The Cold Start Problem: How to Start and Scale Network Effects

by Andrew Chen

I wanted Zoom to be free, at least for the basic experience, so that people could see why it was so much better. I first thought, maybe it should be limited based on participants. Maybe 3 attendees could join, but once there were 4, you’d have to pay. But that didn’t feel right. I studied Dropbox’s pricing strategy and wondered, why did they start charging at 2 gigabytes instead of 1? As I thought about it, I realized, it gave you time to use Dropbox more, and the more you used it more likely you will hit the cap and starting paying. I wanted Zoom to be the same way, so I set the limit to be 40 minutes per meeting but you could get the full experience of the product. That way, if the quality was good and you liked it, then you’d eventually pay. Even from the early days, these key product decisions made a big impact on Zoom’s trajectory. The product combined an easy-to-use app that allowed meetings to form quickly, had a value proposition that was simple to describe, and was free to use, at least initially.