SM: Would you synthesize what EchoSign is for us?
JL: EchoSign is the simplest way for any business to get contracts signed, tracked and filed. We want to take all the pain out of paperwork and contracting, and make closing a deal on the web as simple as it is to work on WebEx or track in Salesforce.
SM: This is an idea you financed yourself?
JL: We financed it through the prototype stage ourselves. We then learned a couple of things. First, we discovered that AdWords was not going to do it. Second, in the beginning we did not know exactly who our target customers and what our target vertical were going to be. We knew it would be one notch or one layer higher than the SOHOs we had originally envisioned. We realized that what our customers needed in 2005 was not a slick AJAX web app; what they needed was security, dependability, uptime and reliability. What they needed was what became known as SaaS in 2006 and 2007.
If we had Salesforce or some other platform in 2005, we could have self- funded longer. In 2005 we did not have a platform we could leverage. Our product only works if it is always available. British Telecom closes $200 million a month in new contracts on EchoSign. If it does not work the last hour of the last day of the quarter, we lose the customer forever. If you go to SalesForce and it is down for 15 minutes for maintenance, it is not the end of the world.
If you go to close your customer in real time and that service does not work, you will never get that customer back. We had to build hundreds and hundreds of workflows and accommodate thousands of corner cases. We never realized we had to accomplish all of that just to get a single customer. The first six months were brutal because we did not get it right. Instead of having fewer customers than we wanted, we had no customers. After six very tough months we had six customers. Today we have 8,000.
SM: After having only six customers after a half of a year’s worth of work, did you think you might be on the wrong track?
JL: It told some people, who quit, that message.
SM: What did it tell you?
JL: I knew we had the right idea. I knew that with businesses on the web there had to be something beyond eFax. There had to be something beyond an analog contracting process. I also knew that 50% of revenues closed with a contract, and that process had not improved in a decade. There was an opportunity, and I knew we didn’t get it as right as we thought when we had it on the white board.
Essentially, I knew we had not approached it smart enough. I knew there are challenges when you try to figure out something like this completely on your own. I did an exercise on my own where I went back and I figured out I could draw two conclusions. One conclusion is that it is really hopeless. The other is that maybe those six customers are somehow representative of the 6,000. Maybe they had such a high pain point that they were willing to adopt our risky product because of the good they found in it.
Our first customer turns out to be the same as our 8,000th. Our very first customer was a woman named Christina Carman who does debt consolidation services. She has 100 stay-at-home sales reps with 200% annual turnover, and she has never met any of them. She has infinite competition on the web because of AdWords. There are literally thousands of brokers who offer these services. She had a need for the two things EchoSign did in 2005: she needed to sign very quickly and very easily, and she needed to track it. Even if 100 stay-at-home reps are getting the contracts signed, if she does not have visibility into her team, the whole business process is broken.
That is the same customer as Qualcom, Taleo, SuccessFactors or LinkedIn. They all sound different but they are really the same as Christina, just not as extreme. The right answer for a lot of people may have been to quit, but I just felt there was something in the six customers we had.
SM: How much money had you sunk into the venture at that point?
JL: We had raised venture funding by that point, which made it worse. After the prototype I knew we needed money to do this for real, so we raised $2 million from Storm Ventures. We had already spent half of it and we had six customers.
SM: Your investors must have been going crazy!
JL: The one advantage I had in my investor is that I have known him for 15 years. I made him money consistently over that time. I had a long-term relationship with him, and he had as much confidence in the business as I did at that point. One of my co-founders worried, and others worried. It was clear we were not going to get more money until we improved.