Before you give the signal for the opening of trading on the NASDAQ, CEO of video conferencing service Zoom Eric yuan turned to the cheering crowd. Overall he gave the impression of an insecure person. But then a shy smile on his face gave way to an expression of concentration, and he said: “Today starts a new game”. His startup really is not as well known as two technology companies that recently debuted on the stock exchange: taxi service Lyft, and the photo sharing site Pinterest. But for those who are familiar with the yuan, the surprise was not his success, and the fact of his personal presence at the opening of trading.
A businessman who goes to meetings
Founder of Zoom (develops cloud-based software for video conferencing), Eric yuan actively use its own product for business. When he has attracted funding from major venture funds, he appeared at a meeting with investors personally only once — to make sure they have downloaded the app Zoom.
Yuan held working meetings with both small and large investors only through the service Zoom. Exceptions were few: before the IPO, he deigned to briefly leave his headquarters in the Californian city of San Jose and take a trip to nearby San Francisco to attend business lunch with the investors of the company. After the meeting, he immediately went back to work. That is why everyone is so surprised by the fact that he came to new York for the IPO. It was his eighth trip in five years.
According to Yuan, before signing a contract with Zoom the representatives of the companies always say, “Eric, we soon become important customers Zoom. We should meet personally.” This entrepreneur says, “fine. I will meet with you personally, but let’s first have a video conference”. Usually this is enough.
The success of the IPO
Worked it on wall street. High demand for the company’s stock Zoom (officially called Zoom Video Communications) prompted Eric Yuan to raise their initial price to $36 apiece, allowing the company to obtain estimate of $9.2 billion, and 49-year-old founder of Zoom — to enter the list of billionaires.
When the first day of trading the company’s stock soared to 72%, a market capitalization of Zoom increased to $15.9 billion, and the state of the Yuan, which owns 20% shares of the new technological giant, increased to $3.2 billion
And all this thanks to the software for video conferencing, which does not invent the wheel again — just helps it make you feel any better spin.
Previously, the yuan led the development of platforms for webinars and video conferencing Cisco Webex. It was then that he decided to create software that would work well in the meeting room of the Board of Directors of some of the Manhattan company, and in the kitchen in an ordinary Chinese family. Zoom uses cloud technology and runs on a business model freemium. This means that anyone can use the free version of the service and conduct a video conference with a length of up to 40 minutes. Full version program Zoom offered for the money. Head of online cloud storage Box and active user Zoom Aaron levie was so impressed by the financial performance of Zoom so that they could sell a Deluxe edition with “these excellent figures.”
With annual revenue in 2018, $331 million (more than in 2017 118%), Zoom was one of those rare technical “unicorns” that go for an IPO at a profit.
The company has 50 000 corporate clients, including Samsung, Uber, Walmart and Capital One. Sudden fame that befell Zoom in the IPO, is something new for the company, whose leader not only studiously avoids public attention, but extremely lean refers to the budget of a startup. Every time he brings someone from their friends products with the company logo, for example, a backpack, he shall reimburse the expenses. Behind all this lies an amazing story about perseverance and self-improvement, which proves that a small startup can challenge the market leaders and succeed.
Such rapid economic growth Zoom of course involves risks. The company’s management have yet to prove that Zoom in something better than its rivals, including Internet giants Google and Microsoft. Eight years ago, when Eric yuan founded the service, these companies are deterred from Zoom all venture investors. Competition Zoom amount to the former employer of the Yuan by Cisco. Its leaders may now regret the withdrawal of the developer. Although most technology companies sympathetic to Zoom (in the number of startup partners include Atlassian, LinkedIn and Slack), the list of its competitors is likely to increase as soon as the user Zoom will start to expand.
One dream Eric Yuan came true: he gave the bell to open trading on NASDAQ. But he dreams not only about that. Once the social network Facebook combined users from all over the world. The entrepreneur plans to follow the example of Facebook to unite all businessmen in the world. In the end, the service Zoom can be a bigger platform from Cisco, which earlier was headed by yuan. “It’s like a marathon,” said the founder of Zoom. “My rival is ahead of me by 8 km, but this is normal. I’ll run faster and still catch him.”
Eric yuan was born in a family of mining engineers of Shandong province in Eastern China. His business he started back in fourth grade. Yuan collected construction waste in order to pass the contained copper for scrap. When an enterprising young man found out that the collection point will only accept the metal, he tried to burn all the excess in the back yard. As a result, he burned the neighbor’s house. In retrospect, Eric yuan to inherent a restrained tone said: “My parents were very upset.”
At Shandong University of science and technology Eric yuan studied applied mathematics and computer science. At age 22, already as a graduate student, he married. The future billionaire was already convinced that one day will open their own business, and admired entrepreneurs such as bill gates. So he decided to move to the United States, which at the time was rapidly developing technological companies. Easier said than done. Border customs service of the USA has requested the business card of the businessman in English and in error made the name of the Yuan in the register of consultants. The result was a misunderstanding, and the American guards felt that the yuan will be in the US to work part-time. As a consequence, he was denied a visa.
Over the next fifteen years skeptical members of the American immigration seven times denied him a visa. But yuan didn’t want to give up. “Okay. I will do everything in my power until I know that I will never be able to apply for a U.S. visa,” thought at that time, the future billionaire.
In the summer of 1997, the yuan has got a job in a technology company Webex, since the establishment of which was held only two years. He moved to Milpitas, California. On Friday a young professional used to program all night and then on Saturday afternoon, not enough sleep, to play football. At the peak of the dotcom bubble growth platform video conferencing Webex developed rapidly due to the widespread increase in Internet speed. In July 2000, the company completed an IPO, and in 2007 it was absorbed by the American conglomerate Cisco for $3.2 billion Soon after Eric Yuan was appointed head of the Webex. However, by 2010 he was disappointed in the work. According to the businessman, the problem was that the Webex service was not good enough. Every time users Webex have logged in to start a video conference, the system first determine the version of the program to run (for iPhone, Android, PC or Mac), which significantly slowed down the work.
Accordingly, the lines were overloaded, and the video and audio quality left much to be desired. In addition, the Webex service lacked modern features, such as the mode screen sharing on mobile devices.
Conversing with bill Ty, a venture capitalist, who subsequently was one of the first to invest in Zoom’s Eric yuan said, “Someday someone will create a cloud-based video conferencing service, and I shall the end come”.
The entrepreneur spent a year trying to convince the management of Cisco to let him remake the Webex service. In 2011, when all his attempts to convince the user was not successful, he gave up and decided to leave the company. “Cisco executives were more interested in creating a social network similar to Facebook,” — says the billionaire. “Cisco made a mistake. Three years after my dismissal, they realized that I was right.”
The biggest obstacle in his way was the need to convince the wife that he made the right choice. According to his wife Yuan, he refused a very lucrative job because by the time the yuan has already led the 800 employees of Webex. “I know the journey will be long and very complex. But if I don’t try it, I’ll regret it,” he said to his wife.
First Eric yuan asked friends, including familiar investors of Tango messenger, give him a couple of checks totaling $250,000, so he could pay 30 engineers (some of them were in China) to work on his new idea: the creation of improved software for video conferencing and then running the corresponding application. Business angels, including former CEO SUBR Webex Iyar, believed in Eric Yuan and invested in his startup has $3 million
To beat the giants
First, yuan called the new company Saasbee. “All venture investors considered it a terrible name,” said Jim Chairman from the company Maven Ventures. It Sheinman became one of the first investors Zoom and coined the current name of the company.
A few months Eric yuan realized that he again wants to deal with services for video conferencing. Investors were skeptical. Microsoft has acquired Skype, the Internet giant Google also launched Hangouts, and former employer of the Yuan, Cisco, still occupied a large market share. This meant that several companies have become immediate leaders in the niche.
In addition, the market has been a lot of startups, for example, a well-funded cloud service videoconferencing on the BlueJeans Network. “To succeed in this niche, you will need to create a flawless program,” said one of the investors refused to Fund the Zoom.
The headquarters company was located in a dilapidated office building, in which often the Elevator was not working. With such a great camera on a cheap fridge, Eric yuan and his American team almost two years worked on the creation of a new product in the Californian city of Santa Clara. When they finally rolled out the Zoom, he differed from competitors.
Zoom software does not slow down the system and almost instantly determined how the device is used for video conferencing. This meant that the service Zoom not need multiple versions for different operating systems, for example, for traditional PCs and for Mac. In addition, in the Zoom software was embedded layer that protects the service from errors that could occur when force-updating browsers like Chrome, Firefox or Safari.
Service Zoom also can work with low speed Internet and with the decrease in the volume of operative memory of the device by 40%. Full version Zoom sold at lower prices than the competition. The cost of a monthly subscription to Zoom was a $9.99 (now $14,99). Head of customer service Department Zoom Jim Mercer said that they have worked for a competitor Zoom, GoToMeeting startup when I first learned about the service by Eric Yuan. His colleague then bought the full version of Zoom to see what caused the excitement around the new service. Mercer remembers: “One click and we entered the private office. The meeting was able to participate 25 people at a time.” “What kind of magic? How do they do that?” he thought then.
After launch Zoom startup has attracted funding in the amount of $6.5 million from the investment company of billionaire Li Kashin Horizons Ventures. They say that the richest man of Hong Kong, and he actively uses the program. In 2015, the company Emergence Capital invested in Zoom $30 million Shortly thereafter, the manual Zoom beginning to attract larger corporate clients. According to partner, Emergence Capital Santi Subotovsky, the yuan has surprised all investors, when he came to the meeting and insisted that they have uploaded to the phone app Zoom. Then, in real time, he held a company presentation on video. Yuan again surprised them when he warned potential customers of major corporations that the Zoom functionality may not yet fit them. The first customers to Zoom are a fast growing company in Silicon valley, Box, Slack, and Uber.
In 2016, the Zoom began to serve not only a technological company. Now the number of Zoom customers include large retailers Gap Inc. and Williams-Sonoma.
At the children’s hospital of the city of Phoenix doctors attend meetings, conduct consultations before the surgery, and work with patients using the service Zoom. Previously there used more complex software that had to taste all the medical staff. For the past four years at the children’s hospital use Zoom. In addition, doctors give the iPads to the children, who have to spend a long time in the hospital, and give birth to their accounts Zoom. Thus, children can communicate with each other in virtual support groups, as well as “to attend school” without risk to health.
Representatives of the famous venture capital Fund Sequoia Capital more than two years trying to invest in Zoom. In early 2017 they finally do. During the fourth round of financing, the company Eric Yuan has attracted investment from Sequoia Capital for $115 million, and evaluation of Zoom exceeded $1 billion “We have done everything with due diligence. But I remember telling someone that the world must be at least thousands of Yuan Erikov, because every person we talked to knew him,” said Sequoia Capital partner Carl Eschenbach.
A basketball fan
The secret of the popularity of Eric Yuan simple: he conducts all business meetings using Zoom. This habit came from his passionate love for basketball. Since moving to the United States, the yuan was a fan of the NBA. First, he admired the playing style of the basketball player Los Angeles Lakers Kobe Bryant, and then began to support the basketball team Golden State Warriors. Eric yuan made it a rule to attend all basketball games and gymnastics competitions, which were attended by his children. It is worth noting that one of the unique features of the Zoom video conferencing service can be called the ability to change the background to hide, where the user is. So, in the background you can place your company logo or any other image. Last summer, the eldest son of the Yuan, which this year finishes school, he participated in a basketball tournament in Los Angeles. Eric yuan recalls: “I put on a background photo of the beach in Santa Barbara. My business partners thought I was there. After the meeting, I accidentally deleted the image”. All participants saw that the yuan is actually in the school gym. According to the billionaire, they were very surprised and in unison said, “What was that?”.
In the past year because of his passionate love for basketball billionaire let one of the known players of the Golden State Warriors act as the investor’s Zoom. But it was not about basketball stars like Stephen Curry or Kevin Durant, but the “veteran” Warriors Andre Iguodala. “We had a very good conversation with him about how basketball relates to its business,” said andré Andre Iguodala. Yuan and Andre Iguodala respect each other — both the professionals who achieve success, because it put the interests of the team above their own personal.
Savings on everything
Two months before the IPO, Eric yuan bypasses the sales Department and engineering Department into the new headquarters Zoom in San Jose. In this office are already working elevators, but is still not very much. Yuan decided to rent Unfurnished office near the train station Caltrain to save on the budget. Now in China celebrate the new year. The billionaire walks around the office and gives subordinates a small red envelopes. Most of the staff he knows by name. “Shred them,” he says with a grin to a group of developers, as if teasing their children. “Open the envelopes only after we leave. There is a lot of money!”. Now the company Zoom operates 1,700 people, many of whom received millions of dollars in the IPO. Red envelopes is a traditional Christmas joke. Each of them is one crunchy “happy” in denominations of $2.
Eric yuan really saves on a lot. It’s another message for the public: in the company Zoom greater importance is given to the product, not bonuses for the employees. From the CEO of the company even have an office. His office combined with the office of his friend and former colleague on Webex and Director of Zoom for the production of Oded Gal. Three years ago, an entrepreneur lured it into your startup from BlueJeans Network. Yuan’s rare to catch in the office. A couple of times a year and does a billionaire chooses another temporary place of work. They may be conventional office Desk, located in another room. To give to understand that he chose this table, he leaves two photographs of his family and the pile of books he recommended reading. Then the billionaire will convene a team of experts with whom he works side-by-side and discusses pressing issues. From October 2018 it with a team of engineers working on the development of the new product, called the Zoom Phone. This is one of several large production lines, greatly advertised company Zoom in recent months.
In addition, the company introduced upgraded videoconferencing facilities of the new generation of Zoom Room. Despite the fact that an increasing number of users of Zoom (to date, every sixth user) comes to your personal Cabinet with the help of mobile apps, according to Yuan, many companies still hold meetings in the conference rooms. Zoom is only responsible for the software, and partners such as Dell, Logitech and Polycom provide TVs, cameras and speakers. Portfolio Zoom Room strategically important contracts with large corporations, CEO of which conduct many business meetings over video.
Although Zoom and produces equipment for the meeting rooms, the very concept of Zoom Room resembles a product line of Cisco, former employer Eric Yuan. The irony is that last year guide, Cisco introduced a new design for the video conferencing service Webex, which looks suspiciously like the platform interface Zoom. New head appointed Cisco veteran Microsoft Sri Sreenivasan. His task is to resume production of adapters, web cameras and other devices, which you can use for video conferencing. Srinivasan was glad to cast a shadow on the reputation of Zoom: “Cisco and Zoom cannot be compared. Zoom developers have created a good product, but has borrowed much from Webex”. According to him, soon, Cisco will return to the market with new technological solutions.
There is much to develop
Cisco persepective video conferencing service as well as Google, Microsoft, and maybe Apple with Amazon again threaten the prosperity of the Zoom, as it was in the first years of existence of the company. Manual Zoom claims that cooperates with at least 90 of the 100 leading cloud companies from the Forbes ranking. However, some corporations (e.g., Sony) and have not switched to the Zoom because of the fact that the system was too difficult to integrate such a large business. In other companies, including GM and Verizon use completely different services. And Ford, for example, only a few use Zoom. Even Qualcomm, which owns a small stake in Zoom, use the services from Cisco and Microsoft. “Some companies simply use the services to which they are accustomed,” said Quinn Li, Qualcomm Ventures partner.
In service of Zoom gradually add new features, and the number of accounts in the system is constantly increasing due to the fact that some large companies, thousands of employees simultaneously use multiple worker chats for internal communication. The manual Zoom should be cautious and avoid excessive budget savings, which may harm the quality of the product. In January of 2019 in service operation Zoom was documented violations. Then Zoom in to blame the failure of the cloud Amazon Web Services. But users didn’t know about the glitch and just saw that the Zoom app is not running.
When Eric Yuan asked about a similar glitch in the third-party contractor, the entrepreneur said: “It can be compared to a restaurant. The guest must receive only pleasant impressions of his visit: from the moment when he crossed the threshold of the restaurant, and up until the very end. You can’t blame anything other”.
But it is certainly a double-edged sword. When in March 2019 there is a major glitch in the Facebook, the House of representatives of New Zealand conducted broadcast meetings of the committees on Facebook Live, and using the service Zoom. In IPO filing, filed with the Commission on securities and exchange Commission (SEC), manual Zoom noted that the majority of the 500 largest companies in America feature at least one subscription for the full version of Zoom. But not all of these companies has signed a major contract with Zoom, which most likely involves the conclusion of several large transactions in the future.
Don’t forget about the international market, which accounted for only 18% of the company’s transactions for the last financial year. In the UK, Japan, France, Germany and Australia there is great demand for the service. The output of these markets is an important task for manual Zoom. The major successes of the company Zoom yet achieved in the canadian market. Zoom in now considering further expansion. In the first months of existence of the company lean Eric yuan decided not to buy domain zoom.com and made a choice in favor of cheaper addresses zoom.us. However, in the past year, the company acquired the domain zoom.com for $2 million, because it can help business development in foreign markets because it does not cause direct associations with the US.
China remains a bit of a dark horse. More than 500 engineers Zoom live there, which in itself is quite rare for an American company. According to Yuan, the Chinese market is unpredictable. However, taking into consideration personal when Eric Yuan and the fact that the Zoom engineers live in China, it can be assumed that if a technology company and be able to conquer the Chinese market, it has to be Zoom. Here, of course, should be put aside thoughts of potential problems related to the protection of personal data.
If the company hopes to someday reach the extent Cisco, in subsequent years, the Zoom will need to launch more new products. In the past financial year, the sales of multinationals from California San Jose amounted to $49 billion, the stock of Cisco has soared to the best levels in the last 20 years, and the market value of the company increased to $250 billion
The manual Zoom will have to improve the product. The ability to use only a voice connection is likely only the first feature added to the app Zoom. After it, others will follow. For example, it would be possible to introduce the ability to send text messages and share files. Emphasis could also be done on the data processing: Zoom customers can already go to other services, recording and stenographers calls conferencing. Data analysis of such calls would have helped sales representatives to identify phrases or behaviors that indicate the readiness of a potential client to seal the deal. With this data, you could set as a perfect time to make the call, and its ideal duration. In the future, similar tools could help marketers, product developers and customer service representative to learn from their own videoconferences held via Zoom. The company Zoom has powerful friends that can help its leadership to implement such plans if Zoom will not conduct too active competition. A leading software development company Atlassian and Salesforce, have become direct investors Zoom, while others, such as the LinkedIn network, called the Zoom as its important partner.
Newly minted billionaire Eric yuan is unlikely to let success go to his head. Yes, the owner really drives a Tesla electric car. But it is connected only with the fact that, in his opinion, the two companies are very similar: design service Zoom and the Tesla cars differs from the design of competitors ‘ products, and “under the hood” hidden “solid filling”. We should also not forget that Tesla are actively using the service for meetings. Returning to work the following Monday after the IPO, Eric yuan will continue to publish in the official account Twitter Zoom in positive customer feedback about the service. He hoped that the employees will follow his example. In the day of the IPO, the company leased a banner in times square in new York, and its employees from all over the world are using video conferencing in wave Zoom Eric Yuan, when he gave a call to the opening of trading on NASDAQ. One mentor Eric Yuan told him that the IPO will remind high school graduation: “someday you will celebrate, but the fun will end. But you don’t want to “high school graduation” was the peak of your career?”.
Translation Of Pauline Sanaevoj
Read more •••