Few companies have grown as fast as Tesla. In particular, it grew just before and after the launch of the Model 3, the first affordable EV.
“We expanded Tesla from $2 billion in revenue to $2 billion in revenue in 30 months,” Jon McNeil, former president of Tesla, now co-founder and CEO of DVX Ventures, told Crowd at TechCrunch's All Stage event in Boston.
It wasn't McNeill's first scaling company, nor was he his last. Previously, he founded six different companies, and after Tesla he joined Lyft as COO before starting his own venture company, where he launched 12 startups.
Over the years, McNeil has developed playbooks that help companies identify when they are ripe for scaling. He shared these insights with an audience at TechCrunch All Stage 2025 last week.
When assessing the size potential of a company, McNeil primarily reviews them with two different measures that fit the product market and fit the market. It is not uncommon for investors to concentrate on these concepts, but McNeil distilled them to two objective measures.
Regarding product market suitability, ask each startup “40% of customers say they can't live without your products.” Otherwise, the company is not ready.
“We're continuing to add, add, add, adjust products until it's 40%, and then we're fine, boom, now it's good for the product market,” McNeill said. “It's actually objective and measured. It's not emotion, it's not sense. It's metrics.”
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“We did research on companies that actually achieved breakouts, and those companies achieved breakouts at almost 40% acceptance levels,” McNeill said.
Second, McNeill considers whether the company has a strategy that is available in a mature market. Specifically, he is interested in whether the amount the company spends on acquiring a customer known as the cost of customer acquisition (CAC) is well below the total lifetime value (LTV) that the customer raises the company.
When a company starts withdrawing four times the amount of money over the life of its customers, it's when you know that the LTV-to-4-1 CAC ratio – is more than you spent to win it – the company is ready.
“Then we pour cash. But before that, we've cashed $100,000 at a time just to get to another stage gate,” he said.