Zoom’s principal private shareholders comprise Eric S. Yuan, a Chinese-American billionaire businessman that founded Zoom. Dan Scheinman, board member and angel investor in Zoom since the start, and Santiago Subotovsky, also an early investor in Zoom. Zoom follows a freeterprise business model, channeling free accounts into enterprise customers.
|Products and Services||Zoom Video Communications, Inc. is a company that offers a range of cloud-based video conferencing and communication services. The core offering is the Zoom Meetings platform, which provides high-quality video and audio conferencing, screen sharing, chat, and collaboration features. Zoom also offers specialized solutions such as Zoom Phone for voice calling, Zoom Webinars for large-scale events, and Zoom Rooms for conference room systems. Additionally, the company provides integrations with third-party applications through the Zoom App Marketplace.||Zoom’s primary product, Zoom Meetings, caters to a wide range of users for virtual meetings and collaboration. Specialized solutions address specific communication needs, such as voice calling and webinars. The Zoom App Marketplace extends functionality through integrations.||Zoom Meetings, Zoom Phone, Zoom Webinars, Zoom Rooms, Zoom App Marketplace (integrations with third-party apps), chat and collaboration features, screen sharing.|
|Revenue Streams||Zoom generates revenue primarily through subscription fees paid by businesses, organizations, and individuals for access to premium features and hosting virtual meetings. The company offers a tiered pricing model based on the number of participants and features required. Additionally, Zoom earns income from large-scale events hosted through Zoom Webinars and other specialized solutions.||Subscription fees from premium plans are a significant source of income, providing access to advanced features. Income from Zoom Webinars and specialized solutions caters to specific needs.||Revenue from subscription fees (e.g., Zoom Pro, Zoom Business, Zoom Enterprise), income from large-scale events hosted through Zoom Webinars, revenue from specialized solutions (e.g., Zoom Phone, Zoom Rooms).|
|Customer Segments||Zoom serves a diverse customer base that includes businesses, educational institutions, government agencies, non-profit organizations, and individuals. The brand appeals to users seeking virtual communication and collaboration solutions.||Zoom’s target demographic encompasses various industries and sectors, including corporate, education, government, and non-profit sectors. Individuals also use Zoom for personal video calls and virtual gatherings.||Businesses, educational institutions (e.g., schools, universities), government agencies, non-profit organizations, individuals seeking virtual communication and collaboration solutions.|
|Distribution Channels||Zoom distributes its products and services primarily through its website, where customers can sign up for subscriptions and access resources. The company also collaborates with authorized resellers and partners to reach a broader customer base. Additionally, Zoom offers integrations with third-party applications through the Zoom App Marketplace.||The website serves as the primary distribution channel, enabling customers to sign up and manage subscriptions. Collaboration with authorized resellers extends market reach. The Zoom App Marketplace enhances functionality through integrations.||Distribution through the Zoom website (zoom.us) for subscription sign-ups and resources, collaborations with authorized resellers, promotion through the Zoom App Marketplace (integrations with third-party apps).|
|Key Partnerships||Zoom partners with authorized resellers and distributors to reach a wider customer base, particularly in regions and markets where local expertise is valuable. The company also collaborates with technology companies to provide integrations through the Zoom App Marketplace. Additionally, Zoom forms strategic partnerships with educational institutions to offer distance learning solutions.||Collaborations with authorized resellers and distributors expand market reach and local support. Partnerships with technology companies enhance functionality through third-party app integrations. Strategic alliances with educational institutions facilitate distance learning solutions.||Collaborations with authorized resellers and distributors (e.g., Zoom authorized reseller program), partnerships with technology companies for integrations (e.g., Zoom App Marketplace), strategic alliances with educational institutions (e.g., partnerships with universities for distance learning).|
|Key Resources||Zoom’s key resources include its cloud-based infrastructure for video conferencing, research and development capabilities, a global network of data centers, a portfolio of patents and technology, a user-friendly interface, customer support, and a commitment to security and privacy.||Cloud-based infrastructure powers video conferencing services. Research and development capabilities drive innovation and service improvement. A global network of data centers ensures reliable performance. Patents protect intellectual property. A user-friendly interface enhances usability. Customer support is essential for user assistance. A commitment to security and privacy builds trust.||Cloud-based infrastructure for video conferencing, research and development capabilities, global network of data centers, portfolio of patents and technology, user-friendly interface, customer support, commitment to security and privacy.|
|Cost Structure||Zoom incurs costs in cloud infrastructure maintenance and expansion, research and development efforts, marketing and advertising campaigns, employee salaries (including engineers and developers), data center operations, customer support, and investments in security and privacy measures.||Cloud infrastructure maintenance and expansion represent ongoing costs. Research and development expenses drive innovation. Marketing and advertising campaigns promote the platform. Employee salaries, especially for engineers and developers, are a significant portion of costs. Data center operations support service reliability. Customer support is necessary for user assistance. Investments in security and privacy require resources.||Costs related to cloud infrastructure maintenance and expansion, research and development of new features and improvements, marketing and advertising campaigns, employee salaries (e.g., engineers, developers), data center operations, customer support, investments in security and privacy measures.|
|Competitive Advantage||Zoom’s competitive advantage lies in its user-friendly platform, high-quality video and audio conferencing, scalability, global network of data centers, commitment to security and privacy, and integrations with third-party applications. The platform’s simplicity appeals to a broad user base, and its performance supports large-scale meetings and events.||A user-friendly platform simplifies virtual communication. High-quality video and audio conferencing ensure an excellent meeting experience. Scalability accommodates various group sizes. A global network of data centers ensures reliable performance. A commitment to security and privacy builds trust. Integrations with third-party applications enhance functionality.||Zoom’s user-friendly platform, high-quality video and audio conferencing, scalability, global network of data centers, commitment to security and privacy, integrations with third-party applications (e.g., Zoom App Marketplace).|
|Value Proposition||Zoom provides businesses, organizations, and individuals with an accessible and reliable platform for virtual meetings, collaboration, and communication. The platform offers high-quality video and audio conferencing, screen sharing, chat, and integrations with third-party apps. Security and privacy measures ensure safe communication.||Zoom’s value proposition centers on simplifying virtual communication and collaboration. High-quality video and audio conferencing enhance meetings. Screen sharing and chat features support collaboration. Integrations with third-party apps extend functionality. Security and privacy measures ensure safe communication.||Virtual meetings, collaboration, and communication with a reliable platform, high-quality video and audio conferencing, screen sharing, chat features, integrations with third-party apps, security and privacy measures for safe communication.|
Eric S. Yuan founded Zoom Video Communications back in 2011.
As he had been working for a videoconferencing company called WebEx, as the company got acquired by Cisco, he became Vice President of engineering.
As he had a new idea for a new videoconferencing company, he pitched the Cisco management, who rejected it.
As that happened, Eric S. Yuan left the company to found Zoom Video Communications, which would become one of the most successful video conferencing apps.
How is Zoom ownership organized?
Zoom ownership is divided into two types of shares: A and B.
Each share of Class A common stock is entitled to one vote per share, and each share of Class B common stock is entitled to 10 votes per share.
The Class A common stock and Class B common stock usually vote together on all matters.
How does Zoom’s executive compensation work?
As with any public/listed organization, Zoom’s compensation structure is based on various elements that try to align short- and long-term and personal and team incentives.
Based on a few core principles, explained below:
|What We Do||What We Don’t Do|
|Emphasize long-term equity incentives||No guaranteed “single-trigger” change in control payments|
|Tie performance cash incentive opportunities to defined business objectives||No tax reimbursements or tax gross-ups on severance or change in control payments|
|Provide transparent disclosure of performance incentive targets and payout structure||No special executive welfare or health benefits, or retirement plans not available to our employees generally|
|Structure severance benefits as “double-trigger” requiring both a change in control and an involuntary termination for payout||No guaranteed salary increases or bonuses|
|Maintain a clawback policy||No hedging or pledging of our stock|
|Assess risks of our compensation program|
|Maintain a Compensation Committee comprised entirely of independent directors|
|Retain an independent compensation advisor|
The key features of the compensation structure within Zoom are:
- Base salary.
- Performance incentive.
- And long-term incentives.
|Base Salary||Provides financial stability and security through a fixed amount of cash for performing job responsibilities.||Fixed compensation that is periodically reviewed and adjusted if and when appropriate.|
|Performance Incentive||Motivates and rewards for attaining performance goals that are key drivers of our annual operating plan.||Incentive opportunities are dependent upon specific performance goals (which may be corporate performance goals and/or individual performance goals or sales goals in the case of executives subject to our sales compensation plan). Each goal has a defined threshold level necessary for any payout and a reasonable cap on payout. Actual incentive amounts earned are determined after the end of the performance period (quarterly or annually), taking into account the extent to which the performance goals have been achieved (and any relative weightings of such goals).|
|Long-Term Incentive||Motivates and rewards for long-term Company performance; aligns executives’ interests with stockholder interests and changes in stockholder value. Attracts highly qualified executives and encourages their continued employment over the long term.||We have not historically granted equity incentives on a regular annual “refresh” cadence. Equity incentives may be granted as and when we determine appropriate for new hires, promotions, or other special circumstances, such as to encourage retention, or as a reward for significant achievement. Equity grants since our initial public offering have been provided in the form of restricted stock unit awards that vest over a multi-year period.|
|Zoom’s Comparable Companies for Compensation Structure Analysis|
|Coupa Software Inc.|
|Palo Alto Networks, Inc.|
|The Trade Desk, Inc.|
|CrowdStrike Holdings, Inc.|
|Veeva Systems Inc.|
|Slack Technologies, Inc.|
From the base salary, a performance-based compensation can be built.
For instance, the base salary of Eric Yuan, CEO and founder, was just $300K, in 2021.
|Executive||Fiscal 2022 Base Salary ($)||Percentage Increase in Base Salary from January 31, 2021 (%)|
|Eric S. Yuan||300,000||0|
You can see below how Zoom assesses its compensation structure, by weighing in various factors.
|Corporate Performance Goal||Payout Formula||Weight||Actual Achievement||Payout Percentage||Weighted Payout Percentage|
|Net MRR(1)||Less than threshold achievement (70% of target): no payout Target achievement (100% of target): 100% payout funding Maximum achievement (150% or greater of target): 200% payout funding||70%||70.8%||3.0%||2.0%|
|Non-GAAP Income from Operations(2)||Less than threshold achievement ($942.0 million): no payout Target achievement ($1,345.7 million): 100% payout funding Maximum achievement ($1,749.4 million or above): 200% payout funding||30%||123%||177%||53.1%|
And that is how the total compensation is formed. For instance, in 2022, on a base salary of $300K, Eric Yuan, the company’s CEO, overall, earned over $800K, primarily made of non-equity incentive plan compensations.
|Name and Principal Position||Year||Salary||Bonus||Stock Awards(1)||Non-Equity Incentive Plan Compensation(2)||All Other Compensation||Total ($)|
|Eric S. Yuan, President and Chief Executive Officer||2022||$301,731||—||—||$13,224||$800,134(3)||$1,115,089|
|Kelly Steckelberg, Chief Financial Officer||2022||$377,164||—||—||$16,530||—||$393,694|
|Ryan Azus, Chief Revenue Officer||2022||$427,452||—||—||$415,220||—||$842,672|
|Aparna Bawa, Chief Operating Officer and Interim Chief Legal Officer||2022||$402,308||—||—||$17,632||—||$419,940|
|Janine Pelosi, Chief Marketing Officer||2022||$377,164||—||—||$16,530||—||$393,694|
- Founding Story:
- Eric S. Yuan founded Zoom Video Communications in 2011.
- Yuan had previously worked for WebEx and Cisco before leaving to create Zoom.
- Cisco rejected Yuan’s idea for a new videoconferencing company, leading him to start Zoom.
- Zoom became highly successful as a video conferencing application.
- Ownership Structure:
- Key shareholders of Zoom include Eric S. Yuan, founder and billionaire businessman.
- Other significant shareholders include Dan Scheinman and Santiago Subotovsky, who were early investors.
- Zoom has two types of shares: Class A (1 vote per share) and Class B (10 votes per share).
- Business Model:
- Product Ecosystem:
- Zoom offers a set of products that make up its ecosystem, facilitating various communication and collaboration needs.
- Details about the specific products within the ecosystem were not provided in the given information.
- Executive Compensation:
- Zoom’s executive compensation is structured to align with short- and long-term goals and to incentivize performance.
- Elements of the compensation structure include base salary, performance incentives, and long-term incentives.
- Performance incentives are tied to achieving specific business objectives and goals.
- Long-term incentives aim to align executives’ interests with stockholder value over time.
- The compensation structure is assessed and adjusted based on factors like corporate performance and comparable companies’ data.
- Notable executives include Eric S. Yuan (CEO and founder), Kelly Steckelberg (CFO), Ryan Azus (Chief Revenue Officer), Aparna Bawa (COO), and Janine Pelosi (Chief Marketing Officer).
- Compensation elements include base salary, bonuses, stock awards, and non-equity incentive plan compensations.
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