Eric Yuan Explains the 6 Simple Tactics He Used to Build Zoom Into a $20 Billion Business
Anyone familiar with video communications giant Zoom’s growth story knows that its successful IPO was no fluke. Since Eric Yuan started the company in 2011, it has amassed over 2,000 employees, does over $120 million in quarterly revenue, is at a market cap of over $20 billion, and yes, it is profitable, too.
To get behind the scenes of Zoom’s rise to prominence in a crowded space, I interviewed Yuan, who started the company as a sole founder and endured the ups and downs of Zoom’s business from day one. He shared with me the six principles that were pivotal to him building and scaling Zoom.
1. Have deep domain expertise
Though Yuan started Zoom from scratch, he was no stranger to video communications. Being a founding engineer and VP of Engineering at Webex, he gained deep domain expertise over the course of over 10 years before he started Zoom.
He explained, “During the time of Webex growing from $0 to greater than $700M, the company was sold to Cisco. The Webex team lost the passion and drive to further grow the business because many Webex veterans left and Cisco’s integration with Webex was not successful.” From the experience, he learned that “You have to keep working hard to deliver happiness to customers and you have to control your own destiny.”
Having the experience growing the Webex from the ground up, Yuan knew the ins and outs of the video communications business. This gave him a huge edge when he founded Zoom, allowing him to jump a lot of the learning curve common to early-stage startups.
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2. Take risks
By 2011, Yuan had become one of the centerpieces of the Webex business after Cisco bought them out. At this point, he managed over 800 employees and had a cushy salary. Naturally, his wife wanted to know if he was sure about quitting to start something of his own.
Eric might not have been sure about how Zoom would turn out, but what he did know that his time at Webex was up. He told me, “Every day I’d talk to my customers at Webex and they’d tell me how unhappy they were with our service. This was a terrible way to spend my days, it weighed heavily on my heart.” It made his next move that much clearer: “I wanted to spend my days delivering happiness, and I knew I had to take charge of my own destiny to do that.”
The video communications market was already getting crowded around 2011, and he told me many of his friends advised against starting a company in the space. Even so, he took a leap of faith and quit.
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It worked out big time. Eric humbly told me: “This risk ended positively as most of the solutions in the market weren’t working well for customers, so it didn’t matter how many vendors there were.” A pretty big understatement for Zoom, now a $20 billion market cap public company as of June 2019.
3. Run lean
Though Yuan had the know-how to run a successful video communications company and had taken a risk to start Zoom in an already crowded market, he couldn’t have grown Zoom at the pace he did without running lean.
For starters, Yuan was a solo founder, and he saw this to be a huge advantage, especially in the early days. He told me: “Being a solo founder allows you to move quickly -- when you’re going up against massive, entrenched competitors, you need to maximize speed and agility. Having just one person at the top allows for faster decision making.”
Besides, he had already done this once before at Webex. He didn’t need to split early-stage equity with a partner when he could lay the framework himself.
Aside from running Zoom on his own at first, Yuan had a knack for managing money. In the early days, Zoom was known for its modest office space. Yuan told me: “If I were to spend investor money on nice furnishings and so forth, particularly early on, I might not have it for opportunities that can really grow our business.” A lot of early-stage companies can take a page from Zoom’s playbook.
What’s inspiring though is that Zoom’s lean philosophy hasn’t deviated much from day one. In Yuan's words, “From the start and to this day, I want to maximize our investors’ value. Every dollar I raised from the investors represents their trust, so I should live up to their expectations.” It is this principle that allowed Yuan to scale Zoom to the extent it is today.
4. Prioritize customers
Another reason for Zoom’s hyper-growth in the last couple of years is Yuan’s extreme care for his customers. Many startup founders focus on marketing to get the word out about their companies -- campaigns, social media, etc. Yuan, on the other hand, believes, “Keeping our existing users happy is our number one growth strategy. If our existing customers are happy, they expose our platform to new users, both by meeting with them and by telling them about their experiences with Zoom.”
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5. Ensure work-life balance
Yuan has been vocal about making it to all of his kids’ basketball games and gymnastics meets. Naturally, I wanted to ask Yuan about how he does it. How is it possible that someone who runs a multi-billion-dollar company can make it to every one of his kids’ commitments?
He told me, “I don’t travel for work very often, maybe one to two times a year. If a customer or someone else wants to meet with me in person, I say, ‘Let’s Zoom first. If that’s not good enough then we’ll meet.’ 99 times out of 100, a face-to-face on Zoom is all that is needed.” With the time saved from doing a Zoom call instead of traveling, Yuan is able to make time for his kids.
In his words, “If I’m home instead of traveling, then it’s simply a matter of blocking out my schedule for my kids and making it clear that these windows are not negotiable.” Now that’s impressive.
But Yuan did remind me that he didn’t really think of work-life balance in the way that I intended to ask him: “I believe that when you care deeply about what you’re doing, there is no need for the traditional ‘work-life balance.’ I think about it as doing what I care about as opposed to working.”
That’s what I like about Yuan so much -- he’s living life enjoying everything he does. Regardless of revenue, that in itself defines success.
6. Be deeply passionate
But where Yuan truly stands out as a founder and CEO is his extreme passion. Oftentimes, you can find Yuan on Twitter tweeting back and forth with his customers -- ordinary people like you and me. He told me, “We have awesome, passionate customer success and social media teams, but when I see a customer who needs help or is unhappy, I take that personally.”
That’s a defining characteristic about Yuan: his passion isn’t derived from the money he makes, but rather the customers he makes happy. His passion is apparent in his interaction with customers, as he often offers to contribute directly to the Zoom codebase to fix customers’ issues.
In Yuan’s words, “I care about these people and their experience with Zoom, so it feels very natural to me to want to jump in and see if I can help.” He’s passionate about his customers, who he is confident will bring happiness back to him in the long term.
The way Yuan sees it, “What better way to have a real-time pulse on how your business is doing, what features or integrations you should be building and so forth than to be listening to your customers all day?” Yuan’s passion for improving Zoom’s product is deeply correlated with his passion for helping his customers.
Passion. That’s why Yuan, as CEO of a huge public company, never gives up and has been able to reach the level of success he has today.