Few companies are as fast as Tesla, especially before and after the company launched the Model 3, its first affordable EV.
“We scaled Tesla from $2 billion to $20 billion in 30 months,” former Tesla president Jon McNeil, now co-founder and CEO of DVX Ventures, told TechCrunch’s full-stage event in Boston.
This is not McNeill’s first expansion of the company, nor is it his last. Previously, he founded six different companies, after Tesla, he joined Lyft as COO before starting his own venture capital firm, where he founded twelve startups.
Over the years, McNeil has developed a script that can help him determine when the company matures to expand. He shared these insights last week with TechCrunch All Stage All Stage 2025.
When evaluating the company’s expansion potential, McNeill mainly follows two different measures, product market fit and entry market fit. It is not uncommon for investors to focus on these concepts, but McNeil distils them into two objective measures.
For the right fit for the product market, he asked every startup: “40% of your customers say they can’t survive without your product,” he said. If not, the company is not ready.
“We’ve been adding, adding, adding, and tuning products until we get to 40%, and then say, well, boom, now we’ve fitted the product market,” McNeil said. “It’s actually objective. It’s not a feeling, it’s not a feeling. It’s a metric.”
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“We did a study of businesses that actually achieved breakthroughs, which achieved breakthroughs at about 40% of the acceptance levels,” McNeill added.
Second, McNeil looked at whether the company had a mature listing strategy. Specifically, he is interested in the amount of the company’s spending to acquire customers (CAC) (CAC) is enough to be less than the total lifetime value (LTV) brought by the customer.
When a company starts to make four times the money in a client’s life, rather than the cost of acquiring them, the LTV to four-to-one CAC ratio – this is when he knows the company is ready.
“Then we poured in cash. But before that, we just wanted to get to different stage gates at a time, we spent $100,000 at a time,” he said.
