Zoho Day 2024

By Patrick Moorhead - February 13, 2024

The Six Five team discusses Zoho Day 2024.

If you are interested in watching the full episode you can check it out here.

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Transcript:

Daniel Newman: Zoho Day, not a publicly traded company, but it was a lot of fun. We heard from the CEO, Sridhar Vembu, who we brought, we were the first to sit down with him in a Six Five interview, and you’re going to have to click the link. We’ll drop that later when it goes live. Great conversation. Sridhar does not come to Zoho Day to talk all that much about Zoho itself. After doing this for a couple of years, I can tell you Sridhar likes to focus on these bigger, broader, mega topics trends. He likes to talk macroeconomy, geopolitics.

This year one of his big focuses was transnational localism. Last year, it was privacy, which is still top of mind for Sridhar, but what I really loved about the conversation, Pat, we had our teams there. They spent multiple days and it wasn’t a big launch event. It was a focus on the Zoho business, Zoho One, the distribution of products. This company really is set out and designed to be that one-stop shop for small to mid-size companies and over the years has grown into larger and larger enterprise use cases, whether it’s ERP, CRM, supply chain, AI, silicon. This company, data management, privacy, web browsers, collaboration, they have a tool for everything, very unique business approach.

Sridhar really spent a lot of his time talking about two things, how the economy is going to continue to grow with a significant amount of the cash creation and business valuation all going into a few companies, splashed a really interesting slide about the daily cash flow created by just I think a couple of companies. Maybe it was like Google, Microsoft, and Apple. Ironically, he made the call that the two companies last year, that one were Microsoft and Apple or something, you and I screamed out, “NVIDIA!” I don’t know what happened, but we both thought that was interesting, but I guess maybe, again, from a different seat, different perspective, different place.

In the sit down, the interesting mega theme that he chose this year, this transnational localism, Pat, was all about bringing economic value to economies that can support lower wage earners, lower cost of living, lower real estate valuations, and he was pointing to the fact that Zoho was making substantial investments to be in McAllen, Texas. So McAllen, just for anybody that isn’t familiar, is like the southernmost point in Texas. It’s a border city. It’s a good size. It had pretty much everything, restaurants, shopping, that you would need. It’s not what you’d probably see on an average CNN clip about the border. You didn’t see the border wall, you didn’t see a line of people crossing, you didn’t see all the craziness that you’re seeing in the news right now, but what you did see is a city that you can probably live in, Pat, for 20% of the cost of living in Austin to buy a home.

Sridhar was really focused on as the ability to buy a home continues to become harder, you’re seeing reproduction rates go down. That was a correlation that he made that was very, very interesting. People aren’t having kids. They’re not sure they can afford a place to live. These are the things that he’s thinking about sharing and what he’s trying to do with Zoho, whether it’s the work they do in Southern India outside of Chennai, the farming that he likes to talk about or it’s the bringing the Zoho often is in events into these smaller cities is connecting technology and the growth of the technology is going to bring to smaller economies to make work more affordable.

Pat, I guess I’ll just say the correlation that’s really interesting is you think about Texas itself, we are a microcosm of that same concept because moving from Silicon Valley to Texas, even though Austin now has become very, very expensive, still has a proportional income effect that seems very substantial to most people that make that transition. Now, go from Austin to McAllen, I think what he’s trying to say is the distribution of workforce with lower cost of living, it is very possible to put work into these economies, employ lots of people.

I think one of the things that stuck with me the most, Pat, was when he talked about in India for $100 a month you can get workers that probably operate at a similar capability and quality people that here might make 60 or $80,000 a year. So that disproportion creates this gap that we still societally have no opportunity or no idea of how to solve. I thought Sridhar was really interesting. So the company also went into its continued focus privacy, AI, ERP, CRM, and that was a big part of it, Pat, but I always love the Sridhar conversation. I’m going to wrap there, but I always love just listening to his broader strokes of things going on in the world that most people just don’t talk about.

When a CEO of a tech company goes up in front of a room full balance, usually it is a big, “This is our big vision of our new products and technology.” Pat, I don’t know that that’s wrong. I think that makes a lot of sense, but it’s also different, fun, and interesting. By the way, Zoho has built itself into probably around a billion dollar company on annual revenue by being a little bit quirky, a little bit different and solving problems for a very unique audience, and it’s working. So a lot of credit to them. Check out the conversation when we post. It’ll go live.

Patrick Moorhead: Zoho is one of the most unique companies out there from my point of view. The conversation with their CEO is very unique, reminded me if I could pick a CEO that whose conversations are closer, I’d probably pick Michael Dell, Michael Dell and Jeff Clark, the one two punch. Jeff really hits products hard and Michael is the statesman and he’s talking economics, he’s talking culture and things like that. Now, Michael does love the products, and if you ask him, he has an incredible amount of detail around it and, like I said, unique. Here we have most companies and I’ll say Zoho’s biggest competitors who would probably be Salesforce, NetSuite, and SAP, folks like that, and their propping up, standing up big outposts in major metropolitan areas.

This transnational localism, I think a great example was nearly a decade ago when Zoho set up shop in Austin when it wasn’t this behemoth of a city, and the way that I read McAllen is, Austin might be the US headquarters, but McAllen is likely going to be where all of the action will happen. You get the community excited. Who knows? You might get some tax breaks. Cost of labor is a lot less and that doesn’t mean that people aren’t going home with less money. It just means the cost of living might be 50 to 60% lower than a major metropolitan area. So it totally makes sense.

I thought the AI conversation was interesting, Daniel, for nothing other than it didn’t seem very impressed with the capabilities and that, again, again, I talk about Zoho being the … I’ve never heard a company with that point of view. My first read, Daniel, is that it’s maybe because they haven’t figured out how to do it cost-effectively. Their pricing approach is very interesting, and you will not pay more money to get AI-infused results, very similar to a Zoho, sorry, not a Zoho model, but a Zoom model. I think Zoom and Zoho are one of the only two companies I’m aware of, I’m sure there are more who isn’t charging more. SAP does, Salesforce does, Microsoft, Google, as we’re going to talk about a little bit later.

I would’ve liked a little bit more product like new product discussion and announcements, but that’s just me. I’m a product guy, wanted to see what was coming out, but my guess is that Zoholics is going to be the big place where they’re going to do that. Stay tuned for Zoholics. The Six Five will be broadcasting from that show.

Daniel Newman: Yeah, we will. Yeah, maybe.

Patrick Moorhead: I know, in our backyard.

Daniel Newman: Hey, Pat. Yeah, I do like when shows are here. My goal is to go nowhere next year.

Patrick Moorhead: Can you imagine that? I couldn’t even imagine that. I think it’d be life-changing. I know it would be life-changing for me and my health. I am not as healthy doing all the travel that I do. My ring tells me that. My watch tells me that. You can see it. I turn into angry Pat, mourning Pat most of the time.

Daniel Newman: By the way, do you ever just feel that you don’t feel well? Are you 100? So I wonder if we’re going to turn … You know how GPS has societally turned us into idiots, useful idiots behind the wheel? I’m like, “There’s the restaurant. In the entrance right there, it says enter,” but the GPS said turn a block ago. So I’m riding on the wrong street because it’s like, “No, the GPS has to know. There’s no possibility that sign right in front …” My point is, and I’m funny because I’m a manual watch guy, I don’t have an Oura ring. I do love the tech and I played with it all, but I actually preferred and not, it’s like I don’t always want to know. You know how you and I are the opposite. It’s like you know your stressed in the moment, you’re like, “Dan, look at my stress level right now,” and I’m like, “Pat, I can see it on your face. You look fricking pissed. I know you’re stressed.”

It’s like weight. It’s like I don’t weigh myself a lot because I tell when I’m eating well and feeling well, and if I weigh myself and it doesn’t tell me what my body’s feeling, but every so often you need that truth bomb, and that’s where the data’s so valuable. So it’s interesting, we can become hyperdependent, we can completely decouple from it. Somewhere in the middle is balance, and just please don’t wear a Vision Pro around that’s got a weight scale so you can watch your realtime weight.

Patrick Moorhead: Hang on. No, I’m just kidding.

Daniel Newman: Don’t put it on. Don’t put it on yet.

Patrick Moorhead: All right.

Daniel Newman: Can you do a segment with it though?

Patrick Moorhead: Dan, I looked at that, I looked at it on my countertop and I looked at how ridiculous the case is, and I just left it right on there. It’s like a fricking giant marshmallow.

Patrick Moorhead
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Patrick founded the firm based on his real-world world technology experiences with the understanding of what he wasn’t getting from analysts and consultants. Ten years later, Patrick is ranked #1 among technology industry analysts in terms of “power” (ARInsights)  in “press citations” (Apollo Research). Moorhead is a contributor at Forbes and frequently appears on CNBC. He is a broad-based analyst covering a wide variety of topics including the cloud, enterprise SaaS, collaboration, client computing, and semiconductors. He has 30 years of experience including 15 years of executive experience at high tech companies (NCR, AT&T, Compaq, now HP, and AMD) leading strategy, product management, product marketing, and corporate marketing, including three industry board appointments.