Wade Foster, CEO of Zapier, on flywheels & user acquisition on the way to $35MM ARR

Have you ever tried to save an email to Evernote? Fire a Google Calendar from a Slack message? Getting programs to talk to each other without direct APIs used to be a nightmare. And then came Zapier.

Zapier is the solution to help companies set up powerful workflows and make nearly any software program talk to another. With their service, you can connect over 1300 apps (and growing) to each other without a custom built hook. The service originated during a hackathon weekend, and it has quickly grown into one of the largest software companies of the decade. In just over 7 years, Zapier graduated YCombinator, has grown to $35 million in ARR, and recently they were named #53 on The Forbes Cloud 100.

It’s also notable to mention that Zapier’s structured a bit differently than most businesses. Zapier is a 100% distributed team of 170 individuals scattered around the globe — and they are strong through leaders around remote work culture.

In this episode, Wade Foster, CEO & founder of Zapier, talks with Dave about the strategies he has used to achieve massive revenue and user growth. Their conversation covers early user acquisition, finding ideal customers through forums, building growth flywheels, the split between Growth vs Marketing, failed strategies, and much more!

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In This Episode You’ll Learn:

0:01 — Introduction
1:47 — Why accolades mean the most for family members; Zapier’s #53 spot on the coveted Forbes Cloud 100
3:33 — The startup weekend that birthed zAPIer
4:10 — What is Zapier? Where is the business at right now?
5:15 — When people think tech founder — they don’t often think the Midwest. Has being from Missouri shaped Wade’s success?
6:39 — How Wade used online forums to spark growth at Zapier
8:56 — “It was the right amount of traffic” — how low volume but high intent users in the early days changed the game for the business
11:22 — Breaking down the Zapier flywheel
12:05 — Growth strategies and risks that haven’t panned out well
14:34 — What do the growth and marketing teams look like at Zapier? Wade explains his thought process while building that part of the organization
15:32 — “Growth has to be a core competency from the get-go”
17:02 — Chief growth officer vs chief marketing officer
18:52 — What’s a counterintuitive thing you believe about growing a startup?
20:58 — The best things Wade has done to improve as a CEO
23:44 — The salty six; rapid-fire questions to know Wade better

Full Transcript:

DR: Welcome back to Scale or Die, the show where we uncover proven growth strategies form growth experts and CEOs behind some of the world’s fastest growing startups.

And every year Forbes puts out a list, at least for the last three years, called the Cloud 100. And this list includes companies like Stripe, Slack, Zoom, and this year number 57 was Zapier. And we have, of course, Wade, the CEO of Zapier here on the show with us.

We’re excited to dig in and talk about kind of the journey from the start all the way up to getting on the Cloud 100. So, welcome Wade. Thanks for being here.

WF: Yeah, I’m excited to be here.

DR: Was that a pretty exciting deal for you guys to find out about the Cloud 100.

WF: Yeah, it is cool. It’s a nice validation. It’s a good honor of all the work that the team does for the customers. You know, we serve our customers day in and day out and always nice to get a little recognition for the hard work.

DR: Yeah, totally. You guys don’t seem like you care a whole lot about the accolades of the powers that be in Silicone Valley. But I’m sure it’s nice to make some lists somewhere.

WF: Yeah, it always feels good. But honestly, I’ll tell you a secret. The thing that it feels the best to is family members. Because we have a 100% remote team and so sometimes it’s like, is that a real job. How does that work? And so like, when it’s, hey look, we’re on the Forbes Cloud 100 list, like, it’s a real job. Trust me.

DR: Yeah, that is awesome. Very cool.

WF: So, especially for family members.

DR: That’s amazing. But even they don’t even know how big of a deal that is. They’re like oh, you know, Slack, are they a big company?

WF: Yeah, but they know what Forbes is. So, they’re like, okay that’s cool.

DR: That’s awesome, very cool, man. So, we have been using Zapier at our companies for about five years now. So, from early on I think, and we freaking love it man. I mean, this is like one of the most used, most talked about software that we use, companies that we really like. And everybody loves it. And it was only till recently that we realized that it wasn’t Zapier, it was Zapier. Is that a common issue for your guys?

WF: Oh yeah, yeah, we have like in our footer, Zapier makes you happier. And when you hover over Zapier it like wiggles to draw attention to it. We try and do little things to get people to pronounce it the right way.

DR: I’m just curious, where did the name come from in the first place?

WF: So, we started at a startup weekend. So, we’re like, we need a domain, we need a name fast. And I kind of was like, well, we’re building stuff on API so it would be cool if API was in the name. And then I-E-R is a common ending in English. And so I was like maybe there’s an A-P-I-E-R thing. And, you know, did a quick look on a couple domains and Z-A-P-I-E-R was available. And so I’m like, okay, you know, $8 buck later, $9 bucks later that’s who we are.

DR: It sticks.

WF: Yep.

DR: That’s awesome. Very cool.

What is Zapier in your own words and kind of where are you guys at as a company right now?

WF: Yeah, we help people connect all of the common business tools that they use. So we have integrations into 1300 apps, things like Slack, like Google apps, like MailChimp, like Salesforce.

And you can set up really easy to set up workflows. So, if you want to save email attachments that come through over to Dropbox you can do that. If you want to get a Slack alert for a new payment in Stripe you can do that. And then of course as you start to use it you kind of uncover a little bit of the power where it’s like you can build more complicated workflows.

We just launched a new feature: Pass. So it’s like a lot of extra stuff you can do under the hood. But it all starts with kind of that insight, oh, I can set up a little thing that helps me push something from this app to another.

DR: It does kind of hook you. Like you don’t realize you need it until you’re like, I just need this thing in a Google Doc. I’m just gonna do this one time. And before you know it like your whole business is like intricately woven in. It starts with a little hook.

WF: It does. It totally does.

DR: So, are you from Missouri?

WF: I am from Missouri, yeah.

DR: So you’re from Missouri. I’m from Kansas. I went to Kansas State. You went to Mizzou, but then I came over. We both spent some time at Mizzou. I think people think tech founder they don’t think the Midwest. So, I’m just curious from your perspective, you live out in San Francisco now, or San Francisco area.

Has being from the Midwest played any notable part of your story and building Zapier do you feel like, or how you think about yourself on the scene?

WF: You know, I think we have fans and stuff in Missouri and the Midwest so there’s some, you know, kind of like you get some cheerleaders because of that ’cause they wanna see you do well. They wanna see you be successful. And I think, you know, starting a company is so hard. It’s everyone who’s ever tried to start a company knows how incredibly difficult it is. So you take your cheerleaders wherever you can get them.

DR: Yeah, yeah.

Very cool, so let’s talk growth. Going back, when did Zapier start?

WF: 2011.

DR: 2011, and now how many employees do you guys have?

WF: We’re at 170.

DR: Okay 170, and what about ARR right now. Do you have those numbers, do you share numbers?

WF: Our numbers which we released in March are at 35 million as of March of 2018.

DR: Cool, cool.

And so I guess when you kind of launched how did you get those first users?

WF: The thing, the first place that we looked at was forums.

So, a lot of SaaS apps that have public forums. So you could go to the Evernote forum, the Dropbox forum, Basecamp forum, Salesforce forums, and you would see people saying, hey, when are you guys gonna build an integration with Google Contacts, or with Dropbox, or with whatever app that they wanted to see an integration built with.

And the thing we recognized was these forum posts were often sometimes a little dated. They were kind of old and then they would have tens, sometimes even hundreds of comments where people would be plus one, me too, let me know when it’s gonna exist, I really want this. Why haven’t you built this yet? I can’t believe you aren’t paying attention to this integration. See how many comments are on this thread.

That was the gist of what was going on in these threads. And you know the response from the companies in these threads was often something like, hey, we have this on our radar. We’re paying attention to it. We’ll give it some thought, you know, during our next roadmap planning cycle. It was the classic if you’ve ever worked in a product org you know what that is. That’s a PM telling you no.

And so we were like, huh, so for whatever reason these companies can’t, won’t, we couldn’t tell. Like, it’s like they’re just not gonna build this stuff. So we felt like okay maybe we’ll build it. And then I would go into the forums and I’d say, I’d drop these comments. I would say, hey we’re working on a little project. If you want to build this yourself here are links to their API docs and you can go try and set this up on your own. But I got a little project where I’m trying to build a thing that can help you with this. So, if you’re interested in checking out the project click over here and you can give it a try.

And that was like just a really nice strategy for us at the time because we would get, you know, I’d drop a comment like that and it would send us three or four or five visitors, but they were all highly targeted. These are people who are like, I want this thing. And so they would click through and be like, you have the thing. Please give me the thing. And it was just the right amount of traffic for us. You know, we’d get 10 visitors here and there, all super interested, all really wanted this to exist. In the early days, that’s all you want is just like one person, five people that really care about this problem. So it really helped us get those first few users.

DR: That’s kind of how you got the idea, kind of validated it. And then was like, so as you kind of like launched was you kind of saying hey, this is a good idea. Let’s build this thing. Were you just posting in forums?

Was that the main growth plan to start off?

WF: Posting in forums was like the earliest thing we did. And then eventually we started once we had a public pages that had pages to talk about the integrations we supported, we would go work with those partners and they would link over to our site and say, hey if you’re looking for a MailChimp integration with Google Docs there’d be in the MailChimp integration directory they’d link over to the page on Zapier where it’d talk about that stuff.

So we’d get traffic directly from these partners. We’d work with them to send emails out, to get blog posts up on the site. So those early partnerships were really helpful, and then along the way, we were creating all these pages for integrations, and those would get indexed by Google.

And when people would go search for them we’d show up there too. And then the product we really worked hard to make it simple and easy to use. And the business model, we have a freemium business model so a lot of you got started for free. And as a result, it created some word of mouth, so things would spread. So those are kind of the, a few of the mechanisms that fueled the growth at Zapier.

DR: Very cool. Yeah, that makes a lot of sense. I mean, we’re small potatoes but we have sent so many customers to your guys over the years just because we were like a marketing agency at first. Then we kind of switched into like teaching marketing. We’d build funnels. And it was always like, okay this only works if you use Zapier.

We’ll build you, give us your account details. We’ll set it all up for you. And it was like, even with Proof now, we finally just got our official app. So it’s good to be in the Zapier family. And it’s like we send so many people there because it’s just like, hey, you have to use this to do what you’re looking to do. So that makes tons of sense.

Has that been, is that like 100% of growth for you guys is through those partnerships. Do you guys do kind of growth strategies outside of that? And what does that look like?

WF: I mean, it really is this flywheel where it’s partners build things on Zapier that creates pages that get indexed in Google that we can send traffic to that people will link to. And that brings more partners into the fold.

And then it just kind of like flywheel gets going. You know, we’ve done things on the content side of stuff where we, you know, we have a pretty popular blog and resource page these days that pulls in a lot of traffic. So that’s helped. But most of that’s helped from more of like a brand awareness sort of thing rather than a direct user app position mechanism. That early partnership flywheel has been really a critical growth lever for us.

DR: Yeah, makes sense.

Have there been any growth channels or strategies you guys have tried over the years that just haven’t panned out, or bets you’ve taken, or risks you’ve taken?

WF: Oh man, so many, so many. We’ve tried so many things. And you know I think the thing is they might work for us now. You kind of give things a try. We did this two-sided referral thing that like Dropbox did where it’s like, hey if you refer a friend you get some bonus stuff and they get some bonus stuff. So we tried that. And that didn’t work for us at all.

DR: Why do you think that didn’t work looking back?

WF: Well, I think a lot of people try this and they fail at it. I think the reason Dropbox succeeded I think they’re an exception.

Dropbox succeeded because it was a very easy to understand thing. It was a lot of people needed Dropbox and they understood what space meant. It was hey, if I share somebody I need more space because I want to put another movie in my Dropbox account. Or, I want to put more songs in my Dropbox account.

So they knew that was a thing that they really understood why they were doing this trade-off. I really want to get that so I’m gonna invite my friends into Dropbox. And I also know that they probably want this too. So it was very like it was, the incentives were just aligned for everybody where it was like I want this stuff. I know my friends want this stuff. It’s very clear.

And it was harder for us to figure out exactly what the value prop is. Like the language around Zapier was trickier. What’s a Zap? What’s a task? Those are new concepts we are bringing to market.

Whereas Dropbox wasn’t teaching people storage space. People had always managed their storage space on their machines. So they knew what it was like to run out of storage space. So that’s my hypothesis. I think Dropbox really just had a nice mechanism that worked really really good for them.

DR: Seems like the ones that I’ve seen that have worked well have been more consumer-based than B2B. And Dropbox, you know, in that stage it was just you tell your mom about it and you tell your brother about it. And like, it’s just a very consumer-oriented incentive plan.

WF: Totally, and you know PayPal had their thing where they’d give you $10 bucks in PayPal stuff. So what’s better than a payment service giving you money. Like that can certainly help you grow. That kind of referral things though I think like you said they fit a certain type of business. And others it’s tougher to do.

DR: Yeah, very cool.

So you’ve got 170 people now. How many of those are like on the growth and/or marketing team of the ones that are there?

WF: We probably got about 30 or so focused on growing the business in some way either product, engineering, partnerships, writers, that sort of stuff that are really thinking about how do we grow the user base. How do we convert users? How do we create enough value that we can convert them to paid, that sort of thing.

DR: So what does it look like, and like what advice did you give for like you guys, when did you kind of have your first person that was thinking about growth. Though again, for you guys it was different partnerships are a huge part of it. But it’s like, how do you start building out that growth and marketing side of the company?

WF: I think it’s tough. I think a lot of it it has to be a founder that starts doing a lot of this stuff. So, I was doing quite a bit of it. And honestly, Brian and Mike did a lot of work here too.

You kind of have to make it like a core competency of the business from the get-go. I think folks who are kind of searching for magic bullets, like well I can build a great product but I can’t, you know, I just need to hire the growth person to come in and fix my growth problem. They’re kind of looking at it from the wrong way.

"There's no one that's going to come in and understand your business as well as you do. So like, you kind of have to figure out what are some of these growth things that could work on your own."

And then once you start to figure out like oh, there’s actually an opportunity here that starts to signal what’s the type of person to bring in. If you start to realize, oh, content could be at play here.

So, maybe you’re starting to bring in somebody who’s got some experience in that. You’re still wanting to bring in a pretty generalist ’cause you’re gonna wanna run a lot of experiments. But it’s different bringing in that type of person versus saying, you know, a lot of the stuff we need to focus on is more from a product standpoint. We’re gonna build a lot of features that are gonna create virality.

We’re gonna do a lot of user-generated content. If that’s the kind of thing you’re gonna do you really need to bring in a strong product person that understands this sort of stuff.

So, you know, I think you have to figure out these insides on your own inside the company. And then when it comes to bringing on that first person you’re looking for a generalist who has experience kind of in that set of things where you’re like my instincts after a couple tests tell me this is the spot.

DR: Yeah, it makes sense. Here’s the question I have personally had and wrestled with and I think you might be able to give insight. I was looking on LinkedIn doing some creeping.

Looks like you guys have a Chief Growth Officer and a Chief Marketing Officer. My question is what’s the difference between those two.

What do they do? How do you think about that? When do companies and why do companies want those two different people instead of that being one thing?

WF: Yeah, so at Zapier the way it works is the Chief Growth Officer is really a Product Manager at heart. You know, it’s kind of digging into what do we need from a product standpoint that is gonna drive this business.

And so they’re paying a lot of attention to the marketing pages, the activation funnel, and the retention funnel throughout the business trying to reduce the friction all the way through that. So it’s really a product and engineering team that’s running that side of the business. Whereas the marketing side they’re spending a lot more time thinking about how do you create awareness for the product.

How do you really understanding the users.

Who are the users?
What segments are working?
What segments are not working?
What are the types of campaigns we need to spin up?
Who are the partners we need to be working with?

And so it’s more like, it’s a different skill set than what the product, the growth side is looking at.

DR: Is that pretty common for a company at your stage to kind of start to split those two focuses out like that.

WF: You know, we might be a little early compared to when most companies start to split those things out. But we had an opportunity to work with two fabulous people on a growth and marketing side. And we just said let’s do it. Let’s go for it.

DR: Got ya. Kind of the right person at the right time. It may be an error, but bring them in.

WF: Yeah let’s do it.

DR: Very cool. So what’s something maybe that you’ve discovered over the years.

What’s something counterintuitive that you believe about growing a startup that maybe most wouldn’t think?

WF: I think a lot of times your growth is dictated by the market. And I don’t think first-time founders perhaps appreciate that as much as they might think. They often think, well I’ll build a great product and we’ll grow a business around that.

And to a certain degree, you can brute force that. And that can work. But the market that exists around the problem you’re solving matters a lot, especially in terms of is this gonna be a good business or a great business.

And the thing that separates a lot of times good business from great businesses is that you’re playing in the right space. And that was something certainly at Zapier that we just lucked into. You know, we figured out, like hey, you know this integration thing feels like a fun thing to build.

We’re not certain if there’s even a big market here, but it feels like there’s a market. So we’ll build something. We’ll build a nice business. Maybe we can work on this full time and if we do that’ll be great.

But over the years we started to uncover and unravel an understanding of what the broader market looked like and started to realize, holy cow, the opportunity for this particular thing is much much larger than we had originally anticipated. And I know when we went in it was not something where we’re like, okay, this is gonna be, you know, we’re gonna build a really meaningful, big, large company that is gonna sit at the center of all these SaaS companies and connect the world sort of thing.

That was not what was on our mind. But you kind of uncover that as you go. And I think every market has those dynamics. And to a certain extent you just have to kind of get in there and live those to realize, like, where are the market forces. Where did market forces exist? And if you find a wave, it’s good to go surf it.

DR: Okay, so one thing I’ve been working on a lot is becoming a better CEO. I’m kind of shifting from this total scrappy do everything to okay, let’s do some CEO things.

I’m curious, like what’s the best thing you’ve done in the last year to improve yourself as a CEO to make that shift at this stage?

WF: I’ll give you two things. One, I got a coach. I was kind of a bit anti-coach. I kind of thought ah, that’s kind of a snake oily sort of industry. But I started, I did this thing where I go interview CEOs who are about a year ahead of me.

And I ask them the question you just asked me. It’s like, what can I do to, what are the things that worked well for you?

What are the things you wish you’d implemented sooner?
Where do you think you over-invested?
What did you spend time on that didn’t matter?

I asked a lot of questions like that just to figure them. I started hearing people say, well I got a coach. Well, I got a coach. Well, I got a coach.

And I’m like, what. This didn’t, it just didn’t resonate with me. But I heard enough smart people tell me that that I was like well, I should investigate. These are smart folks. I should figure out why, why they’re giving this advice that feels counter to me. And eventually, I kind of I guess came to my senses a bit and found somebody who I thought was really good and started working with them. And that has been really helpful. It just kind of sorting through the day to day problems that you have running a company. So that was one.

The second thing is we got to a certain size where we started to round out our executive team and really bring in the leaders that can own functions in a way that you as a CEO will never own a function. And I think that really changed the dynamic of the CEO role for me when it’s like we actually have a team of executives that are going out implementing the strategies and it really feels more like a CEO role when you have that.

Versus the younger days of Zapier, it never felt like a CEO role to me. It always felt like a title that is there, but I feel like I’m still working in the business a lot. And so I’m actually assuming a lot of roles. I’m assuming a marketing leadership role, or a support leadership role, or a product leadership role which kind of accompany your CEO duties as well. But over time when the executive team starts to fill out you start to realize, ah, there is a lot more work in the CEO role. So, I think it’s only been as we cross maybe 100 employees where I felt like, okay, that is a goal that I can really truly assume in it’s, I guess, entirety.

DR: Yeah, yeah, yeah, okay, very cool. Well, as we finish up here we always end with six questions we call the Salty Six. I don’t know why we call it the Salty Six, but it sounds interesting so people listen.

So, this is six rapid-fire questions for you to answer just for us to get to know you a little bit better. Sound good? Are you ready?

The Salty Six

WF: Let’s do it. I’m ready.

DR: Are you nervous or are you feeling pretty good about it?

WF: I’m always nervous with these, so we’ll see.
DR:  All right, so number one.

1. What do you do for fun?

WF: I play a lot of racquetball, nailed it.

DR: All right.

2. What’s the best conference you’ve ever gone to?

WF: Oh man, the best conference I’ve ever gone to? I mean, I’m gonna call it startup weekend where we started Zapier conference. That has to be the best one because it led to what we build.

DR: Love it.

3. What podcast do you listen to, if any?

WF: I don’t listen to any podcasts.

DR:

4. Okay, what book are you reading right now? What’s on your nightstand?

WF: I’m reading through the High Growth Handbook.

DR: Okay, what is that?

WF: It’s all about growing, fast-growing companies.

DR: All right, High Growth Handbook.

5. Michael Jordan or LeBron?

WF: Michael Jordan.

DR: Why?

WF: I grew up watching, idolizing that guy.

DR: Did you have posters on your wall?

WF: I would wear his jersey to school. And you know I was like, I’m gonna be the next Michael Jordan. I was convinced.

DR: Okay. And then what one person you would like to invite to a dinner party dead or alive.

6. You just wanna get in the same room with someone and have dinner, who would it be?

WF: George Washington.

DR: Why, why George Washington?

WF: I think the American Revolution is super interesting and he made a lot of decisions that I think were somewhat counterintuitive. You know, a lot of folks after the war was won wanted him to become a monarch and he chose not to. And he resisted that temptation and set up the American democracy. And his leadership style was interesting. He invited people into his cabinet that had total polar opposite opinions and viewpoints on things. And so he brought really good advice and sought diversity of opinion and things like that. And so I think he’s, he just seemed like a very different kind of leader for the time when it was, you know, typically kings did the things that they thought were best and didn’t always consult with other folks. And I think he kind of beat to a different drum, so.

DR: Amazing, love it. Well, very cool man. Well, that is the Salty Six. You survived, passed with flying colors. And man if people want to watch what you’re doing, or learn more about what you’re working on where can they find you?

WF: Zapier.com you come check out the product and if you’re curious to follow me I’m on Twitter (@wadefoster).

DR: Love it, love it, well thanks so much for being on man. This has been good. Thanks for watching, or those on the podcast thanks for listening. Tune in next time for more stories from growth experts and CEOs behind the world’s fastest growing startups. Thanks, Wade.

WF: Awesome, thanks for having me.