Press "Enter" to skip to content

What made Zoom zoom?

Amy Cook discusses the possible causes behind the take-off of everyone’s favorite video-conferencing platform.

 

If you’re like me, you probably had never heard of the video-conferencing platform, Zoom, until earlier this year. It was also possibly the least significant change in your life at the time. Perhaps the only people more surprised by its surge in popularity were Zoom themselves. Chinese software engineer, Eric Yuan, founded the company in 2011 amid doubts from investors that the market was already dominated by likes of Skype, Google and Cisco. Despite this, use of the software jumped 30-fold in April, its value jumped from $15.9 billion to almost $60 billion, and earnings were roughly double what they had originally forecasted for March. 

 

Yet, the success of Zoom can’t help but feel like some sort of market failure. Yes, demand skyrocketed as national lockdowns were imposed, but ostensibly, the market was already dominated by tech giants, and in retrospect Zoom feels somewhat inferior to its competitors. It was not long until its reputation was clouded with concerns about security against hijackers, safeguarding schoolchildren and the company’s close political ties to China. So why was Zoom so successful? Was there a minimum number of users who kick-started Zoom’s journey to success? If so, how many were enough?

 

The Virulence of video-calling

Zoom benefits from what economists call network effects. People need to coordinate on what software they use. The first time I used Zoom a friend had suggested it, the second time I made someone else download it. Such spill overs accelerate the demand side of the market, but also act as a barrier to new entrants. You’d expect Zoom to grow proportionally to the number of current users and with positive demand shocks, which is great news if you have a high number of current users and an inbound pandemic. But what were Zoom’s numbers like pre-Covid? Let it not be misunderstood, Zoom has been valued at over $1 billion since 2017 and was already making headlines in its own industry. It had the capacity to grow but, nonetheless, it was still a little fish in a sea of sharks. 

 

Things changed when a flood of new consumers entered the market in 2020. Everyone was seeking their preferred way to connect remotely. Network effects help explain growth, but not why Zoom was taking market share away from its competitors. One explanation suggested by tech experts is that Zoom offered a more ‘accessible’ platform. I am not fully convinced. For individuals, downloading Zoom does not feel logical when also confronted with the likes of FaceTime, WhatsApp and Facebook. For businesses, maybe, but the benefit of a stronger security platform is surely worth the cost of learning how to use it. 

 

More Fashionable than Facetime?

For individuals like myself, with little to lose from risking a low-quality software, maybe it can be explained by some kind of availability heuristic. If you have heard about Zoom and are looking to download a video-conferencing software, it is likely Zoom will come to mind first. Zoom was fashionable this year, so to speak – though this would be a concerning reason behind the Government’s choice to use Zoom for cabinet meetings. To the average person, the experience across platforms is not significantly different, suggesting most people would not spend time thoroughly researching before downloading (assuming most people are indifferent and one’s choice of software is random) – if it’s then good enough, it won’t be deleted. 

 

But this then begs the question: why was Zoom trending? Where was Skype’s comeback in our hour of need? With high certainty, we can reject the possibility that the 30-fold increase in users all made the independent decision to download Zoom, suggesting no network effect took place. Combining some of the ideas above, it could be that a big enough group of people so passionate about Zoom indoctrinated their indifferent friends and let network effects take course. Maybe Zoom’s background changing feature had some people so zealous about video-calling that the momentum could not be contained. 

 

Isolation got us all crazy?

However, this explanation still feels lacking. The pandemic increased general demand for video-calling software, but I suspect it also affected demand in other ways. The pandemic changed the lives of everyone to an unrecognisable point. People became uncertain and scared for the future. And whilst I wouldn’t suspect a direct causal relationship between fear and downloading Zoom, hysteria certainly causes people to act more randomly than otherwise. All of a sudden, isolation from those around us gave a different purpose to video-calling. Downloading Zoom became as urgent as securing an online food delivery slot, or washing your hands. And Zoom felt like a new software able to serve this new purpose. 

 

If you’re looking to release a video-conferencing platform, to see such rapid growth you would probably need a far greater number of users than Zoom did back in January. But if you’re lacking in numbers, a pandemic might also do. 

Be First to Comment

Leave a Reply

Your email address will not be published. Required fields are marked *

%d bloggers like this: