I’m not familiar with the Seeking Alpha article writer, but the article offers some intriguing suggestions about what and why Zoom should consider buying other companies to capitalize on its current position and create a service that would be even more adaptable and harder for companies to switch from.
The writer emphasizes that Eric Yuan made a brilliant decision to rebuild video chat rather than trying to add an app onto a weak product when he left WebEx. At the time, he was told that the video conferencing field was too crowded, but he proved his critics wrong.
It notes that there is a good reason Zoom’s stock trades at higher multiples than comparable companies: it’s growing much faster.
The writer argues that just as Google and Facebook used their stock to neutralize threats and fuel growth through acquisition. Zoom needs to do the same.
He thinks that Zoom should buy Agora because It’s a bigger threat than Google or Microsoft, it would give Zoom moats (switching costs and scale economies), and it would be a reunion.
Agora CEO Bin “Tony” Zhao was an engineer at WebEx in 1997 along with Yuan. He left in 2004 after the WebEx audio streaming product "started receiving so many complaints: their session was cut off, the quality was bad, and so on.”
Later, Zhao realized:
If someone could provide an easy integrated API to support that capability, application builders everywhere would have less barriers in using real-time audio and video in their apps. This would open up a world of possibilities and use cases.
Evidently, Agora does that well and new startups are using Agora. The writer states that The threat to Zoom is that thousands of companies plug Agora into their products and offer a better experience for the thousands of use cases that people use Zoom for today.
Among his reasons for an Agora acquisition are that it would Give Zoom a better foothold into the new use cases . . . by becoming the platform on top of which thousands of companies build video-based products [and] … Agora gives Zoom an API product.
He also suggests that Zoom consider buying:
Loom (access to asynchronous video messaging)
Whereby (for use by smaller casual users)
Icebreaker (video chat for social gatherings which is not Zoom’s strength)
Hopin or Run the World (for large events)
The writer notes that Zoom has hired a Head of Corporate Development, Colin Born, and an analyst which suggests that Zoom is going to start buying companies.
I don’t know enough about Agora or the other companies (or their technology) to evaluate if they are a good fit for Zoom. However, it is worth watching to see if Zoom does decide to buy companies and what companies they buy.
Making the right decisions on what company to buy and when to buy it can significantly influence a company’s success.
It would be interesting to see reactions to the writer’s proposals versus a “what is a moat” and “does Zoom have it” debate.
All the best,