What comes after Zoom?

This article analyses video in general and Zoom in particular from a technological point of view. It says that video will be present evermore and asks “Will it still be Zoom, though?” After you read the article I’d like to discuss it from an investment point of view…

What comes after Zoom?

We had video calls in science fiction, and we had video conferencing in the 1990s, just as the web was taking off, as a very expensive and impractical tool for big companies. It was proposed as a use case for 3G, which didn’t happen at all, and with the growth of consumer broadband we got all sorts of tools that could do it, but it never really became a mass-market consumer behaviour. Now, suddenly, we’re all locked down, and we’re all on video calls all the time, doing team stand-ups, play dates and family birthday parties, and suddenly Zoom is a big deal. At some point many of those meetings will turn back into coffees, we hope, but video will remain.

Will it still be Zoom, though?

https://www.ben-evans.com/benedictevans/2020/6/22/zoom-and-t…


Welcome back! I hope you had a nice read.

I found it a good and well written article. I could take issue with some of points it makes but then we would get lost in a mass of trivia. As investors what concerns us is not “Will it still be Zoom?” but “Is Zoom a good investment now?”

Technology tends to become commoditized over time and video-conferencing will not be the exception. If you have followed my sigmoid or “S” curve posts then you’ll know that the two points of interest for investors are the bottom and the top curves of the technology’s “S” curve. The bottom curve marks the market’s acceptance and adoption of the technology (at around 15% market penetration) and the top curve, the market’s saturation (at around 85% market penetration). As investors we want to be long in between those two points, not too soon, not too late.

I believe that video-conferencing is well past the chasm so it’s time to be LONG, but a long time before market saturation so just enjoy the ride.

Denny Schlesinger

48 Likes

I also read that article and thought it was good.

What stood out to me was this part: “Taking this one step further, a big part of the friction that Zoom removed was that you don’t need an account, an app or a social graph to use it: Zoom made network effects irrelevant. But, that means Zoom doesn’t have those network effects either. It grew by removing defensibility.”

I read this argument before on Ben Thompsons Stratechery. He also argues that Zoom’s virality excludes it from having network effects.

I don’t know if I agree with that. As far as I understand it, you can not make a video call where one person uses for example Microsoft Teams, and the other uses Zoom. You are either all on Teams or all on Zoom. There is no “cross-platform”-compatibility. I know that you can enter a Zoom call with an integration Bot through Teams, but then again this is just an integration tool that gets you to a Zoom call (like if you share a Zoom-browser-link). Just because you can use Zoom easily and from any device or app doesn’t change the fact that once you are on a Zoom call you use Zoom technology. Thus, I think there are still network effects in this market.

The goal, btw, is not to amass free users that can quickly jump into calls from their browsers or competing apps. The main goal is to land and expand into enterprise customers that pay for more functionality (which vastly exceeds the functionality of the free version). Does anyone really think enterprises will keep and use multiple conferencing solutions because “it doesn’t matter which one you use”???

Of course, at the end of the day products get commoditized. But in Zoom’s case, this is still far in the future. The same commoditization argument could be said for telephone/internet services. But aren’t we still paying for these services and aren’t the companies providing these services still very profitable?

Niki

7 Likes

As far as I understand it, you can not make a video call where one person uses for example Microsoft Teams, and the other uses Zoom. You are either all on Teams or all on Zoom. There is no “cross-platform”-compatibility.

As I understand it, you can use different platforms but then you cannot use encryption and other security features.

But even if you weaken the network effect moat there still is the “Positioning” moat. Google is “search,” Microsoft is “Office,” Cisco is “networks.” Zoom is “tele-conferencing.”

Of course, at the end of the day products get commoditized. But in Zoom’s case, this is still far in the future.

My point exactly.

Denny Schlesinger

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Thanks for sharing this Denny. The positioning perspective is a great reminder. All day long I hear “I’m doing a Zoom” from people. While Google is trying to knock Zoom down with free users that feels more like something friends and free users would use. But any company or business of any size I see using Zoom - that’s what we use exclusively with clients all around the world - and it works great!

6 Likes

The mention of science fiction had me immediately turn to holographic meetings. Why put up with old-style flat-screen meetings when you can be apparently face to face?

A quick look found some talk about a privately held company called Spatial.

“CEO Anand Agarawala told me that Spatial’s product had evolved ‘from something like a 3D Zoom meeting to something more like a 3D Google Docs workspace.’ … Agarawala says his company already has 85 paying customers and that the technology is being explored by a significant portion of the Fortune 1000.”

https://www.fastcompany.com/90466060/nreals-svelte-ar-glasse…

Here’s the concept at the company website:

https://spatial.io/

I’m sure there are plenty of others. This one just caught my eye.

There’s no reason Zoom can’t pursue a virtual/augmented reality option itself. If I were in my teens or 20s and wanted to make progress over flat-Zoom, I’d want something more like this to come after it.

Might be off-topic as Spatial is privately held, but figured I’d try to answer the topic title’s question.

best,
dan

8 Likes

There’s no reason Zoom can’t pursue a virtual/augmented reality option itself.

Most people won’t have the bandwidth to do that, however. Most homes are wired with asymmetrical Internet service, where downloads are much faster than uploads. There are historical reasons for this (technical reasons, costs reasons, and use reasons). But as use patterns on the internet change the need for a more symmetrical internet connection go up. People used to download much more data than they uploaded, and this is changing - we are now uploading much more than before. We have 200mbps down but only 12 up, for example. I would not be able to upload a holographic stream of myself, for example, while on a conference call, with the internet we have.

So… there’s your reason why Zoom (or anyone) cannot do this. Infrastructure isn’t there yet. This is a reason to be looking at the 5G space however, either as direct investments, or an indicator that things like AR can take off.

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bjurasz,

I think you make a good point, but, 5G will increase our ability to transmit greater amounts of data. The question for me is whether the infrastructure - everything before the edge - will be able to support such massive rates of data transfer. Luckily, 5G is not going to arrive in one year, but will be gradually phased in as was 4G. I think companies like FSLY will have a greater and greater role to play during this buildout.

Gordon

1 Like

What stood out to me was this part: “Taking this one step further, a big part of the friction that Zoom removed was that you don’t need an account, an app or a social graph to use it: Zoom made network effects irrelevant. But, that means Zoom doesn’t have those network effects either. It grew by removing defensibility.”

What stood out to me was how incorrect it is to say that only Zoom does not require accounts to participate in a meeting or join a call.

WebEx has had this for years. Skype has had it since 2016. Zoom made their app easier to use/deploy (and in one case that resulted in a security problem since addressed), and made setting up calls easier. It really was just simply a better UI.

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The main goal is to land and expand into enterprise customers that pay for more functionality (which vastly exceeds the functionality of the free version). Does anyone really think enterprises will keep and use multiple conferencing solutions because “it doesn’t matter which one you use”???

No.
And the goal is to get the big enterprises customers. They setup rooms for video conferencing with cameras and microphones. You have a meeting with 2 or 100 people and “invite” the room(s) to the meeting as well and the people. In the room you tap on the tablet and with one tap you are joined to the meeting.

Zoom, Microsoft or whoever is your provider gets a fee per person and per room every month. Once setup (lots of IT work) the service is very sticky.

Mike

1 Like

“As I understand it, you can use different platforms but then you cannot use encryption and other security features.”

Based on the use of the term “platform” above, which refers to the company/app, this is not how it works. It is a server-client (a.k.a. the cloud and the app you use to connect to it) paradigm. You can not use an MS Teams client to connect to a Zoom server.

If you used “platform” to mean “operating system” (OS) then yes, you can access Zoom from any OS, but only because they create apps that run on all of them, which is one of their value-propositions as many companies use multiple: Windows, Mac OSX, Linux, Android, Apple iOS, as well as browser-based which is, itself, cross-platform.

“There’s no reason Zoom can’t pursue a virtual/augmented reality option itself.”
“Most people won’t have the bandwidth to do that, … We have 200mbps down but only 12 up, for example. I would not be able to upload a holographic stream of myself, for example, while on a conference call, with the internet we have. …”

I won’t dispute the lack of symmetrical connection options (I’m lucky enough to have such a service via Novus in Vancouver, BC). I will however drop a quick OT comment about this general point as I think we should ignore it entirely, for now.

With many developing technologies, the version that is eventually used will be quite a bit different from the early iterations. Remember in the early days of the internet it was commonly accepted that it couldn’t scale. However, all sorts of new tricks will be developed and added together to create new ways to transmit information or utilize infrastructure (or create new kinds of infrastructure, etc). New ways to compress data is one example we have seen over and over. A more modern trend we will see is using concepts like Machine Learning to provide ways to skip some data altogether and instead derive new data that is sufficiently similar to the original data as to render the difference irrelevant to users/viewers.

We are already seeing systems that can generate or patch damaged images by using Machine Learning Models trained on massive amounts of images to automatically understand how to blend source images to create something totally new that fits.

In the near future you may be uploading even less than you do today. It will be much more efficient to train a Machine Learning Model of yourself and then feed it just enough for it to reproduce your likeness in real time (computed elsewhere). Once a photo-real virtual version of you is being rendered in real time you can layer in other Machine Learning Models to do fun things like speak to a group of people in different countries in their native languages, in real time, at the same time. I expect this will take far less data than you use for video right now. It may only take something equivalent in size to text with an authenticating identity signature so we can trust the fake you is the real you.

My point is, we have lots of time before we need to talk about this in relation to a Zoom investment thesis. It is too far in to the future to be a risk to the business and too far in to the future to predict reliably anyway.

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You can not use an MS Teams client to connect to a Zoom server.

Apparently not true.
https://www.youtube.com/watch?v=aDX0fMJZVSI

You can not use an MS Teams client to connect to a Zoom server.

Apparently not true.

I believe what the video shows is that you can launch the Zoom application from within Teams. Similar to how I launch it and start meetings within Microsoft Outlook everyday. It is not suggesting you can talk Teams video app to Zoom video app. It is still Zoom app to Zoom app - just launched from within the Teams application.

I view this as awesome news for Zoom. Teams users know the Zoom video experience is much better than a Microsoft video experience so someone created a convenient method for all the Teams users to do Zoom call while still using Teams for chat.

This is a big win for Zoom video.

Clydej - long ZM

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RafesUserName: “It will be much more efficient to train a Machine Learning Model of yourself and then feed it just enough for it to reproduce your likeness in real time (computed elsewhere).”

This is a very interesting take on things, and meshes well with deepfakes technology.

https://www.theverge.com/2019/6/10/18659432/deepfake-ai-fake…

AI deepfakes are now as simple as typing whatever you want your subject to say

In the latest example of deepfake technology, researchers have shown off new software that uses machine learning to let users edit the text transcript of a video to add, delete, or change the words coming right out of somebody’s mouth.

1 Like