When Zoom announced Zapps last month — the name has since been wisely changed to Zoom Apps — VC Twitter immediately began speculating that Zoom could make the leap from successful video conferencing service to becoming a launching pad for startup innovation. It certainly caught the attention of former TechCrunch writer and current investor at SignalFire Josh Constine, who tweeted that “Zoom’s new ‘Zapps’ app platform will crush or king-make lots of startups.”
Zoom's new "Zapps" app platform will crush or king-make lots of startups. https://t.co/HYtxmaO91R
Dark day for virtual event ticketing apps, since Zoom is doing that itself
Big day for whiteboards & task managers, since it's leaving those to platform partners pic.twitter.com/KCYRDteDIi
— Josh Constine 📶🔥 (@JoshConstine) October 14, 2020
As Zoom usage exploded during the pandemic and it became a key tool for business and education, the idea of using a video conferencing platform to build a set of adjacent tooling makes a lot of sense. While the pandemic will come to an end, we have learned enough about remote work that the need for tools like Zoom will remain long after we get the all-clear to return to schools and offices.
We are already seeing promising startups like Mmhmm, Docket and ClassEdu built with Zoom in mind, and these companies are garnering investor attention. In fact, some investors believe Zoom could be the next great startup ecosystem.
Moving beyond video conferencing
Salesforce paved the way for Zoom more than a decade ago when it opened up its platform to developers and later launched the AppExchange as a distribution channel. Both were revolutionary ideas at the time. Today we are seeing Zoom building on that.
Jim Scheinman, founding managing partner at Maven Ventures and an early Zoom investor (who is credited with naming the company) says he always saw the service as potentially a platform play. “I’ve been saying publicly, before anyone realized it, that Zoom is the next great open platform on which to build billion-dollar businesses,” Scheinman told me.
Zoom launches its events platform and marketplace, brings apps to your calls
He says he talked with Zoom leadership about opening up the platform to external developers several years ago before the IPO. It wasn’t really a priority at that point, but COVID-19 pushed the idea to the forefront. “Post-IPO and COVID, with the massive growth of Zoom on both the enterprise and consumer side, it became very clear that an app marketplace is now a critical growth area for Zoom, which creates a huge opportunity for nascent startups to scale,” he said.
Jason Green, founder and managing director at Emergence Capital (another early investor in Zoom and Salesforce) agreed: “Zoom believes that adding capabilities to the core Zoom platform to make it more functional for specific use cases is an opportunity to build an ecosystem of partners similar to what Salesforce did with AppExchange in the past.”
Building the platform
Before a platform can succeed with developers, it requires a critical mass of users, a bar that Zoom has clearly passed. It also needs a set of developer tools to connect to the various services on the platform. Then the substantial user base acts as a ready market for the startup. Finally, it requires a way to distribute those creations in a marketplace.
Zoom has been working on the developer components and brought in industry veteran Ross Mayfield, who has been part of two collaboration startups in his career, to run the developer program. He says that the Zoom Apps development toolset has been designed with flexibility to allow developers to build applications the way that they want.
For starters, Zoom has created WebViews, a way to embed functionality into an application like Zoom. To build WebViews in Zoom, the company created a JS Kit, which in combination with existing Zoom APIs enables developers to build functionality inside the Zoom experience. “So we’re giving developers a lot of flexibility in what experience they create with WebViews plus using our very rich set of API’s that are part of the existing platform and creating some new API’s to create the experience,” he said.
Looking back at Zoom’s ascent a year after it filed to go public
The company is also offering the ability to embed the Zoom experience inside an external app using an SDK and APIs, or they can also build a chatbot that interacts with Zoom much in the same way bots can help you as you are using Slack.
He says that the final piece after providing the tools to build an application on top of Zoom is an app store or market place. With Zoom’s approach, using the capabilities in the Zoom App Marketplace, users can actually add an app right from a meeting, where other users can see it, which Mayfield points out, helps with word-of-mouth marketing. “We’ve started the App Store in this Zoom experience, including in a meeting where I can search, browse, find an app, add it, authorize it and use it on the fly right there,” Mayfield explained.
Green says Zoom is working on hitting on all of the key elements of a successful platform with its approach. He believes that in addition to the tools, Zoom needs to be clear where it intends to innovate so it doesn’t crush startups building companies on the platform, while also finding ways to help them succeed.
“Zoom needs to communicate the areas they anticipate innovating themselves so that entrepreneurs can pick areas of opportunity where they won’t have to compete with Zoom, and they have to help companies promote and monetize their offerings such that it becomes a much easier way to build valued customer relationships and generate revenues over time,” he said.
Building promising startups
With all of these elements in place, companies have started building Zoom Apps. One such app already in the Zoom Apps Marketplace is Docket, a company that won the Zoom Apps Marketplace competition last month at Zoomtopia, the company’s customer conference.
As we use video conferencing on a daily basis, we are learning that a meeting is more than simply getting together online to discuss something. There is content around that meeting and Docket is trying to be the company that handles that piece. “Docket gives teams the ability to build and share agendas, save meeting notes and resources into a searchable history, and track action items and next steps through to completion,” Docket founder and CEO Darin Brown told TechCrunch.
Emergence’s Jason Green still sees plenty of opportunities for enterprise SaaS startups
While Docket is not run exclusively on Zoom, Brown says building a Zoom App was an easy decision. “A key part of our overall growth strategy is to meet our customers where they are, and an overwhelming majority of Docket customers use Zoom for their video conferencing solution,” he said. He added that Zoom is providing an easy way for users to access the product and is helping to remove barriers for users looking to get started quickly with its App Store approach.
Because of this Brown says that he didn’t hesitate to take a chance on being an early adopter of the platform, even though there are going to be inevitable growing pains as they work out the kinks in the developer tooling. “Being an early adopter gives us an advantage not only in exposure to support Zoom’s customers but it also allows us to build relationships with Zoom and influence the direction of the platform in a way that is greater than a company the size of Docket would otherwise be able to do,” he said.
Making investments and checking them twice
Investors are always looking for the next startup frontier and experienced ones like Green and Scheinman believe that there is great potential here in the early going for companies to build them on Zoom. In fact, Scheinman is an early investor in Docket.
“Since the Zoom App Marketplace competition, we’ve made six investments and they’re all startups building on the Zoom platform or otherwise working with Zoom. We were lucky to see the early ideas of what developers want to build on Zoom through the [Zoomtopia] competition and we have some ideas that we think need to exist, so we started looking to invest in the best teams building on these categories,” Scheinman said.
Green says his firm invested in several startups built on Salesforce that have successfully exited over the years including Veeva, ServiceMAX and SteelBrick. He sees similar potential on the Zoom platform and is placing his early bets.
“We have made our first investment in a Zoom platform company called ClassEDU, building an application purpose built for the education market. It was founded by Michael Chasen, the former CEO of Blackboard, the leading SaaS company selling into the education vertical. [ … ] We are looking at a number of other companies and haven’t announced them yet, but expect to be soon,” he said. It’s worth noting that Maven has also invested in ClassEDU.
Green says he’s comfortable investing in these early startups because he believes in the potential for Zoom to be a successful platform, but he still advises startups there can be a downside to this approach of building a company. “Building a startup is inherently a risky bet, and leveraging platforms can reduce some of the early risks and friction of getting a product to market, but also can create longer term risks and frictions if not managed successfully. The key is to build enough of your own technology and competitive moat on top of a platform such that the platform can’t or won’t try to replicate it,” he said.
Green adds, “Diversifying your bet across multiple platforms over time can also help. If things are going well, this becomes harder as diverting resources from something that is working well to buy insurance is always a challenging decision for a resource-constrained enterprise where focus matters.”
Zoom is at the center of the work and education universe right now, mostly due to the pandemic, but there is strong reason to believe that even when the pandemic ends that Zoom will continue to offer a valuable service in a hybrid office/work-from-home world. By offering a platform to build applications that take advantage of the meeting software, it’s possible it could be a valuable new ecosystem for startups. Certainly, some prominent VCs are betting that will happen. Time will tell if they were right.
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