Apr 15, 2021 · 32m · 20vc
20VC: Scaling Zapier To $140M ARR and a $5Bn Valuation on $1.4M of Funding, What Founders Misunderstand About Fundraising & How Founders Should Think About Secondaries Today with Wade Foster, Founder & CEO @ Zapier
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In this episode of The 20VC podcast, host Harry Stebbings speaks with Zapier co-founder and CEO Wade Foster about building a $5 billion business on just $1.4 million in venture funding. Foster shares key insights on capital efficiency, remote work culture, executive decision-making, and scaling operations.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Harry holds 30.7% of the talking time here. How this is scored →
Harry as informed peer 3.1 Guest teaching 3.1 Guest disagreement 1.6 Harry pushing back 2.0
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 19:48 Dismissing venture capital hype
Wade forcefully rejects the conventional narrative around venture funding, arguing that founders get seduced by flattering VCs into selling equity they will later regret losing.
Hardest push from Harry ▶ 21:36 Challenging the anti-fundraising positionHarry directly challenges Wade's anti-venture stance by arguing that modern capital costs are so low that dilution is negligible for strong companies.
Biggest teaching moment ▶ 19:48 Reframing venture capital as equity saleWade educates both the host and listening founders by reframing fundraising as selling off piece-by-piece ownership of a compounding asset.
Harry holds his own ▶ 21:36 Citing Stripe's $600M round at $95B valuationHarry demonstrates deep market knowledge by citing Stripe's mega-valuation data point to counter Wade's argument regarding excessive founder dilution.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Episode Welcome and Podcast Sting | 1 | 1 | 0 | 0 | Harry introduces Wade and asks about his origin story and entry into startups. Wade shares his career journey post-2008 financial crisis in a friendly and collaborative opening exchange. | |
| Learning Agility and 'Fake It Till You Make It' | 2 | 2 | 1 | 1 | Harry prompts Wade on 'fake it till you make it' and advice for graduates. Wade gently reframes the concept toward continuous learning and curiosity rather than pretending to have expertise. | |
| Building and Managing a Successful Remote Culture | 3 | 3 | 0 | 2 | Harry cites Coda founder Shishir to ask detailed questions on staff meeting mechanics and presses on task accountability. Wade openly discusses the operational trade-offs of remote staff meetings. | |
| Internal Communication Systems and Tooling | 3 | 2 | 0 | 1 | Harry references Jay Simons to ask about specific communication tools and probes org scaling break points. Wade breaks down Zapier's internal tool Async and key team size inflection points. | |
| Executive Hiring and Personal Leadership Growth | 3 | 2 | 1 | 2 | Harry gently pushes back on Wade having 14 direct reports and probes executive hiring challenges. Wade candidly admits executive hiring is the single hardest part of scaling a company. | |
| Role Models in Business and Vulnerability in Leadership | 3 | 2 | 0 | 1 | Harry shares his own company role models to prompt Wade on admired organizations and leadership frameworks. Wade explains how vulnerability helps align teams around real operational problems. | |
| A Critical Perspective on Venture Capital Fundraising | 3 | 7 | 6 | 2 | Wade strongly critiques venture capital marketing, reframing fundraising as selling off equity rather than an achievement. Harry acknowledges his perspective as a VC while Wade warns founders against VC flattery. | |
| Evaluating Low Cost of Capital vs. Capital Need | 7 | 6 | 6 | 7 | Harry pushes back firmly against Wade's anti-VC stance, citing Stripe's $600M raise at a $95B valuation to argue that dilution is minimal and capital is cheap. Wade holds his ground, arguing that taking money just to sit on it dilutes valuable compounding equity. | |
| Founder Secondary Transactions and Wealth Strategy | 4 | 4 | 2 | 3 | Harry presses Wade on secondary sales and asks if taking $10M off the table is appropriate. Wade explains how modest secondaries de-risk personal stress while maintaining long-term equity upside. | |
| Quickfire Round: Influences, Quirks, and Future Vision | 2 | 2 | 0 | 1 | Harry leads a rapid-fire session touching on books, parenting traits, early pricing models, and future plans. Wade shares the humorous origin story of using the Fibonacci sequence for Zapier's first pricing plans. |
Statements from this episode (20)
Zapier reached $140M ARR and $5B valuation on $1.4M primary funding
“Post-YC in 2012, Wade raised 1.4 million dollars for the company from Bessemer and Threshold, but since that round, he's scaled the company to a hundred and forty million in ARR and a five billion dollar valuation without any traditional style venture rounds h…”
Foster: Join the smallest company possible to learn how business works
“Well, if you want to learn how to run a company, I think the smaller company you can be a part of, the better, because you're just going to get exposed to, like, the whole of the thing.”
Zapier executives resolve minor meeting items silently in 10-minute pre-reads
“Yeah, you know, at Zapier, we, like, the exec team has a staff meeting every week. There's a prompt ahead of time that tees up the topics, and so people sort of pre-fill out their documents and Folks join a Zoom for the meeting. We do 10 minutes of pre-read. W…”
Foster: Leaders should not enforce accountability for non-priority meeting items
“I tend to say, you know, because we've intentionally put them below the, like, priority list, I don't worry about them all that much. Like, I kind of take the mindset of, like, well, if it was really important, it would have been, like, the number one thing we…”
Zapier built an internal Reddit-style forum tool called Async
“We've built this tool, Async, internally, that is like a I mean, the best way to describe it is kind of like a Reddit style, but long form Reddit, I guess, where you can post blog posts and assign them, like, into a category or, like, maybe subreddit if you wa…”
Zapier hit operational scaling breakpoints at 30, 100, and 300 employees
“I feel like we're kind of at starting to get to a little bit of another inflection point where we're sort of having to reset some of how our operating cadence works. Like, how our management structure works yet again. So, like, I'd say 30, a 103 hundred kind o…”
Foster: Executive hiring is the single hardest challenge for any CEO
“I have not encountered anything harder in my career than, like, hiring great executives. Any CEO who tells you that's not at least in their top two, like, I would be like, really?”
Zapier CEO Wade Foster reduced his direct reports from 14 to six
“Today I have six, I think, so, you know, I'm doing pretty good right now, but there's been, you know, even as early as late last year, I had, like, 14 or something like that.”
Foster: Midwestern companies generally lack the ambition found in Silicon Valley
“Having operated inside of Silicon Valley, like We've tried to sort of borrow some of the ambition that you find in companies there. Like, I think you don't necessarily get that in the Midwest.”
Foster: The VC community excels at marketing and selling itself to founders
“This is a thing that I just feel the VC community is just so good at marketing and selling itself that it is really hard to resist that temptation.”
Foster: Founders are not raising money, they are selling company equity
“You are not raising money. You are selling a part of your company. That's what you're doing.”
Foster: Many startups raise large venture war chests without accretive plans
“And I see a lot of companies go out and just, like, taking these war chests and, like, selling all those parts of the company only just to sit on the cash and never do anything with it. Or to go spend it in ways that aren't accretive to the business.”
Foster: Avoiding fundraising redirects founder energy into product and growth
“So many founders spend so much time engaged in the fundraising process. That is a huge mental and time investment that you have to commit to, and so for us, we never had to do any of that. That all Was founder energy poured right back into helping our customer…”
Foster met select VCs quarterly to preserve fundraising options without pitching
“I did want to be in a position where we could do that quickly, and so I just sort of set up a, like, simple calendar where I said, you know, hey, One Friday, every quarter, I'm gonna, like, go snag lunch with somebody, or I'm gonna jump on a Zoom call with som…”
Foster: Founder secondary share sales enable bolder business risk-taking
“You know, I generally think that, particularly for founders in particular, like, having a little secondary generally is a good thing. When you run a company for a long time, you tend to not pay yourself super well. You take on a certain, like, personal finance…”
Foster has not taken $10 million in secondary stock sales
“I haven't. So, I don't need that much money, like, to sort of live a good lifestyle, I think, is sort of what it boils down to.”
Zapier's initial pricing model was based on the Fibonacci sequence
“We sort of said, screw it, we're going to do our first pricing model based on the Fibonacci sequence, and so our plans were 11 dollars, 23 dollars, and 58 dollars, and then we named them Amps, ohms, and volts, sort of like riffing on the zap theme a little bit…”