Good discussion, folks; thanks for chiming in. It’s why I started this thread. I did want to respond to this one comment, though:
Now someone in IT says he wants to you to switch to some other provider. Imagine how big a task that would be. Literally every employee in your company would need to be re-trained. Every conference room would need to be ripped apart. Your customer interactions would need to be adjusted.
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We just did this, in fact, at my employer. Full Cisco tele-everything – Jabber, phones, WebEx, videoconferencing (with and without WebEx) rooms, the works. We switched to Zoom in a matter of a few days, really. And, it would seem that with the savings we’re apparently getting, many of the conf rooms are now getting MASSIVE (and I mean massive… the boxes are bigger than my car) new TVs – like 85" or whatever big. While I’m not sold on Zoom being “better” (and I’ve shared already that it’s crashed on my several times while the worst thing WebEx ever did was take too long to dial out to get me on the bridge), if it’s cheaper and “just works” that is A Thing ™ to take note of.
I’m likely not going to bother with the ZM IPO, especially knowing that share lock-up is down the road. Think I’ll wait and see if there is another buy opportunity; or if not, that’s OK, too.
Imagine you have employees all over the world (you are a global company) and you’ve invested a lot of time and energy implementing a collaboration tool. You’ve trained nearly every employee on that platform. Your sales, marketing, finance, R&D, and other G&A teams have 4-5 meetings each day that use it. Your customers are familiar with it, as your inside sales team regularly runs sales calls on it and your marketing team runs webinars.
Sure. But didn’t you just make the case against Zoom as well? Imagine that your current provider is NOT Zoom. And you have all sorts of equipment all setup for Skype for business or Webex, etc.
You are going to switch to Zoom to just save 10%?
My company happens to use Skype for business and we have one button video conferencing in dozens of rooms as well as in a dozen other locations. I have had two Zoom meetings (setup by other companies) in the past month. Both were a bit of a pain, relatively. One had terrible internet audio, the other was OK. One was on site with others back in the other company’s office via Zoom. I asked them why their company chose Zoom. They said Zoom is better than Skype for 100+ people on a video call.
I’m sure that the problem in comparing services is that you have to compare like to like. In other words, you have to see, hear and use the best setup of each provider in a well configured conference room…not only on a laptop.
My guess is that all the money is made on the medium to big company setup…and here switching costs are very high.
Zoom is not going to have 100% marketshare. It is like not investing in Zscaler or Mongo because some companies choose an alternative. The numbers and collateral evidence indicate that Zoom is a special company and they are disrupting the industry.
This said, this IPO is not so much related to fundamentals and more to mania. Everyone wants to get that Elastic or Zscaler bounce and fighting to get in and then out if they can.
The other stocks that had great IPOs went public at much lower market caps. That left a lot more upside as the businesses thrived. Zoom appears to be priced to take better advantage of demand and not going out at a ridiculously low valuation as was the systematic case the last few years. You don’t need to own everything and I will wait a few moths and see what happens.
The usual pattern is the IPO taking off, and then at some point crashing and then rebooting itself. May not happen to Zoom. All depends on how that first earnings call goes. But it happens often. If such happens then I will get interested in investing in Zoom and not just buying into an extremely oversubscribed IPO mania.
Literally every employee in your company would need to be re-trained.
I’ve never received any training on any of the half dozen TC/VC providers or over a dozen migrations I’ve ever been through.
Some maybe more complicated than others but even global MNC Fortune 500 corps I’ve been with don’t bother to train on these tooks. User experience and choice appears to have zero influence in staying or migrating and even jabber and hardware installations don’t seem to make a difference to stickiness or loyalty lock in. Somewhere in corporate a decision gets taken and within weeks the employee base gets switched and user preferences and client continuity be damned.
When we switched from Webex to zoom, we saved more than 50% (I think it was 70% actually). So zoom not only gives you better capability but it was at a substantially reduced price. It was definitely worth it, we saved a bundle.
I don’t see pricing going much Lower but I guess anything could happen.
…The numbers and collateral evidence indicate that Zoom is a special company and they are disrupting the industry. This said, this IPO is not so much related to fundamentals and more to mania. Everyone wants to get that Elastic or Zscaler bounce and fighting to get in and then out if they can.
The other stocks that had great IPOs went public at much lower market caps. That left a lot more upside as the businesses thrived. Zoom appears to be priced to take better advantage of demand and not going out at a ridiculously low valuation as was the systematic case the last few years. You don’t need to own everything and I will wait a few months and see what happens. The usual pattern is the IPO taking off, and then at some point crashing and then rebooting itself. May not happen to Zoom… But it happens often. If such happens then I will get interested in investing in Zoom and not just buying into an extremely oversubscribed IPO mania.
Excellent analysis Tinker, I agree, and will probably do the same.
This is why sometimes it’s best to wait unless your broker can get you in and out for a quick profit if that is what you are after…
Lyft Investors Sue Over Slump, Claiming IPO Was Overhyped
Lyft Inc. was sued by investors who claim the ride-sharing company overstated its market position when it went public last month, leading to a dramatic plunge in its stock price.
Two separate class-action complaints against Lyft, as well as its officers and directors and underwriters, were filed Wednesday in state court in the company’s hometown, San Francisco.
Since going public March 28, Lyft has declined 17 percent to $59.51. That compares with the offering price of $72. The stock sold off sharply amid larger rival Uber Technologies Inc.’s filing for an initial public offering last week, as investors will soon have another option to bet on the potential of ride-sharing and gig-economy.
The investors claim Lyft was exaggerating in its prospectus when it said its U.S. market share was 39 percent. In both suits, the plaintiffs also dinged the company for failing to tell investors that it was about to recall more than a 1,000 of the bikes in its ride-share program.
The company didn’t immediately respond to an emailed request for comment on the lawsuits.
Lyft Investors Sue Over Slump, Claiming IPO Was Overhyped Lyft Inc. was sued by investors who claim the ride-sharing company overstated its market position when it went public last month, leading to a dramatic plunge in its stock price. Two separate class-action complaints against Lyft, as well as its officers and directors and underwriters, were filed Wednesday in state court in the company’s hometown, San Francisco. Since going public March 28, Lyft has declined 17 percent to $59.51. That compares with the offering price of $72. The stock sold off sharply amid larger rival Uber Technologies Inc.’s filing for an initial public offering last week, as investors will soon have another option to bet on the potential of ride-sharing and gig-economy. The investors claim Lyft was exaggerating in its prospectus when it said its U.S. market share was 39 percent. In both suits, the plaintiffs also dinged the company for failing to tell investors that it was about to recall more than a 1,000 of the bikes in its ride-share program. The company didn’t immediately respond to an emailed request for comment on the lawsuits.
This seems off topic but since it was brought up, I guess it’s reasonable to comment. I’m not an attorney so I’m not an expert but I just don’t understand how these lawsuits can be considered legitimate. Stock prices go up and down. There are always known or unknown risks. In any case, I suspect all companies are beset by these nuisance lawsuits/extortion attempts and deal with them as an expected cost of doing business. I doubt there is anything unique in the case of the Lyft IPO. Does anybody else here have a different perspective or expert opinion?
But I just can’t get too excited about Zoom despite the great numbers. They are offering a product in an already reasonably crowded space of virtual meeting software. They have two primary selling points (the way I see it): It works and it’s easy to use.
Agreed. The company I contract for switched over to Zoom from Lync, and as a user can’t say I’ve seen any difference in quality or downtime…both have had issues and fairly frequent equipment downtime events. About a year ago it was much worse than Lync, which led to a lot of grumbling about switching back. Basically, nobody outside of IT knows why the switch was made, it was more disruptive than productive. Perhaps it’s easier to administer. In fairness those issues seem to have been resolved, but it’s also true I’m in fewer meetings now
In any case, this is one where I don’t see a compelling lead in or moat around the product. It’s just a productivity component, and too easily replaced.
Rob,
The situation you’ve described in not too dissimilar from the company I worked at. Only the company I was at was probably larger and more geographically disbursed than the one you posited. I retired about 9 years ago, so I’m sure the landscape has changed.
We were Webex users. I have no idea how many conference rooms were Webex capable, but I imagine virtually all of them. I say this because I don’t recall any special accommodations for Webex in meeting rooms. One person would project their desktop on a screen and we would dial in on a spider phone. Most often, when using Webex I never left my desk, either the one in the office or the one at home where I worked 2 days a week. So far as I recall, there was no outside training on Webex. You received (or if you were hosting, sent) a meeting notice with the meeting info and a phone number. Even though I was in IT, I had nothing to do with desktop apps so I had not the foggiest about how this virtual meeting software worked, but it did. I don’t recall ever having a meeting delayed or postponed due to technical problems. Ease of use was start the Webex app, input your credentials, log in and separately dial in for the audio portion. Not many people struggle with that or need a lot of training. Setting up a meeting was only slightly more difficult. I don’t know what kind of training the IT support folks received. That was my experience where I worked. Just an anecdote. For whatever reasons, apparently it was/is not as trouble free elsewhere. At the time (maybe this has changed) Webex did not share real time video, it shared one attendee’s desktop display which was predominantly (but not exclusively) static PowerPoint presentations or MS-Word text documents. The person sharing their desktop could easily be transferred to a different attendee.
I realize this is kind of apples and oranges. Zoom is video sharing, Webex was (still is?) desktop sharing. But sharing information rather than faces seemed to be adequate. I don’t recall anyone ever expressing reservations or any negative comments because they could not see other meeting participants.
I’ll grant, if you’ve already bought into Zoom, there may not be much motivation to switch. I don’t know how Zoom is packaged and sold, but if it’s already very cheap a competitor will have to compete on something other than price. Zoom already offers a free entry level, limited functionality but still quite useful version. It’s hard to compete with free on price. And maybe that also serves as their barrier to entry. Hard to say. If the TAM is as large as they claim, there’s probably room for more than one provider. As you mentioned, Zoom puts way more money behind S&M as opposed to R&D. But so can any other company.
Anyway, I am simply relating my perception, you have a different one. That’s what makes markets. I wish you the best irrespective of how well Zoom performs. With investing, I’ve found that you sometimes miss opportunities and you sometimes buy dogs. No one bats 1000 in this game. You just need to right often enough to make a pretty good return, even an astonishing return.
