Zoom—a video conference technology company based in San Jose, California—not only broke into a highly competitive industry, but it also became an industry leader. Zoom’s success can be attributed to good leadership, a growing market, a customer orientation, accessibility, and the ability to secure funding.
Eric Yuan is the CEO and founder of Zoom. He got the idea for the company when he was in college in the 1980s and regularly took a 10-hour train ride to visit his then-girlfriend.
He knew there had to be an easier way to see her. At the time, video communication was a distant dream as widespread consumer internet use was still years away. After relocating from China to the United States in 1997, Yuan landed a software developer job at Webex, an online communications company, in the midst of the so-called dot-com boom.
The dot-com era was marked by a period of rapid growth in internet use. While excessive investor speculation of internet firms caused a stock market bubble that would eventually burst, Webex remained strong. When Cisco acquired Webex in 2007 for $3.2 billion, Yuan became the vice president of engineering, overseeing more than 800 employees. Yuan, however, wasn’t happy with the company’s online service, which often cut in and out and lacked various modern features.
His calls to update the platform were ignored, so he left in 2011 to build a cloud-based video-conferencing tool of the future that prioritized customers and their needs.
Zoom, founded in 2011, entered the video communications market at a time when consumer and business demand for video conference products was increasing. It was around the same time that Apple introduced FaceTime and Skype was acquired by Microsoft for $8.5 billion. Almost a decade later when the COVID-19 pandemic struck, the demand for Zoom’s products accelerated as the need to communicate from a distance became more prevalent than ever.
Yuan decided that his company’s vision would be “video is the new voice” and its goal would be to deliver happiness.
It’s this customer orientation that has contributed to Zoom’s success. From Yuan’s experience at his previous company, he knew consistent and quality video connections should be a priority. To add to that, Zoom offers 24/7 customer service, which Yuan would often take part in during Zoom’s early years. Yuan would reach out to any individual who canceled their service. This focus on customer service is a large reason behind Zoom’s high customer satisfaction ratings.
Another key element in Zoom’s success is accessibility.
When it launched, Zoom had several competitive advantages.
For instance, its software identified the user’s device, eliminating the need for multiple versions of the software.
Additionally, it had high security protections in place that kept bugs out. But perhaps most important to the customer, Zoom was able to operate on slow internet connections.
From the start, Zoom was easy to use, and this holds true today. Case in point, when someone is invited to a Zoom meeting, they need only to click a link to attend. Even if users choose to register for a basic account, it’s free to host up to 100 participants with an unlimited number of meetings.
Premium features are available on Pro, Business, and Enterprise accounts at competitive rates. This is known as a “freemium” pricing model. By offering free entry-level access, Zoom has opened up its platform to the masses and lowered barriers to product trial.
Many start-ups struggle to find financing. Initial funding for Zoom came from Webex executives who knew Yuan and believed in his ability to build a quality product. Though Zoom didn’t see profits for many years, investors kept investing because of the platform’s promising future. When Zoom made its initial public offering (IPO) on the Nasdaq stock market, it was already growing and profitable, a rarity for tech companies. With an IPO price of $36 per share, Zoom was valued at $9.2 billion. Now, the video communications company is valued at close to $100 billion.
Yuan’s ability to identify a growing market and create a superior product that was easy to use led to Zoom’s presentday success. The COVID-19 pandemic only accelerated Zoom’s path to the front of the pack. As people worked from home, students attended school online, and friends gathered for virtual happy hours, Zoom emerged as the go-to service.
Looking to the future, Zoom is focusing on new products and winning over large clients. Maintaining its customer orientation and continuing to innovate will better prepare Zoom for future growth opportunities and challenges.

 

Questions

1. What entrepreneurial traits did Eric Yuan—the founder of Zoom—have that enabled him to turn an idea into a very successful company in a very competitive market?
2. One of the benchmarks of a successful business is satisfying the needs of its customers. How is Zoom meeting the needs of its customers?
3. One reason Zoom has been successful is that it is easy to use. What other factors have made Zoom a popular choice for video conferencing?