How Zoom Dominated the Video Meetings Space Market

Google Meets, Skype, and dry boring and boomer UI incumbent legacy software like Cisco's Webex are waaaaaay behind Zoom's popularity today.

This underdog who is now the main dog:

• has marketshare of at least 40% in video meetings

• has grown by 2,900% from 2020 and 2021

• has 30x its growth since 2019

• has more than 500,000 paying business customers

• has 13M monthly active users

• has 300 million daily participants

• made $4,09 billion in revenue in 2022 (54% increase from the year before)

• is currently worth $20B

How is it possible for a product to brute-force and wedge itself into a well-developed market? Zoom hasn't invented it's own category leader - instead it became a leader in existent one.

How?

By doing product right, obsessing over the customers, and lucky timing.

Zoom's founder and CEO, Eric Yuan moved to US and worked on Cisco's telemarketing tool Webex. Over the years he has established himself and led a team of 750 people as the VP of engineering.

In 2011, Webex Cisco was a success which generated $800M annually. It was also littered with bugs and poor UX/UI.

Classic corpo software.

Orgs that used Webex had the budget and the need. The companies forced poor employees to use it and swallow all the usual corpo software drawbacks:

• jacked-up pricing

• poorly designed UI

• laggy connections

• locked ecosystem

• difficult onboarding and installation...

Back in 2011, Cisco Webex had no competition so they didn't put much into customer care. 

Big mistake! Once you're in a leadership role, you have to work even harder to maintain the distance.

Eric Yuan also pushed for cloud-based functionality of the app. The leadership wasn't interested at the time.

Hence, Eric bailed (🤘🤘)!

As a proper product leader, Eric talked to the customers constantly. Even though the company was making bank, the customers didn't love the product. 

In 2011, Eric left Cisco, gathered $500k of initial investment from his own savings, business friends, angel investors and venture forth on his own.

About 40 engineers came with him. I tend to imagine themas robin hood and the Merry Men in tech.

That year he collected $3M of seed investments and had his first beta testers. In 2012 he got more investments from Qualcomm and delivered his first beta test at the Stanford accelerator.

Since the start, Zoom has focused on the quality of the video. If there's one thing that's important it's how well the moving face looks like on the other side. 

With engineering chops, the Zoom team delivered wicked quality video even with low-bandwith for dozens of participants. 

The one metric they persuaded was lag time below 150 mili-seconds. Why's that? Because people perceived sound delay from video above the 150ms threshold as unnatural. 

The product was amazing! When Zoom officially launched in January 2013. By May 2013, they already had 1M users.

The customer and product obsession continued. When Eric Yuan pitched for series C funding, he didn't put together a dry slide deck.

Oh no no no...

Before the meeting, he asked investors to download Zoom and delivered the pitch on the actual product itself. This way, the participants dropped and picked up their jaws during the presentation.

Badass🤘🤘

In the years from 2015 to 2019, Zoom continued securing investments and working on the product. 

In 2017 they secured $100M from Sequoia capital.

That year they had $60M in revenue. 

In 2018 the rev numbers showed $151 which doubled in 2019 at $351M.

In 2020, Zoom exploded. The Covid years happened and the era of working from home started. All companies, schools, and organizations moved to Zoom to handle our stuff. 

By then, Zoom was already the default option known for best experience. All that obsession on the customer and constant improvements on the product made it an obvious choice. 

Zoom doubled the revenue from 2019 to 2020 (from $351M to $622M and 4x-ed it next year (from .62B to 2.65B).

Insane in the membrane!

Now you use Zoom just like you use gmail for mail, and google for search. You "jump on zoom".

Zoom is one of my favorite success stories, since they were able to beat the incumbents. Google and Microsoft tools have the resources and distribution power. But Zoom was able to wedge in by focusing on the amazing product, constant improvements (they released more than 300 features from 2019 to today), and obsessing over the customer.

It was the opposite of corporate software - it's friendly, cheap, and easy to use. 

3 Savage Tweets

3 Wicked Songs

Punk, endless magic of Lana Del Rey, and a drum and bass party hitter I can't get enough (🎶I'm about to leave you on sileeeenceeee 🎶) 🤘🤘

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Have a wonderful week!

🤘🤘

d.