Aug 18, 2017 · 44m · y-combinator
The CEO Who Pays Employees to De-Locate From the Bay · Y Combinator
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this Y Combinator podcast episode, host Craig Cannon interviews Zapier CEO Wade Foster about Zapier's pioneering remote-first culture, capital-efficient growth, and pragmatic startup philosophies. Foster shares actionable lessons on scaling distributed teams, leveraging strategic networks over venture capital, and accelerating personal and founder growth.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. How this is scored →
The partners as informed peer 3.6 Guest teaching 4.9 Guest disagreement 1.3 The partners pushing back 0.9
speaking balance: gold is the partners, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 18:15 Debunking winner-take-all market clichés
Wade firmly dismisses common venture capital phrasing around winner-take-all markets, using Mailchimp to show how bootstrapped companies easily outperform heavily funded competitors.
Hardest push from the partners ▶ 18:46 Pressing on the definition of winner-take-all dynamicsCraig prompts Wade to rigorously define the boundary between winner-take-all mechanics and markets where Mailchimp can thrive without network effects.
Biggest teaching moment ▶ 23:11 Exposing media and VC bias for Silicon Valley companiesWade breaks down how tech media relies on venture rounds as flawed proxies for business success, skewing coverage toward local Bay Area startups.
The partners hold their own ▶ 39:50 Connecting iteration velocity to software downside riskCraig builds on Wade's high-repetition learning thesis by identifying that low downside risk in software enables rapid trial-and-error experimentation.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | The partners as informed peer | Guest teaching | Guest disagreement | The partners pushing back | Why |
|---|---|---|---|---|---|---|
| Zapier's $10,000 Bay Area Delocation Package | 3 | 4 | 1 | 1 | Craig asks about the origin and results of Zapier's $10,000 delocation package. Wade explains how it generated massive application spikes globally despite almost no candidates actually taking the Bay Area buyout yet. | |
| Remote Work Philosophy and Airbnb Onboarding | 3 | 5 | 1 | 1 | Wade details Zapier's Airbnb onboarding ritual and why starting remote from day one creates operational documentation muscles that co-located companies struggle to learn later. Craig serves as a receptive interviewer facilitating the narrative. | |
| Remote Management Frameworks and Company Values | 3 | 5 | 2 | 1 | Wade challenges startup founders who try to reinvent management paradigms instead of adopting established, scientifically-backed frameworks like Manager Tools. The dynamic remains conversational with Wade offering clear managerial philosophy. | |
| Transitioning from Internal Promotion to External Hiring | 4 | 5 | 2 | 1 | Craig combines Twitter questions regarding Zapier's decision not to raise institutional capital after YC. Wade dismantles the dogma around fundraising identities, framing venture capital purely as an optional utility rather than a marker of success. | |
| Evaluating Market Dynamics and Winner-Take-All Myths | 4 | 6 | 2 | 1 | Wade dismantles the common tech myth that B2B markets are winner-take-all, using Mailchimp as proof that bootstrapped companies can dominate against well-funded VC competitors. Craig prompts Wade to distinguish between B2C and B2B network effects. | |
| Leveraging Y Combinator's Network for Strategic Partnerships | 4 | 5 | 2 | 1 | Wade critiques the media narrative and VC bias that assume great tech companies can only emerge within Silicon Valley. Craig agrees, adding commentary regarding founder imposter syndrome. | |
| Zapier's Product Evolution, Moats, and Enterprise Expansion | 4 | 5 | 1 | 1 | Craig asks how Zapier protects its moat against copycats and approaches enterprise sales. Wade explains that their partner-built integration ecosystem creates defensive moats and freemium adoption provides internal corporate champions. | |
| Scaling Regional Talent and Remote Career Progression | 4 | 5 | 1 | 1 | Wade describes the talent constraints of scaling companies in smaller cities and explains Zapier's internal career progression pathways that yielded 97% retention. Craig asks about transparency in employee tracking systems. | |
| Cultivating Connection and Engagement in Remote Workforces | 3 | 4 | 0 | 0 | Craig asks how Zapier monitors remote team happiness on a daily basis. Wade explains tactical rituals like pair buddies, unstructured Slack channels, and spontaneous team activities. | |
| Learning Velocity, Personal Passions, and Founder Growth | 4 | 5 | 1 | 1 | Wade reflects on his learning philosophy using racquetball reps and support ticket volume, emphasizing rep velocity over premature perfectionism. Craig enthusiastically concurs with the premise for software development. |
Statements from this episode (20)
Zapier pays $10,000 to new Bay Area hires to relocate elsewhere
“If you're in the Bay Area and you take a job with Zapier, we'll pay 10,000 dollars to help you relocate to anywhere, or so we call it delocate.”
Zapier saw a 30% applicant surge after announcing its delocation package
“Since then we've seen probably about roughly about a 30% increase in applicants. To Zapier.”
Zapier hired 15 people post-announcement but paid zero delocation bonuses yet
“So we've actually hired about 15 folks since then, and only one person from the Bay area. She's in the process of, like, mulling over whether she wants to take it or not, but so we actually haven't offered any, because we haven't hired any folks in the Bay Are…”
Zapier flies new hires to Bay Area Airbnbs for in-person onboarding
“So we do this thing called Airbnb on boarding, which when we hire folks within the first month, we actually do like to have them spend a week in person out here in the Bay area. So we'll, we'll rent an Airbnb. We'll bring their manager out here, them out here …”
Startups should adopt proven management frameworks instead of inventing new ones
“I think a lot of companies, at least in startups, like they try to reinvent the wheel here. I think it's not probably a great idea, especially if you're growing really fast. It's, there's, like, a lot of good, like, scientific-backed research on, like, how to …”
Zapier adopted the Manager Tools podcast framework for internal company management
“So like we, there's this podcast called manager tools and they have like a paradigm. And we basically just said like, we're just going to use their philosophy on how they go about stuff. Because we were like jive, like 95% of it jived with us. So we were like,…”
Almost all early Zapier managers were promoted after six to 12 months
“Historically, almost all of our folks who have moved into like management positions have been working at Zapier for, you know, six, 12 months.”
Zapier joined Y Combinator for Silicon Valley network access, not capital
“The primary reason we did YC wasn't for the capital. Primary reason we did YC was because we were from Missouri relatively unknown and not well connected into the broader tech ecosystem, particularly for our product, which is integrations with other SAS compan…”
Freemium is generally a bad business model for bootstrapped startups
“Freemium is a bad idea generally for bootstrap companies because like you're going to have a ton of support for free users who don't pay you anything. And if you're not getting any money from them, it's going to be really hard to bootstrap.”
Identifying strictly as bootstrapped or VC-backed harms founder decision-making
“When you like start to put your own identity and like, well, I'm a bootstrap or I'm a VC thing like that starts to affect your decision-making in ways that are probably not Healthy for your company. And it's just better to look at money and fundraising general…”
Mailchimp won its category without raising any outside venture capital
“You look at something like Mailchimp, which haven't raised a single dime. They have dozens of well-funded, super well-funded public companies that are direct competitors and still Mailchimp takes the takes it home as the winner of that market.”
True winner-take-all markets are rare in B2B software
“Whereas in B to B, like it's pretty rare to have like true winner take all markets. You know, if you're making yet another CRM company you know, there's dozens of CRM companies that are very good CRM companies that compete with each other head to head and are …”
Paul Graham connected Zapier to a target partner VP within two days
“And then when we got in YC, one of the first things I did was, you know, emailed the folks and PG was like, oh yeah, we can help with that. And found a, you know, like a company that acquired like their CEO and like I had an intro to like a high level VP, like…”
Tech media overvalues Silicon Valley because VCs avoid traveling for deals
“And so they end up having to rely on proxies for that. And a good proxy often is, you know, where's the venture funded companies happening and venture funded companies have tend to happen closest to where VCs happen to live because they don't like to travel th…”
Zapier has the most integrations, and partners build the majority of them
“So for us, you know, we have the most integrations of anyone and most of our partners are building the integrations for us.”
Local talent shortage is the top scaling bottleneck in smaller cities
“So I think that's probably the biggest scaling challenge that you might actually just run into. If you're the first in a city of a billion dollars or a billion dollar company is just, is there the talent there?”
Zapier achieved 97% employee retention over a 12-month period
“Our attention is like incredibly high. So we actually just ran the numbers last week like 97% retention for over the last 12 months.”
Zapier's employee Net Promoter Score reached a world-class 72
“Our, we did, we started doing like an employee net promoter score and came in at like 72 which is like pretty world class.”
Wade Foster consults founders one year ahead of him every six months
“One of the things that I always like, I like to do is about every six months, I'll go seek out founders who are basically a year ahead of me. And just ask like, what did you do in your last year? Like, what was the smartest thing you did in last year? What was…”