Old line business models and the new Internet can’t cohabitate, claims the guy who had a chance to sell Zoho to Salesforce’s Marc Benioff.
Something in the numbers for Salesforce made Zoho CEO Sridhar Vembu unimpressed with the announcement of a Google Apps integration deal with Salesforce. Vembu provided a look at Salesforce’s balance sheet, and he didn’t care much for how the numbers added.
“Salesforce spends nearly 8 times on sales/marketing as it spends on R&D. Sounds to me a text book definition of “business model bloat’,” said Vembu. “If you are a customer of Salesforce, it makes you feel really happy that the company spends 8x on selling to you as in writing the code, right?”
That imbalance of selling to research makes Salesforce’s Google Apps deal look like a doomed prospect to Vembu. Benioff offered to acquire Zoho, a prospect that held no appeal for Vembu.
“I told him there is just no cultural fit between our companies and such an acquisition would be miserable for both parties,” said Vembu, who thinks Benioff is stuck in the 1990s in thinking of software and business models.
For similar reasons, Vembu thinks Google Apps integrating into Salesforce won’t be a “durable” business model. Vembu also mentioned Google as Zoho’s principal competitor, a position we think may be a one-sided thought on the Zoho CEO’s part.
Zoho, after all, does not compete on paid search ads, Google’s main revenue source. Google could fold up its Apps business tomorrow, and not impact the bottom line in any appreciable manner.
