Zoom's $15 Billion Bet on the Enterprise

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The most important thing in tech today is …

Zoom’s planned purchase of Five9 for $14.7 billion, clarifying its post-pandemic growth plan. Zoom’s ambitions aren’t about consumers, or even business video.

It looks like Zoom wants to be the modern platform for high-stakes business communication, period.

I happened to talk with Zoom founder and CEO Eric Yuan less than a week ago about the company’s impressive run during the pandemic, when businesses and consumers alike found tremendous value in Zoom’s reliable and easy-to-use software. I had two main questions for him: Now that Zoom has both a consumer and an enterprise brand, how is he deciding where to focus investment? And how will he make it count, since he’s up against the richest companies in tech?

The Five9 acquisition would provide an answer to both. This focuses Zoom as an enterprise company, with software to facilitate communication between coworkers, business partners, and with Five9 between businesses and customers. That’s an important piece Zoom was missing before, and one that could give it an interesting point of differentiation versus Microsoft, Salesforce, Cisco and others.

Are there risks? Sure. The main one is probably Zoom stock. This is structured as an all-stock transaction, and Zoom says it will close in the first half of 2022 — which means it could easily take 11 months. If Zoom’s stock price rises over that time, the deal gets sweeter for Five9 shareholders. If it drops relative to Five9, they could pressure Zoom to improve the terms.

Either way, in this proposed deal a COVID-era high-flyer is moving to trade its stock for a solid business with strong growth fundamentals. I bet this won’t be the last time we see this play called.

While you were sleeping …

Military-grade spyware licensed by an Israeli firm to governments for tracking terrorists and criminals was used in attempted and successful hacks of 37 smartphones belonging to journalists, human rights activists, business executives and two women close to murdered Saudi journalist Jamal Khashoggi, according to an investigation by The Washington Post and 16 media partners. Washington Post

Robinhood is seeking a market valuation of as much as $35 billion in its upcoming initial public offering, according to an amended SEC filing released Monday. CNBC

In the broader world …

U.S. stocks fell aggressively Monday on concern a rebound in Covid-19 cases would slow global economic growth. The selling picked up as the session continued and the Dow Jones Industrial average was currently headed for its biggest drop of the year. CNBC

On the horizon …

Today, 3 p.m. ET: Fortt Knox 1:1 with PubMatic CEO Rajeev Goel

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