How to scale after product market fit? - Wade Foster, Co-founder & CEO at Zapier

There's this thing called— there's this concept called Chesterton's Fence that a lot of policymakers use. And the sort of the metaphor is that if you want to remove a fence, you can remove the fence. But before you remove the fence, you should understand why the fence is there in the first place. And after you've uncovered why the fence exists, then and only then can you decide to remove the fence. I think this is really important for figuring out where you should innovate and where you shouldn't, because a lot of times people just sort of assume we're going to innovate everywhere and everything that exists is not as good as it could be. And so we're going to fix everything. But—

Hello everyone, welcome to #StartupBasics series in the Insights Alley podcast, where startup founders and teams can learn from proven founders and experts about product growth, sales strategy, and everything in between to make their own startup successful. I'm your host, Arun Verma. And let's get started. In today's episode, we will talk to Wade Foster, who is the co-founder and CEO of Zapier. Zapier is a product to connect different apps, tools, and automate your workflows. We would talk about Wade and Zapier's journey of scaling their startup and what are the lessons that we all can learn about scaling a startup after having achieved product-market fit. Oh, by the way, Zapier has achieved an ARR of more than $50 million USD this year. So here is the episode. Hello Wade, welcome to Insights Early and thanks a lot for taking out some time for doing this. Really appreciate it.

Yeah, thanks for having me.

So Wade, would you like to start with telling us your story in brief of your career and starting Zapier and what is the company up to now and like what does Zapier do?

Yeah, so I started Zapier in 2011 with two co-founders, Brian and Mike, back in Columbia, Missouri. Before that, I was working in— yeah, I worked in a small startup. I'd worked in sort of a growth stage company in Columbia, Missouri, you know, for a couple of years right out of school. But it really took me, you know, I think what really set me down the path was in 2008, there was the financial crisis here in the States and it was hard to get a job. So I actually found myself working at a tiny little startup in Columbia and fell in love with building software. And so from that point in time, I always knew like, ah, that's what I'm gonna do. You know, over the next couple years, I dabbled in a lot of stuff on the side, playing with, you know, various little side projects and things like that. When I teamed up with Brian, and Brian and I had built like some little one-off products, we built like a WordPress forms plugin that could work with Salesforce for a client. We built a few other things, and Brian had this idea for Zapier, which was people needed to connect all these tools that they were starting to use in their business, things like Salesforce and QuickBooks and Mailchimp. Zendesk, what have you. And if there was sort of a hub-and-spoke, really simple way where you didn't have to know what the APIs, how to use the APIs, that could be really valuable for a lot of folks. And so that was sort of the original idea for Zapier was to help people get more out of the tools they're using. And, you know, the core of Zapier hasn't changed much today. Certainly our scope of impact has, but at its core, Zapier helps people be more productive at work by getting more out of the tools that they use. So we hook into 1,500 different apps, things like Slack, Trello, Mailchimp, QuickBooks, Salesforce, all the way down to the tiniest startup that, you know, maybe only has a couple, you know, dozens or hundreds of customers. And we help you connect and automate the work that you're doing with those tools.

Right, right. I am myself a Zapier fan and a user, of course.

Awesome.

So Wade, in this episode, I wanted to discuss with you about how to scale your startup after you seem to have achieved product market fit, right? But before that, I wanted to ask, like, how did you guys identify and perhaps quantify your own product market fit in case of Zapier?

Yeah, for us, you know, Brian and I had had clients that were asking for things like this. And then when we started to poke around online, we would go look at the forums of these different services. So if you, you know, Evernote had a community, Dropbox had a community, Salesforce had a community, QuickBooks had a community, all the 37signals products had communities. And in those communities, you'd often see the customers asking for integrations. They'd be saying, hey, are you going to build an integration with this tool or that tool? And the answers from the companies was typically, "Not right now," or, you know, "Hey, we're thinking about it," which is sort of code word for, "Nah, we're probably not going to do this." And so we kind of took that as a bit of a hint that if we were able to build that, there was probably a lot of people that could benefit from a product like that existing. Because we saw that stuff happening in those forums, we sort of had an inclination that like, "Hey, if this existed, it would work." And then when we started building it, you know, we would post links in those forums and say, hey, we're working on a little project, check it out if it's interesting to you. And those people would come sign up, use the product and be happy. And so we felt like, hey, people like this product, even people— I remember our first customer, our very first one couldn't figure out how to use the UI. The product itself was so rough around the edges that it was almost impossible for them to use. I remember jumping on Skype and walking them through setting it up. And his reaction was like, oh my goodness, this is going to change the way that I work. He was so happy that this thing existed. And so for us, that was a signal that, hey, we probably do have product-market fit. The product's not that good and people still are clamoring for this. They're loving this. They're saying it's going to change their business. And so having that sort of reaction was a good sign for us that if we kept going, there was likely going to be more success ahead of us.

Makes sense. Makes sense. So let's move to the scaling and growth phase. So for the last few years, I guess you guys have been growing and scaling in every shape or form from every aspect. How do you define what even is even meant by scaling the company and how does it differ from earlier phases of perhaps pre-product market fit?

Sure. You know, I think the biggest difference is when you're starting a company, you know, it's all this sort of search for what is the product, what, who is the customer, and the person who inevitably does all that work is you and your co-founders. So you do every single possible job in the company. You do customer support, you do marketing, you do product development, you write the code, you do, you know, every, every email, every copy like that is your job is to figure out those You know, any interactions with your lawyers or accountants, like you're having to do those jobs. And so I think in the early days when you're sort of on that quest for, you know, is this thing going to work, it's just all on your shoulders. You have to figure everything out yourself. As you sort of reach product-market fit, you should, you know, if you're a sort of traditional B2B type product like Zapier is, you're going to start generating revenues. And when you start generating revenues, all of a sudden the company starts growing and you have money to sort of create leverage for yourself and for the organization. Probably the biggest difference in the scaling up is now instead of you doing every single job, you're gradually hiring out teams and teams of teams that take on those individual jobs. So now at Zapier, we have whole functions. We have a marketing function, a support function, an engineering function, like all teams and teams of teams that are solving all those different problems. And so your job as a founder or CEO in particular is not to do those things anymore, but it's really to build the teams that can do them and try and set the direction of the company. If you find yourself doing anything any of those individual tasks, you still probably have more scaling work left to do. So I think that's probably the principal difference from you as a, you know, from an individual perspective that I've found, right?

Makes sense. So let's discuss all the aspects of when it comes to scaling the startup, right? So let's start with the product itself. Like, what has your experience been? How would you advise other startups when it comes to scaling the product in terms of tech and engineering to product and design and to the core value prop of the product itself?

I think, you know, once you find like the initial inkling of like product market fit, you're— now it's all about sort of reducing friction in my mind. You know, you kind of have this thing that's sort of working, but it's probably suboptimized in tons of ways. And so you're trying to find ways that, you know, remove all those frictions, remove all those suboptimizations so that when people find the product, you are— it's able to serve their needs more quickly. They're able to onboard and get to that sort of time to first, you know, aha moment is much much quicker than it might have been for your sort of initial prototypes and MVPs. And along the way, you're trying to bake into the product things like distribution, you're trying to build growth mechanisms into it. Because once you have that sort of core market fit, your biggest challenge is actually just, just that people don't know about you. And so finding ways that your sort of core, you know, customer segment or potential customer segment can figure out that you actually exist becomes one of the most important problems that you have to figure out how to solve as you grow, right?

In product itself, like, how does the product metrics change? As in, like, your North Star, which probably would be something on the likes of, let's, let's say, like, number of successful zaps fired every minute, which is obviously tied to revenue. How do you think— I'm just assuming— how do you think about this when you are in such a growth and scaling mode?

Yeah, you know, we've played around with the concept of, like, a North Star metric a little bit, but we never found that sort of mental model worked great for us. We kind of— we've always looked at like a handful of metrics. 2 or 3 different metrics have been really important for us. One is, you know, are we signing up new users? Two is, are we generating more active users? And three, are those active users converting to revenue? And then there's other metrics that sort of break down from there, but those 3 at its core give us like the simplest funnel, which is, did you get a user? And then did you turn that user into an active user? And then did you turn them into a paying customer? And so those 3 have formed a bit of a really simple funnel for us that has helped drive We find that those three in combination help us manage the business effectively. And now different teams will sort of break them down a little bit. So like someone who's paying attention to active usage might be saying, well, we need to figure out, you know, how many people are starting a Zap versus how many people are enabling a Zap versus, you know, if there's, you know, creating a Zap has multiple steps in the process. So like how many are getting— so there's this little subfunnel around activating users that people do pay attention to, but that's one team. The whole company as a whole is paying attention to those top three metrics more or less.

Makes sense. So let's talk about revenue. So when I was reading about you guys, like, your growth in terms of ARR has been so exponential and phenomenal. And this sort of revenue growth is basically the main characteristic of a successful scaling of a company, right? Like, from 2016 to '18, your ARR grew from approximately $10 to $50 million plus. And so how did you guys do this? And like, what have your key learnings been in this, in scaling revenue so systematically yet exponentially?

Yeah, this is where, you know, once you have that core market fit, it really does come down to how can you make sure that more people discover the product. And so for us, that's been investing in sort of the core distribution channels. So you've seen us put a lot of effort into our partnership ecosystem. We have 1,500 partners on the platform today, and every new partner we add is a new user base. That's a new potential customer, that's a new potential partner who is sending their customers our way. So that's a big benefit for us to make sure that we continue to have more and more apps on the platform over time. We're also We're also investing a lot in content marketing. So you can see a lot of our blog and our Learn has grown exponentially since those days, and our publishing cadence is super high. And we also put out a lot of material about the integrations themselves. So there's landing pages that talk about all the different ways that you can connect and automate these different tools. And those end up doing well in search and in other channels too. So each of those systematically grows over time. So you're trying to find and identify these marketing channels that you can scale out, that you can scale up, and will give you exposure to more and more customers over time. And then at the same time, your product is— you're evaluating where are these, you know, if your marketing is working, if you're driving more attention to the product, then your product teams are paying attention to where are the customers dropping off, where, you know, where's traffic dropping off. And those are the places in the funnel where you spend a lot of time trying to optimize. And so sometimes you're saying, well, our signup rates aren't good enough, so we gotta spend more time on the digital distribution side of things. So maybe we're paying attention to conversion rates on our website, or maybe at some point in time you're looking at your activation rate and you're like, well, we're driving a lot of traffic, but for whatever reason they're just not converting. And so then you're trying to figure out, there's something wrong with the onboarding, is there something wrong with that initial experience that's not going well? And then maybe sometimes, you know, you're getting a lot of active usage, but it's not turning into paid. And so you're trying to figure out, are we driving the wrong types of users to our product, or is our pricing model wrong? Are we— is the, is the model for which we're trying to convert these people wrong? You know, it's this sort of inquisitive scientific method that you're going through where you're just trying to spot where's the friction, where's, where's the thing that's going wrong? And you're trying to systematically improve amongst all those elements at the same time. And if you do it well, it sort of grows magically. But the thing is, it's hard. This stuff is hard even for companies that are successful. And I like to think we've had some degree of success. It's been a meandering journey for us along the way.

So what exact challenges do you think in scaling this way is? So my two-part question would be, is this some sort of very systematic and predictable way of predicting revenue when it comes to the scale that you guys are at? And why haven't you guys tried the route of perhaps sales agents or like, you know, sales teams? And I saw you're like, you guys don't have salespeople even for team plans or enterprise plans. So like, I'm curious to know your thoughts on this.

Yeah, I think for us, you know, our sort of approach to sales is that most people don't actually want to spend time talking to sales these days. You know, about your experience as a consumer, if you're, you know, wanting to buy something online, you go to Amazon.com, you buy it, you purchase, you check out and you go. If you have to talk to someone at Amazon, if you have to talk to customer support, Amazon is not sort of uplifting their, their value prop in a way that is meeting your goals as a customer of Amazon. And so I think more and more buying is moving towards that type of behavior. And so even though we're in a B2B sort of situation where you traditionally have seen sales teams and enterprise agents sort of deployed, Even in B2B, that's becoming less and less the case. People want to be able to try your product out. They want to be able to see if it can work for themselves, and then they want to be able to buy without having to talk to you. Now, sometimes they have to talk to you and you have to find ways to enable that. And so you see, in our case, we have a pretty large customer support organization and they exist to sort of help people along in that buying process. And then also if they have questions after buying and around configuring Zaps and and, you know, something goes wrong with his app, they'll help them get that up and running too. So I think a lot of it has to do with us as a customer and consumers. The way that we buy products is changing, and the traditional sales approach isn't going to work anymore. You know, I think today, like, in the States, I get calls all the time that are scam calls, and so I never answer my phone anymore. So cold calling, not really going to be effective in a way that it has in the past. Email is similar. I get so many cold emails these days, like, it's just not as effective anymore. So some of these traditional channels are getting watered down to be effective. So as the way we think about it is that the way people are buying for the— we're trying to build for the future of the way that people buy, which is a much more sort of self-serve streamlined approach. And so that's how we've approached our go-to-market, right?

And I guess your product is inherently like that, that it's so close to the end user that, you know, first of all, if I want to automate anything, I connect two apps, I'll use all of my five apps or whatever the free limit is, and then only I'll go to my manager or my boss and say, oh, I need I need some paid version for this, right? So it's like, yeah, bottoms up.

Totally. And that's a great point to make because it is— some products are going to be inherently different. Like if you have a product that only works if it's deployed across, you know, a massive enterprise, exactly, your go-to-market is going to have to look a little bit different because enablement, your sort of onboarding, is going to require a big services element. And so your, your sales process might look a little bit different for that. But for us, you know, it is a— it's a bottoms-up sell where the end user is often the buyer. Perfect, perfect.

Coming back to the question again, so like, are you guys able to do this predictably? And like, how predictably? What are the challenges of making that revenue, which is very self-serve and acquisition-based revenue and conversion of the customer, how predictable that is? Because in general salesy process and sales teams, it's generally more very predictable revenue that we could, right?

Yeah, in our case it's predictable as well. When you sort of think about the channels that we spend our time nurturing, things like our partnerships channels are predictable. Our search is fairly static over time. Certain keywords grow, you know, some segments grow, some decline a little bit, but But on the whole, it's fairly predictable. And so this drives like a fairly consistent amount of traffic to us over time. And the growth rate then is fairly predictable over time as well. So it's not too different than a sales-heavy motion in that regard.

Makes sense. Talking about platforms and integrations and your partners, I was listening to your talk and you were talking about the growth that these partners have created for you when you opened up the platform and you invited other developers. So like how that has been like your experience like, and especially when it comes to scaling that?

Yeah, you know, I think that's been an important part for us is to really make sure that we serve our partners well. A lot of them sort of struggle to build integrations. They struggle to build them. A lot of them, they struggle to maintain them. It's hard to sort of invest in that. And that's a thing that we do all day, every day. And so we have all the sort of infrastructure to make sure that happens magically. And then if we can provide them a way that they just sort of have to plug their API into Zapier in a way that sort of works, that's a lot less effort for them and they get a lot of the same upside that they're going for by sort of building out platforms. And so for us in 2012, when we built that original developer platform, giving those capabilities to our partners to sort of accelerate their ecosystems, to give a one-stop shop for all these different sort of integrations that they're looking for, the value prop was so high for them that a lot of them decided they would do it. And so, you know, you see Slack built their integration in 2014. Zoom built theirs in 2015, Airtable built it in 2016. All these companies, when they were tiny and not large companies, it was one of the first things they did. And now all three of those companies have gone on to be billion-dollar companies plus, and Zapier has been a part of that story by helping them sort of connect to the rest of the tools that their customers use.

Yeah, that's like such a good mutual relationship with both growing, right? And I guess it becomes a very integral part and stakeholder these partners become for your entire ecosystem. Makes sense.

Exactly.

Awesome. Let's talk about customers, like when you scale your company. So probably your first customers, first users, the early users or adopters are not the same as the scaling users. Like what did you guys figure out when you started scaling and how did you figure that out?

Yeah, your customer base does start to change over time. And in our case, it's broadened. So the sort of original user, like you mentioned, is very much sort of an early adopter team inker, you know, wants to check out all the different tools, plays around with stuff, is maybe a little more curious. So that type of customer is going to need a lot less sort of guidance and handholding. They'll put up with sort of rough edges in the product. They sort of understand how to figure things out on their own. And so that user doesn't need a product that's really as easy to use in some ways. And so as we've grown, we've had to do a much better job at making the product really, really drop dead simple, easy to use so that a more mainstream audience can can benefit from it. And you also, your offering gets more sophisticated as you grow as well. So, you know, we didn't have 1,500 apps in 2012, we had 50 apps. And so, you know, when you scan to 1,500 apps, we've also added a lot more features that sort of help with a variety of things. And not every user is interested in all those features. So you have to come back and revisit your onboarding flow all the time because you're adding all this other stuff. Your onboarding flow still needs to be simple to accommodate these types of users as you're sort of adding more power behind the hood. And I think that's And that's the thing that many products sort of forget about. They sort of just keep throwing the kitchen sink into the product and that first run experience, that onboarding experience for customers slowly degrades because the product has become more sophisticated. So you have to balance the sophistication of your product with still creating a simple onboarding experience. And that's one thing we've constantly been trading off on as we've grown.

Apart from the user experience part, as a customer segment, like how do you guys navigate in terms of perhaps going upmarket, SMB, or like finding that sweet spot of customer segment and how do you think around this?

Yeah, I think you kind of just have to understand what your product— like, who's, who's winning with your product today. And so for us, it's been very much a very small business, an SMB, who's been— received most of the sort of benefits of the products. We poured most of our energy into making the product really, really great for them. Now, along the way, we have tons of users who don't fit that mold, and we're happy to service those as well, but they kind of have to deal with some of the suboptimizations, the friction around the product that may not suit suit them perfectly because we haven't optimized that from a product development perspective. Now, the way we think about it into the future though is eventually we want to sort of— our mission is to help everyone be more productive at work. So whether that's folks in enterprise businesses, whether that's folks in non-English speaking languages, we have to find ways to service those folks. And so it's just kind of trying to understand what segments seem lucrative and then figuring out which ones have friction. And then from a product development standpoint, figuring out, okay, what friction can we remove? What can we build to make it easier for those folks to buy Zapier, to use Zapier over time?

Right. That makes sense. But in all this, like, how do you make sure still you are as close to the customer and their needs, outcomes, and problems? You know, kind of be still customer obsessed and be empathetic towards them as you scale up and have so many thousands or like whatever number of customers that you have.

Yeah. One thing that's been really important for us is All Handsome So we've done all-hand support at Zapier since the beginning. Everyone at Zapier pitches in on customer support. So while we do have a large customer support team that's dedicated to this task, everyone spends a little bit of their time, a couple hours a week jumping in, talking to customers, helping them set up Zaps, helping them solve some problems with it. And that really builds sort of customer-centric culture, an organization that builds empathy for the customers. It helps us understand where we're, we're sort of helping our customers succeed and where we're actually getting in their way and where we need to improve the product and the design and the user experience to make it easier for them. So that's daily, that weekly time we get to spend with customers, everyone gets to spend with customers, really does help build that muscle as you scale, right?

That makes sense if everyone is doing it. Okay, let's talk about people in your team, which is again super important aspect of scaling the startup, right? So like, how did you guys navigate, and perhaps you still navigate, navigate hiring more and more people in the company and scaling the teams?

Mm-hmm. Team building is probably one of the harder parts of growing and scaling a company. You know, humans are inherently messy, flawed people, and we don't always work at our best every single day. That's just like human nature, myself included in that. And so I think there's been a lot of lessons learned around what it takes to build strong, great teams. Some things that have helped us, you know, we got pretty clear about what values were early on. And, you know, we sort of uncovered the question we asked ourselves to uncover those is what makes people successful inside of Zapier? How are they able to succeed where others might not succeed? And we developed a set of 5 values. So it's a small set that was memorable that, you know, spoke to how we work at Zapier. And there are things like default to action, default to transparency, empathy, no ego, growth through feedback, stuff like that is what our values are. And we now use those as part of our hiring process. So we have questions that specifically screen for how people's— how people align with those values, if we feel like they're able to sort of add to them in some ways. And then we also make that part of our performance review process. So that sort of holds us accountable to living our values on a day-to-day, week-to-week basis. And that has been a really, really useful tool for getting us to all work in the same, a similar fashion to sort of help us make decisions in a way that are aligned, our risk profiles start to be similar. And those those— that way of working helps build alignment, which is really important as you grow, because the more and more people you add to your company, there's a lot more coordination and communication overhead. And so if you have alignment on what the vision of the company is, if you have alignment on your values and the way that you approach work is, if you have alignment on the goals that you've created, all of a sudden a lot of those— the stuff you're working on gets easier, it gets simpler, because you're not debating some of these foundational stuff. You've sort of have agreement on the foundational, and now figuring out how to solve problems for customers. And so those are the things I think that have been really crucial for us in helping us scale from a, from a people perspective.

Right. One very interesting thing you said about measuring if that person is culturally fit with Zapier or not. And how do you objectively measure that in the screening and interviewing and hiring process?

Sure. So like take a— take a value like default to action. So we want people who are sort of doers. This is important for us because we're a distributed organization. We don't have people that look over your shoulder every day to check on your work. Like, we kind of assume that you're gonna go figure things out on your own. That's an important part of working at Zapier. And so we wanna make sure that folks are able to get things done, that they're sort of doers. So a question you might ask for this is, you know, tell me about a problem you figured out at your last company and what you did about it. And so a sort of not great answer would be, you know, here's a problem I figured out and I made sure to raise it to my boss. It's like, well, you know, that's, that's good that you raise it to your boss, but that's kind of the least amount of effort you could have done in that situation. A better thing might be, hey, I figured out this problem and I figured out this solution and, you know, let my boss know and it helped customers out. Okay. That's a pretty good, that's a pretty good answer. It's not, it's not a great answer, but it's good. Then like a great answer might be, hey, I identified this problem. I found a solution that worked for me. I asked around for my teammates and other other folks at the company to see if they were running into this, saw this as well, and found a way to deploy it out to all the rest of my teams as well too. And now all of a sudden you've got someone who's not only default to action, but they're also figuring out how it can sort of apply in a more universal systematic way, which checks the default to action box for us. And it also checks our don't be a robot, build a robot value as well. Cause you're thinking about how do you build systems and structure for scale? So we have these little rubrics that's like, here's how to grade here's how to think about some of these questions to figure out, are they going to sort of be able to operate in an environment like ours successfully?

Right. That's a quite nice approach for filtering out. It makes sense. Apart from cultural fit, like with the ever-increasing headcount and scale, like how do you keep the quality of the candidates and the hires, like, and do not compromise on the quality and keep the quality intact for the hires at any cost? Like, how do you think and manage this at scale?

This one is hard. I think it's very natural for folks to sort of want to, you know, is find ways to like train people up and sort of say, and train people up, I say, is not actually a bad thing. You should definitely be training people up inside of your organization and helping them scale. I think there's a difference between training people up and a manager who says, I can get them there, because the reality is managers aren't able to get people there. Individuals are the people who do the learning. And so if the person isn't quite there yet, they have to have that sort of learning mentality to figure out how, how to get get them there on themselves. And so if you find your manager sort of saying in the interview process, like, well, they're close, I think I can get them there, that's a really sort of dangerous road to go down. The magic that sort of worked for us is to just make sure that myself, my co-founders stay really close to the hiring process and review and screen every candidate to make sure that we're sort of bringing in people who are better than us as we continue to scale, or people who have ability to be better than the folks that are existing at Zapier. And that, I think, is one of the best ways to build a high-performing team over the long haul, is that if you're constantly finding ways to raise the caliber of folks in your organization, you're going to be able to solve harder and harder problems as you scale. And that's very important because the problems get harder and harder as you scale.

Of course. Of course. That makes sense. In the same line of thought, I wanted to ask, like, how does this work out when it comes to perhaps scaling the early-stage employees employees promoting them into the senior and leadership roles versus hiring new people in the senior and leadership roles? Like, how do you think and manage this and balance it out?

Yeah, I mean, I think the balance thing is what you're hoping for. Like, you kind of hope that as you grow, some of your early stage folks will kind of grow into those leadership roles. And then I think you're hoping that you're able to hire in sort of some seasoned experience as well, and you get that good mix of people who are homegrown and understand the culture, understand the history and where you've come from with a mix of sort of fresh outside thinking that comes with sort of a certain amount of seasoning where they've seen some of the problems you're going to tackle before and be able to nail it as well. That's sort of like the ideal that you can get to. You don't always get the opportunity to do the ideal though. Sometimes, you know, you're not able to hire seasoned outside folks because you're, you don't have the revenue or you don't have the resources to hire a seasoned outside person. And sometimes you're not able to grow. Sometimes your internal early hires aren't able to sort of adapt to the new job which is, you know, in the early days you're, you're doing all the work and the late, as you scale, you actually need to manage and lead teams. And that's a totally different skill set. Management is a different discipline than IC work. And so you don't always get the sort of optimal environment. I think the biggest thing is you're just constantly trying to assess what the needs of your company are. You're trying to look to see if you have folks internally who have grown and risen to that occasion. And if so, you give them the opportunity to flex to it. And if not, if you really have something that's critical where you can't take a big risk, you're trying to find people external from the company that can meet that bar as well too. There's not like a formula, I don't think, right?

So what just you mentioned, like, what about those people who are perhaps not able to scale up as fast as the company? So like, what do you do and how do you manage them? What do you do with them? And perhaps how do you help them scale up as fast as the rest of the company? Or, and if still not, then what's your process like then?

Yeah, you know, I think the thing you got to realize is one, One, these people are massively valuable to your organization, even if they aren't able to sort of scale into like traditional leadership management roles. They have years of history working at your company and that's irreplaceable. You can't go hire somebody who has 6 years of experience working at your company. That's just not something you can get out on the public market. And so I think recognizing those contributions is a very important first step and telling that individual who's maybe struggling to scale in those traditional leadership management roles, like, you are valuable to us in so many ways that it's not like if you can't sort of scale and take this job, there's so many other jobs in this company that you can do excellently. And just having that honest conversation, because I think a lot of times people get sort of— it's our natural tendency where they say, if I can't scale fast, like, I've failed the company or I failed at my job. And nothing could be further from the truth. It's just hard to be successful in scaling companies in those management leadership roles. Those jobs get harder, faster than any other thing in the company, but there's so many different other things where a person can continue to learn and evolve their skillset and can contribute at a very high level. And sometimes people just don't see that. It's hard to see that when you're sort of stuck in a job that maybe has outgrown you a little bit. And so the, I think the first and most important thing is just painting a picture for them about how their experience at the company still remains and will continue to remain incredibly valuable. And then hoping they sort of, then And then it's, then it's where it's sort of like a, it's a two-way conversation comes in. If they're open to sort of helping fill those other roles, those other leadership opportunities, whether it's as an IC or as a manager, and hope that they're open to that because you want them to stick around, you want them to be able to continue contributing. But ultimately it's an individual decision. If that person decides, nah, I'm not, this isn't for me. Like I actually want to go back to an earlier stage company or I want to continue growing in a more, you know, senior role or something, sometimes they do leave and have to go somewhere else. And I think being willing to just be honest and have those conversations regularly is, is really the sort of key piece of the equation.

Wow, that's pretty— that's indeed very beautiful. Awesome. So for a specific skill set that just you talked about, when you're trying to hire very senior, perhaps a VP or a CFO— I know you don't— you guys don't have a CFO now, but like But the point being, how do you hire for senior and very senior and leadership roles as a founder?

Very carefully. You know, I think a big part of it is trying to identify, you know, what are your needs? You're trying to fit, you're trying to figure out what's the sort of most important thing that you need this person to do over the next sort of 12 to 18 months and figure out what characteristics that person will have. Then you're trying to figure out what are the characteristics that might enable that person continue scaling, you know, 24, 36, 48 months out into the future. And you sort of optimize for the next 12 to 18 months, but with an eye for can they continue to help grow your organization even further out into the future. The challenge with these types of roles in fast-growing companies is that sometimes these executives sort of specialize in different sets of scales. And so there's certain executives that might do great once there's like 1,000 people in the organization. But would struggle in an organization that only has 50 people because there's just not enough resources for them to manage. And so it's trying to figure out, you know, what do you need right now? Do you need someone who can roll up their sleeves a little bit and do some of the work on their own? Or do you need someone who is a way bigger, better strategic thinker and who can sort of build fantastic teams and is an amazing recruiter because you're going to scale up immensely over the next, you know, 18 months? So it's kind of just really honing in on what's the most important thing that you want out of that person. And then and shaping your search around that. I think the wrong way to go about it is to just sort of like, you know, find people who have the title at companies that you like and then just go trying to talk to them and figure out like, ah, does that person fit or not fit? You're gonna— it's gonna take you a lot longer to find a great person if you haven't really sort of sat down and done that exercise of honing in on what is it that you really need out of this role over the next, you know, 12 to 18 months.

Right. Let's talk about culture. I know you just touched upon it, but my question question was like, how do you perhaps evolve your culture or keep your culture intact, or perhaps a healthy mixture of both when you scale?

Mm-hmm. The values piece that I mentioned is really important. You know, having that as part of your hiring process, as part of your performance reviews, builds a sort of DNA into your organization that drives it forward in a way nothing else I've seen, at least for Zapier. Then I think, you know, when you talk about evolving your culture, This is where I think your senior leaders are really important. A big reason why you go out to hire a senior executive is that you want them to change your company in some way. If you didn't want that, you probably wouldn't be hiring this person. You, if things were going amazingly well, you probably wouldn't need them. And so when you go out to hire those folks, I think you're trying to figure out what is it that you want them to change. If your organization is struggling with sales, is it that you really Do you need them to bring a much more sales-driven perspective to the table? And can they effectively do that change inside of your company? So you're trying to figure out what is it that you really need to sort of shift in your organization. I think it's foolish to think that the, the culture you put in place at 10 people is perfect and is the one that you should scale to 100 or 1,000 people. There's going to be flaws in your original version 1.0 of your culture that you're going to need to improve upon. Senior leaders are a really important piece to do— way to do that. And then sort of like the one— if hiring great senior leaders is 1A, 1B is making sure that extends down to every other role that you're hiring in your company. Every individual has the opportunity to be additive to your culture, to really improve upon it, or they have a chance to sort of subtract from it and getting crystal clear about how you continually make sure that people are additive to the goals of the company, to the values of the company. That I think is sort of 1B in making sure that your comp— your culture becomes stronger over time rather than weaker, right?

Makes sense. So Wade Foster, in terms of management of the company and the organizational design, the org chart, different teams, hierarchies, structuring, it's like, how do you create and then manage that when you scale, and that too successfully?

This is probably different for different companies and different go-to-market motions. There's sort of like your, your functional management hierarchy, you have your sort of matrix org, you have your sort of, you have more of your sort of traditional hierarchy that you can do, or you can do your sort of business line, your sort of like general manager approach. It kind of just depends on what your, your needs of your business are and the types of things you're trying to achieve. There's sort of this phrase that gets thrown about from time to time called you ship your org chart, which basically means the output of your organization is effectively matches how you've done your org design. So I think you kind of want to work backwards from what is it that you want to give to your customers and then design an org chart that feels like it's going to help deliver upon that thing to your customers. And this stuff might change over time. You know, I think we, we just went through a bit of a reorg and engineering inside of Zapier, and a big part of that was sort of a realization that like the things that we want to deliver to our customers are going to be more effective if we set up ourselves less in a functional way and more in a, in a sort of business unit type way from, from an org chart perspective. And so we reorged our engineering team to sort of match that approach. And so I think you just got to ask yourself, like, what is it you're trying to deliver to your customers and what's the best way to align your teams to do that, right?

How does the collaboration and communication with the scaling team and other systems, perhaps workflows, gets made and evolved? And how do you make sure they don't break as you scale, right? And especially since you are a fully remote and distributed team, like, how do you manage this scaling of collaboration, communication?

Yeah, they're definitely gonna break as you scale. I— it feels like that's inevitable. And if they don't break, they're certainly going to be cracks in the armor. You just gotta recognize that when it's not working or it's suboptimal in some ways and adapt to that. I think this is where building a culture of experimentation around the way you work is really important. If you sort of come into any conversation with your team and say, here's how we're going to do it, this is the way that it works, this is the way that it's always going to work, and we're not going to adjust from here, you're just not going to get it right. And your team isn't going to buy into that sort of thing. And so the way we've always approached any sort of changes that we've, we've brought into the organization is to reflect that we're not sure if these are the right changes. We think that they are, otherwise we wouldn't be doing doing them. We think they're going to make us better, but they're going to be experiments because we've never done it this way before. And so we're willing to be wrong, we're willing to give it a try and an earnest effort. We're not going to sort of give it a half-baked effort, we're going to give it our, our full effort to make it work successful. But if it doesn't give us the results that we hoped we were going to get out of it, we're going to reflect on that and we're going to adjust again. And so be willing to do that, whether it's your org design, whether that's your communication and collaboration setups. I think any of those things, you've got to build a bit of an experimentation culture and be willing to change it when it's not working. And that's really how we've approached this problem.

Right. Any example that you could give when it like breaks down or what sort of cracks and then how do you fix that?

Like, I'll give you a very— so a good example would be as we've scaled up our product teams, you know, in the early days there really was just one product team. You know, we could work on one feature at a time. And so the way we decided decided to work on a feature is a handful of us would jump on a Zoom call. We'd sort of debate what we should build next. And then once we sort of committed to the thing, we'd go build it. 100% alignment. It could be a little bit consensus-driven because like everyone could sort of weigh in and get their opinion. And that allowed us to sort of just go build the thing. As you get bigger, you have more product teams. Today we have 10 product teams. Somewhere along the way, I forget exactly where, but maybe like 3 or 4 different teams, I would say, is where you start to have people stepping on different toes where, you know, okay, now we can build 4 features at the same time, but these features overlap here and there, or this one doesn't align with that other feature perfectly. And all of a sudden you've got a lot more people working on the stuff at the same time. So you start to see this frustration where it's like, ah, if I knew you were working on this, we could have helped, we could have collaborated, we could have made it better. Or like, oh, you worked on a thing that I want wanted to work on. So you get some of that, that steps in. So you start to see things like that bubble up and you have to adjust how you communicate what gets worked on. You have to adjust how you make decisions. It can't be consensus-driven when there's 50 people trying to agree on the next features to build. You have to sort of have people who are going to be the ultimate deciders of the right features. You have to find ways to make sure that people's opinions get weighed in because you want to use the full brains of your entire team to build the the next best thing, but you still need ways to break ties and to have forward momentum. So as you grow, you just have a lot more of that coordination, collaboration, communication overhead, and you have to use tools and frameworks to help you to move forward. Otherwise, sort of the bureaucracy of the org kicks in and it'll slow you to a crawl.

Right, that makes sense. What about goal setting? I guess from individual basis to team-wide to company-wide? Company-wide, as you discussed, like, yeah, and also like goal alignment and OKRs or whatever system you might be using, like, how do you scale that?

This, I think, is one of the important ways you solve the problem we're just talking about, which is if you as an executive team and as a CEO, a big part of your job is to sort of set the vision and the goals of the organization. And so if your executive team does that well, if it sort of understands what is the strategy, what are we trying to achieve over the next year, what What are we trying to achieve over the next 3 years? Set up some objectives, some metrics. In our case, we do use OKRs that sort of paint a picture of where we need to go and then allows the teams to sort of ladder up into those goals in a way that aligns with them. That, that's working well for us. And it gives those teams a fair amount of autonomy in how they do it. So you can say is from an organization perspective, hey, you know, one of our objectives is, let's just say it's to reach the next 100,000 customers or whatever. Well, you can sort of give a team and say, hey, this is your job to figure out how. We're not going to tell you how to do it. You have a lot of sort of lateral ability to think through that problem. We just know that this is the thing that needs to happen. And so each layer gets some autonomy in how they want to reach those goals. And then you have to have review points and check-in points along the way. We do them monthly just to make sure that everything is kind of fitting in with each other and that, you know, things that are— that we're staying on course. And if we're getting behind on things, we adjust resources appropriately and all that sort of stuff. So yeah, OKRs has been a really important part for us around making sure that that alignment and goal setting process scales well.

Right, right. So Wade Foster, in all this continuous scaling of the company and every aspect of it, your role and your co-founders, like all of your roles evolve as well when you scale, right? I mean, in starting, founders could just be good product managers or marketers or engineers, but when scaling, you need to be a good CEO, CPO, CTO, right? So my question is, one, what are the changes that you have faced as a founder and CXO when you scale? And two, how do you prepare for it, learn for it, and be good at it?

Um, shoot, it's a question I ask myself every day. You know, I I think, you know, in my case, this is my first time doing it. And so I think it's just being honest with myself that, hey, it is my first time and trying to get as much help with it as I can. You know, I started working with a coach 18 months ago who's helped coach a lot of CEOs who are way better at the job than I am, who built companies way bigger than the ones that Zapier is today. And that's been a really important part for me. I've built a bit of a network of CEOs that I trust and that I respect who I can email or call and ask for their sort of opinion on a variety of topics over time and get their insights into the, the things I'm struggling with. And that's been helpful. And I think that just sort of willingness to learn and to keep an open mind about how things are going to have to change and evolve has been the thing that's helped me the most. You know, I think the moment you start to think that you've figured the job out is the moment you've probably failed because the job just gets harder as it goes. As the company grows, you've got to find a way to keep better, getting better as you go. You got to find a way to keep learning as you go. So that's been the biggest thing for me. And then speaking of the help thing, it's not just external help as well. This is where hiring in a strong executive team really goes a long way. So if you can get experienced people who have been there and seen some of this stuff in your executive org, it'll help you out immensely. So we have an experienced CFO. We have experienced CMO, we have an experienced VP of engineering, and people like that are able to sort of help clue you in on the things you don't know yet. And you should listen to them, like you're paying them a lot of money. You want to take their opinions into account. And so I think getting that, those experts internal to your org is critical as well, because they're going to see all the problems intimately. They're going to see what's working, what's not working, and they're going to have a lot of expertise on how to solve. Some of those things. That has been really helpful for us too as we've grown.

Right, that makes sense. Okay, so Wade Foster, could you recall in your experience, or you have seen other founders, any big mistakes when it comes to scaling and like how do you rectify them?

Big mistakes when it comes to scaling. I think the biggest challenge is talent. Like the talent in your organization is going to make or break you. And so you have to continually be leveling up the, the level level of talent in the organization. And that doesn't necessarily mean, you know, hiring, you know, seasoned people in every single role, but the caliber of person who is coming in at your entry-level roles should be getting better over time. The caliber of people coming into senior-level roles should be getting better over time. All of those things have to improve as you continue to grow. And I think there, I think if you sort of let those things atrophy, the job's going to get way harder. You're gonna— your ability to meet your customers' needs is going to get a lot tougher because the talent around you is sort of atrophying over time. So if there's sort of a— if there's a challenge, if there's a biggest challenge or a biggest mistake you can make, I think it's just not building a team that can work fantastically together and one that can improve together over time, right?

So people indeed is the most important resource of a company, right?

I think it is, yeah. And you have to— you have to care for it appropriately.

Absolutely. By the way, I remember like once I was talking to a founder of a B2B SaaS startup. So what happened is they targeted that they would reach $1 million ARR in one year from the number that they were at, right? But after one year, they could not reach even half. They were steadily growing, but, you know, not at the scale that they— and the rate that they were hoping for. So obviously everyone wants to scale very rapidly, exponentially, but what to do when you are not scaling as fast and as rapidly as you want? So like, what do you do?

I think you ask a lot of questions. You start to try and, you know, inspect your organization with very critical eye— what's working, what's not working with your product, with your team. You try and look at companies that are growing quickly and try and see if you can figure out why are they being successful. You know, is it, is it because their product has certain characteristics that yours doesn't? What are the things that they do that make them grow and succeed? And what are the things that you do that make you grow and succeed or not succeed? And then try and use that to, to adjust. That might mean that your product has, you know, if you're not growing as fast as you want, maybe there's something that's missing in your product that helps it be more viral or makes it grow more effectively. Or maybe that there's something in your talent pool or in your culture that's hindering your ability to grow. Maybe you need a second product line. Maybe you've tapped out on the market. Maybe your market that you're playing in is too small. There could be a lot of reasons. I mean, The reasons can be a mile long, but I think you have to look at it with a very honest— and with a certain level of intellectual honesty. And you gotta try your best not to tell yourself— to fool yourself. You might ask other people too. Like, you might ask people external to the org who are willing to sort of speak truth to you and not sort of worry about your feelings as much, because that's the stuff that you really gotta tease out. Otherwise, you probably won't be able to break out of the growth trajectory you currently have, right?

So Wade, when you're scaling, I guess systems, processes, and system thinking, I guess all this becomes very, very important, right? So first, first of all, do you agree with this thought? And like, if yes, how do you think on this? What sort of system thinking or processes you have inculcated in Zapier when you guys have scaled?

Yeah, super important. You know, things like our, you know, baking our values into the hiring process. That's, you know, that's That's a system that works alongside of a process that helps us scale our talent management. You— this is super important. And at your most senior levels in your org, you need this desperately because the way you solve problems as an executive is not by doing the work yourself. You're often asking you, who, who does this work? Or how does this work get done? And your executives need to be able to design how the work gets done effectively. And great systems thinkers are going to be way better at that than people who aren't. And so that is super important skill set to have as you scale an org, right?

So when you scale, how do you sort of find out what are the functions that you have innovated on, and for the rest of the things that you can just do whatever is the norm? Or another way of saying, putting it would be, what are the strengths or value proposition there are for your company? Because I guess these are the areas where you would have expertise and leverage on over other companies, right? So you don't need to invent every part of your business, right? So like, how do you guys identify that and act on that when scaling? So one example I thought of, like, you guys don't have a sales team, but— and that kind of a setup, but instead you guys have made such a giant kind of a monstrous machine of acquisition and self-serve, right? Big fan of your blog, which is a kind of an acquisition machine, I guess. So like, so for smaller as well as bigger customers, so like, how do you guys find out and what would your advice be for any founder to find out those core strengths.

There's this thing called Chester— there's this concept called Chesterton's Fence that a lot of policymakers use. And the sort of the metaphor is that if you want to remove a fence, you can remove the fence. But before you remove the fence, you should understand why the fence is there in the first place. And after you've uncovered why the fence exists, then and only then can you decide to remove the fence. I think this is really important for figuring out where you should innovate and where you shouldn't, because a lot of times people just sort of assume we're going to We're going to innovate everywhere and everything that exists is not as good as it could be. And so we're going to fix everything. But that's sort of impractical. Yeah, of course everything could be better, but your company has too many things that have to go right for you anyway that you can't really innovate everywhere. So if you sort of do this sort of first principles thinking around these various areas, whether it's your go-to-market motion, whether it's how you design your engineering org, whether it's you have a remote team or an in-office team, whether it's how your management team is structured, you sort of do that exercise of Chesterton's Fence and understand why do companies do it that way? Why are they successful with it? Or why are they not successful with it? Then and only then can you decide to innovate. If you're sort of innovating for the sake of innovating, I think you're probably going to struggle. But if you sort of understand the reasons why it works, the reason why it doesn't doesn't work, it'll give you a much better perspective on if you should do it differently or not. So in our case, you know, we have a fairly traditional management structure. We didn't innovate there, and we, we didn't innovate because when we sort of looked under the hood, when we sort of asked all the things, we sort of realized traditional management done well, it works. Like, it's pretty good. Now, it's kind of hard to do traditional management well. I'm not going to debate that. It's a very difficult thing, but it's better than not management. And so we're going to be traditional in that regard. The sales perspective, we looked under the hood and we said, you know what, we actually can do this a much better way. We know how to do this more effectively. And so we're going to innovate there. So I think that's the approach we've taken and it works well for us.

Right. Awesome. Any other example of systems thinking? You just mentioned one example of inculcating and, you know, perhaps checking for culture right from the beginning of the funnel of when you are hiring. Any other Any other examples that you have seen while scaling up in any aspect?

Yeah, I mean, OKRs are a sort of example of systems thinking. You know, designing your go-to-market motion is an example of systems thinking. You know, designing your support, like any sort of design of teams or teams of teams or mechanisms for which your work gets done is going to have some element of systems thinking involved.

Right. And like somewhat opposite to that, like when you're growing so fast, how do you still as a team do things that that don't scale and perhaps maintain that mantra, right?

Yeah, you certainly find situations, particularly where you're doing new things or small things where you kind of— it's still the best approach is just roll your hands up and get it done. So maybe you're launching a new feature. Well, probably best to just get on the phone with a bunch of customers and walk them through the feature. You're never going to do that once you scale the feature. You want the feature to be easy to discover, self-serve, all that sort of stuff. But when you're getting ready to launch it, you're probably going to do it, you know, individual by individual to really understand if it's working well or not. So anytime you're doing something new, I think is good to sort of do those things by hand, I guess, a little bit until you really understand it and then you sort of figure out, okay, how do we scale it up from here?

Right. Makes sense. So Wade Foster, that was pretty much it. Any final advice you would give to post-PMF founders on how to scale successfully? What have been your biggest learnings up to now?

Keep learning. The problems don't go away. The successes and the failures, just— you just get more of them. You succeed more and you fail more, and you constantly are gonna have to learn along the way. And so as long as you're willing to keep learning, I think you'll be successful, right?

So like, eventually, when you scale, everything scales, whether good or bad.

Yep, it does. Exactly right.

Any resource you would suggest to listeners for learning more about this exactly, scaling startups? Books, people, blogs?

You know, I think the, the SaaS blog is great for, you know, scaling SaaS companies. There's a really good— that's a really good resource as well. There's a good book called The High Growth Handbook that came out a year or so ago from Elad Gil. Those are two things that I would check out for sure.

Perfect. Anything you would like to plug in? How can people reach out to you?

Yeah, I'm active on Twitter. You can catch me @WadeFoster and then check out Zapier. It'll help you automate some of the work you're doing, be a little bit more productive if you've not checked it out before.

Absolutely. Well, Wade Foster, thank you so much for all the insights. It was a pleasure having you on the show.

Yeah, thanks for having me too, Arun.

That's it, folks. Thanks for listening. Do give me your feedback about the podcast. What could be improved? What topics and guests you would like to see on Insights Alley? You can leave a comment on the YouTube video or could email me at arun@insightsally.com. You can also message me and connect with me on Instagram, Twitter, etc. My handle everywhere is @arun11192. And remember, always be learning. Bye!