Summary List Placement
The 25-year-old productivity tool company Zoho believes that staying private has been one of the keys to its success — and doesn’t have any ambitions for an IPO.
Zoho offers a suite of productivity and business applications and competes against public software giants like $57 billion market cap Atlassian and $95 billion market cap ServiceNow. Unlike those competitors, which raised $522 million and $269.28 million from investors, respectively, before going public, Zoho has never taken outside investment.
That strategy has meant that it’s always needed a “strict focus” on profitability, Zoho chief strategy officer Vijay Sundaram told Insider, but also that it has the freedom to take smart risks.
“We make investments that might not pay off in the next five years, and we really don’t care,” Sundaram said. “That’s hard to do when under the binoculars of Wall Street.”
Most unconventionally, Zoho has invested in land for employee-managed organic farm in Texas.
“When COVID-19 hit, we saw how employee needs were changing and the need for collaboration and safe socialization was at an all-time high, so we invested in a working farm 40 minutes outside of Austin, where employees can meet to get their hands dirty and partake in harvesting crops, bring their children and work, if they choose,” Sundaram said. “We’ve seen great success with this farm with employees being more engaged and happy and feeling like part of a community, even when most of the world is still remote.”
Wall Street’s focus on quarterly results can lead to actions that are “counterproductive,” Sundaram says. Instead, Zoho’s model focuses on supporting employees and customers, rather than returns for shareholders. For instance, the company also decided early on in the pandemic that it would not lay anyone off.
“Technologists are the best to determine the direction of the company and where it goes,” Sundaram said.
This strategy has worked for Zoho, Sundaram said: The firm’s global business has been growing its revenue at an annual rate of about 35% in the past six years. (The firm declined to share specific figures.) Though revenue only grew 29% in 2020, Sundaram said that that was significantly higher than it expected after the pandemic (and subsequent economic downturn) hit in March.
“From a pure numbers perspective, I think we did OK,” Sundaram said. “From an employee perspective, we managed to retain people and keep people engaged and be productive.”
And as for this year?
“So far, 2021 is looking good.”
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