ZM: A Force to Reckon with.

Investment Analysis Clubs Saul’s Investing Discussions
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Whether you attribute it as a great WFH play ( in the current context) or see a paradigm shift happening towards a more digital future ( as opposed to physical one).

ZM is a force to reckon with…

Here are three key factors that guide my reasoning… (italicized text are my thoughts).

1. Product Potential: There are very few products I can think of that were enterprise scoped and went so viral with consumers so fast. 300 M users in such a short span of time! Compare that to the 182 million subscribers Netflix currently has. How much potential does ZM user growth have from here? 400 M, 500 M, 1 B… all those numbers seem possibilities to me.

With all these new users that have been on-boarded and so many of them using ZM for many different reasons ( meetings, learning, party, weddings…) think about the features/use cases that this consumer base is generating and helping guide ZM to what they should be building and enhancing in the years to come. A lot of companies struggle to find those use cases and the world now is offering those to ZM for free. It’s now upto ZM to enrich all that user experience!

2. Video Platform for tomorrow:
Being a dev this fascinates me. Can you imagine the possibilities of creating an add-on/widget using this API: https://marketplace.zoom.us/docs/api-reference/zoom-api ? e.g. adding video chat to whatever you wanted.

ZM can very well be the video platform for the foreseeable future.

3. Amazing Leadership:
The recent response and call to action to fix the current security vulnerabilities speaks volumes about ZM’s leadership.

It’s just a matter of time all of these security issues will be in the rear-view mirror .

Closing thoughts: What more can you ask from a SaaS company that’s enabling this digital age at this scale? What’s the probability of another product that reaches a 300 M user base so quickly…?

During my commute to work in 2019, ZM advertisements occasionaly popped out on my AM radio but I didn’t pay much attention. I would like to thank Saul for the bringing this great company to my attention and am happy that it’s a part of my portfolio.

Cheers!

ron
long <OKTA, AYX, DDOG, NET, ZM, CRWD>

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“Closing thoughts: What more can you ask from a SaaS company that’s enabling this digital age at this scale? What’s the probability of another product that reaches a 300 M user base so quickly…? “

You mentioned NFLX above as well. So I wonder how many more customers NFLX would have if they gave their service away for free. 200 million? 500 million?

As an investor right now in ZM and no doubt enjoying this crazy run right now, I haven’t lost my own realization that I’ll never pay for Zoom, and wondering how many eventually will. At what market cap is this just getting completely ahead of its skis if it’s not already.

More importantly where’s the moat? The brand? I don’t think so. Someone can come up with a cuter name and just as good an experience. Look how many pay apps there are. I use 4 different ones now.

Enjoying the ride, trimming a bit. Wondering.

TMB

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  1. Platform Scalability
    I cannot emphasize enough how impressive it is that the Zoom platform was/is able to scale 30x without issue. I’ve seen it written that this is unprecedented. This provides some insight regarding the quality of the software implementation. Is that easily replicated by a potential competitor? Not in my experience.
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RE: “More importantly where’s the moat? The brand? I don’t think so. Someone can come up with a cuter name and just as good an experience. Look how many pay apps there are. I use 4 different ones now.”

It’s happening right now, they just got competition from Facebook

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  1. Platform Scalability
    I cannot emphasize enough how impressive it is that the Zoom platform was/is able to scale 30x without issue. I’ve seen it written that this is unprecedented. This provides some insight regarding the quality of the software implementation. Is that easily replicated by a potential competitor? Not in my experience.

Exactly! This is a huge reason why Zoom has been so successful. Their product just works, and it works damn well. Those who underestimate how substantial this is are missing the point.

I work for a major defense contractor and we’re locked in with WebEx, which has had nothing but issues in the recent weeks. How embarrassing when we’re presenting to our government customers and WebEx is dropping audio and screen sharing capabilities! It’s not pretty. Of course anybody who uses these platforms would prefer the one that is simple to use and doesn’t crash. Reliability and ease of use should point to the clear winner. I understand why Zoom is eating their lunch. It’s unfortunate that due to the perceived security threats, we won’t be switching anytime soon.

Facebook’s new product is unlikely, in my opinion, to gain any traction in the corporate world. Sure it might become popular for interactions with friends and family, but those are the majority of non-paying users of Zoom anyways.

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