On May 4, 2023, Zoho held its Zoholics conference in Austin, TX which included a media and analyst track in addition to the customer track. After all, Zoholics is a customer event. During this event, about 80 participants of the former track had ample opportunity to learn about and discuss the latest news at Zoho. We also had the opportunity to listen to - and question - a panel of customers who gave candid answers about their journey with Zoho and challenges they faced. Of course there was plenty of room for mingling and networking with Zoho executives and, of course, with analysts and customers. In addition to the breaks between the tracks, there was a pre-evening reception, a dinner on the event day and a casual brunch at the Zoho farm just outside of Austin.
As usual for Zoho, the sessions were less about feeding us with PowerPoint (or Zoho Show, to be precise. Why would Zoho not use a Zoho product?) but about giving good information and a genuine interest in getting feedback. This was evident not only during the sessions but also by the customer panel and an open Q and A with representatives of the Zoho leadership team.
Of course, the customers were reference customers. Still, they openly admitted challenges. In one case e.g., it became evident that Zoho's HR software has scope for improvement, another example was users preferring MS Teams to Zoho Cliq.
The sessions covered four grand themes:
The release of Ulaa, a privacy orientated browser
Zoho’s upmarket momentum
A kick-start set of solutions to help solopreneurs and very small businesses to get running
Zoho’s AI strategy and OpenAI integration
Ulaa
Zoho announced the release of Ulaa, its new privacy orientated browser. Here an edited summary of the ChatGPT+ generated summary of the announcement. The full announcement can be read here.
Ulaa is a privacy-centric web browser designed to protect user data from online tracking and surveillance. This browser aims to counter the dominance of tech companies over user data, offering built-in advertisement and data tracking blockers, privacy customizations, end-to-end encryption, and a multi-ID model for enhanced user privacy. Ulaa does not share user data with any third parties and prohibits DNS pre-fetching, which can cache data, and motion sensors that track mouse movement and clicks.
Ulaa also introduces dynamic mode switching, with five unique modes: Personal, Work, Developer, Kids, and Open Season. Each mode offers a tailored browsing experience and is isolated from the others for added privacy and functionality. These modes can accommodate a variety of user needs, ranging from online banking and shopping to professional web development and safe browsing for children.
On the productivity front, Ulaa provides integrated apps like Zia Search and Zoho Notebook, tabs management options, and a built-in feature called Annotator for screen capture and annotation. The browser also supports all Chrome browser extensions.
Ulaa is free and its desktop version is available for download, with iOS and Android versions in beta testing.
Upmarket Momentum
For about four years now, Zoho has been working on expanding its customer base into enterprise territory. Zoho announces where its focus for the company's further upmarket growth lies. The full announcement can be read here. Here is an edited summary, generated by ChatGPT 4.
Zoho Corporation, a global technology company, has announced significant investments across its entire portfolio to expedite growth in the mid-market and enterprise segments. After witnessing a three-year, 65% CAGR in these sectors, which now account for one-third of the entire business, the company is set to expand its offerings and services. Zoho currently has over 90 million users across more than 600,000 global businesses.
The planned investments are targeted at go-to-market services, new products, platform extensibility, AI, and privacy and security. They are intended to transform the enterprise customer experience and enable customer success systematically. Specific highlights include:
Go-to-Market Investments: Zoho is growing its Enterprise Business Solutions (EBS) group to offer expertise across solutions engineering, implementation, and customer success. It is also strengthening partnerships with technology consulting firms and expanding regionally to support large organizations better.
Platform Investments: Zoho is focusing on the expansion of its Marketplace, which allows businesses to extend Zoho and integrate it with incumbent software. It also promotes no-code and low-code extensibility to streamline deployments.
New Applications and Enhancements: Zoho is introducing Zoho Contracts, a comprehensive contract lifecycle management solution, and integrating Zoho DataPrep with Zoho CRM for efficient customer data management.
Security and Privacy Investments: Zoho is launching Zoho OneAuth, a comprehensive multi-factor authentication application, and Zoho Directory for secure workforce identity and access management. It is also introducing Ulaa, a privacy-centric web browser designed to protect users' personal information and internet activity.
AI Investments: Zoho is investing heavily in its AI strategy, launching ChatGPT for Zoho and broadening the capabilities of its internal AI engine, Zia.
Kick-starting a small business
Without a press release, Zoho's Raju Vegesna announced the availability of five solutions to support solopreneurs and the starting phase of new businesses. These solutions are initially only available in the US, some even only in regions of the US, which in all likelihood is the reason for not issuing a press release - Zoho being an engineering first as opposed to a marketing first company.
These solutions are
Zoho Solo: Zoho Solo is a one-stop mobile-only app for the management of a one-person business that covers customer management, task tracking, expenses, invoices and taxes. It is currently in private beta.
Zoho Start: Zoho Start is a helper for aspiring entrepreneurs to legally set up their business. it is intended to take all the hassle out of this sometimes scary process.
Zoho Domains: Zoho Domains is a domain registration and hosting service that also ties in to Zoho Sites to enable the quick building of business websites.
Zoho Publish: Zoho Publish is a reputation management service that enables businesses to drive visibility and build trust for the business from one single platform. It enables listings on various directory services, to monitor and react to incoming ratings and reviews and to get actionable insights via analytics. Zoho Publlish is currently in beta and will be integrated into Zoho One.
Zoho Tables: Zoho Tables combines the ease of use of a spreadsheet with the power of a database application. Many organizations still are run using spreadsheets. Zoho Tables adds no-code automation, custom fields and collaboration into the mix and is delivered using a variety of templates.
AI Strategy
The third announcement covered Zoho's AI strategy considering generative AI. The full release can be read on Zoho's website; the edited ChatGPT summary is right below.
Zoho has announced the integration of 13 generative AI extensions and applications powered by ChatGPT into Zia, their in-house AI engine. This integration blends Zoho's decade-long AI investment with third-party intelligence, thereby enhancing customer experience, value, and privacy protection.
This move is grounded in Zoho's AI strategy, which is based on three core principles: enhancing customer experience, safeguarding customer privacy, and providing customer value. Zoho's AI solutions, built in-house, deliver a more intuitive and efficient user experience, protecting customer privacy without compromising data, and offering multifaceted value by improving productivity, ease of use, and cost-effectiveness.
Zoho's suite of applications, including Zoho CRM, Analytics, Desk, Writer, and more, have been updated with generative AI integrations. These new features offer a wide range of benefits, from summarizing key customer records, offering predictive analysis on ongoing deals, to automatic summarization of customer tickets and generating personalized emails.
Customers wishing to harness the new generative AI capabilities within Zoho's applications will need to enable these features actively. This can be done using their existing OpenAI account API key. The cost of using the generative AI features will be determined by the number of APIs used, and customers will be billed directly by OpenAI. This move offers customers the flexibility to choose and pay for only the AI capabilities they need, further enhancing the value offered by Zoho.
Looking ahead, Zoho has a clear AI roadmap and vision. In the short term, Zoho plans to continue Zia's integration with third-party intelligence, such as ChatGPT, to leverage the latest technology in its broad portfolio of business solutions. As part of its long-term strategy, Zoho aims to internalize generative AI technology, providing its 90 million global users with intelligent experiences while maintaining its high value and privacy standards. Furthermore, Zoho is developing proprietary Large Language Models (LLMs) that are capable of conversing, summarizing, paraphrasing, and learning new tasks with zero-shot learning techniques, aiming to revolutionize AI-driven communication and knowledge discovery.
The bigger picture
This is quite a lot to digest. Zoho is broadening its scope in a variety of dimensions from CRM/CX for SMSs, its sweet spot of earlier times. The breadth of the application portfolio increases and covers an increasing number of business functions. Simultaneously, the application depth increases and delivers increasing capabilities. This includes big investments into AI.
For about four years, Zoho expands its target market into the enterprise arena. Now, we see a foray into very young and very small businesses.
On top of this, Zoho ventured to create its own privacy-first web browser. Although this browser is based on the existing Chromium engine, it has taken considerable effort to "de-Google" it.
My point of view and analysis
Zoho announced a potpourri of new things during this event. Let me analyze them in the order of announcements and end with some general points.
The addition of a privacy-orientated web browser to the product portfolio of what is a business application vendor turned technology vendor initially sounds a bit strange. But then, it increases Zoho's credibility on the privacy frontier. It also opens up some quite interesting roads, see below.
Ulaa
I have been using Ulaa for about eight months now and find it quite on par with other browsers. Not being one to switch between different modes frequently, I find the delivery of five different ones quite appealing. What I also find appealing is that Zoho does not have a revenue model that remotely bases on advertisements. So, Zoho's privacy pledge stays more than credible. On top of this, I can easily see numerous business use cases for Ulaa. Zoho already has a good number of points of presence around the globe. With the different modes it is easily imaginable to offer a Zoho VPN that can be tied to a mode, or something like Apple's Private Relay to add a layer of protection. Additionally, Zoho offering business applications, it would be possible to add a layer of management controls with a console to manage web permissions.
Enterprise strategy
As Zoho is moving upmarket for some years now, it is gratifying to see that there is significant traction, especially given the current difficult economic environment. A 3-year CAGR of 65 percent shows that customers do see value for money, which is exactly one of Zoho's core promises. To me, the investment priorities make perfect sense, although some people asked why there is no more investment into marketing. The answer to this question is probably by observing the size and affiliation of the media and analyst track. While there have been quite some known faces, many have been new. Some of them are focusing more on the enterprise markets, some are leaning more towards the SMB arena. And, they got some tough questions answered. If this approach is successful - and I do not see any reason why it should not - Zoho has enhanced its marketing chops significantly by engaging with some well-connected influencers.
Between this, and the relentless work of the EBS group, any doubt about visibility should vanish.
The enterprise strategy largely revolves around Zoho's more mature applications, in particular the CX stack. This serves as a strong basis for a land and expand approach, as there is also a strong account manager, or in Zoho lingo, a directly responsible individual, DRI. Still, to avoid being pushed into a niche, this means that other, less mature, applications need to mature fast.
Zoho has also made big inroads with SI partnerships. One of the big successes was the ability to partner up with a good number of global SIs. While this is big, it is equally important to also win bigger regional SIs, as these are closer to Zoho's target markets and to industries than the big ones. They also often have a better reputation. As one analyst stated, in contrast to smaller SIs the big SIs also want to totally control the projects. This can be damaging to the vendor. I second this statement from my own experience. The current way of embedding Zoho EBS into the SI project team scales only so far. Given this, it might be interesting to strengthen the partnership strategy by rolling out an implementation methodology. This would further increase Zoho's credibility.
With regards to partnerships it now should also be the time to look deeper into industry solutions together with knowledgeable SIs and VARs. As this requires some investment on the partner side, some smart incentivizes are needed for this. Zoho's offerings are still largely horizontal, albeit with a wide scope.
What remains, is Zoho internal. As Prashanth V K, head of Zoho CX Marketing Strategy, said to me when I told him about a software selection for an upper mid-market company that resulted in exhibiting rather SMB market behavior: "I can confirm what you observed was not systemic and was more of an anomaly. As Vijay said earlier, old habits die hard". It is here, where Zoho's strength of deploying long tenure employees into new markets to establish the unique Zoho culture has its challenge. While I am sure the this challenge is not insurmountable, it is important to address the enterprise market different from the SMB market. Single occurrences can hurt the whole organization. Even more so, if the opportunity is not about extending the footprint in an existing account but gaining net new names.
Kick-starting small businesses
The kick-starting and solopreneur offerings are a stroke of genius. While they are available only in selected regions, their potential is ginormous. It is hard to overestimate it. In particular, looking at Zoho Solo with its mobile first approach, has a TAM that is in the billions of businesses. The only thing is that the backend needs to scale fast and big enough. Zoho Domain tying into Zoho Sites for building websites offers direct added value.
All in all, this set of solutions immediately becomes a funnel for the Zoho solutions that address bigger companies. This means that Zoho can support the growth of a company from a one-person shop to a worldwide enterprise. If I had heard about these solutions from many other companies, my reaction would have been deeply cynic: A marketing plot to lock in the companies. Not so when offered by Zoho, where these offerings totally fit into the value proposition that is at the core of Zoho's culture.
Considering, that Zoho already now has more than 600,000 customers, this opens up another avenue, as colleague Josh Greenbaum observed astutely.This can become the foundation of a business network. Zoho has all the ingredients, from procurement and order management software, via a portal, product and inventory, commerce functionality, etc. This is an intriguing thought.
AI strategy
The sudden success of OpenAI and its GPT models caught Zoho flat-footed, just like all other business software vendors around. This can be clearly seen in the flurry of announcements and pre-announcements covering great and not-so-great ChatGPT-integrations that every vendor around made in the past few months. Naturally, Zoho could not avoid jumping on the generative AI bandwagon, too. And Zoho did an impressive jump, covering nearly 50 business use cases across 13 applications.
The challenge here is that the usage of OpenAI is not conducive to Zoho's privacy pledge in itself. It is clearly what I would consider a stop-gap solution, as the press release suggests and co-founder Tony Thomas confirmed in a conversation. The partnership with OpenAI was established after considering several LLMs, with GPT coming out best for Zoho's use cases. Still, is a deviation from Zoho's usual DIY mentality, and from the terms of its privacy pledge, namely usage of own data centers and complete oversight of customer data, privacy, and security. To accommodate for this, it is a good move to also deviate from the usual procedure of enabling improvements automatically. The OpenAI-integrations are turned off by default. They require a customer-owned API key and the API usage is billed by OpenAI and not by Zoho after the integrations are activated by the customer.
Going forward, Zoho intends to build and deploy its own generative technology. Expect this to happen by leveraging and improving open source technologies. Also, expect this to not happen in 2023 anymore. As there are further use cases for generative AI in progress, the migration paths from old scenarios to new scenarios will be interesting.
General points
Zoho is clearly punching way above its weight. Being a company of "only" 12,000 employees, it has an incredibly rich and steadily growing offering. Additionally, the company's values of being independent and pursuing a non-extractive capitalism put a limit on Zoho's growth and therefore finances. Not to be misunderstood, personally I endorse this! It is the right way.
However, it raises the question when a big bite becomes too big a bite to swallow. Or the other way round: How to avoid being stretched too thin? This question has two facets, an internal one and an external one.
I asked Raju Vegesna, Zoho's head of North America. His response to the internal aspect was: it is a matter of leadership that needs to be in place to leverage the strengths of a decentralized organization.
This leadership is clearly in place. Zoho is a very decentralized organization that places decision authority where decisions are needed. This works through a strong set of shared values. I have rarely seen an organization that is as decentralized as Zoho and at the same time lives shared values.
The external facet is a bit more difficult. It is about factors that are disruptive to the potential business. The prominent example is OpenAI. The challenge is that generative AI develops extremely fast, models are huge (GPT four is estimated to have more than one trillion parameters) with corresponding compute requirement. Training is expensive and access to the necessary training data can be expected to become increasingly difficult for privacy and IP reasons. Zoho's data centers might lack compute power, while Zoho at the same time lacks the finances to build up additional data centers fast enough. After all, the infrastructure market is a platform market, and platform markets favor their biggest participants.
Vegesnas solution? Use smaller and more specialized models in an orchestrated manner. It is a typical Zoho solution. It is outside the mainstream, forward thinking and pragmatic. And it is one that might just work.
Everything considered, I believe that Zoho's momentum is still increasing. Many a vendor would be well advised to have a look at how Zoho manages how to adapt and overcome and to consistently deliver solutions that convince.
May 11: corrected a quote that was too short and added a bit of context to it in the Enterprise strategy analysis section
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