I really think that companies such as Globant have proven that, if done correctly, one can build a successful business by offering top-notch programming talent to interesting web companies.  Realizing the potential of such an endeavor has as much to do with creating a vibrant company culture in tune with the needs of the programmers and the company’s potential customers.  Here, in Colombia, I think a company such as Koombea, which has won international coding competitions, is further proof that the potential certainly exists.

Eventhough I’ve been looking forward to building my own web app (and a company around it), there are so many things pulling me in this direction, that I just can’t ignore it any longer.  I’ve had qualms about going full force into a services business (like outsourced development), but, after further reflection, it’s finally clear to me that this path has a lot of positives.

Like I said, building a vibrant company culture is a big part of doing this successfully, but I’ve had great experiences doing this for others.  Fifteen years ago, when I moved to Colombia from the states, I got the chance to build a services organization from 2 engineers to more than 20 at Compaq Computer and we achieved such a level of excellence that our country (Colombia) had the best customer satisfaction levels (our measure of success) in the whole world.

The incredible thing is that when I established that BHG (Big Hairy Goal) three years prior, I got a ton of snickers from the team and I’m sure they were convinced that they were dealing with one “gringo loco” (that part was true).  Nevertheless, after five years in the valley (Silicon Valley) and a little flexibility in my adjustment to the Latin American culture, I saw that amazing things were possible.

I’m continuing to develop this project and will, firstly, make sure that I start locating top-notch talent before offering anything to potential customers (startups and other SaaS and web companies).  I’d really like to get some young raw talent that can absorb a ton of high performance culture and values from Silicon Valley type companies instead of going whole hog for senior developers who might have acquired a few too many stodgy bad habits along the way.

What are your thoughts on what I’m embarking upon?

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Upon hearing this, many companies immediately think of customer service, which is indeed important.  Nonetheless, many customers and non-customers offer suggestions that could or could not be of value to such organizations.  Companies that hear their customers are also open so something called “open innovation” whereby innovations can come (in part or in whole) from outside the company’s boundaries.

In terms of suggestions, one example revolves around the team at Zoho, a SaaS provider. As can be seen by the image at the top of this post the company made a slight change to its headline statement at the top of its web site between September 4th and the 13th of this year.  About a year ago, I had the pleasure of interviewing the company’s founder and CEO, Sridhar Vembu and must admit I was quite impressed by his vision and intelligence.  At that time, the company web site was little more than a listing of all their applications.

I asked Sridhar if they were thinking of revamping their messaging to focus on customer benefits and improve the general design of the site.  He said they were and a couple of weeks ago, I stumbled upon the new site, which, in my mind, is an improvement.  Nonetheless, in my email congratulating them on the new site, I did mention that it might be a good idea to include two messages: 1) Who Zoho makes companies more productive and 2) the millions of users they have.  See my email below.

It says a lot that a few days later, they had taken action on these suggestions (from outside of their company) and implemented them.  It was certainly possible that the suggestion would not have been implemented, but it is apparent that they take these suggestions seriously and are open to anything that helps them improve. This is a great lesson in whatever name you’d want to put on this (e.g., open collaboration, open innovation, etc.) for other SaaS providers and highlights the type of open company culture that such companies would do well to embrace.

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We already have a team of more than ten engineers assembled and are close to negotiating a seed investment to get off to a running start.  One of my jobs is to find interesting projects in the states and/or Europe.  I will be reaching out to my contacts to find these.  Many operations down here focus on small traditional projects in the local market, but we are focused on working on top tier projects with innovative companies (large and small).

The initial software development center will be based here in Colombia with the possibility of setting up additional centers in the most appropriate places (e.g., Asia, eastern Europe, etc.).  We have some pretty impressive technical people (including architects).  Nevertheless, I mentioned that we should look for a superstar CTO anywhere in the world and periodically fly that person down here to guide the technical team and develop the company vision.  My friend was surprised by the suggestion, but he immediately saw the logic.

Thus, if you are superstar CTO material or know someone who is, please contact me. This position is for you if you’re into leading a team of eager learners and workers down here in Bogota, Colombia and are interested in fun international travel (reach out to anyone at the local embassy and they’ll tell you how much fun Colombia is – really, beyond what you’d expect).  Obviously, the idea is for our new CTO to be a partner in the business and this would include becoming vested in the company.

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Some of the quotes from the attendees: “The workshop confirmed to me that my understanding that continuous innovation in business is a reality”, “We now have tools to create a solid SaaS plan”, “We learned a ton!”, “The workshop allowed us to plan everything we need to plan,”the learnings from the workshop will allow us to convert our abstract ideas to concrete plans,”we now have new ideas for SaaS initiatives which we never had planned.”

In Latin America, Venture Capital is still scarce for startups, so there’s a big chance that the trailblazers will come from existing companies with profitable revenue streams.  Nevertheless, there are already startups (such as JoinCube) that are off and running with their initiatives.  This workshop is designed to get the group learning from each other and provides some conceptual models for team members to exchange ideas in order to, first, develop an original plan and, secondly, to iterate or “pivot” quickly as the project starts to take flight.

I will be giving this workshop in Colombia and then in other countries.  There are two versions of the workshop.  One is focused on developing SaaS offerings.  The other is for employees of large companies in Latin America interested in taking advantage of digital innovation and understanding how, as John Hagel espouses in his white paper on the “Shift Index”, digital technologies are transforming industries such as banking, retail, tourism and media.  Participants will make use of new tools to develop innovation initiatives for their companies while becoming literate on the “new world” that has come into being through digital technologies.

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Additionally, from my own clients (software companies) and others, I’ve seen keen interest in developing new offerings leveraging the cloud. Nevertheless, there are many options and much confusion as to how to proceed.  Developing a solid SaaS solution takes a lot more than simply hosting on the cloud and that is where the true opportunity to differentiate your software company lay.

This is going to be quite an interesting year and I am going to have the opportunity to help my current clients and some new ones that should be hiring me soon.  My objective is to have each client understand the power of a SaaS offering and to set a clear objective for the same.

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In my last post, I spoke about my conversation with Sridhar Vembu, CEO of Zoho Corporation, an innovative software company headquartered in the US, but with most of their employees based in India and China.   I wrote mostly about the ingredients of the company’s success.  In this post, I’d like to delve a bit further into Sridhar’s vision and philosophy and its applicability to Latin America.

While I was speaking with Sridhar, I was reminded of John Hagel’s book, The Only Sustainable Edge.  In it, Hagel mentions two important areas touched upon by the Zoho CEO. The first one has to do with Zoho’s ability to offer customers value at an affordable cost which is in synch with Hagel’s assertion that technology innovations are opportunities to “create more value at less cost.”  Zoho’s location, recruiting, training and company culture paired with its bet on cloud computing make are certainly aligned to a goal of creating more value at less cost for their customers.  Additionally, Hagel points out in his book that managing across two cultures “can create new opportunities to enhance performance by drawing on the best of both cultures.”  Certainly, this is not news to Sridhar who lives and breathes it every day.

In Latin America, many discussions on entrepreneurship center upon the disadvantages of the region when compared to the U.S. This runs the gamut from lamenting the scarcity of investment capital; the lack of the right human capital and other ecosystem and infrastructure components that are missing. As an aside, the same day of our talk, Sridhar actually wrote a post on his blog about the VC issue. However, anyone from Latin America who could listen to Sridhar speak about his particular voyage, would actually start to feel as though companies coming out of emerging regions such as Asia or Latin America are at a distinct advantage when compared to US companies. What a great perspective!

While players such as Salesforce.com, Microsoft and Google have solid and focused SaaS offerings, Zoho has been adding applications to its suite at a blistering pace.  Though the company’s user base also continues to grow, it’s only a fraction of Google’s user base.  Sridhar has heard this observation before and I’m sure can read between the lines of the sometimes veiled (sometimes not) insinuation that this means that they will eat Zoho’s lunch some day.  Nevertheless, I believe Sridhar is correct (at least for the time being) in asserting that Google’s rising tide can lift all boats floating in the SaaS “sea” since they are helping to educate customers on the value of these new SaaS offerings.

The company is profitable and is free to follow its long term strategy.  While the Google threat (and others) will probably get more palpable as time goes by, I agree with Sridhar’s view that companies don’t get killed by competition; they commit suicide. Nevertheless, one area where I believe that the company needs to improve is in its customer messaging or marketing in general.  For instance, instead of a list of applications on the homepage, it would make more sense to quickly set up customers depending on their specific vertical or business process.  Fortunately, this is precisely one of the areas for improvement that the company has targeted and openly acknowledges that it could do better on the marketing front.

Final Thoughts

I think it’s obvious that I truly enjoyed my conversation with Sridhar on a number of levels.  He mentioned that he is quite passionate about the topic of how emerging market companies can compete with companies based in developed markets, which is also a strong passion of mine.  During our talk, I got the sense that Sridhar has a firm conviction that companies from emerging countries can truly compete on equal footing with “marquee companies” and actually possess advantages that they need to leverage.    Hopefully, at a later time, I can speak a bit more in depth with Sridhar about the topic of digital innovation in emerging markets.

As a VC in my previous life, I had the opportunity to speak with extremely intelligent and capable entrepreneurs and investors.   After my conversation with Sridhar, I’m as impressed with him as with any other person I’ve met.   Different people are remarkable for different reasons.   For instance, Google’s founders had the insight to understand the need for organizing the world’s information with the oncoming, accelerated adoption of the Internet. Even more importantly, before they fully saw how big and successful they could become as a company with an actual business model, they jumped in and started solving the problem.

Solving such grandiose and ambitious problems is something that is handsomely rewarded and rightly so.  Nevertheless, there are a number of dynamics, which are creating the need for new types of companies:  ones that offer digital innovation at a lower cost.  New technologies such as cloud computing, virtualization and SaaS delivery provide the digital foundation.  Also, as it turns out, emerging markets such as Asia and Latin America, actually offer advantages that astute entrepreneurs can leverage.  As Zoho’s trajectory points out, to execute this correctly takes a number of competencies such as a clear vision, competent leadership, focused development of human capital and above all…patience.

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A couple of days ago, I had the opportunity to talk with Sridhar Vembu, CEO of Zoho Corp, a strong player in the SaaS software market. The company’s corporate headquarters are in Pleasanton, California and the majority of it’s about 1000 employees are based out of India and China.  These and other characteristics make Zoho and Sridhar, who has spent half his life in India and half (presently) in the states, an excellent model for digital innovation in Latin America.

First off, what really struck me about Sridhar after our chat was the balance of three key characteristics of his personality that came across:   1) His passion for the “people aspect” of building a business, 2) his practicality and incisive thoughtfulness and, finally, 3) an underlying, intense pride (in his people, what they’ve accomplished, etc.) and competitiveness.   Incidentally, my own opinion is that this type of open personality, high level of intelligence, balanced outlook and strong personal drive will be key leadership traits for achieving success in the coming years, but that’s a topic for another post.

I won’t go into a ton of detail about the company because there’s a wealth of information on their site and in other articles. If you want to delve deeper into the company’s history and Sridhar’s unique (and, in my mind, spot on) thinking about digital innovation in today’s context, check out Sramana Mitra’s excellent interview. In a nutshell, Zoho bet on cloud computing and the SaaS delivery model early and are just now really hitting their stride in the market with about 2M users.  Also, as a recent article in BusinessWeek Magazine states, Zoho competes with behemoths such as Google, Microsoft and Salesforce.com.  All this from a point in 1999 when, as Sridhar mentioned, they had one key goal: survival.  Now that’s a goal many small business people can identify with, but particularly, those in emerging countries such as in Latin America where capital is in even shorter supply.

So what happened after 1999 to garner them so much success?  It had nothing to do with getting Venture Capital (VC) funding since they’re a private company which has bootstrapped itself since the beginning.  Sridhar mentioned that their strategy has focused on depth of functionality, breadth of offerings, integration and support.  The integration focus is a boon to usability because they are able to integrate key functionality from their applications into the work processes of their customers.  Through “contextual information integration” things like email (even Gmail) are integrated with the CRM product so that customers can get their work done faster.

In terms of support, at least one person I referred Zoho to here in Latin America, has had an incredible experience in this regard.  Sridhar mentioned that part of their engineers’ training entails alternating time on the support lines as well as monitoring the support database helping them into the customer mindset from the outset.  In order to execute such a strategy, Sridhar mentions a trait that the company must possess: patience.  Patience to develop employees straight out of high school into productive professionals, patience to solve what Sridhar describes as the small business “IT problem” and patience to build an organization for the future.

What a terrific model for Latin American companies to follow.  There’s a ton of talent down here and, Sridhar and Zoho’s journey can be a lesson for many.   As he mentioned, Sridhar himself looked to a number of Japanese companies such as Honda as models to follow.  After WWII, Japan was a developing country (like India or all of Latin America) and through patience and dedication, they were able to achieve the economic and technological feats we take for granted today.  It’s important to note that modeling yourself after someone doesn’t mean cloning them and Sridhar has certainly adopted some characteristics of the Japanese model, but not all.

This last point is an important one.  Just this week I was in a meeting with some entrepreneurs when someone asked me if Colombia’s path to success was, among other things, in finding an instantiation of a Stanford University (the context of the conversation was the lack of an ecosystem in these countries such as exists in Silicon Valley).  I feel that Zoho’s example shows that you don’t need a carbon copy of another country’s ecosystem, you need to build on the strengths you have and, in Zoho’s case, that was patiently sticking to their strategy and building their organization.

Sridhar made a great point about the fact that in Silicon Valley there’s quite a bit of talent to choose from no matter what expertise you need.  It seems to me, Sridhar has taken a disadvantage in emerging markets (scarce talent pool with world-class expertise) and converted it into an advantage. By giving young people without a college degree a chance to successfully prove their mettle and compete with international powerhouses such as Google and Salesforce, Zoho benefits from the resulting highly committed, passionate and dedicated group of employees it is nurturing.  Aside from this, such a highly motivated group of collaborators injects much energy into the company and, according to him, “keeps [him] young”

In tomorrow’s post, I’ll delve further into Sridhar’s vision and philosophy and its applicability to Latin America.

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