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Zapier reached a $5B valuation with $1.3M of funding

forbes.com

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Re: Zapier reached a $5B valuation with $1.3M of funding

#31

Post by amelius »

staunch wrote: post #21

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.

Yes but did they copy the idea using their own skills, or did they need VC funding to get it off the ground?

The former seems ok-ish, the latter not so cool and unfair to the original inventors of the idea.

Re: Zapier reached a $5B valuation with $1.3M of funding

#32

Post by ineedasername »

valuearb wrote: post #11

$5B is a pretty ridiculous valuation for a $140M revenues company.

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...

Re: Zapier reached a $5B valuation with $1.3M of funding

#33

Post by staysaasy »

eloff wrote: post #2

> “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 a…

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.

Re: Zapier reached a $5B valuation with $1.3M of funding

#34

Post by jeff18 »

imacoder wrote: post #20
vmception wrote: post #7

Earlier quoted context omitted.

The article says “hamster wheel”, not that they didn’t take it. The headline here adds ambiguity that wasnt written

If there is a valuation, then there was funding or there will be funding. Looks like funding came from YC, so yeah, they were funded.

Not necessarily! Shares trade all the time without funding the company. The valuation depends on what people pay for those shares.

Re: Zapier reached a $5B valuation with $1.3M of funding

#35

Post by staysaasy »

valuearb wrote: post #11

$5B is a pretty ridiculous valuation for a $140M revenues company.

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.

Re: Zapier reached a $5B valuation with $1.3M of funding

#36

Post by staunch »

amelius wrote: post #31
staunch wrote: post #21

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.

Yes but did they copy the idea using their own skills, or did they need VC funding to get it off the ground? The former seems ok-ish, the latter not so cool and unfair to the original inventors of the idea.

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.

Re: Zapier reached a $5B valuation with $1.3M of funding

#38

Post by reducesuffering »

valuearb wrote: post #11

$5B is a pretty ridiculous valuation for a $140M revenues company.

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?

Looking much more like a lot of value there.

Re: Zapier reached a $5B valuation with $1.3M of funding

#39

Post by Kaze404 »

capableweb wrote: post #22
_gmnw wrote: post #6

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.

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?

What's wrong with criticizing a headline that presents factually untrue information?

Re: Zapier reached a $5B valuation with $1.3M of funding

#40

Post by ineedasername »

staunch wrote: post #21

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.

[0] https://en.wikipedia.org/wiki/Multiple_discovery

[1]https://en.wikipedia.org/wiki/Yahoo!_Pipes

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