Eric Yuan on Keeping Customers and Employees Happy

Full Transcript

Eric Yuan: Our company culture is just two words, very easy, very catchy: Deliver happiness. And, for me, as a CEO of a company my number one priority is to make sure Zoom employees are happy. I believe if you have happy employees, you’re going to have happy customers.

Kathleen Schwind: Welcome to View From The Top, the podcast. That was Eric Yuan, CEO of Zoom. Yuan visited Stanford Graduate School of Business as part of View From The Top, a speaker series where students, like me, sit down to interview business leaders from around the world.

I’m Kathleen Schwind, an MBA student of the class of 2023. I was honored to sit down with Eric and talk about his company becoming a verb, the role of the GSB in his entrepreneurship journey, and what Eric has found to be the meaning of life. You’re listening to View From The Top, the podcast.

Kathleen Schwind: Eric, it is an honor to have you here today. Welcome back to the GSB.

Eric Yuan: Thank you. I’m very, very excited to be back every time.

Kathleen Schwind: Now, I’d like to start off by thanking you for not only helping to keep the world connected during the pandemic, but for creating a product that brought all of us a lot of joy and laughs, too. Everything from the Zoom weddings to Zoom attire. I’m thinking professional tops and pajama bottoms, and everything in between. So, thank you.

Eric Yuan: That’s why I like Stanford and like GSB. Because I know Stanford and GSB only use Zoom. They never use any other product.

Kathleen Schwind: That is a true statement. Now, few founders can say that their companies have turned into a global verb. Take us back to the very beginning. How did you first come up with the idea for Zoom?

Eric Yuan: Back in the 2010 timeframe I was at Cisco. I was the corporate vice president over there. And when I came to America in 1997 I joined WebEx as one of the first founding engineers. I worked extremely hard trying to make WebEx better. And, unfortunately, after years of hard work, back to 2010 timeframe every time I can tell you, when I talked to the customer I did not see a happy customer. Every morning when I woke up I did not want to go to the office.

Because when we would talk to the customer, every time they would share their pain point, quality not very good, mobile experience horrible. I really wanted to fix that problem. Unfortunately, they told me that that’s not a good idea. You still can see a lot of WebEx. Why do you want to cannibalize WebEx? And it took me about a year. I failed to convince others. I guess that’s sort of common with] GSB to learn how to convince others. So I guess I didn’t that course. I failed to convince others. But, anyway, I finally decided to leave to build my own service.

Kathleen Schwind: And a key part in your story, you mentioned coming to the United States in the late 1990s. That path to get to the U.S. wasn’t necessarily smooth was it? What kind of challenges did you run into coming to Silicon Valley?

Eric Yuan: Gee, that’s a long time ago. I was a very good engineer and I should get a visa. And, unfortunately, it took me nine attempts to get here. My visa application got rejected eight times. But, luckily, I got the final visa and came here. But looking back I really appreciated it because to practice my perseverance. And, again, it took me one-and-a-half years to come to America to pursue my American dream

Kathleen Schwind: Wow. And keeping on the international fame, I don’t know if you know, but we have quite a few of our classmates in the audience who are internationals and are living in the U.S. for the first time. What were some of those first years like in the U.S., as someone who had never lived in Silicon Valley or the United States before?

Eric Yuan: That’s a good question. I remember before I came here I was extremely excited. Because when I was a kid I was always read the stories of HP and Silicon Valley, Apple. Very exciting. However, after I landed here I realized it’s not that easy because you have to learn the culture, history, how to make new friends and build their trust, language barrier, all kinds of things.

And, luckily, I live in Silicon Valley. Silicon Valley is not only a world-wide innovation center, but also the people here are extremely friendly. A lot of leaders would try to help you. I think I feel like I’m already part of Silicon Valley. And looking back I was like, wow, this is the best experience.

Kathleen Schwind: And I love your optimism. You came from China to the United States not speaking English. You applied for a visa nine times. And you rose up in WebEx and Cisco, and then you came to the Stanford Graduate School of Business. What role did being at GSB play in that vision to turn an idea you had back in 1987 into a company that is now known around the world?

Eric Yuan: That’s a great question. Any time if I have time I take a break and I want to be a part of the GSB group. I want to sit here like you guys. I’m very excited. The reason why I [unintelligible] is back to early time when I came here. Before I came here I was very confident. I said, “Wow!” America is a hug opportunity. As long as you work hard you can achieve your dream.

I worked for WebEx for a while. Quite often I would work very, very hard and made very good progress. However, sometimes your confidence level is suddenly not very high, as high as the first day when you landed here. And because you make some progress you do not want to take a risk. You do not want to start over. And I participated in the Stanford and GSB SEP program.

I can tell you, actually, just literally after the summer, the day after I left Stanford I felt more like the first day when I landed in San Francisco Airport. My confidence level was extremely high. I almost [unintelligible] to start a new company at that time. So being here just one summer my confidence level was at least twice as high. For all the GSB students, you’re here one or two years. I guarantee you your confidence level is probably four times higher. If you are not, I can tell you [unintelligible] program. The SEP program is also pretty good, too.

Anyway, I was so grateful to Stanford GSB. A lot of colleagues and good professors. By the way, to manage a company and manage a team is pretty challenging. And sometimes you feel very lonely in the downtime. Every time I feel like that, if I come back to GSB and to Stanford campus I can tell you I sort of fully recharge myself. That’s another reason why I’m here today. I need to fully recharge myself.

Kathleen Schwind: It’s definitely a special place. I agree with you.

Eric Yuan: Very special. And also there is an entrepreneurial atmosphere here in GSB. I think it’s a great opportunity for all of you after your graduate.

Kathleen Schwind: Well, fast-forward. The company that you had the idea for way back when you were inspired at the GSB, that company has fundamentally changed the way that we all stay connected.

Eric Yuan: That’s what GSB taught us. To build something to change the world.

Kathleen Schwind: Absolutely. But Zoom is seen as something that was an overnight success. But that wasn’t the case, was it?

Eric Yuan: Yeah. It took us a lot of effort. I think prior to Covid, probably most of the people never heard about Zoom. But we were very patient. As long as we keep improving the product experience to make sure our customers are happy, I knew sooner or later that we were going to achieve something.

Kathleen Schwind: It sounds like a lot of hard work went into. And part of that hard work was finding investors for Zoom. It’s hard to fathom, but back then investors weren’t jumping at the bit to invest in Zoom. What lessons do you have from that period of time that you can share with the entrepreneurs and the aspiring entrepreneurs in the audience today?

Eric Yuan: It’s good here, so I can share the story. After I left Cisco I was vice president of engineering. I [unintelligible] WebEx. I had a lot of connections. It should be straight forward, right? Talking to VCs, they all want to invest [too]. That’s my thought. But I was completely wrong. And I tried to talk to almost every VC I knew. Nobody wanted to invest in me. And a VC friend told me, “Eric, as long as you build something else, our check was ready for you.” So meaning you should not build another video collaboration solution.

And I remember I talked with one VC and, again, the VC mentioned that’s a horrible idea. You should not do that. But on the way back I told myself, “You are wrong. I’m going to prove you are wrong.” So after I got back to the office I [unintelligible] to be you are wrong. I [remember that after] the VP of a public company. So when you try to raise the capital, first of all we are humble.

There is a reason why VC did not invest in you. You’ve got to understand why this is good for you. But sometimes VCs might be wrong. If you think you’re right and VCs are wrong it’s not [embarrassing]. You’ve got to work harder to prove they are wrong. That’s what had happened to us.

Kathleen Schwind: I think that’s an incredibly important lesson that I know a lot of us starting companies will keep in mind.

Eric Yuan: Yeah, don’t give up.

Kathleen Schwind: Absolutely.

Eric Yuan: Especially for those VCs who never got educated here at GSB.

Kathleen Schwind: And I think another important lesson in that story is learning to pivot. As you mentioned, Zoom was a successful company before the pandemic, serving mainly B2B clients. And then, boom, the pandemic happens and you have to add B2C into that portfolio. What were some of the big lessons that came away, and how did you rapidly adjust to such a significant expansion in your customer base?

Eric Yuan: I think that’s a tough experience. Because you are so right. Zoom was built to serve remote customers prior to the pandemic crisis. And during the pandemic crisis we had so many new users, consumers, all kinds of new use cases; k-12 schools, telemedicine, telehealth. We never thought about those consumer use cases. And the mistake we made is, prior to the Covid crisis we had a lot of [secured] features, but normally we worked [unintelligible] enterprise ITT. [Unintelligible] [test] our product with some process. They are going to enable some [secured] features or privacy features.

And for those first-time consumers the experience is very different. They do not have an ITT. Then we realized we made a huge mistake. Not only did we [unintelligible] of offering the service, but also we should have [unintelligible] of serving the IT [unintelligible].

And so we learned a hard lesson. We quickly took actions and we won their trust back. Because when you have lost their trust, you’ve got to make sure to take actions as quickly as possible. And also keep everything open and transparent; why you made a mistake, the effort and how to fix all those problems. Keep everything open and transparent and communicate with the customers. [Lesson learned] and, finally, we won their trust back.

Kathleen Schwind: Absolutely. And I want to pick up on a word you said, which is mistake. Something that I admire so much about you as a leader is your honesty and transparency, like you were talking about. For example, when data and security issues were brought up during the pandemic, your response was to publicly roll out a statement of how we’re fixing it, here are the problems that we see, and this is how we’re going to take feedback into account.

You touched on this a little bit, but we would love to dive in a bit more. How do you see transparency being important in leadership? And how can we, as future leaders and leaders in the business world, think about being transparent in difficult situations?

Eric Yuan: I think, first of all, during a difficult situation you’ve got to take a step back and try to understand what happened. And the users, why [do they] share with you all those issues. Because I think they care about us. Ultimately, for us, if you can address all those problems, who is going to benefit? Zoom, right? That’s why we embrace all those challenges.

And at the same time we’ve got to take actions. First of all, I needed to publicly tell them, “Sorry. I messed up.” [We got in their face]. For all the issues we know, what’s the problem? What is the cost? What’s the solution to address all those issues? And I personally hosted weekly security meetings with all the end users. And I also shared with them transparently about the efforts, the plans, programs on how we [double-downed] on security and privacy, a lot of things.

They are pretty smart. They understand. Are you going to try hard to fix those issues, or are you just going to talk about it? So that’s [unintelligible] data two years ago at Zoom. And prior to the Covid crisis if you look at our privacy and security it’s very small, around a dozen people. And now we have more than 200 full-time employees. Because of that we took privacy and security very, very seriously. A lot of security companies deploy Zoom, [government] customers use Zoom. And, finally, the customers that really like Zoom are saying, “Yeah, you guys admitted those mistakes and then quickly fixed that problem.” And also made it better, even better than any of our competitors in terms of security and privacy

Kathleen Schwind: Because you had a lot of people relying on you. Can I get a show of hands of how many people used Zoom during the pandemic? I think I know the answer.

Eric Yuan: Thank you. I used it, too.

Kathleen Schwind: Yeah, there we go. John [Delevingne] mentioned the staff of four, but I want to bring it out again because I think it’s incredible. The number of Zoom users increased from 10 million to 300 million per day.

Eric Yuan: That’s meeting participants, not a user.

Kathleen Schwind: Meeting participants, yes. Meeting participants per day in just four months. Zoom was really pushing to the spotlight, and also given a chance to shine. Walk us through your thought process. When did you realize that Zoom could play a critical role during the pandemic?

Eric Yuan: I remember I think the first time was my daughter. Her school. They also included the school and everybody online. I remember it was a Monday morning. I work so hard and my daughter didn’t even know what was doing. But she was asking the first time, “Hey, dad, how do I raise my hand in the Zoom call?” I realized, wow! I never thought my kids were going to use Zoom. And I think it was the first time I think I realized, wow, this is a huge potential. I didn’t realize.

And there was a huge opportunity at that time to help the world and how to help the community and the society. This a responsibility on our shoulders. The good news is we heavily invested in our company culture. The team worked extremely hard. I can tell you, I personally had more sleepless nights than in any time in my career, along with a lot of engineers because we were at capacity. If India, Brazil, and a lot of other countries fell off and maybe there are small glitches, you’ve got to fix it quickly.

I can tell you, wow, that’s a six-month timeframe. And the good news is [it was all worth it]. It’s pretty tough, very challenging.

Kathleen Schwind: I can’t even imagine. I have to ask, hearing about the responsibility, hearing about all the things you were thinking about, the sleepless nights, how do you stay grounded? And how do you prioritize what really matters?

Eric Yuan: That’s why I like GSB. I learned a lot of stuff. I was mentally prepared well. Because on the one hand, if you really want to do something to make the world better, to change the world, for sure you are going to face all kinds of challenges. Mentally you’ve got to prepare well. It may not be today, it may be next year, maybe next week. So mentally at least I was prepared very well.

So when that happened I realized on the one hand you are facing a challenge. On the other hand you also realize if you can overcome all those challenges, guess what? Your company, your team, yourself will become much better. That’s why we levered that opportunity to look at every corner of our business. What are we going to do differently to improve?

Our team size, for example, prior to Covid we only had a little over 2,000 employees. Now we hired over 6,000 employees over the past 18 months. This was a great opportunity for us for the future, and to position us very well to transform our business from being a video conferencing app company to be a platform business. That’s a huge opportunity.

Kathleen Schwind: And the opportunities that Zoom has even in their future are huge. I want to come to a question first, though, that is something that we talk a lot about here at the GSB, which is work/life balance. I’ve heard that, in addition to running one of the biggest companies, you are also an active parent on your children’s basketball teams. How do you balance and how do you think about that work/life balance between spending time on your company, while also spending time with your family?

Eric Yuan: That’s one thing, I guess, during my time at GSB I did not learn how to balance that. And the reason why is, at that time I also felt out of balance. And I talked with many other classmates and some professors trying to figure out a way how to balance. And later on I realized, as long as you think about balance there’s no answer. So don’t just think about balance. Think about if you like work — it’s part of life — you are passionate about something and you are good at something and you also contribute value. And if you like that, that’s part of life. Work is life. Life is work. Don’t just think about balance, as it were.

Two is, what if there is a conflict between work and life? At Zoom our principle is very simple. Whenever there is a conflict in work and life, your family first. It’s always like that. Take my personal experience, for example. Many years ago it was our Christmas party. And my son’s high school was also going to have a basketball game in San Francisco. I told our team, “Sorry, there’s a conflict. I’m going to enjoy my son’s basketball game. I will be very late to the Christmas party.” That’s our philosophy.

Don’t always think about balance. Find your passion. Work is life and life is work at the same time. If there’s a conflict, family first. That’s very simple. But don’t think of balance. If you think of balance, every day you are going to struggle. Every month you are going to struggle.

Kathleen Schwind: In addition to putting family first, it sounds like happiness is something that is so important to you. How do you take that personal value of happiness, and then translate it into a company culture that’s also based on happiness?

Eric Yuan: Company culture is extremely important. Looking back I think that’s one thing I personally feel proud of. Because on the first day I started Zoom, I remember I only did two things, I looked at company culture and value. And it was part of the company culture, like a table.

Anyway, our company culture is just two words, very easy, very catchy. Deliver happiness. And, for me, as a CEO of a company my number one priority is to make sure Zoom employees are happy. I believe if you have happy employees, you’re going to have happy customers. So I do all I can to think about how to make sure Zoom employees are happy. And at the same time, employees are going to make the customers happy. That’s our company culture.

Kathleen Schwind: Wow. And it sounds like as CEO you have a lot of people to keep happy; your customers, your employees, shareholders. What happens when one of these stakeholder groups isn’t happy? How do you keep them onboard?

Eric Yuan: So, first of all, we should tell them what is the purpose of life. The purpose of life is really about happiness. Right? And also sustainable happiness comes from making others happy. For those shareholders, like if stock prices are down they are not happy. And we tell them, “Hey, this is a short-term thing.” And, plus, we should communicate with them very well about why. Let’s say you want to buy Zoom stock. Why are you becoming a stakeholder?

And, ultimately, we want to make sure the employees or shareholders truly understand our company mission. And they cannot only look at the short-term stuff. If they do not understand the purpose of life, and just staying focused on short-term happiness, for sure that’s not our company culture. We always think about what we can do differently to focus on long-term, sustainable happiness, rather than just short-term happiness.

Sometimes employees just focus on the money, or the power, or the title. Those are short-term happiness. The longer-term you’ve got to make sure the happiness is sustainable. Always think about the long-run; make the customer happy, make the employee happy. And down the road you will get a much better return.

Kathleen Schwind: And keeping on that happiness thing, because I think it’s so unique to who you are as a person, something else that we think a lot about here at the GSB is what kind of leader we want to become. We have a class where we ask ourselves why would someone follow us. Given your background, being an immigrant to the U.S., being an engineer, overcoming adversity, putting happiness at the center of everything, how would you describe your leadership style? And how has that evolved over the years?

Eric Yuan: Again, I was very fortunate to live in Silicon Valley. And during my career here I had so many mentors truly helping me to shape my leadership style. And I think many years ago I would have said my leadership style is very hands-on leader. I tried to work so hard trying to understand – again, this is kind of “should I come to GSB first,” otherwise I’m not going to spend so much time to learn marketing, sales, and support and strategy. I learned a lot. I really wanted to understand how business operates. And it’s one of very hands-on leadership. That’s kind of my personal style.

But later I realized, that’s not scalable. How to delegate some of the very important work to a team. How to make sure you are surrounded by a lot of leaders, that are probably even better than you on some fronts. I think I learned a lot, especially over the past two years. And I do not think I can sleep given there are so many challenges, so many opportunities. That’s my leadership style that I think completely changed. How to balance between the hands-on leadership, and also dedication.

Kathleen Schwind: So it sounds like as Zoom scaled you had to adapt your leadership style to fit that so it could scale with it.

Eric Yuan: Yeah. Otherwise there’s no way to scale up your business.

Kathleen Schwind: Exactly. We talked about Zoom pre-pandemic. We talked about Zoom during the pandemic. Let’s look to the future. Five years from now what is Zoom going to look like? And what are you excited for?

Eric Yuan: Five years later I assume we will be, for sure, five years better. From our perspective we truly believe in the future from a technology perspective Zoom can deliver a much better experience. You and I can sit at home. I can sit anywhere. Let’s say at the local Starbucks coffee. I shake your hands. You feel my hand shaking. I give you a hug and you feel my intimacy. And even if we speak a different language we can understand each other. And get a cup of coffee, enjoy the smell remotely. All those technologies will be part of our offering in the future.

At the same time we would like to transform our business to be a platform company; video, voice, team chat, conference and systems, events, webinars, and also all other collaboration solutions. Essentially, the end user, they can live within the Zoom platform and get most of the work done, rather than always switching back and forth to other applications. And cost is very high, right? Essentially, Zoom is more like a working hybrid work operating system. That’s why we are very, very excited.

Kathleen Schwind: I’m excited for that, too.

Eric Yuan: If any of you like that vision, feel free to join us.

Kathleen Schwind: So you kept the world connected during a global pandemic and brought happiness to millions. Ten, 20, even 50 years from now, what do you want people to remember about you and about Zoom?

Eric Yuan: It’s a great question. I think one thing I really want Zoom and myself to be remembered for is, if someone were to write a book they would say, “During the 2020 Covid-19 crisis there was a company called Zoom that truly helped the world. Truly enabled global connections.” That’s what I want the world to remember myself and also all the Zoomies. That’s pretty much. But, again, we just started our chapter two. And we are embarking on a Zoom 2.0 journey. There’s more exciting stuff down the road.

Kathleen Schwind: Wow, wow. Principled and purposeful leadership. You must be a GSB alum.

Eric Yuan: Yeah, absolutely.

Kathleen Schwind: A final question before we move into audience Q&A. This is a question we’ll be asking each of our speakers as they come throughout the year. And the question is, principled leadership is paramount at the Stanford GSB. What do you view as your role in leading with responsibility to not only your company, but to society at-large?

Eric Yuan: That’s a great question. When I was there at Cisco, the former CEO Chairman, John Chambers, was such a good leader. I learned one thing from him. As a leader, when you look at the business and the organization you work for, don’t always think about your organization. Always think about your organization’s social responsibility. What it can do to help the community and society. That’s what I learned.

That’s why when it comes to Zoom’s value. Our company value is just one word, care. We care about the community, customer, company, teammates, as well as ourselves. So we care about our community. That’s extremely important. Make sure your business, your organization is part of a society. You think about how you can put it differently, right? Not only think about day-to-day work, but also play a bigger role. Make sure you can contribute back to the community, to society.

Kathleen Schwind: Spoken as a true GSB alum.

Eric Yuan: Thank you.

Kathleen Schwind: We’re now going to —

Eric Yuan: I passed the test, right, to be a very qualified GSB alum?

Kathleen Schwind: One hundred percent.

Eric Yuan: Thank you.

Kathleen Schwind: You passed with flying colors.

Eric Yuan: Thank you.

Kathleen Schwind: We’re now going to move into audience Q&A.

Male Voice: I still remember that particular day, October 27th, 2020, when I was in China having a Zoom interview with Harvard Business School. And right in the middle of their interview the severe connection issue, or censorship that might have captured my twisted sense of humor, whatever it was forcefully shut me out of the meeting. And they weren’t allowing me to log back in. And a month later I received a rejection letter from Harvard Business School, which spurred me to apply for the even better business school, Stanford GSB, where I proudly find myself at this moment.

And I really appreciate Zoom for having changed my path in a very meaningful way. Anyway, so regardless of the countless efforts made by Zoom to improve the security and transparencies, I think there are still not a few people who have concerns over Zoom’s association with the Chinese government. In fact, some organizations, including Taiwanese government, Japanese government, and some private companies in the U.S. still ban official use of Zoom.

In my view, Zoom has been particularly susceptible to these kind of China-related speculations because of your personal background, and the fact that Zoom was actually complicit in China’s censorship and [repression] in 2020. So my question is, how would you go about reconciling your personal identity as a former Chinese national holding an American passport with the need for navigating a multi-national tech company like Zoom in such a complex and sensitive business environment shaped by the U.S./China relationship these days?

Eric Yuan: Good question. First of all, I think that’s one of the best use cases, your experience on Zoom. How lucky you are you are part of GSB. I think it boils down to one thing, how to build trust. That is very important. All those issues you just described boils down to one thing. Because the other side you don’t see the customers who never use Zoom because of some other government. They do not know who we are. How do we [establish] their trust. That’s right, at Zoom favoring trust is our playbook.

The problem you mentioned, yeah, I was born in China. When the pandemic crisis came, a lot of us counted on Zoom for some mission-critical application. They do not know who I am. And I’m an American citizen. They do not know that. They say, “Oh, Zoom, maybe it’s kind of registered in other countries.” That’s not the case. All those issues, guess what? We did not do a good job.

We should have proactively communicated with the world who is Zoom, the company and what Zoom is. And, also, what is our company’s culture and value and the mission. All those kinds of things. We levered that opportunity to communicate it with whoever may not understand our business, may not understand our team, may not know me. To lever that opportunity to build a trust.

That’s why today you look at like President Zelensky. He uses Zoom. And, also, a lot of governments also use Zoom, as well. And so many security companies, as well. Ultimately, that’s a way for you to always take a step back to understand what had happened. And to understand the problem, the cause, and good solution. I think that’s why today we are doing pretty well on that front.

Male Voice: I just want to maybe ask you, how do you share your secrets to be such a big success as a minority of the Asian? And today we also have a lot of international students, Asian students here. Do you want to share how to make a big impact as a minority in the United States? And please share some advice and experience.

Eric Yuan: That’s a great question. First of all, I think, again, America culture-wise is very, I would say, open-minded. You work hard and contribute. I think they will embrace you, the community and also the business industry. And I think that’s a huge opportunity. I think don’t just think about your background that much. Just think about what you can do to contribute back to the community and to society.

If you can show the world you can create a lot of value, here you will be very successful. Quite often the reason why you’re not successful is because you don’t think about it from others perspectives. Always think about what you can do differently. Every day you become better aware of yourself, your company gets better. And, also, you make the world better.

And then, actually, you’ll be recognized very well. Your business also will be successful. Ultimately, I think the common mistake is because you do not get better, your business does not get better. And you think, oh, maybe you’re a minority and there is some discrimination. I think that’s not the root cause. Always focus on yourself, focus on your business, and create more value to society. That’s the key.

Female Voice: My name is Jiawen Tang. I am a second year here. My question is about the role mentorship has played in your life and your career development. Can you tell us who your most influential mentor was, and how they shaped your life?

Eric Yuan: Wow. We do not have a lot of time, otherwise I can share a lot of mentors. Let me take a step back. One of the leaders I truly think influenced me most in terms of leadership style is a former CEO of Walmart. It’s Lee Scott. He talked about leadership and the Cisco offsite and had a huge influence. I even did a blog and had a poster on the wall in my office. And I think he, for sure, is the best in terms of influence to my leadership style.

And, also, over the past several years quite often I would see some progress and I was facing challenges and I would call a lot of the CEOs, like Salesforce CEO, Marc, and Oracle CEO, Larry, and HP CEO, Enrique, and also Ray Dalio. He is such a great leader. He and his team stopped by my office to talk with our leadership team. He helped us a lot. Quite often I can call many of the CEOs to help me.

That’s another reason why Silicon Valley has a great culture. A lot of leaders want to help you out. I’m pretty sure a lot of leaders, even if they do not know you, want to help you out. Because it’s how to give back. This is part of the Silicon Valley culture.

Male Voice: My name is Alex. I’m an MBA2. So at the beginning of the pandemic there were, obviously, a lot of video chatting and services out there; Google+, Skype, and, of course, Zoom. Why was Zoom the one that triumphed in the end?

Eric Yuan: Good question. I think the founder is GSB alumni, that’s the reason. Yeah, that’s the reason. Anyway, I think to build a better solution you’ve got to spend more time with your customers. Ultimately, it was innovation. Innovation is really about you want to be the first company to understand customer pain points. And, also, take actions quickly, and to be the first [vendor] to build a solution. If you keep doing that, sooner or later you are going to win. So that’s our approach. That’s the reason other competitors lost.

Female Voice: I’m a first year MBA student here. My question is, what was the most frustrating moment in your professional career? And how did you overcome the difficulties, and what did you learn from it?

Eric Yuan: Oh, that’s a great question. I think, again, there are too many frustration moments in my career. Very often, for whoever, the number one thing is you’ve got to calm down. That’s very, very important. Because to be a CEO the most important thing is you want to make a better decision. If you do not calm down, and if you are very frustrated, very likely you are going to make a wrong decision. That’s very important. You’ve got to make sure to take a step back, calm down, and make sure you always try to make a better decision. That’s the number one thing.

The number two thing is, at Zoom we also have a formula, the problem, root cause, and solution. Frustration, we’re not happy with anything. Every time you see a problem, like a huge problem, you probably feel frustrated. You’ve got to take a step back. Just focus on the problem, root cause, and a solution. If you can have a better solution, guess what? You are going to become a better company. And every time you say wow because there is a problem, Zoom will get it better tomorrow. I’m going to become a better leader tomorrow. Then you should be happier. Why do you feel frustrated? And that’s my principle.

Female Voice: I’m an MBA2. You talked about the importance of patience as you were building Zoom and that it took time. But now that you’re a listed company there is also share price pressures, there’s pressures of quarterly results. So how do you balance the short-term share price responsibility that you have versus the long-term customer pain point?

Eric Yuan: That’s a good question. This is my mentor and I learned a lot from him, as well. A company called Nvidia, and the founder and CEO, Jensen, who is also a Stanford alumnus, as well. See, all the Stanford alumni companies do very well. You look at Nvidia, the company history. I remember there was a time 10 years ago the stock price was flat. Look at it today; the number one semiconductor company.

Because you make sure as a leader to always focus on the long-term goal. Do not focus on short-term. [And in regard to any good team, communicate as a team]. The mission of the company is extremely important. You want to recruit and retain those employees who share the same mission, and then you can focus on a long-term goal, rather than just a short-term goal.

Also, I learned a hard lesson. Over the past several years I can tell you, our engineer team has been very stable. I did not lose a single top talent. But we do lose a lot of salespeople because they may not understand the company mission. That’s why I say focus on recruiting those talents who can share the same mission and focus on long-term. Nvidia is such a great example.

Male Voice: Opps, sorry. I was on mute.

[Laughter]

Eric Yuan: That’s a feature.

Male Voice: So, Eric, my name is Sean. I’m an MBA1, as well. My question to you is, Zoom really transformed within the first three to six months. I went from talking to my grandfather’s forehead to actually hosting thousands of people on it. And you said customer was in the center of your development, but you also had so many different types of customers. Customers wanting sophistication of the product, and others wanting more basic needs. So how do you optimize for the product development phase and the growth phase and the communication phase of your product?

Eric Yuan: This is a good question. As time goes on, the [unintelligible] you have to change dynamically. So for the first several years I was [hands on] to the product side for the first four-and-a-half years, five years. And after that I probably shifted most of my priority of work to go-to-market and sales and marketing. But later on I realized that’s not scalable. They have to kind of take their turn. And the company to focus their priority from product-focused to go-to-market-focused, and then back to the product focus.

I needed to shift my focus on product. That’s what had to happen in the past six or nine months. You have to make sure from the top. From a CEO perspective I always look at the product side. Otherwise, very soon your product may not [the best]. So that’s why I dedicated a lot of the go-to-market, the responsibility and the task to other leaders. And I spent most of my time on the product side and [unintelligible] features [unintelligible].

Sometimes the features you see that are very, very good for [unintelligible] customers may not work for consumers and vice versa. How do balance that and make sure you always simplify the product experience. And, also, make sure with every product the managers, engineers truly understand why you added the feature. When you build the product it’s very easy to add so many features. But guess what? It’s not very easy to use anymore. It’s so crowded. So how to balance that; ease of use, feature set, [unintelligible] customers, and also consumers. The key is make sure you focus part of that, starting from the CEO and the founder, and all the team will follow.

Kathleen Schwind: Eric, thank you for sharing those insights. And thank you for all of your excellent questions. Before I click end meeting, it’s a view from the top tradition to close with a lightning round. So I’ll say a short statement and you answer with the first thing that comes into your head.

Eric Yuan: Sure.

Kathleen Schwind: Ready?

Eric Yuan: Yeah. I’m always ready.

Kathleen Schwind: Most annoying Zoom habit.

Eric Yuan: Mute.

Kathleen Schwind: Favorite basketball team.

Eric Yuan: Oh, Warriors, for sure.

Kathleen Schwind: Got some fans. Number of Zoom weddings you’ve attended.

Eric Yuan: More than a dozen.

Kathleen Schwind: Well, if you’re looking for anymore, I have quite a few friends getting married this year. So we can —

Eric Yuan: I can tell you the wedding ceremony hosted on Zoom, that’s a best use case. Because Zoom has a very cool feature called touch up your appearance.

Kathleen Schwind: I’ll keep that in mind. Best advice you’ve ever received from your parents.

Eric Yuan: How to work and stay humble.

Kathleen Schwind: And something you can’t live without.

Eric Yuan: Love.

Kathleen Schwind: And I think the world that we live in today, that’s something that we could all use a bit more of. Eric, thank you. It’s been a privilege.

Eric Yuan: Thank you.

Kathleen Schwind: You’ve been listening to View From The Top, the podcast, a production of Stanford Graduate School of Business. This interview was conducted by me, Kathleen Schwind of the MBA Class of 2023. Lily Sloane composed our theme music and Michael Reilly and Jenny Luna produced this episode. You can find more episodes of this podcast at our website gsb.stanford.edu or wherever you get your podcasts. Follow us on social media @stanfordgsb.