Hard Lessons on Finding SaaS Product/Market Fit
Rohith Salim is the co-founder and Chief Product Officer of SpotDraft, a product that helps companies create, manage and review legal contracts.
In 2017, SpotDraft's three founders teamed up to launch their new startup. They saw an opportunity to streamline the end-to-end contract management process and believed they could solve that problem.
Initially, they built a product for freelancers and solopreneurs. But they quickly realized that most people in that market weren't willing to pay for a solution.
So they decided to move upmarket and target Fortune 500 companies. But they didn't have the experience or credibility to win customers.
Eventually, they struck a deal with a large reseller through which they got their first couple of customers. On paper, things were looking pretty good for them, and they were able to project out several million dollars in revenue from this one channel.
But working with a reseller also created several new issues for the founders. They found themselves doing custom development work for each customer, which led to a higher onboarding and support overhead. But worst of all, they didn't own any direct relationships with customers – they were effectively a sub-contractor.
It took the founders a long time to understand a fundamental lesson – as a SaaS business, you can't channel partner' your way to product/market fit.
Eventually, the founders had to go back to the drawing board, do a bunch of customer interviews and try to figure out a completely new plan.
In this interview, we talk about how they went through that process, how they had to deal with losing some customers and revenue, and how they've been able to turn things around and start growing again with a more focused strategy.
TranscriptClick 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 talk to Rohith Salim, the co-founder and chief product officer of SpotDraft, a product that helps companies create, manage, and review legal contracts.[00:00:37] In 2017 SpotDraft's three founders teamed up to launch their new startup. They saw an opportunity to streamline the end-to-end contract management process and believe they could solve that problem. Initially, they built a product for freelances and solopreneurs, but they quickly realized that most people in that market weren't willing to pay for a solution. [00:01:00] So they decided to move up market and target fortune 500 companies, but they didn't have the experience or the credibility to win those type of customers. Eventually they struck a deal with a large reseller through which they got their first couple of customers. On paper, things were looking pretty good for them, and they were able to project out several million dollars in revenue just from this channel alone. [00:01:25] But working with a reseller also created several new issues for the founders. They found themselves doing custom development work for each new customer, which led to a higher onboarding and support overhead. But worst of all, they didn't own any direct relationships with customers. They were effectively a subcontractor. [00:01:45] It took the founders a long time to understand a fundamental lesson as a SaaS business. You can't channel partner, your way to product-market fit. Eventually the founders had to go back to the drawing board, do a whole bunch of customer interviews and try to figure out a completely new plan. In this interview, we talk about how they went through that process, how they had to deal with losing some customers and revenue and how they've been able to turn things around and start growing again with a more focused strategy. [00:02:17] So I hope you enjoy it. Rohith welcome to the show.
Rohith Salim: [00:02:19] Hey, Omer, excited to be here.
Omer Khan: [00:02:21] Do you have a quote, something that inspires or motivates you that you can share with us today?
Rohith Salim: [00:02:27] Yeah, so believe it or not I heard it on SaaS Club first. It was actually from a Recht Kelsey from Venuebook and it was her quote, but I mean, the quote is actually from Winston Churchill where it's, it goes basically like “Success is not final. Failure is not fatal. It's the courage to continue that counts”.
Omer Khan: [00:02:49] Very appropriate for entrepreneurs.
Rohith Salim: [00:02:50] Yup. Exactly. And yeah, like I said, caught it on SaaS Club.
Omer Khan: [00:02:57] Yeah. And so, so w when I reached out to you to talk about setting this up, you were like, Hey, I feel like I know you because I've been listening to the podcast for, for awhile. So it kind of makes the conversation a little bit easier when we sort of, well, at least you feel like you've been talking before. So let's, let's talk about SpotDraft. Can you tell us what does the product do? Who is it for? And what's the main problem that you guys are helping to solve?
Rohith Salim: [00:03:24] Yeah. So SpotDraft is an end to end contract automation platform. We help companies create, manage and review legal contracts. There are companies like DocuSign, HelloSign, PandaDoc so on and so forth. That ended up. Focusing on the execution side of contracts around like, Hey, I need to collect signatures from all these different people.[00:03:51] Whereas we focus on everything before the contract is ready to be executed and everything after the contract is executed, be it like in the pre-execution side, this sort of includes things like collecting the necessary approvals, routing it to the right people. Going ahead and ensuring certain additional documents are uploaded as a part of the entire contract workflow. [00:04:16] And so on before the contract is ready for signing. And then once a contract is executed, making sure, like it's sort of processed continuously in terms of sending reminders to our customers around, Hey, these are contracts that are expiring, or you set a reminder for this, you know, on such and such date, allowing for them to track their obligations and rights of every single contract on the platform itself, those are the kinds of problems and areas that we sort of like go after.
Omer Khan: [00:04:45] Got it. So you and your co-founders it's Shashank and Madhav.
Rohith Salim: [00:04:50] Yes.
]Omer Khan: [00:04:52] So you guys founded SpotDraft in 2017. Can you give us a sense of the size of the business in terms of revenue, team, customers?
Rohith Salim: [00:05:02] Yeah, so we are between a half a mill and a mil in revenue. At this point, our team is around 50 people at this point, which is pretty big for me. I'm like, wow, we have a lot of people in the company in terms of number of customers. We are at 25 plus at this point and growing. So, yeah.
Omer Khan: [00:05:23] Okay, great. Let's talk about like where the idea for this product came from.
Rohith Salim: [00:05:33] So I feel like a more interesting way of looking at it is the idea for the problem that'd be going after came from. And I can't take any credit for that, that was all Shashank. So Shashank my co-founder, he is the lawyer in the group. He went to Harvard law. Work as a wall street lawyer for several years. And he was basically, in fact, me, Madhav, Shashank, overlapped together while we were living in New York.[00:05:59] Although we didn't know each other that well, we did end up overlapping there, but he loves to tell the story where he was sitting in his office late at night, one day. And he was reading this article on self-driving cars and he's just like, he was just blown away by what was actually happening. [00:06:20] And what he essentially had to do was essentially like, correct drafting errors on this document and a lot of clerical work, but it was sort of very, very important work. Right. And he's just like, if cars can start driving themselves, why am I like copying and pasting stuff? There has to be something better. [00:06:40] Why isn't anyone doing it? It feels like, it felt like a very important enough problem for him to actually solve, like go after the sort of like the legal tech market or where the end consumer is a lawyer, more than anyone else. So. Yeah.
Omer Khan: [00:07:00] Yeah, no, that was interesting. I remember sort of reading something about that and I thought it was just funny that in the one hand he's thinking about self-driving cars and, and where technology is, and then I'm like, wait a minute.[00:07:12] As a lawyer, I'm still copying and pasting. Yeah. It's like, there's, there's something wrong with this picture. Yeah. Okay. So that's where the problem was born. And then how long did it take for that to turn into. A product idea or the first version of the product. So like how, first of all, how did you, three of you guys get together?
Rohith Salim: [00:07:30] Yeah, so it was sort of Shashank that sort of pulled us all together. He was really able to sort of sell us the vision. Like both me and Madhav were doing other things at the time, you know, but this to us just felt like bigger problem, a bigger market. And one of the things that he told told us really sort of stuck with us and it was sort of like, he's like, Hey guys, the biggest sort of innovation that's happened in the legal industry was a plug-in to Microsoft word called track changes.[00:08:06] And that was in 1995. Right. Since then people have basically been doing the same thing over and over again. You know, if a contract needs to be reviewed, it's like red lines, why emails send to one party, and that party ends up redlining the document again and sends it back to you. It's just, nobody's actually building for the space. [00:08:27] But if you actually look at the size of the market, look at what's happening here and while we weren't sure at that point of what exactly the product needed to be. We were pretty sure about, Hey, this is a market that is large enough. It isn't going anywhere. And at the same time, it looks based on everything we understood that point. There were a ton of problems, right. Or a ton of opportunities for us to add value.
Omer Khan: [00:08:53] So what what did you guys do? Like did you kind of go out and start talking to customers, or did you start building your, your MVP? Like, what was the next step that you took?
Rohith Salim: [00:09:02] Yeah so, it initially started with a couple of different wire frames around, like what the product would be. and Shashank basically getting on calls with as many people as possible and just pretty much just sort of trying to understand the market and being like, Oh, this is a problem. Oh yeah, SpotDraft can totally do that. You know, just wait for us to launch. So that's kind of what,
Omer Khan: [00:09:26] Wait for us to write the code.
Rohith Salim: [00:09:28] Yup. Yup. Yup. That's that was sort of what happened in the background there was obviously work being done, but like at least the initial work during the initial times, it was all Shashank. I give them all the credit there to really sort of give us more understanding of the market and like figuring out like, you know different people we should be speaking to and so on.
Omer Khan: [00:09:49] And so when you, when you guys shipped the first version of the product, what, what did it do in terms of functionality? Because presumably it didn't do all the things you just described. At the start of this interview.
Rohith Salim: [00:09:59] Yeah. So I feel like we went through a few different pivots. I'd say the first version of a product was around a very, very simple contract workflow, right?[00:10:13] Where someone can come into the platform. They could actually go on to answer a few questions, have a contract generated, which could send to the counterparty. And the counterparty would end up answering back questions and then the contract is ready for signing and both parties in the batting the signature, and it gets executed. [00:10:34] The first version of the product, it was a very, very simple workflow. And the initial market almost were like freelancers and solopreneurs and so on and so forth. Right. We quickly came to realize that we would make no money selling to that market.
Omer Khan: [00:10:50] So, so this was people who presumably, because this was a market of people who, who didn't have the money to spend on lawyers and they wanted some low-cost way of getting some kind of contract created.[00:11:08] But it wasn't like, you know, two companies trying to negotiate a deal. And, and as you sort of described, like put together their contract and go through red lines and all that stuff, this was a much simpler scenario.
Rohith Salim: [00:11:18] Yeah. This is a much simpler scenario. We basically build out an entire templating engine and the ability to create contracts out of templates, which could end up being executed on the platform itself.[00:11:30] You know? So the idea was like, Hey, forget about Microsoft word and all of these different kinds of things. Just. It's we have faster doing on SpotDraft it, like there was adoption in the freelance market, but it was just one of those things where charging anything for the service. Didn't almost make sense, it's kind of like, how often would they end up like signing a contract, you know?
Omer Khan: [00:11:53] Yeah.
Rohith Salim: [00:11:54] And what's the sort of purchasing power with that. It just didn't match up a little bit.
Omer Khan: [00:11:59] So I'm curious why you, you ended up focusing on that target customer. Is, is that the, the kind of person that you guys were talking to when you started trying to sort of validate the idea and just get feedback on, on, on what type of product to build?
Rohith Salim: [00:12:18] I guess it was just easier in some points to just sort of build that, you know, as a team, getting this built end to end and shipping it out, it was definitely a problem, but it wasn't sort of a problem where the target market had the purchasing power that was needed. So yeah, that's what I would actually sort of see, ended up happening at that point.
Omer Khan: [00:12:40] Okay. So, so you've got a product shipped that can help with sort of basic contract workflow, but, you've realized that the market that you're targeting isn't the right one. And so what happens next or what happens next?
Rohith Salim: [00:13:01] Yeah. So again, Shashank, he is arguably one of most grittiest people. I know he's someone who rarely ends up giving up on things. So it was pretty clear to us that we needed to sort of move up market. So getting meetings with larger companies and stuff like that, it's difficult when you're this sort of no-name startup. And at the same time, you're sort of trying to end up handling their contracts.[00:13:33] If you think about it, which is super sensitive information for these larger customers. So he had his idea around figuring out various channel partners. We could actually end up getting to end up selling for us. I, and specifically when I say child channel partners, what I mean by that are like these system integrators, these large IT services, businesses who they're businesses essentially implementing various technologies and sort of making sure that their customers start adopting newer technology and so on and so forth, you know?
Omer Khan: [00:14:08] Yup. So, so basically you're, you're in a position where it's like, you want to reach a certain type of customer, but you, it's not easy to access them.[00:14:18] And you're not in a, in a great place as a, as an early stage startup to say, Hey, we know we're going to come in and help you, or, you know, streamline your, your contract workflow, but being able to go through these resellers who already had relationships with those customers, and we're already selling a sort of a kind of a spectrum of, of different technologies. [00:14:40] And there was some incentive for them as well to go in and sell this to those customers. That was the general kind of premise, right?
Rohith Salim: [00:14:47] Yep. That was basically the premise. The idea was like, Hey, how can we really sort of understand the problems that these larger companies actually face so that we can actually build for them?[00:14:57] And yeah, this, this was one of those things that just sort of made sense, you know.
Omer Khan: [00:15:02] Okay.
Rohith Salim: [00:15:03] At the time.
Omer Khan: [00:15:04] And so you approach, like how long did it take you to sign up the first reseller or channel partner.
Rohith Salim: [00:15:13] Yeah. So we only ever had one sort of a system integrator/reseller. I sort of described them less as a reseller and more as a channel partner, our system integrator that's, that's sort of how I describe them.[00:15:30] So I think it took several months for this to actually end up happening. That part was actually quite straightforward. What we really got out of that was a whole bunch of, like Shashank was basically then on calls, like nonstop with like different people that they wanted him to pitch to. It could be on one day it could be like this Australian bank or another day it could be the South African conglomerate, or it could be this telecom company, biggest start of Norway, you know? [00:16:07] So what we really got out of that, where a lot of these calls. And it took a while to actually end up closing some of our first deals. Why are this particular channel partner, they were like big deals as well, both in brand name as well as ticket sizes and so on and so forth. Yeah, that's what happened there.
Omer Khan: [00:16:25] Okay. So you've got one channel partner who is going out there and selling the product. For you guys and you, you, you get a couple of these deals in place, but the, the product that you'd built was for a month, a simpler workflow for that freelancer, for the, that kind of person. So what happened when this product is put in front of a larger organization or someone who has kind of more, more complex needs for, for contract workflow?[00:17:03] Was it, was it, were they able to start using the product as it was? Or did you guys have to start doing a bunch of dev work?
Rohith Salim: [00:17:11] A whole bunch of dev work? Oh my God, it was crazy. So, and part of it again, I blame us for it. Not anyone else when you're actually selling to a Fortune 500 company and so on, it's much easier to sort of sell frontier tech to them like cutting edge tech to them than it is to actually end up selling somewhat commoditized stuff for them. Right. Because a lot of like commoditized tech is already being sold by, you know them by the Oracle's and the SAP's of the world. Right. What they're sort of really interested in buying and what they're really sort of interested in experimenting with are things related to, at that time, it would things related to blockchain and artificial intelligence and so on and so forth. Right?[00:18:00] And we did have some level of expertise in-house in those areas. And while we were working on these things, we. Kept sort of like diving deeper and deeper into a lot of that frontier tech, you know? So we were pretty confident around like building certain things out for them. And the idea was that, Hey, we're going to actually build this thing for you, you know, which we didn't have yet, but we're going to show you a demo on such and such day. [00:18:32] Once you're satisfied. You're going to actually end up then we'd move on to a proper engagement with an actual UAT followed by an actual roll-up after.
Omer Khan: [00:18:43] Sounds more like a consulting gig.
Rohith Salim: [00:18:46] Yeah, it definitely, it definitely was. I feel like there were times when we used to like swap the product out and add new features and stuff like that on a day on day basis or a week on week basis.[00:18:58] Just to close a deal just to impress a client. So it was very, very much, it definitely felt very service-y at that point.
Omer Khan: [00:19:07] And that's okay. Right. I mean, when you, when you're sort of in the early stages of, of building your SaaS business, you're going to have to do these kinds of things, because you haven't really kind of find product market fit yet.[00:19:23] And so, Hey, we're getting feedback from customers. So let's take that on board and let's figure out how we keep building the right product for our market. But at what point did you realize that this was becoming a problem?
Rohith Salim: [00:19:35] Oh, I mean a few different things sort of happen. So I think it's sort of important to describe the product that we built because that'll offer a little bit more color. So what we ended up building was a, what we called RAG or red, Red Amber Green analysis or RAG. And essentially what that was, was a customer could go on to end up uploading a contract on the platform. And we would tell the customer that, Hey, these are the things, these are the parts of an agreement that is compliant, these are the parts of the agreements that's not compliant. And these are the parts of the agreements that is partially compliant. Right? So that's essentially what we built at that point. And it was one of those things where like, it works great in a demo. You can just imagine that, right?[00:20:25] Like, Hey, I'm uploading a document. Right? And like, wow, it's telling me that this is compliant. This is not compliant. This is great. You know, it really captured the imagination of a lot of the folks that we speak to purely because It's new, it's sort of using AI. It was interesting, right? The challenge sort of came up though, when customers actually started using it, when the end user, the lawyers started using it. [00:20:58] Right. And this is sort of one of the limitations of the technology itself. Right. And what I mean by technology is like the entire AI ML space altogether, where it's great. Until it isn't, you know, so it's kind of like, Hey, I'm uploading this contract and it seems to have gotten a few things. Right. But it doesn't actually get these other things right. Right. And we are like, Oh, you need to end up training the model with doing this. And you need to know tagging data this way. Right. Oh, okay. Fine. Great. But just sort of like, it was a product that just sort of required the user to do so much work. In order to get any kind of value out of. I remember one of the customers we worked with, we went into a UAT phase. [00:21:49] UAT is like this user acceptance testing phase, where they kept trying to test the platform. And we had this minimum criteria of like, Hey, we need to hit at least 75% accuracy, but contracts itself is just so subjective. You know, if you think about it and it just became this thing where the customer was essentially and rightfully so, I don't blame them for this at all around, Hey yeah, this is right in this contract, but not writing this other contract and testing, et cetera, et cetera, et cetera. [00:22:26] It just kept going on and on and on, you know, and I'm just like, Hey, like just sort of onboarding customers, shouldn't end up taking like this long, right? If it's like this, we can onboard like one or two customers a year. Right. And when not going to be a big business, just sort of in that, right. How we're sort of looking at product and stuff like that. [00:22:49] It's just not going to scale because like every customer we onboarded felt just as hard as the first one. Which isn't great. Right. When you're building a software business, when you're building a SaaS business, the margin cost for the first customer is very high, but every additional customer should end up decreasing quite dramatically. [00:23:07] Right. And what I mean by margin cost is just margin cost for like development and product and so on and so forth. So yeah, that's sort of what happened that just sort of like, how long the sales cycle was, how long it took to onboard customers. Those are the kinds of things that, you know, just did not make sense, did not make sense, did not make economic sense. [00:23:29] That's when we were like, Hey, this isn't really working for us. We need to somewhat go back to the drawing board and figure out what will actually end up really making sense for us, you know?
Omer Khan: [00:23:40] Yeah. Cause I, you know, earlier that the situation looked great on paper that, you know, you've got this big deal with this this services partner, a channel partner.[00:23:52] You can project out how you're going to hit your first million just from doing this. So on the face of it, it looked great, but then you sort of realizing wow, onboarding, and like his support is, is a big overhead. It was okay doing this with the first couple of customers. But if we keep just going this, you know, taking the same approach, it's going to take us five years to get to, you know, double digit customers or something like that. [00:24:23] And, and also the product was becoming an issue as well. Right. Because it almost sounds like you had multiple flavors of, of the product depending on the customer. And it wasn't really one, it wasn't really a SaaS product.
Rohith Salim: [00:24:38] Yeah. It was definitely one of those things where we built a whole bunch of things on top of, right? And believe me, it was like cool tech. But it was just becoming unruly to manage. And it was definitely something that needed to be rethought, you know? And that was something that we were pretty clear about in terms of the fact that something needed to change. We just weren't sure what it was. And I would almost say that it took us a lot longer to realize that that I wish it did, you know, but it was also one of those things where, you know, like Shashank, me and Madhav were all fairly, we're all, we're all folks who don't really like to give up easily. And when we actually did end up deciding to pivot away from it, or, Hey, we've actually had these customers, we'll continue to solve them. It was, I truly believe we explored everything we possibly could before actually making that decision. You know? So yeah, that's what happened there.
Omer Khan: [00:25:39] And, and I think the biggest problem here was that. You didn't even own the customer relationship, right? You were just kind of, you were like a subcontractor.
Rohith Salim: [00:25:49] We will basically. Yeah, that's a good word to actually describe what we were. We were basically this company that this bigger company was using to actually end up opening doors for them to end up selling a whole bunch of other institutes.[00:26:03] And it was like the customer we were dealing with. Didn't care about the product. Right. The end user was someone though that we couldn't get access to. So it was just, yeah, that, that piece right there was definitely not ideal. The, the sort of thing that I like to, whenever I meet different entrepreneurs or people who are like looking to build a company and they describe things to me, what I, what I keep telling them is that you can't channel partner your way to product market fit. [00:26:36] You just have to do the work. You know, you just have to warn the early customer relationships, really understand their problems. That's the only way to do it, in my opinion.
Omer Khan: [00:26:45] Yeah. Yeah. And then, and then you'd also told me that you'd been listening to the the interview with Advait from GoGuardian and how the channel partnership was actually is a significant part of the revenue that, that, that business generates.[00:27:00] But I think there's situations that are a little different, right? I mean, he didn't start out that way. And that's the point you're making, you're not saying channel partners don't work. There's just not the way, to, as you said, get to product market fit or, or, or rely on in the early stages of, of trying to get traction.
Rohith Salim: [00:27:15] Yeah. Your product has to be mature enough to actually end up supporting a channel partner. You know, I I, I don't blame a channel partner at all. You know, it's our own naivety that we almost didn't understand that at that point, but with Advait from GoGuardian, it was like at least from listening to the interview, it felt like, Hey, the product is already ready.[00:27:37] They will, like, they figured out this distribution channel for schools and they literally ended up being like, Hey, we made the sale. Why didn't you actually build it through this particular channel partner and the power dynamics itself away different, you know, when you think about it there. So, yeah, I definitely felt like product is a lot more mature, you know, before they ended up exploring it and you know, their revenue numbers are great. [00:28:02] You know, I think in five years they hit $50 million in revenue or something like that, that I. Yeah, so it can definitely work. The only thing I'd say is that really make sure you understand your end customer and make sure your product is mature enough to actually end up supporting it.
Omer Khan: [00:28:20] So, so you basically ended up going back to the drawing board, but how long did that take?[00:28:24] So you, you sort of started out in 2017 at one point. Did you guys say, okay, this isn't working let's, let's go back and kind of figure out how, how, you know, we sort of unwind what we have here and come up with a better approach.
Rohith Salim: [00:28:41] Yeah. So this actually happened in 2019 and the last, I want to say Q4 of 2019, I want to say September or October of 2019.[00:28:57] And I actually remember this pretty clearly, so we knew this wasn't going to work. We knew we had money in the bank from these existing customers, but we knew that in order to scale to actually be the company we needed to be. Our current strategy wasn't working. And me and a Madhav of actually went on a trip to Lisbon for web summit. [00:29:22] It was like a sponsored trip. We got free tickets and so on and so forth. So both of us actually ended up going for that. And I remember us like thinking pretty deeply about what exactly we would need to do. And one of the reasons why the product that we were working on until then didn't sort of work is because all the sort of data that was being used to actually end up training the AI models to end up protecting if something is like compliant partially, compliant or not compliant, we'll created by us, right? [00:29:54] And it wasn't sort of like from user generated content, almost. It was during that trip, we sort of, at least me and Madhav really started thinking about like, Hey, if we really needed to make this work, what are the different pieces that we would need? [00:30:07] You know, what are the kinds of things that, that we would need to end up happening. And then after that trip also like spoke to Shashank a bunch. But beyond that, we started really speaking to a lot of in-house councils, you know, like people and really trying to understand that existing sort of workflow. Right? [00:30:25] And. Actually watching them review contracts and recording it and then watching the recording all over again and just sort of trying to understand what exactly the entire process they followed internally within the organization is who are the different teams that they sort of interacted with is like, it was literally sort of going back to the drawing board. [00:30:45] I don't want to say we threw away the older product. It's still very much operational and it's still something we sort of support, but we knew that. That there were problems in the space we needed to sort of understand what exactly we were. We really needed to do what exactly we needed to really sort of focus on and double down on. [00:31:04] So I'd say end of 2019, fourth, quarter of 2019 around September, October, that sort of like when the inception of what we have right now started, and we really started doubling down on that piece.
Omer Khan: [00:31:19] Okay. So let's talk, firstly, about the product from, from the work that you did there and talking to customers, looking at the market, what did you change about the product?
Rohith Salim: [00:31:29] Yeah, so it was a few different things and some of these things happened organically itself in terms of these are things that we learned as we went about building the product. Right. So one of the things for us was. Okay. So some of them were based on gut, you know, and in terms of things that we were excited to work on and things that we felt were pretty ambitious to sort of work on.[00:31:56] Some of it was definitely based on how do people currently do this job, right? What are the problems with how they currently do this job? Can we sort of fix it. And the third thing was around like, Hey, is what we're trying to do. Is there like a large enough market here for us to actually go after? Right. [00:32:14] So what we essentially did, there are a few different things and it's sort of a fairly complex product in some ways, but we try to keep it as simple as possible, but at its core, what we essentially sort of built was our own editor. Right. And this is sort of built specifically for the legal use case. You know, the in-house counsel, if you're not looking at most of the editors out there are rather 99% of all the contracts that are reviewed and contracts that people work on are done on Microsoft word and Microsoft word wasn't built keeping a lawyer in mind, and it probably will never be built, keeping a lawyer in mind because it's just too broad, a product. Right. But if you think about a legal contract there's actually, a lot of structure to it. [00:33:13] There's the preamble where you sort of describe who the different bodies are that are entering into this agreement and why they're entering into the agreement. There's this entire section on definitions, you know, in terms of, in terms of where you end up defining all the different terms used in the agreement and certain ways by which different things are actually phrased and so on. [00:33:33] So there's a lot of structure to an agreement and people sort of use a general purpose editor to do all they work on that, you know. And lawyers, if you've ever seen like lawyers and reviewing agreements, it's kind of like, they either have two screens open and then they have one screen with one part of the document and another screen where they actually make their edits and they keep scrolling up and down. So on and so forth. One of the other really interesting things that we sort of learned when we did a lot of our user interviews is. Imagine, let's say let's use two real companies. So let's say Uber and Tesla doing this deal. And the lawyers from each side are negotiating, right? The actual deal is sort of owned by the business people in the company where the business development team from Uber and the business development team from Tesla, but the contract negotiation is happening between each of these different departments. [00:34:33] So what would end up happening is that the lawyer in one of these companies, when they need input from different people, they would end up sending an email out with the word document, to all the different departments that they need input from. They ended up getting, they ended up adding comments on it and so on and so forth. [00:34:51] Then that ended up getting feedback from everyone, again, as an email and responses to the word attachment. And then they'll end up opening up each of those work attachment, and then they end up working on their own document. And that was just like crazy for us. You know, we're like, Oh my God, this just seems like so much work. [00:35:10] Then another thing that we sort of realized was like, Hey, lawyers actually end up spending so much time just cleaning up the document before it can get sent to the counterparty. They review the entire agreement once. Looking for drafting at us, they try to make sure that they clean up all the comments, you know, in terms of, Hey, this is a comment that is a discussion between me and my colleagues. [00:35:31] I don't want the counterparty to know about that. You know, because this is sort of like exposing sensitive information. I don't want them to actually get access to any of that. Right. So like our editors sort of built keeping all of these sort of unique insights around. How contracts flow within an organization in mind, it's almost like a place where people can come in and collaborate specifically fall on tracks. Right. That's sort of what we started with, you know, so, …
Omer Khan: [00:36:02] Yeah. Okay. So you sort of improve the product around the user experience, sort of the general workflow. What about the issue you mentioned earlier around you know, customers complaining about the sort of the machine learning promise, not living up to the demo and the fact that it needed to provide a whole bunch of training data for this thing to work properly.[00:36:25] Did you fix that? Did you leave that as it was like, what, what, what did you do in that area? Cause that, that sounded like that was, that was a pretty significant problem for customers.
Rohith Salim: [00:36:33] Yeah, that definitely was a significant problem with customers. And it's something that the editors sort of tied into that, you know, because the way this sort of works is that now all of a sudden we are getting the user to end up creating training data for us.[00:36:48] Right. It is a contract that comes from a counterparty. We are able to identify, Hey, these are the different clauses in the agreement, right? These are specific areas that are heavily sort of negotiated. So all of a sudden we were getting the user to end up creating training data for us. Right. And it's sort of like in real-world contracts and we also sort of positioned the sort of ML side of things not as, Hey, more as suggestions rather than as anything else. But again, some of these things are things that we are still working on, you know, and still trying to improve for the, it's not something that gets solved overnight, but using the editor is a as sort of like our. Not star and sort of as a foundation, it would sort of allows us to do a bunch of these things, so.
Omer Khan: [00:37:35] Okay, great. So, okay. So the product looks like it's in better shape. How did you start finding customers? So now you've got to go the direct route. What were the, the channels that you initially tested to find customers and, and what worked for you to, to land your first customer, your direct customer?
Rohith Salim: [00:37:55] Yeah. So it was basically outbound to be very honest, you know? So there are a couple of things we did. We did end up attending. A few different conferences, right? Back when there were physical conferences, you know, so we attended, we attended a bunch of legal conferences and medical bunch of in-house councils.[00:38:16] So on and so forth. A bunch of them showed some level of interest wearing degrees of interest, but our first sort of customer with this new product approach that sort of came up through an outbound cold email, almost that went out, she was actually looking for something we sort of were like, Hey, we're building this exact same thing. [00:38:41] We develop the right relationship with these with these customers. And yeah, that's sort of what happened there.
Omer Khan: [00:38:50] Okay. And then, so is outbound still the biggest driver of new customers for you today?
Rohith Salim: [00:38:59] Yes. Currently it's definitely outbound. There's some predictability to it, but at the same time, we also know that we do need to end up nurturing and building out other channels.
Omer Khan: [00:39:10] And how, how big is your sales team?
Rohith Salim: [00:39:12] So our sales team is four people and Shashank you know, who jumps in on sales calls whenever needed, but yeah. They're great. They're fantastic.
Omer Khan: [00:39:24] And, and how much of your revenue is coming from this? So if so, we can always think about this in like two, two products, right?[00:39:29] So there was, there was sort of part one, which was SpotDraft that you went through this, this channel partner, and there's a bunch of like custom dev work. And then now you've moved to, you know, sort of a true SaaS solution and made that sort of product pivot. So this new product, how much percentage wise is, is sort of the revenue coming from that now.
Rohith Salim: [00:39:49] Yeah. So it's around 65% and growing at this point, we still do have a bunch of revenue from our older customers and that's okay. You know, we're still supporting them. They're still doing whatever we can. We do want to make sure they continue to get value from SpotDraft, but we're not actively trying to onboard customers into the older product.
Omer Khan: [00:40:10] And is there some plan to move them over to the new product? Is this driven by either some kind of, you know, Do you have some long-term agreements in place that you need to honor with these customers, or they just have a bunch of functionality in the legacy product that, that isn't met in the new version of the product.[00:40:30] What's, what's the reason you haven't been able to sort of move these people over.
Rohith Salim: [00:40:34] Yeah. They do have a lot of legacy functionality, which. I'm hesitant to sort of like introduce into the new product, into our new focus, just because it doesn't make sense to me to actually end up focusing all the time and energy to actually end up doing that it much rather, and, and you know, the other thing to keep in mind is that these customers themselves are very different in nature. You know, some of the newer customers that are all the newer customers, we're getting on a, there's a very sort of specific use cases that they're actually want us to solve, whereas these larger customers, the problems that they want to solve are again, very sort of different, you know, so trying to merge them both into one product, it's just something that we're not ready for. So yeah, for right now, this is how we are keeping it.
] Omer Khan: [00:41:25] Okay. So, I mean, it's an interesting experience to go through, and obviously you guys learn some, some important lessons here and sort of came back from that pivoted on the product. And it sounds like the, the way you're growing you're on track to hit your first million ARR hopefully soon.[00:41:44] But when you look back at your experience, is there anything you wish you'd done differently?
Rohith Salim: [00:41:49] Yeah, so I feel like it's very easy to end up getting lost in the weeds. You know, when you're building a company around and just being focused on the operational side of things, being like, Hey, this is what needs to get shipped. Let's make sure we do it. We promise this to so-and-so, et cetera, et cetera. I feel like there were, in certain cases, we should have caught our losses even earlier than when we did. It's easy to see that in hindsight, but. More than anything. I wish we'd cut our losses even earlier. You know, if he lost out on a few customers that we ended up getting onboard right at the end, but just sort of making the shift to what we're doing right now instead of end of 2019 due, let's say mid 2019, you know, that what I really. Ended up setting us up for even better success at this stage, you know, so.
Omer Khan: [00:42:40] Yeah. And, and, and I think it's kind of easy to look back and, you know, like they say, like in hindsight, everyone's a genius, right. And we can kind of look back and say, yeah, of course, you know, you should have done it this way.[00:42:51] And maybe not even bother doing any kind of channel partner relationship for the first, you know, X number of years and gone directly and built a product like this. But the other way to look at this is you probably had to go through that experience. And part of that, at least part of that journey. To understand the market well enough to be able to get to where you are today.
Rohith Salim: [00:43:13] Yeah, yeah, no, I, I agree. You know, it's, it's one of those things where Shashank loves to say this where he's just like, Hey, unless we did that, I would have always thought we could have done it, you know, but we literally gave it our all, you know, and we had some level of success, but it just, wasn't the level of success that we wanted.[00:43:32] You know, so we had to make that decision, those things. So, yeah, the big thing though is and I think I mentioned this earlier as well. Like when you're starting a company, it's, it's important that you don't get married to the solution or the solution that you've built, but rather you're just in love with the problem that you're trying to solve. [00:43:51] And if the solution you build isn't really. Apt for solving that particular problem or addressing that particular problem in a scalable way, you should be okay to actually change that. You know, you should be okay to actually, like, I'm not saying you do that every single day or like every month it's your, your team is gonna go crazy. [00:44:16] You know, if they see so much flux, but. More than anything, it's important to be in love with the problem rather than being in love with your solution. [00:44:24] Omer Khan: [00:44:24] Yeah. Yeah. I agree. I agree with you. I think as you know, you, you, you may have mentioned it, but I think it's, it's the right thing, but it's just really hard to do, especially when you're in the middle of that situation, right? You don't want to say no to any customer. You don't want to say no to any, any feature. Once you've invested so much time in building a product, you don't want to rip it out and do something different you want to it's like, maybe it's just, it's that kind of thing about, well, maybe it's just, you know, maybe it's just that, that is just around the corner. [00:44:57] If you just keep going one more day, one more day, right. We can kind of get there. And then eventually I think you can look back and say, okay, We need to do something different, but when you're in the middle of it, it's, it's really tough. Isn't it?
Rohith Salim: [00:45:07] Yeah.
Omer Khan: [00:45:08] All right. Let's wrap up. I'm going to go into the lightning round. So I'm going to ask you a seven quickfire questions. So just try to answer them as quickly as you can, ready to go.
Rohith Salim: [00:45:17] Yeah.
Omer Khan: [00:45:18] Okay. What's the best piece of business advice you've ever received?
Rohith Salim: [00:45:23] Hire people better than you and make sure they're set up for success.[00:45:28] What book would you recommend to our audience and why? [00:45:31] The hard thing about hard things by Ben Horowitz, it's probably the most raw book of entrepreneurship, you know, around and just going through the blind I don't think I've experienced everything that Ben Horowitz has gone through, but I do feel like especially over the last few years, I've gone through a portion of it. Highly recommend it to anyone who wants to start a company.
Omer Khan: [00:45:57] What's one attribute or characteristic in your mind of a successful founder,
Rohith Salim: [00:46:01] Grit, just not giving up.
Omer Khan: [00:46:04] What's your favorite personal productivity tool or habit?[00:46:09] So this is something that I've been doing recently and I think it's working out pretty well for me, but I block off two hours in my day from 9:00 AM to 11:00 AM to just sit and think and write down notes on higher leverage activities. It's never a product spec or anything like that. It's more around like, Hey, this is something I think is broken or why is this broken, but just blocking off time in your day to actually think about your business is important. [00:46:38] I like that, that's a good one. What's a new or crazy business idea you'd love to pursue if you had the time?
Rohith Salim: [00:46:45] Yeah, so bunch of interesting things in the healthcare space, a lot of a lot of interesting problems. I don't know what exactly yet. I just know that there are a bunch of different kinds of inefficiencies in hospital and how hospitals are on or how clinics are on and so on and so forth. I've seen that firsthand. I, and I feel like it's, again, a massive industry, so yeah,
Omer Khan: [00:47:08] What's an interesting, well, fun fact about you that most people don't know?[00:47:11] Rohith Salim: [00:47:11] So one of my co-founders know this, but for most of the time during the pandemic, I worked from a hospital. So my wife is actually a doctor and she works at this hospital, which is brand new and they have a whole bunch of empty offices and stuff like that. So after a certain point of working from home, I just, it just became too much for me. And I just ended up going with her to work, hijacking his office and walking out of there. So, yeah.
Omer Khan: [00:47:44] That's fun. And finally, what's one of your most important passions outside of your work?
Rohith Salim: [00:47:48] Yeah, so I struggled with answering this because I feel like all I do is work and think about work. But what I do enjoy doing is I also enjoy traveling, you know I feel like it's important to take a break periodically and just going to a different place really helps you think about problems differently. Think about things that you are going through in your head a lot differently. It, it, it sort of rejuvenates you, so yeah.
Omer Khan: [00:48:16] Awesome. Great. So if people want to find more, learn more about SpotDraft, they can go to spotdraft.com. And if people want to get in touch with you, what's the best way for them to do that?
Rohith Salim: [00:48:27] You can find me on Twitter. It's @rohithsalim, rohith_salim, R O H I
Omer Khan: [00:48:35] Awesome. Rohith, thank you so much for joining me. And you know, I appreciate you staying up late. It's almost midnight over there for you.
Rohith Salim: [00:48:43] Yeah. It's 11:50 PM, but don't worry about it.
Omer Khan: [00:48:48] I appreciate that. And you know, thank you. Thank you for sharing your stories. It's been great to chat and you know, we shoot you and the rest of the team, the best of success.
Rohith Salim: [00:48:57] Thanks a bunch, Omer.
Omer Khan: [00:48:58] All the best. Take care. Cheers.
Rohith Salim: [00:49:00] Take care. Bye.
- “The Hard Thing About Hard Things: Building a Business When There Are No Easy Answers” by Ben Horowitz