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There’s been a lot of talk about the consumerization of IT in the workplace. But in the case of Zoom, the pandemic forced the high-flying video conferencing service to rapidly shift gears in the other direction, with some painful lessons along the way.
Zoom founder and CEO Eric Yuan said despite the company’s culture of trying to see the world through its customers’ eyes, many of its assumptions were called into question when a wide range of consumers suddenly began using the platform for everything from distance learning to virtual cocktails with friends.
“On the one hand, we were very excited, because after many years of hard work your dream is coming true of helping people stay connected,” Yuan said. “But then suddenly you have 30 times more growth than you were expecting, so how do you handle that? You’ve got to work harder.”
Yuan spoke on the second day of the Web Summit mega-conference, where the impact of the pandemic on work and technology has been a big theme this year.
Founded in 2011, Zoom initially targeted the kind of customers who had been using Cisco’s WebEx. Yuan had been an early WebEx employee and stuck with the company when Cisco acquired it. But after several years, he found himself losing motivation because customers seemed increasingly unhappy with the product.
“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,” Yuan said.
He knew that despite a large number of video conferencing options, the company wasn’t meeting business customers’ needs. Still, he had a famously hard time raising money for his new startup, with a long list of venture capitalists taking a pass. Looking back, he doesn’t blame them.
“I think they were not wrong,” he said. “Because it was indeed crowded. Nobody thought the world needed another video service. However, I spent a lot of time talking to the customers. I knew the market potential was big because nobody liked the existing products.”
Time proved him right, and Zoom went public in 2019. At one point, it was the best-performing tech IPO of 2019. The video conferencing company priced its IPO at $36 a share and saw it pop 72% on the first day of trading before eventually reaching $102.30 per share in June. It closed in late December at $66.64 per share, as investors felt it faced growing uncertainty heading into 2020.
Then the pandemic happened. The company had been preparing for growth, but nothing like the tidal wave that hit.
Zoom reorganized around the new reality, and Yuan had to rethink how to onboard employees as the company sustained a rapid hiring pace. A year ago, Zoom had 2,400 employees, and now it has 3,400. Like many companies, it had to devise new ways to impart its culture to employees who had never met in person while making sure the new hires felt integrated into the virtual workplace.
More dramatically, consumers flocked to Zoom, which went from business tool to cultural touchstone, becoming practically synonymous with video calls. People were no longer Skyping. They were Zooming.
Initially, the company was overjoyed. Zoom’s daily meeting participants exploded to more than 200 million in March from a previous high of 10 million. As VentureBeat’s Emil Protalinski wrote in April: “Let’s put those numbers into context. Skype’s daily active users grew by 70% month over month. Microsoft Teams’ daily active users jumped 110% in four months. Zoom’s daily active users exploded 1,900% in three months.”
The stock market applauded, driving Zoom’s stock up to $559 per share in mid-October. But there were stumbles and some black eyes as the company struggled to adapt.
While Zoom offered a certain ease of use, some of the settings left consumers vulnerable to “Zoombombing,” when an uninvited participant crashes a Zoom video. The company had to change the defaults on its K-12 program settings so teachers had more control over who enters a virtual classroom and what can be shared. The Electronic Frontier Foundation even issued a consumer’s guide to Zoom settings.
Security proved to be an even bigger embarrassment. Success brought more scrutiny, and soon the company seemed to be facing daily headlines over security flaws, privacy breaches, lawsuits, and investigations. Eventually, Zoom announced it would stop all new feature development until these problems were fixed. In October, Zoom announced a gradual rollout of end-to-end encryption for all customers.
Looking back on this period, Yuan said the fundamental problem was a failure to see the world from the eyes of these new consumers. Security, for instance, had typically been something addressed by the IT teams of enterprise clients.
“Normally, the enterprise IT team working together with us would enable or disable some features,” Yuan said. “With consumers, we have to take this approach further, and so we’re learning quickly. And that’s why we have to change our internal approach.”
A post-pandemic world
With vaccines arriving, Zoom is again facing uncertainly. Over the past six weeks, news about vaccine progress has sent its stock plunging, while new vaccine obstacles can push it right back up. Clearly, Wall Street isn’t convinced the world is going to continue using video conferencing at the same rate once schools and offices reopen.
Yuan generally agrees, but he’s more optimistic that the exposure to video conferencing will lead to some fundamental and enduring changes. In terms of business travel, for instance, he argues that it’s going to be hard to justify many traditional trips, given their expense, time requirements, and environmental impact.
As for offices, he believes a hybrid model will emerge as companies experiment with different mixes of remote work.
“Maybe today and tomorrow we all can work in the office,” he said. “And next week, we can all work from home. It shows you can have more time, and you have some control to be with your family and to get what you want.”
Yuan sees more dramatic changes as 5G networks become ubiquitous over the next decade and augmented reality allows for richer interactions over video. These tools should bridge more of the distance between real-world and virtual meetings.
“We’ll feel like we’re sitting in that same Starbucks and drinking a coffee together,” he said. “Anyone, no matter where they are, will always feel like they’re in the same place together.”
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