Russ Heddleston - DocSend

DocSend: A Case Study in Product-Led Growth – with Russ Heddleston [273]

DocSend: A Case Study in Product-Led Growth

Russ Heddleston is the co-founder and CEO of DocSend, a SaaS platform that lets you securely share your documents with real-time control and insights.

When Russ was an intern at Dropbox, he found that many people still shared files as email attachments even though it wasn't secure or easy to track. He decided to change that.

Being engineers, Russ and his co-founders wanted to build a product right away, but they resisted the temptation. Instead, they decided to meet with potential customers to get feedback on their product idea, which resonated with a lot of people.

Once they'd had enough customer conversations, they built DocSend as quickly as possible, putting little effort into design or marketing. And to get the word out, they gave away free accounts in exchange for feedback. It didn't take long for DocSend to become a quick success.

But they weren't charging anything for the product. As DocSends' growth continued, the founders realized they needed to change their model. It was hard to keep growing without any revenue, so they created a $10 a month plan and they kept growing.

In 2016, the founders built a sales team to help generate more demand. While it felt like the right move, their sales efforts failed. Eventually, they gave up on doing outbound sales and instead went all-in with a self-serve model just two years later.

The team increased its prices and reworked the product positioning but didn't actually make any changes to the product. Suddenly, their most expensive plan was the most popular. The more they charged, the better they seemed to do with free to paid conversions.

Today, DocSends' growth is driven primarily by word of mouth and SEO, and the team continues to focus relentlessly on building a great product. To date, they've raised over $15 million dollars and have a team of around 55 people.

This story is a great example of how to learn from your mistakes and why product-focused models can succeed. I think you'll find it interesting and insightful in many ways.

In this interview we talk about:

  • Resisting the temptation to build a product and talking to customers instead
  • Continuously improving the product and raising money over the years
  • Why building an outbound sales team failed and why self-serve worked better
  • Lessons on creating a new product category and focusing on horizontal markets
  • Selling to the buyer rather than the end-user
  • Growth channels and acquiring new customers
  • What building a great product means to Russ


Click to view transcript

Omer Khan: [00:00:00] Welcome to another episode of The SaaS Podcast. I'm your host Omer Khan. And this is the 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 talked to Russ, the co-founder and CEO of DocSend a SaaS platform that lets you securely share your documents with real time control and insights.

[00:00:40] When Russ was an intern at Dropbox, he found that many people still shared files as email attachments, even though it wasn't secure or easy to track. And he decided to change that. Being engineers, Russ, and his co-founders wanted to build a product right away, but they resisted the temptation. Instead, they decided to meet with potential customers to get feedback on their idea, which resonated with a lot of people.

[00:01:09] Once they'd had enough customer conversations, they built DocSend as quickly as possible. Without putting much effort into design or marketing and to get the word out, they gave away free accounts in exchange for feedback. It didn't take long for DocSend to become a quick success, but they weren't charging anything for the products.

[00:01:33] As DocSend's growth continued, the founders realized they needed to change their model. It was hard to keep growing without any revenue. So they created a $10 a month plan. And the business kept growing. In 2016, the founders built a sales team to help generate more demand while it felt like the right move, their sales efforts failed.

[00:01:56] Eventually they gave up on doing outbound sales and instead went all in with a self-serve model. Just two years later, the team increased their prices and reworked the product positioning, but didn't actually make any changes to the product. Suddenly their most expensive plan was the most popular one.

[00:02:16] And the more they charged, the better they seem to do with free to paid conversions. Today, DocSend's  growth is driven primarily by word of mouth and SEO. And the team continues to focus relentlessly on building a great product to date they've raised over $15 million. And have a team of around 55 people.

[00:02:40] This story is a great example of how to learn from your mistakes and why product focused models can succeed. I think you find it interesting and insightful in many ways. Russ, welcome to the show.

Russ Heddleston: [00:02:51] Thanks Omer, great to be here.

Omer Khan: [00:02:53] Do you have a quote, something that inspires or motivates you or just gets you out of bed that you can share with us?

Russ Heddleston: [00:02:58] I don't really have a quote necessarily, but something that's inspired me for a long time. It's just, building great software. Like at Stanford, I did a masters in human computer interaction and you know, the cool thing to do is to like go into like operating systems or compilers. But I like to HCI because there's just a lot of software that gets built.

[00:03:18] That's just not the right software. You can usually build it. It's just a question of will they use it? And I just think there is a lot of work to be done in the software world, building great software that people actually like to use.

Omer Khan: [00:03:29] Great. So for people who aren't familiar with doxing, can you just kind of give us the overview?

[00:03:33] What does the product do? Who is it for? And what's the main problem that you're helping to solve?

Russ Heddleston: [00:03:39] Yeah, sure. It kind of depends on who you ask. So we we've got over 15,000 customers for DocSend today. A high level. It's basically just a way to send a link instead of an attachment and see how long someone's reading it.

[00:03:51] And to have security specific to that link around, like who can access it? Who can they forward it to? And the recipient never needs to log into a system. So it's just a better way of sending documents. And we started it because I was like, why are people standing so many attachments? There's so many ways to not send an attachment and people were still sending attachments.

[00:04:09] So we just kept following that thread and it's kind of led us to where we are today with the product. And we always talk about it as a horizontal product that we market vertically. Cause it could be a CFO, it could be a CEO, it could be a salesperson, someone at customer success, someone in banking, lots of different ways to use a product.

Omer Khan: [00:04:25] So DocSend is your second startup, which you founded with your founders, Dave and Tony. But can you tell us a little bit about your first startup?

Russ Heddleston: [00:04:36] Yeah, for sure. So, my first startup was called We bought the name off a guy in like Massachusetts who's just hoarding the domain and as two, two co-founders for that one as well.

[00:04:47] And there were all engineers and I started Pursuit while I was in business school and we raised 500,000 for it, ran it for a little over a year and ultimately ended up selling it to Facebook as a talent acquisition. We shopped at LinkedIn and Facebook. And so it was actually a good outcome to it, but I just learned so much going through that experience.

[00:05:05] Talk about like a year to accelerate learning. I made so many mistakes, but in the end it ended up being just really productive for me. And I was at Facebook for a couple of years running product for the pages team. And then as you mentioned left to start DocSend with Dave and Tony, my two current co-founders.

Omer Khan: [00:05:20] So, how did you guys come up with the idea for DocSend?

Russ Heddleston: [00:05:23] It was an iterative process. Sometimes I talk to founders and I get the sense that like, you know, since the age four, I knew I had to, this was my destiny to solve this problem in the world. And whenever someone has that, I'm like, wow, good for you.

[00:05:36] Like, I don't remember anything about what happened, and they certainly had no such desires. So for me, Dave and Tony, One lesson I took away from the first start-up Pursuit was to really be thoughtful before building something. So as an engineer, there's always a tendency to just get in and start writing code, but then there's a lot of inertia to that.

[00:05:54] So for DocSend even before we knew we were going to work on docs and we basically had a big spreadsheet of a bunch of ideas that the three of us had. And without writing code, we try to like go sell things. We'd go talk to people we'd like really kind of get out in the world. And we just kept knocking items off the list.

[00:06:10] There's like, nah, that idea, that idea. And with DocSend I always say that you can't prove something's a great idea, but you can in a relatively short period of time show that something's probably a bad idea. And so for DocSend we just interviewed enough people where we're like, yeah, this just seems like someone should do it.

[00:06:26] Like, I don't know if this is going to be a huge company or not, but someone, someone should solve this problem. And so after doing that for a few months, we kind of, you know, broke ground and just started writing code.

Omer Khan: [00:06:36] So that's pretty unusual for engineers or developers to do what you just described, which is resist building something. And instead going out and talking to people and trying to figure out if it's it's worth doing, because you know, most of the time it's often easier to build the product. And if you enjoy doing that, it's, it's a natural thing that you can sort of lean into. So where did that sort of mindset come from? Why did you guys take that approach? Had you already learned the lesson the hard way before?

Russ Heddleston: [00:07:11] Yeah, totally. We had each kind of learn this independently, in different ways. Dave and Tony tried to start a mobile game previously that didn't work out. And then as I mentioned with Pursuit, like we had a bunch of ideas on a list for Pursuit, and we decided to just go with the top one there because of our personal experience, but getting a year into it, I realized that it wasn't working.

[00:07:35] And it probably wouldn't work and it wasn't going to work for reasons I should have known at the start. So, you know, starting DocSend. And I was like, okay, let's look before we leap. And you're right, it is kind of uncomfortable for engineers to go out and talk to people. But I remember like one of my co-founders Tony loves cars, really big car fan.

[00:07:53] And so you were thinking like, Hmm, I wonder if we can sell software to like car dealerships. And we went and talked to a few car dealerships and I was like, no, there's no way I want to sell software to car dealerships. They have so many problems that are more important than what we'd be trying to solve for them.

[00:08:09] So, and that's just something we wouldn't have learned unless we actually went and had those conversations.

Omer Khan: [00:08:13] So what was it about DocSend what were you hearing back from, or your potential customers that gave you the, the signal that this is the, this is the thing for us to work on.

Russ Heddleston: [00:08:27] Yeah. So, I mean, for me, the idea came from when I interned at Dropbox while I was in business school back in 2010, and I kind of assumed that, you know, Dropbox had solved the attachment problem where, you know, I used to email my cell attachments, they got rid of that.

[00:08:41] And then I, while I was there, we came up with the link sending model where you can just create a link to a document and send that like, That are no more attachments and people are still sending them. And so, as we interviewed people, it kind of became clear that, you know, if you're using Google or Microsoft, you know, there's just not an easy way there to, to send a link.

[00:08:57] And there's also not a lot of reason to send a link. Like you just don't get much back from it. So we'd give people kind of a menu of like benefits. If we did this, then would you, if it was this meaningful for you with this meaningful for you, and we just heard that, yes, it would be meaningful in a whole bunch of different situations and we'd record the conversations. We transcribe them and we try to pull out common elements, which actually gave us like a pretty decent early roadmap in terms of like what it was that we were building. And there, there was no one hair on fire problem. It was just a collection of benefits that we hoped in total would be sufficient to change people's behavior.

[00:09:30] Which turned out to be true, you know, for some people caring about like, which page is read for how long is super critical for other people, understanding that, Hey, this link was forwarded to these three people. Here's who they are. Here's the LinkedIn profile, you know for some people it's a security element around, you know, like making sure that only these people can see it, but making sure that they don't have to create an account like a Google drive.

[00:09:50] If I, you know, send you an invite you to a document and you don't have a Google account, you have to create a Google account. That's too much work. You're not going to do that. So I'm just going to default to like sending you the attachment. So, you know, we just heard enough consistency in the people we talked to that we were like, yeah, this is a thing that should exist.

[00:10:07] Another thing we did actually was go around and talk to the companies that I thought should be building what DocSend is. So I talked to Microsoft and Google and box and Dropbox, and, you know, the response we got was like, yeah, this is a great idea. I was like, are you going to build it? They're like maybe, maybe in a couple of years.

[00:10:21] And I was like, ah, okay, that's far in the future. And then we got a couple offers to buy us, like as a talent acquisition, which was an interesting, cause I had just been through that and I wanted to create a real business, but I asked them what we'd be working on. And their answer was something totally unrelated to what DocSend was so I was like, wow, they really aren't going to build this.

Omer Khan: [00:10:38] So you pitched the idea of of DocSend solving this problem, and then they wanted you to come and join them and work on something else.

Russ Heddleston: [00:10:48] Correct. Right. Which is like the most definitive way to, for me to be like, yeah, they really aren't going to fill it. I figured I had more to gain than to lose and being upfront with people.

[00:10:57] And what I didn't want to do is I didn't want to like, try to build this thing. And then in a year, like have a really big company. I can't compete with just. You know, do something identical and it was true. I, I learned a lot more and you know, there's definitely a startup fear that I don't think is warranted where your startups will be worried that it becoming we'll copy them.

[00:11:16] Like I was, while I was at Facebook, you know, I to talk to these startups and they were like super cagey with me about what they're working on. And I'm like, listen, like we for sure have whatever you're working on in a big spreadsheet of ideas. And I'd be terrible at my job. If you shared with me what you're working on.

[00:11:30] And I'm like, okay, everyone at Facebook drop what you're doing, we're going to go all in on whatever it is that, you know, like, no, like our roadmap is our roadmap. So I, you know, I think, I think as an early stage company, speed of learning is something that's just really important and that feedback loop can make sure you're on the right path.

[00:11:45] Because again, I didn't want to do what I did at Pursuit where we, you know, work on something for a year and then figured out it wasn't going to work. If we were going to fail, I'd rather fail quickly.

Omer Khan: [00:11:52] Yeah I mean, in many ways you, you sort of think about this as it feels like, like this is a feature that Google, Microsoft, Dropbox could add that would make life a lot easier.

[00:12:05] And. You know, initially when I sort of thought about the AI, I thought, you know, how big is the opportunity? And sometimes, you know, it's, it's hard to sort of see that, but you know, you guys have, have done really well with this. I mean, you know, DocSend is now what, like an eight figure business and you guys are still growing how quickly you're growing at the moment?

Russ Heddleston: [00:12:29] We'll probably grow 75, 80% over the next year. We might hope it depends. We've had like kind of a bump in growth since the pandemic started. So kind of TBD how sustained that is. And then we also have a bunch of big bets that we're coming out with next year. So we'll see what that does to our growth.

[00:12:43] But if we can just keep doubling, you know, getting near, near to doubling year over year, we're also cashflow positive and have a $0 CAC. So it is a really interesting business and it kind of reminds me in some ways of Calendly, which is another thing where it's like, Oh, it's just a little calendar. Like how big could that be?

[00:13:01] They're very big. So I don't think you could have started this business. Like. You know, the 10 years ago, no one would have believed this, this could be a thing, but if my belief is that, you know, we're creating something that is pretty universally needed across a lot of different types of businesses and that's enabled it to actually spread pretty quickly.

[00:13:17] And I think it gives us a very large TAM, even though, to your point, you're like, ah, on the surface, it kind of feels like a feature that someone else should add. It's like, well, if you combine it with a bunch of other features and have clear messaging around the value proposition, then I think it can be a big business.

Omer Khan: [00:13:31] Yeah. Yeah. And, and in terms of team, you guys are, what about 54, 55 people at the moment?

Russ Heddleston: [00:13:37] Yeah, I think we're 55 people and you know, one of the things I've, I've continually talked with our team about is that the scorecard for a startup is not headcount and it's not capital raised. I feel like those can be kind of misleading indicators of success. Like we've all heard stories of companies raising a ton of money and going to zero or, you know, hiring a ton of people like being, being at a hyper-growth company is not necessarily fun. And they're often just a lot of management problems that come with that. So, you know, we, we take a different approach where we say, what do we want to do in the next 18 months?

[00:14:08] And then work backwards from that plan and say, what team do we need? For that. And then what funding do we need? And it doesn't necessarily require a giant team. Most of what we spend is on product engineering and design. And you know, if anyone's ever worked on a product team, you know, one of the best ways to tank productivity is to like double the team immediately.

[00:14:27] Like everyone's interviewing all the time, then you're trying to onboard people and, you know, it's just like, it doesn't actually help you for a very long time. So we're trying to be pretty measured about how we grow the team and just happens to be the case that our revenue is growing faster than you know, our, our head count our costs.

Omer Khan: [00:14:43] So we're definitely going to talk about the $0 CAC, but before we get into some of the details of that, let's talk about like what you did in terms of building the product. So you had these conversations, you've identified, this thing is worth building. How long did you guys spend on that first version of the product and getting in front of customers?

Russ Heddleston: [00:15:06] Yeah, that's a great question. And I wish we would have just on that org, you use customer earlier because DocSend was free for the first two, three years that we had the product. So the first step after doing the interviews and then having like, okay, We're going to do it. We didn't focus on design at all.

[00:15:24] We just made it super ugly and we tried to build a first version as fast as possible. We didn't even have a marketing site and then I would trade other founders for a DocSend account and exchange for product feedback. And so one of the first use cases for us was fundraising sending your pitch deck around to investors because, you know, A lot of times investors just don't read it and they say no, or sometimes they read it or sometimes they for it to your company and it gets back to you. It's just frustrating.

[00:15:47] So we would, you know, if you went to, you just would see a login, but no information about what we did, but in order to get something to market fast enough, I won't even call it market something to beta fast, as fast as possible. We would, you know, give founders a login and say, why don't you try this out?

[00:16:02] And we got a lot of really good feedback from that. And then we also use our own product for our own seed fundraising. And actually one of the first people I sent a DocSend link to, remember, there's no information about what our company does. And in our seed deck, the first page was our team page. Cause you know, like my co-founder and I are pretty strong backgrounds.

[00:16:19] So I say, you know, put your strengths first. So that's what I did. And the person responded back to me. I love what you're doing afforded to the student who call you. Can't wait to learn more, but he only looked at the team page. He actually didn't look at what we're doing. So I liked from the very first people was caught in a lie.

[00:16:34] It wasn't like a, a bad lie or anything, but it's just really funny. So I ended up talking to this person's colleague and we kind of chuckled about the irony of what had happened there.

Omer Khan: [00:16:41] I love your login form. That's I'm really excited about that.

Russ Heddleston: [00:16:47] Yeah, exactly. Yeah, I don't even know if he went to, but he, he just looked at the team page and the team was sufficiently impressive that he wanted to take the meeting, which is totally fine.

[00:16:55] But then, you know, that's not what he said. So after he raised the seed round, then we. Went back and created a marketing site and made the design better and did a lot of cleanup and then launched it at a TechCrunch Disrupt in 2014.

Omer Khan: [00:17:07] And how are you guys sort of paying the bills in his first two, three years when the product was free?  Had you had you raised money by then, or was this a part-time thing?

Russ Heddleston: [00:17:18] No, it was full-time. So, I mean, that was another lesson I learned from my first startup is that if you're stressed about money or a lot of times like people ask me, I don't even start a company.  And also I often ask them other kind of personal finances and you want to make sure you at least have like enough personal runway.

[00:17:33] So the first startup I was in business school, so I had like school debt, and then we had company debt and that, that made it hard to really think long-term about stuff. It was, it was not the best. For DocSend, you know, going forward in my career a little bit. It was nice because my co-founders and I could each put in like a hundred thousand bucks.

[00:17:48] So it wasn't savings. It was just like, let's work on this for a year. And we got our costs covered. So we, we only raised money when we wanted to hire more people for the team. And so that's when we went out and raised a 1.7 million that uncork led. And so that's what we were working off of for the first kind of year and a half.

[00:18:06] And when we launched DocSend, there was no way to pay for this software. It was just free. Cause we were still just trying to figure out what was this become? And then we were fortunate to raise an 8 million Series A from August Capital. So we basically raised like almost 10 million and had no revenue at that point in time. And then we needed to go figure out what the business was.

Omer Khan: [00:18:24] Was there a plan for, for revenue or you guys seriously was like still, you know,  figuring that out.

Russ Heddleston: [00:18:32] Well, because our theory is that DocSend is so horizontal. You know, we thought maybe it'll spread like a consumer thing. So, you know, that's why he was like a free product.

[00:18:42] And it was like, we were going to, Oh, it'll be freemium. And it was like growing, but it was growing linearly. It wasn't growing exponentially. So I'm like, Oh, if this is a consumer business, that's not going to work. And so then we put in a paywall and we noticed that a conversion actually went up. Once we put in the paywall, we also realized that all the people who started using it when it was free, didn't actually value the software.

[00:19:03] So it was another lesson for me around like, Oh, we know it's useful, but you kind of have to set expectations upfront around kind of what is this worth? And so every time we've increased price, ironically conversion has gone up as well. But yeah, at the, at the beginning, those first few years, like we were just being really kind of capital efficient, cause we were just burning money. Right. We're not making any money. Then that was to be honest, quite stressful. So very happy that we're in the position we're in today. I'm also very happy that, you know, we were fortunate enough to raise some money. You know, there's definitely, some companies have the mentality of growth at all costs versus efficient growth. And so one of the things that's paid dividends for us has been investing in efficient growth over time.

Omer Khan: [00:19:43] So give me an example of that, because I think that's an important point. I think we should just dig into a little bit.

Russ Heddleston: [00:19:50] For sure. So what are good examples? So our biggest growth channel is the product itself. So we paid a lot of attention in the early days to how people were using DocSend and how we can unblock them, because there is some amount of kind of viral spread, but even more than that is just word of mouth. So. Like even today, 60% of our signups are direct people just typing in and they come to the product.

[00:20:17] So, so that, that is one thing that we invested in early and we definitely intentionally only built for the end user and just making it a cleaner and better product for them. And that's paid off like that is sustainable. There will always be that kind of word of mouth spread on the marketing side.

[00:20:32] We in 2015, published a research report. So I worked with my professor at Harvard Business School on this first research report. and we used a bunch of opt-in data from founders that had been using DocSend, right. Cause those are some of our first users and it was really thoughtful, but it took a ton of time, but that research report still gets a ton of visits.

[00:20:54] So, you know, on the marketing side, since then, kind of come back and spend a lot more time doing more reports like that. And that's a playbook that we can run, not just in fundraising, but in M and A, in sales and marketing and customer success and quotes and proposals. So those, those pieces of content are evergreen.

[00:21:12] They take a lot of time, but they pay dividends over a long period of time, as opposed to demand gen or like sponsoring a conference or outbound sales, or they're just many other tactics one could use, but the ones that have worked best for us have, have always been pretty sustainable.

Omer Khan: [00:21:26] How did you get your first customer? At what point did you decide that you were going to start charging? So I think it was like, what, 2016, maybe around that time?

Russ Heddleston: [00:21:36] Yeah, I think it was yeah, it was about 2016 that we started charging for DocSend. Even before that, actually I think the first revenue we got was a founder who used DocSend for fundraising, who gave me a bottle of whiskey as a thank you because our software was so helpful for him.

Omer Khan: [00:21:53] It all counts man. It all counts.

Russ Heddleston: [00:21:55] We'll take it back to the office. I was like, yeah. And then in 2016, cause again, we were, we were trying to make it exponentially growing and, and it wasn't, it was a little better than linear. So we're like, dang, okay, well, we've got to monetize if it's, if it's not going to be exponential growth, we've got to monetize and we weren't sure how much to charge.

[00:22:14] And so at first we just put in like $10 a month or like it's freemium and you can pay us $10 a month, right. In 2016. And, and then we noticed that like, yeah, people were converting and actually like it wasn't slowing our growth down at all. Having kind of a limited free version and then this $10 paid version.

[00:22:31] So I was like, huh, that's interesting. I would've thought that charging would have increased our kind of conversion rate, but it, but it didn't. So that was the very first step of monetization that we took.

Omer Khan: [00:22:39] So you've got plenty of money in the bank at that point, but you weren't spending it on a lot of marketing, right?

[00:22:50] I mean, from what I understand, like most of that money. And, and the focus would still continue to be on, on just building the product. And was that a conscious decision that you guys made or again, was that just because of your background, that's where you guys sort of leaned into and decided to focus on.

Russ Heddleston: [00:23:10] I think it's probably just because of our backgrounds. It is worth noting that we did spend a period of time trying to do outbound sales. And so we did hire up a whole STR team and do outbound and there are a ton of lessons learned from that that we can get into if you want.

Omer Khan: [00:23:26] Yeah. Let's joke on that. Cause that's, I think that's pretty interesting.

Russ Heddleston: [00:23:30] Okay. Yeah. So I think for any founder, your, you know, your investors are looking at you hoping that you return the fund for them, right? That you're going to be a huge public company. And so there's some conventional wisdom about how fast you have to be growing to get there.

[00:23:43] And we weren't growing fast enough. So, you know, we were told we need to, you know, find a way to grow faster. And so we tried to do outbound sales and outbound sales does work, but it is really expensive, especially in San Francisco to hire humans that are cold calling other companies. And so. And then at the same time, we were also still doing the self-service stuff.

[00:24:03] So I think for any early stage companies, it's really a mistake to try to do, to go to market models. At the same time, you just got to pick one. So, because we were kind of split between the two, I think for a period of time, we didn't do either, especially well. And although we were closing 50, 100K deals with outbound. It's just really expensive and there's a long payback period to that. And it's very capital intensive. So just look at Box and how much they raised and how much dilution they gave up to get through they are versus Dropbox and how much they raised and how much solution they gave to get where they are.

[00:24:36] So. Outbound sales can be predictable if you do it well, if anything's not working perfectly and outbound sales, it's really hard to troubleshoot. Is it the product? Is it the VP sales? Is it the AEs? Like, is it customer success? Like there's so many things that can break there that in 2018 we decided to just go back and go all in on the self-serve model.

[00:24:58] And to be honest, it's made my life a ton easier since then. Just having that focus both for myself, for the company. And it just makes it really clear, like what we will, what we won't do. And we still have a lot of like enterprise customers people with thousands of users on DocSend, but those customers align philosophically with how we're building our product, which is for the end user.

[00:25:19] You know, we want to be the best in the world at what we, what we do. And that means building for that end user, not necessarily the economic buyer. So any economic buyer, that's like, I want the, some AI driven dashboard or something. It's like, well, we could build that for you, but we're building for your end user.

[00:25:35] So you're going to get better adoption. You're going to get better usage. You're going to get the value out of it. But it's at the expense of some of these enterprise features that we know you want. And that's kind of an uncomfortable situation to be in. But it does give us a lot of clarity and I do expect that we'll, we'll go back to enterprise in a couple of years at some point down the road.

Omer Khan: [00:25:51] So how big of a sales team did you build initially?

]Russ Heddleston: [00:25:55] See, I think we ha we had a VP of sales and then we had four, eight EAs and we had six SDRs.

[00:26:04] Omer Khan: [00:26:04] So that was around 2016. So you probably did that for like a couple of years and then. When you, when you said, okay, we're gonna, we're gonna kind of basically sort of stopped doing this was this because, Okay, it's really expensive trying to get these enterprise type customers doing it with outbound sales. So let's try to reach those customers in a different way, or was this more of. Okay. That's probably not the right market for us to focus on right now. We're going to put our energy into a different segment.

Russ Heddleston: [00:26:40] Yeah, it's kind of both. I mean, so our, our average cost of acquisition was about $19,000 per account. And the average revenue per account was a little less than that because our win rate not surprisingly was highest for smaller teams because the person buying software is sitting closer to the people using it.

[00:26:59] And so having a multi-year payback period is just a recipe for spending a ton of money. So there was that though also the market changed. So we were specifically targeting sales enablement, and our biggest competitors in that category raised hundreds of millions of dollars in that two-year period.

[00:27:18] So maybe just a little bit of bad timing. They're very enterprise focused. And so our, our, our products are just really different, but you can't use both of them. You only use one. So I kind of looked at these things and then I just kind of looking at the self-serve and what I did was we, as a team, we looked at who was using DocSend on the most and who were, who were the biggest advocates of it.

[00:27:37] We also had this interesting thing that would happen where our support team would get requests from, you know, signups being like, are you the service that does blah, blah, blah. And they'd be like, yep. And then they would just sign up and start paying because our website just said sales enablement. And in talking to a bunch of our customers and users who loved us the most, what we realized was like, okay, This is actually a very horizontal, like we've been really focused on this one vertical, but there are a lot of people who are using us in a lot of different ways, specifically, like a lot of financial services people or bankers or investment bankers or CEOs or CFOs.

[00:28:10] And so that's what the, like, taking all that information into account. We redid our plans, pricing and positioning, but not our product in 2018 product the same, but just how we talk about it. We changed up and then that just. Started to take off. I mean, I definitely take it as a lesson that, you know, at each stage of your company, things that didn't work before my work now, and it's always productive to be spending some amount of your time, one talking to your customers, staying close to them and to like being open to experimenting with, you know, your business model, basically.

[00:28:42] Especially if you're not necessarily, if you're not a better mouse trap company, you know, if you're, you know, kind of Reebok going after Nike, that's, that's fine. You kind of know what the business model there for something like DocSend though, we're, we're trying to build a business in something that is not really a category.

[00:28:55]So there, you know, we can look at, you know, Dropbox pricing or Google pricing, or we could also look at like interlinks pricing or diligent pricing, and we're trying to thread the needle and create a category. That's kind of, all of these things bundled into one. And so it's kind of unclear how to price that.

[00:29:10] So I'm really happy we went through that exercise in 2018 and it's paid huge dividends for us ever since, because again, our conversion rate went up significantly. Like I was talking to an investment banker and he was like, he was like, Oh, I love your service. We all use your service all the time. It's the only thing we use.

[00:29:25] I was like, wow. He's like, I can't believe I'm not paying you for it. And as I looked into the system, it was like, wow. Oh, well, your secretary is paying $10 a month. He's like, like I said, we're not even paying for it. And so we didn't increase pricing that much, but you know, it's a 150 bucks a month for three seats on the advanced plan.

[00:29:43] Which for this investment maker is still not very much money. Like he doesn't care, but that's 15X as much. And ironically, more people trusted us when we charged them more. They're like, Oh yeah, this is a real service. Like I'm actually paying for it. So we were doing ourselves a real disservice by being so far off in our initial pricing.

[00:30:00] A lot of our customers to be fair though, are still very price sensitive. So we still have that $10 price point there. And I think if that is like a simple easy to use, send and track a PDF. Can I think the internet should just have that, that should be a property in the internet. So we left that plan alone, but then we put in place a couple of more expensive plans that actually are the main drivers of our growth today.

Omer Khan: [00:30:19] So one of the challenges with going horizontal is that it becomes really difficult to appeal to everybody because you've got so many different segments of people, maybe different use cases. And the risk is that your message can kind of get watered down that doesn't really appeal to anybody. So how did you guys tackle that. And what, if any lessons did you learn from sort of that horizontal focus?

Russ Heddleston: [00:30:50] Yeah, that's a great question. The old joke is like we're focused on 10 things, we're focused on anything. So if you, you know, being a horizontal business, we can't do everything for everybody. So we really focus on the external sending of documents like that.

[00:31:07] So we constrained the workflows that we appeal to. So our, our mission statement is to combine common workflows. For sending documents externally into one intuitive solution, which in some ways is like a pretty narrow view of things, but I'm like, we can be the best at that. And then the challenge is how do you represent that to a bunch of different personas and a bunch of different industries.

[00:31:25] And, and talking to our customers one of the things that kind of came across is that our, our brand promise is around control. If people really want control. So we kind of have this lowest common denominator messaging on the website around that control. And then we have broken out by persona and by industry all the specifics and quotes and case studies for how different people use the software and get value.

[00:31:46] Because as I mentioned earlier, some people value certain parts of what we do more than other parts. So we have to tailor how we present that to them. And there are other examples of this like Vidyard is a good, good example or Lucidchart where it is horizontal. And if you go to the website, you'll see a bunch of different, like examples of how you can use them.

[00:32:02] So you're like, Oh, I'm in sales. This is how I use your product. Like, Oh, I'm a CFO, so I use your product and that's been working pretty well for us. We also use a piece of software called Mutiny that allows us to tailor the initial experience on our website based on, you know, the visitor. So, if we know enough about the person, we'll actually just tailor the marketing site to what we think is most likely to convert them best in terms of value proposition and kind of how we talk about the software. So that's also been a good optimization for us.

Omer Khan: [00:32:31] What was that protocol?

Russ Heddleston: [00:32:32] It's called MutinyHQ.

Omer Khan: [00:32:34] Okay. I haven't seen that before. Okay, good. Also, you talked a little bit, you mentioned earlier about sort of selling to the buyer instead of the end-user and obviously you learned some, some lessons from that in terms of what, what the buyer wants isn't necessarily what's right for the end user or the product that you're building. Do you have any examples of like, Like how you learned that lesson?

Russ Heddleston: [00:33:00] Well, this back to my time at at Stanford, you know, studying computer science, and I just remember, I did a lot of internships, like an intern at Microsoft, intern at Trulia and I remember at the time this is, you know, back in like 2005 in the, the kind of best in community.

[00:33:15] There's like a lot of talk, even one, she about the consumerization of enterprise. You know, the question is like, why is this enterprise software just so hard to actually use? And there was a theory that like, Oh, at some point usability will become more important. That's what we're today. And I'd say still most enterprise offers just really annoying to use.

[00:33:35] So, and so for me, it's just like, I don't, I don't really want to be working. I want to be proud of the product that I'm building. And I I'd like to be able to use that product myself. And so that's, that's why we've kind of made it a conscious decision to, to build for the end user and just make it a great experience for them.

[00:33:50] And over time, we kind of chip away at the enterprise features that we know we need, like SSO or SAML or, you know, having user controls or, you know, teams of users and permissioning around that. So we chip away at that over time. But by staying true to that, that end user. That also gives us a pretty sustainable edge in the sense that we get, we see virality, we see word of mouth growth.

[00:34:12] We even see like really big deals walk in our front door. What will it be like a who like using his personal account, a Gmail account will go sign up, play around with DocSend have their team play around with DocSend and then come to us being like, okay, yeah, we're ready to buy. Right. That's very different than if we had a paywall or instead of talk to sales you thing.

[00:34:31] And then it's like, Oh my gosh, is this really any better than these other solutions that I've looked at? I just really want to give it a try, kick the tires also by keeping that. You know, kind of $10 a month plan. We do get more of a reality from that. Cause we get about a million people a month visiting a DocSend link, which when you think about it, that's like a pretty good advertising channel, right.

[00:34:51] Product tends to advertise itself. And because it's so easy to get in and use it yourself, we see a lot of people coming in and trying it and be like, Oh, I get it now. And even if they themselves, aren't a potential user, they'll often mention it to someone else. That's somebody they might want to use.

Omer Khan: [00:35:05] Is that the main way that you're acquiring customers or traffic?

Russ Heddleston: [00:35:11] There are a few channels. Like I mentioned before, the content marketing has worked really well for us. So these reports that we put out, but that's still a minority of the traffic. The number one channel is still direct people typing in

[00:35:23] So one project we're doing this quarter is actually in our signup flow to ask people where they heard about us, because interestingly, we've never asked them before. So I'll be curious to see what that kind of shows. But then after that far distant second is just kind of SEO. And so we've done a good job kind of ranking for various key words that people might search for.

[00:35:42] And we get people into the product that way, like early on as well, like answering questions on Quora, like how do I password protect a PDF? The answer is DocSend. And so that was actually a good way to bootstrap. Our SEO is to go through and answer a bunch of questions on Quora, but surprisingly by and large, it is word of mouth that still spreads our product. This is just really surprising to me that we can get to this scale and still have that be such a big channel.

Omer Khan: [00:36:05] And so that, that direct traffic is different to a user who might, like, let's say I receive a DocSend link from somebody. I take a look at the document and then maybe there's some link or mentioned there about, you know, trying DocSend and I click that and set up my own account. Would that. That's treated as a separate traffic.

Russ Heddleston: [00:36:29] Yeah. That's not, that's not direct. So, so direct means that we actually have no prior record of having seen you before you hit our marketing site. So if you were, for instance, that if you clicked on a DocSend link and then it, and then, you know, a month later come and sign up for DocSend like we would know we'd be like, Oh, that that's kind of that viral about visit workflow. So we track all that stuff. So, so direct really just means you're just typing it in. If you come through SEO, like you, you, if Google is the referer, when we see you, then, then we attribute it to that. So we do track all these channels. It's just the case that direct is, is the biggest one.

[00:37:04] Which would also include, for instance, people who are you turned on privacy. And so, you know, they're just do not track that they would also look at like their interact. But my understanding is that's a relatively small percent of people who fall into that. Most of them, they just heard about us somewhere and then come check it out.

Omer Khan: [00:37:20] I'd love to see those results when you get them curious about that. I think this is interesting, cause that's a, that's a massive amount of traffic that's coming through. Yeah. Okay. So the, you know, you mentioned a few times about building a great product and sometimes that can get misinterpreted as a really great designed product or, you know, or could be loaded with features.

[00:37:53] But what does building a great product mean to you? Because I think it's so integral to everything that you guys have done and how you've been able to grow this business.

Russ Heddleston: [00:38:04] Yeah. Yeah, because it can mean so many different things. Right. Is SAP a great product? Like it's a huge company. I think it's a great product.

[00:38:11] It just means something very different. Like we're not, we're not, that's not what we're building. So for me, what I like about. DocSend and the products in general are ones that at first, like they don't make me feel dumb. Like I get what they do. I can get in there and I can do something very easily. So we try to make it as simple as possible to have someone send a link instead of an attachment and then get analytics on what's happening to that link and keep control of it and being able to update it and seeing where it's forwarded. Like. That we try to make super easy. Like, that's really just a basic concept.

[00:38:45] Like, Oh, okay. Like some people don't even look at the per page stats. They just like the notification emails they get. And it's like, that's fine. If that's all you want, we'll make it easy for you. But you know, I, then I liked the fact that DocSend has some mastery within it. Like if you want to keep digging, you can find subsequently more and more complicated workflows that you can accomplish in our solution and, and more nuanced things that you can do with it. So it kind of reveals itself over time if you're looking for that. And this is also related to what I was talking about earlier with just kind of unblocking users when they run into walls. So one of the things we found pretty early on is that some users were trying to send one link to a collection of documents. And so what they would do is they would create a bunch of docs and links to different documents. They put those links into another document. They put that document package to DocSend. And we like looked at it in a database. They're like, wow, a lot of people are doing that.

[00:39:37] So we're like we should build that feature. And that feature is called Spaces. And so just the ability to send one link to a collection of files or other things, and that is also our data room product. And it can be as simple as sending one link to three documents or it can be organizing 500 documents in different sub folders and creating 10 different links in each different link has different properties and have different permissions and different visibility.

[00:40:00] And so it can get really complicated. You can dynamically watermark, everything have allow lists for who can access it. And so it gets complicated if you want to go that direction, but it doesn't need to. And so that's, that's one of the things yeah, like about, you know, in my definition of great software is that, you know, it's there, if you want it but it's not, it's not in the way of you doing something basic with it. So ironically, Microsoft has a saying that if a user can't find a feature, it doesn't exist. I'm like, there's so many features of Microsoft that I can't find you having worked there or wherever there's two. So it, you know, in, in our, in our minds, it's like, it's fine. If, if a user doesn't want to use a feature, but it's pretty easy for them to figure out what else they can do.

Omer Khan: [00:40:39] Yeah. So looking back over the last seven years or so. And while you'd be working on this business, is there anything you wish you'd done differently or you sort of go back and tell yourself in 2013 or 2014?

Russ Heddleston: [00:40:56] Oh man. There's so many things. I'm sure like a lot of people, I feel like if I were to do it over again, I could do it in half the time. But I would say when I mentioned earlier around trying to have to go to markets, I would strongly caution founders to. To not do that to, to be focused to hunt. What model is best for you?

[00:41:15] Like if you're going to be enterprise sales, go all in on it. If you're going to do, self-serve go all in on it. Know that self-serve takes longer. You know, enterprise sales is definitely the fastest way to get to a hundred million in ARR. So focus is underrated. In my opinion, there's also an element of patience.

[00:41:30] So I think in earlier years I could have been more patient on some topics. And then I also think team and culture early on, I really beat myself up. If we, you know, made a miss hire or, you know, even we thought they'd be a good fit and they weren't a good fit. And then we would try to make it work with the employee or the exec.

[00:41:48] And invariably, you know, it wouldn't work out either they'd leave or we'd let them go. And then, you know, I think man, I just wasted so many months on this. I probably could have done that faster. So I've kind of learned to be nicer to myself if we make an as higher. And I've also just kind of expectations set with the team that, you know what we're, we're gonna get it right more than we're gonna get it wrong, hopefully with it, but we're still gonna get it wrong sometimes. And that's okay. And we want to make sure that this is a really awesome place where I went to work. And part of that is make sure we have a good culture.

[00:42:17] And part of having a great culture is making sure we have the right team. And that means, you know, when there's a bad fit, we have to fix that. So that that's also something I think we could have saved a lot of time with if we had taken that approach earlier.

Omer Khan: [00:42:28] Yeah. Some good thoughts there. All right, we should wrap up and move on to the lightning round. So I'm going to ask you seven quick fire questions. Just try to answer them as quickly as you can. Ready to go?

Russ Heddleston: [00:42:41] Okay.

Omer Khan: [00:42:42] All right. What's the best piece of business advice you've ever received?

Russ Heddleston: [00:42:46] No success in the boardroom will ever make up for a failure at home.

Omer Khan: [00:42:51] What book would you recommend to our audience and why?

Russ Heddleston: [00:42:55] Thinking Fast and Slow by Daniel Kahneman. And because it's just the behavioral economics, just like understanding how people think about stuff. To me, it's just super interesting and really applicable across a lot of areas.

Omer Khan: [00:43:07] What's one attribute or characteristic in your mind of a successful founder?

Russ Heddleston: [00:43:12] Perseverance.

Omer Khan: [00:43:14] What's your favorite personal productivity tool or habit?

Russ Heddleston: [00:43:18] I mean, lately it's just been Calendly. I love not having to spend time scheduling things.

Omer Khan: [00:43:23] What's a new, crazy business idea. You'd have to pursue if you had the extra time?

Russ Heddleston: [00:43:26] Oh man. We, we, we see, I, see a lot of these and just talking to various founders. I mean, I'd love to tackle some of this stuff in healthcare. It's just really hard. It's hard to fund. It's hard to do, but there's some crazy ideas in healthcare that I think someone should do.

Omer Khan: [00:43:39] What's an interesting or fun fact about you that most people don't know?

Russ Heddleston: [00:43:43] Probably that I grew up in South Dakota or that I like to go swimming in the ocean. In San Francisco. It's very cool.

Omer Khan: [00:43:51] Why?

Russ Heddleston: [00:43:53] You can try it. It's great.

Omer Khan: [00:43:55] Yeah. Sure. And finally, what's one of your most important passions outside of your work?

Russ Heddleston: [00:44:00] Well, at the moment I got a puppy this summer, so that's been a fun project to raise a dog. So that are probably just, you know, my wife, friends, family, just those, those personal relationships are really valuable to me.

Omer Khan: [00:44:11] Russ, it's been a pleasure chatting with you. I love your story. And I think it's, it's really interesting what you guys have been able to accomplish with, you know, what is a relatively simple idea, but when you, once you peel back the layers, you realize how much of an opportunity there is and how much you can do and how much people still need help solving just this being able to share documents or easily. So thank you for taking the time and, and chatting and, and kind of sharing your experience and your insights. If people want to find out more about DocSend, you can be one of those people that types in And if people want to get in touch with you, what's the best way for them to do that?

Russ Heddleston: [00:44:54] Just probably add me on LinkedIn. I'm pretty responsive there or follow me on Twitter @rheddleston now those are probably the two best ways.

Omer Khan: [00:45:01] Cool. We'll include links to those in the show notes. Thank you for making the time. And I wish you and the team the best of success. Yes.

Russ Heddleston: [00:45:09] Thanks Omer thanks for taking time as well.

Omer Khan: [00:45:11] Cheers.

Russ Heddleston: [00:45:12] Cheers.

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The Show Notes