As the founder of DocuSign, Tom Gonser says his biggest fear is not running out of money — it’s that they’re not moving fast enough.
Rest assured, DocuSign will never be accused of moving slowly. Over the past 12 years, the electronic signature company has been growing at a startling clip. Today, it employs more than 1,100 people, up from 300 just two years ago. It also is unlikely to run out of money, having raised $230 million in capital over its lifetime, including cash from investors such as Ignition, Accel, Google Ventures and Salesforce.com.
The company is technically headquartered in San Francisco, but Seattle still claims DocuSign as one of its own. The company was founded in Seattle and has more than 500 people here, compared with more than 300 in San Francisco. It’s No. 1 on our GeekWire 200 index of privately held tech companies in the Pacific Northwest.
I interviewed Gonser, the company’s chief strategy officer, last week on stage in front of 600 employees, who were in Seattle for an annual sales event. In addition to his biggest fears, Gonser also spoke about his thoughts on building a company from scratch and his favorite adrenaline fixes.
Here’s an edited version of our conversation on stage:
What was the first company you started?
Gonser: “I was about 12 when I got this great idea to mow lawns. Because that’s what you do when you are 12 and living in Boise, Idaho. I got my first lawn-mowing job by crossing the street and asking, and they said ‘Sure, 10 bucks.’ I went to the next house, and the next house. Soon, I had 12 lawns going. It was great. And, then I realized I’m too lazy to mow 12 laws. At the same time, I had a bunch of friends looking for work, so I was paying them to mow my lawns. I would pay them $8 to mow a $10 lawn. It was a great deal. I learned a lot about business. I learned that having a happy workforce was important because if they aren’t happy, they don’t show up, and then you have to mow a lot of lawns.”
With so many new employees at DocuSign, I would think it would be hard to establish a culture. How do you manage the company’s growth?
Gonser: “This event is one of those examples. We also have a formal program to bring people on board, and bring them up to speed on what we are doing and how we are changing the world. The interchange this week has been great. You don’t have a chance to sit with your peers when you are that far apart.”
Now that you are at this size, do you still consider DocuSign a startup?
Gonser: “Of course. It’s a startup because we are innovating at a fast pace. We are still private and we are incredibly innovative. As soon as we slow our pace, and do something crazy, like grow at 10-15 percent, or we stop innovating, then you can’t call it a startup anymore. Then, it’s just a business, and you just go to work.”
Does that make you still an entrepreneur? You’ve been here 12 years, how do you keep it fresh?
Gonser: “Because we are innovating so rapidly. Twelve years ago the problem we were solving was trying to get an electronic signature to happen. But our customers came back pretty quickly and said we love how familiar this is, but we don’t just need to do signatures. We have a whole different problem. Our problem is that we have this business process that we didn’t automate because it needed a signature, so if all you do is give me a signature, you didn’t really help my business. You just managed a little piece of it. So, we realized at that point we had to manage the entire document lifecycle. So, as we’ve grown, we’ve started to continually learn new things about what we need to do about expanding our current service.”
Four years ago, you made the decision to make e-signatures free to individuals. Was that a scary moment to make that decision?
Gonser: “It wasn’t for me, but for Neil [Hudspith], who is responsible for revenue. He was making us kind of crazy. But I think when you are inventing a new category, which we did, it has to be OK to eat your own. What we realized was there were some companies coming up from the bottom, who could potentially become big, so we said if all you are trying to do is get a signature, we can make a great product that would fit into that marketplace and protect the low-end of the market. And, even beyond the low end of the market, it can be a great tool for creating brand recognition and acquiring new customers. We have 2 or 3 million users out there who have it on the Android, iPhone or Windows Phone. So, I don’t want just a few million of consumers doing that for free, I want 100 million consumers using it for free, because we are laser-focused on targeting the companies that should be using the full solution.”
Did that decision end up paying off?
“”Absolutely. If you look at our mobile applications, they are by far highest rated app in the store, and it’s the most secure. It spreads virally that way. For example, last year, we were landing a large bank. We had been talking to them for a long time, and they mentioned on the last day, that it was kind of embarrassing that it had taken them so long to sign this contract because their customers were already using us.”
In a previous interview, you said your biggest fear was running out of money, but in our call preparing for this talk, you said you didn’t believe that anymore. I wonder if that’s because you’ve raised $230 million in venture capital?
I believe a lot of entrepreneurs believe their biggest fear, and the reason why they don’t go start something, is because they are going to run out of money. I have run out of money. Twice. And, it sucks. But you are just out of money. The world doesn’t end. You go get a regular job and you save some money, and then jump in the lake again. There’s a lot of people who come up with great ideas, but they don’t do anything about it because they are afraid of running out of money.”
You do have one fear: It’s that you aren’t moving fast enough. I guess you want to spend that $230 million quickly.
“Yes, I think speed is very important. We have to grow our business faster than the market is growing. I’m paranoid, and I spend a lot of time looking at potential threat factors in the marketplace … Does Bitcoin have some sort of angle on what we do that we should be looking at? Are there international companies that are outside of our view that are building up momentum? Are there four people in a garage building something crazy? We spend a lot of time on where we think the market should go, and at the same time keeping our eyes open. Quite honestly, we did [electronic signature], so other people can do it, too.”
Based on some of the extracurricular activities that you enjoy, you sound like an adrenaline junky?
“Yes, I am. I like to fly rockets, believe it or not. We go to Black Rock right after Burning Man, and there’s a big launch we do. The rockets are like 20 to 25 feet tall, and go 50,000-60,000 feet in the air. It doesn’t sound like an adrenaline thing, but it’s a lot like starting a company. You design a vehicle like that, it goes over Mach, and goes really high and you want to get it back in one piece because they are like $5,000 to $8,000. You spend a year designing it, and then you launch it, and when you launch it, you hope all the systems are working. When you launch, it’s just like starting a company. You can’t go back. You are either going to be successful or explode. Another kind of adrenaline comes from windsurfing in big waves on the Bay or on Hood River. The kind of adrenaline I don’t like is that I hate roller coasters. I hate it because I’m not driving it. If i’m driving it, it’s all great.”
So, you are also a control freak?
“No, and here’s also an example of that. My last company, NetUPDATE, had the problem of being founded in 1998. I had the experience of having a fantastic run-up, and then going into work one day and the market had collapsed. It was a really bad day. When I ran my last company, I was really passionate about what we were building, to the point where I always wanted my hands on the product. And when you have a VP of product and a VP of engineering, and you are also doing their job, they get kind of pissed at you. So, this time, I said when I started this company, I’m not going to run it. I’m going to run product vision and make sure we keep pushing in that direction. It’s obviously been a great choice. Keith [Krach, CEO] is a great captain of the ship. I don’t regret it at all.”
In other interviews, you’ve been asked when that turning point happened, where you became comfortable with the business and you don’t have to worry anymore. People always ask you like it’s happened already, and you answer that it hasn’t happened yet. Is it ever going to happen?
“Probably not. I suppose if we were 99 percent of the market, then I’m not that worried. We are the market-share leader, but the global market is 3 percent penetrated, so rah-rah, we are market-share leaders at 3 percent. If we were to let off our guard, or step off the accelerator, how fast would it take for someone watching our pattern to get the next 3 percent? That’s why I think it’s really important for us to go for it. There’s probably a point — not 99 percent — where you feel comfortable, and when I feel comfortable, I won’t do that anymore. I will do something else that’s crazy.”
Is that when you go public?
“No. Everyone always says, what’s your exit strategy? Going public is a funding event. It’s a way to raise capital and raise money to do fast growth and do certain things at the company.”
That could describe DocuSign’s profile.
“Absolutely, it’s an option. The private markets are also very good, though. I think the key is to navigate your funding options as you build your business, and to minimize how much your money costs.”