The “Verticalization” of Zoom

How startups are building the future of video conferencing by carving out their own verticals

At first glance, the video conferencing market looks oversaturated and impenetrable for newcos. While many VCs had this same sentiment in Zoom’s early days, the environment only looks more daunting as tech giants like Zoom, Microsoft, Google, Cisco, and even Verizon take part in the land grab.

While history does tend to repeat itself, we’ve been observing two growing trends that may pose even larger threats to Zoom than any of its direct competitors:

1. Verticalization: building vertically-focused applications tailored to particular use cases
2. Unbundling: the productization of underlying technology and features that make it easier to build custom solutions

Just as natural forces reshape landscapes over time, verticalization and unbundling are natural processes that have been observed whenever any business dominates a horizontal market — such as Craigslist, Linkedin, or G Suite. Profitable markets attract startups and adjacent competitors that carve out verticals or products that they can better serve. Jeff Jordan and D’Arcy Coolican explore this phenomenon as it relates to platforms:

Savvy founders know that finding the right market at the right time can be like a cheat code for startup success. Looking at verticals within the broad horizontal platforms that are near their breaking point is like a cheat code for a cheat code: if you’re paying attention, it will point you to the next great unbundling and where the next wave of opportunity and innovation will come from.

In this first post, we will look at how the verticalization of video conferencing is unfolding today and what the long term impact will be for general-purpose tools like Zoom.

Why Verticalization is Necessary

Companies like Zoom that achieve massive growth and ubiquity lose one important competitive advantage: the ability to focus on a particular user. Recent events have forced the adoption of Zoom for use cases that it was not originally designed for. Teachers struggle to manage a classroom. Game nights with friends feel overly rigid. Working on a project with coworkers becomes inefficient. Zoom has become the lowest…