Zoom and Grubhub helped position themselves for the future by using their success over the last six months to help companies hit hard by the pandemic, CFOs of the two companies said last week at the MIT Sloan CFO virtual summit.

Grubhub saw its business double as people ordered online instead of going to restaurants, so its leadership focused on three priorities: ensuring their drivers and customers could transact safely; building capacity to meet stepped-up demand; and increasing business of their participating restaurants, its CFO Adam DeWitt said.

On safety, the company spent millions of dollars buying gloves, masks and hand sanitizer in bulk for its drivers. 

"It wasn't clear if science was behind this stuff at the time, and it was expensive," DeWitt said. "But we [decided] buying PPE in bulk was worth it." 

They also required drivers drop off orders and ring the doorbell instead of delivering in-person.

"Had we taken a traditional approach, we would have tested the change for weeks, looked at customer care rates, refund rates, and missing food rates," he said. 

But customers said the new approach made them feel safer, DeWitt said.

Capacity was less of an issue. Since they operate as a marketplace, their operations are built to scale up as orders increase without the cost of each order going up, he said. Ensuring the ability to scale up driver capacity was harder, but that problem worked itself out as ride-share drivers whose business had disappeared moved to food delivery. "We got lucky," he said. 

The bigger strategic decision was how to help hard-hit restaurants. 

"Just giving our restaurants a check, reducing prices, is not that helpful," he said. Instead, the company's goal was to use its increased demand to help drive more business to the restaurants.

"If it costs me $5 to generate for them a $30 meal, that's creating velocity in the system," he said. "Restaurants can keep people employed, keep buying food from their suppliers, and pay their rent. So, for us, it was trying to figure out how to take advantage of that."

Free school use

Zoom decided early on to make its platform available for free to any school that wanted it to help them shift to online learning, so the challenge was ensuring the company had the capacity to handle the surge. 

"We had 125,000 schools sign up for free use in 90 countries," said Kelly Steckelberg, the company's CFO.

Until that point, the company managed all of its capacity using its own servers in co-location facilities. To ensure it could meet the demand without having excess capacity once demand subsided, the company for the first time bought extra capacity from public cloud partners.

"One of our partners brought on 6,000 servers for us in a day," she said. "That's crazy, and yet that's the demand that was being driven."

The use of public cloud was key when demand dropped during the summer, when schools were out, and picked up again in the fall.

"Historically, we built our data centers to run at 50% of peak capacity, so we would have had a lot of excess capacity sitting in our data centers during the summer, and yet by leveraging the cloud we were able to scale that downward and then ramp back up in the fall," she said. 

Another growth area for the company was the small business sector, which went from 20% to 36% of their customer base over the last two quarters. To help these companies leverage the platform more, Zoom acquired an event platform provider so they can use one platform to take sign ups, collect fees, send out the link, and host the event. 

"We saw an opportunity to bring that together and have a more cohesive experience for both business owners and consumers," she said.

The biggest challenge for the company was tackling security concerns as individuals and small businesses that weren't used to hosting meetings ran into trouble when they made event information publicly available. 

"To restore that trust, for 90 days, we stopped development, unless it made the platform more secure," she said. 

The company also formed a CISO council that brought together chief information security officers from around the world. "It was a humbling experience for all of us," she said.

The company also acquired security company Keybase. "They have a talented team of security engineers who helped us accelerate the release of our end-to-end encrypted platform," she said. The platform changes launched in October. 

From the CFO perspective, these decisions were made at unprecedented speed. The CFO's role traditionally has been to slow the process down until testing could be done, but it was better to take risks, even if it meant making mistakes. 

The traditional model that CFOs tend to work in didn't apply," said DeWitt. 

But the fast action not only helped the two companies help their customers, the CFOs said; it helped them be better prepared once the pandemic eases and they return to more normal growth trajectories.