Any false positives with customers as you scale?

Answered by: Tien Tzuo, CEO, Zuora

Category: Marketing and Sales

As a company, you start with a value proposition that resonates with a lot of companies.  Next thing you know, you wake up and whether it's 30 customers 300 customers or 3000 customers, you have a diverse set of customers. At that point, usually only about half of those customers are really the customers that you should have at scale.

As an entrepreneur, it’s hard to wrestle with this stuff because what are you going to do? Fire those customers? You don't have to do that. But you have to understand which of the customers will help you build a really successful, healthy business as you continue to spread. It’s important for entrepreneurs to understand this.

As Zuora, we have a mental model called the climb and it's a visualization on how to build a company. The key thing is the visualization of switchbacks and the idea that when you climb a mountain you don't just scale the side of it but you do switchbacks to climb it We e like the switchback metaphor because a lot of times when you're growing a company, you go through an inflection point where the things in the past right aren't the things that you need to carry into the future. These are examples of false positives. So how do you create a mental construct that forces you to say that I learned a lot from this phase and let me take a blank sheet of paper and reset my goal for the next phase. Then figure out which of the past things you want to drop away. What were the lessons that in hindsight you shouldn't do? What should you do more of? And then carry those things with you into the future. I guarantee that you know that in the first set of customers you closed with your business model, you should never have closed some of them but you only know that through hindsight. You have to have the courage to accept that it doesn't mean you going to fire them but it does mean, you’re going to stop closing those customers. Now, go and close the good customers.