Nearly three years later, Zoom’s boom has apparently waned. The company announced Tuesday that it would lay off 15 percent of its staff, or 1,300 employees, and that chief executive Eric Yuan would cut his salary by 98 percent in the coming fiscal year. In a letter to staff, Yuan noted that the company’s workforce grew threefold in two years.
“We didn’t take as much time as we should have to thoroughly analyze our teams or assess if we were growing sustainably, toward the highest priorities,” he wrote.
The cuts come amid a landslide of layoffs in the tech industry — with big names such as Alphabet’s Google, Meta, Amazon and Microsoft each eliminating thousands of employees. But Zoom’s predicament follows a particularly dramatic rise and fall.
Once a relatively obscure workplace tool, Zoom stock peaked at $559 in October 2020, as it achieved a kind of cultural relevance rare for office technology. It became a verb, synonymous with video calling — even if you were using Skype. The software’s ubiquity even led to a new emotional state, “Zoom fatigue,” which could have contributed to its recent struggles.
Zoom’s growth has faltered. In November, it trimmed its sales forecast for the year to up to $4.38 billion, down from the $4.4 billion it had predicted in August. Net income fell by more than $290 million to $48.4 million in the third quarter year-over-year. Recently, its stock has hovered at around pre-pandemic levels, or down about 85 percent from its peak.
The company is also facing intense competition from the deep-pocketed Skype owner Microsoft, which is investing heavily in Teams.
Zoom is an “extreme microcosm” of how tech firms that over-hired during the pandemic are now correcting, said Alex Smith, a vice president at market researchers Canalys. With slim sales growth of just 5 percent in the latest quarter, “its correction of 15 percent head count reduction is likewise more extreme,” he said. (By contrast, Alphabet is laying off 6 percent of its workforce.)
Many large corporations are still using Zoom, with the service in November reporting revenue from its enterprise business increasing some 20 percent on the year. But what it calls “online revenue” — generally sales from individuals and smaller businesses subscribing directly through Zoom’s website — is down about 9 percent.
Candace Shively, a 70-year-old former teacher in Georgia, saw the intense adoption of Zoom firsthand. As a leader of several community organizations — a local quilt-making guild and a group to welcome new neighbors, among others — she has introduced many fellow retirees to the platform.
“These folks wanted to do everything on Zoom,” she said. “I think they would have shared on Zoom while cooking or cleaning bathrooms if they could have figured out how.”
For Shively, though, the shine of the software faded fast. She became sick of sitting, sick of “endless yakking,” and sick of “being captive in a little box.”
She channeled her frustrations into creating a quilt she calls “Zoomsick,” which depicts Zoom meeting windows featuring an abandoned wine glass, a person hiding under a blanket, two kids fighting and an entire frame filled with feet, among other striking scenes.
Such meetings can be “exhausting,” Andrew Bennett, a management professor at Old Dominion University, said in an email. Zoom may be falling out of favor “because other forms of communication, like emails, can take less energy to complete,” he wrote.
In a 2021 article, Stanford psychologist Jeremy Bailenson outlined some of the factors that could make Zoom such an energy drain, such as “excessive amounts of close-up eye gaze” with strangers and difficulties giving and receiving nonverbal cues. Remaining still — as is the social norm on Zoom — can also be tiring.
During face-to-face meetings, “people pace, stand up, and stretch, doodle on a notepad, get up to use a chalkboard, even walk over to the water cooler to refill their glass,” Bailenson writes. “There are a number of studies showing that locomotion and other movements cause better performance in meetings.”
Chezale Rodriguez, a 37-year-old dance instructor in Arizona, doesn’t have to worry about staying still in her Zoom meetings: she started using the platform for dance classes during the pandemic’s early days.
“I’m very grateful for the convenience and opportunity to be in a space with people, near and far,” she said.
Rodriguez remains a loyal user.
“For those who I haven’t had the opportunity to get in front of yet. It’ll be on screen in the meantime,” she said.