Zoom CEO Eric Yuan joins Yahoo Finance's All Markets Summit 2021

Yahoo Finance's Andy Serwer spoke with Zoom CEO Eric Yuan about the company's enormous growth amid the coronavirus pandemic, competition, and privacy laws.

Video transcript

ANDY SERWER: Eric Yuan is the founder and CEO of Zoom. He started the company in 2011 and took it public in 2019. Since the COVID pandemic gripped the globe, Zoom has revolutionized the way we work, learn, and play. Zoom is among the rare breed of tech businesses whose brand is so powerful, the name of the company is also a verb.

And I'm here with Eric Yuan, the CEO of Zoom. Eric, nice to see you. As we said in that intro, this has been an overnight success 10 years in the making. And of course, your company has just zoomed into the popular culture and our zeitgeist over the past year. What surprised you the most about your company's success?

ERIC YUAN: Yeah, thank you, Andy. I think that what has surprised me most is that, you know, Zoom was built to serve our enterprise customers. We never thought about so many consumer-driven new use cases, like a Zoom wedding ceremony, K-12 school kids leveraging Zoom for online learning. I think that those kind of new use cases surprised us the most.

ANDY SERWER: Of course, everyone wonders, can you keep up this amazing success you've had so far? Last year, the stock hit 550. It's now at 280, so coming back down to Earth a little bit. But how do you keep the trajectory going forward?

ERIC YUAN: I think the way for us to look at the growth, I think we got to look at everything from a customer perspective, right? We got to keep improving our business, keep innovating, and make sure to solicit feedback, do all we can to truly care about our customers, to deliver happiness to them.

Also, as the CEO of a company, my number one priority is to make sure Zoomies, our employees, they are very happy. By doing that, I think we will be OK. So meaning there are so many great opportunities ahead of us. Literally, we just started. Video communication is going to change the way for us to work, to learn, to play. I think a huge opportunity is ahead of us.

ANDY SERWER: Yeah, let's drill down into some of those potential opportunities, Eric. What ways can the company grow besides just the core video conferencing?

ERIC YUAN: That's a good question. I think that when we started, you know, our focus was on video communication, which is to focus on our next generation of cloud-based video conferencing company. However, over the past three years, we're adding more and more new services, like a video-- cloud-based phone system, Zoom Webinar, Zoom Chat, Zoom Events. Recently, last year, we launched, also on Zoom, Zoom Apps and also a lot of new opportunities. Like last month, we announced the Zoom Video Engagement Center, which is the foundation for our future contact-center offering.

I think ultimately, we would like to offer our full UC platform, not only just for video conferencing and huge opportunities when it comes to a full UC stack.

ANDY SERWER: I want to ask you about the competition. And first, I want to ask about the past, and then I want to ask about the present and the future. In the past, there were competitors and still are like Skype and Webex at Cisco, which you know all about. How come they didn't take advantage of the opportunity the way that you did?

ERIC YUAN: I think that they did try. I think they tried hard. But I think, you know, first of all, I would say we built everything from the ground up with a cloud-based, video-first architecture-- a huge difference in terms of architecture, right? And plus, we really focused on the customer experience to make sure to simplify our product, you know, usability. You know, no matter who you are, even K-12 kids or grandparents, they know how to use Zoom. Zoom just works.

I think, you know, ultimately, I think we spend more time on talking with our customers and really understand the customer's pain point. We're building a better solution. That's the reason why we're ahead of the game.

ANDY SERWER: Yeah, and then I want to ask about the new competitors and the current competitors, which includes Microsoft Teams and Google Meet. And what concerns you about these two giant companies getting into the space and really competing with you vigorously?

ERIC YUAN: Those two companies are great companies, right? And not only do they have a little bit of overlap, but also we partner with both Microsoft and Google, right? I know both companies very well. We learned a lot from those two great companies. I really do not think, you know, we should focus on Microsoft or Google. I'm a competitor just to ourselves.

The reason why is, there's huge opportunities, you know, for the next 10 years. Why do we need to focus on our competitors? We got to spend more time on talking with our customers, make sure our employees are happy, keep on innovating. I think that we will be OK.

If you laser focus on competitors, what if they are building something not right, right? So you've got to focus on customers. That's why I-- we do not feel very concerned about any of our competitors.

ANDY SERWER: I want to ask you about return to office, return to work, hybrid work, and what you're doing in your own company. Because you might assume that at Zoom, you want everyone to work from home. But that's not the case. You do believe in a hybrid workplace. Is that right?

ERIC YUAN: Andy, that's why at this moment, I'm working from home. But also, in over the past 15 months, we know how to, you know, work from home, right? There's no productivity loss.

However, you know, the side effect, you know, is mental health anxiety, depression. We are human beings. We need a social interaction. Unfortunately, Zoom does not have those features yet, right? Like Andy, you and I, we cannot shake hands each other. I cannot give a hug, right?

I think we need to get it together. That's why the hybrid world will be the future, right? Like two days in the office or two days at home, I think that's future. We got to support hybrid work, give our employees flexibility.

ANDY SERWER: Is that what you have right now at Zoom, hybrid work, or are you getting everyone back to the office at some point? Or what's the status right now?

ERIC YUAN: Not yet, in the middle of the process. And we are planning to go back to office to support hybrid work early next year. For now, I think almost every Zoom employees are still working from home.

ANDY SERWER: Eric, I think you said back in May that you suffered from a little of Zoom fatigue yourself, which is another phrase that's entered the popular lexicon, but you got over it. So how do we address that, and how many Zoom meetings do you have on a typical day?

ERIC YUAN: I think one thing, Andy, I can tell you, there's no Zoom fatigue whatsoever anymore. Everyone-- myself included-- already figured out a way to handle that. You know, we proactively take a break. I do not need to schedule a 19 Zoom meetings anymore, right? Quite often, you know, maybe five or six Zoom meetings.

I take a break sometimes. I hide my own video. And I play games together before the meeting is over, because we have Zoom Apps. For now, I do enjoy using Zoom every day and never feel like I have a Zoom fatigue anymore.

ANDY SERWER: Hey, do you have any stories of high-profile customers you can share with us? Maybe President Biden using Zoom or Tom Brady, or something like that. What are some good Zoom customer stories?

ERIC YUAN: Yeah, you mentioned that both of them, and this is great. You know, it's great to know both of them. I think they are using Zoom. And also so many great stories, you know, like "Saturday Night," you know, the show. They also use Zoom, as well. I think, you know, Jimmy Kimmel also use Zoom.

I think, you know, so many celebrities, NBA stars-- Andre Iguodala also, he's using Zoom very often, as well. And yeah, again, you know, you name it. I think almost everyone I know of, they all use Zoom.

ANDY SERWER: Have you ever zoomed with Jimmy Kimmel then?

ERIC YUAN: I think I did not get a chance. But I know he loves Zoom. And next year, we are going to invite him to join our user conference.

ANDY SERWER: That sounds like a great idea. Hey, one thing that is very hot in Silicon Valley right now--

ERIC YUAN: [INAUDIBLE]. Sorry for that. Sorry. In terms of your last question, like we-- we invited a coach team, you know, at our user conference last month. And he told me that he is using Zoom very often to engage with his team.

ANDY SERWER: OK, wow. OK, thank you for that bit of information, as well. I want to shift gears a little bit and ask you about the metaverse, which is a very hot topic right now. And I'm wondering if you've thought about incorporating the metaverse maybe not right now, but down the road into Zoom somehow?

ERIC YUAN: Absolutely, we always think about how to further innovate. Metaverse is a great, you know, new topic. Actually, we already started a while back, how to support and lever the AR and VR, and how to support a metaverse world?

I think from a server side, I think a lot of new ideas, new innovations. Unfortunately, I think we will take several years to make sure they know a metaverse supported, like videoconferencing, will become mainstream. I do not think we are fully ready yet.

ANDY SERWER: Eric, I could see that Zoom logo behind you. And of course, your trademark, that brand name has become a verb. It's so powerful, and it's so valuable, especially to have created something like that in such a short time.

I know the company again is 10 years old. But really, people have just become aware of it over the past 18 months really. And I'm curious. How do you intend to capitalize on that?

ERIC YUAN: I think, first of all, Andy, you know, we are so fortunate we picked up a good name-- Zoom, right? And it's a verb now. I think, first of all, I think, you know, looking at a market opportunity, huge opportunities, like video communication is going to change the way for us to work, to live, to learn, and to play. We just have started.

But you just talked about the metaverse. I think the AR, VR, and AI, you know, we truly believe video communication like Zoom can deliver a better experience than face-to-face meeting in the future. We are not there yet, but we are going to get there in the next 5 to 10 years.

ANDY SERWER: Cybersecurity is a big concern of the Biden administration. And I'm wondering if you've had any conversations with administration officials about that subject?

ERIC YUAN: Yeah, we have, you know, government [INAUDIBLE] team. We have also very, very big security and privacy team. And the security and privacy is part of our company DNA. We are doubling down on that.

Every feature, every new use cases, we always look at a privacy and a security perspective. Whenever there is a conflict between innovation and new feature release, you know, with privacy and security, we always prioritize privacy and security. I think that's a key to deliver a much better service to our customers.

ANDY SERWER: And privacy obviously was a concern, especially a few-- well, last year really, early in last year in 2020, with your company. But I know you resolved a lot of those issues. Still, I'd like to ask you, how you weigh privacy concerns with, say, requests from law enforcement maybe trying to take a look at something that happened in connection with an investigation. How do you weigh those two forces there?

ERIC YUAN: It's a great question. We publish the privacy policy, and we keep everything open, transparent. Not only do we publish that privacy policy, but also, you know, we're also need to publish the report. So meaning who requested that, and what kind of context? We have a dedicated team to make sure Zoom it's going to be used by those, you know, business customers or education, health care.

However, if some, you know, bad apples are trying to use Zoom call for the bad things, for sure, you know, our team, we are going to work together to make sure and to help. And again, we have very clear, you know, privacy policy we published and also discussed with our community, as well.

ANDY SERWER: Last month, you reached an agreement with a cloud center company called Five9 for you to acquire that company for $14.7 billion. But then those shareholders rejected that deal. Are you still going to look to do acquisitions to grow the business?

ERIC YUAN: I think, first of all, we look at everything from our customer's perspective, right? That's the reason why we announced to join forces together with Five9. And we think we are going to deliver our long-term value to both sets of long-term shareholders. But also financial discipline is also foundational to our M&A strategy.

And when it comes to M&A strategy, we always look at it the technology talents. We do not-- you know, and focus on acquisition to drive our revenue, our customer growth, right? I think we are going to look at other startup companies if it's technology with [? talents. ?] Also, the contact center remains our strategic priority. You know, we are very confident in our ability to capture its growth potential by doing our-- Like last month, we announced our Zoom Video Engagement Center. And we also partner with other contact center service providers.

ANDY SERWER: Last summer or this past summer, you announced some new products and services-- Zoom Apps and Zoom Events. And I'm wondering, how those projects are going?

ERIC YUAN: Yeah, those new products are doing very well. And Zoom Events, we leveraged our own Zoom Events to host our annual user conference, Zoomtopia, last month. And you know, so many applications are built upon our platform in order to introduce the new Zoom Apps. Like recently, last month, like the DocuSign, right?

And also, you know, building the Zoom Apps dramatically improved the way for us, like for me, to sign. Every day, I receive so many DocuSign, you know, emails, right? Sometimes, I have a question. How to facilitate that? That's why those Zoom apps can certainly help. We are very, very excited about those new opportunities.

ANDY SERWER: Eric, you came from China. And word has it that your visa application was rejected eight times before you were finally accepted. Number one, how did you persevere? And number two, that sounds difficult. But isn't it even that much more difficult for people to come into this country at this point, and what should we do about that?

ERIC YUAN: I think first of all, looking back, I never complained in like eight times or next attempt. I would say, this is great. It's more like the practice, you know, for my perseverance. Looking back, I'm so grateful, right?

I think looking at it, you know, today, you know, I think the government is doing absolutely the right thing to make sure-- for those high-tech workers, right, and to facilitate them to get a green card. But they got a doctorate degree or go to the greater universities, why not offer a green card to them, right? Because they are going to help the country.

You know, look at a lot of startup founders. Look at the great e-commerce companies, the CEOs, like Microsoft and Google and Adobe, right? All those CEOs, they also are immigrants. Imagine, you know, we do not have a great flexible immigration policy. We even do not have those great CEOs.

That's why I feel-- I'm very optimistic. I know those great [? talents, ?] you know. They still want to come to America, come to Silicon Valley. They are going to contribute more and more to the American economy.

ANDY SERWER: Eric, you just mentioned Silicon Valley. And of course, a lot of companies seem to be leaving Silicon Valley. Tesla announced it's going to Texas, and, of course, others. What do you think about that, and would you ever leave the Bay Area?

ERIC YUAN: No, not at all. I'm a huge fan of Silicon Valley. I think Silicon Valley is a worldwide innovation center. No any other places even close to Silicon Valley in terms of its very inclusive, innovative culture. I think at the same time, more and more people that come to Silicon Valley, right? And more and more greater startup companies will be born in Silicon Valley.

Also, I'm so grateful to Silicon Valley. Over the past 24 years, I live here and learn a lot from so many leaders here. And I'm just so grateful. I would like to do all I can to contribute back to the Silicon Valley. And I do not think I will leave it at all, you know. And I really love Silicon Valley.

ANDY SERWER: And final question, Eric. Again, company is 10 years old. It doesn't seem like because people hadn't really heard about it before the pandemic. But what were the first eight years like versus these most recent two years?

ERIC YUAN: I think that Zoom was already a fast-growing business prior to the pandemic. And our employees, we worked so hard, and we became a [INAUDIBLE] public company in 2019. And we are doing all we can to deliver happiness to those business and enterprise customers. I think over the past 15 months, Zoom was a different company. The reason why-- we had to embrace all those consumer-oriented new use cases.

And like the end of 2019, you look at a daily meeting participants, only 10 million. March and April last year, it all the way jumped to 300 million daily meeting participants. I think we're still very rapid today.

And we are very proud of our employees. And we're proud of our customer support. I think that Zoom became a very different company now. I'm seeing a huge opportunity ahead of us.

ANDY SERWER: All right, Eric Yuan, CEO of Zoom. Thanks so much for joining us.

ERIC YUAN: Thank you for having me, Andy. I really appreciate. Thank you.