On April 18, Zoom had its initial public offering (IPO). Shares began the day at $36 and closed at $62 — a leap of 72% — giving the video conferencing software company a market cap of almost $17 billion.
By all accounts, Zoom is a resounding success: Not only does it count one-third of the Fortune 500 and 90% of the top 200 U.S. universities in its customer base, but it also turns a profit, making it a rarity among tech unicorns.
Furthermore, Zoom founder Eric Yuan was the first person of color to ever top Glassdoor’s best-rated CEOs, a list whose rankings are based on employee reviews. Yuan, who immigrated from China to the U.S. in 1997 at age 27, founded Zoom in 2011.
Business leaders can learn much from this CEO and the rise of his company. Here are three powerful lessons.
Focus on Execution
When Yuan first moved to the States, he was hired as a coder for Webex, and eventually ascended the ladder to lead its engineering team. He continued in this role through Cisco’s $3.2 billion acquisition of Webex in 2007. Soon afterwards, however, he grew frustrated. He knew Webex’s product could be significantly improved, and was embarrassed by negative customer feedback. For an entire year, he asked Cisco to let him rebuild the platform, but was stymied.
So in 2011, Yuan left to start his own company, determined to create a superior video conferencing tool. As Forbes reporter Alex Konrad wrote: Yuan “didn’t reinvent the wheel, just made it a lot less painful to turn.” Zoom stabilized for poor internet connections, for example, and utilized a web client that streamlined the experience across Macs and PCs.
This focus on execution was integral to Zoom’s success. “I would say the best decision we made was that for the first two years we were heads down to the product side,” Yuan told a Forbes contributor in 2017. “We kept improving the platform, making sure that it was solid.” Greg Holmes, Zoom’s head of sales, agreed with this assessment, explaining: “At the end of the day, the biggest reason for our success is… [customers] realized it was something that worked every time, and they could count on it to get business done.”
Don't Fear Big-Name Competitors
When Yuan first pitched Zoom to friends and investors, many questioned the wisdom of entering a space already dominated by major companies such as Microsoft’s Skype, Google’s Hangouts, LogMeIn's GoToMeeting, and of course, Cisco’s Webex.
“[Yuan] came to a market that everybody said was done,” Dan Scheinman, former Cisco executive and Zoom angel investor and board member, told CNBC. “He was competing with free and some pretty big incumbents.” In a January 2017 Forbes interview, even Yuan acknowledged the industry was “extremely crowded.” Still, he believed quality would prevail, saying: "If our product is better than any others, we can survive."
He was right. Since that interview, Zoom has doubled its revenue each year: from $60.8 million in 2016 to $151.5 million in 2017 and $330.5 million in 2018. As Jamie Sutherland, founder and CEO of Sonix, explained in Forbes: “The Cardinal rule for any startup: Solve a really big problem and solve it well… While there was lots of rhetoric around the idea that video conferencing had been solved, the reality was that it wasn’t really solved well.” Zoom, he said, changed that.
Live Your Message
Yuan first contemplated video conferencing when he was in college, and had to travel 10 hours via train to see his then-girlfriend, now-wife. “I detested those rides,” he told Thrive Global, “and used to imagine other ways I could visit my girlfriend without traveling — those daydreams eventually became the basis for Zoom.”
Perhaps because Zoom’s mission — to make video communications “frictionless” — has always been personal to Yuan, he has lived the company’s message since day one. Yuan, for example, never missed his three children’s sporting events, often using Zoom to take calls from the gym. He also promised his wife that Zoom’s technology was so good he would only have to travel twice per year.
“I have kept that promise,” he told Forbes in 2017. “I hope that with video conferencing like Zoom everyone can spend time with family. I feel proud of what I am doing.” Still today, Yuan takes the vast majority of his meetings remotely via Zoom. According to a recent Forbes profile, he only met with his venture capital investors once in person — when he flew to New York for Zoom’s IPO, it was just his eighth work trip in five years.
Given his success, one would never guess that, the first time Yuan tried to start a business, he literally burned his neighbor’s chicken shack down. Or that, when he applied for a U.S. visa, he was rejected eight times in a row. Yuan overcame these obstacles to become a billionaire at the helm of a multi-billion dollar company — and leaders in any industry can learn from his vision, humility, and determination. Following the closing bell on the day of Zoom’s IPO, Yuan exemplified his leadership style when he told The New York Times: “I looked at the price this morning and I thought, ‘Wow, I better go back tonight to get back to work.’”
