A report from Contrary Research. Discover Zapier's founding story, product, business model, and an in-depth analysis of their business.
The average business today will use 88 applications across their organizations, and business professionals use 9.4 applications per day to complete their work. The application interplay is typically a repetitive chain of actions following an initial trigger. As one example, someone fills out an Airtable interest form, which triggers an email being sent out. That email triggers a meeting being booked, and that meeting populates a set of fields in a CRM.
In a 2021 survey, 88% of SMBs said business automation allows them to compete with larger companies, and 9 out of 10 knowledge workers claim automation improves productivity. Knowledge workers are the majority of the labor force, representing over 100 million workers in the United States, and 82% use or are planning to use automation software.
Wade Foster (CEO), Bryan Helmig (CTO), and Mike Knoop (President) founded Zapier right out of college. Over two days at a Startup Weekend event in Missouri, the trio built a product prototype that would later become Zapier. Their idea was rejected by Y Combinator, but the team continued to build the Zapier on nights and weekends.
Zapier was an early pioneer of the product-led growth sales motion. They made it free for any prosumer to get started without approval from their IT teams. That allowed the company to save on having a large sales team and helped them reach profitability two years after its founding. At their core, Zapier is positioned to make money only when users save time. The more time users save with zaps, the more likely they are to build other connections. The more number of connections, the more money Zapier makes.
Some of the most commonly connected tools on Zapier, like Slack, Salesforce, Google, and even Calendly, have announced workflow integrations products within their existing platforms to upsell their customers and capture the value of their integrations directly. Instead of having to rely on Zapier to connect Calendly to any other application you can build that same integration natively without having to leave Calendly’s platform.
Transfer by Zapier enables customers to process batches of data too large for the traditional Zapier pipeline to process. Transfer strengthens Zapier’s infrastructure to handle larger loads. The more data-centric every company becomes the more they need systems to manage that data. Zapier’s expansion into Transfer places them in the data pipeline market along with companies like Fivetran.
With the 2020 announcement of Google Workspace and Microsoft bundling their productivity suite into Teams, Zapier faces platform risk from these two major productivity suites. Zapier’s top 2 integrations are Google Sheets and Gmail.
Zapier skewed from the traditional way of building a large technology company by focusing on remote work (even paying employees $10,000 to move out of the Bay Area), not taking significant venture funding, building a product-led engine without a traditional sales team (only really adding people to the sales team in 2021), and pursuing profitability rather than growth.
