Zapier raised about $1 million after Y Combinator and has never raised primary capital since.
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Wade Foster said on ToplineRaise less money: current tools let companies go faster with less capital, and giving up equity is "the closest to a one-way door" a company has.ListenFundraising & investors
5 sources
Wade's advice to founders is to raise less money, because current tools let companies go faster with less capital. Listen
He said this is for founders building for the long haul, who will face platform and technology shifts that require taking steps back. He added that without that flexibility a company can get stuck on a local maximum and miss a important platform shift. He also said founders may not feel this need today.
“I think the reality is like, raise less money. These tools enable you to go faster with less capital.”
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Equity is one of the hardest things to undo inside a company, close to a one-way door. Listen
Wade reasoned that once money is not the constraint, giving up a portion of the company should be a thoughtful decision. He said few other things inside an organization are as hard to get back as equity.
“It's the most difficult to get back It's like the closest to a one -way door”
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Zapier raised about $1 million after Y Combinator, became profitable, and has not raised primary capital since. Listen
Wade said the founders treated that money as if it were the last they would ever raise and wanted to work out how to get profitable and grow from it. They did not want to give equity away to outside venture firms. The company has been profitable ever since.
“Yeah, we raised a million and change post YC and then we got profitable after After that and have never raised any primary capital”
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At Zapier, money was not the constraining factor. Listen
Sam suggested two possible reasons for staying bootstrapped: that money was not the constraint, and that he would rather own more of a slower-growing company. Wade said the first was definitely the mindset, so selling equity had to be weighed carefully.
“One is no, money is not the constraint. Customer growth is the constraint. We don't need your money to grow.”
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Wade saw a bootstrapped company, Veterans United, grow from about 500 to 1,000 employees without ever raising outside money. Listen
Veterans United was owned 50/50 by two brothers and never raised a dime. Wade was employee 500 and left about 10 months later, when the company had a thousand employees. The experience made him skeptical that raising a series A, B, C and D is the only way to build a great company.
“They never raised a dime. And I was employee 500 there.”
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Wade Foster said on ToplineZapier green-lit no new hires or software spend without CEO or CFO review, forcing teams to try AI first; it took about a year before teams pushed AI themselves.ListenLeadership & culture
2 sources
Zapier made AI adoption a forcing function by requiring CEO or CFO review before new hires or software spend. Listen
Wade said the company did not green-light new hires or new software spend unless he or the CFO had a chance to review why it was needed, and this required people to try AI first. Hackathons and internal show-and-tell sessions continued. He said the approach took about a year to take effect, after which teams pushed on AI themselves.
“We said, hey, we're not going to green light new hires or new software spend unless either me or my CFO have a chance to review.”
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Zapier publicly praises employees who find AI approaches that work, reinforcing a long-standing company value. Listen
Wade said the company brags about people who find something that works, and they get a lot of props. People are curious and interested to see it. Zapier has had a value called don't be a robot, build a robot since the beginning, and people love seeing what their peers are building.
“We just brag about those people.”
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Sam Jacobs said on ToplineA founder might rather own 25% of a billion-dollar company than 3%, even if the diluted path reaches a billion five years sooner.ListenFundraising & investors
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Sam suggested a founder might rather own 25% of a billion-dollar company than 3%, even if the billion comes five years sooner. Listen
Sam said that if it takes 15 or 20 years to reach a billion in revenue, that is fine, and noted Zapier is a YC 2012 company, about 13 years old now. He offered this as one of two possible reasons for Zapier's approach. Wade responded that the first reason, money not being the constraint, was definitely the mindset.
“I'd rather hone 25 % of a billion dollar company than 3 % of a billion dollar company, even if the billion dollars comes five years sooner or something like that.”
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Wade Foster said on ToplineThree-year visions and one-year roadmaps are far less accurate now, because new models arrive every three to six months and their capabilities only emerge over time.ListenStrategy & market
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Multi-year product roadmaps are less accurate now because new models arrive every three to six months and their capabilities emerge over time. Listen
Wade said you often do not know what a new model can do on day one, but over weeks and months you learn what experiences it allows. He said he finds the accuracy of three-year visions and one-year roadmaps to be much lower now.
“I find the percent of correctness of those documents to be just a lot lower these days.”
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AJ Bruno Bruno said on ToplineQuotaPath builds its financial model only on the product it has today, keeping it predictable for the board and treating anything new as upside.ListenMetrics & finance
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AJ builds QuotaPath's financial model only from the product it has today and treats anything new as upside. Listen
AJ said the board expects a predictable quarter-to-quarter model, so the company leaves a larger margin of error for what it does not yet know. All upside is tied to what it is building and thinking about. He said his board is good but still sometimes falls back on patterns from two or three years earlier.
“We're going to take our financial model and completely make it predictable off of the product that we have today and today and what we know today.”
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