• Causal Engines

Zoom: When Reinventing the Wheel Pays Off

When we think of attractive startups to invest in, we tend to look towards the “exciting” options emerging in the market – the product that revolutionizes a space, or a company proposing novel workflows, or generally startups that offer something unique and exciting. For instance the story of Uber is a great example of an incredibly novel idea disrupting the market. When Uber first came onto the scene, the concept of getting a ride through your phone from a stranger was completely foreign. Typically venture capitalists are attracted to these glamorous, exciting pitches but sometimes the best ideas sound boring.

These companies allow us to contrast the story of Zoom’s founding by Eric Yuan, a Cisco VP of Engineering who worked on WebEx, a video conferencing software. In 2011 when Eric decided to leave Cisco to found Zoom, the market was already saturated with video conferencing software like WebEx, Citrix or GoToMeeting that were already established products. Eric, seeing some of the dissatisfaction in WebEx users, tried to invent a faster, easier to use video conferencing software by solving the backend engineering problems holding back other products. But when venture capitalist firms heard Eric Yuan’s pitch for Zoom, they mostly saw an engineer with an unimaginative product in a crowded space, and a TAM too small to make Zoom worthwhile. Eric had to draw funding from a random assortment of funding from colleagues and personal connections.

Since then, Zoom has become one the premier players in its space, and perhaps the only “winner” of the COVID-19 pandemic. So that begs the obvious question: how did Zoom subvert everything we know about making a good startup? Eric Yuan understood that for his business to be successful, he didn’t have to reinvent the wheel – he just had to make it turn faster and easier and people would come to his product. After working on WebEx for so long, Eric Yuan knew its pitfalls: users were unhappy with slowdowns when too many people were on the call, delays caused by WebEx having to identify the type of device, and required high-quality internet connection to function. With Zoom, Eric sought to make an easy to use product that worked really well. This meant reducing the amount of data Zoom used so it could be used with spotty internet, creating a lightweight web client to identify your device, expanded features for mobile devices like screen sharing, and frankly making a faster product. These fixes mattered a lot, especially when dealing with the subtleties of human communication. Combined with an attractive freemium model, Zoom was well prepared to capture the abrupt shift to remote work due to COVID-19. Eric Yuan’s story reminds us to always remember that customers crave better experiences and investing in those experiences - no matter how boring it seems - will yield success.

We would like to thank Yitzi Weiner at Thrive Global, Alex Konrad at Forbes, and Ben Gilbert at Business Insider for their inspiration.

This article is a collaboration between Archit Bhise and Alex Li.