Beyond Eric Yuan’s Zoom: How He Went Out All Alone
While Zoom stole the show at its First Public Offering and investors smiled home, feeling better that at last here is a technology company that can work, Zoom’s CEO, Eric Yuan, is the man to laugh last. That the company was valued at $9.2 billion from the IPO and that Yuan is now a new billionaire in town is not a story to be dismissed. Eric Yuan who recently shared his most private life with Forbes Magazine, shared deep insights about what we did not previously know about the 49-year-old billionaire.
From Burning Down His Neighbor’s Cottage to Being Denied Travel Visa
Life has been tough, but not to the degree we see it in Yuan’s case. On a normal day in Chinese eastern Shandong Province, in fourth grade, Yuan was supposed to be home playing or stuck to his parents’ TV set, but he would choose to go on a holy cause of making the planet better and safer by collecting construction scraps to recycle his parents’ broken-down chopper. The aim was not to rid the environment of wreckage, but of course — as you would expect from all serious minded entrepreneurs — to make profit. But then the facility needed only metal to be reconstructed and sold, and Yuan having none of those, decided to set the whole thing on fire, which would have almost caught and razed down his neighbor’s home but for the quick response from firefighters. This is just the beginning of the frustration in his life. Years later, he would be at the US embassy (after a Mathematics and Computer Science degree from the Shandong University of Science &Technology and a marriage at the age of 22) applying for grant of visa and having his visa applications denied for 8 times.
“I told myself, okay, great. I’ll do all I can until you tell me that I can never come here anymore. Otherwise, I’m not going to stop,” Yuan said, in annoyance.
Failure To Innovate Is Another’s Opportunity.
Yuan won! In the summer of 1997, he started work in a two-year-old Webex, based in California, which went public in July of 2000 and was acquired by Cisco for $3.2 billion in 2007. Yuan was very sad about this move by Webex, nevertheless. He finally left Webex (then Cisco’s acquisition) because his bosses at Cisco wouldn’t let him rebuild Webex, leaving behind a job so lucrative that he was managing 800 people. Yuan’s reasons:
“Someday, someone is going to build something on the cloud, and it is going to kill me,” Yuan told Bill Tai, a venture investor who became one of the first backers of Zoom. “Cisco was more focused on social networking, trying to make an enterprise Facebook,” he said.
“ Three years after I left, they realized what I said was right.”
Concerning the loss of the security of his job and earning, Yuan told his wife:
“I know it’s (going to be) a long journey and (is going to be) very hard, but if I don’t try it, I’ll regret it.”
Within months, Yuan found out that he would shoot his shot at video conferencing business against Microsoft’s Skype, Google’s Hangouts, Cisco leading the market share, and other multiple startups already on ground. The idea of video-conferencing for Yuan “would require flawless execution to win,” said one investor who did not invest in Zoom.
Related: How Zoom Has Proven That Innovation Can Win Any Time
When Zoom launched, it had several key differences from the crowd.
- Its lightweight Web client could figure out almost instantly what kind of device you were using, meaning Zoom did not use different versions for Mac or PC.
- It also presented a software layer that shielded any bugs that usually follow updates from web browsers like Chrome, Firefox or Safari.
- Zoom could do business even at 40% data loss, so it would still work on a very slow internet connection.
- And at $9.99 per host per month ($14.99 today), it undercut its rivals. Zoom customer service chief Jim Mercer was then working at competitor GoToMeeting when a colleague opened a Zoom account to see what the hype was about. “One click, we were in, and there were 25 feeds of participants at the same time,” he says. “We were like, ‘What is this voodoo? How are they doing it?’ ”
So Much Has To Depend On Trust and Goodwill At The Start-off Stage.
Leaving Cisco for Zoom, Yuan had to confront the hurdle of every startup: money! To get his first set of 30 engineers for Zoom, he had to convince his friends, including investors to write him $250,000 checks. He was able to get more — $3 million from Webex CEO, Subrah Iyar — before he could get Zoom (then Saasbee) started.
The success of the business under Yuan meant Zoom would further raise $6.5 million from Li Ka-shing’s Horizons Ventures, $30 million round from Emergence Capital in 2015 and $115 million Series D round in early 2017 by Sequoia, making the company worth $1 billion. Eric Yuan’s personality would become so influential that Zoom did not even work hard to prove that it is worth its claim. According to Zoom’s partner in Sequoia, Carl Eschenbach,
“We were going through all the due diligence, and I remember saying there have to be a thousand Eric Yuans in the world, because everyone we spoke to, they knew Eric, big or small.”
Building A Product Is One, Believing In It Is Another
Yuan surprised partners at Emergence when he turned up for his pitch event there and instantly insisted that every investor download the Zoom app and join him for a live video conference of the presentation, says partner Santi Subotovsky. This shock would come again later that year at large corporations. Eric Yuan never missed any opportunity to practice what he preaches. He makes sure every investor in the room had downloaded the Zoom App before proceeding, whenever he raised money from venture capital investors.
“Customers have always said, ‘Eric, we’ll become your very important customer, you’ve got to visit us,’” says Yuan. “I say, ‘Fine, I’m going to visit you, but let’s have a Zoom call first.’’
Don’t Celebrate Yet; Success May Just Be Temporary
After the IPO on Monday, it appears Yuan is not taking his new found billionaire status to his head.
Although, Eric Yuan shares his office with his product chief and friend Oded Gal, a fellow Webexveteran he hired away from BlueJeans Network three years ago, he is rarely there. He is either off for a new product launch, or he has taken up a temporary desk with a team he wants to focus on by sitting side-by-side with them. Yuan has mostly been with the engineers since Zoom announced a voice product in October, now called Zoom Phone. Zoom Phone is one of several major product lines Zoom has boasted of in recent months, alongside an update to its conference room bundle called Zoom Rooms. Though an increasing number of Zoom’s users log in via smartphone–one out of six today, Yuan says–many big firms still depend on hardwired conference rooms. Zoom provides the software; partners like Dell, Logitech and Polycom supply the TVs, cameras and speakers.
In the meantime, don’t expect Yuan to let his newfound billionaire status go to his head. Back in his cubicle the Monday after the IPO, he kept strolling down the Zoom Twitter account for customer testimonials to retweet. Employees, who showed up around the world for the IPO ceremony to wave to their boss over a live feed in Times Square tweeted— what else?
“You go celebrate one day, and that’s it,” Yuan says, of a mentor who told him IPO is like graduating from high school “You don’t want high school to be the peak of your performance, right?”
Charles Rapulu Udoh
Charles Rapulu Udoh a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organisations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution and data analytics both in Nigeria and across the world.
