Zoom: An IPO Done Right?

How one videoconferencing company surprised us all.

Eric S. Yuan, CEO of Zoom. Photo with credit to Zoom.

Who are they?

What do Zoom actually do? Well, they pretty much do one thing really well: video communications. We’ve been using Zoom at Brandwatch for a few years now, and what others have reflected in the commentary around the filing is true: it does indeed just work. That’s true for video calls with two participants as much as it is for company meetings with hundreds of people dialing in.

A Zoom call in action.

They’re profitable

When the filing was posted online, I did what I usually do: scroll right on down to the second page where a high level summary of the financial data is written.

  • PagerDuty, who filed on March 16th, made $79.6M revenue in fiscal year 2018, but a net loss of $38.1M.
  • Lyft, who filed on March 1st, made $2.2B revenue in fiscal year 2019, but a net loss of $911.3M.

The web interface is a second class citizen

If you’ve ever used Zoom, you’ll have noticed that in order to join a video call, you are asked to download the native application. And I’m not just talking about a mobile application; I’m talking about a desktop application. Yes, that’s annoying. And yes, most SaaS companies that have floated let you access their service via the browser, as it is the easiest barrier to entry for most users, and also makes the development process simpler: engineers are only building for one platform.

They heavily use data centers

One of the bullet points in the summary of risks in the S-1 is as follows:

Customer acquisition is paid back in less than a year

In Alex Clayton’s excellent breakdown of the Zoom S-1 filing he shows how incredibly efficient Zoom’s customer acquisition is when compared to other companies:

They’re actually happy

Yuan describes his role as “keeping his customers and employees happy every day.” That certainly seems to be true, since Zoom reported a 72 net promoter score in 2017, and they won an Employee’s Choice Award on Glassdoor in 2018.

Ding ding ding

The impressiveness of Zoom’s S-1 is less because they’re growing faster than other technology companies. It is inspiring because they’ve legitimately chosen to do business in the best way for both their staff and their customers. The financial success is secondary to this mission, yet it is proof that it can follow a great product and culture. Staff and their families win as well as the users.

VP Engineering @brandwatch. Writing things that interest me. Hopefully they'll interest you as well.

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