Zapier Revenue, Valuation & Funding (2024)

now this 24-year-old texted his friends a $5 billion idea but he didn't know it at the time in fact Wade Foster then turned that idea into Cold Hard Cash in 2011 when he launched zapier with his two co-founders now zapier helps you connect different apps together and build automated workflows it took them a bit but they hit 50 million bucks in Revenue in 2019 before breaking 150 million in 2021 all bootstrapped I mean imagine owning 100% of a $150 million Revenue stream now how did Wade do this how did he win so big well he keeps his customers less than 5% churn every month number two he keeps great people around him eight out of his 10 original team still work at the company today and lastly he increases what customers pay him every month by adding new features today they pay $40 per month but that's all going up over time now if you guys are in your 20s and you want to build a multi-billion dollar company like Wade you cannot miss this interview let's jum jump in hey folks if we haven't met yet my name is Nathan ladka I launched and sold my first software company back in 2015 and went on to write a book about it which you guys made a Wall Street Journal bestseller purchasing over 30,000 copies thank you so much for that after the book I launched this show and went went on to create founder path.com I raised a large fund to do non-dilutive deals with B2B software Founders so far we've invested in over 400 software Founders totaling $150 million here in 2024 we're doing three to four New Deals per week so if you're looking for Capital and don't want to give up Equity go sign up at founder path.com for free to get your offer all right let's jump into the interview hello everyone my guest today is Wade Foster he's the CEO and co-founder of zapier a workflow automation tool used by over 3 million people to connect the work apps they use every day before the company Wade worked as a customer development lead for the idea Works Inc in Missouri he's an alumni of combinator and has degrees in industrial engineering and business administration from the University of Missouri Columbia wait are you ready to take us to the top yeah let's do it all right man so I think a lot of people listening to the show have probably heard of you for some or or the company for some reason or another but for those who have not heard of the company quick quickly what do you guys do and how do you make money sure zapier helps people be more productive at work by helping them connect all the business tools that they use so if you use things like slack or Gmail or Dropbox or MailChimp or QuickBooks or Salesforce or any number of 1400 apps you might be using in uh your work we help you build automations and connect them easily and it's a premium service uh so you can get started for free and then we have monthly subscriptions so that uh is roughly how we make money that's great I want to talk more about uh you announced recently you passed $35 million run rate I also know last time you were on you were really effectively executing a strategy uh related to launching additional landing page is 25,000 or so so I want to talk more about kind of the growth strategy ideas you know blossoming in Wade's head for 2019 and hopefully have a good show let's start obviously with the revenue number so you did announce I believe you passed about 35 million bucks in AR that was in September of 2018 uh we passed 50 million yeah okay good so 50 million and most of help me understand most of that Revenue are you starting to see more Enterprise level accounts coming in or this is still kind of low touch uh low arpo or you know kind of model are yeah we still have very much a product driven sale uh you know we drive folks to the product they sign up and they upgrade with their credit card um we accept credit cards PayPal primarily is the the mode of um payment we do have um customers across the Fortune 500 broadly so we have lots of Enterprise usage but it's very much a bottom up bottoms up product driven sale do you see because of that do you see you know most people see churn where people are cancelling because it's you know uh it's too expensive and so they're churning and finding kind of cheaper alternatives many people could argue you're actually at the base of a lot of these other companies then you look look at Enterprise levels like you know snap logic mu soft Etc do you see actually people churning you once they hit a some a very aggressive amount of usage you know not really um I think most of that's because you know once you get started with zapier it's so simple easy to use um the product scales really well with you too like we have a lot of um robust error catching uh we have a lot of sophisticated features that helps folks um scale their usage as as well so we see folks go pretty far with us um and very rarely I can't even think of a time when someone said you know I'm stopping using zapier I'm GNA go start using something like a meal soft this might let me let me give a better example do you ever hear conversations like this Wade I love you guys I'm using you for like 10,000 like zaps a month but like I need X Y and Z built can your engineering team do this and you might go eh not on the road map we recommend you go use x Enterprise you know competitor do those come up you know you know that comes up all the time you know of course customers always have feature requests that they're looking for more sophistication I think every software company runs into this um and a lot of times you know it ends up being like yeah I think you probably need to go hire an engineer to build this on your own you probably need to start using tools like AWS to like set this up on your own but most of our customers aren't like that most of our customers aren't Engineers that are building their own things um they're looking for something that they can do it with off the shelf yep RP still about 20 bucks on average yeah we've raised it quite a bit um so we're doing a little better than that but in the in the ballpark okay was that intentional or kind of accidental raise you know I think as you start to get more as you age as companies tend to age arpo tends to go up if you have a good mechanism why where people start to use the product more so those older cohorts start to use the product more get more value out of it they upgrade to bigger plans and they start to pull your uh arpu up just as a a business as a whole um so that's usually how that happens for companies and certainly zappier is no different back in October 2017 when you were last on the show you you articulated you passed about 60,000 customers on the platform where are you today uh we have over 100,000 paying customers today that's okay that's great and what you said one of the big drivers and I don't know if this was in the moment thing back in October 2017 but you cited specifically air the air table partnership as driving a lot of new folks into your platform does that continue to perform well and what other Partnerships are performing for you you know air table definitely has been like a standout new application I think we release our fastest growing apps list every year um this past year we were seeing companies like front uh like uh Discord um which is kind of like a a slack for for like gaming um Community primarily um really popular Squarespace um opened up their uh ecosystem quite a bit and so we have an integration with them now those have all been um important new apps that have been added to zappier in you know recent history and have performed quite well I think you know a lot of folks use those tools and so naturally they need to connect those to other things that they're using yep and 100,000 north of 100,000 customers and 50 million bucks in AR I mean that would put your kind of RP more at like 40 or 50 bucks a month versus 20 I mean you said slightly more but that's like doubling is that accurate yeah okay I mean that's I was you're not giving yourself enough credit here right you're you're a humble guy but I mean that's like doubling arpu is a big deal over just 18 months um okay interesting and walk me through any other kind of growth levers that kind of surprised you last year you talked a lot about your landing page strategy and your partnership strategy in the last show so we won't go deep into those but any other growth tactics you're trying you know the thing that's most important for us is we want to have ubiquity and the apps that people use and so we spend so much of our time focusing on how can we make sure that we have coverage across all these different apps that people are using at work as new apps are launched as new products from existing companies launched we really just focus on trying to have that ubiquity because when we support the things that people use then zapier becomes useful for them if we don't support the tools that they use then zappier is not useful for them uh and so I think that's a big big piece of it um you know of course we've also invested a lot in an area that perhaps surprised me we've invested a lot in our internal apps so um this is kind of a thing that once users don't come to zap here for these things but they stick around for them which are things like uh our filters our formatter our code steps our delay steps our scheduler our email parser they're these little utilities you could almost think of them as like a modern Excel macro it's like a it's like a VBA VBA kind of macro kind of thing yeah yeah but they're easier to use they're more accessible and they help folks kind of extend what they're trying to do with a lot of these applications because sometimes you know apis can sometimes be messy under the hood we're using apis and so the end user needs a way to uh to kind of configure a little bit you know it's like well I have a first name and a last name here but I really just want the first name so our formatter can help you say well I just want the first the you know split at the space and just give me the first name uh so these little utility functions help people just get more out of these tools that they're looking for um in a way that's pretty accessible to kind of your your average worker uh what do you look for in terms of signals for new upand cominging apps that you see are doing well but are not on your platform yet I'm sure you have a very sophisticated approach to kind of trying to find these signals and and acting on them as quick as possible you know I think um it's not too different than perhaps like a VC might approach things uh you know you're trying to pay attention to uh you know are they hiring more people is um you know is their traffic going up you can look at like Alexa rankings and stuff like that are there did they raise some money obviously that's not always a signal but you're just trying to piece together all these like little public bits of information to figure out like hey is there someone that we should be talking to that we're not talking to um so it is it does look very similar to I think like what VCS would do when they're on the hunt for you know trying to invest in a in a company that's growing wait I'm a bit shocked I never thought I'd hear you compare yourself to a VC when you're so contrarian on the whole VC and funding model let's let's go into that branch of the business now so you've raised very little Capital less than a million correct yeah yeah right at a million yeah are those folks still on the cap table or have you kind of done the whole wisy approach and bought those guys out no they're still on the cap table okay you sound kind of happy and you're you know you're happy with status quo there yeah yeah yeah of course I think our investors are um solid you know we went through YC a big stakeholder for us one of the larger stakeholders for us and they continue to just provide a lot of useful value even at the stage that we're at um so you know while I think there's a lot of Bad actors in Venture I do think there are very good folks out there as well that can truly live up to that value ad pitch that you hear so often and what's team size today how many folks we're right at uh about 200 200 people 200 folks and what's the breakdown on that when you look at kind of in onboarding Marketing sales support engineering uh about a third is in engineering uh about another third is in Customer Support Services onboarding things like that customer enement um and the rest is kind of like a you know marketing Partnerships probably makes up a big chunk of the rest product design uh HR Finance that sort of stuff and all remote or all in San Fran we're 100% remote still no office that's great that's good sa saves on save on your expenses right yeah I mean a little we not as much as you might think I we um the big benefit you get at a remote is you have access to a global talent pool so you can hire anywhere and then uh your retention rates you know especially if you invest in your culture you invest in your values you invest in the type of company you are retention rates are really high um you know of our first 10 employees eight are still here and you're founded it back in 2011 right yeah 2011 what do you do so a lot of people when they say I want to go remote for all the reasons way just described but Nathan like I'm a micromanager and I don't know what my team's doing it every one of the day and I can't look over their shoulder I mean how do you do you basically just tell tell your team listen we don't care where you work or when you're work but here are the objectives for this month and as long as we make progress we're good to go is that kind of how it sounds like yeah more or less you know I think the whole the thing that so the folks that are like I'm a micromanager I can't see people sitting down I actually think they might enjoy a remote environment even more so especially if they're good communicators um because in a remote environment it's less about you know did the person show up and smile this morning or say hello at the water fountain yeah yeah totally um sorry about this I gotta you okay something just went crazy what like noise or yeah like a bunch of music just started playing you're not sure where it's coming from well here's the big question what kind of music is it it was a bunch of country music just started playing sorry about that folks I think my wife like had the uh my headphones hooked up to something in the other room just went crazy that's funny well look I'm a country music fan a little bit of Garth Brooks never heard anybody so that's good if it's country mussic it had to been my wife so um anyway sorry about that so so we're saying um you know micromanagers remote managing those teams I think the most important piece there is that um when you're in a remote environment a big part of what you're trying to do is ask people set the objectives and then set the deliverables and so if you pay attention to what those deliverables are you can see are they doing the work in the time frame which I expected so if you think about customer service it's are they replying to customers you can go look into your uh you know your your your ticketing software and track the numbers and see like hey are they actually performing at the the the level that I think is uh representative of what we should be performing at for an engineer you go look at their commit messages look at the code is the contributions there what I expected for product managers do they have stories and specs written out and do they understand the users really well and those logged in your project management software so like in a remote environment there's these little artifact facts that are existing in all these different tools that you're using to help you see are things getting done and if you don't see those things you ask a question you say hey what's going on I thought we were you know I thought we'd agreed that this would happen and um if you don't see it it it poses a question doesn't mean necessarily like something's going wrong but you know to ask a question about it so I actually think that that when you're in a remote Environ it kind of strips away all the like um ornaments of being in an office where you kind of kid yourself that you're doing a good job at management where you're like oh I see him sitting there I smiled at them I gave a compliment over lunch like all's good yeah it makes you feel good but like are you really truly measuring the progress of what's happening in your company or not H I'd argue probably not Wade let's shift from employee retention to customer retention last time you were on the show you said less than 5% logo churn per month are you still sub 5% yeah that's right more or less yep okay and you guys are I'm a customer by the way so I I I've been able to reverse engineer a little bit of the life cycle emails you guys have gotten more aggressive on I believe on the life cycle emails like hey this zap sto working you should log in and like check it out or something might be wrong here um what are you doing to keep turn low I think a lot of it is things like that you know one of the things that is so powerful about a tool like zappier is that we can help you with so many different types of problems that you might be experiencing in your business uh across different types of spaces so we can help you with marketing we help you with sales we can help you with customer support we can help you with engineering we can help you with operations so we can help you in a lot of different ways but because we can help you in a lot of different ways it's sometimes hard when you come into zap to go like well what should I use this for um and so those life cycle emails if we do a good job we get to know what you are using zapier for and we're able to propose better recommendations for you better a to serve up content that might resonate with you um now I don't think we're doing job at this I think there's a lot more we can do to improve on this over time but that's definitely a thing that um we've invested in and I think it helps with longer term retention is if we're introducing you to well if we're just helping you solve more problems over time you're happy to keep using us and then Wade shifting back to you right people might look at kind of Zap your as a company go okay there's three founders there's 200 people on the team there all remote they they're not beholding to anyone they raised very little money relative to their AR everything's working for them a guy like Wade is only going to keep doing this if he sees opportunities to like learn new things fast and go after big new challenges if they don't see what you're going after they might go Something Fishy is going on here why is he still in this so the question to you is like what are you learning every day or what are you looking forward to learning over the next 12 months you know I I think the the thing that is constantly fun for me is the opportunity we have to serve our customers at scale like we've seen uh so many folks come into zapier and say what kind of impact it's had on them from a work perspective but also from a personal standpoint we've had people tweet pictures of them and their family at you know Disney World saying like thanks for thanks zapier I get more moments like this because of you and that those kind of moments like are fuel it's just like wow how can we create more of that and the excitement part of me is I want more of that but then the learning aspect is okay we're at 200 people okay well what do we got to do 200 people 100,000 customers well what do we got to do to get to 200,000 customers what do we got to do to get to two million customers because all those customers represent you know someone with their family their kid at Disney World who's happy about zappier existing and along the way there's all sorts of challenges that you're dealing with and the challenges change in scope and size also the people you get to work with change um over time as well uh the different skill sets that you want to bring into your org change as well and so that all that stuff just kind of keeps things fresh and it keeps you energized to keep trying to create more moments like that for your customers um if I could meet you know a customer every day I fact I like if I could meet a customer of every hour of every day like I would do it because it's just so energizing to hear the success that we're able to bring for them wait what's your you said your wife was in the other room playing country music what's her name uh my wife is Chelsea if if you came back tomorrow and said Chelsea just want to let you know me and the boys and the team you know we had all team on hands deck we turned down a billion dollar offer to go ahead and sell to Salesforce yesterday does she kill you so my wife is has started to use zapier herself she's a consultant for uh small businesses it's an important customer to have by the way yeah she used to be a teacher and you know when we started zappier she's a teacher and I was like well you know she probably never will understand quite what we do she'll get it like you know the concept you she'll get the elevator pitch um but like she won't ever be a user but now I hear in the other room coaching you know her clients on how to use zapier teaching them how to use Gmail teaching them how to use a sa and all these different tools together so she hers we're selling she's probably like what am I going to do for my own customers Wayne uh she's like are you guys like is zacher GNA keep existing uh so I'm sure she would be a little uh a little a little on the fence if that came through yeah well the the reason I'm asking is I mean there's there are so many people right now going after just companies where there's data being exposed to some degree and I'm sure you guys have an amazing engineering team and everything's locked down but for example y's an investor if they're able to see some of your back end and see which apps are actually taking off from in terms of how many zaps per month that allows them to make better investment decisions and maybe there's soft information being shared there even if it's just you mentioning hey we're about to release our top app list here here it is to you before everyone else gets I mean like there's stuff like that I mean do do you worry about kind of data and specifically kind of governments going after companies that deal in these pipeline kind of businesses you know I I don't worry about that too much um nah it's not something that we think you know is a concern from us for competitive threat or from um you know Market risk I think for us our goal at the end of the day is let's solve our customers need and if we keep chasing after our own customers and keep trying to meet their needs um we'll always be in a good position the world is too short on companies that care deeply about solving for the customer problems that if we can be one of the few that does that well um we'll be fine all right wait on that note let's wrap up with the famous five number one what's your favorite Business book o what's my favorite let's see I'll share one I read recently um I don't know if it's this underrated book about a manufacturing facility in Springfield Missouri that practices open book management uh so they share all their accounting statements with the whole company and they allow their employees uh these are Factory workers to help make critical investment decisions um because they've taught them how all to use the accounting wait what was the name of the book it's the great game of business is what it's called the great game of business interesting yeah all right number two is there a CEO you're following or studying right now let's see I I think uh Jeff basos and Patrick Collison are two of um the better Moder cosos out there that I um like to listen and read anything that they put out number three are you built on top of stripe by the way we do use stripe very good what's your personal favorite online tool for building the company Let's see we use slack and zoom are still super critical parts of operating a distribut team for us yep number four how many hours of sleep do to you get every night eight hours that's great and S obviously married Chelsea any kiddos yet or no no kids got a dog though all right and how old are you Wade I'm 32 32 last question what do you wish your 20-year-old self knew oh my gosh uh what do I wish with my 20-year-old self knew know you know I think my I think I wish the 20 my 20-year-old self was uh a little more open to hearing the advice from others I think uh you know you mentioned my I'm a bit of a contrarian at times uh I think uh my 20-year-old self probably took that a little too far uh and I probably could have done a better job at listening oh come on Wade you also know those angles give you beautiful spots in the Press which helps Drive growth it helps be contrarian yeah I think so but um there are certainly best practices have become best practice for a reason uh if you approach things with sort of a first principles sort of thinking mentality and break things down a bit try and understand the root cause um you know which best practices are there for a reason and then you know which ones are kind of just BS and they exist to you know serve some other purposes uh chesterton's fence is one of my favorite uh like uh logical things uh wait what's What's this called I haven't heard of this chesterton's fence uh it's just like a good way to think about decision- making so it I think some US policy maker introduced this concept and it's um if you move into a neighborhood and there exists a fence that you don't like an ugly fence uh and you want to take it down before you take it down you should figure out why the fence exists in the first place if you understand the reasons for why the fence existed in the first place then feel free to go take it down but if you don't understand yet you should probably not take it down quite yet uh and so I think it's a really powerful way to think about decision making is if you're proposing something if you're proposing to stop do something you really should understand the reasoning behind it first and once you do feel free to make whatever you can draw whatever conclusions you want from that and go whatever Direction you think contrarian or not but until you reach that point you might want to reserve judgment adding on to that just I'm on the Wikipedia article now research it's his def fence's history first you may find out why it was created and perhaps understand that it still serves a purpose and if you believe the issue it addressed is no longer valid frame your argument for deletion in a way that acknowledges that yep I love that very cool I have to I we'll link to that in the show notes all right guys there you have it again Wade zapier passed 100,000 customers 50 million bucks in AR back in September 2018 they've doubled barp over the past 18 to 24 months up to about 40 bucks per customer profitable 200 people now awfully remote still less than 5% logo turn as he looks and doubles down on how how to go from 100,000 customers to 200,000 customers less than a million bucks raised Wade thanks for taking us to the top yeah thanks Nathan