#99, Managing Director of Zoho Europe, Sridhar Iyengar: Scaling-up SaaS

0:00See, the way we look at AI is in the industrial revolution, you had manual machines doing work And then you had industrialization and you had power machines, power tools, which could do it 10 times faster. And that's the similar example here. That's what we see with AI. It's a tool. At the end of the day, it's a tool.

0:29It's quite rare these days to encounter an executive who has dedicated 29 years to the same company. Our next guest, Shrida Iyengar, exemplifies this commitment. Shrida joined Indian software company Zoho Corporation at its inception back in 1996 in the middle of the dot-com boom. He now serves as the managing director of the European region. Zoho is a remarkable company with a global customer base known for seamless integration between business applications. They were a very early proponent of integrating generative AI capability into their products and are one of the few global competitors in the CRM space to the juggernauts like Google and HubSpot.

1:16In our conversation, we explore the parallels between the dot-com boom of the 90s to the AI era that we're currently in now. We delve into the cultural differences between Europe and India. We discuss how Zoho innovates and integrates new products into their product suite. and we also examined the future role of AI in shaping their product evolution and the marketplace generally. This was a really interesting conversation. It's Shrida Iyengar.

1:50Shrida, how are you? Thanks for coming on the Tech Leaders Podcast. I've been so excited to talk to you. Hi, Gareth. It's lovely to be here. Thanks for inviting me. Let's start the way we always do. Shreed, what does good leadership mean to you? So there are a few things to leadership, right? So typically people confuse leadership with management. So leadership in essence is, you know, you basically have a sense of direction for your team, for your company and so on. Yeah. Provide clarity and direction and enabling your team members, empowering them, enabling them, removing the obstacles that they may face along their journey to meet that objective, that shared objective, shared goal.

2:33Yeah, sure. And that's what good leadership is. It's about enabling and having that multiplier effect on your team. Absolutely. I think you summed it up perfectly there, Sridhar. I think it's about being clear about what the goal is. What are we all working towards collectively? And then leading the way to get to that target. It sounds very simple, doesn't it? But so many people get it wrong. For the guests who are not familiar with Zoho or maybe yourself, can you give us a little bit of an introduction to yourself from the point of sort of leaving education right up to where we are now? So I'm Sridhar Anghar.

3:07I am part of Soho, have been part of the company since inception. That's 28 years and counting. So we started off in 1996. I'm an engineer by both qualification and engineer at heart. With a lot of passion for technology back in the early years, as when I grew up, I could see how software was transforming the world. Computer science was transforming the world. I wanted to be part of it. As a company, we built SaaS business application that can power any business, any enterprise. You know, in terms of being part of that digital transformation, that's been my ambition from childhood, being part of this software industry that can change the world.

3:51That's what I like doing. I've built products in the past, but also played roles in different areas, product management, engineering, marketing, and so on. Right now, I'm responsible for our business in Europe. and I'm based here on the Netflix for that. Fantastic. Okay. I'd like to ask you to zoom in to 1996, Sridhar. Okay. Can you give us the specific story behind Zoho? Where did it come from? Why did you call it Zoho? Okay. And why did it happen? That brings back a lot of old fond memories. So 1996. So here's the setting. The time was 1996. And you're talking about this in the backdrop of two locations.

4:30One in the U.S. where our CEO was based, and the second was in India where some of the other co-founders were based. So the company started almost in parallel in India and in the U.S. with a vision to really build a software powerhouse that could improve productivity in terms of enabling businesses to reach their maximum potential. but also to build a company that operates in a very different way, meaning it's not necessarily profits and just business for the sake of business at all costs. One of the fundamental tenets was we would be bootstrapped, which was very unique for a company at that time.

5:14And this was also pre-dot-com bubble and pre-VC boom, as you may know. You were called something else then, though, I take it. Is it AdventNet you were called then? Absolutely. Absolutely. So we were called AdventNet back then. And the vision was, you know, the vision was not to compete with the likes of the giants like Google and Microsoft. The vision was to build great software, put it in the hands of people. And back then, we didn't even have cloud. So this was downloadable software. And it's evolved over time into cloud software. And, you know, build out products so that people would start using it.

5:52That was really the vision. Absolutely. Okay. So from the early days, let's say from 96 up until 2011, what were the sort of main milestones that sort of set you on the path you ultimately ended up pursuing? What was the biggest moment in that early period of AdventNet? So we started out with building a software suite, which was in a completely different domain. We started off building software for telecom networks, basically, the telecom area. And from there on, so we had large telecom providers, vendors, equipment manufacturers who would use our software in their telecom equipments. And then from there on, diversified into enterprise IT management.

6:35That was the second line of business. It's still profitable. It's still an operating business division that's doing really well called Manage Engine. And then along the way, we could always be in a curious company. So always with our ears and eyes on what's coming up. And we see trends like cloud computing, software and services, open source, all this come up. and it made us think, you know, the era of download software could be disrupted by the advent of cloud. And, you know, we have to get into that and you never know how it's going to turn out until you get into the game and play the game. And so you have to be part of it and see how it pans out.

7:16So everything that we do at Zoho starts off as small experiments and so did our cloud journey. We started building, you know, having small teams that would go and learn how to build a CRM system, for example, or a word processor, something as fundamental and basic as that. It might be fundamental from a user standpoint. However, the engineering and the tech that goes into it is quite complex in terms of building up your entire cloud stack from the ground up. And this was done by a set of individuals who had never built that. We've always prided ourselves on building everything versus the buy versus build mentality.

7:56We are engineers. We're building everything, including the data center, including every part of the tech stack from the database right to the UI and AI and everything. And that's a great learning. That's a great adventure and experience. And we could see the cloud coming up. and we started building up business applications and that could be delivered as software as service. And that was the start of the Zoho cloud division and the cloud journey. Adopting a SaaS model, obviously, which came out of the cloud, the shift to the cloud, that sounds like it was the big moment for Zoho then in terms of growth and product innovation.

8:41It obviously changed everything for you guys, didn't it, by the looks of it? Let me just quickly ask you though, Shrida, before we talk about that, and obviously the challenges that came with that growth. The late 90s, early 2000s, you alluded to the dot-com boom there. Maybe some listeners may not be familiar with that, or they probably would have heard of it. But I'm just curious to know, that was a very exciting time in technology and IT. And a lot of people have said there's a lot of parallels from that time to right now in terms of the excitement and buzz around AI and AI capability. you know do you what's your take on that do you see parallels do you think there's similarities i think so and i think um while the dot-com bubble was the first tech bubble bubble has always been the bubble so if you go back to the you know the gold rush in the old california days yeah it's similar so whenever there's huge opportunities the first thing that it attracts is huge amount of capital and venture capital as well and then everybody tries to get into that thinking there's a huge payday waiting.

9:47However, the reality takes time to set in and that means that, you know, that opportunity is limited and only certain companies can, you know... Will benefit from it, yeah. Will benefit from it. Yeah, sure. And that's the same we see in AI as well. So every other company is doing something in AI. So there is a lot of hype around AI. But there is value, but there is also a lot of hype. Yeah, no, absolutely. And there'll be losers and winners, But the problem is there'll be more losers than winners, won't there? There always are. And it's the famous story about pets.com, isn't it? But obviously, out of all that carnage of the bubble bursting in 2001 or whatever it was, came Amazon.com.

10:30And that was obviously one of the most successful companies ever. So talk us about the early years of growth then. You obviously rebranded to Zoho. You moved your business model to a SaaS model and obviously moved over to the cloud. Talk us through those early years of growth, Shridhar. What was that like? What was it like to be part of that? And what did you learn from that accelerated growth from sort of 2011 onwards? Right, right. While the markets that we served changed from telecom to, let's say, the enterprise IT to the cloud, to basically the business and the enterprise using cloud software, some of the fundamentals of our business have stayed the same.

11:12fundamentals as in the business model is build great software, sell great software, flow that money back into R &D, and then that cycle continues, right? Sure. So the differentiator is a product and technology-led software offering and not necessarily a sales and marketing-led. So that's been one of the fundamentals. The second is about data privacy protection, right? So in 2018, GDPR came into effect. so that made data protection, data privacy to be very fancy, very must-have for regulatory companies. But then that's always been something fundamental to us since 96. So we've always believed customer owns their data, so we will never monetize that.

11:56The third is, of course, to invest in people and building up teams. So some of the software that you see built for the cloud infrastructure was done by people who built the same kind of products for the telecom market. It's the same people who learned new stuff and built it for a new market. So that's a lot of excitement opportunity in that as well. Yeah, I can imagine. I know obviously your background is engineering, but you've obviously been very close to product development through your career, of course. What was the biggest step forward, do you think, Shreda, for Zoho from a product standpoint?

12:33See, I think one of the things we've done is to build a platform that can scale up to serve our needs for the present and the future. And when I say platform, platform, on which you can build up and roll out new products quickly, that's why you see half a dozen products being rolled out every other year. And that's the innovation that customers see coming from us. And basically, if you look at the goal, the goal is to cover all aspects of a business or an organization, be it, you know, if you look at departments in a company, in an organization, would have sales team, marketing team, legal, HR and all.

13:16Build software that can enable productivity, can enable digital capabilities for all these different teams. And that was the vision, to build it end-to-end, provide a very broad offering. And a lot of that culminated in this package called Zoho One, which we launched in 2017, which was basically one platform to power your entire digital business. Yeah, sure. And that was very compelling for our customers. Yeah, of course. And that's what businesses want, isn't it? They want convenience and they want simplicity. You don't want to be using a different piece of software for every single business function.

13:53you want it all to be in one place, don't you? So obviously you were involved in the global business or you were based in India for a lot of your career. Is that correct, Sreedah? What would you say is the biggest difference then? And this is a very big, broad question, but in terms of on a macro level, what's the biggest difference between the European market and the Indian market? But in terms of software consumption, what's the biggest difference? Oh, well, that's a big one. well first thing is there's a huge cultural shift yeah right in terms of how one sees software and i would say there are differences on both sides of course there are market i mean one thing when i was in india you tend to view europe as one market right yeah and when you arrive here you realize europe is not one markets it's probably 20 different markets how you know the uk operates is very different from how Germany operates, from how Spain operates.

14:52There are language nuances. There's also rate of adoption that varies per country. And you just have to adjust to the pace of the market and stay steady, stay with your customers, stay with your partners, and keep working with them, serving them. And that's really the key to success. So differences-wise, there are differences. India had the benefit of no legacy technology or very little legacy technology so which means that you can leapfrog to the cloud very easily but in a developed market you always have legacy you have to deal with that so how do you transition from an old gen technology to a new gen technology you always have to think of those consequences as well yeah I didn't think of that that's absolutely that makes total sense I think another big difference I suppose Sridhar correct me if I'm wrong, is the demographic as well.

15:46I think India is a very strong young generation coming through. I think Europe has, I don't know, a much older population, considerably older. That is the one very exciting thing about India, I suppose. But I think population-wise, I think it's pretty similar, isn't it? There's not too much of a difference between Europe and India. Can I ask you then? I don't really understand who resembles your competitor more. Is it Google because they've got this ubiquitous all-in-one platform for software? Or are you more sort of competing with HubSpot, who are more in the CRM world? I know you compete with both, but who would you regard as your true natural competitor out of those two or anyone else?

16:29Right, right. That's a great question, Garrett. I get asked that question, or rather we at Zoho get asked that question quite a lot. And the answer to that is it depends. So it depends on what area typically someone would ask us, who do you compete with? But in what sector? Are you talking about the collaboration and communication category? Are you talking about the Salesforce automation category? Are you talking about the marketing automation category? So if you look at, we are present in different categories of software products, right? Software verticals. and in every different product category, we've built a strong offering that competes with the best of best out there.

17:13Of course. So that's one level of competition. Then there are other very few companies and you can count them on one hand where they cover the similar kind of breadth that we do, but there are, you know, there's just very few. So on that scale, we're very unique in terms of the, not just the depth of offering in each category, but also the breadth. because traditionally we have taught and this is what we have learned that you have to use finance software for finance and all that. So people tend to think and operate in silos. And when you look at it from an organization standpoint, they all have to work together.

17:51So only if your software enables this interaction and collaboration, will your people also work together. And that's the view we've taken. The software has to work well together for your teams to work together. Absolutely. So integration is at the core of all of your products. It's moved in. It's basically by design. And I want to ask you about AI. How do you think that AI will change Zoho over the next couple of years in terms of the way you operate and in terms of the way that you function as a business on an operational level? I think we're, again, I mean, it's like deja vu, right? It's like the SaaS moment.

18:28Yeah, yeah. So there's this new technology that's coming up. It has the power to transform the industry and probably much more broader in this case of AI because it goes beyond software. It can touch upon every other industry. So what we're seeing here is it can transform the industry because AI by itself doesn't mean much, but what it can enable industries and companies to do is phenomenal. So let's look at, for example, and that's been possible because of recent developments in semiconductor chip industry, right? Sure. So the ability to process so much data is what has accelerated AI software.

19:17So look at GPT-4, for example. The amount of data it's able to process, the amount of things, the kind of things that can enable to do, right? So if you look at how can it transform Zoho, it can actually, we're looking at a lot of these AI technologies, see how we can bring it into the products to benefit customers. And that means that you can automate some things. You can actually make your customers more productive. You can provide suggestions. So let me take a few examples when it comes to customer support. You can provide some suggestions and recommendations on what an appropriate response can be.

19:58Similarly, you can have some level of prediction on what's the best time to contact customers. In terms of content creation, you can actually edit, provide some, how to write a better content when it comes to a document or an article and so on. And similar kind of automation, similar type of suggestion can be done in various of our products, different products of ours. And then, of course, the software development itself can be hugely transformed using AI, right? Yeah, of course. In terms of generative AI, right? So it can help you write software in a very efficient way, very quickly as well. Yeah.

20:41Be able to test it quickly as well. And that means that you can churn out capabilities very quickly. You can become a very agile, very responsive company to your customer needs. Yeah, I think that's the big one, Shredda, isn't it? It's the ability to cover more ground. And I suppose top-performing programmers or whatever, salespeople or whatever it is, will be able to do more than what they could do previously. But I think it's the ones who are able to work in tandem with the tools. that's the bit that's going to really accelerate some people more than others. I interviewed a guy from the Netherlands, Roger Verkoven, brilliant guest.

21:23He works for OpenAI. He's based in Amsterdam. And his LinkedIn profile, I always think of this, it sums it up, his LinkedIn heading is, you won't be replaced by AI, you will be replaced by somebody using AI. And I think that's absolutely true, isn't it? You know, I think that people who utilize these incredible generative tools will have such an advantage, you know? This episode was brought to you by Be Digital. Be Digital support leadership teams to optimize cost and get more out of technology investments. Be Digital and the team have unrivaled expertise with technology license management and data remediation and are therefore perfectly positioned to help prepare organizations for AI technology capability.

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22:35So what are you guys doing to ensure that your employees utilize tools for a better outcome for the business? Is that something you're consciously trying to improve right now? See, the way we look at AI is AI is basically in the industrial revolution. Before that, you had manual machines doing the work and then you had industrialization and you had power machines, power tools, which could do it 10 times faster. And that's the similar example here. That's what we see with AI. It's a tool. At the end of the day, it's a tool that can enable you to do things faster, maybe more accurate. And you can compile information across industries, across the world to crunch the data in a very short time.

23:25So that's how we see AI. For us, AI is a means to an end, our vision of making our customers, these organizations much more productive still, the fundamental goal. And we would use AI to basically accelerate that. So wherever we reduce AI in specific contexts to solve problems, which means if you're using the customer experience platform, how can AI basically make our customers become more productive, more efficient to use AI in that context? So AI is an enabler for us and our software as well. Yeah, no, absolutely. So, I mean, staying with the theme on a sort of more macro sort of societal level, though, I mean, there's a lot of scaremongering out there with people saying that AI is going to displace, it's jobs displacement it's going to be millions of people out of work and it's not like before, it's not like the industrial revolution where new jobs get created, this is different what's your thoughts on that Shreda, how do you think this is going to play out over the next 5 to 10 years?

24:32I do think that new jobs will get created and if you see an industrial revolution create new jobs like machine operators. You will need AI operators in the future where you need people. I mean, you will still need the human ingenuity, human judgment to kind of do the final check to take decisions. That will never go away. And AI will remain as tools, power tools to enable people to take the right decision. Instead of taking a lot of time, instead of doing things manually, they just have a better way of doing it. There is a truth there. There may be fewer jobs. I mean, there'll be some jobs which will be automated.

25:15Yeah. And then, but there'll also be creation of new opportunities, new jobs, maybe higher skill, different types of job which uses AI to do certain things in a very creative and innovative way. Yeah, I saw a clip the other day, the CEO of NVIDIA, I think he said it maybe at the end of last year or earlier this year, about how software engineering, there's going to be far less demand for software engineers because everyone's going to be a software engineer through no-code platforms and dragging and dropping code and creating applications in a very simple way. Do you see it like that? Or do you still think software engineering has got a big future?

25:55The question is, for example, traditionally, you would say that only certain companies fall under the category of being a technology company. Now, what would you call a transportation company like Tesla? Would you call that a technology company? Would you call that a car company? That's the question, right? So the definition of what we call software and what we call technology is changing. Technology becomes so pervasive and so has AI that every business, every company will be AI enabled without them even knowing it. And they would employ these, call it AI operators or users who would be using these technologies as commonly as you use a computer today.

26:40Yeah, that's a really good answer. That's a transformative power. This can go much deeper and much far than what we've seen. Yeah, 100%. No, I completely agree. I think our perception of certain vocations will change. Not in every case, the vocation themselves, I suppose. But no, that's really interesting. What are you most excited about, Shrida, in terms of this boom in generative AI? What do you think is going to be the most positive change we see over the next couple of years? There's always this debate about how fast do things evolve, right? From a point of view of technology rollout, meaning technology development is one thing, but how fast or how quickly does it get into the hands of the people?

27:27So we're talking about productivity enhancement and citizen services. If I have to do something, if I have to order a service from a government portal, how quickly can I get those citizen services? Things like that. So in a futuristic world, all that is within the power of your mobile. In a lot of countries, you already see that, but that's where things are heading, right? In terms of being able to access and get things done very quickly, very efficiently, without doing a lot of running around. And that's definitely exciting. Getting that into the hands of people in their day-to-day use. Yeah, that's the challenging part.

28:07And that's what, that's the real battle. It's like the technology is there, really, isn't it? to do incredible things, to increase productivity, to do incredible things generally across so many areas. But the manifestation of that technology innovation has to be real for people to use and benefit from it, doesn't it? If you have to be a Java developer to benefit from certain things, then obviously the man in the street is not going to be able to ever realize that technological capability. And that's a good lead on to what I wanted to ask you about, really, Shrida. So how much is AI, I'm sure it's already developed your product, but what's next?