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How Zoom is changing lifestyles amid coronavirus

In this article:
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Santi Subotovsky, Emergence General Partner and early Zoom investor, joins Yahoo Finance’s Alexis Christoforous and Brian Sozzi to discuss how coronavirus has changed work styles and how Zoom is aiding that change.

Video Transcript

ALEXIS CHRISTOFOROUS: With so many of us pivoting to work from home, we know companies like Zoom are seeing a big surge in demand, and this morning, I am delighted to have with us Santi Subotovsky. He is of Emergence General Partner, one of the first and the largest institutional shareholder in Zoom. Santi, good to see you. Good morning. Tell us what you first saw in Zoom, years ago, when you became the first large investor, that perhaps the world is starting to learn about Zoom during this pandemic.

SANTI SUBOTOVSKY: Sure. Good morning, and thanks very much for having me. We came across Zoom back in 2012, so it was very early in the life of the company. And I would say we had two things going in our favor. One of them is that at Emergence, we're incredibly thematic, and we were tracking this new trend that we started seeing back then, of people trying to work remotely, and trying to connect with a video-first experience.

And second, I had the immigrant advantage. I'm from Argentina, I had my friends and family there, and I tried everything until I found Zoom, and Zoom just worked. So I started using it, both for business and personal, back then. And then when I met Eric, I realized that he was the real leader. Even back then, he was showing incredible vision, and this idea of doing the right thing, which is the same thing that we're seeing now when the company needs that the most.

BRIAN SOZZI: Santi, Zoom has absolutely blown up. It's become a one word thing, just like Google, in many respects, right now, given the situation. But they are battling with privacy issues, and we are seeing reports this week that Zoom has hired a bunch of real tech and security experts. Eric Yuan, the CEO of Zoom, has said privacy issues could be fixed in 90 days, but is that realistic?

SANTI SUBOTOVSKY: So the company has always been focused on doing the right thing for their users. And I believe that in challenging times, that's when companies and leaders show what they're really made of. And in this scenario that we are experiencing right now, I believe that Eric and the company have done exactly the right thing.

First, making sure that the company could provide access to people who needed Zoom, and going from 10 million daily participants to 200 million daily participants, and the quality of the service still being at the top is incredible.

Then, as we started seeing new use cases that we were not built originally for, because the company was an enterprise company, where you have CIOs and CTOs setting the rules. And now, we started seeing how this was being used for consumer use cases. So the company and Eric took in feedback. And then, from that feedback, they went into action with a 90 day plan to address the issues that were raised, setting the [INAUDIBLE] council, setting these Wednesday webinars with Eric where you can ask him anything. So the company has been incredibly transparent and incredibly action-oriented. So I do believe, and I trust, that they will do the right thing to keep us all connected, secure, and safe.

ALEXIS CHRISTOFOROUS: Along the lines of the privacy issues, Santi, we know that a number of school districts, including New York City's school district, is encouraging teachers to move away from Zoom because of those privacy concerns. I know you have a personal relationship with the CEO, Eric Yuan. What has he said specifically about how Zoom is being used in education, and how he hopes to make that more secure, and hopefully win back the business that now they may be losing, ironically?

SANTI SUBOTOVSKY: Yeah, so I have two grade school kids, and they are on Zoom every day. And what I see is that now, going to these schools all around the globe, and enabling these kids and these people to still learn, it's a big challenge, and it's a big opportunity for us to do the right thing. So there's been a lot of work on educating people on how to use passwords, how to use waiting rooms, and that has created a huge push, and has enabled people to go back and start using Zoom again in a more secure environment.

BRIAN SOZZI: Santi, our parent company, Verizon, stepped up and paid a good chunk of money yesterday for Blue Jeans, a video conferencing firm. You sit on the board of Zoom. Have you been approached for any offers for the company, and then if not, are you an acquirer of other work-from-home assets in this environment?

SANTI SUBOTOVSKY: We're seeing that this pandemic has accelerated a lot of the work-from-home and remote working activities, so we believe there's going to be a lot more action in the category. We are trying to figure out right now how to make sure that we support our existing users, and they stay connected, they stay sane, they stay safe. We anticipate-- and I personally anticipate from an investor perspective-- that there's going to be a lot more activity in this category because this pandemic has also exposed a lot of gaps in different areas.

So for example, we talked about education, and what we're seeing is that there's still a big opportunity to build around Zoom and help them deliver a better experience for education, for yoga studios-- I've done paint night over Zoom-- and the product can deliver those experiences. They have an Apps Marketplace that enables third parties to build on top of the platform to better cater for those specific use cases.

ALEXIS CHRISTOFOROUS: Santi, do you believe the interest that we're seeing in Zoom right now is just temporary, and that when, at some point, we do go back to normal and an open economy, that people will move away from Zoom? Or will it now become part of our everyday lives, to some extent? And if so, how?

SANTI SUBOTOVSKY: I personally believe that the adoption curve of this collaboration-- technologies has shifted permanently. And we've been seeing this transition over the years, but right now, we accelerated that. A lot of people had this concern, it's like, oh, should I turn on my video? And this, it's like, what's going to happen? You guys are experts on camera, but a lot of people are not. And this has forced us to overcome that video on, video first-- video first shock. So I believe that the curve has shifted completely. So I believe that once we get back to the new normal, these technologies are going to be a more important part of what we do on a daily basis.

BRIAN SOZZI: Santi, Emergence has a lot of different stakes in public companies, private companies. But in your view, as you take a step back, what company could be the next Zoom? What's the next big trend in technology that you're starting to get pretty excited about?

SANTI SUBOTOVSKY: At Emergence, we've been incredibly thematic since the early days, when we started investing in the Cloud. And right now, we're seeing a lot of activity around what we call coaching networks. And that's a layer of artificial intelligence that sits on top of Enterprise applications.

The second thing where we're seeing a lot of activity is the mobile and [INAUDIBLE] workforce. If you think about all the workers that are not sitting in front of a computer, that are on the go, those workers need technologies. For example, a company called Upkeep in our portfolio, that's exactly what they do.

And the third area that we're seeing as a very interesting opportunity is what we call industry cloud. Vertically focused applications like [? veba ?] systems that build operating systems for specific industries.

ALEXIS CHRISTOFOROUS: At what point in your maturity do you start to invest in companies at Emergence? Because I know with Zoom, they were very much in their infancy when you actually made a big bet on them, Santi.

SANTI SUBOTOVSKY: Yes. And that's what we do. We are early stage investors. We're focused on enterprise, focused on early stage. So for us, we want to hear from a few early customers that they are passionate. And that's what we've heard from companies like Zoom or Viva or Retail Zip Line-- people saying, if you turn this off, I'm going to quit my job and move on to another company that's using this product.

So it's typically when companies have a handful of customers, it's a very small team, and they need help scaling that go-to market engine.

BRIAN SOZZI: Santi, one more for me. What is-- I know you have a very close relationship with Eric Yuan, the founder and CEO of Zoom-- how is he on a personal level? I think a lot of folks that I've talked to suggest he's not getting much sleep, and he's up pretty much around the clock.

SANTI SUBOTOVSKY: Yeah, I would say that-- I mean, the entire Zoom team is working around the clock to make sure that we can all stay connected in a safe environment. And Eric, offline and online, is the same person. He hasn't changed. When I first met him, the company was small, it wasn't obvious. There were a lot of people who were saying, this is not going to happen, it can't be done. Now, it's more obvious. Eric hasn't changed. It's still the same visionary, humble, obsessed with customers, taking in feedback, and being incredibly transparent and action oriented. So that's what we love about him. This desire to do the right thing, and not to optimize on every possible angle, but just do the right thing.

ALEXIS CHRISTOFOROUS: Yeah, that is refreshing and nice to hear. Santi Subotovsky, Emergence General Partner. Thanks so much for being with us. Be well.

SANTI SUBOTOVSKY: Thank you very much.