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Post-IPO Nonprofits

  • "We have a history of cumulative losses, and we do not expect to be profitable for the foreseeable future."

  • "We have a history of losses and we expect our revenue growth rate to decline; as our costs increase, we may not be able to generate sufficient revenue to achieve or sustain profitability."

  • "We have a history of losses, and we may not achieve profitability in the near future."

  • "We have a history of losses and may not achieve consistent profitability in the future."

  • "We have a limited operating history, a history of cumulative losses and we do not expect to be profitable for the foreseeable future."

  • "We have a limited history of operating profits and, as our growth rates decline and our costs increase, may not achieve or maintain profitability in the future."

Sources: S-1 statements

How comforting is this trend?

What if your bank said: "We've been losing money and we may go under, but you can trust us with your money." Would you trust them?

Why is business data any different? Trusting your data with a vendor is no different than trusting a bank with your money. At least your bank is FDIC-insured. What happens when your software vendor goes bankrupt?

Unlike big banks, cloud companies don’t get the privilege of government bailouts.

Let’s look at the numbers

7 Companies
56 Combined Quarters over the past 2 years

0 Profit

A common thread between these companies can be found in their sales and marketing spending being several times more than their engineering spending.

Think about that for a second...

Are these tech companies selling software or just sales companies selling technology?

The ultimate cheerleader for SaaS still isn't profitable after 15 years.

  • Market share theorists justify sales and marketing spending in the name of 'gaining market share'. Salesforce has been gaining market share for 15 years now.

  • Reality is

  • No Company
    Owns Any Market.

    Ask Nokia and BlackBerry in the smartphone market. Ask Hotmail and Yahoo! Mail in the email market. Ask IBM and Microsoft in the PC market. Ask Salesforce in the CRM market in a few years.

    Spending on Sales and Marketing will not help companies stay ahead of the curve.

How can you trust these companies to run your business when they can't run their own?

Profitable for 20 years

We believe in the power of cloud computing to transform how IT works and we invest heavily in R&D to realize that vision.

We don't believe spending endless sums in sales and marketing benefits the customer ultimately. When a "technology" company spends 6-7 times on sales and marketing as it does on R&D, the product is just an after-thought.

The customer pays a heavy price, first for the privilege of being sold, and then in terms of the company under-investing in R&D long term.

We believe there is a better way at Zoho.
The cloud can be profitable.

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