Zoom founder Eric Yuan reacts at the Nasdaq opening bell ceremony on April 18, 2019 in New York City. The video-conferencing software company announced it’s IPO priced at $36 per share, at an estimated value of $9.2 billion.
Kena Betancur/Getty Images
- Zoom founder and CEO Eric Yuan chatted with Business Insider Editor-in-Chief Alyson Shontell at the Web Summit Conference to discuss Zoom’s unprecedented rise to become a household name.
- Yuan previously worked at Cisco WebEx and didn’t like going into the office because he “did not see a single happy WebEx customer,” which motivated him to create Zoom.
- Yuan explained how the company had to quickly adapt from its original enterprise focus to providing its product to regular consumers during the pandemic.
- Yuan doesn’t believe Zoom’s popularity will go away after the crisis ends: He told Business Insider that the pandemic showed how easy it is to communicate and engage without needing to constantly travel or commute to work, and that people won’t want to give that up.
- Visit Business Insider’s homepage for more stories.
Video conference company Zoom has had an incredible year as the coronavirus crisis has turned it into a household name.
As the pandemic raged through the world, shuttering offices and forcing people to stay home, Zoom became the go-to platform for remote work and corporate conferences, but also for weddings, happy hours, yoga classes, and everything in-between.
The sudden need for this kind of tool spurred blockbuster growth: Zoom gained hundreds of millions of new meeting participants in mere months, its revenue increased 367% from a year prior in the most recent quarter, and its stock has soared nearly 500% in 2020.
It has also faced an avalanche of security and privacy issues that led to criticism and internal changes, including a settlement with the FTC over allegations that it falsely claimed to offer end-to-end encryption.
Founder and CEO Eric Yuan admits that the company had to scramble to accommodate to its new consumer user base.
“We started from enterprise and now we’ve got to embrace the consumer: It’s very different,” Yuan said during a conversation with Business Insider Editor-in-Chief Alyson Shontell at the Web Summit Conference. “So we had to learn quickly – take actions quickly – to adapt to that.
In the wide-ranging discussion, the duo also chatted about how Yuan got his start, why Zoom has never been interested in an acquisition, and the reason that the product will remain relevant when the crisis is over.
This transcript of Business Insider Editor-in-Chief Alyson Shontell’s conversation with Zoom founder and CEO Eric Yuan has been lightly edited for clarity and length.
Alyson Shontell: Eric, thanks so much for sitting down with me today. I wanted to start out by throwing out some statistics that are truly mind boggling. You began in December, actually, just before this year, with 10 million daily meeting participants. In April, that shot up to 300 million. I don’t think that scale like that has ever been seen before. The year is projected to bring in about three trillion meeting minutes for Zoom participants in all of 2020. And then also, I believe last quarter, you actually generated more as a company than you did in the entire year prior and you were doing just fine the year prior. So that’s where you are right now. But I want to zoom back a little bit to January 2020, as you were planning out this year for you and your staff. What did you think, that January, that the rest of 2020 was going to look like?
Eric Yuan: Yeah, so thank you for that. So prior to the pandemic crisis, we never thought about this kind of a growth. In 2020 – very similar to 2019 or 2018 – the focus of Zoom was to build, to find new customers. In terms of how we grow our business, we doubled down on our net growth, hired some engineers. In terms of growth rate, we expected very similar … we never thought about this kind of growth when we started this year.
Shontell: And then watching it happen: Was that exciting? Was it terrifying? I feel like it’s got to be some of both.
Yuan: Well, on the one hand, we were very excited because of the many, many years of hard work. You feel like your dream is coming to true, right? To help the world, to help people stay connected, our employees were very excited.
However, also, suddenly you have 30 times more growth. How do you handle that? [Employees] need to be working harder and a lot of processes need to be improved, and it’s full of opportunities as well.
Shontell: Well, I have so many more questions about how you all have managed to scale as the demand has been there over the past few months, but first I want to go back even farther to your journey as a tech entrepreneur. I believe you came to the US in your twenties from China after facing eight different US visa application rejections (finally got in on the ninth try, thank goodness for us).
You joined WebEx as an early employee and then grew at Cisco – I believe you were managing a team of about eight hundred people when you made the decision to leave. You’re in your forties, and you decide there needs to be yet another video player.
I want to take that moment in time where you’re thinking about starting this company: Had you thought about starting a company before? You were very successful in your career: Why risk it all and start a company then?
Yuan: So, you are right, I moved to Silicon Valley when I was 27 years old to pursue the American Dream and also to embrace the first wave of the Internet revolution. I think in the economy, all the innovations are driven by the startup ecosystem. After I moved here in 1997, I knew that someday, in the future, I was going to start my own company. I had no idea when and how, but that was my dream. So that’s why I always prepared well and that’s one of the key reasons why I decided to leave to start my company.
Another reason why, was because I was part of the WebEx team. The year before I left, every day I did not want to go to the office because I did not see a single happy WebEx customer. That’s another reason that triggered me to leave to start a company.
Everyone, I think, working in Silicon Valley always has a dream: Either you start something or join the startup ecosystem.
Shontell: And as you were thinking about beginning Zoom, I believe you had trouble fundraising initially and faced a lot of rejection: ‘This idea has been done before.’ ‘You’re up against Apple FaceTime and all these incumbents in the space.’ Since you were at Cisco and WebEx, you knew this problem intimately, but it didn’t seem immediately obvious that there needed to be another solution. So how much rejection did you face as you were looking to get this off the ground?
Yuan: The good news: I don’t remember how many rejections, because there were too many. And looking back, I do not think that they are wrong because the market indeed was too crowded. A lot of enterprise vendors, also free services… Nobody thought, ‘The world needs another solution.’ However, I just spent a lot of time talking to the customers: I knew the market. The potential was big, however, nobody liked the existing product. So I did see a small opportunity to build a better solution. So, you are right: No VCs wanted to fund that, if I was a VC I’m not sure I’m going to fund this either.
Shontell: That’s fair. Well, the ones who did I’m sure are glad that they did, now in the end.
This past year has had exponential growth beyond, I think, your wildest dreams, probably any founders’ dreams. But before that, you grew a solidly profitable business over the years. Was there any other exponential point? I think Silicon Valley selects this curve they like to see where it’s, ‘up and to the right, everything’s going right.’ Is that how it was for Zoom before the IPO? Or how did you scale in the early days?
Yuan: So before we went public, I think our growth was very similar to other software-as-a-service companies. So year over year, maybe for the first few years, you come in at 100% growth, and after that growth goes down a little bit, because to be able to build a software service, there’s no way you grow like this. [Indicates with hand, steep diagonal to the right.] It’s always step-by-step and organic growth. Overall, it’s very manageable. I think that’s the kind of growth we were expecting – we like that kind of growth. With that, everything is manageable. I never thought about, suddenly you have this kind of growth – it’s so hard.
Shontell: Yes, I seem to remember Aaron Levie, who’s a fellow entrepreneur, saying that your numbers were so good ahead of your IPO that you could make a coffee table book out of them, which I think is a good goal for a lot of founders to strive for.
So now, as you were looking at the IPO, is that the exit that you always wanted? Had you thought about, ‘Should acquisition be a route?‘ Have you thought about, ‘Should acquisition still be a route?‘ I mean you’re very successful now, but I imagine that others are calling. How do you think about what’s the right path for your company?
Yuan: When I was coming here back in 1997, I had already planted a seed and I thought about, someday, if I can start a company, I really wanted to go to New York and ring the bell and enjoy that, NASDAQ, becoming a public company moment. That’s why, when we started, I always told myself, no matter what, that’s our dream. So, we never thought about any acquisitions: No matter how good you think the deal is, it’s always shooting for be a public company.
Shontell: That’s great. I believe I read that one of your investors told you, ‘You don’t want high school graduation to be the peak of your career, so you can’t let the IPO be that either. You’ve got many more chapters ahead.’ So let’s dive into what’s happened over the last six months. So, as I mentioned, your daily meeting participants have absolutely skyrocketed. What has dealing with that exponential growth been like on the inside, in the trenches? What can we not see as users on the outside?
Yuan: First of all, we do enjoy that experience of being a freshman in the public company community. So, yeah, internally, I think, first of all, I truly appreciate everything: the employees doing good work – very hard work – doing all we can, everyday, to think about the customer and how we can make sure our product gets better. I think hard work is extremely important. That’s one.
Two is even from outsider perspective, the growth is great. However, internally Zoom was built for serving enterprise customers. During the pandemic crisis, we’ve had so many first-time consumers. We also offered a free service to more than 125 thousand schools. So those use cases and users are very different. We have to improve our internal process of product privacy, security, how to prioritize those features to the consumer and enterprise customers. We’ve had to evolve our business as quickly as possible.
Because, you look at other businesses: Normally you start from consumer and you can embrace enterprise. We started from enterprise and now we’ve got to embrace the consumer. It’s very different. So we had to learn quickly – take actions quickly – to adapt to that.
Shontell: How did you you reorient your business around consumer? Because you’re right, a lot of people do start with the consumer path and then go to enterprise and you had to scramble to do it in reverse. There were security challenges, as you mentioned, and you were dealing with this in real-time in the public view. So how did you reorient the company so quickly?
Yuan: First of all, part of our company culture is ‘delivering happiness,’ meaning we do all we can to look at everything from a customer perspective. I think that that culture, suddenly, helps out a lot.
Also, when we were facing all kinds of new use cases, new consumers, we took a step back and really tried to understand, what’s the difference? What are the thoughts from the end-user perspective who think about our service? What can we do differently?
So as long as we look at everything from a customer’s perspective… Like think of privacy, for example. If you do need all those security features, the enterprise IT team, they work together with us to be enable or disclose a features.
For consumer users: They do not have an IT team. We have to make the decision for them. We’re learning quickly, that’s why we’ve had to change our internal practice and processes to embrace those new use cases and new consumers.
Shontell: And as you’re dealing with all this, how did your routine as a CEO change? What were your days like and what were the teams’ days like? I just imagine you guys staring at a computer, typing all day long, getting no sleep.
Yuan: I don’t think I changed my daily routine process that much, just a little bit longer hours, compared to prior to the pandemic crisis. And when I wake up, I always think about, ‘Hey, what can I do differently today?‘
In the evening I also have a 15 minutes in the evening in my calendar so I think about, ‘If I could start over today, what would I do differently?’
And also a lot of meetings, but I do enjoy that. Once I had a total of 19 Zoom meetings. That’s pretty much the same routine process, but just a little longer hours.
Shontell: And I understand that your staff grew in size about a thousand people from the beginning of this year to now in 2,400 plus at the beginning of this year, about 3,400 now. How was scaling that quickly, and how do you maintain the culture through it all, through the long hours and all the hard work, plus bringing on so many new people?
Yuan: Alyson, that’s a great question. That’s something that keeps me up in the night because it’s hard. Now have several thousand people, every quarter we hired hundreds of new employees, especially when we all work from home and in the new employee onboarding process it’s different now. And with no social interaction, it’s pretty challenging. So that’s why every day we talk about how to make sure our newly hired employees are fully engaged with existing employees, how to make sure when we have Zoom calls and try to know those new employees, and also talk about company values. Again, we are also learning, it’s not of that easy.
Shontell: So one thing that’s a challenge in any fast growing company, I’m sure you’ve witnessed this at WebEx as an early employee and you’re seeing it probably now at Zoom is that it’s really hard for employees and even leadership to keep up as a company is just changing so quickly. People that are right for a certain phase of a company aren’t necessarily right for the next phase of a company. How are you managing that and how’s your team managing that? I know you’ve gotten a lot of new leadership lately. How are you making sure that you’re the CEO who is not just right for the Zoom at the beginning of this year, but the Zoom for now? And how do you make sure your team is as well?
Yuan: Yeah great, great question. So at Zoom, our philosophy is always that we talk about, for every employee, myself included, the number one goal is what we can do differently to become a better version of ourselves. Every day, even prior to this pandemic crisis we always talk about that. Because our company culture is about delivering happiness. Make sure you become a better version of yourself, make sure you all improve. When we have hired new leaders or new executives, we would like to hire those with a huge potential. They can grow themselves along with the company goals. Even for the internal promotion, sometimes the candidates may not be ready. We do set up a strategy goal where they can grow themselves. I think by doing that they try to learn something new. We all learn something new. We all get better.
Shontell: And as I said, one more question before we move on to the final segment of this, which is kind of our future looking, is for an entrepreneur who is suddenly finding themselves with the amazing problem of having so many customers so quickly and reaching this exponential phase like you’ve just gone through. What advice would you give them? What advice you wish you had known at the beginning of this year?
Yuan: I think it’s probably two things. First of all, be patient and don’t think about the overnight success, keep on doing what you are doing, keep doing what you are good at. Be patient. I think good things will follow. Zoom is viewed as a sustainable business. It’s a long journey. Sometimes we have ups and downs, you lose a customer, you win some customers. A lot of things you have to enjoy everything, enjoy ups, enjoy downs. How do you maintain that? That’s very important for any entrepreneur.
Shontell: So I want to look forward a little bit at the future of work, of travel, of Zoom. But first, let’s start with Zoom. So the pandemic should end at some point here. Recently, we saw Pfizer come out with some very positive vaccine results and some stock took a hit. What does it look like after the pandemic?
Yuan: First of all, we all wanted someone to come up with some vaccine technology as soon as possible. The reason why we all work with home starting March, it’s pretty painful, right? I also believe the way for us to work, to live and to learn and play is very different. Let’s say after the pandemic crisis is over tomorrow, after we all go back to the office, I do not think we always need to go back to the office, for every employee. Maybe today and tomorrow we all can work in the office, starting the next week we all can work from home. Only on Monday, Wednesday, Friday we are home. You know, Tuesday and Thursday we are in the office. The world will become a hybrid. It’s good for climate change, it’s good for productivity, I think that’s a world we’ve got to embrace. I think there’s a lot of use case I believe Zoom can have.
Shontell: And what do you think about business travel? I believe you weren’t a big traveler to begin with. I think I read that you did almost all of your entire IPO roadshow remotely. Sometimes we don’t know where you are. I’ve read that sometimes you’re in a sweaty basketball gym, but you’ve got your nice Zoom background on so people can’t tell. So what do you think of the future of business travel? Will we be Zooming instead? What does that look like?
Yuan: So prior to the pandemic crisis – except for last year – usually I only traveled, at most, twice for business travel. To use Zoom, I can meet in many more conferences than business travelers. Otherwise, I think it is too much time and it’s not good for climate change.
I fundamentally believe that after the pandemic crisis, business travel will be less and less. (I don’t mean you have less and less travel: You have more time with your family and you still can travel with your family together.)
But with business travel, I’m pretty sure that everyone now realizes that with a tool like Zoom you can meet with more employees and more customers and more prospects. It works. That’s why I think fundamentally the number of business travels be much less after the pandemic crisis.
Shontell: And what do you think the future of video looks like? I think for a world to be truly like, not much travel, some days in the office, some out, sometimes it feels like we’re in just the very first inning of video versus where it can go. What will 5G do to it? Virtual reality? Where is where do you see video right now versus where it’s going?
Yuan: We believe, the video conferencing, we would like to deliver a better experience. Like in today, I see you in a physical meeting. In the future, you will feel my handshake. And also if you get a cup of coffee, I also enjoy the smell remotely and I will speak a different language, with AI, we both can understand each other. With AR device, it will feel like we are sitting in the same Starbucks Coffee as well. That’s the world we imagine. No matter where they leave, no matter what kind of language they speak, they always feel like they’re in the same place, and they can understand each other, that is where we are thinking.
Shontell: And how far out is that world where I can feel your handshake and smell your coffee, do you think?
Yuan: I think of maybe 10 to 15 years. You can one-click to digitize the coffee.
Shontell: I’ll hold you to that. We’ll circle back in ten years to see. So I’m going to speak one or two more questions. First, I wanted to say, you have become incredibly successful, not just Zoom, but you personally. Your net worth has jumped about 400% this year, I think maybe even more. And all the success that any person could want in their career you seem to have. So what has this all done to your perspective on life? Work? Family? How do you even set future goals when it feels like you’ve already accomplished so much and you have so much?
Yuan: I look at myself or look at my family, I look at the way I work or play, and I do not think anything has changed. Maybe we all work from home, I think Zoom’s still Zoom. I do not think anything’s changed except for I do enjoy more work, more long hours. I do enjoy that because I have more responsibility because we are helping people stay connected during the pandemic crisis. What if we can do more? What if we can do differently?
Customers: that is my focus. That’s my priority. For me, as the CEO at Zoom, my number one priority is to think about how to make sure every employee is happy. Together we make a company. Everyday I think about that. I think nothing has changed.
Shontell: So the more successful you get, the more you want to work.
Yuan: Absolutely, because I enjoy that. I really enjoy that.
Shontell: That’s great. I think that’s probably partly how you became so successful in the first place. If people enjoy what they do, it really shows.
So I want to end on some advice for fellow entrepreneurs in audience to give a little bit about if you’re hitting an exponential growth phase. But just in general, if you have ambitions to create a company the size of Zoom someday or future Zoom someday, what do you tell people who want to get going and hope to be successful as an entrepreneur?
Yuan: So my two cents is: first of all, if you got an idea, don’t hesitate, just do it. And looking back, I did not realize how excited I was when I started a company. That’s why I really liked that Nike slogan, “Just do it.”
Number two, I would say, focus on the company culture. That’s extremely important. Maybe for several years, you do not know that, but if you trying to scale up your business, if you do not have a good culture, you are going to face all kinds of challenges. Sometimes you even cannot fix that.
Shontell: Well, thank you so much. And thank you to all of you for watching.
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