Vanta CEO Christina Cacioppo and Zapier CEO Wade Foster made the decision to take a disciplined approach to fundraising. They flipped the equation of a typical startup founder: instead of raising money to enable a certain amount of growth, they eliminated the assumption of fundraising, controlled their spend, and evaluated how to ramp up spending based on what the business was bringing in.
Anu Hariharan sat down with Christina and Wade to talk about their unique funding history in our first episode of Same, Same but Different.
Same, Same but Different with Vanta and Zapier
You can also listen on Spotify, Apple Podcasts, or Twitter. 3:20 - Christina, why did you wait so long before raising your first round? Vanta was bootstrapped until raising a Series A round that ended up looking more like a traditional Series C. The company has surpassed 3,000 customers and is valued at $1.6B. Investors want to fund businesses that don't actually need funding. Christina talks about ensuring they were truly building something that people wanted and finding product-market fit. 7:10 - Christina, what was the scale of Vanta when you decided to raise? Why did you decide to raise if you were cash-flow positive? Vanta had true signs of product-market fit, as shown by the impact of sales and marketing. Christina talks about raising to ensure they didn’t lose the market they created. 10:50 - Christina, how did you say no to the investors wanting to fund Vanta? What was your mental model? Be pragmatic with how you plan to spend funds; ensure the dilution from fundraising is worth it. Christina talks about already hiring as quickly as possible and funds not helping with this challenge. 14:15 - Wade, tell us about your experience raising a seed and why you decided not to raise again. Zapier raised only a $1.3M seed round in 2012 and has been profitable since 2014. The company is valued at $5B. Treat each funding round like it will be the last money you ever get. Wade talks about his personal experience working for a quickly-growing, bootstrapped company, growing Zapier in a cost-effective way, and addressing constraints without fundraising. 20:00 - Wade, did you always want to build a bootstrap company? When did you know Zapier had product-market fit and that it was a business model predisposed to being bootstrapped? When you make something people care about, it’s easy to sell to customers. Don’t hire until it hurts. Wade talks about finding product-market fit, their repeatable go-to market strategy to grow their base without a ton of capital, and their philosophy around hiring and building a remote company. 24:30 - Wade, how did you attract talent without big headlines about fundraising news? Wade talks about hiring in a distributed way, writing about their learnings, and unique hiring tactics to raise the profile of Zapier as an employer. 27:00 - Wade, what was the hardest part about hiring for a bootstrapped company? Wade talks about this not being an issue when hiring outside of Silicon Valley and already being profitable. 29:15 - Christina, can you highlight Vanta’s journey to product-market fit? You can’t raise your way into the right product. Christina shares insight into her first customers and advice on testing the value proposition with early users. 35:45 - Christina, when did you know you had product-market fit and what were the signs? The path to product-market fit isn’t linear. Christina speaks to the mistake of focusing solely on hiring versus selling in the early days. 38:45 - Christina, how did you attract talent without big headlines about fundraising news? Christina shares how her pitch to candidates changed throughout Vanta’s journey. 44:10 - Wade, how has hiring changed since the pandemic? Wade speaks to more companies competing in this remote environment and how this is shifting again given today’s economic climate. 46:45 - Wade, what is your advice for founders whether to fundraise or not? Determine the constraints in your business and figure out how to address those. Wade shares their biggest challenges and his mental model to determine whether to raise or not raise. 49:00 - Wade, talk about your early days and how you were able to reach product-market fit as a remote company. When building a company, pick a lane: all remote or all in-office; the hybrid approach is the most challenging. Wade talks about how this played out for Zapier, including working in-person with his co-founders the first few years and reaching product-market fit during this time. 51:15 - Christina, do you recommend in-person, remote, or hybrid? Christina talks about the importance of documentation for remote and hybrid companies. 53:30 - Christina, how long in Vanta’s experience was in-person important? Christina shares the challenges of shifting from in-person to remote. 55:30 - Christina, how are you thinking about fundraising today in this funding environment and what advice do you have for founders? If you can, push your fundraising out — and if you can’t, it’s all about unit economics. Christina talks about her recent experience fundraising ( $110M Series B) and the importance of metrics. 58:00 - Wade, what advice do you have for founders in this funding environment? Running a good business never goes out of style. Focus less on what investors care about and a lot more on what your customers care about.