Zoho Thinks Small Is Beautiful

(MoneyWatch)  Zoho is like the sea creature that survives by taking tiny nibbles from unsuspecting, larger rivals. Not that it wants to kill those rivals ?€" in fact, it needs an ecosystem in which to thrive.

The company sells a range of enterprise applications and productivity software, mostly via the cloud and mostly in competition with much larger vendors like Microsoft, Google and Salesforce.com. However, the company isn't worried about being overwhelmed by those behemoths, Zoho CEO Sridhar Vembu recently told me over breakfast.

Quite the contrary, Zoho thrives by being providing point solutions that complement existing applications, and can afford to do so at relatively low prices because it's smaller than its competitors. For instance, it has created a spreadsheet that acts like a front end to business applications used to manage customer accounts -- Microsoft has a similar tie in between its Excel spreadsheet application and SAP's suite of management software, but is the product of a specific partnership marketed as Duet, whereas Zoho will provide this type of customization on an ad hoc basis. "The integrations is where we really add value at a price point that's really attractive," Vembu told me.

"We have the flexibility of doing things that way, because the amount of money we need to put food on the table is lower than, say, Microsoft," he added.

Zoho has 350 employees all told, compared to 3,500 in one of Salesforce.com's units alone. "If we do one-tenth of Saleforce.com, we'll be laughing all the way to the bank," Vembu added. More seriously, he said Zoho's size "makes it viable to do more customizations."