How Zapier Hit $50M ARR and 100,000 Paying Customers While Staying Bootstrapped (Interview with CEO Wade Foster)

Introduction and Zapier Origin Story

Nathan Latka

00:00And this 24 year old texted his friends a $5,000,000,000 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 $50,000,000 in revenue in 2019 before breaking 150,000,000 in 2021, all bootstrapped. Mean, imagine owning a 100% of

00:27a $150,000,000 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 teams 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

00:53in your twenties and you wanna build a multibillion dollar company like Wade, you cannot miss this interview. Let's jump in. Hey, folks. If we haven't met yet, my name is Nathan Latka. 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

01:18one went on to create founderpath.com. I raised a large fund to do non dilutive deals with b to b software founders. So far, we've invested in over 400 software founders totaling a $150,000,000. Here in 2024, we're doing three to four new deals per week. So if you're looking for capital and don't wanna give up equity, go sign up at founderpath.com for free to get your offer. Alright. Let's jump into the interview. Hello, everyone. My guest today

What Zapier Does and How It Makes Money

Nathan Latka

01:46is Wade Foster. He's the CEO and cofounder of Zapier, a workflow automation tool used by over 3,000,000 people to connect the work apps they use every day. Before the company, Wade worked as a customer development lead for the IdeaWorks Inc. In Missouri. He's an alumni of Y Combinator and has degrees in industrial engineering and business administration from the University of Missouri, Columbia. Wade, you ready to take us to the top?

Wade Foster

02:06>> Yeah. Let's do it.

Nathan Latka

02:07Alright, 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. For those who have not heard of the company, quick quickly, what do guys do and how do you make money?

Wade Foster

02:18>> 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 1,400 apps you might be using in your work. We help you build automations and connect them easily. It's a freemium service so you can get started for free. And then we have monthly subscriptions. So that is roughly

02:43>> how we make money.

Nathan Latka

02:44That's great. I wanna talk more about, you announced recently passed $35,000,000 run rate. I also know last time you were on, you were really effectively executing a strategy related to launching additional landing pages 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 I hopefully have a good show. Let's start obviously with the revenue number. So you did announce, I believe you

Revenue Milestone: $50M ARR Confirmed

Nathan Latka

03:04passed about $35,000,000 in AR that was in September 2018?

Wade Foster

03:08>> We passed 50,000,000.

Nathan Latka

03:10Oh, it's 50. Yeah. Okay. Good. So 50,000,000 and most of help me understand most that revenue, are you starting to see more enterprise level accounts coming in or this is still kind of low touch, low ARPU or, you know, kind of model?

Wade Foster

03:23>> Yeah, we still have very much a product driven sale. You know, we drive folks to the product, they sign up and then they upgrade with their credit card. We accept credit cards. PayPal primarily is the mode of payment. We do have customers across a Fortune 500 broadly. So we have lots of enterprise usage, but it's very much a bottoms up product driven sale.

Nathan Latka

03:46Because of that, do you see, you know, most people see churn where people are canceling because it's, you know, 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 at enterprise levels like, know, SnapLogic, MuleSoft, etcetera. Do you see actually people churning you once they hit some very aggressive amount of usage?

Wade Foster

04:11>> Not really. I think most of that's because once you get started with Zapier, it's so simple, easy to use. The product scales really well with you too. We have a lot of robust error catching. We have a lot of sophisticated features that helps folks scale their usage as well. So we see folks go pretty far with us. And very rarely, I can't even think of a time when someone said, I'm stopping using Zapier. I'm gonna go

04:40>> start using something like a a MuleSoft.

Nathan Latka

04:42This 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, not on the roadmap. We recommend you go use X enterprise competitor. Do those come up?

ARPU and Pricing Model

Wade Foster

05:00>> That comes up all the time. Of course, customers always have feature requests that they're looking for more sophistication. Think every software company runs into this. And a lot of times 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 set this up on your own. But most of our customers aren't like that. Most of our

05:22>> customers aren't engineers that are building their own things. They're looking for something that they can do it with off the shelf.

Nathan Latka

05:28Yep. ARPU is still about $20 on average?

Wade Foster

05:31>> Yeah. We've raised it quite a bit. So we're doing a little better than that, but in ballpark.

Nathan Latka

05:36Okay. Was that intentional or kinda accidental raise?

Wade Foster

05:39>> I think as you start to get more As you age, as companies tend to age, ARPU tends to go up if you have a good mechanism 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 ARPU up just as a business as a whole. So that's usually how that happens for companies and

06:03>> certainly Zapier is no different.

Customer Count: 100,000 Paying Customers

Nathan Latka

06:05Back in October 2017, when you were last on the show, articulated past about 60,000 customers on the platform. Where are you today?

Wade Foster

06:12>> We have over 100,000 paying customers today.

Nathan Latka

06:15That'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?

Key App Partnerships Driving Growth

Wade Foster

06:29>> You know, Airtable definitely has been like a standout new application I think. We release our fastest growing apps list every year. This past year, we were seeing companies like Front, like Discord, which is kind of like a Slack for like gaming community primarily.

06:50>> Really popular Squarespace opened up their ecosystem quite a bit. And so we have an integration with them now. Those have all been important new apps that have been added to Zapier in recent history and have performed quite well. I think a lot of folks use those tools and so naturally they need to connect those to other things that they're using.

Nathan Latka

07:10Yep. And north of 100,000 customers and $50,000,000 in AR, I mean that would put your kind of ARPU more like 40 or $50 a month versus 20. I mean you said slightly more, that's like doubling. Is that accurate? Yeah. Okay. I mean, that's You're not giving yourself enough credit here, You're a humble guy. But I mean, that's like doubling ARPU is a big deal over just eighteen months. Okay, interesting. And walk me through any other kind

Growth Tactics: Ubiquity and Internal Utility Features

Nathan Latka

07:31of 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?

Wade Foster

07:41>> You know, the thing that's most important for us is we want to have ubiquity in 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 are launched, we really just focus on trying to have that ubiquity. Because when we support the

08:05>> things that people use, then Zapier becomes useful for them. If we don't support the tools that they use, then Zapier is not useful for them. And so I think that's a big, big piece of it. 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 this is kind of a thing that once users don't come to Zapier for these things, but they stick around

08:30>> for them, which are things like our filters, our formatter, our code steps, our delay steps, our scheduler, our email parser. These little utilities, you could almost think of them as like a modern Excel macro.

Nathan Latka

08:46Yeah. It's like a VBA kind of macro kind of thing.

Wade Foster

08:50>> 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. We're under the hood, we're using APIs. And so the end user needs a way 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

09:14>> name. And so our formatter can help you say, well, I just want the first split of the space and just give me the first name. So these little utility functions help people just get more out of these tools that they're looking for in a way that's pretty accessible to kind of your average worker.

Nathan Latka

09:33What do you look for in terms of signals for new up and coming apps that you see are doing well but are not platform yet? I'm sure you have a very sophisticated approach to kind of trying to find these signals and acting on them as quick as possible.

Wade Foster

09:48>> You know, I think it's not too different than perhaps like a VC might approach things.

09:55>> You're trying to pay attention to

09:58>> are they hiring more people?

10:03>> Is there traffic going up? You can look at like Alexa rankings and stuff like that. Did they raise some money? Obviously that's not always a signal, but you're just trying to piece together all these 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? So it does look very similar to I think what VCs would do when they're on the hunt for trying

10:29>> to invest in a company that's growing.

Funding Philosophy and Y Combinator

Nathan Latka

10:31Wait, 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 1,000,000, correct?

Wade Foster

10:45>> Yeah, yeah, right at 1,000,000. Yeah.

Nathan Latka

10:47Are those folks still on the cap table? Have you kind of done the whole Wistia approach and bought those guys out?

Wade Foster

10:52>> No, they're still on the cap table.

Nathan Latka

10:53Okay. You sound kind of happy and you're happy with status quo there?

Wade Foster

10:59>> Yeah, yeah, of course. I think our investors are

11:03>> solid. We went through YC,

11:07>> 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. 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 add pitch that you hear so often.

Team Size and Remote Work Structure

Nathan Latka

11:26And what's team size today? How many folks?

Wade Foster

11:28>> We're right at about 200 people.

Nathan Latka

11:32200 folks. And what's the breakdown on that when you look at kind of in onboarding, marketing, sales support, engineering?

Wade Foster

11:38>> About a third is in engineering. About another third is in customer support services, onboarding, things like that, customer enablement.

11:50>> The rest is kind of like marketing partnerships probably makes up a big chunk of the rest, product design, HR, finance, that sort of stuff.

Nathan Latka

11:59And all remote or all in San Fran?

Wade Foster

12:01>> We're 100% remote, Still no office.

Nathan Latka

12:04That's great. That's good. Save on your expenses, right?

Wade Foster

12:08>> Yeah. I mean, a little. Not as much as you might think.

12:14>> The big benefit you get out of remote is you have access to a global talent pool. So you can hire anywhere. And then your retention rates, especially if you invest in your culture, you invest in your values, you invest in the type of company you are, the retention rates are really high. You know, of our first 10 employees, eight are still here.

Nathan Latka

12:36And you were founded back in 2011, right?

Wade Foster

12:38>> Yeah, 2011.

Nathan Latka

12:39What do you do? So a lot of people when they say, I want to go remote for all the reasons Wei just described, but Nathan, like I'm a micromanager. I don't know what my team's doing every morning the day, but I can't look over their shoulder. I mean, how do you do you basically just tell and tell your team, listen, we don't care where you work or when you work, but here are the objectives for this

12:55month. And as long as we make progress, we're good to go. Is that kinda how it sounds like?

Wade Foster

12:59>> Yeah, more or less. You know, I think the whole So

13:06>> 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. Because in a remote environment, it's less about, you know, did the person show up and smile this morning?

Nathan Latka

13:23Say hello at the water fountain. Totally.

Wade Foster

13:31>> Sorry about this. I gotta

Nathan Latka

13:34You okay?

Wade Foster

13:36>> Something just went crazy.

Nathan Latka

13:38What? Like noise? Or

Wade Foster

13:39>> Yeah. Like, a bunch of music just started playing.

Nathan Latka

13:42You're not sure where it's coming from? Well, here's the big question. What kind of music is it?

Wade Foster

13:46>> It was a bunch of country music just started playing. Sorry about that, folks. I think my wife, like, had the my headphones hooked up to something in the other room just

13:54>> went crazy. Well, look.

Nathan Latka

13:55I'm a country music fan. Little bit of Garth Brooks never hurt anybody, so that's good.

Managing a Remote Team Without Micromanaging

Wade Foster

13:59>> If it's country music, it hadn't been my wife. So anyway, sorry about that.

Nathan Latka

14:03You're That's okay.

Wade Foster

14:04>> So we're saying, you know, micromanagers, remote, managing those teams. I think the most important piece there is that

14:13>> 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 timeframe which I expected? So if you think about customer service, it's are they replying to customers? And you can go look into your

14:33>> ticketing software and track the numbers and see like, hey, are they actually performing at the level that I think is 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 logs in your project management software. So like in

14:56>> a remote environment, there's these little artifacts 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 agreed that this would happen. And if you don't see it, it poses a question. It doesn't mean necessarily like something's going wrong, but you know to ask a question about it. So I actually

15:22>> think that that when you're in a remote environment, it kind of strips away all of the like 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 them sitting there. I smiled at them. I gave them a compliment over lunch. Like, all is good. It makes me feel good. But like, are you really truly measuring the progress of what's happening in

15:43>> your company or not? I'd argue probably not.

Churn Rate and Lifecycle Email Strategy

Nathan Latka

15:47Wait, let's shift from employee retention to customer retention. Last time we were on the show, you said less than 5% logo churn per month. Are you still sub 5%?

Wade Foster

15:54>> Yeah, that's right. More or less. Yep.

Nathan Latka

15:56Okay. And you guys, I'm a customer, by the way. So I've been able to reverse engineer a little bit of life cycle emails, you guys have gotten more aggressive on I believe on the life cycle emails like, hey, this Zap stopped working. You should log in and like check it out or something might be wrong here. What are you doing to keep churn low?

Wade Foster

16:15>> I think a lot of it is things like that. You know, one of the things that is so powerful about a tool like Zapier is that we can help you with so many different types of problems that you might be experiencing in your business across different types of spaces. So we can help you with marketing, can help you with sales, we can help you with customer support, we can help you with engineering, can help you with

16:36>> operations. 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 Zapier to go like, well, what should I use this for? And so those lifecycle 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. We're better able to serve up content that might

17:01>> resonate with you. Now, I don't think we're doing a good at this. Think there's a lot more we can do to improve on this over time. But that's definitely a thing that we've invested in. And I think it helps with longer term retention is if we're introducing you to, if we're just helping you solve more problems over time, you're happy to keep using us.

Nathan Latka

17:20And then Wade, shifting back to you, right? People might look at of Zapier as a company and go, okay, there's three founders, there's 200 people on the team, they're all remote, they they're not beholden to anyone, they raised very little money relative to their ARR. 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

Wade's Personal Motivations and Future Goals

Nathan Latka

17:41don'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? What are you looking forward to learning over the next twelve months?

Wade Foster

17:52>> You know, think the thing that is constantly fun for me is the opportunity we have to serve our customers at scale. Like we've seen 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. And we've had people tweet pictures of them and their family at Disney World saying like, Thanks Zapier, I get more moments like this because of you. And those

18:25>> kinds of moments like our 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 gotta do? 200 people, 100,000 customers. Well, what do we gotta do to get to 200,000 customers? What do we gotta do to get to 2,000,000 customers? Because all those customers represent someone with their

18:53>> family, their kid at Disney World who's happy about Zapier 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 over time as well. The different skill sets that you want to bring into your org change as well. And so all that stuff just kind of keeps things fresh and it keeps you energized to keep trying to

19:21>> create more moments like that for your customers. If I could meet a customer every day, in fact, if I could meet a customer of every hour of every day, I would do it because it's just so energizing to hear the success that we're able to bring for them.

Nathan Latka

19:37Wait, what's your, you said your wife was in the other room playing country music. What's her name?

Wade Foster

19:41>> My wife is Chelsea.

Nathan Latka

19:42If you came back tomorrow and said Chelsea just wanna let you know me and the boys and the team, we had an all team on hand deck. We turned down a billion dollar offer to go ahead and sell to Salesforce yesterday. Did she kill you?

Wade Foster

19:52>> So my wife has started to use Zapier herself. She's a consultant for small businesses.

Nathan Latka

19:59It's an important customer to have, by the way.

Wade Foster

20:01>> Yeah, she used to be a teacher. And when we started Zapier, she's a teacher. And I was like, well, no, she probably never will understand quite what we do. She'll get the concept, she'll get the elevator pitch, but she won't ever be a user. But now I hear on the other room coaching her clients on how to use Zapier, teaching them how to use Gmail, teaching them how to use Asana and all these different tools together.

20:24>> So she, hers, we're selling. She's probably like, what am I gonna do for my own customers, Wade? She's like, are you guys, like is Zapier gonna keep existing? So I'm sure she would be a

20:40>> little on the fence if that came through.

Nathan Latka

20:42Yeah. The reason I'm asking is, I mean, 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, YC is 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

21:04investment decisions and maybe there's soft information being shared there even if it's just you mentioning, hey we are about to release our top app lists, here it is to you before everyone else gets it. Mean like there's stuff like that. Mean do you worry about kind of data and specifically kind of governments going after companies that deal in these pipeline kind of businesses?

Wade Foster

21:22>> I don't worry about that too much. Nah, it's not something that we think is a concern from us for competitive threat or from

21:34>> 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, we'll always be in a good position. The world is too short on companies that care deeply about solving for the customer's problems, that if we can be one of the few that does that well, we'll be fine.

Famous Five: Books, CEOs, Tools, and Sleep

Nathan Latka

21:57All right, wait on that note, let's wrap up with the famous five. Number one, what's your favorite business book?

Wade Foster

22:02>> Oh, what's my favorite? Let's see. I'll share one I read recently. I don't know if it's

22:11>> This underrated book about a manufacturing facility in Springfield, Missouri that practices open book management. So they share all their accounting statements with the whole company and they allow their employees, these are factory workers, to help make critical investment decisions because they've taught them how all to use the accounting.

Nathan Latka

22:30Wait, what was the name of the book?

Wade Foster

22:32>> It's The Great Game of Business is what it's called.

22:34>> The Great Game of Business.

Nathan Latka

22:35Interesting. Yeah. Alright, number two, is there a CEO you're following or studying right now?

Wade Foster

22:40>> Let's see. I think Jeff Bezos and Patrick Collison are two of the better modern COs out there that I like to listen and read anything that they put out.

Nathan Latka

22:52And number three, are you built

22:53on top of Stripe, by the way?

Wade Foster

22:54>> We do use Stripe.

Nathan Latka

22:55Mhmm. Very good. What's your personal favorite online tool for building the company?

Wade Foster

23:00>> Let's see. We use Slack and Zoom are still super critical parts of operating a distributed team for us.

23:08>> Yep.

Nathan Latka

23:09Number four, how many hours of sleep to get every night?

Wade Foster

23:11>> Eight hours.

Nathan Latka

23:12That's great. And obviously married, Chelsea, any kiddos yet or no?

Wade Foster

23:16>> No kids. No kids. No though.

Nathan Latka

23:18Alright. And how old are you, Wade?

Wade Foster

23:20>> I'm 32.

23:21>> 32. Last question.

Nathan Latka

23:22What do you wish your 20 year old self knew?

Wade Foster

23:24>> Oh my gosh. What do I wish my 20 year old self knew? I

23:33>> think I wish my 20 year old self was a little more open to hearing the advice from others.

Chesterton's Fence and Decision Making

Wade Foster

23:42>> You mentioned I'm a bit of a contrarian at times. I think my 20 year old self probably took that a little too far and I probably could have done a better job at listening.

Nathan Latka

23:52Oh, come on, Wade. You also know those angles give you beautiful spots in the press, which helps drive growth. It helps be contrarian.

Wade Foster

23:59>> Yeah, I think so. But certainly best practices have become best practice for a reason. 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. 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 serve some other purposes. Chesterton's fence is one of my favorite

24:28>> logical things.

Nathan Latka

24:30Wait, what's this called? I haven't heard of

Wade Foster

24:31>> this. Chesterton's fence. It's just a good way to think about decision making. So I think some US policymaker introduced this concept. And it's, if you move into a neighborhood and there exists a fence that you don't like, an ugly fence, 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,

25:02>> then feel free to go take it down. But if you don't understand yet, you should probably not take it down quite yet. 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, free to make whatever. You can draw whatever conclusions you want from that and go whatever direction you

25:25>> think contrarian or not. But until you reach that point, you might want to reserve judgment.

Nathan Latka

25:32Adding onto that, just as I'm on the Wikipedia article, research the fence's history first. You may find out why it was created and perhaps understand that it still serves a purpose. If And 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. Will link it in the show notes. Alright guys, there you have it. Again, Wade, Zapier passed 100,000 customers,

Closing Summary and Key Numbers Recap

Nathan Latka

25:54$50,000,000 in ARR back in September 2018. They've doubled the ARPU over the past eighteen to twenty four months up to about $40 per customer. Profitable, 200 people now, all fully remote, still less than 5% logo churn. As he looks and doubles down on how to go from a 100,000 customers to 200,000 customers, less than a million bucks raised. Wade, thanks for taking us to the top.

Wade Foster

26:13>> Yeah. Thanks, Nathan.