How DocSend sold to Dropbox for $165,000,000

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When you hear that today’s guest sold his document sharing startup to Dropbox for $165M you might wonder how someone could be so lucky. Well, as you’ll hear in this interview, it was not an easy journey.

Russ Heddleston is the founder of DocSend which was acquired by Dropbox.

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Russ Heddleston

Russ Heddleston

DocSend

Russ Heddleston is the founder of DocSend which was acquired by Dropbox.

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Full Interview Transcript

Andrew: Hey, they’re freedom fighters. My name is Andrew Warner. I interview entrepreneurs for an audience of entrepreneurs. me is someone whose software. I bet everybody in my audience has used at one point or another. In fact, I went to look for your name, uh, the guest is Russ Huddleston Russ.

When I went to look for your name in my inbox, and I look for Dropbox. I think just about every investor update, every investor communication that was sent to me was sent using DocSend your software. I feel like this software, or I thought before I, I read up on you for today’s interview, I just felt like a simple, brilliant idea. Russ, of his friends. Realize that we wanna send documents to each other. we wanna know if people have read them in control, who gets to see the simple, beautiful, elegant set off on tech crunch, whatever the conference was called at the time, hit it big with the tech community, grow to enterprise, sell to Dropbox for 165 million super simple, super successful. I just read this story of how we did it, that our producer put together. I can’t believe how much you’ve been through Russ. I don’t know how you’re still Did you have you seen a therapist or at least a good

Russ: Uh, well, thanks, Andrew. It’s great to be on the, on the podcast and I would be happy to, to, to dive in and kinda give you any behind the scenes info that you think might be useful for the audience.

Andrew: I’m gonna start with the win and then we’ll go back and figure out how we got it. And I should say, this interview is sponsored by the company that will help you hire great developers. It’s called lemon.io and by the company, that’s gonna allow you to invest in art. And I’ll tell you later why you should go to masterworks.art/mixer G but Russ, Take me to the day the sale went through. Do you remember what that was?

Russ: yeah, I do. so much that happens like before enduring and after that, I don’t know what other people think of typically with an acquisition. Um, you know, there there’s just so much work that goes into it. The amount of diligence, especially for anything that’s a pretty sizable acquisition.

Like the first one I, I had at Facebook, it was a talent acquisition. Right. So that was basically just us getting hired and paid a little bit more to like, not work on the other thing. But especially when you’re going through like a whole business acquisition where they’re acquiring it for the revenue, there is a ton of diligence that has to go into that.

And, uh, you know, so , you just kind of like run ragged for months, uh, because then you, you, you have to get to the LOI and then, so you have to have a business sponsor and then you talking both sides and then, um, you know, then you have to go from Y to, to definitive. And so you got like your whole law team, that’s going all in on this.

And then you, you typically haven’t told anybody at your company. That you’re working on this. So everyone at the company is just kinda like, you know, the CEO’s gone and then there are all these things that can go wrong. And I think in a lot of like the way I’ve heard it said in any, any good deal, fair deal, both sides are like a little unhappy, um, is like something I’ve heard.

So in our case it was, it was one don’t get me wrong. Great, great acquisition, especially because of how little money we raised, but we’re performing super well. We were profitable at the time. We didn’t need to sell. So I think they thought they paid too much. I thought they paid too little. So, you know, by the time the, the deal closed, like I was just really tired and also just like kind of glad it was over

Andrew: Okay.

Russ: and it’s kind of a relief to be able to tell everyone else working at, at docs end it’s like, it’s like, oh no, Russ isn’t just bad at his job.

Decided not to come into work for, you know, a couple months he was actually going and working through this, selling the company process.

Andrew: and at one point it looked like it wasn’t gonna happen. Like the business was actually, how close did you get to $0 in the bank?

Russ: Um, we had a little less than a million in our, in our bank account.

Um, but at the time we were burning quite a bit. And so it was never less than six months of runway, but

man, even approaching six months of runway, if you’re the person who’s staring at your bank account, That’s really stressful. So yeah, in, you know, our kind of brief history as we raised 1.7 million in a seed round in 2013 at a 7 million pre.

So as people complain in the market right now about, oh my God prices have come down. Like, well, they just kind of reset. It’s like, wasn’t that long ago that like our seed round was that was perfectly reasonable seed round. In 2013, we then raised an 8 million series, a at a 19.5 million pre money valuation in 2015 preemptively from a, a VC.

I just really liked, but we didn’t really have much revenue at the time. And I’m so happy we raised that money then because it allowed us to like iterate until we figured it out. But what happened in 2018 was that we were selling up market and sales enablement. And we had, uh, and still have some competitors that have raised hundreds of millions of dollars in that vertical.

And it was a, uh, had a baptism by fire for me of selling into the enterprise. You know, I’m a software engineer by background and product manager. Like what do I know about enterprise sales? Well, now I know a lot about enterprise sales, uh, talking to a guy I know at scale VP kind of notorious enterprise SA investor. He was telling me that a technical CEO takes them like two, two and a half years to figure out enterprise sales. And I’m like, that described me in a nutshell, but while we were selling up market, you know, we were trying to win these, you know, 10, well, more like 50, a hundred thousand dollars contracts. And we were just losing, I don’t know about you, but like losing isn’t fun.

I hate losing

it’s it’s especially not fun. So we were just losing and I kind of saw the writing on the wall of like, We can’t raise a lot of money in this, you know, use case sales enablement because of these other competitors they’re targeting us. It feels really mean and unfair. They’re undercutting us in all these deals.

We’ve got the better product, but like we might just lose. So yeah, that 2018 was a, was a stressful year. Um, happy to take it from

wherever from here, wherever you think you wanna

Andrew: you know what you mentioned your, your previous company. Let’s talk about how that started off was that, um, it was called pursuit. You started that when you were still in business school, right?

Russ: Yep. I started that while I was in, in business school, out at Harvard, um, uh, with two friends of mine

who were software engineers at Trulia. Um, and so I still keep in touch with them. They’re awesome guys. Um, Um, the, that was, that was a great learning, uh, working on that. It was, we had a great domain pursuit.com.

I remember finding this guy in Massachusetts that owned it and convincing him to take 20,000 bucks for the domain.

Cuz I figured out that he really wanted to buy a boat. And so I was like, think about it. Do you boat or the domain name? I was like, you’ve been squatting this domain name for like 15

years.

Like now is the time you should buy a boat. And so he’s like, okay, so he sold it for $20,000 and then we raised a small seed round of 500 K. It was really hard to raise that. I called it my pity round of funding cuz people would be like, we don’t really know what you’re building here, but you seem really enthusiastic and we like you.

So we’ll, we’ll give you some money.

So raised a seed

Andrew: What was the original idea that you were building?

Russ: Um, so for me in my, uh, the previous company, I, I was the, I ran the engineering team, um, and it’s really hard to recruit software engineer. And you always wanna have a referral program in place, but it’s hard to like motivate people to use that.

So we were building software that would help motivate like people to make referrals and specifically multi like multiple degrees outside of your network. So

I could ask you Andrew, like, Hey, do you know anyone for this job? You might know, oh, I know someone, my network, and then we’d split the referral bonus.

You and I, it turns out that just from a behavioral psychology perspective doesn’t work. So we are

Andrew: But this is what you did at, at tr at, uh, Trilia. This is what you were doing at the real estate company that you worked with. Is that right?

Russ: Uh, it came from the time I was managing an engineering team at gray Stripe, which

is a mobile ad network. Yeah. So I interned it Trulia back in 2006, uh, when they were just like five people while

I was still an undergrad, I was just kind of like my, you know, nights and weekends coding gig on the

side that they paid.

Great. Pete and Sam are awesome. Like it was

really fun. But then out of, uh, uh, grad school at Stanford, I’ve worked for gray Stripe joined as like employee seven

there and kind of built out, uh, the engineering team. And then pursuit was a product that solved a problem that I had

in that role. But in building it out, we didn’t do enough diligence to begin with.

In retrospect, I looked back and I, I realized that if I had done more user interviews before we started writing code for pursuit, I could have figured out that it wasn’t gonna work

Andrew: Wow. You know what

Russ: writing any code.

Andrew: you know, Russ, for so many of us who are watching this from the outside, it made so much sense. This seemed like a brilliant idea. And there were a few companies who were pursuing this approach, right? The idea that your employees and your network know the best people, they just don’t have enough incentive.

Why pay a head hunter when you could just reward the people in your network and your, in your company who were bringing in their friends who are similar to them. Anyway, that seemed to make sense. How could you have known, what could you have asked people? What could you have done as far as research? It would’ve told you this is not going to fly.

Russ: I actually sat down and wrote a post mortem, on it. Uh, and, and, why it doesn’t work. We could do a whole like podcast on it, but the incentives weren’t well aligned. The people who are best at referring others care about their reputation. And if you mix money in there, Becomes unclear what someone’s motivation is for referring a

candidate. And so you’ve got the head hunting world, which is just

like straight up monies involved. And then you’ve got the Silicon valley network of people who are referring other candidates because it’s like a karma thing. And if you mix money in karma, then you know, so we, we found that we were connecting a lot of people to jobs.

They were just going around our system. So maybe there’s something there in terms of like what to do differently, but that’s the, that’s kind of the crux of the behavioral psychology that I, I did not understand and

Andrew: do you think you could have asked something? How could you have figured that out ahead of time? Because if you would’ve asked me, I would’ve said, you know what? I do make a lot of referrals. People thank me for years afterwards. Yeah. Actually, you know what? I take it back as we’re talking. I realize I would’ve told you.

No, I can’t take money for it because it

Russ: Right. We could have mocked it up. We could have tried to just like, make it a smoke and mirrors type of thing, you know, to try it out. Uh, and, and so, yeah, we were gonna pivot to the kind of next idea on our list. That was another tough learning from pursuit is that you think like, okay, I think we can prototype this in like, just a couple months.

And then suddenly you’re like one year later you’re like, oh, dang, everything takes longer than you think it will. And as an engineer, you’re always like, I bet I could do that on a weekend. and then, uh, we were gonna pivot to the next idea on our list. And Facebook was an early user of, of what we had built.

And so they, uh, we interviewed at LinkedIn and Facebook and decided to go to Facebook and, um, had a great experience there, got to, to see the

company go public, but yeah, pursuit like great, great learning opportunity.

Andrew: Did, uh, Facebook end up with that domain?

Russ: Uh, no. So in talent acquisitions, you, you often don’t wanna acquire the company assets.

Like there’s a fair amount of diligence you have to do if you’re gonna actually acquire the assets of a business. And so oftentimes you, you just don’t, if you just want the people, uh, you know, and you know, like we think we spent close to a million dollars on the, the, the diligence for, you know, the acquisition with Dropbox.

So anyway, it it’s certain, it’s smaller dollar amounts. Like if you don’t need it, then you, you just don’t take it. So that’s why I say it’s a, a talent acquisition, but no, I think, uh, there is some other company using it now.

Andrew: I see, uh, 5 0 1 C three. Nonprofit is on the site

Russ: Mm-hmm,

Andrew: Okay, nice. Uh, exit for you. I mean like you, you didn’t suffer financially. You ended up doing okay. You got into Facebook, a company that was clearly on the rise at the time. The next step was, what was it? You and two other friends now sitting around and saying, what can we do?

What’s the next business idea?

Russ: Right. So while I was at, uh, Facebook, two of my other friends from undergrad at Stanford also saw for engineers, uh, that I worked with at gray Stripe, uh, gray Stripe had sold, uh, that company acquired them like Dave and Tony that, you know, they had like kind of, they got their earn out and then they were leaving to start something.

And it’s hard to find people that you’ve got a history with and

really trust to work on a new company with it’s like the whole founder dating problem. So I made the difficult decision to leave, you know, an amazing opportunity at Facebook and go work with Dave and Tony. And the second time around, you know, with them, then I’d obviously told them about pursuit and kind of like the process there.

we decided to like, do more diligence on an idea before we started building it out, uh, because our temptation is to write code to software engineers. And if you’re not writing code, you just kind of be like, oh my God, what am I doing every day? So we had this process and we would like each day rotate whose apartment we went to in San Francisco.

And we had a spreadsheet of ideas. I was like, what are the things you find exciting? And we’d just, we’d go through. And we’d like, just prove something was a bad idea, like in like, you know, a week or two. And so we kind of got through bunch of them and then with, uh, docs end and I realized this is like an unsexy way of describing how one creates a company, because I feel like the the popular version is like, oh my God, like I just saw, I’ve known in an early age, I had to go solve this problem or.

I saw it at a past company and like, no, the three of us just kind of sat around a coffee table, went through ideas and then tried to put holes in it and then we’d go off and interview people. We’d also go off and interview any founders we had found who were like, had done something similar in the past.

We’re really just trying to approach it from all the angles and with DocSend, you know, the, the theory was like, Hey, why do people still send so many attachments? This is crazy. And so we went and talked to a lot of people, like, why do you send attachments? And we talked to like, um, even went to like Google and Microsoft and box Dropbox.

And I was like, Hey, here’s this concept that, you know, ended up becoming docs. And I was like, why don’t you guys build this? And you know that, which is, you know, I think is a startup. You have more to gain than to lose by doing that. And the response I got was that is a good idea. We might do it someday, but not in the next two years.

We even

got a

Andrew: the idea was what the idea was that peop

Russ: send and track links. So add a lot of value to the sender of a document. So they’re willing to adopt using a link and not an attachment

and make it really easy for the recipient to view that information in document form. That’s not, that’s not a crazy concept.

Andrew: So the, the note, the thing that you noticed was people were sending attachments. And if you ask them why it’s, because it’s just easier to use Microsoft word or whatever I’ve got or the PDF and send it over. That makes sense. What’s the, what’s the problem that you noticed that they had, that was so big that they would be willing to try this new thing.

Russ: In some of the first users for DocSend were just other founders raising capital.

And the, the Tam was never like the, we was never the goal to, just, to like, have it be for founders. We, in our interviews, we talked to sales people, we talk to people in financial services. We obviously talk to, uh, founders. We talk to a lot of people who are sending information externally and, and it, so it’s not so much that like sending an attachment is a problem.

It’s more around that information. How important is it? Like how much downside is there? If that information gets into the wrong. You know,

so how, how, what, what does security mean? And then like what do you stand to gain or lose by knowing if they have, or have not read that information ahead of, let’s just say a meeting, like how many times have you gotten on a call and say, have you had time to review the documents?

Right? Because if you haven’t, this meeting’s gonna go super differently than if you’ve spent a whole bunch of time reading through everything. Right. So that scene, state information can be super helpful. And so some of our first users were founders raising capital, cuz I had just been through this process with pursuit and I wasn’t building docs in exclusively for myself.

Like I was with the pursuit concept, but I was myself, a user of this would, would be a user of this. And so yeah, we found that fundraising really high urgency use case where the scene state information is really valuable and you don’t want your documents to go beyond the intended audience, but it also has to be something that’s pretty easy to use for the recipient.

Otherwise they just won’t bother. So you kind of had to hit all of these things on the head and and then people would change their behavior.

Andrew: Got it. You know, what I, before docs end, what I would do is I would use a Bitly link that was created for an individual user that went to a Google drive file. That would then tell me if they opened the link or not. Because if they per, if they filed the link, the number on, on the Bitly stats would go up. That seemed like such a narrow use case that I didn’t think of it as a business, but you are seeing it much bigger in a, in a much more painful way as a founder, trying to raise money and trying to figure out, did they even look at the documents that I sent over? Are they pretending when they say they care?

Are they pretending when they have objections to my idea,

Russ: Yeah, there’s a internal product at Facebook. We had, I think it was called pixel mate or something, or pixel tracker where, um, I did some design work at Facebook and you had kind of put up your, your mock in this tool and then it would show you the faces of everyone who’s seen that, that design.

And so then I would do crafty things.

Like I would send this out to a group and say, Uh, let me know if you have any feedback. Otherwise I will assume this design is approved cuz as a product manager, I’m just trying to like move things forward. Right.

And so, And so, then, uh, so the default you have to say, you know, no, uh, and, but then, you know, so if nothing comes back, great, we go forward.

But I would also check to see who’s looked at it. So if,

if they have looked at it and then not responded, they have approved it, they can’t come back saying like, oh, you didn’t gimme enough time or

something like that. And then if like Zuck, if you saw like Zuck on like seeing the, your your mock you’re like, oh my gosh.

So it kind of, I don’t know. It gave me some insight into the joy of scene state and what one can do with

it. Uh, and so yeah, for you, you might be thinking, ah, niche use case. And for me I’m thinking, why are there this many billions of attachments sent every year? This

just doesn’t make any sense. These should all be.

Andrew: way.

Russ: Why aren’t they all links, like you

can update it after you send it. Like, how about that

is a crazy concept. And I was like, but there is a link sending feature in Dropbox in drive, like why aren’t people using those? Right. Like you just kind of follow that train of

Andrew: Why weren’t they using that?

Russ: There’s just, it’s a little too clunky.

Um, and uh, I mean, it’s certainly better now, like now that your people are sharing. Um, and the, the other thing is that we, we looked at the world in terms of document creation. We, we looked at the world of document creation and collaboration going hand in hand. So even in like 2013, we’re like, okay, Google and Microsoft are gonna win, like have already won the document creation game.

It’s very hard to compete with word or PowerPoint. Now you’re finally starting to see some other players come up

in like Coda or. The online spreadsheet

stuff, but at the time we were like, okay, the they’re gonna, they’re gonna win that. And then the emphasis, then it becomes on like, what’s the external sending piece.

That to us was interesting. And then

there’s a question. Will people pay for that? And our, our thesis was that yes, businesses will pay for the feature sets that Google and Microsoft are neglecting to build as part of their suites. And they’ve still neglected to build it. It, so that was kind of, we, we just failed to prove that Doon was a bad idea in like the first, like few months of like going through all of this thinking, poking all of the holes and everything being like, show me why we shouldn’t build this.

And then at the end of the day, we’re like, I think this shit exists in the world.

Like just as a

Andrew: And asking the companies that should naturally be integrating these as features of their software. Why aren’t you doing it? And them saying, we’re not gonna do it anytime soon. Wow. I just love that idea. Was there any other idea that got close to making it that maybe in retrospect you look at and you say, so I want you to do.

Russ: Uh, yeah, we were gonna build basically, uh, the other one we got pretty close on was basically what G2 crowd is today. And in 2013, there was clearly a need for, uh, new iteration on online reviews of software

products. And so we, we decided not to, to build an online review,

but G2 crowd has done very well for themselves.

So it was there. We were corrected in like, observing that, that was, would’ve been a good time to start like a competitor to that, that particular

Andrew: why didn’t you do that? What was it about that that told you it’s not the right move for us?

Russ: Well, I think G2 crowd also had a number of years where it just took him a while to take off. So. We, we just didn’t find, find there was as much urgency in that use case in 2013, you know,

since then the just number of online SAS vendors has gone nuts. So the need for it is, is more pronounced, but in 2013 it wasn’t as much.

And this, you know, document link sending thing, the three of us just got more excited about it. And so at a certain point you gotta decide and move forward. And so we’re like we’re doing it.

Andrew: I like that it also can generate revenue from the beginning. It can stand up on its own. You don’t need a big crowd of people using DocSend for it to work. It just does. as

Russ: actually an entirely different, uh, thing. We were not very good at charging for docent. At first, the first two years was just free. You know, it took us like, well, took two years to build it and launch it. So we launched it, a tech disrupt in New York and then we were, it was just free. And then

our

Andrew: why free and why two years before we get into the, the next part of it, why was it two years of building? When I, I think I, I know I have Russ oversimplified your business so much, probably because it is so simple. I just opened up a DACA earlier from a few months ago, type in a password, opened it up.

It worked so naturally. And I think maybe because it works so well, I underestimated how much work went into making it work well. But if you’re looking back at the first two years, why did it take two years to get that first version out?

Russ: uh, it only, well, it took one year before we launched it. So what we did is we launched it and we started in March of, uh, 2013. Uh, we did basically six months of prototyping, uh, and we just made it. Ugly and off the shelf as possible. Not we weren’t investing anything in design. It was just literally the functionality.

We didn’t need a marketing site, so we could give, you know, login accounts to people in exchange for feedback. So that was like the, the prototyping. And then these were the founders we gave it to, to track their pitch decks. And so that was just a very quick and dirty thing. And then once we convinced ourselves like, Hey, they do like it.

We, we should probably hire a team. That’s when we went out and raised our seed. And then we learned a ton on that first version of the, of docs end. And so we scrapped it. We just started over from scratch and we said, okay, now we’re gonna rebuild it. We’re gonna make it look great. And then that took us another six months.

Uh, and we had to hire a couple engineers and then we went and got a design firm and then we launched a tech disrupt in 2014,

basically. Uh, and so that took the first year and you’re right, that, that version was like relatively straightforward and simple. We had another year of just free. And then we started charging like 10 bucks a user a month because we didn’t know if it was gonna be B2B or B2C.

Right. Like, think of like all the use cases for just documents being sent everywhere. Why shouldn’t everyone use DocSend and we pretty quickly realized that, uh, it’s not for there, there’s higher urgency in some use cases than others.

Um, and so we ended up coming up with this, like ECCs, um, where people love DocSend if it’s external, uh, if it’s custom.

If it’s critical. And if it’s sensitive, if a document fits all of those things, like doxins the best thing on the planet for that use case. There are other use cases that might not have one of those. And then doxins clearly a nice to have kind of thing still, still

useful, but like becomes more nice to have than like need to have

Andrew: Okay. And so I get it, it wasn’t a whole year of building out your vision. It was a year of prototyping getting feedback, adjusting, fixing, then making it look really good. And then finally at the end of that year, launching. right. That’s that’s what it is. What did, how did the idea change as you were starting to show it to people and having them use it? What did you not expect?

Russ: um, if you look back at our 2013 pitch deck, it is pretty much exactly what we built. So

I think we did enough. Research front to know like what was in scope for DocSend and, uh, what they would like about it. Um, what we ended up evolving over time was we have a full data room feature set in DocSend now.

And so like that that’s only something we could have done on top of like the kind of the first product we’ve also

got a full e-signature set of like features and, and docs end, which is awesome for a lot of those use cases we’re adding, you know, video support is something that’s coming up, um, where just like there, once we got product market fit in the initial section, it was interesting to observe like where we could evolve from there, uh, and getting into new things.

I think one of the things I didn’t anticipate early on was how controversial DocSend would be on Twitter with investors, putting up a huge stink about DocSend links over a many year period, as far as I know, there’s still complaining on Twitter. And that was funny for a few reasons. One it’s free advertising for DocSend

awesome.

Andrew: That helped.

Okay.

Russ: yeah. Like I even see like doin come up in like, you know, praying for exits or other like meme accounts. people talking about docent and so VCs complaining about on Twitter, but then those VCs are also self-selecting to advertise that they’re not especially founder friendly because when you’re the investor, you’ve got all the money.

Right. And like you should, as the investor, do whatever makes the entrepreneur’s life easiest. Like it doesn’t really cost you anything. If the entrepreneur can see if you’re reading it or not, that shouldn’t really inform your investment decision around it. So I did not expect that docx and would be controversial or as controversial as it

Andrew: They, there are a couple of things. There are some who just said, look, if you send me the PDF, I just have an ongoing record of the PDFs that I know I can keep of what you’ve said you’re gonna do and what you’ve done. And that’s helpful. There are others who said, I don’t like you spying on whether I looked at it or not.

Maybe without even any reason, it just felt a little bit weird and icky. And then basically, I don’t remember them being the kinds of people who are not founder friendly. I just remember them being the kind of people who are so privileged that they could tell you to go and give them a presentation in French and you’d have to go and learn French just because they were just the people you wanted to please.

And that’s the way they were carrying themselves with this. And they basically said, it’s easier for me this way. Do it easier for me if you wanna work with me.

Russ: Yeah. And that’s the, the age old question is like who in this awkward dance between an entrepreneur and, uh, the venture capitalist who who holds the power and the market kind of dictates that, like, it was always the case from early on that the most confident founder. Used DocSend and the founders were like, I’ll just do whatever the VC wants.

Fine. They can just send the PDF. That’s. I mean, whatever that works too, it’s just the ones who were the most confident. And it usually meant they had like done it before, or like they had more of a, kind of a ability to negotiate with the investor. Like those people have always loved DocSend.

Andrew: Eventually I think you even put a, I know you did, you put a feature in that said how long people were spending on each page and there were some investors. Am I right about that?

Russ: Oh, we’ve had that from the very beginning time per

page. Yeah.

Andrew: So investors then would sometimes have somebody just sit and click on it to make sure that they were sending people, the signal that they were spending time on it.

And truthfully, I have to tell you, Russ, I’ve done that too. Now that I say it out loud, I shouldn’t point at other people, someone would send me a deck and I go, I want them to see that this is something I’ve considered. I know it doesn’t take me that long to read it, but I could see, they put effort into it.

I’m gonna pause on this page for a few seconds and then I’ll, and I’ll go to the next page just to signal to them that I care

Russ: There are a couple

things that surprise people. One is that if you switch tabs, we will pause, tracking. So I get some investor to like, ha ha ha I’ve

I’ve fooled you by switching tabs. I’m like now we actually paused the tracking. Uh, and so that doesn’t fool us. Um, and it was surprisingly annoying to go through and figure out every browser.

And even every browser version has like different little signals. They’ll

tell you if you switch tabs or like in focus, outta focus type of things, and then getting like the per page tracking to be accurate across all them. And we had to go back and support really old browsers that even Microsoft doesn’t support like versions of IE, cuz banks will be using really old browsers.

So there’s just a lot of stuff we had to, to build in there to like make all that information accurate. Um, but yeah, people, people really appreciated it, um, that it, that it was so accurate. And then. On the investor side, we started publishing stats about the average view time, because yeah, investors were doing what you’re saying, where they’re like kind of modifying their behavior, but like the average read through a deck is only a few minutes.

Anyway, you like, you might think that you’re unique and flip, flip, flip, flip, flip.

You’re not, what everyone does. And so, uh, it, it really is, uh, something that I’m entertained by that we created a new social norm around, like who is allowed to track. What, and what does that mean? And. You know, like one of the things we said early on was that as a justification for the per page tracking, it’s kind of like a digital body language in the sense that if

I’m in a meeting with you, Andrew, and you’re just on your phone the whole time, that just kind of tells me you’re pretty checked out and don’t really care, you know, in the same way, if I send you a link to my deck, that’s something I poured my whole life into and you don’t even bother to read it ahead of the meeting.

Like, okay, you just, you just didn’t take the time to read it. That’s good for me to know, cuz that’s just kind of where you’re at. So that, that seemed super reasonable to us as an explanation. But yes, it depending on who you were. Some people I think were a little irrationally, uh, uh, angry about, about this new newfound power that entrepreneurs were given.

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Russ: Cool.

Andrew: All right. Thank you. You gotta keep that in mind.

I got an idea. I got a sense that you’re gonna start another company. Are you, do you feel like you’re at that place? You’re laughing that off. I feel like you are. I don’t think, I think you’d be a great advisor, cuz you seem like you’re someone who doesn’t have the, you don’t, you don’t have a BS part to you, which I, I do.

You don’t have it. and so I think you’d just be a good advisor, but I feel like you’re you love creating and that there’s, that maybe you sold too early to Dropbox. It’s clearly grown a lot since then. I feel like you have, maybe you’ve seen the inside of Dropbox and you’re saying to yourself, I could do better than this.

I know I

Russ: just to clarify one thing, I, I will say that, like it, I got this feedback from a lot of other founders when I was, we were going through the acquisition process and everyone

just said, it’s a personal decision when you decide to sell. So I, and I actually in retrospect think that’s true. So, you know, it’s, it’s not that we sold earlier, too late or whatever we sold our company.

And you know, that is what it is. I think Dropbox is great and very natural acquirer for

Andrew: I don’t mean to say that as a way of beating yourself up. I, I mean, or beating you up, I feel like you’ve got a multi-billion dollar business in you and I’m, and I’m feeling like that’s the next step for you at some point. Do you think that I’m right about that? I don’t know you that well, I’m just guessing based on what I’ve seen in your past.

Uh, some of it that we haven’t talked about yet, and that’s in what you built with DocSend

Russ: I will say, I, I love software. It’s just really fun. It’s and building software companies is just awesome. Like we’re alive at such an interesting time where there’s just lots of software left built. In my opinion, I even did my master’s at Stanford in human computer interaction. And my theory was that most software can be built.

It just shouldn’t be built or it’s not the right thing to build . And one of the guys I did classes with in projects with was Mike Krieger. So, uh, that he was one of the co-founders of Instagram. So, you know, it’s that my thesis still holds true that I think that there’s, there’s a lot left to build and, uh,

Andrew: I do, I sometimes look around and I feel like there isn’t, we’ve done it all. And now there are five of everything. And then I feel, that’s why we’re all going to crypto because we wanna challenge ourselves to do something almost too stupid to see if we could make it work anyway, because everything does seem to have been built in software.

What do you see is still left out there to.

Russ: Uh, I like remembering the late 18 hundreds as a period, not personally, but having read about it, uh, at the

late 18 hundreds, it was also kind of generally considered that humanity had built everything. And two really funny notable exceptions, humanity had not invented the mouse trap yet, or the paperclip

So, uh, you know, part of me agrees with you, Andrew, like, yeah, maybe we’ve built it all, but then I think, no, we definitely have not. Uh, we, we have not built all, all software. I mean, I’ve got like ideas in my own head, like options for like what I might start if I did something again. Um, and everyone’s like, oh, I just wish I had a great idea.

And my thinking around that is usually like, pick a problem space. Like, are there, are there still inefficiencies in how businesses are run? And the answer is absolutely. like,

Andrew: What’s one that you see that you may not pursue. And maybe you could actually, you seem like the kind of person who would tell us even what you are thinking or pursuing, just so you could, uh, do that devils advocate thing that you were doing before. What’s an idea that you’re running through.

Russ: um, I actually don’t wanna say any of them just because I still am employed by like Dropbox right now. We’re still working

through the integration. So more, more of like a technical lead, the fifth type of thing,

but, uh, at, you know, just the, the going after a particular yeah. Problem space. Uh, I have been investing in companies in the last year, which is a ton of fun, uh, actually, um, Uh, just to, to get involved at that level.

And I mean, I think I’d say if anything, my brain always gravitates towards just boring B2B SAS software. That’s what I like. I gave, uh, yeah, as talking through ideas, a friend they’re like, yeah, all of your ideas are just like problems that need a solution and people are willing to pay for. And I’m like, absolutely.

That is exactly where my brain goes. Like if I have, like, if I was known for my career, like building useful software that people pay money for, I’d be like, great. You could put that on my tombstone. I’d be very proud of that.

Andrew: all right. We were talking about how the most confident, uh, entrepreneurs were using docs end. I feel like you were very confident in that early raise. I think you told our producer, you spent only two weeks on fundraising and you were able to close it out quickly. That’s the time that you gave yourself, because you knew you could do it based on your experience.

Right?

Russ: Right when Dave, Tony and I started DocSend, we each put in some money that wasn’t savings, just, you know, money that we had. Um, we’d, you know, been through an exit before. And so we were, you know, more financially stable, but we didn’t wanna put the bill for hiring a, a team. Like we were happy to put the bill for ourselves and

and, and like spend at least a year on this, see if we can find something.

And so then when we were like, okay, we’re at the point where we need to start hiring engineers so we can go faster. Um, having had my experience at pursuit, I was like, okay, I don’t want this to drag out into a six month pity round. Like I want to do it like fast and get to know or get to yes. But that’s what I wanna do.

So I like lined up, I don’t know, 30, 40 meetings in a two week window. Um, right at the beginning of September. I remember this because I went to burning man the week. So like before Bernie man, I like set up all my meetings for the first two weeks of September. I went off to Bernie man had a great time and I came back and then I was in pitch mode.

so like back to back, cuz I

wanted to do them all in a condensed period. And if the answer was no, then okay, fine. We’ll just go back. We’ll make more progress. We’ll tweak things, you know, we’ll, we’ll see. Maybe we need to get some more traction or something before we pass the bar and can find an investor so we can start hiring other people that wasn’t a big deal, but I just didn’t wanna spend six months doing it.

So I would say I was more confident in the process and how the game works. And so we got a ton

of notes by the way. It’s very distressing for most startups going through the fundraising process, you get belittled. A lot of people are like, do you really think you’ve got what it takes? You just, if you get a lot of

nos from people that just, it’s not very confidence inspiring, like, or it’s not good for your ego.

Um, but you only need one that

Andrew: How did you keep your confidence up?

Russ: Um,

Andrew: How did you keep your

Russ: Oh, by giving myself a deadline. I was like for two weeks. Yeah, it’ll be fine. I can absolutely get through this. And so at the, we were getting near the end of the two weeks and I was like, well, I guess we’re just not gonna raise right now. And, uh, Encor was one of the last firms I pitched.

Uh, I pitched Charles Hudson who’s now is at precursor. He has left to start his own fund.

Um, I had pitched Jeff previously for pursuit. He had turned me down, uh, but you know, remembered me like, oh, that guy. Oh. And then you went to Facebook. Wow. Okay. So he, uh, he did not even, I don’t even think he read our pitch deck, but Charles liked it.

And then the Monday following, uh, I met with the partner reading at Encor and I got a term sheet Monday night. So on the third week, Monday

night I got a term sheet. And so I was like, cool. So I turned around and I, uh, well, one, I negotiated with Jeff because I was like, listen, we’ve already got like offers to buy the company for more than the pre money.

So we kind agreed on a, a price. And then I turned around and I said, anyone else wanna gimme a term? No one else wanted to gimme a term sheet, but everyone else wanted to, uh, join the round. This is the dynamic. I

didn’t realize at the time where it’s like early stage, like, like seed rounds is like half from the term sheet.

And then everyone else is just fighting over the rest of the allocation. And so I very quickly went from like, oh my God, we’re not gonna be able to raise to, like, we had like way over subscribed. We had like four point something million for like a 1.7 million round. And I was like, wow, what a

lending effect? This is fascinating to, to observe. So that’s always something I try to keep in mind too for, you know, your question, like, how do you get through it? You gotta remember that there are a bunch of odd dynamics involved in all of this and you just do the best you can and, and, and, see what comes out of it. So, yeah, but UN per was an awesome partner for us.

And so, yeah, they, they, uh, were a great seed investor to get on.

Andrew: all right. You did tech crunch, you launched, and then, um, you got more users. What a great audience for you to, to talk about docs end with, and then soon after you raised, uh, series series a 8 million,

Russ: mm-hmm

Andrew: what was, what happened between those two period? How did it, how did growth and product change?

Russ: that’s a great question. And the story is a funny one. I don’t think I’ve ever told this it story, but, um, on a podcast when I was leaving, uh, Facebook and decided to go, you know, join Dave and Tony. I also kind of like looked around in the market and kind of asked myself, what, what do I wanna do? I kind of briefly considered venture.

And, uh, August capital was a firm where I had, uh, kind of interviewed and for anyone who’s ever interviewed for like VC jobs, they end up being like kind, you know, pretty informal, get to know each other type of things. Um, And so I was interviewing with one of the partners there. And then I said, Hey, you know what, I’m just gonna go do this thing.

I didn’t even get an offer to the offer stage from them, but kept in touch with the firm. Um, and then we also pitched that firm, August capital for, uh, our seed round, but they said, we’re too early. And I said, that makes sense. You guys, your fund is way too big. You, you do A’s and BS like this. Oh. And then, uh, fast forward, like a couple months and the, you know, Howard who ended up be leading the investment in, in being on our board for the whole length of the company.

He’s like, he just kept getting DocSend links from random entrepreneurs and they were raving about it.

And so, um, we only had, we had a very small amount of revenue in 2015, but Howard basically came in and preempted our series a and it was, uh, you know, we agreed on a, a price in terms. And I asked some other people who were in VC and they said, listen, you’ve got, this is, uh, just a bet he’s making on you.

You don’t have the traction. It required to raise this much money. And I was like, well, we’re gonna take the money. We might need it later. We’re still gonna like, be thoughtful about how we build it. But, uh, I’m so glad that we did, like having that cushion in there was, was really helpful. But yeah, it was, uh, it was, it was fortunate just to, to keep in touch and then the, yeah, for the, the series a like, there are all sorts of different stories about how people get that deal done.

Like for us, that just happened to be how it worked out for us.

Andrew: I read that when you worked at Facebook, Chris Cox gave, had the advice that at Facebook, they were watching users run into walls and then building product features that break down those walls. Did you do the same? Were you looking to see where people got stuck, where they had problems and that’s how you knew what to add?

Russ: Oh, 100%. I, I should also say that I’m so appreciative of the time I got to spend at Facebook, uh, for a couple years, cuz especially in their early days they had such good. Engineering culture. And they had like, just a such great product management, like team where, you know yeah. You know, Chris and I were actually in the same Friday at Stanford years ago, which is really funny to me.

Um, but yeah, Chris’s such an amazing product leader,

but yeah, I learned a lot and that was certainly one of them,

which is observe your users and like, what are they doing? And so a lot of the innovation at docs end, it was just by observing our users and what were they trying to do? And like, just continuing to be curious and then wondering like, well, what can software help with here?

And then just kind of, I call it like a trail of breadcrumbs, just kind of following the trail down the road.

Andrew: There was one period where you told our producer, just watching what they’re doing on the software. Wasn’t enough. You had to actually go and talk to them. that was a, am I right

Russ: Oh, yeah, for sure. For sure. Yeah. Like data is data. You can even do, you know, capture their session. You can kinda see what they’re clicking around on, but, uh, I’ve always loved talking to DocSend users and, you know, just learning about their businesses. Like , um, like I’ll give you one example when we were, uh, 2018 redoing all of our, uh, pricing, packaging and positioning, kind of coming up with the concept of docs on today.

Um, same product, but we were trying to like figure out cuz we didn’t want to go sell the big sales teams exclusively. We wanted to do more of like a product of growth. Broach interviewed hundreds of customers. I was talking to one managing director of an investment bank. Toronto. And, uh, they had a huge amount of usage on it.

I was like, wow, you, you really like the software? What do you use it for? He’s like, well, I email the attachment to my secretary. She uploads it into DocSend. She sends me back a link. I then send the link to the

potential client. And then she sends me screenshots of their like viewing behavior. And I was like, huh

And uh, and he’s like, the crazy thing is that we don’t pay you. I’m like, well, no, your secretary pays us $10 a month. He’s like, like I said, we don’t pay you we were just charging him way too little. And so that informed a couple of things. One is on the advanced plan for docs, and there’s a three seat minimum because we found a lot of like, these firms were like sharing logins when I mean, come on.

And there’s also just a really high, willingness to pay in a lot of these like use cases. And in some cases, actually, we found that people didn’t trust us because we were charging them too little money, which is fascinating to me. So

we increased pricing in 2018 conversion, went up. Which is bizarre. And so, and none of these

things would’ve been discoverable if I’d just been looking at the data, this like could only happen by going and having a lot of conversations with a whole bunch of people and just being curious.

Andrew: You were starting to say why you didn’t charge for the first few years. And I interrupted. Cause I wanted to get more details on the first few years, let’s go into, into why you didn’t charge. Freemium was already a thing by then.

Russ: Yeah. And we thought, okay, doc’s gonna be classic freemium. It’s gonna be huge. And what we decided and discovered was that, oh, well, there is a smaller market with much higher urgency and. It just seemed like the right decision to go after the smaller market with more urgency. And we discovered this is only businesses using it and businesses sending information to other businesses.

This is just clearly something that should be like a paid only thing, not freemium. So we changed our, our freemium model. Uh, we actually still have a hidden free tier where if you stop paying us or cancel, we downgrade you to this free tier. So like your account is still there and you can get back back into it.

Um, but, but yeah, that, we had a lot of evolution in our thinking around that where, you know, is it freemium? Like how much is enough? And so I have always since then urged entrepreneurs that I invest in or advise, or just even chat with to really think about pricing, packaging, positioning, like all these like businessy things early in their company, because especially for a group of technical founders, it’s tempting to build a great product, but I didn’t realize the degree to which.

You need all these other things, not just a great product, if you’re gonna end up with a great business at the end of the day.

Andrew: So when you talk about packaging, for example, and positioning, how did you change

Russ: So the first version of docent was just like document analytics. That was pretty much it and it was, uh, free, open to everyone. And then we’re like, okay. Oh, wow. And then, uh, some people are using it for this. Some people are using it for that. Uh, we sold a couple like 50 K contracts to larger sales teams.

And so then we were like, okay, we’re gonna go, just do that. We’re gonna sell into sales enablement. So then we changed our marketing sites. They just like sales enablements, call us for pricing, talk to sales type of thing. And then. We, we saw all these signs. Like people tried to get it into the enterprise tier, just over support.

So like support people were selling more software than like our sales people. And then I was like, okay, well this is wonky. I don’t think, you know, this upmarket thing is like where our product shines. And so we, uh, redid everything after all these like interviews. I came up with the concept that our brand promises.

That’s what people are buying and it’s not like we’re just gonna be sales. We’re just gonna be fundraising. We’re just gonna be account management. We’re just gonna be financial services. We’re kind of all these things. That’s just in the user base, cuz these are the people who gravitate to the product and in order to get the early adopters, they’ll use it no matter what as evidence by, you know, investment bankers in Toronto, signing up for a product that says sales enablement.

They’re like, no, no, no. I know what your product does. Like I’m I know it’s for me, even though we like just said on the market, say it’s not for you, but for later adopters, they kind of need to come to the site and see someone saying, Hey, it’s for you. So it’s a horizontal technology that we market vertically.

Like that’s what we came up with for DocSend with a brand promise around control. And so if you go to our website now, you’ll see like, Hey, all these different use cases for the technology, which at the time was a little different. Like we didn’t see as many companies doing that, but fast forward even just a few years and I’m starting to see a lot more companies take that approach.

Andrew: Control and insights is what stands out for me on the whole page. Now

Russ: Yeah.

Andrew: that, that combination, um, You also had a finance tier. Can you tell the story about the finance tier

Russ: Yeah, sure. So pricing and packaging are a dark art. You can pay companies tons of money to do all the research in the world around pricing and packaging. I don’t know if you get incremental gains doing that. Dropbox is a whole team internally just devoted to pricing, which makes sense, especially a Dropbox size, but for us, we couldn’t afford it.

And it wasn’t even clear if it was the right answer. So after doing all these interviews and realizing like, okay, we’re gonna make everything self. Um, so we, we had like a $10 plan and a $30 plan. We got rid of the $30 plan. The average that our sales team was selling in to like other sales teams was $45 a user a month.

So we didn’t know what to do with the $10 plan. So we left it. So then it was $10 a month per user, and then $45 a month per user. And that just looked a little wonky. And so we’re like, okay, let’s put in a third plan. And just for symmetry, we’re gonna say $150, uh, a month.

Um, but it comes with three seats included.

So it’s basically the same price as the standard plan,

the kind of middle one. And then, eh, this kinda like roughly looks nice and then there’s enterprise call us, but like, we’re not really focused on that. And at first we called that the finance plan and we didn’t put any differentiation in. That we didn’t actually have any other features in that plan.

And so then we, we launched it and we were hoping that, you know, everyone’s gonna pick the middle one at 45. And so that the idea is like everything being sold through a sales team, it’s just gonna be sold direct on the website. You don’t need to talk to anybody. You can just sign up. That’s clear what people want here.

And we were shocked when people

started paying us for the finance plan. And so then I had to go back and talk to users and be like, what is it that you were looking for? in this plan? And so we added a lot of features around dynamic watermarking, um, like allow lists or disallow lists. Um, there are just a lot of security features, um, that are kind of more data roomy and they also wanted

data rooms. So we started building all that out and then we went back and re-looked at those users and realized like, huh, only 30% of them would be in any flavor of finance, shockingly. And so. We had a little internal debate and we changed the name of it to advanced. And so if we had not put that up there, I don’t think we would’ve ever found that out.

I was telling our team that it’s it. We called it the Eddie Bauer plan, cuz Eddie Bauer or sorry, the Ford Explorer had an Eddie Bauer version. That was just way more expensive. And that card didn’t sell a

lot, but the previous, most expensive one sold a lot more, which is a thing that happens in pricing.

Andrew: because it looked less expensive in comparison.

Russ: Yeah. And we thought that the

standard that what would happen is that people would buy the standard plan. In fact, everyone bought the Eddie Bauer car or a lot of people did. And that was what was so

surprising to us. Yeah.

Andrew: And then that taught you what they were looking for, what they were expecting when they were thinking about finance. And then you knew to start to build that. And by the way, you mentioned data room, data room is like a virtual hard drive with security features on it. Am I

Russ: a great question. So there’s this legacy industry called virtual data rooms. It’s a holdover from the olden days of like pre-internet where if, uh, you know, a banker is representing a client, selling their business, uh, prospective buyers would have to come to a physical room and read the documents in that room.

And those documents could not leave that room. And so then this went online, became the online analogy of, of that’s called virtual data room. It’s about two and a half billion a year in spend. A lot of people don’t know what a VDR is. Um, but for the average person, what they want is a folder like a shareable folder with security features, with access controls, uh, and analytics.

That’s what, that’s, what they want. And so it might be the case that you only get access to the first third of this folder. Someone else gets access to the second two thirds of it. I can give access to nine different people. I can control things independently for what they can see or not see. Uh, I can have you sign an NDA before you get in or not.

And like that, that nuance, uh, even if people don’t know what to call it is often what they want. And that’s what I am referring to when I say data room for the feature set that, that DocOne eventually built out.

Andrew: My second sponsor is masterwork. Do you know masterworks, Russ? It’s okay to say no. I feel like I’m introducing them to a lot of new guests. All right. Here’s what they noticed. They notice that a lot of people, when they get rich, they start to invest in art. Why partially, because they just love the beauty of it and they wanna support art and have it around them.

But the other reason is art withstand a test of time. If you look at the companies that were on the Dow Jones, industrial average, when it first launched, many of them. On now, but the artists that have been around for since, before we were born and around that time are still up and running. Russ. I just saw your face, do something, everything.

Okay. We’re going a little longer than expected. Okay. Anyway, that’s why they’re doing it. Art holds up. The problem is art is very expensive and it’s hard to, to secure. And so what masterwork decided to do was get people together, buy art together, securitize it, and then allow multiple people to own a piece of art.

And. You can buy into art without buying the whole piece of, uh, artwork. That’s what masterworks is all about. Hundreds of thousands of people already members of masterworks. If anyone in my audience is interested in getting into this, if you’re curious about it, you could do what I did. You could just start by having a conversation with masterworks.

They will explain it all to you. Answer your questions, give you, um, an understanding of how easy it is to get involved with it. All you have to do is go to masterworks.art/mixergy, masterworks.art/mixergy to get started

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Andrew: Why did you go into, um, into enterprise sales? If this wasn’t really your thing? It feels like there was something going on with profits that was leading you there from my understanding.

Russ: right. So I often remind other entrepreneurs about this, especially first time entrepreneurs, like at the end of the day, anyone starting, uh, a company needs to make a real business out of it. like, you know, like, and that can happen sooner or later, depending on, you know, how much capital you’re able to raise.

But for us, our investors said, Hey, you, you gotta start making some money. And I think the last few years might. be odd in the sense that there was so much capital in the market that people could just not make money and, and just raise a lot of money. Um,

so, you know, for, uh, I think for better, uh, we were pushed to make money after the first couple years, or at least have a business plan.

And I would highly encourage I’m sure to do that. And the self-serve was kind of puttering along at $10 a user a month, but then, you know, selling a couple of 5,000 K contracts, you know, I was like, oh, this is promising. And our investors was like, yeah, you should just do that. And. You know, to the credit of the space, like there is a whole sales enablement space now, and people are making a ton of money off of that.

And I think that would’ve been a valid direction for us to go in, except that my co-founders are not, you know, enterprise sales natives, and the way we’d been building DocSend was for the end user, not the economic buyer. And so we were able to win deals, but our average cost of sale was about $19,000. We had a whole outbound team of SDRs and AEs and it, it would’ve been fine.

Normally if our competitors hadn’t raised a ton of money. And so we kind of got out raised in that vertical. And so there’s some, some tough lessons around that. I feel privileged to have survived that period for for docx end, but you know, it’s not all, you know, warm and fuzzies and startup land when businesses are competing with each other.

Andrew: What’s going on, you used the word mean? I think with our producer, how, what are they do? What were they doing that was so aggressive? Did they find out that you were in the bidding and then undercut you even to lose money? Was it something like that? What were they

Russ: Yeah, I’ll give you one example. So we’re, we’re selling to a company and, uh, I, I think, I don’t think it matters. It’s Fastly, like, um, and then,

uh, what happened was we, there’s a person internally that’s overseeing the kind of, um, trialing out different softwares to like figure out like what’s their sales team gonna send attachments with, you know, how do you find and send documents like sales, collateral?

And so the person kind of overseeing the trial. Uh, we work with them on the criteria and if you’ve read a hard thing about hard things, you know, it talks about, you know, like you gotta win the criteria, otherwise you you’re kind of lose the deal. And so you’re going negotiating the criteria. And then, you know, we take the, go through the effort of rolling out the software, across sales, people, getting all their feedback.

And, oh my God, we won the sales people, liked our software the best. Awesome. And then what happened was that we lost the deal because that person overseeing the evaluation, they’re like the person who hired them into the company in a different exact role, not even like a different department, um, uh, was friends with someone at a competi.

And someone on that company’s board had like asked them for a favor and then they’d heard that we were in market. And so then, you know, the person who ran the evaluation was. Uh, if it’s not important to you sure we’ll go with the other one. They, they seem like they’re okay-ish. Uh,

and so then at the last minute we lost the deal in like a very targeted way.

And so that’s the sort of thing where I’m like, oh my gosh, we built the better software. We won the evaluation, we lost the deal and if you fill up every single day with experiences like that, it’s, it’s not ideal in my mind. So I’ve got nothing against enterprise software, but for DocSend what ended up winning at the end of the day was the self-serve product led growth motion that we’ve got.

And I even told our company this. So I was like, if this is the only business option we had. We could make it work, but because we have this other go to market motion that works better, like, let’s do that one. It’s got really high margins, there’s a low cost of sale. It’s got all

these awesome properties.

Um, but, but yeah, the, the, the reason you use the word mean is that, yeah, especially in enterprise sales, if you’ve got like a, a really kind of neck and neck competitor, it can get, it can get pretty heated in, in like those sales and, uh, and that attracts a certain type of temperament, I would say. And, uh, a certain type of company wins.

Andrew: let’s talk about why you sold. what led you to start looking for a sale?

Russ: I just don’t know. Well, we did not, uh, look for a sale. We had another public company that came to me, that CEO came to me and he said, Ross, I need to need to sell your comp, wanna buy your company. And I was like, huh? Uh, I think we’re actually, we’re actually doing pretty well. So that that’s okay. Um, I should also note that I think part of the CEO’s job is thinking at least a little bit about outcomes.

And so, like I told you, I had, even when we were starting docs and went around to everyone else who I thought should build it and, you know, gave them the pitch on it. And then we went off and build it, but I kept in touch with those companies. And so we were kind of like on their radar, not because like I had like a plan to sell the company or something like that.

My view on exit strategy is like, don’t bother with one, just build enough value and good things will happen. if you’re fortunate, maybe IPO someday. Uh, but if you build a good business, like you’re gonna have optionality there. And so I kept in touch, he came to me, he said, I need to buy your company. He’s like, oh man, this is gonna be more expensive than I thought.

And so he got pretty close to number that my co-founders and I thought would’ve been reasonable. I had a relationship with Dropbox from before. Cause I interned there in 2010 and I tracked down drew and I said, let me work for you. And he said, fine. And I had a great summer there. Uh, and so, you know, I went back to Dropbox and I said, uh, this other company might.

They’re getting pretty close to number. We might accept, like, is this something that would be fit for you? And they’re like, let’s check internally. They checked internally. They’re like, yeah. Yeah, it is . And so they came back with a number that was higher and so went to the board. They were like, sure. Went to co-founders.

They’re like, yeah. And then we did it. And then we signed L Y and it took three weeks of diligence. Like doc sand was a very, and still is a very clean company in the sense that, you know, we’ve just been really buttoned up from the beginning. So there’s not a lot of, like, there aren’t really weren’t any skeletons in closets that, that required cleaning up.

So it felt very short and also very long, because those are very long days going from like independent company to like, Ugh, we got bought . So.

Andrew: Set for life fair

Russ: Yeah. We only raised 15 million total for docs end, and I’m very proud that we beat the IRR of all the funds that were investors as well. And then also Dropbox is super happy with it. So it’s one of those ended up being one of those

deals where it’s kind of like classic Silicon valley software, everyone made money, really useful product doing well, solves a real problem in the world.

And so, um, yeah, it, it feels like, ah, it was, it was a good outcome and something I’m, I’m proud of.

Andrew: Is, did you get into this space because of your uncle? Like, is this come, just coming back to the original motivation, I heard that your uncle said to you, if you really wanna do well, go pick the hardest thing that you can study in school. And is that why you got into electric engineering? Is that why you got into tech?

That that was the hardest thing that you could spend your days on?

Russ: yeah, I had in my, I grew up in South Dakota and I had one uncle who worked in tech. In the kinda like nineties and, and, uh, that was my only connection. That’s

why I went to, to Stanford actually kind of came out and visited and was like, wow, this is awesome. And I didn’t know, I wanted to be in tech when I came

out to Stanford, but yeah, I got that advice.

Andrew: And tech wasn’t what it is today. This is before mark Andre, before Netscape, before Jeff Bezos was

Russ: I graduated from high school in 2002, so that’s when I got to

Stanford and the prevailing advice at the time was like, everything’s gonna get outsourced to India. Don’t bother studying computer science. Like we just, we missed it

out. We missed out an edge, everything, the.com it’s all done. Just like you’re saying everything has been built.

don’t even bother Um, and so I wasn’t sure wanted to major in, uh, but then yeah, based on this advice, I was like, yeah, I should study. Um, I wanna, you know, get a job afterwards. I’ve always loved, you know, engineering and math and so started, uh, Al engineering. And then pretty quickly realized that I just personally gravitated to the software side of things more.

Uh, software’s just really fun for a variety of reasons for me. Um, but yeah, I thought that was good advice, uh, from that uncle around, you know, like yeah, sure. You can go back and learn to be a software engineer later. Um, in my case, like if I didn’t major in that, what would I majored in like history? I find history, fascinating.

I, you know, read every book, Dave McCall has ever written type of thing, but I thought, you know, well, I’m at Stanford world around university. I might as well take advantage of, you know, what their best stats and that happened to be, you know, computer science.

Andrew: Damn that worked out well. All right. I hope you’ll tell me when you’re ready. What you’re going to be doing next. I know you’re with Dropbox. I know that you’re there. I see the companies growing. It’s not like you just. You sold and everything. Just, I don’t know, got neglected.

You’re doing

Russ: investing in it. The, the team’s happy. The product’s done super well. for them. Um, you know, there there’s a lot of alignment in both the go to market model and it continues to be the case that like, I think Dropbox should have built a doc send like product many years ago and they did not, they did the build by partner like math and they ended up buying.

Um, and so, yeah, there’s, there’s a lot to do in terms of team integration, technology integration. So there’s a lot to work

through there, but yeah, as for me up next, I, you know, probably, uh, will take off some time to travel, you know, I think, I think I’ve earned that at this point and then I’d be happy to let you

know, like what I, what I gravitate towards next.

Andrew: What kind of travel? What kind of travel

Russ: Uh, I never took a gap here, so I’m a, you know, like after high school, so I’m like, I should do that. So yeah, my wife and I just go travel, like the

Galapagos is on the list, Israel. Um, I wanna go do some, uh, great walks in New Zealand. So there’s, there’s no shortage,

uh, of kind of places to run around and, and go see, not surprisingly running a startup, you don’t have as much time for kind of annual vacation as you know, you’d like, and so for me, I’m like, yeah, I’ve got some pent to travel to, to go run around and do, which will be fun.

Andrew: All right. Thanks so much for being on here. What a killer story, what killer experience. I’m so glad to know you and to see all this happen, the what’s your personal site, or how can people connect with you

Russ: Um, I’m just russon.com or Russ dropbox.com. Or you can follow me on Twitter

or you can, uh, add me at LinkedIn. Um, so I’m not, I’m not too hard to find on the internet.

Andrew: all right, right on Russ. Thanks so much for being on here. Thank you everyone. Bye.

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