Would You Rather Be First to Market or Better?

Adam Kalsey thinks Michael Arrington is paid off:

“At Under The Radar a few months ago, Mike Arrington was one of the judges for a panel on web-based productivity apps. One of the companies that presented was Zoho, a company that’s building web office apps using as the backend. Arrington was particularly hostile toward Zoho and made it rather clear he didn’t like them. From my notes on the session

Arrington: You’re perceived as second on everything. Features seem to be copies of everyone else. And PR efforts are too aggressive. Zoho: Not really. Arrington: You’ve gotten in fights on my blog comments with 37signals and Chillis. Zoho: they apologized. They’re copying us.

So imagine my surprise today when TechCrunch carried a blog entry thanking their current sponsors and making nice about all of them – including Zoho.

Zoho has quietly put together one of the best and one of the fastest Ajax office suites.

It seems that all it takes to go from “features seem to be copies of everyone else” to “best and fastest” is a little cash.”

Adam, I believe it’s the other way around. I know for a fact that Zoho (AdventNet) wanted to be a TechCrunch sponsor from the very beginning and Mike refused them. He did so in the spirit of what he stated, i.e. he would only accept sponsorship from companies that he actually truly believes in and as such writing positively about them would not become a conflict of interest.

So why did Mike change his mind? Well, I am not reading his thoughts, but I have a fairly good guess. Zoho has been diligently executing, coming out with more and more products (plus a few in the works), and it does not take a nuclear scientist to see their vision: to offer the most complete and eventually integrated suite of office / productivity tools over the web. It’s not only the individual products, but the full vision that differentiates Zoho, as I stated before. If Mike came around and realized this, I respect him for changing his view of the company.

Adam, I thank you for your post, as you pushed me to sit down and type up what I’ve been wanting to talk about for a while: If you’re not the first to market, does it mean you’re just a copycat? Can a startup “claim” a space that others should stay out of it?

The whole debate around Zoho products started on TechCrunch, when Mike posted a positive review of Zoho Writer:

“Zoho Writer is the newest entrant and is as good as the rest. Think Word + Group Editing + Ajax. It’s a rich ajax application that allows sharing and group editing, and, like Writely, has a great wysiwyg editing interface and excellent image import and manipulation features.
In fact, it’s pretty much exactly like Writely, except they do not yet support Word format import/export or tagging (coming soon).”

Than all of a sudden an entire lynch-mob arrived, led by Jason Fried of the 37Signals fame, who chastised Mike for covering “rip-offs” like Zoho’s products. (As brilliant as Jason is, I wonder why the Web2.0 camp should treat him as a cult-leader… but that’s worth another post some day). Clearly, some commenters thought “land-grab” should be the law of Web 2.0, new entrants have no right to compete, and TechCrunch should definitely not cover them.

A similar (but far more business-like) discussion ensued at the recent TiEcon conference, where Mike moderated a panel on “Web 2.0 – Why Now?” . Kevin Rose, Digg’s Founder was of the opinion that there’s no value in being a “me-too”, startups should always do new things. Yet on the same panel were Tony Conrad of Sphere and Emily Melton of DFJ, speaking for TagWorld. Both Sphere are TagWorld are addressing an existing market with mature “incumbents”, and Mike agreed with Tony and Emily that their approach is significantly different to give them a chance to be successful.

But forget panelist, let’s look at some of the truly big names in software. We would not have a Google today if Larry and Sergey simply had accepted the fact that Yahoo “owned” search. How about Microsoft? How many truly “new” products do they have? Office? Years before Word I used WordStar, and Excel was a “me-too” compared to Lotus 1-2-3. Access? Hm… perhaps Dbase II from Ashton Tate? The very existence of the Microsoft’s OS monopoly is due to IBM’s generously stupid license deal with them, and Bill Gates’s shrewd deal with the creator of QDOS.

The list could go on, but I think the point is clear: there is no land-grab in software. “First mover advantage” is significant in some areas – like Kevin’s Digg, since it depends on a network effect – but in others the second or third player to the market may just execute better. (Btw, second to the market does not mean copycat, since anyone will likely recognize that developing these products takes some time, so parallel efforts are going on at different companies – but timing is beyond the point here anyway). Update (7/22): Innovate or Imitate…Fame or Fortune? by Don Dodge list additional examples, and so does his new post on Zune.

At a previous post I went to great length explaining why I consider Zoho’s offering superior to others. Without repeating the entire post, here’s the summary: individual products may or may not be “better” than the competitors, but at least they are equal, and Zoho is the ONLY complete Web Office Suite (and more). They may not have been first to the market with the individual products, but they likely will be the first in achieving three major steps:

  • Complete Suite: Writer, Sheet, Show, Drive, Creator, Planner. Oh, and they happen to offer a complete “Virtual Office” as well as CRM. (Please note, Drive and Show are not yet announced, but it didn’t take a lot to guess the URLs. Update (6/22): Zoho Show has just been released. Au revoir, Powerpoint!)

  • Since they are the only ones with all the components, they will also be the first ones to integrate these products (remember when you could not move data between Excel and Word?)

  • The last step in the “master plan” has to do with this chart– but I’ll keep it for a separate post.

When you look at all the above, it’s hard not to see innovation. Is it Product or Business Innovation? As a user I really don’t care, I’ll be just happy to enjoy the benefits.

Update (6/21): The comment thread below is worth reading through: Zoho received anonymous criticism, which prompted CEO Sridhar Vembu to show up here and promise immediate investigation. Within half an hour he came back with the facts, and two hours later he reported the copyright issue fixed. I’m impressed by his responsiveness, which is consistent with my previous positive experience of help and support at various levels in the company. To complete the story, please read Sridhar’s post on his own blog.

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  1. Anonymous says

    You may want to ask Zoho why they use the Prototype javascript library and removed the copyright information. That is a violation of the terms of use and a major violation of the open source nature of the library. Are they claiming they’ve written this code themselves? Is this the kind of company you really want to praise?

  2. 1st to market or Better?…Zoli ponders the question

    Zoli ponders an interesting question, Would you rather be first to market, or better?But forget panelist, let’s look at some of the truly big names in software. We would not have a Google today if Larry and Sergey simply had

  3. Nice post Zoli…

    I can think of countless examples where it was NOT a good idea to be first to market. We see that a lot in the medical and biopharma markets. Company A spends hundreds of millions and years working to define a new treatment/device and fight for FDA approval and then larger competitors or generics come in an effectively capture portions of the market (sometimes major portions) without the “innovation.”

    And in the software world it certainly works both ways. It wasn’t long ago we were all writing eulogies for the big ERP vendors as their “best of breed” competitors in supply chain and CRM were “out innovating them” and now we’ve done a 180 whereby the ERP vendors are so dominant it’s essentially a discussion of which one wins the platform war.

  4. Anonymous:

    I will personally investigate this issue and get back here. I don’t know the library in question, and I don’t know which Zoho service you are referring to, and if we have done it, yes, it is bad. I will get back to you end of the day today.

    Our development team is under strict instruction to be very vigilant on intellectual property issues, particularly in the use of open source libraries (which we do use). If we have made a mistake here, we will apologize and fix it right away.


    Sridhar Vembu

  5. Zoli Erdos says

    Jason, another example is Vonage: they single-handedly created the VOIP market and now we’re witnessing the vultures circling Vonage’s carcass….

    (This is not a classic example in the sense that other players did not outsmart, innovate or just execute better, the market simply got commoditized but being first mover Vonage’s costs are extremely high)

  6. Anonymous:

    A quick investigation revealed that we have used Prototype.js in two places (we are checking other services now):


    In the first instance, the copyright is fully preserved. In the second instance (which is an older version of the library), the copyright is missing. It was an inadvertant mistake. We apologize. We will fix it by tonight.

    We take these issues seriously, and will be hyper-vigilant to ensure it never happens again.

    Sridhar Vembu

  7. Does “better” matter?

    Zoli Erdos asked "

  8. We have fixed the issue in Zohosheet. Once again, our sincere apologies for this oversight.

    We are now doing a full review of all our code, to make sure we don’t have this anywhere else.


    Sridhar Vembu

  9. I have responded to the post itself at Zoho as fast follower

  10. After a detailed analysis, we found out what happened with the copyright notice. We have an internal framework, which is used in some of our products, including Zohosheet, for some of its modules. This framework uses a build script which it removes all comments from Javascript code, in an attempt to reduce the download size. This build script arose because some of our own homegrown scripts have a lot of comments.

    So you can imagine what happened: the developer checked in code with comments and valid license headers (which are also comments), and the build script removes those comments in the final stage. The build output itself, packaged as a binary, is deployed in the production system. That binary has inside it the Javascript code in question. It was a completely innocent mistake, but nevertheless, it is our fault. We apologize sincerley.

    The framework with that offending build script is used in only some of our products, which is why the copyright notice was preserved in some products and not in others.

    We are checking our entire code base to find any other instances of this. We should complete it this in a few days, and if we find other instances, we will immediately modify the script.

    Anonymous commenter: please accept our gratitude for bringing it to our attention, and our apologies for letting this happen.


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