious meditator, but my preferred meditation is to just sit there and stare at infinity for a long period of time. [Laughter]

Role of Customer Experience

Michael Krigsman: We have some questions from Twitter. Sal Rasa asks a question that's actually really important and I want to talk about this. Let's talk about the customer experience. Sal asks this question, "How do you gather and access customer needs to enhance the customer experience?"

Sridhar Vembu: This is a very important one, actually. More and more and more, we are coming to the awareness that the entire purpose of business is to create a customer and keep a customer happy. The customer experience should drive all. The customer is the reason we are in business, and this is sometimes forgotten in a very sort of productionist or production oriented system where our job is to produce something and throw it over the wall and somebody will buy it. That is not the understanding now.

Customer experience dominates because, let's face it, modern … (indiscernible, 00:15:36) we are at a post-scarcity world with a lot of material goods, software, a lot of this. It's not like there's any scarcity of all these things. The whole emphasis shifts towards the customer and the customer experience has to dominate all aspects of how we run a business.

That's really how we have thought about the Zoho software suite. That's why we are known for CRM and the customer experience. We knit the whole software, the whole suite around the customer experience.

Michael Krigsman: Do you have formal mechanisms for gathering? I guess every software does. Let me put it this way. As you're thinking about the operations of the company and the definition of product features, how does customer experience come into play?

Sridhar Vembu: If you look at it, we engage in maybe thousands of tickets per day in terms of our engagement with our customers around the world. Then we have these events everywhere now. In fact, as we speak, there are events going on in the U.K. and there's one in Dallas, and so around the world these events where our people go meet the customer one-on-one. We have our active customer advisory board. Then we conduct these online community meetups.

Feedback pours in from all these channels, all of these, and then we integrate and synthesize. A lot of our product management strategy vision is, how do we keep evolving the product suite so that we can meet the growing customer need and the evolving customer need.

There is an internal drive for this. We identified some areas that we need to work on. There is all this feedback that is driving this process. That is how we keep the company agile and very responsive to the evolving marketplace.

Business Transformation and Process Change

Michael Krigsman: Let's go on to another question. Gus Bekdash is asking a question. "A little bit of automation here or there means you've transformed without re-architecting processes or making structural changes." He says, "How would you educate them and what examples would you show them?"

Sridhar Vembu: Actually, I think I got the gist of it. I often say this to customers. In fact, I've said this exact thing to CIOs.

We are very proud of our software, but not even our software. There's nothing you can just turn on and then get magical results unless the organization, the culture, all of this is already ready for it or willing to transform itself for it. The mere software, no-one's software, nobody's can fix a broken organization. That's very important. In fact, this is the cultural element, the org culture; all of it is the critical part.

Once you have all those in place, and software can help trying to get some of it in place but, still, the org transformation is still a broader goal than only the set of tools that you use. Then the organization can be much more responsive to the customer and to the market, ship better products, offer better services, all of that. But for that, it is important to get the organization's culture right. Then the software tools work with you to enhance your efficiency there.

Michael Krigsman: Following up on that, to what extent are you involved with your customers as they are going through these transformation journeys, or is it distant; you supply the software and then they take care of their change?

Sridhar Vembu: It's multiple modes that our customers will use us tactically, that our customers will use us strategically. When they are using us strategically, we get engaged quite a bit. I get involved in many of these conversations. Of course, we have now 7,000 people, so there is a lot of this going on simultaneously.

The good news is more and more customers have come to see Zoho as a strategic part of their organization technology infrastructure. That's where then we come in. We share what are the best practices that we have seen and we share our tips.

I also, along the way, always emphasize, you want to get your culture right. Don't assume that any software is a magical thing that you can just turn on and everything will work for you because you have to get the culture right in order to get the maximum value out of any software.

The Challenge of Building Enterprise Software

Michael Krigsman: We have another question from Twitter. This is from CubeYogi - Leader in Zoho Solutions and Zoho Partner. He asks, "What is the secret sauce of the--" and this is a quote "--magical unmatched depth--" magical is pretty good "--unmatched depth and breadth of 40+ enterprise apps of Zoho, which no other enterprise organization has been able to get to?"

Okay. He's a fan. What's the secret sauce? How do you build this stuff?

Sridhar Vembu: This kind of software, it's difficult to build, so that's why not a lot of people built it. It requires a particular organization culture, a particular way of thinking to be able to build this. It's not purely about the software talent, even though, of course, that's a vital ingredient, but it goes beyond that. It goes beyond the technical talent involved.

Let me explain that a little bit. The org culture in Zoho is one where there is both a lot of autonomy across our product lines and our divisions and, at the same time, a sense of shared values. This is important because, without the autonomy, people cannot move fast and produce all of this. If everything is centralized, all the decision-making, like for example people are waiting on me for crucial decisions, they cannot actually move fast.

When you do this and you just say this without the shared values, what happens is a lot of organizations with that autonomous mode of execution then start to work across purposes. It doesn't gel together. To bring that together is a cultural shared sense of values.

This is actually a very interesting topic. A lot of organizations think of their things in terms of professionalism. I liken this analogy. When you don't have a culture, it's as if you throw people, professionals, talented people together; you get the culture of people in a bus going someplace. I use that analogy because obviously there is no such thing as a culture of people on a bus going someplace. The driver takes them somewhere.

A lot of organizations think that way where you assemble a bunch of professionals and then there is somebody driving them someplace. That isn't that shared culture of shared values. Not at all. It never builds up.

When you think of people as replaceable resources, that bus, people get on and get off the bus, and the driver is still driving somewhere, that is how the culture becomes a kind of … (indiscernible, 00:23:08). With that, I don't believe that you can build this broad suite because it will start working at cross-purposes. To do this, you have to have a sense of shared values.

Michael Krigsman: When you say that the risk is working at cross-purposes, can you elaborate what you mean by that?

Sridhar Vembu: Yeah. We have right now all these products, 40 different products. Inevitably, there will be product overlaps and this piece needs to talk to that piece. This product management group has to be in synch with another product. A lot of this, it cannot happen just by command and control, me ordering everyone to just obey. That cannot work. As systems get larger and we have smart people, it cannot work.

People have to have a shared mission. What is the purpose of this suite? How does it work together? Then make often what are seemingly sacrifices for the common good. That is important. Without it, you cannot build this kind of a product suite.

Building an Enterprise Software Suite

Michael Krigsman: We have a very relevant question to this from Arsalan Khan who says, "How did you break through the culture of your first customers when you were just a beginning startup?"

Sridhar Vembu: A good story. We went to a tradeshow in Las Vegas. I remember I was there. We are a tiny booth, like a 10x10. That's the smallest booth there. We met a few customers, and we showed them the one station.

We didn't know this at that time. It turned out that a particular set of customers at that time were printer manufacturers. They were interested in our software. It turned out the reason was they were competing with HP in printers. HP was strong in software. These companies were not strong in software. They needed a partner, so we happen to have the right product for them. That is how we found the first customers.

The lesson here is, you want to find some niche somewhere, a pain point somewhere that you address. Then you get the first customer because they are taking a risk with you. In this case, they reason they take the risk is because they needed the software and their competition had it. They didn't have it, so they came to us.

Michael Krigsman: On this topic of the breadth of coverage, one of the things that I've seen over time because I've known of Zoho and have tried and used the products over the course of many years is, I've noticed that the support is getting better, bugs are getting better, but still support is not even across all of these products; some of the products are really polished and others are less so; then some have more bugs and some have less. How do you maintain consistency?

Sridhar Vembu: This is a good question. All software takes sort of a maturation lifecycle. You have to mature over time and you cannot just turn it on and instantly everything is perfect on day one. We are a learning system. We constantly refine and adapt.

Speaking of support, actually, in the last two years, our fastest growing themes in the company have been support where we put in a lot of resources. It shows because, actually, our customer satisfaction has really massively improved. It also has helped the product to get better because when support people are constantly engaging the customer, talking with them, they get the ideas on what we should be doing better in terms of even the product. How do we avoid having this problem with the customer in the first place? It's one thing to provide a support person to solve the problem. Another thing is to help avoid the problem for the next customer.

All of this has gotten better. You are right. Because we are constantly doing new software and, as it comes in, there is the initial learning cycle that we go through. Then we get better rapidly.

In fact, that maturity cycle is accelerating because now the initial quality gets better because we have the experience and a lot of the software now goes through extended periods of both internal and what we call charter customer testing where some customers will really need it, adopt it first, and give us feedback. Only after we get 50 or 100 customers, we actually launch it in the market. All these are the ways in which we are improving that whole initial quality, initial customer satisfaction.

How Zoho Balances Agility with Software Quality

Michael Krigsman: How do you balance flexibility with quality? For example, for one of your products, Zoho Flow, which is sort of similar to Zapier, I submitted a request. They actually added some feature that I needed. I was really surprised, in fact, and it was great.

That kind of responsiveness and agility, responsiveness to customers and agility, can create its own set of problems because, in the zeal to get it done fast, it's like, "Okay, great. We have this new feature but it doesn't really work." How do you balance that?

Sridhar Vembu: A really good one. What tends to happen in this is, when a product is relatively new, it doesn't have a lot of customers. At that time, actually, you can move faster. The teams, in effect, they are working for the initial customers, so they tend to move faster.

As a product gets mature, two things happen. One is, because it has already had tens of thousands and millions of users, it gets sanded to more perfection because any problem that you encounter, the odds are someone else already would have encountered that, would have been addressed in product management, engineering, or support one way or another, so you are less likely to find more obvious issues.

At that point, necessarily, the system also has to slow down. We cannot be making changes and risk breaking something for the millions of users. That is how, naturally, that cycle works where the products that are newer tend to evolve faster. The products that are more mature tend to evolve slower.

In the cloud, there is a major benefit. We actually turn on some new features only to some customers at a time. Again, I mentioned the charter customers where let's say Customer 1 badly wants a feature. We will tell them, "Would you mind if we turned it on for you, but you will accept that this may have some breakages? Will you tell us what works and what doesn't work?" We turn it on for a few customers with their permission, then validate it for a long period, and then go to the broader market and turn it on for everyone. The cloud actually gives us that natural advantage that way.

In fact, we ourselves are the first customer for most of our products. What it means is we have 7,000 employees, so things tend to get a lot of internal feedback before anything goes out.

Role of Corporate Culture

Michael Krigsman: Again, continuing on the breadth of the coverage, you have so many products; to what extent are you personally able to be involved with each of these products and to what extent are you hands-off having delegated and managing the broader aspects of the company?

Sridhar Vembu: It really depends. I actually work hands-on on some things. Obviously, I cannot work hands-on on everything. The reason I actually have a hands-on on some technology areas is so that I stay on honest and I stay grounded because I remind myself what is our business. We are in software. I need to know the software, so I keep track of this in one or two initiatives myself.

The good thing here is, if you look at our senior managers, they've been with us 15 years, 20 years, 21 years, so it's really common. They effectively run their own businesses very well. I mentioned there are a lot of shared values so that they will bring to me maybe a difficult philosophical question or maybe a strategy question, but they will solve a lot of the other questions themselves. That is what allows the system to scale. If everything has to wait for my input, we can never scale this way.

Michael Krigsman: What is the role of the culture in being a self-correction mechanism? I'm not being clear. To what extent does the culture help people in the organization who are owning these products self-correct their behavior, their decisions?

Sridhar Vembu: Every one of our product groups is constantly in touch with customers. Of course, customers now speak up. There is support. There's Twitter. There is social media. All of these things, the feedback pours in.

Senior managers, myself, we are constantly looking at the Twitter streams and any critical feedback poster, you can be very sure that that gets attention from a lot of senior people. Not just me, but a lot of other people. That actually keeps us honest.

Whenever somebody says something critical of us, then we know there is some issue to address and that gets attention. There is an internal feedback mechanism.

Actually, the customer is a better boss than me because then the senior managers already know who they are to address, who they have to speak to, to keep happy. It's not the CEO, but it's the customer. That is a natural, internal self-correcting mechanism.

Michael Krigsman: You've been in business for longer than almost all software companies.

Sridhar Vembu: Twenty-three years.

Michael Krigsman: Twenty-three years. There are very few software companies that have been around for that length of time and so, how do you prevent complacency and arrogance to infect the company?

Sridhar Vembu: That's an excellent question. Actually, this comes from hiring and I've always said that my preferred … (indiscernible, 00:33:17) is I want to hire people who know of humility and contentment. These two are values that even for the company that humility and contentment are essential and we try to reflect that in our marketing, all of these, because you're exactly right. In fact, once you succeed, arrogance, institutional arrogance becomes a major issue for any company, and that's something we have to battle.

The good thing is, our people are actually, almost to a fault, almost humble to a fault. That's actually a hallmark of the company and that helps to stay grounded.

Also, always, one of the things that ground you is if you are constantly receiving this customer feedback. This is literally a true story. Just this morning, just before this call, I actually had an email exchange with a customer who had an issue. I linked them with our support people. I linked them with a customer empathy person to call that customer. That keeps me grounded too, that you cannot get really arrogant when you actually are in the line of fire, line of duty every day.

Michael Krigsman: We're soon going to be running out of time, so this is the part of the show where I have to ask you to answer relatively quickly because I have a whole lot of things left [laughter] to talk with you about, but we only have a limited amount of time. You just mentioned you have a customer empathy person. What is that?

Sridhar Vembu: Yeah. [Laughter] That is, inevitably, when you are handling thousands, tens of thousands of requests, there will be a certain number of customers we let them down; we don't actually do this right. We have a group that actually scans our tickets and, of course, they're alerted … (indiscernible, 00:35:01) whatever they scan.

Then, whenever they see some customer is not getting supported well enough by our standard, they immediately intervene. They call the customer. They talk to them. They apologize, and they try to set things right. We have that group.

In fact, the good news, I was talking to our customer empathy person and she said, "You know, actually, I don't have a lot to do these days. Actually, the volume of things has gone down for me to do." I said, "That is good. You are the one person I don't want to keep too busy," I told her. [Laughter]

Michael Krigsman: All right. We have another question from Twitter, and this is from Sam Kumar. He's asking about the future, so you can see how comfortable you are answering this. "As you enter large enterprise markets, are you seeing a requirement for speech analytics and workforce management?"

Sridhar Vembu: Definitely, the workforce management we have seen. We are doing a lot more with the AI ZR, and we are working on all these projects. The workforce management, actually, we have now products in that line of tools. There is actually something called Work, currently, that is in sort of trials now. Yes, we are definitely seeing these requirements.

Michael Krigsman: Looking forward into the future of Zoho, can you share with us what you're working on, where you're going?

Sridhar Vembu: Yeah. We are looking constantly for ways to enhance our own software faster, higher quality, security, a lot of these. In other words, as we built out the software, we have gained more experience in the nature of software development itself. We are looking at that on a foundation level.

There are three, the triangle. There is productivity in terms of development. There's software quality in terms of the quality of the software. Then there is security. We believe that there are some technologies, techniques available to make all three better at the same time: improve productivity, improve quality and, of course, make it more secure. These are the things that we are working on at a fundamental level, and these innovations will flow through all of our products and the customers will benefit.

Ultimately, we also have a philosophy in business where we believe that, as these innovations make us better, make us more productive, we also should pass on the savings to the customer. The customer should benefit from better software at better prices. That is a critical thing for us because we want our software to be affordable to every business on the planet.

Advice for Mission-Driven Technology and Software Company Founders

Michael Krigsman: Let's finish up with advice. As I said at the beginning, you're a very different species of a software company than most of the Silicon Valley ones that are out there. What advice do you have to entrepreneurs?

Sridhar Vembu: Well, actually, generally, I don't like to give advice because it really depends on what the internal goals are. I'm not talking about externally stated goals. People ought to go into their own person and ask, who am I? What is my goal? What is my objective in this business? Why am I here? They would answer the question themselves, honestly. They are to face themselves and answer that question.

Let me advise the kind of person who will answer the question this way if they want a mission-centered company, they want the company for the long-haul, all of these. It's actually okay not to be that. I don't judge people who say, "I want to make lots of money and I want to sell the company." It's not for me to advise them on this.

I will say that if you share the things I share, then I can provide you advice. The advice is, you stay long-term focused and you are able to then direct your short-term activities steadily towards alignment of the long-term. If you have the time, give yourself the runway. We have 23 years we have been in business. I hope to be around for another 25 years longer.

That means that you have a lot of runway to think about these problems long-term, and it also allows you to build a company differently. For example, you might do something to pay the bills today but you might have a mission that evolves in a different direction. You have the ability to do that. For example, Amazon is a retail company that also became a leader in AWS in the cloud. That kind of transformation is possible if you think long-term.

Michael Krigsman: You just made what I think is maybe the fundamental point, which is asking the question, why do I exist as a business; why am I here? Can you elaborate on how an entrepreneur can even begin to approach that question in a really honest and penetrating way?

Sridhar Vembu: The really honest way is very important because it ultimately goes to the "Who am I?" question. It's a spiritual question, really, "Who am I and why am I here?"

Honestly, I'll tell you there is no guidebook to answer this. This is why religion, philosophers, or spiritual gurus, all of them exist for this to face up to this. I'm not arrogant enough to think that I have any insight into this.

People have to answer this first. They have to be honest with themselves because a lot of times when we try to answer it, we are trying to answer it for some other person on what would impress them, but we have to actually think for ourselves. Why am I here? If you answer that question, you come up with it.

I've told you that there is no formula or any way to answer this, but maybe you read. Maybe you reflect. Then a lot of these techniques could provide you some insights. You have life experiences that will provide you insights. That is the critical one before you know where you can take a company. The "Who am I?" question is very important to answer, to have an idea of before you can answer, "What is my company here for?"

Michael Krigsman: I think some, probably even many, entrepreneurs are listening to this and saying, "Oh, this is not relevant because I'm just trying to build a business," but I absolutely think that this is fundamental.

Sridhar Vembu: As I said in the beginning, maybe no one has to ask the question because you are just trying to keep the doors open and you're just trying to survive. But as things come to the floor, particularly when you succeed, that's when this question becomes much more important. If you have no idea, if you never thought about it while you are trying to make a living, then you feel more lost, actually. Even as you are going through the day-to-day struggles of keeping the doors open, it is good to have a glimpse into our inner selves and ask, "Why am I here?"

That's why I say, you have to start asking it earlier than later. People say, "Oh, I'll figure out all these after I make it." Well, then what is making it? That's why it is important to ask the question ahead of time.

Michael Krigsman: This absolutely is the important question, I believe, for durable success in business. We're pretty much out of time, but we have one more. Very quickly, I'll ask you one more question from Twitter, which just came in, which I think is interesting in the context of what we were just discussing. This is from Sanjeev. He asks, "Do you consider Zoho as a Silicon Valley product or a hardcore Indian product?" [Laughter]

Sridhar Vembu: [Laughter] We consider ourselves a good product. [Laughter] I actually try not to define these in such terms because Silicon Valley connotes certain things. As you said in the very beginning, we are a unique animal. In fact, to be honest, a lot of inspiration came from places like Japan where a lot of companies have thought long-term.

Actually, right now, I am in front of the Sony camera. This particular technology I know; I've studied their R&D. They've been working on this R&D for 40 years on this, which is why it's still world class, right? That's the kind of company that I get inspired by.

You can say maybe a company based out of India and Silicon Valley with a lot of Japanese inspiration. How does that sound? [Laughter]

Michael Krigsman: It sounds pretty good. Unfortunately, we're out of time. I wish we had time to continue. Sridhar Vembu, CEO and Founder of Zoho, thank you so much for taking your time today.

Sridhar Vembu: Thank you. I really appreciate it. Thank you.

Michael Krigsman: It's been a lot of fun. You have been watching CXOTalk. We've been speaking with Sridhar Vembu who is, again, the CEO and founder of Zoho. Before you go, subscribe on YouTube and don't forget to subscribe to our newsletter. Just hit "Subscribe" at the top of our menu bar. Thanks so much, everybody. We have amazing shows coming up and I hope you have a great day. Bye-bye.

Michael Krigsman: We're talking with the founder and CEO of Zoho, a different kind of species of software company, and I mean that in the best way. I want to introduce Sridhar Vembu. He is the CEO and the founder of Zoho. Sridhar, how are you? Welcome to CXOTalk.

Sridhar Vembu: Thank you for having me, Michael. I'm really happy to be here today.

About Zoho

Michael Krigsman: Please tell us about Zoho.

Sridhar Vembu: Well, you said an interesting, different species of a software company. That's exactly right. Zoho, we are a cloud software company at one level, and we call ourselves the operating system for business. Really, what's different about Zoho is that we provide an end-to-end suite of software covering all aspects of business to our enterprise customers. That is really the end-to-end focus on that.

Along the way, we also have built a company in a very different way. Just one aspect of it, it's bootstrapped, entirely bootstrapped, no outside money, no outside investor. It's still private after 23 years. That has some interesting implications that we will talk about today.

Michael Krigsman: I will also mention that I have been using Zoho for a while now. You have an extraordinary number of modules. You're a very, very large suite of software.

Sridhar Vembu: Yes.

Michael Krigsman: The number of modules that you have is pretty amazing. Tell us. How do you organize or how do you think about that broad set of modules? You're covering a lot of territory.

Sridhar Vembu: That's one of the more unusual things about Zoho, as you mention. Really, these were all organically built over the last 15 or 16 years of the products' existence now. It didn't come all overnight. This has taken a long-term effort and commitment to R&D, and that is how these products were born. Now, the Zoho suite, if you go to Zoho.com, you will see over 40 individual applications. Then, out of that, maybe about 60 or 70 mobile apps along the way, so it's a full suite covering all aspects from sales and marketing, customer experience, internal collaboration productivity, HR and finance, analytics, all of it. That's what really distinguishes Zoho from everyone else.

Michael Krigsman: Also, the modules cover a combination of, can we say, back-end processes like finance or HR, as well as extremely customer facing front-end processes, like you said, CRM, marketing, things like that.

Sridhar Vembu: In fact, we flip it around and say it gives you a customer-centered … (indiscernible, 00:02:58) revolve everything around the customer and then we build out the internal processes around all of this, so that's also what is special. It is enterprise software built to the customer first and then everything to support the customer, all the internal processes around it.

Michael Krigsman: I want to remind everybody that we're speaking with Sridhar Vembu, who is the CEO and founder of Zoho. Sridhar, you've been describing; we've been talking about the scope of coverage, the broad scope of applications, modules that Zoho includes. How did you start?

Zoho's Mission and Purpose

I'm hesitating here. I'm trying to think, how is the best way to ask the question. Why did you start Zoho but, more importantly, what is the mission? You haven't accepted VC money. The company is worth a lot of money as a result of the growth. Why? [Laughter]

Sridhar Vembu: In the beginning, if you go back to the beginning of the company, we saw an opportunity to build a new kind of software, and that's the initial. We had nothing. We just started writing code, and there wasn't a big vision of where we were going to get to, but there was a mission. I'll distinguish the two.

The mission was to be a good company, try to do good by both employees and customers, and stay long-term. That was actually there from the very beginning. From almost day one, I said that the company's real mission was to treat employees well, customers well, and stay in business long-term.

We didn't have a vision of what we were going to build and that came in the process of building it. The vision itself got established over a period of time. As we built more and more software, we saw more opportunities to integrate them. We saw opportunities to solve problems we didn't think of in the beginning. That is how the whole software suite evolved.

Michael Krigsman: One of the things that struck me when I first started using Zoho, I think a lot of people think about Zoho as being primarily a CRM. Obviously, that's very important to you. I was really, again, struck by the extent of the coverage that you have. I cannot think of any other software company outside of really large ones like Oracle or SAP that even approach the kind of coverage that you include.

Sridhar Vembu: That is absolutely true. In fact, we have about 7,000 employees and, at our size, I think it's safe to say no one else has that level of breadth and depth.

The Meaning of Success

Michael Krigsman: I'd like to talk about that mission that you were just describing. You talk about doing good and being a good company, but let's face it; in Silicon Valley, every company says, "We are going to change the world and we're going to do great things for the world." A lot of times, frankly, as we all know, it's just nonsense.

For you, how do you evaluate your own efforts to that metric? How do you know that you're accomplishing that goal, doing good and being a good company?

Sridhar Vembu: This actually goes back to, in the beginning, obviously, for every company the first existential question is, why should we exist? Do we need to exist? Does the market want us to exist? That is that initial existence question translated as, how do we put food on the table?

Once you get past that stage, you achieve a measure of success. I define that as being self-sustaining. We are profitable enough to keep going.

People achieve a level of success. Then the question of the mission starts to dawn on you. What is it all for? Now that I have reached here, where do we go? Why do we exist still?

In fact, people who are very success-focused, they have financial metrics like we want to achieve $100 million in sales or $1 billion in sales or whatever. Then they tend to never think about the mission question. Then what happens is, once they reach that goal, suddenly, they become purposeless in a way, goal-less.

At some point, for anybody, even the most financially minded people, it turns out that the money alone cannot motivate you. It loses that whole ability to motivate. Then it just dawns on people, "Oh, my God! I've gotten here, but I don't know where I go from here." That is actually something that I understood early on in our existence that I felt that unless we had a mission, this whole thing is not worth doing.

Money alone cannot motivate you long-haul. I do mean long-haul here. We've been in business now 33 years, now, and we still keep going.

To keep going that way, you have to have something bigger than only money. This is not to say money is not important. Obviously, we are a business. We have to keep the doors open. We have to pay our employees. We have to take care of customers. All that requires money. But money alone cannot be the purpose and that is where it brings the mission question.

Company and Personal Success: Internal and External Metrics

Michael Krigsman: For you, then, what is that purpose?

Sridhar Vembu: We actually have defined it in two ways. There is an internal and there is an external in this. Externally, we want to be a company that customers really love and they feel we are part of their success and want to stay on long-term with us. We take care of them so well that they really take us for granted. We want to be there as part of their daily work.

In fact, our website, we say, "Your life's work powered by our life's work." We really do mean it, so we have done our life's work to be able to power our customers' life's work. That is the external focus.

Internally, I also have a goal that we want to treat people well and provide well-paying jobs that people can live on well and stay with us long-term. That is important to me in two ways. One is, I look at the company as kind of an extended family in a way that I don't look at people as resources that are temporarily there to do something for us and then that thing is over and they move on. I look at people as, we want to hire people so that we can keep them. We have done a good job long-term on this. Our attrition rate is actually quite low and I'm really proud of it.

This plays into both ways. People who stay with us long-term go on to serve customers long-term, and the customers stay with us long-term, so it actually becomes, over time, something more than a company. It becomes a community. There is a human element that comes.

It's not only about the bottom line, the quarterly statements, and all of that. That's something that a lot of people say it, but don't deliver it. To be able to deliver it, you have to have that long-term focus. That is the mission part here. We have to take care of people well.

Along the way, do something good for the world and a small mission of good that we can do. That is where our initiatives like Zoho University come in where we provide an alternative educational model. That's the third leg of it. There are employees, there are customers, and there is a broader community.

Michael Krigsman: What you're describing is in stark contrast to the typical Silicon Valley way of doing things, which is, let's raise money from VCs. Let's sell as much stuff as we can as fast as we can possibly do it. Then let's flip the company, like real estate.

Why? Why do you have this? It's obviously a personal thing. Why? Why not do it the standard way?

Sridhar Vembu: At some point, actually, we had to face that question ourselves a long time ago. This was actually very early on in our history. There was a company that came to acquire us. This was around, I'm talking about, the previous bubble, the 1999, 2000, that bubble.

We got offered, at that time, what seems like lots of money. We had to face that existential question, why not sell? Why do we stay in business? We can take the money and run, right?

I actually posed this question to my cofounders. I asked the question. We can now sell, make lots of money, and we can move on. Who wants to do that? Actually, nobody wanted to do that.

I asked, so I'll never ask this question again because we are now committing for life here and let's just agree to this, right? And no regrets. Our people, my cofounders all wanted, yes, this is what we want to do, then it's like a one-time decision and we never looked back at the question again. We made up our minds and that's it. We are going all the way now.

Michael Krigsman: You're committed for life?

Sridhar Vembu: Yeah. [Laughter] That's how I think about it, committed for life.

Michael Krigsman: [Laughter]

Sridhar Vembu: I mean it's funny when you think that way, but then the company itself is evolving with life goals. Think of it that way. The company is part of the life process. It's not separate from you in that sense.

Whatever life things that are interesting, you know, like Zoho University came later. I have an interest in education, so Zoho University became part of the company's mission.

In other words, whatever interests then become part of a company's mission, and this we can afford because it's a private company. We have no external shareholders. No one controls our destiny. Then it's our life missions, life objectives become part of the company's mission too.

Michael Krigsman: In fairness, I have to also mention that you've been described as a billionaire. Apparently, the financial part has kind of worked out okay as well.

Sridhar Vembu: Well, I know I think of myself that way because I separate myself from the company as well in that sense. Actually, that's a true answer.

Where I come from in India, Mahatma Gandhi made this point. Mahatma Gandhi is an interesting person, right? He as never a socialist. He never had any interest in it. But he also advised the capitalists, "Think of your company as something you hold in trust for a future generation." That's what he said. "You are really a trustee of whatever things you own, in the world you own, because that way you think of it as an organic, long-term living entity rather than some exploitable resource." That's what Gandhi said. Actually, this part about Gandhi is not well-known.

I actually have come to accept that as my own goal, not that I started out that way. I never thought about these things, but now I realize there is a lot of wisdom in what Gandhi said about this.

Michael Krigsman: Are you a meditator?

Sridhar Vembu: Somewhat. I wouldn't say I'm a serious meditator, but my preferred meditation is to just sit there and stare at infinity for a long period of time. [Laughter]

Role of Customer Experience

Michael Krigsman: We have some questions from Twitter. Sal Rasa asks a question that's actually really important and I want to talk about this. Let's talk about the customer experience. Sal asks this question, "How do you gather and access customer needs to enhance the customer experience?"

Sridhar Vembu: This is a very important one, actually. More and more and more, we are coming to the awareness that the entire purpose of business is to create a customer and keep a customer happy. The customer experience should drive all. The customer is the reason we are in business, and this is sometimes forgotten in a very sort of productionist or production oriented system where our job is to produce something and throw it over the wall and somebody will buy it. That is not the understanding now.

Customer experience dominates because, let's face it, modern … (indiscernible, 00:15:36) we are at a post-scarcity world with a lot of material goods, software, a lot of this. It's not like there's any scarcity of all these things. The whole emphasis shifts towards the customer and the customer experience has to dominate all aspects of how we run a business.

That's really how we have thought about the Zoho software suite. That's why we are known for CRM and the customer experience. We knit the whole software, the whole suite around the customer experience.

Michael Krigsman: Do you have formal mechanisms for gathering? I guess every software does. Let me put it this way. As you're thinking about the operations of the company and the definition of product features, how does customer experience come into play?

Sridhar Vembu: If you look at it, we engage in maybe thousands of tickets per day in terms of our engagement with our customers around the world. Then we have these events everywhere now. In fact, as we speak, there are events going on in the U.K. and there's one in Dallas, and so around the world these events where our people go meet the customer one-on-one. We have our active customer advisory board. Then we conduct these online community meetups.

Feedback pours in from all these channels, all of these, and then we integrate and synthesize. A lot of our product management strategy vision is, how do we keep evolving the product suite so that we can meet the growing customer need and the evolving customer need.

There is an internal drive for this. We identified some areas that we need to work on. There is all this feedback that is driving this process. That is how we keep the company agile and very responsive to the evolving marketplace.

Business Transformation and Process Change

Michael Krigsman: Let's go on to another question. Gus Bekdash is asking a question. "A little bit of automation here or there means you've transformed without re-architecting processes or making structural changes." He says, "How would you educate them and what examples would you show them?"

Sridhar Vembu: Actually, I think I got the gist of it. I often say this to customers. In fact, I've said this exact thing to CIOs.

We are very proud of our software, but not even our software. There's nothing you can just turn on and then get magical results unless the organization, the culture, all of this is already ready for it or willing to transform itself for it. The mere software, no-one's software, nobody's can fix a broken organization. That's very important. In fact, this is the cultural element, the org culture; all of it is the critical part.

Once you have all those in place, and software can help trying to get some of it in place but, still, the org transformation is still a broader goal than only the set of tools that you use. Then the organization can be much more responsive to the customer and to the market, ship better products, offer better services, all of that. But for that, it is important to get the organization's culture right. Then the software tools work with you to enhance your efficiency there.

Michael Krigsman: Following up on that, to what extent are you involved with your customers as they are going through these transformation journeys, or is it distant; you supply the software and then they take care of their change?

Sridhar Vembu: It's multiple modes that our customers will use us tactically, that our customers will use us strategically. When they are using us strategically, we get engaged quite a bit. I get involved in many of these conversations. Of course, we have now 7,000 people, so there is a lot of this going on simultaneously.

The good news is more and more customers have come to see Zoho as a strategic part of their organization technology infrastructure. That's where then we come in. We share what are the best practices that we have seen and we share our tips.

I also, along the way, always emphasize, you want to get your culture right. Don't assume that any software is a magical thing that you can just turn on and everything will work for you because you have to get the culture right in order to get the maximum value out of any software.

The Challenge of Building Enterprise Software

Michael Krigsman: We have another question from Twitter. This is from CubeYogi - Leader in Zoho Solutions and Zoho Partner. He asks, "What is the secret sauce of the--" and this is a quote "--magical unmatched depth--" magical is pretty good "--unmatched depth and breadth of 40+ enterprise apps of Zoho, which no other enterprise organization has been able to get to?"

Okay. He's a fan. What's the secret sauce? How do you build this stuff?

Sridhar Vembu: This kind of software, it's difficult to build, so that's why not a lot of people built it. It requires a particular organization culture, a particular way of thinking to be able to build this. It's not purely about the software talent, even though, of course, that's a vital ingredient, but it goes beyond that. It goes beyond the technical talent involved.

Let me explain that a little bit. The org culture in Zoho is one where there is both a lot of autonomy across our product lines and our divisions and, at the same time, a sense of shared values. This is important because, without the autonomy, people cannot move fast and produce all of this. If everything is centralized, all the decision-making, like for example people are waiting on me for crucial decisions, they cannot actually move fast.

When you do this and you just say this without the shared values, what happens is a lot of organizations with that autonomous mode of execution then start to work across purposes. It doesn't gel together. To bring that together is a cultural shared sense of values.

This is actually a very interesting topic. A lot of organizations think of their things in terms of professionalism. I liken this analogy. When you don't have a culture, it's as if you throw people, professionals, talented people together; you get the culture of people in a bus going someplace. I use that analogy because obviously there is no such thing as a culture of people on a bus going someplace. The driver takes them somewhere.

A lot of organizations think that way where you assemble a bunch of professionals and then there is somebody driving them someplace. That isn't that shared culture of shared values. Not at all. It never builds up.

When you think of people as replaceable resources, that bus, people get on and get off the bus, and the driver is still driving somewhere, that is how the culture becomes a kind of … (indiscernible, 00:23:08). With that, I don't believe that you can build this broad suite because it will start working at cross-purposes. To do this, you have to have a sense of shared values.

Michael Krigsman: When you say that the risk is working at cross-purposes, can you elaborate what you mean by that?

Sridhar Vembu: Yeah. We have right now all these products, 40 different products. Inevitably, there will be product overlaps and this piece needs to talk to that piece. This product management group has to be in synch with another product. A lot of this, it cannot happen just by command and control, me ordering everyone to just obey. That cannot work. As systems get larger and we have smart people, it cannot work.

People have to have a shared mission. What is the purpose of this suite? How does it work together? Then make often what are seemingly sacrifices for the common good. That is important. Without it, you cannot build this kind of a product suite.

Building an Enterprise Software Suite

Michael Krigsman: We have a very relevant question to this from Arsalan Khan who says, "How did you break through the culture of your first customers when you were just a beginning startup?"

Sridhar Vembu: A good story. We went to a tradeshow in Las Vegas. I remember I was there. We are a tiny booth, like a 10x10. That's the smallest booth there. We met a few customers, and we showed them the one station.

We didn't know this at that time. It turned out that a particular set of customers at that time were printer manufacturers. They were interested in our software. It turned out the reason was they were competing with HP in printers. HP was strong in software. These companies were not strong in software. They needed a partner, so we happen to have the right product for them. That is how we found the first customers.

The lesson here is, you want to find some niche somewhere, a pain point somewhere that you address. Then you get the first customer because they are taking a risk with you. In this case, they reason they take the risk is because they needed the software and their competition had it. They didn't have it, so they came to us.

Michael Krigsman: On this topic of the breadth of coverage, one of the things that I've seen over time because I've known of Zoho and have tried and used the products over the course of many years is, I've noticed that the support is getting better, bugs are getting better, but still support is not even across all of these products; some of the products are really polished and others are less so; then some have more bugs and some have less. How do you maintain consistency?

Sridhar Vembu: This is a good question. All software takes sort of a maturation lifecycle. You have to mature over time and you cannot just turn it on and instantly everything is perfect on day one. We are a learning system. We constantly refine and adapt.

Speaking of support, actually, in the last two years, our fastest growing themes in the company have been support where we put in a lot of resources. It shows because, actually, our customer satisfaction has really massively improved. It also has helped the product to get better because when support people are constantly engaging the customer, talking with them, they get the ideas on what we should be doing better in terms of even the product. How do we avoid having this problem with the customer in the first place? It's one thing to provide a support person to solve the problem. Another thing is to help avoid the problem for the next customer.

All of this has gotten better. You are right. Because we are constantly doing new software and, as it comes in, there is the initial learning cycle that we go through. Then we get better rapidly.

In fact, that maturity cycle is accelerating because now the initial quality gets better because we have the experience and a lot of the software now goes through extended periods of both internal and what we call charter customer testing where some customers will really need it, adopt it first, and give us feedback. Only after we get 50 or 100 customers, we actually launch it in the market. All these are the ways in which we are improving that whole initial quality, initial customer satisfaction.

How Zoho Balances Agility with Software Quality

Michael Krigsman: How do you balance flexibility with quality? For example, for one of your products, Zoho Flow, which is sort of similar to Zapier, I submitted a request. They actually added some feature that I needed. I was really surprised, in fact, and it was great.

That kind of responsiveness and agility, responsiveness to customers and agility, can create its own set of problems because, in the zeal to get it done fast, it's like, "Okay, great. We have this new feature but it doesn't really work." How do you balance that?

Sridhar Vembu: A really good one. What tends to happen in this is, when a product is relatively new, it doesn't have a lot of customers. At that time, actually, you can move faster. The teams, in effect, they are working for the initial customers, so they tend to move faster.

As a product gets mature, two things happen. One is, because it has already had tens of thousands and millions of users, it gets sanded to more perfection because any problem that you encounter, the odds are someone else already would have encountered that, would have been addressed in product management, engineering, or support one way or another, so you are less likely to find more obvious issues.

At that point, necessarily, the system also has to slow down. We cannot be making changes and risk breaking something for the millions of users. That is how, naturally, that cycle works where the products that are newer tend to evolve faster. The products that are more mature tend to evolve slower.

In the cloud, there is a major benefit. We actually turn on some new features only to some customers at a time. Again, I mentioned the charter customers where let's say Customer 1 badly wants a feature. We will tell them, "Would you mind if we turned it on for you, but you will accept that this may have some breakages? Will you tell us what works and what doesn't work?" We turn it on for a few customers with their permission, then validate it for a long period, and then go to the broader market and turn it on for everyone. The cloud actually gives us that natural advantage that way.

In fact, we ourselves are the first customer for most of our products. What it means is we have 7,000 employees, so things tend to get a lot of internal feedback before anything goes out.

Role of Corporate Culture

Michael Krigsman: Again, continuing on the breadth of the coverage, you have so many products; to what extent are you personally able to be involved with each of these products and to what extent are you hands-off having delegated and managing the broader aspects of the company?

Sridhar Vembu: It really depends. I actually work hands-on on some things. Obviously, I cannot work hands-on on everything. The reason I actually have a hands-on on some technology areas is so that I stay on honest and I stay grounded because I remind myself what is our business. We are in software. I need to know the software, so I keep track of this in one or two initiatives myself.

The good thing here is, if you look at our senior managers, they've been with us 15 years, 20 years, 21 years, so it's really common. They effectively run their own businesses very well. I mentioned there are a lot of shared values so that they will bring to me maybe a difficult philosophical question or maybe a strategy question, but they will solve a lot of the other questions themselves. That is what allows the system to scale. If everything has to wait for my input, we can never scale this way.

Michael Krigsman: What is the role of the culture in being a self-correction mechanism? I'm not being clear. To what extent does the culture help people in the organization who are owning these products self-correct their behavior, their decisions?

Sridhar Vembu: Every one of our product groups is constantly in touch with customers. Of course, customers now speak up. There is support. There's Twitter. There is social media. All of these things, the feedback pours in.

Senior managers, myself, we are constantly looking at the Twitter streams and any critical feedback poster, you can be very sure that that gets attention from a lot of senior people. Not just me, but a lot of other people. That actually keeps us honest.

Whenever somebody says something critical of us, then we know there is some issue to address and that gets attention. There is an internal feedback mechanism.

Actually, the customer is a better boss than me because then the senior managers already know who they are to address, who they have to speak to, to keep happy. It's not the CEO, but it's the customer. That is a natural, internal self-correcting mechanism.

Michael Krigsman: You've been in business for longer than almost all software companies.

Sridhar Vembu: Twenty-three years.

Michael Krigsman: Twenty-three years. There are very few software companies that have been around for that length of time and so, how do you prevent complacency and arrogance to infect the company?

Sridhar Vembu: That's an excellent question. Actually, this comes from hiring and I've always said that my preferred … (indiscernible, 00:33:17) is I want to hire people who know of humility and contentment. These two are values that even for the company that humility and contentment are essential and we try to reflect that in our marketing, all of these, because you're exactly right. In fact, once you succeed, arrogance, institutional arrogance becomes a major issue for any company, and that's something we have to battle.

The good thing is, our people are actually, almost to a fault, almost humble to a fault. That's actually a hallmark of the company and that helps to stay grounded.

Also, always, one of the things that ground you is if you are constantly receiving this customer feedback. This is literally a true story. Just this morning, just before this call, I actually had an email exchange with a customer who had an issue. I linked them with our support people. I linked them with a customer empathy person to call that customer. That keeps me grounded too, that you cannot get really arrogant when you actually are in the line of fire, line of duty every day.

Michael Krigsman: We're soon going to be running out of time, so this is the part of the show where I have to ask you to answer relatively quickly because I have a whole lot of things left [laughter] to talk with you about, but we only have a limited amount of time. You just mentioned you have a customer empathy person. What is that?

Sridhar Vembu: Yeah. [Laughter] That is, inevitably, when you are handling thousands, tens of thousands of requests, there will be a certain number of customers we let them down; we don't actually do this right. We have a group that actually scans our tickets and, of course, they're alerted … (indiscernible, 00:35:01) whatever they scan.

Then, whenever they see some customer is not getting supported well enough by our standard, they immediately intervene. They call the customer. They talk to them. They apologize, and they try to set things right. We have that group.

In fact, the good news, I was talking to our customer empathy person and she said, "You know, actually, I don't have a lot to do these days. Actually, the volume of things has gone down for me to do." I said, "That is good. You are the one person I don't want to keep too busy," I told her. [Laughter]

Michael Krigsman: All right. We have another question from Twitter, and this is from Sam Kumar. He's asking about the future, so you can see how comfortable you are answering this. "As you enter large enterprise markets, are you seeing a requirement for speech analytics and workforce management?"

Sridhar Vembu: Definitely, the workforce management we have seen. We are doing a lot more with the AI ZR, and we are working on all these projects. The workforce management, actually, we have now products in that line of tools. There is actually something called Work, currently, that is in sort of trials now. Yes, we are definitely seeing these requirements.

Michael Krigsman: Looking forward into the future of Zoho, can you share with us what you're working on, where you're going?

Sridhar Vembu: Yeah. We are looking constantly for ways to enhance our own software faster, higher quality, security, a lot of these. In other words, as we built out the software, we have gained more experience in the nature of software development itself. We are looking at that on a foundation level.

There are three, the triangle. There is productivity in terms of development. There's software quality in terms of the quality of the software. Then there is security. We believe that there are some technologies, techniques available to make all three better at the same time: improve productivity, improve quality and, of course, make it more secure. These are the things that we are working on at a fundamental level, and these innovations will flow through all of our products and the customers will benefit.

Ultimately, we also have a philosophy in business where we believe that, as these innovations make us better, make us more productive, we also should pass on the savings to the customer. The customer should benefit from better software at better prices. That is a critical thing for us because we want our software to be affordable to every business on the planet.

Advice for Mission-Driven Technology and Software Company Founders

Michael Krigsman: Let's finish up with advice. As I said at the beginning, you're a very different species of a software company than most of the Silicon Valley ones that are out there. What advice do you have to entrepreneurs?

Sridhar Vembu: Well, actually, generally, I don't like to give advice because it really depends on what the internal goals are. I'm not talking about externally stated goals. People ought to go into their own person and ask, who am I? What is my goal? What is my objective in this business? Why am I here? They would answer the question themselves, honestly. They are to face themselves and answer that question.

Let me advise the kind of person who will answer the question this way if they want a mission-centered company, they want the company for the long-haul, all of these. It's actually okay not to be that. I don't judge people who say, "I want to make lots of money and I want to sell the company." It's not for me to advise them on this.

I will say that if you share the things I share, then I can provide you advice. The advice is, you stay long-term focused and you are able to then direct your short-term activities steadily towards alignment of the long-term. If you have the time, give yourself the runway. We have 23 years we have been in business. I hope to be around for another 25 years longer.

That means that you have a lot of runway to think about these problems long-term, and it also allows you to build a company differently. For example, you might do something to pay the bills today but you might have a mission that evolves in a different direction. You have the ability to do that. For example, Amazon is a retail company that also became a leader in AWS in the cloud. That kind of transformation is possible if you think long-term.

Michael Krigsman: You just made what I think is maybe the fundamental point, which is asking the question, why do I exist as a business; why am I here? Can you elaborate on how an entrepreneur can even begin to approach that question in a really honest and penetrating way?

Sridhar Vembu: The really honest way is very important because it ultimately goes to the "Who am I?" question. It's a spiritual question, really, "Who am I and why am I here?"

Honestly, I'll tell you there is no guidebook to answer this. This is why religion, philosophers, or spiritual gurus, all of them exist for this to face up to this. I'm not arrogant enough to think that I have any insight into this.

People have to answer this first. They have to be honest with themselves because a lot of times when we try to answer it, we are trying to answer it for some other person on what would impress them, but we have to actually think for ourselves. Why am I here? If you answer that question, you come up with it.

I've told you that there is no formula or any way to answer this, but maybe you read. Maybe you reflect. Then a lot of these techniques could provide you some insights. You have life experiences that will provide you insights. That is the critical one before you know where you can take a company. The "Who am I?" question is very important to answer, to have an idea of before you can answer, "What is my company here for?"

Michael Krigsman: I think some, probably even many, entrepreneurs are listening to this and saying, "Oh, this is not relevant because I'm just trying to build a business," but I absolutely think that this is fundamental.

Sridhar Vembu: As I said in the beginning, maybe no one has to ask the question because you are just trying to keep the doors open and you're just trying to survive. But as things come to the floor, particularly when you succeed, that's when this question becomes much more important. If you have no idea, if you never thought about it while you are trying to make a living, then you feel more lost, actually. Even as you are going through the day-to-day struggles of keeping the doors open, it is good to have a glimpse into our inner selves and ask, "Why am I here?"

That's why I say, you have to start asking it earlier than later. People say, "Oh, I'll figure out all these after I make it." Well, then what is making it? That's why it is important to ask the question ahead of time.

Michael Krigsman: This absolutely is the important question, I believe, for durable success in business. We're pretty much out of time, but we have one more. Very quickly, I'll ask you one more question from Twitter, which just came in, which I think is interesting in the context of what we were just discussing. This is from Sanjeev. He asks, "Do you consider Zoho as a Silicon Valley product or a hardcore Indian product?" [Laughter]

Sridhar Vembu: [Laughter] We consider ourselves a good product. [Laughter] I actually try not to define these in such terms because Silicon Valley connotes certain things. As you said in the very beginning, we are a unique animal. In fact, to be honest, a lot of inspiration came from places like Japan where a lot of companies have thought long-term.

Actually, right now, I am in front of the Sony camera. This particular technology I know; I've studied their R&D. They've been working on this R&D for 40 years on this, which is why it's still world class, right? That's the kind of company that I get inspired by.

You can say maybe a company based out of India and Silicon Valley with a lot of Japanese inspiration. How does that sound? [Laughter]

Michael Krigsman: It sounds pretty good. Unfortunately, we're out of time. I wish we had time to continue. Sridhar Vembu, CEO and Founder of Zoho, thank you so much for taking your time today.

Sridhar Vembu: Thank you. I really appreciate it. Thank you.

Michael Krigsman: It's been a lot of fun. You have been watching CXOTalk. We've been speaking with Sridhar Vembu who is, again, the CEO and founder of Zoho. Before you go, subscribe on YouTube and don't forget to subscribe to our newsletter. Just hit "Subscribe" at the top of our menu bar. Thanks so much, everybody. We have amazing shows coming up and I hope you have a great day. Bye-bye.