[Podcast] DocSend CEO Russ Heddleston chats startups with Venture for America

Venture for America is a fellowship program aimed at helping recent college grads jumpstart their careers as entrepreneurs. A few weeks ago they interviewed our CEO, Russ Heddleston, on their podcast “Smart People Should Build Things.” Listen in to learn more about Russ’ background, how he built and sold a company to Facebook, what he learned there, and how DocSend came to be.

Click here to listen to the podcast, or read the full transcript posted below.

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Full Transcript

Intro

Interviewer (Jeremy): Today, we have Russ Heddleston, founder of DocSend. I’m sure you’ve had that moment where you’ve sent out an attachment and wondered if anyone is actually reading it. Well, Russ and his colleagues have tried to solve this problem by creating links which you send, instead of attachments, that will allow you to track user behavior.

So imagine, you send out that important pitch to investors or that important pitch to a new client, you now know how much time they’ve spent on page one, page two, page three, etc., and you know how they’ve interacted with it overall. You’ll hear Russ tell more about it. But it’s a very powerful tool. I think it really has the power to change, and as he’ll tell you, make an honest reader out of your reader as well.

Russ has been riding shotgun in the second wave of the tech boom since he graduated from Stanford in 2006 with a Bachelor’s Degree and a Master’s Degree in Computer Science. He worked at Trulia and Greystripe, where he was the Director of Engineering prior to going to Harvard Business School.

While he was at Harvard, he launched Pursuit, which was absorbed into Facebook. And then he left Facebook to start DocSend. It’s a lot of life packed into a decade on the job. It was a lot of fun talking to Russ, really articulate guest. Here’s my chat with Russ Heddleston.

Jeremy: Hey, Russ, thanks so much for joining me here today.

Russ: Good. Of course. Thank you for having me.

Jeremy: Yeah, so I mentioned to you before we started recording, but for our listeners, Russ is our guinea pig here on the phone podcast. And from the sounds of my headphones, so far so good. So thanks for joining us all the way from out west in Silicon Valley.

Russ: Yeah.

Russ’ Background

Jeremy: So Russ, I feel like you’re kind of – I don’t know, make you blush – the prototype here of the modern entrepreneur. You studied computer science at Stanford, earned a BA and a master’s degree. You did some robotics research there. You graduated in a fairly robust tech ecosystem. I’m imagining you were just knocking away recruiters and offers. Tell me if I’m wrong. How did you make your choices as you graduated, presuming there were many offers for you?

Russ: Yeah, I was fortunate enough to get some offers. But before going to Stanford, I’m from South Dakota mostly. So entrepreneurship and technology were not things that were kind of pre-determined for me. It’s just something I kind of fell into as an interest when I got to Stanford because it’s just in the water there. Everyone is really excited about it. Someone made the analogy to me when I was an undergrad, that railroads in the 1900s were like technology today. So I want to be involved in the interesting things of our time, and that’s computer science. So that’s how I got into it initially.

When I graduated, I did have some other offers. The thing that was interesting about entrepreneurship was just that it’s unknown and interesting things will happen. So I was actually deciding between a big tech company, going and being a manager consultant at McKenzie, or joining this small six-person startup. I happened to know the lead investor for that company, Greystripe, and I just really liked the team. I liked the opportunity. It made sense to me. I was just really interested to see where it would go and what would happen. So that’s how I ended up picking that one as the first job I had out of my master’s program at Stanford.

Jeremy: I called you a prototype before, and now I’ll call you like a poster child for VFA, because that’s kind of what VFA is all about. Trying to get people to spurn the easier path where the recruiters lurk from banks and consulting firms to join six-person startups like Greystripe. So you joined as the Director of Engineering. Was that your title when you joined?

Russ: No, no. As a 21-year-old, 22-year-old, I joined as their generalist on the business side but as a software engineer, so I ended up chipping in. But I just wanted to help out on the business side there. And then we had this snafu where the company grew really quickly and then the VP of engineering left and took about half the company with him. So it’s like one of those battlefield promotions where it’s just like, “Our engineering team is in trouble.” It was like, “Great! I’ll help.”

Jeremy: So you were quickly promoted to that position. Gotcha. Okay. Were you daunted by that? That was my point, I guess, that you’re in your early 20’s and you’re in this position with this startup. Did you feel ready for it?

Russ: It’s all about the context for it, I guess. I think I would have been daunted if someone had positioned it to me as like, “This is really important. There’s a lot of pressure on you.” But at the time, I was just the best person for the role. So we had a really strong and awesome CTO, Andy Choi. So just getting to work with him was really fun for me and we were really complementary in our skill sets, what I worked on versus what he worked on.

So it was really more about a partnership and then building the team back. And I had already been there for a little while, so I had some good context for what was going on. So the set of things that needed to be done was pretty clear. The title they got put on top of it, new Director of Engineering, was really not as important.

Jeremy: Right, right. So you ultimately went and got your MBA, but your pre-MBA at this point. I mean, some of managing is obviously innate. You don’t need to take courses to do it. How did you find yourself managing members of your team? Who was the pre-MBA Russ Heddleston?

Russ: It was about the same as the post-MBA Russ Heddleston. I will say, actually, that I studied engineering primarily because I was told to go learn a real skill. And I actually always wanted to study business because I think business is fascinating. I think people are fascinating. But the advice I got was good advice, which is go learn a specific skill and then learn the business of that later on. And so, I learned the business of software after learning the fundamentals of how to build software.

So managing the team at Greystripe, my first manager experience – and yeah, there were a lot of takeaways I had from that – managing is really hard. I remember I had to put an employee on the performance improvement plan and then ultimately let them go. That was a really hard experience. Not sure I dealt with it all that well. I later learned in business school that no one really deals with it all that well. It’s more like lowering my expectations on how to do that. Like, one third of all firings and with the person not being fired, I thought that was an interesting stat that I learned at business school. It’s just hard to do when you get into that meeting.

So in retrospect, I did an okay job with that. And then the people were brought on, just finding the right people for the right roles and making them happy, my takeaway from that was it’s primarily about making people feel fulfilled and like they’re doing a good job and then they will do a good job. But it was more just a bit of trial by fire in that particular position.

Jeremy: I think one third of all, as I’m an entrepreneur also…I fired very few people, but I think one third of them have ended up with me weeping and them consoling me. “It’s okay. You’re gonna be okay.”

Russ: Right. It’s stressful for everybody.

Jeremy: It’s absolutely horrible. It’s something you can never get used to. I mean, I don’t know, maybe some people do. I certainly haven’t.

Going to Business School and Founding Pursuit

Jeremy: So you joined Greystripe and it’s just like juggernaut. It’s raising money, and it grossed to like $30 million in revenue pretty quickly. And then you go to Harvard Business School. What was the thought process in leaving Greystripe, and was that a really tough decision?

Russ: It was a tough decision. I had always wanted to go back to business school. The company had just kind of reached a point where I thought it was best that I find a replacement for me, someone who had more experience in the role. It was just something I wanted to go do, and that was just a good time for it. So I had a very good run. I was at Greystripe for three years. I remember, in my interview for business school, they asked me kind of the same questions, like, “Why do you want to go back to business school?”

And my answer was that, “I just feel like it’s going to be a really interesting couple of years for me. I really want to learn about this stuff.” It’s like, “Oh, okay. That seems like a pretty good reason.” And pretty honest, I really did like the content of the degree. And I found a really good replacement for me at Greystripe as well, who did an amazing job growing and leading the team for the next few years. He’s actually the VP of Engineering at Pandora now. He’s gone to have a really good career. So it all worked out well for everyone on all sides.

Jeremy: So, no looking back? It was the right choice?

Russ: Yeah, it was the right choice. I was there for a while. They ended up selling the company later. The industry was consolidating. Growth was slowing down a bit. I wanted to go get some different experiences, having been there for a few years. So yeah, it worked out just fine.

Jeremy: So you went to HBS. I’m curious. I know you just said a second ago. You said, “Oh, you know, this is going to be a good experience. I’m going to learn a lot.” But did you go in intent on starting a company? What was your plan entering the business school?

Russ: Yeah, I wanted to try starting a company. My plan was to start a company while I was in business school, and my thought process was, “Well, if the company is successful, then I’ll drop out and I’ll have a successful company. That’s great. And if it doesn’t work out, then I’ll stay in business school and I’ll have an MBA, and that’s fine too.” So it just seemed like being a student is a really good cover and it gives you the space to work on some interesting things.

It’s really hard to think of a business to work on while you have a full-time job. Most jobs are more consuming than you have hours in the day, so just making room to work on something on the side just isn’t really feasible. So when I went onto HBS, I had a couple of friends I had worked with before, that I already chatted with about working together again. And so while I was in business school, we started a company and worked on that for a little over a year. That company is called pursuit.com.

Jeremy: Yeah, it’s interesting you say that. And I agree; it’s tough to start a business when you have a current business because business is going to be all consuming, but so can school and the socializing that comes with school. What were you cutting back on to start Pursuit?

Russ: Yeah, I mean, the saying in business school is, you can…there’s sleep, partying, and school. You can only pick two of the three. [inaudible 00:11:55] in startup as a fourth. I think you can still only pick two of the three. Sleep wasn’t one of them, for sure. It was mostly school and the startup. Those are the things that I did. I didn’t get the Baker Scholar Award or anything for excellence in the classroom.

There’s definitely more I could have done preparing or doing homework or just spending more time on things at school. But I was just writing code, traveling up to San Francisco, kind of building our business, and then sitting in the classroom, hearing interesting lectures from professors on topics that I wanted to learn about. And I did actually make a lot of really good friends in business school as well. But I definitely wasn’t leading the charge in terms of socializing or partying.

Jeremy: Right. Okay, so you started Pursuit, which was described as bridging – maybe you can better explain it better than me – social and professional networks as a social referral site. Is that an accurate…why don’t you explain it instead of me explaining it?

Russ: Sure. Well, I had just come off this experience at Greystripe where I had to recruit an engineering team. That’s really, really hard, and the people mostly came from our own networks. The referral programs are messy and hard to do and hard to track. So the thought was, why don’t we help companies recruit by having a software enabled referral system for them to use?

You know, referral systems continue to be a really great source of candidates for companies, and what we built is a feature that could be used in a lot of other systems and is actually used in companies like Greenhouse and Lever and all modern day applicant tracking systems. But that was the theory. So me and my two co-founders built the prototype. We signed up maybe like 50 companies to use the thing, did a bunch of interviews. It was a very solid value proposition. So that’s what we ended up building out.

Being Acquired by Facebook: Knowing When It’s Time to Exit

Jeremy: So Pursuit was absorbed by Facebook. How did you and your co-founders determine that that was a reasonable choice? Obviously, Facebook being a pretty daunting player in any sort of referral space or any social space, how did you determine that you were taking it to its logical end?

Russ: Yeah, that’s really hard. I actually wrote one of my papers in business school – that I’d be happy to send you – as kind of like a post-mortem while I was going through it, kind of cathartic experience. Because to start a company, you have to be fanatically excited about it. Like, “this is something that has to exist in the world,” like, “We have to build this. It’s going to be amazing.” And so we went through the fundraising process. We went through the sales process. We built the whole thing out. To reach a point where you kind of recognized the facts for what they are and decide maybe this isn’t quite what we thought it would be.

In our case, the order in which things happened was…like, fundraising was fine. We could raise money for this thing. Sales is fine. We can sell this thing. But then when we actually got companies to use this referral system and we were looking at the data, the data did not match up with our expectations. A lot of people got referred to companies out of network. The referral bonuses that got paid out, people felt weird about money being involved in it. And when we looked at the numbers and when we did interviews with our customers and the users of it, we found a couple of logical gaps in our thinking that changed the problem statement kind of significantly.

And that’s the whole exploration process that you need to go through, the trial and error. In the case of our product, we learned that we had to change things pretty significantly. So the question was like, “Oh man, do we go back and do we start over again? How we are gonna change things?” We decided, at that point, it was worth exploring just getting acquired. So we went and interviewed at LinkedIn and at Facebook. But Facebook, we had sold them on Pursuit, using the product for their company. And their response was, “You guys are awesome. Why don’t you come just chat with us?”

And so we chatted with LinkedIn as well and then decided to go with Facebook. It’s what you call a talent acquisition, where they covered a bunch of our debt and paid back money and stuff, and then made us a really good deal on working there. The theory on their side was that we were gonna help them compete with LinkedIn and build out a more professional site to Facebook. They ended up not doing that, but I did end up being the product manager for Pages, which is kind of the entity that companies use on the Facebook platform. And that was really interesting.

We also used our learnings to redo the internal recruiting system at Facebook and their own referral system. So we got a lot of value out of that as well. But deciding to shut down Pursuit was a difficult choice. But in hindsight, it was the right decision. I don’t think, if we had pushed harder on the way we were building it out, it would have worked out in the end.

Jeremy: It’s interesting, the entire life cycle of Pursuit happens while you’re in school. It’s almost like an accelerated… I’m imagining a mashup or a bunch of quick cuts in a movie that accelerates time. You just went through that whole thing.

Russ: It’s like the Rocky montage scene or something.

Jeremy: Exactly. I was gonna reference a Seinfeld scene in which Jerry goes through an entire relationship in less than one episode, and they show the videos. But I think even Seinfeld is dating out of our audience at this point. But yeah, it’s pretty amazing that you had that whole experience while in business school. All those learnings had to have been really helpful.

Key Learnings as a Facebook PM

Jeremy: You moved to Facebook as a product manager, seeing, obviously, growth on a really massive scale. What were the key learnings from your time at Facebook?

Russ: I mean, it’s so different. I interned at Microsoft as well when I was an undergrad. I also interned at Dropbox really early on. Every company is so different. So the takeaways for software at scale are, I think, always different. Some things are constant, like, just keeping in mind, if you’re at Facebook scale, one of the features we were adding to Pages was adding a friend connections. Like, which of your friends are connected to this business in some way, shape, or form?

So having that social connection, we were thinking would make you more connected to that company. Like, “Oh, ten of my friends like Best Buy. That’s cool. I guess I like Best Buy too.” Just computing and storing that information, we had to spin up a bunch of new server centers. It was just millions and millions of dollars a year just to implement that feature, just in the back-end storage that was required for it.

Jeremy: That’s crazy.

Russ: The types of considerations you had to make when thinking about things were different. Also, just at Facebook scale, Facebook Pages is still the largest business software system in the world. There are more businesses on Facebook than anything else. Just kind of as a virtue that there are more people on Facebook than anything else.

So we redesigned Pages. We did the timeline design. Just thinking through the considerations of that and the ripple effect through businesses is just pretty astounding. I will say, to Facebook’s credit, that they do a really good job of allowing the people who are building the products to make the right decisions despite the consequences. So my takeaways from Facebook are mostly that they’re doing things right, and it’s a really impressive company. Especially because they’re able to break things or at least change things at their scale.

The DocSend Origin Story

Jeremy: So I guess the same question I asked you about Greystripe when you left for HBS. Why leave Facebook? It’s a sure thing, right? That’s a company that’s going crazy. The share prices continue to increase, and you walked away again. What were the considerations?

Russ: So it’s kind of similar to working on Pursuit. There were two of my good friends from undergraduate at Stanford that I had hired on at Greystripe. We had said that we wanted to start a company together. Like, “We’d like to do this. We’d like to start a company together.” It didn’t work out while I was in business school. They stayed on at Greystripe and were engineering managers there. But while I was at Facebook, they were deciding they wanted to leave the company that had bought Greystripe and they wanted to start a company.

So it was more like a “If not now, when would we actually work together again?” So I decided to leave to go work with them on DocSend. It just seemed like a “I’d like to go try again.” Facebook is a great company and lots of things going for it. No problems with it. But life is short. If you’re gonna do it, you might as well go try. And I went to work with Dave and Tony again. So decided to just take the leap.

Jeremy: When you’re starting a business with friends like that, people have been friends for a long time, are there…I admit. I’ve made the mistake. I tried to start a business with a friend, and I wasn’t really evaluating that person on a business level. I was evaluating that person strictly on a friend level. How did you evaluate co-founders, and how did you ensure that you guys could work together and maintain friendships?

Russ: Yeah, that’s a great question. When I look at my friends, the number of them who would also be a good co-worker is small. So there’s some Venn diagram of people you’re friends with, people you can work well with, and then the overlap is some subset. But there’s not that many people fall into both camps. In our case, we had already worked together at Greystripe. And we all studied computer science together, so we had all done class work together.

So I both had a sense for how talented they were as engineers and I also had a sense for how well we got along socially. And both are important. I don’t think you need to be friends with your co-founders. You just need to work well together. But if you’re also friends, that goes a long way creating a nice culture for your company. A bunch of our early hires at DocSend were also people we had worked with at Greystripe or elsewhere.

It’s just a really good sign. If people have worked together before and choose to work together again, it bodes really well for the company. That’s actually really helped us in recruiting. It also has helped us in finding investors. One of our investors was saying that one third of their investments blow up because the co-founders have a disagreement of some sort. Which is a pretty crazy high number.

Jeremy: Right. Yeah, that is really interesting. Which leads me to another question about co-founders and those blow ups. I don’t know if you’ve had big inflection points where there’s been disputes, but how do you guys work to resolve disputes if there are three of you there?

Russ: It’s pretty consensus oriented. We split our equity equally amongst us. Sometimes with co-founders, someone will be more important or more in charge and “the buck stops here.” But the three of us have known each other for so long that it’s really we make decisions together about things. And that has its ups and its downs. On the up side, it’s just nice to be supported by two other people. It’s very stressful to start a company and go through the whole process.

So to have two other people you can rely on and trust, is really helpful. In terms of decision making, I guess it depends. We, early on, divided up the responsibilities so there wouldn’t be too much design by a committee going on. So, you know, one co-founder is CTO; one co-founder runs all the product stuff; and then I do the sales and the financing and other company stuff. And so within those areas, people just make decisions and move forward.

Jeremy: So when you started DocSend, was this a pain point that you had experienced? I feel like almost all businesses start from pain points. What was the genesis of DocSend?

Russ: Yeah, that’s a great question. It’s really nice if you’re starting a company and you can relate to the problem you’re solving. Whenever I see a founder who has no idea what their target user thinks or feels, it’s a risk. It’s definitely a risk. In our case, a few different things came together that made the idea behind DocSend really attractive. I interned at Dropbox when there were 15 people, in summer of 2010.

We came out with the sharing model or the “shmodel” as we called it, where you could send links to files. That seemed like a really useful thing because you don’t want to send attachments. Attachments are awful. It’s better to send a link. I’m like, “Okay, that makes sense.” I also believed that people will always use documents. It was told by some early Microsoft employees that even in the early ’90s, Bill Gates was discussing when documents would die, like, “When would the document format go away in favor of some web-oriented thing?”

And we still have the documents. People are still going to create documents. Attachments aren’t a good idea; you should send a link to it. And if you’re in a business setting, you really want a bunch of other features around tracking and security and other things. No other company was building that at the time. Also, while I was at Facebook, we had an internal system called Pixel Cloud that would track designs that you sent people.

So I did some design work there as well. And so I would send around links and Pixel Cloud, and just getting that feedback on who actually looked at my content was hugely important to me, just being able to do my job well. So we kind of combined all these things and we were like, “I think tracking and analytics and security around document sharing is a real thing. And now it seems to be a good time to start that company.”

Jeremy: So you and your co-founders start this business. I found this quote from you. I’ll read it, even though you know you said it, but our listeners don’t. “Even once you’ve convinced yourself you’re working on a problem worth solving, it’s a long road to making that vision a reality. Being successful takes a lot more time, effort, and patience than is visible from the outside. We’ve been working on DocSend for over a year and it’s still just the beginning.” One year in, what was visible to the outside world, and what did people think about DocSend? What was it to you? What was viable, and what did you need to work on?

Russ: Yeah, so one year in, I guess what we did when we started is, we started with a bunch of interviews. So we didn’t sit down and start writing code. We thought that was a bad idea. We wanted to do interviews. So we did a bunch of customer interviews, figured out the pain points, the work flows. And we were like, “Okay, we’ve got a theory of DocSend. Great.” So we built the first version. We gave it to some people. They said, “We love it. This is great,” or were like, “Awesome. Okay. We’d like to hire out a team and move faster. So we’re gonna go do fundraising.”

But I anticipated that if we were gonna do fundraising – this is like six months in – the question we would ask is, “Why isn’t Google doing it? Why isn’t Microsoft doing this?” And so we had to answer that question. And so what I did is, I went around to all of the companies that we thought should build out what DocSend does and showed them what we had built and showed them our customers. And we were like, “It’s obvious that you should build this. Why aren’t you building this? Or are you building this?”

And all of them were like, “Yeah, that’s a good idea. Of course, we have this on our idea list, but we’re not gonna build it now.” And then we also got some acquisition offers, and when we asked them what we would work on, they were actually gonna put us on other projects, just because we were a good technical team. And so that told me, more than anything, that they really weren’t gonna build out DocSend. It just wasn’t a priority for them. So using that data and the other data, we went off and raised our seed round of funding, $1.7 million.

That was six months in. And then six months after that – so one year in – we launched our product at TechCrunch Disrupt in New York City. That was really the first anyone could see of the product. Before that, you went to DocSend.com and it was just blank. You’re the invite only kind of testing system that we had. And the first version was very quick and dirty. And then based on the feedback, we built out a really nice elegant version that was the thing we launched after one year. And so I think for that quote, that’s why that was just the beginning. We had been working on it for a year and we finally had something to show to the outside world.

Jeremy: Can you give me a sense of what that first year was like personally for you? Was sleep still the thing you were cutting out personally?

Russ: You know, I was actually getting more sleep that first year than I was at Facebook. You know, Facebook, I ended up sleeping at the office. Because there’s just so much pressure and so many things going on. When you’re working on your own, you set your own schedule. Especially in the beginning of a company, no one’s yelling at you. No one’s telling you to do anything. It really has to be motivated from within.

Jeremy: Right.

Russ: So, in our case, we did work hard. We worked long hours, but there were steady hours that we chose. And we rotated apartments. So one day we’d go to Dave’s place, one day we would go to Tony’s place, or my place. We all would sit around the table and we’d set our schedule and we set our goals. You have to be very self-motivated. And there’s no feedback. There’s no positive feedback from the outside.

No one’s telling you “This is fantastic. You’re already successful.” You have to do it yourself. You get a lot of no’s from pretty much everybody, especially if you’re doing something that people don’t know they need. So yeah, it takes a lot of discipline. And if you look at it from the outside, it’s hard to tell that progress is being made, even.

Jeremy: Right.

Russ: Especially with a software business because you’re sitting around typing.

Jeremy: You raised the $1.7 million…

Russ: We’re also generating revenue. So the combination of the two has worked out well for us. The $1.7 million, that was really critical at the beginning just to move faster, to be able to hire ahead of our revenue and to focus on building a good product, not on optimizing a small amount of revenue.

Jeremy: How quaint that you’re generating revenue. How old fashioned of you to be trying to make money. That’s crazy. You’re like one of the first tech companies we’ve got on here who’s like “Yeah, we’re raising money. We’re trying to be a real business.” Is there any additional pressure on now? Things have kind of changed in the last couple of months. Is there any additional pressure on you to be profitable?

Russ: No, we still have enough cash. Profitability isn’t the immediate concern. It’s just all about how fast can you grow, how fast can you scale. So, you know, can we hire out a team of 50 salespeople, or can we spend a ton of money on SEM? So there are a lot of experiments that we’re running. The product is growing really quickly. People really like it. We have a really big product roadmap. There are a bunch of things that we’re working on in parallel. But yeah, profitability isn’t the immediate concern, but yes, we always want to make more money. If we suddenly turn profitable, I’d be very happy about that.

Jeremy: Right. Sort of refreshing. It’s interesting to have a product roadmap and how you went to all these other companies and talking to them like, “Hey, does this make sense?” It’s kind of on their radar screen. There must be just an endless number of features that you want to add to DocSend. How do you make those choices? Is it just super obvious, or is it just a constant internal debate as to where to take the product?

Russ: Yeah, that’s another great question. I think it depends on the type of product that you have. So for some companies that are very vertically oriented, if you’re selling to a very specific target user, then that user dictates your road map, and it’s pretty obvious what you need to add and in what order. If you have a really horizontal product, those are much more difficult to decide on what features to build if you’re trying to be everything to everybody.

So, in our case, it is a pretty horizontal product, but we picked vertical salepeople that we specifically build for. So we prioritize their input over other input. So that’s how we dictate our product road map. The things that matter the most to them are the things that we will prioritize in the product.

Using DocSend to Fundraise for…DocSend

Jeremy: When you raised your round of funding, you had a prototype that was working. Did you have the data to back up how people were interacting with your own presentation, and were you changing your presentation according to the feedback that you got from your own program? If that makes sense? I think I just ended up with some loop somewhere.

Russ: Yeah, exactly. It is something of a self-referential product. We certainly did use our own product in our fundraising process. And yes, the data was really important. We actually published some research earlier this year on best practices in fundraising, because it’s hard to tell, as an individual entrepreneur, when you’re sitting around your pitch deck, like, what should be in your pitch deck. The useful feedback is more immediate on which investors are looking at it, which investors care, who should I followup with, making sure the thing is secure and you’re turning it off later.

So we used it in that way, which is a bit more anecdotal. But yeah, for instance, we found that the team slide was by far the most popular slide. So we put that one all the way at the beginning. Also, the second most popular slide was this slide that was like anecdotes about what we are. It’s like “Google Analytics plus Dropbox.” It had like five different “we’re the A for B.” And the fifth one, I think, said, “We’re like cat insurance plus a sauna,” and it had an [inaudible 00:37:57] next to it. And in the bottom, it said, “Just kidding. We don’t even know what that product would be.”

But it’s just in there to make sure investors were actually reading things. And that was the second most popular page, so we put that one up in the beginning. So we did make those modifications based on the time that people were spending inside the deck.

Jeremy: Were investors saying to you, “I’m intrigued by this DocSend thing. But wait a second. I think you’ve customized this presentation so I will be intrigued, so maybe I’m not that intrigued by this after all”?

Russ: We did have one investor who…whenever I would ask for intros to people, we’d send them a link to the deck and I wouldn’t really say anything, like “Hey, we’re looking to raise money. Here’s what we’re working on. Here’s our deck with the link.” So they’d have to read the deck to see what we were working on. One investor opened it up, just looked at the team page. And we have a good team, but he didn’t look at anything else.

And so he responded to me like, “Hey, I love what you’re working on, and I can’t wait to hear more. I have forwarded it to my colleagues.” But I knew, from the data, that he didn’t actually know what we were doing. All he did was look at the team page and then decide based on that that he would like to learn more, which is fine. It’s just funny that he phrased it as “I like what you’re working on.” He did in fact forward us to his colleague, and his colleague thought that was funny when I shared that with him.

Jeremy: Were they ultimately part of the investor group?

Russ: No. We ultimately did not let them. They were more of an A round investor anyway, and that was our seed around.

Jeremy: Gotcha. It would have been quite the story, the inspirational story for others, like, “Don’t worry. If no one’s reading your presentation, just make sure it ends up in the right hands of somebody who is willing to look at it.”

Russ: Well, actually, our lead investor from our seed round, Jeff Clavier, I went back later and looked at the data, and he didn’t actually ever look at our deck. But his colleagues did. And then we pitched him in person. And then he actually turned around and started using our product immediately. It was just funny to me that he never actually looked through the links that I had sent him on DocSend.

Jeremy: Are people afraid to…do you have family members who are like “Wait a second. He will know if I’ve read this.” Are your friends skeptical of you that you’ve got all this…and I recognize that your system works through links. But are people suspicious of communications with you, like, “Oh, boy, I better read this because Russ sent it”?

Russ: I guess that would be more like the email tracking thing. No, we’re solving a very specific need that only really exists in business communications. It’s not the tool that I’d use with my sisters or my family or my close friends. It’s just not how those relationship work. I’m not sending them documents anyway. So yeah. When we look at our usage, it’s really only used in business transactions.

Jeremy: I could imagine that working in my family quite well.

Russ: Maybe for your family it’s a good fit.

Jeremy: My brother is sending me something, saying like, “I want to know you read this. I wonder if you’re not just saying like ‘Okay, let’s go on a family trip.'”

Russ: That’s right. Yeah.

What We’ve Learned about How People Interact with Presentations

Jeremy: So I’m curious. You gave us a little bit of insight in terms of how people interact with presentations. What have you learned about human behavior? How much time will we spend…what’s a long presentation? I’m asking 50 questions and tripping over myself. How long can a presentation be? Exactly. Take a breath. How long can a presentation be? Can someone receive a 20-page presentation these days? What’s the optimal size? What’s a lot of time for someone to spend on a presentation at this point?

Russ: We have all types of documents in our system. If you’re sending a Dickens novel or something, that’s going to be a different read time. A pitch deck is different than a product proposal.

Jeremy: Let’s go with pitch deck. What’s the longest a pitch deck can possibly be? What’s a lot of time for someone to spend on a pitch deck?

Russ: A lot of time is anything over four minutes. So when we did this research, we looked at…we had a bunch of companies opt-in to this research. They allowed us to look at some of their stats, and so we found that the average successful deck was read for three minutes and 44 seconds.

Jeremy: Okay.

Russ: A lot of people were like “Wow, that’s not very long. I mean, people should spend more time on things.” People are actually incredibly efficient in flipping through information and making a decision on it they want to learn more and dig deeper. And ironically, the longer someone spends in your presentation, the worst it is for you. Because the decks that were the most successful…like, our deck had an average read time of about two minutes. And this was confusing for us.

So as we dug deeper, what we found was that the decks that were the most successful seemed obvious. Like, if I was to read your pitch deck, and it looked obvious to me, like, obviously this is a thing. It should exist in the world. Like, why hasn’t someone done this before? Like, of course. I’m left without any objections. Those are the ones that are the most successful. It’s actually really hard to create one of those. It’s hard to create a deck for business that doesn’t exist and it’s obvious that that business should exist.

The deck that had the most time spent in them were the ones where the readers weren’t really sure what was going on and they actually spent the most time on the product pages because it wasn’t even clear what the product did. So that’s a bad sign. If someone is spending ten minutes in your deck, I guess it’s nice that they’re giving you the compliment of spending that much time figuring out what you do, but it’s probably not a good sign. You should probably make your messaging clearer.

Jeremy: So you’ve been around for two years. Has anything changed? Can you look and say, “In 2013, people spent four minutes and now they spend three and a half. It looks like they’re going to spend…”? Is there any predictability from the data?

Russ: It hasn’t changed from what we looked at. Obviously, there are a lot of privacy concerns with everything in our system. Other than in this fundraising research, it’s really the only glimpse into average read times that we have. But those span to a six-month period and they were pretty constant. I haven’t seen anything in the market lately that would lead me to believe that any of those numbers have changed. The biggest thing we’ve seen shift has been just social norms.

So you were asking “Does your family behave differently if they know you’re tracking them?” If we take, as a micro-causism [SP], the relationship between entrepreneurs and venture capitalists, we’ve basically created a new social norm where VCs can expect to get DocSend links to pitches. And this changes behavior in a number of ways. First is that they just accept getting these links. Like, this is how you’re going to get these links, so that’s how it is. And then second, because they know that the other person is going to see their viewing behavior, they won’t, for instance, open it up at 2 a.m. and look through it.

They’re like, “It’s kind of embarrassing that they know I’m still working. I’m going to look at it in the morning. I can’t spend too little time in it because that’s offensive. And this is an intro from someone else, so I need to spend enough time reading it that they know it’s a respectful read through of their deck.” It actually motivates good behavior, which has just been an interesting equilibrium to reach.

Jeremy: That’s a very interesting offshoot of the intent. That’s a really interesting insight. I’m curious. Do you experience time differently now? If you’re sitting through a TV show or a play or listen to a speech, are you like “No, I know you’ve got to get this information in earlier, and I know you’re gonna move through this faster”? Does this translate into other audio/visual experiences?

Russ: This is completely divorced from DocSend but I do think, in general, that storytelling is difficult, and there are good ways to do it and there are bad ways to do it. So, being able to hold the attention of an audience is hard and you have to really know your audience. So just looking at a pitch deck for documents, you’ll see in the data if you lose someone. It’s kind of interesting, you’re seeing them, watching them going through your content. If you’re in a face-to-face meeting, they can’t really zone out and start doing email.

They might, but that’s really rude. So you’re not really sure when they mentally switch off if you’re being boring. But you can see that if they’re looking through it on their own. And you’ll see where they fall off. So if you’re trying to tell a good story and you want them to consume all the content, you need to present it in the right order. So the same thing exists in movies and other mediums. Yeah, so that’s definitely something that passes through my mind, but I think it passes through all of our minds who are watching movies. It’s got a slow middle to it and it’s like “No this is probably not the best way to get through this part.”

The Future of DocSend

Jeremy: Right. So we’re at the beginning for DocSend, right? You’re just under two years old. Or just over two years old?

Russ: About two and a half years old.

Jeremy: Yeah, just over two years old. What does the future hold for DocSend?

Russ: Well, a lot of things. I think every phase of a company is really different. As actually being a founder, your job changes every few months. It’s never the same, that’s for sure. We’re up to 14 people now. We have a bunch of positions open that we’re hiring for. As the team grows, it’s going back to management challenges, keeping everyone happy, office space, logistics.

Now we have a sales team. Finances become more difficult to manage. So it’s across all fronts growing things, breaking processes, remaking them. But we’re just on track to build a large profitable business. So that’s what we keep building for. Everything takes longer than you think it does, though. So it is still the beginning, and looking forward, there’s a ton left to do.

Jeremy: Right. What keeps you up at night at this point?

Russ: A lot of things. It’s hard to know the optimal ordering of things you should build, how you should allocate resources. So just for the product that we have to make are important, and software is really hard and costly to change. So there are far reaching implications to what we choose to build. So we spend a lot of time thinking about that, but otherwise, it’s just people. A company is a set of great people that you’ve assembled, so keeping everyone happy, keeping everyone motivated. Those are the day-to-day challenges that keep me awake.

Jeremy: Do you operate with any particular business philosophy or is it day-to-day let’s go? Or is there some sort of guiding principle in the way you’re trying to grow and manage DocSend?

Russ: I’d actually love to hear what other people’s answers are to that question.

Jeremy: I’ll start asking. This was an improv question.

Russ: Yeah. I think everyone who is a founder or a manager is kind of looking around, being like “What’s everyone else doing? What are their best practices.” Yeah, we don’t have a particular philosophy. I mean, some people will spell it out and they’ll have some acronym that’s on the wall that stands for, like, honesty, integrity, hard work, and empathy or something.

So far, we haven’t had to codify it, being a team of 14 people, but we will have to. I haven’t learned at any other company that having a philosophy like that that’s up on a wall is needed or helps a lot. But my sense is that to have our culture scale as we ourselves can either grow faster, we will have to codify it and we will have to put it up. But at the moment, it’s really just been hire good people, tackle problems day-to-day. And that’s been working well for us so far.

Jeremy: Awesome. I want to thank you for your time. We’re bumping up against time. This was really interesting and I appreciate you joining us and being our phone guinea pig. Maybe we’ll be able to check in with DocSend in the future. Thanks so much, Russ.

Russ: Yeah, likewise. Thank you for having me on.