Zapier and the future of automation
Zapier and the future of automation
Why organizing along 'industry verticals' might help this Silicon Valley upstart
Zapier remains one of my favorite companies of the current decade. There are three specific reasons why I love the company:
They are among a handful of companies that get paid by helping creators and businesses unlock hidden value. There is no reason for anyone to use Zapier – there is no actual physical or digital product on offer here. Businesses and individuals only use Zaps because it supercharges their workflow, helping them save time and money. This conversation between the founders helps best explain Zapier’s vision:
The company has taken the mantra of ‘doing things in public’, popularized by folks like Jason Fried and DHH, and really made it into their own. Even though it is not really a startup anymore (200+ employees, $50M+ ARR run-rate), the company still seems to have the feel of a scrappy startup. This is due to the company’s approach of openly sharing their experiments, with employees and founders openly writing and speaking about their experiences. For folks who like to read such stuff, this is really endearing. (P.S: Their guide to remote work remains one of the best resources on the topic. Their approach to remote work is also a great reason why I expect them to continue to succeed over the coming years)
Unlike most startups of the post 2008 era, they have avoided raising funding rounds in favor of maintaining ownership and remaining hyper-focused. The company’s $1.2M seed remains its only funding to date. Judging by Webflow’s recent funding round, this is a company that could easily raise a Series A at a >$200M valuation. And yet, the founders continue to ‘bootstrap’ the business with cash flows from customers and continue to operate within a relatively narrow focus area (SaaS integrations).
However, I think Zapier is missing a trick in terms of what its offering could look like. It’s a company positioned today for integration with software businesses and workflows. Apps – Slack, MailChimp, GSuite – you name it and they’ve probably got it covered. And admittedly remaining focused on this vertical alone warrants a $10B+ Enterprise Value.
But if the objective of the company is to 10x its audience and help benefit more end users, it needs to organize differently. More specifically, the teams need to be organized around industry verticals. And ultimately, all apps and use cases need to be built out with an ‘industry’ focus. (B2C/Personal use can be a separate industry too for ‘hobbyists’)
Before we discuss why, let’s start by acknowledging that while apps like Slack, Salesforce or Trello have grown in popularity, they remain a drop in the ocean in terms of percentage of daily work conducted on them. Why? Most knowledge work still happens largely on Excel, PowerPoint or Word on old PCs. And it will continue to do so for the coming decade. Microsoft’s Office Suite remains the ultimately productivity killer app. Now a savvy user could technically copy-paste their Excel spreadsheet onto Google Sheets and figure out a series of Zaps that helps them save time. But that’s asking too much of the user and you’ve already lost 98% of your audience. This isn’t about code or no-code. This is about transaction costs. Mental transaction costs, specifically. It is one thing to expect me to figure out how to use your software. It’s a much stiffer ask to tell them to also figure out what is the best use case for Zapier in my daily work. Opening the Zapier website presents me with an array of 1500+ apps with tens of thousands of Zaps. But frankly this is overwhelming for me - a relative technical nerd. Choice paralysis and what not. And I can’t imagine how an ‘ordinary’ user responds when they first encounter Zapier.
Imagine an alternate world - one in which Zapier is set up internally along ‘industry-lines’. Now, let’s say we have an insurance product team in this world. This team spends its first few months conducting in-depth user interviews with folks in different areas of the industry to understand the pain and repetition points in the industry. I am almost certain that the problems will involve ‘simple’ things. Turns out that everyone is using Excel for pricing and spend half their day cleaning these data set. Or call center agents do their daily data entry in a crummy 25-year old software that gulps out a csv file at the end of the day.
Now, the insurance team creates a master task list of potential use cases for Zapier might help these folks. This list of tasks is really the product roadmap for the next year for this team. There’s tonnes of use cases really; from a pricing actuary getting support around cleaning an XML file before it goes into their regression model, to a call center agent getting some support with the data entry. Bit by bit, this insurance product team goes on building out apps for the insurance industry – where a ‘use case’ becomes a future Zap on Zapier. Now as the end user, when I come on Zapier – the company asks me about my industry and job title and immediately throws out the ‘top 10’ recommended Zaps. And if the initial pilot is successful, the company can roll out this industry-based structure out across is entire operations
Software isn’t eating the world. Menial tasks and drudgery have been eating it since the dawn of human civilization. We are all meant to be doing a lot more with our finite time than doing repeat work. If even marginally successful, the company can change its tagline from ‘extending the functionality of the web’ to ‘extending the functionality of human lives’.