The below is a full (unedited) transcript of a Youtube session / podcasting episode I recorded with Russ Heddleston, co-founder and CEO of DocSend in Q1 2021. You can view the video/listen to the podcast on Youtube, Apple Podcast, Stitcher or wherever you get your podcasts.
Erasmus Elsner 0:06
Welcome, everyone to this week’s episode of Sand Hill Road. This week’s guest is Russ Huddleston, who’s the co founder of doc cent. Russ, welcome to the show. Where does this podcast find you today?
Russ Heddleston 0:17
I am in Tahoe, California today. And thank you for having me on the show.
Erasmus Elsner 0:22
Yeah, I’m super excited. And I think my audience who’s quite active in the tech ecosystem, everybody has either used Docsend been a receiver of Docsend, but maybe for the broader audience, what is Docsend? And why should we care?
Russ Heddleston 0:38
Haha, well, you don’t have to care if you don’t want to. But the way I describe Docsend some level, it’s just a really easy way to send and track a document, the internet should have something that does that. If you’re fundraising, it’s great because you can see if an investor reads it, how long they spend on each page, if they forward it to their partner, not right, you can disable downloading if you have dynamic watermarking, you can turn things off later. On the recipient side, it’s always really easy to use, you never need to have a Docsend login. It’s like one of the things that people hate about interlinks is remembering their login. But doxon has evolved over the years. So we also do e signature, we have data rooms, we get used by sales teams and marketing teams and customer success teams, we’ve got about 70,000 customers. But the opportunity we saw was, you know, Box, Dropbox, Google Microsoft aren’t weren’t gonna build this.
Erasmus Elsner 1:24
And you know, there are a lot of point solutions, but they’re expensive. And they’re targeted enterprise. And you just wanted to build something that was easy to use relatively affordable. And it was great at what it did. I remember the first time I got to dance and link was just like this weak signal. And nowadays, my inbox is full with the links, and it’s been like an avalanche. So I’m extremely excited to have you here with me today. But before we dig more into docs, and let’s take a step back and find out a little bit more about your background. So Docsend isn’t your first time at Founder seat, you started another company before, which was sold to Facebook, you’ve been quite transparent, saying that it was indeed an acqui hire. And I’m currently in close contact with a founder who’s going through such an acqui hire transition. And I told him well, if you want it to work for for Apple or Facebook starting companies seems like the most cumbersome interview process that you could have chosen.
Russ Heddleston 2:17
Yeah, yeah, I agree with you. If you if you want to work at Facebook, you should just go apply and work Facebook. Getting there through a talent acquisition is much more difficult. And it’s very uncommon. And talent acquisitions over the years have kind of gone in and out of favour. I mean, there’s always been a market for really good talent and good talent often wants to go build something on their own. And for us, there’s definitely quite a bit of whiplash around like, as a founder, you’re out there pitching, saying this is gonna be huge. And then you have to turn around and admit it’s not working and go work at a company. Like there’s a lot of mental dissonance there. For pursuit specifically, it was a great learning experience. For me, I had two co founders, we are all software engineers, we had a whole bunch of ideas on this list about what we wanted to tackle in the HR space. And, you know, we jumped at the first one, we started writing code, we got 5060, companies signed up 2000 users. And we were kind of like looking at the data and talking to people and we’re like, oh, this is not going to work. And it took us about a year. And I had a lot of learnings from that. And so we were gonna pivot to the next item on our list, and we’d raised a small seed round, and we’re gonna pivot to the next idea on the list. And so he messaged people saying we’re gonna shut it down. And Facebook invited us to be like, Hey, no, no, no, come work. Here. We have a lot of stuff we need help on. So he interviewed at Facebook and LinkedIn decided to go to Facebook. And I told my co founders at the time was like, you know, if we go there for a while, and then we can always come back to this next item on our list. This is an interesting opportunity. And, you know, it could be really fun. And my boss there, Google Rajaram, just an awesome guy. We’re still in touch. And he’s an investor in Docsend. And it was true, I had a great experience at Facebook, I feel very lucky that we got to go, I got to go through the fundraising process, raising around and then going through the m&a process.
Erasmus Elsner 3:58
You had this position at Facebook, you were a product manager in the pages team, you get used to a certain lifestyle, I always say there’s nothing more addictive than a monthly paycheck. And nevertheless, at one point, he decided, well, this is a cosy corporate setup. But I got to be a founder. How was that process of saying, Okay, let’s do it again.
Russ Heddleston 4:24
Yeah, I mean, I wouldn’t say that it’s my DNA to be a founder talking to some people or founders, they that it’s like, I had this idea when I was five. And it’s like, I don’t know, it’s never really struck me that way. Like, I grew up in South Dakota for the most part, and I didn’t have an email address before getting to college. So I felt like I was really coming from behind getting into this whole tech world. And for me leaving Facebook, there are a couple factors. One is that I just finished a really big project. It was this timeline design, which they’ve just recently come up with the next iteration of launch that it was doing really well and we’re just thinking about what’s next. So it’s kind of a in between spot in my role running the product for the pages team. And then more importantly, my two co founders for docs, and we don’t work together at this other tech company called grey stripe, that company got acquired, and they were leaving, and I wanted to work with them. So I think about it in terms of like, you know, we’ve long careers, where do we want to spend our time, and I really wanted to work with Dave and Tony, we didn’t actually know what we wanted to work on. So that was interesting. And I didn’t know leaving Facebook, I was leaving a lot of money on the table. But you know, my thought process was like, you know, I think in the grand scheme of things that it’s this is not going to be my biggest regret looking back and being eickhoff, I’d stayed at Facebook for a little longer, you know, I would have made more money, you know, it was more like, Oh, this is gonna be fun. And it’s not even the case that needed to be like, we were starting something, but also starting something is is fun. But yeah, that was kind of the thought process, I left on good terms as well. You know, like, still keep in touch with my boss. So I do think it’s important for you know, anyone who wants to start a company is you leave on good terms do very good work. People also ask me like, Well, how do you find a technical co founder, I need to learn to code. And so I was like, well, you go work at a big company, make friends, and then leave and then keep in touch with them and see you can even something come come with you. So when I left these, we did thankfully avoid the mistake we’d made the previous time of wanting to write code. Like as an engineer, it’s really hard to not write code, because you’re like, Oh, my God, that’s how I add value. So we are out there like interviewing potential customers doing research, just talking to anybody wants to have ideas and trying to figure out which one is the most promising. And that was a that was a big shift. But I also knew from my pursuit time, that time passes really fast. So as soon as you start writing code, you’re you’re putting inertia behind yourself, and it’s hard to change. It’s hard to let go of it, it’s hard to see it, because you’re in the weeds, but it’s hard to see it from a high level, the years zips by, you know, you’re thinking about that. So what I didn’t want to do is have the three of us, you know, work for years on something that wasn’t gonna go anywhere. So that research upfront and really being measured about it, I think, was very helpful.
Erasmus Elsner 7:01
It’s interesting how a product idea at the point when you got the crew together, wasn’t fully fleshed out. Because a lot of companies, they start out as a side, side project side hustle to your main job. In the past, you said, it’s really important that you have a fully committed team together from the beginning, because otherwise, you’re never really sure when you have the equity split discussions, are they really fully on board? Are they are they really behind it, you got to have Dave and Tony, leave their jobs along with you and really work on this full time, which I think is quite the decision on their part. In a sense, it’s a luxury, but it’s also puts you under pressure to, to come up with great ideas.
Russ Heddleston 7:41
They had already decided that they were going to leave and wanted to try something new. So that was the cue for me, because they’d been at the company that acquired grey stripe for long enough, to your point about trying to make it on the side. I mean, both models were kind of I know people have started very successful companies where it was a side project. For me, that’s tough, just because I like being all in on whatever I’m doing, you’re appointed puts a lot more pressure on you, if it is your full time thing, there’s an urgency, that’s hard to replicate, there’s also an element of any given idea has like a moment in time when it could work where there’s a window of opportunity. And if you’re doing on the side, then you’re probably gonna be making progress at a slower rate. It’s not true for every idea, but we just wanted to go on another another point to make too is that it’s important to be personally financially comfortable. So for the three of us, you know, we put in 100k not of savings, and we set a timeline of the year, you know, let’s let’s commit to a year and have enough money that we’re not gonna be stressed about it and see if we can come up with something we’re excited about. And that was in pretty stark contrast to my other startup because I was in business school at the time and I personal debt. And you know, there’s the pressure of starting something is high. So you want to make sure that you’re minimising the other risks that are and the other stresses that are involved in doing that.
Erasmus Elsner 8:59
It’s quite interesting that if you’re stressed, you never come up with great ideas, you only come up with short term solutions. I heard you talk about your first time around fundraising for pursuit, which came out of a different situation a situation of having to ask for money, or as in the second time around the docks. And I think you were in a really fortunate position of having found a real niche and having built a first version of the product.
Russ Heddleston 9:25
Yeah, you there’s a lot of interesting points there to make. And again, fundraising can be done a lot of different ways people have different philosophies on it. And one lesson I learned I think it’s true pretty generally is the first time around with pursuit. I strung out pitching people over a long period of time, I was asking for intros and I would take a meeting here and take a meeting there and we never had a lead investor. I basically just got a bunch of convertible notes together. It took me forever and it was like six or nine months or something like that. And it was really painful. And that was time that was taken away from actually working on the product. So we got the round done, but it wasn’t fun for me. And so coming to the talks, and again, remembering that, you know, so we put in some money, we’ve got personal runway, so we’re not in a big hurry. But we built a beta version of it, we didn’t have a marketing site. And we decided, like, Okay, well, we got enough conviction here, we want to hire some other people. And that was kind of the, in our minds, like, the point where we’d like to raise a seed round was like, well, we’re gonna hire other people than we’d like some outside capital. So I set aside just two weeks, and I said, if I can raise in two weeks, great. If I can’t, then I will come back again in a few months after making more progress. But I figured now at a minimum, I’m gonna get some great feedback, a nice excuse to keep in touch with some of the people because I’d already kind of met a bunch of people, you know, when I was pitching for pursuit. So I set up, I don’t know, 30-40 meetings in a two week period. But it was still tough. I got a lot of Nos. And then I did get one yes, from Jeff Clavier from Uncork. And so he gave us a term sheet. And I had pitched him back with pursuit. And they said, No, they’re, I think it’s also important to remember for founders that you don’t lose face. If someone says no to you keep in touch with them, like they’ll invest in your next company. And even if you only have like a mediocre outcome, but you run it well, investors love investing in in serial entrepreneurs, because you learn so much like you’ve de risk yourself by being through the process before so I pitched Jeff, on a Friday, I actually pitched Charles on his team who sent us gone on to form his own fund. And then I pitched the partnership on Monday, they gave me a term sheet Monday night, I turned around, asked everyone else like, Hey, you got a term sheet, anyone else would give me a term sheet. And there’s the No, I didn’t realise for seed funding. It’s not collusion, it’s more like, you get a lead. And then other, they only take half of the round, which is different than series A or B, you’re beyond. Everyone else just wanted to fill up the rest of the round. So I went from a lot of maybes to a lot of yeses. And then I emailed everyone saying, like, Oh, it looks like we have enough money. So if you want to be included in this round, let us know why. And then as soon as you tell that to people, then everyone freaks out. So someone who’s like, oh, maybe I’ll invest 25,000, they’re like, I need to have at least 500,000. Otherwise, it’s not worth my time. We went from in a few days having like nothing committed to having like $4 million committed or four and a half or something. And we only are asking for 1.5, increase it to 1.8. We just flipped really quickly. So I think it was very helpful, though that is like you don’t want to be grocery shopping, ball hungry type of thing. Like we knew what our backup was, like, we were comfortable that we didn’t need this money right now. But we didn’t need to raise at some point. And we were fine. You know, running through this getting some feedback and trying in a few months. As it turned out, we found someone who had conviction in what we were building and was willing to lead the round.
Erasmus Elsner 12:47
Now that’s I think that’s that’s such an interesting behaviour that that happens once you get a strong lead. And Jeff Clavier, from Uncork is definitely well connected and well respected as the lead going in. And then you had I think, whenever Lerer Hipeau from the East Coast, right and, and Cowboy Ventures joining the round as well. And when I looked into your overall financing history, so far, I would have expected you to have raised multiples of what you’ve raised now in total, and talk to us a little bit about being capital efficient.
Russ Heddleston 13:16
Sure. And I think Finally, Silicon Valley, especially gets really fixated on like the number of dollars you’ve raised and like that valuation, but that is actually a little bit different than the value you’re creating. And certainly more money can help in many situations. But I think for any given founder working on a particular idea, that idea is going to have some benefits to it some drawbacks to it, like if you if you is on to receive an opportunity, that opportunity might be better attacked by going up market, you know, enterprise play, it might be better by doing a long tail SEO, play, or assaults or play, it depends on the idea. And once you get far enough into your company, there are actually a lot of things that are outside of your control is kind of becomes a path that makes the most sense. Sometimes you can hire a CEO and you can move into a different role. And, you know, sometimes the founder sticks with it. But so I think for docs, and we’ve done a good job following the thread of what makes sense for us. But our funding journey was we raised 1.7 million for the seed. And then or we really had any revenue, we actually raised the series A from August capital, which was 8 million, our thinking there was it was inbound, and we didn’t need the money, then however, I figured that we would probably need the money at some point, it would allow us to move faster. So we weren’t at breakeven or making any money. So then we raised a series as we’d raised 9.7 million didn’t really have any revenue and had to figure out what on earth our business was. So we did burn a lot of money. We tried a lot of things. We tried selling to enterprise, which is still a great path for us. We still have a lot of enterprise customers. But what we realised was that the docs and just by nature, how it works, you get docked on links. There’s a natural viral viral component to it. And there’s also a really big word of Mouth component to it spread. So in 2018, we decided to go all in on that. optimising self serve. And there a bunch of things that go into that people always ask me like, oh, how do you do product lead growth? How do you do, like self serve, and there’s like no silver bullet to it, it’s, it is a lot of hard work. It involves a lot of talking to customers, it varies based on what is your business, and what is your product, but we made a lot of smart optimizations to it, and it started to take off. So by the time we got to the stage where we could raise a Series B, we didn’t actually need to. And so we raised 5 million from DCM, which if you’re just looking at our crunchbase, might look like a bridge round or, you know, not good, but actually big up round, it was just we didn’t need more money than that necessarily had a term sheet for a lot more, but I felt that investor would push us to go up market. And I do think it’s important to focus. So we were a small team that we’re like, now we’re just gonna focus on this, we can go to market later. And so that’s the the thread that we’ve been following. And we get pitched for money all the time now. But capital isn’t actually our biggest hurdle, we would only raise more money to basically just announced to the world like, Hey, we’re doing great. And sometimes people do that. They raise more money just to have a new mark to market and for recruiting and But for us, and what I tell our employees is like we’re not keeping score based on capital raised or headcount. We’re keeping score based on just building a great company. And so that’s what we’ve we’ve been focused on. But again, it’s really different for every company, I am really happy we took that series A because that did allow us to take risks to try more things. But the goal has never really been to be super capital efficient. ferredoxin however, you know, it’s, we’re gonna raise, you know, 30 40 million bucks. Like, it’s also kind of awkward to have much money sitting on your balance sheet, you know, we tend to work backwards from like, what do we want to do? And what do we need to, you know, like, what resources do we need to accomplish that, and it just happens to be the case for us that we don’t need outside capital. We and we don’t need necessarily to raise money for for validation, we’ve we’ve got a really great team. And people recruit like us, just because we are good at what we do. We have a product that people really like. And we’re just kind of a low ego, no nonsense, like just really talented team.
Erasmus Elsner 17:00
I love that I love that I can feel the no ego, South Dakota mindset really shining through a duck’s and because this is really these two sides of the spectrum, I always say, on the one hand, you have the people who do the vanity rounds, they get really good at spending other people’s money, they they talk about product market fit, but at the end of the day, they build a company for the investors. And then on the other hand, you have the indie hackers crowd that’s super capital efficient, and you know, trying not to raise a single dollar, and then they can run any experiments. So I think there’s a golden path. And I think you’re probably on that one. But let’s take a step back now and focus a little bit on docs and and the products starting with this realisation that the PDF attachment hadn’t been updated since the mid 90s. And really building from there, maybe talk about the very first version of the product. At one point, you said it was built with probably $100,000 What did it look like?
Russ Heddleston 17:54
The real cost was the customer labour for me and my co founders, because we’re, you know, we, we have a lot of job opportunities, as you said, you know, the, the Facebook check is, you know, addictive type of thing. So it was really opportunity cost. And the software just does not cost much to make these days, right. Like anyone can just hack something together, like learn to code come up with a design. So the cost of building it wasn’t, isn’t really an important metric, although I will say that if you’re just building SAS is very high margin, very low cost. other businesses do have more actual capital requirements up front. So I think that’s one of the reasons that sass companies are valued so highly. But yeah, the first version, you know, we kind of thought about this as, okay, we should be able to send and track stuff, I want to see if they read it. And I was thinking in my head, like every meeting that starts with Did you read the document, it’s like, that’s just wasted breath every time. Or, you know, and fundraising and people being like, oh, I’ll take a look. And they didn’t take a look. Or they took a look. And they didn’t respond. But just trying to understand like, what is happening to these very important documents that are being sent around, like I just like to know. And so that was the first version, there’s the ability to create multiple links pointing to a document, then then for each of those links, when someone goes to it, we track how long they spend on each page. And because it’s a unique link, we can see who they forwarded to. And we prompt them for their email. And that that was that was the first version. And before we even had a marketing site, I would actually give it to friends who were raising capital. And I’d give to them for free in exchange for just giving us product feedback. So we never really intended for it to be just like a fundraising tool. We always wanted it to be something bigger, but that’s just that was the easiest place to start. So we just started iterating from there, and then we launched it at TechCrunch Disrupt in 2014. Just so long ago, but we didn’t know if it was gonna be b2b or b2c. We’re like maybe students will use it for their resume or you know, maybe it’ll be used and who knows. So it was just free at first we didn’t charge anything. And we just kind of wanted to see where where it goes. And after we launched it, we saw a spike which is Great, but then it kind of like increased into like a linear rate, which is as a founder like, Oh ,it’s not, it’s not exponential, it’s just a linear rate. But over time, as we’ve evolved it, we’ve been able to find a way to make it grow closer to exponential, it’s certainly better than one year. There’s been a lot of learnings in there in the meantime. But it’s also interesting that as you get adoption for your product, as long as you’re continuing to talk to people and get their feedback, you’ll actually see new paths open up that weren’t available to you when you started. The thing. And that’s certainly been true for us is startup founders are very receptive group of early adopters, but pre Docsend now not the biggest customer group, even though it’s not your largest customer group,
Erasmus Elsner 20:04
If I go to your site, I can still find a lot of content that is useful for founders, including the metrics, how long does VC spent, on average, three minutes or four minutes on the successful versus unsuccessful decks, you have this startup fundraising network, you have all kinds of great initiatives?
Russ Heddleston 20:56
Yeah. So when we talk to our company about what is Docsend, and we describe it as a horizontal technology that we have to market vertically, and the mission statement for the company is to combine common workflows for sending documents externally into one intuitive solution. And that gets used in a lot of places. So, you know, even though we started in the startup world, we sell to banks, we sell to big sales teams, we sell to fortune 500, like we we you know, across our 17,000 customers, it’s a lot of different use cases for it. But again, coming back to the marketing and vertically, like we have a team that’s just dedicated to this sort of use case, which is great. And one of the things we recognised is that it’s people ask like, Well, how do you get press and it’s like, it’s really hard to stand out. One great way to get press is to use a unique data set that you have. And we happen to have a unique and interesting data set in a market that’s very, very opaque fundraising. And so by coming out with those lessons, those learnings doing that research, it’s, it’s a really great value add to the community. But it’s also good for us as a business. And just because we’re marketing to startups doesn’t preclude us from marketing, to sales teams, or to banks, or to getting into any of these other use cases. It’s also pretty helpful. Like if a startup founder fails, they go on, they join another company, they’ll probably talk to them again. Or they succeed, and they start hiring a bunch of people, they’ll probably hand it to their sales team. So in many VCs will say do not target the startup world. It’s just too tiny to build a venture scale company, which is true.
Erasmus Elsner 22:23
However, it has some great properties that can be really useful, depending on the type of company that you’re starting. And this fundraising network. There’s also this ability to have your deck reviewed by a team at docs. And I think that would be quite interesting for my audience. What does it entail? Maybe a shout out to this programme? I think it’s a great instructor.
Russ Heddleston 22:42
Yeah, that’s really fun. Like it’s we, in our marketing team, you know, quarterly, we’ll go through from new ideas like, what verticals are we gonna go after? What progress we’re gonna run? And like, what are some crazy ideas. And, you know, the docs and fundraising network is one of those crazy ideas. And so it is the combination of some tech on the backend to analyse decks. And it’s a small team that will review them, but we put together 7080 lead VCs that are part of this network. And again, we’re only focused on lead investors, going back to my own experience fundraising, once you get a lead, it’s really easy to fill it out. So we’re trying to screen for the best decks and they can come from anywhere, they don’t have to be USBs don’t have to be Silicon Valley based. And it’s basically like a matchmaking service. We’re pre discerning, depending on the quarter, only 10 to 20% of the ducks that are submitted, get approved. But then we you know, this team knows for these at lead investors, like who has preferences for b2c b2b Enterprise product lead, those sorts of things. And so we can just easily send the deck to everyone who’s relevant. And it’s really gratifying to see people you get funding that way. And we’d look at it from a company perspective, just as most founders use Docsend anyway. And that’s the only requirement and you know, we have a $10 month plan, there’s a free trial, but they have to send us a Docsend link to their to their deck. So it’s training people, but it’s free. You know, that seems like a reasonable, reasonable trade off. But yeah, it’s it’s been really fun. There are a bunch of other services out there. And so the goal of the fundraising network isn’t to like take over the world, the only way to get in front of VCs. It’s basically just to save founders, the effort of having to like build a giant list and get warm intros, which is just so much work. And so you should do that too. And if there any other ways that a founder can get investor interest, you should use those as well. You don’t have to own the use the fundraising network. But it’s just one more tool to help make founders lives easier, especially when going out and raising capital. Another unique thing about how we’ve structured it is that we actually give founders feedback on their decks. So if you send your deck to a seed investor, and it’s not a fit, they’ll just say, Oh, I need more, I need to see more traction, or it’s just not a fit, but it’s not in their interest to actually give you feedback, which is really frustrating. Because you need to see more attractions are often a euphemism for something else, but he’s just not gonna tell you. So even for the decks that we reject, we do give them feedback, which we’ve been told has been very helpful for many.
Erasmus Elsner 24:59
I think what you’re building there, it’s a company of its own, which a number of people have already attempted to be before, a central funding marketplace. But it’s definitely the perfect wedge of actually being the platform through which data flows. Talking a little bit about expanding your customer base to other verticals. And you mentioned that you are verticalized. In your use case, I think one early adopter group after the core startup founder group was salespeople, and I think marketing agencies. Talk to us a little bit about expanding to other verticals, and what the adjacencies were and how that came about.
Russ Heddleston 25:34
Yeah, yeah, that’s a great question. And again, there are many ways to go about this, we just have that we have one particular view on it. So the way we think about expanding our product is we start real simple with actions that you can do send track, control, execute, those are very basic, right. And I still think that Google or Microsoft should be building docs. And because I think it’s a big opportunity, but they’re not. So you know, this external sending thing is something we can focus on. So we take those core actions, and then we build those into workflows. So you can think of like the deal sourcing workflow, that’s what I described at the beginning around, I’m gonna send this MSN 10, links to 10 different people see who’s reading it. And that information will help me prioritise who cares and who does not helping me do my job faster. That’s the workflow that applies in sales and plays in fundraising and applies in a lot of different places. We also look at deal management, which is kind of our spaces or data room product. So that could be like, it could be an m&a It’s a data room. But it’s also like a sales deal room. We think about relationship management and other workflow. So that’s Investor Relations, that’s customer success. That’s an investor portal. And then we think about execution, which is just signatures, which is something that we’ll be doing a lot more of this year. And then those flows apply to different use cases. So then through that lens, you can say like, oh, fundraising, Investor Relations, sales, customer success, m&a, you know, the agencies doing things like getting things signed. And so we take a look at who is using the product, because people find very creative ways to use the product, and then we learn from them. And then we figure out how do we put that up on our website? And how do we attract more of those people. And so we’ve been very methodical, and how we’ve kind of increased the edges of the product. And we do have some product philosophies around, we’re not going to go do anything that’s too niche for a particular vertical, we want to do things that have the most leverage across the most users. So that kind of keeps us necessarily horizontal. And then, you know, we instead of building something to, you know, take it, we’re gonna like build this whole new thing that’s like further away like rallies, like no, make the product better for the people who use it today, which increases engagement. And then it kind of like naturally spreads itself. So those are some of the guideposts for us that we’ve used as we’ve kind of built out the product, tonnes of different use cases for doxon, like unintended consequence was, you know, after you’re getting founders to use it, and if you go on Twitter, they’re all these like, tweet storms from VCs be like, send me a PDF. And it’s not really our problem, that this is a tool that makes fundraising a little bit easier for the founder. So most VCs are big fans of the product. And they’re like, Whatever makes it easiest for entrepreneurs. But there are a few ones who are vocally against it. But we looked at the data last year, and over half of venture capitalists use Docsend for their own fundraising. So we’re like, oh, we should talk about that on our website. So we now put up their you know, language around how do you use doxon to run your annual LP meeting? Or how do you use docs, and when you’re raising your venture fund, suddenly different but kind of similar to your startup, raising money as a startup, but then we also see it in sales teams are adopting it. And so what’s the content that we can use to target sales teams or agencies, like PR agencies are such a good fit for PR agencies. And then we also get these really interesting inbound deals like there was a public company that the seaso wanted a tool he could give to employees to do the right thing. And he tried a bunch of the enterprise grade security oriented, they’re all kind of clunky, they’re pretty expensive. And he was asking a friend who’s in venture capitalists, hey, how do you solve this problem, you must give a lot of sensitive documents. He’s like, giving her docs in the seaso comes to us as he has this problem. It’s us versus Microsoft, and Adobe, and doxon. One, and so we’ll see things like that. We’re like, Oh, that’s interesting. I wonder if all other CSOs have that problem? Maybe we should go talk to them. So we’re kind of in a constant cycle of seeing where we’re getting traction, seeing what the needs are. And then for that given audience, asking yourselves Well, what are the sales and marketing playbooks we can run to speed up that adoption process because smart people will just figure it out. But for you know, kind of mid late adopters kind of Crossing the Chasm thing. We need to have the case studies we need to have the marketing material, we need to have everything up on our website to just make it really obvious.
Erasmus Elsner 29:51
One really interesting example of really expanding the product by learning about how users actually use it on a day to day basis was when you had a couple of marketing agencies building WordPress showcases, I think it was sort of their, their marketing portfolio. And they would build custom websites, integrate Docsend links. And that sort of gave you the initial idea, and impetus for coming up with Docsend spaces, which is a really great product. Talk to us about the vision of that product and where it could go.
Russ Heddleston 30:23
Yeah, yeah. And this is actually just an interesting story about the evolution of many any product and like, following the thread. And while I was at Facebook, you know, Chris Cox, when he would talk about it back in the day, you’d say, you know, we, we just would watch user behaviour and see where users are running into walls, and then try to unblock them. So that early days of Facebook, you know, they saw people who were going and checking multiple profiles, you know, seeing like, Is there something new? Is there something new, because you had your little wall there, like, we should just build a newsfeed, you know, then like, that was a revolutionary concept. You know, Facebook would not be what it is today without that. But that was something they found by just watching people and in Docs, and we saw, yeah, we had some agencies that would, you know, we would see like, Oh, my God, you’re embedding docs and links in this like, weird website, and you’re paying a developer to build it like we can do that for you. And as a gut check to be like, How common is this, we looked in our own database, we looked for work, documents in Docs, and it had docs and links in those documents. And so what people were doing is like, you’d create, you know, Google slide, and then they’d have little images on there. And then they hyperlink them to doc says links, and then they put that document back in Docs and create a link to it. And so they’re basically trying to send one link to a collection of documents, which does not seem like rocket science. So we’re like, okay, we can build that. So that spaces, and then when we launched it, we saw people using it in a variety of different ways, but people were using it as data room. So then we were talking to those people, and they wanted more security. So we’re like, okay, so we got a dynamic watermarking, we added an allow list, we add authenticated viewing, so that we you need to know that it’s your email address. And that was like, awesome. It’s like, Oh, my God, now we’re in the data market. One of the other requests was, we really would like to sign an NDA, I have some time to do before they get into this data room. So we’re like, okay, we can we can build a one click NDA thing on it, and kind of like looked at it. And we’re like, Okay, well, we could use DocuSign, or hellosign API. So those are kind of clunky. And we already have a lot of the viewing technology built in. So we’ll just build our own. So we built the back end to be legally compliant, you signed and we put that one click NDA feature in there. And we also kind of came out with this kind of like, you can just send an NDA sidelong and get signed. And then suddenly, people started using that a lot. And they’re like, we want the rest of you signature too. And they’re like, Okay, I guess now we’re also in the E signature business. And so we’re in the process of building all up, and they all fit together really well. So these aren’t like, it’s not like enterprise software, where you have to do customised stuff for each client. And then you kind of end up with this Frankenstein thing. Like as we build docs, and we’re pretty thoughtful about keeping it intuitive and making it all seem pretty seamless together.
Erasmus Elsner 32:56
And I love how how the original product was being additive within the workflow of people and then methodical about expanding tracking the behaviour and seeing, you know, where can we really add value and talking about value, and capturing value pricing, the first version of Docsend was freemium. If I go to the website, today, it looks like a pretty standard SaaS pricing page, where you start out with a fordable self service option and you go upstream. In the end, you also have an enterprise version, I assume, from my outside perspective, that the bulk of the revenue and the bulk of the attention is still on the self serve cohort, rather than moving too much upstream. Talk to us a little bit about how you thought about pricing, how you think about pricing going forward?
Russ Heddleston 33:41
Yeah. So I think things less as enterprise versus self serve. And I think about like, Who are you building for. So all the stories I’m telling about, you know, like people using features and having needs, those are the people who are actually using the software, that’s the end user. So we’re very focused on building for the end user, if you get to, you know, you talk about, you know, the seaso, or a CFO, or you know, someone in sales enablement or product marketing, they’re often buying software on behalf of others. So you get the economic buyer there. And the end user and the economic buyer often don’t need the same thing. And so you’ll you’ll kind of see this difference in the market where enterprise products just are different to us, then things that are built for the end user, we do plan to go build for the economic buyer, and we have a lot of features for them. But by and large, we’d skew towards building for the end user, you know, we started docks, and it was free. And we thought, hey, it might just take off like crazy, which could have been a valid path for the company, like millions of users. But as I mentioned, it was linear. We’re like, okay, we have to charge so we are charging $10 a month and we’re like, well, let’s go try to go at market so then, like, Okay, we got $10 a month we have enterprise we’ll put in a team plan of $30 a month and we pick $10 just because you know that’s like you know, Dropbox pricing or just like it’s like the smallest amount I could justify and be like, let’s just see conversion did go up. By the way. People didn’t trust us because you weren’t charging So it looked a little shady. So we actually started growing faster once we started charging. And then over time, you know, we’re selling enterprise. And we had all these people asked support, like, Hey, are you the service that does blah, blah, blah, we’re like, yep. And then we did sign up for the enterprise plan, which wasn’t really meant for them. It had a lot of like, user like admin features and team features. And, and so we in 2018, were like, let’s just put everything from enterprise or almost everything into self serve plans. So then we decided to make the standard plan, the average cost that we were selling average was 45. So we left personal 10, we had standard 45. You know, I was talking to like the managing director of a bank in the Toronto and he was like, it’s ridiculous. Your service is basically free. And I was like, Oh, no, you’re paying us $10 a month. He’s like, like I said, it’s free. And his secretary was using it, paying for it. And so we put in this fight, we called it at the time finance plan at $150 a month. So it was 1045 150. Finance, we didn’t have any differentiation. At first, we just talked about it differently. There’s a case study from Eddie about the Ford, Eddie Bauer car, where it was a ridiculous car than it is that was just way more expensive and branded for Eddie Bauer. And that car didn’t sell a lot. What happened was the previous most expensive word sold a tonne more, there was a really successful car for them. But ironically, they just didn’t sell that much of the car. And so we were thinking that might happen for us. With the finance mind, putting it up there, even though had no differentiation, just made the 45 price point seem more reasonable. But surprisingly, people started buying it. Like even though there’s no differentiation. And again, our conversion rate went up, we just weren’t charging enough. And people didn’t feel like it made sense to pay that little for our product. And so then we just started adding, you know, the rest of the features, and we turned it from the finance plan into the advanced plan. And then that’s the plan that you know, can really replace interlinks, or it can be used as data. And it’s also more flexible, it can be used for a lot of stuff. So our pricing journey, I don’t know how somewhere just other companies pricing journey. And I’m sure it’s not optimal. We’re going to revisit it again later this year. Because again, as you know, as you add more, as we add more value to these plans, maybe we can charge more. But we’re never going to have a model where we charge like a separate price for esign. We’re very much bundling these things all together, and there’ll be across different packages. But we visited again and see if maybe something different makes sense today. And we’ve left the personal plan there, just because I think the internet should have a relatively cheap send and track a PDF feature. That’s just that’s just something that should exist, and $10 seems fine. I should also mention that we used to be freemium, and decided not to be freemium anymore. And for some companies that works for some it doesn’t. For us, our users are all b2b, either all businesses, and these are usually like, like pretty well off business people that are trying to get something done, they could all afford to pay. So we pulled out the freemium. But we did leave in the personal plan there that we thought that just made sense.
Erasmus Elsner 37:48
Talking about the future and about what’s next for docs, and you mentioned the new product on the signature side, is it expanding in that region, or what’s the ideal 2021 look for you?
Russ Heddleston 38:00
It’s going to be a really fun and exciting year, we’re growing our engineering team by only 50%. And the idea there is that, you know, I co founders and I have worked on teams that grow a lot faster. And it can just be hard to make sure you onboard, people make sure they feel like they have impact, make sure everyone’s in the right swim lanes, that’s how much we’re gonna grow the engineering team. And then we’re going to grow the marketing team quite a bit, because we have a bunch of new programmes, we’re going to, we’re going to run support and customer success kind of grow as a function of the need that we have for it. And then we’re investing a lot more in like operations and getting a couple more analysts and, you know, in HR, and that kind of all those areas. And so that’s kind of like on the people side. And then on the what we’re building side, we get all this inbound, that is us versus interlinks. And we know exactly what our gaps are. And oftentimes, we can replace them and we win. Sometimes we don’t, until we know exactly what the feature gaps are. And we’ll have those built like relatively quickly. And it’s the same for E signature, we know where the gaps are. And in my mind, you know, if you’re trying to use DocuSign, it’s not creating a 10x, better e signature product. I think it’s bundling e signature in with other workflows. I think that’s that’s a disruptive thing. So this would be the two pushes this year. And then once we have those features, that’s there are all these new marketing playbooks that we can run there, these new verticals that we can go after. And so a lot of it is just blocking and tackling and executing this year. And we’re fortunate to have like a great team. And they’re just a tonne of fun to work with. So from my point of view, yeah, things are great, they’re getting better. And we’ll have to decide at some point when we’d like to go up market that will probably do like what a lucid chart did, or an air table or any of the other ones that are kind of in the same category around, you know, get your product built really well for the actual user. And then on top of that builds go to market approaches that will target larger companies and build out those features as required to service those larger companies. So that’s kind of how we think about I’m
Erasmus Elsner 39:56
So excited you saying that you’re going to replace IntraLinks. Everybody who’s ever worked in finance, this heart just warms to this idear, I think there’s so much whitespace in that area. So super excited that you’re tackling this heads on.
Russ Heddleston 40:08
We already get used as a data room all the time. It’s just, you know, can you make it better so we can go up market and be more relevant. And what’s always interesting to me is that one person is using as a data room another person is using as a dealroom is selling, you know, doing an enterprise sale another person’s using as their investor portal. So it’s still really horizontal. All these things just make sense together. But yeah, certainly on the pricing side, pricing per page is just awful. And the data market gets a bad name, because it’s episodic, in many instances. And so you know, that means high churn rate, which is going to mean low multiple on your revenue. However, it’s just such a big need an industry that we feel like it’s time that someone do something different there.
Erasmus Elsner 40:50
Absolutely. So Russ, we have five minutes on the clock. One thing I wanted to ask you, you’re hiring a lot of new people, scaling a startup is always so complex, and you seem like a thoughtful second time founder more on the cautious side, probably thoughtful on who you bring in, you just mentioned, you’re just going to grow by 50%. What are the main challenges in growing and scaling up spending,
Russ Heddleston 41:14
If you’re doing a hyper growth company, and those are typically like outbound sales type of things, then that’s, it’s kind of different how you run and scale your company, at least for us, you know, as we invest in great people, like, you know, we pay really well, we invest a lot in our managers, if you’re only and again, coming back to why we need more money is that we’re growing a lot faster than 50%. So we don’t necessarily it’s capitalism, our limiting function right now. But you know, if you’re growing at that rate, you can actually afford to promote people, like people will learn in the jobs, and they can take on more responsibility. But if you take a first time manager and say, hire 10, people, you’re not setting them up for success. So when we look at this year, you know, we’re going to be able to scale really well, it’ll, it’ll be hiring it like a good clip, it’ll feel fun and interesting. And we’ll be able to promote people, as we hire, we try to make sure that, you know, we give people all the tools to do their job well. And if it’s not working out, you know, we were very good at it just parting ways, sooner rather than later with them. So they can find a place that is a fit, we say there’s a fit for everyone, somewhere just might not be at docks end. But we were fortunate to have like just a great set of people.
Erasmus Elsner 42:20
And in terms of I have to ask the question in terms of remote hiring has this always been part of your, your company DNA? Or has that changed over the last couple of months?
Russ Heddleston 42:33
This has changed for everybody. We were before the pandemic planning to have kind of a hybrid model with an office in San Francisco. But we kept finding great people, right, like the war for talents real and we’re competing with public companies. And so when we find someone great, we want to make it work. And so you know, since the pandemic started, like, we were already set up well to be remote, so it wasn’t super jarring. And we’re you know, very good at being asynchronous, writing things down being really organised. And so it’s actually felt pretty normal to just interview and hire people even never meeting them in person. So no complaints like on our side. And you know, people have moved to San Diego, they’ve moved to Minneapolis, they’ve moved a lot of different places. And so we try to be very supportive of them and whatever they want to do. And when the pandemic is over, I think there will be a lot of value in working together sometimes. But there’s also a lot of value in not having to commute an hour each way every day. So it’ll be some blend of the two. Absolutely.
Erasmus Elsner 43:31
So Russ, thank you so much. I want to conclude now with you giving a shout out where people can find out more about you what you’re up to and webinars Docsend is doing because you’re so active in the community. You brought in Cassie, who I know back from Atrium, you put up lots of great content, maybe give a shout out.
Russ Heddleston 43:49
Yeah, so yeah, definitely shout out to Cassie. She’s fantastic to work with. And Nick runs our newsletter follow that it’s got really great content, really great stories, primarily targeted at like founders and VCs and kind of like the startup market. But that’s a great way to keep updated on what we do. We’re going to come out with a lot more research this year, around, you know, pre seed seed a even like venture capital fundraising, to try to keep up with the times and see how those processes are changing. And if your fundraising like how you can set yourself up for success, so keep an eye out for that research. You take advantage of the the fundraising network. If you are fundraising. I’m just Ross Huddleston, on Twitter, so feel free to follow me. Or you know, Ron is a friend of my undergrad who started this app called clubhouse or look for me on clubhouse cuz that’s a fun place to have some impromptu kind of conversations with folks as well.
Erasmus Elsner 44:37
Yeah, I know on Twitter, you get a lot of heat from some VCs, and you’ve been quite active on Twitter, defending yourself and standing up for yourself.
Russ Heddleston 44:47
It’s often just correcting some misunderstandings. I would say it’s not antagonistic in any way, but we do try to try to educate everyone and, you know, make sure everyone understands what it Docsend is all about.