Zoom CEO flying, thanks to videoconferencing usability

Eric Yuan is building a videoconferencing powerhouse based on addressing old bugbears

I’m in a WeWork shared workspace on an icily cold day in central London and Zoom CEO Eric Yuan is at his San Jose, California HQ, but thanks to his videoconferencing service we can spend 40 minutes talking, a length of conversation that, he says, is close to perfect for any conference session.

Coming in true-to-size, with crystal-clear audio and video from a “Zoom Room” cubicle, this is the videoconferencing vision that has been (over)sold to us so many times for decades now. Yuan has arguably come closest to making good on that promise in a sector that has never taken off the way many pundits expected.

Conferencing more broadly has long seemed to fit the bill for a world in which business travel is expensive and full of hassles, but usability, price, proprietary vendors and other factors have made it a harder sell than expected. We’ve all been there: links that don’t work, the need to install pop-ups, scratchy line quality... Even simple audio-conferencing calls often don’t work, so what chance has the full video and collaboration deal? But, in a crowded field, Zoom might be emerging from the pack with its increasingly popular combination of usability and ability to tolerate low-bandwidth, lossy connections.

Why? In part because of heritage. Yuan and his team have form here. He led WebEx engineering in the years where the company became a verb and a de facto standard for screen sharing, having joined the then startup after getting his US visa and leaving his native China.

The Zoom formula is simple. Dial in or click through an app; 1-1 calls are free and unlimited, but free group calls timeout at 40 minutes. Hosts can pay a subscription for unlimited group minutes. Yuan has built a company in the classic SaaS models: build appeal from the ground-up, land and expand, make it viral: Okta recently said that Zoom is the fastest-growing app in EMEA and the firm recently expanded to the UK to meet demand. The aim of Zoom is to be “frictionless”, an adjective so often risibly inappropriate but Zoom really is a cinch to use in my experience and it’s refreshing after having had so many dismal, frustrating experiences in communications.

Zoom was founded in 2011 and only went commercial four years ago it is already serving up over 30 billion annualized meeting minutes. One of the pleasures of youth in business is that you can add new services without adding bulk to core code and a very nice feature of Zoom is the record/transcribe service. Partners include the likes of Slack, Okta and Amazon Alexa, cloud-native firms that are shaping the new IT zeitgeist.

Salesforce.com, Slack, Workday and ServiceNow are Silicon Valley templates that Yuan admires as modern, customer-centric concerns. Zoom works on a freemium model with one-to-one calls always free. Yuan and co. are after early adopters who will stay loyal and pay later, a model similar to that which underlies Dropbox.

A smiling, effusive man, Yuan made the move over when Cisco acquired WebEx in 2007. He says my negative perceptions of the conferencing/sharing sector are far from unique and adds that it was that situation that gave him the idea for the company.

“None of those solutions worked. That’s why there is a huge market opportunity,” he says.

Should market leadership have been WebEx’s opportunity to lose? After all, it pretty much owned 1990s screen sharing so surely it could have parlayed that leadership into the superset of video conferencing and collaboration.

“WebEx, at its core, is a data collaboration solution and that technology is almost 20 years old,” Yuan says. “Code I wrote in 98 is still running today. It’s not designed for video.”

There’s another reason too: the internetworking giant’s videoconferencing hardware business.

“Cisco is a great company but they don’t want to cannibalize their existing business. [At Zoom] we wanted to be a conferencing provider first. That’s a huge market and pain point.”

Yuan left WebEx/Cisco after 14 years with the idea of Zoom front of mind.

“After I left Cisco I [got] $3m [in seed money] from friends. They know me well and some just gave me money but some others said, ‘Eric, this market this market is so crowded and there are so many solutions out there, there’s no way for any company to build a better solution’. I said, ‘I understand, but if you talk with any customer, ask them are they happy with their solution. None of those customers are happy.”


Happy people

Zoom, like so many of today’s hot companies, is a company highly dependent on customer satisfaction and it has a Net Promoter Score of 72.

“Ultimately it boils down to one thing: the company culture,” he says. “Do you think about ‘sell more and get more revenue, earn more money’? Our culture is focused on delivering happiness for our customer. We think about how to make the product better, lower the price, make every interaction between Zoom and customers very happy. The world is not like 20 years ago – every company has to look at it from a customer perspective.”

It sounds cheesy put like that, but Yuan says he started the company by putting himself in the position of a textbook customer.

“I’m sitting at home, I have terrible WiFi… how do I make my customer happy like this? Other companies, you share feedback and they might come back in six months. You have to understand where the pain points come from.”

Zoom, for example, focused attention on low-bandwidth environments and Yuan says it can tolerate more than 50 per cent packet loss rates before the service drops out. Zoom’s labs in 10 data centers worldwide monitor connectivity to anticipate where challenges are before sessions are initiated and they then troubleshoot or partner with local ISPs to make sessions work.


A beautiful outlook

Yuan sees a wide vista of opportunity and is planting seeds for future growth: 92 per cent of the top 200 US universities use Zoom and he notes approvingly that the kids “all grew up with video, they don’t give out phone numbers”. ‘Get the Millennials using now, and the money will follow’ appears to be the mantra.

“Our mission is to offer a better conferencing solution than face-to-face experience,” Yuan says. It sounds glib but he’s surely right in saying that after many in-person meetings “after one hour you can’t remember what you said…” hence the record/transcribe capability.

What’s next? Yuan sees value in mining AI and facial detection to analyze meeting content so, for example, a sales team might have failed to close a deal can find out why. There’s even a virtual handshake feature in the works to make virtual meetings more like the visceral, real-life version.

Today, Zoom has about 1,020 staff and, having raised $145m in funding, Yuan spies a $20bn market opportunity. While he doesn’t think any company can get 90 per cent of that, he wants a big chunk.

“The real competitor is just ourselves. We need to be paranoid, be humble and listen to customers,” he says. “As of today we know our products are better than anyone out there – but if we become arrogant and there’s no innovation…”

Will there be any area where video won’t work and displace the face-to-face world I grew up in, I wonder. “In the sales kick-off they want to play together and they want to drink together, and somehow we don’t support that feature,” he laments.