Why Zoom is Successful & How it Makes Money

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I chose to look into Zoom because of its wild success and growth as a digital communication tool for many businesses and schools during the time of COVID-19. Their focus is quite simple and straightforward, making their product very successful at what it set out to do. This power in simplicity is a common theme, and something that is important for me to take a hint from when moving forward in this project. Especially with the complexity of the problem at hand, it is important to focus in on a single key aspect in order to come up with the most successful solution.

Qadri, Muaaz. “Why Zoom is Successful & How it Makes Money.” What is the Business Model of, 21 June 2020, https://whatisthebusinessmodelof.com/business-models/zoom-business-model/.

“Eric was serving as the VP of Engineering at Webex when he decided to venture out on his own. 

So why did he quit Webex & how did Zoom turn into such a big phenomenon?”

The Zoom Backstory

“With the market alreadt saturated with products like Skype, Google Hangouts & the then market leader Webex, investors were skeptical of putting money into Eric’s new venture”

“Two years later, in 2013, Zoom launched its first iteration, raising a $6 Million Series A round at the same time. 

“A key difference between Zoom and other existing companies, like Skype, was that Zoom was created with a video-first mentality. The existing players had created audio first and then adjusted to video, which led to an increase in costs.”

“Zoom managed to get traction because it differentiated itself in many different ways from the existing players.

“Zoom video conferences were easy to set up and compatible with all devices, including desktop and mobile via its Android and iOS apps. Zoom was able to handle a data loss of up to 40%, so it worked with a weak internet connection as well. To top it all off, Zoom had a $9.99 per host plan ($14.99 now), which made it cheaper than its competitors.

How Does Zoom Make Money

“In simple terms, Zoom operates on what is popularly known as the freemium business model, wherein it provides free limited services to hook users & turns them in paying subscribers in exchange for upgraded services.”

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