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This article was published on April 30, 2020

Responsible growth: Why tech companies must wake up

Don't just follow the 'norm'

Responsible growth: Why tech companies must wake up
Sridhar Vembu
Story by

Sridhar Vembu

Co-founder and CEO, Zoho

Sridhar transformed Zoho from a modest software company serving network equipment vendors into an innovative business application disruptor Sridhar transformed Zoho from a modest software company serving network equipment vendors into an innovative business application disruptor with 50+ million customers - all while staying privately owned and funded. Sridhar holds a master's and PhD in electrical engineering from Princeton University.

There is this lingering idea among businesses that growth is and should be limitless.

It’s as if the economy of scale has no ceiling, no curve, no saturation point, and all growth drives proportionate cost savings, operational efficiencies, and technological improvements.

This, of course, is not true, and as many companies are finding out, things like research and development timelines, talent shortages, data storage costs, sales and support demands, and software expenses all conspire to cap growth and expansion, beyond which a company can no longer claim savings from scale.

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A company shouldn’t go after more customers until it can sufficiently satisfy and accommodate the ones it already has.

This makes logical sense, but most industries (tech in particular) have been thrown out of whack by IPOs, VC rounds, and a general ‘monkey see, monkey do’ attitude among CEOs.

But are those companies and leadership aware of just how mad our business world has become, what can they do to grow responsibly and in sync with demand?

Avoid sinking money into software

One myth among businesses at any level is that without a large enough customer-base or annual revenue or capital investment, a company cannot commit the funds or the time needed to build out sophisticated software solutions.

What ends up happening is businesses get pressured into sticky contracts with vendors promising short go-to-market times and infrastructure to scale and comprehensive tech support.

Many businesses find that these vendors fall short on delivering all that was promised.

For certain businesses, using the public cloud makes sense (but we’ll get into that in the next section). However, for many mid-sized and enterprise businesses, using low-code development tools to build out solutions in-house can save money without a huge time or talent investment.

Certain low-code platforms are user-friendly enough that you don’t need a dedicated software engineer on staff to create them.

What’s more, these solutions can be tailored to a company’s particular industry vertical.

And when these tools are homespun, it’s easier for a company to deploy them across their entire software suite. It just takes commitment and foresight. 

Grow your talent, don’t buy it

Another common misconception is that top talent is bought, and not developed.

It’s true that if a software company is looking for a decorated full-stack developer in today’s market, it’s going to cost, and that salary may exceed the value the position adds to a company, especially smaller businesses.

But if a company in any industry takes a long view of its goals and what it hopes to provide its customers, they will experience less churn and also be less likely to find themselves in desperate need of a particular position at a critical time.

Consider hiring young, perhaps inexperienced people that can grow with your company. If you take a chance on somebody, and grow their skills in-house and with patience, you may find that that person will stay with the company longer and provide more value than a new recruit, plucked from a competitor with competitor-level salary expectations.

Also, be realistic about what prior knowledge is actually necessary for a given job. In many cases, certain positions are better served by a young person without a four-year degree than a person with a PHD.

The public cloud can get pricey

One of the reasons businesses turn to infrastructure providers is that they can decrease time to market for their products and increase developer speed.

No doubt, there are tremendous benefits for certain companies in using IaaS, but the practice has become so common that many of these infrastructure providers are tipping the scales and benefiting more from these partnerships than those companies who rely on them to stay open and afloat.

It’s also not a set-it and forget-it system. Software companies are still responsible for technical upkeep. Operating systems need to be patched and updated, firewalls need to be audited, and the applications themselves need to be kept up to date. That work is passed onto the customers of IaaS vendors, and these companies often fall behind, in essence reversing much of the technical advantages availed to them by using the public cloud.

For small or new software companies, the public cloud can seem like the only option to scale. But this is not necessarily true, and often this thought-process comes out of the misconception that lightning-fast growth is the only way to compete in today’s market.

Over time, it’s the companies that have invested in their own technology stack, their own data centers, that have found real operational savings.

In fact, some companies that had previously relied on the public cloud, including Dropbox, are slowly moving onto their own servers and discovering huge financial and operational advantages.

Help customers help themselves

Any growing business understands that customer support needs to expand on pace with its user-base.

That being said, there are more ways to offer support than just hiring on or training support agents.

Events like customer meet-ups and free training can serve double duty in both meeting customer support demands as well as fostering community and increasing brand visibility.

Thorough documentation, available in multiple languages, will also alleviate the strain put on customer support agents.

As is true with the examples above, building out a comprehensive software support network takes time.

It works best for companies that favor slow growth and long-term success rather than immediate market penetration and unrealistic growth projections.

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