Why the traditional ‘Silicon Valley’ approach to business operations isn’t always the best option for a tech firm

The ‘Silicon Valley’ approach to business operations – often the traditional method of founding and running a successful company via external investments and operating with external shareholder interests in mind – is not always the best option

Instead, being privately held and bootstrapped should be given very serious consideration for businesses. It allows founders and owners to retain control over company policy and financial discipline, and provides a unique freedom for experimentation without external pressures from third party partners or investors with a controlling stake.

This negates the need for a short term approach to appeasing stakeholder demands, giving a business the option to operate in exactly the way they wish. This could be to prioritise creativity, the consumer experience, or even to maintain inherent brand values that do not typically ‘play well’ with the industry approved method for doing things. In short, there is true freedom to innovate.

Owning the full company also gives the option of planning for the long-term, and allowing the company to weather less profitable quarters and years in favour of R&D, knowing that it will result in a superior outcome further down the line. Furthermore, the independence from wider stakeholders means that a business can invest in its surrounding communities and even wider economies. This potential for long term customer relationships can also build a level of trust and build superior customer experience which cannot be outdone when all parties know the vendor has an exit in mind for their end goal.

But how does bucking this trend actually work in practice?

Zoho has been a firm advocate for this approach to business operations ever since it was founded in 1996.

It has allowed us to prioritise what really matters to us, including championing ‘rural revival’, adopting a ‘customer-focused’ policy, and adopting a ‘privacy by design’ approach to data practices.

This is all made possible as we own and run the ‘full stack’, including data centres, and so can be absolutely confident in making promises to our customers. With no external or third party services to rely on, or to have access to our systems and their data, it’s easy to make promises that remain truthful and ethical when your trusted business decision makers are the ones calling the shots and following up on them.

Admittedly, making promises such as that customers’ data will never be monetised, does forfeit the chance for some short term profit and marketing opportunities that are being utilised by competitors, but the customer relationship remains the priority. In a typical company, this approach would be enough to make external investors and shareholders nervous, forcing most companies to forfeit long form or even ‘risky’ endeavours. After all, profitability at all costs is usually the ultimate focus within this sort of business operation.

Not only that, but the independence from wider stakeholders means we can invest in our surrounding communities and even wider economies. For example, Zoho’s head office in Chennai, India, houses Zoho Schools, an alternative outlet for higher education that gives students a stipend to attend, and results in many taking jobs at Zoho following their training. There is also a school on site for the children of employees, as well as an on-site doctor.

Zoho also believes firmly in rural revival, and questions why ‘traditional’ companies feel they must house their head offices in busy and congested cities, which end up starving rural areas of talent and the ability to create their own economic health, resulting in ‘topsoil talent erosion’ as talent migrates to where the work is. Before and during the pandemic, we set up many rural offices around the world, to help stop this erosion. This also contributes positively to our employee experience, as employees can have a better quality of life with more affordable housing, less congestion and more open space around them for a healthier lifestyle.

In relation to more current affairs, bucking the trend of the traditional ‘Silicon Valley’ approach to operations creates a more adaptable and fluid business, even for a global enterprise, which employs hundreds of people across multiple territories.

In terms of our freedom to help communities, in response to the pandemic, Zoho introduced several initiatives, free-trials and support schemes to help struggling businesses navigate during one of the most difficult times in modern day business. This included the introduction of a free package of ten applications which support home working for free. Named Zoho Remotely, this remained  free of charge for the majority of 2020 to help businesses adapt to full time remote working. The package incorporated apps enabling communication, collaboration and productivity.

Zoho also offered free meals to many from our catering team in the Chennai area and continues to offer vaccination drives and other support to staff and local communities where possible.

Many businesses are not in the same position in terms of being privately held and profitable – so cannot adopt this exact approach – it is quite unique in our industry. However, it is important that this different approach to business operations, and one where we have ambition to remain private and focus on doing what we love, gets the same column inches and credibility as its public company alternative.

We have enjoyed a hugely successful 25 years in the industry, and will continue to focus on global expansion, while proudly and fiercely keeping our brand values and the attributes that make us different, at the heart of what we do.

About the Author

Sridhar Iyengar is MD at Zoho Europe. Zoho offers beautifully smart software to help you grow your business. With over 75 million users worldwide, Zoho’s 50+ products aid your sales and marketing, support and collaboration, finance and recruitment needs—letting you focus only on your business. Zoho respects user privacy and does not have an ad-revenue model in any part of its business, including its free products.

Featured image: ©Green Butterfly