The general consensus is that seemingly overnight Zoom went from an unknown company to essential infrastructure. That’s not true.

Prior to the coronavirus, it was a major player in enterprise communications.  The reason most people didn’t know about it, is that it was designed as a B2B company (business-to-business sales) rather than a B2C (business-to-consumer). The company had a $16 billion IPO in April of last year. Hard to argue that it’s a “surprise” success after that. For several reasons, B2B companies typically don’t generate the amount of hype consumer-facing firms do.

To understand why Zoom is everywhere now, you need to understand that Zoom is really two businesses: software as a service and hardware.

Software as a service

This is the Zoom everyone knows about–video conferencing. Zoom offers this service through a freemium model. Basic service is free, and customers upgrade to paid tiers for additional features. This is a commodified industry. For the typical non-commercial user, there’s a limited difference between Zoom/Skype/Facetime/Google/Teams. The only major benefit for regular folks is that Zoom allows more than four people on a video screen at once. Zoom does offer benefits over the others for enterprise meetings (larger number of participants).

Hardware

Zoom became a viable business by concentrating on business communications. The following is a typical business situation that displays Zoom’s value.

Imagine that you own a factory in Minnesota. All of the operations people work out of the Minnesota HQ (finance, supply chain, etc.). Meanwhile, you have ten salespeople selling your product throughout America. Every month you have a meeting to talk about the impacts of each function on sales. 15 HQ employees attend the meeting in person and the 10 salespeople call in. Prior to Zoom, the company was required to maintain a bunch of different systems to run this meeting.

1. Room scheduling system to ensure the conference room is reserved
2. AV system to display the presentation to the people in the room
3. Screenshare system that ensures remote workers can see the presentation in real-time
4. Conference call technology to ensure that everyone can hear everyone
5. Audio system that captures all the conversation in the room
6. Cameras in the room so that remote people can see speakers

Zoom was the first one to provide all six in an integrated, easy-to-use offering.

Here’s how the company describes the product in their recent 10k:

Zoom took something that was fragmented and boring, and made it easy for IT people to manage. When the Coronavirus happened, Zoom was well positioned, because many tech-savy business were early adopters. This isn’t to say it has been painless. Here’s Zoom’s CEO talking in BusinessWeek about the growing pains of moving from a B2B company to B2C.

Yuan argues that Zoom’s issues stem not just from its explosive growth but also from the new types of users flocking to it. “We built this as a platform for knowledge workers, for businesses with IT departments,” he says, sitting against a digital backdrop of the San Francisco hills that he obscures as he leans into his webcam. For Zoom users in nonpandemic times, he goes on, there would be a tech support person helping them set up their screen-sharing settings and reminding them to have a password.

The whole article is worth a read.

TL/DR – Zoom didn’t come from nowhere. It was a massively successful enterprise communication platform that is now used by regular consumers.

Photo by Allie on Unsplash