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Zoom Answers Privacy Concerns With End-to-End Encryption

Oct.15 -- Kelly Steckelberg, chief financial officer at Zoom Video, discusses upcoming security features and the company's investor event, Zoomtopia, on "Bloomberg Technology."

Video Transcript

- Kelly, you are wrapping up your Zoomtopia investor event right nowm so thank you so much for taking the time to join us. I want to start with this end-to-end encryption, which is a dramatic change. How will this change my Zoom experience?

KELLY STECKELBERG: So we announced at Zoomtopia, our users conference, that end-to-end encryption will be available in technical preview next week. As you said, it's going to be available for both free and paid users.

And what this means is that users that are on the Zoom client will have a higher level of security and privacy at their meeting, and that the encryption keys will be generated by the participants' machines themselves and known to no third party, not even the Zoom servers. So it will be a really high level of security that will be combined with the reliability and the scalability and the quality of Zoom video and our platform.

- So now that we've stabilized in pandemic mode, with some people going back to work but many of us still at home for the foreseeable future, what's your outlook on growth? Do you see demand still accelerating, and if so, how much?

KELLY STECKELBERG: So we've had a really amazing experience over the last six months. And I think-- to talk a little bit about some of the results, first of all, what we've seen is growth in this cohort of customers with fewer than 10 employees. You look at our results from Q4 of FY20-- that represented 20% of our revenue. And in Q2 of FY21-- this is our last quarter-- it was up to. 36% And so that's a tremendous growth.

And this is really an expansion of a cohort that-- historically, before the pandemic, we had really been primarily focused on our upmarket enterprise customers. And now that we've seen this growth, we're really listening to and focusing on these customers.

And with that, really excited that we announced yesterday our OnZoom, which is a one-stop location for small businesses and consumers to come together to host events. And we've all seen this. I'm sure this is happening in your household, where there are things like piano lessons and yoga lessons happening, but it's been a very disparate experience.

And so what we're doing is really trying to streamline its experience for the small business owners and their consumers to come together on Zoom and be able to have a unified, consistent experience. So really excited to announce this and to see where it goes. And we think, looking forward, this is obviously going to be continued to be a really important part of our long-term strategy.

And then in the upmarket what we have seen is, companies have continued to buy. They've expanded now beyond their business continuity planning into really thinking about, for the long term, how are they going to bring their employees together in a safe and efficient way?

And so another announcement that I love from yesterday was our Smart Gallery. And this is part of our Zoom Room solution. What Smart Gallery does is-- we have all had this experience over the last six months and working together in this environment that there's been a democratization of communication, is what I like to call it. Because when you get on a Zoom, everybody's square is the same size.

And if you think about companies starting to want to go back and put their employees maybe in a hybrid approach, and some are in the office and some are at home, how do you keep that? How do you keep that benefit that we've achieved and not have somebody who's working from home when everybody else is in the office, looking at the back of someone's head? And that's what Smart Gallery's going to do. It's going to enable us to have that appearance that we're still all on the screen together.

- You unveiled OnZoom, which is this solution for folks who want to host and monetize events. I know you said it's not initially material to revenue. But what about the mid- to long-term potential in terms of having a platform that can offer virtual experiences? How much revenue do you expect this to drive in the future?

KELLY STECKELBERG: Well, we're at really early stages, as we just launched this. But what we're excited to do is learn from our hosts, learn what's important to them, listen to them, and see how they and their customers come together to leverage the platform.

And initially really focus on the small and midsize businesses, but I think in the future, we're going to start with the larger events being hosted there, and maybe even enterprises will want to leverage this platform. So I think there's a lot of potential. We're just at super early days of the cycle.

- Obviously, you've now got Zapps, allowing others to embed their apps onto the Zoom platform. Eric Yuan, your CFO-- CEO, excuse me-- yesterday talked about the importance of cooperation. But when it comes to companies like Microsoft and RingCentral that are also competing for your customers, what is the line between competition and collaboration?

KELLY STECKELBERG: So everything we do in Zoom is focused on delivering happiness to our customers. And we believe that that means, sometimes we really cooperate and work very closely with companies to ensure that our customers get this best-of-breed approach, but that we come together and work seamlessly. A great example of that is our API integration with Slack, for example.

But on the other side of it, there is competition. But we believe that competition makes us all be better and is good for the consumer. We don't take it for granted. We're very paranoid about our competitors. And that drives us every day to be on the forefront of development and thinking about what we can do to support our customers every single day.

And I think Eric-- what you're referring to, also, is Eric did talk about, there are times when customers want to use aspects of other platforms like Microsoft. And we also provide an integration there so that, again, our customers can use the products that they love and come together with Zoom for video communications, and also our Zoom Phone application, which are really the key components of our platform.

- Now, I know the team has been working very hard to improve the security features and shake off that early Zoom bombing issue reputation. Congresswoman Jahana Hayes of Connecticut recently spoke about racist trolls attacking her during a Zoom town hall. Do you think the company has done enough to prevent disruptions like this? And if not, what else do you think the company can do?

KELLY STECKELBERG: So we've learned a lot during the last six months, and security and privacy is now front and center and embedded into everything that we do. I often get asked, are we done? And we will never be done. It is now part of every design. Every product that we put forward, we think about this.

And it is ongoing. It takes diligence. It takes commitment. And it's a combination of education, helping that our users know how to best use our platform, how to best equip them with things like features and functionality that allow them to keep their meetings secure and safe. One of my favorite ones is our Privacy Shield, that when you're hosting a meeting, it puts all of the features and functionality front and center.

And it's also helping educate them about the best way to communicate with attendees in meetings, not, for example, publishing meeting credentials publicly. That makes them accessible to anyone. We're also working with AI to ensure that when we do see situations where meeting credentials are publicly available, that we're doing everything we can as quickly as possible to make them be private again.

So we take this very seriously, and we're spending a lot of time as a company, obviously, always thinking about how to keep our users and meeting participants secure.