Some highlights from Zuora CEO Tien Tzuo’s recent discussion with Index Venture Partner Mike Volpi:
“When you net out the patterns of how companies really grow, one of the things that really jumped out at me is that growth is not a linear path, but it’s really done through a series of stages. The whole idea of the climb is to start identifying what are the stages of a company’s growth, and how you navigate stage one after another.”
“You can prove the idea before you actually create a fully-formed product. If the idea is right, and you’re confident enough to put a revenue number on it, then you can actually sell. You’ll still have to fulfill those contracts, of course, but you can sell.”
“By the time you get to $10 million you want to be careful not to have boxed yourself into a niche, so that you’re only selling to one vertical. Especially in a world with much such wide and effective distribution channels, you want to be able to show that you’ve got a diverse set of customers.”
“By the time you get to $10 million, you can support a 40, 50, 60 person organization, and now you’re starting to get some scale. The chances of you dying as a company and going bankrupt, wind up really shrinking. You’re going to survive, so the question now is not how are you going to survive?”
“The hard decisions are going to be things like: We’ve been chasing this customer segment, and it seems to be working but when we take a hard look at it, it really is an unprofitable segment. Do we really want to go pursue it?”
“A lot of the seeds for company difficulties or failures in the $30 to $100 million run usually stem from that $10 to $30 million run. They didn’t really take a step back and fundamentally understand their business model.”
“When you start to approach $100 million, people really want to know if the vision is real. These are mainstream, public investors. You had this idea of a product, you painted a picture of a big market, and you closed a bunch of customers. Now, what’s the big vision?”
“Don’t start the whole platform vision too early. Platforms really evolve from doing something else.”
Listen to the full presentation here.