Like the case exercise, and made me even more impressed with how you can clearly lay out the facts and recommendations for complex companies with support
One question - can you elaborate on how buying Figma results in increased network effects? Is it simply "they've bought Figma's preexisting network effects" or is there some synergy with Zoom's user base / product that increases those network effects?
Hey Packy! Great read. Couple of comments/thoughts
1) The vertical strategy space (based on the 2 medium articles you’ve linked to seems to be overcrowded at this point). Also I wonder how large the space will be. In the jobs space there has been a lot of talk about vertical unbundled mini lnkds’s (lnkd for nurses) with workflow features (scheduling, paying etc) for which I see a need but do you think this will play out the same way for more niche video conf offerings? I see the same trend with dating apps and I'm very iffy on if the vast majority can make money (https://dozenworthyreads.substack.com/p/why-are-there-so-many-dating-apps)
2) Why acquire rather than partner? Pre-empt someone else acquiring them?
The other relevant event from 1994 is the launch of Amazon. It provides the perfect playbook on how to employ cheap capital to build moats. That includes a bit of M&A but mainly MASSIVE investments in-house.
Zoom could use its data on customer usage to pinpoint the biggest opportunities, some wild guesses:
-Vertical integration: across the whole online communication experience (hardware? mic., lights, home office setup)
-Horizontal: solutions for specific industries (possibly with M&A but Zoom may also know better than anyone what writers, developers, accountants, etc do on Zoom)
- Zoom Prime: a recurring bundle for home (like Amazon's video and delivery) and office use (like AWS) including all of the above
With their cash-rich balance sheet and $22B in excess EV could Zoom pursue a Facebook-like strategy when it comes to competition from upstarts? That is, keep a close eye on growth trajectories of different services and acquire or imitate any breakout ones. Some thoughts on what could give Zoom moat-like qualities:
* Is it that hard to imitate cocktail parties and other similar user experiences layered on top of Zoom's technology?
* If the answer to the above is no, then are there network effects due to people having Zoom already installed on their phones from work needing to tap a button to switch accounts and use it for an event, therapy, personal gatherings, etc?
Perhaps one thing that's easy to forget is that while Zoom doesn't have a clear moat, neither do any of the "verticalized Zooms". With the depth of their pockets, could Zoom repeatedly enforce their advantage and create a semi-moat?
Great article & analysis.
Like the case exercise, and made me even more impressed with how you can clearly lay out the facts and recommendations for complex companies with support
Awesome read!!! Yuan should follow your advice and just get Agora and a few more.
Great insights!
Good stuff Packy.
One question - can you elaborate on how buying Figma results in increased network effects? Is it simply "they've bought Figma's preexisting network effects" or is there some synergy with Zoom's user base / product that increases those network effects?
Great read, makes me want to invest in Agora not Zoom!
Hey Packy! Great read. Couple of comments/thoughts
1) The vertical strategy space (based on the 2 medium articles you’ve linked to seems to be overcrowded at this point). Also I wonder how large the space will be. In the jobs space there has been a lot of talk about vertical unbundled mini lnkds’s (lnkd for nurses) with workflow features (scheduling, paying etc) for which I see a need but do you think this will play out the same way for more niche video conf offerings? I see the same trend with dating apps and I'm very iffy on if the vast majority can make money (https://dozenworthyreads.substack.com/p/why-are-there-so-many-dating-apps)
2) Why acquire rather than partner? Pre-empt someone else acquiring them?
Great writing and no-boring analysis Packy. Keep it up!
Very good read! I like the case study format!
This was such an excellent read. Really well written. Thanks Packy!
Really enjoyable stuff to read, always something to get you thinking. Thanks
The other relevant event from 1994 is the launch of Amazon. It provides the perfect playbook on how to employ cheap capital to build moats. That includes a bit of M&A but mainly MASSIVE investments in-house.
Zoom could use its data on customer usage to pinpoint the biggest opportunities, some wild guesses:
-Vertical integration: across the whole online communication experience (hardware? mic., lights, home office setup)
-Horizontal: solutions for specific industries (possibly with M&A but Zoom may also know better than anyone what writers, developers, accountants, etc do on Zoom)
- Zoom Prime: a recurring bundle for home (like Amazon's video and delivery) and office use (like AWS) including all of the above
Great read, as always, Packy.
With their cash-rich balance sheet and $22B in excess EV could Zoom pursue a Facebook-like strategy when it comes to competition from upstarts? That is, keep a close eye on growth trajectories of different services and acquire or imitate any breakout ones. Some thoughts on what could give Zoom moat-like qualities:
* Is it that hard to imitate cocktail parties and other similar user experiences layered on top of Zoom's technology?
* If the answer to the above is no, then are there network effects due to people having Zoom already installed on their phones from work needing to tap a button to switch accounts and use it for an event, therapy, personal gatherings, etc?
Perhaps one thing that's easy to forget is that while Zoom doesn't have a clear moat, neither do any of the "verticalized Zooms". With the depth of their pockets, could Zoom repeatedly enforce their advantage and create a semi-moat?