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Zoom Video Communications

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Zoom Video Communications, Inc.
Type of site
Public
Traded as
FoundedApril 21, 2011; 9 years ago (2011-04-21)
HeadquartersSan Jose, California, U.S.
Founder(s)Eric Yuan
Key peopleEric Yuan, CEO
Kelly Steckelberg, CFO
Peter Gassner, Director
ServicesVideotelephony
Online chat
Business telephone systems
RevenueIncrease $622 million (2019)
Net incomeIncrease $21 million (2019)
Total assetsIncrease $1.289 billion (2019)
Total equityIncrease $833 million (2019)
Employees2,532 (2020)
URLzoom.us Edit this at Wikidata
Alexa rankPositive decrease 18 (As of 17 June 2020)[1]
[2]

Zoom Video Communications, Inc. (Zoom) is an American communications technology company headquartered in San Jose, California. It provides videotelephony and online chat services through a cloud-based peer-to-peer software platform and is used for teleconferencing, telecommuting, distance education, and social relations.[2][3] Zoom's business strategy focuses on providing an easier to use product than competitors, as well as cost savings, which include minimizing computational costs at the infrastructure level and having a high degree of employee efficiency. [2][4]

Eric Yuan, a former Cisco Webex engineer and executive, founded Zoom in 2011, and launched its software in 2013.[5] Zoom's aggressive revenue growth, and perceived ease-of-use and reliability of its software, resulted in a $1 billion valuation in 2017, making it a "unicorn" company.[6] The company first became profitable in 2019.[7][4] In 2019, the company completed an initial public offering.[8] The company joined the NASDAQ-100 stock index on April 30, 2020.[9]

Beginning in early 2020, Zoom's software saw increased use following the quarantine measures adopted in response to the COVID-19 pandemic.[10] Its software products have faced public and media scrutiny related to security and privacy issues.[11][12][13] A large part of Zoom's workforce is based in China, which has given rise to surveillance and censorship concerns.[14]

History

Zoom headquarters in San Jose, California

Early years

Zoom was founded by Eric Yuan, a former corporate vice president for Cisco Webex.[15] He left Cisco in April 2011 with 40 engineers to start a new company,[5] originally named Saasbee, Inc.[16] The company had trouble finding investors because many people thought the videotelephony market was already saturated.[16] In June 2011, the company raised $3 million of seed money from WebEx founder Subrah Iyar, former Cisco SVP and General Counsel Dan Scheinman, and venture capitalists Matt Ocko, Logo of TSVC, and Bill Tai.[16]

In May 2012, the company changed its name to Zoom.[16] In September 2012, Zoom launched a beta version that could host conferences with up to 15 video participants.[17] In November 2012, the company signed Stanford University as its first customer.[16] The service was launched in January 2013 after the company raised a $6 million Series A round from Qualcomm Ventures, Yahoo! founder Jerry Yang, WebEx founder Subrah Iyar, and former Cisco SVP and General Counsel Dan Scheinman.[18] Zoom launched version 1.0 of the program allowing the maximum number of participants per conference to be 25.[19] By the end of its first month, Zoom had 400,000 users and by May 2013 it had 1 million users.[20][21]

Growth

In July 2013, Zoom established partnerships with B2B collaboration software providers, such as Redbooth (then Teambox),[22] and also created a program named Works with Zoom, which established partnerships with Logitech, Vaddio,[23] and InFocus.[24][25][26] In September 2013, the company raised $6.5 million in a Series B round from Facebook, Waze, and existing investors. At that time, it had 3 million users.[20] By June 2014, Zoom had 10 million users.[citation needed]

On February 4, 2015, the company received US$30 million in Series C funding from investors including Emergence Capital, Horizons Ventures (Li Ka-shing), Qualcomm Ventures, Jerry Yang, and Patrick Soon-Shiong.[27] At that time, Zoom had 40 million users, with 65,000 organizations subscribed and a total of 1 billion meeting minutes since it was established.[28] Over the course of 2015 and 2016, the company integrated its software with Slack, Salesforce, and Skype for Business.[29][30][31] With version 2.5 in October 2015, Zoom increased the maximum number of participants allowed per conference to 50[32] and later to 1,000 for business customers.[33][34] In November 2015, former president of RingCentral David Berman was named president of the company, and Peter Gassner, the founder and CEO of Veeva Systems, joined Zoom's board of directors.[35]

In January 2017, the company raised US$100 million in Series D funding from Sequoia Capital at a US$1 billion valuation,[36] making it a so-called unicorn.[37] In April 2017, Zoom launched a scalable telehealth product allowing doctors to host remote consultations with patients.[38][39] In May, Zoom announced integration with Polycom's conferencing systems, enabling features such as multiple screen and device meetings, HD and wireless screen sharing, and calendar integration with Microsoft Outlook, Google Calendar, and iCal.[40] From September 25-27, 2017, Zoom hosted Zoomtopia 2017, its first annual user conference. At this conference, Zoom announced a partnership with Meta to integrate Zoom with augmented reality, integration with Slack and Workplace by Facebook, and first steps towards an artificial intelligence speech recognition program.[41][42]

IPO and onward

On April 18, 2019, the company became a public company via an initial public offering. After pricing at US$36 per share, the share price increased over 72% on the first day of trading.[43][8] The company was valued at US$16 billion by the end of its first day of trading.[8] Prior to the IPO, Dropbox invested $5 million in Zoom.[44]

During the COVID-19 pandemic, Zoom saw a major increase in usage for remote work, distance education,[45] and online social relations.[3] Thousands of educational institutions switched to online classes using Zoom.[46][10] The company offered its services for free to K–12 schools in many countries.[47][48] By February 2020, Zoom had gained 2.22 million users in 2020 — more users than it amassed in the entirety of 2019.[49][50] On one day in March 2020, the Zoom app was downloaded 2.13 million times.[44][51] Daily average users rose from about 10 million in December 2019 to about 200 million in March 2020,[50][52] with 300 million daily meeting participants by the end of April 2020.[53][54] This led to an increase in the company's stock price in early 2020, despite a general stock market downturn.[55] Zoom stock went from less than $70 per share in January 2020 to $150 per share by the end of March, giving the company a market value of $42 billion.[44]

On May 7, 2020, Zoom announced that it had acquired Keybase, a company specializing in end-to-end encryption.[56]

Criticism

Zoom has been criticized for "security lapses and poor design choices" that have resulted in heightened scrutiny of its software.[57][13] The company has also been criticized for its privacy and corporate data sharing policies.[58][59][60] Security researchers and reporters have criticized the company for its lack of transparency and poor encryption practices. Zoom initially claimed to use "end-to-end encryption" in its marketing materials,[61] but later clarified it meant "from Zoom end point to Zoom end point" (meaning effectively between Zoom servers and Zoom clients), which The Intercept described as misleading and "dishonest".[62]

In March 2020, New York State Attorney General Letitia James launched an inquiry into Zoom's privacy and security practices;[63] the inquiry was closed on May 7, 2020, with Zoom not admitting wrongdoing, but agreeing to take added security measures.[64] Also in May 2020, the Federal Trade Commission announced that it was looking into Zoom's privacy practices.[65]

In April 2020, Citizen Lab warned that having much of Zoom's research and development in China could "open up Zoom to pressure from Chinese authorities."[14] In June 2020, Zoom was criticized for closing multiple accounts of U.S. and Hong-Kong based groups, including that of human rights activist Zhou Fengsuo, commemorating the 1989 Tiananmen Square protests. The accounts were later re-opened. Zoom alleged that it has to "comply with local laws," even "the laws of governments opposed to free speech."[66][67][68] Zoom subsequently admitted to shutting down activist accounts at the request of the Chinese government.[69] In response, a bi-partisan group of U.S. senators requested clarification of the incident from the company.[70]

Workforce

In January 2020, Zoom had over 2,500 employees, 1,396 are in the United States and 1,136 are in their international locations.[71] Although 700 employees within a subsidiary work in China and develop Zoom software.[14] The company ranked second place in Glassdoor's 2019 "Best Places to Work" survey.[72][73]

Zoom's product development team is largely based in China, where an average entry-level tech salary is one-third of American salaries, which is a key driver of its profitability.[74][14] Zoom's R&D costs are 10 percent of total revenue, less than half of the median percentage among its peers.[74]

See also

References

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