…or if you prefer, the Hollywood Squares? (and thanks to Tinker and Saul for the CAP discussion which made me consider the longevity side of the moat concept)
I work for a very (very) large company. We have a lot (LOT) of locations. We also have very little SaaS (I’ll save the details of that for another post).
BUT, what we do have with increasing frequency, is Zoom meetings. We are a heavy Microsoft shop with Skype everywhere for chat, etc (as an example, we don’t use Slack, at least not on the business side). So, why all the Zoom meeting all of a sudden?
The distributed team LOVES to see each other face-to-face. It’s the 9-BLOCK of video on the conference. They can hold up signs. We see the different organizations. Work from home people are brought in. Oh, and from their phones. (does any of this sound like Skype or Tele-presence?)
any/all computers have cameras. No need for the ‘special’ room.
Want to Zoom with a supplier? Awesome. Can’t do that with Skype. Try getting that onto the network.
A customer call? Zoom does that.
Does any of that sounds like we will have less of that in the future and not more of it?
Thanks jputter. It’s always nice to get some consensual validation from someone who is actually experiencing it out in the field. We appreciate the input.
Saul
We’ve had video conferencing and electronic meeting capability for several years with GoToMeeting, Google Hangouts, Cisco Webex, and other similar tech from Microsoft, etc. I participate in a lot of meetings with remote customers, associates, and partners. I’ve only ever been asked to a Zoom meeting once or twice, almost all the meetings are in one of the other techs. From my vantage, it seems like a crowded space, led by some large and savvy enterprise class software giants.
Perhaps that is Zoom’s advantage for the time being, to get into the cracks and crevices that are not already occupied by the tech giants, but it may be challenging to maintain a stronghold there. I’m holding a small position in ZM for now, but keeping an open mind for an argument why ZM will displace the established giants in this space.
Our teams are spread out across the midwest. A 1 and half hour drive will get me to my nearest team member.
We are required to have a “huddle” three times a week for 15 to 30
minutes. We use AnyConnect, the first thing we learn to do is tape over the camera. The second is “mute the mike”
Anecdote on the other side. My employer has folks in homes and offices around the world, plus lots of videoconferences with external contacts. Previously used Skype, but people preferred Zoom. Once we adopted Microsoft Teams, company stopped paying for Zoom. People griped for a bit but its functionality is much closer to Zoom’s than the old Skype’s was. Everyone’s dealing with it.
Taking all these anecdotes together, I see a category with some vocal devotees, a user base who is largely agnostic between the many options (as long as their solution is functional), low switching costs and an overall low level of customer lock-in.
They call me,
MrTBS
Long ZM with a small and cautious position
My team of ten uses Zoom to conference once a week. We pay for it, obviously we’re a tiny customer. We used Skype until a group member suggested Zoom. After one try, we made the switch permanent. We meet with collaborators around the world once or twice a month. In the last six months they’ve all requested we switch to Zoom, or if not, we made the request. In one case they griped about downloading new software, then we told them they can run just from the browser and no more griping. OTOH, my group refuses to use Slack, no matter what. I am the lone dissenter, I enjoy collaboration and some light hearted banter, but they don’t want to be bothered or be accessible all day.
In general, anecdotes are not a good investment strategy, but can help with understanding the business. From my experience Zoom is a pleasure to use and solves a major pain point. We can’t get by without it, but we also switched in one day with ZERO costs, and if something better came along, we would do it again. With a strong network effect they might achieve lock-in. For example, I think whenisgood is vastly better than Doodle, but nobody will accept a whenisgood request from me. If I try, I am asked to send it again as a Doodle. Doodle has achieved lock-in despite zero switching costs (in my world).
People want easy. Zoom is easy. Skype was easy too but it sucked. Zoom is easy and it’s awesome, but I need to see swtiching costs to own it. But that’s just how I see it. It’s all about the switching costs when investing in software. I use software all day every day and I know why I switch and why I don’t switch. It’s the integration into the organization, when the software gets intertwined into everyone’s daily grind. When the output from software on my computer is linked as input to software on someone else’s computer, or when I have built a library of custom actions or code that cannot be ported to the latest greatest software, and my workflow depends on those routines, it’s nearly impossible to switch. This is why Cobol and Fortran are alive and well. When the software is just great software but all I do is point and click on actions that are built in, it’s dispensable, unless there is no alternative. Right now, Zoom is dispensable as best I can tell, but if it becomes the standard conferencing software, it might achieve lock-in, and nobody will waste their time entertaining alternatives. We only have so much time in the day. Skype simply wasn’t good enough, so they left a gaping opportunity. Zoom filled it. Now that it’s filled, they might own the space.
Skype simply wasn’t good enough, so they left a gaping opportunity. Zoom filled it. Now that it’s filled, they might own the space.
That might be true in some cases, but I don’t think that is the defacto path for everyone. I don’t doubt for a moment that a lot of companies are moving away from Skype, but the assumption that they are all going to Zoom seems to be a stretch.
In my company Google Hangouts has a pretty solid lock-in from the network effect because it is an extension of Google Apps, which is our corporate standard. Prior to Hangouts we used GoToMeeting, which also worked pretty well, and both of them are pretty much the equal to Zoom in just about every respect. You can share screens, video and audio. Google also runs in the browser, although it works best in Chrome.
I’ve also used join.me and WebEx, which also run in a browser, and they are pretty solid contenders in the corporate environment. I know some folks that swear by TeamViewer and apparently it runs on a browser as well. There are multiple players and a lot of them are free. But I would not overlook the network effect of Google, it integrates seamlessly with Google Mail, Google Calendar, Google Contacts and Google Chat, making it a virtual no-brainer if you already use Google Apps.
Taping over the camera is more prevalent than people might think. #1, bad angle fairly closeup shots from a laptop of someone’s nostrils/ears; or showing that they’re just looking elsewhere / down at notes.
Want to Zoom with a supplier? Awesome. Can’t do that with Skype. Try getting that onto the network.
I’ve done 3 to 10 Skype meetings a week for 5 or 10 years. Maybe half are audio only, but most include video and/or screen presentations.
I’ve done maybe 5 or 6 Zoom meetings…the audio quality has been noticeably worse in these.
I own both ZM and MSFT.
But I’ve done plenty of Skype meetings with outside companies, so I’m not sure what it is that Zoom does that Skype doesn’t. Maybe it is something that your IT has to configure or pay extra for. One click in Outlook completely sets up every Skype meeting, both internal and external.
External companies that have Zoom are always OK with using Skype.
All that said we are converting to MS Teams. We currently have a few “beta” test conference rooms with big screens for this…they are all partially or fully broken. (supposed to work seamlessly with Skype at other locations)
Some people are paranoid of the man therefore Video Conferencing and Communication is a bad market to be in?
I goes the TAM. A lot of meetings do not need telepresence. In fact I know of some engineers that attend two or three meetings at the same time and get drawings done while they are at it. They are not fully engaged. The really awesome power of Zoom is lost on them.
For technicians we may are may not be doing something that may or may not be prohibited, like attending the meeting while cruising down the interstate or grabbing some breakfast or coffee at a truck stop.
I have found anecdotal evidence to be a horrible indicator of trends. The studies I have seen are that millennials prefer teleconferences compared to older generations.
The millenials I know won’t even talk on the phone. They will only email.
Studies have shown millenials are more likely to videoconference. Studies also show that companies that become zoom users significantly increae (almost double) their videoconferencing time.
Those are the studies. I work at a Fortune 500 company. 15,000 employees worldwide. So yes I can make anecdotal examples that contradict these studies but won’t bother because “knowing a handful of engineers that tape the camera lens” is not a basis for investment decision.
Those are the studies. I work at a Fortune 500 company. 15,000 employees worldwide. So yes I can make anecdotal examples that contradict these studies but won’t bother because “knowing a handful of engineers that tape the camera lens” is not a basis for investment decision.
True.
It comes down to quarter over quarter growth.
I am long and in the red on zoom. Down close to 30 percent. The question is. . . do I add here?
There is enough FUD that while the pricing looks very good on Zoom, ZScaler and Crowd, I am unwilling to add more now. Probably the most bullish indicator you can get.
Studies have shown millenials are more likely to videoconference. Studies also show that companies that become zoom users significantly increae (almost double) their videoconferencing time.
Those are the studies. I work at a Fortune 500 company. 15,000 employees worldwide. So yes I can make anecdotal examples that contradict these studies but won’t bother because “knowing a handful of engineers that tape the camera lens” is not a basis for investment decision.
What likely happens is that videoconference time greatly increases even though many tape over, put a blocker on their camera or simply turn off their camera in the settings.
While not a user of Zoom, I am a heavy user of BlueJeans. I have staff in different countries, so all 1:1 and department meetings are done that way. I also work on multiple projects with teams that are in different countries. Except for Monday, since it is Sunday night in the US, I likely spend 2-5 hours a day on video meetings. I don’t know how they charge, if it is just by user by month or do they calculate a different rate for those who turn on or off the camera, but I am guessing it is just by user.
If that is the case, it likely won’t matter how much increase in video usage is happening. Most of the time the conference is done this way for Audio and collaboration. In any given meeting, most of the users have blocked or turned off their cameras. The only team we usually see are those that are grouped in a conference room but for the rest that are sitting at home or in the office, they turn off their video. But it probably doesn’t matter in the end as the tool is still very useful without video.
I use video in department meetings and 1:1’s with my staff. The rest of the time, usually leave it off.
- Want to Zoom with a supplier? Awesome. Can’t do that with Skype. Try getting that onto the network.
But I’ve done plenty of Skype meetings with outside companies, so I’m not sure what it is that Zoom does that Skype doesn’t.
I have to agree with the second poster here – I’m not sure I follow the argument that Zoom is better than any other method of video conferencing. I have actually used the product and came away unimpressed. But I’ve never used Alteryx, Twilio, Mongo, or Elastic…maybe I wouldn’t be a raving fan user of those either. No product has a target audience of “anyone and everyone.”
It seems to me that what’s special about Zoom is their financial results. Still, I think some are treating Zoom as if their great numbers will never slow down. With Zoom still a $20 billion company, I see a lot of better opportunities. I’d take a bet that Elastic, Alteryx, Mongo and Smartsheet all double before Zoom does. They’re all at market caps between about $4.5b and $7.5b, roughly a 3rd or a 4th the size of Zoom. But Zoom doesn’t have 3 or 4 times as much revenue…not even twice a much. If it fails to grow at near-100% for the next few years, it will not end up being a good investment.
I don’t think ZM is doomed…I’ve even started looking again with interest. With the lockup expiring yesterday, perhaps the next few days will give us even better prices. I haven’t felt like it’s a screaming buy yet. I just know that I would never make it more than a small position as long as it’s anywhere near the current price.
From my perspective as a long term investor, as opposed to a trader, I purchased Zoom with the intent of holding for a minimum of 3 years; with the right to pull the rip cord should things change dramatically with my underlying investment thesis.
When things get a bit crazy in the market, like today, and sentiment begins to shake or make me question my investment thesis on Zoom, I re-read my investment journal related to Zoom which tells me the following:
8 Straight Quarters of Triple Digit Top Line Growth,
Most Recently achieved profitability at $0.03 EPS and $15.3M Free Cash Flow
Zoom; in this high growth stock environment has the Perfect Storm of Rapid Revenue Growth + Profits
Nice Top Line Growth ['17=$60M, '18=$151M, '19=$330M, Est. '20=$540M]
Gross Profit Margin runs in the 70% to low %80% range
According to Gartner, by 2022, 65% of meeting solutions users will take advantage of SIP/VoIP for conferencing; up from 20% in 2017 (market growth)
Latest quarter; APAC and EMEA combined for 20% of Zoom’s Revenue, but grew 127% YoY [International Growth is key to the thesis] See deal with HSBC
I began my starter position on 04/1/19 at $64.75/Share. I continued to add to my position on the way up; topping out for me on 06/18/19 at $99.80/share and I have continued to add to my position on the way down; most recently on 09/30/19 at $75.42/share.
While others on this board may not share my view; I see Zoom today as falling back to a more comfortable or more reasonable valuation; currently sitting at $68/share as I write this entry. Early on, perhaps I was caught up in the hype that was fueled by a rapidly growing company that was also showing profitability and hence my willingness to buy additional positions on the way up to extremely high valuations.
However, remaining honest with myself and remaining committed to my original investment thesis for Zoom, then why would I not see today’s pricing as nothing more than a great company on sale? Today could be another great day to add to my position. Unfortunately for me, at this time my dry powder has been substantially depleted over the past month as I have continued to add to a number of other great companies that have been on sale.
I went through Reagan National airport in Washington DC this morning on my way home from a business trip.
You know those little bins you use for your ‘stuff’ going through security? The ones you use for your shoes? Your belt? Your electronics? Everything from you pockets? Your 3oz-limit fluids in any carry on luggage?
ALL of them were branded with Zoom. Zoom logos on the sides, a couple tag lines in the bottom of the bins. Some thing like:
Video, Phone &
Conference Rooms.
zoom
I have a photo, impossible to share in this forum. I can’t estimate the cost, but the reach is incredible. I’ve yet to take a position, or move on from GoToMeeting, Hangouts, or Skype. Maybe it’s time.