- Zapier introduced a "delocation" package in March, offering $10,000 to help employees relocate from the Bay Area to anywhere.
- The delocation package has resulted in a 30% increase in applicants to Zapier, with a significant increase in quality candidates.
- Most of the applicants were not from San Francisco, indicating that the package elevated Zapier's profile and attracted applicants from outside the Bay Area.
- Zapier has hired 15 people since introducing the delocation package, with only one person from the Bay Area.
- Zapier does not generally offer relocations other than the delocation package.
- The company interacts with a subset of employees in person through Airbnb onboarding, where new hires spend a week in the Bay Area.
- Starting as a remote team helped Zapier develop organizational habits and processes that are beneficial for remote work.
- Zapier went through several inflection points as the team grew, leading to the introduction of a management structure and the hiring of more managers.
- Setting values and adopting established management practices have been key to successful remote management at Zapier.

- The speaker recommends adopting established management practices to avoid problems in an organization.
- They mention using the philosophy of a podcast called Manager Tools to raise the organizational baseline for managers at their company.
- As the company grows, they face the challenge of hiring new managers from outside the organization.
- The speaker explains that they chose to participate in Y Combinator (YC) primarily for the network and not for the capital.
- They mention that they only took a small amount of money after YC to cover expenses and experiment with their business model.
- The speaker explains their pragmatic approach to fundraising and advises that it should be seen as a tool rather than a defining factor for a company's identity.
- They suggest that the decision to raise money depends on the market and the specific needs of the business.
- The speaker discusses winner-take-all markets and explains that B2B markets rarely fall into this category due to the absence of strong network effects.

- Building true network effects in B2B is challenging but valuable if achieved
- YC helped the speaker make important connections and partnerships
- Success in business depends on making a product people want, happy customers, hard work, and some luck
- The myth that being in the Bay Area is necessary for success is perpetuated by media and stereotypes
- Having a competitive advantage and locking out competitors is important
- The speaker's company is focusing on expanding adoption in enterprise companies
- Freemium model and having champions within organizations helps with sales
- Bureaucracy and talent shortage can be challenges for scaling in smaller cities
- Talent availability is a major challenge for scaling a billion-dollar company in a city where it hasn't been done before.

- The biggest challenge in scaling a company is finding and training talented individuals
- Hiring experienced senior professionals has been the preference, but ambitious individuals with potential for growth are also considered
- A plan is created for each individual's career goals and skill development
- The company focuses on employee retention and has a high retention rate of 97%
- Happiness and satisfaction of employees are monitored through surveys and regular one-on-one meetings
- The company encourages informal communication and bonding through activities like pair buddies and off-topic Slack channels
- The CEO emphasizes the importance of continuous learning and the value of speed in learning and improving skills
- The CEO shares his personal experience of learning racquetball and emphasizes the importance of practice and repetition for improvement.

- The speaker advises founders to not focus on perfectionism but rather to try a variety of things and learn from them.
- They mention that in the early stages, mistakes are not a big deal as there are few customers and opportunities to improve.
- The speaker is always trying to improve as a CEO and seeks advice from founders who are a year ahead.
- As an organization scales, some people may not be able to handle the growth, so retention rates may be affected.
- The speaker suggests finding experienced individuals who can provide guidance and help navigate challenges.
- The speaker also shares a racquetball tip, comparing it to startups and the importance of finding someone who can provide expertise and accelerate learning.

- Zapier introduced a "delocation" package offering $10,000 to help employees relocate from the Bay Area.
- The package resulted in a 30% increase in applicants, attracting quality candidates from outside the Bay Area.
- Zapier hired 15 people, with only one from the Bay Area, and does not generally offer relocations.
- They use Airbnb onboarding for in-person interaction and have developed remote work processes.
- Zapier went through inflection points, introducing management structure and adopting established practices.
- They recommend adopting management practices and mention using Manager Tools philosophy.
- Zapier participated in Y Combinator for the network, not capital, and only took a small amount of money.
- The decision to raise money depends on market and business needs.
- B2B markets rarely fall into winner-take-all category due to weak network effects.
- They focus on expanding adoption in enterprise companies and use freemium model and champions for sales.
- Challenges in scaling include bureaucracy, talent shortage, and availability in smaller cities.
- Talent availability is a major challenge for scaling in a new city.
- The biggest challenge is finding and training talented individuals, with a focus on employee retention.
- Happiness and satisfaction are monitored through surveys and regular meetings.
- Informal communication and bonding are encouraged through activities and channels.
- The CEO emphasizes continuous learning and the value of speed in learning.
- Founders should focus on trying different things and learning from mistakes.
- As organizations scale, retention rates may be affected, and guidance from experienced individuals is important.

Wade Foster is the CEO of Zapier (YC S12) - https://twitter.com/wadefoster

https://zapier.com/

Read the transcript here - http://blog.ycombinator.com/the-ceo-who-pays-employees-to-de-locate-from-the-bay

YC's podcast is hosted by Craig Cannon - http://twitter.com/craigcannon

I haven't started with questions from Twitter before but I feel like they kind of covered some of the initial ones I wanted to go off with so maybe we should just go with those So the first 1 was from Ben Thompson And he asked for more detail on the pay to leave San Francisco.

So I think you guys called it delocation.

Well, we introduced this delocation package, I think it was in March.

And the concept for those of you who aren't familiar was if you're in the Bay area and you take a job with Zapier, we'll pay $10,000 to help you relocate to anywhere, or as we call it, delocate.

This was, this was an idea that 1 of our engineers came up with because we'd seen in interviews with folks from the Bay Area, they would come to Zapier because we're 100% remote and say like, oh, I'm interested in y'all in part because I like the product, but also because, you know, this remote thing helps me get away from San Francisco because I'm either disenfranchised with, you know, housing costs here or like I have family somewhere else that I'd rather be living with or I just wanna be somewhere else.

You know, a whole bunch of reasons, right?

And so what the engineer on our team kind of hypothesized was like, well, maybe there's this nascent demand here in the Bay Area where folks who are like kind of just putting up with it because that's this is where the jobs are and he's like There's probably some folks who are kind of on the fence that like if a good opportunity came along They might be willing to jump on that but maybe they just need like a little bit of a nudge to go do this sort of thing and so that's where like the whole idea of this delocation package came.

It's not that crazy like plenty of companies here in the Bay Area even like will pay relocation costs to help you move here sort of like well let's just turn it on its head and say, we'll help you move anywhere, right?

So we launched that, I think it was in March.

And the funny thing was, since then, we've seen probably about, roughly about a 30% increase in applicants to Zapier.

Yeah, we've had like, our roles routinely get 100, 200 applicants.

Some roles we've even had, I think our record is like 1500 applicants for 1 open position.

And it's Signal, like those are, they're 30% increase in like quality candidates.

And 1 of the interesting things we noticed was the applicants weren't actually from San Francisco.

A lot of them were just from wherever the heck they were.

And so it was clear that the like offering this thing, You know, it got some buzz in mainstream media, and so it kind of just elevated the profiles app here.

And so folks were like, even who weren't in the Bay Area, were like, this just seems like a cool company.

They have the same types of values that I have, they are working on an interesting product, and so we got a lot of great applicants from outside the Bay Area again.

So we've actually hired about 15 folks since then and only 1 person from the Bay Area.

She's in the process of like mulling over whether she wants to take it or not.

So we actually haven't offered any because we haven't hired any folks.

And do you guys ever do relocations other than this current thing?

Like most folks are where they want to be or like they're heading that way anyway.

So like, that's, I mean, that's kind of the beauty of remote work is that.

You don't have to live in a place just because that's where the jobs are.

You can live in the place that you want to be because that's just where you want to be.

You know, you've got family there, you've got friends there, you've got life there, you've got a hobby there, you've got, you just want to explore the area because you've heard cool things.

Like, it doesn't matter what the reason is, right?

And so, how often are you actually interacting with, how many employees are you guys now?

Okay, How often are you interacting with, you know, a significant percentage of them in person?

Well, in person we do, so, we do this thing called Airbn onboarding, 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 rent an Airbnb, we'll bring their manager out here, them out here, and then spend a week working alongside them.

So generally it ends up being like anywhere from like a half dozen to a dozen folks out here at a time.

And it works really nicely because the founders are all here.

And even, you know, the 95th person in the company, we get to know really well.

Like we'll spend the night, like take them out to dinner.

Like we'll talk to them about why the role is important at the company, like why we're happy that they're here and they get like a full week with us, which is like pretty rare at, you know, once you pass like a certain amount of employees, like maybe you'll do like a lunch with the founders like right out the gate, but it's not that much time.

So we actually like really spend a lot of time with them.

You know, within that first month, for the, for those first folks.

So, you know, we do get to spend like a fair amount of time with a subset of folks every month.

So basically a week every month I'm spending some time in person with a few people on the team.

And so do you think that your success as a remote team is a function of you starting remote or do you think you could have shaped into that?

I think it definitely helped a lot to have started that way.

I think it would be pretty tough to transition any sizable team to like a remote or partial remote setup, because there's just like little cultural habits that you get into that are, that make remote kind of successful.

So we started Zapier as a side project, side projects naturally, you don't have offices, you just work on them when you can, which is not necessarily in person, it's at a coffee shop or your house or whatever, right?

And so we got used to working through like pull requests and on Trello cards and in chat and things like that.

And so that built up kind of our organizational muscle for like documenting things, writing down like processes and stuff like that.

So then when you hire folks on they're able to like adopt that stuff.

When you're in an office you up to a certain point you can kind of ignore that stuff because you have the option of tapping someone on the shoulder and being like hey you know what's the what's the command that I need to do for this again?

You know, whatever it is that you need help with, you can just pull folks into.

But for us, like, you know, if you're working with a teammate halfway across the world, like, that's not an option.

So you kind of have to get good at like, Hey, here's like the read me for this stuff.

And make sure that's all up to date and working pretty well.

So I think had we have like started, you know, 10 people in an office and then added remote folks, like we sure certainly could have gotten there.

And I know companies that have done that, but I think it's just that, you know, you have to unlearn some stuff and then relearn it a different way.

Whereas we just learned it that way from the get go.

And was there a point at which like you guys were scaling up and you were like, oh, we're we've entered like a different class of like remote team size and we have to handle things differently.

They're not, and it's not too different I think from even in locate like co-located companies have like those inflection points to where you're like we need to change some stuff up because it's not working.

So for us, there's about 3 of them where we've kind of had to really not reinvent ourself, start to rethink a few things.

So the first 1 was around like 20 people, which was up until that point, I was the sole manager, but like not really management.

Like when it's less than 20, everything kind of self happens.

So like me and Brian and Mike, my co-founders were just kind of making sure things that happened.

But once we got to about 20 or so, it's like, actually, there's starting to be some coordination overhead.

We need to like, think about like, maybe what a little bit of a management structure starts to look like.

And so Brian, Mike, and I started really sharing those roles around there more in a little more formal matter.

Then at about 40, it got 40 to 50 or so, it got even more complex and we added more managers.

And then that was like the first time where I was solely managing other managers.

So that was like an interesting transition as well.

You know, the folks that were like primarily hiring people and onboarding folks were not necessarily me anymore.

And So like, how does that work then as a remote manager of managers?

What are your like pro tips having now you've been done it for several years now?

Yeah, I think you've got to set like a, you really need to set like the values of what your company is going to look like.

So you know, just the high level things that you care about.

You know for us it's like we like folks who are like default action get stuff done because you know there's not someone sitting beside you to help you out that's like a big thing.

We like folks who are good writers and can be transparent because that's really important in a remote team.

We like folks who have a lot of empathy and are like really good, just helpful people because you're working in Slack and in text all day.

So it's like, you need to be able to empathize when maybe like a sentence doesn't come off quite right or like whatever, like you can be like, ah, no, I trust that they, like they had good intentions here.

This wasn't like meant to be, you know, harsh to me or whatever, right?

So those are like important values that we had that lend themselves well to remote environments.

And once you have that stuff set in place, you kind of have, you have to adopt some sort of like management paradigm, like how you approach management.

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 back to research on like how to be a good manager like go find the good stuff and learn that and just kind of just cargo cult adopt that in your organization because it's gonna be way, you're gonna have like way less problems than if you tried to like come up with your new inventive management structure alongside this other like new inventive product market the thing that you're trying to bring to market.

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, we're gonna just use what they have.

And that helps get all the managers that I was working with, I knew that they were following a similar process that I would be following with folks.

So that kind of raised like the organizational baseline for like your experience at Zapier is gonna be at least this good.

You might get a manager that's like above and beyond and way better, but like, hopefully we don't have any like managers that are just like bad, like really, really bad.

So we make sure they go through the training that they need to have and kind of understand the values and how we apply them and all that sort of stuff.

And then that helps for me, who's not managing managers, I can kind of know that they're doing, following our guidelines and stuff like that.

And so now that like you're, you know, approaching a hundred people, do you feel that there's another inflection point coming?

Like we started hiring probably our default is to like, we like to promote folks from within.

So historically, almost all of our folks who've moved into like management positions have been working at Zapier for, you know, 6, 12 months, like a good chunk of time, which helps them learn the culture, but they also know the product and the role and everything really, really well.

Downside is, they're a new manager, so they have to learn some of that stuff, but that's not unteachable stuff.

Now we're at a point where occasionally we don't have someone ready to like promote up and we have to hire in a new manager.

So like that's a new challenge for us now because

bringing in someone who's going to like guide a function or a set of people who you know primary experiences at other orgs which is not necessarily a bad thing.

They bring in great outside perspectives that have been helpful, but you also have to like teach them the org while they're also trying to teach other, like train and coach other people in the organization as well.

So that's like an interesting inflection point as well.

Yeah, like we brought on a few, you know, outside management folks now and you know, it's going pretty well, but like there's like anything like there's, you know, things that you got to keep working on.

All right, so Ben asked like a multi-part question.

He, and like many of these questions were common across Twitter.

So, they want to ask you about raising money.

So, you guys are like famous or infamous for doing YC, raising some money and then never raising money again.

Like I'm going to combine a couple of questions here.

So another person, Matt Sherman, who actually wanted you to come on the podcast from the outset.

He basically said, why did you guys choose to go into YC if you weren't planning to raise a lot of capital after?

And maybe you were planning to, and you didn't decide.

Yeah, well, the primary reason we did YC wasn't for the capital.

The 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 SaaS companies, we were building a lot of those relationships from scratch.

And YC kind of helped us, well we're just able to plug into an existing network basically.

So for us the network was really valuable because you know then when we went into partners at least there was like some thread, somebody who said like oh yeah we know this team, this company, like they're pretty good folks, like you should you should chat with them.

Even when you're really, really small, like we were at the time and no 1 really had any sort of reason outside validation reason to believe in us.

Other than like, Hey, they seem like they're building a cool product.

So for us, like that was the primary reason for doing YC.

The money, sure, like, okay, it was nice, right?

But, you know, I don't think that was the primary reason for us doing it.

And then, you know, afterwards, we did take a little bit of money because when you're just getting started, like things cost money.

And like, if you don't have anything and you haven't figured out like a business model yet, like, you know, and if you're going to be living in the Bay Area, which we felt we wanted to like, try and stick around a little bit because to help build up those relationships, it's just really freaking expensive to live here.

So a little bit of money helped us kind of get past those early days when, you know, we just weren't pulling in that much revenue.

And you guys were priced a little bit differently, right?

Like you started out charging people And then you went freemium, right?

And so that was a function of the money as well.

You, that allowed us to do, yeah, at least try freemium and see if that was a model that would work, which if you weren't like, I mean, if you.

Aren't doing like 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.

So yeah, like allowed us to experiment with the business model a little bit.

And so why did you choose to not continue to raise money?

I mean, we never needed to, is the, the pragmatic answer.

And I think we've always taken a very like pragmatic approach to fundraising.

You know, a lot of people have this, you know, it's like, well, it's either, it's either bootstrap or, you know, or it's like VC and there's like some identity involved in it.

Which I think when you like start to put your own identity and like, well I'm a bootstrapper, 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 generally as like a tool.

It's a tool in your tool belt that you can use if you need it.

And so that's how our approach to fundraising always was, was it's just a tool to help you if you need it.

If you don't need it, then why take on the dilution?

And so for us was we, we were able to figure out the business model and we, our growth rates were working just fine.

And we've never been hindered by our ability to spend capital.

We've always felt like we're spending at a rate that was comfortable for us.

So bringing in more capital wasn't going to fundamentally change our ability to grow the company.

So we always just said, well, we'll just keep growing it how we're doing it.

And so then I imagine you get a lot of questions from people who are like, should I raise money?

What are your, do you have like a mental model to advise people on that?

Well, you know, I think it's a pretty personal decision.

To me, the answer is generally like, what is the business market you're tackling?

There's some products that yeah, probably is going to lend itself more towards that.

Like, you know, pure enterprise plays sometimes take a little while to develop and you're gonna need more capital out the gate.

Things that require like inventory or infrastructure, things like that are going to be capital intensive.

So sometimes fundraising is really just a function of the market that you decide to go after.

But then also it does depend on like how you want to go about things.

Like you can be a successful bootstrap company and be the winner of your market.

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 it home as the winner of that market.

So there's a lot of these phrases that people say like, ah, winner take all money.

You really need to look at your market and just understand it really well.

And fundraising can help you create a moat, but usually it's not why you created a moat.

Having more money doesn't necessarily make the moat it is a tool to help you figure out what is the moat that's gonna help you build your company and if money isn't the thing that's gonna help you do it you need to figure out what is gonna help you kind of build your moat and help you grow your company.

So then how do you how do you better I mean define like a winner-take-all market versus like why was MailChimp you know possible?

Well so like MailChimp isn't in a winner take all market, right?

Like there's not a network effect that, you know, MailChimp doesn't get better because there's more MailChimp customers, right?

Winner take all markets tend to exist where the product gets better because there's more customers.

And this often happens in like B2C markets.

So, you know, like Google gets better because more people use Google.

Facebook gets better because all your friends use Facebook.

Those are like classic examples of network effects, really helping the product get better.

And the business model doesn't really work unless everybody is kind of using it.

Whereas in B2B, 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, there's dozens of CRM companies that are very good CRM companies that compete with each other head to head and are all successful.

And they're going to continue to grow and be successful.

And that's pretty much how it exists in B2B because it's very tough to build like true network effects in B2B.

So if you can find a way to like have a B2B company that has true network effects, that's probably going to be a pretty special thing.

And it's worth trying to figure 1 out, but it's not a necessity to build a good company.

And so looking back on kind of like using YC as a vehicle into the bay, Was that helpful for you or?

You know, I remember early on we had a relatively big company that we were trying to build a partnership with.

And there was a bit more like bureaucracy and hoops to jump through to build a partnership with versus a lot of the companies we were working with at the time.

And we just kind of tried to go through like their typical front, you know, they had an email or a contact form on their website, like we filled it out.

And we were just like not making any headway at all that way.

It was just, you know, we, I think we got in touch with 1 of their like frontline people and they just didn't understand what we were doing or why it even mattered.

And you know, kind of just set us to the side and then we tried another angle and it just, just things weren't happening.

And then when we got in YC, 1 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 in 2 days.

And you know, that week it was like, oh yeah, this is great.

We should definitely be doing something with this.

So, you know, those relationships clearly matter in business and YC had already tapped in and kind of set up its own and it had connections into the broader tech ecosystem, you know, helped us plug in and be successful because those existed.

And so then what do you advise founders who are starting companies, you know, in Missouri, in Florida, you know, in other countries?

Well, I think, you know, the biggest thing is similar to what you all preach all day every day, which is, you know, make something that people want, right?

So figure out, you know, what it is that people want, figure out what they're gonna pay for, and just make them incredibly happy.

You don't necessarily, well, there's nowhere does it, like, there's so many companies that are successful that are outside the Bay Area, that I think if you're getting caught up and if people are telling you, you have to be in the Bay Area to be successful, like you should probably be a little more critical of that advice because there's so many examples that are just like that not being true pay attention to the fundamental things that make companies really good which is good products happy customers And like working really hard and getting a little lucky.

Like those are generally like the 4 things if you do those pretty well, like you're gonna have some level of success.

You may not be like a breakaway success because a lot of that stuff depends on like timing and more luck and market factors and things like that.

But generally, if you do those 4 things, you'll be successful.

Some companies may be more successful in the Bay Area because of unique factors for that company, but I think those are fewer and far between than most companies.

It seems to be more of a psychological thing right because like people have this somewhat of an imposter syndrome Where they're like oh, we can't be that but in reality most companies aren't venture-backed anyway.

Yeah, well, I think 1 of the things that You know perpetuates this myth a little bit is just kind of the way the media cycle works is the media tends to write about companies that they think are doing great.

It's very difficult for the media to get access to real factual data like revenue numbers to know which companies are doing great.

See all Y Combinator transcripts on Youtube

The CEO Who Pays Employees to De-Locate From the Bay