Zapier is one of the most impressive startups in the last decade to come out of Y Combinator. And the reason why is because they’ve only had to raise one round of funding and yet they generate over $50 million in annual recurring revenue today. In this article, we’re going to dig into the five ingredients to Zapier’s success.
Ingredient 1: Built a fully remote team
Even before full-time remote work became a trend in tech and as well as in the world because of the pandemic, Zapier was on the ball in terms of identifying the need for a fully distributed workforce.
In fact, if you check out their careers page, you can see that they span over 17 time zones in 28 countries. Now that I’m working with a fully distributed team today, as well as in my prior experiences in which I went from a company that was super remote-friendly to a fully remote team, I know the benefits of having this sort of workforce.
One of the biggest benefits that I’ve observed that I think Zapier has probably benefited from as well is organizations are often like living organisms. And so what that means is that when you’re distributed over a number of time zones, it means that your organization is actually always on as well.
In other words, there’s never a time period when the office is just shut off. There’s always somebody working on something and it allows you to actually work more efficiently in an asynchronous environment. Taking things to just a smaller scale, I’ve shared with you in prior articles on how my virtual assistants are in a different part of the world. And so I’ll punt work their way because I know that when I’m not working, they will be working on the business.
And then by the time they’re done, I will be ready to start working again. So by having this sort of fully distributed team, I think Zapier really benefited from the perks of having a asynchronous workplace that really officially took care of business in terms of getting things shipped. Aside from that, though, having a remote team has its perks in that you’re able to tap into a global talent pool.
As opposed to just being restricted to the tech workers in San Francisco, Zapier is able to recruit from anywhere. And this is something I’ve seen even in my current company, in which we’ve been able to find great talent in just places that aren’t traditional tech hubs. You’ll start to see this trend more and more, but you’re already seeing it with older tech companies like Salesforce. Just recently, they had to cancel their lease on their new San Francisco office space because of their new and more flexible working policy in which their team can be more distributed.
All things considered, I think the remote first attitude of Zapier paid huge dividends for them. And you can actually see that in their team composition, in which they’ve mentioned how eight of 10 of their first employees are still with the business today.
Ingredient 2: 10X customer experiences
Before digging into Zapier’s case, I think it’s important to note that this is not a unique ingredient to Zapier. You see this a lot with the startups that are able to achieve hyper growth because what they do is they prioritize their customer’s needs truly in all situations above their own.
In past interviews on different podcasts, the Zapier CEO, Wade Foster has emphasized how he has every single member of the team take part in customer support. I think this is one of the strongest things you can do as a startup in order to have a competitive edge. And as Wade Foster explains, the reason why he does this is because there’s often a disconnect between the engineers that are solving the problems that users have and the problems that your users are facing.
In other words, engineers might be trying to solve the problem but they don’t actually truly understand the frustration behind the problem. And so if you have this sort of disconnect between your customer support and the engineer that’s solving it through your product, then your product is also going to have this same disconnect in terms of actually truly solving the problem.
This is a really important takeaway behind Zapier success as a business. By having every single person across the organization truly understanding the pain points of the customer, it allows everybody to lift each other up in building a truly remarkable product. I’ve actually been part of companies before in which the CEO is so protective of software engineering time that they never let the engineers actually interact with the customers. So I see these actual disconnects that happen when the software engineers trying to solve a problem just based off of a ticket from somebody on the customer success team. But doesn’t actually understand the pain point of the customer.
As a result of this customer-centric approach, Zapier has achieved some remarkable returns in terms of lifetime value of their customers. In a recent Nathan Latka interview, Wade Foster actually shared how monthly churn is still less than 5%. And the lifetime value has grown 120% per customer, as well as the average revenue per user more than doubling.
So from Zapier’s example, you can tell how 10X-ing your customer experiences really has a huge difference and pays huge dividends for your business. If you want to truly internalize this, I recommend picking up a copy of Tony Hsieh’s Delivering Happiness book, which he wrote over a decade ago.
Ingredient 3: Followed success’ trails
In an interview with Indie Hackers, Wade Foster shared how early on they noticed how Twilio was featuring their customers and making them look like heroes. In other words, they were always creating new content pieces that share different use cases and applications of Twilio services. In other words, they were frequently writing about case studies and different use cases for how their customers were using Twilio.
By sharing this vast library of customer stories, Twilio was enabling prospects to see themselves in these other businesses that were already using Twilio, as well as helping their existing customers think about further applications of how they might use Twilio to grow their business. From this insight, Wade Foster took this sort of approach with the content marketing of Zapier.
As we went over in our recent article, we dug into how a ton of Zapier’s organic moat right now is around content pieces that relate to the apps that they integrate between one another. So something that Wade Foster was able to pick up from Twilio was that these cues case stories were really helpful in creating a flywheel, of more buzz, and more people talking about how they were using Zapier for their own business.
I’ve seen this sort of human behavior, even in my own current space in which as I was growing a partners program, I realized that partners became more successful when I was able to share with them the different strategies that other partners were already seeing were working. I think the insight here is that when you see somebody else doing something that you think you can do to you naturally latch onto the idea that it’s possible, and you go ahead and do it.
And so in a similar way, when you’re building your business, what you you might want to do is come up with a ton of different user stories or examples of how people are using your product or service. That way new people can think about themselves in the shoes of your customers. And then get interested in inquiring more about your product.
This is a common first principle that I see across all of the best-in-class SaaS businesses. If you want to check this out and validate it for yourself, just look at any of the highest growing SaaS businesses in the enterprise SaaS world.
Ingredient 4: Played the long-game of content marketing
The thing is a lot of times venture capitalists don’t think that organic SEO is a truly competitive mode for a business, but what’s misunderstood is that it actually can be when it’s done over a long period of time. Zapier is one of the first companies I’ve seen that has truly invested a multi-year effort to their SEO strategy.
As we went over in my last article, Zapier ranks for tons of long tail keywords around all of the different applications that they integrate with. In case you don’t know what Zapier does. They essentially help different apps communicate with one another without needing a direct integration. Zapier essentially adds a layer in between in which they’re able to feed in data from one application to the next application.
So as you saw in the last article, we went over how Zapier has made a lot of content around how to information on things like Google docs, as well as Google forms. Just looking at these few examples, imagine doing that hundreds of times, that’s essentially what Zapier has done with every single application that they integrate with.
So as you can imagine, as they rank for hundreds, if not thousands of long-tail keyword phrases, this really stacks up and it builds a ton of organic traffic and interest for Zapier. The results speak for themselves. As I’ll put up on the screen here, Zapier has had astronomical growth in terms of long tail placements, as well as organic search traffic.
This has been hugely beneficial for Zapier’s business for a number of reasons. The first reason is because it helps new people discover their business. When somebody is looking for a Google sheets integration, they might actually stumble upon Zapier and then learn more from there using a free account.
Aside from just checking out their SEMRush profile, you can confirm this by checking them out on Similar Web. You can see from Similar Web, they’re getting a ton of traffic from organic search and that this has been a trend for more than just the last few months. Another reason why this is a huge growth marketing channel is because if you’re writing about Google sheets and an integration with Pipedrive, then it actually incentivizes both Google sheets and Pipedrive to promote that integration with Zapier as an option for its users.
So in other words, you build up more partnerships with other businesses in which they will create some sort of page on the Pipedrive side of things to share how things integrate with Zapier and in the process, they’ll probably provide some sort of back link that then goes back to Zapier.
And when Zapier has all these hundreds of backlinks, essentially then signals back to Google, “hey, this site is really important when it comes to integrating all of these different applications.” It’s a great flywheel effect that you’ll see as Zapier continues building out these long form pieces.
To this day, SEO can be a major competitive mode for your business as long as it’s viewed from a long-term lens, as opposed to a short-term lens. In my opinion, a longterm lens is anything where you were investing on the SEO side of things for at least two years with consistent content going out.
Do you want to see another example of great organic SEO power? Just check out a site like Airbnb the next time you book a place to travel. They’ve done so well from a programmatic SEO side of things to truly flesh out their competitive advantage.
Ingredient 5: Stayed malleable to their market.
The CEO shared in a Useproof interview how somewhere along in their growth journey they actually tested a two-sided referral system that was similar to Dropbox.
In case you’re not familiar with that, Dropbox pretty much gives you more storage. If you invite your friend and your friend accepts that invitation, but in Zapier’s case, what they found was that explaining what a zap was or what a task was, was actually really difficult. It’s not like Dropbox situation in which it’s really easy to explain the concept of giving somebody another 500 megabytes of storage.
What’s important to take away from this insight though, as Wade shares this is that Zapier has always been open to testing new things and remaining malleable to the feedback that they’re getting from their tests.
By not getting married to a particular strategy, it allows them to remain more nimble as a business and truly figure out what is going to work in their space. Aside from this point, Wade is also demonstrated malleability through another statement that he made in this interview. He talks about how he’s come to understand growth as being often dictated by the market.
And that first time founders often don’t fully appreciate this. I completely agree with him here and that sometimes the timing of your company is actually just not right with the rest of the market. And so you can have the best product in the world, but the market just isn’t ready for it. And so that’s why you don’t take off.
You can actually see this in the story behind YouTube and why YouTube was specifically successful. YouTube was not the first video streaming site that ever came out. However, they came out at a time in which the overall space of broadband internet and high speed internet really became more mainstream.
So as a result, YouTube was able to win when they came onto the market because of the fact that everybody had fast enough internet to not just be stuck buffering their videos. Playing in the right sandbox was pivotal for Zapier success because it gave them enough time to truly flesh out product market fit. And then from there from achieving their initial product market fit, they were able to identify their true side in terms of the bigger marketplace that existed for them. Combined with all the prior ingredients for success, a beautiful flywheel took off.
Big takeaways
There are two things that I want you to remember when it comes to Zapier’s success.
- The first one is, as Naval says, “Play long-term games with long-term people.” That allows you to have more probabilities of actually being successful.
- The second big takeaway is to 10X your competition through your customer experiences. When you truly put your customers first, you will typically win in whatever space you pursue.
If you liked this article, be sure to check out my YouTube channel to get new videos every single week. I’ll help take you from zero to self-starter as you grow your business, get more customers, and hone your business acumen. Also, feel free to share this with anybody that you think might benefit from learning the principles and strategies Zapier use to grow over $50 million ARR.
Sources:
Wade Foster, CEO of Zapier, on flywheels & user acquisition on the way to $35MM ARR
Finding Your First Paying Customers with Wade Foster of Zapier
How Zapier Went From Zero to 600,000+ Users in Just Three Years