With millions of people being forced to stay home to help stop the spread
of COVID-19, many have found creative ways to virtually stay social –
happy hours, trivia nights, birthday parties and Zoom, one of dozens of
video conferencing services, has risen to the top thanks to intense
separation measures and a profound resonance with this new social
distancing culture.
I think it's the Steve Jobs phrase that he used to talk about when he
described products. It just works.
When using Zoom, it's much more pleasant and also more easy to have it be a
conversation. The company's stock rose 67 percent from the beginning of
February to the end of March, while the S&P 500 went down 20 percent.
Daily downloads of the Zoom app have increased 30 times year over year,
and it has been the top free app for iPhones in the United States since
March 18th. And the fact that Zoom is growing, you know, 90 percent
while, you know, Skype is likely shrinking, WebEx is likely shrinking,
tells us Zoom is gaining share at a really high rate.
This tech darling, originally servicing mostly businesses and universities,
is now in the business of connecting everybody in a time when separation
is so important.
It's deeply human. I think in these times of isolation, the idea of the
connection, of empathy, and of knowing you're not by yourself is so
important. Let's take a look at how Zoom became the go to platform, how
it's handling the influx of users and whether the company's success can be
sustained after offices open back up.
Zoom hit the stock market in April of 2019 with huge success.
And after just three days of public trading, it became the most valuable
stock to go public up to that point of 2019.
There is a sense that these guys very much are the hot IPO for big
tech for the year. Investors liked what the company was doing, despite
numerous competitors like Microsoft, Google and Cisco, who already had a
stronghold on the video conferencing market.
When they went public, they were more than doubling their revenue at a
really impressive scale of, you know, several hundred million dollars and
doing so while being profitable and actually generating cash.
The company remained a popular stock, but it really took off at the
beginning of February 2020.
If you ask me what the key to this market is it Zoom.
I mean, it's a Zoom economy.
You heard Hans talk about it.
This not changing. It is technology that comes from a person who knows
very well that little category.
Eric, you on the CEO used to be the head of engineering for WebEx, and
that was before it was bought by Cisco in 2007.
And so he knows that category in a way that most people don't.
But there are so many other services like Zoom – Skype, FaceTime, Google
Hangouts and business solutions like WebEx, Microsoft teams go to meeting
and others. Microsoft and Cisco are so deeply embedded in enterprise.
If I'm a big Microsoft shop, I'm not ready in this environment to say, let
me experiment with Zoom and see what happens.
I'm just going to double down on Teams are going to double down on WebEx.
Skype alone has 40 million daily active users, a 70 percent jump month over
month. Talking business, Cisco's WebEx platform expected to host 13
billion meeting minutes in March.
But Zoom has surged to the lead.
Zoom said it's on a huge spike in users in March with 200 million people
per day, up from about 10 million per day in December.
Zoom is experiencing a network effect because one person use it, then that
person says, hey, I am doing a video call and I'm doing it on Zoom.
Please join Zoom. Next thing you know, you have five more people using it.
And it has been able to handle the increased popularity.
Zoom has been careful to put resources in bolstering its capabilities
during this high usage time.
The chief financial officer, her name is Kelly Steckelberg, she said that,
hey, already we are careful about how we use our infrastructure.
We make sure that our infrastructure is never going beyond 50 percent of
the actual capacity of the infrastructure, so that basically there's never
a situation where all of our servers are maxed out.
Zoom is a cloud based platform based on Amazon's AWS and Microsoft's Azure
servers. So if Zoom sees a huge spike in meetings, it can easily access
more space, which has given it a lead over its competitors.
I think the reason Zoom has much more reliability over the other people is
because it was built to be a cloud native solution.
Microsoft Teams is using a combination of, I believe, SharePoint as a
backend as well as Skype.
And so you're using code that was written more than a decade ago and
trying to make kind of make it fit in a cloud environment.
WebEx was built for hardware meeting rooms, right?
It wasn't built for, hey, bring your own device and mobile devices.
And so that is why I think Zoom is scaling a lot better than these other
people. Zoom's easy to use interface and free option have turned it into
the go to platform for fitness classes, university classes, family
meetings, happy hours and dance parties.
There are even Zoom weddings now.
Now this pandemic is making us realize that we like kind of want
relationships that matter and that will survive through like this distance
that we're in right now. And it's like self-isolation that we're in right
now. That's Ileana Valdez and Patrycja Gorska, two university students who
created a Zoom based blind dating service called OkZoomer.
We were expecting like maybe 200 people to sign up.
We would just manually match them.
And then we were reaching like six hundred like a few hours.
And we were like, we need more people working on this.
OkZoomer now has about 13000 unique users.
But OkZoomer is just one of many clever ways people are connecting on Zoom.
Weddings, bachelor parties, bar mitzvahs, meditation sessions.
Gary Goldman and Anuva Kalawar have organized daily Zoom based events,
including wellness seminars and a talent show for their organization Out
in Tech. They're calling it Queers on Zoom.
We wanted to provide a digital platform Mondays through Fridays for the
hundreds and thousands of LGBTQ techies in our communities.
We've had everyone from a 13 year old student and her dad to the CTO of
Axios join.
And it's been the go to platform for preschools, great schools and
universities who now hold online classes.
I'd never taught online before in any format.
I had a lot of uncertainty about exactly how it would work, and I also had
assumptions about it that that proved to be incorrect.
Jeannie was not alone in questioning her work school and life would
continue online, but adaptation led to some interesting results.
You're looking at their face.
You're really seeing their expressions, and they're about as close to you
as you are to them and to everyone else.
And you can you can really engage in this exchange, in this conversation,
in a way. In some ways, it can be better.
But bringing all of our social activities online has brought some privacy
concerns along with it.
All of a sudden, millions of people around the world, including some
powerful dignitaries, are broadcasting themselves online.
Zoom has been sued for sharing user data with third parties without users
knowing. In 2019, Apple had to silently update its macOS after a
vulnerability was discovered that allowed any website to forcibly join a
user to a Zoom call with their video camera activated without the user's
permission. Zoom released a fixed version of their app as well, and Zoom
worked with Apple to resolve the issue.
Some publications are commenting on Zoom's privacy policy, claiming the
company has more control over video content than users would assume.
New York Attorney General Letitia James wrote a letter to the company
asking if any new security measures had been put in place to protect
users since the sudden increase in traffic.
Zoom's says whether you are a business or a school or an individual user,
we do not sell your data and details how users can manage their data on
Zoom's platform. I do think the more of these sort of incidents that
happen, it's going to be maybe it might create a little bit of incremental
pressure on Zoom.
Some schools are requesting or requiring teachers to record their Zoom
classes, which can create an uneasy space for students.
My school is recommending that or maybe requiring that every teacher
automatically record all classes this semester.
If you say something that's wrong or that you actually happen to disagree
with even only seconds later, that that's OK.
That that's part of it.
That's part of the process.
And I think that the recording gives me gives me some concern.
Another recent privacy concern involves Zoombombing, where a malicious user
will join a Zoom meeting and show explicit or disturbing images.
This could be bad for business since many schools are relying on Zoom to
conduct classes.
And if these obscene, violent interruptions become more frequent,
administrators might seek another platform.
There's going to be a debate out there about content on Zoom, right, and
are they going to be responsible for monitoring and controlling the
content that that happens on on the platform in the way, again, like a
Twitter, right has an entire army of people who are dedicated to
monitoring content. There are ways that users can protect themselves.
Hosts can set passwords on meetings and have a meeting as being recorded,
participants who don't want their faces shown can simply turn off their
video. There is nothing I think unique to Zoom that wouldn't happen under
other video conferencing technologies.
I think it's very much just a hey, it's incidents that happen and it's an
easy kind of report for press to kind of run with.
But I wouldn't necessarily say like this is something that if Zoom does
take seriously, is going to really weigh on.
Zoom CEO Eric Yuan issued an apology for security lapses that have been
reported this week and said the company will double down over the next 90
days to fix any issues.
Another concern is what's going to happen when people go back to work,
school or get back to their lives at home.
Zoom makes most of its revenue off of its video conferencing
subscriptions. But much of the recent spike in usage comes from people
signing up for free accounts.
Zoom itself has been vocal about saying we're not sure how much we're going
to be able to create revenue and ultimately profit out of all of these
free users we're accumulating.
I guess I'm asking whether you think that a lot of the spike in demand
you've seen over the last couple of weeks will stay with you for the long
term or whether it will immediately drop off again when we see this virus
subside? That's good question.
I do not know. After all, Google, Microsoft and Cisco, creators of Google
Hangouts, Skype and WebEx, respectively, have very diverse businesses.
They aren't just focused on video conferencing.
Microsoft isn't going to be nearly as aggressive.
Neither will Google because they have so many other things to worry about.
Zoom does have a few other products, though.
Zoom has this big thing right now called Zoom Phone.
Basically, Zoom is going after the cloud phone or PBX market to build a lot
of business. This is the way that they're monetizing.
There are so many, I imagine, vertical use cases where you can take this
technology, package it up for a specific vertical and then sell it as a
different solution.
Zoom expects many of the free users not to pay for Zoom once social
distancing measures are lifted, but hopes the positive experiences had
during this time will encourage businesses, schools and others to start
paying for the service or adopting other Zoom's services.
I think that even after this crisis is over, I'm pretty sure a lot of users
probably still want to use Zoom at home.
Zoom seems to be in the game for the long haul.
If it can survive a post covered 19 world and can continue to fix privacy
complaints as they come up.
Companies are going to see firsthand the limitations of using Teams for
video conferencing, of using WebEx and start to say, hold on, we need to
re-evaluate what solution we're using and that I think opens the door for
Zoom and even Slack for that matter.
And it could have a lasting effect on the way we interact with our friends,
families and co-workers.
I was supposed to have several makeup classes because I was going to be
traveling. And I realize now that if I had Zoom as a possibility, I
wouldn't have had to cancel classes.
If folks really wants to keep it going, then it's a relatively low lift,
specifically considering that we have volunteers in the Zoom accounts and
a great community. We can build up enough of a user base and stuff like
that, sure. Absolutely.
If not, then I think it was a fun project we tried.
Whatever the future holds for Zoom as a business, Zoom has certainly left
its mark on the culture of our unified quarantine.