The History Of Eric Yuan’s Zoom
When COVID-19 brought the world to a halt in March 2020, Eric Yuan knew millions of people would rely on Zoom.
Since then, Zoom has been one of the largest beneficiaries of the remote work boom of 2020 and 2021.
With mind-boggling growth stats, like 300 million daily meeting participants and 3.5 trillion annual meeting minutes, Zoom has become a video conferencing giant in a little over 18 months.
While Zoom recognizes the huge role the pandemic played in the uptake of its tools (yes, Zoom has many tools; not just video), were we all heading into a world of Zoom anyway?
“Work is no longer a place, it’s a space where Zoom serves to empower your teams to connect and bring their best ideas to life.” Eric Yuan, Zoom.
With business transitioning from analog to digital, and traditional to modern work, remote work, video, collaboration, and business technology are developing at an exponential pace.
Pre-pandemic, video and collaboration vendors like Microsoft and Cisco could reel off battle cards with compelling adoption stats and endless features.
One man behind the success of Cisco’s collaboration platform, Webex, was Eric Yuan, now the Founder and CEO of Zoom.
You could argue Eric Yuan has been there and done that. But let’s take a look at the man behind one of the decade’s most innovative companies.
Eric Yuan biography
Eric Yuan is the Founder and CEO of Zoom. He was born and raised in Tai’an, Shandong Province, China.
Reportedly, Eric had been inspired to find a solution to his 10-hour train rides to visit his girlfriend. As such, his first public work of video telephony was in his first year as a university student in 1987, where he developed a piece of bespoke video telephony software.
His education includes:
- Shandong University of Science and Technology (BS)
- China University of Mining and Technology
- Stanford University Graduate School of Business
The most recent of these qualifications comes during Eric’s time as VP of Engineering at WebEx—an online meetings platform. In 1997, Eric moved to San Francisco and was one of the first 20 hires on the WebEx team. In fact, Eric was one of the founding engineers and proved crucial to the success of its online meetings product.
WebEx was acquired by security and networking giant, Cisco, in 2007. Eric took on the role of VP of Engineering for what would become Cisco Webex. Note, Cisco dropped the upper case E from the second half of Webex.
Reportedly, when Eric pitched Cisco his idea for a mobile-friendly video system, it was turned down.
What did that pitch idea become?
Zoom!
And the rest—as they say—is history.
But, my word, haven’t Eric Yuan and Zoom been busy?
Zoom history
In April 2011, Zoom began its journey. By September 2012, its first iteration beta was released. Within four months (Jan 2013), Zoom 1.0 became available to the public.
Within five more months, Zoom had been used by one million different users. It was from this point on Zoom became a mature video conferencing product.
By 2016, Gartner (a global research company) had named Zoom a leader in its Magic Quadrant for Web Conferencing. The same accolades continued in 2017, 2018, and 2019.
In 2018, the Zoom app marketplace launched, housing various Zoom integrations to enhance the work experience within Zoom.
In January 2019, Zoom launched its cloud telephone service (Zoom Phone). This was a pivotal moment that saw it change from a web meeting app to an all-around business communication service.
In April 2019, Zoom went public. Zoom stock shot above its $36 IPO price almost immediately and peaked at $104.49 in mid-2019.
Building on the success of video and phone services, Zoom Chat (now Zoom Team Chat) was launched as an in-app Slack-like messaging platform.
And then in early 2020, the world was rocked by the coronavirus pandemic, with millions of people forced to work from home. In March, Zoom was downloaded 2.13 million times in one day. By April 2020, Zoom surpassed 300 million daily meeting participants.
During a time of insane growth for Zoom, it acquired Keybase—an end-to-end encryption (E2EE) tool for secure messaging and file-sharing.
Later that year, Zoom announced E2EE for meetings up to 200 participants.
Thanks to the addition of Zoom Phone to the portfolio, Zoom was named a leader in the Gartner Magic Quadrant for Unified Communications as-a-Service (UCaaS) Worldwide.
Zoom also retained its leadership in the Gartner Magic Quadrant for Meeting Solutions—making it five years in a row.
At the start of 2021, Zoom announced sales of one million Zoom Phone seats.
In May 2021, Zoom Events was launched to create specific Zoom spaces for virtual experiences.
As a result of Zoom Phone, Zoom Team Chat, and increasing security measures, Zoom reported a first quarter total revenue of $956.2 million, up 191% year over year.
In July 2021, Zoom announced its intention to acquire Five9 for $14.7bn—the largest acquisition in Zoom history.
The deal did not go ahead but now Zoom has launched its own contact center in February 2022.
By April 2022, a brand new Zoom whiteboard was unveiled to provide a better collaborative experience in meetings.
In June 2022, Zoom Team Chat became interoperable with other messaging platforms. Users of Microsoft Teams, Slack, and Webex can now send messages cross-platform.
Fast forward to July 2022 and Zoom Phone now boasts 3m seats. Zoom also announced end-to-end encryption for Zoom Phone and Zoom Breakout Rooms in July.
Then at Zoomtopia in November 2022, it was made official that Zoom Phone has passed 4m seats.
Here we also saw a rather large announcement that Zoom was moving into email and calendaring.
Zoom is now a household name
Like Google and Skype before it, Zoom is now a verb as well as a noun.
“I’ll Zoom you later” and “Let’s have a Zoom” have become commonplace.
We’ve also made our own terms for Zoom-specific emotions and practices. Terms like Zoom fatigue and Zoom-bombing are now seen in many publications.
While these have negative connotations, they emphasize how commonplace Zoom calls have become.
As if you couldn’t get any more Zoom in your life, it became an official partner of Formula 1 in March 2021; in theory, a natural partnership
But some industry commentators have suggested there may be a little gamesmanship involved.
Webex had announced its sponsorship of the McLaren F1 team only a month earlier.
Digging further into the F1 partnership, Zoom was a sponsor of the Virtual F1 Paddock during 2020—a year when everything went virtual and a large number of meetings went Zoom.
Why is Zoom suddenly so popular?
In a busy world where meetings run people’s workdays, travel reduction and productive meetings are key drivers of video conferencing adoption.
“Customers have always said, ‘Eric, we’ll become your very important customer, you’ve got to visit us.’ I say, ‘Fine, I’m going to visit you, but let’s have a Zoom call first. That’s usually enough." Eric Yuan, Zoom.
In B2B, there are lots of comparisons between leading collaboration apps; all competing for a slice of the video conferencing pie.
To gain such popularity in a market so saturated by names like Microsoft, Google, GoToMeeting, and Cisco, Zoom had to (and arguably has) executed on the one thing that makes it stand out amongst competitors: ease of use.
“It would require flawless execution to win,” says one investor who passed on Zoom.
And this means ease of use must continue throughout the entire meeting experience. Something which Eric has been vocal about in the past.
“It’s like a restaurant. When a customer walks into a restaurant, until they leave, the entire experience needs to be great. You can’t blame anything on anyone else.” Eric Yuan, Zoom.
And this is why Zoom became a consumer favorite during the pandemic. The ease of joining, sharing, and participating in a meeting made it simple for me, you, mom, dad, grandma, granddad, and even great-grandma and great-granddad.
Simplicity is the reason Zoom became suddenly so popular for home use. And you might add to that the brand awareness type of marketing activities Zoom has run for some time.
Zoom had been on billboards, airport lounges, and train seats long before the pandemic. So, while you may have been using Zoom for the first time during 2020, you’d probably seen it displayed somewhere.
Is this a nod to Cisco’s huge brand awareness tactics while Eric was a VP there? Only he will know. Cisco has, for a long time, invested in sponsorship activities at soccer matches and other televised sporting events.
Back in B2B, Microsoft houses will always argue Teams is the superior tool because of Microsoft 365 integration. Webex and Slack users are so used to their favorite UIs.
You can read our feature comparison articles here:
It’s safe to say that even being in the same procurement process as these major players is high praise for Zoom.
On competing with top vendors, Christopher Isak, Marketing Leader at GPA, who has worked in the business communications industry for 15+ years, says:
“Zoom achieved more than other video conferencing startups have achieved in a short time span. It started out as a niche tool and could not convince all enterprises to switch in the early days. With a growing number of users and effort spent to make the platform more secure, Zoom has become a more serious competitor in the enterprise communications world.” Christopher Isak, GPA.
As Zoom has moved from a video startup to an enterprise competitor, Zoom’s popularity is undeniable.
It’s not all been plain sailing for Eric Yuan and Zoom, though.
Zoom growth challenges
The main challenge Zoom faced during the early stages of its unexpected hypergrowth was security.
In October 2020, Zoom announced end-to-end encryption for free and paid plans for meetings with up to 200 participants.
On end-to-end encryption—the most important element for B2B comms—Dave Michels, Founder and Lead Analyst at TalkingPointz—an enterprise communications analysis firm, lays out the four phases Zoom laid out:
- Client key management: Zoom meetings will generate and manage private key pairs known only to the client. The clients will use these to generate and exchange session keys without needing to trust the server. Key management will support Zoom clients, Zoom rooms, and scheduled meetings only. Think of this as the level of security for most E2E encrypted platforms today.
- Identity: identity providers via single sign-on can (SSO) vouch for their users without trusting Zoom. Other users will get a warning if their contacts are on new devices.
- Transparency trees: a “trust but verify” stance that forces any deviations from protocols to be discoverable allows for continuous third-party audits.
- Real-time security: those not on SSO can get the same ‘before the fact’ protections as those using SSO.
With Zoom becoming a genuine competitor to industry veterans, nipping any security questions in the bud immediately became Zoom’s top priority.
According to a report by the National Security Agency, only a few collaboration vendors tick all the boxes when it comes to security.
Zoom stock history
Zoom became a public company on April 18th, 2019. Initial pricing was $36 per share.
Before the IPO, Dropbox had already invested $5m into Zoom—despite already working on its own collaboration tool.
By the end of the first day of trading, Zoom’s stock price had risen 72% and was valued at $16bn. A sign of things to come.
But, could any financial analysts predict what was about to happen?
Zoom’s stock price rose from $36 to $102 by July 2019.
Come early 2020 and there was no stopping the traction Zoom was building.
In March 2020, as a worldwide pandemic was declared, Zoom reached a new high of $150 per share.
One considerable dip occurred during confusion over Zoom’s 300 million meeting participants announcement.
Zoom stock dipped nearly 9% in April 2020.
“We unintentionally referred to these participants as ‘users’ and ‘people,'” Zoom confirmed to The Verge. “This was a genuine oversight on our part.”
But as offices shut down and working from home became second nature, Zoom’s stock price continued to rise.
By the end of May, Zoom touched $200.
The biggest spike on the Zoom chart happened during the week commencing August 24th, 2020. As news of the coronavirus pandemic took a turn for the worse, Zoom moved from $298 to $369 in a single week.
Steady gains followed and, on 11th October 2020, Zoom’s stock price was $559.
Is Zoom making money?
Yes. Zoom is making money.
Zoom’s 2021 revenue is reported as 2.7 billion USD. Its Condensed Consolidated Statements of Operations shows a gross profit of $691,243.
Its financial results for the first quarter of the fiscal year 2022 show a first quarter total revenue of $956.2 million, up 191% year over year.
As a result of this, Zoom has raised its total guidance range to $3.975 billion for the full fiscal year.
Zoom also included a statement on cash flow.
“Net cash provided by operating activities was $533.3 million for the first quarter, compared to $259.0 million in the first quarter of fiscal year 2021. Free cash flow was $454.2 million, compared to $251.7 million in the first quarter of fiscal year 2021.” Zoom Video Communications, Inc.
Is Zoom overvalued?
At the time of writing, Zoom’s stock price has leveled out. As COVID-19 vaccination rates increase, the market has decided that Zoom remains a huge tool—but not as huge as it was during the pandemic.
With a market cap of $100.4 billion, Stock Analysis analysts predicted the average rating for ZM stock is “Buy.”
The 12-month stock price forecast is 414.79, which is an increase of 23.13% from the August 2021 price.
Further portfolio additions like Zoom Phone and Zoom Team Chat confirm Zoom is expanding into additional enterprise markets.
Both products have seen widespread business adoption. As of January 2021, Zoom has sold over one million Zoom Phone seats.
In fact, when Zoom surveyed its Zoom Phone users, 90% of respondents said they are now experiencing better audio quality than with their previous solution. 93% also agreed the Zoom Phone solution is more affordable.
Whether you consider Zoom overvalued or not, its innovation is outpacing the naysayers.
So, what comes next for Zoom?
There is no public Zoom roadmap but you can subscribe to planned changes for Zoom APIs, webhooks, SDKs, and the Zoom App Marketplace Platform.
The future of Zoom
When considering the future of Zoom, there are several pieces of this jigsaw puzzle.
Expanding markets
On July 18, 2021, Zoom announced its acquisition of Five9 in a deal reported to be worth $14.7bn.
Not bad going since the company valuation of $16bn after the first day of public trading, eh?
While the contact center market may seem an odd move for outsiders of the business communications industry, it’s an obvious choice according to unified communication (UC) experts.
Blair Pleasant, President & Principal Analyst of COMMfusion—a business communications analysis firm, expects Zoom to dominate the video contact center.
“The introduction of Zoom Phone changed the game for Zoom, indicating the company’s intention to go beyond video and meetings to the full spectrum of unified communications capabilities.
The obvious next step was to offer a contact center solution—as many organizations prefer to purchase telephony and contact center from the same vendor.
Just as Zoom has made consumers and business users comfortable with using video for business meetings and virtual events, Zoom will help make consumers comfortable using video for customer service.
In the next few years, Zoom will leverage its UC and contact center capabilities to provide the “Collaborative Contact Center,” enabling contact center agents, customers, and experts throughout the organization to collaborate and work toward solving the customer’s issue or problem.” Blair Pleasant, COMMfusion.
Artificial intelligence in Zoom?
Alaa Saayed, ICT Industry Director at Frost & Sullivan—a research and consulting leader, agrees with Blair Pleasant’s sentiment.
“Zoom moved from being a frictionless video meetings provider to becoming a full-fledged communication and collaboration platform.I envision the next phase will be to improve experiences with artificial intelligence. Virtual and augmented realities (VR/AR) and gamification elements could create immersive experiences independent of where individuals are.” Alaa Saayed, Frost & Sullivan.
Conquering the rest of the world
Markets like China and the Middle East have been unhappy hunting grounds for telephony and video providers.
Zoom has already announced intentions to expand in Singapore. A new R&D center opened and Zoom plans to hire hundreds of staff there.
Outside of geographies, there’s the seemingly untapped market of the frontline worker. Both Microsoft and Workplace from Meta have alignments with non-office-based workers.
“Zoom must extend its experience to non-knowledge workers. We are talking about a potential market of 2.1 billion workers that also needs to be connected.” Alaa Saayed, Frost & Sullivan.
Dom Black, Research Director at Cavell Group—a business technology research and consulting firm, thinks that the combined adoption of Zoom Phone and a potential contact center acquisition to an increase in the market(s) available to Zoom.
“With over 1.5m Zoom Phone users added in less than 30 months, it shows that this is not a small add-on but a serious competitor.
Furthermore, a contact centre acquisiton highlights not only that Zoom is looking to build a full suite of communication services but also that they can leverage their financial position to bring best-in-class services into their portfolio.
The growth in Zoom Phone and a potential contact center acquisition will only increase their available market as businesses come out of the pandemic and re-evaluate their communications solutions.” Dom Black, Cavell Group.
What comes next for Zoom?
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