Wade Foster (00:00:00):
I think oftentimes people think of product-market fit as this sequential thing where it's we're going to start with the product. Once the product's good, then we're going to start working on the market side of it, and then the fit thing comes third. But I've always thought of it as it really is better when the product and market is actually it's a reinforcing mechanism that it's not two distinct things. It all just works together in a pretty magical way and I can be honest, that's hard to do, but I think you look at the best businesses, and I think they all have this dimension where they just are-

Eric Ries (00:00:40):
Everybody knows or thinks they know what it takes to build a $5 billion company. You need to come to Silicon Valley, you need to raise a lot of money, you need to hire top talent from name-brand schools, you need to have the fanciest pedigree and the most elite investors. But what if everybody knows is totally wrong? Well, you can judge for yourself in today's episode where we're going to talk to Wade Foster who's created a company called Zapier. Who's done things just about the opposite of the typical conventional wisdom and yet has had tremendous success. A lot of companies like to brag about how much money they've raised. Zapier likes to brag about how little raising just over a million dollars despite its multi-billion dollar valuation.

(00:01:24):
Today, Zapier has only 750 employees, but they serve hundreds of thousands of customers and they're part of an emerging trend of companies that have been able to scale their impact without growing headcount. They have been a fully remote company since long before the pandemic, and they have a distinctive culture that is well, as you'll see a little bit different. Wade took the company from Columbia, Missouri, where he was from through Y Combinator, and yet didn't change his business-building philosophy. You'll still see the humility, you'll see the first principles thinking, and you'll see the commitment to staying close to customers through the entire 13-year journey of building Zapier. I hope you'll enjoy this conversation with Wade Foster.

(00:02:08):
This episode is brought to you by DigitalOcean the cloud loved by developers and founders alike. Developing and deploying applications can be tough, but it doesn't have to be. Scaling a start up can be a painful road, but it doesn't have to be. When you have the right cloud infrastructure, you can skip the complexity and focus on what matters most. DigitalOcean offers virtual machines, manage Kubernetes plus new solutions like GPU compute. With a renewed focus on ensuring excellent performance for users all over the world DigitalOcean has the essential tools developers need for today's modern applications with the predictable pricing that startups want. Join the more than 600,000 developers who trust DigitalOcean today with $200 in free credits and even more exclusive offers. Just for listeners at do.co/eric terms and conditions. The Eric Ries Show is brought to you by Mercury. The bank account I actually use for my startup. I've been around a lot of startups and a lot of FinTech products over the years.

(00:03:10):
People often think the way to simplify the complexity of finance is to add layer upon layer upon layer of software and automations and workflows, and all that winds up with is a really complicated mess. Mercury's figured out the thing that really matters the bank account. If all of your workflows, all of your automations are driven from the place where the data and the money already are, life gets a lot simpler. Mercury simplifies your financial operations with powerful banking, giving you greater control, precision and speed so you can operate at your best. We all know speed is the ultimate advantage that startups possess. Your bank account needs to speed you up, not slow you down. Apply in minutes at Mercury.com and join over 200,000 ambitious startups that trust Mercury to simplify their finances and perform at their best. Mercury is a financial technology company, not a bank. Banking services provided by Choice Financial Group and Evolve Bank & Trust members, FDIC.

(00:04:07):
First of all, thank you for coming on. I mean, I really appreciate it and I just think this is such a great story. I'm really excited to share it. So I live in Silicon Valley and I am surrounded by contrarians and almost to the point that they're all contrarian in the exact same way and they can't stop talking about how contrarian they are. They're building their companies in the same way. It's really to me kind of amusing. And when they say contrarian, I don't think they have what you guys have done in mind. You've built the company in a totally different way than conventional wisdom says you should. And I'm curious before we get into the what of it, I'm curious about the why. How did you have the idea that you should do things in a different way?

Wade Foster (00:04:51):
I think we're probably... Many of us were a little bit of a product of our environment. I'm not sure that it felt all that weird or different to us. Myself and my two co-founders, we worked at this company, Veterans United in Columbia, Missouri before we started Zapier. And that business is owned 50/50 by two brothers. It never raised a dime. I was employee 500 and when I left 10 months later when we were starting Zapier, there was a thousand employees there. They were selling mortgages during the financial crisis and growing like crazy. So you look at that and that was some of our formative experiences. The companies that we were following online were folks like 37signals and MailChimp and GitHub. We're using these products.

(00:05:43):
And that's our point of view. And when you think about building a software company, being in the middle of the country, it's not like if we go start a company, there's people throwing millions of dollars atus to go found this thing. It was like, no, we think we got to make money. If we want to have a company, the company's got to make money because otherwise we're not going to eat. And so that just seemed pretty obvious to us and that's where a lot of the ideas started was just from that simple thesis or I guess those simple people we had to look up to, the companies we had to look up to.

Eric Ries (00:06:26):
But you did eventually come out to Silicon Valley, you did Y Combinator, you encountered people who have a very different idea about company building. What was that like?

Wade Foster (00:06:35):
Yeah, so the one thing we did follow in Silicon Valley is we were Hacker News readers and we read Paul Graham's essays. And so we were a fan of that and we felt like, okay, we're building this company that's trying to integrate all these different apps. Probably would be helpful if we had more exposure to the people that are running these companies. And we're like, well, YC is probably a good way to get a little bit of that stamp of approval, help do that. So we went through the application process. We actually got rejected the first time we did the YC thing. Second time we did, we got out there, we come out and we go through the program and it's a great experience, learn a lot of stuff. But there's also some things that we start to hear that just is presented as the gospel truth that we had examples that just totally refuted it. Where it was like, oh no important company has ever been built without doing X, Y, Z thing.

(00:07:33):
And we're like, well, we just came from one that was, so that's not true. And the moment you hear that, it actually starts to call into question all the other wisdom that you're hearing from this person. Because you're like, well, what else are they exaggerating in this process? I think we just had this healthy skepticism of everything that we were hearing and really trying to just trace back why are they giving that advice? Why does that make sense to them? And so you had to go back and look at the company and the situation and all the things that they were in that caused them to say, "Oh, that is..." To draw that conclusion. And we hear it all over the place.

(00:08:09):
It's around raising money or whether you should have an office or be a remote team or whether you should have a sales team or no sales team. You just hear all these things that are given out as like, well of course this must be the way to go do it. And we were always just like, are you [inaudible 00:08:24]? Really? Really? That was just our, I don't know, default skepticism I think at the end of the day.

Eric Ries (00:08:30):
All right, well I've always appreciated your aw shucks Midwestern way of talking about how you did these things differently and it just wasn't really an act of greatness on your part, it was just you're a victim of circumstance and you had that skepticism. But I got to say, I've been around a lot of entrepreneurs over the years and there is a certain courage that is required to do things differently. And when an authority figure tells you do it a certain way to not say, "Well, I guess there's something wrong with me and I must be doing it wrong." Or even to feel like, gosh, to get the status that these people enjoy, I have to chase their idea of what good looks like, but to stick to your guns and think from first principles. So I'm curious if you can talk a little bit about where that comes from. What's in your background that gave you the courage to do that and made that seem like the natural thing to do instead of the more common thing honestly, which is just to start chasing status and copying what other people are doing.

Wade Foster (00:09:30):
Yeah, I never... Shoot, gosh, I'd like psycho-analyze here. I think I never cared too much about being the popular person I guess at the end of the day. It was just like I just was always competitive and I wanted to win and it was like, let's go figure out the right... How does this system work? I was just that kind of person was like, how does this actually work? And it was always a bit of a game to go figure those things out. And then maybe also a little bit of laziness too at the end of the day. Where it was like I always just was like, what is the fastest route to get this done? And so if you're going to go try and build a company, I didn't want to do anything that didn't matter. If it didn't matter at all, I was like, I just don't want to do it.

(00:10:11):
I want to do the stuff that actually matters. And so when you think about the decision to go remote, it was like, gosh, got to go buy an expensive office. You got to go find a lease, you got to go figure out how to navigate real estate and all these things and we barely have product market fit. I'd much rather be doing customer support right now. I'd much rather be shipping product features right now than going and figuring out this other thing. When us working out of an apartment with a wifi connection and using Google Chat and Campfire and the tools of the day were working fine.

(00:10:47):
There was no issues with that. And so that's where we spent most of our time is we just spent a lot of time with our customers and helping them out. I don't think we spent all that much time hanging out with these other folks who were playing startup or pretending that they were. It was like, nah, we're... And so the people you're around are the ones that rub off on you and we're around our customers. And so that's what we did, I guess. So I don't know if that's the exact reason why, but that's probably how I think about it in hindsight.

Eric Ries (00:11:20):
Well, I totally relate to that. I really remember when I was early in my career getting all this advice from people about, as you say, the gospel truth of startups. And a lot of it would be of the form, Steve Jobs did this thing, this one time where everyone knows that this is how it was done. And I always have this thought in the back of my head, which was, okay, even if I grant the premise that that thing did happen at that time, how do I know that it applies to me? How do we know that what worked in that industry will work in my industry or what worked then will work now? I used to think, how do we know that that person was successful because of that thing versus in spite of that thing, think about the horrible behavior that Steve Jobs would subject people to.

(00:11:59):
People think, oh, he wore a black turtleneck and he was a bit of an a-hole to the people around him. I guess that must be why he succeeded and maybe, but maybe he succeeded in spite of those things. It was all these questions and I would press people for answers and they'd often look at me like why are you asking?

(00:12:15):
Just follow the rules because if you follow the rules, you'll look the part, you'll raise the money, you can fake it till you make it. I always found that so unsatisfying. So I have to say having watched you guys grow from afar and now you're a classic overnight success, 10 years in the making or longer now, I've always admired that about you and about the company. So I appreciate you starting with that. Can I take you back to Missouri? Because when people think of your typical $5 billion company and how it was started in technology, I don't think Columbia, Missouri, is the first place that comes to mind. So how did you wind up there and how did you wind up running a tech company way outside of the Silicon Valley ecosystem?

Wade Foster (00:13:01):
Yeah. Well, I grew up in Central Missouri, 30 miles south of Columbia actually in Jeff City. And Columbia is where the big state university is. University of Missouri, Missouri Tigers. Came time to go to school it was like, yeah, that's this big old state school, that's where everybody goes. It's what we could afford, kind of was the default choice. I also didn't know what I wanted to do, and so a big state school made a lot of sense because it was like, yeah, there's a lot of stuff. If I change my mind, I can go change my mind. So went there and for the first few years of school just floated around, just enjoying time, being a good student and all that stuff, but didn't have the sense of like, oh, I'm going to go start a startup. I definitely didn't have that driven attitude that you hear from a fair number of folks.

(00:13:54):
The thing that really sucked me in was the confluence of two events. So one summer I had an internship at a big telecom company, massive telecom company. And I remember that experience was I'd show up and first hour of the day I'd do all my work and then not have anything else to do. And the rest of the day I'd be like, well, I guess I'll just goof off on ESPN or something like that. And for a couple of weeks I was like, wow, this is pretty cool. This is great. But then after a few weeks, I'm like, is this it is? I don't think this is all that satisfying honestly, over a long haul. And my boss was like, "Wade, you're doing amazing. You're doing great work. Keep it up. Great job." And I'm like, I think I'm phoning it in. I don't think this is actually amazing.

(00:14:50):
And that was like, I really don't think corporate America is for me, honestly. I was like, I just don't think it's going to be a super satisfying path. Then the following summer was a financial crisis hit. Nobody's hiring, you can't get a gig anywhere, et cetera. And I'm starting to just hanging out online doing more stuff and stumbling into some of these online marketing things like, hey, Google AdWords, you can have a website and you can put this thing on and you can start making money. Well, that's interesting. I wonder how that works. And anywho, one thing led to another and I found this local EdTech startup that was doing a bunch of stuff with natural language processing, like automating... Automatically grading school essays, things like that, which now in the world of ChatGPT feels so quaint, but at the time it was really hard.

(00:15:41):
And so they were looking for a marketing intern. I didn't know anything about marketing, but I was like, I'd been reading up on all this stuff online and I was in engineering school, so I was like, I'm smart enough, I'll give it a try. And they brought me in and I got hooked just hook, line, and sinker. It was so much fun to build a software. I was like, this is... We're working out of a professor's house, it's just weird and different. Started using this online software, the fact that you could put a website up and someone halfway across the globe would buy it from you. I was like, holy cow, this is amazing. I cannot believe that this stuff exists. I had no exposure to this in Central Missouri prior to this and here I am tasked with doing marketing for this company. And I remember thinking, okay, what do I got to go do to figure this out?

(00:16:33):
And so I start trying everything, every trick I was reading up on everything. I was like, okay, I'm going to try SEO. I'm going to try content marketing. Social was starting to become a thing at that point in, I'm going to try that. None of this stuff is working. I try email marketing, I try BizEd. I was like, oh, I'm going to try direct sales. I'm going to try calling folks. None of this is working. And I'm convinced at this point I'm like, they're going to figure out that I'm just really bad at my job and I'm not going to keep my job. There's no way. How should I keep my job? And I started to mess around with product management, started to pay attention to who are our customers. We don't have that many customers. Why do they like us? Do they not like us? Stumbled across your stuff, stumbled across Steve Blank's stuff.

(00:17:12):
And started to get a little more curious and started to think, well, maybe it's actually not marketing that's a problem. Maybe we're just building something that nobody actually wants at the end of the day. And started to spend a lot more time talking to the actual customers and really trying to understand what are their actual problems, what are the things they care about. And again, came to the conclusion, I'm like, I don't think we're building something that someone wants. And if you looked at what we were doing, it was the company was run by a professor who was scratching his own itch. It was a research project for him versus an actual commercial endeavor, which he was having a great time with it and was really happy with the path that it was going on. But for me, I was more interested in seeing like, hey, how could we build this, grow this, et cetera.

(00:18:00):
And so that's when I started to get hooked on this concept and met my co-founder Brian, who was playing jazz, and I had been playing jazz as well too. And so he and I just started hanging out more, doing a bunch of side projects, pitching each other ideas back and forth. We're doing WordPress plugins, WordPress sites, anything to make a buck, reading the same books, following the same folks, and knew at some point in time, hey, maybe if we could go do something together, we would. And I went over to Veterans United because he was working over there. They have this legendary marketing team and I was like, well, at least I could figure out how to be a good marketer if I show up and work with them for a little while.

(00:18:38):
So did that. And one thing led to another, and Brian one day pitched me, he was like, "Hey, I noticed that when you go to all these software sites and you see their forums, there's always customers asking for integrations. They're always saying, "When are you going to have an integration with X?" And you go read the replies from the customers and it's full of plus one, me too, I really want that. And then eventually you get 10 replies in, 20 replies in, a product manager chimes in and says, "Hey everyone, thanks for the feedback. We really appreciate it. We'll take a look at it-

Eric Ries (00:19:10):
We'll take it under consideration and prioritize it accordingly. Yeah.

Wade Foster (00:19:13):
Yeah. And I was just like, "This ain't ever going to happen." And so that's where, and I was working with the Marketo API at the time, and I'm a bad engineer. It was this old-school SOAP WSDL thing. It was just... I'm not... And I'm like, oh my goodness, I was like, "If we built this, I would be customer number one. I know that I would want this. We have all these examples in these forums of people wanting this thing." And so that was the genesis of this idea of just three of us hanging out in Columbia, Missouri, and just go figure out how to build a cool product that solved this problem we observed.

Eric Ries (00:19:50):
That's such a great example of something that I know a lot of people struggle with because you told two different stories that superficially sound the same, where you have a professor who was scratching his own, itch and because he was building for himself, there was no market. And yet here you're saying that the fact that you know that would use this product if it existed is a sign that it's a good product to build. Those are clearly not both examples of the same thing, and yet it sounds both like scratching your own itch. So just help people understand the difference between what you saw there and what you saw here and how you think about... People talk a lot about founder problem fit or there's all this lingo and stuff to just talk about how did you know that it was a problem that you could commit yourself to want to solve and you felt that would be worth solving?

Wade Foster (00:20:37):
Yeah, I think, well, with the first one, I had been actively trying to sell this thing. And look, it could have been, I was just bad. I just didn't know what I was doing. I thought I tried hard, I was trying hard, but maybe it was me, but it definitely felt like the proverbial, I'm pushing a boulder up a hill to try and get this thing to happen and it just wasn't happening. Whereas with Zapier, so yeah, we observed this stuff in the forum. Yeah, I had the problem myself, but so it's like, okay, there's something there. You have this hunch that maybe there could be something there. I'm sure the professor had the exact same sort of mentality to your point.

(00:21:17):
The difference was, I remember when we actually started to go ship something to a customer, and Andrew Warner who runs Mixergy, was actually our first customer. I remember finding he was on this, there's Stack Overflow has this sister site that's like web users, power users of web apps. And he had asked a question on that forum saying, "Hey, does anyone have a PayPal Highrise integration?" And it was a little bit dated, I think it was a few months old, but I was like, I'm just going to cold email him and just see. We're probably [inaudible 00:21:46]-

Eric Ries (00:21:46):
Did you know who he was? Did you know he was the podcaster and...

Wade Foster (00:21:49):
I mean, I listened to his podcast a little bit, and so I was a fan, but he wouldn't have known me from anybody. And so I just take a lot... I'm like, I'm going to craft the perfect email to this guy. I looked up, I was like, "Hey, are you still looking for this PayPal Highrise thing? If so, I think I might have something for you," et cetera, et cetera. Fire off an email and just wait. He emails back and says, "Hey, no, I actually don't need this anymore. I'm good to go here. But did you build something?" And the fact that he asked me that question, I was like, okay, great. I have permission to try and pitch him on something else. And so I went to his site and I noticed like, okay, he's using Wufoo on his contact forms. I also knew that he was using AWeber to run his email lists.

(00:22:32):
Because he talked about it on his shows. And so I was like, okay, I know what I'm going to do. I'm going to email him back and say, "Hey, yeah, we're trying to help connect a bunch of different apps like PayPal, Highrise, Wufoo, Aweber." And then I inserted two or three others just to make it feel normal and then fired off an email. He was like, "Oh, I actually really do need something for Wufoo and AWeber. Can I get access to this thing?" And so I remember messaging Brian and Mike and I'm like, "Hey, tonight we got to build Wufoo and AWeber integrations."

(00:22:57):
And so that night we hacked it together, sent over the thing to Andrew, and Andrew's like, "Great, this is awesome." And I forget the exact details, but maybe a day or two later he emails back and is like, "Wade this looks awesome. I'm having some tough time getting going with this. Do you think you could jump on Skype to walk me through how to set this stuff up?" So I jump on Skype and we're going through, we're helping him set up that Zap, get Wufoo connected to AWeber, and I'm watching him try and do this. The product's not very good, poor design. To paint a picture when you select which Wufoo form you want to hook up, instead of listing out the names, the name you had given your form, we were listing out the IDs.

Eric Ries (00:23:42):
The IDs. I know I've done that too. Yeah.

Wade Foster (00:23:47):
Of course. A normal person has no clue. A normal person has no clue the IDs and so that's the kind of stuff that is happening here. Anyway, we get him through the whole setup process. We go to test it and turn it on, and he submits a lead into his Wufoo form, pops over into AWeber immediately. His eyes light up and he goes, "Oh my God, this is so cool. You don't know how much this is going to save me, Wade." And then he's like, "How much do I owe you? I want it. Tell me." And I remember walking away from that thinking, that's the exact opposite experience I had with the old product. The old product with the professor's thing it was like pushing a boulder up a heel and that product was well designed, well-engineered, it had all the right stuff you would expect.

(00:24:36):
Over here this was weeks old software that was it worked, but it still needed a little bit of... We needed to do some revs on this thing. And over here, the guy's so excited that it exists and I was just like, oh my gosh, if we actually had the same quality of software, but with a problem people actually cared about, I think we got something. And so we just rinse, wash, and repeated that process for, I don't know, maybe a hundred people. I would just personally onboard and just take all these notes for where... And every single time it was the same thing where it was like, this is awesome. You all are really onto something. And I was like, I don't even feel like I'm selling. It didn't feel... I still don't consider myself a salesperson, but here at ours, it just felt like, I don't know... Felt like I was selling lemonade on a hot summer's day. It's like I don't have to work for this at all and so that to me was the difference. It was just people wanted the thing that was it.

Eric Ries (00:25:36):
Most people, even most entrepreneurs have never had the experience that you're describing, and even serial entrepreneurs I know who have just lived a life of total frustration where they've come to actually internalize the idea that life is always pushing the boulder up the hill and trying to get people to eat their vegetables when they don't want to. And it's one of the things that makes it really hard sometimes to pivot is if you don't realize that what you're describing is possible, it's really challenging. And I'm curious if you think you would've had a sufficient appreciation for it if you hadn't had the frustration you were dealing with in the prior company?

Wade Foster (00:26:09):
No way I would've had it. Just no way. Yeah, I mean just totally... I remember walking out... I still remember when I finished that call with Andrew and it was a very nice Missouri day. And I remember walking outside literally doing a big old fist pump because I was like, this was so different. It just felt... Now it helped that it was my own creation a little too. You have some of that own ephemeral joy from being something you willed to life but I was like, that worked. One try, it worked. How is that? It's not supposed to be that easy, but it was, I don't know how else to describe it.

Eric Ries (00:26:47):
Were you embarrassed to be showing Andrew someone you admired your janky prototype?

Wade Foster (00:26:51):
Oh yeah. I was so nervous, so nervous walking through that Skype call because here's a guy that I kind of look up to and walking him through the software and it's like, this isn't great, this isn't awesome. And then when we get to the end and his reaction is that I was like... It was kind of jarring. It was like, okay, all right, this is going better than I thought it was. Yeah.

Eric Ries (00:27:18):
Okay. And it was smooth sailing from then to unicorn status, right?

Wade Foster (00:27:23):
Well, no, not smooth sailing. A lot of effort put into it, but we mostly once 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? We've got some competitors out here that are doing some interesting things. Are they going to be faster than us or not faster than us? How's that going to work out? So these are all variants of good, good problems. The site went down and people rely on this. That kind of stuff is the heart. There's a lot of effort that went into that, how to hire a team, how to lead it. So all these things, problems no doubt, but all very good kinds of problems at the end of the day.

Eric Ries (00:28:21):
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(00:29:23):
Go to neo4j.com/E-R-I-C to learn more. So talk about, we've been talking about the product Zapier, and I think probably most people listening to this are familiar with it and you've given a sense of what it can do and certainly in those early days it's really about integrating different SaaS products together. And that really dates the founding story. That's really at the height of the beginning of the SaaS era when those automations were starting to become really important. Obviously, now the product is a lot bigger, but talk a little bit about the company. We talked about how to build the product, but how did you build the company in those early days?

Wade Foster (00:29:59):
I remember PG gave us some advice on first session at YC.

Eric Ries (00:30:04):
This is Paul Graham? [inaudible 00:30:05]-

Wade Foster (00:30:05):
He was like, "This summer you should do..." Yeah, Paul Graham, founder of YC, and he gives some advice. You should do three things. You should be writing code, you should be talking to users, and you should exercise. With the exercise, one being take care of yourself. I remember Brian and I on day one of YC... Mike sat this one out. Brian and I went for a jog. We felt like we checked the exercise box off. And then for the next two or three years, we wrote a lot of code. We talked to a lot of customers and that's what we did honestly. It was just nonstop how do you get more integrations, customer support? We'd wake up and our first hire was a customer support rep because we'd wake up and we'd be doing support until 3:00 PM and thinking, this is really helpful. We really understand our customers really know what they're wanting out of us, but at a certain point, we actually got to go fix the things that the problems they have with this stuff and we just need a little help on the customer support side of that.

(00:31:07):
So our first person was that and we really wanted to stay really close to customers and the problems that they were facing. It helped also too that amongst the three of us, we had all the core skills that were required to go do this. So we didn't have to go hire a lot. We're also fairly young, so it's not like we have huge responsibilities outside of work. So we're just pouring everything into this and we're willing to go through what others might perceive as a little bit of pain. We're just out of college. We don't have money. We're used to living on ramen budgets. There's no reason for us to need gobs and gobs of money. So we did raise that million and change right after YC, 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. It needs to hurt us and so like, hey, we're waking up and doing support till 3:00 PM yeah, that's starting to hurt. We need to get somebody to help here.

(00:32:08):
Now we're trying to ship a lot of these integrations, but our backlog of requests for integrations is a lot longer than we're being able to fulfill. We need to get another engineer in here too to go help us out with some of these things. But we're being... I would just wake up and look at the balance sheet and then the cash flow statement. I'd be like, okay, we've got enough coming in. I think we could probably hire the next person. And I would just delay certain decisions by a couple weeks or maybe a couple months just to make sure that the cash flow stayed nice and tight. 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 quaint.

Eric Ries (00:33:00):
Quiet. Quiet.

Wade Foster (00:33:02):
Some of these folks burn that amount of money in an hour. It's comical how much it gets burned but that was our mindset. It was like, we do not want to do this. We want to stay close and staying close to it and doing the work ourselves also meant that we really understood every aspect of the business. We understood customer acquisition, we understand the product, we understand support, we understood the finances, we understood the culture, and it meant that we could learn at a really good pace.

(00:33:31):
And I think back to it it's like that was really one of the things we got right. Because if we'd have tried to shove a bunch of cash and a bunch of people into this, I think we would've actually killed some of the magic because we would've been spending our time and attention on other issues that weren't talking to our customers and writing code. So the very early days of the company were all about that. I mentioned getting profitable in 2014. We had 10 employees in 2014, so three years in, we're still not that many people. We're just staying so close to the work.

Eric Ries (00:34:08):
You'll like this old classic Silicon Valley joke, which is I start a company now I have a problem. So I raised some money. Now I have two problems. So I hire some people. Now I have three problems.

Wade Foster (00:34:19):
Three problems.

Eric Ries (00:34:22):
That's such a great-

Wade Foster (00:34:22):
That sounds about right.

Eric Ries (00:34:23):
Such a great example of it's become more of the rage of late to talk about the idea that we're going to have companies that scale without growing, where the impact that the company can achieve is not correlated to its headcount. But I feel like that's actually kind of an old idea of making a comeback and you guys are such a great example of that. But again, I got to ask, you must have been around people who told you the conventional wisdom, which is that if you don't do that, if you grow at this suboptimal pace and you just chase break even and you don't take the big swing, surely some better finance competitor is going to come in and eat your lunch, you're going to miss the opportunity, the window will close [inaudible 00:35:02]. I can only imagine how many times people gave you that advice.

Wade Foster (00:35:07):
Oh, we a hundred percent had that.

Eric Ries (00:35:08):
Yeah. What was that like?

Wade Foster (00:35:09):
Yeah, so I remember we woke up every day terrified. There was a product company. I actually love the product. It's a great product. IFTTT, If This Then That, they launched, I want to say they'd launched maybe six months before us and belle of the ball. The TechCrunch's, writing about them, they've got all the love on social, very focused on consumer though. We're focused more on work, that was our orientation always we're going to be for work. But IFTTT is doing amazing. They're raising tons of money, tens of millions of dollars, and later hundreds of million dollars from name-brand VCs, et cetera.

(00:35:54):
And folks are saying, "IFTTT's going to get you. IFTTT's going to get you. They're going to get you. All they got to do is start doing work stuff and they're going to get you." And so I remember waking up every single morning, checking the news and just thinking, this is the day that IFTTT's going to launch a for business thing. And if they launched a for-business thing, I was like, I mean, they've got all the attention, they've got all the hype. Maybe that's it, if that happens, maybe we can't compete.

(00:36:23):
But at the end of that, end of the day, it was just that it was simply fear that was there. And our approach was like, well, how do you combat that? We got to just get up and do the same thing. So we're going to get up and we're going to try and ship more integrations. For us, we had this really powerful distribution engine that was more integrations led to more landing pages led to more search keywords. And so that was how we grew.

(00:36:46):
And so it was like, okay, we need to just really be focused on this flywheel and get this right and maybe we can just get enough traction, get enough brand reputation that even if IFTTT does this thing, people know us as the real deal place to do work automation at the end of the day. But yeah, well-funded competitor. Conventional wisdom said, had all the advantages at the end of the day, but IFTTT has done fine for themselves. But we've outpaced them at this point in time quite a bit. And I think if we'd have had all the money, all the attention, all the other stuff, I don't know that we would've been as laser-focused on writing code, talking to users [inaudible 00:37:35]-

Eric Ries (00:37:34):
Occasionally exercise. Well, I'm glad you're talking about that-

Wade Foster (00:37:37):
Occasionally exercise.

Eric Ries (00:37:38):
...because it's so interesting to me that this idea, this meme is out there because you yourself already said as you're telling this story that if you had tried to cram money and growth into it, you would've killed the thing that made it really special. And yet even you had this paranoia that not having done that would leave you at a disadvantage. So there's this idea floating around that you have to be maximum. You have to do everything to the max. Maximum exploitative, raise all the money you can, do what you have to do to customer, just do whatever it takes. That's the only way to succeed. And I think even those of us who've seen something different within our own eyes, we still can buy into that idea. And it can be hard to feel like you're doing things differently and not chasing that thing. And I'm curious, you're talking about that paranoia about the day would come one day when the well-funded competitor came for you? Did the day ever come? What happened?

Wade Foster (00:38:29):
I mean, the day hasn't come yet as far as I can tell. I mean, it's different. The fears are different these days, but they still exist. Back in the day, it was IFTTT. Now it's you wake up and it's like what new AI thing exists that could totally just revolutionize an entire industry, revolutionize an entire space? And now it comes from every direction. It's some random startup no one's ever heard of is doing this sort of stuff. So yeah, I don't think that fear ever totally goes away. I mean, even to this day, I don't know that we're right. I know that it has worked, but I don't know... I don't have the counterfactual. I don't know.

Eric Ries (00:39:13):
You can never know that. That's the curse of entrepreneurship. You only get to run the experiment one time. You said something really interesting in passing.

Wade Foster (00:39:20):
Yeah, exactly.

Eric Ries (00:39:21):
I mean, Zapier could be more of a textbook lean startup story. So many elements, the MVP, the laser focus on experimentation and learning. The story he told about Andrew is such a classic example. And we'll link to Andrew's podcast, shout out to him. It's a great, great show. But I mean just a great example of how a customer reacting that way to an early prototype is extremely revealing about what's really going on and where you are throughout the product market fit. And we talk about there's the value hypothesis that first that okay if we could build it, there is a customer who actually finds it delightful. There's a light standard we call it. But then there's also the growth hypothesis. Too many companies only focus on building something delightful.

(00:40:03):
They never actually figure out how the distribution is going to work, how our customers are going to find out about it. And you built this incredible flywheel that is a great example of a concept we call the engine of growth, which is a situation where new customers come as a side effect of the action of past customers. We call it the law of sustainable growth. And so many growth hacking and marketing tricks and gimmicks and whatever have this fundamental problem that even if you're really good at doing whatever the marketing activity is, let's say you can get the press to write a story about you at will and each time you do that, it gets you a thousand users. Well, as the size of your customer base grows, a thousand customers as a percentage is going down. So you have to be able to grow the marketing effort in line with the proportion of customers that you have.

(00:40:49):
And so in order for it to be sustainable somehow it has to be powered by the size and scale of that customer base. So most people, for example, would say that SEO, especially in those days, would be in the category of something that doesn't scale. Because even if you rank for a really important keyword, that's a fixed benefit. And yet you were able to build this flywheel using power surge engines such that it scaled with the business. And that's a really unusual flywheel. I wonder if you could talk a little bit about how you discovered that growth engine and then how you validated that growth hypothesis was going to work.

Wade Foster (00:41:20):
We were inspired, borrowed, stole the concept from Patrick McKenzie [inaudible 00:41:28]-

Eric Ries (00:41:31):
Oh, yeah. Shout out Patrick McKenzie. We'll link to him too.

Wade Foster (00:41:32):
Yeah, folks will know him from probably his work at Stripe maybe, and writes a great financial newsletter these days but long before that he had a micro business, I guess. [inaudible 00:41:47]-

Eric Ries (00:41:48):
Bingo Card. Bingo Card Creator, right?

Wade Foster (00:41:48):
Called Bingo Card Creator. Yes.

Eric Ries (00:41:49):
Bingo Card Creator. Oh, yeah.

Wade Foster (00:41:50):
And he would write all about... He would share all of his notes. It was great. It was so great. And he had this one called Scalable Content Creation. And he had this insight that was really sharp, which was folks might search for bingo cards, but turns out they'll also search for history bingo card or physics bingo card or wedding shower bingo card or US history bingo card or insert any sort of keyword around a bingo card. And it turns out it's pretty cheap for him to make a page that is X bingo card. In fact, he made a little CMS for it and he hired a woman, I think it was like a stay-at-home mom, and said, "Hey, for every one of these you come up with, I'll pay you, I don't know, five bucks." And he did the math on it. It turns out not that many people search for history bingo card, it's tiny.

(00:42:49):
But for every page he'd create, he'd spend $5 and he'd get enough visitors that he'd make a return on that. I think he'd sell for bingo for his US history bingo cards. So it costs five bucks to make the US history page. He sells the US history template for 10 bucks. Great. He makes 40 bucks off, that costs him five bucks to make it. And rinse, wash, and repeat that for every single permutation of bingo cards you can think of. Kind of genius-like arbitrage thing to think about. And so we saw that and we're like, hmm, that's interesting. I bet you could do that for integrations and software integrations are probably a little more lucrative than bingo cards. Just going to go out on a limb. And we were like, okay, well it works just the same.

(00:43:40):
Every integration we've got should have a landing page that is that app with any other app that you can sort of hook up on the platform. And so for us, that meant anytime you went search for PayPal or High-Rise, like Andrew Warner was back in the day, or Wufoo and AWeber, back in the day, there's a landing page that ranks for it. And at the time the search engine rank, the search results for these types of searches were abysmal. There was just nothing. Nothing. It was like Stack Overflow links and gists and just stuff that was no good at all. Now if you go search link, you can see-

Eric Ries (00:44:12):
Of course, it's really different.

Wade Foster (00:44:13):
Like everybody. Zapier is doing this and everybody's doing this. It's not much of a secret anymore. But at the time this was super novel. And so 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, N + 1 new landing pages, and keywords to go rank for. And that's another tranche of customers coming in and then-

Eric Ries (00:44:37):
Who probably also are submitting requests for new integrations.

Wade Foster (00:44:40):
...the magic really started. Submitting requests for new integrations. And the magic flips in when we built our developer platform to allow the community now to come build integrations into the company. So now you're getting customers coming in through keywords, you're getting the community to build integrations and it's just us brokering this stuff in the middle. And so when you talk about a lean startup, well that really does help you be fairly lean when the labor's coming from this side, the demand's coming from this side. Customer acquisition costs rounds to zero because organic search is free.

(00:45:10):
And so it's us doing customer support and making sure this workflow engine doesn't stop working. That's our job is it can't break. It has to work really, really well and I think that engine was super important. And I like the way you talk... The way I end up talking about this with other founders who are thinking about is I think oftentimes people think of product-market fit as this sequential thing where it's like we're going to start with the product. Once the product's good, then we're going to start working on the market side of it and then the fit thing comes third. But I've always thought of it as it really is better when the product and market is actually, it's a reinforcing mechanism like when you look at the best products, it's just baked in that way-

Eric Ries (00:45:55):
It's one thing, it's not two-

Wade Foster (00:45:57):
...where the product ends up or where the-

Eric Ries (00:45:58):
...this ain't the space-time continuum, they're not separate things. It's one thing.

Wade Foster (00:46:01):
Yeah, it's not two distinct things. It all just works together in a pretty magical way. And I can be honest, that's hard to do, but I think you look at the best businesses, and I think they all have this dimension where they just are symbiotic in that way.

Eric Ries (00:46:18):
In the early stages, the product is the marketing is the product there. There's no distinction-

Wade Foster (00:46:22):
Exactly.

Eric Ries (00:46:23):
...and from that, just to date ourselves a little bit from that era, I remember people were talking a lot about the need to add monetization to products. So the theory at that time was you raise a bunch of money, raise a grid, build a great product, give it away for free, get a lot of customers addicted to it, and then start charging the money. I remember thinking that adding monetization to a product made as little sense as adding productization to money. They're not separable things that you just add, it's not a layer of cake you build it by layers. The things are highly integrated and if the whole engine can't turn as a whole, then the thing is not going to grow. And we saw so much startup mortality from people who didn't seem to understand that at that time.

Wade Foster (00:46:59):
Yeah. I mean to that point in our beta, it was paid. We had a paid mechanism as part of it, mostly because we wanted to understand, we wanted it to all fit. We didn't want to be attracting these tire kickers who were never going to pay a dime for it, and then us to be reacting to customer feedback that wasn't actually customer feedback, it was just tire kickers. And so you did want it to be a many business to just know that yeah, this is the business we're optimizing. I feel like the longer you wait on that, the more behind you get and the more it just starts to be incongruent. And I think to your point, you see this where there are some really phenomenal products on the internet where monetization is just really bad. The business of that is just no, no good. A lot of the early community forum software stuff are amazing communities, amazing places to hang out. They're just great, great products. The businesses are just abysmal. You just wouldn't want to run one of those at the end of the day.

Eric Ries (00:48:01):
Well, and eventually the product suffers. Eventually, the community suffers because there's no business model defending it. And so it was, think about how social media decimated some of those [inaudible 00:48:10]-

Wade Foster (00:48:10):
Well, and especially if it gets overfunded.

Eric Ries (00:48:11):
...just based on a matter of a business model.

Wade Foster (00:48:12):
And especially if it gets overfunded and now the returns are expected to be dah, dah, dah, dah, dah. Now they have to grease every dime out of the thing where it probably could have been... Those communities probably could have been really good products with decent businesses put on top of them versus aiming for these venture [inaudible 00:48:32]-

Eric Ries (00:48:32):
And I really liked your idea of creating this debt that you have to catch up to because I do think that so many companies are ruined by investors, frankly. When investors create this mismatch of expectations this pressure to do things and that drives otherwise good products often in an exploitative direction. And it brings to mind something I've always wondered about Zapier is this story is so much about trust because you are asking people to trust their business to you kind of in two different ways. And I'm curious if you think about it the same way. Well, I was thinking about this, that on the one hand, I have to trust you. I'm thinking about Andrew who if I hook up my contact page to my email list, it better work. If someone signs up and it doesn't wind up on their email list.

(00:49:15):
My business is broken and now I have an unhappy customer and so I'm trusting that the performance of the software will be what you say it is and also on top of that, I'm also trusting you in the privacy sense that as I'm taking my most intimate private data as a company, my customer records, my billing records, and I'm passing them through your hub and spokes model, it must mean a lot of my sensitive data is passing through your servers. And I have to trust you're not going to do something evil with it. I'm curious, how did you think about winning over people's trust and how have you thought about maintaining that trust at the company at scale?

Wade Foster (00:49:47):
Yeah, I mean, the early days, honestly, we just have to give credit to folks like Andrew and others that were early customers because I don't know, how would we have conveyed that? I still don't.

Eric Ries (00:50:02):
That's magic of early adopters-

Wade Foster (00:50:04):
It just was literally-

Eric Ries (00:50:04):
If you've never seen it's hard to believe.

Wade Foster (00:50:06):
It really is. Exactly. And so all the credit goes to them for just honestly for no good reason. Just saying, "Hey, I'm willing to take... I have a big enough problem that I'm willing to take the risk." And then I think over time... It really is a time aspect. It's like once you have some customers, it's like, well treat them really well and make sure that you fulfill the promise and then you start to build up a reputation for like, okay, great. Zapier is good, Zapier is great, and now 13 years in, a lot of people trust us. They know that our stuff is good. But 13 years, that was just time. It was just a consistent application of doing right by our customers for a long, long period of time. And look, there was other things that we could do to de-risk certain things.

(00:50:54):
So for example, you talked about, hey, there's a lot of this data coming through our pipes. Well, we have a task history where we purge those records after a very short period of time, so we're not storing any of this data at rest. And then all of a sudden it's like, oh, okay, I feel more comfortable with that. We have task history that has replay associated with it. So when something breaks, great, hey, you can replay it. You can turn on auto replay if you want this to replay twice. So you can start... Over time you start to learn and figure out, okay, here are the types of ways things can go wrong, and here are the safety mechanisms, the safety nets we can erect around them such that one, we can prevent it or if we can't prevent it, because we can't prevent everything that we have mechanisms to recover from those failures.

(00:51:40):
And so over time, you're just building more of these mechanisms in. And some of it's our own ideas that we just came up with as we thought through it. Some of them are candidly just customers saying, "I think y'all should do this." And we're like, "Yeah, we probably should." And so then we built it, bake it in. And then again, it's that time aspect where it's you just keep the consistent application of taking care of your customers year after year after year. It really does compound. And I do think this is something that... Again, this is something that venture companies sometimes get topsy turvy. In the quest for revenue, you can be so obsessed with dollars today that you actually hurt your long-term revenue potential. We've seen this in the last couple of years where markets go sideways, companies raise so much money, they're trying to hit their numbers.

(00:52:27):
Everybody raises prices, everyone raises them a ton, and look for a little bit I think the market kind of understood. They're like, I get it, et cetera. But at a certain point, it's like... We had a vendor that showed up a week before our renewal and said, "Hey, it's going to cost four times as much and we're going to shove this other piece of software down your throat that you don't want." And we're like, "Well, you know what? We'd rather just renew it one year instead of three years." The vendor said, "Oh, if you're going to renew it one year, it's still the same price." And so look, we renew it three years, but you know what? Next time that renewal comes up, I don't think we're going to stick around. It's just hard for us to want to do that.

Eric Ries (00:53:09):
If companies never acted-

Wade Foster (00:53:10):
And look, I'll be the first to say we are not perfect on this dimension. We've made our fair share of mistakes. But 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 a little bit of revenue, a little bit of just growth for the durability of these customers over the long haul.

Eric Ries (00:53:32):
I always say that if established companies never acted in an exploitative way, there would be no startups. Because every time someone does what you're describing, I'm always like some startup somewhere is high-fiving right now being like, great, that's my opportunity. I now have three years to try to come in and displace that vendor who you're now pissed off about. Whereas you were perfectly happy before and the incumbency advantage would've made it hard to create that opportunity.

Wade Foster (00:53:55):
Yeah, this is where I look at Amazon and I'm just so impressed. I think Bezos just got it right. He's like, hey, your margin is my opportunity. And then he figured out a way to do it to the scale of Amazon and how do you remain true to those founding principles decades in. It's incredible.

Eric Ries (00:54:12):
I want to talk about you did eventually grow the company. You're what 750 employees now? Something like that. A lot of companies I meet, the founders have great intentions. They're like, okay, yes, I want to build durable customer relationships. I want to be a trustworthy counterpart. That's really important to me. And when you have 10 employees, 15 employees, 25 employees, you can personally oversee and make sure everyone is true to those values and that culture. But when you get past 100, 150, certainly by the time you're at 750 employees, you're having to trust that your employees are going to embody that ethos and you're now being going to be held responsible by customers for the behavior of people that you don't interact with that often. How have you managed that? Have you found that stressful? And how have you managed to keep that trust even now you're no longer building the product directly, but you're building this machine that builds the product?

Wade Foster (00:54:57):
I think this is the hardest thing after you get product market fit or something like that. It's all about people and cultural tenets and people are not predictable. They behave in all sorts of different ways. Hiring is fraught. It's a really challenging mechanism. The thing that has worked the best has been finding leaders who really do espouse a similar mindset, a similar point of view, and it's not they're like... It's not that you want group think, but you want them to similarly obsess about the customer, similarly obsess about the problem space. Similarly obsess about product quality, sort of have similar standards, I think is probably the main place where similarity come in. And the hack that I like is I like people who have higher standards than me because I know if they're going to have higher standards than me, I'm just not going to have to fight that hard at the end of the day for what's right for the customer, what's right to get done. But by golly, this is probably the most mistakes I've made are probably in this category of work easily. It is super hard.

Eric Ries (00:56:14):
Have you done anything from a structure or process point of view to try to make sure that you're not having cultural drift that those values are being embedded in the company?

Wade Foster (00:56:24):
So I would call out maybe two things. First, 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 it's not just posters on a wall, it's actually a mechanism to reinforce these things. So that helped and that certainly was really powerful. Still remains really powerful, but as we've gotten larger and larger, they're not prescriptive enough for some of the detail-oriented work. And so I remember a couple years ago we had some changes in our exec leadership on product and engineering, and as I was getting in, I was noticing this phenomena that happened where there was just like... Because we hire remotely, we're hiring people from all over the world and they don't always have... They're coming from all these different companies, all these different sets of best practices. So every new leader is coming in and trying to insert their set of best practices and nothing was inherently wrong with any of their best practices, but the stacking of-

Eric Ries (00:57:32):
Yeah. But you can't have 25% Google, 25% Apple, 25% Microsoft. Yeah, you can't. They don't work together.

Wade Foster (00:57:37):
And then it's the stacking of them that just grinds the gears to a halt. And it was just like nothing is getting done because it was we have to go through every single set of best practices, which ended up being a worst practice at the end of the day. And so I was like, we're not shipping anything. We have to fix this. This is fundamentally broken. And myself and a couple Zapier vets just sat down and were like, hey, we're going to write what we call our build principles. And these were just like, how we think about shipping products. When do we ship product? How do we think about the quality levels? How do we think about experimentation? How do we think about all these things just to define this as what our way of doing it is? Not that it's the right way, but at least we can act a little bit like a hive mind when it comes to these decisions.

(00:58:23):
So we're not relitigating the how of the work. Instead, we can debate is this the right feature to ship. Is this the right customer problem to solve? Our debates can be oriented there versus on what's the right dev process to use or what's the right blah-de-blah process to use where I'm like... No customer would ever be proud that this is the conversation that we are having internally and that in fact is often a thing I describe when I see us getting stuck in a rut and be like, hey, if all of our customers looked internally and saw the discussion we are having right now, would they be really happy about this discussion? And if so, I'm like, it's probably a good discussion to have but there's a lot of times in these customer needs-

Eric Ries (00:59:00):
Totally.

Wade Foster (00:59:01):
...where if they had a chance to look inside of it, they would go, I am so frustrated at you all right now because this does not solve the problem I care about. And so it's just a good grounding question to keep people a little on the straight and narrow to go like, okay, yeah, we're optimizing something that customer just doesn't give a crap about at the end of the day.

Eric Ries (00:59:20):
It's an old Deming aphorism that the customer is the most important part of the production line. And he used to advocate for that perspective that you would look to see the things that you're doing to see if that's something that a customer would care that you're doing it or is it pure internal navel-gazing. And so much of what goes under the banner of quality is actually not something that is a customer impacting.

Wade Foster (00:59:41):
Leading to that-

Eric Ries (00:59:41):
I want to run an idea-

Wade Foster (00:59:42):
So anyway, these build principles did help quite a bit in terms of, and then we just try and just getting leaders to talk about it. Like, "Hey, you did a good job at this. You followed this really well." And I think it's also important to do it, especially when you don't get the outcome you'd hoped for, but you still believe in the mechanism at the end of the day. That's really helpful people because it gives them permission to keep doing it that way. Because they're like I'm not going to get in trouble because that's at a certain scale everybody's just worried am I going to keep my job? So you have to keep reinforcing them to do the hard things and say that's actually the way you keep your job. You don't keep your job by playing it safe because if you play it safe, we're actually never going to be interesting, which is kind of the irony of this whole thing is that playing it safe is actually the riskiest thing you can do-

Eric Ries (01:00:30):
It's very risky. Yeah.

Wade Foster (01:00:31):
...at the end of the day.

Eric Ries (01:00:33):
In a previous episode, we talked about this idea I call the culture bank, which is basically the way you build a strong culture is you do things that are for the customer's benefit that involve some kind of sacrifice in defense of your values and that you tell stories within the company. You have to tell people that it happened so people know that, look, even though we didn't get the outcome we wanted, even though this cost us something, this value is so important. It's the right thing to do. And when you do that, it's like you're making a deposit in a bank. And the advice that someone once gave me was that basically you set up this bank and you only make deposits, never make withdrawals. It's so easy to talk yourself into thinking that it's a good idea to break the value this one time, but you start to do it once, you'll do it all the time. But I want to run a further idea by you.

(01:01:13):
Because I'm curious if this resonates with you. One of the things that I've worked with some companies on is we build this trigger when you said that the values were not specific enough as you grow to guide people's behavior, and that's a very common challenge that companies run into where they have these high-level values and then there's the performance rubric and you're missing this intermediate layer that's like make it real for me.

(01:01:33):
So it's a concept called a leader's guide where you actually tell stories, you document them and you repeat them all the time and it becomes part of how you build the performance review matrix, tell stories about times when people did the right thing by these values. Here's what it looks like. But the idea I want to run by you, I call the two-way review, which is that whenever people do this, the stories inevitably go stale because you guys have been around for 13 years now. So some of the legends of the company will be an amazing thing. Even some of the stories you told me, they're old stories that time when Andrew Warner called you, I'm sure everyone's sick and tired of hearing that story by now. And people say, "Okay, well just because Andrew Warner called you about that thing 13 years ago, now you're doing the thing that used to drive you crazy. You're telling me it's something worked in the past. How do I know it's going to work for me?"

(01:02:18):
And I've heard plenty of people say, "Sure, the founder could have gotten away with that 13 years ago, but I can't ship an MVP now. I can't do something that we know we can't do that." So you have to have a process to revitalize those stories. And it occurred to me one day that we actually do the story collection every year when we do performance reviews, we write down and we collect all these stories, and generally, HR throws them away at the end of the cycle. We don't keep those or maybe put them in the employee's file, but the rest of the company doesn't hear. And so the two-way review is basically a process of using the performance review to update the leader's guide to bring new stories in and keep it fresh. People understand here are the new challenges that we're facing, and I'm curious if that cycle of using it to build the matrix, using that then to do the reviews, using the reviews to then update the stories, which update the matrix that resonates with you.

Wade Foster (01:03:12):
I like this idea because there are a lot of positive behaviors, positive outcomes that are buried in these things that a manager and a direct report are generally the only people that ever look at it. And so if you had a mechanism to extract those out and use those to go celebrate, like, hey, here's some incredible behaviors, approaches, whatever outcomes from this quarter that we wanted to shine a light on that stuff is it is really powerful.

(01:03:45):
I have gotten this feedback where from my teams that are like, "Hey, Wade, you usually have the right ideas on things, but you don't repeat it enough. You need to repeat it until you're sick." And so I have to get used to it. I mean, you talk about the Andrew Warner story, I guarantee there'll be some Zapier employees that listen to this podcast and they'll have never heard that story-

Eric Ries (01:04:10):
Right. For the... Some people have heard it 500 times.

Wade Foster (01:04:12):
...and they'll be learning. Yeah, they'll be learning it for the first time. Even though I probably told that story, I don't know how many times. It's the great David Ogilvie quote for advertising. He's like, "Hey, you're not talking to a standing army. You're talking to a moving parade." And that concept is so important to embrace as the storyteller where you're like, oh, I'm not repeating myself to the same people. I'm actually talking to different groups of folks all the time, and it's okay to play our greatest hits over and over and over and over again people like them. They really do.

Eric Ries (01:04:47):
That's how they became your greatest hits. Yeah, exactly.

Wade Foster (01:04:48):
I know.

Eric Ries (01:04:51):
I want to switch gears, just I feel like we've got to talk about AI. We'd be remiss if I didn't talk to you about it because I don't know if you had this in mind when you started the company, but it seems to me like the way that generative AI has played out these past few years. You are one of the companies that is most ideally situated to take advantage of that megatrend, and that must be both enormously exciting. But you mentioned earlier a little bit daunting. You're also going to face all kinds of new competitive threats from capabilities that we couldn't have even imagined when you started this company. So I'm curious if you could talk a little bit about some of the new things you're doing in AI and how do you see AI changing the future of work, changing what it means to automate work, those kinds of things people are really concerned about it and maybe even a little bit excited about. How do you see it?

Wade Foster (01:05:36):
I mean, we're super excited about it. I think we founded the company on the premise that we're humans who think computers should do more work. We want automation to work for everybody. And I certainly feel like we believe a lot in human ingenuity, human spirit to solve problems, but for far too many of us, we're limited by the tools of our time. If you're not an engineer, it doesn't matter if I have a great idea, I'm not well equipped to go do some of these things. And so certainly the Zapier of 2011, 2012 helped. It felt like a step in the process. We definitely made it a lot easier for folks to set up integrations. And then in 2016, we made it a lot easier for people to set up workflows. But there's still the depth between idea and execution is still too far apart.

(01:06:24):
We still need to shrink that and make it faster to get there. And AI is just like another... I say it's another, it's probably the biggest step function change in technology capabilities that existed. I think for us, the experience has been one of a combination of, again, fear and jubilance at the same time where you see what these models are capable of and you start to go like, well, are we going to be relevant in the future? Is our stuff going to matter? But then also you start to play around with it and you realize like, oh wow, there actually is some really incredible stuff that could happen when you add AI into the workflow.

(01:07:06):
And so we've got the most boring version is actually where all the value is happening. Old school Zapier, workflows, there is 400,000 customers. They've delegated almost a hundred million tasks to AI. I think the reason it works so well is that AI is really well situated for certain tasks, but it's super unreliable for a lot of tasks. So if you go play with a lot of the AI agent tech, their demos are really slick, but the challenge is the reliability is too small and it doesn't work that great. Why? If you can-

Eric Ries (01:07:37):
Not a lot of those demos being deployed to production. Yeah.

Wade Foster (01:07:40):
I know. But 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 it. So you can say, "Hey, I want to collect a lead from the site. I want to enrich it with ChatGPT or I want to enrich it with CLEAR, but then I want to go scrape the website and pull some details through ChatGPT. Then I want you to draft an email based on what you learned, and then I want you to send it into Gmail as a draft that I can go personally go review, and press in." All of a sudden you've got a workflow that works pretty dang good and is super powerful for anyone that's doing any sort of lead generation techniques versus having the AI try and do every single one of those steps, it's going to come up with some gargoyle gook at the end of it.

(01:08:24):
And so I think that's where Zapier has been a huge net beneficiary is that it's opened up AI to a whole host of non-technical people to use and open up and unlock these new use cases. But that said, we still think that that is exciting, but you have to anticipate I think with AI, where is things going? That works great for today, but the model improvements are so fast. And so that's where we've invested in things like Central where Central is saying, "Hey, what if you just designed Zapier from the ground up? In an AI modern era, what would that experience look like?" And that's a chatbot where you can talk to it and describe your workflows and see if it can go set it up. You can work asynchronously with data, you can pull it in a much more real-time manner. And the use cases there are pretty good.

(01:09:12):
It has a little more of the reliability challenges that the old stuff doesn't, but it unlocks a lot of ease of use that you don't get with old-school workflows. So that's pretty exciting. Then we've invested a lot in things like tables, interfaces, and stuff like that. And that's interesting to look at because you go chatbots, which is where a lot of the early AI work is happening it's pretty powerful, but it's not clear to me that that is the perfect user experience paradigm. And so it's interesting to go look at other pre-existing user experiences and say, "Well, what if you built tables with AI in mind? What if you built interfaces with AI in mind? What if you built workflows with AI in mind? How would those experiences work and how would you blend all those things together?" I think then you combine that with Zapier's ecosystem of 7,000 tools connecting all this stuff.

(01:10:01):
We have all this data we can pull in and push out to the world, and it does make for a really fun sandbox for us right now. It is super fun to be working on these problems at this moment in time and yeah, I'm sure like a lot of startups, it's also terrifying because everybody sees the opportunity and goes, there's going to be some really awesome stuff that's made. At the end of the day though the great thing the customer always wins. Customers are going to have a lot of fun in the next five years. It's going to be awesome.

Eric Ries (01:10:27):
So one of the things that's interesting about this AI stuff that you're working on, it's almost like you're having to go back to your startup roots. I mean, I've called it for a lot of companies a second founding. Does it feel like that? That you're rediscovering what it was like to have to do that, but now do it in the context of a much larger company?

Wade Foster (01:10:43):
Oh, a hundred percent. And I think you talk about having to learn how to build a team that's oriented around this work. So many of the folks that you hire along the way, you're hiring for just their expertise at a particular skill set around scaling a problem, and now you're starting to try and launch new stuff and you're starting to find that not everyone is as comfortable in the ambiguity of new things as other people. And you start to have to go, okay, how do we do that in the context of a company where there's a lot of folks who are like, I'm not so sure I'm willing to take that risk. I'm not so sure that that's good enough. I'm not so sure that we should be working in this area. I'm not so sure. I'm not so sure. I'm not so sure. And sometimes it doesn't come off quite so polite as I'm not so sure.

(01:11:38):
Sometimes it comes off as like that's the biggest mistake this company is ever going to make. And I think the thing that we have found is you got to go back to... Like you said, you got to go back to the roots. How did these teams work in the early days? Well, it was a small team that was passionate about a problem, who cared deeply about this set of customers, and you just get out of their way and you just say, "Hey, go do this thing. Really go figure it out." The unique constraints are you still kind of do have to do it within the existing context of the business. It's not an entirely net new thing and so there are more friction points to it. And I think we have learned how to ship a product. We've learned how to get early customers, we've learned how to get early revenue.

(01:12:27):
We're still learning how to package it all up together in a way that feels like it's a part of a unified Zapier experience. And every chapter has been like pulling teeth to work our way through it. It's just harder, I think, to do it inside these companies than it is to do it externally. But here's the thing, we have some amazing advantages to do it inside of the company. Customer acquisition for these new products is so much easier. So much easier and so it's just different. But I think the learning is just get a small group of folks who really care, who know how to ship, who love that problem space, and then let them launch the thing so that you can just start getting that iteration loop going.

Eric Ries (01:13:20):
I wrote a lot about this in The Startup Way, so I won't recapitulate all of that, but one of the things I've noticed is a lot of founders have a sense of vertigo. It's your identity is strange when you realize that you're no longer the entrepreneur in the story. You're actually more like an investor. You're more like a mentor. You're helping the entrepreneurs that work for you and you're having to hold them accountable in ways you wish people had held you accountable back in the day. That right mix of giving them the freedom to experiment, but still trying to have it be... Giving them the benefit of the wisdom that you've had.

(01:13:53):
And it's hard to remember, I think that they weren't there. They weren't there when you talked to Andrew Warner, they weren't there in Columbia Missouri when you guys were first starting out. So they've only known Zapier in the context of it as this multi-billion dollar behemoth. And you're asking them now to adopt a mindset from your past. And I'm wondering, have you had that sense of vertigo, that strangeness of the change in roles as you do that?

Wade Foster (01:14:17):
Oh yeah. I mean, it's weird. One of the products we launched, I remember just going, "I don't get this. I just don't. I don't. I don't I don't. I just genuinely don't." And then when we launched it, the response was incredible. And I was just like, "What is going..." It just was like, okay, I am not dialed into the entirety of our customer base in the way that I maybe was at that time. I knew every single customer, every inch of the product, every bit of surface area. Now look, I still know a lot, but there are pockets where there's people inside the company that have better insights, better points of view, and so figuring out how to differentiate between... Identify the folks who really do have a keen and novel insight versus someone who is just riffin' that's tough. That's hard.

Eric Ries (01:15:18):
All right, I want to do a lightning round of a couple of quick things before we-

Wade Foster (01:15:21):
Go.

Eric Ries (01:15:22):
...end. A lot of things I wanted to ask you about. First of all, I got to know favorite Zap of all time.

Wade Foster (01:15:28):
Honestly, I'm going to share. The most boring Zap that I have is the one that I've used since we adopted Slack. So Slack is... And it's had a couple of different iterations, but if you recall Slack, it certainly still is this way, but in the early days horrible. If you hated email because it was hard to keep up on things. Well, Slack just made it worse. Instead of one inbox, you got a million inboxes. And so the first iteration of this Zap was literally starring Slack messages and then sending me an email so that I could remember to come back to them later. I've since updated it quite a bit and so now it's not just me that interacts with that, I work with my EA, so I will star messages, I'll send them through a ChatGPT prompt to summarize them and rewrite them. Those land in a Coda doc that now my EA can help triage things with.

(01:16:21):
And so it's a lot more sophisticated now to help me just manage the influx of information that a CEO deals with on a daily basis. And I think the unique thing I can do in partnership with my EA is say, "Hey, there's a lot of tasks inside of here that don't require Wade specifically to go do. It just needs a general smart person." And so between me and her, and occasionally we rope in some other people when it's exceptionally busy, we're able to suck in all this information and then push it back out to the org with pretty fast SLAs so that it just keeps the drum beat of the organization working. So like I said, it started with this just very simple thing, which is like I'm going to star a Zap or star a message in Slack and send me an email to now it's my little mission control for managing company.

Eric Ries (01:17:09):
Super cool. All right. You once famously paid employees $10,000 to de-locate from the Bay Area to other places. Why?

Wade Foster (01:17:18):
Yep. This was a funny one. So it sounds a little silly after the pandemic, but pre-pandemic, I remember we were at a Zapier retreat and a couple employees were just talking about fun things we could do. And some folks had noticed that we'd hired a couple... Zapier had always been a full remote team. We'd hired some folks who within their first month of joining Zapier had left the Bay Area to move somewhere else. One had gone to Florida, one had gone to Pennsylvania, all mostly for family reasons. And they were like, "Huh, that's interesting." Most companies are relocating folks. They're spending $10,000 to get you to move to the Bay Area. What if we put a spin on this and did a de-location thing and we'll pay some money for them to leave the Bay Area? And I remember they pitched it to me and I was like, I don't know how I feel about this.

(01:18:13):
I was living in California in the Bay Area at the time, I'm not really sure I want to come dogging on the place I live in this way. But the head of marketing at the time, I was meeting with a PR agency that next week and it was an intake call to meet with them for the first time and he was given a download on the company, all the fun stuff. And then they get to the end and they're like, "Anything else that's interesting?" And without consulting with me, he goes, "Well, we have this de-location package thing we're working on where we pay folks to relocate out of the Bay Area." And they're like, "Oh, that's interesting. Tell us more." So he gives them some of the details. We had not ironed this out, mind you. And the next day they're like, "Hey, we've got a reporter from Inc. that wants to write about your de-location package."

(01:18:58):
And I'm like, "Wait, what?" And so I was like, "Well, I guess we're doing this." And I whipped up the policy, wrote an external blog post because I wanted to have something that the external world could reference. And we put it out there. That thing went viral like I've never experienced it. That was the first time I felt like we actually broke out of Tech News and got into the mainstream news. The local TV stations were interviewing us about this. I remember one San Francisco folks tried to interview me once, and then I got bumped. The first time I got bumped was because the red iPhone came out. And then the second time I got bumped was because the Oakland Raiders were moving to Las Vegas. And I was like, oh, my competition in the news segment is a lot different than what I'm used to-

Eric Ries (01:19:42):
It's not... Yeah, we're not talking about some other tech companies.

Wade Foster (01:19:44):
People ate that stuff up. But the heart of it was just simply that folks should be able to live wherever they want and you shouldn't be forcing them to come to Silicon Valley for this and it was just an inversion of that-

Eric Ries (01:19:54):
Did you feel bad? Did you feel bad when bashing San Francisco became a meme and whatever?

Wade Foster (01:20:02):
No, I didn't. I think there's definitely a Silicon Valley bashing that is probably not appropriate, but look like any place in this world some people love it and some people it's not for them. And I do think with Silicon Valley, it probably gets exaggerated on both sides. There's a set of folks that are like, "This is heaven on earth." And then there's a version that's like, "This is a hellhole." And I'm like, it's just a place.

Eric Ries (01:20:31):
It's just a place.

Wade Foster (01:20:33):
And it's a good place most of the time there's some things that could be better. And yeah, it's just a place.

Eric Ries (01:20:39):
You've talked a lot about the power of... The surprising power of compounding, getting 1% better every day and you said that it's easier to iterate than it is to invent. And I feel like that also goes against the grain of the idea that the swashbuckling entrepreneurs got to take the big swing. What do you mean by that?

Wade Foster (01:20:56):
I think probably the best exaggeration of this is how we think about launching new products. We've launched a bunch of new products recently and always internally, folks are wanting to see them be... There's always nervousness when we launch. They're like, it's not good enough. People don't like it. We can't launch. The quality is not good enough, dah, dah, dah. All these reasons why we shouldn't go do it and mostly it's subjective. It's our own personal interpretation of how we feel about that product. And then every single time we go launch it and launch can... Put your own version of launch. This doesn't have to be the grandiose version of launch, but literally, just put it in front of customers, start bringing folks in, and having them react to the thing. Every single time the moment that happens, we get much more laser-focused on what really matters, because all of a sudden you start to have real customers beating on this thing and you have real customers saying, "Ooh, tell me more about that. I really like that," or, "Why didn't you all build this? I really need this."

(01:21:58):
And all of a sudden the momentum and the energy across every individual on that team starts to pick up because people are marching to this customer feedback. And I think it speaks to that where it's so much easier for us to iterate on something that already exists because you have that feedback loop, you have that mechanism to get going. And so one of the best things you can do, whether you're shipping a product or whether you're writing a document or whether you're doing anything, is just put the first draft out there and just start to get that feedback loop going. Because once you get that feedback loop going, you're going to find you get better so much faster through the iteration process.

Eric Ries (01:22:33):
Wade, I just want to say thanks for coming on the show. Thanks for taking time to do this, and thank you for blazing your own path, and I hope maybe creating some permission, some space for others who want to do things differently will follow in your footsteps. So congratulations on all the success and thanks for coming on.

Wade Foster (01:22:47):
Thanks, Eric. Pleasure's all mine. I appreciate all the stuff you put out in the world. We definitely... You're one source of wisdom that helped us on the contrarian path, I should say.

Eric Ries (01:22:56):
Thanks for saying that. You've been listening to The Eric Ries Show. Special thanks to the sponsors for this episode DigitalOcean, Mercury, and Neo4j. The Eric Ries Show is produced by Jordan Bornstein and Kiki Garthwaite. Research by Tom White and Melanie Rehaq. Visual designed by Reform Collective. Title theme by DP Music. I'm your host, Eric Ries. Thanks for listening and watching. See you next time.

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