From Bootstrapped to Category Leader: Lessons from Zapier’s Founders
October 17, 2019
When Bryan Helmig, Mike Knoop, and I first had the idea for Zapier, I was still working my day job at Veterans United. We put in long months of late nights, early mornings and weekends before we were ready to graduate from side project to full-fledged business. Even in those very early days, we were intentional about running things as efficiently as possible. Initially, it just made sense to take a bootstrapped approach; but even as things got more real, we continued to always think carefully about each decision.
We’ve never gotten hung up on doing things the way everyone else does, and that has served us well.
Today, we are a 100% distributed team of over 250 people providing millions of loyal users with the ability to connect business apps and automate workflows. We currently support more than 1,500 apps, and our library is always growing.
Since our founding in 2011, we’ve come a long way. Interestingly, many of our earliest decisions as founders still hold up, even after years of growth and evolution.
Build Everything Around the Customer
The customer has to be at the forefront of any business.
Pre-Zapier, my day job at Veterans United was in marketing automation. At the same time, I was doing freelance work that involved common tools like WordPress, MailChimp, Wufoo, etc., and I was running into challenges around how to get these different apps connected and working together well.
In the course of my personal research, I saw many other people on forums asking for integration and noticed the threads were lengthy and old. That was our hint that people wanted to connect tools and get their software working together. Additionally, the age of the threads indicated the companies behind these products weren’t prioritizing integrations.
So, the idea for Zapier emerged as a direct result of listening to the needs of the people who would eventually become our core customers.
Since then, we’ve remained committed to supporting our customers. We did a lot of hand-holding with our first dozen or so customers in order to ensure that they got value out of our product. And then, when we started bringing on new team members, we made sure that every new hire regularly worked a customer service shift, because that’s where you gain the deepest appreciation for what customers really need (and want).
We continue that practice today, and extend it to include roles that aren’t typically exposed to customers—operations people, accountants, recruiters, etc. We find that becoming personally acquainted with our customers is beneficial to all our team members. For instance, recruiters with first-hand customer experience are able to give job candidates real examples of what it’s like to work at Zapier. This helps ensure we bring on people who truly understand what our company is all about.
In Silicon Valley, it’s easy to get turned around and focus on the wrong things—investors, the ecosystem, your peers. But we’ve never lost sight of who we’re here to serve, and that’s been a core pillar of our success.
When the Customer Evolves, You Evolve
When Zapier first launched, our customers were technically forward solopreneurs and entrepreneurs. These people weren’t engineers; they were early adopters of SaaS products who were trying to figure out how to get everything working together. Our users were also our buyers, which made it easy for us to understand who we were talking to and who we needed to listen to.
But as we grew, our customer base expanded to include larger businesses. We were no longer dealing exclusively with owner-operators; there were additional layers of people and often our buyers were not using our product directly. Things got a little more complicated.
While we had always been dedicated to providing value long before attempting to capture it, we had to be even more careful about where we put paywalls and how we established that value. We had to address the needs and questions of multiple audiences. We also needed to shift our focus a little to ensure that our product was embedded into key workflows within larger businesses. When Zapier becomes a core part of how a business works, it’s much easier for users to make a strong case to a non-user buyer about the importance of upgrading and renewing.
When you’re just starting out, knowing what your customers want and need is a little bit of a guessing game. You don’t have much data to go on, so you have to listen closely to the few customers you already have, lean on your own experience as a buyer/user, and then trust your product intuition. You make decisions, and then watch to see what happens.
Maybe you add a new pricing level and then watch to see if people convert. If they don’t, you investigate why not. You iterate and optimize, and eventually, you get more data and you can put everything you’ve learned into developing a scalable model that’s more effective and sustainable for the long run.
The point is, no part of your business is ever “done.” Your customers will change, so your business must change.
Collect Data Even Before You Can Use It
Speaking of data, collecting it is something we advise every startup to do as early as possible. While we didn’t have any problem jumping into the breach when we needed to (our original pricing structure was based on the Fibonacci sequence with tiers priced at $11, $23 and $58), we always made an effort to use whatever data we had available.
One of the smartest things we did was to set up events on tons of little things that were happening in our product so that we could track all these different elements. Even though we couldn’t do much with the data at the time, we collected a lot of it right out of the gate. This meant that once we started bringing in data scientists and analysts, they had a wealth of historical information to work with right away—no need to wait while the data collection engine revved up.
You don’t even need a super sophisticated approach to this. We used Redshift. The key is to get started immediately. It’ll put you miles ahead later in the game.
Figure out How to Tell Your Story so Customers Get It
Before you can get users to experience the value of your product, you have to be able to explain your product’s value in a way that makes them want to try it. Explaining what Zapier is in one sentence has always been a challenge. We can talk about connecting apps and automating things and increasing productivity, but even then, people aren’t left with a clear understanding about what Zapier actually does.
When we were first trying to attract new customers, we found that the best way to tell our story was to wrap it around specific use cases. For instance, one use case might be about the way Zapier can automate sending contact information from a Wufoo form to a marketing database in MailChimp. This is a use case that immediately interests anyone using those two apps for email marketing and on-site forms.
Once we established that the use cases were the best way to illustrate Zapier’s value, we built out content around the different use cases—landing pages, case studies and blog posts. We knew that in those early days most users wouldn’t walk in through the front door, so to speak, so we made sure to provide other relevant points of entry. The whole strategy mirrored the forum posts that were the inspiration for Zapier. We focused on addressing customers’ specific challenges rather than a broad and generic sales pitch.
Include a Freemium or Trial Option
One thing we didn’t get right immediately was offering a freemium option or even a free trial. This wasn’t part of our initial strategy, but we made a quick adjustment to add a freemium offer. This is pretty mandatory for product-led companies because it provides a mechanism that allows you to accelerate time to value and—ultimately—help drive users to paid options.
Having a way to deliver value before attempting to capture it is a powerful tool, especially for a company like ours that was essentially creating a new category. Being so new to the market, few people had ever heard of, never mind used, a product like ours. Our freemium plan was a way to help us educate our potential customer base. It removed any friction that would have kept prospects from getting into the product and playing around to see what they could do, and that was critical.
Think Carefully About Your Fundraising Needs
A lot has been written about our once-and-done approach to fundraising. Like many other aspects of our company story, our commitment to being capital efficient is really a product of our circumstances as much as a philosophical or strategic choice.
We founded Zapier in Columbia, Missouri, which is not a hub of VC activity. We also held our employer, Veterans United, up as an example of how to scale without raising a dime. That company was owned and run by two brothers who had grown the business to more than 1,000 employees who managed billions of dollars in VA home loans each year. This inspired us to focus on building a product people loved, pricing it fairly and then getting it into the hands of the folks who needed it in a scalable and efficient way.
With this mindset, we looked at capital-efficient businesses versus capital-intensive businesses. Capital-efficient businesses tend to have really strong network effects (like referrals) and efficient scaling strategies (like search). Capital-intensive businesses, on the other hand, tend to have heavy sales models and major capital requirements around things like labor and equipment.
Keeping this context in mind, we did a small seed round in 2012 and otherwise made business development decisions that would help us stay squarely in the capital-efficient category. We avoided the temptation to fundraise for the sake of filling bank accounts or getting media coverage. We didn’t feel compelled to follow the traditional playbook if it didn’t make sense for our company. We decided to only raise money if we actually needed it, and it turned out we didn’t need any beyond that first round.
Instead, we invested in our product in ways that would drive growth and revenue through increased acquisition and upselling additional services to existing customers. Mostly, this was about filling feature gaps that we hadn’t anticipated in early iterations of the product—things like built-in Zapier apps including formatter, email parser, filter and so on.
Expanding and enhancing our developer platform has also been really key to our short- and long-term success. This platform allows our partner ecosystem—which now includes more than 1,500 partners—to build the integrations into Zapier. In fact, the majority of our app library has been built out by the ecosystem, so it’s a very efficient model for us. Overall, extensibility has been a key component of our success. When users can take your product and adapt it to their unique needs, that creates big ecosystems that are hard for rivals to compete against.
Consider the Possibility of Being a Distributed Company
Finally, another area in which we were kind of accidental pioneers is the remote working trend. Zapier is a fully distributed company with all 250 of our employees working remotely. While this business concept has become much more mainstream, when we were starting out, it was definitely an anomaly.
At first, it was mostly a matter of necessity. In the beginning, Zapier was a side project, and side projects don’t have offices. Instead, we collaborated via chat, GitHub and other online tools. We got so used to working this way (and it was so efficient and productive) that when we started to hire we didn’t see a need to change our approach.
This was especially helpful since we were in the Bay Area and our first hires were people we’d worked with in the past back in the Midwest. Even when we were only a half dozen people, we were spread out across three or four different cities.
Though we came to the distributed model by default, we wouldn’t change a thing. It’s not for everyone, but there are many benefits to working this way. Being distributed gives us access to a wider talent pool, lowers our overhead and helps with employee satisfaction and retention. And going remote is easier than ever because of new technology and tools—like Zapier—that help teams communicate, collaborate and get things done.
Try New Things. Make Your Own Way.
One of the throughlines that weaves in and out of all our experiences and choices at Zapier is a commitment to trying different things and being unafraid to take a non-traditional approach.
When I was first out of school, I didn’t have a really clear focus. I’d done well academically, but didn’t have a lot of pursuits beyond that. And then the 2008 financial crisis hit, and it didn’t take me too many weeks of trying to land a job (or even an internship) to realize that being book smart wasn’t enough—you need real experience and you need passion. You need to get interested in things.
That’s when I started playing around with the internet a lot more. I saw people having success with new business models and software. So I dove in, and I learned. And I learned a lot. That try-anything mindset and willingness to do things differently than people expect is what eventually led Bryan, Mike and I to connect the dots around the idea for Zapier and then make that idea a reality.
So get out there and try new things. Experiment. Learn. Choose your own path, and don’t feel like you have to do everything by the book. The book is constantly being rewritten by people just like you.