Omer Khan [00:00:00]:
Welcome to another episode of the SaaS podcast. I'm your host Omer Khan and this is a show where I interview proven founders and industry experts who share their stories, strategies and insights to help you build, launch and grow your SaaS business. In this episode, I talk to Jake Stein, the co founder and CEO of Common Paper, a platform that provides standardized contracts and contract management software for B2B software companies.
Omer Khan [00:00:36]:
In 2008, Jake and his co founder Bob Moore started RJ Metrics, a business intelligence company working out of Bob's attic without taking salaries for the first year and a half. Those early years were grueling as Jake and Bob struggled with finding product market fit, acquiring customers and and generating enough revenue to stay afloat. By 2012, they finally found traction and grew the business, raising over 20 million in venture capital. But their success was short lived. In 2015, their business model was disrupted when Amazon launched Redshift, causing RJ Metrics to stop growing.
Omer Khan [00:01:17]:
They were forced to do painful layoffs and eventually sold the company in what they described as as an okay exit. But the story didn't end there. In 2016, Jake and Bob spun off a small feature of RJ Metrics into a new company called Stitch. In a whirlwind 18 months, thanks to some perfect timing and execution, they sold Stitch for $60 million, a far more successful exit than their previous venture. Now, drawing from those experiences, Jake launched common paper in 2021 to solve the widespread problem of contract standardization. But finding success hasn't been easy.
Omer Khan [00:01:54]:
Their initial product focused on NDAs, but it failed to gain traction. With months of enterprise customer conversations resulting in zero conversions, they were forced to pivot. Jake and his team had to scrap their initial model and refocus on more complex agreements for B2B SaaS companies. Today, common Paper is a seed stage company with a team of eight people. They have 140 paying customers so far, and thousands of companies have used their platform to close deals worth tens of millions of dollars.
Omer Khan [00:02:27]:
In this episode, you'll learn how Jake navigated the rollercoaster of startup life from the grueling early years to a successful exit, and why persistence is crucial in entrepreneurship. What led Jake to pivot Common Paper's focus, and how recognizing when to change direction can be vital for your startup success. We also talk about why Jake chose to make valuable resources available for free and how this counterintuitive approach might benefit your own go to market strategy.
Omer Khan [00:02:57]:
We also talked about how Jake leveraged his past experiences to build a more resilient business model and why learning from both failures and successes is critical for founders and what unique customer acquisition strategies Common Paper employed and how you can adapt these methods to grow your own B2B SaaS company. So I hope you enjoy it. Jake, welcome to the show.
Jake Stein [00:03:18]:
Thanks so much for having me.
Omer Khan [00:03:19]:
My pleasure. Do you have a favorite quote, something that inspires or motivates you that you can share with us?
Jake Stein [00:03:25]:
Yeah, I love. There's a particular quote from Warren Buffett and it's not necessarily what you'd expect from him, but it's don't save sex for old age, which is. It's actually career advice. So if there's something that you want to do, there's no time like the present. And don't spend your life preparing for something that you might be able to do right now.
Omer Khan [00:03:45]:
I love that. I love that so much. Anyway, this could become a therapy session. I could start talking about all the things that I wish I had done sooner, but. Great, great one. So tell us about Common Paper. What does the product do? Who's it for? What's the main problem you're helping to solve?
Jake Stein [00:04:05]:
Yeah, so who we're for and what we're trying to solve is B2B software companies and specifically their contracts with their customers. It's a problem that I encountered a bunch of times in my career. There's two pieces to how we help. One is standardization of the contracts themselves. So we create open source standard contracts, sort of like the safe but instead of for fundraising for sales. And then the other piece of what we do is build software for managing those contracts.
Jake Stein [00:04:36]:
So proposing negotiating, getting them signed, getting paid for them once they are signed, and keeping track of all the terms with all the different customers.
Omer Khan [00:04:44]:
Give us a sense of the size of the business, where are you in terms of customers, revenue team, all that stuff.
Jake Stein [00:04:51]:
Sure, yeah. So we're a seed stage company with eight people. We have 140 paying customers. Hundreds and thousands of revenue. We have hundreds, actually. Take that back. Thousands of companies that have used Common Paper to close deals with their customers and tens of millions of dollars of deals have been closed on our platform.
Omer Khan [00:05:13]:
Common paper was founded 2021. But this story that we're going to tell our audience starts back in 2018, 2008, when you and Bob Moore, who I interviewed on episode 396, founded a business called RJ Metrics. It's a really interesting story and the journey that you guys went on and how you ended up exiting that business and then spinning off a feature which turned into be even more successful than the rest of the business that you had sold. And when I interviewed Bob, he kept on talking about you.
Omer Khan [00:06:06]:
We'd talk about something that happened, he'd say, well I got to give Jake credit for that. And then something else is like, well, Jake was the guy who really did that. And Jake kind of helped me with this and he was the level headed person and he's the meditator and all of this stuff. And I was like, okay, he's mentioned Jake so many times. I should just get Jake on the show and hear your side of the story. And obviously what you're doing now, all
Jake Stein [00:06:31]:
my payments to Bob for promotion fees really paid off.
Omer Khan [00:06:35]:
So tell us the story. I mean we'll do a condensed version just so people who haven't heard Bob's interview can get a flavor of the story. And if they want to dig deeper, they can go and listen to episode 396.
Jake Stein [00:06:50]:
Sure, yeah. So Bob and I met working at our first job at a college at a VC firm. This actually before 2008, VC firm called Insight Venture Partners, doing basically all the junior stuff that you do, trying to find deals, trying to help the partners do due diligence. And RJ Metrics came out of an idea that Bob actually had around productizing some of the analytics work we were doing for the portfolio.
Jake Stein [00:07:17]:
And so we left in 2008, started RJ Metrics and the business went through a couple iterations but ultimately we focused on business intelligence data analytics targeted primarily at e commerce businesses. And this was really the heyday of new DTC e commerce businesses. And we had, it was a slow start. We didn't take a salary for the first year and a half. We didn't fundraise for the first three years.
Jake Stein [00:07:44]:
So we really just working out of his attic trying to get customers and then eventually getting a crummy office, convincing someone to quit their excellent job to come join us and just sort of working from there. Eventually we got product Market fit, had some really amazing customers. We had a phenomenal team that we joined us and there just weren't that many startups in the Philadelphia area at that point. And so I think we were able to sort of punch way above our weight in terms of who we hired.
Jake Stein [00:08:14]:
And my current co founder at Common Paper, Ben is one of the people that we hired that I got to meet through that process. And we ultimately ran that business until 2016 when it was acquired by Magento, who was our biggest partner. They're an E commerce shopping cart platform, sort of a open source Enterprise focused version of Shopify. That company, Magento, was ultimately acquired by Adobe. And so, you know, RJ Metrics is now a subsidiary of a subsidiary of a very large company.
Jake Stein [00:08:47]:
But as always happens with these sorts of things, there's a lot of twists and turns and ups and downs. And I mentioned we got product market fit. Ultimately we sort of lost it at various points. So we were a rocket ship then we were not so much a rocket ship. Then we had some good ideas and then we lost it. Ultimately what we found was we created this small second product which was oriented around a new way of doing analytics rather than everything sort of bolted together.
Jake Stein [00:09:17]:
The idea was you get a bunch of different tools that are each really good at one specific thing. For the computer scientists in the audience, it's more of like the UNIX philosophy, like small tools that do one thing really well. And it eventually came under the name of the modern data stack. And this feature that we had created for, that we thought had a really bright future. So we, when we were selling that original business to Magento, we spun off this, this other piece and rebranded it and called this Stitch.
Omer Khan [00:09:47]:
Let's talk about Stitch in a second, because the RJ Metrics piece, you talked about sort of finding product market fit and then sort of losing, losing it and so on. So from what I recall, the first three years of that business, 2008 to 2011, I guess you, you guys bootstrapped. It was a struggle finding customers. You were just, you know, it was about just getting enough revenue to stay afloat. Then eventually through that perseverance in 2012, you started to get traction and customers and feel like you had product market fit.
Omer Khan [00:10:37]:
And then I can't remember exactly what happened, but. There was something that happened which kind of made the architectural decisions that you'd made with the product a bit more irrelevant, I guess. Is that what.
Jake Stein [00:10:58]:
Yeah, that's exactly right. So, yeah, there's, you know, with all these things there's always a lot of moving pieces and it's complicated, but in this case there's like a pretty clear before and after moment. And it's when Amazon Web Services launched Redshift, which was a cloud hosted managed data warehouse. There had been many data warehouses before Vertica Netezza, lots of other things, but this was the first one that in your AWS console you could just spin up and have working in like a minute or two.
Jake Stein [00:11:29]:
All of a sudden there were already some competitors of ours, companies like Looker and Mode, which were primarily focused on the front end, like the Dashboard of what you look at. And they pushed all the work down to the database and common paper. We prided ourselves on being not common paper, sorry, RJ Metrics. We prided ourselves on being much deeper than folks like that. We had the data ingestion, we had the data transformation. We managed a warehouse data warehouse for you.
Jake Stein [00:12:00]:
And we built out the visualization layer and all those things were really tightly integrated together, which had a bunch of benefits. Like we could get you up and running super fast with very little work on your part. And we also knew all about these e commerce businesses, so we knew what kind of reports they wanted to have. So the first time they logged in, it was all working and all there.
Jake Stein [00:12:19]:
But all of a sudden, when Redshift existed, anybody in the world could get a much better data warehouse than the one that we had slaved over instantaneously. And our product did not work with Redshift on that day. So folks like Looker and Mode, they could just point their front end visualization and analytics layer at Redshift Instead of at MySQL and all of a sudden their product had superpowers and our product did not. And we had to go through a really long process to sort of decouple ourselves from our homegrown solution to that.
Jake Stein [00:12:56]:
And that was part of a broader shift in the industry of when I talked about the Unix philosophy before, going from these big tightly coupled stacks of tools together to picking one thing for the analytics, one thing for the data ingestion, one thing for the visualization, and sort of being able to mix and match those tools together.
Omer Khan [00:13:14]:
So it was three years of just trying to get this startup off the ground. Then eventually year four things start to happen and you're growing. That lasts for a while and then suddenly things flatline and it doesn't look like this is going anywhere. Things get pretty tough by 2015 that you guys had to do some layoffs, right?
Jake Stein [00:13:44]:
That's right. Yeah, we. And this is ultimately a mistake that Bob and I made where we had a sales model that sort of assumed some things around the business. And we created this team for sourcing new business. And it was traditional. You got AES, you got SDRs. And as we started growing in the time when we did have really strong product market fit, all the metrics look great, we invested a dollar, we got way more than a dollar out. It was like sort of the.
Jake Stein [00:14:21]:
In our analytical minds, we're like, okay, this is the green light. This is what everybody is going for. And our investors were like, yes, do it, you've got it. Go. And so we really staffed up that team and we had some really aggressive sales goals. And then after another quarter or two, the metrics of that team got somewhat worse, but not like terrible. It was like, okay, this is still ROI positive, but in order to meet our really aggressive sales goals, we would actually need significantly more people.
Jake Stein [00:14:53]:
And we thought, okay, if we need more people, that's fine. The math still works. So let's go from aggressive hiring to really aggressive hiring and then fast forward another quarter or two after that. All of a sudden the metrics got way worse. And all of a sudden the math didn't work at all. And in addition to it being harder to acquire a customer, we were also like our churn rate was ticking up and we just sort of had to look each other and the business in the eye and say, we messed this up.
Jake Stein [00:15:27]:
And this, given the current reality of the business, we are staffed incorrectly for it. And around this time, this small second product called Stytch, was in its early days, but had really promising characteristics. And that was a product that was, it was totally product led. Like we had some salespeople that could assist with it, but most of the customers just signed up and used it. So we were like, we have this fast growing new thing that requires a different staffing model.
Jake Stein [00:15:54]:
We have this existing thing where we now have the wrong staffing model if we want this business to make it. Unfortunately, we have to basically yet to do a layoff. And that was really rough. I mean, it was obviously worse for the people that were impacted by that, but it was definitely the worst day of my professional life.
Omer Khan [00:16:15]:
How many people are we talking about that you guys had to lay off?
Jake Stein [00:16:18]:
So it was 25 people were impacted.
Omer Khan [00:16:23]:
Yeah.
Jake Stein [00:16:24]:
So it was about a quarter of our team.
Omer Khan [00:16:28]:
That's pretty significant.
Jake Stein [00:16:31]:
It was, yeah.
Omer Khan [00:16:32]:
Okay. So you go through that. And so when you get to 2016
Jake Stein [00:16:38]:
and
Omer Khan [00:16:40]:
this acquisition by Magento comes along, I'm guessing you guys are feeling pretty relieved that this is not going to end in a complete disaster, that you'll, you'll walk away with something from what you've been doing for the last eight years.
Jake Stein [00:17:01]:
You're right. And Magento was always on our short list of who we thought might make sense to buy us someday. We had really good relationships with a bunch of people that worked there. There was a clear strategic alignment. They had an unbelievably bad reporting interface. They knew it. I'm not saying throwing shade at them. They were great at other things. And so we were Great at the thing that they were terrible at. And we had a lot of customer overlap, so seemed like a strategic fit.
Jake Stein [00:17:28]:
And also, yeah, as you said, the business was not a rocket ship anymore. So we were not thinking, how do we set this company up to go public? We were thinking, what is the future of this company? And this seemed like a great outcome.
Omer Khan [00:17:42]:
I don't think it's public what you sold RJ Metrics for. Bob described it as an okay exit.
Jake Stein [00:17:51]:
Yeah, I think that's right.
Omer Khan [00:17:53]:
But then he also told me about what happened. Was it with Looker some years later?
Jake Stein [00:18:03]:
Yeah. So Looker, who was one of the competitors I mentioned, who had made some very forward looking architectural decisions that at the time we thought were dumb. And obviously they were right. They, I believe, sold their company for somewhere between two and three billion dollars. And so that was, that was better. That was better. And I mean, you know, they deserve it.
Jake Stein [00:18:28]:
And one of the great things that I've really come to be grateful for is that getting to know like looker people and honestly most of our like, competitors over the years, both at RJ Metrics, Stitch and Common Paper. And like, I genuinely, like, was really jazzed when I saw the Looker thing, like for like a minute I was like. But I. Yeah, I think they executed amazingly and they had some really smart product decisions and a bunch of great people on their team.
Omer Khan [00:18:53]:
Yeah. Okay, so the next chapter is you mentioned Stytch, which was basically a feature in RJ Metrics that you guys spun off into a standalone product. And you said earlier that it was totally product led. This was a very different journey. You went from working full time on Stitch to a pretty decent successful exit in what, under two years?
Jake Stein [00:19:32]:
Yeah, it was slightly over two years, but yes, that's right. It was really an accelerated timeline. And I think one of the advantages we had was just having spent eight years trying things, learning things, having challenges, trying to fix them at RJMetrics, applying all those learnings into Stytch, where we had been selling into a very similar customer base with a similar sort of like trying to learn how to turn all those nos into yeses. So yeah, we officially launched ditch in 2016 and sold the company in 2018.
Omer Khan [00:20:12]:
Okay, and that number is public, correct?
Jake Stein [00:20:16]:
That's a public number Talend disclosed at Talend's, the company that bought us. That was $60 million.
Omer Khan [00:20:21]:
Okay, and then so you were at Talend for a couple of years and then 2021 you founded Common Paper. Where did the idea come from for this latest Business.
Jake Stein [00:20:34]:
Yeah. I feel like I've been thinking about what would eventually become common paper for basically my entire career. So in the early days of RJ Metrics, I was much more on the go to market side, the customers, sales support and everything like that. And Bob was more on the product side. And we ended up wearing a bunch of different hats over the years, but we had no money in the early days and so I was trying to save money any way that I could.
Jake Stein [00:21:03]:
So I would just like read every contract we got and if I didn't understand it, I would send it out to our lawyers. But like for a lot of these contracts, I just seemed like I kept getting the impression over and over again, like all the words in this are different, but it seems like they're all about basically the same thing. And there's like some important things that are different here. But yeah, like why don't we all just say this the same way? And then this happened.
Jake Stein [00:21:29]:
This ended up becoming a very big deal both at RJ and eventually when Stitch layered on a sales motion, we started entirely product led. We eventually had sales that we added for bigger deals. And at both those companies, everything about contracts with customers seemed crazy to me. It slowed down our deals, which is very important. It was expensive to get these contracts negotiated and like it made the relationship with our customer.
Jake Stein [00:21:58]:
Like at a time when I felt like things should be really happy, they've self identified a problem, they believe in our solution, they want to give us money for our product, and then we get in a little fight about whose template we use and we trade red lines. And then after all that, eventually we get the deal signed. And then we actually had to do all the stuff that we promised to do. And that's like, it's not really that hard to keep track of when you have five customers.
Jake Stein [00:22:24]:
But we were fortunate to have some success. And with hundreds of customers or thousands of customers, it's really challenging to keep an inventory of what's in all those PDFs inside all your Dropbox folders. So it was all those problems sort of percolating over the years. And then the final thing that really sort of crystallized it for me, just how this is not just a me problem, this is not something that annoys me, but this is more pervasive.
Jake Stein [00:22:51]:
After the Talend acquisition, I was attending their sales kickoff where their entire sales team, plus the executive team goes to a ski resort or something like that, talks about what's coming for the year. I was on a panel with the other members of the exec team and the general counsel was talking about what his team was focused on and he made just sort of an offhand comment at the end like, oh, and we're going to release a new version of our msa.
Jake Stein [00:23:17]:
It'll be a little simpler and well, you know, bring it, bring it down to like 18 pages. And then spontaneous standing ovation from the sales team and the like. GC for a second thought he was like being punked. He was like, what is going on? But there was so much pent up frustration with their sales contract and how long it took. So anything that would streamline that was something they were super excited about. And I was like, okay, this is not just a me problem, this is an everybody problem.
Omer Khan [00:23:44]:
Yeah, this is funny. How is column paper different from things like Docusign and those types of products?
Jake Stein [00:23:54]:
DocuSign is like an amazing company. They built this really big business and the world is much better for the fact that we are now signing contracts online rather than FedExing around dead trees. That I would say DocuSign is, you know, they now have some other product, but they're primarily an E signature company and they're completely horizontal. Like you can upload your sales contract to DocuSign and get it signed. You can also upload your lease, you can upload your employment contract, you know, anything.
Jake Stein [00:24:26]:
And then effectively you're putting a picture of a signature on top of a picture of a contract. And what that contract about, it doesn't really get impacted. There's all this stuff that happens before the signature and after the signature where the actual contents of that contract are incredibly important. It's deciding what template you're going to use with your counterparty and figuring out are you both okay with that. It's negotiating the specific terms like are we going to have unlimited liability or are we going to have a very small liability cap?
Jake Stein [00:24:53]:
Are we going to have Delaware jurisdiction or California jurisdiction? There's all that back and forth. There's when you're signing it, making sure that what you're signing is actually the thing that you negotiated. And then there's all the things that are downstream from the contract. It's one party paying the other. It's making sure you have the insurance you promise to have, that you have the compliance. And so the difference with common paper is that we are more narrowly targeted at a certain kind of agreement. And specifically B2B software contracts and commercial contracts between vendors and customers.
Jake Stein [00:25:24]:
We provide both the actual standard contracts themselves and we have software that manage those contracts at the level of structured data about the terms. So, yes, we can put a picture of the signature on top of it, but we're much deeper because we're actually enabling both sides to interact with the semantic meaning of that contract rather than just let's put this thing that might as well be a contract about anything else.
Omer Khan [00:25:52]:
You see this opportunity, how did you go about validating this idea? Did you feel like there was already enough from what you had seen? You know, this would effectively be your third. Was it your third startup?
Jake Stein [00:26:09]:
It depends how you count. But also, I did have a landscaping company in high school. That one didn't have an exit.
Omer Khan [00:26:15]:
So. Yeah. How did you go about just getting to the point where you felt confident enough that this was the thing that you were gonna spend the next few years of your life on?
Jake Stein [00:26:24]:
Yeah. So one thing we didn't mention is after I left talend I had, there was about a six month period before we started, before Ben and I started Common Paper. And part of that time my wife and I were taking a road trip and we were camping and, you know, just kind of hanging out. But toward the later end of that time, I was spending more and more time doing customer development on what would become Common Paper. And so, like, I felt passionately about this. This was something that had really bothered me.
Jake Stein [00:26:55]:
And I had some ideas around what the solution looked like, and I had little anecdotes like that talent example I mentioned at sales kickoff. But I wanted to go a lot deeper. And so I had, over the course of that period, more than 100 customer development calls, which is honestly overkill in hindsight. I think it's useful to do customer development, but I think I had too much time on my hands.
Omer Khan [00:27:20]:
You must really like talking to people.
Jake Stein [00:27:22]:
I do. Just this conversation, every other conversation is no fun. But yeah, I talked to salespeople, I talked to attorneys, I talked to finance and operations, talked to a lot of people who had experienced this problem, someone who had tried to solve it. Yeah. Just spent a lot of time trying to understand what everybody's experience was of it and what they had tried.
Jake Stein [00:27:47]:
And that really helped crystallize for me both how widespread it is, the different Personas that are impacted by it, and what the landscape of things were that at least those folks either had done or were hoping to do to address it.
Omer Khan [00:28:03]:
When you launched the first version of Common Paper, was it just focused helping with NDAs? Is that how you started it?
Jake Stein [00:28:15]:
That's right. Yeah. So we, the way that our product and our whole development works is that we actually create one of these standard agreements first. So actually maybe to back up we, we sort of model the standard agreement process after an open source project.
Jake Stein [00:28:31]:
But instead of, you know, software developers contributing code through GitHub pull requests, we have a committee of more than 45 attorneys and they are meeting and sending red lines and responding to surveys about what ought to be in this agreement, what do they hate to see in these kinds of agreement, what are the things that get negotiated, what are the things that are standard. And so that's a multi month process for each agreement that we do. We started this with the simplest agreement, which would be an NDA.
Jake Stein [00:29:01]:
And NDAs are a problem that a lot of people have, but it's rarely like a hair on fire problem. But it was like the thing that we thought we could do the fastest. So that committee came out with an NDA. We sort of built our software around that. We started building the software before they were done with the agreement kind of in parallel. But yeah, version one of the platform was we can help you create NDAs, we can help you negotiate NDAs and we can help you sign NDAs.
Omer Khan [00:29:29]:
And then how did the market respond to that?
Jake Stein [00:29:33]:
It was not a rocket ship of success, would be putting it mildly. Yeah, we had a rough time for a while and like in the early days I think we, I think we maybe had a pricing page just so we could like have something to point to. But like we set up our pricing to make sure that everybody would be free. And so we were trying to get people to use our product. We were not trying to charge anybody. We just like wanted to get feedback.
Jake Stein [00:30:04]:
We were just trying to see like, does this thing work? Does it actually add value? And it was a real struggle to get anybody to use it at all in those early days.
Omer Khan [00:30:13]:
It was a struggle to get people to use the free product.
Jake Stein [00:30:18]:
Correct.
Omer Khan [00:30:19]:
That must have felt great.
Jake Stein [00:30:20]:
It did not feel great. Yeah, it was. I mean, honestly, like, I wish we were like, I wish someone would report a bug. I wish someone would tell us like, you know, because it's hard to keep, you know, trying to improve the product when you don't have any like feedback. And so I think what it really was was that it's just not a big enough problem that we bit off at first.
Jake Stein [00:30:44]:
And I mean that's, honestly, that's the most valuable feedback you can get, which is just that this is not, it didn't matter how good we were going to get at NDAs. And to be clear, the first version of the product wasn't great on any dimension, but I don't think it was. Well, if we just added these three more features around NDAs or if we had just made the UI faster or snappier, it was just not enough. And it was ultimately, it was helpful to continue talking to people.
Jake Stein [00:31:13]:
Some of those people that I talked to in the original conversations, some brand new and trying to see why won't they do it, what is missing there to motivate them to switch what they're currently doing and start actually using our platform.
Omer Khan [00:31:32]:
So what did you learn? Because I think you described one problem, which is it just wasn't a big enough market in terms of that many people out there that wanted to solve this problem. But the people who did want to solve this problem, what do you think was holding them back from using the product? They don't have to pay for it.
Jake Stein [00:31:59]:
Right. So I think it actually, the market of people who need to sign NDAs and who have a pain point around NDAs is actually gigantic. The issue was, at least in the part of the market that we were talking to, which was mostly, you know, B2B software companies, and in those days it was almost exclusively SaaS companies. NDAs were not like the biggest problem they had. And so if we were just solving that one piece of it, they still had to have their other system. They still had to have everything else they were doing.
Jake Stein [00:32:37]:
And like, even if it's a slam dunk on this one thing, it's like, you know, if, I don't know if there's a good analogy, but like, if you had a second computer that was just really good at doing email, like, unless email is your whole job, you're probably not going to be like, switching to another one. Like, you really want to do email on the same computer as you do everything else on.
Omer Khan [00:32:58]:
Got it. Got it. So basically it was like the only people that would use the product at that point were the ones who cared enough about NDAs but didn't have a solution in place.
Jake Stein [00:33:17]:
Exactly. And there are, you know, enterprise enterprises that use NDA only solutions and there are like outsourced services. I've since learned that there's a bunch of things. There's entre there, there's a bunch of stuff that is sort of like a marketplace for getting your NDAs reviewed. But like, those are. First of all, we are not talking to those buyers in the early days and they had these big entrenched things that we were just not ready to.
Jake Stein [00:33:41]:
So even if we had been talking to them, we would not be able to close any of those deals in the early day.
Omer Khan [00:33:46]:
Okay, great. Well, not great, but okay, we've sort of unpacked that. But what did you do next? How did you kind of get past this issue?
Jake Stein [00:33:55]:
So the most important thing we did from there was we tackled a way more complex agreement, so a cloud service agreement, which is basically the sales contract for selling SaaS. And so we jumped to from the simplest thing to what was ultimately basically the most complicated thing. But we sort of realized, like, we need to go for the thing that really matters, and nothing matters more to like the commercial side of a business than the sales contract. And so the committee tackled that as the next agreement.
Jake Stein [00:34:30]:
And we built out our software to handle multiple agreement types to handle the csa, that cloud service agreement. And then that's when we actually did our, like, public launch on Product Hunt. It was only after we had that second agreement and we had some, at least some people doing some things in the product where, like when we, when we couldn't get anybody to do anything, we were like, all right, well, getting, you know, 10 times as many leads isn't going to help.
Jake Stein [00:34:57]:
But once we had the this second agreement type, which was way more work for us, we, we found some people. This was, this was enough for some of them.
Omer Khan [00:35:07]:
So now you've got a product which at least you've got one use case, which is important enough and painful enough that those same people are now at least willing to consider switching over to using common paper.
Jake Stein [00:35:27]:
That's right. And in this case, we actually also did a better job of even getting people to use the standard agreement before the software was ready. So our standard agreements, you know, you can use them in our software. You can also just download a Word Doc or PDF from our site and go. So we went out to a bunch of these people and said, hey, here's this great new contract. It's. That is free. We're also building a platform for managing it, but you can use the contract today.
Jake Stein [00:35:54]:
And we got some more people to use that. So that was more evidence that, okay, this is important enough to motivate behavior change if we have a good solution.
Omer Khan [00:36:02]:
Okay, I know you spent months of doing calls with enterprise customers, and there was a lot of enthusiasm and excitement. And then it led to zero conversions.
Jake Stein [00:36:24]:
Yes. If you want to be precise, your bounce to zero.
Omer Khan [00:36:27]:
So when you say months, like months of conversation, how many roughly people were you talking to? And you know, at that point, what, what was your sense of the opportunity with, with enterprise customers from. Based on what you were hearing from them.
Jake Stein [00:36:45]:
So, you know, my original or our original vision for, for Common Paper was, you know, we would focus on a specific industry, B2B software. And this is something that has applicability from the earliest stage startup to the biggest enterprise. And we still strongly believe that that is true. But one of the things that's very different about how we started Common Paper versus how we started RJ Metrics, for example, we talked before about how RJ Metrics we bootstrapped for the first three years.
Jake Stein [00:37:17]:
So Common Paper, Ben and I raised a seed round before we had a product. It was just a deck. And we went to some investors that we had worked with previously at RJ&Stitch and raise that seed round first. And so we had like created our pitch for investors. And then I, I was doing most of the sales calls.
Jake Stein [00:37:41]:
So I would talk to all these enterprise customers and I would paint this vision of standard contracts and what they enable and how software that's made for them is better and the network effect of standard contracts and how beautiful the world is when you know, because there's other standard contracts that are really valuable. So wouldn't it be great if we, if we had this here and you propose a contract to your counterparty, they already know about it. It's great.
Jake Stein [00:38:04]:
And I had these conversations for maybe six months or so and once people got it, they loved it. Some people got it instantly, some people got it a little later. But as long as they did, like everyone was rooting for us. Everyone was like, yes, that is the vision of the future that I want, I want to live in that future. Please let me know once you have that network effect. Once everybody else is using these standard contracts, I would love to use them then too.
Jake Stein [00:38:33]:
And I sort of took this as yes, they are so in. They love this. And then I would follow up and I'd be like, hey, do you want to deploy this now? Can we help? And you know, they just never really did it. They sort of just like sort of faded away. And I think I wanted to hear yes. And they were saying yes, but they weren't saying yes to yes, I want to use this today. They were saying yes, I believe in your vision of the future.
Jake Stein [00:39:02]:
And the issue was that I was pitching them with that same investor pitch of that future when everyone is using this and the network effect and this is really valuable. But I wasn't really pitching them about like, here is what is in this for you today and here are the things that you're concerned about today and here are the specific resolutions to those today. And here's what's in it. Yeah, here's exactly that.
Jake Stein [00:39:24]:
And once I started drilling into that with these people, then it was extremely obvious that they were like, yeah, we don't want to do this until lots of other people are using it too. We are not going to be early adopters of this, but we're excited about when you get a bunch of other people to be early adopters. And then on the flip side, when I talked to an early stage startup, they were like, oh, wow, you have software and a contract that comes with it. That is great, I'm ready, sign me up.
Jake Stein [00:39:53]:
And then so I was seeing these crazy diverging responses once I was drilling into like, why do you not or do want to do something right now versus like do you believe in this vision of the future? And the vision of the future again is like, I think the right place pitch for a seed stage venture firm before you've built a product. But it's not the right pitch for a customer.
Omer Khan [00:40:17]:
Right, Right. Yeah. Well, actually I had a question about that because I mean, obviously focusing on the specifics is kind of important when you're talking to customers, right? And what problems and how you're going about solving them and and so on. But isn't it when you're talking to enterprise customers, you may not have a lot to offer, especially as a startup early on. And don't you need to compensate for the lack of features by having the vision there as well?
Jake Stein [00:41:03]:
Yeah, absolutely. And I don't mean to say don't talk about your vision. I think I was the main benefit, I was selling to them was a benefit that sort of definitionally wouldn't be there on day one. And so I think having that as the sweetener on like whatever slide 10 of 10 is, I think great. Or maybe, you know, slide 1 of 1 and then, you know, you get into the specifics. I think maybe a better model.
Jake Stein [00:41:34]:
And this is actually, I think this was the third agreement that we built out was the design partner agreement.
Jake Stein [00:41:40]:
And I think what I could have done and what would have worked better with some of these enterprise customers is structuring it as a design partnership where I get them bought in on the vision and then I talk about a program by what specifically I'm going to do and you're going to do and like we're going to have this working relationship where you're going to test out the product, you're going to give me feedback and you're going to tell me up Front if it does A, B and C, that is a product I'm interested in buying.
Jake Stein [00:42:05]:
And we're going to build according to our vision and your specific needs. And hopefully within three months or six months, the product gets to a point where you are actually a regular paying customer. And maybe in recognition of the fact that you're taking an early gamble on us, you get a discount or you get a lot of influence on our roadmap or whatever and maybe you become a reference customer for us. So I think structuring it that way is another great way to do it.
Jake Stein [00:42:28]:
Especially when the product doesn't do anything today it's just an idea. But again I think it's the vision is only one part of it you need to get really into. Like what does that person need to do to get promoted or to hit their budget goal or whatever. And the vision alone is not enough.
Omer Khan [00:42:46]:
Right? Yeah, totally makes sense. So let's talk about customer acquisition. You told us earlier that you have about 140 customers today. I'm sure the first 10, 20, whatever was like anyway, anyhow kind of thing. But in terms of growth channels, like what, what has been successful for you, how have you been able to generate leads and you know, sales, like what's, what's worked? What's worked? What's working right now?
Jake Stein [00:43:22]:
So the biggest thing that is responsible for the biggest source of our customers and the highest converting ones is ungated free products. I would say those products, like one of them is our standard contracts and the other category are these tools for customizing the contract for your particular company. We think about this as they're not necessarily the same as our app. Our app has a free tier. These are things that you don't even necessarily need to sign up for.
Jake Stein [00:44:01]:
You could just go to our website, download the contract or go to the website, answer some questions and then we generate a word doc for you, for example with the answers pre filled in. And this was a big part of our strategy to give a lot away candidly, like try to create a whole lot of value and have that. And it's again very modeled after an open source company where like if you go to mongodb.com, you can download the community version of MongoDB for free and run that and then never give Mongo Inc. A dime.
Jake Stein [00:44:35]:
But they get a bunch of traffic, they get a bunch of a big audience. Some of those people use Mongo for hosting, use the enterprise version and whatnot. So that has always been our strategy. And that's, I would Say, the single biggest thing that has and continues to drive a lot of traffic to our website and get people to sign up and convert to paying customers.
Omer Khan [00:44:52]:
So where are. How are people discovering these? Is it kind of through search?
Jake Stein [00:44:59]:
So there's a decent chunk of people who come through search, and this is actually something that I misunderstood for a big chunk of the company's life, where I thought we were killing it on SEO because we had all this traffic in search and it was growing. It turned out that most of that traffic, that search traffic, is branded, where it's people searching for common paper or common paper contracts or something like that, which is awesome. And I think that's basically brand. It's word of mouth.
Jake Stein [00:45:30]:
It's people being sent the contract, seeing it's from us and saying, oh, cool, I want to check that out for myself. And so that's great. But it's not like our crazy SEO skills.
Omer Khan [00:45:41]:
It's basically people who don't want to type in commonpaper.com.
Jake Stein [00:45:47]:
exactly right, exactly.
Omer Khan [00:45:49]:
And they're like, oh, I just got to go. I think it's like navigational queries or something like that. So that was like, aha. Moment when you're like, oh, all this SEO goodness and organic search traffic we thought we were getting, they kind of already know about us because Google is just helping them get to us again and again. So what did you do to fix that? And were those free products or contracts already on the site at that point?
Jake Stein [00:46:25]:
They were. They were not on the site in, I think, a really ideal form because a lot of the stuff is like, you can download a Word Doc, you could download a PDF, which is, if you're going to. Because our original mental model is okay. You don't want to use our software. That's great. We're going to give you it in the format that you can just upload into DocuSign or there's a million other contract tools out there. And that's great. We want people to use the contracts and other tools as well.
Jake Stein [00:46:52]:
Upon investigating this further, we were like, oh, wow. Putting it in these file formats is really not great for SEO. It's also not a great user experience like a lot of our target users. I mean, some people, they want to view the contract in Word, and I think lawyers and other power users are that way. But especially if you're a startup founder, you're not thrilled about going into a Word doc to do it. When we decided, okay, SEO is really important to us, we're not doing great on it.
Jake Stein [00:47:23]:
What is A way we can do that, but really provide a great user experience. And that's when we actually were inspired by. You ever look up lyrics on genius.com, used to be called Rap Genius?
Omer Khan [00:47:35]:
No, I'm not sure if it's that site, but yeah, yeah, that kind of stuff. Yeah.
Jake Stein [00:47:39]:
Okay, well, they've got this format where it's like annotations on top of lyrics. They've got the lyrics and then if you click on any of the lyrics, a little bubble pops up and it's like on this line, Kanye is referencing whatever. Or if you look at a Taylor Swift song they have, and I love that it's like the guided tour of the song. Sometimes they even get the artists to do it. But a lot of times it's just random people on the Internet explaining it.
Jake Stein [00:48:03]:
So we thought, could we do that but for our standard agreements? And so we now embed the standard agreement in the webpage, but basically have another column where if you click on the clause in the contract, this other column like auto scrolls and. And we either give you an explanation of this, we have a benchmark report where we'll say whatever. For this term, the most common thing is this. The most second common thing is that we'll say why someone might prefer A or B in this situation and basically give all kinds of context.
Jake Stein [00:48:37]:
So it made the content much easier for Google to crawl and understand. Helps us with SEO. But most importantly, it's just a huge user experience boost for the people that are coming to our site and trying to understand these contracts. So that's been a big push for us to create those. We have those for about half our contracts now. It's an insane amount of work for Tiffany. The attorney on our team is like the person creating that. So she's working through all of them and doing an amazing job.
Jake Stein [00:49:02]:
But that's been really helpful for improving our SEO as well.
Omer Khan [00:49:05]:
I mean, it doesn't sound like it's cheap to create these things that you've got dozens of attorneys on your committee. I'm sure they're not working pro bono for you guys. And then multi month kind of iterations in the time and then anyone can come and take this thing, download it and never even use your product.
Jake Stein [00:49:29]:
One thing I'll clarify. So those attorneys that are like modeled after open source contributors, they are not paid for this. That is something where.
Omer Khan [00:49:37]:
Wow.
Jake Stein [00:49:37]:
Yeah. And so again, Tiffany, the one on our team is sort of like the maintainer of this project. So she's a full time employee of our company. But those folks have day jobs and they're doing this because they want the contracts that they get to be better because they get a lot of nonsense, which I'm eternally grateful to them. And we take them out to fancy dinners every once in a while or send them gift cards as thank yous, whatnot.
Omer Khan [00:49:59]:
I never thought of attorneys as open source contributors, but that's pretty cool.
Jake Stein [00:50:04]:
Yeah, it is extremely cool. And I think not everyone would be into this, but we have a pretty special group that are participating in this. The other thing I'll say though is that like, you're fundamentally absolutely right. Like the, the RJ metrics model where we were in Bob's attic, it was two of us and we just like immediately tried to sell someone on this product that barely existed yet. Common paper doesn't really lend itself to that. There's a lot more upfront investment that is required.
Jake Stein [00:50:33]:
And, you know, the bet we're making is that means that there's a much bigger opportunity in the long run. But yeah, you're right, this is not an easy thing to get going. But yeah, we're starting to avalanche to happen.
Omer Khan [00:50:48]:
Right. So, I mean, from a user's perspective, it sounds pretty good that you've got access to this library of free standard contracts. Do you still have a free plan today with.
Jake Stein [00:51:02]:
We do, yes.
Omer Khan [00:51:03]:
Yeah. So you got. Yeah, of course, you've got tons of free users. Generally. What's that journey look like when somebody discovers these contracts? I'm sure you have probably a lot of people who end up downloading these things and you never see them again until they want the next contract. But are you able to track how someone maybe takes one of these contracts and then eventually becomes a customer?
Jake Stein [00:51:41]:
So if someone just downloads a file, we do not or cannot track them what they do after that, other than occasionally someone will sign up and we might happen to talk to them and we'll say, how'd you find us? And say, oh, XYZ company sent me your sales contract or your NDA. And I was like, oh, cool, I didn't know XYZ company was using us. That's fine. And maybe I'll reach out to them and just say thanks or offer to get on a call.
Jake Stein [00:52:05]:
But yeah, the overwhelming majority of users of the standard agreements we don't know about and we find out about new ones all the time and occasionally we find out about huge ones that have bigger volume than anybody else on our platform, which is really fun. But a subset of the people who go to the standard contract Web pages.
Jake Stein [00:52:24]:
The final step in that contract customization flow that I mentioned, that free ungated product is, hey, you can download a Word doc with their custom template right now or you can click this button and go into common paper and we'll save this template for you and you'll be able to manage it in the platform, you'll be able to sign it, you'll be able to do all this fun stuff. And your first couple contracts are free. You actually get two free contracts a month. Two free sends a month on our free plan.
Jake Stein [00:52:53]:
And so that's our biggest source of new users for the app. One of the things, I don't know if I mentioned it before, after that challenge with the enterprise customers, we really zeroed in on early stage companies and specifically early stage B2B SaaS companies and oriented our go to market around them. That's why we built the design partner agreement for those early stage folks.
Jake Stein [00:53:16]:
And really kind of like we are now on iteration three of our pricing model and there's a free plan, there's a startup plan and there's a growth plan and then there's an enterprise for some of the bigger folks. But when we were designing it, we said, okay, this free plan is for people who maybe are on the verge or have their first customer or two. They just don't have a lot of volume.
Jake Stein [00:53:37]:
It's probably the founder selling and then there's a plan for, okay, it's probably founder selling, maybe one or two salespeople or ops people that are pitching in. And then eventually it's like, okay, you have a sales team, that sales team probably has a manager and you're scaling and those different groups of people have different functionality needs, they have different volume needs. And that's how we think about the monetization of our product.
Omer Khan [00:54:04]:
I really like that most companies, especially with marketers involved, would put the contracts behind some kind of gated thing, right? It's like, yeah, give us your email address, you can download it and then we will harass you until the end of time until you know, you become a customer. I really like the way you've done it. It's very, it's not pushy at all. It's like, here's all the, all these contracts you can get access to, you can, you can see them, you can download them.
Omer Khan [00:54:44]:
Oh, by the way, if you want to use common paper, you can. And it's free. Okay. So it's a very pleasant journey and it's, you know, Do you guys ever sort of, do you feel it's working well enough or do you ever sort of debate about, hey, should we put this stuff behind? You know, should we make this gated content?
Jake Stein [00:55:09]:
So we never consider, should we put, make, make the contracts gated that we feel very confident that like the big bet we're making is that like we are, there are plenty of horizontal contract management companies in the world. We are not, it's not that we're like not building a good tool for horizontal contract management. We are not building a tool that can do that. So like if you have a bunch of leases that you need to manage, you can't do it in common paper.
Jake Stein [00:55:39]:
Like again, you could put signatures on them, but you might as well go use DocuSign. We're making a fundamental bet that these contracts are going to become standards and we've built our software around them in a completely different way than everybody else in the world. And so if you are using the standard agreements, our software is insanely better. And if you're not using the standard agreements, you can't be a customer of ours. So our big bet is can we make these standard agreements standard?
Jake Stein [00:56:10]:
And you know, to the point of, you know, is it working well enough? I think we have an insane amount of space to go, but they've been downloaded tens of thousands of times. Like, I think, I think we have some early indications of success. But yeah, we, we are not thinking, oh, can we get more email addresses if we gate these behind? It's, it's, can we make these things used by everybody as sort of the, the way the safe is for fundraising? Can we be that for software sales?
Omer Khan [00:56:40]:
Aside from these free contracts, is there anything else that's helping you generate leads and sales?
Jake Stein [00:56:51]:
Yeah, sure. The next thing after that that has been pretty important to us is, is content marketing. And specifically we really focused on this. Once we zeroed in on early stage B2B software companies, we were talking to more and more of these founders and just had sort of like a set of questions that kept surfacing over and over again.
Jake Stein [00:57:14]:
And partially because we were answering the same question over and over again, partially because we thought it'd be good content marketing, partially also because I wanted to ask a bunch of other people, like, I know my answer to that, I know our team's answer to that, but very far from having all the wisdom under one roof. So we've created some how to guides, some explainers for what kind of contract you might need depending on your go to market model, your stage, how to run a design partner program, things like that.
Jake Stein [00:57:47]:
Where I've now sent those links to probably more than 100 people who've asked me the question because we keep getting the question asked but we used to just sort of explain it live. So those have been really valuable lead gen assets for us as well. Those things are what organic, non branded organic search traffic we get is mostly to those things. But yeah, that's been a powerful lever.
Omer Khan [00:58:11]:
All right, I could keep going on but we should wrap up. So let's get on to the lightning round. I've got seven quick fire questions for you. What's one of the best pieces of business advice you've received?
Jake Stein [00:58:24]:
So one of the best pieces for sure it comes from my dad and he said basically often the best way to make more money is to take a pay cut. And he did this in his career where he's an attorney, different kind of attorney, but basically had a really nice job, well paying, stable and quit to start like a little two person law firm with his former professor from law school who at another point was his boss and took a gigantic pay cut to do that.
Jake Stein [00:58:59]:
And ultimately it worked out great and they had a great career together. And I think that's definitely top of mind for me where like I had a really nice, well paying job right out of college and then took 100% pay cut to, you know, joined Bob and do RJ metrics. And then similarly it was making a nice living at Talend and then left that and started Common Paper with Ben. So that really resonates with me.
Omer Khan [00:59:20]:
Yeah, I love that. What book would you recommend to our audience and why?
Jake Stein [00:59:24]:
The Lessons for Corporate America. It's like the consolidated excerpts from Warren Buffett's Letter to Shareholders. I've read that book. I don't know, probably three or four times. Best book on business I've ever read.
Omer Khan [00:59:34]:
What's one attribute or characteristic in your mind of a successful founder?
Jake Stein [00:59:39]:
Just not giving up, often irrationally. Like. Yeah, the more you can be like Rocky Balboa.
Omer Khan [00:59:47]:
Well, you're a Philly guy, right?
Jake Stein [00:59:48]:
I'm a Philly guy, yeah. If you're willing to not give up even if you're getting punched in the face.
Omer Khan [00:59:54]:
What's your favorite personal productivity tool or habit?
Jake Stein [00:59:58]:
I'm pretty simple. I make to do lists a lot. I take a lot of notes and like it's partially for productivity, partially for anxiety reduction. But at the end of every day I like look through my to do list from that day, see which things are crossed out. I make my to do list for the next day and then so just every day when I start, I've got that, that list and then at the beginning of the day, I'm prioritizing stuff. Yeah, it's helpful for me.
Omer Khan [01:00:20]:
What's a new or crazy business idea you'd love to pursue if you had the time?
Jake Stein [01:00:24]:
Yeah, if I had the time. I would love to figure out a way to get I95 out of Philadelphia. I want to reroute it around the city. I think real estate is so valuable in the city and I think this is the same in some other cities, but it's so much cheaper outside the city. There's an amazing arbitrage opportunity and I think it would make everybody's life a lot better.
Omer Khan [01:00:44]:
What's an interesting or fun fact about you that most people don't know?
Jake Stein [01:00:49]:
I'm really into ping pong. And in fact, when I was younger, I was ranked from New Jersey and I was the 44th ranked table tennis player under 21 in New Jersey.
Omer Khan [01:01:01]:
Nice, nice. So that's a pretty serious player.
Jake Stein [01:01:06]:
Yeah. And in fact, I've got behind me. I don't know if you can see this. There is a ping pong paddle printed on it. Is Warren Buffett playing ping pong?
Omer Khan [01:01:13]:
No. You combined your two loves.
Jake Stein [01:01:18]:
What more could you possibly have?
Omer Khan [01:01:19]:
How cool is that? And finally, what's one of your most important passions outside of your work?
Jake Stein [01:01:25]:
I really enjoy meditation. It's really helpful for me. I got out of it for a little while, but I've recently refound my practice and yeah, that's really important to me.
Omer Khan [01:01:34]:
Is there a kind of meditation you do or are you just a guy who just, you know, like, close your eyes and that's it and like, what's the deal?
Jake Stein [01:01:43]:
Yeah, I think the tradition I've studied the most is just is Vipassana. I do twice a day. One day is solo. I just go into our back garden, look at flowers and concentrate on my breath. And then I also in the evenings, I typically use the Sam Harris Waking up app. I find his guided meditations get me in a good spot.
Omer Khan [01:02:05]:
Have you been on those Vipassana retreats?
Jake Stein [01:02:07]:
I signed up for one and then Covid happened and so they canceled the retreat. They did a zoom version, just like a one I think I signed up for. I don't remember. It was three or five days. So I hope to go on one eventually. But since then we've had our first kid, my wife and I, so that complicates going away for longer periods.
Omer Khan [01:02:31]:
I meditate every day or at least try to I've probably been doing it for about 15 years. Have these moments where I fall off the wagon and then get back on again. My wife has talked a lot about going on one of those Vipassana retreats. I'm not sure I'm that that kind of there yet. It feels like pretty advanced stuff to be able to do for that many days.
Jake Stein [01:02:55]:
But I'll just say, and you probably know people who have done it too, but from the people I've heard from, it's 100% satisfaction rating. Basically, I have a handful of friends who've been on them. There's a tremendous selection bias, obviously the people who go on those. But yeah, I hope they do it.
Omer Khan [01:03:15]:
Love it. Great. Well, thanks Jake, for joining me and retelling part of the story, but also helping us understand your journey with Common Paper. And I really appreciate you sharing a lot of the struggles that you've had along the way and just the way we were able to unpack them and hopefully give listeners some useful insights that will make a difference for them and for other founders who are maybe struggling with those things. So I appreciate you doing that.
Omer Khan [01:03:49]:
If people want to learn more about Common Paper, they can go to commonpaper.com and if folks want to get in touch with you, what's the best way for them to do that?
Jake Stein [01:04:00]:
Yeah, I'm just jakeommonpaper.com they can shoot me an email or I'm Akestein on Twitter.
Omer Khan [01:04:06]:
Sweet. Thank you so much. Appreciate you joining me and I wish you and the team the best of success.
Jake Stein [01:04:11]:
Thank you so much for having me. This is a lot of fun. Cheers.
