Sign up to receive 5 free days of our daily summary for tech news.

Selling Outside the Startup Box

Last spring, HR automation platform Zenefits realized it had a problem: It was too reliant on other young tech companies as customers to keep up its growth rate. Not wanting to be typecast as a service provider for startups, Zenefits deliberately looked outside of tech for new business.

While finding non-tech firms harder to sign up than technology ones, Zenefits still made inroads. About 75 percent of new customers are now non-tech and non-Californian, says Parker Conrad, the CEO of Zenefits, compared with 90 percent tech companies mostly in California previously.

“We just changed who we were going after,” Mr. Conrad said. “It turned out there wasn’t much we needed to do.”

Startups often sell their products and services to other startups to gain initial traction. But an over-reliance on startups can pose a risk for future growth—especially if venture capital funding dries up and startups go out of business. That’s what happened during the dot-com bust of 2000, magnifying the impact of the downturn.

No subscription? You're missing out.

Join the high-powered community of tech and business leaders who rely on The Information's original news and in-depth reporting.

These days, Amazon Web Services, Microsoft and Google are all offering lines of credit to startups for their cloud platforms, which provide the modern infrastructure for startups. Neither company has disclosed the scale of the programs.

Jessica E. Lessin and Matt Ocko commented on this article.
Read comments from top tech and industry leaders
Joe Lonsdale
Joe Lonsdale
Founding Partner, Eight
Chamath Palihapitiya
Chamath Palihapitiya
Founder & Managing Partner, SocialCapital
Tina Sharkey
Tina Sharkey
CEO, Brandless
Jonah Peretti
Jonah Peretti
CEO, Buzzfeed
Adam D'Angelo
Adam D'Angelo
CEO, Quora
Brit Morin
Brit Morin
Founder & CEO, Brit + CO
Dustin Moskovitz
Dustin Moskovitz
Co-Founder, Asana
Christina Miller
Christina Miller
President & General Manager, Turner
Max Levchin
Max Levchin
CEO, Affirm
Adam Mosseri
Adam Mosseri
Director of Product, Facebook
Alex Mather
Alex Mather
The Athletic
Martha Josephson
Martha Josephson
Partner, Egon Zehnder
James Murdoch
James Murdoch
Co-Chief Operating Officer, 21st Century Fox
Andrew Kortina
Andrew Kortina
Founder, Venmo
Ben Chestnut
Ben Chestnut
Co-Founder & CEO, Mailchimp
Ruchi Sanghvi
Ruchi Sanghvi
VP Operations, Dropbox
Login or Subscribe to follow the discussions happening here and real-time in our   Slack Community.
“The startup community is like a sharp knife. If handled effectively, it’s a really good way to go for startups. But if not handled appropriately, it can really be deadly. You can make some real mistakes,” said Kenny Van Zant, business lead at Asana.