We became a very happy NASDAQ public company back in 2019, December of 2019. Look at a daily meeting participant around 10 million, and a few months later in April-May time frame, all the way jumped to more than 300 million daily meeting participants.
I saw 30x growth in daily meeting participants in a few months.
This is Masters of Scale. I'm Jeff Berman, your host. This week on the show, Zoom founder and CEO Eric Yuan reveals how feeling stuck at a big tech company led him to strike out on his own, how Zoom handled astronomical overnight growth at the start of the COVID pandemic, and how the company is now evolving in the age of AI. Eric still remembers the moment he decided to move to Silicon Valley. It was the early 1990s and he had a chance to see Bill Gates speak. Bill's message: computers were about to upend the world.
I was so fascinated by his speech. I realized internet was going to change everything and I thought about what should I do. And the best way, you know, to embrace the first wave of internet revolution is to go to Silicon Valley. And I tried so many times. I was in Beijing, China, and I applied for the visa. You know, it's a long story. Every time the reason is different and they did not give me the visa.
Eric's visa applications were denied eight times. His ninth attempt finally worked.
When they gave me the green light, say, 'Yeah, this is your visa.' And I was so excited because I dreamed of going to Silicon Valley for a long time.
Eric, did you have a job lined up in Silicon Valley? Did you know what you were going to come do?
Yeah, I did. Because that's an H-1 working visa. So meaning, you know, the company sponsored me, and it's WebEx, you know, sponsored me to come here to write software.
And what was it like for you coming to the US in the late '90s to join WebEx and start a Silicon Valley life? I mean, on a personal level, how did you experience that transition?
Mentally I was ready because when I was a kid I always liked reading the books about what's happening in Silicon Valley, like HP, Apple. Silicon Valley has a wonderful culture. I think after three or four months I feel like already part of Silicon Valley because everyone here is so friendly and they all want to support you, help you, and very inclusive culture here. No matter where you came from, as long as you can contribute, you know, you stay humble, you work hard, the culture here really welcomes you. So I feel extremely excited after a few months.
And Eric, you're joining WebEx. We're still in the dial-up days. We're in Web 1.0 era. I mean, we have audience members who were not born in this time frame. What was it like trying to scale WebEx in that era?
Yeah. So I remember back then the WebEx office was very small. Our next door neighbor was Hotmail. So Hotmail was acquired by Microsoft back then. I think at that time, you know, all the engineers, including two co-founders, we all realized the huge potential of internet. However, back then the internet was extremely slow, the PCs were not powerful enough, and we were working so hard on optimizing the technology. Essentially, WebEx was the first generation of content sharing, the screen sharing. You are so right, at that time the voice over IP didn't work. The way for WebEx users to use our technology is to use a phone call and share your screen.
So, Cisco acquires WebEx. You're not a founder of WebEx, but you're early. It's your only Silicon Valley job and you'd been there for something on the order of 10 years at that point, right? You stayed at Cisco for a while. What was it like joining a big company and learning to work inside that structure rather than in the environment of a real Silicon Valley startup?
So for the first two years after the acquisition, Cisco let WebEx still run independently, right, and still separate. And the WebEx office was not a part of the Cisco campus. And I think overall the experience was great until like 2010 time frame. Because at that time, because of the customer feedback, the video experience was not great, and mobile experience not great, and WebEx became so, you know, not user friendly. I feel like I have an obligation to fix that problem. The way to fix that problem is you got to build something from the ground up because WebEx architecture was not a video collaboration, it's more like a data collaboration. And unfortunately at that time I did not get enough support. So they thought there's no need to rebuild WebEx. And yeah, that's finally I decided to leave.
I mean, before we get to leaving and starting Zoom, you hear this over and over again. You've got entrepreneurial teams that are capable of moving quickly and identifying the problems and coming up with the solutions, and they run into bureaucratic roadblocks. The sort of sclerosis that affects large organizations, the inability to get out of their own way and move quickly to the future. I'm just curious, like, what if you'd been able to sit with the Cisco leadership at the time, and maybe you were able to do so, why can they not see the need to invest in the rebuild and to build something new for this moment, rather than effectively force you to leave and go do it on your own?
It's a great question. And this is pretty common especially for large corporations. But the way I look at this is, I think there's so many reasons. But later I realized, you know, John Chambers is great, he really understood the importance to have very scalable video conferencing. He didn't know I wanted to build a new solution, right? It's because so many layers. If he knew that, very likely I'm probably still at Cisco, right, to build a solution. So ultimately, how to make sure, no matter how big your company is, make sure the bottom-up approach always can reach to the final decision maker. That's very important. Either have a culture like that, you have a structure or process. If you have too many layers, and quite often the senior leaders, they may not know what's going on. That is very important.
What inspires you to say, I'm going to go start a brand new company for the first time in my career and go after this?
Mentally I was already ready. Otherwise, I feel like, how to tell my kids, oh, I work at a bigger company for my entire career? I just did not feel good. So the best way to embrace the Silicon Valley culture is to either build a startup or join a startup. That's why when time was ready, I was ready.
And what was the original vision for what became Zoom?
After I left Cisco, I want to build a new solution. But I want to build a consumer solution. I didn't want to build another business solution. Unfortunately, it's really hard to monetize.
Were you self-funding it? Were you bootstrapping it at this point? Were you raising money? How did you actually fund the new company?
Yeah, so to start with, I tried to raise a seed money from some VCs, and they did not think the world needed to have another solution. Luckily, I got the seed funding from a few of my friends.
And there were other video solutions at the time. It wasn't like it was a wide open space. What did you see the opportunity as that you could differentiate and build a real business there given the entrenched competition? I mean, Skype was already owned by Microsoft at this point, right?
Yeah. So what gave you the confidence that there was a real opportunity here?
So you are so right. There were so many solutions out there. That market was extremely crowded. However, I did spend a lot of time talking with those users. Do you like Skype? Do you like WebEx? I did not see a single happy customer who told me that they really like the existing solution. Then I realized, what if I build a better solution? I think I have a chance to survive.
And Eric, given the experience, you know, joining WebEx so early, being there and helping drive so much of the scaling journey, and then being inside the large company that Cisco is. What about culture? Like, how did you think about building the culture at Zoom?
Yes. So that's very important. So Zoom's culture on day one until today exactly the same: deliver happiness. Meaning we do all we can as a business, we make a customer happy, build the best solution to delight our customers. And that's culture I think really helped Zoom become where we are today. And every day I'm the CEO, the number one thing for me to think about, how to make sure all Zoomies, Zoom employees, happy. Together we make a customer happy. It's very important. If you do not have a great culture, you really cannot scale your business. You can grow your business to a level and maybe very soon you are going to hit the wall because you do not have great culture.
How do you assess and track happiness inside the company? How do you know how you're doing on internal culture?
Early on when we were very small, right, almost everyone, it's very easy. But later on as company becomes bigger and bigger, it's really hard. You got to look at everything, right, from a senior management team, middle layer, individual employees. Also do the survey, and also based on interaction with the customers, based on the feedback, how you build the product, how you treat employees, how you recruit employees, how you retain employees. Is this your virtual background or this is your... I see a lot of books, right?
This is my real background. These are my...
