When video collaboration service provider Zoom goes public this year, founder and CEO Eric Yuan can claim he built two successful technology platforms and companies. Zoom, though, is the result of superior effort based on lessons he learned after selling Webex to Cisco.
The Lowdown: Last week, Zoom filed for an IPO. The company, founded just seven years ago, is in a bid to raise $100 million in fresh capital. Investors valued Zoom at $1 billion in 2017, putting it among the so-called unicorns — start-ups with at least 10-figure valuations. What makes Zoom unique among unicorns, though, is that it’s profitable. According to press reports, Zoom posted profits of $7.5 million on revenue of $330 million. The profit crossover is a remarkable achievement given that many larger unicorns engage in deficit spending and burn through venture capital cash to build out their fortunes.
The Details: There’s no word on when Zoom will go public or on how it will use the new capital. The likclihood is that Zoom will use the new funds to fuel product development, sales capacity expansion, and channel buildout to continue its fight for market share.
The Impact: Zoom is a highly popular and growing video collaboration platform in the $24 billion technology segment. Zoom’s success is creating competitive challenges for other providers in the field, including Cisco (Webex), LogMeIn (GoToMeeting), Microsoft (Skype), and Google. A stronger Zoom could create barriers to entry for segment newcomers, including Amazon (Chime) and Facebook (Workplace by Facebook).
Background: Several published reports tell the story of Yuan, who immigrated to the United States to do software development specifically on collaboration platforms. He was the founding engineer of Webex and was part of the team that sold the company to Cisco in 2007 for $3.2 billion. Yuan left Cisco in 2011, reportedly embarrassed by the poor functionality and user experience. He left Cisco to start Zoom, with the sole ambition of starting a company whose products offered an easier and better user experience.
Related Links:
CNBC: Video-Conferencing Company Zoom Files to Go Public With Over $300 M
FORBES: Can Cisco Respond To Zoom’s Challenge In $20B Videoconferencing Market?
