According to Gartner, web conferencing will be used for 15% of enterprise voice and video communications by 2019, up from less than 1% in 2016. A rising player in this space is cloud video conferencing service Zoom Video Communications, which recently made it to the Billion Dollar Unicorn Club.

Zoom Video Communications’ Journey

San Jose, California-based Zoom Video Communications was founded in 2014 by CEO Eric Yuan. He was one of the founding engineers at WebEx Communications, which was acquired for $3.2 billion by Cisco in 2007. He went on to be the Corporate Vice President of Engineering at Cisco. In 2011, he quit Cisco to start his own company that would create a new video service on top of modern cloud architecture.

Zoom unifies cloud video conferencing, simple online meetings, group messaging, and a software-defined conference room solution into one easy-to-use platform. It offers meeting solutions in a freemium model. It offers the free basic plan for one-to-one meetings up to 40 minutes and charges between $14 and $20 per month for premium plans targeting small teams, medium, and large enterprises. It also offers software-based conference room solutions for $49 per month.

Zoom’s market penetration is strongest among tech companies, but it also claims to work with 88% of the top 200 universities. It has over 400 employees and 450,000 business customers including 5800 educational institutions.

Zoom Video Communications’ Financials

Zoom does not disclose the details of its financials but has disclosed that its revenue grew nearly 300% in 2016 and it was profitable in the third quarter of 2016.

It has raised $145.5 million from investors including AME Cloud Ventures, Emergence Capital Partners, Horizons Ventures, IT-FARM, Qualcomm Ventures, Maven Ventures, Sequoia Capital, Bart Swanson, Bill Tai, Carmen Elizabeth Sanchez C., Dan Scheinman, Matt Ocko, Mike Everett, Patrick Soon-Shiong, and Subrah Iyar (founder of Webex). In January this year, it raised $100 million from Sequoia Capital in a Series D round that valued it at $1 billion. Sequoia partner Carl Eschenbach, who led the investment, will be joining the Zoom board.

Apart from legacy vendors Cisco and Polycom, Zoom competes in a crowded market for enterprise web-conferencing services where you do not just have startups like Highfive, Join.Me, Vidyo Inc., and BlueJeans Network Inc. but also larger players like Adobe, Citrix, and Microsoft.

There have been several acquisitions in the space. Microsoft bought Skype for $8.5 billion in 2011 while IBM bought Ustream for $130 million last year. It is quite likely that Zoom and other rival startups follow them to be part of a larger software suite.

More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion Dollar Unicorns. The term Unicorn was coined in a TechCrunch article by Aileen Lee of Cowboy Ventures.

Photo Credit: Gunnar Bothner-By/Flickr.com