Zoho’s resident blogger and CEO of its parent company AdventNet, Sridhar Vembu, was dumping on Salesforce – an understandable exercise since Zoho’s stash of SaaS Office-wannabe productivity programs includes a Salesforce rival CRM module – when he happened to mention that Benioff, Salesforce’s CEO, had tried to buy Zoho.
Benioff likes to position Microsoft as old-fashioned and passé.
Vembu uses the same dictionary when talking about Salesforce.
He claims Benioff has little comprehension of the value of an open ecosystem and is “still playing a 1990s software game, with expensive software (sorry, software-as-a-service!) and a business model that is sure to make Larry Ellison flinch, which is saying something.”
He produces spreadsheet using data from Google Finance that shows that Salesforce is spending nearly eight times on sales and marketing that it does on R&D, which Vembu calls “business model bloat” and an “evolutionary dead-end.”
Then he tells the following story to illustrate his point, assuring readers he is not under NDA:
“Several months ago,” he says, “Salesforce.com invited us to participate in their AppExchange ecosystem. They knew of our Zoho CRM competition (which is why it was mutually agreed than an NDA was inappropriate), but the AppExchanage folks thought it was still good for their ecosystem. We agreed that it would be good for both of us, so we worked on making Zoho work with AppExchange, with their help & support. We invested in R&D to make the integration work, and we were about a week from launch, when Marc Benioff decided to pull the plug. He invited me for discussions. He offered repeatedly to acquire Zoho outright, which we rejected. I told him there is absolutely no fit between our companies, particularly with his business model (as noted above) and our business model. I told him there is just no cultural fit between our companies and such an acquisition would be miserable for both parties. Finally, he offered to let us integrate Zoho into AppExchange, provided we pull the plug on Zoho CRM. We told him that kind of pre-condition is totally unacceptable, and it also completely negates his claims of openness of their platform. Needless to say, we never did agree on the issue, and we dropped the integration effort.”
He claims the integration of Google and Salesforce – for all the speculation about Google buying Salesforce – won’t last because their business models are so different.