Eric Yuan, founder & CEO of acclaimed enterprise communication platform Zoom (which went public in April 2019 and currently holds a market cap of $16bn) is interviewed by Administrate CEO John Peebles at Turing Fest 2018 - via Zoom call, of course...
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Lead Strategy Turing Fest 2018
Fireside Chat: Eric Yuan
Auto-generated transcript - may contain errors. Tap a timestamp to jump the video.
Welcome everybody to the session that we're gonna have now with the founder and CEO of Zoom, mister Eric Yuan. My name is John Peebles. I'm the CEO of a company here based in Edinburgh called Administrate. And if we rewind about eighteen, twenty months ago, I was in the audience in San Francisco at a conference, and I was really, really frustrated.
We had just opened an office in the Middle East, and we were having a lot of difficulty with communications. Just calling the office was difficult. We certainly couldn't do any sort of video sharing, screen sharing was difficult. We had this team that we were trying to incorporate as part of our operation and communicating with them was just very, difficult.
And so I was sitting in the audience of this conference and then they said, well, you know, we're gonna introduce this founder of a company called Zoom, which I had never heard of. And he came on stage and two things caught my eye very quickly.
The first was I was like, well, we could maybe see how this product works and it could maybe work for us. But the second thing was that he was Chinese. And some of you may or may not know, I grew up in China.
I lived there for most of my life until I went to the university. And so it was just such a thrill to see a Chinese guy who, like me, grew up in China and, like me, was kinda running the company not in the country where they were from.
And on top of that, the Zoom story is really amazing. And so when we approached Eric, we said, Eric, we really want you to come to Edinburgh and talk at touring festival. And he said, well, I don't like to travel. I got a family and also I'm running this video communications company.
It's a bit weird to fly out when we could just do it over Zoom. Right? But I kept bullying him, and I said, Eric, you gotta come. You gotta bring your family and so on. And so finally, he said, okay. I'll fly out there.
And it was about a day or so before we're gonna pick him up from the airport last night, and he emailed and he said, my son has had an accident and so unfortunately, he can't be here with us today. So in a touring festival first, we've got Eric piped in from San Jose, California, maybe from your house, I don't know.
And we're gonna have a have a chat over Zoom. And it's it looks like you're it's like you're right here. So thanks for thanks for joining us. So, Eric, if you could I'm just gonna get rid of this window here. If you could just maybe introduce yourself and, tell us a little bit about your story and the Zoom story to get going, and then we wanna make this interactive.
And, you know, if you have questions and stuff, we'll probably do a little bit of that as well. So Yeah. John, thank you so much. I appreciate it for the invitation. I really apologize. So sorry. Cannot be there. And, one week ago, my son, when he played at a basketball tournament, and he his cheekbone was broken and just had a surgery last weekend, and so sorry.
But we we still will go there, but we postponed our trip to Friday. And so I'm so sorry for that. But, anyway, so thank you all, and so sorry. And even even if Zoom does work very well, I'm so sorry I cannot be there.
I cannot shake hands with you, and sorry for that. So, anyway, so I'm Eric Yuan, and I'm the founder and CEO of Zoom. And prior to founding Zoom, I was at Cisco for almost five years. And I was Cisco's corporate vice president in charge of Cisco's overall collaboration software development.
And, you know, I came to Cisco as a part of the Webex acquisition, and I built Webex before as one of the first several founding engineers. Ultimately, I became vice president of engineering at Webex. I came to the Silicon Valley in nineteen ninety seven from China and, you know, joined Webex.
We were very lucky, you know, at Webex. You know, we I joined in nineteen ninety seven. We went public year two thousand, and has even made a huge mistake, but so did the company to Cisco. And after that, and I realized, you know, Webex is very old product.
I I be before I left the Cisco, every time when I talked with the Webex customer, I did not see a single happy customer. I really wanted to go fix the problem. Essentially, I think I created that problem. So that's the reason why I left the Cisco Webex to build the next generation of a solution to really deliver focus on delivering happiness to our customers, to make sure the customer will never use the collaboration solution, they feel happy.
That's how it started. And over the past several years, I think we made a very good progress. Over one million business customers are using Zoom today. And we reached the one hundred and forty five point five million funding last round led by Sequoia, which was end of two thousand sixteen for one hundred million.
And we have over thirteen hundreds people in the worldwide. We we also have office in London. So thank you. So, Eric, when when I first heard you speak, you I think you had just done the hundred million raise from Sequoia. And the the person asked and they said, well, something that's interesting about Zoom is that you'd raised this money, but you hadn't spent any of it yet.
Is that still true? It you know, or you're cash flow positive from a very early step in the company. Yeah? Yeah. You are right. That's still very true. But so by the way, you know, the secured one is our d wrong. Actually, you know, the wrong before c wrong, that money also in the back.
They did not spend. And, you know, I think that given the age, you know, when I started a company, I, you know, I already went through the year two thousand market crash, you know, two thousand eight financial you know, crash. I, you know, I was very conservative, you know, from the.
I know like other company just to focus on the growth growth. You know, I wanted to be cash flow positive even if, you know, we when we were very small. Because, ultimately, we wanted to control our own destiny. You never know. Look at it today, market is great.
But, however, you know, the start up is a long journey. You never know what's gonna happen. What if suddenly there's economic, you know, issue, there's a market crash, can you survive? You cannot always think about, oh, don't worry. Whenever I do I need a capital, just getting more money from VC.
I think that's a sort of a wrong philosophy. That's why we want to be cash flow positive. However, to have more capital, for sure, we're happy. The reason why suddenly you have a new idea, you want to double down something, you know, you can quickly invest.
Right? Rather rather than spending like a several months time to reach the new capital. That's why I think that, you know, on the one hand, we wanna be cash flow positive. On the other hand, also want to make sure we have a flexibility.
Always have enough capital in the bank. Right. So I think that was something that surprised me at the time. I think it surprises a lot of people. You've probably heard this before, but it's not an iron fast rule. You know, you don't always have to grow for grow go for growth.
There are VCs that understand and funders that understand that there is another way like like you've demonstrated. Yeah. Because you look at some, you know, a great companies. I just you know, like, take a Uber, for example. It's a great company and also our customer because those companies, you know, in a different, I would say, scenario.
Right? Meaning, you know, there's there's more capital because their number of, you know, opportunity is just the market share. It's something new. Right? Just, you know, raise more money just to, you know, keep growing, and everything's about a growth. Nothing wrong nothing is wrong about that. Right?
However, most of the startup companies not like that. Right? Gotta do make sure, you know, control your own destiny. Cannot only focus on growth because that's very dangerous. Right? Always think about, you know, can you survive even without outside help in your four VCs?
You know, make sure that you have a sustainable steady growth rather at no cost just to grow grow. I don't think that's sustainable. Right. So I I think the the second piece of the intro story that I told was we got back, we tried Zoom, and it and it worked really well.
And we use it every day, all day, and it works really well in the Middle East. And the first time we met, you were like, does it work well in the Middle East? Because I don't think you had many customers at that time.
And we said, yeah. It works great. How is it that your product and, you know, we we we had Webex and administrate. I tried Skype for Business. And not that we wanna, like, you know, bash other products, but why is it that Zoom's working so well?
Why are you so confident that you can get on in front of an audience like this and it's just gonna work? How what what's the difference there? That's a great question. So, you know, first of all, you know, I'd like to take a step back, you know, to to share what's going on in the conferencing industry.
You know, the first generation of a conferencing is audio conferencing, you know, starting the as nineties. Right? The audio conferencing means, you know, you just dial into a audio bridge. Everybody dial your number, you know, you know, type the the the passcode, and that's a first generation.
And the second generation is about the web conference. So meaning, in addition to the audio conferencing, hey, John. I like to talk with you talk with you over the phone. I can share my PowerPoint. I can share my slide deck. Right? That's the, you know, web conferencing and dominated by Webex and the GoToMeeting and other solutions.
The new era is about video conference. So because of that, you know, you there's only two ways to get it there to build a great video conference solution. One way is to tweak your existing solutions, like, based on your audio conferencing solution or based on web company solution.
Or another way is to build something from the ground up. Because I build Webex before. Right? You know, the the code I wrote in nineteen ninety eight still running there in the Webex product. It's very old. But, however, I knew that to have the best experience, you cannot tweak your existing system to get it there.
The one that we should do something from the bottom up, more like a take a Tesla car, for example. Right? The reason why Tesla car is so great, give you a great experience is to build everything from from the ground up. And that's why I think that if you look at the video conferencing, the best optimized way to build a greater solution is also to build something from a grown up.
And Zoom took that approach, and we we do the everything, every layer from a grown up to us, I think, almost three years and the best engineers to build web as before. When you look at other solution, all of their those solutions, none of them was built from the ground up to embrace video collaboration.
You know? That's why, you know, the our product, you know, compared to others, I think that we have a better experience. Right. So I think also so we're we're sitting here in Edinburgh. We're deep underground, by the way, Eric. It's a great time to spend a whole day underground in this conference center.
But, basically, you are we're hearing from people like yourself and a lot of other really successful founders, really large companies. And I remember at times, I'm I'm sitting there listening, wow. This guy just raised a hundred million dollars and it's still in the bank and there's nothing for me to learn.
Right? I I I'm a I'm running a small company. I've got we've got investors, whatever. There's nothing for me to learn from a guy like you. But one of the things that we talked about when we were meeting in your office was the process that you went through to actually even get to the United States and how hard that was and how long that maybe you could talk a little bit about that because I think it's sometimes you know, we talked about it, but there's just there's trials and you can't give up in any company.
And maybe just talk a little bit how how you learned that that lesson. Sure. Absolutely. By the way, you you can you can learn something, right, for for from that of one hundred million funding because it it does generate the interests, you know, but we put our money in the bank.
So anyway, so It's good It's always good PR in any in any event. Yeah. So I I came to Silicon Valley in ninety seven. Actually, I was in China nineteen ninety five time frame. And I remember, actually, I I flew to Japan and for I lived there for several months.
Happened to see, you know, Bill Gates, you know, Maxsoft. He was the chairman and also the former CEO. He also had, you know, event in in Japan. And I that's the first time I listened to, you know, a a great event like that.
Peter Gas also, he was there. He talked about the overall landscape of, you know, what's happening in industry, why Internet can change everything. I was so impressed. I I truly believed Internet is due to change everything. After I've been to China, I wanted to start a company to focus on Internet business.
And my original idea is to sell books online because I have a, you know, publishing house industry in China. However, nineteen ninety five, nineteen ninety six time frame, and nobody heard about Internet, you know, back then. I thought probably it would take another ten years for China to start embracing Internet.
But looking back, I was wrong. And, however, back then, I say, I cannot wait. I really wanted to embrace the first wave of Internet Internet, you know, revolution. And I say, I should go to the, you know, the Silicon and take a look because Yahoo is so popular.
Netscape, I would say, wow. All those great companies, all of them, they are based in Silicon Valley. That's why I I I really want to go there and take a look and then come back. However, you know, when I try to get a visa to go to the United States, I got rejected.
And I felt very frustrated. But, however, I realized I will try all I can. I still want to get my visa. I reject the second time, third time, fourth time. I got rejected eight times. Luckily, the next attempt, you know, I was successful.
And when I got there, I I realized, wow. That's huge opportunity. Silicon Valley, you know, I had so many good ideas, very diversified, you know, culture, and I settled down here. I give up my startup in China and joined Webex. And I really like the culture here at Sitting Y.
Wow. So you when and when you're getting rejected second, third, fourth time, were people like, maybe you should give up or this is a stupid dream. Or No. That's good news. I can practice my perseverance. Right? You know, to start a company, you gotta have that.
I think I proved myself. I told my wife back then. I said, don't worry. You know? I would plan. If they even if they rejected me twenty time, I will try again and again. Luckily, I had only tried it eight times. Looking back, that's not bad, actually.
Yeah. So how many like, for instance, what are some other times where you got rejected more than eight times? Did you get rejected eight times for funding? Or, you know, what what are some of the other struggles that have that have happened in Zoom or or at Webex?
I think, you know, because of the head of struggle, everything else is is relatively easy. So I no. That's a that's a good answer. I yeah. In terms of funding, I think is I'm the sole founder. I really don't have a bandwidth to go outside and shop around to raise the capital.
So my the way I because I'm also Android investor. You know? The sitting there are so many VCs. You know? On the way hand, it's so lucky. You know? So fortunate. There are so many VCs, you know, nearby. But also, unfortunately, because of there are too many VCs, you really do not know who is gonna invest in you.
Because of my philosophy is you you got to find those businesses of those, you know, the the, you know, general partners who would like to invest not only into your business, but also you. Right? This is very, very important because business can be up can be down.
If we would if they only invest into your business, what if your business goes south? Right? They are not doing any. Right? To find out those investors who are willing to bet on you, that's not that easy. That's why, you know, my philosophy is don't focus on raising your funding.
Think about how to survive first. Meaning, you build a service. Make sure you have a happy customers. You try to be cash flow positive. You control your own destiny, and you have more and more happy customers. Those are VCs. They are going to reach out to you.
I think that's the best way to raise money. Otherwise, you you need to spend all the time. That's why when I started raising up a funding, I only talked with my friends. And I go to the state of funding, even the aid around funding, also by and the last before my all the friends, you know, all the, you know, personal network because I want to have a flexibility.
So you were an engineer, software engineer. You come to Valley. You become VP of engineering essentially. And then you said, well, I'm gonna stop writing code or managing people who write code, and I'm gonna build this business. And now there's thirteen hundred people, and, you know, you're probably not writing too much code anymore.
How did you go through that transition? And you're also probably you know, you're doing it in a language that's not your first language. So you're you're trying to, you know, broaden your skill set. You're trying to communicate with a lot of diverse different people.
What was that like, and what did you learn on that that journey? A great question. So, yeah, after I left Cisco, you know, and I I still wanted to write some code, but my team do not allow them, you know, to write a code.
They know that that I'm I'm not gonna fix the box. So and but, anyway, so I I think that, you know, transition from, like, engineer leader to a founder, I would say, you know, definitely is not that easy, you know, job. Right? However, I I you know, for mentally, I already prepared well, you know, before I left Cisco.
Right? Because I was a corporate vice president before I left Cisco, and I really wanted to learn, you know, the marketing, the sales, and a lot of other things, you know, rather just to focus on the engineer work. I'm you know, for sure, there are so many hurdles, but I truly be the one thing.
It's hard work. And if our competitors, they work, like, ten hours a day. You know, I got to work eleven hours or twelve hours a day. Okay. Every day, I spend one hour or two hours more than any others by doing that every day, every year.
I think no matter what kinds of hurdles ahead of you, you can overcome. I actually believe a harder work is gonna change everything. And do you feel do you feel like growing up in China shaped how you view the world? Do you think you would have the same outlook around stability and sustainability and hard work if you'd grown up in another country?
Or is it just something that is common amongst entrepreneurs? Like, what what are your thoughts? That's good good question. So you look at it like all the startup companies, you know, in Silicon Valley. The more than fifty percent of founders, they were not born in Silicon Valley.
Right? I think all those immigrants, the one thing that in common is is, you know, all those, you know, who came to the United States from other countries, very hungry. They really want to, first of all, survive. Right? They all work hard. Right? That's one thing in common.
That's why I see, you know, no matter where they are now, they all understand where they were coming from. You know, like, know, when they came here, you know, they do not have any connections. Right? And the the only way for them to swipe is to work hard.
I think, you know, I think that's one thing I think probably, know, I think advantage, you know, compared to any other, you know, I think the founders. And another thing is kind of, like, for me, I was born in China. I really kind of, you know, grown up from that environment.
Right? It's kind of you got to respect others working hard, humble, and plus the open transparent culture in the the the the the United States. I think you learn the both side, and, of course, we'll help you a lot too as well. Yeah.
I mean, China was a very different place too at that time. So I left China about the same time you left China, and it's nothing like it is today. Are there any good stories you have from when when you were growing up or how it's changed?
I and the one thing I when I grew up, actually, when I was in the middle school, and I I tried to to make some money. And, actually, you know, I I was born in Shandong province Shandong province. Right? And I think I I tried to collect, you know, some use the the the corporate land.
Right? And to sell that, you know, to the the the I think local, you know, the use the corporate land in the collection of the company when I was in the elementary school. And I I think, you know, every time, every winter break, I I I do you know, I smell all all the time. You know?
I think one size, you know, I try to collect the use of copper line. You know? I seen a lot. You know? How to kind of get rid of the the plastic, you know, the the, you know, you know, you know, outside of the plastic, right, the stuff.
And I try to burn that and it cause a bigger problem and cause the fire. So and but anyways, so I learned a lot. I try to say, hey, you know, how to make money. So and a lot of I think China actually, you know, I think it's I would say, you may not know from our side perspective.
I think read about the business. And everybody today, actually, you will try to hire some engineers, the new engineers, really hard. The reason why almost everyone, they they all think about it. They wanna start a company, you know, after they graduate. I think entrepreneurship is is about, you know, is about everything now.
Right? And I think a lot of people, you know, start a company there now. So Yeah. Yeah. So we've got a little bit of time. I don't know. Do we have any questions from the audience? Does anybody wanna ask Eric anything? I've got a few more things. Yeah. We've got one here.
So, Eric, I don't know if you heard the question, but basically, when you raise a hundred million dollars or a hundred million pounds, you do get some dilution. And so what in your mind is the trade off between having the security but, you know, giving up some of the company and having a little bit of dilution?
What's the thought process there? That that's a great question. You know, every time that you raise a new round of a fund a fund, you always have have to fix that kind of question. I think the first of all, don't worry about the delivery.
Right? Because overall, you really want to grow the the, you know, the business. Right? Make the pie is bigger and bigger. Right? Even if let's put it this way. Even you own a ten percent. You know, in a one billion dollar company, you know, so the ten percent rather than, you know, one hundred billion.
Right? The focus on how to grow the the the pie, grow your business. Right? And also at the same time, you know, you you before you, you know, you you close the deal, focus on those partners, we see really want to bet on you.
Right? If that's the case, it's not gonna worry about that much. But, ultimately, you're right. You also want to make sure it can do your own destiny. Right? That's why be careful. Right? And but at the same time, you you also wanna make sure, you know, without outside of capital, if you can grow the business, that's perfect.
Like, a company like Adolescent. Right? Australia based company, they do not need any, you know, add capital from our side. They're still doing very well. If you can build a business like that, you know, that's perfect. But, however, you know, quite often, you need to raise the money.
I do not worry about the dilution that much. You know? Really focus on the growing the the the the the pie. So growing the the the the the the base to the next step. So a question I have for you, Eric, is, you know, you you're starting out on Zoom.
It's brand new. And there are at least two very big incumbents in the market. Right? You've got GoToMeeting and Webex. Right? And I think everybody would say, you know, they've got unlimited funds. They've got hundreds and hundreds of engineers. You've got not that. Right?
What what are your thoughts about competition? Were you worried? It just doesn't seem like a smart move, obviously, now. But but at the time, it just does not seem like a great idea. You are right on, actually. You know? I remember, actually, you know, I tried to do a bit of Zoom.
I talked to several we see it's not for raising the fund because I already get the money from my, you know, angel invest. First, None of them told me that I can put it off. They say, wow. This is so crowded. There's no way for you to build a better solution.
But, anyways, so given that I worked for Cisco for many years, if I never worked for a bigger company, for sure, I feel scared to to compete against to the big, incumbents, those legacy company. They have all the resources. But given that I worked for the big companies like Cisco before, I know I can compete.
The reason why is, you know, the the start of a company is about speed. The only weapon we have is the speed. You know? And, you know, all those big company, they have all the resources, but they are very slow, extremely slow. You know?
Whenever a customer give a feedback request a new feature, guess what? Probably, you know, it will take them six months to release something. In our case, it will take us two weeks. I can give you something. Right? I think that if I understand that, I think that I know.
Don't worry. You know? I think ultimately, I think if we can, you know, focus on the customer experience, have a better service, and focus on speed, where can we win? Looking back, you know, you know, Total Meeting is gone. Right? The the the Total Meeting was sold to LogMeIn.
Right? Just two days ago. Right? LogMeIn just added a in a quarterly earnings. Their stock was down by twenty six percent. And as a CEO of LogMeIn specific admission, one of the key really is is that Zoom, you know, got most of the customers.
So and speed it, basically. So And you've still got a hundred million dollars in the bank. Yeah. Great. So so what what's next for Zoom? So I was in London a couple weeks ago, and I started seeing ads on the underground zoom dot u s.
You should get zoom dot u k, by the way. That's that's a tip. But what's next for Zoom? Because at the time, six, eight months ago, you weren't thinking of anything outside of the United States really, but is it now international expansion a priority?
Or Yes. It is. So our, you growth philosophies, we don't want to grow, you know, by you know, as a generating leads with our marketing, you know, budget. Right? So our philosophy always look at where we see the organic growth. And then we are gonna double down and triple down.
So we started from North America, and so we did not do anything outside of the North American market. However, we see that great organic growth, you know, from, you know, UK, from Australia. And we did not do anything, but we did see that many the the users.
And after that, we realized, okay. Great. Why not a double down, triple down on those growths on those countries? Right? That's why we build the office, you know, in London first and in Australia, Sydney as well. And, also, you know, we look at our, you know, the daily the the users, where that come from.
We did see the users, many users coming from Japan as well. I would say, yes. This is great. You know, that's why I've hired the the the salespeople in Japan now. And also the next stop he also hired the the country manager for for you know, the in France as well because we also see the organic growth.
You know, that because of the organic growth, I know we would like to double down, triple down, and build a local office, you know, for the folks on the international growth. We never wanted to to spend money to generate, you know, the the the in the growth first.
And we wanna see focus on organic growth and then double down. That's why I think that, you know, down the road, every day, whenever see the huge organic growth, we are gonna have office there. Right. So we've got time for probably one more question if anybody's got it.
No. We don't. We're I'm getting oh, sorry. No more questions. But I I will say this. You know, I was sitting over here in Edinburgh. We were building the integration with Zoom, and it's easy to think, wow, you know, these these guys like Eric have built these huge companies.
They're really busy. Yes. I I I fired an email to Eric, and I said, hey. I'm in town, and we're we're I'm getting oh, we're I'm in town. Would you have a chance to meet with with me? And he said emailed right back and he said, yeah.
Come on down. And in that meeting, I don't if you remember, I was kind of explaining we had a struggle that we were kinda get going through to administrate at the time. And you just said, don't give up. And he said, don't give up. Promise me you won't give up.
And that meant a lot to me personally. I'll I don't think I'll ever forget that meeting. You it's probably your fifth worst meeting of the day at least. And but, you know, I I think that's a real key thing as you know, thank thanks for that, Eric.
Thanks for being with us today. But let's let's all remember, you know, there's always someone behind you on the journey, and they might be emailing you and asking you for some time. And I really do appreciate you joining us at six your time, and, it's been great.
Thank you all. Really thank you, John. Really appreciate it. So sorry I cannot be there. Apologize. Have a wonderful day. Alright. You too. Thank you. Thank you. Thank you so much. Thanks, John.