The pandemic was a boom for ZOOM. How can it grow in the future?
Original Publish Date: Sep 15, 2020
The pandemic continues to leave a disastrous mark on huge parts of the global economy. Yet, the change in individual behavior, societal outcomes because of the pandemic has led to certain sub-industries flourishing.
Some sub-industries that are doing well during this pandemic are easy to recognize like telehealth, delivery services, remote learning, while others might seem perplexing at first like used cars, plant-based foods, end-of-life services.
Zoom Video Communications, Inc. (ZM) – or popularly known as “Zoom” – has also seen a surge for its video-first communications platform with the move to remote work during the pandemic. The growth and adoption stats are extraordinary enough to make you take a second look.
Daily average users rose from about 10 million in December 2019 to more than 300 million daily meeting participants in April 2020.
In Q2 2020, Zoom joined Pokémon GO and TikTok as the only apps to be installed over 300 million times in a single quarter.
By February 2020, Zoom had gained 2.22 million users in 2020 — more users than it amassed in the entirety of 2019.
Zoom’s stock price since IPO in April 2019 also shows the benefit of these astounding stats.
Source: Yahoo Finance
All this exponential growth from Zoom gives rise to two interesting questions.
At the company level,
Question #1 - Can Zoom sustain this growth beyond the pandemic?
From a broader business perspective,
Question #2 - What can we learn about growing beyond an unusual short-term boost to business?
Let’s ponder these questions by going through a few takeaways from Zoom’s current state of operations and its proposed growth plan.
Zoom’s current value comes from specific product features - not a long-term “competitive moat”
No matter who you ask; the common themes behind the pandemic success of Zoom point to its ‘ease of use’, ‘simple interface’, ‘reliability’ as the stand out reasons. Even the company’s marketing collateral highlights the benefits of the Zoom platform as follows,
Easy to use
Easy to deploy and manage
Reliable
Attractive return on investment
Scalability
Integrated (with cloud software applications)
Flexible terms
That’s an example of perfect alignment between the company messaging and actual end-user experience. This also reflects in Zoom’s high Net Promotor Score (NPS).
Despite all this positive news, there are still factors that might impact Zoom’s growth trajectory.
Any potential mass return to the office will bring down Zoom usage, making enterprise customers even more crucial to the company. Among the many direct and indirect competitors of Zoom; Microsoft and Google have the benefit of replicating the well-received Zoom features for their own video solutions and can seamlessly push it through to their global user base.
Zoom’s immediate growth plan is all about improving on what it’s already doing
The growth strategy outlined in Zoom’s investor reports follows all the usual points you expect from a publicly traded company. They want to (1) retain customers by serving them better, (2) get new customers, (3) win a higher share of wallet from existing customers, (4) keep innovating, (5) expand internationally, (6) form partnerships and build an ecosystem.
This is a traditional playbook you can expect from a lot of companies across different sectors. One thing becomes clear. Zoom wants to preserve its current lead or at least ensure that it maintains a respectable market share in a crowded marketplace.
The only remotely interesting things that Zoom hints about wanting to do relates to online event management and AI influenced video features. All these continue to be incremental efforts. Maybe Zoom’s mission is a limitation.
Zoom might want to reconsider its “playground”
The mission influences a company’s approach towards its organic and inorganic growth efforts. Zoom has married itself to video communications and that might limit the boundaries of the sandbox it wants to play in. The parameters from this mission can blur Zoom’s visibility into much bigger shifts in the workplace.
Source: Zoom Website
And that leads me to the next takeaway…
Zoom shouldn’t be shy about making a bigger gamble on a broader shift in the workplace
One of the broader shifts that will stay with us even after the pandemic is the move to some version of decentralized work. Every company would differ on the parameters of this decentralization. Yet this is a trend we won’t escape from.
This is a huge area ripe for companies to explore for solutions. The opportunities in decentralized working can build on the variety of solutions that Zoom already offers like Zoom Rooms, Zoom Video Webinars, Zoom Conference Room Connector. Opportunities in decentralized working span the spectrum of collaboration tools, ‘immersiveness’ developments like augmented reality and virtual reality.
Zoom faces the classic challenge of managing differing priorities to stay relevant long term
The pandemic boom requires Zoom to get on top of its current state of operations. Deliver on its immediate promises (for ex: security, encryption) effectively. But it also needs to act audaciously beyond current obligations to reduce the possibility of turning itself into a generic, ‘me too’ player in a crowded space.
Zoom offers an ongoing case study of a company launched into the business stratosphere by circumstances beyond its control. This pandemic boom may not be everlasting although the benefits of the boom might persist in some form. In any case, it should get all of us thinking about our own business endeavors and potential actions.
What would you do to capitalize on a sudden boom in business? Do you have measures in place to turn that sudden boom into sustainable growth for the long term?