Do you have dreams of entering a crowded market, packed with competitors like Cisco, Microsoft, Adobe, Citrix, Polycom, etc.?
This is exactly what Chinese entrepreneur, Eric S. Yuan, embarked on back in 2011 when he founded his company Zoom.
In just 6 stressful years he grew his company to $1B. That’s right $1,000,000,000 in company valuation, which is virtually unheard of but he did it and this detailed case study will provide you with the strategies he used and how it impacted exponential growth.
if you’re adept at video conferencing and virtual teams you might have heard of the video conferencing app called Zoom.
The spread of the COVID-19 during 2020 has affected so much of the world to adapt their business models to incorporate virtual team, meetings, Zoom has become almost synonymous with its function (video conferencing). Just like Google (search engine) and Uber (taxi services) are now verbs, so is Zoom.
Zoom had already become a fan favorite for running team meetings since a lot of our team is virtual. We use Zoom for 50-75% of all of our meetings at Walt Digital.
With virtual teams becoming more and more popular, Zoom has evolved from an already-successful IPO to a stock market powerhouse, now worth more than Uber and Lyft combined. According to market intelligence firm SensorTower, first-time installations of Zoom’s mobile app have shot up more than 728% since March 2, 2020.
To sustain that type of growth, Zoom has built offices in Santa Barbara, Sydney, San Jose, Denver, Atlanta, Paris, Kansas City, London, Tokyo, and Amsterdam. The company currently employs more than 2,000 people.
Though they attained funding from investors, they kept attracting funding from venture capitalists because of their insane growth. Zoom has proven itself as a “unicorn,” and as its market cap has now increased beyond $40.3 billion. (Although, Zoom’s founder and CEO Eric Yuan hates the term “unicorn,” and tells Zoom employees not to use it).
Now what did Zoom do to achieve this type of success, and what can you learn? Read on to put Zoom’s current success.
“How did Yuan Do It?”
Here’s a mini background on Yuan so you can get an idea of the experiences that shaped him to become the founder of the juggernaut called Zoom.
Eric S. Yuan is originally from China. In the mid-’90’s, he decided to apply for a U.S. visa but was rejected. He continued to apply again and again over the course of 2 years and finally received his visa on the 9th try. But he eventually arrived in Silicon Valley in 1997 and joined WebEx, a real-time collaboration company with 10 employees.
It took him 10 years to steadily become a VP of Engineering, managing 800 engineers worldwide. And in 2007, Webex was acquired by Cisco for $3.2 billion, and Eric went on to become Cisco’s VP of Engineering. So you may have interpreted, he has an extensive background in tech and Silicon Vally type of businesses. In 2011, Yaun left the company because the new management didn‘t support innovation, the product became outdated, and customers unhappy.
So Yaun decided to create his own customer-oriented video communication tool that actually works “and doesn’t make you want to pull your hair out.” This made the idea of Zoom a customer-driven platform and this was ingrained in Zoom’s company DNA.
This actually the same approach Jeff Bezos took with Amazon, making them the #1 customer-centric eCommerce platform to date.
But for Yuan, after he started his new endeavor, around 40 engineers from Cisco joined him. And together they started building Zoom.
From 2011 to 2013, they focused on building a product with the best experience in the market. During the first limited-access launch in 2012, Eric personally emailed every customer who canceled their service, discovering their reasons. Which can be the best type of data you can receive: learning why someone won’t use, didn’t like, or wouldn’t recommend your services/product.
The main issue user and prospect pointed to: It was a very crowded market. In addition to Cisco, there were several other established players including Microsoft, Adobe, Google, Citrix, and Polycom, as well as newcomers like Highfive, Join.Me, and Vidyo.
Yuan’s solution for breaking free from the competition was pretty simple:
Zoom would build the best product in the market.
Yaun once told the media outlets:
“It’s extremely crowded, but the potential is huge. If our product is better than any others, we can survive.”
But building a product that better than everyone is must be difficult right? Where would you even start with a task of this type of proportion? Refer back to the previous statements above: It’s all about being customer-driven.
“We have a relentless focus on making the best product with the best user experience. This is ultimately what every customer wants. Toward this end, we spend much of our time listening to customers and fine-tuning our software to fit their needs.”
At Zoom, gathering – and adapting the platform to customer feedback is exactly how they’ve been able to build a wold-in-class product. Even the Zoom team gathers this feedback when they conduct Zoom video meetings. (Even employee feedback can be colossal).
Zoom also constantly monitors its Net Promoter Score (NPS), which currently stands at a staggering industry-leading 72.
Net Promoter Score is a management tool that businesses use to gauge the loyalty of their customer & client relationships. It serves as an alternative to traditional customer satisfaction research & is claimed to be correlated with a business’s revenue growth.
In 2013, they launched the product publicly and focused their marketing on these things:
1. The product itself is viral (you need to invite somebody to have a video conference), so the #1 goal is to make you happy with the quality.
2. Freemium (free unlimited 1-on-1 calls, free conference calls up to 40 minutes. Zoom decided on 40-minute limits because research showed that 45 minutes was the ideal duration for a video conference.)
3. They removed all the friction: made the ability to join the call without signing up, without installing software, in 3 seconds, just by clicking a link. That boosted virality even more.
4. Offered the service to educational institutions globally. 1,400 joined.
5. This is huge! They established partnerships with software providers:
6. Added a video component to Redbooth.
7. Created a program named “Works with Zoom”, which established partnerships with Logitech, Vaddio, InFocus, and other hardware and software vendors.
8. Zoom managed to have its software integrated into InterviewStream, a company that provides remote video interviewing capacity for employers.
9. The media started to test the new service and write awesome reviews, spreading the word out even more.
10. Spared no expense when it came to promoting their brand: NBA Game arena branding in exchange for free use of the technology (displayed on scoreboards, digital signs, etc), 1+ Million Twitter follower count, Billboards, & much much more. This branding actually shortened sales cycles because of their increased confidence in the brand of prospects.
Results:
+ In 2013, 3 million people participated in a Zoom meeting, in 2014 Zoom had 30 million, & in 2015, it grew to 100 million.
+ Now they have over 400 million people using their service.
+ Company now employs ~2000 people.
+ They raised some venture funding and achieved a $1B valuation.
References used: Drift.com & Aladdin Happy
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