Russ Heddleston, Co-Founder and CEO at DocSend | Best Fundraising Strategies and a Guide to Growing Your Business

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About The Guest

Talking Points

• 00:00 – Intro
• 01:02 – Russ Heddleston’s Origin Story
• 06:09 – Why Russ Decided To Start His Own Business?
• 10:06 – How Did Russ Get The Idea To Start A Business?
• 17:07 – How Does Russ Research For Product Market Fit?
• 23:34 – What Was The Main Focus When Russ Was Building Docsend?
• 26:48 – How Case Studies Can Help In Growing The Business?
• 30:20 – What Are Russ’s Fundraising Strategies For His Business?
• 38:24 – Advice For Founders When They Start Searching For Investors?
• 42:18 – What Are The Best Practices For Fundraising?
• 49:03 – Where Can People Connect With Russ?
• 49:44 – What Was The Biggest Challenge Of Russ Heddleston’s Career And How Does He Overcome It?
• 50:55 – What Would Russ Tell His 20-Year-Old Self?
• 51:36 – A Book Or A Podcast Recommended By Russ?
• 52:20 – Who Is Russ’s Mentor?
• 53:24 – What Does Success Mean To Russ?

Show Links

1. https://www.linkedin.com/in/heddleston/
2. https://twitter.com/rheddleston

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4. HUBSPOT – https://hubspot.sjv.io/successstorypod

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What is the Success Story Podcast?

On this podcast, you’ll find interviews, Q&A, keynote presentations & conversations on sales, marketing, business, startups, and entrepreneurship.

The podcast is hosted by entrepreneur, business executive, author, educator & speaker, Scott D. Clary.

Scott will discuss some of the lessons he’s learned over his own career, as well as have candid interviews with execs, celebrities, notable figures, and politicians. All who have achieved success through both wins and losses, to learn more about their life, their ideas, and insights.

He sits down with leaders and mentors and unpacks their stories to help pass those lessons onto others through both experiences and tactical strategy for business professionals, entrepreneurs, and everyone in between.

Website: https://www.scottdclary.com

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Machine Generated Transcript

SUMMARY KEYWORDS

founders, people, raise, company, business, selling, startup, sales, market, fundraising, docs, idea, pitch deck, end user, entrepreneurs, product, big, co founder, shopify, salesforce

SPEAKERS

Russ Heddleston, Scott D Clary

 

Scott D Clary  00:00

Welcome to success story, the most useful podcast in the world. I’m your host, Scott D. Clary. The success story podcast is part of the HubSpot Podcast Network. The HubSpot Podcast Network has incredible podcasts like the salesman podcast hosted by wil Baron. Now if you work in sales, you want to learn how to sell or you want to peek at some of the latest sales news and insights. You need to listen to the salesman podcast. The host will Baron help sales professionals learn how to find buyers and win big business and effective and ethical ways. If you think any of the following topics resonate with you, you’re gonna love the show, how to find and close your dream job and sales 12 essential principles of selling digital body language, how to have better zoom sales meetings, or how to tell a remarkable sales story. If these are topics that would interest you. Go check out the salesman podcast wherever you get your podcasts or at hubspot.com/podcast network. They my guest is Russ Heddleston. He is the co founder and CEO of Doc Send Now previous to docs and Russ did a few different things. He was a product manager at Facebook. He ended up at Facebook because Facebook acquired his first company pursuit.com. He also held roles at grey stripe and Trulia. He sold the docs end to Dropbox for $165 million in 2021. He holds an MBA from Harvard, and an MS in computer science from Stanford. So what did we speak about we spoke about his journey building docs and how he ideated The first concept of docs and and how he found that product market fit. So we spoke about his startup strategy than starters startup strategy in a broader context. We spoke about fundraising tactics that lead to investment inside the venture capital market insider advice on investors and investment management, founder opportunities, obstacles and successes. We spoke about product led sales strategy, acquisition insights, and basically everything that he went through in both pursuit calm as he built that and sold to Facebook, as well as docs, and that he built and then sold to Dropbox. So let’s jump right into it. This is Russ Huddleston. He is the co founder CEO of dachshund.

 

Russ Heddleston  02:22

Sure, so I’m from South Dakota originally, there’s not a lot of tech there. There’s a lot of farming a lot of great people. But you know, I didn’t I didn’t grow up in tech. I didn’t grow up with computer science. And then I got out to Stanford was very fortunate to get in there and study up lecture engineering undergrad, studied computer science for a master’s degree. But I got into tech there just because there’s so many startups out of Stanford and I graduate high school in 2002. I graduated college 2006. And you know, at the time there was like the still the.com Bust. Everyone’s like, Oh my God, all the engineering jobs, you can get outsource. There’s nothing there. I was like, I want to study computer science because it’s fun and interesting. And so I did that. And I got to work at some awesome places. I interned at Microsoft and undergrad as a product manager interned at Trulia when they were like six people or four people, Pete and Tommy had just started it as a software engineering intern there. When I graduated from Stanford, I went to work at a mobile ad network called gray stripe was like seven people. I was like, I want to go work in startups and had a awesome experience learned a ton ended up like running the engineering team, which I wasn’t qualified to do at all that you know, you get battlefield promotions and startup land as a thing that happens. And then I went back to business school at Harvard, mainly because I just wanted to go learn some of the business side of things wasn’t really sure if it would have like an ROI. But I just thought it’d be fun life experience and interned at Dropbox that summer when they were like 16 people. I’ve had a habit historically of just things I like early down. Yeah, you see products you like they make sense. You track them down, a lot of times they end up being successful. The intern there decided I wanted to start my own things. So started a company called pursuits. It was my first go around, I had two co founders who also worked at Trulia, and are awesome people. And we raised a seed round, did it for about a year and then realized it wasn’t gonna work. So we either had to pivot, or that was those are options. And so as you’re shutting down our product, Facebook was an early user, they said, Hey, come here, like we’d love for you to work on some some stuff for us. And so interviewed at Facebook and LinkedIn went to Facebook. And so that’s what I would call like a talent acquisition, which is a great outcome for you, for us at the time and ran product for the pages T team at Facebook for a couple of years, got to see Facebook, go public, and then decided I wanted to go try again. And my two co founders at Doxon. We went to undergrad at Stanford together, we all worked at Graystripe together, and so Graystripe have been acquired they left and you know, it’s a lot of times people ask like, oh, how do I find a co founder? And it’s hard. You know, there are people you’ve worked with before and you like working with me, you keep in touch. And if you get a chance to work together again, those those things happen pretty rarely. So yeah, I left a lot Have money on the table at Facebook. And it was a wonderful place to work. And I learned a ton there. But I wanted to go try again. So we started dachshund in 2013. And ran it for eight years almost exactly. And ended up selling it to Dropbox in March For 165 million and we raised only 15 million for Docs and topic I’m happy to get into is you know, how much to raise when to raise you know, is that the metrics? I always told our company at Doxon that, you know, we don’t keep score based on headcount or dollars raised we keep score based on just building a great company. And so he saw a great fit with Dropbox. And so now I am working at Dropbox and getting to work on on doc said but you know, so that’s kind of the storage of data as it is not bad man.

 

Scott D Clary  05:42

Not bad. I can I you know, you say so casually, like we just sold it for 101 60. What was it? 165 165?

 

Russ Heddleston  05:52

Yeah. I feel proud of it because they bought a real company. Like we were profitable at the time of acquisition, growing really, really fast figured out a lot of really interesting things. So anyway, yeah, it was it was a good acquisition for Dropbox to integrate outcome for the team.

 

Scott D Clary  06:09

Did you you were like going to Stanford, you were like, I’m gonna build my own thing. That was always it. There was no other other career path for you?

 

Russ Heddleston  06:18

Oh, absolutely not. No. And I still don’t really think of myself as like an entrepreneur in the sense of like, some people like I just if age of four, I knew that’s what was gonna be life path there. I don’t know, some people have these origin stories where I’m, like, good for you. I wish I had clarity at a young age. I feel like I often still don’t have any clarity. No, I had no idea what I wanted to do in college. And, you know, I kind of you know, ran around looking at like, oh, who would employ me and so like a lot of people out of Stanford go work in management consulting. And so I have a bunch of friends of McKinsey, I actually went through and I was very fortunate to get an offer from McKinsey at a Stanford and I remember being at sell dinner, and kind of seeing all the Managing Directors kind of like bragging about business school and stuff like that, and just trying to think about and I was like, I just think startups are fun. There’s just so much uncertainty there who knows what’s gonna work because like, you always get a good story out of it. It’s an accelerated pace of learning. So, you know, I did the real risky thing, because I’ve had other offers from big tech companies as well, I went and joined, you know, seven person startup because my mentor had just done their Series A, so I knew they had funding, like the team, I thought it was a smart space to be in. And it was, they had a really good value, prop and a really good idea, they ended up being the number two to AdMob. And so you know, as interesting case, study in like, some spaces are a winner take most so you know, Graystripe still good outcome. But it was It wasn’t AdMob. But it was, for me an awesome learning experience. So having observed a few different startups, I wanted to try myself. And so I don’t necessarily think of myself as an entrepreneur, although the kind of joke is amongst my friends were entrepreneurs as well, like, you know, you start a company there’s, there’s they’re definitely low points. It’s really frustrating. And then typically, what you’re most qualified to do is start another company at the end of it if you have an exit or whatever happens, so as probably what I’m most qualified for, but as an entrepreneur, you end up usually being a jack of many trades is kind of the skill set, especially early on that helps helps kind of get done whatever whatever needs to get done.

 

Scott D Clary  08:17

I just want to take a second and thank the sponsor of today’s episode, Shopify, and don’t you love that sound as a sound of another sale on Shopify be all in one commerce platform to start, run and grow your business use Shopify gives entrepreneurs the resources once reserved for big businesses, so upstarts startups, and established businesses alike can sell everywhere synchronize online and offline sales activity, and effortlessly Stay informed you can not only sell your product, but you can reach customers online and across social media networks. With an ever growing suite of channel integrations and apps including Facebook, Instagram, Tik Tok, Pinterest and more. You can gain insights as you grow and detailed reporting of conversion rates, profit margins, and beyond whatever you need to track Shopify can track for you. And remember Shopify was built to liberate commerce for entrepreneurs and big businesses alike. Shopify is tirelessly reinventing tools of growth and scale for over 1.7 million businesses of 1.7 million businesses. Trust Shopify. To help them organize their online and synchronize with their offline sales. You should be able to use it for your business as well connect with your customers drive sales, manage your day to day, accept all major payment methods and integrate with any third party app you could possibly think of. If you want to try out Shopify right now go to shopify.com/success story that’s all lowercase for a free 14 day trial and get full access to Shopify, his entire suite of features grow your business with Shopify today go to shopify.com/success story right now. Remember success story is all lowercase that shopify.com/success story. So how did your How did your process for so Okay, so you’ve worked in startups, you want to you want to start something. So walk me through your, the mental the mental process that you went through in determining what you wanted to build out? How did you even ideate on first startup second startup? What was that? Yeah, sure.

 

Russ Heddleston  10:23

And one thing I also say about myself is like, I think historically, I’ve been pretty impatient in many ways in my career, leaving too soon, or, you know, as at Facebook, I was like, oh, it’s already too big. You know, it clearly wasn’t there. No, I Yeah, everything is faster. And, you know, it goes sorts of things. And, you know, there’s there’s a lot to be said, for patients. Like the more years of experience I have. The the first startup pursuit, we we wanted to solve a problem we had is three engineers, which was that it was really hard to hire engineers, and a lot of the great engineers that we got at the different companies I worked at, were through referrals. And so we’re like, Let’s build software to help track and manage referral programs, which is still a valid idea, I think it’s probably a better feature of a full ATS applicant tracking system. So like a lever or a greenhouse, or, you know, the play, there’s some really big ones. But we didn’t do a lot of research on the market, we just solved the problem that we ourselves had. And, you know, so that’s how we came up with the idea. And then, you know, we did a post mortem on it, and kind of like, we would have just done more research on it ahead of time, we, as engineers wanted to get in there and start start building. And so you know, when we, when I left Facebook, and started document with Dave and Tony, I was like, Guys, we should be more thoughtful about what we do. Let’s not write code on day one, because it’s tempting to write code. But as soon as you write code, then you’re kind of already committing yourself to a particular path. Ironically, this happens with pitch decks as well, when I talk to entrepreneurs, if they spent too much time making something look pretty, they don’t want to go back and redo their pitch deck, because it’s just like they’re too far in the irrational escalation of commitment, which is never not necessarily good. So for Doxon, we explored a number of ideas. And before building out the concept behind docks, and we did a lot of research, we went back and looked at like, hey, who started something like this before. And then, you know, my belief is that there aren’t really any new ideas. There’s just good timing and good execution. And I also ran around and talked to all the other companies, I thought should build docks and, and I was like, Hey, why don’t you build this concept? And, yeah, this came from a learning I had at Facebook, where, you know, is a product manager kind of running product for the pages team. I got introduced a lot of founders who are kind of curious what what is Facebook doing, I’ve got an idea in the space. And they’re often very cagey with me about their idea, which from my perspective, is kind of silly, because I would have been terrible at my job. If I was like, Oh, my God, this entrepreneur without any traction and an idea, it’s just such a good idea, everyone drop what you’re doing, we got to go copy this person, you know, it’s just like, that’s just like, really not how it works, the engineer has way more to gain than to lose by trying to get for me like what Facebook is doing and how we’re thinking about things. And so I’ve ferredoxin ran around and kind of tried to get that information. And people were receptive and said, Hey, we think it’s a good concept. And you know, we might do it someday, we’re not doing it. Now. We got a couple of talent acquisition offers, which was very flattering, but I had been through that, and we wanted to build a business. And I also asked, Hey, what are we working on? And it was something totally unrelated to docs, and you know, other other things they had. So I was like, Okay, I guess you’re not going to build it. So that was the general process that we used for ferredoxin. I do think in general good to have some knowledge of the space in which you’re starting a company either through just a lot of diligence, or through past experience. So Tony had worked at a startup, they end up selling to box, kind of at a undergrad and the I interned at Dropbox and generally kind of knew this space, and we just we did a lot of research on it. So but it

 

Scott D Clary  13:57

wasn’t solving a problem you had at the time. It wasn’t it was a little bit different.

 

Russ Heddleston  14:02

It was so toxins got 23,000 Plus customers at this point, and is I don’t think I can share stats, but we’re growing really fast. And you know, so the we described oxen as a horizontal product that we market vertically. So some of those applications have docks and our problems I have. So I’ll give an example of one of the earliest use cases for Doxon, which was startup fundraising, which we’ve only recently started marketing towards we originally came up with Oksana just a document analytics that’s like all it’s out on her website. And then we’ve like, kind of changed it up to being like sales enablement. And we still have a bunch of like big sales teams, which is great. And then only in 2018. Do we kind of change our marketing site to be you know, docs and brand promises are on control, and it’s a horizontal technology that will market vertically, but ever since the very beginning. We’ve had a lot of people use Doxon for fundraising, and that’s a need. I’ve personally had, you know, when I was raising money for pursuit of put together my pitch deck, I sent it around to people, I just got crickets back and it was so hard to raise money. And, and you know invariably leaked to competitors and we get it I get it sent to me by other people being like, hey, just you know, your deck is getting sent all around, it was just like, well, that who sent it around, I don’t know, I’ve done it, like 30 people could have any of them. So I was like, there’s gotta be something better here. And so the one of the initial concepts behind docs, I was just like, Hey, be able to create as many links as you want pointing to a document, each link is unique. Each link can have different settings. And when people look at that document, you can see how long they’re reading each page, not rocket science. I just think that’s a service that should exist on the internet. So our first users were friends of mine, who were founders who were off raising capital. And I’d say, hey, we don’t even have a marketing site for this thing. It’s just in beta might break just like, you know, it’s free, hey, just use this. It’s better than an attachment people be like, Yeah, awesome. Okay, fine. Sure. And then, you know, people are like, Oh, this is quite interesting. I really liked getting this and then like, okay, cool. But like, the idea was never to build like a vertically integrated solution for fundraising or something like that. The idea was always that docs and is like, pretty widely applicable in terms of like how often this particular set of workflows shows up, and like a b2b context. But it was helpful to be guided early on in that I cared about it because I use Docs and for my fundraising, I use oxygen for my investor relations, I use oxygen for all of our sales or customer success, like anything we’re sending outside of our company is a document link, as it should be, because then we can track it centrally, we understand what versions are performing and like where they’re going, we can, you know, have a lot of lists and make sure they’re not, you know, shared beyond the desired audience, all the data feeds back into Salesforce. So we do use our product a lot, which has been awesome in terms of understanding, and you know, the nuance of it. But that isn’t to say that, you know, they’ll it will use Doxon in ways that, you know, I just don’t have those use cases. And so we have built it in such a way that is extensible beyond the things that we use

 

Scott D Clary  16:52

it for. So it seems like because the use cases have evolved, in probably use cases that you’d like the the application of something like that. It has like unlimited use cases, anytime you like you just mentioned anytime you send an email to anybody, there’s a there’s a potential use case for dioxin, but Okay, so let me let me ask you this. So how do you at an early stage when there’s so many different ways that you can brand it and market and position it? How did you find product market fit? And then, of course, to teach people that are listening? How should they look for product market fit when the early stages to validate the idea?

 

Russ Heddleston  17:23

That’s a great question, Scott. And, you know, there’s a real natural tension between, you know, when you’re starting a company, it being venture scale, and being able to raise money, and solving something that is kind of more understandable. You know, yeah, like, as a founder, and so you’re on the one hand, you’re like, Oh, I gotta pitch this thing, where, hey, we’re gonna be a giant company, and you take over the world, and like, you know, like, oh, cool is like, you know, my, my pitch deck needs to be like, we’re gonna be Amazon, you know, but then what you forget is that when Amazon started, like, they had a real tough time raising money, because they were like, we’re just going to take us books and sell them online. And so, you know, the thing I tell entrepreneurs is like, don’t confuse your pitch deck with investors with like, what you need to do today to start getting traction. And it can’t be the case that what you tell investors is a lie. But it is it is a greater, it is greater than what you’re currently doing, you can aim small to start. So you know, for for Doxon. You know, a lot of like, the kind of guerilla marketing we did in that first couple years was like, Yeah, we just released it at TechCrunch. We kind of saw, hey, who’s using it, who’s liking it? And then, you know, like, how do we document those use cases, and then, like, try to figure it out. And we found a really good fit and sales. That’s kind of like how we got into the sales enablement game, which is still a great vertical for us. But you know, I think my advice to founders would be trying to find an application of your insight that has enough urgency for user that they’re actually going to care about what you do for them. Because I often see a founder say, Hey, I’ve identified something, it could be huge. It could be massive, it’s going to be everything. It’s an API for blah, blah, blah. And then we’re using, you know, AI on the back end, and like, okay, I can see how like that, like general differentiated approach to note taking could be interesting and maybe useful, maybe accompany, but it’s like, to whom is this like, so important that like, tomorrow, they’re still going to open up your site. And when people have a difficulty with that, then I’m like, oh, and then if they’re like, oh, yeah, here’s an example. I’m like, Okay, well, then just give me the picture that person like, how does their life change based on like, what you’re building for them? Are you replacing something? Are you consolidating things? Like, are you saving them time? Are you saving them stress? Like, what are you doing for them? Because I think in software, one of the things I love about it is that if you solve a small problem, a small problem, you’re often solving a big problem. Like, you know, a lot of companies that you know, end up not being big software companies, I think fail on execution or timing, not necessarily that what they’re doing isn’t extensible if they’re at the right place at the right time and executing well, so solve something small and then continue to think about Like, well, how might this be extensible because just like in the example of Amazon, you do something well, it opens up new doors for you, things you couldn’t do on day one you can do on day five, once and once you especially if your business model is SAS, like you get a flywheel going, where that cash flow starts to help fund your business and can help you expand into other things. So docs on started is just like a way to send and track links to documents. But then over time, we realized, okay, we can get into this like deal room space for sales, or we can get into data rooms data rooms is like two and a half billion a year in revenue. It’s crazy how big it is. And it’s like, legacy software, no one especially likes it. It’s pretty entrenched. And so you know, hey, all right, we can go into the data room market and like, Hey, I people use E signatures as well. Like, let’s just get into the E signature market. And so you know, as you find success, it opens up new avenues to you. So as a founder, don’t necessarily be too concerned around, you know, what you’re doing is too tiny. And when you create the pitch for investors, pitch division, like where could it go over time. And that’s a demonstration of how you could think big but in terms of the path to get there, like no one goes from like zero to huge overnight, like there’s usually more nuance in the beginning and so it’s okay to do unscalable things and aim for like relatively small markets early on.

 

Scott D Clary  21:13

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Russ Heddleston  23:47

Well, we definitely did a lot of things wrong. And Doxon has been really great learning experience. I think if you talk to most entrepreneurs who have had a successful accent, or have a successful company that they’re running it, they usually would say, yeah, if I did it over, I could probably do it and half the time. Because you know, especially as a founder, you’re usually on like the edge of your knowledge, you’re kind of pushed to the edge of your comfort zone because you’re necessarily working on the things that no one else in your company is an expert on as you try to figure them out. And so for Docs, and we didn’t know who the end user was going to be when we launched it originally just document analytics. Yeah, attachments are bad. People want to see who’s reading documents they send, we released it, and we just kind of waited to see what happened. And then we at a certain point because we raised a series a it’s a retrace, like 10 million and we’re like, Okay, we got to create a business now like unfortunately, every entrepreneur at some point needs to go from fun technology project to real business. And so we spent a couple years selling up market and sales enablement and one of my key learnings from from that and we still do a good job selling up market is that, especially with limited resources or a relatively small team, you kind of have to decide if you’re building for the end user. Are the economic buyer in b2b software land. And there’s a big distinction there. Like if you’re selling 1000, seat 10,000 seat deployment of your software at a company, you’re building for the economic buyer who is buying your software on behalf of the others, if it’s not a great experience for the end user, the economic buyer doesn’t really care, like, does the usability of Salesforce hold them back from selling million dollar deals? Like no, no, it does it like the food making their UI a little more intuitive be helpful to me as an end user? Absolutely. You know, but they’re building for the economic buyer, they actually did start building for the end user with worth noting. So you can go from one to the other, it’s usually easier to go from end user to economic buyer DocuSign being a great example. But for Doxon, we started building for the end user. And that’s been our strength the whole time. And so even though we spent some time selling at market, if we had to make that work, we could but by building for the end user, and also following the strategy of you know, horizontal product that we market vertically, that works out really well for us because the product spreads awareness of the product. And then the marketing side educates the different ways to use our products, and then that converts really well for us. So I would definitely call that product lead growth more so than like demand, like demand gen doesn’t really contribute a lot. For us. It’s not like channels contributes a huge amount for us. It’s not like we do outbound sales or anything like that organic is the number one kind of channel for for Doc’s end, and how we gained users. And that’s really just us continuing to make the product better and continue to educate people on like, how flexible the technology we’ve built is and just the number of ways that you can use it. So there’s there’s a lot that goes into that. But it always leaves open the option of us going up marketed enterprise, which I assume like I’d like to do at some point.

 

Scott D Clary  26:48

I was I’m just curious if like because now we look at you you just mentioned a great case study with with Salesforce. Um, do you think that that only potentially worked because that was more of a blue ocean when Benioff brought Salesforce to mind he really just created He created the category of cloud. But do you think in in more of like a red ocean, having the end user in mind leads to a quicker ramp?

 

Russ Heddleston  27:17

I think that it’s something that’s new in the last decade, like the possibility for this just because and I would dispute that for Salesforce, it was a blue ocean, I think that’s a way of painting it historically. Like when they started Salesforce, it wasn’t clear that being in the cloud was a differentiator at all, like if everyone agreed it was a differentiator, the incumbents would have moved faster to it. True. True. So as part of their marketing, and I think part of what they were so good at is they they were able to like really point that out is like, Hey, this is a great differentiator, then they made a market. But you know, in the early days, yeah, they were selling to SMB, they were selling on the edges, everyone else is pitching enterprise and by selling down market, it gave them enough time to build a product to start going at market same with DocuSign DocuSign for many, many years, like 50 people and all SMB and then you now there 90 plus percent enterprise so it’s more pretty quickly into that other companies like Survey Monkey probably should have gotten enterprise sooner and did not and so now they’re they’re trying to play catch up. Other companies like Survey Monkey number one enterprise so you know, there’s like no right answer to these these sorts of things. What is new though, and probably the past like a five to 10 years has been how big a company can get only building for the end user without having to go up market to enterprise because it was previously thought sure you can get a foothold there. And then you go enterprise and that’s the interesting thing. And if you look at Calendly or Lucid Chart or Grammarly, you know,

 

28:48

MailChimp, MailChimp, MailChimp, they’re great. Another great

 

Russ Heddleston  28:51

example. Like they, they actually been around for a very long time. So they were one of the original ones to kind of run that playbook and what an amazing exit for them. And so yeah, you can build a surprisingly large company by staying down market for a long time. But it varies on the company. I think for early stage founders, though, it’s like, is it a win or not, you know, like, no one, you know, especially for the average person, you’re like, Did you sell your company for 100 million or 10 billion and like, or it’s like, Oh, my God, you had a successful company, you know, so most startups fail. And like, when I talk to founders, I’m like, let’s let’s be reasonable about, you know, like, what you’re aiming for here. And usually you’re just aiming to you have an insight, you want to make a successful business. And software is fun, because it has the unintended consequence of often being much larger than people expected it to be. But I think for the purposes of like, as a founder, advising other founders on, like, how to get started, you know, it’s like kind of those early things and I think it’s okay to just focus on the end user early on, there are enough case studies now or like, you can build a great business out of that. And then by the time you have that option to when to go up market or if to go up market usually already created a business of some success at that point. which is an amazing milestone and it’s like a privilege to be able to have that conundrum to even think about at that point, you know, hey, I’m going to raise a series B, or C or you know, raise 40 million bucks here, like, how much am I going to like building a separate team to go up market? Like, that’s a stressful decision, but like, you’re already in a position of like, You’re doing okay.

 

Scott D Clary  30:18

Yeah, no, it’s very good. Okay, I want to I want to this is, I love this. And I didn’t know where this was gonna go. But I appreciate some of the insights that you bring the table on this, because I haven’t had this conversation with many of the people on the show. But I wanted to also pull out some fundraising and investment insights from you. Because I know that you speak a lot about this. This is obviously something that you’ve done multiple times. So let’s, let’s jump into that a little bit. So fundraising tactics I even heard on this weekend startups, you’re speaking about 18 month fundraising, Sprint’s maybe you want to, like dive into first time founder, they want to go raise money, should they? And how do they do it?

 

Russ Heddleston  30:58

Yes, that’s a great question. And there, there are a lot of pieces that go into that. Maybe I’ll start with real early stage, maybe you haven’t even created a company, should I create a company? Like, you know, how do I raise money. And I’ll use an example like my first startup pursuit, like for pursuit I had, you know, I was in business school. So I had, like, you know, personal debt for that. And, you know, I was like, stressed about money. And it’s like, really not a fun spot to be in. So I think if you’re thinking of starting a company, make sure you have a year of personal runway, like not savings, but just like, you know, you and your co founders can put in 100k Each, or something like that, there is like a precede now, which is actually great, it’s like three or 400k, that you can raise. And you don’t have to have necessarily anything to show for it, you can just be a couple people in an idea. And that can be great. But that’s also kind of expensive. So some founders will skip the pre seed round, it kind of depends, if you’re, you know, let’s just say you are going to go do a pre seed, and you’ve gotten a personal runway to last a while to get a co founder, that sort of stuff. Like when, when to raise money. It’s all about, you know how much research you’ve done and what you have to show for it. So, you know, to get a pre seed round raised, you’ve got to go research the market, you’ve got to have the means of building a product. So that means you’ve got to have you know, if you’re non technical, go convince someone technical to be your co founder, like, that’s a pretty important thing, you can kind of do that on nights and weekends or go network, let’s just say you’re, you’re stressed about money, like go save, go go get a job at a big company, maybe you’ll get a job in a big company in a vertical that you might want to start something in a few years, like most founders are, you know, in their 30s, or 40s, you don’t necessarily have to be in your 20s to start a company. And you know, you can you give a lot of time to go start a company. So anyway, you can you can be patient. And then let’s say you’ve got a idea, you got a co founder, you know, you’re even able to like self fund a little bit, make some traction, you know, the question I ask is like, Are you stressed about kind of minutiae having to do with like, either your own personal finances or like buying a whiteboard for your office, or, you know, like server costs. And if you can raise money, and that helps you focus on your business, you should probably go do that. So for Docs, and we didn’t need money for ourselves. But you know, we didn’t feel comfortable footing the bill going in hiring a team. So we built the first version on our own. And we didn’t make it look pretty, we just made it functional. And then we did enough, like beta testing with people to be like people like it. Like we can’t find a reason why this isn’t a great idea. And we think we should go make a company out of it. And so the thinking there was like, let’s because I also learned from pursuit that, you know, you can drag this out a long time. And a lot of first time founders especially tend to dip their toe in the water with fundraising. And I’m like, no, no, no, don’t do that. Just just like just go all in, see how fast you can get to know see how many meetings you can line up in a two week window a month in the future and get a good read on like, Do you have something that’s fundable now or not? And if not, that’s okay. Try again in three to six months, you know, if you can afford to wait that long, but try to get to know quickly as opposed to having one off meetings here and there over a six month period. So for Roxanne, we set up all of our meetings at a two week window and I was like, if we can Murrays awesome. If we can’t, we’ll just go back to building for another, you know, three to six months, and then we’ll go try again. And we were fortunate and that Jeff PVA at uncork was like yeah, in his mind is kinda reminded him of SendGrid he’s like, you know, I feel like there are a lot of ways to like, not send an attachment, you know, you can use Dropbox, for instance, or something else, like, but, you know, SendGrid at the time, that was a really crowded space. And, you know, I think it’s from a VC perspective, like everything is a red ocean because he hadn’t seen everything before. He’s like, but he was like, Yeah, I’d use Doxon and so as your fondant, so you know, and for us that allowed us to go hire a team, you know, hire you know, a good designer, to like invest in like taking the learnings from our beta putting together A marketing site and then launching it at TechCrunch Disrupt. And so, you know, that was really useful. And then that gave us a signal that we raised the, you know, Series A. And the idea behind that was like, well, like we’re not to like revenue generation yet, like, we need to do some iterating figure out what is the business, but people clearly liked the product. And so we were fortunate enough to raise that. So there’s kind of like a hurdle at each kind of stage depending on like what you have to show for it. But yeah, I think the the main things is a founder or like, Take stock of like, what you’ve learned, and the evidence you have that says what you’re working on, could be a big company, and then try to get to know as quickly as possible, in terms of like, getting all the meetings and like, you know, getting all that feedback. And by the way, fundraising is of necessity, a depressing process, because everyone gets almost all knows, you know, it’s like and the founder who successfully raised you say congratulations to them. And what they don’t respond with is, oh, by the way, 95% of my meetings, were all like, really like harsh nose. And they were, you know, really mean to me, but I got one. Yes. So we were able to raise, it’s like, no, they don’t tell you that. They just say yay, we raised you know, so a lot of times in the middle of fundraising is kind of the lowest point. And then you just, you just need one, yes, to make it a success. So a lot of times, I’d like founders who haven’t been through the process before, I tried to like, kind of coach them on like, Hey, make sure your spouse knows or your significant other your friends know, you’re gonna go through kind of a rough period here, your co founders know, kind of like mentally brace for it, because it’s just like a thing that happens. So let’s

 

Scott D Clary  36:33

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Russ Heddleston  38:39

Wow, yeah, three, series A and C and Endoxifen has research on all these different stages. We’ve tried to quantify it because and the research that talks and doesn’t and stuff is just of interest to me personally. Because when I was starting proceeding, I was asking for advice. I got just so much anecdotal advice. I’m like, This is what I didn’t work to do that or this is what I didn’t, it didn’t work. So don’t do that. And I was like, has anyone like done any like kind of research on this. And when I went to conferences, it’s usually like, like, older venture capitalists who pontificate about like what they like to see in the company. And if you’re going to get me to invest, here’s my investment philosophy. And it’s kind of more geared towards like them pontificating on why they’re so brilliant and successful, which you know, as an entrepreneur in the audience, being like, I just need your money is like not necessarily super helpful to me. And I’m like, I don’t even care about your money. I just need someone’s money. I’m trying to fundraise here, you know. So for the docs and research, we try to come at it from the entrepreneurs perspective. And so we break out how a Series A is different than Series C than precede and, and so on. Even venture capital fundraising is something we have enough data on to have some interesting takeaways. And it’s not so much like what should you do? It’s just like common takeaways from all the companies that we can get to participate in this research around, like what are common factors of success and failure. And so the narrative that a company tells really depends on what they’re doing. And so it’s kind of hard to give specifics, which is kind of annoying. And to your question around, like, is it better to raise like pre revenue or like, pre launch? Or the answers usually, like, it depends. Because that’s what I mean by take stock of like, what you have to show for yourself kind of as evidence. Like, if you’re a second time founder, you know, awesome if you’ve got a, like, a really great track record. And career is like a Google machine learning engineer, or you’ve gone to like, name brand schools, you know, these are all things that can count in your favor. If you’re, you know, if you’re like, Oh, my God, I’m a nobody. I’m non technical. I have nothing of note on my resume that a venture capitalist be like, Oh, well, at least that’s uh, you know, impressive, something or other, you know, then yeah, maybe you need to have a little bit more traction or revenue or something to show for it, maybe you have to be a little bit scrappier. And so the answer is, it depends. And so that’s why, you know, it’s just good to, like, get advice from from folks. And you know, the nuance of your business. And typically, it’s easiest if you can get advice from like, if you’re raising a seed round series, a investors because they’ll be more honest with you hoping that they’ll come back to them later. And they’ll have an advantage and funding your Series A, as opposed to getting advice from seed investors, when you’re looking for seed round? Like, they’re just looking at us, like, do I invest or not? So so get that, that advice, but specifically to, you know, do I raise before revenue or after revenue or before launch or after launch? Like the common trade off is that it’s always easier to sell the vision before launch. Because you can say it’s going to be huge. And so you can be persuasive as a founder, and just say, like, here’s all the evidence I had Doxon raised our seed round before we publicly launched. So we raised our Series A before we had any notable revenue. So we decided to, you know, do those things earlier, rather, rather than later. But on the other hand, launching early gives you more information on like, what is working or not working. So you can kind of get started, like actually scaling your business earlier. So there’s just tough trade offs to make for all of these decision points. And so you know, his fundraising Unfortunately, his time as a founder, you don’t get back, like you don’t get credit for the time you spend fundraising, you just get credit for building your company. So fundraising is a necessity, but you kind of want to get it done as early as possible, or as fast as possible and kind of get back to building your company.

 

Scott D Clary  42:18

And you I know that you’ve I know that you’ve mentioned that. fundraising and like sort of best practices are vary case by case. Are there? Are there any, any anything that that is more universal, that you can sort of help someone walk away with that exhibit? Listen, if you’re fundraising, like this is a best practice based on what I’ve seen, or there’s a probability that if you do this, you’re going to end up being more successful? Or is it just really on a case by case you don’t want to commit to any absolutes, which is also no,

 

Russ Heddleston  42:46

I could go through a whole bunch of stuff for you. We could spend a couple hours on

 

Scott D Clary  42:51

I’m sure you. So let’s, let’s do a few. A few. Okay, well,

 

Russ Heddleston  42:55

we’ll do a few. The first is like people ask, Do I need a pitch deck or not? And my answer is usually yes. If you’re asking that question, yes, people who don’t need a pitch deck have enough previous success to and the relationships to just walk in and say, Here’s generally what I’m doing. Give me money, and like, okay, and people also, most people, yes, be like, Oh, can I create a video pitch and like, well, maybe, but like, just the way it works, at least in Silicon Valley, your kind of like professional, you know, software investing, like venture capital is like pitch decks allow investors to be very efficient running through things. And so it’s like three to four minutes per visit, like view on average. And so they can just intake a lot of information about what you’re doing. So yes, you’re probably going to have to create a pitch deck. And then also, by the way, that pitch deck is so helpful when you have to go hire a bunch of people. It’s also very helpful in forming like what your sales deck looks like, if you’re doing b2b, you’re doing any sales. And it’s just a really helpful document for what are you doing like document like, and then you’re going to iterate on that in the future. So So create a deck, and be thoughtful doesn’t need to be the world’s best design thing. Also, in the creation of that deck, keep it simple. The most common mistake I see is that people make what they’re doing sound more complicated in the hopes that it makes it sound smarter or more defensible, and it does not have that effect. Typically, you know, one of the nice tests of this is like, can you take it to a friend who’s not in tech, your parents and aunt uncle, and tell them what you’re working on and see if they can like, repeat it back to you. And even when you’re asking, like friends for feedback, give them your pitch, show them your deck, give them your elevator pitch, and then ask them like, how would you repeat this back to me? And if they have difficulty with that, that means you got to dumb it down more, because the best pitches seem like intuitive makes sense. And they might leave you with questions like, why hasn’t that been done before? Or isn’t that kind of like blah, blah, blah? And then you can answer and address those things. But if you start the pitch with, why is it differentiated, that gets in the way of like, what is it to begin with? And so a lot of founders, especially first time founders aren’t comfortable dumbing down what they’re doing to like that level of simplicity, which I think you kind of have to do, in order to get across the point. There are other like best practices around like, why now? Or why you, you know, type of things like those aren’t obvious questions like I see a lot of founders where they’re like, Well, I don’t need to add a why now section or why no page, it’s obvious that this is a thing that should be done today. And another thing to stress for founders is that nothing is obvious to investors, like assume no knowledge on the part of an investor, when they’re reading your deck. So, you know, like, as you go through and keep an eye out for like, start with the obvious stuff, you know, like, why are you uniquely suited for this? Why is this a thing that has to be done today? Why hasn’t been done before? And there are also invariably going to be like, holes in your pitch that you know about. So for Docs, and one of the holes in our pitch was like, why doesn’t Google just go do this? Or why doesn’t Dropbox go do this? And there wasn’t a great answer. And for a lot of software, there’s not a great answer as to why Google doesn’t do it, or some big other company, there’s been a lot of research around innovators dilemma. And if you’ve worked in a big company, it becomes a little bit more apparent, like why things just move real slowly. But in terms of like, you know, pitching it, and you know, how to represent that, you know, for us, I was like, Well, I wouldn’t talk to people, and they’re just not going to build it. So, you know, for you as a founder, it’s okay to leave some things unanswered. Like, don’t over stress about them. If, you know, the question is like, Well, why doesn’t Uber do this? It can’t be so close to Uber that’s like, over, they probably will do this. But if it’s like, listen, they’re focused on these things. There’s a risk. But you know, I’ve talked to some friends there. And I think we’ve got years in the future to do this. And some investors might say no, like, That’s too risky. Other investors might be like, I believe you. And I think you’ve got a great head start on it. And we’ll back Yeah. So again, you only need one. Yes. So instead of focusing too much time on like that particular hole in your deck, maybe put more effort into what is your go to market? How are you scrappy in the beginning, or, Hey, what’s your hiring plan or like list all the engineers you know, that you’re going to recruit once you once you get the funding in the front door. So there are those things, I think another common one is like financials, if you’re like a seed stage company, don’t put financials in there. I think this is like a thing. And like the 80s, or maybe 90s, or something where it’s like the business plan thing. And then you had to, like have pro forma numbers and like it, especially early on, like don’t, don’t do that. It’s like very rare that that needs to be a thing, like, to the extent your business has like cogs or it’s like a physical product, you need to demonstrate that you understand kind of like how those things work. But like, you know, if you put financials in there, people will spend a lot of time reading them. And that’s not necessarily what you want, because usually your financials aren’t the bright spot for your startup. And anyone can make up math and make it look like a hockey stick. So I’d say you know that that’s like a made up exercise like not to put in there. I’ll pause there, there are other things I can go through that are just kind of like that’s like best we’ll do we’ll

 

Scott D Clary  47:54

do a part two one time in that I’m sure you could go on. Okay, um, I want to, I want to I always finish these up with a like really quick, rapid fire. But for people that want to connect with you, where should they go? Social website, where do you want to point them?

 

Russ Heddleston  48:10

Twitter’s great. So you can follow me there I mean there or LinkedIn or just Ross at Dropbox?

 

Scott D Clary  48:18

The other one so I want to take a second and thank the sponsor of today’s episode HubSpot. Now, it’s hard to build a business card to make your dreams a reality when it feels like you’re spending all your time working on your CRM working on mundane admin tasks. But the HubSpot CRM platform is purpose built for scaling with your business and those big dreams of yours. So it’s impossible to grow now, HubSpot has intuitive visual workflows. It has bot builders, the HubSpot CRM platform can automate campaigns across your website, email, social media, digital ads and chat for clear communication across all your channels. Zero mixed messages. With the HubSpot teams feature you can organize your account by teams and segment leads soar through content and easily view team’s performance reports and KPI dashboards. And thanks to sequences, you can create flows that automate sales outreach, follow up time to personalized email so you can scale your customer relationships like never before the HubSpot CRM platform is easy to implement and ready to scale. So dream big. Learn more about the HubSpot CRM platform and how it can help your business grow. better@hubspot.com All right, I’ll put that in the show notes too. Okay, so rapid fire. Biggest challenge you’ve had in your life. What was it had you overcome it?

 

Russ Heddleston  49:51

Oh, biggest challenge. Oh, um, oh, man. That that’s a that’s a great question. Um, I’ve been very fortunate in my life, there have been a bunch of challenges. I mean, one with Doxon was like we in 2018 needed to, like we were selling a market and it wasn’t working super well. And so, you know, we had to kind of pivot our whole marketing site and kind of our go to market which was that was that was a scary, scary year. And so, you know, we didn’t put out I guess adapting to change is like one of the things as a founder like no one else might know about it, but for you You’re stressing out. Yeah, even in like undergrad, like just figuring out like, what what jobs go gets or like work stuff has always been a challenge. I know. I don’t think able to come up like anything like specific. No, it’s

 

Scott D Clary  50:40

good. It’s good. It’s good, man. It’s it’s it is what it is. It’s what you’ve lived. And it’s that’s that’s half the battle, I thought the pivoting and iterating and leaning into change as a founder, that’s pretty damn good. I don’t know, just me. That’s a good good advice. If you could tell if you could tell your 20 year old self one thing, what would it be?

 

Russ Heddleston  51:01

Probably just be patience. And also keep in touch with people. It’s interesting, especially being in tech how long our careers are and how, you know, it’s a lot of the same people over and over again, like this the same stories being repeated over and over again, it’s a really fun industry to be in. But you know, it’s a it’s a long term game. So I would tell my 20 year old self like Be patient, you’ll have time and the people you’re going to school with now are going to go do lots of interesting things, make friends stay in touch and you know it career, career will happen and good things will happen.

 

Scott D Clary  51:36

Good a book or podcasts or audible or something you’d recommend people to check out.

 

Russ Heddleston  51:43

Let’s see to a book a man called obey, I just find that to be like such a tear jerker. That was a that was such a good one. Like, or a brief history of nearly everything I’ve been told is one of the most difficult books to finish, I actually found it to be relatively interesting. So those are two or another another book would be, you know, Thinking Fast and Slow by Daniel Kahneman is a great one. I find behavioral psychology to be so relevant to anything like software related, especially anything product lead growth related.

 

Scott D Clary  52:20

Very good. I’m a person that had a major impact on you. Who was that? What do they teach you?

 

Russ Heddleston  52:26

Oh, there have been a lot of people. Over the years, Benjamin Wayne was an independent board member for Doxon. And he’s the CEO at cluster media. And he’s just such an impressive and smart guy and think this is the fifth company, he started. And he’s the CEO. And he’s done b2b and b2c, and such an interesting career. But having him on board for a couple years was just really fantastic. Because whenever I was stressing about something in the weeds, he always just had a good way of kind of elevating the conversation and bringing clarity to it in a way that I was just like, Man, I want to be that good of an entrepreneur someday or that good of a leader. So I learned a ton from him. And he’s just a great guy. So for any entrepreneurs out there, especially if you get past Series A, you’ll usually have an open independent board spot, and take that seriously. Like it’s a opportunity to get a really good mentor to get someone really good to come in and really guide you go to help your company a tremendous amount.

 

Scott D Clary  53:25

Perfect. And then last question, what does success mean to you?

 

Russ Heddleston  53:29

When I interviewed at Harvard Business School, they asked me why I wanted to go because I was an engineer, and it’s kind of unusual. And I was like, you know, I don’t think I’m gonna regret like the the money part, or the kind of like opportunity cost. I just think it’s gonna be an interesting story. And I think I’m gonna have a good time. So, you know, in terms of my aspirations, I think software is a lot of fun. And it’s just really interesting, I take a lot of pride in all the people we’ve hired over the years for Doxon that we’ve kind of like, started their careers, help them advance in their careers, and, you know, been a really powerful avenue for me to just create a culture and environment that, you know, I like to be a part of, and it’s just so cool that we live in a time when, you know, like people can just pick up and start a company and it scales and you know, and there’s just so much left for software to help with and there’s just so much software left to build. So I just find the spend my career there