The CEO of Zoom Communications shares his imperative to create "customer happiness." Join us for a glimpse inside one a top enterprise software startup unicorn. 

Eric Yuan is the CEO and Founder of Zoom. Prior to founding Zoom, Eric was corporate vice president of engineering at Cisco, where he was responsible for Cisco's collaboration software development. As one of the founding engineers and vice president of engineering at Webex, Eric was the heart and soul of the Webex product from 1997 to 2011. Eric proudly grew his team from 10 engineers to more than 800 worldwide, and contributed to revenue growth from $0 to more than $800M.

In 2017, Eric was added to the Business Insider list of the 52 Most Powerful People in Enterprise Tech. In 2018, he was named the #1 CEO of a large US company by Glassdoor and EY Entrepreneur of the Year in Northern California (software category). Eric is a named inventor on 11 issued and 20 pending patents in real time collaboration.

Transcript

Michael Krigsman: You know I hate the term "customer experience." Everybody talks about customer experience. It's one of these things that means pretty much nothing. But you know what term I do like? I like the idea of making customers happy because it's obvious; it's clear what it is.

Today, on Episode #321 of CXOTalk, we're speaking with somebody who dedicates his life to customer happiness. I'm Michael Krigsman. I'm an industry analyst and the host of CXOTalk.

Now, before we go any further, please, please subscribe on YouTube. Do that now.

I'm just delighted to welcome Eric Yuan, who is the founder and the CEO of Zoom Communications, to CXOTalk. Zoom is a product that we actually use here, so we use it every day. Eric, welcome to CXOTalk. Thank you for being here.

Eric Yuan: Michael, thank you for having me. Thank you.

Michael Krigsman: Eric, please tell us about Zoom.

Eric Yuan: Zoom is a modern enterprise video communication company. We're working very hard to make video communication frictionless.

Michael Krigsman: Eric, you were at another company, and you left to start Zoom. Why did you decide to start this company, Zoom?

Eric Yuan: Yeah, so it's a good question. A little bit of background about how I started Zoom, so prior to founding Zoom, I was at Cisco. I was Cisco's corporate vice president of engineering in charge of its collaboration software development.

I came to Cisco as part of the WebEx acquisition. Actually, I built WebEx before as one of the first several founding engineers. Ultimately, I became Vice President of Engineering.

Before I left Cisco, before I left Cisco WebEx, every time when I talked with a WebEx customer, I did not see a single happy customer. Personally, I felt very embarrassed. I really wanted to fix that problem.

Cisco is a great company, but Cisco was unwilling to change its collaboration strategy back then. That's why I had to leave to build a better solution to bring happiness back to WebEx customers.

Michael Krigsman: Eric, when you talk about happiness, this is kind of a silly question because we all know what the term "happiness" means in kind of a conventional way, but what does customer happiness actually mean for you more precisely?

Eric Yuan: That's the most important thing. To me, I think, every day as a CEO who manages a company, I have so many things to work on but, ultimately, I've got to understand what's the number one important thing as a business, right?

If we cannot make the customer happy, nothing will matter. That's why this is our number one priority. If a customer is happy, everything else will be easier. Customers will like to talk with us, share our stories with others and, essentially, will help us to further improve our product experience and also make our business better.

Michael Krigsman: Customer happiness then starts from really understanding the thing that's most important to them. Is that the key issue here?

Eric Yuan: Absolutely. You've got to look at everything from a customer perspective. If you truly care about them, you are not only going to look at it from your perspective. When you build a product, you will say, "Hey, will this product, will this feature, deliver happiness or add value to a customer or not?" Anything you do, look at it from a customer perspective. Then, actually, the customers, they will feel more like a part of your business. They're happy to grow your business.

Michael Krigsman: But, Eric, you talk to anybody that sells a product or sells a service; everybody says the same thing. Everybody says, "We talk to our customers. We listen." Yet, there's a lot of unhappy customers out there. Drill into it. What are you actually talking about?

Eric Yuan: Ultimately, it's three things. When we talk about happiness, first of all, your product has got to work, right? Every time a customer is using Zoom, they really like it. That's the number one thing; your product has got to work. Every time after the meeting is over, customers say, "Yes, this experience is great." They enjoy using your product.

The second thing is your process. When you do business with customers, you've got to make sure your process is very simple but very easy.

The third thing is about the people. Meaning, because not only do those customers use your product but, also, we want to make sure every interaction between Zoom employees and the customers  — say like support, a customer success manager, engineers, our product managers  — every interaction between our company and the customers, they enjoy it. Process, people, and the product, from all those three aspects, we make sure the customer is happy.

Michael Krigsman: When you started Zoom and it's clear that customer happiness was kind of a mandate for you at the outset, but did you think it through analytically as you just described that we need to do these three things in order to accomplish that customer happiness goal?

Eric Yuan: I think, yes. Wow. That's a very good question. Maybe a little bit of personal story, so before I left Cisco WebEx because the customers were not happy, so every day I was not happy at all. Right? After I left and when I started the company, the first question I asked to myself was, this is a start of a company, a long journey. It could be 10 years or 20 years. What kind of a company do I want to work for, for the next 10 to 20 years?

Ultimately, I really want to make sure every morning when I wake up, I feel very happy; I want to come to the office to work. That's really important.

Also, understand one thing. Sustainable happiness is coming from making others happy. We apply that theory to our business. So, as a business, we do all we can, look at everything from a customer perspective to make the customer happy. Then our business will be happy. Then employees will be happy and then I will be happy.

How do we make sure the customers are happy? We look at every interaction from the product, the people, and the process. Even on the Web, we already understand that.

Michael Krigsman: How much of your corporate effort and your personal time is devoted to this?

Eric Yuan: One hundred percent or maybe 200%. Every day, I look at my calendar. Either meetings with customers or looking at our internal process and how to simplify that, how to make sure we design our company process and also from an end-user perspective. We will look at it from our employee perspective. Even look at it from our internal perspective and also the product as well.

Every day, just look at all those three things: people, product, and process. I spend all the time on those three things.

Michael Krigsman: Okay, but I need to be skeptical here. Okay? [Laughter]

Eric Yuan: [Laughter]

Michael Krigsman: Because--

Eric Yuan: I am not. [Laughter]

Michael Krigsman: [Laughter] All right, so you're an engineer, and I know you spend a lot of time with the product. But when you're sort of deep in the weeds of the product and also then figuring processes out, you're not always thinking, or maybe you are, "Well, will this make customers happy?"

I guess I'm not being clear so, to clarity, to what extent is that reference point present? And, in a practical way, how do you ensure that the decisions you make, big ones and tiny decisions, reflect that reference point? How do you do that in a practical way?

Eric Yuan: That's a good question. For me, actually, I understand that because we have over 1,000 employees. How can we make sure everybody, when you work on something, either product or process, we always look at it from an end user customer perspective? Ultimately, it boils down to our company culture. Everybody needs to understand that.

I give you one example. Like free users, they want to call our support. They want to get some questions or try to get some help. If we really focus on customer happiness, we will help them. That's what we did over the past several years. We still serve our free users very well.

Say the customer wanted to cancel. We make cancellation very easy. They do not need to spend too much time to call us, do this, and then cancel the service. We make everything easier. So, any decision we are going to make it here, we always want to make sure, "Will this help our customer or not? Will this change benefit our customer or not?" Ultimately, that's part of our company culture.

Michael Krigsman: I will say that people should know that we're a paid user of Zoom. You guys have supported CXOTalk and underwritten CXOTalk, which we appreciate, but we're a paying customer of Zoom. Recently, I had to subscribe to the Zoom  Meeting Connector because we had a guest that was using another system and they have to integrate. I will say that the cancellation process was really simple and, in that moment, I said a mental thank you to Zoom.

Eric Yuan: No problem. Thank you. Yeah.

Michael Krigsman: I want to tell everybody that we're speaking with Eric Yuan, who is the CEO of Zoom. There is a tweet chat taking place right now. You can ask Eric questions using the hashtag #CXOTalk.

Eric, another dimension of all of this is, what are the results that you see? You're doing all of these things. How do you know that it's working and how do you measure it? What are your points of evaluation?

Eric Yuan: Yeah, so when you focus on the customer experience to make sure the customer is happy, I think they are going to help you. See, like our NPS score is 72. It's much better than any other competitors. Also, they always share the great stories with some others and they refer so many prospective customers to us.

The second time when they use the Zoom service (more like what you are using) they always share feedback with us to help us to further improve our product. Because of that, that's why we can grow our revenue, grow our business very well in terms of number of users, in terms of revenue. We are growing very well because of those great customers.

Michael Krigsman: To what extent do you tribute the culture versus the fact that your product seems to have the right features and it's stable? As you said, it just simply works. Can you even separate those two, the culture from the product?

Eric Yuan: I think you cannot separate those two, actually. The product is kind of more like the outcome of your company culture, right? If you do not have a great culture, occasionally you might develop a good product. However, that's not sustainable. Very soon, you are not enlisting new customers. You try to add some features you think is right. The customer may not like it.

If you have a good culture, really look at everything from a customer perspective, I think your product will be sustainable. Meaning, you always can improve your product, improve your process, and improve everything centered around the customer experience. That's why culture is the number one thing. The product is sort of the outcome of that.

Michael Krigsman: The issue then is one of being able to deliver those results in a consistent way. If you're consistent over time, then it becomes sustainable. You're saying that it's the underlying culture that makes these other things or these other things are a reflection or an outgrowth of the right type of culture.

Eric Yuan: Yes, absolutely. I gave you one example. This is a long, long time ago when I was still at WebEx. The early days of WebEx, we were working very hard. We built the first generation of a collaboration solution. But, later on, if your team is becoming arrogant, not humble anymore, when customers share the feedback with you, you say, "Oh, oh, oh, that's not important. You don't understand. That's why we do it this way."

When you do that, very soon I think your product will fall apart. You cannot have a great product anymore. That's why we always focus on culture and really look at everything from a customer perspective every day. We want to be very humble.

Michael Krigsman: To what extent is focusing on employees important? Let me just make the comment that I know the answer because, recently, Glassdoor selected you, selected Zoom, as one of the best places to work. Obviously, your employees feel something good is going on there.

Eric Yuan: Yeah, so it boils down to, we talk about our customer happiness. That's the most important thing. But how to do it? Because when you build a business, you cannot, as a CEO, do everything. You need to count on your employees.

Every day, all those interactions with your customers and our employee, how can we make sure our employees are happy? If the employees are not happy, I'm pretty sure the customers can feel that and the customers will not be happy. For me as the CEO, my number one priority is to make sure our employees are happy, and then they can deliver happiness to our customers. I think that's, internally, our number one priority.

Michael Krigsman: How does that, again, play out in a really practical way? The reason I ask this, Eric, is because, you talk to any CEO in Silicon Valley, every CEO says the same. "Our number one priority is our employees." You know what? Ninety-nine percent of the time it's just words. How do you make this play out in reality?

Eric Yuan: That's a good question. I would say 99.9% of CEOs, we all share the same intention to make the employees are happy. But here at Zoom, we are doing several things we think can really help us to make sure our employees are happy.

First of all, we have a clear, very, very … (indiscernible, 00:15:50) culture…. Also, our value is just around a word, "care," meaning we care about our community, care about our customers, care about our company, care about ourselves, and care about our teammates.

The care is part of, is a core value of our company. We want to make sure every employee understands that. This is our company. We've got to care about each other.

Any questions from any of our employees, they are going to share it with us. We built an open, transparent culture. Once, every two weeks, we have an all-hands meeting. Every employee, they can submit questions anonymously, anything. Feel free to let us know.

Because, for us, we are not looking to just maximize our company revenue, maximize our number of users. Every day, every manager, leaders, myself included, we all just think about, "How do we make sure the employees are happy?"

I'll give you one example. We promote self-learning here. An employee told us, "Hey, I'd like to learn something. I'd like to go buy a book." This is great. We reimburse the books. Any book you buy for yourself, for your family, we always reimburse. The reason why is we care about you. There are so many things. All those questions are coming from our employees and, at Zoom, we think about how to make sure they are happy.

Michael Krigsman: What happens when people give you negative feedback, you get negative feedback from employees? Nobody likes to hear negative feedback. We all like to be told, hey, we're great.

Eric Yuan: No, we really like the negative feedback because I learned from the former CEO of Walmart, H. Lee Scott. The ability to give constructive and honest feedback is a rare talent. The reason why those employees give feedback is because they care about the company.

This is our value. If they care about the company, no matter what kind of feedback--good feedback, negative feedback--their intention is good. We trust our employees. Any negative feedback will help us to become a better company. That's why I like all those negative feedback.

Michael Krigsman: You have over a thousand employees and you're growing really rapidly. Actually, let me ask you. How fast are you growing? You became--again, one of these sort of horrible terms--a unicorn, meaning your valuation was over $1 billion. Before we go on, tell us about your growth and things like that.

Eric Yuan: Yeah, so two years ago we got funding from Sequoia. Back then, that was a billion-dollar valuation, but we do not use that unicorn word often here at Zoom. We just move forward.

We more than doubled the employee headcount over the past 12 months and we grew our user base revenue relatively well. Again, we just think that's more the outcome of happy customers. As long as every day we make our product better, process better, and also make sure every interaction with our employees and the customers better, I think everything else will be taken care of well.

Michael Krigsman: You more than doubled your employee headcount over the last year? I didn't know that. Wow.

Eric Yuan: Yes, that's exactly what we did because we also expanded our business to international: to Japan, Australia, and in Germany and France. For sure, we needed to hire more and more employees: also, Singapore; the next generation of a collaboration solution; a lot of cool features like artificial intelligence; and more customer support. And that's why we have to hire more and more great employees.

Michael Krigsman: Wow. You're a busy guy. I appreciate you taking the time to be here on CXOTalk. You're hiring all of these people. How do you find the right ones?

Eric Yuan: Yeah, so normally we do not look at you: "Hey, where did you graduate from?" or, "Which company did you work for before?" We focus on self-learning and self-motivation. Those two things are very important.

Even if, say, you never graduated from any college, as long as you really want to learn, we're likely going to hire you. Also, here at Zoom, our managers, myself included, we do not spend lots of time to motivate our employees. We really like the self-motivated employees because we are all adults, right? You've got motivate yourself. That's why we focus on self-motivation and self-learn.

Michael Krigsman: We have some questions from Twitter. I'm going to answer the first one. We've had a lot of tweets, and so I think I've missed some questions. If you've asked a question, please ask it once more. I apologize. Again, it's the hashtag #CXOTalk.

We have a comment, a question from Jennifer Banzon. This will fall into the constructive criticism category, I'm afraid, Eric. This is live and unrehearsed, everybody. "We, UCLA, are a customer and happy with Zoom. Webinar Registration Form has serious limitations and less than great customer experience. Any plans to enhance?"

Eric Yuan: Jennifer, thank you for sharing the feedback with us. To further improve our Webinar Registration is indeed part of our Webinar roadmap. I will get back to you about our updated plan. I know for sure this is part of our roadmap. We really understand that. Yeah. Thank you.

Michael Krigsman: Again, I want to remind everybody. Now is a great time to ask questions of Eric Yuan. He's the CEO of Zoom. We have him here with captive attention, so ask questions using the hashtag #CXOTalk on Twitter and we will get to your questions.

Eric, we were talking about selecting employees. On the one hand, it sounds like life is great in paradise but, at the same time, any time you're growing rapidly, you're hiring so many people, you're building processes, what are the kinds of challenges that you face as you try to increase this and maintain this ideal and this reference point of customer happiness?

Eric Yuan: Yeah, so as I mentioned earlier, if our employees are not happy, sooner or later our customers will not be happy. If the engineers are not happy, guess what, the code will be very buggy. If the sales are not happy, I do not think they can share that great story about our company, about our product.

Ultimately, the culture is still the number one important thing. How do we maintain that happiness culture? When you hire the employees, how can you quickly let the employees know, like knowledge transfer, involve our company in the process, and really care about our employees? Whenever the employees have questions or problems, how you can care about them and quickly resolve those issues is not something very easy.

That's why even if our intention is great and really focus on employee happiness, we still have so many problems every day, but we understand that. This is a part of the journey to grow your business. As long as we really focus on that, as long as we trust our employees, as we're humble, we are paranoid, I think we'll be okay. That's the nature of growing any business.

Michael Krigsman: Is there a tension between the investment that you need to make and keeping employees happy and other aspects, having processes and designing software with a good user interface? All of these things can be done less well or better. Is there a tension between the additional capital requirements and the time that things take to get it done right versus this goal?

In other words, to ask it more simply, why don't you just take some shortcuts? Nobody is going to notice. Right? No one will know. You'll make more money. Why don't you just do that?

Eric Yuan: I think you cannot focus on short-term outcomes. You've got to look at it in the long-run, so make sure everything you're doing is sustainable. Otherwise, quite often the short-term gain might cost huge problems for the future. Even if you added a feature, you say, "You want to increase the price because only you have that feature. Nobody else can offer that." That's why you want to increase the price. I think that's absolutely wrong. Don't do that.

We want to make sure everything we are doing here, the product side, people investment or process, make sure everything is sustainable. That's really important.

Michael Krigsman: Sustainability then over the longer-term is a key part of this.

Eric Yuan: Absolutely because to build a successful company, it's a long journey. I don't think about an overnight success. Don't think about five years to ten years. Always think about in the long-run.

If you look back ten years from now, is it still the right thing to do? Is it still the right feature? Is this still the right investment? We always need to look at it from that perspective.

Michael Krigsman: You have engrained in the decision making processes looking at the longer-term perspective as well as the shorter-term results.

Eric Yuan: Absolutely. Whenever there's a conflict, we always focus on the long-term.

Michael Krigsman: You're in this amazing position of having this very rapidly growing company. You have revenue. You have great funding. What can a company do, a CEO do, that doesn't have the luxury of this kind of cushion and they have to cut corners because they just simply don't have the money to invest? What can a CEO or a company in that position do to maintain this kind of approach of customer happiness?

Eric Yuan: I want to say you've got to take a step back and don't always think about growing your business. Don't always think about: double your revenue; triple your user base; double your headcount. Always take a step back and look at who will be your first user. Who will be your first paid customer?

Make sure to spend all the time [to] make sure your first user, first paid customer is happy. Just start from there and then you might get a second one. Then focus on the second one. Then focus on the third one.

Do not always think about growing your business. Think about how to make sure your existing users are happy. If you do that, everything else will follow.

Maybe you have more than one customer. They are going to call you. You do not need to spend money on marketing for them to get more customers. They are going to come to you and then you can grow your user base. Then you will kind of get more funding from VCs.

Focus on the most important thing: your existing customers and your existing employees. Don't every day think about growing and growing.

I would say our philosophy is don't grow too fast. Always focus on the existing customer and focus on our employee happiness.

Michael Krigsman: You sound like a guy who is running a services business rather than a guy who is running a product company. I understand Software As a Service is a service but, really, you sound like a professional services consultant person.

Eric Yuan: We are a service company. I think, in the future, every company, every software company is a service company because everything is delivered from the cloud. Software As A Service, essentially, you build the software. You do not sell the software anymore. You sell the service. The service is not only software, but also the billing, the cancellation, the product experience, how to migrate from one cloud to another cloud. Ultimately, you are right. That's a service-oriented economy.

Michael Krigsman: It sounds, again, like your entire mindset is beginning with the service. I'm simplifying it, but that sounds like that's your life.

Eric Yuan: Yes. If you think about every day how to serve your customers well, either they call you or you added a feature or you make the process easier. If you do not serve your subscribers well--this is a software as a service world--they are going to cancel your service. Michael, take your user case for example. If Zoom does not work like you want, you are going to cancel. You are going to find something else. It's very easy.

Michael Krigsman: Let's change topics slightly and talk about the future collaboration and where is all of this going? I don't mean in five or ten years, but over the next two, three, maybe four years, because you're helping shape this market, and you're in a position to see what's going on and what you're most advanced customers are doing. Where is this going over the next several years?

Eric Yuan: I think, first of all, I would say video is going to become a mainstream service. Meaning, in the next several years, and no matter where you go, no matter what kind of device you are using, just one click, you can have a video communication, video collaboration like this experience. But, down the road, we truly believe that online video collaboration, video communication experience will deliver probably a much better experience than a face-to-face meeting.

Early this year, we announced the meeting transcription feature. So, after a meeting in Zoom, we can generate text business transcription. In a fiscal meeting, I do not think we can have that, right? More and more, I think of all these cool features like AR or maybe the AI technology will be applied into the video collaboration industry and truly change the experience of online video collaboration.

Michael Krigsman: Other kinds of things that you see coming down the road that will make the online meeting experience better and improved relative to in person?

Eric Yuan: Yeah, quite a few things. Like I say, Michael, I'm talking with you. Unfortunately, we are not in the same Facebook conf room. I really cannot shake hands with you, right? But, in the future, I think a cool feature will be added into this. If I shake hands, it can feel like that. And I give you a hug; you also can feel like that.

I think, ultimately, in the next five to ten years, I think that those kind of cool features will be added into video collaboration. Essentially, you can sit anywhere and you feel like you're in the same conference room and the experience is even better.

Michael Krigsman: Where will AI, artificial intelligence, and machine learning come into play? I know, unlike many, many, many other software companies, you don't call yourself an AI company. Thank you for that. But I know that AI, as you mentioned earlier, is something that you're working on. What's the relevance of machine learning and AI to video collaboration?

Eric Yuan: Yeah. AI is a technology. You're so right. We are not looking to talk about AI that much. However, AI as a technology will help us improve our product experience. The customer, they may not see that. I'll give you one example.

See, like I take a webinar for example. If the host, the webinar host or moderator, the … (indiscernible, 00:31:43) a topic, and maybe you talk too fast. We can leverage AI technology and, based on attendees’ face detection, we would say, "Hey, please slow down." Michael, when you ask the question and Eric, as the audience, do not understand that because my face is like this, based on AI technology, we will send you a real-time reminder to either slow down or it'll give you some suggestion.

Also, to leverage the AI, we can make the AI based meeting transcription more and more accurate. Today, it's 90%, 91%. How do we improve that to 95%? All those AI technologies behind the scenes will help us improve the product experience.

Michael Krigsman: How about in terms of improving video quality, audio quality? You're limited by the Internet and by compression. Is there a role for AI to improve those areas as well?

Eric Yuan: Very right. Actually, we have a big team working on all the quality improvement like noise reduction, echo cancelation. We use an AI framework to analyze where the noise comes from and how the echo is generated and then leverage that to improve our audio quality. We are already doing that for a while, actually.

Michael Krigsman: You're using AI or machine learning to improve audio quality already?

Eric Yuan: Yes. Yes, we have been doing that for already several years now.

Michael Krigsman: And so, you're saying that in this instance, you're using these techniques to evaluate the type of noise and then, therefore, how to compensate.

Eric Yuan: Yes. Also, based on every meeting experience, and based on the AI framework, we keep improving that. We'll have an algorithm to improve the echo and noise.

Michael Krigsman: Your audio and video quality tends to be really, really good. Now, I'm asking these questions because I have a personal interest in this topic because I do this video streaming thing all the time, and so I happen to be really interested in these issues. Hey, I'm like the audience, right? It's a good opportunity for me to ask.

I know you invest a lot of time in the audio and the video quality. What do you do and how do you ensure that your quality is better than competitors and better than what's come before?

Eric Yuan: Again, every day, we leverage our backend monitoring data to analyze every meeting, every data to see how many meetings have a great experience, how many meetings might have a problem. Based on that, we're trying to understand why this meeting or that meeting has a problem. Maybe, oh, there's one meeting that the Wi-Fi is not reliable and the data loss rate is more than more than 55%. You really cannot recover from that. The audio quality, video quality is not good.

We can let our team work on how can we further improve our audio or video algorithm to support good video quality? Say like you have data loss rate more than 55%, or maybe you have a long-haul connection between here and, say, maybe attendees … (indiscernible, 00:35:09). How do we improve that? Every day, our engineer teams are working very hard to really address the real-time problems.

Michael Krigsman: One of the issues that comes up for me because I interview so many people using relatively cheap webcams is the lack of quality that the webcam, that the hardware is able to generate just in terms of exposure compared to, say, cameras with a larger sensor. Is there anything that you can do to take that low-quality image and somehow improve it even though the source quality may not be that great?

Eric Yuan: Yeah, so I'm using a webcam now. It's about a $50 webcam. I think after we capture the video data from the camera, we also have a software layer to try to improve the quality. Also, that's why we built an advanced algorithm to improve that quality. We not only just count on the video capture data from the webcam, but also have our own layer to improve the video quality.

Michael Krigsman: The ideal thing would be for you to somehow work some type of magic on the data coming out of that webcam to produce a better result than one would expect from a sensor of that size, basically.

Eric Yuan: Yeah, so like encoding efficiency, like the color and the change and also adjust your lighting, all those kind of things. We also have those layers to improve the video quality.

Michael Krigsman: We have another question from Twitter. Okay, so now we step back from geek questions about video quality and compression. By the way, I would love to go deep, deep, deep on this topic, but we have a question from Twitter regarding the workplace and future of work, collaboration. Gus Bekdash is asking, "How can AI help with reducing the information overload?"

Eric Yuan: I think that's a good question. There's so much information available every day. There's so much new information that's going to be generated every day.

I think the systems or software or the service, they should understand your preference, meaning what kind of topic you like. We try to push the data to you rather than every day you need to look around to find the information or find the tools. I think the system will become much better if we further leverage AI technology.

Say like, Michael, based on every day which website you go [to], which product you are using, we know how you really like video. Whenever we have a video enhancement, we should automatically send enhancement information to you rather than you trying to look around where are the video enhancements. With AI, we really can understand every user and then send the right information to you.

Michael Krigsman: We only have about five minutes left. I have a lot of questions I want to ask you. How do you balance the richness of developing a rich set of features with the need to keep the product as simple as possible?

Eric Yuan: Well, that's a wonderful question. That's every day, actually. I can tell you, every day, we never know how to knew engineers. We are always making some mistakes. Quite often, you have ten users, right? One user feels the opposite about one feature. They send the feedback to you.

On the one hand, we've got to listen to them. On the other hand, if you just added a feature to make sure this user is happy, guess what. Very likely you make the other nine users not happy. How do you balance that?

Quite often, we always look at if only two or three users need that feature, we are not going to change the experience for everyone. We are going to add it as an advanced feature to easily let you find that. You can … (indiscernible, 00:39:26) feature by yourself. You are so right. Otherwise, down the road, you add more and more features, the product will become so complex.

Also, we needed to really understand why customers needed this feature. Quite often, we need to understand the pain point. Very likely, most of the users, they will tell you how to fix that. They already give you the solution, but do not all blindly follow what they told you. Really take a step back and understand, why do you have this problem? Then try to figure out the root cause. Then work together with the customer to build up the new features to satisfy the customer needs.

Michael Krigsman: Okay, but this flies in the face of customer happiness because I'm a customer. I want you to change something, and I want you to change it now. I'm unhappy because you're saying no because other customers don't need it.

Eric Yuan: Sometimes, yes, because if the feature request will benefit everybody, why not? If it will only benefit you or maybe some other users, we want to be very careful because we should look at it from every user perspective. Otherwise, it's very easy to add more features.

But guess what, later on  — that's the reason the WebEx product I built before is so hard to use. There are so many things. Nobody is going to use that anymore.

Michael Krigsman: I was going to make a comment. I pay $19 a month or whatever Zoom costs, and I don't care about the long-term of Zoom. I want my feature built and I want it now.

Eric Yuan: Please tell me the feature, and we'll figure out a way to serve you well, but another feature may not be exposed to all the other users, but we still can add this feature to your profile.

Michael Krigsman: But then you're into developing custom software. But, seriously, how do you balance? How do you make these balancing decisions?

Eric Yuan: Again, this is a service and not only software because we deliver everything from the cloud, not like traditional software where everybody should install the same version. Our backend side, our cloud, there are so many different configurations. For your profile, we enable this feature. We enable an advanced echo cancelation. For others, we know it's just based on your profile.

We can automatically enable or disable some of the advanced features like security or all those cool things. Essentially, we already have all those features but, based on different account settings, based on different user profiles, we deliver different feature settings. That's a part of, I would say, the beauty of a cloud service.

Michael Krigsman: I will say that in my two years of using Zoom, you guys have been very, very responsive. I know with you that you really mean it and that's what you do. We have literally about a minute left and so, in that final minute, can you kind of summarize everything you know? What's most important? Just in a minute, our final minute, tell us the secret.

Eric Yuan: Actually, I have so many things that I do not know; I really want to learn. Every day, when I come into the office, I really want to understand where we have a problem. That's why I like reading all those books. I really want to talk with the customers and get feedback.

It's not about what kind of things I know. It's really about what kind of things you want to learn and then can quickly learn from either customer feedback or from others' success or stories and apply that to your business. It's just self-learning. That's really important.

Michael Krigsman: As we finish up, what advice, what final advice do you have for other people trying to build a company? You've mentioned some things earlier, but people trying to build a company looking at Zoom as a role model, what advice do you have for those folks?

Eric Yuan: It's very simple. If you have a dream, just do it. Don't hesitate.

Michael Krigsman: Okay, well, we are out of time. I would like to thank Eric Yuan, who is the founder and the CEO of Zoom, for joining us today. Eric, thank you so much for taking time and being with us today.

Eric Yuan: Thank you. I appreciate it.

Michael Krigsman: Everybody, we have more great shows coming up. Go to CXOTalk.com. Right now, right this second, would you please, please subscribe on YouTube because that really does help us out a lot? Thanks, everybody. I hope you have a great week, and we'll see you next time. Bye-bye.

Michael Krigsman: You know I hate the term "customer experience." Everybody talks about customer experience. It's one of these things that means pretty much nothing. But you know what term I do like? I like the idea of making customers happy because it's obvious; it's clear what it is.

Today, on Episode #321 of CXOTalk, we're speaking with somebody who dedicates his life to customer happiness. I'm Michael Krigsman. I'm an industry analyst and the host of CXOTalk.

Now, before we go any further, please, please subscribe on YouTube. Do that now.

I'm just delighted to welcome Eric Yuan, who is the founder and the CEO of Zoom Communications, to CXOTalk. Zoom is a product that we actually use here, so we use it every day. Eric, welcome to CXOTalk. Thank you for being here.

Eric Yuan: Michael, thank you for having me. Thank you.

Michael Krigsman: Eric, please tell us about Zoom.

Eric Yuan: Zoom is a modern enterprise video communication company. We're working very hard to make video communication frictionless.

Michael Krigsman: Eric, you were at another company, and you left to start Zoom. Why did you decide to start this company, Zoom?

Eric Yuan: Yeah, so it's a good question. A little bit of background about how I started Zoom, so prior to founding Zoom, I was at Cisco. I was Cisco's corporate vice president of engineering in charge of its collaboration software development.

I came to Cisco as part of the WebEx acquisition. Actually, I built WebEx before as one of the first several founding engineers. Ultimately, I became Vice President of Engineering.

Before I left Cisco, before I left Cisco WebEx, every time when I talked with a WebEx customer, I did not see a single happy customer. Personally, I felt very embarrassed. I really wanted to fix that problem.

Cisco is a great company, but Cisco was unwilling to change its collaboration strategy back then. That's why I had to leave to build a better solution to bring happiness back to WebEx customers.

Michael Krigsman: Eric, when you talk about happiness, this is kind of a silly question because we all know what the term "happiness" means in kind of a conventional way, but what does customer happiness actually mean for you more precisely?

Eric Yuan: That's the most important thing. To me, I think, every day as a CEO who manages a company, I have so many things to work on but, ultimately, I've got to understand what's the number one important thing as a business, right?

If we cannot make the customer happy, nothing will matter. That's why this is our number one priority. If a customer is happy, everything else will be easier. Customers will like to talk with us, share our stories with others and, essentially, will help us to further improve our product experience and also make our business better.

Michael Krigsman: Customer happiness then starts from really understanding the thing that's most important to them. Is that the key issue here?

Eric Yuan: Absolutely. You've got to look at everything from a customer perspective. If you truly care about them, you are not only going to look at it from your perspective. When you build a product, you will say, "Hey, will this product, will this feature, deliver happiness or add value to a customer or not?" Anything you do, look at it from a customer perspective. Then, actually, the customers, they will feel more like a part of your business. They're happy to grow your business.

Michael Krigsman: But, Eric, you talk to anybody that sells a product or sells a service; everybody says the same thing. Everybody says, "We talk to our customers. We listen." Yet, there's a lot of unhappy customers out there. Drill into it. What are you actually talking about?

Eric Yuan: Ultimately, it's three things. When we talk about happiness, first of all, your product has got to work, right? Every time a customer is using Zoom, they really like it. That's the number one thing; your product has got to work. Every time after the meeting is over, customers say, "Yes, this experience is great." They enjoy using your product.

The second thing is your process. When you do business with customers, you've got to make sure your process is very simple but very easy.

The third thing is about the people. Meaning, because not only do those customers use your product but, also, we want to make sure every interaction between Zoom employees and the customers  — say like support, a customer success manager, engineers, our product managers  — every interaction between our company and the customers, they enjoy it. Process, people, and the product, from all those three aspects, we make sure the customer is happy.

Michael Krigsman: When you started Zoom and it's clear that customer happiness was kind of a mandate for you at the outset, but did you think it through analytically as you just described that we need to do these three things in order to accomplish that customer happiness goal?

Eric Yuan: I think, yes. Wow. That's a very good question. Maybe a little bit of personal story, so before I left Cisco WebEx because the customers were not happy, so every day I was not happy at all. Right? After I left and when I started the company, the first question I asked to myself was, this is a start of a company, a long journey. It could be 10 years or 20 years. What kind of a company do I want to work for, for the next 10 to 20 years?

Ultimately, I really want to make sure every morning when I wake up, I feel very happy; I want to come to the office to work. That's really important.

Also, understand one thing. Sustainable happiness is coming from making others happy. We apply that theory to our business. So, as a business, we do all we can, look at everything from a customer perspective to make the customer happy. Then our business will be happy. Then employees will be happy and then I will be happy.

How do we make sure the customers are happy? We look at every interaction from the product, the people, and the process. Even on the Web, we already understand that.

Michael Krigsman: How much of your corporate effort and your personal time is devoted to this?

Eric Yuan: One hundred percent or maybe 200%. Every day, I look at my calendar. Either meetings with customers or looking at our internal process and how to simplify that, how to make sure we design our company process and also from an end-user perspective. We will look at it from our employee perspective. Even look at it from our internal perspective and also the product as well.

Every day, just look at all those three things: people, product, and process. I spend all the time on those three things.

Michael Krigsman: Okay, but I need to be skeptical here. Okay? [Laughter]

Eric Yuan: [Laughter]

Michael Krigsman: Because--

Eric Yuan: I am not. [Laughter]

Michael Krigsman: [Laughter] All right, so you're an engineer, and I know you spend a lot of time with the product. But when you're sort of deep in the weeds of the product and also then figuring processes out, you're not always thinking, or maybe you are, "Well, will this make customers happy?"

I guess I'm not being clear so, to clarity, to what extent is that reference point present? And, in a practical way, how do you ensure that the decisions you make, big ones and tiny decisions, reflect that reference point? How do you do that in a practical way?

Eric Yuan: That's a good question. For me, actually, I understand that because we have over 1,000 employees. How can we make sure everybody, when you work on something, either product or process, we always look at it from an end user customer perspective? Ultimately, it boils down to our company culture. Everybody needs to understand that.

I give you one example. Like free users, they want to call our support. They want to get some questions or try to get some help. If we really focus on customer happiness, we will help them. That's what we did over the past several years. We still serve our free users very well.

Say the customer wanted to cancel. We make cancellation very easy. They do not need to spend too much time to call us, do this, and then cancel the service. We make everything easier. So, any decision we are going to make it here, we always want to make sure, "Will this help our customer or not? Will this change benefit our customer or not?" Ultimately, that's part of our company culture.

Michael Krigsman: I will say that people should know that we're a paid user of Zoom. You guys have supported CXOTalk and underwritten CXOTalk, which we appreciate, but we're a paying customer of Zoom. Recently, I had to subscribe to the Zoom  Meeting Connector because we had a guest that was using another system and they have to integrate. I will say that the cancellation process was really simple and, in that moment, I said a mental thank you to Zoom.

Eric Yuan: No problem. Thank you. Yeah.

Michael Krigsman: I want to tell everybody that we're speaking with Eric Yuan, who is the CEO of Zoom. There is a tweet chat taking place right now. You can ask Eric questions using the hashtag #CXOTalk.

Eric, another dimension of all of this is, what are the results that you see? You're doing all of these things. How do you know that it's working and how do you measure it? What are your points of evaluation?

Eric Yuan: Yeah, so when you focus on the customer experience to make sure the customer is happy, I think they are going to help you. See, like our NPS score is 72. It's much better than any other competitors. Also, they always share the great stories with some others and they refer so many prospective customers to us.

The second time when they use the Zoom service (more like what you are using) they always share feedback with us to help us to further improve our product. Because of that, that's why we can grow our revenue, grow our business very well in terms of number of users, in terms of revenue. We are growing very well because of those great customers.

Michael Krigsman: To what extent do you tribute the culture versus the fact that your product seems to have the right features and it's stable? As you said, it just simply works. Can you even separate those two, the culture from the product?

Eric Yuan: I think you cannot separate those two, actually. The product is kind of more like the outcome of your company culture, right? If you do not have a great culture, occasionally you might develop a good product. However, that's not sustainable. Very soon, you are not enlisting new customers. You try to add some features you think is right. The customer may not like it.

If you have a good culture, really look at everything from a customer perspective, I think your product will be sustainable. Meaning, you always can improve your product, improve your process, and improve everything centered around the customer experience. That's why culture is the number one thing. The product is sort of the outcome of that.

Michael Krigsman: The issue then is one of being able to deliver those results in a consistent way. If you're consistent over time, then it becomes sustainable. You're saying that it's the underlying culture that makes these other things or these other things are a reflection or an outgrowth of the right type of culture.

Eric Yuan: Yes, absolutely. I gave you one example. This is a long, long time ago when I was still at WebEx. The early days of WebEx, we were working very hard. We built the first generation of a collaboration solution. But, later on, if your team is becoming arrogant, not humble anymore, when customers share the feedback with you, you say, "Oh, oh, oh, that's not important. You don't understand. That's why we do it this way."

When you do that, very soon I think your product will fall apart. You cannot have a great product anymore. That's why we always focus on culture and really look at everything from a customer perspective every day. We want to be very humble.

Michael Krigsman: To what extent is focusing on employees important? Let me just make the comment that I know the answer because, recently, Glassdoor selected you, selected Zoom, as one of the best places to work. Obviously, your employees feel something good is going on there.

Eric Yuan: Yeah, so it boils down to, we talk about our customer happiness. That's the most important thing. But how to do it? Because when you build a business, you cannot, as a CEO, do everything. You need to count on your employees.

Every day, all those interactions with your customers and our employee, how can we make sure our employees are happy? If the employees are not happy, I'm pretty sure the customers can feel that and the customers will not be happy. For me as the CEO, my number one priority is to make sure our employees are happy, and then they can deliver happiness to our customers. I think that's, internally, our number one priority.

Michael Krigsman: How does that, again, play out in a really practical way? The reason I ask this, Eric, is because, you talk to any CEO in Silicon Valley, every CEO says the same. "Our number one priority is our employees." You know what? Ninety-nine percent of the time it's just words. How do you make this play out in reality?

Eric Yuan: That's a good question. I would say 99.9% of CEOs, we all share the same intention to make the employees are happy. But here at Zoom, we are doing several things we think can really help us to make sure our employees are happy.

First of all, we have a clear, very, very … (indiscernible, 00:15:50) culture…. Also, our value is just around a word, "care," meaning we care about our community, care about our customers, care about our company, care about ourselves, and care about our teammates.

The care is part of, is a core value of our company. We want to make sure every employee understands that. This is our company. We've got to care about each other.

Any questions from any of our employees, they are going to share it with us. We built an open, transparent culture. Once, every two weeks, we have an all-hands meeting. Every employee, they can submit questions anonymously, anything. Feel free to let us know.

Because, for us, we are not looking to just maximize our company revenue, maximize our number of users. Every day, every manager, leaders, myself included, we all just think about, "How do we make sure the employees are happy?"

I'll give you one example. We promote self-learning here. An employee told us, "Hey, I'd like to learn something. I'd like to go buy a book." This is great. We reimburse the books. Any book you buy for yourself, for your family, we always reimburse. The reason why is we care about you. There are so many things. All those questions are coming from our employees and, at Zoom, we think about how to make sure they are happy.

Michael Krigsman: What happens when people give you negative feedback, you get negative feedback from employees? Nobody likes to hear negative feedback. We all like to be told, hey, we're great.

Eric Yuan: No, we really like the negative feedback because I learned from the former CEO of Walmart, H. Lee Scott. The ability to give constructive and honest feedback is a rare talent. The reason why those employees give feedback is because they care about the company.

This is our value. If they care about the company, no matter what kind of feedback--good feedback, negative feedback--their intention is good. We trust our employees. Any negative feedback will help us to become a better company. That's why I like all those negative feedback.

Michael Krigsman: You have over a thousand employees and you're growing really rapidly. Actually, let me ask you. How fast are you growing? You became--again, one of these sort of horrible terms--a unicorn, meaning your valuation was over $1 billion. Before we go on, tell us about your growth and things like that.

Eric Yuan: Yeah, so two years ago we got funding from Sequoia. Back then, that was a billion-dollar valuation, but we do not use that unicorn word often here at Zoom. We just move forward.

We more than doubled the employee headcount over the past 12 months and we grew our user base revenue relatively well. Again, we just think that's more the outcome of happy customers. As long as every day we make our product better, process better, and also make sure every interaction with our employees and the customers better, I think everything else will be taken care of well.

Michael Krigsman: You more than doubled your employee headcount over the last year? I didn't know that. Wow.

Eric Yuan: Yes, that's exactly what we did because we also expanded our business to international: to Japan, Australia, and in Germany and France. For sure, we needed to hire more and more employees: also, Singapore; the next generation of a collaboration solution; a lot of cool features like artificial intelligence; and more customer support. And that's why we have to hire more and more great employees.

Michael Krigsman: Wow. You're a busy guy. I appreciate you taking the time to be here on CXOTalk. You're hiring all of these people. How do you find the right ones?

Eric Yuan: Yeah, so normally we do not look at you: "Hey, where did you graduate from?" or, "Which company did you work for before?" We focus on self-learning and self-motivation. Those two things are very important.

Even if, say, you never graduated from any college, as long as you really want to learn, we're likely going to hire you. Also, here at Zoom, our managers, myself included, we do not spend lots of time to motivate our employees. We really like the self-motivated employees because we are all adults, right? You've got motivate yourself. That's why we focus on self-motivation and self-learn.

Michael Krigsman: We have some questions from Twitter. I'm going to answer the first one. We've had a lot of tweets, and so I think I've missed some questions. If you've asked a question, please ask it once more. I apologize. Again, it's the hashtag #CXOTalk.

We have a comment, a question from Jennifer Banzon. This will fall into the constructive criticism category, I'm afraid, Eric. This is live and unrehearsed, everybody. "We, UCLA, are a customer and happy with Zoom. Webinar Registration Form has serious limitations and less than great customer experience. Any plans to enhance?"

Eric Yuan: Jennifer, thank you for sharing the feedback with us. To further improve our Webinar Registration is indeed part of our Webinar roadmap. I will get back to you about our updated plan. I know for sure this is part of our roadmap. We really understand that. Yeah. Thank you.

Michael Krigsman: Again, I want to remind everybody. Now is a great time to ask questions of Eric Yuan. He's the CEO of Zoom. We have him here with captive attention, so ask questions using the hashtag #CXOTalk on Twitter and we will get to your questions.

Eric, we were talking about selecting employees. On the one hand, it sounds like life is great in paradise but, at the same time, any time you're growing rapidly, you're hiring so many people, you're building processes, what are the kinds of challenges that you face as you try to increase this and maintain this ideal and this reference point of customer happiness?

Eric Yuan: Yeah, so as I mentioned earlier, if our employees are not happy, sooner or later our customers will not be happy. If the engineers are not happy, guess what, the code will be very buggy. If the sales are not happy, I do not think they can share that great story about our company, about our product.

Ultimately, the culture is still the number one important thing. How do we maintain that happiness culture? When you hire the employees, how can you quickly let the employees know, like knowledge transfer, involve our company in the process, and really care about our employees? Whenever the employees have questions or problems, how you can care about them and quickly resolve those issues is not something very easy.

That's why even if our intention is great and really focus on employee happiness, we still have so many problems every day, but we understand that. This is a part of the journey to grow your business. As long as we really focus on that, as long as we trust our employees, as we're humble, we are paranoid, I think we'll be okay. That's the nature of growing any business.

Michael Krigsman: Is there a tension between the investment that you need to make and keeping employees happy and other aspects, having processes and designing software with a good user interface? All of these things can be done less well or better. Is there a tension between the additional capital requirements and the time that things take to get it done right versus this goal?

In other words, to ask it more simply, why don't you just take some shortcuts? Nobody is going to notice. Right? No one will know. You'll make more money. Why don't you just do that?

Eric Yuan: I think you cannot focus on short-term outcomes. You've got to look at it in the long-run, so make sure everything you're doing is sustainable. Otherwise, quite often the short-term gain might cost huge problems for the future. Even if you added a feature, you say, "You want to increase the price because only you have that feature. Nobody else can offer that." That's why you want to increase the price. I think that's absolutely wrong. Don't do that.

We want to make sure everything we are doing here, the product side, people investment or process, make sure everything is sustainable. That's really important.

Michael Krigsman: Sustainability then over the longer-term is a key part of this.

Eric Yuan: Absolutely because to build a successful company, it's a long journey. I don't think about an overnight success. Don't think about five years to ten years. Always think about in the long-run.

If you look back ten years from now, is it still the right thing to do? Is it still the right feature? Is this still the right investment? We always need to look at it from that perspective.

Michael Krigsman: You have engrained in the decision making processes looking at the longer-term perspective as well as the shorter-term results.

Eric Yuan: Absolutely. Whenever there's a conflict, we always focus on the long-term.

Michael Krigsman: You're in this amazing position of having this very rapidly growing company. You have revenue. You have great funding. What can a company do, a CEO do, that doesn't have the luxury of this kind of cushion and they have to cut corners because they just simply don't have the money to invest? What can a CEO or a company in that position do to maintain this kind of approach of customer happiness?

Eric Yuan: I want to say you've got to take a step back and don't always think about growing your business. Don't always think about: double your revenue; triple your user base; double your headcount. Always take a step back and look at who will be your first user. Who will be your first paid customer?

Make sure to spend all the time [to] make sure your first user, first paid customer is happy. Just start from there and then you might get a second one. Then focus on the second one. Then focus on the third one.

Do not always think about growing your business. Think about how to make sure your existing users are happy. If you do that, everything else will follow.

Maybe you have more than one customer. They are going to call you. You do not need to spend money on marketing for them to get more customers. They are going to come to you and then you can grow your user base. Then you will kind of get more funding from VCs.

Focus on the most important thing: your existing customers and your existing employees. Don't every day think about growing and growing.

I would say our philosophy is don't grow too fast. Always focus on the existing customer and focus on our employee happiness.

Michael Krigsman: You sound like a guy who is running a services business rather than a guy who is running a product company. I understand Software As a Service is a service but, really, you sound like a professional services consultant person.

Eric Yuan: We are a service company. I think, in the future, every company, every software company is a service company because everything is delivered from the cloud. Software As A Service, essentially, you build the software. You do not sell the software anymore. You sell the service. The service is not only software, but also the billing, the cancellation, the product experience, how to migrate from one cloud to another cloud. Ultimately, you are right. That's a service-oriented economy.

Michael Krigsman: It sounds, again, like your entire mindset is beginning with the service. I'm simplifying it, but that sounds like that's your life.

Eric Yuan: Yes. If you think about every day how to serve your customers well, either they call you or you added a feature or you make the process easier. If you do not serve your subscribers well--this is a software as a service world--they are going to cancel your service. Michael, take your user case for example. If Zoom does not work like you want, you are going to cancel. You are going to find something else. It's very easy.

Michael Krigsman: Let's change topics slightly and talk about the future collaboration and where is all of this going? I don't mean in five or ten years, but over the next two, three, maybe four years, because you're helping shape this market, and you're in a position to see what's going on and what you're most advanced customers are doing. Where is this going over the next several years?

Eric Yuan: I think, first of all, I would say video is going to become a mainstream service. Meaning, in the next several years, and no matter where you go, no matter what kind of device you are using, just one click, you can have a video communication, video collaboration like this experience. But, down the road, we truly believe that online video collaboration, video communication experience will deliver probably a much better experience than a face-to-face meeting.

Early this year, we announced the meeting transcription feature. So, after a meeting in Zoom, we can generate text business transcription. In a fiscal meeting, I do not think we can have that, right? More and more, I think of all these cool features like AR or maybe the AI technology will be applied into the video collaboration industry and truly change the experience of online video collaboration.

Michael Krigsman: Other kinds of things that you see coming down the road that will make the online meeting experience better and improved relative to in person?

Eric Yuan: Yeah, quite a few things. Like I say, Michael, I'm talking with you. Unfortunately, we are not in the same Facebook conf room. I really cannot shake hands with you, right? But, in the future, I think a cool feature will be added into this. If I shake hands, it can feel like that. And I give you a hug; you also can feel like that.

I think, ultimately, in the next five to ten years, I think that those kind of cool features will be added into video collaboration. Essentially, you can sit anywhere and you feel like you're in the same conference room and the experience is even better.

Michael Krigsman: Where will AI, artificial intelligence, and machine learning come into play? I know, unlike many, many, many other software companies, you don't call yourself an AI company. Thank you for that. But I know that AI, as you mentioned earlier, is something that you're working on. What's the relevance of machine learning and AI to video collaboration?

Eric Yuan: Yeah. AI is a technology. You're so right. We are not looking to talk about AI that much. However, AI as a technology will help us improve our product experience. The customer, they may not see that. I'll give you one example.

See, like I take a webinar for example. If the host, the webinar host or moderator, the … (indiscernible, 00:31:43) a topic, and maybe you talk too fast. We can leverage AI technology and, based on attendees’ face detection, we would say, "Hey, please slow down." Michael, when you ask the question and Eric, as the audience, do not understand that because my face is like this, based on AI technology, we will send you a real-time reminder to either slow down or it'll give you some suggestion.

Also, to leverage the AI, we can make the AI based meeting transcription more and more accurate. Today, it's 90%, 91%. How do we improve that to 95%? All those AI technologies behind the scenes will help us improve the product experience.

Michael Krigsman: How about in terms of improving video quality, audio quality? You're limited by the Internet and by compression. Is there a role for AI to improve those areas as well?

Eric Yuan: Very right. Actually, we have a big team working on all the quality improvement like noise reduction, echo cancelation. We use an AI framework to analyze where the noise comes from and how the echo is generated and then leverage that to improve our audio quality. We are already doing that for a while, actually.

Michael Krigsman: You're using AI or machine learning to improve audio quality already?

Eric Yuan: Yes. Yes, we have been doing that for already several years now.

Michael Krigsman: And so, you're saying that in this instance, you're using these techniques to evaluate the type of noise and then, therefore, how to compensate.

Eric Yuan: Yes. Also, based on every meeting experience, and based on the AI framework, we keep improving that. We'll have an algorithm to improve the echo and noise.

Michael Krigsman: Your audio and video quality tends to be really, really good. Now, I'm asking these questions because I have a personal interest in this topic because I do this video streaming thing all the time, and so I happen to be really interested in these issues. Hey, I'm like the audience, right? It's a good opportunity for me to ask.

I know you invest a lot of time in the audio and the video quality. What do you do and how do you ensure that your quality is better than competitors and better than what's come before?

Eric Yuan: Again, every day, we leverage our backend monitoring data to analyze every meeting, every data to see how many meetings have a great experience, how many meetings might have a problem. Based on that, we're trying to understand why this meeting or that meeting has a problem. Maybe, oh, there's one meeting that the Wi-Fi is not reliable and the data loss rate is more than more than 55%. You really cannot recover from that. The audio quality, video quality is not good.

We can let our team work on how can we further improve our audio or video algorithm to support good video quality? Say like you have data loss rate more than 55%, or maybe you have a long-haul connection between here and, say, maybe attendees … (indiscernible, 00:35:09). How do we improve that? Every day, our engineer teams are working very hard to really address the real-time problems.

Michael Krigsman: One of the issues that comes up for me because I interview so many people using relatively cheap webcams is the lack of quality that the webcam, that the hardware is able to generate just in terms of exposure compared to, say, cameras with a larger sensor. Is there anything that you can do to take that low-quality image and somehow improve it even though the source quality may not be that great?

Eric Yuan: Yeah, so I'm using a webcam now. It's about a $50 webcam. I think after we capture the video data from the camera, we also have a software layer to try to improve the quality. Also, that's why we built an advanced algorithm to improve that quality. We not only just count on the video capture data from the webcam, but also have our own layer to improve the video quality.

Michael Krigsman: The ideal thing would be for you to somehow work some type of magic on the data coming out of that webcam to produce a better result than one would expect from a sensor of that size, basically.

Eric Yuan: Yeah, so like encoding efficiency, like the color and the change and also adjust your lighting, all those kind of things. We also have those layers to improve the video quality.

Michael Krigsman: We have another question from Twitter. Okay, so now we step back from geek questions about video quality and compression. By the way, I would love to go deep, deep, deep on this topic, but we have a question from Twitter regarding the workplace and future of work, collaboration. Gus Bekdash is asking, "How can AI help with reducing the information overload?"

Eric Yuan: I think that's a good question. There's so much information available every day. There's so much new information that's going to be generated every day.

I think the systems or software or the service, they should understand your preference, meaning what kind of topic you like. We try to push the data to you rather than every day you need to look around to find the information or find the tools. I think the system will become much better if we further leverage AI technology.

Say like, Michael, based on every day which website you go [to], which product you are using, we know how you really like video. Whenever we have a video enhancement, we should automatically send enhancement information to you rather than you trying to look around where are the video enhancements. With AI, we really can understand every user and then send the right information to you.

Michael Krigsman: We only have about five minutes left. I have a lot of questions I want to ask you. How do you balance the richness of developing a rich set of features with the need to keep the product as simple as possible?

Eric Yuan: Well, that's a wonderful question. That's every day, actually. I can tell you, every day, we never know how to knew engineers. We are always making some mistakes. Quite often, you have ten users, right? One user feels the opposite about one feature. They send the feedback to you.

On the one hand, we've got to listen to them. On the other hand, if you just added a feature to make sure this user is happy, guess what. Very likely you make the other nine users not happy. How do you balance that?

Quite often, we always look at if only two or three users need that feature, we are not going to change the experience for everyone. We are going to add it as an advanced feature to easily let you find that. You can … (indiscernible, 00:39:26) feature by yourself. You are so right. Otherwise, down the road, you add more and more features, the product will become so complex.

Also, we needed to really understand why customers needed this feature. Quite often, we need to understand the pain point. Very likely, most of the users, they will tell you how to fix that. They already give you the solution, but do not all blindly follow what they told you. Really take a step back and understand, why do you have this problem? Then try to figure out the root cause. Then work together with the customer to build up the new features to satisfy the customer needs.

Michael Krigsman: Okay, but this flies in the face of customer happiness because I'm a customer. I want you to change something, and I want you to change it now. I'm unhappy because you're saying no because other customers don't need it.

Eric Yuan: Sometimes, yes, because if the feature request will benefit everybody, why not? If it will only benefit you or maybe some other users, we want to be very careful because we should look at it from every user perspective. Otherwise, it's very easy to add more features.

But guess what, later on  — that's the reason the WebEx product I built before is so hard to use. There are so many things. Nobody is going to use that anymore.

Michael Krigsman: I was going to make a comment. I pay $19 a month or whatever Zoom costs, and I don't care about the long-term of Zoom. I want my feature built and I want it now.

Eric Yuan: Please tell me the feature, and we'll figure out a way to serve you well, but another feature may not be exposed to all the other users, but we still can add this feature to your profile.

Michael Krigsman: But then you're into developing custom software. But, seriously, how do you balance? How do you make these balancing decisions?

Eric Yuan: Again, this is a service and not only software because we deliver everything from the cloud, not like traditional software where everybody should install the same version. Our backend side, our cloud, there are so many different configurations. For your profile, we enable this feature. We enable an advanced echo cancelation. For others, we know it's just based on your profile.

We can automatically enable or disable some of the advanced features like security or all those cool things. Essentially, we already have all those features but, based on different account settings, based on different user profiles, we deliver different feature settings. That's a part of, I would say, the beauty of a cloud service.

Michael Krigsman: I will say that in my two years of using Zoom, you guys have been very, very responsive. I know with you that you really mean it and that's what you do. We have literally about a minute left and so, in that final minute, can you kind of summarize everything you know? What's most important? Just in a minute, our final minute, tell us the secret.

Eric Yuan: Actually, I have so many things that I do not know; I really want to learn. Every day, when I come into the office, I really want to understand where we have a problem. That's why I like reading all those books. I really want to talk with the customers and get feedback.

It's not about what kind of things I know. It's really about what kind of things you want to learn and then can quickly learn from either customer feedback or from others' success or stories and apply that to your business. It's just self-learning. That's really important.

Michael Krigsman: As we finish up, what advice, what final advice do you have for other people trying to build a company? You've mentioned some things earlier, but people trying to build a company looking at Zoom as a role model, what advice do you have for those folks?

Eric Yuan: It's very simple. If you have a dream, just do it. Don't hesitate.

Michael Krigsman: Okay, well, we are out of time. I would like to thank Eric Yuan, who is the founder and the CEO of Zoom, for joining us today. Eric, thank you so much for taking time and being with us today.

Eric Yuan: Thank you. I appreciate it.

Michael Krigsman: Everybody, we have more great shows coming up. Go to CXOTalk.com. Right now, right this second, would you please, please subscribe on YouTube because that really does help us out a lot? Thanks, everybody. I hope you have a great week, and we'll see you next time. Bye-bye.