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- [00:05]
A
I've worked for 40 years. The pace of change right now in every aspect in our product innovation, in our go to market, in our packaging and pricing, we just discussed in how we market, how people discover us. I mean, all of that is just changing at a rate that is exhausting and exhilarating at the same time.
- [00:26]
B
That was DocuSign CEO Alan Teigason. Hi, I'm Motley fool producer Matt Grier. Now DocuSign provides E signature solutions and other contract management tools. We recently had a chance to talk with Alan Tegeson about opportunity, innovation and the business of DocuSign.
- [00:45]
A
Hello, fools.
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C
Tom Gardner here with our Chief Investment Officer Andy Cross and Toby Bordelone. And we're so excited to be able to spend this time with the CEO of DocuSign, a Motley fool recommendation ticker symbol DOCU. And the CEO is Alan Teigason. And Alan, thank you so much for being here with today.
- [01:02]
A
It's a pleasure to be with you, Tom. Thanks.
- [01:05]
C
So, of course, this is a standard opening question for you that everybody thinks historically of DocuSign as a signature company. Let's talk about all that it does now with AI workflows and just get right into it in terms of the end to end workflow opportunities of the company.
- [01:20]
A
Yeah, fantastic. Yes. Well, I'm sure many of the listeners have signed with DocuSign over the years, either in a personal or professional context. And I look, that's an amazing starting point. Right. We are involved in the perhaps most important moment of the journey that an agreement goes through. And that was part of what attracted me to the company three years ago, was that position and affinity. But as you said, there's a lot more to agreements than the execution moment. And DocuSign had had that general idea for a while that, you know, we could go upstream from people executing documents, to mass customizing documents, maybe to identifying the parties and so on, but we'd never really put it together end to end in an agreement management suite. And so that's what we've done. We launched that in June of last year. And literally every stage of the agreement journey, from creating the agreement, negotiating it, managing all the internal approvals, pre filling the agreements, executing them, and then managing them once they're executed and figuring out what you might want to renegotiate, or figuring out how you're doing in your contracts or where you have exposure, all of that is available, much of it AI enabled, which I'm sure we'll get into. We call it intelligent agreement management. And it's been Fun. So it's been a revitalization of the company. I think we've rediscovered our innovation mojo and benefiting from, as I said at the beginning, from already being a trusted partner with the signing product. And that's a nice starting point.
- [02:42]
C
Two follow ups for me and then I'll let the real great interviewers get in the mix. When you re energize a company in terms of awakening its desire to innovate, what are the top two or three things that you think are essential to that transformation? That just the process of getting those muscles working again.
- [03:00]
A
I think the first thing is, look, you have to have the right leaders. And so I attracted some great folks to that, combined with some of the amazing talent we had here could be leading that effort. I think we had to articulate a compelling vision, a mission that felt worthwhile and that honored sort of what we had done before, but represented the opportunity and, you know, sometimes it's better to be lucky than good. I joined in October 22 and GPT 3.5 launched a month later. And I had some idea of what was going to happen with AI, but obviously that's worked out incredibly well for us. And then lastly, I think you got to set some immediate goals that allows people to feel like they can be successful. And we set this goal of launching the first part of the suite and in particular launching our intelligent repository, basically a place to store all your agreements that uses AI to extract all the essential data out of them. And we agreed on that in August of 22 and we launched a beta by the end of January the following year. And I don't think anybody in product engineering thought that that was possible or good idea. I think once we did it, it was such a can do moment for the company and it was so exciting. It became the heart of our launch and then we launched the company in a big way and you sort of gradually got all the teams involved through the sales and support teams. I think the whole company has sort of rallied around that mission and a sense that the transformation is now possible. You got to articulate a bold vision, but you also got to show them how they can get there. And having those early proof points was super important. Trading at Schwab is now powered by Ameritrade, giving you even more specialized support than ever before, like access to the trade desk. Our team of passionate traders ready to tackle anything from the most complex trading questions to a simple strategy. Gut check. Need assistance?
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B
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A
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- [05:12]
C
The forest level down right down to the pine cone with this follow up in a very unprofessional interview format. But how is the suite priced now? What has changed in pricing with the addition of all these features?
- [05:23]
A
Yeah, you'll not be surprised to hear that it's gotten more complicated. But I mean historically the way Docusign has been priced is we sell our electronic signature product sort of in a batches of envelopes basis. Envelope is basically a collection of documents that are sent for signing. And that was a good proxy for value. Right. You know, didn't capture how important the document was, but it was sort of a, a nice simple model that everybody could understand and that allowed us to scale up. Well, that obviously doesn't work anymore given that we're now doing this much broader range of workflows that's not necessarily related to agreement volume and the value depends on which parts of the suite that you use and maybe how large your library is. So we've evolved because you got to keep it simple enough that we sell to companies of all sizes. We're not just enterprise company, we sell to 100 person companies, even to two person real estate offices and everywhere in between. And so it needed to be simple to start. So we used a seatbelt model with some thresholds for the size of your library and now we're rolling out a more complicated or complex model that is a platform plus various features that could turn on and where we attempt to capture some sense of the value that we're delivering and that the customer would feel good about paying for. But to be honest with you, it's evolving as we speak. Right. Because all these AI features, what you really want is to align your pricing with the value that you deliver. It's just so hard to find those proxy metric that are objective and that you and the customer can't agree on. And then it has to be simple enough that they can understand it going in and that we can explain it to them in a relatively short conversation. And I don't think we've nailed that yet, but we're getting there. But we started with something relatively simple with sort of Seat plus and then we're evolving towards more platform pricing with tokens for different types of value.
- [07:14]
C
It's never really felt great as an analogy going to you Andy, but you know, we're building the plane as we fly it. You know, we've all heard it before. Maybe we don't want to actually visualize that. That probably doesn't feel great. But with all of the new tooling, all the new tooling, all the upgrades, I mean, you have to be able to keep transforming yourself. And that means the value you're creating is going to shift and it's going to be a fluid environment.
- [07:35]
A
I've worked for 40 years. The pace of change right now in every aspect in our product innovation, in our go to market, in our packaging and pricing. We just discussed in how we market, how people discover us. I mean, all of that is just changing at a rate that is exhausting and exhilarating at the same time.
- [07:52]
D
I wanted to have a follow up on that because you talked about some of the sales restructuring, reorganization. We've been hearing this from a lot of different software companies. I think this is part of this conversation about things moving so fast and being able to articulate your value prop. Talk a little bit about what encouraged you to change or what forced you maybe to rethink the sales organization and what change did you actually implement throughout the year.
- [08:16]
A
So I think to start, DocuSign was historically a direct sales company and to a fairly extreme extent. So I mentioned earlier how we have customers of all sizes. Unless you were buying the absolute most simple bundle we offered, you were basically told to talk to a seller. And so we had sellers that had hundreds of accounts, sellers that had a smaller number of larger accounts. But basically everybody was assigned to a salesperson. 85% of the company's revenue was managed by the direct sales team. And when I came in, my first observation was, wait a minute, we're a digital contracting product. You should be able to digitally transact with us in a more robust way. And so we worked on that and we made a lot of progress on that. So now you can order all the products and upgrade as you see fit. But the second part is as our product roadmap changed from this point, solution that everybody understood well and that many people were able to implement by themselves without any external help to this broader agreement management solution. What we needed both on the sales front and on the post sales side changed, right, because we're now selling a solution, a platform that others can even add on top of. And that's just a very different kettle efficient. So we've been doing a lot of enablement, which is a fancy word for training your sales team, as well as upgrading in select places to get people who are more familiar with that motion. We are leaning much more heavily on partners now. So historically there wasn't a need for a partner to be involved in selling Signing. But with this new platform we need the Deloitte to the world and their counterparts regionally and in specific industries to do more work with us. And they're very interested, but we have to learn to dance with them and do a better job of that. And so those are some of the changes on the sales side, then the support side. Of course, again, Sign was a simple, singular product and it was a fairly transactional support model. People would call or email. It's a problem and we could usually solve it with the phone or that way. Now it's a much richer set of processes. You got to consult with people on how to use the AI, how to get their data in the right place, and how they might want to change their workflows. And those are all more robust things. Some of those are things that a classic enterprise software brand that would have done before, and some of it is specific to AI. This notion of building models with customers that didn't really happen before.
- [10:35]
E
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- [12:06]
C
Let's randomly leap forward 12 years and ask ourselves, has DocuSign replaced law firms? Have we moved beyond just the management of the actual workflow to a lot of the negotiation? The whole process of coming to agreement can be automated.
- [12:22]
A
No, I don't think so. Let me say a couple things. First of all, I think you will absolutely see automation of some lower level legal work activity today. So things like you could imagine an automated negotiation of an NDA. I don't think that's super futuristic. I think that's mostly possible with tech today. And since there's not that much risk in most cases, I think we'll see some of that. And you can imagine sort of agent type onboarding of new vendors or new clients. But I think that's not really, I think, why people retain law firms. Yes, they do do some of that work today and so some of that work will go away. But the reality is that legal is one of the most under resourced functions in any company. It's one of the reasons why everybody always complains that legal is a bottleneck, right? So there's so much headroom, I think, to take those repetitive but manual tasks and automate them. So I think on the more complex judgment where there's meaningful amount of risk involved, sure the AI will do a lot of pre processing and we'll serve it up to humans, but you'll still have human review for an extended period of time, in my opinion. Now, you know, I think it's very scary to try to forecast what's happening in 12 years. That was your time frame.
- [13:42]
D
You meant 12 months.
- [13:43]
C
If we had said 12 years, how long of a time is that? 1995, obviously we know the pace has picked up so much so it's really interesting to think how planning happens. Your answer to that suggests that. My second question, which is more of an idea I wanted to play out and have you shoot it down. You've already shot it down. But would we ever think about renaming our company from DocuSign to DocuFlow?
- [14:04]
A
You know, we had that discussion because, you know, we went through a significant rebranding exercise holistically, not just about the name, but about our look and feel and what we were trying to communicate about the brand when we were getting ready to launch. Intelligent review and management. And I said to the team, look, I was willing to consider anything but changing the name. Look, if you've got a name like ours that's instantly recognizable and has very positive, generally affinity, I think the bar is incredibly high to mess with that. I mean, we have over 1.5 billion individual profiles that have executed a document with DocuSign.
- [14:43]
E
Right?
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A
We have over 1.7 million monthly paying customers that pay us for our services. I mean, those are very large numbers. I can't even imagine the media plan and the effort that it would take to meaningfully substitute that if you tried to change the name. So, yes, I did have people who suggested that, and of course it does tie us back to sign, but they.
- [15:07]
C
And I were dismissed from your company.
- [15:09]
A
I'm sorry, but I don't think that would be a good idea.
- [15:12]
D
You've been focused on bottoms up, innovating. You've been talking about this, you've done that. Talk to us a little bit about the product development, the innovation engine. If you maybe peel back the curtain a little bit for us at DocuSign without getting too much into the weeds. But just curious how you think about motivation, your team and just a release schedule. How quickly are you trying to innovate these days?
- [15:36]
A
DocuSign was Covid darling, right where we were growing very nicely before COVID And then we have all this demand pull forward from COVID And then when that receded, it was a hard reset. Some use cases fell away and customers had pre bought and bought more than they needed. And so it was a pretty tough reset. And that affected all parts of the company. And I think one of the things that's a hidden cost of that kind of automatic demand is that it's not just your salespeople who fall asleep and forget how to sell. If your product engineering organization said, well, as long as I keep the lights on, I can sort of do what I want. And I think we lost some DNA. There wasn't as much of a focus on shipping and moving the needle from an innovation perspective. And so as we discussed earlier, I think resetting the bar, articulating a new vision, explaining to people that they were empowered to go and innovate and suggest ideas, raising expectations on beliefs, velocity. I mean, we were, you know, doing a couple releases a year, and now we're shipping much more frequently. And so all of those things are little things that you do. You give people better tools to get their work done faster. You know, all those things have, have helped speed up productivity. We're in a much, much better place. I still would like to Move faster. I'm, you know, impatient by nature. And I think particularly in today's environment, you kind of need to be impatient. You can't be looking at yourself or how you are doing compared to how you were doing year two, three years ago. You got to be looking at how fast are the cutting edge companies going, and they are going very fast. Do you see any threats on the AI front in terms of being a threat to your business, allowing competitors perhaps to come in and more easily compete with what you're doing? You know, I think that AI is so let me put it this way. I think what it unlocks for us and for the category is such a massive leap forward. You know, historically, documents, agreements have been dumb, flat files, right? They might as well have been in a physical filing cabinet. Everybody had this PDF stored somewhere, if they could even find it, and they didn't know what was in it, and they had no tools for managing that. And so AI really transforms that. So that's an unlock not just for us, but for everybody. But then the fact that we start in this position of having all this understanding of agreement structure and being involved in so many steps of agreement workflow and having the distribution to all these companies, look, you got to worry, as we talked about earlier, about some smart startup coming up with some killer functionality that you hadn't thought of or can't replicate. But I feel it's been a blessing and just a giant opportunity for us, and I'm just very fortunate to be leading DocuSign at this time.
- [18:22]
C
Alan Teigason, CEO of DocuSign, thank you for spending time with us and we enjoyed every minute of it. Obviously have been following DocuSign since its IPO all the way through and so excited about what you're creating there with your team and all. DocuSigners. Are we DocuSigners when we come to work?
- [18:37]
A
We are.
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E
Yeah.
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C
We're docusigners in the way that Jensen Huang is working to bring us new technologies, you're working to bring us investment returns. And we thank you just as much as we thank Jensen and thank you for the time and best of luck.
- [18:49]
A
Thank you. It was really great to chat with you guys.
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B
Appreciate it, as always. People on the program may have interest in the stocks they talk about, and the Motley fool may have formal recommendations for against. So don't buy or sell stocks based solely on what you hear. All personal finance content follows Motley fool editorial standards and is not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check out our show notes. For the Motley Fool Money Team, I'm Matt Grier. Thanks for listening and we will see you tomorrow.