It’s been well over a decade since Tom Gonser helped start DocuSign. Since then, the company has raised more than $500 million and become an industry leader with its electronic signature and paperwork platform.
Yet even 14 years after its launch, Gonser still sees huge growth and innovation opportunities — not only for digital signatures, but various other related verticals.
GeekWire caught up with Gonser last month at SXSW in Austin, Texas, where the technology leader spoke on a panel about the future of digital identification — something DocuSign is certainly thinking about quite a bit, as you’ll see from our conversation.
Gonser, regarded by some as the “father of electronic signatures,” now splits his time between DocuSign’s offices in Seattle and San Francisco. The company originally started in Seattle but relocated its headquarters to the Bay Area, though the Seattle office is still the company’s largest. Gonser also now visits Bend Ore., which serves home to Seven Peaks Ventures, the 3-year-old venture capital firm that Gonser recently joined.
Read on for our conversation with Gonser (interview edited for brevity).
GeekWire: Tom, good to catch up with you and thanks for taking the time. Your new gig at Seven Peaks sounds cool. What are you up to there?
Tom Gosner: “What I do at Seven Peaks is focus on new and innovative companies in spaces that I know. If you look at the digital transformation bubble and everything from what DocuSign does, there’s lots of branches from that. Identity is one of them — there’s a whole bunch of different implementations of identity, whether it’s corporate access management identity, or a consumer play where we’re trying to get rid of passwords, and everything in between.
For me, from an investment opportunity perspective, it’s natural to be looking at who’s inventing these new things, whether that’s identity technology, identity management, the innovations on blockchain technology, smart contracts, payments — those are all areas that I’m pretty familiar with. It’s kind of natural to be looking at those markets and those companies and also looking at this from a DocuSign strategy perspective, so they fit together pretty well.”
GeekWire: What’s your role at DocuSign these days?
Tom Gonser: “I’m on the board, so pretty active in that regard. I spent quite a bit of time just talking long term strategy with the CEO and a lot of the execs. I’m still pretty connected to a lot of people in the company, so it’s more ideation — more of, ‘What do you think about this?’ I’m still really passionate about all of the things we can go do. There’s a lot of innovation yet to come.”
GeekWire: Let’s talk about that innovation. You were just talking about getting rid of the password.
Gonser: “I wouldn’t say that’s a main focus for DocuSign, but there are companies out there that are putting technologies together with that objective. For us, it’s interesting. We have a huge network of users, hundreds of millions of unique people who have what I would call a ‘trust graph’ in DocuSign. We don’t expose it right now and it’s not a product. Right now, when you go to interact with a transaction, there’s an identity proof that the sender puts you through and we have several tools to do that. But we don’t currently persist any of that to say, ‘Well, you’ve done this 10 times, so now you have this huge trust core.’
As we look at trying to reduce friction more and more and more, even for transactions of high value, it may make sense for us to do some things that allow people to persist the identities and the authentications that they’ve gone through. Because ultimately, our business is all about streamlining transactions and getting rid of friction, creating a situation where people aren’t re-keying data and they’re not having to prove who they are all the time. We are focused on making transactions happen faster and faster and faster, to the point where you can look at improving the ability for people to reach agreement through our system.
GeekWire: What about payments? The company rolled out DocuSign Payments in October. How big can this get, especially when you combine it with what DocuSign is already doing with signatures?
Gonser: “It’s a huge piece of smart contracts. Think about it just from an extension of the surface area where payments can happen. Today, if I’m a business, I can build a shopping cart system that takes credit cards. But then I’m dealing with the credit card data, PCI compliance and all that complexity, and that’s really the only place I can put it.
Now with DocuSign, I can put a secure payment surface area into any document. That could be a web link on my website where someone signs up for something; it could be something that we have a conversation about and I send you a contract through DocuSign. It’s any number of areas that can be put in place. One of the benefits is that the payments infrastructure is between DocuSign and the payment gateway — both highly secure systems. The user doesn’t have to be involved with any of that stuff. It’s totally safe from that perspective; radically fast to deploy; super safe from a PCI compliance perspective; and I can deploy it in any document.
If you think about all the documents out there that talk about a payment, there’s a lot of them. There are so many contracts that contemplate reaching an agreement so that you’ll pay someone to do something. But the [signature] and payment have been two different things. Now you can merge those two together so that by filling out an agreement to have someone come mow your lawn, you are also going to be paid, and have that happen as part of the contract.
There’s not only a speed and efficiency and a security benefit, but potentially there’s things that change the way businesses actually work. If you think about contracts getting smarter and smarter, some contracts say, “Hey, when we sign this agreement, you’ll owe us 10%. Then when we reach this milestone, you owe us 30%, then when we’re finished, you owe us the balance.” It’s pretty easy to see a smart contract starting to govern that, too. It turns a contract into a computer program, so it’s a great evidence of that for how contracts are getting smarter and smarter.”
GeekWire: Can you talk about the next one, two, even five years for DocuSign? What would you like to see happen?
Gonser: “It’s about continuing to expand the digital conversation that we manage. You’ll see contracts get smarter and smarter and smarter, and be able to do things more and more autonomously. That’s a humongous opportunity. Some of it is machine learning, and a lot of it is around data. In order for a contract to be smart, it has to get data from the outside world. It can get that from people when they fill out forms, but if you think about contracts becoming truly smart, there needs to be a way that it can get triggers from things to know that clauses need to be energized or payments need to be made, etc. I think we are going to see, very much like the Internet of Things, is that there’ll be more and more interfaces to these smarter contracts that allow it to make decisions by itself so a human being doesn’t have to do it.
Today, contract management typically goes, ‘We agreed on this contract and it has a bunch of stuff in it that we have to do and they have to do.” Human beings have to run around and make sure those things are happening. Then if it happens, then we have to pay them, or then we have to do this or order this equipment, or whatever. A smart contract eliminates the need for human beings to have to do that.”
GeekWire: That reminds me of what DocuSign did with applying smart contracts to the car leasing experience.
Gonser: “That’s a great example. It’s really where contracts become computer programs, and ultimately, the platform we have is exactly that. It allows somebody to take a DocuSign system five years from now, and no matter what business you’re talking about, create this smart contract that manages a process, but to do it from a general purpose starting point. If you think about, a good example of a smart contract is if you ever go into your investment account and say, ‘If Apple stock ever gets to $630, I want to buy 100 shares.’ That’s a smart contract, because once you say that, it’s going to keep looking at that until it happens. Then when it happens, it’s going to execute.
It’s not a very smart contract, but it’s pretty smart. It’s really hard to build it — someone had to custom code that specifically for the bank. If you can imagine a system that will allow you to go into DocuSign and it’s as easy as creating a template, and make that same kind of logic happen for anything in the business, you know it changes everything.”
GeekWire: When you think about when you started DocuSign and fast forward to today with all these new products, is this what you expected? You’ve got to be pretty pleased, right?
Gonser: “Absolutely. The reason we’ve been able to continually advance is because we’re really listening to and watching what our customers are doing. It’s funny, if you think back to when I first started the company, I literally thought the only thing we were trying to do is just make a signature happen digitally in an easy way, without any software or any confusing stuff. The first customers told us this would change their world. But then we did that and they said, ‘this is awesome, but it’s not enough.’ They not only needed people to sign documents, but needed to fill out forms and be routed over to a second person, and have that data go into some other system. They needed us to manage that whole digital workflow for that document. As they deploy our technology and start doing more and more things, we have an unfair advantage in that we’re watching and helping them. From there we start to see opportunities that go beyond that. Payments is a great example of that.
The other thing that’s interesting is businesses that use Docusign are improving something that’s really fundamental to their business, as opposed to sort of a side thing. If I’m in business and I’m competing against somebody that takes three weeks to do a transaction, and I now can do it in one day, I’m going to win. We can fundamentally improve the core transaction speed of a business — that’s so impactful, and we’re just getting started.”
GeekWire: What about an IPO? DocuSign has been pegged as a potential company to go public for the past few years.
Gonser: “It’s fair to say that we’ve talked about that for a long time. An IPO is a funding strategy, and when it makes sense, it makes sense. It’s also something obviously nobody talks about before they actually go do it. But the business is doing really well. The markets are doing well, and we like it right now. It’s a great time to be at Docusign.
Some people have asked me that question, ‘So your exit strategy, when are you going public?’ That’s not an exit strategy. An exit is like selling the company or quitting or shutting down. It’s a funding strategy, and the private markets have been pretty good. We’ve been able to raise money at fair valuations to fund the business and go forward. You’re always balancing public versus private as you look forward is your funding strategy. We’re in no rush, and we’re also not not looking at it either. It’s all about strategy.”
GeekWire: “Let’s talk about Seattle and San Francisco. You’re not living in one place or the other right now, but you’ve had experience in both places. Is there anything that you’ve picked up on just in terms of the differences in the tech ecosystems, the vibe, or just as a place to live and hang out?
Gonser: “It’s really different from when we first set up. When we first came down to San Francisco, we were figuring out if we should be there or in Palo Alto, because everything was going on in Palo Alto.
That’s changed a lot. San Francisco is now the hotspot to be if you’re tech. That’s a big shift; it’s also radically expensive. Seattle’s not cheap, but both of those markets are at the high end, and San Francisco is just really high end in terms of cost.
It would be difficult to start a company in the city because your cost of office space and salaries is going to be massively high and you’re going to have longer commutes. That’s an interesting thing — at Seven Peaks, one of our focuses is, ‘Let’s find really amazing tech companies, ideally that aren’t in the Bay Area,’ because it just adds so much expense for a small company.
If you’re bigger, you need to have presence in the Bay Area — maybe not your whole company, but you need to have some presence there because it’s a tech hotspot. But it’s perfectly viable now to start a company in Portland or Seattle or Salt Lake City.
There’s one company I know that was in Cupertino and they needed to expand their office. But the next place was going to be more expensive, so they moved the company to Bend. Their average commute went from one hour each way to 10 minutes. They don’t pay employees as much, but it doesn’t cost as much to live there. And I think they’re all happier.
I think there’s a shift, and DocuSign to some degree feels this, that you don’t have to be downtown anymore to get everything done. You can be farther out; I can sign a contract from the beach. I think you’re going to see sort of a next generation of tech companies popping up in places like Boise, Idaho.”