How does Zoom find the entry point, execute it, and finally wait until the inflection point arrives.
Editor’s note: This article comes from the WeChat public account “ Random Book ” ( ID: luanbooks), author: Yin Liang, Producer: Pan chaos.
In April last year, Zoom went up 70% on the night of its listing, reaching a market value of US $ 20 billion. The news has stimulated a lot of Chinese entrepreneurs. They have worked hard in the Chinese market for so many years, and few of them have a market value of more than 10 billion US dollars. However, a Chinese who has been rejected by the United States 9 times can easily cross, especially what he does is an industry with an ancient sunset like video communication. It was this company and the Chinese CEO who were not well known in the mass market before going public.
On the night of April 18 last year, the circle of friends of Chinese Internet entrepreneurs was mostly filled with the sense of loss brought by this strong contrast.
Just 20 months have passed since the outbreak. The market value of ZOOM has doubled due to the epidemic situation and has exceeded 40 billion U.S. dollars. Because of the epidemic, many beta versions of the bugs at Tencent Conference can be quickly measured, with billions of minutes per day. Dingdingfeishu also began to improve the video conference function urgently. Previously, Eric’s former colleagues in China also started to develop related enterprise user products.
But according to individual observations, the most mainstream conference product in the Internet industry is still zoom.
On the eve of ZOOM’s listing last year, Chaofanshu once published an article about his research and analysis. At the beginning, a huge question mark was given. “Communications occur in scenes, but there is no scene in Zoom, so users are not necessary. Go to Zoom again. “
Zoom only has screen sharing and file sharing, without its own business scene and workflow. Now the entire Indian business scene is Google, which integrates directly in Gmail, and Microsoft has also integrated Skype into Office and integrated it into Office.
But the thing that I didn’t expect is … During this epidemic, I used up all the software with full workflow and richer scenes. As a result, everyone switched to zoom because video conferencing products can be simple and good at the same time. The basic requirements of using and stabilizing are really too difficult.
One year after this article was published, zoom went to China Telecom to pull a special line, and the Chinese version was released, and the stock price quadrupled.
Flip to a comment that was pinned at the time, “The video conference market is highly competitive, Zoom can continue to increase market share, in addition to simple and cheap and easy to use, the most important thing is product compatibility & interoperability, coupled with freemium pricing-driven word-of-mouth viral transmission. With the migration of hardware to Cloud / SaaS, competition, Cisco, Polycom, GoToMeeting, and Vidyo are not very likely. In the long run, Microsoft is a big threat. After all, it has Teams / Skype / SharePoint ecological collaboration capabilities. But for now, Zoom ’s user utilization and satisfaction are still higher than Microsoft ’s. In the optimistic direction, Zoom is not just a video conference, but a mobile workforce tool. The newly launched Zoom Phone is also grabbing a cup in the UCaaS market, 12x is not high. “
Looking at it again today, the conclusion that Zoom is “mobile workforce tool” may need to be re-examined, and even the answer may be the opposite. Zoom is developing so quickly because the PC experience is better than mobile. A while ago I chatted with a famous low-key investor. He said that startups must be sharp, and the best products are only for those groups of people, taking care of the people that big companies will not pay attention to. Zoom is PC-based.
Zoom’s mobile is not bad, but the most complete experience is still on the PC version. The main focus on mobile phones is the political correctness of the times. Ignoring the PC is the norm. However, the small screen on the mobile phone is difficult to use for file sharing. When you work, you use PCs in the office. This epidemic made everyone use PCs only. Zoom gives more information.
In the 1990s, ptel (software video) was killed by polycom. Thirty years later, the rise of zoom (software video), everything was reincarnation.
This article analyzes the development trajectory of typical video conferencing from software, hardware, and SaaS services. How Zoom finds the entry point, persists in doing the right thing, fights for execution, the final inflection point arrives, and the model is overturned to win the market.
Zoom’s Red Sea Breakout: Eat stock, fight to execute, and dare to burn money with great popularity
© ️Turn over the original book
Author: Yin Liang Producer: Pan chaos
Published time: 2019-03-26
Zoom is like WhatsApp. Extremely simple, easy to use, stable, and free.
But Zoom is 2B. It ’s very unreasonable for companies that provide audio and video conference services to be free. Very few people can bear the loss and keep burning money. But Eric yuan may just realize that corporate communications is a huge market and see that the market is still in the early mature stage of continuous growth.Internet companies’ cost structure and product advantages go to check in.
Zoom is the old owner of Webex, and they are recruited by Webex people, even branches of the whole city are jumping to Zoom. Zoom solves the technical defects of Webex, and even adds beauty functions to office conference products.
The turning point of Zoom happened after entering the education market to do customized services, which brought Zoom the first stable income, and then the company was confident to fight other money-burning battles.
But with Webex and Google open source code, the quality of video calls may not be much different in the future, and everyone may have to embed instead of independent APP.
More importantly, Zoom only has screen sharing and file sharing, without its own business scene and workflow. Now the entire Indian business scene is Google, which integrates directly in Gmail, and Microsoft has also integrated Skype into Office and integrated it into Office.
Communications happen in scenes, but there is no scene in Zoom, so users don’t need to go to Zoom again.
But these challenges are still only potential risks. The reality is that after Zoom gradually brought in major US companies and governments, Zoom became the first in the US market and now it is entering the Asia Pacific region. Now Zoom has a preliminary network effect.
This article will review the thinking, exploration and industry competition environment of Zoom in the early stage.
I. The best and worst times
The video conferencing market has always been regarded as a typical highly competitive Red Sea market. Every year, there are new companies joining it, and there are also established companies launching the stage.
History goes back to 2011, representative key events:
Polycom leads the Chinese market with a 51.4% market share after the acquisition of Dingshitong. This year, it launched the Polycom® RealPresence platform and acquired cloud video collaboration startup Vivu to prepare for the cloud strategy.
In 2011, Cisco made major organizational changes, and at the same time the largest layoffs of 6,500 people. On the video conference track, after the acquisition of webex and Tandberg, the focus was on the integration of the telepresence platform.
After completing $ 25 million in Series C financing in 2010, vidyo continues to rely on the use of SVC (Scalable Video Coding) technology solutions to erode market share of video conferences such as polycom and Cisco.
Microsoft officially acquires Skyp for $ 8.5 billione, became an independent department of Microsoft, and officially closed MSN two years later, Skype replaced it and realized seamless switching.
Google’s open source WebRTC (Web Real-Time Communication) is included in the W3C recommendation standard. This important open source project opens a door for a large number of start-up companies, especially in terms of capabilities.
…
This year is the best time for polycom, cisco and domestic Huawei to continue to lead the market share, occupying high-end market users (polycom’s revenue is almost 90% or more, from Fortune 500 customers).
Although emerging companies such as vidyo have already begun to scale, they still cannot change the overall market structure. Their target customers are the same. Although the plan has changed, they are all equipment-centric, the structure is more and more complex, and the cost is getting higher and higher. Instead, there is little control over the workflow. It is a complete hardware communication tool.
This year is full of variables and the worst era of surging currents. The managers of monopoly companies can see the general trend of cloud services, but they are still powerless. Year after year.
Complex processes and deployment schemes make it difficult for users to really use them. These issues Eric yuan 4 years after Webex was acquired, it has been confirmed to see the general trend of synergy and cloudification. Finally, in 2011, Zoom started the entrepreneurial project.
The positioning of Zoom: Extreme focus, dislocation competition
Eric yuan established Zoom in 2011. Enterprise communication is a big market, and Zoom ’s positioning is very clear, “to create the ultimate cloud service for enterprise communications.” Where is the ultimate? Can be said to be the core barrier:
The high-quality audio and video quality, because the cloud plus mode requires a lot of algorithms to deal with packet loss, to ensure that the words are not lost, and the video is smooth, this zoom has invested a lot of manpower.
A simple and convenient way to join the conference and open connections across enterprises. This is also one of the limitations of Webex that year. The idea of Webex’s original software information island allowed Eric to see a good opportunity for “coordination”. In the early mature markets, Webex was played, and Webex people were recruited.
Complete solutions, from SMB to large customers, both have different demands. However, with the iteration of zoom year after year, a perfect product matrix is formed, and additions are constantly made to lead competitors. TheseThe barrier became a sufficiently high threshold.
Three turning points appear: Trend changes can change the original rules
The changes in the external environment and trends make it possible for things that were not favored or things that could not be completed. Once this trend matures, the acceleration will be very large.
Enhanced computing power of the terminal: The iPhone was released in 2007, and mobile device capabilities are increasing every year. In 2012, it can reach high-definition processing capabilities, which also means that the “heavy client and light server” model After the pass, the client can be responsible for more audio and video encoding and decoding work, and the server is responsible for data forwarding. In this way, the computing power requirements will be several orders of magnitude lower, and it can support more concurrent volumes. Provides the feasibility of computing power.
The popularity of 4G networks: 2010 is the first year of North American construction of 4G networks, and operators are building network nodes on a large scale. Audio and video conferences occupy high bandwidth, which is another necessary condition in addition to computing power. 4G provides 20Mb / s network uplink and downlink, which has made the network link level to meet the high-definition channel requirements.
Free office has become a trend: more and more Silicon Valley engineers like the free office model, and everyone is likely not in the same specific office location. But communication as a basic job demand is often just needed. E-mail is an asynchronous communication method, and it is impossible to achieve instant multiple rounds of feedback. Similarly, it is basically impossible to complete a conclusion through IM discussion by multiple people at the same time. Therefore, audio and video conferences have the absolute advantage in restoring the communication experience to the greatest extent. People need email and IM, as well as video conferences. All meet the rigid needs of different scenarios.
SAAS has entered a period of rapid development: Zoom was established in 2011, and slack was established two years later. Earlier Salesforce has become a model for corporate SAAS. The entire market, especially North America and Europe, has recognized SAAS and the willingness to pay. It has become mature, and the SAAS in the Chinese market started in 2014 and 2015, but it is still in the market education period. Another benefit of market maturity is the recruitment of talent and the recognition of capital. Zoom’s initial team of 40 people were all from Cisco. According to Eric’s description, Cisco also saw this market, but it was complicated.The staggered product system and its open attitude also make it impossible for Eric to set up Zoom.
For Zoom, its inflection point comes from the education industry to do customized services. This opens Zoom to the first stable income, and then has the confidence to fight the burning of money. It is to use the advantages of Internet companies and the advantages of Zoom products to fight other current traditional companies.
Once you hit it, it ’s possible that branches in other cities will all jump to Zoom. With network effects, it is currently the first in the United States. After Google open sourced Webrtc (though not mature in 2011), it has made it possible for many startups to cut into corporate communications, but it is very difficult to find an industry that continues to bring revenue and eat through.
Fourth, industry model dispute: Wall Street trap
The audio and video conferencing market has always been full of players, and each gene has a different solution. The evolution process can be divided into two camps: device-centric and collaboration-centric.
Device-centric: giants Polycom, Cisco, and domestic Huawei.
In the Chinese market, the video conferencing during the SARS period reached a historical climax in 2002, and even a rare situation appeared. Relying on proprietary hardware equipment, proprietary networks, quality and C-end products are vastly different, but the overall price is also extremely high. Polycom ’s largest project in Asia-Pacific history, ICBC, costs 200 million, and its target users are firmly locked in the Fortune 500 and the government. It is expected to continue to catch up with Wall Street, from SD to HD, ultra-clear, and continuous iteration of integrated conference room solutions.
Whoever conquered the 1080P device first will earn more added value. Major manufacturers are constantly pursuing higher profits from top to bottom. However, the hardware equipment faces a replacement cycle of about 5 years, and the target users are fixed. The plate can easily meet the ceiling. Polycom’s highest historical valuation is about 6 billion U.S. dollars, after which it has fallen around 1 billion U.S. dollars, and finally privatized and delisted.
After the Snowden incident, the business of Cisco’s foreign equipment manufacturers was severely affected. Although large companies have been trying SMB market and cloud service solutions, their organizational structure is difficult to change due to the high-margin value network strange circle.
Vidyo should be regarded as the company most likely to jump out, and still can’t jump out of the ceiling of equipment thinking. The founding team has serious internal divisions and has not made free products. Finally, even if the CEO is replaced, the time window period has passed.
Collaboration-centric: Eric is technically born, but a businessman.
The genes of Zoom at the beginning is to use cloud-plus mode to do synergy, focusing on ease of use and practicality. The biggest advantage of this model is that it fully utilizes the existing equipment in the hands of users and properly completes the communication. The point is, compared to traditional hardwareThe solution, although the overall experience is not dominant, but the price is sufficient.
Break the silos of traditional audio and video solutions with the cloud model. At the same time, the network and terminal capabilities are strengthened, and the experience is continuously improved. At the same time, compared with Skype, Hangouts, Facetime, etc., Zoom is more focused on B-side enterprise collaboration. At the same time, Eric values the R & D team and product quality. No matter from packet loss processing, SVC technology, or multi-device connectivity, etc., it is a leader in the industry. It has been climbing in this industry and eventually forming its own industry barriers.
As a comparison, the domestic small fish adopts a hardware terminal plus cloud service model to be a B-side user. It is dramatic that this founding team came from Polycom, which favors hardware solutions, and Zoom, which is from software solutions. Webex.
Five, Zoom’s execution: do the right thing
“If a company’s strategy is easily copied and succeeded by another company, it means that this strategy is not very important to the company. The transformation of strategy into execution is the top priority. It takes years to accumulate. ”
Eric believes in the importance of execution in the company. During the implementation, it was extremely popular, especially when the market was large.
The cloud model started with burning money. The first paid user of Zoom in 2012 was Stanford University. At that time, the products had not yet been officially released. Later, colleges and universities also became its main customer group. The top 200 in the United States Institutions, more than 90% are Zoom users. Eric is a very smart businessman at this point. After graduating from college, students in the company will still have the habit of using Zoom. B-side users from college to the workplace will smoothly transform and keep snowballing. Plus the amount of network effects is done layer by layer.
Nearly 90% of Zoom ’s revenue comes from the North American market, but it does not mean that there is no possibility in other countries. It ’s just that the time is not yet ripe, but Zoom still has a good replication model. India, Philippines market growth is good. In China, Zoom is an agency system. There are five or six agents. You can use the Zoom brand, but users are still on his platform.
Free + Prime mode:
Zoom ’s product line used a free model from 2011 to 2013. High quality, easy to use, 200 people can access at the same time, this model and product form is very in line with the education industry and SMB companies’ demands for flexibility. Even if the small team version of Prime in the later period is $ 14.99 / month, it still has a price advantage.This obviously lowers the threshold for users. Because of the simple use method, simple payment model, and simple privatization deployment scheme, Zoom users have gradually entered the big B-end market, including many of the world’s top 500 users.
Important product lines:
In addition to the regular product line, Zoom has also launched an expansion into the medium and large enterprise market, including Meeting Connector, Room Connector, Webinar platform, etc.
Zoom Meeting Connector, an enterprise private deployment solution, meets the meeting mode of hybrid cloud for enterprise users.
Zoom Room Connector, an enterprise gateway service. The original hardware video conferencing generally uses industry standard H323 and SIP protocol stacks. These devices often occupy a certain existing share in the enterprise, especially large companies such as the world’s top 500 companies. Through the Room Connector, through the two ecosystems of Zoom (private protocol) and existing equipment, Zoom successfully found an integrated mouth.
The Webinar platform is connected to a CDN for large-scale webcasts.
Profitability and financing:
Revenue of US $ 330 million in 2018 has doubled compared to 2017, and it is important to realize profitability. Already started to do the Asia Pacific market.
For financing, Bill Tai is also an angel investor in Twitter and Tango.
In 2013, A round of 6 million US dollars, Qualcomm investment
In 2013, Series B USD 6.5 million was invested by Victoria Harbour
In 2015, the Series C financing was US $ 30 million, Emergence
In 2017, Series D raised 100 million US dollars, Sequoia
Six, the logic behind (culture, values)
Eric yuan (袁征) listened to Bill Gates in 1994The speech identified the Internet as the future trend. After joining the Webex in 1997 after eight rejections, from an ordinary engineer, after hard work, he was promoted to manager and director to VP. The genes of the same, zoom’s founding team still maintains the “self-driven” feature, work hard, emphasize reflection and summary, most of the executives grow from within.
“Delivering Happiness” is the company culture that Eric has always emphasized. As a CEO, you must strive to make employees happy. When employees are happy, they will find ways to make customers happy. When customers are happy, I will be happy. When I am happy, I will Think of ways to keep employees happy. This is a virtuous cycle, simple and efficient. The customer is happy and the company can survive.
“Care” is Zoom ’s values. What a company is most afraid of is that it gets bigger and more complicated. Our “care” has five levels of meaning: caring for the community, caring for the company, caring for customers, caring for colleagues, and caring for ourselves.
Zoom is no accident this year. It will be listed on NASDAQ, but the competition will never stop. After Webrtc is open source, it will open a door to make the communication iterate faster. Many business scenarios and social needs content. Business needs a workflow. Compared to social pictures, Zoom only has screen sharing and file sharing.
As a tool, Zoom still does not have enough control over the workflow. The entire Indian business scene is Google, Skype is integrated into Office, and Slack and Trello are also potential competitors to cut into the corporate communications from the perspective of workflow.
In addition, there is also a layer of PAAS service providers for real-time audio and video, which has lower latency and interactivity than traditional live CDN solutions. This is a business that sells traffic by a technical means, without paying attention to the business product itself. Typical representatives include Tokbox, Twilio, Genband, Agora.io, and so on. I will talk about one later.