🎂 Dan Springer & Chris Merritt Fireside Chat
2020 marks Cloudflare’s 10th birthday. To celebrate this milestone, we are hosting a series of fireside chats with business and industry leaders all week long.
In this Cloudflare TV segment, Chris Merritt will host a fireside chat with Dan Springer, CEO of DocuSign.
Dan, thanks for spending time with us. Today, I'm joined by Dan Springer, the CEO of DocuSign, and we're going to go through the impact of Dan and on the company, Dan's background, the Internet, how it's infected and affected the industry, and just sort of unpack the spirit of Birkbeck at Cloudflare.
So Dan, thanks for being with us today.
Thanks for having me, Chris. And just as we were just getting to sort of do a little bit of background, we're talking about the role and the impact of the fires that are coming through and that hopefully your family is safe and sound where you are.
Where are you today? I'm in San Francisco. For those of you that are local, I'm probably seven blocks from the Cloudflare headquarters.
And I'm in that building in San Francisco that's leaning the Millennium Tower.
It does have a very distinct visual feel to it.
You can tell. Is it 18 inches or what's it off by now?
You know, it's one of those things where I'm not a structural engineer by academic training.
I've come to the understanding that I know nothing about what's happening.
But the good news is there's tons of people that live here, like bankers and lawyers that think they're really smart.
They will all tell you exactly what's happening, exactly how the fix is going to work.
And if you just diagonal and I'm like, what do you think?
You don't even know what you're talking about.
So I just tell everyone, I don't really know. It doesn't look like it's leaning.
I can't feel that it's leaning. But supposedly it's leaning and supposedly there's a fix in place.
So we'll see whether it works. There's smart people will be engaged on this just to get us kicked off here.
So I was as we're getting to sort of unpack your background, you grew up in Seattle, went to Occidental, HBS, McKinsey, worked in the tech space with another number of startups, went through the long life cycle with Responsys from their early days, sort of a refactoring of the business all the way through to the acquisition made by Oracle, and then took some time off retirement.
I guess it's version one. And then you've been at DocuSign ever since.
And that's been a real rocket. So maybe just a little bit as you're looking back on your career, how do you think about the big transitional elements and what are those sort of stand out in your mind?
Well, you know, I think the it's funny when we have any measure of success in Silicon Valley, it always strikes me as strange that people say, it was me.
You know, it was me.
I was brilliant. I pretty much did all by myself. I carried a few people on my back.
I think the place is just so full of serendipity, you know, and on the positives and the negatives.
And I had, you know, one or two gigs in that set that you described, one and a half, but I'd say weren't great.
The other ones, I've just been super fortunate.
And I try to think back, well, what makes a good choice? People ask, what were the good choices, bad choices?
I have a fairly simplistic answer, which is when I looked at a place and I thought, I actually understand really well what they're doing and what the opportunity is.
That was a good thing when I didn't exactly understand, but it just sounded sexy and it tended not to be a good thing.
And then when you made the choice on the people you're going to work with.
So when I went in places and said, these are people I want to work with, that's been really good.
And if I've been sort of willing to be flexible on the quality of the people, less good.
So those are my kind of two insights from all the changes.
And then, you know, I think the there's just, again, there's a ton of fortune, good or bad.
For me, it's been almost all good. I've been very lucky. And it's been a pretty nice rising tide.
You know, the last 20 years, I left McKinsey in 97.
So I guess I've been and came back here to NexCard. So 23 years, you know, pretty much really working in tech in the valley.
And it's in San Francisco, I've lived in San Francisco all that time.
And it's been a lot of good, a lot of good, you know, successes along that way.
So I've been fortunate to hit a couple of them.
And, you know, when I think about the transitions, to answer your question, I've never actually left a job for another job.
You know, I graduated from college, got a job, went back to business school, got a job, you know, McKinsey, you get to a place where you say, keep doing this or not, I ended up deciding you want to do it after four or five years, stayed a little longer to open a new office in Seattle.
And then you kind of leave the firm and join a company.
And then after that, everything, some I sold, some got bought, you know, got bought for a lot of money.
A company called Tellio, I sold for about 50 bucks, more or less drove it into the ground.
And but then I went and got a next thing. So I never actually left a job to go do another job.
And so my transitions were all about having taken the opportunity to be able to look around.
I always try to encourage people to do that instead of saying, I heard about another thing, I'm going to jump to do that is, you are your most valuable asset.
And I always say, give yourself the respect, you know, to say, if I'm going to think about doing something, I should step back and look around and not just be reactive to someone that's maybe recruiting you.
And if you decide you want to leave someplace, sit down with those people and decide, hey, guys, I'm going to leave, let's figure out a good win win transition.
People respect you for it in the end.
And, and I think it's actually really smart business, because then you'll make a good decision versus do I trade from this to this, I think is a very dangerous way because you have the reality against, you know, the demo, someone showing you the demo.
And, and I think that's a, it's a, it's a crazy way to make decisions.
So I think you want to have time to look around and really evaluate where you are in your development, in your career, and then effectively say, okay, that that's where I am now, what is the right opportunity, who are the people, etc.
leverage a broad network, you know, one of the great things about this space is most of us have connections with people in the investment world, the venture side, go talk to those people and understand what's happening right now, where they're interesting trends, I'm a big pusher for that.
And then the last thing is I did the odd transition after we sold responses where I didn't have a job for, you know, three and a half years, because I had to, I'm a single parent, I'm a full-time single, I mean, they're one just graduated from college and one's in college.
So now they're grown up. But at that time, I was a stay at home dad.
And it was the best career decision I ever made. So that was a transition that after Oracle bought responses, I wasn't planning on doing that.
Getting back to serendipity, it just sort of fell in my lap. And all of a sudden, I thought, my kids are middle school, high school is my last chance to be with my boys.
You know, in a focused way, I really want to have more time with them.
And that ended up being the best career decision, the best personal, but also best career decision I ever made.
When I came back to DocuSign, you know, almost four years later, I felt like I was reinvigorated.
And I knew how much I wanted to be building company again.
And I just think I was much more sensitive and much more, I'm not gonna say I'm woke, but I was much more asleep than I was when I came back.
And I think it's allowed me to be more successful here. So those are kind of how my transitions play out.
Those are quite distinct. I want to tease one of the things out, as you were coming back into the workforce, and coming back and looking at DocuSign, if you were to go back now, and the impressions that you had as an outsider evaluating DocuSign at the time, what are those things you're like, yeah, I got that right, that part, I understood well, being an outsider, and then joining the company, as compared to what are those things you're like, I had that totally wrong.
Yeah. You know, I had this expression in the VC world, the first board meeting you have, after you invested, where they call it the oh, shit board meeting, because then you're gonna go, I thought you guys said there was no competitors.
Well, yeah, I thought we had enough cash. Well, so, so interestingly, at DocuSign, sort of an anomaly.
So so I'll just contrast responses. I came in, and they totally sold me a bill of goods about where the business was.
So as it was a complete turnaround in the train wreck.
And the first year was brutal. DocuSign, it was everything I expected.
So DocuSign, me had what I needed was is a fantastic technology platform, with a very strong market shared leadership position.
And I'm not an engineer.
You know, everyone in Silicon Valley, we fancy ourselves product people, which means like, you know, I've done searches with Google or something.
So now I'm like, I'd be a low bar.
I have an iPhone. So I'm kind of like a tech guy, you know.
But so we all think we're product guys. But but I have enough self knowledge to know that I'm that I'm not a technical person.
I'm not an engineer. I'm an economist by academic training.
So I, it doesn't make sense for me to go to a company, if the answer is, I got to fix their product, because then, you know, their technology stack, I'm probably not the right leader for that company.
What people thought about DocuSign was that the business was messed up.
And it wasn't. And in a very short period of time, I could tell it wasn't before I joined.
And I could tell it was just actually a complete diamond in the rough.
It was a fantastic business that was almost doing everything right.
And the few things that weren't going right, were absolutely self inflicted.
So and then I showed up and within three weeks, I was like, Yep, I was right.
It's a really great company. This is gonna be the easiest thing, you know, responses, I sometimes joke, I earned, you know, some share of the credit for turning around responses and getting that, you know, over a billion back when a billion six was considered a lot of money, when we sold it now.
No, we get out of bed for $1 .6 billion. But it was, you know, there was some real work there.
This one, I did very little, it was it was just waiting, which is waiting for almost anyone to walk in.
And, and stop a few crazy, silly things we were doing.
And then the rest just took off. We went public a little over a year after I joined.
So it couldn't have been that much work, you know, to go public 14 months later.
So it answer your question, it was exactly what I expected, you know, like, really, it sounds maybe that sounds like too aggressive to say, but it literally was almost exactly everything that I expected.
And it was almost all, almost all good.
Well, then that sometimes you're lucky. And sometimes you with experience, and perhaps that cooling off period, your your antennae for picking a winner was, was quite tuned.
And that could be, that could be the case. I like that.
I'll use that in the future. I think it's, it's funny when I when responses became successful.
And there was a lot of great things about that platform to one of the board members, Tim Haley, this famous quote, in the press where he said, you know, responses, we really needed to bring had five CEOs in the three years before there, we needed to bring in a CEO who had like, a modicum of capability to take this asset and make it successful.
And in Dan Springer, we found just that person who had a modicum.
And I was like, he made he didn't mean it that way.
But it kept thinking like I only had a modicum, I prefer to think I sailed over the talent goal.
And I think I did it because it was a docusign. I think it would actually be a fair articulation, which was, we absolutely just needed a CEO to come in who had a modicum of talent.
And I just, you know, barely eked over that hurdle of a modicum.
That's, that's a humble perspective. And I'm sure that that's rooted in your success, followership that you have.
Maybe give me a little bit of insight as as you've watched DocuSign go through the history during your tenure.
You've seen the business context and the background moves from obviously pre COVID to now post or during COVID.
I don't think the post COVID, during COVID.
Yeah. And you've talked about the acceleration of digital transformation.
I've heard you talk about that a little bit. Maybe just talk about how technology and consumer behavior is changing and how that is impacting DocuSign.
Yeah. Well, I think, I think, you know, we feel like nothing has changed in the sense that we've taken u-turns in the market.
I think we've seen acceleration.
So we take a look at where our business was, you know, we started this year, we were off to a great start.
You know, our signature business was strong.
Our broader agreement cloud offerings like CLM was doing great. And then half, we, our quarter starts on February 1st, our year starts February 1st.
Halfway through the first quarter, you know, COVID hit and, you know, we sent our employees home to work from home, as did a lot of other people.
Yeah. And our business was doing well, actually took off even faster.
And so, you know, just give you a sense.
In the prior year, we were at about three or 4,000 direct customers a quarter.
That means when we actually had a conversation with not coming just on the web, those are great customers too, but they're smaller.
People had a direct conversation.
So three to 4,000 a quarter in the first half, Q1 and Q2, we had 10 ,000 each quarter.
So a lot more new customers coming on and our existing customers, we have a land and expand model, also accelerated their growth with us.
And so, you know, we saw an acceleration and it's interesting because when people talk about that, a lot of times the question is, well, is this a one -time thing because the COVID will go back?
And, you know, my view, it is pretty clear.
My view is that people were going to do all of these things anyway. You know, our customers were going to, the people that says like, you know what, we were actually FedExing sales contracts to people or hand delivering them.
And now they couldn't do that anymore because no one was sitting at the office, you know, the other place.
So there was no way to do that. If you said to me, were those people going to five years from now still be FedExing contract?
No, it was going, they were going to get there.
So, but some people who weren't doing it yet said, I can't get any sales contracts done today.
They called us pretty darn quickly and got on boarded to go.
And a lot of those are companies we actually were in discussions with already.
They were saying, yeah, we know we're going to do this someday. And then bam, they need to go fast.
Same thing for people using us for HR to hire people. You know, it's pretty interesting.
People haven't thought about that. How do you hire people if you can't have them come into your office and fill out a nine nine?
I mean, there's just things that you just logistically go, is there a way to do that?
And we go, yeah, we got that over here. And, and that was great. But I think the reality is we're going to just see people continue to do more and more of these use cases will happen.
So our view is COVID has been an accelerator for our business.
And the people won't go back. But it may be that whenever the new normal, whatever that is happens at some point, we may have be growing at a lower rate than we are in the middle of COVID, but probably at a higher rate than we were growing pre COVID.
Because I think this has been a one time shot where people have said, we just need to transform our businesses digitally faster.
So that's kind of how we see the transformation.
And, and as you think about sort of the, the new normal that we're in, in the industry that you're, you're working within, the value chain, I can imagine there are people that will have been disrupted companies that will have been disrupted.
I don't know the full portion of the value chain that notaries, lawyers, paralegals, couriers, I can imagine there's various industries that will be, so some will be negatively impacted, some will be positively impacted.
How do you think about the sort of the winners and losers that are in your industry and how that could reset post COVID?
Well, I think there's two ways to think about it.
When you think about the sort of the value chain, there's the companies and then there's sort of the functions within them.
And so I don't see anybody, I've yet to see a customer and we have, you know, 750 ,000 customers and hundreds and hundreds of millions of users.
I've never heard anyone say DocuSign has not made our lives substantially better unless we've had a bad implementation.
And we don't have a lot, but we do have from time to time, we don't get that right, or an SI that's installing in an enterprise doesn't get it right.
And those don't happen very often. People, when you say, and one of the great things about this company, and I meet somebody and I say, what do you do?
I go, I work for DocuSign.
And nine out of ten people say the same thing. I love DocuSign.
And then they tell you these stories we call Docu Love Stories. I was in the Serengeti and I was able to buy a home.
And sometimes I think the stories are really just, they want you to know that.
But there's a story about, all right, I've got my first job this way.
And they always have these wonderful experiences.
And these people aren't even our customers. Most of them are just users.
They don't pay me anything. They think they're a customer, by the way. They go, I'm a DocuSign customer.
And I go, really, really? How much do you pay for DocuSign?
What do you mean pay? Yeah, some people actually pay. The people who sent you that agreement you signed, they paid us.
But I think the answer to how that plays out in the industry is that most companies, it's dramatically better.
And they get a very high ROI from just a pure cost basis and not having to print things and mail things and all of those things.
And all the time savings for the manual processes are significant.
And then the experience is better. So everyone pretty much is pretty high on us.
In terms of what happens to folks across those various roles, there are some areas where we provide efficiency.
And that can actually, one person's efficiency can be another person's lost job.
Let me just be clear about it.
When we work with some of our large customers, they actually look at the opportunity to say, we've got a bunch of clerks sending out offer letters and then taking offer letters back and then entering the information once they're signed and then calling someone to say, order a PC for this new person and calling someone.
They have all these processes that we go, well, what do you guys use? Your workday?
We just integrate with workday. And you send out an offer letter. When it comes back, sign.
It automatically, the API calls and fills out the thing and it puts in the request and through service now, maybe through the internal system to give them a computer, et cetera.
So then you think, well, who are all those people that used to do all those steps?
Now they just have to do one step, which is send a docusign.
And so people sometimes resist. And we definitely see that.
The bulk of the value people get isn't about headcount reduction, but there's definitely, there can be some of that.
So those people, clerks that were doing a lot of manual processes could be at risk with a digital transformation product like docusign.
The other thing is about the professionals you're referring to, like attorneys, they love it.
And it may be that you could find some paralegal somewhere that would say, I actually really like doing this boring work and I just want to keep doing this mundane work.
And if I could keep that job forever doing that, I'd do it.
But most of them say, I'm just so much more efficient now. And I can do less of the boring work.
We were talking about analyzer, the new product we just announced this week.
And it basically says a contract shows up and you run it through our artificial intelligence product.
And it says, these four clauses are not industry standards.
You want to take a look at it. And these two clauses are not consistent with what your company does.
It's got 90 day payment terms and you guys do 45 days or whatever it is.
Okay, go. Versus start at the beginning and just start reading, looking for what might seem unusual or strange.
And so I think the people who are using that, that are attorneys, they're not saying to themselves, I don't know, this is really going to hurt my job prospects.
I think they're saying this made my job a lot less boring.
And it's the same thing if you think about our search capability and how we leverage artificial intelligence.
If you said, hey, guess what guys, we're doing an acquisition.
We need to find all of our contracts that have most favored nations pricing.
How do we do that? Well, call everyone up, tell them to come in this weekend and we're going to review all of our contracts.
I mean, that happens, right? And now we just say, well, why don't we just use this search, both natural language and artificial intelligence to try to see where there's preferential pricing or unusual pricing.
Let's use that as the first cut.
And now we go from, you know, 6 million contracts to, you know, 6,000.
Now we still have to pour through this, but at least you're, you know, down to a manageable piece.
And you have to spend Saturday on it, you know, on the project.
So those are the kinds of things that I think make those people's lives better.
I suppose there's some analysis we can come up with and say, it's going to reduce the number of paralegal hours or something like that.
But I don't think they're upset about it.
Well, having gone through that contract pouring over clauses and irregularities and anomalies, I had a little bit of PTSD.
And then I had my anxiety come down a little bit as you were describing the new product.
You've talked about this, I think you called it the agreement cloud, right? This platform that brings together a bunch of different pieces.
How do you think about becoming core in that agreement cloud?
And how do you think about others in the ecosystem?
And where do you want to play and how do you create an ecosystem like that?
Yeah. So I think for us, you know, it's funny, we always have this phenomenon when you have a new positioning.
And when people say to me, like, hey, how do you talk about DocuSign when you talk to a prospect, a customer, or just executive in the industry?
And I never start off by saying, you know, we're the e-signature company.
But if you go to anyone and you say DocuSign, like a call and return, I'm sure 80% of people will say e-signature.
Because that's what got us to the dance.
And that's what built us. And e-signature is a fantastic thing. But I start off every conversation with DocuSign, we're the agreement cloud company, we help you prepare, sign, act on and manage all of your agreements.
And then they go through a little spiel, whatever.
But at the end, if the person says, great, now I kind of wanted to buy some e-signature from you guys today.
There's only one proper answers.
Yes, ma 'am. Or yes, sir. I can sell you some e -signature today.
And that's how most people actually start their journey into the agreement cloud.
Because, you know, and it's one of the reasons that the CLM industry, the Contract Lifecycle Management, it took off a few years ago, it had been moribund for years.
When you talk to all the people, you end up buying Spring CM, one of the players in space.
And you ask them, why did their business pick up?
And they say, you guys, everyone starts signing all their agreements. Now they're all digital.
Now people can manage the digital, you can have a platform. When everything was paper-based, and it was like a digital management platform for agreements, for things that are sitting in a filing cabinet, you know, it's not a super helpful tool.
And so we sort of unlock this opportunity of this broader piece.
So preparing agreements, most people were using Microsoft Word or using the G Suite or something, which is great.
And then people said, yeah, but then you have to import it in.
And if you have to edit, you have to take it out and do it again.
Couldn't you guys make native documents? So we just started doing that. First one's on Salesforce platform, one of our biggest partners.
And then we're going to work through all the other, it'll be on the workday, all our other partners too.
And then APIs, the integrations that we build, or when we talk about taking actions, you know, 60% of all volume that goes through DocuSign signatures today, don't start with someone in an app building a contract, it's an API call.
You know, something happens in one of their systems, and that kicks off an agreement, you know, or something happens, you know, with an agreement that kicks off another piece, you know, an example of a sales contract.
So that's a big piece. And then the management phase, which is that storage repository of your agreements, or this intelligence search we talked about, that's another phase.
So we have to tell everyone, that's, that's what the story is, it's the agreement cloud.
And moving from a single product to a platform, it's a big deal.
It's a lot of change, there's a lot of integration required, we've done a couple of acquisitions, which means you now have, you know, different code bases to integrate.
And that will be, I think, the difference between whether we are a good company or truly great company, will be if we can make that transition to really have built a platform.
And that's not just on the stuff we built, but being an open system and integrating with all the other players.
From a competitive standpoint, where it's kind of weird, is that if you look across the companies in that broadly defined agreement cloud, well, in Signature, we're six times bigger than the next biggest player, Adobe bought a company called EchoSign.
And they used to be the same size, but we're growing a lot faster than they are, we're taking share, you know, every year, and we're about six times bigger now, and maybe seven times before too long.
So that's a powerful leadership position to have.
And by the way, EchoSign and the Adobe Sign product, we think they're five times bigger than the next biggest player.
This industry is incredibly concentrated in a good way.
If you have the market share leadership, we have about two thirds of the developed market.
But it's still early, because the TAM's about 25 billion, and we just passed a billion revenue last year.
So it's still early innings, and yet we have a very big lead. So it doesn't mean when you have a big lead in early, you know, you have to be careful that you don't get someone to pass you by.
So we do give thought to that. But most of the other players and those other product areas are much smaller than we are.
So we're kind of in this weird situation, we're trying to make this much bigger cloud platform, we're the biggest player by far of anyone in the space.
And we had had this sort of dramatic leadership and signature.
But in some of the other places, we're not even the biggest, there's a couple things where someone's, you know, be 50% bigger than we are 75% bigger than we are.
And we think we'll pass them.
And we think our agreement cloud strategy will be the winning strategy.
And they don't have the other components, they might just have CLM, or they may just have an analytics product, and just fine.
We think in the end, customers are going to say, I want this platform solution.
So if we're right, that will be the way we win.
If we're wrong, we have a bunch of disparate solutions, we'll do fine.
I mean, we'll do okay. Our CLM product, the first year we put it out after we integrated our work with the spring work, we were in the top quadrant for Gartner, just two companies in the upper right corner.
So we pretty quickly moved into a leadership position, because the other companies just aren't of our scale.
So that's kind of how we think about that dynamic. That's, it's, it's quite nuanced.
And you're right, moving from somewhere we have a position of strength and dominance in the category now, laddering out to different parts of the value chains.
It's, it's risky, but you have a point of view, if you think about the chains that we're going through with COVID and working home, and some of that being permanent, some of that being temporary.
And, you know, the central role the Internet is playing at the backbone across that, how do you think about the sort of the future, if you were to look out 10 years, looking back, what are your predictions as it relates to either consumer behavior, consumer use of the Internet, or commercial use of the Internet?
Like, what are the things that come to mind, that you think we'll look back and say, that was the point in time that this happened?
Well, here's the insight that we latched on to? Well, I think a couple things happened.
I think for DocuSign, you know, there's, we talked about serendipity earlier, there's something that just can make magic happen.
And what happened for this company was the real estate industry with the Realtors.
And Realtors just had this horrible process they had to go through when someone's buying and selling a house, where they have these signing ceremonies with this giant deck, and you'd sit down, and they would, they all joke about it, you get these two sides, somebody maybe had this like acrimonious, you know, negotiation, but then to be efficient, you got one notary shows up, if they need a notary for something, and both parties come together, and they're all signing all the things and, you know, pass it, no one wants to sign them.
And, you know, we're not gonna sign the document that you're gonna sign that.
So we have to do it together in the same, you know, ceremony for this.
And, you know, everyone is signing all these documents and pretending to read them.
And they said, it's just this comical thing where you'd spend an hour and a half, because people would go, hmm, the asbestos disclosure, and they're not even reading it, but they're just wanting to, they don't want to feel stupid, like they're signing things without looking at it.
And all of a sudden, they said, well, if you can do this digitally, one, me as a realtor, I don't have to sit in the room and watch people pretend to read documents that they're, you know, signing back and forth.
And two, you don't have to schedule it just, and so it just became this great thing for them.
And it exploded. And then, and so now we have this massive share of the realtors, like almost all of them use DocuSign.
And that then became that change of finding that one use case that exploded, because so many people lease a house or buy a house.
I mean, most people have that experience of a common experience that drives that industry.
And that yeah, but then they saw that experience.
And they said, like, wow, that was so cool. And then they go back to their company or their other parts of their lives.
Why can't we just do that? Why do I have to have you send me like, can I have to fax you something and sign?
Couldn't I just do that?
You know, and that's what really took off for the company.
So that was the first piece. And then the second thing, I think, about six or seven years ago, so before I was involved at all in DocuSign, six years ago, this concept of digital transformation became a thing.
And it became, I think, kind of cool for large companies to say, you know, we're with it, you know, and we're digitally transforming our business.
And, you know, some of them have been using them and buying software for obviously years, but they just hadn't thought about that construct.
And so I think the combination of the consumer Internet getting prevalent, so people in businesses started to say, why do I have this crappy software?
That's right. Yeah. Why can't I have like the one that people pay no money for?
The free products that people use are better interfaces than, you know, my business software.
And I want to digitally transform my business. And they started hiring people like transformation officers.
And those people started looking for use cases where they can make their business better.
And then DocuSign was known as having this, and that's really when it really started to explode.
Dan, thank you for being a part of this, which is great to get your insight and your wisdom into your category and your background and some of the key success items along the way.
We really appreciate you taking the time with us today. All right.
Fantastic. Chat with you guys. All right. Take care. Bye, Dan. Cheers.