No. of Recommendations: 85
I have similar take...they had a great year, tons of upside, but that dreaded "execution" item came up. But I believe the execution concerns to be overblown, and here is what I mean:

As noted elsewhere, ZS sells top-down, as their approach is a dramatic shift from legacy infrastructure usually owned by the network or security teams. It is a C-focused sale, because you can be potentially eliminating jobs (expense) or at the very least you are threatening the status quo of the folks that were making the decisions and were responsible for maintaining the legacy on-prem firewall-type of security solutions.

Using hyper-converged as an example: when you sell HCI, you can't go to the storage admin, because normally they have expertise and a comfort level with the storage arrays they already have (netapp, emc, pure, etc) and HCI sort of eliminates the need for a storage admin in some cases. So you have to go ABOVE the storage admin.

Same thing here with security...have to go above the teams that have expertise and comfort level with legacy solutions. In some cases there are new cloud-roles in larger Orgs...or the CISO has a big-picture mentality. Either way, you need to speak with decision-makers that will have an open mind to the ROI associated with doing things very differently.

ZS, like any smaller company, can only scale so much, in terms of the actual touches they can get with clients. So they need to leverage partners. ZS refers to SI's and service providers as the normal IT reseller channel isn't ideal for them...those resellers often focus on on-prem and their contacts are the same ones that ZS is trying to go above. So those Accentures and Deloittes of the world that will help companies "transform" are the type of partners that help ZS. Microsoft touting ZS for O365 is huge. I do not know if MSFT sales reps actually ever mention ZS...probably not, as they are focused on their own sales of msft products, but just the fact that ZS and their partners can point to MSFT web showing ZS as a preferred security provider for O365 is additional help.

After the first waves of momentum fade, you need to ramp up Sales, which they are doing. Their reps made the company what it is, then the IPO brought tons of attention, and now PANW and others are helping their cause by calling out that ZS is the one to beat. But in order to scale and win more of those big accounts in a top-down manner, you need someone connected.

I don't put stock in any one sales leader, but I do agree they appear to have been selective and got a good one in Dali Rajic. He headed sales for App Dynamics, which Cisco bought.
Here is glassdoor talking about their sales culture, with mostly positive reviews
More on their sales culture here:

Here is interesting article by one of AppDynamics founders on evolution of App Dynamics as a younger company until being acquired by Cisco, and talks about the hire of Rajic:
In 2011, we were interviewing for VP of Sales for the Eastern US. We had just filled the position, but we had one last candidate, Dali Rajic, who had flown in from Chicago to interview so we didn’t want to cancel. I asked him, “How would you deliver targets consistently and never miss?” He said, “I manage to sales capacity, not to deals. When you manage to deals, you miss. If you have enough productive sales capacity and the right sales process, you can never miss.”

"Even though we’d already filled that Eastern U.S. sales position, I was blown away by Dali’s structured approach and confidence so I asked to create a special position for him. And it turned out to be a great decision; today, Dali is our Chief Revenue Officer and runs worldwide sales for all of AppDynamics."

Yet another article on the sales process success at AppDynamics from Medium:

Yet another article...this one actually written by current MDB CEO, via Forbes: leader is just one guy, but this seems like a great hire, and his processes should take root about 3 Q's from now, giving ZS a great 2H of their coming fiscal year. In the meantime, the secular tailwinds of O365 and SD-WAN and existing customer base spending more, should lead to a good 1H.

The other thing I like, is that, imo, this is the bottom in the sense that full fiscal year guidance (sandbagged as usual) was given. For the next 3 Q's, we get to benefit from beat-and-raise.

I did think ZS was running too hot, and like ESTC, they were expensive from the IPO start. I think the dip today was a great place to add or start a position in ZS, if you hadn't already had a large allocation.

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