Last month, we took Paris by storm when we hosted 1600+ SaaStr fans from around the world at our inaugural SaaStr Europa. One of the event’s most anticipated sessions featured SaaStr Founder and CEO Jason Lemkin onstage with Zuora President Marc Diouane, discussing the company’s recent IPO, how to approach hiring internationally, and much, much more. Check out the full session video and transcript below!
And we’re doing it all again, even bigger and better, next year! Don’t miss out on two full days of thought leadership content, networking opportunities, fantastic French food, and fabulous evening events, all in the heart of Paris — snag your Europa 2019 tickets and catch up with us on the other side of the Atlantic next year!
Transcript:
Jason Lemkin: What does Zuora mean? I should know this. Where’s the name from?
Marc Diouane: We have three cofounders, Tien Tzuo ‑ you can see the Z‑O‑U ‑ we have Cheng, and we have K.V. Rao.
Jason: Ah!
Marc: They put all the letters of their name there.
Jason: They mixed them up.
Marc: Exactly.
Jason: Then it was Zuora.
Marc: It’s exactly this.
Jason: What is interesting about it is actually most people will not mispronounce it. It is phonetically understandable even with that. No one says Zoowari. They pretty much get it right, don’t they?
Marc: Some people here in Europe, they will see Zorro, Zora.
Jason: Zorro?
Marc: Yeah. [laughs]
Jason: How about on the roadshow with Wall Street, did they get it right?
Marc: They got it right.
Jason: They got it right? Zuora.
Marc: The only problem is Z, the last letter of the alphabet.
Jason: That is a downside, isn’t it?
Marc: When you search… [laughs]
Jason: That’s true. You probably have to do just a little bit more PR than if you’re…
Marc: I agree.
Jason: Who starts with A? Who’s gone public that starts with A? I should know this.
Marc: Adobe’s one of the big ones.
Jason: Adobe, but they’ve been around for a while. Which of the new IPOs starts with an A?
Audience Member: Atlassian.
Jason: What’s that? Oh, Atlassian, of course. Of course, they come…Every public equities market, they’re going to start with Atlassian.
Marc: It’s when you [inaudible 1:30] remember.
Jason: Yeah, good. Are we ready from an AV and everything perspective, maybe? Thumbs up, yes? We’ll start. We’ll keep it informal. This’ll be a great session. Marc and I talked about chatting a long time ago, and then when we got together, this idea, I want to talk about a couple things first, but your first 1,000 employees.
It’s crazy. You were telling me when we met last, you’ve got to hire 400 employees at Zuora in the next 12 or something months?
Marc: In the next 12 months, yes.
Jason: Which is crazy. I think for a lot of us as founders, this is one of the most challenging things to learn about. It seems like the hardest thing is to recruit your first management team. Then you learn you actually have to recruit your second management team as part of your first management team.
Then people ops just gets crazy. I do want to spend most of our time talking about that. Before we get there, a couple things. Zuora IPOed when? Everything seems, it’s going so fast today. Two months ago, three months ago? It seems like four years ago.
Marc: Two months ago.
Jason: Two months ago? Is it a blur for you, or is it just a blur for me?
Marc: It’s a memorable moment, somehow, in the company history, but I don’t remember it already.
Jason: You already don’t remember it?
Marc: It’s already behind us. We have a big sense of responsibility now, unforgiving markets.
Jason: When I wrote this, there were 12 SaaS cloud IPOs already. Now, it’s 15 this year. Why did everyone wait until 2018?
Marc: The market is good.
Jason: The market is good. Is it that simple?
Marc: In reality, I don’t think they’ve waited to 2018.
Jason: They were just waiting?
Marc: You have to go whenever you are ready, regardless of the market condition. This is reality. ’18 has been a great year, the right timing for us, but we could have gone last year, one year earlier.
Jason: You could have gone, right? I know this is hard to quantify, but how hard is it to IPO? It seemed, and I chatted about it briefly earlier, the first SaaStr Annual, Aaron Levy was kind enough to come one week after the roadshow.
That was the first SaaS IPO of this generation. To paraphrase him, it was hard. It was hard. Wall Street didn’t understand recurring revenue. Multiples were lower. It’s always hard, but how hard is it today to IPO?
Marc: It’s hard for the people here. You have to be dreaming already big, and have a big vision for your company. I believe the IPO should be the target discussion number one. Then the second one, maybe to be acquired. Try to avoid, basically, to die slowly somehow.
[laughter]
Marc: You should be aiming for IPO, for sure. You should be aiming. Since I joined the company back to five years ago, I joined the company, because I wanted to have an IPO experience. Before Zuora I joined the company, that’d be two years IPO.
We built up a business from almost $150 million to $1 billion in 10 years. Starting small and building piece after piece of modernization, it’s extremely difficult, but extremely rewarding as well.
Jason: Let’s talk about that just for a second. You joined Zuora about five years ago. How many employees were at the time?
Marc: At the time, we were roughly 200. 130, 150 in the Bay Area, and 60 people in Beijing.
Jason: You joined as president. If you can remember, roughly how much ARR or revenue did you have back then?
Marc: Probably less than 30. Subscription revenue was probably around 25, 26.
Jason: 25. Just to finish the IPO thing, and then let’s talk a little bit. If you’re at 25 million ARR ‑ which can seem like a lot, but more of us can see it these days ‑ and you’re growing at a decent clip, can you IPO?
Should you feel comfortable that you can go for it? How did it feel then? Did you feel like you could go for it at 25 million?
Marc: I believe, certainly, that the revenue today has to be probably higher. A couple years ago, that’s $100 million. Even company went out, I would say less than $100 million. It’s a combination of revenue size, total addressable market.
It’s also organizational readiness. I will say the organizational readiness is probably more important than revenue.
Jason: Let’s talk about that. Just today, in 2018, when is inevitable? In other words, how big and how fast are you growing? Looking back in time, when as a senior executive or founder, you can say, “Look, I’ve got a shot at IPOing.”
What is inevitable? Is it 20 million, 40 million, growing 60 percent? Do you have a rough sense? When does inevitability come in, now that you know the market cap?
Marc: At $25 million my first year, we almost doubled. That means we were growing at 85, 90 percent, at $25 million. When you start to reach the $100 million mark, if you can sustain 30 to 40 percent, it’s probably minimum requirement to be able to go IPO.
Jason: For sure. Maybe growing 80 percent at $25 million, we can call inevitable, for purposes of today?
Marc: I will say yes.
Jason: OK, good.
[laughter]
Jason: Then I want to spend most of our time talking about people, but let’s talk a little bit about going upmarket. You joined Zuora early, but I met Tien I think when he was still at Salesforce. Then I remember he came to my office at Echosign, probably almost pre‑revenue.
Wanted to build almost a self‑service, low end company that would have looked a lot like, I don’t know, Stripe’s newest product, or things like that. Now, you’re doing huge enterprise deals. What are the learnings for folks for going upmarket, both in general, and even from a founder’s vision?
What are the lessons for Zuora, because Zuora has gone very upmarket?
Marc: You are right. We started with mainly the SaaS cloud. The way that I have to position it, you need to go, I will, toward back into the least friction path to revenue to reach a certain scale.
Then if you want to grow fast in the cloud enterprise business, you need to go upmarket. In Zuora, we did it a little bit different than most of the SaaS companies. We wanted absolutely before going IPO to build up all the potential growth levers that we will need post‑IPO.
We are multi‑segment. We cover startups, because you are the disruptors in the market. It’s really important to use you somehow to disrupt the big ones. We have the enterprise space. We have the strat space.
We cover all the segments. We are international. We have two beachhead products, really two separated sales organizations. We had really planted somehow our seed in all the levers that we might need this year or next year to be able to keep the 30, 40 percent growth year over year.
Jason: The startups you talk about even today at Zuora’s scale, the year you sign them, they’re not going to have a huge impact on your revenue, right? You’re hoping that they will grow, that the Boxes and others, will grow into your big customers.
How do you resource them? How do you comp the sales reps? How do you do marketing spend when the first year ROI might be limited, but the total value could be jaw‑dropping? How do you do that?
Marc: It’s a tough market in the sense where I believe it’s only 0.1 percent of the companies are reaching, I will say, the $100 million mark.
Jason: Yes.
Marc: The last ‑ stop me if I am wrong ‑ I believe 2 out of 20,000 goes IPO.
Jason: Two out of…?
Marc: 20,000. It’s a lot.
Jason: How do you invest in those seeds when you’re an enterprise product?
Marc: You need to strike the right balance. In that market space, we have a lot of attrition, a lot of churn. We have probably 43 percent churn. That’s companies going out of business or being acquired. We started like that, and we’ve been mainly focused on that market today.
We really try to self‑service as much as you can. You need to build up, I will say, technology and to improve your software to make sure that it has as much self‑service as possible. Try to really focus most of your investments towards the large accounts.
Jason: One more business model question, and then let’s talk about people. I may have a little bit of the Zuora story off, but I think as you’ve gone bigger and bigger, Zuora has solved bigger and bigger problems in terms of managing how folks manage subscription revenue.
As part of that, you have to do more services, more customization, more extensibility. What have you learned? When founders start off, you want everyone to use the same version of your product. With Zuora, it would seem to me, would be a product that if you didn’t stop the customers, at some point, they might give you $10 million, $20 million, but you build a custom piece of software for them.
How do you know where to draw that line between a big check, but all of a sudden it’s a one‑off product?
Marc: You have to have a vision and stick with that vision here. We never wanted to build up a highly customized software for one specific customer. Moving up markets, I call it, positive frictions in the system.
If you stay around the lower end, you will never be able to change enough your production organization, to be able to add some more to the product and try to expand the footprint of the product. You have really to carefully choose your customers.
What we did, we spent a lot of time trying to think about our sweet spot. I said, “We can cover many vertical markets.” We said our sweet spot is with SaaS cloud technology companies, hardware, IoT, and media. We stayed around that. As long as the dimension and the marketing, they can generate the lead from the three vertical markets, we agreed that we should service those customers.
Obviously here the bigger they are, the more complex they are. You need to push your product organization, to be able to add more to the product and avoid any customizations. To service those customers who said product first, then we built up what we call these connect apps.
We had an organization that didn’t do customization. If a customer needs something that is different from the others, we need just to make sure that it might be reused for other customers. We built that up, and then at last resort services customization.
Jason: I’m guessing just today when a hot lead comes in and it’s let’s say a Fortune 2000 company, I bet the sales team really wants you to build something very custom to get that seven‑figure deal, don’t they? We all have experienced it, but my guess is Zuora has a lot of those stresses. The sales team comes in…
Marc: Completely.
Jason: …I can close a $2‑million deal, but I need about six months of soft custom software. How do you handle that, when sales comes in with that hot deal? It’s true. You need that.
Marc: You have to have the ability to say no. We are blessed in a certain way because we don’t have that much competition in our markets. The only option for those large companies is SAP and Oracle. SAP and Oracle, they cannot cover all what they need. It will be anyway large customizations.
From the scope of our solution, our solution covers already much more what can Oracle or SAP cover to the customer. From that perspective, we didn’t have the big push or big basic pressure from the competition, to be able to fall in the trap and try make it to offer anything the customer wants to do and to customize the solution.
Jason: Sometimes it’s actually competition that pushes you to customize more than you like. If the competition is going to do it, can you risk losing the deal? It’s stressful. It’s stressful.
Marc: I agree with you.
Jason: Yeah. It’s stressful.
Let’s talk a little bit about this idea of hiring 400 employees a year. First question…before we even get there. Does it ever get any easier hiring? Hiring is so hard. Does it ever get easier?
Marc: It will never get easier.
Jason: Never get easier?
Marc: Despite the fact that we have a critical mass 1,000 people. It’s never easier in the sense where you have probably a better brand recognition, more stable organization. You might be able to attract different type of people. The people that work for a startup are certainly different than the people that would work for a large organization.
The hiring is still a difficult exercise, and it’s extensive human capital business. You have absolutely to be careful regardless of the size of your organization, to have really clear processes in place to be able to hire the right people. We’ve made a lot of mistakes as well.
The growing pain of any company, making mistakes and learn from the mistakes. I have the tendency to say that, you grow in the form of plateaus. That means you have fast growth period, followed with a plateau to digest back at the growth, and then learn from that and grow again.
What’s helped us a lot…we really got all the organization and we have defined what we call a hiring profile. Let’s make sure that across all the company, regardless of what the person will do, we need to make sure that we have a consistent characteristic of the people that you want to bring in the company, in making sure that you can be consistent with your core values and the culture of the company.
That’s helped a lot. As soon as we establish that profile, it’s got at least much more easier. It’s almost like a common language we need in the organization when it comes to hire the people and onboard the people.
Jason: How do you get managers to go along with that? How do you get managers to agree? Everyone’s under pressure to hire, and many managers want to bend those roles. I need to get someone in this next week.
Marc: Let me tell you a story, that’s been the learning. Regardless of how many years of experience…and I hired thousands of people in my 25 years’ experience. At Zuora, back to calendar year 2015…’14 we did extremely well. Almost grew by a 100 percent.
Jason: It’s crazy.
Marc: We said, “We’re going to invest a lot.” We raised a lot of money. We raised $150 million and we said, “This is our time. We need now to invest in growth.” We hired almost 50 account executive, a lot of managers, but we didn’t have that profile. I used to interview everyone.
Since we hire managers, I said, “We’re going to trust those guys.” We will empower those guys to hire. We hired almost 25 reps. I walked into a room where we did the onboarding. Just looking to the people in the room, I said, “Wow. We are really in deep trouble here.” Those people aren’t the people that will be successful in this company.
Jason: Just looking at them you could tell? Just physically looking at them?
Marc: Just working. Just working the room, hearing the people, looking at people. I said, “It’s not really consistent with what we want to see in the organization.” That year, we had almost 30 to 35 percent attrition because we have to replace those people, spend a lot of money, obviously, here.
This is the year where we call the plateau of the company. We grew 25 percent versus the 40 percent we were aiming for, but we have to learn from that.
Jason: That was directly correlated to attrition.
Marc: Completely.
Jason: That’s interesting. We all, especially as founders, we want to empower our managers. We want to say, “Go out and find the best people. I trust you. I believe in you,” but if you want to build a consistent culture, there’s limits to that, right? They have an incentive to go out and hire whoever they can, to finish the job right.
Marc: They cannot. I have a theory around that.
Jason: They can’t anymore?
Marc: I call it the submarine theory there. Even with 1,000 people. You need to be capable to stay on the surface, but you have to be capable to go deep whenever you need it, and going deep in the organization. That means you have to stay closer to people.
I like to be closer to people. I will go talk to the sales, the manager, and lead gen engineers, just to check if the managers…they are really making a consistency with the profile we have established in the organization.
Jason: Let’s talk about a topic we talked about when we met before this. I like to work with people forever. I enjoy no attrition, long‑term relationships. What have you learned? What’s the half‑life of a VP? Especially for folks here, you’re going to work so hard to recruit your first and second management team.
It’s just exhausting to think about having to hire another VP of Sales, another CMO. What have you learned? How long does a VP last?
Marc: Depending on the maturity of the company. Obviously, I have said before, each maturity phase of a company requires some type of different talent and profile.
Jason: Different talent and profile.
Marc: You have to be cognizant of that, and to be able to understand really quick the limit of the people. I have the tendency to say, “No compromises.” At the end, it’s about the business. That means it’s not only you. It’s the people working in the company.
You have to be able to pull the trigger and say no, or potentially change a person, whenever you think the person, a certain level of seeding in terms of competency there to be able to grow again.
The growth of the company is directly correlated of your ability to bring the right people into the organization at the right time.
Jason: It is. Zuora’s maybe 11 years old, 10 years old?
Marc: It’s 11, yeah. 11 now.
Jason: 11. How many VPs made it five years at Zuora?
Marc: Very simple here. If you look to the E staff, the E staff, we are only three that’s been in the company more than five years.
Jason: Three.
Marc: The CEO, the CFO, myself, that’s been in the company more than five years.
Jason: That’s an interesting trio. It’s the COO and the president. Hopefully, they stay, and the rest of the management team had to be rebooted as you scaled, right?
Marc: Completely. This is the learning. This is what I said. I don’t know any company that will have a smooth ride, unless you are a Facebook, Google of the word, Snap of the word, but you don’t need to have complex organization to be able to scale your business.
You need absolutely to really look at the people and say, “I have reached $25 million. For the next couple years to get $41 million, I might have to think about different people.” Learning those plateaus, as I call it, when you stall, you have troubles, products go to market, the management legion, they are directly correlated to leadership.
It’s the leadership. At certain point, they are not capable to do it in different ways, to be able to scale, and to continue to grow as an organization. You have to have the courage sometimes to say, “You are not the right person for this type of company at the stage where we are.”
Jason: You talked about the plateau year, when you had challenges. When someone’s done a great job as a VP, but you’re not sure how long they’ll last, do you wait until they have a rough quarter or two? Do you make a change before you can see it in the numbers?
They’ve earned it, right? You know it, because you can see it out there, but the numbers haven’t shown it yet. When do you make a change for someone that’s done a great job? That’s a tough one.
Marc: It’s tough. You have to be careful as well to stay back, making sure that you are giving the right environment for the people to be able to make it as well. Sometime, you might hire the right person, but that person might be in the wrong back end environment management team.
You need absolutely to get involved to understand if the people will make, and if the people, they have the right environment. In general, we are giving to the people two quarters. If you take a VP, you will give them probably six months. Six months, you stay close to them.
Jason: Six months to succeed?
Marc: To succeed, exactly.
Jason: Then how many, you give them two rough quarters before…? What about the other side? Six months, if they don’t make, you have to make a change. Then what about a potential decay?
Marc: Then ideally, you don’t have to wait until they will have some rough quarter to really understand. A VP is a leader, usually is managing people. You know, talking to the people, if the person is really deeply involved, if the person has the juice to be able to overcome the challenges, and how the people is involved in the business.
You know that all. You have absolutely to stay in very control of the organization. You have to be paranoid. You know that if today, it’s working well, it’s going to break somewhere. You have to stay paranoid and stay close to the people to understand if your managers, they are doing what they’re supposed to do.
Course correct according to the feedback you are getting from the people.
Jason: Let me ask you this one question, then I want to go onto something else. This is one I still struggle with, which is how do you top someone? If you have a good VP, and you need a next VP, how do you do that?
When do you do it, and how transparent are you with somebody, especially someone who’s very passionate about what they’ve done? I don’t know how to do this well.
Marc: We really work with external people to be able to do that. We have some external coach sometime.
When the people, they really reach a certain limit, and the people, they like the company, they like what they do, and they want to do more, obviously, it’s a tough conversation to tell to the person that you will not get promoted, or you will not keep your current responsibility.
Usually, we have HR structure and business partners, and we work really closely with the HR organization to be able to coach some people. You have to be transparent as well. I had to do it many times.
We have people that’s been in the company seven, eight years. We want to keep those people, but it’s really important to give them the right job. They used to manage one entire organization when the organization was half of the size of today.
You need absolutely to be capable to bring people from outside, or promote the people from inside, and reduce the scope of responsibility of those guys. You have to explain them. Really, transparency is the key at the end of the day.
If the person is motivated to stay in the company, and he likes or she likes what they do in the company, I believe that they will accept it as long as you can invest in them.
Jason: If you’re going to do a search for that boss, you talk to the person, you tell them, “We’re going to look for your boss,” then you go out and do the search, and they may have to hold that job for another three to six months, even though they know they’re not going to have it? How do you handle the search part of it?
Marc: Usually, in our situation, hiring 400 people, you need to hire 10 to 15 percent of the 400 in managers. We open the req. We see outside. In the Bay Area, it’s very difficult to hire. Sometime, the lead time could be six months to nine months. You don’t want to create somehow drama in the organization.
Jason: How do you handle this? I don’t know.
Marc: I like in general, if it’s a really sensitive search, I will go outside, interview the people. If I have someone that I like, I will have the person also interview his boss, and making sure that person is in the loop.
Talk to the person, and having him in the loop to be able to interview the person. The people, they have to be self‑aware. If he’s self‑aware, and he’s a major person and leader in definition of the company, that person should be capable to see that potential candidate and say, “I can learn from these guys.”
Better for me to work with someone I like, than being forced to work for someone that I will not be in the loop to interview.
Jason: Let’s go back to an interesting point you talked about earlier, which is the rough year. I wrote years ago about my own one. I call it the year of hell. I think everyone has a rough year. Everyone has this challenging one.
You joined Zuora, and all of a sudden, you go from 25 to 45 in a year. It’s hard, but it seems so easy. Then you reaccelerate later in IPO, but there’s a rough year. We talked in particular about recruiting. Most of us will go through a period where we’re hot, then we’re less hot, and we’re more hot.
How do you recruit, especially in a hot market like the Bay Area, when you’re not hot anymore? How do you go out and say, “Well, we’re not growing that much this year, but last year was great, and we hope to grow again a lot next year”? How do you have those conversations in a competitive market?
Marc: It’s tough. Back to that calendar year 2015, it’s my year of hell, like yours. It was a really difficult year. Difficult year, because when you don’t grow at the pace that the people, that meaning the employees, are expecting you to grow.
In the Bay Area, if you are growing less than 20 percent, you are in the category of the companies that will die slowly.
Jason: Everyone knows. All the employees know. Everyone knows.
Marc: Everyone knows, exactly. Then it’s not only about hiring, it’s about retaining the people. That year, I’ve lost more of my sales operation.
Jason: They just picked off, right?
Marc: It’s exactly right. They’ve been hired. Those people, they don’t believe anymore. You need, there is a lot of communication. Have the people somehow a part of the plan. Get them more involved, a lot of town hall meetings, a lot of communication, making you retain the people.
I believe the leadership is really key. That year, what really helped us to retain the maximum number of people, we had a strong first line management that really clearly understood that it’s not a company problem, a market problem, it’s really growing pains somehow in the organization.
That first line management to help us to retain the people and cruise through that 2015 year.
Jason: When you have tough patches, do you tweak the sales comp plan so that people are a little bit better compensated?
Marc: We did that.
Jason: You have to do something, don’t you?
Marc: That year, we changed our compensation almost three times that year.
Jason: Three times?
Marc: Exactly.
Jason: That’s almost whiplash. It’s too much, isn’t it? It’s close.
Marc: [laughs] For the first line management across the company, that’s only sales, we gave them 100 percent of their bonus that year just to retain the people.
Jason: Then next year, you walk it back when the growth comes back, and that’s OK? People understand that?
Marc: The people, they understand that. It’s what I said before, the management. You need to have transparency, good communication, having them as a part of the solution to solve the problem that we are facing, too.
To make sure they can understand it, and they can believe in what we are doing there. It lasts, what, three quarters, and they can see that the business was back again. We had almost three rough quarters, and then the fourth one, all the changes we’ve made start to really pay off, and we start to see some growth trajectory.
Then ’17, ’18, ’19, we’ve seen the acceleration.
Jason: Just one more on that point, and then I’ll move onto a different point. It is so important, because a lot of us will make this mistake. When you had the rough couple quarters when you went like, you had to pay the sales.
The sales team has to make their commission. You have to make a living wage. You have to find a way. Sometimes, as founders, we get upset. We’re like, “If we missed the quarter or two quarters, you’re not going to get your bonus, either,” but you’ll lose the team if one way or another, they can’t make a competitive wage, won’t they?
Marc: Completely.
Jason: You have to find a way.
Marc: Good people leaving will cost you much more than the commissions you can potentially concede and give them that year. It’s a good retention, as long as you believe in those people. Those people, they are the key to your success.
It’s an investment, but that investment will pay off. That investment paid off the following year, no doubt.
Jason: One last thing I want to make sure we get in before we run out of time, there were two other things. At least one, because you have a lot of experience here. Let’s talk about, and make flip it around for this audience.
You’ve done a lot of setting up international offices and remote offices. What are the learnings? How do we do it? Whether you want to get an office from here going in the US, whether you want to get an office in Paris going here, who should do it?
How much should you commit? When do you know how to do it? How do you get another office going?
Marc: It’s tough.
Jason: [laughs] Everything in this conversation, it’s all hard, isn’t it?
Marc: It’s hard. It’s really hard.
Jason: It never gets easier.
Marc: If it’s hard, like in your back yard, where you can see the people, talk to the people, imagine now hiring someone in Japan or hiring someone in Europe, where you are in the Bay Area, nine hours’ time difference?
Jason: How do you do it?
Marc: There is something really important. It’s the network and back channel to people. When you hire, for the people from international, I had the chance to have a really rich network that you hire the people at Zuora that you trust.
Our international expansion has been extremely successful. Most of the company, they will have probably multiple attempts to go international. In Japan, one of our competitors tried to go there five time.
They try, fired, try, fired, and they’ve never been capable to go there. We did that the first time, because we know the people. In general, for the people here, to go international, it’s even more difficult to hire the right person.
For that hire, make sure that you will put the level of investment. It’s going to take longer for that person to ramp up. It will take longer for that team to really understand how to sell, how to promote your company, and your solution.
It’s really, really important, before hiring the person, you have to do a lot of unsolicited back channel on the person, making sure you have the right one. If it’s wrong, it will cost you a lot, and you might lose potentially a couple years, or waste couple years of potential growth.
Jason: One last topic and then I think we’re out of time. A little bit out of order but one of the things we chatted about before when we talk about building a team and hiring hundreds, you talked about marketing yourself, the company, on Glassdoor and other applications.
Tell us how you do that. We have to sell ourselves so much now. What have you learned? How do you market Zuora on things like Glassdoor and other properties? How do you make yourself an attractive company to join?
Marc: It’s something that I learned along the way as well at Zuora, how to use all the social media and get the employees involved. It’s communication with the employees. You have to strike the right balance. You cannot force them to go to really write some nice reviews on Glassdoor.
Jason: [laughs] You can’t give them a Starbucks card or anything like that if they write a good review? I think it’s been done.
Marc: [laughs] We have a recruiting team. We have really a large organization responsible to recruit, enter the HR. This is their responsibility as well, to check Glassdoor.
From the executive team perspective, it’s about transparency and communication to the people. Everyone is a shareholder at Zuora. We are giving shares and stock to everyone. Everyone is responsible to put up best environment possible for our people and for our customers.
That culture I believe instills somehow a sense of responsibility for the people to talk about the company. Back to fiscal years 2015, we had lot of bad reviews on Glassdoor as well because people leave.
Jason: How do you fix it? I don’t know how you fix it.
Marc: It takes some time. When we start to grow once again, it’s naturally evolve and change. We moved almost from 85 percent I will say the CEO approval rate to almost 100 percent last year, which is really good. It’s a culture.
It’s HR. It’s communication, transparency. You have to use that because the new generation are going there. They are checking on you there before even coming. I learned it in the hard way because in the old world, you didn’t have the Glassdoor of the world. They didn’t know about the company.
Now they can really check on the management. They can check on the company. Check on everyone. You have to have a strategy in making sure that your people understand how important it is and making sure that you the HR and recruiting team that’s also really deeply involved because you might have some bad comment there that’s an unfair comment.
We had couple discussions with Glassdoor to remove because sometimes the competition will go there and add some reviews I will say about you. You have to be careful. Glassdoor, really important. G2 Crowd, very important as well.
Jason: Very last question and then we’ll break just because it always almost surprises founders how much time you have to spend recruiting. How much time do you and Tien each spend recruiting?
Zuora’s lucky. You have a CEO and a president. How much time do you each do your recruiting? How do you split it up? What percent of your year do think of your time do you each spend recruiting?
Marc: I spend obviously more time than Tien, which we agreed is for the key roles in the company, all the executive team has to interview the people. I spend probably 40 to 50 percent of my time sometime.
Jason: Just recruiting, 40 to 50 percent of your time?
Marc: This year. It’s 40 percent of the time outside of your normal hours somehow. It’s early in the morning when you have international people. It’s late in the evening in the Bay Area. You have to keep six or seven hours working else hours. It’s a lot of time. It’s almost four to five hours every day sometimes.
Jason: Every day?
Marc: Every day sometimes to really talk to your recruiting team, talk to your management. You need to have operating currents in the organization to be able to check if your managers, they are really interviewing the people. It’s really moving really smoothly, as much smoothly as possible.
Jason: Final follow‑up, when a lot of CEOs hear this, they get shocked. How am I going to find four to five hours a day to do recruiting when I have to run my company? They think that they can do sequential recruiting. Hire an executive. Take a break.
Any quick tip on how to get your head around it, how to just commit that you have to spend the time, any last tip for the folks here?
Marc: It’s a part of the management duty in the company as well.
Jason: What should you give up to get that time back? Are you allowed to give up anything? Should you drop something?
Marc: I believe you have to prioritize. It’s very difficult in your world and in our world to say I will drop this task here and do something else. I believe that you have absolutely with scale to rely on your managers.
I have an operating cans every Monday morning. I will have all the management across all the company with recruiting team. We all look into the pipeline. How many interviews? See how good are we against basing our targets. Our ability to grow today, it’s almost mechanical. It’s our ability to add more people.
Jason: But you have to have the inputs to hit the number.
Marc: It’s exactly that.
Jason: Marc, this was tremendous. Thank you so much for the time.
Marc: Thank you, Jason. Thank you all.
[applause]
