Discovering Zoom’s origins

In August 1997, Eric Yuan began working as a software engineer at Webex — one of the first enterprise-videoconferencing companies. Yuan grew his team from ten engineers to more than 800 across the globe. To paraphrase Ron Burgundy of Anchorman fame, Webex became kind of a big deal. On March 15, 2007, Cisco Systems acquired the company in a deal worth $3.2 billion.

At Cisco, Yuan rose to the level of VP of Engineering — a key role at a tech juggernaut. As part of his job, he spent a good chunk of his time talking to Webex enterprise customers about the videoconferencing program. To put it bluntly, many businesses disliked Webex’s complexity and general clunkiness. (Apropos of nothing, I felt the same way back then.)

After a few years, Yuan began to doubt whether Cisco would be able to improve Webex as much as its customers were demanding. To boot, other software vendors were starting to catch up. Yuan questioned whether Cisco’s management would invest the requisite time and resources required to build a new, better generation of videoconferencing products — one that could easily scale up and down as needed thanks to the rise of cloud computing.

Yuan wasn’t guessing; he exactly knew what enterprise customers needed. He envisioned a single, modern app that would seamlessly work on any device: laptop, computer, tablet, and smartphone. Because of his background, Yuan realized that minor tweaks to Webex’s legacy code base would not suffice. Rather, undertaking such an endeavor would require a ground-up product rebuild.

Yuan knew that transforming Webex at Cisco would require him to fight many bruising internal battles. After several relatively enjoyable post-acquisition years, the politicking was starting to wear Yuan down. As he told NBC in August 2019, “Every day, when I woke up, I was not very happy. I even did not want to go to the office to work.” (Visit cnb.cx/zfd-123 to read the article.)

Yuan predictably left Cisco in June 2011 and took 40 talented engineers with him. Later that month, he founded Zoom Video Communications, Inc. He wanted to refine a concept that he first conceived during the 1990s as a college student in China. Back then, Yuan had to commute ten hours to his then-girlfriend, now his wife. (Read the entire interview at bit.ly/zfd-eric.)

The company launched its flagship Meetings & Chat service in January 2013. Its target customers remained the same from Yuan’s Webex and Cisco days: other businesses. By May 2013, more than 1 million people used Zoom products. In March 2019, Zoom officially filed to go public on the NASDAQ. April 18, 2019, marked its first day of trading.

Understanding what Zoom does

Zoom’s tools help individuals, formal and informal groups, departments, and even entire organizations communicate and collaborate better. In this way, Zoom falls under the umbrella of technologies often labeled as Unified Communications (UC). The term first gained popularity in the mid-1990s. (I’m happy to report that I was there.) In a nutshell, UC describes a collection of integrated, enterprise-grade communication services. Specific examples include

• Instant messaging (IM): Also known as chat.
• Presence information: Status indicators that conveys one’s availability to communicate.
• Voice: This bucket includes calls or, more precisely, Internet Protocol (IP) telephony.
• Audio, web, and video conferencing: The ability to hold different types of calls with large groups of people.
• Desktop sharing: The ability to instantly see what your peer is doing.
• Data sharing: Interactive whiteboards, annotation, and the like.
• Unified messaging: Integrated voicemail, email, and fax.

You may not have heard of UC before now. Again, though, it’s not exactly new. In fact, the idea of using the web to do things such as make audio and video calls is almost as old as the web itself.

The following sidebar explains a bit of history behind some of UC’s technical underpinnings. Make no mistake: These pillars remain critical today even if they run seamlessly in the background. Feel free to skip the nearby sidebar, however, if you consider it too much information — or TMI, as the kids say today.

Reviewing the numbers behind Zoom’s rapid ascent

Zoom has been a popular enterprise tool since its inception. Case in point: In December 2019, 10 million people regularly used Zoom’s tools. Most CEOs only dream about this level of success. Along the way, Zoom has landed many prominent customers, including

• The Nasdaq stock market
• Ridesharing behemoth Uber
• Delta Airlines
• Harvard University
• High-end audio vendor Sonos

Of course, the preceding list consists of large organizations and/or multibillion dollar companies. You may be thinking that Zoom lies outside of the reach of your local law firm, dentist’s office, or web-design shop.

And you’d be spectacularly wrong.

For a variety of reasons that I cover later in this chapter, Zoom has long appealed to the smallest of startups and mid-sized businesses. (See the section “Reaping the Benefits of Zoom’s Tools.”)

Case in point: My friend Andrew Botwin runs a successful executive coaching shop. His company is the very definition of a small business. Like me, he gladly pays a modest annual fee for Zoom’s Pro Meetings & Chat plan. (Chapter 2 covers Zoom’s specific offerings, plans, and prices, in far more detail.) As Botwin told me, “Zoom allows me to conduct meetings with an in-person type of feel. It also lets me easily share my computer screen with my clients.”

Zoom’s industry penetration runs the gamut: healthcare, retail, higher education, manufacturing, finance, nonprofit — you name it. As for employer age, companies both young and old have jumped on the Zoom bandwagon. For years, thousands of businesses have regularly used Zoom’s tools to communicate and collaborate with their employees, customers, prospects, and partners.

To read more about how a wide array of companies uses Zoom in innovative ways, go to bit.ly/zm-cust.

All of this is to say that, as a company, Zoom was doing extraordinarily well before a global pandemic shook the world to its core.

Assessing how COVID-19 changed Zoom’s trajectory

Starting in early February 2020, the company’s floodgates began to blow open. In a matter of weeks, oodles of businesses from mom-and-pop stores to large enterprises started getting Zoom religion. Examples of rapid Zoom adoption abounded during this unprecedented time. Here’s one of them.

On March 19, 2020, California governor Gavin Newsom issued a stay-at-home order for his state’s citizens. As a result, thousands of California-based businesses needed to adapt to a new world — and fast. One such shop was Reeder Music Academy based in Danville, California. Within a week, the 28-employee company migrated roughly 70 percent of its classes online using — you guessed it —Meetings & Chat. Thousands of small businesses in just one state would have immediately shuttered were it not for affordable videoconferencing tools such as Zoom.

And Zoom adoption quickly spread to decidedly non-corporate environments. As but one example during the height of frenzy, teachers from more than 90,000 schools across 20 countries began educating their students from their homes via Meetings & Chat. Beyond professional reasons, people needed a way to connect with their family and friends. Again, Zoom answered the bell.

To say that Zoom’s user numbers exploded over a three-month period would be the acme of understatement. By the end of March 2020, more than 200 million people participated in both free and paid Zoom meetings every day. (Industry types refer to this number as daily active users, or DAUs.) By way of comparison, just four months earlier, Zoom had averaged approximately 10 million DAUs. The 2,000 percent increase was downright stupefying.

And Zoom’s user growth didn’t stop there.

During its first fiscal quarter of 2020 (ending on April 30), Zoom reported that its DAUs had climbed to 300 million — a 50 percent jump from only a month earlier. Many of those users decided to become proper customers. Company revenue in that quarter grew by an eye-popping 169 percent. Analyst Richard Valera of the asset-management firm Needham called the results “incredible.” (Read more about Zoom’s most recent financial results at on.wsj.com/2Y0RJjz.)

Fast-forward a few weeks. As of July 1, 2020, Zoom’s market capitalization exceeded a staggering $73 billion. If you had bought Zoom stock just a few months earlier, you’d be ecstatic.

It wasn’t all puppy dogs and ice cream for Zoom, though. On the flip side, its viral consumer growth has led to some unexpected issues and a slew of bad press. (I cover those legitimate concerns in Chapter 9.) For now, however, rest assured: Zoom’s management has taken its unforeseen challenges very seriously.

Reviewing Zoom’s industry awards and recognition

Beyond Zoom’s outrageous growth, the company has garnered plenty of recognition and even won some prestigious industry awards. Highlights include

• Leader in Gartner 2019 Magic Quadrant for Meeting Solutions: You may not be familiar with the world of enterprise software. Trust me, though, vendors expend an enormous amount of energy trying to land in the vaunted Magic Quadrant.
• 2019 Inc. 5000 list of America’s fastest-growing private companies: Employers that make this list are doing something right.
• Glassdoor Second Best Place to Work in 2019: Employees tend to like working at Zoom. This accolade and its attendant publicity help the company attract, retain, and motivate highly skilled workers.

Analyzing Zoom’s competitive landscape

When it comes to videoconferencing apps right now, Zoom is unequivocally the prettiest girl at the ball. To be fair, though, it’s hardly the only one.

Before continuing, a disclaimer is in order: Contending that one tool is inherently and objectively “better” than another is silly. (Try telling a long-time Samsung user that she’s missing out on the far cooler iPhone. See how that goes.) So much hinges on personal preferences. For example, say that you’re a die-hard fan of BlueJeans. In this case, no one will convince you that you ought to use Zoom — and that includes yours truly.

Still, consider the following two types of software vendors:

• Group A: Large companies that dabble in many fields. Examples here include Microsoft, Oracle, Adobe, SAP, and Amazon.
• Group B: Smaller outfits that specialize in one specific type of application. Examples here include Zoom, Slack, and BlueJeans.

Generally speaking, the Davids in Group B have historically tended to more quickly innovate and respond to their customers than the Goliaths in Group A. This claim is especially valid over the past 15 years. Precisely because of their laser focus, boutique firms often produce better wares than their larger brethren do. Scrappy upstarts are almost always better at keeping their eyes on the prize.

Zoom’s current market share

Where does Zoom rank in comparison to its competitors?

It’s a fair question to ask. After all, you don’t want to invest in a niche tool that may quickly disappear.

The answer is a little complicated.

In April 2019, Tom Eagle of the respected firm Gartner Research told the website CIO Dive that Zoom is “displacing some of these other giant vendors.” Zoom’s rise has carved out market share from Microsoft, Cisco, and some of the other established behemoths listed earlier in this chapter in Table 1-1. (Visit bit.ly/ciodive-z to read the piece.) Back then, estimates of Zoom’s market share ranged from about 15 to 20 percent.

Of course, answering that question amid the rapid adoption taking place is now virtually impossible. Blame COVID-19 for that difficulty, among many others. Still, it’s inarguable that Zoom’s market share has grown over the past year. How much is anyone’s guess, but the increase is probably substantial.

Exhibit A: In March 2020, Academy Award-winning actress Reese Witherspoon of Legally Blonde fame conducted a highly unscientific Twitter poll on individuals’ preferred work-from-home (WFH) tool. Figure 1-1 displays the results.

It doesn’t take a survey expert to poke holes in Witherspoon’s informal methodology — not that she’s a scientist. The results, however, offer additional evidence that Zoom’s ascension is sudden and real. The natural question is why.

Every year, videoconferencing hardware maker Owl Labs creates a slick and informative report on the state of the industry. The 2019 version of the survey includes responses from more than 1,000 U.S.-based professionals. (You can access it by visiting bit.ly/zoomowl.) Short version: The vast majority of Zoom’s customers love using it.

Zoom solves some of today’s key communications problems

I’ll start with the elephant in the room: Zoom helps people communicate and collaborate far better than when they rely upon text-based messages alone. Specifically, Zoom and its ilk provide key context to everyday communications, thus minimizing the chance for misunderstandings and outright blunders.

That statement may seem obvious and impersonal. It may even invoke a “Duh!” I’ll bet, though, that at some point you sent a colleague, manager, or friend an email or text message that confused her. I’ll also wager that someone has befuddled you with a vexing email as well. As I wrote in my 2015 book Message Not Received: Why Business Communication Is Broken and How to Fix It (Wiley), stripping out essential context is a fundamental limitation of text-based communication. Put differently, when it comes sending to asynchronous messages to others, the fleas come with the dog.

When people actually engage in real-world conversations, they dramatically increase the odds that they are truly communicating. They allow others to immediately ask questions — and vice versa. Remember, the word communicate means “to make common.” It is often hard to achieve that elusive goal exclusively via text messages.

Zoom makes people more productive

Say that you’re experiencing a problem on your computer. For example, a program or your operating system is acting funky, to use a technical term. You write a long email to the vendor’s technical support team detailing the problem. Maybe you even include all the relevant information.

Still, the support rep doesn’t seem to get it. He responds, and the two of you go back and forth over the course of days or, heaven forbid, weeks. Your frustration level rises. Drink in hand, you start venting on social media.

Odds are that the rep isn’t incompetent or evil. He’s just not picking up what you’re putting down. If only you had a way to show him exactly what’s happening in a synchronous manner, then he could try to solve your problem.

Again, thanks to Zoom, you most certainly do. I have used it and its predecessors hundreds of times to share my screen and quickly diagnose technical issues. Other times, I have simply wanted to get someone’s real-time input on a book chapter, blog post, or slide for one of my presentations.

Zoom just works

Zoom’s Meetings & Chat and Video Webinars services are especially easy to set up, use, and manage. If you know how to operate a computer, tablet, or smartphone, then you can be up and running in minutes. For their part, Zoom Rooms and Zoom Phone require some assembly to proceed. In all cases, though, you don’t need to be a coder, a techie, or a hardware expert to use Zoom’s most popular services.

Zoom’s tools work well on computers, tablets, and smartphones. That’s not to say that you can perform every task on every type of device. For example, Meetings & Chat allows up to 49 people to concurrently their video feeds in a 7-x-7 grid. (See bit.ly/zm-ag for a cool animated gif of this grid in action.) If you think that you’ll be able to clearly see those 49 images on your smartphone, think again. Also, showing all those individuals’ screens will tax your laptop’s central processing unit (CPU) and slow down your machine. Put simply, your computer and its operating system may not be up to the task. Ditto if you’re concurrently running ten demanding software programs in the background.

Your device’s CPU is its main processor. It is the electronic circuitry that executes instructions of computer programs. Without a CPU, your computer is effectively a useless, expensive, and heavy paperweight.

These disclaimers aside, though, Zoom’s tools generally just work. If you’re of a certain age, then you may remember when mainstream videoconferencing applications were downright janky.

Zoom is affordable

Say that you’re excited to start using Zoom, but the accountant in you wonders how much it costs.

The answer depends on the specific plan that you choose. (Chapter 2 covers Zoom’s different plans and products in far more detail.) Enterprises with tens of thousands of employees will certainly pony up more than your indie record store owner will.

Not sure about what Zoom can do for you? Fine. Give it a spin for free. For now, suffice it to say that your employer need not spend tens of thousands of dollars on Zoom. What’s more, it doesn’t need to lock itself into expensive and rigid multiyear deals. Upgrade, downgrade, leave, and return whenever you like. In terms of contracts, think Netflix, not AT&T or Verizon.

Zoom is flexible and interoperable

In the past, videoconferencing and collaboration tools didn’t always play nicely with one another. For example, Webex may have worked well for Walter, a Windows 7 user running Internet Explorer. His colleague Donnie, however, wasn’t so lucky using his Mac to run the Mojave operating system and Safari as his web browser. In the past, many conference calls and webinars reverted to a comedy of errors not unlike the one portrayed in this classic YouTube video: bit.ly/cc2-zoom. Half an hour after the scheduled start time, a dozen people were still restarting their computers and finagling with their devices’ audio and video settings.

Fortunately, and as Zoom users know, those days are gone.

Zoom runs on anything. The company has built a flexible and interoperable solution for meetings, phone, webinars, and chat. Say that you’re holding a webinar from your desktop application. Fifty people attend, but they connect in different ways and on different types of devices. Some want to watch via their web browser. Others are on different smartphones and tablets. The attendees also run the gamut: Windows, Android, iOS, MacOS, and even Linux.

It gets even better.

Zoom works seamlessly with more than 200 other third-party apps. (I cover this subject in Chapter 7.) Here are a few examples:

• You use Microsoft Outlook and want to easily add a Zoom meeting to an existing event. You also want to prevent people from calling you when you’re busy. Check.
• Like millions of progressive-minded folks, you’re a passionate fan of the collaboration tool Slack. As such, you want to automatically launch Zoom calls from the Slack desktop client. Check.
• Your company uses Salesforce as its customer-relationship management (CRM) system. You want to start an instant Zoom meeting from a Salesforce event, lead, or contact page. Check.
• A college professor wants to hold virtual office hours with her students in Canvas, her university’s learning management system (LMS). Check.

I could go on for hours. Brass tacks: Zoom plays nicely with the other arrows in your quiver.

Zoom stays in its lane

A man’s got to know his limitations.

— Clint Eastwood as “Dirty” Harry Callahan, Magnum Force

On a related note, Zoom doesn’t attempt to replace essential productivity tools that billions of people have used for years. Zoom enhances other applications and systems; it does not supplant them.

Even Zoom power users continue to rely upon email and other communication tools on a daily basis. Because of Zoom, though, they don’t use those tools quite as much as they did before. For example, you may decide to chat with a colleague via text or voice over Zoom rather than exchange a series of emails in Outlook or Gmail. (Kudos for seeing the light.) Slack users can call each other without Zoom. Those who want to grant others control of their screens, however, will have to use Zoom or another tool. (Slack does not include this functionality.)

Zoom doesn’t try to be all things to all people. It won’t act as your spreadsheet, word-processing program, or CRM system. Zoom will, however, augment these applications. (I revisit this subject in Chapter 12.)

Zoom lets people rediscover their humanity

To state the obvious, Zoom’s customers realize significant benefits from using it. Why else would they pony up for monthly and annual subscriptions? Fair enough, but foolish is the soul who believes that Zoom is a suite of apps that only businessfolks can use. In fact, untold numbers of people frequently use Zoom products for decidedly nonprofessional purposes. (Chapter 17 includes some of them.)

I’m a perfect example.

In early March 2020, I was practicing social distancing like billions people across the globe. I enjoy my space and downtime as much as the next guy. Still, after a few weeks, I craved some human interaction. I held a few virtual happy hours via Meetings & Chat with five of my college friends. No, it wasn’t the same as getting beers with them in person and playing hoops, but it was certainly more fun than our normal, audio-only call.