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The SaaS Podcast - AI, Growth & Product-Market Fit for SaaS Founders
452: Proof: SaaS Growth Lessons from $0 to $100M ARR - with Pat Kinsel
00:46:34
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- [00:00]
Pat Kinsel
Foreign.
- [00:10]
Omar Khan
Welcome to another episode of the SaaS podcast. I'm your host, Omar Khan, and this is a show where I interview proven founders and industry experts who share their stories, strategies, and insights to help you build, launch, and grow your SaaS business. In this episode, I talk to Pat Kinsel, the founder and CEO of Proof, a transaction security platform that helps businesses verify identities and prevent fraud in digital transactions. Back in 2013, Pat sold his social search startup to Twitter. But when he went to register his shares, a notary error nearly cost him his acquisition money. That frustrating experience stuck with him. In 2015, while working as a venture partner at Polaris, Pat decided to test an idea. He put up a simple landing page for an online notary service and ran Google Ads. The ads didn't lead anywhere. He just wanted to see if people would click and what it would cost to acquire them. The numbers look promising, so he launched notarize as a $25 consumer app. But reality hit hard. For three painful years, they struggled to reach the first million in ARR. They were losing money on every single transaction, paying notaries to sit online all day for customers who rarely showed up. Pat questioned the opportunity hundreds of times. At the same time, he was flying state to state, begging legislators to change notary laws. As a result, he was burning through investor money and getting rejected over and over. He spent nearly a decade lobbying and eventually helped to get laws changed in 47 states. By 2019, they'd finally stopped losing money on each transaction and were barely breaking even. Then Covid hit, and demand exploded overnight. But the problem was they weren't ready. Customers had to wait six to 10 hours to get documents notarized, and the team was working around the clock trying to keep the platform from completely collapsing. But most of those Covid customers never actually used the product. They'd bought it as a backup plan during the pandemic, checked the box, and disappeared. So after painful layoffs and reassessing everything, Pat realized enterprises don't just buy one tool to solve one problem. They want a suite of products from the same vendor. So in 2013, they rebranded to Proof and expanded beyond notarization into broader transaction security. Today, Proof serves thousands of customers, including dozens of Fortune 100 companies. They're approaching 100 million in ARR, with around 230 employees, and have raised around $260 million so far. In this episode, you'll learn how Pat validated demand with nothing but a landing page and Google Ads before writing any code. Why? Losing money on every transaction for years nearly killed the company and what finally turned it around. What really happened when Covid demand exploded and why it almost destroyed them. We talk about how Pat spent nearly a decade fighting to make online notarization legal one state at a time, and why most of their Covid enterprise customers never activated, and what that taught them about finding real product market fit. So I hope you enjoy it. I talk to a lot of founders stuck in the same spot. They've got a clear vision. They just need the right team to build or scale it. That's where Gearhart comes in. They combine AI, real engineering and product thinking to help B2B SaaS founders move fast from early idea validation to scaling real products. For over 13 years, they've helped launch more than 70 platforms, including SmartSuite, which raised $38 million and is used by companies like Capital One Bank. Through the end of September, you can book a free strategy session and get 20% off validation, discovery, prototyping, or embedded engineers. For your existing team, visit gearheart IO. That's Gearheart IO. When was the last time you verified your app's emails actually reached users? Someone signs up, expects their welcome email, nothing. They try password reset, silence. They assume your product's broken when really those emails are sitting in spam. Mailtrap is an email delivery platform built for product companies that send at scale, trusted by teams at Atlassian, Adobe and calendly get faster delivery, high inboxing rates and industry best analytics. And right now you'll get 20% off all plans with the code. The SaaS podcast at Mailtrap IO. That's Mailtrap IO. All right, Pat, welcome to the show.
- [04:42]
Pat Kinsel
Great to be here.
- [04:43]
Omar Khan
Do you have a favorite quote, something that inspires or motivates you?
- [04:46]
Pat Kinsel
I do and I want to get it right. So actually it's Michael Bloomberg, of all people, and he says, I know what hard work's about. I still come back to what my strategy always was and will continue to be. I'm not the smartest guy, but I can outwork you. It's the one thing that I can control and I really like that.
- [05:06]
Omar Khan
Is that kind of your work ethic as well?
- [05:08]
Pat Kinsel
Yeah. And we believe as a company and always showing up and having done the work, and I think a lot of companies, you know, they, they meet with a customer or regulator and they say, well, we could do this. And it's very different to show up and say, well, we did.
- [05:21]
Omar Khan
Cool. So tell us about proof. What does the product do? Who is it for, and what's the main problem? You're Helping to solve.
- [05:29]
Pat Kinsel
Well, everybody, of course, everybody. Right, yeah, look, it's, it's certainty at certainty in who you're doing business with, the records that your business relies upon. We're in the business of certainty. And so we started an online notarization. And if you think about that in the paper world, it's kind of silly, right? You go out, you sign documents, someone fills in a little book. And what we really did is we digitized that and we use all sorts of technology for identity verification. It's instantly available online and we create these records that can't be tampered with. So it's certainty. And now we've extended beyond notarization with a lot of new products where we can do that for many things. A more secure E signature experience, account authorization experience. And so, you know, in a world where it's increasingly hard to know if the people you're doing business with are real, we solve that problem.
- [06:18]
Omar Khan
Great. And give us a sense of the size of the business. Where are you in terms of revenue, customers, size of team, Many, many millions of dollars.
- [06:28]
Pat Kinsel
Sorry, I mean we're tens, approaching 100, 100 million.
- [06:32]
Omar Khan
So great. How big is the team?
- [06:35]
Pat Kinsel
We're like 220, 230 right now.
- [06:37]
Omar Khan
In that range you've raised, you told me earlier, 260 million. And number of customers.
- [06:45]
Pat Kinsel
I mean we have thousands of customers, we have tens of the Fortune 100 and a lot of great partners and channel partners, FedEx, Adobe, a lot of industry specific platforms are on our, you know, we integrate with, in the mortgage industry or title industry or financial services. And so, you know, we're a business that, that really does, I, I joke, but we serve everybody, consumers to the most sophisticated, you know, large enterprises.
- [07:13]
Omar Khan
Okay, so let's talk about where the idea for this business came from. So you launched in 2015 and at the time the business was called Notarize. We were trying to figure out when we met because we're both former Microsoft people. I was still at Microsoft at the time you were coming in and there were some meetings and you were pitching something which can't remember what it was. Maybe it was notarized, maybe it was something else. Yeah, probably, but the idea was probably cooking at the time, I'm guessing. So just tell me about what were you doing at the time and where did this idea come from?
- [07:54]
Pat Kinsel
Yeah, so I had been an employee at Microsoft and worked on some search related things and then I left and I started a social search business and then I think we met through those discussions and then it was ultimately the sale of that business to Twitter that spurred this company. And so it's funny, I remember being in Korea in the back of a taxi, and I basically signed all of the definitive documents to sell the business on a phone, know, as we all are accustomed to doing. And then fast forward when it was time, as Tudor was going public, for me to actually, like, claim the money I'd made, I had to register my shares, had to get a document notarized, and the notary screwed it up, caused this huge drama for me. And what's funny, I've been doing this 10 years, and I have heard thousands and thousands of those stories from people. Everyone has a story of driving around in the middle of the night to find a notary or not being able to find a notary or an error in a document. So I've never had to convince people that we need a better way of doing it.
- [08:56]
Omar Khan
Yeah. Yeah. So, okay, so you have that experience. What was the driver that kind of pushed you to say, I'm going to go and solve this? Because when we were talking earlier, I said to you, okay, great. I don't think anybody would disagree that there needs to be an easier way to get stuff notarized. Maybe other than notaries. Right. Who might disagree. But at the same time, it's not exactly a very sexy business to get into. And it just feels like it's just filled with red tape. So even when you just look at that, it's like, this doesn't sound like an easy business to get into. So what was it that kind of drove you to say, I'm going to go and solve this problem?
- [09:43]
Pat Kinsel
Yeah, it's a sea of red tape. And ultimately on the other side, it's a moat of red tape. But to answer your question, maybe a little more context for folks. So I sold that business to Twitter and then joined a venture forever in Boston, Polaris Partners. And I made a couple venture investments. So I led all of the early rounds of financing in a company called Drizly, which was ultimately sold to Uber. And I was on the board of that company that was alcohol delivery and E commerce. I invested in a business called Lob out in San Francisco, which it's a gross oversimplification, which was basically Twilio for print and mail. It's like anything. You're kind of just getting exposure to stuff. I started as an EIR and then became a partner. So I was out just looking. A lot of technology at that time, the concept of your phone as a remote Control for the world around you was really a thing. So Ology was taking off Instacart. A lot of these businesses, there was a joke about push button get pizza. So this idea that anything would be accessible to you on your phone. Drizly was doing a lot of innovation around ID verification in order to comply with liquor policies. So I was kind of observing that play out. It's funny because on the investment thesis side, I see our original business notarized LOB and Drizly is actually the same business. And if you remember, this was a time when everything was about microservices, APIs for everything. And so I look at all three of those businesses and what I see is aggregating sort of latent capacity, organizing it in a more accessible, controllable MANNER, giving people APIs and then really changing the market. And so Drizly, really what they did is they tied into all these liquor stores, they understood real time inventory, they could do order placement. And this finally allowed for the first time ever, alcohol e commerce because it would come from the local retailer Lob. If you think about the way prior to a company like that, you ordered printed materials, you would send over a proof, you'd order a million or 100,000 copies, they get back to you, you'd stuff them in envelopes. They did partnerships with printers around the entire country. And then you could do, just in time, completely customize order and fulfillment at the edge, close to the consumer, and have it delivered. And notarized is just a pool of notaries across the country in all of the appropriate jurisdictions to meet compliance requirements. And so I saw them as the same thing. And so I was kind of in this space looking at these businesses. I get this document notarized, that went poorly. And then I did what anyone would do, which is I did a little bit of online research and realized shit like this market sucks because it has to suck and the regulations dictated to be miserable. And I kind of put it down and I just kept coming back and picking at it and picking at it and picking at it. And then ultimately had a bad ski accident and had a couple months of time and I went deep, deep down the notary rabbit hole and figured out how to do it digitally.
- [12:49]
Omar Khan
So how did you get started? Because again, when I think about this, I don't really understand this business that well at all. But I start to think about, say, well, at that point you've not only got to figure out the legal aspects of how to get stuff notarized, you've got legislative issues and it's probably, is there like a federal level thing? Is there a state by state thing? Like where do you even get started and how did you decide this is where I'm going to initially focus?
- [13:20]
Pat Kinsel
Yeah, I'm a. So I'm a product manager by background, you know, Microsoft. And I've been through all the training and product requirements documents versus specs, which I don't think people learn enough anymore, by the way. And so for fun, you know, I like to write specs or these. I haven't, I haven't done it for a while. I mean, I do it at sort of the micro level here. But so that was like again a phase of life where I was exploring a lot of ideas and I was writing specs. And So I wrote 30 of them for all these different ideas. And it's just a muscle you have to exercise. Right. And so how would I prove the concept? What's my testable hypothesis? Like, da da da, da da. And so I just kind of did it as an academic exercise, candidly, which I think is a great approach because then there's no pressure. You just kind of say, let me take this idea to the end of the rainbow and see where it takes me. And I kind of realized like, you know, so I kind of specked out how I would comply with the law, I thought. And then you kind of asked the questions, is it a usable experience? Can people use it? How would I test it? And so I actually bought Get Notary Co as a domain. I used Unbounce. I set up the ugliest landing page you've ever seen in your life. And I bought Google Ads and I just see if people clicked it. When they clicked it, it didn't go anywhere. But I just wanted to see like, what would my acquisition cost be? What's the market size? What's the conversion rate? I did some basic math and I just said, look, I think that if I could fulfill the service, this thing would hunt. And then on the regulatory side, I just started reading all the laws and what I uncovered is that all the states had this reciprocity regime that said so long as it was valid in another state, it'd be valid in our state. And then you get into Venue. And if you understood at the time there was all the debate around Internet sales tax and Amazon and Venue, I was familiar with those issues and I kind of said, okay, this is the same. And I convinced myself that I could do this and that it was worth testing. And so maybe just sharing something I've learned Throughout the course of my career, I think when people raise money, they always act like they have it all figured out and they don't focus enough on here's this big opportunity and if I could just figure this part out, it would really get me closer to validating this and making it worthwhile. So I was just very clear that this is a huge problem, someone's going to solve it. Here's a way, with a certain budget, I can really learn some things and prove this thing out and then we can make some other decisions. And ultimately funded it out of Polaris, where I was working at the time.
- [15:51]
Omar Khan
Okay, and then what did that first version of the product look like or the mvp, what did it do?
- [15:58]
Pat Kinsel
It was a mobile app. I mean, look, I was trying to solve my own problem as a consumer, which was I wanted to never go looking for a notary again. Right. And so as a mobile application, it was a, you know, dual sided marketplace where notaries would be in their portal and they would process transactions and consumers would upload documents and then connect with these notaries. It was virtually instantaneous. That's been a big part of our get go from the beginning, was always on availability. I think especially as we moved into the B2B realm. You want to be able to say you can reimagine your business on top of this platform, so it has to be high availability. And so we hired these notaries. I lost a lot of money just paying them to be online for when consumers wanted to connect with them. It's basically telemedicine for a notary. You get on video, you prove your identity by answering some questions, taking a picture of your id and you have this shared workspace where you complete the document and then they sign it with a PKI certificate which makes it tamper evident. And that's the basis a lot of the security work we've since done.
- [17:01]
Omar Khan
And were you selling it to consumers at the time? It was B2C, right?
- [17:05]
Pat Kinsel
Yeah, it was single use, $25 a transaction for the longest time. The more I sat on support, the more money we made. Because people's question was like, can I really do this? And I had to be on support. I remember being on my phone, we used intercom. I'd be like, yes, $25. And yeah, it was totally direct to consumer to start.
- [17:27]
Omar Khan
So why did you go after consumers? Like for a product like this, probably going after a B2B play, having some kind of subscription would have made sense. Why the consumer focus first?
- [17:42]
Pat Kinsel
Yeah, so I go back to again Kind of testable hypothesis and assumptions. And my plan, you could have maybe taken a different path. But the plan that I charted was, let's first make sure people will do this thing right? And then the second thing was, let's make sure it's accepted. And then the third thing is let's think about this in the business realm and context. And so our early years kind of followed that journey of the fastest path. The search business that I sold to Twitter, we build amazing technology, and then we really were trying to find a use case. And so some of the meetings that we had had when you're Microsoft was, hey, I got this tech, you know, I think you think you could deploy it, right? And so I watched Uber come to market, and they had the opposite. Like that first version of Uber had no technology. The thing that they just proved is people would order a black car from their phone, right. Over time, it's become extremely sophisticated technology. So some of the advice I got was every company has technology, product, business risk over a continuum. My first startup went from technology into business. I wanted to start with the business risk and to head that off as fast as possible. Yes, consumers will do this. I can acquire them profitably or at least at a reasonable cost. And then backing into all the other issues and use cases, what kind of.
- [19:06]
Omar Khan
Objections did you get in terms of either from the notaries or consumers in using this? Because I'm guessing, I mean, on the consumer side, was there much, much objection? Just, hey, you don't have to go to find, make an appointment, find a notary, do all this stuff. You can do it online.
- [19:26]
Pat Kinsel
Yeah, there's a lot in this question. So first off, I would say, so I build the thing like any, you know, tech person. I hung out of my proverbial basement and talked to no one and just built the thing. And then suddenly I was like, oh, my God, I got to launch this. And so I needed notaries. And at the time, my co founder Adam found a woman out in California who did online notary training on YouTube and went up, met with her, Carol Ray, and she referred us to a bunch of notaries in Virginia, which is the one state we could operate out of. And. And we found this amazing group of notaries. And what I would just say to folks is, notaries are an amazingly entrepreneurial group of people. They all have a bunch of different jobs and they all win business in their local communities, and they're members of their community. And we got very fortunate to start out with a fantastic group of notaries, and they really kind of carried the water for us in that community for a long period of time. Very appreciative of them. On the consumer side, what's interesting is that if you walk down the street and you ask 100 people, what does it mean to get something notarized? I think 95 have no idea. They know they did it at some point in time. I've had very sophisticated venture capitalists that are like the smartest people in banking and real estate ask me, what does a notary have to do with a real estate closing? I think what people don't appreciate is that notarization happens as part of something that you are doing. Right? So when consumers come to the service and they find it on the Internet, they're often not looking to get something notarized. What they're looking to do is to sign a lease agreement or a mortgage closing. And we intercept them and say, hey, you can use our service for that. And the first thing is this, like cognitive, okay, I was looking to do a building permit in Texas and you're saying, I can do it on your site, right? So getting people to understand that it's the notarization is actually the critical part of the process. Then there are the people who actually know what a notarization is. And like me, they've had become accustomed to it being a horrible experience and something is miserable that you have to do in person. And the word notarize has kind of been bastardized. Like Apple uses it for like code signing, right? And there's all these different people and all these startups that have tried to have like a false equivalence for what it is. So it took a while for us to educate folks. So this is actually a legal online notarization. And then the consumers do it, and then for a long period of time the documents were rejected. And there's a lot of funny stories there, like person sold a boat. Turns out all boat title transfers go to the Coast Guard. Had to meet with the coast Guard. Person sold a plane, they go to the faa, you know, mortgage closing title, company underwriter, tax auditor. I mean, so for years it was just consumer notarizes. Document goes to a business, some percentage get rejected, meet with business, explain it, get their operating requirements, security policies, build into the platform and then that's over time. How we've been able to process all this volume and do it with accuracy and scale is like over a decade. You build all the business logic into the platform.
- [22:33]
Omar Khan
So was it mostly, Were you used to running Google Ads or was it like SEO what were you doing to kind of intercept these people looking for either the use case or specifically a notary service?
- [22:44]
Pat Kinsel
Yeah, all the above. So we still run Google Ads today. We've become very sophisticated at this over time. So at like the form and document level, they're tied to ads and conversion rates and you know, all the different CPA metrics and stuff like that. There's a flywheel in the business. If a consumer notarizes document and shares it with the business, they go into nurture campaigns. And so we're very programmatic in that regard. SEO is a huge play for us. And so a lot of form level, use case level, again, trying to explain to someone that you're trying to do a building permit, that's actually something that we can serve on this platform. So we have a lot of content around that sort of stuff. And then channel partners, again, FedEx is a great partner of ours. If you walk into a FedEx and you ask for a notary, they will send you to our site. Staples is a great partner. You walk into Staples, they will send you to our site. And so we have a lot of those types of referral arrangements as well.
- [23:40]
Omar Khan
Growth was relatively slow in the early days. So you launched 2015, I think it was around 2018 that you hit the first million in ARR. Was there a period in that. Was there moments in that time where you started to question whether this was the right market, the right opportunity, whether you were doing the right thing and what kept you going?
- [24:04]
Pat Kinsel
Yeah, I mean like 100,000 times. I mean 2019 was the first year where got real. I mean, in addition to everything else, we also had negative 110% gross margins because I was paying for these notaries to be online all the time. In real estate we had like manual processes pre transaction to generate the transaction. Because there's all this other stuff we do in real estate beyond just the signing, registering it with systems and creating documents and stuff like that. And so that was, you know, 2019 was the year where it was like, you know, we can't light money on fire with every transaction. We first have to solve that problem. So we very proudly exited 19 at 1% gross margins.
- [24:48]
Omar Khan
Nice.
- [24:49]
Pat Kinsel
Which was great going into Covid because that demand and volume that we had during COVID would have just put us out of business. But it was hard. I was out lobbying, changing state laws across the country. We've now changed, I think 47 state laws, all these federal policies. And so with my investors I kept raising money to lobby. And so what Kept us going was on the business side, just the demand and the partnership from these major enterprises who were saying, look, if you can bring this into my market, you're really going to change the way we do business. We had some companies like Lennar, the home builder, invest in the business and support us. First American, the title underwriter anywhere, which is the major real estate company. And so we had a lot of support from industry and it wasn't just they were investing, they were showing up to testify and they were supporting legislation. So you know, the classic the juice better be worth the squeeze. Like we always knew if we could get on the other side of these regulatory issues, it was a great market and we would own it.
- [25:53]
Omar Khan
So then the pandemic arrives and as you sort of mentioned earlier, sort of demand spiked. Everybody was trying to do things online. What, what did that mean for your, your business?
- [26:09]
Pat Kinsel
I mean, I can't even, I don't even know how to. I've got PTSD like we all do, but for multiple reasons. I mean so Covid hits, you know, pre Covid we were demand constrained, right? Like I was paying notaries to be online. We needed more demand. Covid hits like order volumes go up like 100x. We end up having 6, 8, 10 hour wait times to connect with notaries. So we completely changed the business model. We went from an employee model of notaries to a network model, pay per transaction. We went from in house to software based vetting. We just rebuilt the entire notary and fulfillment model, automated payments and chargebacks and scoring and metrics. So that really allowed we have elastic scale effectively now and all sorts of things around alerting to make sure people show up and sign up and there's notaries to process transactions and. But the crazier thing is I was on the phone with basically every state in the country. I literally had a governor call me, I won't say who, and was screaming at me on the phone because they needed to put out emergency regulations like today and what did they need to be? And we hadn't sent them to them federal agencies about changing policy, states change bills. I mean it was just like the craziest time of my life. I didn't sleep and we changed a lot of rules and made a lot of progress and then we won a lot of great customers and business during that time period.
- [27:38]
Omar Khan
It was around that time that you started making the shift to enterprise, right? How did that happen?
- [27:47]
Pat Kinsel
Yeah, my 2020 goal was really to win one enterprise financial services customer outside of real estate. And so we had come into 2020 with a bunch of great real estate customers. And we wanted core financial services, a bank or something to that effect. And then in 2020 we run like 40 of them. I had a 26 year old BDR sign this major, major financial services company who signed our standard MSA with no red lines. So the urgency for I got a salesforce alert. I won't say who it was. And I was like, what? Um, so it's just a crazy time, you know, and there's a lot of positives and negatives to it. Like, you know, coming out of COVID we also, you know, almost died for different reasons, but it was a crazy time.
- [28:40]
Omar Khan
Okay, so you start to get these enterprise customers beyond what you had expected. What, what was the, what was the shift in strategy? Like, how did you, what did you decide? Because you've, you've now sort of built this B2C product. You're serving real estate, you've got enterprise. And I know we joked about, hey, proof is for everybody and it kind of makes sense now. But when you're in the middle of that and all of that's going on and you're struggling to keep up with demand, how did you decide what the strategy was going to be? Where you were going to focus?
- [29:15]
Pat Kinsel
Yeah, I mean, look, I think it's the classic sort of embarrassment of riches and lack of focus, right? So I mean, we were getting thousands of inbound leads a day. I mean it was like insane. And so we built out the whole go to market organization and brought in great leadership and we had business development and high velocity and enterprise and segmentation and sales ops and all this sort of stuff. And the metrics were incredible. Like deals identified and closed in quarter deal size going up. Like everything on the sales metric standpoint was just up and up and up. You know, the challenge then became as Covid kind of came down. Like what we realized is people were buying the product effectively for like a Covid remediation and business continuity reasons. So we get on the phone with folks and we say, hey, it's not safe to meet with your clients. We're signing up people hand over fist. If you want to work with us, you got to be under contract. So why don't you commit to 5% of your volume? Customer goes great and without like thinking about it, because they're so concerned about COVID they sign up. And so we're signing all these deals and everything's looking amazing. Take a step back nine months, 12 months later, how many have activated? How many have real projects, you know, da da da, what's the use case like that they signed up for? What's the repeatability? What are the cogs associated with servicing it? Right. So we really then sort of had this like come to reality of we don't want to be in all these markets. Some of these customers aren't actually strategic, some don't have projects. And so we made the hard decision. We did a pretty significant layoff and really leaned into account management solutions consulting and said look, let's just go spend time with all these customers that we signed up and figured out like why did you buy our product? What's the roi? Things of that nature. And our strategy for a long time coming out of COVID was really like net retention, dollar based net expansion and let's take these clients and grow them. And we had a lot of success with that. And then now we've rebuilt sales in a much more disciplined manner, focused on ICP and markets we want to be in and repeatability and ROI and stuff like that. So look, Covid really destroyed a lot of companies for that reason. People lost sales discipline. They lost the notion of a strategic sale. A lot of people say my sales team became an, you know, became order takers. Right. Sales. A lot of sales culture was destroyed. And so I'm, look, of all the things we've done, I'm really proud that we like dug out of that and it could have killed the. It's funny, like, you know, there's a thousand things that can kill a startup, right? I've, I've tested many of them.
- [32:01]
Omar Khan
Okay, so you're seeing this massive growth during COVID and you're moving towards the enterprise, you know, kind of, kind of focus. And then at what point did you decide that you were going to go beyond notarization and you know, obviously you rebranded to proof around. I think it was what, 20, 23 maybe? Like what, what drove that?
- [32:32]
Pat Kinsel
That sounds right. I think June of 23 is when we announced it. Yeah, look, I mean a couple things. There's many different things at play as to why we made some of those changes. But I would say on the negative camp and just to be straight with folks out there, when Covid sort of started to wind down, we heard from a lot of people that it wasn't strategic and what they had done is like again, Covid remediation. So prior to Covid, you know, we're waiting all these deals for strategic reasons. Digital transformation, reducing errors, reducing fraud. Right. Like, and we were very aligned with our customers. On why they were doing these things. Similar people in similar industries signed up during COVID and then said, oh, Covid's going away, we don't need to do this anymore. So we really had to get back to basics with our your customers and prospects on no, no, no. First, forget Covid even ever happened. You need to be doing this because it is 2023 or 2024, whatever the year is, and it is absurd. You make your clients drive into notarized documents. It's the equivalent of mobile check deposit. People had to cash checks in person. They now take a picture on their phone. Your competitors are doing this with us. We need to bring you along this journey. And in those conversations we did a lot of market research and what we discovered was a couple of things that are obvious to some people out there. But people don't buy point solutions, they buy platforms. And especially at the enterprise level, if they're going to make the investment of bringing you in as a vendor, security, infosec, risk, all of the things they want to know you have a vision and roadmap where they're going to continue to get value from you even if they're just starting with one project. We were a point solution, we were the best online notary vendor. The second thing is that all of the budget, especially in the enterprise, is at a fraud and risk. And specifically people were saying what we want is transaction fraud monitoring and we want transactional security. And we said, wow, if we take this platform that we have, what we provide people is transaction fraud monitoring into all of these analog business processes, they have no visibility into these multi hundred thousand dollar loans that they're doing, retirement withdrawals, account changes because they're paper based, analog or disconnected. And so we can give people tremendous visibility over that sort of stuff. And then in terms of being a multi product platform, we said this product that we've built is really the kind of the superset. It is the highest standard for verification for transaction security. And we had built all of this really hard work because of what notarization required PKI certificates to sign things. And so we said, wow, we could break our platform apart into a bunch of different transaction types. Standalone identity verification, the ability to get on video and interview someone even if you're not doing a notarization, you know, back by fraud services, like we've got all these products now. And so that's, that's really kind of why we made the pivot. And the second thing is that I just believe that startups always have to skate towards a Larger tam. Right. And ultimately, you know, the companies that are the most valuable, it's because everyone can be their customer. Right. You may not do it overnight, but that's the level of ambition. And I think about what's happening in the world today with fraud and deepfakes and things of that nature. Everyone is having this problem. Every business in hiring an HR in their finance department, with someone pretending to be their treasurer. This notion of I need certainty that this is my employee or my customer and the thing that they created is something I can rely upon is a universal problem. And so that's our strategy is really to build our platform out towards being something that every business needs to use either internally or customer facing.
- [36:15]
Omar Khan
Kind of reminded me of the thinking on about with Soham Parekh online, that guy who's been like getting multiple jobs at different startups at the same time.
- [36:26]
Pat Kinsel
This is a very real problem. I mean, like we're having, I mean, look, I give that guy some, I don't say credit, but like he's got, that's just him. But like, you know, it's. There's a lot of articles out that now, like North Korean fraudsters, people in, you know, Eastern Europe are creating synthetic identities and deepfakes and they're applying for jobs and then they're either stealing corporate information or they're getting a couple months of paychecks before you realize, and then they disappear. And then other people are having someone else apply for the job and interview and then they show up and they pay them off. There's all sorts of crazy things in hr, account recovery and support, password reset. I mean, there's so many of these challenges and we think we have the platform that can solve these problems.
- [37:12]
Omar Khan
So just talk a little bit about what are the biggest challenges in building a product that can solve these types of problems. Because notarization is one thing and there's a whole bunch of complexity around that that we talked about, but now you're getting into a whole new world. And then as you said, you add in this component of AI and deepfakes and everything. It sounds like an incredibly complex problem to solve.
- [37:37]
Pat Kinsel
Yeah, it's a complex problem to solve. But look, I mean, you spent time at Microsoft. Good engineering is the basis for a lot of things. Right? And so again, a company that I think is interesting for us to look at is Avalara. Right? And it's in tax and you know, accounting, but like compliance is their moat. Right. And for me, again, 10 years of, you know, trying to do a real estate Closing in Florida versus Texas, A power of attorney in Pennsylvania versus Nevada. Witness requirements, you know, data retention policies, you just, you just take the product requirements and if you have a good engineering team and approach, you figure out how to abstract that out of your business logic and build scalable, configurable systems, right? And so for us, we did some smart things like we abstracted out the sort of business and compliant logic from the client. And so our clients now are dumb and they respond to the service. And so we can configure these flows in any way we want. So a customer comes to us and says, hey, I suddenly have this requirement in wealth management to onboard someone from Europe and I need on video and a witness and they have to do identity verification to this standard. You know, for us it's like, okay, you know, do, do, do, here's where we're going to do it. And then, you know, redundancy in the platform, enterprise scale. Like you just, you just do the work, you know what I mean? And over time you realize that the sum total of it is a lot and it's worth something and other people can't. I mean, people try to compete with us, right? And our, we answer calls at very high scale. In less than one second, we repp. And more compliance. You just put your head down like, go back to my Bloomberg quote, just do the work.
- [39:23]
Omar Khan
Love it. All right, on that note, I think we should wrap up and get onto the lightning round. So I've got seven quick fire questions for you. Uh, oh, okay, let's go then. So what's one of the best pieces of business advice you received?
- [39:36]
Pat Kinsel
It was actually criticism. I was applying for a job at Microsoft with someone. I didn't get the job. This is when I was very young. And he said, I don't think you're a finisher. And at the time I hadn't finished college. And he said, I only hire finishers. And I've been obsessed with that concept sense of really finishing what you start and being someone that's known for it.
- [39:57]
Omar Khan
It's funny how those things just stick with you. Right?
- [40:00]
Pat Kinsel
Stick with you.
- [40:03]
Omar Khan
What book would you recommend to our audience and why?
- [40:05]
Pat Kinsel
Oh my goodness, that's such a great question for this audience. I mean, look, if you're interested in our business, there's a book called Electronic Value Exchange, which I love. Actually, I wouldn't say. If you're interested in the digital transformation of regulated industries, I recommend the book Electronic Value Exchange. It's unfortunately expensive because it's a textbook, but it goes through the history of Visa and it talks about product policy, commercial cooperation, things like that. And I think so many people out there think that they're going to change the world, which just tech. And if you don't take into consideration the rest, you're not going to be successful. But it's pretty geeky and narrow.
- [40:44]
Omar Khan
Yeah, I mean, it kind of took me back to when you were talking about having time off and reading legislation. It's like you got to be disciplined to do that. I mean that's like snooze fest material for me.
- [40:57]
Pat Kinsel
Look, if you want to have a nice night, get a beer, a glass of wine, go read some API documentation legislation and then people's marketing. And it is amazing how you can see through bs. But it's the API docs that are. The people say they do all the stuff and read their API docs. That's pretty clear.
- [41:15]
Omar Khan
What's one attribute or characteristic in your mind of a successful founder?
- [41:20]
Pat Kinsel
Oh man. I mean it's just got to be resilience. I just think, and over time, you know, I think empathy, you know, doing this 10 years, we've had a lot of amazing people, this company who are here, who've left for different reasons and I just so appreciate them and life happens and I think empathy is really important.
- [41:40]
Omar Khan
What's your favorite personal productivity tool or habit?
- [41:43]
Pat Kinsel
I don't know. I don't want to say tool, but I would say habit. And people might think I'm nuts, but every night before I go to bed, I read basically every Confluence post, juror ticket, figma file produced by the company and I comment on almost all of it. And it's how I know I'm still obsessed with what we're doing. I love what we're doing and it's how that I can be the connector across the company. And look, some companies are led by a sales psychopath. If I'm a product psychopath, some people led by sales psychopath and they are in Salesforce every night. So everyone has got their thing. But I just think again, there's just no substitute for like actually being close to the work that's being done.
- [42:28]
Omar Khan
What's a new or crazy business idea you'd love to pursue if you had the time?
- [42:31]
Pat Kinsel
I don't even know where to go with that question. I mean, I'm doing what I want. I mean, I will say I always thought I was going to be a VC or I always wanted to be a VC and then I had that job. And the appeal of that is you get to work on lots of stuff. I love my job because I work on lots of stuff. I'm in auto, mortgage, banking. Every week is something different. So I haven't frankly given myself the luxury of that thought for a long time. Just because I consciously made the decision from being a serial entrepreneur to just like dedicating my life to this. I will say I would love to do something non tech at some point in my life. Not like own a restaurant, but I just would love to do something that's either physical or non tech just for that experience.
- [43:13]
Omar Khan
What's an interesting little fun fact about you that most people don't know?
- [43:16]
Pat Kinsel
Well, I mean I revealed earlier I didn't graduate college. That tends to surprise some people. I don't know. I'm an eighth generation California, which is really quite rare. And of course I moved to Massachusetts and had four kids here and broke the streak. But I'm like I, I get to say Frisco.
- [43:33]
Omar Khan
Right. And finally, what's one of your most important passions outside of your work?
- [43:37]
Pat Kinsel
I don't know. I mean I work and I have family. I mean I have four, four children. You know, I, I love the time with them. We're a big ski family, bike family, you know, know I want to get outside and do stuff with them. But yeah, I mean I, I work and I got kids and that's my life and I love it.
- [43:52]
Omar Khan
Well, Pat, thanks so much for joining me. It's been a pleasure kind of unraveling this story. If people want to check out Proof, they can go to proof.com and if folks want to get in touch with you, what's the best way for them to do that?
- [44:04]
Pat Kinsel
I mean, I'm on everything LinkedIn, you know, I'm just Pat at Proof. I'm on everything. So get in touch.
- [44:11]
Omar Khan
Okay. We'll put your LinkedIn profile or your X profile on the Show Notes page.
- [44:18]
Pat Kinsel
I sold the company to Twitter, so I can't knock my obsession. That's still Twitter in my mind. I'm on there too.
- [44:23]
Omar Khan
Sweet. Well, thank you. I wish you and the team the best of success. It's been a pleasure.
- [44:28]
Pat Kinsel
Thank you.
- [44:29]
Omar Khan
This feels like it's kind of like a 10 year reunion.
- [44:32]
Pat Kinsel
Yes. Should you go get some stir fry in Red West?
- [44:35]
Omar Khan
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