I was having a discussion with someone about zoom, and he brought up the point that it does not have a moat. Another company could come up with software that does the same thing, but better. I believe they even have software that does the same thing. Gotomeeting.com comes to mind.
I had a good reply. It does have a moat. It has incredible brand recognition.
Users of GoToMeeting would tell you that Zoom has a moat …
One case in point AAII who was a GoToMeeting customer has switched to Zoom.
I was having a discussion with someone about zoom, and he brought up the point that it does not have a moat. Another company could come up with software that does the same thing, but better
I made the same “moat” comment on here, because I’ve used online meeting tools for years at work (design centers around the world). I didn’t see Zoom as a significant disruptor, or offering anything standout. So I chose to avoid the stock.
Clearly, I was wrong on this one…
Zoom has a Moat for sure, besides a great brand, it has superior functionality and better customer service than the competition.
GoToMeeting has been around and advertising on the news and business channels for years.
If Zoom can move from 0% to 90% of peoples’ consciousness of video conferencing in 5 months, even as GoToMeeting has been around the whole time, GoToMeeting is no threat to Zoom.
There has already been a lot of discussion about what differentiates Zoom (the “moat”). Here is the short list:
Quality, built from the ground up for video AND FOR ENTERPRISE.
ZOOM IS FOR ENTERPRISE. Ignore all chatter about competing with Google, FaceBook, WhatsApp, etc, etc. Those are not the competition (mostly MS Teams is). Everyone, including Zoom, expects churn in customers with fewer than 10 employees (includes individuals). As investors we are about the bigger customers. They are sticky (greater retention), bigger (more revenue) and can be expanded in to other products, like Zoom Phone. See my post about other things they do: https://discussion.fool.com/beyond-zoom-video-integrate-apps-pho…
You can NOT just “throw some programmers together” and make a copy of something great like Zoom. Code, and systems, and teams/people interactions are complicated. This point is also true for ability to scale, which zoom demonstrated a stunning ability to do when they went from 10M to over 200M daily active participants with almost no issues.
Platform - They can create targeted solutions and integrations with different certification demands, like tele-health or government. They have tons of integrations out of the box and an app store.
Company culture, momentum and growth fuelled by all the right stuff - This sort of thing isn’t usually discussed as moat, but around here it certainly is an unspoken one!! A company with a great product and management and sales and marketing and support and etc and etc, growing revenue and investing wisely in itself creates a momentum that is hard to duplicate. This, in the context of all the above, is investible precisely because it is an advantage, which is part of what a moat is!
Here is just one of the other threads with some more moat-oriented discussion: https://discussion.fool.com/zoom-competition-34480795.aspx?sort=…
Wow I left out “Network Effect” from my list!! This is a communications company so there is a built-in effect:
- Company A uses it with Company B, the employees like it and subscribe to Zoom and also are more familiar with it for personal use.
- Person A uses it with Person B who likes it so much they spread the word at their company.
…Two amplifying feedback loops. This is the effect we saw propel them to become a recognizable brand name.
Both of these bolded points also contribute to the last moat point in my last reply. Business momentum.