Video conferencing is now creating billion-dollar tech unicorns.
Seven-year-old startup Zoom filed to go public on Friday with an IPO of unknown size, and we could see its value reach several billion dollars. The video vendor is already valued at over a billion, and its rise from second-generation platform to one of the leading tech companies of its kind is a definitive sign that video conferencing has arrived as a mainstream business tool.
Zoom’s success is based largely on its user-friendly pricing and usability. It is a prime example of how cloud-based software solutions have shifted the video market away from hardware-heavy on-premises setups and toward downloadable platforms that link with plug-and-play devices to create instant connections. Targeting the average consumer with technology that was once the domain of the IT department has helped grow the use of video conferencing across the modern business world.
The platform’s standalone video conferencing model currently faces a significant threat from the all-in-one workplace collaboration tools that bring together video and office programs, but it already enjoys the loyalty of hundreds of thousands of active monthly users.
So back to our original question: will Zoom go public? In a big way, it already has.
How Zoom Got Here
Zoom is an unqualified success regardless of whether or not it goes public next month, as it appears to be planning. It was launched in 2011 shortly after founder Eric Yuan sold his first video venture, Webex, to Cisco for $3.2 billion. In the intervening years, the company has grown its staff from less than 50 to more than 1,200, seen its number of daily meeting participants grow to a million, and been valued at more than $1 billion (the company has raised more than $145 in funding and received the billion-dollar valuation after a 2017 investment from Sequoia Capital).
A potential Zoom IPO and the resulting injection of resources brings the promise of further innovation.
We’ve reviewed Zoom’s video platform in comparison with its cloud-sourced peers BlueJeans and GoToMeeting, and have rated it highly for value, functionality, and overall experience. The platform can be up and running in minutes, and given that the premium version costs just $14.99 a month, it is easy to understand its popularity–and the platform has become so popular that Zoom has launched its own annual pop-star-infused weekend conference called Zoomtopia, an indulgence reserved for tech’s biggest players.
From a video conferencing standpoint, a potential Zoom IPO and the resulting injection of resources brings the promise of further innovation from a company led by Glassdoor’s 2018 CEO of the Year.
Zoom will need to keep evolving, because another communication unicorn is also considering a public offering this year, and its business model is a real threat to standalone video platforms everywhere.
Zoom’s Competition Now Includes Slack and the Workplace Collaboration Model
Where Zoom has popularized video conferencing for the average business, Slack has started a workplace communications revolution. The disruptive start-up’s workplace collaboration model incorporates everything from chat and video calls to emails and live project documents into a Facebook-style central hub that sits at the center of an employee’s working life. It has proved so successful that tech giants like Microsoft and Facebook have changed the way they market video conferencing and office programs.
Zoom has navigated the rise of Slack by making its products available within Slack’s platform.
Slack’s success has led to rumors that it, too, will go public this year. In true disruptive style, however, it appears that the company plans to go a more unconventional route and offer a cheaper, quicker direct share listing rather than a regular IPO.
Dedicated video callers such as Zoom have navigated the rise of Slack by making their products available within its platform. But now that Slack has native video conferencing that coexistence is less cozy. Slack, and more precisely Microsoft’s clone Teams and Google’s Hangouts, offers something Zoom cannot: it brings with it an entire suite of office products. For the cost of an annual subscription competitive with Zoom’s price, a Teams user gets Word, Excel, and the whole cadre of Office 365 advantages and video conferencing. With Zoom, you just get the latter.
The problem for Zoom is that if we’re already paying for a Teams subscription (or a Slack subscription) that includes video calling, why would we shell out again for its offering?
Will Zoom Go Public?
A potential Zoom IPO is a positive for the video conferencing industry as a whole. Too often, the innovation of startups has been swallowed up by the resources of more established companies. Eric Yuan’s own Webex is chief among the examples–and he has complained about a lack of product development since the sale–but there is also Microsoft’s acquisition of Skype and even Slack’s recent devouring of collaboration rival Atlassian that angered fans of the latter.
Zoom will likely have to come up with something new in order to stay relevant.
Zoom, by contrast, will stand on its own for the foreseeable future. That creates the possibility for continued innovation, and that, in turn, is good for video conferencing.
Seeing as it is unlikely to be able to compete with the extended Office 365s of the business world, Zoom will likely have to come up with something new in order to stay relevant. We’ve seen rival BlueJeans experiment with AI assistants, and that seems a logical path for Zoom to follow. The next phase of Zoom’s existence could follow the mantra of its initial success by making automation and machine learning as accessible to the average business as it once did for video conferencing overall. Could Zoom, for example, be the product that turns the potential of the Internet-of-Things into a part of our working day? If any company could do it, Zoom could.
So will Zoom go public? We hope so, because we want to see video conferencing continue to evolve.