Zoom aspires to become a leading platform for start-ups to establish billion-dollar enterprises.

• Zoom is collaborating with start-ups to accelerate product development as competition from major tech companies intensifies.
• An online contest was held by the company for start-ups to develop innovative features and capabilities for Zoom through the utilization of Zoom APIs.
• The Indianapolis-based start-up Docket, which offers an app to streamline meetings with collaborative agendas, note-taking tools, archives, and task steps, emerged victorious in the competition and aims to secure $2 million in venture capital funding.

Jim Scheinman, the founding managing partner of Maven Ventures and an early investor in Zoom, continues to support the company's future and the vision of its founder and CEO Eric Yuan. Despite competition from companies like Microsoft Teams and Google Meet, Zoom has been thriving due to the demand for its essential services during the pandemic. However, to stay ahead, Zoom is collaborating with start-ups developing new applications on its open platform using Zoom APIs.

Since its launch in 2013, Zoom has grown to 300 million daily participants and its market cap has increased from $15.9 billion at its IPO in April 2019 to nearly $50 billion. Maven Ventures has experienced a 200 times return on investment during Zoom's rapid growth.

Scheinman proposed an online app marketplace contest for start-ups to develop new features and functions for Zoom, which was held in a virtual setting with a backdrop of whales swimming. Ten tech start-ups, selected from a pool of 600 contestants, presented their business plans in Shark Tank-style pitches over Zoom to Scheinman and four other judges, including Zoom's Platform and AI head Wei Li, Carl Eschenbach of Sequoia Capital, Santi Subotovsky of Emergence Capital, and Bart Swanson of Horizons Ventures, who are also Zoom investors and serve on the company's board.

Docket, a start-up from Indianapolis, won the competition for the most efficient Zoom app with an app that streamlines meetings through collaborative agendas, note-taking tools, archives, and task steps. As the contest winner, Docket will receive up to $2 million in funding from four participating venture firms once due diligence is completed. Docket, which launched in January 2019 with $1.5 million in VC backing, is one of several apps on Zoom.

It was a clear choice for us to launch our app on Zoom due to the large user base and the seamless integration of Docket within the video platform, as stated by Brown. He predicts that Docket will have 10,000 users by the end of May, which is a significant increase from the 3,000 users at the start of 2020.

The potential for growth and venture funding for start-ups with innovative apps that utilize Zoom is immense. "Zoom will be the next big platform for start-ups to build billion-dollar businesses," Scheinman stated. "All 10 of the companies we selected as finalists have the potential to achieve a $1 billion business opportunity."

Zoom’s growing pains

Zoom experienced a massive surge in daily meeting participants, from 10 million in December 2019 to over 300 million by late April 2020. This has led to a change in the way people communicate, with benefits such as increased productivity and collaboration, and ease of use. Eric Yuan, founder and CEO of Zoom Video Communications in San Jose, predicts that working from home and video communications will become more accepted as standard practice in day-to-day business in the long run.

To remain competitive against established tech giants that have intensified their video conferencing services as part of their full product suites, the initial start-up must continue innovating.

Verizon Business has recently joined the race for cloud-based video conferencing and event platform market share by acquiring Blue Jeans Network in mid-April, while Facebook has also enhanced its videoconferencing and chat features.

Similar features such as screen sharing, gallery views, meeting recordings, and live transcripts, including from Otter.ai's 25 million meetings, are offered by various services. Pricing ranges from free to monthly subscriptions of $5 for small teams and $15 and $20 for larger businesses and enterprises.

While all services share similar features, the variations lie in how specific features are de-emphasized in the overall mix, according to Dan Rothman, president of software development consultancy Flatbridge Technology in New York. He highlighted that Google Meet excels in social grouping due to its ease of access to contacts, while Microsoft Teams is geared towards businesses, seamlessly integrated with Office 365.

Zoom has faced criticism beyond typical start-up challenges, including concerns about being made in China and being vulnerable to foreign spies eavesdropping. In April, Yuan admitted that some meetings were mistakenly rerouted through China to handle increased traffic.

Zoom is developed in Silicon Valley, but has a large developer team in China to support its higher-level R&D teams in the U.S. Researchers at the University of Toronto found that there are 700 Zoom engineers working in China. Zoom plans to expand in the U.S. by establishing engineering centers in Phoenix and Pittsburgh and hiring 500 engineers over the next few years.

Not a Chinese app

Yuan, an American citizen who grew up in Shandong province, China, and earned degrees in applied mathematics from Shandong University of Science & Technology and China University of Mining and Technology, later obtained an Executive MBA from Stanford University. Inspired by the dotcom boom, he moved to the U.S. in 1997 and joined videoconferencing start-up Webex as a code developer. He worked his way up through cultural and language barriers to become a v.p. in engineering, helping to build Webex over 14 years, including a $3.5 billion acquisition by Cisco Systems in 2007. He stayed on as corporate v.p. of engineering for a few years before leaving the company.

In 2011, after his idea for a cloud-based video service was rejected, he left and took 40 Cisco engineers with him to start his own company, Saasabee. The start-up was later renamed Zoom after an early investor suggested the name from a children’s book.

In April 2019, when Zoom went public, Yuan became a billionaire and his venture investors received a payday. However, as Zoom's user base grew exponentially this year due to the global Covid-19 pandemic, security vulnerabilities were exposed. Despite being designed for enterprise use, Zoom was suddenly being utilized by consumers for work, study, and socializing, as explained by founder Yuan.

In order to address high-profile issues such as "Zoom bombers" disrupting online meetings, Zoom halted the development of new products and established executive-led task forces to implement a 90-day repair plan, commencing on April 1.

The company made several quick fixes, including data routing controls for Zoom hosts, a user-friendly icon for security features, the acquisition of Keybase for end-to-end encryption, default meeting passwords, and named Alex Stamos as a security consultant.

Fighting Goliaths

Although Zoom has made security improvements, it continues to face security challenges. Google has prohibited its employees from using Zoom for business purposes due to security concerns. Similarly, other companies such as Bank of America and Daimler AG have implemented similar measures.

Bill Tai, a Zoom angel investor, stated that the company has been facing competition from four or five major players since its inception. He believes that Microsoft and Google are constantly copying features and that Zoom will eventually surpass them. Tai emphasized his faith in the company's proactive and transparent culture. He was the first to invest in Zoom after discussing Yuan's idea for a cloud-based video service with two friends and co-investors in tech start-ups Treasure Data and Tango.me. Tai has not sold any shares in Zoom and is proud of his 1,100 times return on investment.

Yuan's start-up idea received additional funding after Tai's lengthy memo convinced other angel investors that a new video conferencing service could fill a market gap and compete against Microsoft-owned Skype and Webex.

Tai stated that Skype had stopped innovating and Webex would be integrated into Cisco. He added that he never doubted Zoom's success, but the question was how large it would become.

In 2013, Zoom received $6 million in funding from Maven Ventures, Yahoo co-founder Jerry Yang and his firm AME Cloud Ventures, and Qualcomm Ventures. Later that year, Horizons Ventures, the private investment unit of Hong Kong tycoon Li Ka-Shing, led a $6.5 million second investment. In 2015, Zoom raised $30 million from existing investors and Emergence Capital. In January 2017, the company raised $100 million led by Sequoia Capital before its IPO in April 2019, when it was already profitable. Zoom's 90-day fix-it plan is ending on June 30, and while the U.S. economy is reopening, challenges for the company remain. The app marketplace that Zoom and its venture investors are working on to introduce new features and functions could give the company an edge it needs in this new world of online everything.