The Ides of March 2020 marked a veritable reintroduction of Zoom to most of the world, as a tsunami of consumers suddenly, unexpectedly needed a platform for virtual connection and real-time collaboration — not only for work, but for family dinners, classes all the way from primary school to post-secondary programs, weddings, and everything in between.
But the company, founded as an enterprise technology nine years earlier, was initially more underdog than pack leader, having entered an already-crowded market with less initial funding than many of its competitors. So how did Zoom, under the leadership of founder and CEO Eric Yuan, zoom ahead?
According to Yuan, by spending a lot of time talking to customers — and, still now, not getting comfortable or arrogant as the incumbent. He saw where competing products failed to keep customers happy, and pushed in those spaces in order to survive.
“When it comes to software as a service, if your service is not good, customers have flexibility,” says Yuan. “ In particular, for our market, it’s very easy to switch to other solutions. That’s why we have to look at everything from the customer perspective.”
Yuan began his career as one of Webex’s first 20 employees, back in 1995, writing code. He was promoted all the way to VP of engineering when Cisco acquired Webex in 2007. He saw the need for not only a better product, but a better business model, and left to launch Zoom in 2011.
Self-learning, self-motivation, and gratitude reign supreme in hiring choices as well as product ideation at Zoom — and those tenets account for Yuan trusting his instincts with the freemium (vs. free trial) business model and accessible price-point that so directly launched the company to the fore.
Here, as part of the Iconversations series, Yuan talks with Greylock General Partner Sarah Guo about the path of real-time, virtual collaboration so far — and where he sees it heading. (For starters, Yuan says, “I think we just started.”)
You can watch the interview on YouTube here, and you can listen to the conversation here:
Hi everyone, welcome back to Iconversations. I’m Sarah Guo, a general partner at Greylock. I’m incredibly honored to welcome Eric Yuan, the founder and CEO of Zoom, a now-legendary company and technology that needs no introduction.
While millions of users have used the platform for years, the past 18 months of unforeseen circumstances have spread and intensified the use of Zoom to the point where this is even called the “Zoom generation.”
As the pandemic shifted work, education, entertainment, and pretty much everything else online, Zoom has grown exponentially. By April of 2020, the company was handling 300 million daily meeting participants — representing 30-times growth from December of 2019. We joke internally at Greylock that when we do comparison charts to benchmark our companies, the curve of Zoom always goes off the page, [and] we have to ignore it.
This great rethinking of how we interact with one another is here to stay, and as we gradually re-enter our physical world, Zoom will continue to play a critical role in our lives.
Zoom wasn’t even close to the first video conferencing platform; it didn’t raise as much venture money as many Series B or Series C companies today; and it faces a field of massive, deep-pocketed competitors. But its journey from unlikely upstart to becoming the recognized best solution — and a durable iconic company — serves as an incredible business lesson to entrepreneurs whose missions place them in crowded fields.
Zoom is the legend I’m thrilled is true: the generous, grounded, and customer-centric founder; the best, easiest to use product that actually works; and the innovative business model.
Zoom is the story, to me, of the good guys winning.
Eric knows all about being a challenger, and being the [one] challenged. He began his career in 1995 at Webex as one of the first 20 employees. And in 2007, Webex was acquired by Cisco, effectively making Eric a VP of engineering at the incumbent. The desire to make a better product drove Eric to return to the startup world, and he started Zoom in 2011. Today, Zoom is an $80-billion public company that serves a third of the world’s knowledge workforce.
Let’s talk about all the ways in which Zoom — and Eric, personally — have been able to compete and win, to rise to the occasion of the challenges of the last few years, and how they continue to innovate today.
Eric, thank you so much for being here. I am grateful for our friendship, and for you giving your time to our founders when you’re quite busy keeping the world economy running.
Yes, Sarah, thank you so much for having me. You’re such a great friend. I always enjoy talking with you, anytime. Thank you.
I’d love to start at the beginning. Tell us a little bit about your background.
I was born in China. Being a kid, I was always fascinated by the high-tech stories here in Silicon Valley, like HP or Apple. I really like technology. And I was dreaming about, Hey, someday, maybe I should go to Silicon Valley.
Early 1996, I was still in China, and I knew one of the co-founders of Webex because I traveled to Japan in 1995 for a technology show. Microsoft co-founder and CEO, Bill Gates, he was there, gave a keynote speech talking about the internet. I was so impressed. And I [thought]: I need to figure out a way to go to Silicon Valley as quickly as possible to embrace the first wave of the internet revolution.
Webex sponsored my H-1 working visa, and I came here in 1997 to be a senior software engineer. I wrote the code for Webex for many years, and then [was] promoted: to senior manager, director, and all the way to the vice president of engineering at Webex. I was stuck on real-time collaboration technology since 1997.
First of all, I feel I was so lucky to join Webex. Webex was an early pioneer for data collaboration. Not about a video, but again, still about a real-time collaboration. And I did not know data technology until I joined Webex — for several years — and I realized, “Wow, this is something I really, really have a passion [for].”
Just in terms of the technology itself, you have now been working in real-time collaboration for a long time. What I’m interested [in] about you [is]: Why have you stuck to it?
When I was in college, my girlfriend lived in a different city, and [it was] really hard — really, really hard — to see her. Probably, at most twice a year. At that time, I was daydreaming about: Hey, maybe someday in the future I can have a smart device [where] just in one click, literally, I can talk with her, see her. For people to stay connected no matter where they are — I think it’s very important [to have] that kind of a product become mainstream. That’s why everything, while working for Zoom, is to try to make the product better. I feel like, Wow, I’m very, very excited every day.
I remember some years back when I cold called you at Zoom. You were nice enough to have lunch with me, and I remember you said something that seemed quite weird at the time, honestly, but has come to be true.
I asked you something along the lines of: Why are you doing this? And I was struck by how personal the answer was, because it wasn’t anything about the secular trends, which are of course true. It was like, “Sarah, I just don’t like that we have to go travel and drive around meeting people. I hate getting in the car for an hour to get to somebody across the Bay. But I miss my people.” And I thought that was really great.
Webex, as you said, as a pioneer, was a really small company. You just started as an engineer. What was it like building the product? What was the customer reaction? What was the competitive environment like?
I can tell you it was not that easy. And because the market was so crowded back then, almost everyone told me that, “You know, you better focus on something else. There’s no way for you to pull it off. The world does not need to have another product like that.”
And, good news:
“I did spend a lot of time talking with the customers. I knew back then that none of those products would make a customer happy. And then I realized: If I can build something better than any other solutions to truly deliver happiness to those users, at least I have a chance to survive.”
I remember back then every day the thing I was thinking was just how to survive. Always thinking about making our product better — then I can survive. I always conveyed that message to our engineering team, as well: If we want to survive, our product must be better than any other solution.
Did anyone at Webex in the early days believe it would become as big as it did?
I was part of the early Webex team. I wrote a lot of the code. But at that time, the company was already sold to Cisco. Cisco was a great company. And [yet] every day, I did not see a lot of happy customers. And because the Webex architecture was data collaboration, [I knew] usability [was] not there yet.
I tried to convince others to build a new solution from the ground up. And many others told me that I was crazy — that the world probably does not need to have a new solution like that, the future of collaboration was really about enterprise social-networking, something like a Facebook for enterprise.
And finally [I said], “Yeah, I’m going to leave to pursue my own dream.” I had to build a new solution. Some very good engineers did follow me to realize that dream.
Was there a particular turning point that made you decide to strike out on your own? How many years were you at Cisco post-acquisition?
I think for the first two or three years after acquisition, I was pretty happy there. Until [the] 2009 or 2010 timeframe. I was corporate vice president, managing almost 1,000 people, and every day when I showed up in the office, I [would] feel like, “I better not go to the office.” The reason why? I was not happy, and that influence for others — I can see that. So that’s why every morning when I woke up, back then, I really struggled: “Should I go to the office, or should I stay at home?” At that time, you cannot work from home.
And also, the year 2010, when I was 40 years old, I remember that in February one day I woke up — I still remember that morning — [and] I said: I’m already 40 years old. I live in Silicon Valley – I call it “startup valley.” If tomorrow I’m going to retire, do I regret anything? The number one thing I immediately thought about was, Wow, I did not start a company. Then a sense of urgency: [that] I had to start something, otherwise, I’m going to regret [it].
That day, actually, I accelerated my dream to leave to build a new company.
Well, we’re lucky you did.
You clearly led a lot of people before, but it was your first time being a CEO and being a founder. What was your philosophy on team building? You mentioned a lot of great engineers followed you, but what do you look for in people overall?
I think normally [when] you look at team building, there are two ways. One way is: You hire a very experienced senior leader, and count on this leader — he or she can build a team. That’s one option.
Another way is: You build a team from the ground up. You build a team first, and then you hire a leader to make your team more scalable. We’ve tended to always have the team first, and then we’ll hire leaders.
And when it comes to hiring team- or team-building leaders, we always look at self-learning and self-motivation. Those two things are extremely critical to us, because every startup company is different. You have to learn new things, and plus, we are all adults, everybody has so many problems. If I need to spend time to motivate our team, I really don’t know how to balance. I want to make sure everyone is self-motivated.
Another thing is very important: We like to hire those people with a “gratitude attitude.” Meaning, you’ve got to be grateful. Because, otherwise, even if you’re making very good progress, someday, if you’re not humble enough, you become arrogant. You do not feel grateful anymore, and I do not think you can’t make any more progress. That’s why self-learning, self-motivation, and gratitude are extremely important when it comes to hiring leaders or team building at Zoom.
So, tactically, that makes sense to me. For the CEOs on the call, and for any of us investors and board members: Smart people are not going to tell you that they’re [not these things]. You may be able to tell that they’re arrogant very quickly. But they’re not going to tell you that they’re not motivated or that they’re not learners. Everybody likes to think they’re motivated learners. How do you assess that? What do you ask people, or what do you try to learn about them?
Great question. If I interview someone, I tend to ask a question about, “Please share with me a story when you had a down time. When you are facing a challenge, how did you come out of that challenge? You did it by yourself?” Like, last year, when we were facing all kinds of challenges, our team — they were all self-motivated. You do not need to push them to do this to do that. They know what to do. They’re all working very hard, proactively. I think that’s a central motivation.
And recognizing or giving credit to others who have helped you, and seeking that help.
I think one of the things that people are going to be most fascinated by is [that] the core innovations in Zoom were not just technology, but also a business model. And this predates me slightly at Greylock, but I remember looking back with awe at the Zoom Series A deck in 2012. It’s all like seven slides, by the way.
Zoom was built in-cloud and employed a freemium model, and back in 2012, this was not obvious — this is risky innovation. You had “community marketing” and “product-led [business] model” in your mind when those were not terms that people knew. Instead of the individual viral adoption that connected to an enterprise and channel sales model, what made you convinced that this was the right strategy for Zoom?
I think you’re so right. First of all, I think I also made that mistake as well, when I started.
When I started, I always thought: “Hey, just focus on the product. If a product works everything else will follow by itself.”
I think I was completely wrong. After the product was ready, I realized, even if your product is ready: How do you get those first adopters to try your product?
So then, at that time, we thought: “Wow, we have to be creative about the business model, as well.” You cannot make your business model very complex. That’s the reason why we introduced the freemium model. Good news: Zoom does have a network effect. So: how to make sure [that’s] facilitated, for the users to easily go to your website, sign up [for] an account for free. And they can use that forever, maybe some limits on features. At least they can expose your product to any user [if you] make sure to simplify the business model.
Then, later, I realized the business model is also very, very important. Even if you think your product is better, you have to simplify your business model — make sure everyone [can] know how to try out your product, how to share your product experience with others.
That’s why, here at Zoom, simplicity is everything. Our product development, business model, the pricing, our packaging, our internal system — everything is really about simplicity.
Thinking again about the early days of Zoom, you did get to tens of thousands of active users and callers by the Series A. What was your confidence level at that time, in a few years? Were you ever daunted by the competition? Did you have the same ethos of, “We’re just trying to survive here” like you did at Webex?
Yes, in particular for the first several years. Every day, seriously, I just thought about one thing: how to survive. Because I think all those friends were right: The market was extremely crowded. And at that time, we knew we can build a better product. But we just had no idea how to survive. That’s why, every day, I think about [it]. We were kind of paranoid. Every day you are thinking about how to save money and how to make a product better.
And until — , I think it was the Series C — we reached a certain meeting [to] finally feel like, “Wow, we have a lot of money in the bank now.” But, seriously: [It’s] not the money. It’s really about their trust — from all those investors. That’s why I said we have to work even harder, and to survive.
Even today, I still think about how to survive. We’ve got to be paranoid. We never thought about: Zoom can become a big — a very successful — company. I always thought about: Hey, we’re not far away — to be another good company anymore. And that’s why, I think, you have company culture. Always look at the customer. For me, I always look at employees. Don’t become arrogant, and be paranoid.
I don’t think I’ve ever had a conversation with you that was about business or technology where at some point you do not say “happy customers.” You talk about [it] a lot. It’s a very consistent drumbeat, and it sounds so simple. At the surface level, you’d assume every company cares about happy customers.
Can you describe why you talk about it so often? And why you think it’s any different than any other company?
Because, I think, first of all, when it comes to software as a service, you offer service to customers. If your service is not good, customers have flexibility: they can cancel your service, go to other solutions. In particular, for our market, there’s so many other solutions out there. It’s very easy to switch to other solutions. That’s the reason why we have to look at everything from the customer perspective.
We do all we can: make sure our product is better, price is better. When it comes to interaction between customers and our support team, we have to let the customer know we truly care about them. Otherwise, they can switch to other solutions. That’s why. How to build their trust, how to make sure they’re happy customers.
If they feel happy — even if it’s very easy to switch to the other competitors — guess what? They will not. Because the trust is already there. They know Zoom is a great company to care about them. That’s why happy customers can really help us, even if we are competing in this very crowded market.
I believe that people at Zoom care about me as a user — and happy customers overall — more than many other competitors. How do you get that to happen? How do you convince everybody in your organization to think that way?
I think it’s everyone. First of all, you need to make sure it’s part of the company culture and value. At Zoom, our company value [is] just one word: “Care.” Meaning, care about a community, customer, company teams, as well as yourselves. Make sure you set up the company culture and value to embrace customer happiness.
Another thing is: Really lead by example. In early days — and it’s just the online subscribers at that time, the $10 a month — when I saw the cancellation [for something that was] just $10 a month, I personally wrote an email to them.
Seriously, and quite often, I got an email response back. They say, “I do not like Zoom. You’re not the company CEO. Why are you saying the company CEO? You sent me this email.” And they thought I’m just a marketing person. I said, “No, I’m a real CEO, and let’s have a Zoom call.” And it turned out, by doing that, we did have a lot of very loyal customers.
“If you set up an example, lead by example, have a great culture, and focus on that — I think that’s the the way to go.”
Thinking more about the culture: At Zoom, you’re in the business of making virtual connection possible. And there are lots of circumstances where that’s the best, or only, possible solution. But you talked about the importance of deciding to go into the office at Cisco or not, when you were not positive. You were as much [of] an in-office guy with an office culture before the pandemic. Why and how has your thinking evolved on that now?
I think, prior to the pandemic crisis, we all worked in the office environment, and we enjoyed the social interaction. Sometimes I give our employees a bigger hug when they close the bigger deal, but now I cannot do that.
First of all, Zoom does not have those cool features — like a remote hug, remote handshaking — and that is one of the problems. Another problem is, if you are stuck at home for such a long time, I also realized that mental health, anxiety, depression, are real problems. Seriously real problems. Because we are human.We need social interaction.
However, if you are letting employees go back into the office five days a week, also let them [decide where] work is. Because, nowadays, you realize there’s no productivity loss. Sometimes we do enjoy working at home. That’s why we have to shift our thoughts from employer-oriented, in the working policy, to employee-centric working policy. Give them flexibility. I think that’s the future. Because flexibility is a key for employee happiness.
OK. Let’s switch gears a little bit and talk more about the pandemic, and all the changes that brought.
In March of 2020, it must have felt like being hit by a truck or a tsunami. Zoom went from an enterprise to a consumer product overnight. I also remember that you, at some point, told me, “I got friends who became consumer founders. I think that would be interesting, too.” So you got to do that, too.
But all of that change could have broken many companies, and it’s incredible to me that you just kept Zoom at least up and running — and thriving. What was that like for the business? Give me the play-by-play: How did you deliver against that surge in demand?
Yes, so, wow, it just feels like yesterday. You are so right. I think, prior to the pandemic crisis, we were already a faster-growing company. I had a peak-day run with 10 million daily meeting participants, December timeframe, 2019. And back to March or April, year 2020, guess what? The daily meeting participants all the way jumped to more than 300 million daily meeting participants. More than 30-times more traffic.
How to survive is really hard — really, really hard. Because we had to add capacity: data centers in India, Japan, Europe, here. And around the clock. I, personally, had way more sleepless nights than any time in my career, and our team members as well.
And, especially: Zoom was built for enterprise customers. Suddenly, over the night, we had so many consumers. Even for our product user-interface, we had to change.Not to mention we needed to figure out a way to tell those first consumers, We have so many security features. Tell them how to enable and enable.
Then we realized we had to change our product philosophy. Meaning: Not only do we offer a service, but also we should play a role of IT for consumers. Because consumers — they do not have a CIO, they do not have an IT team. So we hired a lot of people and also changed the product philosophy. And, even doing that, still you’re facing all kinds of challenges. The crisis, the very negative PR, and a lot of things.
And the good news, actually — I always told our team, myself included: “Let’s move forward.” I think about what we can do to leverage this timeframe to truly help the world. Let’s fast forward to 20 years. When we look back, we do not want to regret. We know that Zoom is a great company. We have a great company culture; we really care about our customers. All the challenges are just short-term.
By doing that, I think, we survived. Because we have a great intention; we really want to help the world. So that’s why we were facing all kinds of challenges. The good news: We survived.
Yeah. And one thing that I imagine is true now, that happens with many of the great entrepreneurs we work with, is they get to a certain point in success and then they’re like, “Oh look, there are more things we can do. There are more things that we can add to the world, and there are more problems than I thought there were.”
How have your ambitions changed for Zoom — or your thinking on use cases changed —
since a couple-hundred-million more people started using it?
Yes, you’re so right. When we started, I can tell you one of the key reasons probably a lot of investors, or even friends, did not invest in Zoom [was] because we were too ambitious. We wanted to build more services, at least I remember in my first slide deck. And, later, I realized you have to focus. Focus on one thing, get it done extremely well. And that’s the first thing.
Along the way, for sure, there are so many new opportunities. However, to balance the focus and embrace new opportunities — it’s not that easy. But the philosophy here at Zoom is: We always want to listen to our customers.
Several years ago, we introduced another service because of our customer feedback. Internally, we have a lot of new ideas, new services — but if you do not focus on the customer experience, if you really do not solicit feedback from customers, it’s very easy for you to lose the focus. And when you lose the focus, I think, very soon your product may not be the best.
But maybe, I still think, I made a mistake, I was too conservative, [to] always want to focus on just one product. And sometimes, I got to be a little bit more aggressive. However, how to balance that — between aggressiveness and the focus of concentrating on one service — is not that easy. But every day we got to spend time on that, also talking with our customers.
How do you do what you just described, talking to your customers at scale? Like, 300 million people. I know you don’t sleep very much, but you can’t Zoom call all of them.
Almost every day, there’s no exceptions: A day, at least one or two, sometimes three or four meetings, Zoom calls, with our customers. Used to be I talked with a lot of customers. Now, probably, I only spend time talking to those big enterprise customers. Occasionally, I receive escalations from those individual users. Individual users sometimes send you feedback — why they do not like this feature, they share some feedback. I always reply back, or maybe forward to our team.
And sometimes a sales rep, when they talk with a prospect, if they shared something — why they like Zoom, why they do not like this feature, that feature — our team did take that seriously. They share the feedback with our product team. Essentially, if you have a customer-care culture, and everyone will think about it from a customer perspective, lead by example.
If we just think about the pandemic — the escalations, the data center expansions, the PR, all of it — and its impact on business… Let’s shift, actually, to talk about what it was like for you, because we have a lot of business leaders on the phone here: What was it like, personally, and how did you handle it?
I think, first of all, I’m very optimistic. Meaning, in this world, as long as you work hard, be patient — I think you probably can achieve something. But, however, the journey is not that easy, not as straightforward.
“No matter what you do, [this world is] full of naysayers. But you’ve got to focus on your own dream. Don’t be distracted by other things.”
So, the pandemic is not over. It may never be over in the sense that we once thought it might have been. You are leading a large organization; you have to make decisions with very limited information about the future. Has this changed how you make decisions with more uncertainty? Does it change the cadence of your decisioning?
How do you teach your team, or work with your team, to make those decisions?
Yeah, that’s a great question. I [was] used to making a lot of decisions at Zoom, especially when we were a small company. But over the past two or three years, especially after the company became a public company, I realized it’s not as scalable. And, of course, being a CEO, you start to make less decisions — but you need to make sure every decision is right. It’s actually how to set up the direction. Even if I can’t make a lot of decisions, what if [on] the most important decision, I did not spend enough time? I might have dragged the team in the wrong direction. That would be a huge mistake.
That’s why I tend to make less decisions now, and delegate to our team, because I trust our team. Give them full authority, let them make decisions, let them learn from those mistakes. Otherwise [it’s] really not scalable. That’s what I learned.
Every day, doing my daily self-reflection, I will ask myself: Do I really need to make so many decisions? Why not let our team make that decision? So I tend to make less decisions now. But I also make sure the key decisions [are] very right, especially for the company direction or strategy.
That’s interesting. The pace of decisions that need to be made has actually increased — and the uncertainty around them — and your view is: “I actually should be making fewer of those, despite what’s changed in the environment.”
I was a very hands-on CEO when we started. I liked to make all those decisions because I was in this industry for a long time. I just realized it’s not right. How to grow your team, how to make sure you spend more time, much more time, on those strategic decisions — that’s even more important.
I remember, years ago, we were talking about other communication modes, [something] about VR, and you were like, “Yeah, we definitely have a skunkworks project here.”
What interests you in terms of real-time collaboration, and anything else in the area of Zoom, if you look out five or 10 years? What do you think should happen, or Zoom should make happen?
I’m very optimistic. The reason why is, when it comes to [the] video communication, like Zoom, experience — I think we just started. You look at AI technology, AR and VR technology, smart sensor technologies, all those technologies. The cool devices can truly help to make the Zoom experience better than face-to-face meeting.
Recently, we acquired a company to support live language translation. And imagine in the future, we supported a remote hug. And you get a cup of coffee, I can enjoy the smell remotely. All those cool technologies will help, and will support, the future of remote work. And we are not there yet. That’s the reason why we’re working very, very hard.
And I think that’s the world we’re to live in in the future, and that you really do not need to gather together, you really do not need to speak a similar language. After meeting, the machine can automatically regenerate very accurate meeting notes, and it will share with others.
Look at all those features, technologies. We’re very excited. We just started.
Zoom has made recording and then going back to conversations and sharing conversations much more possible. How do you think about asynchronous video, and are you seeing that change the way people work?
I think we need both. We need real-time video. We need async video as well. However, we’ll have to focus. In the ideal world, you can offer web service from any user perspective, wherever — integrated service for async video. We do not need to have real-time call. I can record a video and send it to you. You can put it back anytime, and also with the notes there.
Even for real-time video: You missed a very important meeting, someone can send you a recorded video session with notes, with action items, and you also can play back. I think that’s the future.
Some things I definitely want real-time, though, including that remote hug feature you said you’re someday going to think about getting to us.
I think one [thing] that just might be of interest to everybody here — because you’re thinking through it yourself, as a company, and everybody here is figuring out what the future looks [like]: In terms of a hybrid work environment, how does Zoom think about that?
I think hybrid work will become mainstream, for sure, because you look at it from an employee perspective. We did a survey, and I’m talking to many other CEOs as well, and almost everyone, they told me that, yes, after they did a survey, employees like the flexibility. That’s why we wanted to increase the hybrid work. And deciding, then, how to make sure [with] our technology, all the new features are designed and built to embrace the hybrid work. That’s very important.
Nowadays, we look at almost every feature. We always ask ourselves, “Will this feature help hybrid work now?”
Like our conference room — we introduced the smart gallery feature, we also supported the virtual receptionist. Almost every feature, we want to make sure. [Like giving] our chat feature a new view [to] make sure you know who is sitting next to you. You can see them. I think that’s very important.
We have to shift towards embracing every feature to support hybrid work, because that’s the future.
OK, a couple of personal quick-takes, before we go to questions from our discussion group. The first is: What’s your favorite recent example of how somebody is using Zoom that you love? Yourself, or a user or a customer.
There’s so many new use cases since the pandemic crisis. I think my favorite use case, still, is [the] Zoom wedding. Zoom marriage was legal in New York. And every time I thought about this, I was super excited. How sweet it is to get married over Zoom.
What is a piece of content — like a book, movie, podcast — that you enjoyed over the pandemic?
I think, during the pandemic crisis, I tended to buy more books, but I may not have been reading all of them. One book I really like is Marc Benioff’s book — and so happen to have it here — Trailblazer. Awesome book. I highly recommend that.
And then: Any advice for entrepreneurs, if you can only give them one piece of advice?
Be patient. That’s very important.
Say a little bit more about that.
Don’t think about success over the night. A lot of people may say, “Zoom, now you became a consumer brand, and suddenly you’re successful.” They did not realize Zoom was already a 10-year-old company. And our team, myself included, was working so hard, day and night, around the clock, since 1997. Twenty-four years of hard work on real-time collaboration. Literally: I’m stuck on this industry, just working on one thing for 24 years.
You have to be patient. Don’t think about any success over the night. Be patient and become an expert and then achieve your dream. Someday you will get it, and good luck will come as long as you’re patient.
Twenty-four years is even a lot more than 10,000 hours of work, actually.
Exactly. Seriously, over the past 24 years, since I lived in Silicon Valley, I really do not go out on any long vacation. Every day I think about the real-time collaboration customer product. Doing that for 24 years, for sure, will have some good-luck outcomes.
Let’s do questions from the group. From an inclusion and diversity perspective, how is Zoom thinking about addressing the proximity bias — the inequality for people not in the room for meetings that are hybrid?
Great question. I look at Silicon Valley, at why Silicon Valley is [a] worldwide innovation center: Because Silicon Valley has a very inclusive culture. No matter where you are, no matter what your background, we come together. That’s where innovation is coming from.
So, back to the Zoom technology, or back to how to support a hybrid work, I said, No matter where we are, no matter where the participants are, how to make sure technology can help.
Every participant [is] very equal in the Zoom set-up. Not like [the] traditional way, if I am sitting in the common room and other people join remotely, they cannot share their voices. That’s why [the] Smart Gallery feature can help. Everybody is equal, no matter your title, your background. And that’s where the innovation come from.
Another question I just got texted is: You obviously had a commitment to having the best product, and then an innovative business model that came after that. But then you describe trying to make a smaller number of really important decisions correctly. Can you talk about a decision that you made — maybe in the middle years of Zoom, because we have many companies that are, let’s say, between 20 and 200 million — [and] they are like, “We’ve got something working, but we don’t know yet what we can make of it.”
Can you talk about a decision that really mattered for Zoom, that you made?
Early days, I remember, back to the business model or the pricing, I [have] two examples. One is: Read about the freemium or free trial. At that time, a lot of people told me that, “Hey, the freemium may not work. It’s very costly. You have to support the free trial. Just give the end user [a] one-month free trial.” I would think, That’s not right. And I was very stubborn, saying, “No, this is for the freemium,” and give [the] end user 40 minutes. Back then, a lot of people told me that I have to reduce down to 20 minutes; I say 20 minutes is not enough. And we have to give more to the free user.
That’s one. Another thing is the pricing. And actually, back then, our price [was] $10. Based on customer feedback, we knew we could charge $14. Actually, we could charge the customer more, but we did not do that. The reason why: we want to build a long-term trust.
“The model is similar to the restaurant business: you have the best product, best price, better service, and you will have a lot of customers to visit your restaurant. That’s a philosophy.”
Yeah, I guess Zoom is my favorite restaurant.
We have one question I think is a really good question, which is: Arguably, Cisco Webex have all of this talent, and they missed out on creating Zoom within Webex, like you said you tried. How do you prevent that from happening at Zoom? How do you create a culture that continues to embrace innovation at scale?
Yes, so first of all, don’t get me wrong: Cisco is this great company. I did learn a lot over there.
I will say it really boils down to one thing: company culture. It’s a product-driven culture or sales-driven culture or customer-driven culture. That’s very, very important. If every day, from all levels, from CEO to the engineers — every day — you spend time on talking with your customers, you will get a sense if the customer likes your product or not.
Sometimes, if a customer already told you, by sending a very clear signal, Your product really sucks, then you’re saying to the customer, Oh, customer you are wrong. This is the way for us to build the product; you have to use our product like this — then you become arrogant. By doing that, [you] are going to ignore customer comments, ignore customer feedback — then you’re going to lag behind, then you are going to lose the market. So as long as you lead by example, have a great culture, really look at everything from a customer perspective — I think you will be OK.
I will give us one more second in case there are questions that people missed. Otherwise, anything you want to share with the group, Eric?
I live in Silicon Valley. We’re very happy. There’s so many new technologies, new startup companies.
I think life is short. Especially for young entrepreneurs. And that’s a mistake I made, when I was young. I wasted so much time on a lot of other things, like playing poker, a lot of other things.
I think understanding the purpose of life is extremely important, especially for young entrepreneurs. And what’s the purpose of life? In my view, the purpose of life is to pursue happiness. Sustainable happiness comes from making others happy. How to make sure — being a CEO, make your employees happy; as a business, make your customer happy. Make your friends, make family members happy — I think your life will be happy. I think that’s very important. So, one thing I wish I knew when I was young.
Well, I’m sure there are some in this audience that will be inspired by you, in the way that you were inspired by Bill Gates at that trade conference in Japan, and I hope so.
But we’re at the end of our time. Eric, thanks so much for being here. We’re very grateful for your time — and for Zoom, without which the past year and a half would just be unrecognizable.
And thank you to our audience, founders, operators, practitioners, friends of Greylock. You’re the reason we host this segment, and we hope you all learned a lot today; I did.
Thank you again, Eric, for your time and for everyone for joining us.
Thank you, Sarah.