TRANSITIONS
This Forbes article titled "The Smartest unknown Indian entrepreneur" maybe a tad gushy, but rightly highlights an Indian software company of note:
"Entrepreneur Marc Benioff is afraid of him. Venture king Mike Moritz wants to invest in him.
You have never heard of Sridhar Vembu, founder and CEO of AdventNet, the company behind newly launched productivity suite Zoho."
It's really about Zoho, as the article explains:
"Zoho does everything that you would do with Microsoft Office. It also has a hosted customer relationship management service that is free for very small companies and only costs $10 per user per month for larger ones. It competes with Salesforce.com (nyse: CRM ), which charges $65 per user per month.
Marc Benioff, chief executive of Salesforce.com, has made an offer to buy Zoho for an undisclosed amount. Benioff seems appropriately nervous, since Salesforce.com's sales and administration costs are high, eating up most of his earnings. Can he afford to compete if Zoho undercuts him at such a dramatic scale?
Vembu has turned Benioff down."
AdventNet is a $40 million revenue business throwing off $12 million in profits this year, with Zoho not yet meaningfully contributing to the financials.
But this is not just about a cool software business. Here's why the company is notable:
"Vembu has a very exciting opportunity ahead of him. What the Chinese have done in manufacturing, he is showing that the Indians can do in software: undercut U.S. and European software makers dramatically.
Not in information technology services. Not by body shopping. Vembu has done something few Indian entrepreneurs have been able to achieve--build a true "product" company out of India. This is not a head count-based business model."
Having followed AdventNet and Zoho for some time now, it's good to see the company getting a little media exposure in the U.S. Agree with Forbes here...this is one to watch.
What'll be more interesting if it serves as a model for other Indian "product" software companies, much like Wipro did for the Indian IT services industry.
P.S. The author of the article does a detailed interview with the founder, which has a lot more detail on the various product lines and their history.
"What the Chinese have done in manufacturing, he is showing that the Indians can do in software: undercut U.S. and European software makers dramatically."
Not necessarily. With the current trends in currencies and Indian software engineer rates, the is no reason to believe that India offers an inherently cheaper place to develop and sell software compared to domestic producers. Far more likely Salesforce.com is just bloated. OSS competitor Sugar, substantially undercuts Salesforce in its core market.
Even the core product is not that cheap. $10/seat/month = $120/year. Microsoft already sells the "student" version of office for ~ $120 and that is for 3 machines/users.
Vembu is probably more like a conventional naturalized Indian CEO who just happens to have his business located in India rather than the US.
The trend to watch is the idea of "free". See Chris Anderson's article in this month's Wired.
http://www.wired.com/techbiz/it/magazine/16-03/ff_free
Software can be developed quite cheaply and viral marketing can generate a good business supported by ad rates and low annual subscriptions. Software entrepreneur Paul Graham (YCombinator) has made the case that the best place to develop software is in existing high tech havens, where hungry young talent will be able to be tap the creative zeitgeist to create novel ideas that can be exploited.
Posted by: Alex Tolley | Monday, February 25, 2008 at 11:29 AM