The Secrets of Zoom's Success
Unconventional wisdom from an unconventional CEO
At first glance, it may seem like Eric Yuan has the typical Silicon Valley startup origin story: A seasoned leader who spun out on his own. But Eric’s story is much deeper, his background includes many challenges, and his vision had many nay-sayers. Despite it all, he believed in himself, he believed in the product he was building and together with his team and his earliest supporters, he built Zoom. Now, the powerhouse of business communications, Zoom runs more than eight billion meeting minutes every month -- and when we ask companies where they are based, the answer could very well be, “On Zoom.”
Earlier this month, Emergence hosted our first ever Emergence Summit, a day focused on providing early-stage entrepreneurs with advice from people who have been in their shoes. I had the privilege to host a Q&A with Eric to discuss his unconventional approach to building Zoom, his experiences on overcoming adversity, his decision to take on incumbents customer-by-customer in what at first appeared to be a crowded market, and his unique ability to identify talent. The full session is available to watch below.
1. Always be learning
Eric arrived in Silicon Valley from his home country of China in 1997, joining WebEx as one of the company’s first engineers. At the time, he was attracted to the Valley’s reputation as an entrepreneurial hub. More than 20 years later, Eric's still inspired by the area’s energy. “I haven’t seen any other geographical region that comes close when it comes to innovation,” he said.
Eric always knew he would start a company one day. That’s why, while he worked as an engineer for WebEx, he always paid close attention to all the other business departments too. “I spent a lot of time with the sales team, with the marketing team, with the support team,” Eric said. “Mentally, I wanted to be fully prepared to start my own company.”
2. Focus on customers, not VCs
When Eric started Zoom, he talked to many VCs -- and none of them wanted to invest. They told him that video conferencing was a crowded market, already dominated by existing vendors. But he didn’t let investors’ opinions stop him.
“I just kept looking at everything from the customers' perspective,” he said. “I’d talked with a lot of people, and no matter which solution they were using at the time -- WebEx, GoToMeeting, and others -- no one ever told me they liked the service they were using. I realized that if we could build something that would actually deliver happiness to the customer, if we could create a service that was even a little bit better than the other solutions, then we would have a chance to survive.”
He compared the experience to starting a restaurant. "If you have a much better service, if your food is delicious, if your prices are good, then you will have a good business on your hands,” Eric said. “It doesn’t matter how many other restaurants already exist.”
3. Prove naysayers wrong
Eric recounted one particular meeting with a VC who told him that there was no way that Zoom could have a chance against the existing competitors in the market. The investor went into great detail, outlining all the reasons why Zoom would not be successful. “At the time, listening to him made me feel really terrible,” Eric said.
But soon after the meeting, he only felt stronger in his conviction to prove the naysayers wrong.
“When I got back to my office, I changed my screensaver to just three big words: ‘YOU ARE WRONG,’” Eric said. “That was my screensaver for many years.”
4. Hit the right rhythm
There’s a certain rhythm to building a successful B2B business, according to Eric.
“For the first several years, you have to be heads-down on the product side. For Zoom’s first four years, I spent most of my time perfecting the product,” Eric said.
But when the product is ready and you have attracted several repeat customers, it’s time to shift the company’s culture to be more sales-driven.
You can’t just assume that if your product works well, you'll automatically get customers. That's just not the case,” Eric said. “But if you only focus on your go-to-market and sales, very soon you're going to have problems in your product and innovation.”
5. Hire smart
Every business is different, and Eric is a firm believer in not following conventional wisdom. “If conventional wisdom worked, everybody would be very successful.”
After years of working across large enterprises, Eric took a much different approach to building his winning team. Foregoing the typical leaders from large companies, he sought out passionate, driven individuals who were eager to learn, grow with the team, and bring a fresh perspective. He was careful to avoid an overly experienced team who would push an agenda solely based on what had worked for them before.
“Our philosophy at Zoom is to only hire people with a strong sense of self-learning and self-motivation. Often, if you hire someone who is very experienced -- you know, the great leaders from other companies -- when they join your small startup, it's very likely they're just going to tell you what to do based on what they’ve done before. It's really hard for people like that to look at your company with fresh eyes, and work from the ground up. I’d rather hire people who want to grow themselves along with the company.”
6. Ignore titles
Zoom has a remarkably flat management structure. Even today as a public company with more than 2,200 employees, the company does not have the titles of VP, SVP, director, or senior director. Having such management levels only serves to slow things down, Eric says. “In business, speed is everything.”
When it comes to hiring, Eric is skeptical of people who are preoccupied with having a certain title. “I think of titles as decoration,” Eric said. “If we’re interviewing someone and they really care about having a certain title, I usually think, ‘Let’s hire someone else.’ You want someone who will say, ‘I truly believe in the company's future. I want to own part of this company. I believe I can grow its value.’”
7. Fire slow
Hire fast, fire fast” is an oft-repeated piece of advice in the startup ecosystem. But Zoom has taken the opposite approach. “We actually fire very, very slowly,” Eric said. That’s because he wants to foster a sense of security and loyalty.
“When you hire someone, you are investing in them. If you see your company culture as a family, you don’t want to fire someone just because their short-term performance is not good. If you do, even the people on your team who are excellent performers will look at what’s going on and say, ‘Someday you might fire me too.’ You’ll lose everyone’s trust.”
That said, there are cases where you do want to fire fast -- if there are issues of integrity, discrimination, or harassment, Eric said. But if the issues are related to performance, a very certain protocol is followed. “We go very, very slow, and we make sure to go through a very strict process.”
8. Look everywhere for new opportunities
As inspired as Eric continues to be by the culture of Silicon Valley, he says if he were to start Zoom all over again, he would not set up an office there. In fact, he wouldn’t set up an office at all.
“Today, the cost of living in Silicon Valley is very, very high -- but the talent is all over the world. If you have a tool like Zoom, why do you need to have a big office here?” Eric said. “You also have other distributed teams, like Invision, Zapier, and GitLab, that all work very well [as fully remote companies]. Today, I do not see the need for a single physical office.”
And according to Eric, there is no shortage of opportunity for founders looking to create the next big enterprise software company. One area that’s particularly ripe for disruption, he said, is HR. “Today, in terms of recruiting, most of the process is still very messy,” he said. “I still do not think there are good tools. But that’s just one example.”
He tells prospective entrepreneurs to do lots of research and put customers first. “Look at the existing big markets, and look at who is in the space. Don’t worry about whether something is owned by a big company, or a small company -- just really look at the product experience,” Eric said. “Then talk to their customers. Ask, ‘Do you like this? Do you like that?’ That is the key. That’s what we did.”
Speaking with Eric is always a highlight for me. Even after many years of incredible conversations, I still learn a lot from someone I'm proud to call my partner, my friend, and my family. As we work with entrepreneurs to help them build iconic companies, we always think of what great leaders like Eric would do. This session was exactly that, and hopefully, his thoughts will inspire other entrepreneurs to build iconic companies!
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