From the time lockdowns became widespread in 2020, online activity spiked. Not only did more and more people start buying and selling online but they also started working online more. The need to conduct meetings online became inevitable and central to the continued operation of most businesses. If you recall well, you would remember that Zoom suddenly became the platform of choice for online meetings. You would think that Zoom was launched in 2020 but no, it has actually been around for 7 years. In this article I shall be looking at how Zoom sharply rose like that – there are lessons you can draw from that.
A Bit Of Background…
Zoom launched around the year 2013. However, Webex was somewhat one of the first players to really take video conferencing a notch up. It was most anticipated to actually become the industry titan. No wonder in 2007 Cisco actually bought Webex for US$3.2 billion. Webex had a couple of problem areas such as instability during connections and also installation inefficiencies coupled with lag issues. Despite all that, Webex grew to a point where it was exceeding US$800 million in annual revenue. Frankly, it was mainly because there were not any formidable competitors at the time.
The Key Name In The Zoom Story – Eric Yuan
Eric Yuan moved from China to the US intending to work in technology. Video conferencing had always been something he was keenly interested in. Once in the US he, later on, managed to get a job at Webex. He was instrumental in developing their software. He gradually got promoted along the way till he became VP of Engineering. During his tenure in that position, Webex grew immensely to a point where they had around 750 engineers.
Eric Yuan was intimately aware of the problem areas on the Webex platform that needed attention. Him being VP of Engineering he repeatedly talked to his superiors about them. However, no substantial attention was paid to him and he actually felt that he was being elbowed. After a while, he could not put up with this toxic working environment and decided to leave Webex. What happened afterwards? Well, it is aptly highlighted in something he said at some point as follows:
“Before I left Cisco I spent a lot of time talking with Webex customers. Every time I talked with a Webex customer after the meeting was over I felt very very embarrassed because I did not see a single happy customer. I tried to understand, why is that? I summarized all the problems Webex customers shared with me.”
It is reported that around 40 engineers Webex left when Eric Yuan left Webex. Essentially these engineers were interested in being part of the team that would see the realization of Eric Yuan’s vision. His vision was to create a potent video conferencing solution premised on addressing the problems Webex customers had cited to him.
The Zoom Journey Begins
With a considerable team behind him and the overall confidence most investors had in his vision, he managed to raise around US$3 million in 2011. Zoom went on to be launched in January 2013 and within 5 months the platform had grown to around 1 million users. It was after that milestone that they managed to raise additional funding of US$10 million. This was at a time when Zoom was being valued at US$25 million. As the year progressed they managed to put together subsequent funding to the tune of US$6 million. This was now at a time when the company was valued at US$50 million. Zoom stepped into the next year with a cool 10 million active users.
The Keys To Zoom’s Success
The overall meteoric success of Zoom was because it was providing a complete package for the customer. This was even enhanced by the fact that their package was way cheaper than other competitors. There are 3 core elements Zoom put together in their package namely, high definition video, a mobile experience, and the ability to conduct web meetings. Other competitors’ packages did not have all those 3 elements yet they were more expensive than Zoom. This was also further boosted by the fact that Zoom was compatible with virtually all commonly used browsers. The other great convenience was low data usage when using Zoom. All in all, Zoom entered the market with its sole focus being to make the customer happy. Even Eric Yuan has at times gone as far as engaging customers by raising any issue on Twitter. The summary of how Zoom got it right is best highlighted in a comment by one particular customer who had migrated to Zoom as follows:
“Zoom understands what the customer wants and its technology and customer service satisfy them better than competitors do.”
This all increased Zoom’s ratings and investor confidence grew so much that in 2017 they managed to secure US$100 million in funding. This subsequently led to Zoom comfortably getting to a valuation of US$1 billion. During their IPO in 2019, their valuation shot up to US$16 billion. Interesting to note is that Eric Yuan says they were not even looking for funding but investors literally just approached them. Then we get to 2020 when the COVID-19 pandemic brought about lockdowns. This only surged Zoom’s growth and today the company continues to grow. So far, the major issue that Zoom has had to deal with is that of security concerns. From time to time there have been security vulnerabilities that have been raised and Zoom has worked on them but it is still a sticky issue. So, what lessons can you draw from the story of how Zoom rose to dominance? Kindly comment below.