- Zoom started trading publicly on Thursday after pricing its IPO at a $9.2 billion valuation.
- The IPO was a boon for CEO Eric Yuan, who owns much of the company and holds nearly 20% of the voting power. The second most powerful investor is Emergence Capital Partners, a venture capital firm that once backed Salesforce and Box.
- We spoke to Emergence partner Santi Subotovsky about what sparked his interest in Zoom, and why Yuan reminds him of Apple cofounder Steve Jobs — only a nicer version.
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When Zoom priced its IPO on Wednesday evening, the video conferencing platform garnered a valuation of $9.2 billion, and founding CEO Eric Yuan saw a huge windfall. Collectively, Yuan and his family now own 20.5% of the company’s common stock, as well as 20.1% of its high-vote stock.
Emergence’s investment in Zoom’s 2014 Series C was worth $1.1 billion with the IPO. Despite selling nearly 1 million shares in the IPO, Emergence still owns 12.7% of Zoom’s high-vote stock.
Emergence General Partner Santi Subotovsky took a seat on Zoom’s board, and he’s been working closely with Yuan ever since.
In the hours after Zoom started trading, Subotovsky spoke to Business Insider about what first drew him to the company and why Yuan reminds him of Apple cofounder Steve Jobs — but nicer.
This interview was edited and condensed for clarity.
Becky Peterson: You’re in New York right now? How did everything go today?
Santi Subotovsky: It was exciting. It was great to see a lot of the Zoom employees, even a lot of the early employees that were there back in 2014 when we first invested in the company. It was great to see a number of customers there celebrating with us. And it was also great to see a lot of investors celebrating.
It was like one of those big family reunions. We’re just celebrating a milestone without thinking that this milestone is the ending.
Peterson: Have you taken a portfolio company public before?
Subotovsky: No, this was my first experience. Hopefully not the last one.
Peterson: You invested in Zoom back in 2014. How did you first meet Eric, and what drew you to the company?
Subotovsky: I had a pain point that other people didn’t have, because I’m from Argentina and I wanted to connect with people in Argentina. So I tried every technology out there to figure out what was going to be the next communication platform.
Zoom not only worked incredibly well but it also started spreading virally, and I started getting invites from friends of friends. That’s when I reached out to Eric and we started building a relationship.
I tried to understand why the technology worked so well, what his vision was, and then I got it. He was rebuilding the entire architecture for this modern cloud environment and that’s what enabled him to deliver incredibly high quality to each of the participants. And that’s why we decided to partner with him.
And he saw that given our experience with companies like Salesforce and Bosch, we could help with go to market, and going from the SMB business that he was targeting early on and into mid-market and enterprise.
Peterson: How big was the company when you first invested?
Subotovsky: We invested when the company had about 30 people and had a few hundred thousand dollars in monthly recurring revenue.
Peterson: As an investor, were there any indications early on that Zoom would get as big as it did? It went public with a $9.2 billion valuation.
Subotovsky: We looked at the market and we saw that it was going through a major transformational change.
The way we thought about it was that in the early days people were building relationships exclusively in a face-to-face meeting setting. And then we tried to shortcut that process and started using email and phones, and those were technology crutches. It wasn’t as good as face-to-face meetings.
What we saw is that people were spending a lot more time on Zoom, even though they could have had face-to-face meetings. So that’s why this notion that video is the way people are going to communicate gave us the sense that this was going to be a big opportunity.
Peterson: Was there ever a point since your first investment when you thought the company might fail?
Subotovsky: It’s a good question. We had hurdles along the way; it’s never a straight line. But overall, the culture never failed. We never twisted the culture just to make things work or because the market wanted us to do this or the customer wanted to do that. We only stayed true to the culture.
It was a culture of care: care for employees, care for customers, care for investors, and care for partners.
Eric is an incredible leader. He’s a visionary. It sounds like describing a version of Steve Jobs that is much nicer. He has that visionary focus of what people need and what’s going to make people’s lives better, but he actually cares about people, and that’s why he’s the nicer version of Steve Jobs.
Peterson: How did you and the rest of the board decide it was time for Zoom to go public this year?
Subotovsky: It was more about how can we get to more customers and how can we expand our footprint. It was a natural progression for the company.
We saw this as a milestone, a graduation. It’s like a high school graduation. But now we’re going to college and we’re still going to work incredibly hard to graduate from college and move on.
Peterson: Recode reported on Wednesday that Zoom was previously approached by Microsoft, which wanted to buy the company. Did Zoom decide categorically not to sell or is it something the team considered?
Subotovsky: Eric wants to run a company and wants to have full control of the culture, and he wants to have full control of how employees and customers feel about the product.
Right now he he feels he’s delivering happiness all around, and if that changes he might change his mind. But for now, he’s obsessed with this culture of happiness, both internally facing and externally facing.
Right now I don’t think that’s in the cards fo Eric and the company. We just want to keep doing what we’re doing.
Peterson: As an investor, what do you plan to do with your proceeds? What happens next for you?
Subotovsky: We haven’t had that conversation. I personally hope to help Eric build the company as he continues working on it. For us at Emergence, it’s not about taking the company public, it’s helping founders build iconic companies. Even though this is a great company, we still have a lot to do and we’re excited to go back to work after this week.
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