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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 gi

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.

wombatmobile 6y ago
The $5b valuation is speculative. Only $1.3m has been raised, which is less than 0.02% of that valuation.
- anonymouse008 6y ago
  Or you could say $1.3m of a theoretical $5bn demand curve has been tested, at one point.
toomuchtodo 6y ago
Khan Academy has an amazing collection of videos on finance. I highly recommend it for understanding cash flows, enterprise value, etc. It's helped me transition (one foot out the door) from tech to finance.
- artemonster 6y ago
  Any other good sources, like books or articles ?
  - ab_testing 6y ago
    The valuation of current tech companies is way astronomical compared to what is considered normal for mature companies. The average price to sales for S&P used to be between 1.5-2.5 for many decades. However for these newly IPO companies the price to sales ratios are around 10-15. Similarly the P/E ratio for S&P companies used to be in the 15-25 range to the considered normal . However with these internet companies, they usually do not turn a profit or if they do, their PE ratios usually lingers in from ~100 to 1000. And the market considers that normal behavior now.
    - throwawayyipyip 6y ago
      Well, to some extent it is. You can argue both ways, and in Zapier's case, I'd say it's overvalued as the 10-15 range assumes obtaining a monopoly. I don't see how Zapier will do that since there's also IFTTT and other services I've tried. With that said, consider huge successes like Amazon. Huge successes like Amazon have been generating much more profit compared to what they were projected to earn in 2010 [1]. I picked 2010 since 2 things are out of the way: the tech boom and the credit crunch. Moreover, people understood that Amazon was here to stay. Despite that, 10 years later, they make 20 times as much profit. If investors knew that 10 years ago, I'd bet that the price would not have been about 130$ 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. [1] https://www.macrotrends.net/stocks/charts/AMZN/amazon/net-income https://www.macrotrends.net/stocks/charts/AMZN/amazon/net-in... [2] https://www.google.com/finance/quote/AMZN:NASDAQ?window=MAX https://www.google.com/finance/quote/AMZN:NASDAQ?window=MAX
      - valzam 6y ago
        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?
        mdeck_ 6y ago
        The point is that (a buyer expects that) the value of the stock itself is increasing. Whether it pays dividends is not the pertinent question.
        jurassic 6y ago
        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.
- syndacks 6y ago
  Curious to hear why you left one for the other. Not too often you hear that move. How is it going so far?
  - toomuchtodo 6y ago
    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.
    - anonymouse008 6y ago
      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?
djrogers 6y ago
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.
- hooande 6y ago
  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
  - alvah 6y ago
    Because you don’t “just hire a developer”, and you certainly don’t do anything close to that for most of the needs Zapier addresses.
  - devoutsalsa 6y ago
    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.
    - freeqaz 6y ago
      Would you mind elaborating on this? I'm not sure what you're saying here. Is Zapier a positive or a negative for you?
narrator 6y ago
>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.
- deleted 6y ago
  [deleted]
- jojobas 6y ago
  There was already plenty of middleware tools that allowed API to API translation. They all (and I assume Zapier is no exception) only allow "no code" integration in only the most basic scenarios. I don't think it has much to do with empathy, much rather unbounded money printing of late.
- xwolfi 6y ago
  Dentists lack empathy: they cant understand how most people think and never explain how they think outside of their bubble. Our startup, Dentir, makes you do things dentists do :p
  - rtpg 6y ago
    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.
ErikVandeWater 6y ago
Why are you assuming the value VCs give it is even close to an honest estimation of its value?
sgpl 6y ago
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.
tamrix 6y ago
Me: I'll sell you 0.0000001% of my company for $1. You: sure Me: My company is now worth $10B! Hackernews: wow that's so amazing! One day in going to be rich doing startups too!
warent 6y ago
I was shocked by how low the number is! My guess was that Zapier was in the 10s of millions
iambateman 6y ago
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.
- abraae 6y ago
  I think of a billion as (very roughly) half of a cruise liner or half of a casino in the strip in Vegas. Not sure how accurate that is but at $5b, I imagine zapier as a cruise ship tied up alongside a glittering glass casino.
JohnJamesRambo 6y ago
Maybe valuations are just way astronomically off right now. https://www.bloomberg.com/news/articles/2021-02-12/warren-buffett-s-favorite-valuation-metric-is-ringing-an-alarm https://www.bloomberg.com/news/articles/2021-02-12/warren-bu...
specialist 6y ago
Word. IIRC, Microsoft acquired CompareNet for $400m in 1999. Scripts for scrapping prices. Written in Perl. I always get stuck on the little questions. Like: Does it work? Is idea worth doing? How big is the market? (I mention CompareNet because I had some contact with one of the founders. It's my IRL example that I never figured out how to play this game.)

wombatmobile 6y ago

The $5b valuation is speculative. Only $1.3m has been raised, which is less than 0.02% of that valuation.

anonymouse008 6y ago
Or you could say $1.3m of a theoretical $5bn demand curve has been tested, at one point.

toomuchtodo 6y ago

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.

artemonster 6y ago
Any other good sources, like books or articles ?
- ab_testing 6y ago
  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.
  - throwawayyipyip 6y ago
    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. [1] https://www.macrotrends.net/stocks/charts/AMZN/amazon/net-income https://www.macrotrends.net/stocks/charts/AMZN/amazon/net-in... [2] https://www.google.com/finance/quote/AMZN:NASDAQ?window=MAX https://www.google.com/finance/quote/AMZN:NASDAQ?window=MAX
    - valzam 6y ago
      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?
      - mdeck_ 6y ago
        The point is that (a buyer expects that) the value of the stock itself is increasing. Whether it pays dividends is not the pertinent question.
      - jurassic 6y ago
        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.
syndacks 6y ago
Curious to hear why you left one for the other. Not too often you hear that move. How is it going so far?
- toomuchtodo 6y ago
  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.
  - anonymouse008 6y ago
    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?

djrogers 6y ago

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.

hooande 6y ago
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
- alvah 6y ago
  Because you don’t “just hire a developer”, and you certainly don’t do anything close to that for most of the needs Zapier addresses.
- devoutsalsa 6y ago
  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.
  - freeqaz 6y ago
    Would you mind elaborating on this? I'm not sure what you're saying here. Is Zapier a positive or a negative for you?

narrator 6y ago

>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.

deleted 6y ago
[deleted]
jojobas 6y ago
There was already plenty of middleware tools that allowed API to API translation. They all (and I assume Zapier is no exception) only allow "no code" integration in only the most basic scenarios. I don't think it has much to do with empathy, much rather unbounded money printing of late.
xwolfi 6y ago
Dentists lack empathy: they cant understand how most people think and never explain how they think outside of their bubble. Our startup, Dentir, makes you do things dentists do :p
- rtpg 6y ago
  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.

ErikVandeWater 6y ago

Why are you assuming the value VCs give it is even close to an honest estimation of its value?

sgpl 6y ago

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.

tamrix 6y ago

Me: I'll sell you 0.0000001% of my company for $1. You: sure Me: My company is now worth $10B! Hackernews: wow that's so amazing! One day in going to be rich doing startups too!

warent 6y ago

I was shocked by how low the number is! My guess was that Zapier was in the 10s of millions

iambateman 6y ago

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.

abraae 6y ago
I think of a billion as (very roughly) half of a cruise liner or half of a casino in the strip in Vegas. Not sure how accurate that is but at $5b, I imagine zapier as a cruise ship tied up alongside a glittering glass casino.

JohnJamesRambo 6y ago

Maybe valuations are just way astronomically off right now. https://www.bloomberg.com/news/articles/2021-02-12/warren-buffett-s-favorite-valuation-metric-is-ringing-an-alarm https://www.bloomberg.com/news/articles/2021-02-12/warren-bu...

specialist 6y ago

Word. IIRC, Microsoft acquired CompareNet for $400m in 1999. Scripts for scrapping prices. Written in Perl. I always get stuck on the little questions. Like: Does it work? Is idea worth doing? How big is the market? (I mention CompareNet because I had some contact with one of the founders. It's my IRL example that I never figured out how to play this game.)