I love Zapier and wish them the best. Been using them the past couple years to automate many things in my e-commerce business.
That being said, I come from a software background (As many here at HN do), and I recently found "Integromat" and have completely switched over all my Zapier automations to them. Their price point is much cheaper (Zapier was beginning to charge a few hundred a month for me - and now I'm down to $29/mo with Integromat which could be $9/mo if I wasn't impatient and wanted 1 minute intervals) - but the kicker for me was their UI and just the "programming" mindset that came along with it - I can do many more complex operations.
Just a happy customer - and hoping they have more success to continue improving their product.
Zapier is definitely a better fit for non-tech people, and more simple tasks though.
Hi, I'm working on a low code alternative, which would allow complex operations too. May I please ask about what e-commerce tasks you're automating? First customer was for copying Shopify orders to Sheets in a specific format.
I love Zapier but I can't justify spending so much on these small automations I use it for. I'm piggybacking on my company account currently but Integromat looks really nice! Exactly what I've been looking for
Hmmm, makes me want to check out Integromat further. I've tried it but have basically stuck with Automate as it's basic but there's enough to automate things. Zapier got a little hectic for some of these tasks too.
As a non-technical founder my company pays Zapier thousands of dollars per year.
We've automated a lot of tedious, manual tasks that you would typically assign a VA.
I think we save some money, but even if it was break even, or more expensive than manual labor, the mental overhead of not managing another person, wondering whether the tedious work was done, and according to specification justifies the cost.
Can you give examples of stuff that Zapier does for you that a VA would do?
In my mind Zapier does things that a junior developer or maybe an office admnistrator would do, not an assistant. I feel like there is a small, but significant difference.
Just a simple task like posting the same thing on multiple social media platforms (Twitter, Instagram, FB, Linkedin) can be automated with Zapier easily.
Zapier joins Tealium and Segment on the list of billion dollar valuations for powering the next generation of ad tech.
As cross-site cookies and browser pixels are increasingly blocked, ad platforms are moving from browser-based tracking to server-side data transfer.
Like those other companies, Zapier provides a single integration point that funnels user and conversion data to dozens of marketing companies' server-side APIs. A few clicks allow you to transfer your customer data to/from hundreds of different platforms.
> Zapier provides a single integration point that funnels user and conversion data to dozens of marketing companies' server-side APIs
I think that conclusion is a little far-fetched. If you've used Zapier you know how expensive it is to run tasks, so in my experience Zapier is used more to automate little bits of your business that you don't necessarily want to bother your engineer with. It's not like Segment that you can just turn on a firehose of data.
It's incredibly cheap in the context of 6 or 7 figure marketing budgets. It gets budgeted as a new compliance cost to continue doing business as normal even after Apple, Mozilla, and Google block advertising pixels from their browsers.
Except it's not far-fetched at all [1]. If you optimize for conversions, and the value of those conversions is large enough, the returns readily cover the costs.
Zapier isn't necessarily just for ad tech. It can any kind of ad hoc automation between well-defined services. We use it for support ticket automation.
IFTTT was a disaster as a product for laypersons. Zapier is how you have to make things work for normal people to use such automation tools. There will be many more Zapiers across every segment where there is complexity in the tooling and interaction.
If a person wanted to start a great business, find a business segment you know really well and create a niche Zapier for it. Then when the big companies come knocking (which they will right before they try to kill you and take your niche), sell to them. It's a repeat of the great CRM / enterprise roundup wars.
i'm sorry but you, an account named marketingtech, are extremely blinded by your perspective right now. Zapier charges $599 usd for 100k "tasks" per month. you want to use Zapier for adtech?
first of all if you only have 100k pageviews a month you're probably not even making $599 from serving ads
and second i don't understand what Zapier is supposed to accomplish in your mind?
maybe you have been using it in a way I can't think of?
from what I think you are talking about: is zapier supposed to like sit between website & like some SSP or DSP? during the bid!?!?! or just to like establish an audience to target like send your new email based id to a DMP or wherever for a customer who wants a PMP deal or something?
Also I'm almost positive Segment in your example is not used in the way you describe to pass user/device identifiers between ad platforms? Like i think they connect to adwords but only to grab the standard reporting data you can get into bq anyways. not any user or device data (impression level stuff is now complicated in their own odd like 'private' data clearing house thing).
It sounds like you're referring to the sell-side of advertising (i.e. a publisher running ads on their site).
I'm referring to the buy-side of advertising (i.e. an ecomm business running a marketing campaign). Each task could be "Tell Google that person 123 visited landing page X." or "Tell Facebook that person 456 purchased a tshirt." This lets you create targeting segments on the platforms and measure the results of your campaigns.
i think we just have different views of the current ad tech ecosystem.
you can already tell google/fb/dsp/ssp directly no need for zapier - they already have pixels. now fb (and more are building) have server to server. puttin zapier in the middle especially for individual pageviews/impressions would be inconceivably ginormous scale
for sure it's super complicated with the changes google is forcing and a ton is up in the air.
but assuming google's vision of the future comes true this type of data exchange will likely be blocked in whole or minimally as we know it now
from what i understand, in that future the browser holds the 'interest groups' e.g. targetable user data we're talking about for remarketing, interest cohorts etc - i think that's floc + turtledove in action
in thinking from sell side example publisher.com would create a (i think k-anonymous?) interest group in browser.
it looks like google might go so far as to kill something like TTD universal id by enforcing a privacy budget. so there goes that idea of a middle man syncing publisher.com login pii identifier -> ssp/dsp
google's write up says bidding happens in the browser via 'worklet' but i think that can be delegated to a DSP if done to their likeing as a 'trusted 3rd party server' which also gets rid of all these identifiers including IPs/UAs (google will obviously control the market lol). so i guess that could be some product but zapier moving into but totally completely different than now
There's a distinction between being a data controller and a data processor.
The businesses that use these platforms are the data *controllers* and are responsible for implementing consent, "do not sell my information", "show me my data", or "delete my data" flows as required by law. The platforms generally offer APIs to implement these required data flows in a centralized way, which is another major value prop for them.
The platforms serve as the data *processor* and can assume the data is compliantly obtained by the controller until informed otherwise.
The sustainability of that model of responsibility must be in doubt, though. Take a simple case like a website that loads a resource from somewhere else. Given how the technology works, any model where the original site is responsible for everything and the user's data is supposedly protected is obviously misleading, because very often it's the third party services that are run by the bigger, more powerful, data-hoovering businesses, and neither the original site nor the user may be fully aware of what is happening or have any practical control over it. The model assigns responsibility where it's convenient, not where it's reasonable.
In that situation, the third-party that is actively collecting and transmitting the data becomes a controller and is subject to regulation.
Under the predominant data transfer model, the third-parties cede responsibility by making the data transfer an active behavior by businesses. Ad tech companies can say "We didn't actively collect the data from customers - we passively received it from businesses." That makes a huge difference in term of regulatory compliance.
That said, this has been the most common data transfer model for years. "Data hoovering" is a misconception that allows millions of businesses who actively send customer data to Google/FB to shift privacy criticism onto the platforms.
In that situation, the third-party that is actively collecting and transmitting the data becomes a controller and is subject to regulation.
And yet they may have no direct interaction with the user/data subject, who may not even be aware that they exist, so this model is still flawed.
"Data hoovering" is a misconception that allows millions of businesses who actively send customer data to Google/FB to shift privacy criticism onto the platforms.
I would have much more sympathy for this point of view if the likes of Google and Facebook were transparent with businesses integrating with them about what that really means in practice. For example, if we did a survey of local stores with simple websites that include any Facebook asset on their site, how many of them do you think could accurately describe the implications in terms of tracking their users? What about sites that use Google Fonts? I'm not even talking about asking businesses to actively upload their user contact details for targeting or deliberate tracking like Google Analytics or Facebook pixels here, just the incorporation of any third party resource into a website.
It's also important to say that this isn't just about Google and Facebook. Many third party resources you might incorporate into a site for some reasonable purpose could also be used for tracking, while the site operators may or may not be fully aware of what is being done and the visitors may not be aware of the resources at all. Think of a CDN used to improve performance or a payment service that recommends including its scripts across all pages on a site to feed into risk analysis, for example.
The general problem is the same in all of these cases. The way the technology actually works doesn't match with the way authorities are attempting to regulate it. Unless you're willing to interpret the current regulations strongly enough that some behaviours with legitimate uses are also effectively prohibited across the entire Web (at least within your jurisdiction) I'm not sure you can ever square this circle as a regulator operating within the current frameworks.
CCPA/GDPR don't really prohibit you from doing things with data or sharing with 3rd parties you just have to be really upfront about it.
Say you were going to take the "Contact Us" form submissions from your website push those to Zapier to check if they were legitimate (before sending email to the addresses), you would need to disclose what 3rd parties you're using, what data is shared with them, etc.
Congrats to the founders for not taking much funding but for employees... this has to suck unless they get to sell their shares to Sequoia as well. (If they even got any options...) Maybe they don't compete for SV talent and most employees aren't used to even getting options as part of compensation.
Is there a specific reason a company would have IPO in mind but wouldn't say they are looking to do an IPO eventually? Is there a particular reason to say that?
Most people would prefer to be paid a good salary for doing good work, rather than uncertain lottery tickets and an obligation to understand how they work.
I think most companies would prefer to operate this way, too.
Sure but this company is headquartered and (mostly) founded in San Francisco. So... stock options from such a company would be standard as far as location go.
It’s a very powerful way to align incentives. It results in a major reduction in political arguments and a major increase in productivity. It’s a long-term incentive, so it causes employees to take good risks for the customer even if they won’t be apparent today.
Stock is literal ownership and it eases “ownership problems” proportionate to the meaningfulness of the expected value of the stock to the employeee-owner. It’s a powerful tool for increasing teamwork.
To be fair to them, they do a pretty decent profit share every year. It is compensation based, so it's nothing life-changing (only say, 5-10% of your total compensation) but it was nice!
First and only place I've ever participated in profit sharing.
I don't know what qualifies as "massive base salaries" but most folks in Support (the team I worked on) were on around $70k+ USD base compensation.
Profit sharing happened twice a year, but I don't remember it ever going above 10% of your six-monthly compensation rate (so effectively, you got 20% at most).
It's a remote first company so i don't think most people in the support team live in San Francisco.
I don't think 70k for a support position is that bad.
I've always thought profit sharing was more fair overall than shares/options for most employees. I'm really glad to hear that this happens at relatively larger companies too.
Strongly disagree for tech companies. At tech companies there is almost always significant lag between when value is created and when profits on that value are realized. The employees who worked for Amazon for the first 10 years generated incredible value but little profit. The value of equity takes into account all of the future profits of the company, not just what is left over in any particular year. The engineers who created Windows are still being compensated for it today if they held their shares, even if they stopped working for Microsoft 20 years ago. That is fairness. The company benefits from your work even after you leave, you benefit from the company's growth due to your work.
If it was hiring locally in San Fran, maybe,but it's a fully remote company with many devs in places where things like stock options sound are as distant dream as $100K salary being on the low end of things. Europe is full of successful companies,albeit not necessarily with such valuations, where any stock distribution is unheard of.
Well yes, if you remove the "unicorn" qualifier you can find lots of companies that don't give employees equity. In many European countries the tax treatment of stock-based compensation is quite unfavorable. Which is one of the reasons Europe doesn't have as many unicorns in the first place.
I think employee comp is pretty low on the list of contributing factors. It's more like because:
1) US is huge market. Any company starting there has a huge headstart compared to one in Netherlands or Poland.
2) European VC sector is almost 20 years behind to the one in the US.
3) American VCs are more like to throw more money at you in general. Many European startups don't even consider seeking capital in Europe, because why get 500K if you can get 2M across the pond for the same thing?
4) Europe doesn't have such a shortage of tech talent as the US, primarily because of the differences in educational systems/funding model, etc. So companies don't need to pay 300K/year to get someone who can do magic.
I'm in the UK where options as part of job compensation are relatively rare. I joined as a contractor originally so wouldn't have been entitled to them regardless, but also they're a US company and only recently (1 year ago) set up a UK entity (I don't have options in that either) so I wasn't surprised to not get any.
I don't fully understand options, admittedly. I joined because I love their product, and I needed a better paying job than the one I had originally. Plus, the culture was pretty amazing at the time I joined! I left because they didn't pay me enough in the end plus cultural issues :P so I've got a new job paying more with a culture I prefer.
The article title is accurate, the one in HN right now is not.
The point was that they did YC and seed round but didn’t raise funding after that. Traditionally startups raise every 18mo and have raised A,B,C,D etc in ~10 years and before hitting $5B valuation.
Even with the latest round, it was a secondary sale, so not dilutive raise. Some investors sold shares to other investors but no new shares where created.
Avoiding that “vc hamster wheel” is that you avoid the conversations, meetings, fundraise roadshows and dilution every 18mo or so. So I think Zapier is an interesting example of a startup choosing a different path. Not purely bootstrapped or traditional vc backed company.
This will work out very well for YC as well as it means their shares were not diluted. Overall it is a huge win for everyone at Zapier and their early investors, job well done!
Sometimes I get shocked by these numbers and it reminds me how little I know about business. Like if you showed me the wikipedia page for Zapier and asked me give it some value, I would be way off. Or if you pitched the business idea to me, I would tell you do something better with your time.
I’m not surprised that people on a developer focused forum would find little to no value in something that enables automation without programming.
Y’all can probably automate interactions with hundreds of web based services in your sleep, using multiple languages, with unit tests, and a Turing complete ML-based proxy server for high availability.
For the rest of us, Zapier is a little like magic. Granted there are other servothay do the same thing, but none that I’ve found do it as easily and as well as Zapier.
The thing is that no-code solutions are nothing new or unique; they're a dime a dozen, and have existed almost as long as microcomputers have. What's not obvious is why Zapier's version is (apparently) a revelation. I'm not saying there is no reason, but that's probably where the GP is coming from.
To add to your point - so much amount of software already exists in the world. Tools like zapier enables people to put these different software services in an massive assembly line and kind of use them to get their workflow.
why wouldn't someone just hire a developer to do this? My understanding is that the market for contractors is oversaturated right now. You could probably pay someone hundreds of dollars to write software that interacts with web services etc if you look hard enough
Like the grandparent comment, it's hard for me to imagine that there are enough people in need of this service to justify a $5B valuation
When I was a non-programmer trying to build a business that needed software, the last thing I wanted was to rely on something I couldn’t maintain myself. For example, I could wire up DNS by hand, but the last thing I’d want is to have to learn Terraform just so I could update my email MX records. Using Herkou because I didn’t want to manage a server was another example. Using something like Zapier to add a row to a spreadsheet or send an email is also amazing.
Re-reading, you're definitely right. Where I got confused was the "Terraform/Heroku is bad because it adds another layer" but then not understanding why Zapier is better?
Creating a Zap that is hosted by Zapier isn’t just easier than hiring a programmer, it’s also operationally easier. Zapier’s team handled all the devops headaches. Yes, it could be more expensive than a budget developer, but I’d have to maintain an ongoing relationship to handle problems in a way I would not with Zapier. The headache isn’t worth it until you really need something so custom that Zapier couldn’t easily do it anyway. Hire a developer when you need one, and not before.
Regarding Terraform, installing it, learning HCL, understanding the state management, maintaining a place to run it, and learning how not to screw it up were all headaches I did not want.
The process of hiring someone for 'Download attachments from this email address to my Dropbox, then create a note in Quickbooks to pay the invoice' is a lot more complicated / expensive than just using Zapier.
I think you're overestimating what people use Zapier for.
why wouldn't someone just hire a developer to do this?
Because developers are relatively expensive.
Because hiring anyone requires identifying someone who can do the job and trusting them to do it well. And even before that, you have to figure out what the job actually is.
Because hiring anyone requires some sort of contract, and that has legal implications that might require approvals etc.
As a developer with the required knowledge and skills, these services offer little value to me, but I'm not their target customer. That knowledge and those skills are the result of decades of study and practice, which is experience that most people don't have, and for all of those people the cost/benefit comparisons are going to look completely different.
Also, no developer you’d hire with confidence is gonna get out of bed for an “I can barely explain myself, but all I need is...” job that pays a small amount.
Create in zapier, send the login to dev; please recreate. Works fine and can, in very many cases, be done for well under zapier's pro account prices. Especially for tasks you need to run 100k+ per month, which is not uncommon if you are trying to build a product yourself.
Because people want to click and get it done without dealing with hiring someone else.
Tasks that need to be automated could be also very small and not worth the effort of hiring contractors.
BC you have to maintain the code then. Also, a non-engineering team member can quickly get an integration they need done without waiting for a developer.
How to hire capable developers is an open question for even the most sophisticated technology companies. Anything that allows you to avoid that problem is extremely valuable.
I'm in a similar boat thinking where are all those people in need of these things but then I look around and realise that 99.99% of the population will ever go as far as using Zapier and not because there's something wrong with it but because it's a good choice for most. Just last week had my colleague with zero tech knowledge connecting Zapier to a couple of systems in minutes savings the company money and more importantly,not delaying pretty important integration.
> why wouldn't someone just hire a developer to do this?
...
> You could probably pay someone hundreds of dollars to write software that interacts with web services etc.
The reason is exactly that. They don't want to pay hundreds for a dev to dev for them, and that's just for 'one' integration, with Zapier they can always add whatever they want. They'd rather have the 'cheaper' option (which to be real doesn't always end up being cheaper in the long run, but sometimes does).
Why would I pay someone hundreds of dollars to build something that I don’t know how to maintain, when Zapier can do the same thing for free or $20/mo?
Give me a break - there’s no developer that anyone could reasonably trust to write even the simplest program and maintain and modify it throughout they year for less than $20/mo.
Maybe I spend several hours finding someone online who will do the job for $200, then I spend an hour communicating and clarifying my request, then another hour testing the result. 1 months later I decide I need the automated email to have a different subject line, or include an attachment that wasn’t there before, so I find the developers’ email address and pay him another $100 to make the change - or maybe I don’t because it’s too much trouble.
In the alternate world (in which I live), I simply fire up my browser and create a task in about 15-20 minutes. When I need or want a change, I change it myself.
Less time, less hassle, less risk, and in all likelihood less cost.
Your opportunity cost for the time spent maintaining, or managing people to maintain it is much higher than $20, if your business has more important problems you could spend time fixing. It’s very obvious that this is true if you’re a yc-type startup, which could be worth $0 or $1B depending on how you spend a few years.
>Sometimes I get shocked by these numbers and it reminds me how little I know about business.
This is because you lack the most overlooked and most difficult to teach skill in investing: empathy. Zapier lets non-programmers, the vast majority of the planet, do things that programmers do. Many programmers have poor empathy and thus make bad salespeople and investors. If you can understand how most of the planet thinks and feels though, you can figure out what is going to work and what isn't.
Twitch.tv is something that amazed me that it became so big. I don't really play video games. Who would spend hours watching people play video games? I couldn't understand this phenomenon because I was limiting my exposure to people only inside my own little bubble of reality. I think one can't be a good investor without constantly developing ones empathy because the appeal of various things is difficult to grasp intuitively without a person who would be the customer in mind.
Personally, I think it's important to spend time with people one has nothing in common with to develop this broader empathy and thus be able to pick up on these trends.
Imagine just blasting out at a person that you've never met and know essentially nothing about, based on a few sentences they wrote regarding startup valuations that "they lack empathy". As in you are willing to assess this other person as being completely devoid of empathy.
His reply is a textbook example of psychological projection. He clearly lacks empathy and is attempting to attribute it to someone else as a defense mechanism.
That's because he lacks empathy. (Only someone lacking empathy would accuse someone who accused someone else of lacking empathy of doing so due to lack of empathy.)
The word "empathy" has an enormous amount of baggage attached to it unfortunately and triggers a whole library of insinuations and assumptions. Admittedly, it was the wrong word to use. I should have said "Consumer empathy" which would have been appropriately in context. Also there are varying degrees of consumer empathy. I know some people who are absolute naturals at understanding people and it's amazing to see how vivid their intuitive understanding of people is. It's like watching people do sketch art who can draw beautiful things like it's nothing.
It could be phrased better, but I think they got the point across. The message is something that most people (not just programmers) could relate on various levels and learn to get better.
Damn, misjudge the potential of some product made someone instantly lack of empathy? or maybe it's just that I can't feel deeply relate to everything, and not because I'm heartless bastard...(We can try to understand, yes)
Also, please don't tell other people that they lack empathy straight in the face, that's plain rude, and hey,...sounds like lack of empathy :p
Sometimes I think the application of that word is way too broad, especially in business setting.
I don't think my mother or father could figure out Zapier. Yet they can figure out the MS Office suite and Excel to get work done. I think the premise is just wrong, Zapier is just not easy enough for non-programmers still.
This may be where some of the mystery over the product among programmers could lie. It doesn't look like it would actually let non-programmers do what programmers do at all.
> Twitch.tv is something that amazed me that it became so big. I don't really play video games. Who would spend hours watching people play video games?
Heh. I grew playing games with friends. When I got tired, I'd spend hours just watching them play and having fun hanging out that way. It was no surprise to me they got so big so fast. It really is all about empathy, and I thought this little anecdote would help strengthen your point! :)
To be fair they didn't think of it either. It was a natural pivot from justin.tv when they see that the majority of their users were using the platform to broadcast games.
> This is because you lack the most overlooked and most difficult to teach skill in investing: empathy.
Everyone is lacking empathy, that is not limited to the profession. Empathy on most parts comes from your own experience and understanding, and everyones horizon of experience is limited.
> Twitch.tv is something that amazed me that it became so big. I don't really play video games. Who would spend hours watching people play video games?
Which is strange, considering how many people watch sports. And most videogames are nothing else, just more focussed on mental skills than physical skills. But the main selling point of twitch is IMHO not people playing games, but the interaction twitch offers alongside this. Twitch in that regard is more like a sportsbar or a local sportsfield, where everyone meets, talks, interacts while some do stuff on the side.
The more buzzling part for me are youtube-videos of people playing stuff, because those are missing the interacting and it's just like watching a very poor movie with low production-value.
> I think one can't be a good investor without constantly developing ones empathy because the appeal of various things is difficult to grasp intuitively without a person who would be the customer in mind.
Yes, it's a given that you need to understand the thinking and problems of customers if you wanna sell them something well. Just throwing stuff at them might work, but more efficient is to understand what they want and what they need, and then build and sell it specifically to the targeted customers.
Similar like in a game you need to understand the abilities and weaknesses of your enemy to slay them. That's why marketing and reasearch exist.
It's kind of like the rise of live electronic music. Oh there aren't any feats of manual dexterity like playing the guitar or drums well, but people go to see electronic musicians perform anyway.
There was an interesting discussion on /r/DJs, about electronic music performances in the late 90s and early 2000s.
One of the comments articulated that the focus was on the music, not the DJ’s performance, and often times the DJ was not clearly visible, nor intended to be.
Another commenter pointed out that as an electronic music producer nowadays, the only way to present your music, as you also pointed out, is to DJ in front of a crowd.
Don’t underestimate a good DJ, though.
But, it was also pointed out that not all good producers are good DJs and vice-versa.
It is also worth mentioning that Twitch has become an increasingly popular venue for DJs to livestream during quarantine. Ephemeral live performances to reduce copyright infringement penalties are the norm.
I've been a programmer for over 20 years and I still use Zapier because I find it relatively quick and easy. Dealing with writing code for authentication, various API versions, debugging, deploying and maintaining the code is all a PITA that I'm happy to avoid where possible.
Does Zapier only get revenue from paid subscriptions? Or do companies pay for promotion / integration? I suspect there is a big business around semi-private APIs and gluing "enterprise" partnership deals together.
I empathize - in fact I feel the pain. Yet in all my many years of using Zapier I've never paid for the service, and I also would never have guessed the scale of their business.
The core difference being that “put value X from system S into value Y in system V” is actually conceptually extremely simple, and is mostly encumbered by machinery around it and “incidental complexity”.
Dentistry _is_ all the complexity and the skill of , like, drilling into your mouth or whatever.
To me, you just proved the GP’s comment about “empathy” (in quotes because imagining yourself in someone else’s shoes isn’t empathy, but that’s what they call it). The difficulty with programming has almost nothing to do with the machinery around it and entirely to do with the ability of the general population to understand statements like the one you just made with 4 variables. The direct proof of this is that Word is much more complex than Sublime Text which I use to program. Yet, everyone knows Word. Of course, if someone starts programming with an IDE, they have an additional tool to learn.
For what it’s worth, I think it’s easier to teach someone to be precise with a drill than it is to teach computer literacy.
Khan Academy has an amazing collection of videos on finance. I highly recommend it for understanding cash flows, enterprise value, etc. It's helped me transition (one foot out the door) from tech to finance.
I fell out of love with tech, and found more leverage in finance. I still write code (Python) for myself for fun, but would rather live in Excel versus VS Code and k8s 50 hrs a week (I squeeze in commits on my open source projects when the family has gone to bed).
I’m semi retired in my late 30s, so it’s gone well. I am so extraordinarily thankful for the experiences and opportunities I’ve had, but recognize when it’s time to close a life chapter.
If you’re willing to offer advice, when did you make the switch and how? That’s quite a jump, and usually upon entering finance you end up with different tasks to fill up a 50+ hour week. PE/IB/etc ... only way you strike rich with easy schedules is a family office?
The valuation of current tech companies is way astronomical compared to what is considered normal for mature companies.
The average price to sales for S&P used to be between 1.5-2.5 for many decades. However for these newly IPO companies the price to sales ratios are around 10-15.
Similarly the P/E ratio for S&P companies used to be in the 15-25 range to the considered normal .
However with these internet companies, they usually do not turn a profit or if they do, their PE ratios usually lingers in from ~100 to 1000. And the market considers that normal behavior now.
Well, to some extent it is. You can argue both ways, and in Zapier's case, I'd say it's overvalued as the 10-15 range assumes obtaining a monopoly. I don't see how Zapier will do that since there's also IFTTT and other services I've tried.
With that said, consider huge successes like Amazon. Huge successes like Amazon have been generating much more profit compared to what they were projected to earn in 2010 [1]. I picked 2010 since 2 things are out of the way: the tech boom and the credit crunch. Moreover, people understood that Amazon was here to stay. Despite that, 10 years later, they make 20 times as much profit. If investors knew that 10 years ago, I'd bet that the price would not have been about 130$ since according to Google Finance, the diluted earnings per share (EPS) is about 42$, which is about 30% of the 2010 stock price.
Mind you, in 2010, investors already put crazy multiples on stocks like Amazon. Yet, their prediction on how much money it would make has been underestimated back then. If the estimates of 2010 were correct, you'd expect Amazon to now have an EPS of like 6.5$ (130/20) since by conservative measures, the P/E ratio is in the 15-25 range.
Correct me if I'm wrong on this, I'm not the sharpest cookie in the jar.
However, Amazon never pays dividends. And you probably cannot really vote on anything with your stock either. So what's the point? There is an interesting article about Facebook with a similar opinion. Zuck owns the majority vote and they never pay dividends. What's the point of owning the stock?
to sell for capital gains when it is higher in the future. Dividends aren't the only way to generate a profit. And for a lot of high income earners, dividends are very tax inefficient as well.
Yep but when our 401ks auto buy in there's a bit of a stop gap. Also I think the bigger reason is that with tech people expect a nonlinear impact. Amazon being the example. So not only revenue break even but market growth and new market opportunities.
Dividends are taxable while price appreciation doesn’t become taxable until you sell. Unless you need income, it’s more tax efficient to shareholders if the company reinvests free cashflow in continued growth.
> However with these internet companies, they usually do not turn a profit or if they do, their PE ratios usually lingers in from ~100 to 1000. And the market considers that normal behavior now.
That's not normal, it's pure stupid. So if you don't think there are people sitting on the sidelines watching idiots bid up shares way, way beyond the replacement value of companies, you're not watching the same thing happen that others are.
Do people even understand what these numbers mean? It means after expenses, assuming no future growth, that's how many years it would take to make back your investment.
Do you know why a P/E ratio of 15 was historically considered high? Because even with modest growth, no one wants to wait 15 years for corporate revenues and acquisition costs to break even. News flash, 15 to 25 years isn't normal.
The average company doesn't even make it 15 to 25 years these days.
This argument is based on the idea that stock markets should price rationally based on value, but evidently that's not really how the markets work. Share prices have -- and need -- very little connection to any "true" value of the business whose stocks are being traded. For the basic investment strategy of trying to buy low and sell high, investors win if the stock subsequently goes up and lose if it subsequently goes down. The reason for the change, if there is any logical reason at all, is largely irrelevant.
Assuming any sort of pricing rationality risks the well-known problem that the markets can remain irrational longer than you can remain solvent. It should never have been possible in a rational market for the recent WSB pump-and-dumps to work, yet many billions changed hands as a result. Not that I have much sympathy for the losers on that one, because it should also never have been possible in a rational market for the short-selling strategy that left them vulnerable to work either. Both groups got away with something dodgy for a while and then some of them lost a lot of money when the house of cards fell.
Whether this disconnection of prices from real value is a healthy way for stock markets to operate as a key element in our financial systems is a separate question, and it's one that a different and probably much smaller group of people care about.
As a footnote, it's probably worth mentioning that some businesses, including tech stocks, don't necessarily follow the traditional models for either growth or dividend payments. So although those P/E ratios might be considered very high by traditional standards, those traditional rules of thumb aren't necessarily useful in these cases, even if we only look realistically at the potential for future profits. A high-growth tech startup might have low earnings in the early days and rely on some big investments for funding instead if it's building a huge user base without yet having a firm strategy for monetization, for example. That doesn't mean it won't have genuine potential to earn a huge amount of money from that huge user base later on if it does find the right monetization strategy.
I think it is fair to say 15-25 is pretty normal. The average P/E on the NYSE has been above 15 for the last 30 years, and most of it's 90 year history.
An easy reality check is other asset classes like bonds or real estate. If you are doubling your money after inflation in less than 15 years you are either gambling or outsmarting the the market.
The problem is that there's too much money lying around and nowhere to spend. Look at Softbank: throwing money at some most absurd companies with the hopes someone else will pick up dogs shit when they're gone. VCs are flushed with money and that's how the model works. At least for now.
> The average price to sales for S&P used to be between 1.5-2.5 for many decades. However for these newly IPO companies the price to sales ratios are around 10-15.
You’re off by anywhere from 2-20x on the price to sales multipliers. At one point Snowflake had a market cap of nearly 200x the projected sales of the next twelve months. Before rates started creeping up, most SaaS was trading between 20-40x NTM and up to 60-80x on upside spikes.
So the theoretical reason for the high values of tech companies is that margin is one of the biggest drivers of value in a dcf, due mostly to the non linear nature of division. However, many of the tech companies we’re seeing don’t have near those margins, they are in fact negative.
Despite the replies, I thought this was a good take.
$5,000,000,000 is a truly unimaginable amount in both senses of the word unimaginable. I couldn’t tell the difference between a $5B and $7B company, for example.
And it’s especially hard to tell for a service which is, somewhat by nature, invisible.
But my smart, non-programmer friends love Zapier and I imagine many of their customer relationships will be multi-decade. There really are so many odd businesses in the world.
I think another thing to keep in mind is that wikipedia pages don't tell the whole story. So you shouldn't feel bad about being way off.
Investors assigning value have access to other metrics not visible to us - customer numbers, growth numbers, revenue and what the revenue growth looks like, internal product roadmaps and other areas of growth, etc.
> “For us, we've always looked at financing events, whether they're primary, secondary or public markets, as a tool in the tool belt. It's something that you can reach for as a person who runs a business that can help you when you need it,” says Foster. “I think that's a much healthier approach to things than sort of getting on a hamster wheel that is difficult to get off.”
That's seems like a pragmatic and healthy attitude towards venture capital. I feel like venture capital is gasoline. You can pour in on a fire to make it grow quickly, just make sure you first have a good fire going and careful not to get burned in the process.
I usually equate VC to some new experimental rocket fuel. It's by far the best way to get yourself into orbit, but the downside is that if it fails you're going to explode rather than cruise to a nice landing.
Most VC would love it if they could be 100% gasoline. The common problems people usually generally arise from them having more fuel than there are fires to put it on.
Correct - accelerant can be traded for “equity for lots of cash plus advice” or purchased “cash for advice” - I’m a big fan of bootstrapping to a financially stable state and having the option to take either route without the business being reliant on either - then again, in Australia we don’t have much choice anyway - venture capital and banks are both exceedingly conservative which perpetuates this approach more so than in other ecosystems with more funding liquidity.
A great example of a slow-burn startup. They had a solid product & revenue stream pretty early meaning they could cover costs and just wait as things grew incrementally.
Of course that wouldn't work for every product model... some really need that huge capital-driven massive growth to get to some economy of scale. But if you can avoid that, you probably keep a heck of a lot more equity for both founder & early (and maybe not so early?) employees.
Zapier is a good example of copying a good idea (IFTTT) and fast-following with good execution. Sure, copying can seem lame, but Google was copying Alta Vista, Facebook was copying Friendster, Microsoft was copying everyone, etc.
Good ideas are important but good execution is more important.
It's also unclear just how much IFTTT influenced that start of Zapier. IFTTT was announced only about 10 months earlier than Zapier. Zapier announced right around when IFTTT has a live prototype. REST APIs were really hitting popularity at that point, so services like these were becoming more & more obvious-- simultaneous invention is a thing. [0] Also, years earlier, there had been a relatively similar offering from Yahoo, Yahoo Pipes, [1] so the idea was pretty much out there before both of these companies. The rise of REST APIs really just made it much more feasible.
We can't run the experiment but it's safe to assume most startups that took very early funding did need it to succeed. That doesn't really take away from the founders effort though. Although it does mean there were probably 10 other teams that had the same idea and skills that failed for not having the ability to raise funding.
This company reminds me of library vs service topic on here a couple of days ago.
5 billion dollars for what should've been a free set of libraries and competing UI interfaces to cater to different levels of tech savviness.
It's crazy how complicated the simplest things are in tech that these companies even need to exist. Hopefully it's just growing pains, rather than consolidation and a swamp for decades to come, like we've had with Microsoft.
I agree overall that many things suited to libraries have become SaaS, but Zapier and similar are well-suited to being a SaaS. For example, a lot of Zapier's services are triggered by incoming webhooks, which doesn't work so great running on the boss's desktop. Same with cron-triggered services.
You really need to run these kinds of services on a server. And the people who use Zapier typically aren't comfortable setting up a server.
Also, there are some very well-done and rather old open source alternatives to Zapier (Huginn, Node Red, etc) but they run best on servers for the reasons mentioned above, so few non-technical people use them.
I don't understand how there isn't more competition. It's not that difficult to wire up different APIs. This is great for open source software because it's highly modular, independent development with very low levels of complexity.
I don't understand how Zapier has such high prices either. At some of the higher tiers, you could hire someone full time just to what Zapier does since they charge per task. Especially because it's not like people organizations are setting up different automations with completely different enough times to really justify the continuous cost.
I really thought it would be a very niche product for a very specific type of organization.
It is not difficult to wire it up, it is difficult to maintain it, upgrade it, monitor it, troubleshoot it (whose API broke), and keep it highly available, while still having time and mental focus to work on not wiring things up.
If it is not a feature of the product, it is diverting a developer’s time, which makes Zapier’s price a bargain.
It is for organizations that have non-developers needing integrations and cannot rely on their internal devteam to get the integration done in a reasonable time and/or cost.
Zapier is basically the biggest "no code" environment on the planet. The people who get the most value out of them don't care about per task prices. They've turned several million people into productive developers.
Great story but it's hard to see where the future growth is going to come from when PowerAutomate gives you unlimited "tasks" per month for $15 per user and it can easily be bundled into O365.
IFTTT kinda gave up in comparison to Zapier - zapier has so many api/service/framework/tool interfaces where IFTTT kinda just went niche with home automation and basic stuff beyond that.
For example, with IFTTT the RSS trigger is pretty stupid but with zapier you can trigger based on parsed fields with values and triggers on those values...
I had hoped that Zapier would put some pressure on IFTTT to do more but it seems like they're comfortable focusing on IoT/basics/appliances
I see, so similar idea, but they have more features with regards to triggers and maybe integration is more focused on business services then IoT and like consumer needs?
Huge Zapier fan and user here. In fact I wrote an article on LinkedIn a while back about how many heads I think their product is saving us. And we have our own developers - there are just so many instances where using a service like this saves us the opportunity cost of building things for our own customers. Almost all of our use cases are around automating data connections for internal systems we use and love.
Why did the article repeatedly refer to the recent purchases as a "raise" or "round", especially after explaining up front that it was a private purchase of already issued shares and that they'd only raised a small amount long ago?
That kind of ignorance makes me doubt other things said in the article.
These (software) are the most incredible the companies the world has ever seen. Sure, valuations may look crazy compared to historical norms in different industries, and may be due for a correction. But still, best businesses ever built.
I'm just sour that they didn't hire me after I worked my ass off on a take-home project. Luckily I found a higher paying gig, but maybe not in the end if the stock is really worth that much heh. Good for them.
I don't understand. They first say that they didn't start with VCs. And only finally, 2 months ago, "Sequoia and Steadfast Financial bought shares at a $5 billion valuation from some of Zapier’s original investors."
But the original investors were "Bessemer Venture Partners, Threshold, Salesforce Ventures and Missouri-based Permanent Equity..."
They did take VC funding though? By pulling themselves up by their bootstraps (and a meager $1.3 million in funding) they were able to start a company!
That's not an insignificant sum of money, I see that they didn't take further rounds, but still this feels like a nice marketing piece with a bad headline.
It's strictly speaking correct in that the $5B valuation was established purely on the secondary market and only from sales of shares of investors (not common holders), which doesn't give the company any VC funding. Also $1.3M in seed funding is a rounding error to get to $5B.
Unlikely due to the buyers also being sophisticated. "Sequoia and Steadfast Financial bought shares at a $5 billion valuation from some of Zapier’s original investors."
Very unlike HN to upvote a comment that has reacted only to the headline on HN, not even the articles own headline, even less the body of the article. Maybe because everyone reading the comments is doing it the same way?
How is that "unlike HN?" I pretty regularly see comments that either make it clear the author didn't read the article (e.g. arguing against points not made, or "adding" additional information that's in the second paragraph) or explicitly say they're only responding to title or some tangential point.
It's a editorialized headline that only appears on HN. The submission itself (it's content) doesn't actually say anything like the title is (was? Seems title changed)
>And in January, investors found a way into the business, just not through Foster. Sequoia and Steadfast Financial bought shares at a $5 billion valuation from some of Zapier’s original investors.
How many? There's a difference between buying 1 share at $5000 and 50,000 at $5000.
No, it's not, because that isn't enough information to determine your conclusion. That's a 36x P/S ratio. Many established public companies are at or exceeding that, like Cloudflare and Crowdstrike. (those companies COULD be overvalued too, but it depends on something else)
The most important factor or metric you're missing from the equation is growth (assuming eventual profit margins are normal). It doesn't matter what today's revenue numbers are, if there is an eventual much better revenue number in the future.
This can be sustained by something like:
100% YoY growth over 5 years: 4.5b revenue at a $5b valuation?
50% YoY growth over 10 years: 8b revenue at a $5b valuation?
I'm not that familiar with tech company revenue growth examples but can you point to many other $5B companies (or companies already making $100M revenue) that get 50% YoY growth for 10 years? As far as revenue goes? That kind of revenue growth would put them into the top 500 companies in the US by revenue, close to eBay [0]. To me this seems very optimistic but I only known the basics about Zapier, not their future direction etc so I'm likely missing info.
Virtually all of the companies trading north of 30x sales are ridiculously overpriced. It’s just a bubble, don’t allow it to distort what long term values really are.
Amazon and Cisco were similarly overvalued in 2000. It took Amazon 7 years to trade back to that price. Cisco never has.
I'm going to assume, based on your outlook and name, you're a traditional value investor. I consider myself one too, and have read Margin of Safety, Buffet, and Intelligent Investor.
Companies north of 30x sales are generally overpriced, but that metric alone is still woefully inadequate to determine true NPV of future earnings. Software co's can afford higher P/S for their true value because of the unprecedentedly high margins they're able to achieve and reap as profit once operating expenses are managed. There's a reason BRK bought Snowflake. Amazon was still a great purchase in 2000 because what ultimately matters is the long term value. You can bet that you'll get more value by buying at a cheaper price later on, but that may ultimately never happen. Knowing that AMZN would be where it's at in 2021, buying it in 2000 is the right choice without 20/20 hindsight of market conditions. Same is true of high value companies like Cloudflare and Fastly. There may be interest rate increases or other reasons they become further discounted in the next 5 years. However there's more a chance that they're true value is adequately discovered while one stays on the sidelines. The margin of safety for them is great and of course we'll be free to see after a few plus years.
I also wouldn't bet on interest rates rising (or falling). Market consensus for their current price is usually pretty good and there are many reasons why interest rates are historically low and likely to remain roughly so.
Amazon stock price dropped over 90% in 18 months after March, 2000. There is no excuse for not doing basic valuation estimates, it can save you from these collapses. You can still love Amazon’s business on 2000, but not overpay for it, just as you can do same with Tesla today.
And the Fed is at zero percent. Name another period where zero percent rates ever existed, and how long did it last? When the money supply has grown 50%+ over the last year how are we avoiding inflation, and if inflation kicks up how are we avoiding higher interest rates?
For some context, some other current P/Es:
Google: 35.06
Apple: 32.54
Microsoft: 34.64
PayPal: 68.38
Amazon: 73.10
Shopify: 420.04
Square: 515.13
Tesla: 1,043.84
Mentioning these 200-1000 P/E companies, as others do, is such an oddity, because there are 500 other companies with 0 earnings or negative P/E that are worse in that aspect.
To invest successfully you don’t pay a high price saying “well there are worse companies at worse prices out there”.
Valuations are always determined by the NPV of future earnings, discounted for time and cost of money. Given rising interest rates all of these valuations will get slashed substantially.
It’s a bubble, after the internet bubble it took Amazon 7 years to trade back to its bubble price. Cisco never has.
30x revenue multiples are actually not too uncommon, especially for a SaaS firm that appeals to both small & enterprise customers, is already profitable, and has a large addressable market.
Here's an article that has a frequency chart based on valuation multiples. Keep in mind that, while it's front-loaded with lower multiples, not all business models have the same potential for revenue growth: https://onstartupexits.com/how-to-value-the-exit-price-for-a...
Sure, though I was just saying these valuations aren't too uncommon. Still, in Zapier's case, they're in hockey-stick revenue growth, and accelerating. It's still a gamble, but not an unreasonable one to believe they'll ultimately justify the $5B valuation. Of course by that point they've be valued at some other ridiculously high number.
Are they in hockey stick revenue growth, or is growth slowing like it does for 90% of startups? How large is their total addressable market anyways? Seems like a super niche product.
One thing I could have been clearer on is that private valuations should be at a large discount to public valuations. You buy shares at a $5B valuation only because you believe it can IPO close to a $10B valuation, or what is the point of investing?
I am using Zapier because their service was very easy to implement a webhook for what I needed at the time. However, the price is high enough that they're on my short list of vendors to move on from when I have the time to spend building my own integration (not replacing everything Zapier does, just for my use-case).
I suspect I am not their intended customer as I don't get a lot of value out of the dozens (hundreds?) of API implementations they offer. But I wonder how much of that revenue represents customers with similar plans.
I'll tell you about the first time I started using Zapier. I wanted to move some data from google spreadsheets to some other system (I don't actually recall what it was, it was 2012). I was on a team of three devs supporting a business critical application.
The options for me were:
* bump something else to have a dev build out the integration
* pay the monthly fee to enable a non technical person to build the integration (it was on the order of $50/month).
* don't get the work done
Above and beyond the value of the UI and uptime managed by someone else, the fact that it could get done by a non programmer made the monthly fee very worth paying.
I think I've used it at 3 companies since, mostly on the free plan. But when I exceed the plan, I don't have any trouble pulling out the company's wallet to pay for it.
> pay the monthly fee to enable a non technical person to build the integration
I'm just curious how that went. Was a non-technical person able to learn Zapier enough to carry out the task? Were they totally non-technical, or just not a professional dev?
They were able to do what needed to be done. I'm not sure what you mean by totally non technical? They weren't developers, but knew how to use gmail and google sheets at a pretty sophisticated level.
> but knew how to use gmail and google sheets at a pretty sophisticated level.
Thanks, that's what I meant. I think someone who's is tech savvy but not a professional developer would do fine with Zapier, but my guess is that completely non-technical people (who only understand browsers, email, word processors, etc) would struggle.
I agree that it feels pretty cray but it's inline with the market. Sector is hot, it has a trendy + efficient product-driven growth model, they're profitable, and growth looks good. There's a lot to like which gives them a revenue multiple at the high end of the market – which currently puts them right around $5B.
They have only raised $1.3m, which they most likely spent a long time ago. They have been profitable (self-sustaining) for years. Sure their stock is not liquid, but there is a strong case that they could move towards liquidation (IPO) at a $5 billion or higher valuation.
That being said, I come from a software background (As many here at HN do), and I recently found "Integromat" and have completely switched over all my Zapier automations to them. Their price point is much cheaper (Zapier was beginning to charge a few hundred a month for me - and now I'm down to $29/mo with Integromat which could be $9/mo if I wasn't impatient and wanted 1 minute intervals) - but the kicker for me was their UI and just the "programming" mindset that came along with it - I can do many more complex operations.
Just a happy customer - and hoping they have more success to continue improving their product.
Zapier is definitely a better fit for non-tech people, and more simple tasks though.