Leadership may be the most underrated quality in investing.

It's not quantifiable or easily measured, and it can't be found in a 10-K filing or quarterly earnings report. But the difference between stocks that deliver life-changing returns and those that fizzle out often comes down to management.

Take Amazon. It was far from the only e-commerce company to emerge at the dawn of the World Wide Web, but it's gone on to become one of the most valuable companies in the world, while dot-com-era names like Pets.com, Webvan, and Living.com went bust. Amazon's success owes in large part to the cultural DNA embedded by founder Jeff Bezos, who has led the company with a long-term philosophy, made pleasing the customer its core mission, and held exacting standards for his employees. 

Zoom Video Communications (NASDAQ:ZM) has been one of the biggest winners on the stock market this year, up more than 500% year to date, resembling Amazon's early breakout days. The tech stock has captivated investors during the pandemic as it's become an indispensable utility for millions around the world whose lives have been upended by the health disaster.

Its results speak for themselves. In its most recent quarter, revenue jumped 355%; customers with more than 10 employees rose 458% to more than 370,000; and its profit margin on a generally accepted accounting principles (GAAP) basis was 28%, a stellar number for any company. Analysts have gushed over its results during the pandemic, calling it "one of the best quarters in the history of software."

Zoom's technology and user-friendly interface have been the biggest drivers of it success. But what really separates Zoom from videoconferencing products like Microsoft's Skype or Google Meet may stem from Zoom's founder and CEO Eric Yuan.

Eric Yuan at the Nasdaq podium for Zoom's IPO.

Eric Yuan and Zoom employees. Image source: Zoom.

A short bio

Yuan story's has become somewhat of a legend as Zoom grabbed the limelight this year, and like the best origin stories, it exemplifies the persistence, ingenuity, and charisma that it takes to build a great company.

Yuan was born in China and wanted to come to the U.S. in the mid-90s when the internet was first taking off. He applied for a visa and got rejected. Over the next two years, he applied seven more times for permission to work in the U.S. and was denied each time. On his ninth time seeking a visa, he finally got one.

Yuan came to the U.S. in 1997 not even speaking English, but he knew how to code and landed a job at WebEx, which offered real-time collaboration software. After WebEx was acquired by Cisco in 2007, Yuan rose to the level of corporate VP of engineering, but while in that position he recognized an opportunity. Customers were unhappy with the WebEx collaboration software, and Yuan believed he could make a better product.

He struck out on his own in 2011, founding Zoom and taking more than 40 Cisco engineers with him. It was difficult for Yuan to find funding as that was the same year that Microsoft bought Skype for $8.5 billion and investors doubted that a start-up could compete. However, Yuan eventually found capital, and the company quickly became successful, attracting 3,500 customers within five months of the product launch. Seven years later the company went public, and today it's worth more $100 billion. 

More than a happy ending

Two things in particular stand out about Yuan's path to success. First, his persistence and dedication in applying nine times just to get an opportunity to work in the U.S is a testament to his character. Clearly, this is someone who doesn't take no for an answer and will seek alternative solutions when the first ones fail. It also shows a degree of optimism that's necessary to become a successful CEO.

What's also striking about Yuan is that he was able to persuade more than 40 of his employees and colleagues from Cisco to join him when he started Zoom, a sign that he commanded great respect and admiration from those people. If not, they probably wouldn't have left what was likely a secure, high-paying job.

Of course, a rags-to-riches story with a happy ending isn't enough of a reason to invest in a stock. The real kicker here is that Yuan is one of the top-ranked CEOs, according to job-review site Glassdoor, as he ranked #1 on its list of top CEOs in 2018, and Zoom ranked #5 in 2018 and #2 in 2019 on its best-places-to-work survey. Ninety-eight percent of reviewers approve of Yuan as CEO, and 94% would recommend the company to a friend. Yuan seems to have the same sterling reputation today that attracted more than 40 Cisco employees to come work with him.

Yuan and his company get those rave reviews for a reason: He prioritizes company culture and employee happiness. In an interview for the website Medium, he said, "Your company's culture is the #1 most important thing to get right. Everything else flows from there."

Yuan added that "If your employees are not happy, nothing else at your company will go well." That sounds like the founding principles of a rock-solid company built for long-term growth.

Zoom's product has won plenty of plaudits, and its results explain why the stock has annihilated the market this year. But I can't think of a better reason to invest in the company, or one that better explains its success, than Yuan's leadership. I'd be happy to put my money in a company led by a CEO like him.

  
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.