Why Did Vidyo Sell So Cheap – Where Do Zoom, BlueJeans, & VSee Fit In?

vidyo videoconference exit

Vidyo was the original video conference startup that set the bar for others to aspire. They created the first software-based video system that was good enough to disrupt the traditional videoconference titans such as Cisco/Tandberg, Polycom, Microsoft Skype for Business….  

They had a roaring start in a market that was dominated by expensive hardware-based solutions. Why did they sell to Enghouse Systems for $40M when they had $60M in yearly revenue?  Vidyo actually was in discussion to be acquired for close to $1B only a few years ago. It raised $170M in investment from a-list investors including Sevin Rosen Funds, Rho Ventures, Kaiser Permanente Ventures, Menlo Ventures, QuestMark Partners, and Juniper Networks among others.  Instead of making a huge return, these investors faced a fire sell.

What does Enghouse Get from buying Vidyo?

Vidyo is deployed across 120 financial institutions and 400 hospital networks, giving Enghouse “ready-to-wear” relationships in those coveted verticals.  While Vidyo’s annual revenue is at around $60M, they had high churn rate and many multi-million license deals were not getting renewed, thus the revenue drop off was so steep that the $40M acquisition price was still good value for Vidyo.  Vidyo had many executive turnovers, including the resignation of CEO Eran Westman in 2017.

Vidyo, BlueJeans, Zoom – Three Paths To Boom or Bust

First let’s take a look at Vidyo’s route in comparison with two other video conference companies – BlueJeans and Zoom. All three got started at about the same time, and all three raised about the same amount of funding ($170.3M, $175M and $160.5M respectively). However, each took a different approach and are now at very different places. What worked? What didn’t? What’s next for each? 

Vidyo’s On-Premise Mistake

Zeus Kerravala on No Jitter has done a nice analysis of Vidyo’s sad exit. His main point, which I agree with, was that Vidyo continued to bet on the on-premise model even as it was losing traction, and missed the cloud solution trend. As mentioned in Kerravala’s article and in various VSee posts, dealing with on-premise servers is an expensive IT maintenance nightmare. When Vidyo finally got around to providing a cloud solution, it was too late and simply wasn’t able to re-capture lost market share.

BlueJeans and the No Download Bet

BlueJeans made the mistake of betting on a completely no download video solution. The problem with this is that the completely browser-based experience simply isn’t that good – where the support costs of dealing with the numerous failure cases kill the user experience, including a poor mobile experience. We’ve written about the BlueJeans user experience problem when it tried to bridge on-premise Polycom with the consumer Skype experience. It simply hasn’t been able to give users the kind of reliable video that downloaded videoconference apps like Skype, Zoom, and VSee are able to provide.

The Zoom Download + User Experience Win 

Zoom on the other hand focused on creating a great video meeting experience both in the cloud and with a download. This focus on excellent user experience has made it the biggest winner in the video conference space so far. With 160.5M funding according to CrunchBase, Zoom has made unicorn status, and IPO-ed th receiving $9B valuation after IPO

Where Does VSee Video Telehealth Fit In? 

At VSee, we took the approach of Zoom but focused on healthcare, by adding many dozens of features unique for telehealth, such as lossless PACs sharing, medical device streaming, flexible hipaa sms/chat, etc.  Our focus on healthcare also allow us to make architecture design decisions to focus on security – so that we can avoid the massive security breach of Zoom. We are the only medical-specific video system on the market.

Telehealth Is More Than Video

Telehealth is more than just video. We’ve built a suite of tools wrapped around the VSee medical video engine such as uber-style load balance, insurance integration, store-and-forward case management, etc.

In addition, healthcare needs AI, clinical decision making support, triage workflows, medical devices, and smart technology integration. It needs innovative ways to augment the shortage of providers, control over-the-top healthcare expenses, and support a growing population of the elderly who want to stay independent. It needs to be able to manage and motivate those with chronic care and those with loneliness and mental health concerns. 

That’s why we have developed a flexible telehealth platform and user experience specific to healthcare. It can be easily molded to the various healthcare use cases and still allow providers to work efficiently and effectively. It has all the add-ons that healthcare needs for a fast launch and then the ability to scale as quickly as needed.

Learn more about VSee telehealth features here


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