Conversation with author of hit piece!

Investment Analysis Clubs Saul’s Investing Discussions
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I had a little email conversation with Tom Warren, the writer of the Verge hit piece, borrowing from what Brian wrote on our board (thanks to Brian). It finished up like this:

Saul:

Tom, On April 2nd, YOU wrote an article with the subtitle “Zoom has skyrocketed to 200 million daily users from 10 million in December”. Those are your words not Eric Yuan’s. In the article you correctly quote Yuan “In March this year, we reached more than 200 million daily meeting participants, both free and paid"

My point is that YOU, Tom Warren, didn’t differentiate between “users” or “participants” in your own article just a few weeks ago. And yet today you write a hit piece on Zoom for doing it. What a joke! Aren’t you embarrassed? Here is the link, in case you forgot what you wrote:

https://www.theverge.com/2020/4/2/21204018/zoom-security-pri…

Tom wrote back, cleverly avoiding answering my question.

Do you hold stock in Zoom? Is that why you’re so upset at the company misleading with its numbers?

I wrote back:

I sure do have stock in Zoom. It doesn’t change me being amused at you writing a hit piece about a company for doing the exact same thing that you did yourself a few weeks ago. You have to admit that that is pretty funny!

Tom responded, again totally avoiding dealing with the fact that he wrote a hit piece about a company when he had done the EXACT same thing himself just a few weeks previously.

Ahh so that’s why you’re emailing me, because Zoom stock is down 8 percent. Got it.

It’s amazing. No sense of guilt, of having misled thousands of readers, nothing. What else is there to say?

Saul

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It looks like Tom saw “The Big Short” too. Like the movie, I believe the truth will come out in the numbers June 4 (or whenever Zoom reports earnings next). We should probably expect more hit pieces until then while institutional investors continue to pick up shares at a discount.

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I’m sorry Saul, but do you expect anyone to respond to a message that’s so obviously hostile?? Was the point to actually point out an error and get it correct, or to express frustration?

CloudAtlas

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“I’m sorry Saul, but do you expect anyone to respond to a message that’s so obviously hostile?? Was the point to actually point out an error and get it correct, or to express frustration?”

CloudAtlas…not sure if you saw my post from this morning on another thread, but I reached out to Tom Warren as well earlier this morning. While my approach was polite and professional and Tom’s responses were not as antagonistic as they were with Saul, Tom was still very quick to jump to and pull the over-used shady tactics card to describe the misunderstanding. He left no room for error or misspoken word which does not seem fair. We have all made the point earlier that the blog post of April 01, 2020 clearly used the metric of “participants”. Its also worth noting that Tom Warren has past professional experiences as being heavily involved in the Microsoft ecosystem and most likely has a bias towards MSFT based on those experiences.

My email exchange with Tom Warren is provided below for ease of access:

Harley Sent:

Harley Carroll harleymcarroll@gmail.com
10:45 AM (7 hours ago)
to tom

The title of the blog post needed to be edited. Not the content of the blog post or the data comparison provided in the blog post. The original blog post compared participants to participants.

Your article could be interpreted as being a bit misleading.

Tom Responded:

Tom Warren
10:49 AM (4 minutes ago)
to me

Not sure if you read the article properly, but the content of the blog was also edited. Thanks for your concern either way.

Tom

Harley Sent:

From: Harley Carroll harleymcarroll@gmail.com
Sent: Thursday, April 30, 2020 10:54 a.m.
To: Tom Warren
Subject: Re: Zoom Participants

Thanks Tom. I will go back and read your article again. I always find them to be of interest. As a Zoom shareholder, I think there has been a “piling on” mentality as of late from the media while others in this space seem to be getting a free pass.

Tom Responded:

Tom Warren
10:57 AM (0 minutes ago)
to me

That’s fair, I’ve noticed the same. I think a lot of it stems from some fairly shady tactics from Zoom, and it not being transparent. Updating the blog post isn’t the issue here for example, it’s not notifying people to correct stories that will have materially impacted the stock.

Tom Warren
Senior Editor
THE VERGE
@tomwarren

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It’s amazing. No sense of guilt, of having misled thousands of readers, nothing. What else is there to say?

He can’t afford to admit that it was a hit piece, it would be devastating in a trial.

Denny Schlesinger

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Looking deeper into this…

Tom Warren responds to me: “Updating the blog post isn’t the issue here for example, it’s not notifying people to correct stories that will have materially impacted the stock.”

Tom’s concern is: …not notifying people to correct stories that will materially impact the stock…hmmmm

Maybe Tom got his rear end in a sling for errors in his article that Saul references above and he felt that it was Zoom’s responsibility to notify him of his error?

Is that why is responds in such a defensive manner?

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CloudAtlas…not sure if you saw my post from this morning on another thread, but I reached out to Tom Warren as well earlier this morning

Hi Harley,

I wasn’t aware of your previous post in another thread. Your conversation with him seemed to be very civil, though he still holds on to the belief that there was wrongdoing.

Personally, I have no horse in this race (I don’t own Zoom), was just commenting on the hostile tone and how humans are materially less likely to admit a mistake when they feel attacked. I’m happy that your interaction went much better!

CloudAtlas

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Saul you have not convinced a man because you have silenced him, or vice versa. You are claiming victory here without surrender.
While I agree with your assessment I would love to have achieved his acknowledgement. This guy is writing you off as an aggrieved stock owner, no doubt reinforcing his position in his own mind. Vultures gotta be vultures but your email exchange was fruitless?
BCTim
PRO ZM til ER, but not LONG Zoom unless they show substance to the 300 million thingy!

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Hi Tim

You are claiming victory here without surrender.

Not at all Tim. I had no victory because he avoided even acknowledging the evidence.

While I agree with your assessment I would love to have achieved his acknowledgement.

Me too.

This guy is writing you off as an aggrieved stock owner, no doubt reinforcing his position in his own mind.

Oh, I don’t think so! I’m sure that he knew that he was in the wrong and that he was making a mountain out of a molehill intentionally, but he didn’t want to acknowledge it. I’m SURE he was aware of it. How could he not be, when presented with a link to his own previous article? He was calling me an aggrieved stockholder to just taunt me, which is why I didn’t continue.

From a stockholder point of view, as long as apples to apples was 30 times growth from the end of January, it makes no difference. The only thing he was trying to do was paint Zoom as dishonest. Changing from users to participants makes no difference to the future of the company. He was just trying to smear it. It simply doesn’t matter to me. I might add a little if the price is still down tomorrow though.

Saul

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Tom wrote back, cleverly avoiding answering my question.

“Do you hold stock in Zoom? Is that why you’re so upset at the company misleading with its numbers?”

That’s clearly a sidestep, not an answer.

I am glad you did that. Thank you.

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Nice work Saul. My only suggestion would be, next time, these “journalists” need to be just hit over the head with something like “that’s the worst journalism I’ve seen in a long time - that’s the point. Go back to writing puff pieces about using Moleskines effectively or something equally trivial.”

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First, I admit I haven’t been following this closely.

I see the original Verge article by Tom Warren: https://www.theverge.com/2020/4/2/21204018/zoom-security-pri… says:
“In March this year, we reached more than 200 million daily meeting participants, both free and paid,” says Yuan.
With Warren himself writing: The challenges of supporting 200 million users compared to just 10 million a few months ago are significant enough

But just yesterday, perhaps in response to Saul’s earlier queries, he writes: https://www.theverge.com/2020/4/30/21242421/zoom-300-million…
Zoom has admitted it doesn’t have 300 million daily active users. The admission came after The Verge noticed the company had quietly edited a blog post making the claim earlier this month. Zoom originally stated it had “more than 300 million daily users” and that “more than 300 million people around the world are using Zoom during this challenging time.” Zoom later deleted these references from the original blog post, and now claims “300 million daily Zoom meeting participants.”

This part of the story has been picked up by other news sources as well. So, it would appear that Mr. Warren was himself taken in by Zoom’s own misleading press report. For its part, Zoom admits the error:

“We are humbled and proud to help over 300 million daily meeting participants stay connected during this pandemic. In a blog post on April 22, we unintentionally referred to these participants as “users” and “people.” When we realized this error, we adjusted the wording to “participants.” This was a genuine oversight on our part.”

Sigh. Issues with Mr. Warren aside, this is yet another marketing department failure on Zoom’s part (first was the inaccurate “end-to-end encryption” claim). Maybe heads need to roll over in Zoom Marketing?

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Thanks to Saul and Harley for reaching out to the author. HIs replies were pretty much what I’d have expected. While It would be unfair to categorize everything Warren writes as biased, I do believe his article Thursday was simply click-bait/fake news. And it certainly was a catch of the day as its headline and theme ended up being repeated in major financial news outlets - CNBC, Bloomberg, Marketwatch, etc. And, from Saul’s exchange especially, he sounded quite proud that his article ended up having an effect on ZM shares.

Zoom has taken a lot of heat in the last month or so. It’s not surprising though, considering who has competing platforms. Microsoft especially, along with Google and to a lesser degree, but not to be ignored, Facebook and Apple (with FaceTime). There’s Cisco too and other “smaller” competing companies.
Do I think there’s a coordinated effort to beat up on Zoom. No.
At the same time, do I think that Giants play nice when you’re in their playground? Definitely not.

Interestingly, the aforementioned Tom Warren wrote an article on March 19 titled “Leaked video reveals Microsoft sees Zoom video conferencing as an ‘emerging threat’. Have to admit, if nothing else, he’s not bad at coming up with click bait headlines. https://www.theverge.com/2020/3/19/21186918/microsoft-teams-…

Thursday, while Zoom was being Mobbed in the square for having written “Meeting Users”, there was a competing headline: Saintly "Microsoft saw more than 200 Million Meeting Participants in one day in April.” A mere coincidence, I’m sure. ;-).

And apparently the onslaught continuers as Zoom and Eric Yuan’s were named in probe involving UT and Wuhan. Yep, now Zoom is being linked to Wuhan lab conspiracy theories and Covid-19. We’ve officially entered into the theatre of the absurd!

It reminds me a little of when Crowdstrike had to get through the Ukraine fake news/conspiracy theory. Although Zoom seems to be up against a whole new level of B.S.

I guess this is what’s considered just “noise” with our investments. Hang onto your hats!

Best,

Brian

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In response to reasonable questions about his own mistake, Tom Warren, the author wrote to Saul:

Do you hold stock in Zoom? Is that why you’re so upset at the company misleading with its numbers?

And then later wrote:

Ahh so that’s why you’re emailing me, because Zoom stock is down 8 percent. Got it.

It’s interesting that Tom Warren felt qualified to judge Saul’s motives about being upset when Saul didn’t mention the stock price or being upset about losing money in his email. We know that Saul and other regular board contributors take an 8% temporary price drop in stride easily and focus on more important metrics when investing. Of course, Warren doesn’t know that, but he immediately assumed the worst motives.

It appears he did the same with ZM.

The day Saul’s post appeared, I emailed Warren and noted:

So it appears that you made the same (understandably human) error of switching between “users” and “participants” interchangeably, rather than maintaining a precise technical distinction. Anyone reading the headline subtitle and the article would have been under the impression that ZM had 200 million daily users unless they thought to ask why Yuan said “participants.”

I then asked:

Is it possible that ZM’s blog post was a language error which the company quickly corrected rather than a deliberate attempt to mislead?

Warren hasn’t responded, yet. I won’t speculate about his motives, but I am considering thanking him for contributing to a temporary price drop, so I could buy more shares last week.

All the best,

Raymond

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“Warren hasn’t responded, yet. I won’t speculate about his motives, but I am considering thanking him for contributing to a temporary price drop, so I could buy more shares last week.”

Last week, immediately after the article was posted on this board, I emailed Tom Warren throughout the early morning hours and he emailed me back each time within minutes.

However, ever since it was pointed out to him that he and The Verge made the same mistake in their use of the terms “users” and “participants” that he was accusing Zoom of making; his has gone AWOL on email.

Crickets…

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I went back and checked some of the older news stories. Looks like even Reuters got this wrong. They reported:

Zoom users top 300 mln despite growing ban list, shares hit record
BY Reuters
— 2:55 AM ET 04/23/2020
(Reuters) - Zoom video conferencing app’s user base grew by another 50% to 300 million in the last three weeks, as the company fought to quell a backlash around security and safety that has seen a number of governments and firms ban its applications.

Ok all this is old news now. But I also found this interesting tidbit:

Cisco’s Webex draws record 324 mln users in March
BY Reuters
— 1:50 PM ET 04/03/2020
By Supantha Mukherjee

April 3 (Reuters) - Cisco Systems Inc’s (CSCO) video-conferencing app Webex registered a record 324 million attendees in March, with usage more than doubling in the Americas,

Reuters got this title also wrong. They meant Webex had 324 M daily participants not users. But wait Zoom had only 200 M in March. That makes Webex 1.6x the size of Zoom. Unlike facebook, and google meets which are more in the social realm, I see webex, Teams and gotomeeting being more used in the Video conferencing space. Makes you wonder about Zoom’s market share in that space does’nt it?

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They meant Webex had 324 M daily participants not users.

Makes you wonder about Zoom’s market share in that space does’nt it?

Tex,

Are you sure about that? I did a search for WebEx users and every article had the same language “324 million attendees in March”.

It’s not the “users” vs “attendees” vs “participants”. It’s “daily” vs “a month.“. That’s the big difference between what Cisco and Zoom said.

In March implies to me for the month of March. And that makes sense because WebEx also said in that report that 73 million meetings took place in March. Which would be roughly 4.5 attendees per meeting.

I tried to find the original release from WebEx but couldn’t find it. We have the Reuter’s article and most other media on the subject probably comes from that. But the meetings and attendees math looks like we are comparing 324 million attendees for the month of March for WebEx to 200 million attendees for a single day in March for Zoom.

To compare side by side here is the 2 statements.

Zoom:

“In March this year, we reached more than 200 million daily meeting participants, both free and paid.”

WebEx:

“Cisco Systems Inc (NASDAQ:CSCO)'s video-conferencing app Webex registered a record 324 million attendees in March,

Darth

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Are you sure about that? I did a search for WebEx users and every article had the same language “324 million attendees in March”.

It’s not the “users” vs “attendees” vs “participants”. It’s “daily” vs “a month.“. That’s the big difference between what Cisco and Zoom said.

Thanks Darth, I was going to point that out myself. Cisco/Webex was so desperate to make themselves look good that they pooled every participant for the whole month of March and tried to slip it in to compare against Zoom’s daily total in March. How funny!

Saul

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Darth,
You are probably correct. Here is more from the same article:

Zoom’s daily users ballooned to more than 200 million in March from a previous maximum total of 10 million, the company said on Wednesday. It was, however, not clear if the number was comparable with Cisco’s due to the different ways the companies calculate meeting attendees.

“Webex grew 2.5 times in Americas, four times in Europe and 3.5 times in Asia Pacific. Our growth is sourced from enterprise expansion, education and telehealth,” said Sri Srinivasan, senior vice president and general manager, Cisco Collaboration.

Cisco said the latest user numbers have more than doubled since January.

Webex grew 2.5-4x increase in meeting attendees. If you average it as 3x growth it suggests 108 M attendees for the whole of January. In December Zoom did 10M daily participants. This would suggest Zoom was about 3x the size of Cisco in video conferencing space even then.
Also Cisco’s 3X growth vs Zoom’s 20X growth rate is indicative of the former’s primary increase in enterprise growth (more monetization) vs the latter’s social growth (less monetization). But despite that it is quite possible that Zoom still likely grew faster than 3X in the enterprise space. But let us not forget that a 3X increase in participants does not translate directly to 3X increase in revenue.

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