CEO Quest Insights
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CEO Quest Insights

The Four-Way Fit — Chapter 20: Minimum Viable IPO Path (Part 3)

The highway opens up as you emerge out of the Minimum Viable Expansion stage. Thanks to your years of hard work, the road sign for “IPO” can be seen in the distance. Your core business has begun to fire on most cylinders — a solid growth engine. Many expansion initiatives have proven successful; you have begun to integrate these more closely with the core.

Now it’s time for your rising enterprise to deliver IPO-worthy growth rates and prove sustainable competitive advantage. You need to expand your addressable market, perhaps via geographic and vertical expansion. You need a bigger product footprint: it’s time to solve a widening constellation of adjacent problems. With these you can claim more profit from each customer relationship.

As a technology company, your technical stack must now be made fit for global scale. Is it still a monolith? Or have you refactored it into microservices, enabling continuous improvement by teams? Does each team own a domain with its unique business outcome objective? Is each team free to pursue its objective without excessive external dependencies? Systems built via microservices architecture create better customer experiences and enable faster innovation — because they are more responsive, resilient, elastic and modular.

As you enter the Minimum Viable IPO Path stage, perhaps your most vital priority is to elevate the maturity and scale of your revenue engine. The rate of top line revenue growth is a critical success factor on that path to IPO. It’s also important to show improvement to your unit economics. Ideally, you want to demonstrate two things: LTV expansion and improvement in the ratio of LTV / CAC.

This stage also prioritizes actions that strengthen competitive advantage. By now, your switching costs and scale economies should have become significant sources of advantage. If your business lends itself to network effects, these should now be coming into bloom. The maturity of your socio-technical systems should be a rising source of systems power. Just as with the elevation of your technical stack, now it’s time to prepare all internal systems, such as Finance and Operations, for the public-company scrutiny and compliance that is soon to come. To strengthen your Brand, it might be time to stake claim to a category named by you, one within which you are the uncontested leader. You must tighten brand identity, and ensure that it informs the playbooks that make up your messaging schema.

None of this can be accomplished without a world-class team. Your top team requires systems thinkers who can envision the enterprise holistically as it is, and as it must become, within the domains of Market, Product, Model and Team. Your success has awarded you the opportunity to aim high for talent, starting at the top but cascading to all levels of the company. It’s on you to seize that opportunity — either through home-grown leadership development or external recruiting, or both. Your leaders must bring world-class functional skills and the capacity to create a strong culture, of course — but they should also be systems thinkers.

Market, Product, Model, Team

Market

  • Market penetration has grown significantly in all top priority segments
  • Expansion continues into new segments, verticals and regions
  • Efforts to extend the value footprint across the customer value chain by expanding into adjacent opportunities continue
  • Competitors are tracked closely as the imperative to increase competitive advantage grows

Product

  • Technical domain teams pursuing a PLG strategy continuously seek to increase customer-defined value
  • Work to elevate the performance of the tech stack (its resilience, responsiveness, elasticity, scalability and updatability) continues
  • New venture teams are created, and existing ones continue their work to discover new value breakthroughs with new products

Model

  • Across all Model subdomains, operational execution becomes primary
  • The pricing scheme is set, though there may be opportunities to gain further leverage by additional regional or segment-based versioning
  • With the IPO path now becoming visible in the distance, the time has come to bend unit economics towards a healthy ratio (LTV / CAC >=3) in all segments
  • The effect of pricing, unit economics and growth investments on cash flow is predictable and tightly managed
  • The customer acquisition method in all its region / vertical / segment permutations is mature, stable and repeatable; the focus now is on scaling
  • As to building your competitive moat, your work within the seven pathways is in its advanced stages; the impact should now be visible in the business, proven by strong pricing power, high retention and improving customer acquisition ratios

Team

  • As a rising global enterprise with public company aspirations, you need a world class team at the top — any weak links must be addressed now
  • The number of management tiers between the frontline and the top grows (a 50 person company needs three tiers, a 400 person company needs four, and a 500+ person company needs five); this requires focus on leader quality (the need for 10Xers), and a careful balance of alignment (with vision, mission, strategy and assigned responsibility) and autonomy (to do the right thing without seeking permission)
  • Culture becomes an ever-more-complex system, with some values shared companywide and others shared just within teams or departments; it requires active care and development via programs and disciplines
  • All of this requires, more than all others, the “thinking competency” called systems thinking

The Story of Zuora

I first met Tien Tzuo, CEO of Zuora, in 2013. At the time I was working to build out a high-level framework on the applied science of company-building, and through an introduction I’d been given the opportunity to sit down with him. He was generous with his time and feedback, and his insights were brilliant. Since then we have kept in touch. Ever since that first meeting it has been a privilege to observe Zuora’s growth into hot public company.

It was 2007, and the back office at Salesforce.com was a hot mess. Marc Benioff had started Salesforce in March of 1999, bringing into the world a brand new business model — software as a service. By 2007 the company was growing like crazy, and with that growth had come big problems. This brand new subscription-based business model was great for customers, but it was proving really hard to manage in the accounting department. One day, Benioff pulled Tien Tzuo into a meeting with two WebEx executives (K.V. Rao and Cheng Zou). At the time, Tzuo was Chief Strategy Officer. He was also Salesforce employee #11, having previously worked with Benioff at Oracle.

As Tzuo stepped into the room, he found himself in the midst of a gripe session. The group was lamenting how hard it was to build a home-grown billing solution that could handle subscriptions. Both WebEx and Salesforce featured multi-tenant software platforms, usage-based pricing and multitiered product editions — the typical attributes of a B2B SaaS business. But the off-the-shelf billing and financial systems that existed at the time (Oracle, SAP and NetSuite) had been built for a transactional, product-based world. They were incapable of serving subscription-based companies. This sad fact had forced both Salesforce and WebEx to build complicated home-grown billing systems. Despite the significant investments that had already been made, these systems were still coming up short.

No silver bullet emerged from the meeting that would fix the problem. The only thing that had become clear as the meeting wrapped up was that millions of dollars and hundreds of developer-years would still need to be invested to bring these billing capabilities up to snuff. As Tzuo listened, a thought occurred to him: “if this is such a big problem, I wonder if a company could be built to solve it?”

Like an itch that wouldn’t stop itching, Tzuo became obsessed with the problem and opportunity. As he continued to ruminate, he reached out to the two WebEx executives that had been in the same meeting. Together, their conversations soon evolved from idle ideation to interest, and then to conviction. After many weeks of conversation, the day came when the three of them crossed the Rubicon together. They all agreed to start a company to solve this problem.

K.V. Rao, Tien Tzuo and Cheng Zou (Source: Zuora)

The three saw that subscription-type businesses were popping up everywhere, and the trend felt nascent. The most obvious examples were the B2B and B2B SaaS businesses sprouting up throughout Silicon Valley. But as they thought more about it, they realized the subscription model had been hiding in plain sight for some time. Car manufacturers were leasing cars. Media platforms had shifted online, and were beginning to offer online subscriptions. What was new was that SaaS was normalizing the model. A tectonic shift had begun in the way products are bought and sold.

Tzuo, Rao and Zou left their day jobs and launched Zuora (the company name is composed from the last names of the three co-founders) in late 2007. Tzuo became founder and CEO. The new venture gained the blessing of Benioff, who offered early guidance and participated in the first funding round.

Thirteen years later, Zuora is a public company with a global footprint. As of this writing it’s worth well over $2B. The phrase “The Subscription Economy” has become popularized in global business jargon, and Zuora sits atop this subscriptions wave, delivering the connective grid that connects pricing to orders to cash in subscriptions-based businesses. The Zuora journey teaches us much about company-building, specifically about the critical stage I call Minimum Viable IPO Path.

Background

One of the threads that tied the three co-founders together was their direct experience trying to bill for subscription-related products — Tzuo at Salesforce, and Rou and Zou at WebEx. Their immersive experiences led them to some early assumptions. Even so, in the beginning Tzuo and his team took the time to validate these assumptions with an intensive round of customer engagement sessions. These conversations validated the core thesis that subscription businesses required a whole new billing infrastructure.

Enterprise operational systems — especially ERP and financial management systems — had been built for a transactional, product-based world. The subscription-based business model was revolutionary, opening the door to powerful new innovations — if and only if the back office could keep up. Subscriptions businesses introduced variable, usage-based pricing; the need to manage alterations in the price (up or down) based on thresholds; and mix-and-match product configurations, each with their own unique pricing schemes. It soon became clear to Tzuo that this flexibility was a key strength of the subscription business model. It enabled companies to cater uniquely to the bespoke requirements of each customer. Tzuo gained a key insight: a successful subscriptions-based business is, almost by definition, a customer-centric business. But all such businesses required back-office operating systems that would support the business model.

At first, Tzuo focused on just one segment — B2B SaaS — and one product — billing. With the business vision conceptually validated by an initial tranche of visionary customers, Tzuo hired seven engineers in San Mateo and twenty in China, and got to work to build out an initial product. The product was prototyped and reviewed with 50 prospective customers. It took six months to turn the final prototype into an initial product. By the time it was released, Tzuo already had secured a few signed contracts. And so began a pattern that persisted throughout Zuora’s early stages of company-building — Tzuo would build the product and the revenue engine in tandem. Each would teach the other.

Early customers included Box, Coremetrics and other SaaS companies. But as time went on, new opportunities emerged. Reed Business Information, a niche media company, learned about Zuora online, reached out and signed up. This deal opened Tzuo’s eyes to the potential of the media vertical. As time went on, prospects from other new verticals came forward. Zuora soon perceived a new opportunity in the developer applications market. Open development platforms like Facebook gave developers the opportunity to launch subscription-based apps, but billing capabilities were limited; this fact held developers back. Tzuo sensed Zuora could fix this gaping problem.

Rapid revenue growth and vertical expansion powered fundraising. Zuora raised a $6.5M Series A round in early 2008, with participation from Marc Benioff and Benchmark Capital. Then in October of that year the company raised $15M in a Series B, led by Shasta Ventures. By that time, the initial flagship product — Z-Billing — had been joined by a complementary addition, called Z-Payments. Soon after that came Z-Force, a product that enabled Salesforce integrations. All of this occurred in the midst of the great recession. Zuora weathered the economic downturn well. Tzuo had been advised by Benioff to get to cash flow positive as soon as possible, and he had heeded the message. The downturn actually drove organic sales as big companies began a shift to the cloud. They required the capabilities Zuora offered. By 2009, another product extension — Z-Commerce — had been launched. Revenue tripled in 2009.

Tzuo was determined to build a company that would keep the customer at the center, even as it scaled. He believed customer centricity is a defining feature of subscription businesses, because such businesses live or die by the value customers receive. To help build a customer-centric culture, Tzuo held all-employee offsites in which every employee was assigned a customer. Each employee was then asked to walk through the customer’s billing challenges, and to present how that company should approach its billing situation. It was a way to get everyone, no matter their function, to walk a mile in the customer’s shoes.

And the company kept growing. Invoice volume processed through its platform doubled in 2014. By early 2015 Zuora had raised $250M in funding, the most recent a $115M Series F round in March of that year. It was around this time, in early 2015, that Tzuo began to prepare the company for the IPO path. This stage extended for about two years, from early 2015 into early 2017. What happened during that period is an object lesson in company-building.

The Minimum Viable IPO Path stage generally progresses through eight steps, shown below:

Heads Up: The Four-Way Fit Spreadsheet

At the beginning of each Phase II stage, it’s important to step back and look holistically at your business — considering the domains of Market, Product, Model and Team. This is certainly true of the Minimum Viable IPO Path stage. To execute this “heads up” motion, it’s best to return to the Four-Way Fit spreadsheet. Update all claims inside the four key domains and within their underlying subdomains. This work helps you develop a more comprehensive, integrated and internally consistent view of your fast-rising enterprise. It helps you define what must become true in order for you to be successful, and to assess whether your assumptions can be considered settled — sure to be true — or whether they still need to be tested before you can act upon them.

This work is especially important at the Minimum Viable IPO Path stage. By this point, your market has woken up. Competitors are no longer blind to the threat you pose. It becomes vital to optimize product value build out your pathways to sustainable competitive advantage. For instance, if yours is a B2B company, by now your work to assess where you fit within your customer’s end-to-end value chain, and determine where you might extend your product’s footprint should be well underway. Can you become your customer’s “one-stop shop” for a whole collection of adjacent value chain activities? What more needs to be done to pursue this vision?

Entering into Q2 of 2015, Zuora was flush with cash from its Series F financing. The company now boasted a marquee list of customers in multiple verticals — companies like Box, DocuSign, Ford, GE, HubSpot, Marketo, Zendesk, and Schneider Electric. It had 450 employees, with an increasing proportion of them in places other than the United States. Now within shooting distance of $100M in revenue, Zuora was rapidly rising towards public company valuation ranges. Yet there was so much left to do. Tzuo recognized he needed to step back and plan for the future.

As to Market, Tzuo and team identified top priority verticals and clarified the company size profile. Zuora would focus on larger companies — global enterprises. These enterprises faced the most complex problems with subscription products, and Zuora’s capabilities wielded their greatest impact inside such companies.

As Tzuo took stock, he saw a widening product footprint, but he also saw holes to be filled. By Q2 2015, it had become clear to Tzuo that to win in the “subscription economy”, his company would need to become a customer-centric “hub” managing workflows between the front office and the back office.

As to Product, Tzuo realized it would not be enough to solve just one part of the problem. Zuora would become pigeonholed — a niche player. Zuora would need to create a fully integrated solution in the vast, complex middle between the enterprise CRM and the ERP. This is the world of subscription orders (product catalogs and customer configuration, pricing and quoting actions), rules-driven rating, versatile billing, global payments, proper revenue recognition enablement, subscription-purposed reporting and customer-centric end-to-end analytics. The product suite didn’t yet match this fully integrated vision.

A business can achieve market expansion via three pathways: product expansion, vertical expansion and global expansion. Zuora pursued all three. As to its product expansion, the company steadily widened its footprint from billing only, to payments, to accounting and revenue recognition, to customer success intelligence to Configure / Price / Quote capabilities and beyond. But none of these expansion pathways had been optimized. Tzuo knew his company was just scratching the surface. It would take much more work to complete the product vision and realize the company’s full market potential. While its first vertical focus was B2B SaaS, Zuora soon vertically expanded into media, then into commerce, and on to other verticals such as IoT and telecom. Its global expansion began in 2012 with beachhead offices in London and Sydney; year by year its global footprint grew with the addition of offices in Paris, Beijing, Tokyo and Chennai.

As to Model, Zuora’s pricing scheme featured a one-time setup fee (professional services revenue), plus 2–3% of the invoice values billed through the Zuora platform per month (SaaS revenue). Price variation was driven by the products chosen in a customer’s configuration. Overage charges were triggered when use exceeded set parameters. Looking towards IPO, Tzuo knew he would need to invest heavily in scaling the revenue engine so as to drive top-line growth, while keeping a close eye on unit economics. He also knew he would need to increase awareness of the “subscription economy” market shift, and the rise of the new category he had begun to call “relationship business management”. He would then need to demonstrate why the Zuora brand would lead this shift and globally dominate this category.

As to Team, in the period leading up to 2015, Tzuo had come to realize that his leadership style was getting in the way. In 2011, the company had 200 employees — and most were not happy. Tzuo’s hard-driving, blunt, micromanaging style had impacted morale. Too many good people were departing the company. Silos had emerged. Departments were fighting each other for resources and losing the forest for the trees. With the help of an organization psychologist, Tzuo began to identify necessary changes — and to make them. He worked on his own leadership approach, shifting from task master to coach. He also recognized much more needed to be done to build a healthy culture and elevate the quality of his team — from the board on down. And so he set out to do it.

Expand Market Size

This “heads up” assessment in early 2015 sparked projects. Tzuo recognized Zuora’s rate of growth would be dependent upon actions in these three dimensions — geographical expansion, vertical expansion and product expansion. As to the first, he needed boots on the ground in major markets around the globe. He began to organize sales teams by region, by vertical and by company size. This rationalization ensured salespeople could better understand their prospect’s needs. Vertical expansion was supported by product customizations, such as the launch of “Z-Commerce for Facebook”, and “Z-Commerce for the Cloud”, and “Z-Business for Media”. SaaS, media, e-commerce, IoT — supported verticals continued to expand in the period from 2015 to mid-2017.

Build Out the Product

In the years leading up to this stage, much work had been done in the product domain. Z-Billing was the first product to be released, followed by Z-Payments, Z-Commerce, and Z-Force. Business development played a key role in the product and its value proposition. Integration partnerships were launched with PayPal, Salesforce, NetSuite, Workday, Sage, Intacct, FinancialForce and Leeyo. For a solution that sits in the middle of enterprise workflows, these integrations were pivotal.

But Zuora’s vision was to deliver a comprehensive enterprise solution in the space between the CRM and the ERP, and in early 2015 holes remained. To fill them, Tzuo unleashed product development, business development and corporate development. From 2015 to mid-2017, Zuora expanded integrations to include new global payment players (such as Stripe, Worldplay, Ingenico and Adyen) and tax platforms (such as Avalara). It bought Frontleaf, a customer health analytics platform that powered the launch of Z-Insights. And it bought Leeyo, a company that had mastered the complex rules around revenue recognition for subscription companies — which powered a new product called RevPro. Zuora also launched Z-Connect, an app marketplace customers could leverage to further configure their solutions. These acquisitions and product launches filled big holes. They enabled a comprehensive repackaging of the product suite. In early 2017, Zuora announced its order-to-cash hub, called Zuora Central.

Finally, Zuora could offer large enterprises around the world a fully integrated solution inside the space between the CRM and the ERP, a system capable of managing the complexities inherent in subscription-based businesses.

Elevate the Technical Environment

By 2013, it had become clear that the Zuora technical platform had become a growth-limiting monolith. Different customers were on different versions of the stack. Customer comments online revealed a disturbing pattern: early in the month, when most companies executed their billing runs, the Zuora platform would slow to a crawl. It was a major source of customer frustration. Furthermore, the stack’s monolithic nature meant that every enhancement needed to be released with great care, lest a bug take down the entire system. Given the mission-critical nature of Zuora’s role in the enterprise, any system outage was intolerable. This reality put a break on innovation.

Tzuo recognized he would need to unleash a big refactoring initiative. The entire architecture of the system would need to be rebuilt. The monolith would need to be decomposed, component by component, into independent modular “Legos” — called microservices. Only with a microservices architecture could the stack begin to deliver the low-latency responsiveness, failure resilience, ramp up / ramp down elasticity and easy modifiability that the company and its customers now required. He knew it would be a five to seven year journey, and that it would cost millions — but it was necessary.

In 2015, Tzuo brought in Brent Cromley, now SVP Technology, to lead the charge. As the Minimum Viable IPO Path stage commenced, Tzuo committed the necessary resources to this critical journey, knowing the full benefits of this work would not be achieved until years later. It was a bold and brilliant decision, one that has just recently begun to pay its full rewards (as of this writing in 2021).

Optimize the Revenue Engine

Tzuo also needed to further elevate the maturity of the revenue engine. He knew that the company’s early successes had been achieved via grit and determination more than repeatable socio-technical systems. That “hero” approach just didn’t scale. Tzuo understood that the team would need to make the engine repeatable, in every region, for every vertical, at every step along the customer journey, at the intersection of people, workflows, technologies and money flows. This would need to happen from bottom to top — from the frontline, to supervisors, to managers, to directors all the way up to VPs — and across the functions of marketing, sales development, sales and customer success.

Tzuo invested to tighten the Zuora brand identity. He anchored that identity around the word “Freedom”, evocative of the increased flexibility Zuora delivered its customers. Then he customized the Freedom theme by the three primary vertical segments: for B2B, “Freedom to Grow”; for B2C, “Freedom to Experiment”; and for large enterprises transforming into subscription models, “Freedom to Reinvent”. The brand identity architecture then informed messaging playbooks, from the style guide to playbooks for growth marketing, product marketing, sales development, sales and customer success.

Tzuo also sharpened the shift-in-the-market-to-subscriptions messaging, evangelizing the “Subscription Economy” theme around the world. He also worked to establish “Relationship Business Management” as an accepted new category (though perhaps with less success).

Strengthen Unit Economics

The team also worked to strengthen unit economics. Tzuo focused on churn, moving net revenue churn from around 99% to about 105% during this stage. He knew this would directly improve LTV, giving him more maneuvering room on the CAC side of the equation. Product enhancements, especially the launch of the RevPro revenue recognition module that had emerged from the Leeyo acquisition, proved significant in reducing churn and strengthening the LTV profile.

Strengthen Competitive Advantage

Since Zuora plays in the middle, between the CRM and ERP systems, the competitive dynamic was and is fascinating. As CRMs like Salesforce sought to expand their footprints, they began to extend into Zuora’s space. So too with ERP systems like Oracle, NetSuite, Workday and SAP. Initially purpose-built for a transactional, product-based world, these large ERP players saw the subscription shift and began to work furiously to refactor their systems so they could serve subscription-based products. Even more, a series of niche players have begun to emerge — including Aria, Apptus, Recurly, Chargebee; and single-feature players like Gainsight and Stripe. The dark side of a large “in the middle” product footprint is that you step on lots of toes.

Because of this, it is all the more important to focus on building sustainable competitive advantage. For Zuora, the available pathways as the company entered this stage were as follows:

  • Brand (naming the market shift as the “Subscription Economy”, naming the category as “Relationship Business Management”, and associating the Zuora brand as the leader of this shift and in this category)
  • Counter-positioning (offering a usage-based pricing model that large ERP players initially found difficult to copy due to damage to their own license-based business models)
  • Switching costs (perhaps the strongest advantage, given that the complex integrations “in the middle” make change painful)
  • Scale economies (still nascent when Zuora was at this stage, though more fulsome now, as of this writing)
  • Systems power (especially the work to refactor the technical stack into a microservices architecture)

Unfortunately for Zuora, the most powerful path to sustainable competitive advantage — network effects — is not an available pathway, given the company’s product focus and business model.

During this stage, Tzuo pursued all five available pathways with great energy. These actions strengthened the company’s performance, which readied the company to enter the IPO stage in the middle of 2017. To build the brand, Tzuo launched the Subscribed conference in 2012. And in 2016 he and the company’s chief data scientist launched the Subscription Economy Index, which tracked the performance of subscription-based companies compared to those companies that were not yet subscription-based. The index showed clearly that subscription-based companies exhibit a pattern of significantly faster growth and higher market value. These actions built on the “Subscription Economy” theme, and associated the Zuora brand with the market shift.

Elevate the Team

To make all of this work, Tzuo knew he needed to build a world class team from top to bottom. He began to cultivate relationships with people that could help bring the company public, such as Ken Goldman, at the time the CFO of Yahoo — who became an advisor in 2015 and joined the board in 2017. Similarly, he made top team moves such as the recruiting of SVP Technology Brent Cromley in 2015. He worked to uplift the team at every level, bringing the most intense focus to the level below the top team.

Tzuo shifted his own leadership style from task master to coach. He knew he would need to have a strong performance-driven culture, one that valued effective cross-domain collaboration and continuous personal growth. And so in 2015 he rolled out the “five pillars” of the Zuora culture:

  • Inspire Others to Action
  • Create High Performing Teams
  • Build Cross-Functional Partnerships
  • Deliver Consistent Execution
  • Lead from Within

He initiated a 360 degree feedback program throughout the company. He adopted (from Marc Benioff at Salesforce) a new approach to build alignment and set goals, called V2MOM (vision, values, methods, obstacles and metrics). Similar to but less rigid than OKRs, the inculcation of V2MOM better balanced alignment and autonomy across the organization.

And he began to approach company all-hands meetings as if they were quarterly earnings calls — with all the requisite reporting of the quarter’s performance, along with the CEO’s business overview and opportunity for questions. This had the dual benefit of increasing employee understanding of the company’s growth imperative, while also preparing the top team for public company life.

All of these moves, taken during this Minimum Viable IPO Path stage, prepared the company to enter its next company-building stage (IPO).

Ever Since

Zuora crossed $100M in revenue and 800 customers in 2015, with about 500 employees. By FY 2017 (ending in January 2017) it had hit $113M, in FY 2018 it hit $168M — at that time boasting over 1000 customers. The company’s strong performance powered a strong IPO valuation: $1.4B on the first day of trading. As of this writing, the company’s valuation is $2.2B. The Subscribed conference now boasts thousands each year. Zuora has recently begun to build a powerful new sales channel, working through tier one system integrators such as Deloitte, Accenture and PWC.

In the years since exiting the Minimum Viable IPO Path stage, the Zuora team has continued to work on the stage’s eight steps. The team has regularly stepped back to think holistically about the business — its growth opportunities and limiting factors. Top executives have continued to pursue expansion — geographic (major focus on Japan), vertical (major focus on IoT) and product (building out the Zuora Central hub and adding workflow management tools). The work to refactor the technical stack is finally mostly complete; now Zuora can organize autonomous domain-based product teams with the freedom to innovate within their assigned domains. Work to optimize the revenue engine continues to be a major area of emphasis, across all regions. Unit economics are continuing to improve. And the company remains focused on competitive advantage — though there is no avoiding the fact that their chosen market is a highly competitive one. And finally, the work to elevate the team continues to this day.

After all these years, online customer reviews about Zuora still reference the difficulty of initial onboarding and launch. For too many new customers, it’s a painful multi-month effort to plug Zuora in. Large enterprises are complicated “in the middle” (between the CRM and ERP), with bespoke integration requirements. It’s taken time for many F2000 enterprises to fully embrace subscription-based business models. Many leaders hold back, afraid of making big changes to core internal systems. They don’t know what they don’t know. But despite these ongoing challenges the shift to a subscription economy is underway. Zuora seems well positioned to lead in a subscriptions-based world.

Summary

The story of Zuora teaches much about how to traverse the Minimum Viable IPO Path. It is no small thing to make your company ready. Tien Tzuo and his team did the job well, putting themselves in position to execute a highly successful IPO.

If your company is about to enter this stage, good for you. It means you have built a great company. If you want to get through this lofty stage and be positioned to initiate and execute a successful IPO process, then you would do well to take some pages from the Zuora playbook.

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