Wade Foster: Why Zapier is Built for the AI Revolution

0:00I think zero to one, so much of your success is just about making contact with reality. You know, there's a lot of value to just shipping things, being out on the edge, and then figuring out how can you just pull these ideas along to everybody else. That's Wade Foster, founder of Zapier. Today, Zapier is hotter than ever. Since the early days of cloud computing, people have used their no-code capabilities to connect almost every app you can think of and automate tasks that would normally waste lots of time. And now they're ideally positioned for the AI era, since they sit between just about everything.

0:39This is Mike Maples Jr. of Floodgate, and it's go time with Wade Foster. This is Mike Maples Jr. and welcome to the Pattern Breakers podcast, where we explore why some founders radically change the future and how they stand apart. Together, we'll learn about the counterintuitive mindsets and actions behind their remarkable success. Brace yourself for a world where chaos is welcome, naysayers are often a positive signal, and movements galvanize misfits who transform the impossible to the inevitable.

1:23While most AI startups burn billions and focus on leapfrogging each other seemingly one week to the next, Zapier has been profitable almost since day one and is extending its approach by plugging existing AI into simple no-code tools that automate everyday business. Their ability to build such a large-scale company while challenging virtually every part of the conventional wisdom is something we can all learn from. Zapier's story begins in Columbia, Missouri rather than Silicon Valley. Wade and his co-founders were hacking away on nights and weekends, stitching together the early version of a tool that let apps talk to each other.

2:03After initially getting rejected by YC, they eventually got in, raised just over a million dollars, and then never looked back. Since then, Wade has shown that if you can make what he calls constant contact with reality and focus on making life delightfully easier for your users, success can compound quietly into greatness. Let's talk to him.

2:30Wade Foster, welcome to the podcast. Yeah, thanks for having me, Mike. Yeah, thanks for coming. You know, your trip to greatness is not all that conventional in a lot of ways. You sort of started off in the Midwest. So how did it even occur to you to start a company in the first place. And what kind of led you to the, you know, the aha moment behind Zapier? Yeah, I grew up in a relatively small Midwest town, like the jobs there where you could work for the state, you could be a teacher, you could be a doctor, you could be an accountant. And so I'm like, okay, there's five jobs that exist. So like my exposure to the business world was minimal.

3:09I didn't grow up thinking like, oh yeah, I'm going to start a company. This is like, this is how you sort of go make in the world. That came much later. I was getting ready to graduate from college around the financial crisis. And I was a decent student, got good grades, things like that, but was not crazy, ambitious or active, et cetera. And I had two things sort of happen. One, I had an internship in big corporate America telco, and I hated it. I would sit at a cubicle all day and, you know, I could get my work done in an hour. The rest of the day, I just would sit around kind of bored. Is this what 40 years is going to look like?

3:47Is this, is this sort of the path? I didn't like that. And then financial crisis hits and I can't really get a job. That is like a moment of reflection where I'm like, well, what, what the heck should I be doing here? I was fortunate enough to stumble across this tiny little software company that was building ed tech software. And I really just fell in love with software at that point in time. And through that process, I was like, you know what? I really would like to build my own software. And maybe one day that means running a company myself. But that was sort of more of a distant thing. Mostly, I want to just learn how to build software.

4:25From there, I remember reaching out to my now co-founder, Brian. He was the one person that I knew in town that had actually built some software and made a little bit of money with it. And I was like, Hey, like, can you just like, show me what you're doing with this stuff? I'd really like to learn, you know, like, like any good entrepreneur, he says, yeah, I'm happy to do that. But there needs to be like a trade involved. And he needed a saxophone player for his, uh, quartet. And so he's like, what you come play for my, my quartet. I played saxophone since I was pretty young. And I was like, sure.

4:57That sounds great. Sounds like a good time. And so, you know, for the better part of, you know, I don't know, a year or two years, Brian and I just would play music, write code, build stuff, work on side projects, et cetera. We were just constantly like pitching each other ideas of stuff to go build. One of the ideas that Brian messaged me one day was like, hey, I'm noticing all these folks that are building, you know, SaaS software. This was kind of, you know, 2009, 2010, 2011 is when sort of that like first version of this stuff is starting to have APIs and get really popular. You'd go to their forums and you'd see customers asking for integrations all the time.

5:31And so we were like, huh, we probably can build something that makes it really simple for, you know, the users of this software, not the developers, but the users of this software to build integrations on their own. So they don't need to know how APIs work and things like that. And so that's kind of the short arc of, you know, what led to the very first bits of Zapier. Huh. So you came up with Zapier because you were trying to solve your own problems as developers? Well, yeah. So Brian had noticed this. And at the time I was working in email marketing and I'm still learning how to code. I'm a bad developer.

6:08I was trying to work with the Marketo API, which at the time was this like old school soap wisdom thing. Like the documentation was in a PDF. I'm not good at this. And so I was like, if this product existed, I would be building our integrations that way versus trying to like bang my head against a wall doing this. Candidly, I was trying to get the engineering team to do it, but they had other priorities. They were like, this stuff is just, you know, on the list of things we care about. It's just so far down the list. But for me, I was like, this is my whole job. Like, this is everything I'm supposed to be doing here.

6:39And I couldn't do it if I didn't have these integrations into Marketo. So then when did you decide to like turn this into a real product then? And was it pretty clear to you that it was a company right away? Or was it at first just a project to make your job easier? We took it to this Startup Weekend event that was in Columbia and teamed up with Mike. And we built the first prototype there. Brian had known Mike for a little while. And after the weekend, we just had so much fun building it that we were like, hey, let's just keep working on this thing. We're in central Missouri, mind you. So, you know, this idea of like raising capital and venture funding and all this stuff is like a totally unknown world.

7:16with one exception, which is we did know about YC and we've read Paul Graham's essays and we knew about that. And so we're like, well, if we got into YC, like, yeah, we probably do that. Like that was like the one little, you know, nook and cranny, I guess, of Silicon Valley that we were aware of. I remember meeting you guys when you had just come out from Missouri, fresh out of the Midwest. Yeah. And so then you went through YC. What was that like? How did it shape your early trajectory. It was incredible. But in terms of expectations, I don't know. It's kind of this weird thing because we come from the sleepy Midwest area.

7:54And when I think of Silicon Valley, it's sort of got this utopian-esque view of technology in your head. And I remember flying out here the first time and going to the YC offices in Mountain View. And it's kind of just in like this office park. It's this warehouse in an office park in a strip mall. Like, and you're like, this is, this is Silicon Valley. This is where like the coolest stuff in the world gets invented. It kind of doesn't look that different than home. Uh, except for the weather, it's just like a lot nicer. So that was like the first realization was like, huh, this is, this is interesting.

8:27Like it actually is not about the location. It's about just the density of people that are here that are building really cool things and really interesting things. The second thing that was like so obviously powerful for us that I don't think I appreciated coming into the batch was it wasn't that YC was this like, oh, man, we're just getting amazing advice left and right, meeting all these incredible people and going to these interesting events and all that stuff. It was very little of that. Yes, there's great advice, but YC publishes most of that stuff. All that's out there. You can read it and ostensibly just do what PG says in his essays, do what they say in their YouTube videos and get 99 % of the value of what YC says.

9:08They don't save like, you know, the real good advice for like the secret insider things. It's just not how it works. but what was really valuable was the fact that you know the three of us were in we lived in a two-bedroom apartment and we just woke up every day and the only thing we did was work on zapier you know that entire summer for three months straight that was all we did we took one day off which was july 4th uh and the rest of it we were just just building zapier and so that concentration that focus that lack of distractions i i don't know that i'll have a more product like a more productive period in my life than that just like three month period of just like raw individual output.

9:46And I think that's what YC does really well is just creating that environment where you really can put everything into it. And was it pretty clear to you early in the YC process that, okay, yeah, this is a company, we're doing this. I had gone in all in a little earlier than my co-founder. So I'd gone in, let's see, we started the company in September, 2011, and I went full time in January of 2012. And then Brian and Mike had went full time, like right before YC. When you then you got going, you haven't raised a whole lot of money since I'm not, I'm not aware of you raising much money at all since, right?

10:23Maybe a little bit of money from Bessemer as a seed round, but like not much. How much have you guys raised in your entire history of the company now? 1.2, 1.3, which was all in 2012. It was the YC money, the Bessemer money, and then a handful of angels. And, you know, now there's kind of this, uh, this expression that people talk about, uh, seed strapping and it's, it's now coming kind of back into fashion a little bit because of AI and some things. What does seed strapping mean to you? I, well, that word didn't exist. I only heard of that word like two or three months ago. And when I heard it, I was like, yeah, that, that's kind of what we did.

10:59Um, you know, most of the 2010s that was not really in vogue, you know, the sort of conventional wisdom in Silicon Valley was like this idea of, you know, blitz scaling. It's like, we're going to raise as much money and we're going to spend as much money. We're going to hire all these people and we're going to throw all these bodies at it. And the job is to like race in front of all your competitors. And like, somehow you're going to go box them out. And I think that is true for some narrow type of businesses. Like if you're a marketplace business that really needs to get to like true, like geographic scale, economic scale, et cetera, that makes a ton of sense.

11:31But I think a lot of classic enterprise B2B software doesn't have that same dynamic. At least what I've seen is a lot of companies that have built good products and have generated good revenue have raised their way into bad businesses because the cap table and the financial structure gets all topsy-turvy because they're just over-infused with capital. Now, post-pandemic, post-zero interest rate phenomena, and now in the AI era, a lot of founders are looking back on that time and going, I think I could do it differently now. I think I could use AI, could use automation to raise just enough money to hire a very small team, build the initial trunk of this, get enough traction.

12:15And then once we have enough revenue, we're just going to fund ourself off of revenue. And I think there's a lot more businesses, particularly in software that can and probably should be built this way. Looking back on it, obviously to succeed at that, you've got to make your sales and marketing costs a lot less than what most startups seem to do these days. What were some of the early things that you did to get efficiency in marketing and awareness building? We had a pretty novel approach to search at the time. When people were searching for integrations, the results were just nothing. nothing there.

12:53And we're like, well, we're going to have a landing page for every type of integration. And it's going to be a nice software as a service style landing page that's well designed and descriptive of what people want. And so when you went to search Zendesk Jira integration, you're going to get a button that says like, hey, we've got that. If you want to get started, sign up for free here. And then it lands you inside of a product that's already got most of that stuff configured. And you're like, great, turn it on. It turned out that that meant we were generating traffic at pretty low costs. Like, you know, this is all organic search.

13:24And so it just was the cost to create those landing pages, which we had a pretty efficient system to go do that. The second obvious thing was our developer ecosystem. So, you know, we made it really simple for folks to add integrations into Zapier. And so, you know, the flywheel ended up being, you know, new integration to Zapier meant new landing pages to rank for. And then the more we, you know, had more applications supported, the more our customer base was saying like, you need to have this service, this service. And they were going and begging these other companies like, why aren't you on Zapier?

13:53You should get on Zapier. And, you know, at some point that flywheel just started to really, really move. And, you know, it went from, you know, us kind of trying, like we were, I mean, it was very, we were greasing the wheels of that flywheel a lot early on, but at some point in time, it just kind of kicked in where it became, if you don't have a Zapier integration, like, what are you doing? So in the early days then, some companies, product market fit is kind of this magical moment. I talked to the folks who were at Netscape in the early days, and they launched the new version of the browser, and they had this bell that rings when it gets downloaded, and it just became this continuous ring just almost immediately.

14:36Other companies, product market fit is more like a gradient. You know, you kind of, you know, you have it someday, you know, you know, you have it now, but it's hard to pinpoint the exact day that it happened. Or was there some turning point? What was it like in your case? You know, was there a turning point moment for Zapier in terms of product market fit? Or did it just happen gradually? And one day it just was obvious that you had it in hindsight. The thing that stands out to me was, you know, kind of going back to that, that software company, that first gig I had, you know, there I was in charge of marketing.

15:09And I candidly, I failed at that job. Like I tried everything to figure out how to sell this software. So I had that formative experience, though, of like really trying to do a thing and just and just really struggling with it. And I remember, you know, the first handful of sales we did for Zapier just felt so opposite of that. You know, our first customer, I'd emailed him and, you know, invited him and said, hey, why don't you check this out? He's excited to do it. He wanted to set up a Wufu AWeber integration. He had emailed me back and was like, wait, I can't get it set up. Can you get on Skype and help me?

15:42And so I get on Skype and I'm like watching him try and set this up. And he's struggling. Like the software is just not ready for prime time yet. We had shipped this thing to him in just an embarrassingly early stage. But we get to the end and he's got his app set up where, you know, Wufu leads can go into an AWeber email newsletter. And so I'm like, OK, well, let's go test it. And he goes and submits a lead to this Wufu form. And then he goes and refreshes the page in AWeber and boom, it's there. And he's like, wait, this is awesome. This is so cool. How much do I owe you? Where can I pay you?

16:17which was the opposite of the experience before. Like the software we had the other place was like well-designed, well-built, super slick. The engineering team there was great. And I just couldn't sell this at all. And so even at the very early days, I was like, something just feels different about this. I had so many of those interactions where it was like, we don't have it totally nailed yet. Like the software is not quite good enough, but man, the reaction is just qualitatively more positive here. You know, a lot of the startups that I've worked with have had this aspect to them where there were these inflections happening outside of the startup that propelled them in many ways to success.

16:58So like a company that was kind of one of your contemporaries at the time, Okta, benefited enormously just from the proliferation of SaaS apps, right? If there had only been three SaaS apps that people were using, the ability to have single sign-on to all your SaaS apps wasn't that big of a deal. But if you had hundreds, it became a pretty big deal. So I'm curious, what were some of the inflections that you think helped Zapier that maybe you didn't even know about at the time or maybe weren't fully aware of, but they just were kind of like the current that kind of underpinned a lot of this? Well, I'd say Okta and us rode that exact same wave of SaaS proliferation there.

17:38I think for us, it was specifically API proliferation as well, too. When we launched, that was the same year that Twilio had launched, Syngrid had launched, Stripe had actually came out of beta. In fact, a funny story, Brian and Mike, my two co-founders, were so excited about Stripe coming out of beta that for a moment I was like, I think maybe they're more excited about building a product that uses Stripe than actually building this product. And so we were just in that era where everyone was exposing APIs. You know, if you'll remember, there was like a, there was all these like mashup services around like, ah, like let's use the Twitter API in this way.

18:16And, you know, the Facebook API this way. And so it was just like in the water at the time where it was like, we want to, people wanted to just try and do cool stuff by combining these things and make interesting things happen. Were there any early decisions that you made looking back on it where it had a massive impact on your ability to scale? I mean, on some level, the customers wanted it. They're pulling through the demand. You keep adding features one at a time, unlocking new ways. But were there particular features or things that you did that you look back on and you're like, okay, that caused an inflection in our own performance?

18:55Yeah, I think there's two that come to mind. The first one was that developer platform we built. And this, I remember this was a lengthy debate. So we're in the middle of YC and YC has Demo Day where you go pitch to a bunch of investors at the end. One of the ways they motivate startups is like, what impressive thing will you have done by Demo Day that shows that makes people go, we think you're worthy? For us, the answer was, we just need to make sure we're integrated with everything. Zapier needs to be the most connected tool out there. And at the time, we are just building them ourselves. We're just brute force one by one.

19:30And we got our shovels and we're just digging ditches over here. That was definitely the fastest thing to do where it was like, yeah, if we want to have the most by demo day, that is probably the shortest path to the most. But we can't do this forever. We need to find a way to get some more leverage. And a lot of folks are like, great, we're going to build a platform. Everyone wants to be a platform. and we've been exposed to so many platforms that we knew how unlikely it was that we're going to go build a developer platform and people are just going to be building on top of the zapier left and right like it just doesn't happen like you you can name the number of companies that have like really really good developer platforms and then there's everybody else has an api and they they like have bd people knocking on everyone's doors begging them to try and build on like the sort of funny thing that happens in our space is you've got, you know, BD people that have no developer resources talking to each other, trying to convince each other, you know, you should build on us, you should build on the other.

20:30Meanwhile, none of them have the capabilities or the resources to actually get it done. But we decided the moment they're like, you know, but, but maybe it'll work for us. And we had one, one singular anecdote that we were like, willing to like, kind of put our chips on it, which was Aaron from Box had emailed us at like 2am on a Saturday, and was like, why is Box not on Zapier? And the answer was, well, it's just three of us like going as fast as we could. Obviously, Box should be on Zapier. But we thought, well, if Aaron's like willing to send an email that late at night that he cares enough about this thing, maybe he's got an engineer that he would be like, yeah, I'll do a little bit of work on this.

21:09If we can make it easy enough, perhaps he could. So we did it and we launched the thing. Mike and Hyatt scrounged up like 13 launch partners where you're on the dimension of they built the integration to we built the integration. It's like, it's a little fuzzy who did, who actually did the work. But the point was we had people on this new platform and it could showcase to the world, like, hey, we're open for business. If you want to add your app to Zapier and we can't do it, we're not able to go fast enough and you want to go, you want to do it on your own, you can do it. And it turned out that was just such a like incredible unlock for us.

21:44The second one was what we call multi-step Zaps. So in the early days of Zapier, we had a single trigger and a single action. If you got a lead inside your Wufu, which is a form product, great. You could add it to a spreadsheet. That's how it works. You got simple integration there. But it was pretty clear to us from our support forums that people were like, we don't just want integration. This should be workflow. I have so many use cases and capabilities where I want to daisy chain these things along. I want to go enrich data. I want to pull stuff in. And I want to route things into different places.

22:20And it took us a while to build this because we didn't build the initial platform even with this in mind. We were just like, yeah, we're going to build integration. That's what it's going to be. As to that. Yeah, exactly. But in 2016, we launched that. And that was definitely a huge unlock. Like we knew there was pent up demand. But, you know, I think in hindsight, we didn't even realize like how much demand there was for like a true workflow product. And so that really did open up a whole host of use cases that we just candidly just didn't support. Our customer support was just filled with feature requests where we're like, we can't do that.

22:54We can't do that. We can't do that. We can't do that. And we're just like, we need to say yes to this stuff. We got to find a way to say yes to this. You know, so far, we haven't really talked about your distributed culture. And I remember you're being one of the companies even before COVID happened, that encouraged people even to not necessarily locate in San Francisco. Where does that come from? You know, what, how did your DNA cause you as a company to be sort of more distributed? And what were the roots of that? Yeah. So companies founded in Columbia, Missouri, you know, we're working as a project.

23:30It's a nights and weekends thing. Projects don't have offices. So we just gotten used to working in, you know, GitHub issues and, you know, Gchat and things like that. The three of us moved to California. We're all working in this one, you know, apartment together. But at the tail end of that, Mike goes back to Missouri, be with his then girlfriend, now wife, as she's wrapping up law school. He's too important to the company. We're not going to boot him out of the company. So, So we're like, all right, well, we'll just kind of work via GitHub issues, Gchat, things like that. We kind of know how to do this.

24:01Thing two is we didn't know how to hire anybody. We're 24 at the time. We had no management experience, no hiring experience or anything like this. And the thought of trying to go figure out how to compete with Google and Facebook for engineers in California, it just felt like a pretty daunting task, honestly. It was like, why would anyone come work for us? We don't know what we're doing. And so we were talking to some mentors about this. And one of them said, hey, a hack that you could try is to go hire people you've worked with before. You already know them. You already trust them. You know the quality of their work.