Perseverance in SaaS: Navigating Pivots, Exits, and New Ventures – with Jake Stein [404]

[00:00:00] Omer: Jake, welcome to the show.

[00:00:01] Jake: Thanks so much for having me.

[00:00:02] Omer: My pleasure. Do you have a favorite quote, something that inspires or motivates you that you can share with us?

[00:00:08] Jake: Yeah, I, I love, there's a particular quote from Warren Buffett and it's not necessarily what you'd expect from him, but it's it's don't save sex for old age which is, it's actually a career advice.

[00:00:18] So if there's something that you wanna do there's no time like the present and don't don't spend your life preparing for something that you might be able to do right now.

[00:00:25] Omer: I love that. I, I love that so much. Anyway, it could, this could become a therapy session. I could talk, talking about all the things that I wish I had done sooner, but great, great one.

[00:00:35] 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?

[00:00:42] Jake: Yeah. So who we're, 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.

[00:00:55] There's, there's two pieces to, 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. 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.

[00:01:19] Omer: Give us a sense of the size of the business. Where are you in terms of customers, revenue team, all that stuff.

[00:01:26] Jake: Sure. Yeah. So we're a seed stage company. We have eight people. We have 140 paying customers hundreds and thousands of revenue. We have hundreds actually, I'll just take that back now.

[00:01:37] 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.

[00:01:45] Omer: Common Paper was founded. 2021. But this story that we are gonna tell our audience starts back in 2008 when you and Bob Moore, who I interviewed on episode 396 founded a business called RJ Metrics.

[00:02:10] It's a, it's a really interesting story and, 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, 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.

[00:02:34] We, we, we'd, we'd, you know, we'd, we'd talk about something that happened. He'd say, well, you know, I gotta give Jake credit for that. And then something else he is like, well, Jake was the guy who really did that, and Jake kind of helped me with this and, and he was the levelheaded person and he's the meditator and all of this stuff.

[00:02:51] And I was like, okay, this is like, he's, he's mentioned Jake so many times. I should just get Jake on the show and, and, and hear your side of the story and obviously what you are doing now.

[00:03:00] Jake: All, all my payments to Bob for promotion fees really paid off.

[00:03:03] Omer: Yeah. So, so tell us the story. I mean, I, we'll, we'll, we'll do a condensed version just so people who haven't heard Bob's interview can, can get a, you know, a, the, a flavor of the story and if they want to dig deeper, they can go and listen to episode 396.

[00:03:19] Jake: Sure. Yeah. So, bob and I met working at our first job at a college, at a VC firm. This was actually before 2008. A VC firm called Insight Venture Partners doing basically all the junior stuff that, that you do, trying to find deals, trying to help the partners do due diligence. And RJ metrics came out of an idea that, that Bob actually had around productizing some of the analytics work we were doing for the portfolio.

[00:03:42] And so we, 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, you know, new D two c e-commerce businesses. And we had, you know, like we, we.

[00:04:03] It, it was a slow start. You know, we didn't take a salary for the first year and a half. We didn't fundraise for the first three years, so we really just working out of his attic trying to get customers and then, you know, eventually getting a crummy office convincing someone to, to quit their excellent job, to come join us and just sort of working from there eventually we, we got product market fit.

[00:04:22] Had some really amazing customers. We had a phenomenal team that, that we joined us and like there just weren't that many startups in the Philadelphia area at that point. And so like, I think we were able to sort of, I. Punch way above our weight in terms of who we hired. And my current co-founder at Common Paper, Ben is, is one of the, the people that we hired that I got to meet through that process.

[00:04:42] And we, we ultimately ran that business until 2016 when it was acquired by Magento, who was our biggest partner there, 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, you know, a subsidiary of a subsidiary of a very large company.

[00:05:05] But as always happens with these sorts of things, there's a lot of, you know, twists and turns and ups and downs. And I mentioned we got product market fit. Ultimately, we sort of lost it at, at various points. So, you know, 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.

[00:05:20] And ultimately, I, what we found was we, we created this small second product, which was oriented around a new way of doing analytics rather than everything sort of bolted together. 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.

[00:05:40] It's more of like the Unix philosophy, like small, 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.

[00:06:02] Omer: Let's talk about Stitch in a second because the RJ metrics piece, you, you talked about sort of finding product market fit and then sort of losing, losing it and, 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.

[00:06:29] 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, and, you know, feel like you had product market fit. And then I can't remember exactly what, what happened, but there, there was there was something that happened, which, which kind of made, made the sort of the, the sort of the archite textual decisions that you'd made with the, with the product.

[00:07:06] A bit more irrelevant, I guess. Is, is that what.

[00:07:09] Jake: Yeah, that's exactly right. So yeah, there's, you know, with all these things there, 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.

[00:07:25] There had been many data, 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. All of a sudden you know, there, there were already some competitors of ours, companies like Looker and Mode, which were primarily focused on the front end, like the dashboard of, of what you look at, and they pushed all the work down to the database and Common Paper.

[00:07:52] We, we were much, you know, we, 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, a data warehouse for you. And we built out the visualization layer.

[00:08:07] 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.

[00:08:24] 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, you know, MySQL.

[00:08:45] 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. And that was part of a broader shift in the industry of like 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.

[00:09:16] Omer: 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 flat line 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?

[00:09:46] Jake: That's right. Yeah. So we. We, and this is, you know, ultimately a mistake that, that Bob and I made where we had a sales model that sort of assumed some things around the business. And we created this, this team for sourcing new business. And it was, you know, traditional, you know, you got AEs, you got SDRs.

[00:10:06] And as we started growing, you know, in those, 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, you know, sort of the, in our analytical minds we're like, okay, this is, this is the green light.

[00:10:23] This is what everybody is going for. And our investors were like, yes, do it. You've, 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, 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.

[00:10:50] And we thought, okay, if we need more people, that's fine. The, the, 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.

[00:11:07] And in addition to it being harder to acquire a customer we were also, like, our churn rate was sticking up, and we just sort of had to, you know, look our, look at, look each other and the business in the eye and say like, you know, we, we messed this up. And you know, like this, this given the current reality of the business, we are staffed incorrectly for it.

[00:11:28] And around this time, this small second product called Stitch was in its early days, but had really promising characteristics. And that was a product that was, it was totally product led. Like we, 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.

[00:11:49] We have this existing thing where we now have the, the wrong staffing model. If we want this business to make it. Unfortunately, we have to basically yet to do, do a layoff. And that was really rough. I mean, I mean, it was obviously worse for the people that were impacted by that, but it was, you know, definitely the worst day of my professional life as it's yeah.

[00:12:08] Omer: How, how many people are we talking about that you, you guys had to lay off?

[00:12:11] Jake: So it was 25 people were impacted. Yeah, so it was about about a quarter of our team.

[00:12:19] Omer: That's pretty significant.

[00:12:22] Jake: It was, yeah.

[00:12:23] Omer: Okay. So the, you go through that, and so when you get to 2016 and this, this acquisition by Magento comes along, I'm guessing you guys are feeling pretty relieved that this is not gonna end in a complete disaster, that you, at least you'll, you'll, you'll walk away with, with something from.

[00:12:49] From what you've been doing for the last eight years.

[00:12:51] Jake: That, that you're, you're right. And Magento was always on our short list of like who we thought might make sense to by us someday. There were, we had really good relationships with a bunch of people that worked there. There was like a clear strategic alignment.

[00:13:04] They had an unbelievably bad reporting interface and they knew it, you know, I'm not saying, you know throwing shade at them like that was, they were great at other things. And so like, 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.

[00:13:18] 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, you know, what is the, the future of this company? And this seemed like a great, a great outcome.

[00:13:32] Omer: I don't think it's public. What you sold RJ metrics for, Bob described it as an okay exit.

[00:13:40] Jake: Yeah, I, I think that's right.

[00:13:42] Omer: But then he also. Or told me about what happened, I think, was it with Looker some years later?

[00:13:53] Jake: Yeah. So Looker, who was one of the competitors I mentioned who had made some very, you know, forward-looking architectural decisions that at the time we thought were dumb, and obviously they, they were right.

[00:14:03] They I believe sold their company for somewhere between two and $3 billion. And so that was that was better. That was better. And, and I mean, you know, they, they deserve it. And, and the, 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 Metric Stitch and Common Paper.

[00:14:24] 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, they executed amazingly and they had some really smart product decisions and a bunch of great people on their team.

[00:14:37] Omer: Yeah. Yeah. Okay. So the next chapter is you, you mentioned Stitch, which was basically a, a feature in RJ metrics that you guys spun off into a standalone product.

[00:14:54] And you, you just said earlier that it was totally product led. This was a very different journey, right? I you, you went from like working full-time on Stitch to at a, at a pretty decent successful exit in what, under two years?

[00:15:12] Jake: Yeah, it was, it was slightly over two years, but but yes, that, that's right.

[00:15:16] 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 RJ metrics, applying all those learnings into Stitch where we had been selling into a very similar customer base with a similar sort of like, oh, trying to learn how to turn all those nos into yeses.

[00:15:42] So yeah, we, we officially launched Stitched in 2016 and sold the company in in 2018.

[00:15:49] Omer: Okay. And that number is public, correct?

[00:15:52] Jake: That that's a public number. Talend disclosed it, Talend's the company that bought us, and that was $60 million.

[00:15:57] Omer: Okay. And then, so you were at Talend for a, a couple of years, and then 2021, you, you founded Common Paper.

[00:16:04] Where did the idea come from for this, this latest business?

[00:16:09] Jake: Yeah, I 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, you know, much more on the, the go to market side, the, the customers sales support and everything like that.

[00:16:25] And Bob was more on the, on the product side. And we ended up, you know, 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 anyway that I could. 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.

[00:16:40] 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, like why don't we all just say this the same way?

[00:16:57] And, and then this happened. 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, for bigger deals. And at both of those companies. Just the, everything about contracts with customers seemed crazy to me.

[00:17:15] Like it slowed down our deals, which is very important. It was expensive to get these contracts negotiated. And, and like it made the relationship with our customer like at a time when I felt like things would be really happy. They, they've self-identified a problem. They believe in our solution, they wanna give us money for our product, and then we get in a little fight about whose template we use and we trade red lines.

[00:17:39] 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, and that's like, you know, it's not really that hard to keep track of when you have five customers, but we were, you know, fortunate to have some success and, you know, with hundreds of customers or thousands of customers, it's really challenging.

[00:17:58] To keep an inventory of what's in all those PDFs inside all your Dropbox folder. So it was all those problems sort of like percolating over the years. And then the, the final thing that really sort of crystallized it for me, just like how this is not just a me problem, this is not something that annoys me, but this is more pervasive.

[00:18:16] After the talent acquisition I was attending their sales kickoff where their entire sales team, plus the executive team, you know, goes to a ski resort or something like that, talks about what's coming for the year. And I was on a panel with the other members of the exec team and the general council.

[00:18:32] Was talking about what his team was focused on, and he made just sort of like an offhand comment at the end. Like, oh, and we're gonna release a new version of our MSA it'll be a little simpler and it'll well, you know, bring it, bring it down to like 18 pages. And then spontaneous standing ovation for the sales team.

[00:18:49] And the, 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.

[00:19:06] This isn't everybody problem.

[00:19:07] Omer: Yeah. Yeah. This is funny, funny. How, how is Common Paper different from, you know, things like DocuSign and, and those types of products?

[00:19:16] Jake: DocuSign, it's like an amazing company. They built this really big business and, and the world is much better for the fact that we are now, you know, signing contracts online rather than FedExing around dead trees.

[00:19:28] The, 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.

[00:19:46] And then effectively you're putting a picture of a signature on top of a picture of the 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.

[00:20:03] It's deciding what template you're gonna use with your counterparty and figuring out, are you both okay with that? It's negotiating the specific terms, like, are we gonna have unlimited liability? Are we gonna have a very small liability cap? Are we gonna have Delaware jurisdiction or California jurisdiction?

[00:20:16] 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 promised to have that you have the compliance.

[00:20:31] 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. 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.

[00:20:52] 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 like, interact with the, the semantic meaning of that contract rather than just, let's put this thing that might as well be a contract about anything else.

[00:21:09] Omer: So how, so you, you, you see this opportunity.

[00:21:13] 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 effect be your, your, your third. Where was it? Your third startup?

[00:21:25] Jake: It depends how you count, but, well, also, I did have a landscaping company in high school that one that one didn't have an exit.

[00:21:31] Omer: So, yeah. How, how did, 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?

[00:21:40] Jake: Yeah. So one thing we didn't mention is after I left Talend, I had it was about a six month period before we started com, before Ben and I started Common Paper.

[00:21:50] And part of that time my wife and I were taking a road trip and we were camping and you know, just just kind of hanging out. But all 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, I felt passionately about this.

[00:22:05] This was something that had really bothered me and I had like some ideas around what the solution looked like and I had, you know, little anecdotes like that talent example I mentioned at, at sales kickoff. But I wanted to go a lot deeper. And so I had. Over the course of that period, more than a hundred customer development calls, which is honestly overkill in hindsight.

[00:22:27] Like I, I think it's useful to do customer development, but I, I, I think I had too much time on my hands. You must really like talking to people. 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.

[00:22:42] Talked to a lot of people who had experienced this problem, someone that 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. And that really helped crystallized for me both how widespread it is, the different personas that are impacted by it.

[00:23:00] And you know, what, what the landscape of things were that at least those folks either had done or were hoping to do to, to address it.

[00:23:08] Omer: When you, when you launched the first version of Common Paper. It was, it was it just focused on helping with, with NDAs? Is that how you started it?

[00:23:18] Jake: 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.

[00:23:27] So actually maybe to, to back up, we, we sort of model the standard agreement process after an open source project. 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?

[00:23:53] 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 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.

[00:24:12] 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.

[00:24:29] Omer: And then, and then how, how, how did the market respond to that?

[00:24:32] Jake: It was not a rocket ship of success would be putting it mildly. Yeah. We, we had a, 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, I. Have something to point to, but like we set up our pricing to make sure that everybody would be free.

[00:24:54] 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. 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.

[00:25:09] Omer: It was a struggle to get people to use the free product.

[00:25:14] Jake: Correct.

[00:25:15] Omer: That must have felt great.

[00:25:16] Jake: It did not feel great. Yeah, it was I mean, honestly, like, I wish we were like, I wish someone would put a bug. I wish someone would tell us. Like, you know, because it's, it's hard to keep, you know, trying to improve the product when you don't have any like, feedback.

[00:25:31] And so I, I think what it really was was that, you know, we had. It's just not a big enough problem that we bid off at first. And, and I mean, that's, you know, honestly, that's the most valuable feedback you can get, which is just that this is not it. It didn't matter how good we were gonna get at NDAs.

[00:25:46] 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 snap year, it was just not enough. And it was ultimately you know, and it was helpful to continue talking to people.

[00:26:05] Some of those people that I talked to in the original conversations, some, you know, brand new and trying to see, you know, why, why won't they do it? What, what is, what is missing there to motivate them to switch what they're currently doing and, you know, start actually using our platform.

[00:26:22] Omer: So, so what did you learn, because I, I think there's, you, you described one problem, which is it just wasn't a big enough, you know, market in terms of you know, you know that many people out there that, that wanted to solve this problem, but the people who did want to solve this problem, what was, what, what do you think was holding them back from, from using the product? I mean, they don't have to pay for it.

[00:26:49] Jake: Right. I, so I, I think it actually, the, the market of people who need to sign NDAs and who have a pain point around NDAs is actually gigantic. The, 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.

[00:27:12] 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 had to have. Everything else they were doing. 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, a second computer that was just really good at doing email, like unless email is your whole job, you're probably not gonna be like switching to another one.

[00:27:44] Like, you really wanna do email on the same computer as you do everything else on.

[00:27:47] Omer: Got it. Got it. So, so, so, so basically it was like the, 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.

[00:28:06] Jake: Exactly. And, and there are, you know, enterprise enterprises that use NDA a only solutions, and there are like outsource services.

[00:28:14] I've since learned that there's a bunch of things, there's entra 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 were not talking to those buyers in the early days and. They had these big entrenched things that we were just not ready to.

[00:28:30] So even if we hadn't been talking to them, we would not be able to close any of those deals in the early day.

[00:28:35] Omer: Okay, great. So, well, not great, but Okay. You, you, you know, we, we, we, we've, we've sort of unpacked that, but what did you, what did you do next? How did you kinda get past this issue?

[00:28:44] Jake: So the, the most important thing we did from there was we tackled a way more complex agreement.

[00:28:51] 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.

[00:29:13] And so the committee tackled that as the next agreement. And we built out our software to handle multiple agreement types to handle the, 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 gonna help.

[00:29:44] 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.

[00:29:53] Omer: 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.

[00:30:14] Jake: 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 Docker, 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.

[00:30:34] It's, that is free. We're also building a platform for managing it, but you can use the contract today. 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.

[00:30:49] Omer: Okay. I, I know you, you spent months of doing calls with enterprise customers and there was a lot of enthusiasm and, and excitement.

[00:31:03] And then it led to like zero conversions. Yes. If you wanna be precise, you bounce to zero. Yeah. So like when you say months, like months of conversational, how many roughly people were you talking to and, 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?

[00:31:29] Jake: So, you know, my original or our original vision for, for Common Paper was, you know, we, 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, one of the, one of the things that's very different about how we started Common Paper versus how we started, you know, RJ metrics, for example, we talked before about how RJ metrics we bootstrapped for the first three years.

[00:32:00] 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, you know, worked with previously at RJ and Stitch and, and raised that seed round first. And so we had like created our pitch for investors. And then I I was doing most of the, the sales calls.

[00:32:20] 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 effective standard contracts and how beautiful the world is when, you know, because there's other standard contracts that are really valuable.

[00:32:36] 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. 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.

[00:32:55] Like everyone was rooting for us. Everyone was like, yes, that is the vision of the future that I want. I wanna 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. And I sort of took this as, yes, they are so in, they love this.

[00:33:15] And then I would follow up and I'd be like, Hey, do you wanna 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.

[00:33:34] They were saying, yes, I believe in your vision of the future. 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.

[00:33:56] And here's what's in it. Yeah. Here's, here's exactly that. And once I started drilling into that with these people, then it was extremely obvious that they were like. Yeah, we don't, we don't wanna do this until lots of other people are using it too. We are not gonna be early adopters of this, but we're, we're excited about when you get a bunch of other people to be early adopters.

[00:34:15] 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, I'm ready. Like, you know, sign me up. And then so I, I was seeing these like crazy diverging responses once I was drilling into like, why do you not or do want to do something right now?

[00:34:38] Versus like, do you believe in this vision of the future? And the vision of the future again is like, I think the right pitch for, you know, a seed stage venture firm before you've built a product, but it's not the right pitch for a customer.

[00:34:51] Omer: Right, right. Yeah. The. 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?

[00:35:04] And exact what problems and, and, and how you're going about solving them and, and, and so on. But isn't, isn't it, you know, when, when you're talking to enterprise customers, you know, 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?

[00:35:37] Jake: Yeah, absolutely. And I don't mean to say, don't talk about your vision. I think I was the, 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 like whatever slide 10 of 10 is, I think great.

[00:35:58] Or, or maybe, you know, slide one of one and then, you know, you get into the, the specifics. I think maybe a better model and this is actually, I think this was the, the third agreement that we built out was the design partner agreement. And I think what I, what I could have done and what would've worked better with some of these enterprise customers is structuring it as a, 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.

[00:36:23] And you're going to do, and like, we're gonna have this working relationship where you're gonna test out the product, you're gonna give me feedback, and you're gonna tell me upfront if it does A, B, and C, that is a product I'm interested in buying. And we're gonna build according to our vision and your specific needs.

[00:36:40] 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, 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, you know, become a reference customer for us.

[00:36:56] So I think structuring it that way is another great way to do it, 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, or whatever.

[00:37:14] And the vision alone is not enough.

[00:37:17] Omer: Right. Yeah. Totally makes sense. So let, let's talk about customer acquisition. You, you told us earlier that you have about 140 customers today. I'm sure the first 10, 20, whatever was like any way anyhow kind of thing. But in, in terms of growth channels. Like what, what has been successful for you?

[00:37:43] How have you been able to generate leads and, and, you know, sales? Like, what's, what's worked, what's worked, what's working right now?

[00:37:51] Jake: So the, the biggest thing that has is responsible for the, 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, our standard contracts.

[00:38:07] And the other category are these tools for customizing the contract for your particular company. We, we think about this as, they're not like necessarily. The, the same as our app. You know, our app has a free tier. These are things that you don't even necessarily need to sign up for. You could just go to our website, download the contract, or go to the website, you know, answer some questions, and then we generate like a Word doc for you, for example, with like, you know, the answers pre-filled in.

[00:38:40] And this was a, a big part of our strategy to sort of give, 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 you know, mongodb.com, you can download the community version of MongoDB for free and run that and then never give Mongo Inc a dime.

[00:39:02] 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.

[00:39:20] Omer: So where are how, how are people discovering these? Is it kind of through search?

[00:39:25] Jake: 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 'cause we had all this traffic in search and it was growing.

[00:39:41] 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, something like that, which is awesome. And, and like, I think that's, that's basically brand, it's word of mouth. It's people being sent the contract. Seeing it's from us and saying, oh cool, I wanna check that out for myself.

[00:40:01] And so that's great, but it's not like our crazy SEO skills.

[00:40:06] Omer: It's basically people who don't want to type in Common Paper.com.

[00:40:12] Jake: Exactly. Right. Exactly. And they're like, oh, I just gotta go. Well, I think Right. Navigational queries or something like that. So, so that was like, aha moment when you're like, oh, all this, all this.

[00:40:22] SEO goodness and organic search traffic we thought we were getting, they kind of already know about us. 'cause we, you know, Google is just, you know, helping them kind of get to us again and again. So what, what did you do to, to, to fix that? And it's like, w were those, were those free products or contracts already on the site at that point?

[00:40:45] 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 gonna, 'cause our original mental model is, okay, you don't wanna use our software, that's great. We're gonna give you it in the format that you could just upload into DocuSign.

[00:41:05] 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. 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 wanna view the contract in Word and, and I think like lawyers and other power users are that way.

[00:41:29] But especially if you're a startup founder. You don't, you're not thrilled about going into a Word doc to, to do it. And so when we decided, okay, SEO is is really important to us. We're not doing great on it. What is a way we can do that, but really, you know, provide a great user experience. And that's when we actually we're inspired by.

[00:41:49] You ever look up lyrics on genius.com? It used to be called Rap Genius. No. I, I'm not sure if it's that site, but Yeah. Yeah. That, that kind of stuff. Yeah. Okay. Well, they, they've, 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.

[00:42:06] And it's like, you know, on this line, Kanye is referencing whatever. Or if you look at a Taylor Swift song, it's, you know, they, they have like base. And I love that it's like the guided tour of the song. Sometimes they even get the artist to do it, but a lot of times it's just random people on the internet explaining it.

[00:42:21] 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 we either give you an explanation of this. We have a benchmark report where we'll say whatever for this, for this term, the most common thing is this.

[00:42:46] 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. 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.

[00:43:05] 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. But that's been really helpful for improving our SEO as well.

[00:43:19] Omer: I mean, it doesn't sound like it's cheap to create these things that, that you've got, you know, dozens of. Attorneys on your committee. I, I'm sure they're not working pro bono for, for you guys and then multi-month kind of iterations and the time. And then, and then anyone can come and take this thing, download it, and never even use your product.

[00:43:43] Jake: Well, one thing I'll clarify. So the, those attorneys that are like model after open source contributors, they, they are not paid for this. That is something where Wow. Yeah. And so again, they, 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.

[00:43:58] But those folks have day jobs and they're doing this because they want, they want the contracts that they get to be better because they, it's, they get a lot of nonsense which I'm eternally grateful to them. And we'll, you know, we take 'em out to fancy dinners every once in a while or like send 'em gift cards and as thank yous, whatnot.

[00:44:12] I never thought of attorneys as open source contributors, but that's pretty cool.

[00:44:18] Yeah, it is extremely cool. And, and I think not everyone would be into this, but we have like a pretty special group that that are participating in this, the, 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.

[00:44:37] Yet Common Paper doesn't really lend itself to that. There's a lot more upfront investment that is required. And, you know, the bet we're making is that means that there's a much bigger opportunity in, in the long run. But but yeah, you're right. This is this is not an easy thing to get going.

[00:44:54] But yeah, we're starting to starting the avalanche to happen,

[00:44:57] Omer: right? So, I mean, it's from, from a, from a user's perspective, it sounds pretty good that you've got a access to this library of free standard contracts. You, do you still have a free plan today with We do, yes. Yeah. So you've got, you've got, yeah, of course.

[00:45:13] You've, you've got tons of free users. Generally what's the, what's that journey look like when somebody discovers these contracts? I'm, 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 like, are you able to track how someone maybe takes one of these contracts and then eventually becomes a customer?

[00:45:45] Jake: So if someone just downloads a file, we do not, or cannot track them, you know, what they do after that, other than occasionally someone will sign up and I, we might happen to talk to them and we'll say, how'd you find us? And say, oh, x, y, Z company sent me. Your sales contractor, your NDA and I was like, oh, cool.

[00:46:02] I didn't know X, Y, Z company was using us. That's fine. And then maybe I'll like reach out to them and just say thanks or, you know, offer to get on a call. 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 are like you know, have bigger volume than like anybody else on our, on our platform, which is really fun.

[00:46:21] But a subset of the people who go to the standard contract web pages. They the final step in that contract customization flow that I mentioned, that like free and g product is, hey, you can download a Word doc over their custom template right now. Or you could 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.

[00:46:43] You'll be able to sign, be able to do all this fun stuff. And, you know, your first couple contracts are free. You actually get two free contracts a month two free, like sends a month on our, on our free plan. And so that's, you know, 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.

[00:47:08] Oriented our go to market around them. That's why we built the design partner agreement for those early stage folks. And really kind of like we, we are now on iteration three of our pricing model. And, you know, 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.

[00:47:25] But the, when we were designing it, we said, okay, this free plan is for people who like maybe are on the verge or have their first customer or two, you know, they just don't have a lot of volume. It's probably the founder selling, and then there's a plan for, you know, okay, probably founder selling maybe one or two you know, salespeople or ops people that are pitching in.

[00:47:45] And then eventually it's like, okay, you have a sales team. That sales team probably has a manager and you, you're, you're scaling. And those different groups of people have different, you know, functionality needs. They have different volume needs. And that's how we think about the, the monetization of our product.

[00:48:00] Omer: I, I, I really like that most. Most companies, especially with marketers involved, would put the contracts, you know, 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, I really like the way you've done it.

[00:48:28] 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. Oh, by the way, if you want to use Common Paper, you can, and it's free. Okay. So it's, it's a very pleasant journey. And it's, it's, you know, do you do, 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?

[00:49:03] Jake: So we never consider should we put make, make the contracts gated that we feel very confident that like the, 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.

[00:49:23] 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. Like, again, you could put signatures on them, but like, you might as well go use DocuSign. The, we're making like a fundamental bet that, this, these contracts are gonna become standards and we've built our software around them in, in a completely different way than everybody else in the world.

[00:49:46] And so if you are using the standard agreements, our, 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? And, you know, to, 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.

[00:50:09] 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.

[00:50:28] Omer: A side from these free contracts, is there anything else that's helping you generate leads and sales?

[00:50:38] Jake: Yeah, sure. The, the next thing after that, 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.

[00:51:00] And partially because we were answering the same question over and over again, partially 'cause we thought it'd be good content marketing, partially also because I wanted to ask a bunch of other people. Like, I, I know my answer to that. I know, you know, our team's answer to that, but you know, very far from having all the, the wisdom under one roof.

[00:51:18] So we've created some how-to guides some like explainers for I. 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 where you know, I've now sent those links to, you know, probably more than a hundred people who've asked me the question because we keep getting the question asked, but we used to just sort of like explain it live.

[00:51:43] So th those have been really valuable lead gen assets for us as well. Those things are, you know, what, what organics non-branded organic search traffic we get is mostly to those things. But yeah, th that's been a powerful lever.

[00:51:53] Omer: Alright. I could keep going on, but we, we, we should wrap up. So let's get onto the lightning round.

[00:51:59] I've got seven quick fire questions for you. What's one of the best pieces of business advice you've received?

[00:52:06] Jake: So one of the best pieces for sure, it comes from my dad and he said basically I. Often the best way to make more money is to take a pay cut. And he 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 it like a gigantic pay cut to do that.

[00:52:37] And ultimately it worked out great and they had a great career together. And, and I think that's definitely top of mind for me, where like I had a, you know, really nice, well paying job right outta college and then took a hundred percent pay cut to, you know, join Bob and do RJ metrics. And then similarly it was, you know, making a nice living at Talend and then left that and starting comm paper with Ben.

[00:52:55] So that really resonates with me.

[00:52:57] Omer: Yeah. I love that. What book would you recommend to our audience and why?

[00:53:01] Jake: The, Lessons for Corporate America. It's like the consolidated excerpts from Warren Buffett's letter to shareholders. Like I've read that book, I don't know, probably three or four times, best book on business I've ever read.

[00:53:11] Omer: What's one attribute or characteristic in your mind of a successful founder?

[00:53:15] Jake: Just not giving up often irrationally. Like yeah, the more you can be like Rocky Balboa.

[00:53:22] Omer: Well, you're a Philly guy, right?

[00:53:24] Jake: I'm a Philly guy. Yeah. If you're willing to not give up, even if you're getting punched in the face.

[00:53:27] I

[00:53:28] Omer: love that. What's your favorite personal productivity tool or habit?

[00:53:32] Jake: I'm, I'm pretty simple. I 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.

[00:53:45] 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.

[00:53:53] Omer: What's a new or crazy business idea you'd love to pursue if you had the time?

[00:53:57] Jake: Yeah, if I had the time, I would love to figure out a way I.

[00:54:01] To get I 95 out of Philadelphia. I wanna reroute it around the city. I think real estate is so valuable in the city, and I, I think this is the same in, in some other cities. But it's so much less, so much cheaper outside the city. There's an amazing arbitrage opportunity and I think it would make everybody's life a lot better.

[00:54:17] Omer: What's an interesting or fun fact about you that most people don't know?

[00:54:21] Jake: I am I'm really into ping pong and in fact, I, when I was younger, I was ranked from New Jersey and I was the 44th ranked table tennis player under 21 in New Jersey.

[00:54:31] Omer: Nice, nice. So you're that's, that's a pretty serious player.

[00:54:36] Jake: Yeah. And in fact, I've got b behind me. I dunno if you can see this. There is a ping pong paddle printed on it. Is Warren Buffett playing ping pong?

[00:54:43] Omer: No. You combined your two loves, you know, what more could you possibly ask? How cool is that? And finally, what's one of your most important passions outside of your work?

[00:54:54] Jake: I really enjoyed 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.

[00:55:02] Omer: Do what kind? Is this the 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, what's, what's the deal?

[00:55:12] Jake: Yeah, I think the, the tradition I've studied the most is just, is a pasta. I. I, I do twice a day. One day is solo low. 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 like the Sam Harris Waking Up app. I find his guided meditations get me in a good spot.

[00:55:32] Omer: Have you been on those Vipassana retreats?

[00:55:34] Jake: I signed up for one. And then COVID happened, and so they canceled the retreat. They did like a Zoom version just like a one I was, I think I signed up for I remember it was three or five days. So I, 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.

[00:55:54] Omer: I, I, I meditate every day, or at least try to, you know, 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 personal retreats. I, I'm not sure I, I'm that. That kind of there yet it feels like, you know, pretty advanced stuff to be able to do it for that many days.

[00:56:17] Jake: I'll, I'll just say, and yeah, you probably know people who've done it too, but like I, from the people I've heard from, it's a hundred percent you know, satisfaction rating, basically. Like I, I have a handful of friends who've been on them. There's tremendous selection bias, obviously the people who go on this.

[00:56:32] But yeah, I I hope to do it, so.

[00:56:33] Omer: Love it. Great. Well thanks Jake for joining me and, retelling part of the story, but also helping us understand, you know, your journey with Common Paper. And I, I really appreciate you sharing, you know, a, a lot of the struggles that you've had along the way and, and just, you know, the way we are able to unpack them and, and hopefully give listeners some, some useful insights that will, you know, make a difference for them and for other founders who are maybe struggling with those things.

[00:57:04] So I appreciate you doing that. If people wanna learn more about Common Paper, they can go to CommonPaper.com and if folks wanna get in touch with you, what's the best way for them to do that?

[00:57:16] Jake: Yeah, I'm just jake@commonpaper.com. You can shoot me an email or I'm at Jake Stein on Twitter.

[00:57:21] Omer: Sweet.

[00:57:22] Thank you so much. Appreciate you joining me and I wish you and the team the best of success.

[00:57:26] Jake: Thank you so much for having me. This was a lot of fun.

[00:57:28] Omer: Cheers.