No one could hear what Eric Yuan was saying at the start of an earnings call from his video conferencing app last week. Then someone in his investor relations team reminded him to turn on the mic. As a mishap it wasn’t a major one for the founder of the smash-hit Zoom. But more challenges await Yuan as he tries to find a path through a difficult period in Sino-US relations.
Who is Eric Yuan?
He was born in 1970 in the city of Tai’an in Shandong province. Company legend has it that he started to dabble in video telephony in the late 1980s as a university student, when he wanted to stay in touch with his girlfriend without making the 10-hour train trip to visit her.
How was Zoom created?
After university Yuan did travel further afield, first working in Japan before moving to Silicon Valley in 1997. He says it took nine tries before he was granted a work visa but he then got his start in California with a videoconferencing firm that was later acquired by Cisco. Later he hawked his idea of a smartphone-friendly video conferencing system to his bosses. They said no and he left to start his own firm in 2011, taking 40 engineers with him. They called it Zoom Video Communications.
Why is Zoom in the news?
Yuan’s plan was to build a video-first business that worked without downloading software onto your browser. Launching with a freemium strategy, it soon grabbed a place at the top of the video conferencing market. After a successful IPO last year, Yuan became a billionaire. But Zoom had most of its success selling solutions to businesses conducting virtual meetings. Then the pandemic happened, transforming it into an essential tool for schools, families and friends. Zoom was suddenly a household name.
This popularity has created problems?
The cloud-based model coped well with the surge in traffic. Zoom’s stock price soared and Yuan’s personal wealth went past $10 billion for the first time at the start of June. But he is also wrestling with new concerns about data security. He says that he first started to realise the potential problem when Boris Johnson, the UK prime minister, tweeted a screenshot of the first virtual meeting of his leadership team. Commentators were soon pointing out flaws, such as seeing which operating platform the government was running its computers on and their Zoom IDs. Yuan said later that he never envisaged that participants would want to share pictures of their sessions on Zoom.
The criticism has a ‘China’ dimension?
Security experts were soon crawling all over Zoom’s business. Its encryption process was slammed as inadequate and critics warned that data was being routed through servers in China. Yuan put out a statement saying that the servers in China only came into play by accident because of a surge in traffic, and that Zoom’s data would not be routed through them again. But the political mood in the United States hardly helped. Much was made of the fact that Zoom has its R&D department in China, with over 700 employees. In April Speaker of the House Nancy Pelosi even referred to it as a “Chinese entity” when refusing to convene a Zoom-enabled Congressional session.
Yuan describes Zoom as a “proud American company” and himself as a “Chinese American” (he became a US citizen in 2007). “If the world misunderstands us, then I don’t blame others, it’s our problem,” he told CNN last month.
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