The Six Five team discusses Zoom Perspectives 2023.
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Transcript:
Patrick Moorhead: You attended Zoom Perspectives 2023 and I saw some pictures of you and famous people. Well, you’re famous too, kind of in the Redwood Forest. What the heck was that, like Disney was something?
Daniel Newman: It was in the Redwood Forest. Look, analyst events are great. I was running around the valley, I saw 14 customers and I spent some time with Zoom at their analyst event. Keith Kirkpatrick and Marc Beattie, two of the analysts on the Futurum team, spent a lot of time there. And Zoom’s been in an interesting inflection. Zoom was the darling of the pandemic. It had numbers and growth and people… Remember the stock ran to like 500 a share and then it lost 90% of its value. Just think about that. And in the whole time, by the way, it was losing value. It was growing at a pretty enormous rate, meaning it’s substantially bigger than it is right now, even though its market cap got halved or quartered over and over again. It’s an interesting set of circumstances and Zoom’s been in this process of reinventing itself, of going from a calling or a meetings platform or just a meetings’ company to a collaboration and communications platform.
It has monstrous competitors, really competitors in Microsoft Teams and Zoom’s ethos has really always been the easy button. I’ve always joked, “What’s the cost of happy?” Because that’s the delta in terms of what a customer might pay to be on Zoom. And I will admit, I use all the platforms for the reasons both as an analyst and because of the customers and the relationships. But Zoom does continuously impress as a very easy to use friendly platform for meetings. But Eric Yuan, who I got to spend some time with, CEO of the company, he wants more. He doesn’t want to just be the platform for meetings. I’m going to surprise everybody out there, so hold your breath. They talked about AI quite a bit at this meeting. Are you okay?
Patrick Moorhead: Yeah.
Daniel Newman: Can you breathe?
Patrick Moorhead: Am I allowed to breathe?
Daniel Newman: But they did hire the former AI chief from Microsoft, the chief technology. XD is his name. I’m not going to even try to pronounce his name, but it was a really great opportunity. I spent some time with him. And the company is really focused on how AI can be applied over the day-to-day connected, communicating, collaborating experience to drive more productivity, to drive better CX on its contact center, to make the movement between mobile and systems more flexible, and of course to win more enterprises. And so XD obviously had a lot of insights and knowledge and he didn’t disclose this, and I’m sure his NDA wouldn’t allow him to do his non-competes and NDA, but about open AI and that strategy. And he seemed very steadfast about going to an open multi-model approach that’s going to use many different LLMs foundational models, mid and small and even micro-focused models to help people be more productive, to make collaboration and an assistant in your pocket.
He even referenced Her the movie in his mind somewhere, and I thought that was interesting as to where this could all go. I keep saying Apple has the most opportunistic position in terms of applying an LLM right over the top of the OS, but where do you start your days? And I think right now Slack and Teams have been more successful in terms of starting your day and where you meet. But can Zoom be the “where you start your day” app? Can it be the “I’m in Zoom and that’s where my messages are, that’s where my meetings are, that’s where my mail goes, that’s where my customer interactions are?” That’s the question they’re trying to answer. But that’s directionally, theoretically with contact center phone, messaging, and of course all its APIs, integrations and the different tools where the company is heading, the company needs some help.
It’s going to need to really get its message right, because I think right now the world still really sees it mostly as a meetings company. And so that’s the big transition it needs to make. I do believe Eric has shown whether it was WebEx the first time around, whether it was Zoom the second time around, that he’s able to reinvent, disrupt, and come up with what’s next. And I think that’s going to be his big challenge ahead of him. But there was some encouraging progress and I felt like the company was really listening. And that’s something that, as an analyst, I really care about is does the company want to hear what the outside world is saying or have they decided they have the best answer and they shut everyone out? Other than Apple, I’ve never met a company that can really do that for a long period of time and get away with it. Zoom seems to be open for business. They’re listening, they have big ambitions around AI and they showed some of their wares. And I’m interested to see how this continues to evolve.
Patrick Moorhead: Strategically, the only right mood that the company has is to create a platform. And like you said, that’s exactly what they’re doing by adding things like email, calendar, whiteboarding, messaging, and even more. I really like their expansion into the call center. It’s just natural for them. And all the magic with generative AI you can bring into the call center, I think we’re not even looking at the potential capability. And the way that I like to look at it is, hey, if AI can be used to take maybe three out of the 10 steps of a customer engagement, I think generative AI could take it up to five or seven out of those 10 steps. One of the biggest challenges that I think the company has, and I think they likely know this, is hey, if what got you in the game was simplicity, and then they layered on top of that security, which in enterprise grade capabilities, how do you make a suite simple is by adding different capabilities.
And I’ve met with their most senior product leaders and they get it. I’m impressed. And I think if any company can figure it out, it’s likely going to be Zoom. The other thing that people forget too is the velocity of products that the company brings out. I should chart this someday, but it feels… It’s at least two or three times the speed of other companies. And I know it used to be easy to say, “Well, it’s because they’re not as secure, or it’s because they do this.” I think that’s off the table. Now, maybe with the exception of military grade type of implementations, but they made a ton of progress. I’m super excited to see where this company goes.
