Zoom’s founder left a 6-figure job because he wasn’t happy—and following his heart made him a billionaire

By Tom Huddleston Jr. of CNBC.

"With coronavirus restrictions forcing millions of Americans to adjust to life working from home, teleconferencing software company Zoom Video Communications has suddenly become a household name. 

As of March 22, the company’s tally of daily users had spiked by nearly 380% from a year earlier, and that’s after the company had already added more than 2.2 million new monthly users in the first two months of 2020 (which is more than Zoom added in all of 2019, bringing the company’s total to more than 15 million), as more and more people working remotely around the world are in need of software to connect them with colleagues and clients on a daily basis.

Eric Yuan is Zoom’s 50-year-old founder and CEO.

Yuan dreamed of leaving China to go to Silicon Valley, ever since he was a young man and heard Microsoft co-founder Bill Gates give a speech on the promise of the internet.

Yuan spent over two years struggling with visa issues — he was rejected eight times in total, finally receiving a U.S. visa on his ninth try — before finally coming to the U.S. in 1997 at the age of 27. He didn’t speak English, but he knew how to write computer code, and he landed an engineering job with the videoconferencing software company WebEx.

WebEx sold to Cisco for $3.2 billion a decade later (the platform is now known as Cisco Webex). Yuan became the tech giant’s vice president of engineering, earning compensation in the “very high six-figures.” But he was unhappy.

“Every day, when I woke up, I was not very happy. I even did not want to go to the office to work,” Yuan tells CNBC Make It.

Though his first couple of years at Cisco had been “great,” he started noticing that, when he’d talk to Cisco Webex’s customers about the video-conferencing product he’d helped build, he “did not see a single happy customer.” In Yuan’s opinion, the product didn’t evolve quickly enough, making it a chore for customers to use. (In fact, Yuan told CNBC earlier this year that Cisco was still using the same buggy code he wrote for WebEx roughly two decades ago.)

(Sri Srinivasan, senior vice president and general manager of Cisco’s team collaboration group, says the company has “redesigned Webex from the ground up” since Yuan’s tenure and points out that Webex clients include roughly 95% of the companies in the Fortune 500, and more than 130 million people use Webex every month.)

As a longtime software engineer with multiple patents related to real-time collaboration technology under his belt, Yuan felt that the evolution of smartphones and tablets created new opportunities for making mobile videoconferencing more accessible than ever.

But by 2011, Yuan realized that, if he wanted to make a product the way he wanted to do it, he’d have to leave the comfort of his high-paying executive job to strike out on his own. He left Cisco and began developing his own videoconferencing software platform while looking for the funding he’d need to build a product and launch a new company.

“On the one hand that’s indeed a big risk, to go from a very well-paid and vice president position [at Cisco]. Why would you want to leave?” Yuan tells CNBC Make It. “However, on the flip side, I was not happy. So, mentally, that’s not a big risk. The purpose of life is to pursue happiness, and I was not happy. Then what’s the risk?”

The gamble paid off, and then some.

In the nine years since Yuan founded Zoom, the company has grown to now employ nearly 2,000 people, while almost doubling its revenue in 2019 to more than $620 million. Zoom launched its initial public offering in April 2019 in what became one of the year’s most successful public debuts. Thanks to the sudden influx of users amid the coronavirus pandemic, the company’s stock has more than doubled since the start of 2020, giving Zoom a market valuation of roughly $42 billion. (Some Wall Street analysts argued last year that Zoom’s stock is overvalued compared to the company’s revenue.)

Meanwhile, Yuan has a 22% stake in his company that’s now worth over $9 billion.

When Yuan founded San Jose-based Zoom, the videoconferencing market was fairly crowded, dominated by tech giants like Cisco, Google and Skype (which sold to Microsoft for $8.5 billion in 2011). That made it difficult for Yuan to convince venture capital firms to back his new venture, but he was able to win the support of friends and angel investors like Dan Scheinman, a fellow former Cisco executive who believed in Yuan’s new project enough to cut him a $250,000 check. (He’s now a Zoom board member whose stake in the company was worth nearly $176.5 million after Zoom’s IPO, in April).

Eventually, Yuan raised $3 million in seed funding from the likes of WebEx founder Subrah Iyar (now a Zoom adviser) and the venture capital firm TSVC. After developing a beta version of Yuan’s videoconferencing software and testing it with tech company clients around Silicon Valley, Zoom launched its first official product in 2013. It quickly became popular with business clients, with over 3,500 businesses using Zoom within five months of its launch.

Two years later, that number had quickly grown to roughly 65,000 companies, with over 40 million individual participants using Zoom’s videoconferencing software. Part of the reason for that rapid adoption: Zoom offered a free product that people could use to stream video calls on their mobile devices or sync with traditional conferencing equipment in an office space. (Zoom still offers its “basic” services for free, but business clients can pay for monthly subscriptions to get more features and allow more participants to use the software.)

Much of Zoom’s early growth was organic; its entire marketing strategy at that time relied on “word of mouth” promotion, according to Yuan. “We didn’t even have a marketing team until 2015,” he says.

Meanwhile, Yuan himself was even diving into customer service in some cases, by personally responding over email to customers thinking about leaving the product. “Whenever I saw someone cancelled, I would reply [over email] to them to try to understand what had happened,” says Yuan, who adds that he “learned a lot” from this practice, and that some of the clients he corresponded with even went on to become loyal, long-time customers.

While Zoom is on an upswing since its successful IPO earlier this year, the company’s path has not been completely free of obstacles — evidenced by the brief backlash Zoom saw in July after a flaw in the company’s meeting app became public. Researchers found a security bug in the app that would have allowed hackers to gain access to Zoom video chat sessions taking place on a Mac computer, which tapped into public fears regarding cybersecurity and privacy in the tech space.

Though Zoom quickly fixed the issue with a minor security patch, Yuan tells CNBC Make It the incident taught him a lesson about how important it is, as a tech leader, to quickly gather the facts and take action in any situation involving a potential security vulnerability.

“Any security issues, you have to be very hands on to really understand what’s the exact problem, and then take quick action,” he says.

Though Zoom has already seen a rapid ascent in the videoconferencing market and continues to face tough competition from larger rivals (like Cisco to Google and Microsoft), Yuan believes there’s still plenty of room for the company to grow. In fact, he thinks Zoom can one day reach over a billion individual users.

“There are over 1 billion [office] workers worldwide,” he tells CNBC Make It. “Our goal is to connect all those 1 billion knowledge workers with the Zoom platform. So, given where we are now ... I would think we literally just started.”"