- Zoom went public on Thursday, and shares soared 81% on its first day of trading.
- Zoom now has three goals: obtaining more enterprise customers, expanding to international markets, and promoting its new Zoom Phone product.
- Zoom CEO Eric Yuan and CFO Kelly Steckelberg talked with Business Insider about how Zoom’s viral nature and a frugal company philosophy helped the $9.2 billion company become profitable.
When video conferencing company Zoom went public on Thursday, shares skyrocketed 81%. But for Zoom, this is just day one of this milestone, and tomorrow, employees are back to work.
"We’ve got to go back to work," Zoom founder and CEO Eric Yuan told Business Insider. "I’m going to fly back to California. We have to double down on our execution and do what we were doing before. We’ve got to keep doing that to make sure we keep our customers happy."
Before going public, Zoom raised $517.5 million from investors, pricing its shares at $36 to achieve a $9.2 billion valuation. Zoom is entering the public markets with profitability on its side — making Zoom stand out in a landscape where tech companies often have redline-filled balance sheets as they go public.
"It’s been something we’ve been striving for for a long time," Zoom CFO Kelly Steckelberg told BI. "It’s an amazing milestone…Given the market conditions and our readiness, we felt now was the right time to do that."
Three post-IPO goals
Now that Zoom has reached its IPO milestone, it has three key goals: sell to more enterprises, expand international sales, and push its new product Zoom Phone, a cloud-based phone system. In January, Zoom hired a head of international sales, and it’s been hiring new enterprise sales representatives as well.
As it aggressively hires more engineers and sales reps, Yuan says a company can’t succeed or grow without a healthy culture. This reflects on the employee ratings site Glassdoor, where Zoom currently has 4.8 stars ouf of 5 and is ranked the No. 2 place to work in 2019.
When hiring, Yuan says the company cares more about whether candidates can build on the company culture and if they are willing to learn than the universities or companies the they come from. After all, if a company culture is broken, it can quickly cause a company to rot.
Meanwhile, Zoom faces its share of competitors: Google Hangouts, Microsoft’s Skype, and even Yuan’s former company, Cisco’s WebEx. But Yuan says Zoom doesn’t focus on competitors.
"We really spend the time talking with our customers," Yuan said. "We try to be the first vendor to address customers’ problems and try to be the vendor to come up with a better solution. If we focus on competitors, it’s not sustainable."
Zoom’s secret to profitability
Throughout the IPO roadshow, Yuan joined all his meetings via Zoom. Steckelberg traveled for the meetings, while Yuan called in from his office in San Jose, California. As a joke, Yuan would change his video background to a different scene, such as a beach in Hawaii. H says shareholders were impressed.
"For the first two minutes, they were surprised," Yuan said. "They said, ‘Wow I did not realize you can do that.’ It’s an awesome experience."
This also showed shareholders how Zoom grew so fast. Steckelberg says it’s because it’s viral in nature. If a host calls someone else via Zoom, the person on the other side has the potential to become a Zoom customer. Zoom does invest in sales and marketing, but it does it with "discipline."
"It has the opportunity to be shared by millions of people without having a sales team to do that," Steckelberg said.
What’s more, Zoom has this philosophy: Employees should take a minute to think about how they’re spending their own money and take two minutes to think about how they’re spending the company’s money. This frugal philosophy, Yuan and Steckelberg say, also helped make Zoom profitable.
"We’re striving for how it helps people think about how people can be as efficient as possible," Steckelberg said. "We want them to be thoughtful about how they bring value to our customers."
That’s because Yuan doesn’t see VC money as money. And every time managers or department heads want to spend money, they ask themselves if there’s a workaround, why they’re spending that money, and what they’ll get as a result.
"I remind myself, the money from the investors is not money from our perspective," Yuan said. "That’s trust. Every dollar is trust. Those investors trust us … That’s one reason that contributed to the profitability."
This, Yuan said, is an important aspect of Zoom’s top company value: care.
"We care for our community, customer, company, teammates, and our ourselves," Yuan said. "Today, we added one more: shareholders."
- IBM is preparing to close its $34 billion acquisition of Red Hat, but Wall Street has ‘real question marks’ after its ‘mediocre’ quarter
- Video conferencing company Zoom prices IPO at $36 per share, giving it a $9.2 billion valuation — 9 times its last private valuation
- Atlassian beats Wall Street’s expectations yet again with 38% revenue growth, but the stock slips down over 9%