This story was first published at CNBC.com under the title, “CEO of billion-dollar Zuora reveals a key management lesson he learned the hard way” by Serena Lin.
Tech veteran Tien Tzuo led his cloud-based software company Zuora to become the latest billion-dollar unicorn after an IPO on April 12.
Founded in 2007, the San Mateo, California-based company provides billing services for subscription-based businesses such as the Financial Times and Box. The stock price soared by 48% on its opening day, and Zuora is now valued at over $2 billion.
The 50-year-old co-founder and CEO tells CNBC Make It he’s learned the hard way that relationship building is key to effective leadership at a big company.
Growing up in an Asian immigrant family in the ’70s in Brooklyn, New York, Tzuo inherited a goal-oriented entrepreneurial working style from his parents, but building relationships and giving praise to people weren’t his strong suits. “I didn’t need praise, so I didn’t understand people who need praise,” Tzuo says.
The Stanford MBA became a well-known Silicon Valley executive while working as the chief marketing officer and chief operating officer at Salesforce. But he says he wasn’t a stereotypical manager. “I don’t wake up in the morning thinking about what you need to be successful, what your obstacles are and how I can remove them,” he told the New York Times. “I’m out there talking to customers. I’m always there to help, but I’m not actively thinking about it.
His high-intensity but impersonal leadership style sent Zuora into a management crisis in the early days.
In 2011, a few early staffers who Tzuo had hired from Salesforce left the company. “I thought they would stay for the whole journey,” Tzuo recalled. “When they left, I had a strong personal feeling of rejection.”
That’s also when Tzuo went through a 360-degree review with Richard A. Hagberg, an organizational psychologist who consulted for tech companies like Twitter and Dropbox. Tzuo took the Three Pillars of Leadership test, and the results showed that he ranked highest in the category of Visionary Evangelist but low in Relationship Builder.
“As an entrepreneur, you are always exercising your dominant hand, which is focusing on the vision and driving people to do work.” Thinking back, Tzuo said his early leadership style might work for a small start-up but not when a company reaches a large scale.
Tzuo decided to make changes. At Hagberg’s suggestion, he read through the book “5 Dysfunctions of Teams” by Patrick Lencioni. Now he looks for the best in his staff members and makes an effort to praise them.
He also changed the culture of the workplace: Once a week, he takes his management team out for dinner, and every quarter, he takes his direct staff for offsite team-building activities. The last one was in Berkeley, California, and he even flew in employees from the East Coast offices.
The company also gives out a “Z-Awesome” award every quarter to two individual employees and one team across its global offices, based on peer nominations.
Zuora now has almost 1,000 employees around the world. In April, it was named one of the best Bay Area companies to work for by Silicon Valley Business Journal.
When asked what he would change if he could go back in time, Tzuo says he would’ve spent more time on building the company culture in the first few years. “Maybe we’d still arrive at the same place, but just a year or two faster.”
“Your company succeeds not with just a hit product,” Tzuo says. “It succeeds because the whole organization of people stay for a multi-decade period of time to achieve the mission.”