Building A $2 Billion SaaS Company: Lessons From A Two Time Founder
Y Combinator Startup Podcast
Deep Dive
What is Zip, and what does the company do?
Zip is a procurement software company that provides a single platform for employees in an organization to request purchases. It routes these requests for approval across various departments like budget, legal, IT, and security before integrating with the ERP or financial system.
How much funding has Zip raised, and what is its valuation?
Zip has raised approximately $370 million, with its most recent Series D round valuing the company at $2.2 billion post-money.
What was the initial idea behind FlightCar, and how did it start?
FlightCar was conceived in late 2012 or early 2013 when Rujul Zaparde and his co-founder Kevin brainstormed the idea of car sharing at airports. The concept was to allow travelers to rent out their cars while they were away, offering free airport parking and full insurance. The idea was developed in just one hour during a meeting at a Panera Bread in Princeton, New Jersey.
What were some of the scrappy tactics FlightCar used to get its first customers?
FlightCar initially parked customers' cars at a BART (Bay Area Rapid Transit) parking lot near SFO airport, which cost $2 per day. They also rented 30-40 base model Corollas from a cheap rental company in San Jose to build supply. At one point, they parked so many cars at BART that the BART police intervened, forcing them to move the cars and operate more discreetly.
What were the key challenges and lessons from FlightCar?
FlightCar faced significant operational challenges, including low gross margins due to high fixed costs like airport leases and shuttle services. The business was asset-heavy and operationally intensive, making it difficult to scale profitably. Rujul learned the importance of starting a high-margin business and avoiding negative feedback loops where low margins make fundraising harder while requiring more capital.
Why did Rujul join Airbnb after FlightCar?
After FlightCar, Rujul wanted to gain experience working at a large, successful company to understand how best-in-class teams operate. He joined Airbnb as a product manager to learn about scaling, hiring, and building high-quality products. This experience helped him refine his approach to leadership and company-building for his next venture.
What was Rujul's approach to starting Zip, and how did he validate the idea?
Rujul and his co-founder Lou decided to validate Zip by selling to their first ten customers entirely through cold outreach, without relying on referrals or personal connections. They wanted to prove market fit by convincing strangers to pay for their product. This approach helped them build a strong outbound sales muscle and gather valuable feedback from potential customers.
How did Rujul and his team price Zip's product for early customers?
They priced Zip's product at $10,000 to $20,000 per year, a rational amount for most companies. Rujul emphasized the importance of charging customers early to validate the product's value and ensure feedback came from paying customers who were genuinely invested in the solution.
What lessons did Rujul apply from his first startup to Zip?
Rujul focused on building a high-margin business with a clear market fit, avoiding the low-margin, operationally intensive challenges of FlightCar. He also prioritized seeking truth and addressing problems head-on, rather than worrying about external perceptions or painting overly positive pictures for investors.
What was Rujul's experience as a YC visiting partner, and how did it influence his second startup?
As a YC visiting partner, Rujul worked closely with founders, helping them think through pivots and challenges. This experience reinforced the importance of execution risk over market risk for second-time founders. It also helped him and his co-founder refine their idea for Zip, which emerged as a pivot during their YC batch.
- Rujul Zaparde's experience as a two-time founder.
- FlightCar's origin story and early challenges.
- Lessons learned from FlightCar's operational intensity and low margins.
Shownotes Transcript