Building a $5 Billion Company the Unconventional Way

In the world of tech startups, there's a well-worn playbook for building a successful company. It typically involves moving to Silicon Valley, raising massive amounts of venture capital, hiring top talent from elite universities, and scaling as quickly as possible. But what if that conventional wisdom is completely wrong?

Wade Foster, co-founder and CEO of Zapier, has taken a dramatically different approach - and it's paid off in a big way. Zapier has grown into a multi-billion dollar company while defying many of the typical Silicon Valley conventions.

The Zapier Origin Story

Zapier's journey began far from the tech hubs of San Francisco or New York. Wade Foster and his co-founders started the company in Columbia, Missouri in 2011. At the time, they were working at a mortgage company and saw an opportunity to help businesses connect their various web applications and automate workflows.

Rather than immediately seeking venture funding or relocating to the Bay Area, the Zapier team stayed lean and focused on building a product that customers actually wanted. As Wade explains:

"We mostly once you sort of we knew that we had something that people liked most of the problems we faced were variants of good problems. It was like how do we figure out how to ship more integrations, how do we figure out how to support all these customers, how do we find more distribution."

This customer-centric, product-first approach allowed Zapier to gain traction organically without relying on huge marketing budgets or growth hacking tactics.

Staying Lean and Profitable

One of the most striking aspects of Zapier's growth is how lean and capital efficient they've remained, even as the company has scaled to hundreds of millions in revenue. While many startups raise huge sums of venture capital, Zapier has only raised about $1.3 million in total funding.

Wade attributes this to a disciplined approach to spending and growth:

"We did raise that million and change right after Y Combinator but we treated it like the last money we were ever going to get. And I remember we had this rule we're not going to hire till it hurts - like it needs to hurt us."

This meant the founders did everything themselves in the early days - from coding to customer support. They only hired when absolutely necessary, which allowed them to reach profitability relatively quickly.

"We got profitable in 2014 so company founded in 2011, took us two and a half years to get there. And between that time the most money we ever burned in a single month was $20,000 which for most Silicon Valley companies sounds quite comical."

By staying lean and focusing on sustainable growth, Zapier was able to build a strong business without the pressure that comes from raising huge sums of venture capital.

Remote Work as a Competitive Advantage

Another unconventional choice Zapier made early on was to be a fully remote company. While this is more common now post-pandemic, it was quite unusual when Zapier started in 2011.

Wade explains that this wasn't necessarily an ideological choice, but a practical one:

"When you think about like you know the decision to go remote, it was like gosh like gotta go buy an expensive office you got to go find a lease you got to go figure out how to like navigate real estate and all these things and like we barely have product market fit. I'd much rather be doing customer support right now, I'd much rather be like shipping product features right now than like going and figuring out this other thing."

By staying remote, Zapier was able to hire talent from anywhere and keep costs low. They've been able to build a strong culture and high-performing team without a central office.

In fact, Zapier famously offered employees $10,000 to "de-locate" from the Bay Area to other parts of the country. This unconventional policy generated a lot of press and reinforced Zapier's commitment to remote work.

Building a Customer-Centric Growth Engine

Rather than relying on traditional marketing or sales tactics, Zapier built a powerful organic growth engine by focusing obsessively on solving customer problems.

Wade explains their approach:

"For us the growth engine became just adding apps to the platform. Every time you add an app it creates more landing pages, those landing pages are all new keywords to go rank for and that's another tranche of customers coming in."

This flywheel effect allowed Zapier to acquire customers very efficiently through search engine optimization. As they integrated with more apps, they created more landing pages and keywords to rank for, bringing in more customers organically.

They also built a developer platform that allowed the community to build integrations, further accelerating this flywheel:

"Now you're getting customers coming in through keywords, you're getting the community build integrations and it's just us brokering this stuff in the middle."

This focus on building a product that customers love and can easily discover has been key to Zapier's capital-efficient growth.

Maintaining Trust at Scale

As Zapier has grown to hundreds of employees serving hundreds of thousands of customers, maintaining trust has been critical. Wade emphasizes the importance of consistently delivering on promises:

"13 years doesn't that that that that was just time like it was just a consistent application of doing right by our customers for a long long period of time."

He also notes that as the company has scaled, they've had to put more formal processes in place to maintain their culture and values:

"We have had company values for a long period of time and we enact those company values in our hiring process so they're part of the hiring rubric and in performance reviews. So we it's not just posters on a wall it's actually like a mechanism to reinforce these things."

By baking their values into key processes like hiring and performance reviews, Zapier has been able to maintain its customer-centric culture even as it's grown significantly.

Embracing AI and the Future of Work

Looking to the future, Wade is excited about the potential for AI to further transform how work gets done. He sees Zapier as well-positioned to take advantage of this trend:

"We sort of founded the company on the premise that like we're humans who think computers should do more work, we want automation to work for everybody."

Zapier is already integrating AI capabilities into its platform, allowing users to leverage tools like GPT-3 within their automated workflows. Wade believes this combination of deterministic workflows with AI will be powerful:

"If you can put an AI step inside of a deterministic workflow you can have the AI do the step that you really want it to do, the thing you really care about."

At the same time, Wade acknowledges that the rapid pace of AI development creates both opportunities and threats for Zapier. They're having to innovate quickly to stay ahead:

"We still think that that is exciting but you have to anticipate I think with AI like where things are going. Like that works great for today but the model improvements are so fast."

This has led Zapier to invest in new AI-native products and experiences that reimagine their core offering for an AI-powered future.

Key Lessons for Entrepreneurs

Reflecting on Zapier's journey, there are several key lessons that stand out for other entrepreneurs:

1. Focus obsessively on solving customer problems. Zapier's growth has been driven by consistently delivering value to customers, not growth hacking or marketing gimmicks.

2. Stay lean and capital efficient. By keeping costs low and reaching profitability quickly, Zapier maintained control and flexibility as they scaled.

3. Question conventional wisdom. Many of Zapier's most impactful decisions went against typical Silicon Valley advice.

4. Build a sustainable growth engine. Zapier's SEO-driven flywheel allowed them to acquire customers very efficiently.

5. Maintain culture and values at scale. As the company grew, Zapier formalized processes to reinforce their customer-centric culture.

6. Embrace change and keep innovating. Even as an established company, Zapier continues to experiment with new products and technologies like AI.

Perhaps most importantly, Wade emphasizes the power of consistent execution over time:

"I think the longer I've been in business the more I'm like you know what it's never been worth it, it's never been worth it. I'm like I'm willing to sacrifice you know a little bit of revenue, a little bit of growth for the durability of these customers over the long haul."

By staying focused on creating long-term value for customers, Zapier has been able to build a multi-billion dollar business in a sustainable way. Their story serves as an inspiring counterpoint to the typical Silicon Valley growth-at-all-costs mentality.

As the technology landscape continues to evolve rapidly, Zapier's customer-centric, capital-efficient approach may prove to be more durable than the conventional startup playbook. For entrepreneurs looking to build lasting, impactful companies, there are valuable lessons to be learned from Zapier's unconventional journey.

Article created from: https://www.youtube.com/watch?v=7ZLRhZ6IWaw&feature=youtu.be