The new year has already been good to videoconferencing startup Zoom, a fast-growing competitor to Cisco’s ubiquitous WebEx.
Just last week, the San Jose-based company raised $100 million at a $1 billion valuation in a round led by legendary investment firm Sequoia Capital, making it Silicon Valley’s newest “unicorn.”
At the same time, Zoom disclosed it had 450,000 customers, including Uber and SolarCity, and that it finished 2016 with two cash flow positive quarters, back to back.
Days later, a report from fellow enterprise unicorn Okta indicated that in 2016, Zoom was the fastest-growing app among its subscribers — a distinction previously held by $3.8 Silicon Valley golden child Slack.
In other words, if you haven’t heard of Zoom yet, you probably will soon. Business Insider sat down with Zoom CEO Eric S. Yuan (via a Zoom videoconference, naturally) to talk about where his startup came from, and where it’s going next.
Zooming out of nowhere
Yuan served as the VP of Engineering at WebEx from 1997, staying in the role for years after Cisco’s $3.2 billion acquisition of the company in 2007.
By 2011, Yuan says, he was getting frustrated in the job: Cisco was focused heavily on selling expensive, complex teleconferencing hardware, and acting too slowly to reconfigure the underlying systems behind its meeting software to meet the new demands created by the rise of smartphones and tablets in the workplace.
“That’s what the customer needs, it’s what the industry needs,” Yuan says.
And so, sensing opportunity, Yuan took some WebEx engineers with him and formed Zoom. Yuan’s thought was that if Cisco wants to go after huge enterprise contracts and sell them complex solutions to their videoconferencing problems, then Zoom could go after the largely-ignored market for smaller companies.
From a technology perspective, Yuan says, Zoom’s platform has been engineered for high performance, even when you have hundreds (or if you’re running a webinar, thousands) of people connecting from different devices. For the IT department, Zoom boasts a simple per-user purchase option, as well as fine-tuned security controls.
Yuan says that his team is so single-mindedly focused on making sure that call quality is good and stable that Zoom’s engineers actually go down and write some of the iPhone app in the Assembly programming language — the very lowest gap between the phone’s operating system and the hardware — to eke out better performance.
And for users, Yuan says that his team designed Zoom to be easy to use on desktop, mobile, and even whiteboards. Connecting with coworkers and colleagues is just a few clicks away, Yuan says. Plus, Yuan says, unlike Cisco’s WebEx, you can share your iPhone or iPad screen on a Zoom call.
So far, Yuan says, most of Zoom’s success has come through word-of-mouth…which, incidentally, is how Sequoia found Zoom for its most recent round of funding, Yuan says.
“We don’t spend a lot of money to sell the product,” Yuan says.
The plan for this new $100 million cash infusion, says Yuan, is to change that a little bit with some new spending on marketing. Zoom also plans on opening more international offices, even as it continues to work on its main product.
Still, Yuan says, he’s wary of following the usual Silicon Valley script for successful startups: He’s very aware of how much cash the company is burning, and would rather focus on the fundamentals of the company rather than building hype for hype’s sake. He’d rather run a company that grows slowly over a long term, rather one that burns out young.
“We don’t want to grow [Zoom] too fast,” Yuan says.
As for the $1 billion valuation, Yuan is quick to dismiss the notion of judging a company on the basis of what investors think they’re worth:
“So what?” Yuan says. “That valuation did not help with anything.”
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