Why I’m bullish on Zoom, even if the market isn’t

Source: Google Finance

I could be entirely wrong of course, but as a tech product person, it makes no sense to me why Zoom is down 68% from its all-time peak stock price and has been on a downward trend since October 2020.

From my perspective, all signals are and have been positive and Zoom is greatly underestimated in the market.

Zoom is the wave of the future. Remote and hybrid work is the now and future. These macro trends are obvious to many by now, so I won’t dwell on this point.

What might not be as obvious are signals in these arenas:

  1. Product
  2. Leadership

Great product = happy customers = more business

Now that I have been in consumer tech product management for over 15 years, it has become second nature for me to automatically, even subconsciously, evaluate the design and potential of apps that I use.

Zoom at its core has an inspiring product that gives me confidence for the long term, and I say this for a few reasons:

  1. Fast iterating: Zoom seems to rapidly iterate and test innovative features, with a steady stream of product improvements. This is a great positive signal, and belies all the leadership and effort that must go on behind the scenes to make it happen. I can see this as a user, I don’t even need to know their product development processes. It does help to know what it takes to ship things fast and build for meaningful outcomes. It also helps to have used Zoom almost daily (yoga class on the weekends, no work!) since before the pandemic, so I’ve had many data points to observe this trend.
  2. Smart product strategy: Zoom’s product strategy is very on point! They’re betting on big platform plays with smart partnering in their developer apps platform (Zoom Apps) and live events/ticketing platform (Zoom Events), for example. Let me delve a bit into the first one. The Zoom Apps platform means that users have many more choices for more productive and fun Zooms (Heads Up! trivia app or Texas Hold’Em Poker app, anyone??). It is smarter corporate strategy to build as much stickiness as possible into the Zoom ecosystem.
    One personal example: I was in a 600-person zoom conference last month (non-tech folks), and they used the Otter.ai integration for live transcription. If you missed what was said, you could easily go back and read it.
    Another example: At Tophatter, we wanted to test doing a Facebook Live to real-time emcee a live auction on our app. We initially looked at using Facebook Live or Instagram Live as the tool, but they didn’t quite have the capabilities. Luckily my smart teammate Shannon Nolan adeptly found the Zoom-Facebook Live integration! We used a Zoom meeting (with its gallery view and share screen abilities) as the Facebook Live video that was projected to all followers of the Tophatter Facebook page.
  3. Innovation up the wazoo: Zoom is testing so many innovations, I can’t even read them all. I can tell that their culture prizes innovation and creativity, just by looking at the ideas and products they’re testing. The thoughtfulness and care is apparent even in the way they talk about their products and goals. Take Smart Gallery, for example. The goal is to create inclusion and equity in hybrid remote/in-person meetings. No one knows which ideas will succeed or fail until they test, but I love this hive of innovation. On top of that, they have a Zoom Apps Fund (as part of Zoom Ventures) to fund innovations in developer apps to bolster the Zoom ecosystem. These strategic moves remind me of Facebook in the early days (I have been bullish on Facebook since 2006, when they opened it up beyond college students).
  4. Ease of adoption: Zoom is easier to use than Facebook. You don’t even need to be a registered user to see a zoom or “know how to use it.” Everyone from all walks of life uses it, from grandma and grandpa to kids of all ages to yoga teachers to murder mystery hosts to you name it. I bring this up in contrast to other companies that also have great products and leadership like say, Slack or Facebook or Instagram. The ease of mass adoption is even stronger with a product like Zoom.

Leadership matters: It comes from the top

I put a lot of weight on the leadership in evaluating a company. When I say “it comes from the top,” I don’t mean a top-down style of leadership, or any particular style of leadership. I mean that the people at the top matter the most because everything is cultivated (or not) based on these people’s values and decisions. Good leadership lends to happy employees and good products, which lends to happy customers, and those are the companies I want to bet on.

As an outsider (I have not talked to anyone who works at Zoom), these are the positive signals I see about the leadership team at Zoom:

  1. Glassdoor ratings lookin’ strong: To no surprise, Zoom is rated 4.5 out of 5.0 stars by employees on Glassdoor and CEO Eric Yuan has a very high 95% approval rating. He was also in the Glassdoor Top 100 CEOs 2021 among large companies. This is a strong positive signal. Glassdoor is pretty useful and frequently referenced by those who work in tech, though as with Yelp reviews, you need to evaluate reviews with your own judgement for an informed view.
  2. A good CEO: You can’t get more top than the CEO, so she or he better be a good one! Clearly CEO Eric Yuan is running a good company somehow, given the Glassdoor ratings. I liked his backstory of starting Zoom against the odds with already-entrenched WebEx and other videoconferencing products in the market (he also worked at WebEx so he knew the lay of the land). This reminded me of Google starting amid established search engines back in the day like Yahoo!, Lycos, Excite, AltaVista, etc. He also started Zoom at the wise age of 41, so he was coming in with good life experience. Besides that, I stalked Eric Yuan’s LinkedIn posts and find his positive vibe inspiring (“Delivering Happiness to Our Users. Your Happiness is My Happiness.” is his LinkedIn title).
  3. An inviting management team: When I looked at the management team page, I was both surprised and felt at ease. I felt like these are people (and indicative of an environment) I’d naturally want to work with, people who would be openminded. Note: I‘m not looking to work at Zoom, but this was a positive signal to me. I also read their backgrounds, not just looked at the pretty pictures. I was surprised because I did not expect diversity on the management team. I have looked at many tech companies’ team pages over the years and it is often quite homogenous. Diverse leadership is more common at consumer Internet companies (hence I enjoy working in those environments), but not at enterprise software companies. Granted, there was no one who looked like me (an East Asian woman) on their leadership team. I look forward to the day when tech companies have executive teams that are as diverse as their customers and employees!

These are the product and leadership positive signals that stood out to me. There are other positive signals, of course, like their revenue growth and financial results, but many people already look at those. There are great stats like 70% of the Fortune 100 and over half of Fortune 500 companies use Zoom.

Lastly, let’s not forget it’s still very early in the game! Zoom has been a public company for less than 3 years. Look at the stock price trajectories of Google, Amazon, or Microsoft. It took these epic companies over 10 years to reach a steep upward trajectory. It’s still early to tell how influential or epic Zoom might be, but to me, it’s an obvious bet for the long term.

Disclaimer: This is not a financial recommendation and not intended to serve as the basis for any investment decision. This is my personal opinion only. I also own Zoom stock (I’m sure no one is surprised).

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