Don’t Make This Common SaaS Founder Mistake with Vishal Sunak of LinkSquares

Vishal Sunak: Yes, they said, "We love it. We're ready to become a customer. We're not your first customer, right?" "Of course, not. No, come on, God, are you kidding me? We've got millions of customers. Just kidding." They said, "How much does it cost?" My co-founder and I, we hadn't talked about how much it was going to cost. With a straight face, deadpanned face, we said, "It's $1,000 a month, it's $12,000 a year." He said, "Cool. Let's get you into the buying process." [music] Male Speaker: Welcome to SaaS Origin Stories. Tune in to hear authentic conversations with founders as they share stories from the earlier days of their SaaS startups. We'll cover painful challenges, early wins, and actionable takeaways. You'll hear firsthand, the dos and don'ts of building and growing a SaaS, as well as inspirational stories to fuel you on your own SaaS journey. Here is your host, Phil Alves. [music] Phil Alves: Today, have Vishal Sunak in the show. Welcome to the show, Vishal. Vishal: Hey, how's it going? Thanks for having me. Phil: Oh, no problem. My first question is, could you tell us a little bit about your company, and what problem do you guys solve? Vishal: Yes, we're building software for legal teams, so, in-house legal teams. We're building amazing software that really helps them modernize how they enable the business to perform and accelerate, and specifically, around contracts today. We have the leading contract management software in the industry, and it's powered by some really incredible technology, including some artificial intelligence that we built ourselves. LinkSquares is an end-to-end contract management experience that enables actions pre-signature to be very efficient, like drafting the same document over, and over again, managing versions, and redlines, approvals, as it gets to the point of signing. Then the actual signature piece, which we do too. Then where you end up storing executed contracts, which is how we got started with an amazing purpose-built repository with AI that essentially reads the contracts, and it creates extracted summaries of what someone has agreed to, which is actually a really big business problem. Companies really struggle to know what's inside contracts they've signed because they're different, they get redlined, you use third-party paper, and so that's the mission. We're coming up on seven years since we incorporated in November. Really been an exciting journey. Phil: That's exciting. I want to dive deeper into the AI part of this software a little bit later because that's super exciting because so many times how you guys applied that. I will do that a little bit later. For now, could you tell a little bit about how did you come up with the idea to build something for lawyers? How did you reach that idea? Vishal: As this is SaaS Origins, the origin is also very fascinating, right? Phil: Yes. Vishal: I think some of the best companies have been born out of firsthand experiences. LinkSquares is no different. I was working at a tech company in Boston with my co-founder, Chris, that a bigger private company came in and decided they wanted to acquire us. We were in the backup space, and they were in the backup space, so it made a great fit, and so, during the point, where the bigger company is integration acquisition, corporate development team shows up at the little company, which is us, and starts poking around, asking questions, one of the big questions they had was trying to understand from a customer agreement perspective, what flexibility did they have to change how we were delivering this backup product? Specifically, could we move their data that we were backing up into another cloud? We were using AWS, but the company that bought us, they had their own cloud. They didn't use AWS. They were big enough that they had, I don't know, 50 petabytes, 100 petabytes in the Midwest or something. They said, "I don't want to pay your AWS bill because it's massive backing up petabytes of data every day. I want to move all your customers off AWS, so tell us which customers' contract says we can move their data off AWS without their permission." The reality was, we're a high-growth company growing really, really fast, highly disorganized on where these customer agreements were. They were everywhere. They were printed out in filing cabinets, they were attached haphazardly to Salesforce opportunities. That wasn't even our process. I don't know. They were in Google Drive accounts, and they were in people's emails. It shined a light, first, on the organizational chaos that companies have around contracts. The second thing it shined a light on was a lot of them had been negotiated, so they were all different and varying. We worked with really large brands too, like Logitech, and Whirlpool, Financial Times, Waitrose. We then used third-party paper. That's a unfair thing that happens, that massive companies will never sign your terms of service. We had a bunch of those on the big revenue accounts, and it was really an impossible exercise. That was a light bulb moment. It wasn't like light bulb moment, quit my job, we're going to go full-time on this. It was a light bulb moment to be like, "Huh, this is really interesting. Maybe it's something worth exploring," and the journey started from there. That is our origin story. Phil: Did you solve that problem for that company before you went and built up this product that could solve problems for everyone else, or how did that happen? Vishal: Oh, I wish that could have been the story, but at the company we were working at, we decided to email all the customers, and say, "Hey, we're going to move your data off AWS," which was really the only answer that we had. It was thousands, and thousands of customers, we couldn't do it line by line, and the timeline was too tight, but it was good enough, Phil, to have an origin light bulb, "Hmm, this is really interesting." Then some of our network, and friends, and other companies, and mentors, they nudged us towards, "Hey, at bigger companies, they have someone who's responsible for contracts." It's called the general counsel. They were the head of the legal team, and we didn't have a general counsel. We were 100ish person company, 120 person company. We didn't have a general counsel. My co-founder and I knew exactly zero general counsels. We did the only sensible thing, which was, buy 25,000 emails and names that we hired someone to mine them off LinkedIn. I think they were in Pakistan or something. We did the only sensible thing, which was, send a bunch of cold emails to general counsels saying, "Hey, I worked at a tech company, looks just like yours. We have this issue, do you have it too?" The hand raises, people just started popping, raising their hand, and saying, "Yes, I have this problem, I just experienced this, something has gone one," and then we just started learning. One conversation led to another, led to another, we kept going. Phil: You started the learning process before you had a product. You just, "Let's cold email out these people, and ask if they have the problem," or did you have a product, and then you cold emailed the people about the product you were building? How did that process went? Vishal: We put our fists down at the table, and we said we will not build software until we talk to 100 general counsels, and make sure that we do the customer discovery, which is so super important to understand that we are solving the right problem. We know what that problem is, it's been validated by many different people. See the problem in the same way, or uniquely different, but that's the same problem. I'm a builder, I'm a two-degree engineer. I studied computer engineering undergrad, I love software, I love technology. I'm a terrible maintainer, my wife reminds me all the time when I forget to empty the dishwasher. I love building things, and I think that was the hardest years for me because I'm such a natural builder. I want to just build stuff all the time. It's nice to found a company also with someone who balances me out. My co-founder, much more methodical, much more patient as a person, and really was the one leading the charge to say, "Let's learn right now. Before we go spend money we don't have in building a product no one wants, let's make sure we get it right." That was such an important part of the journey was getting it right up front. Phil: I agree because I do see that all the time. Like you say, building is fun, especially, if you're a builder, and it's easy to think that you are busy. I see people sometime, they start building too quick, and then they are afraid of showing the product to anybody because they don't know that they are building the correct thing. I think that's such a great insight. How long did you guys stay in the discovery phase? How long did it take you to speak with those 100 people? Vishal: I'd say I had about 25 conversations dealing with general counsels. There was the making of the analyzed product that we have today. Purpose-built repository meant for legal teams that they can get information, or what they agreed that was our problem, and we still didn't build anything. The first thing we built was a fake Rails app. It was a Rails app. It did load in browser. I think we ran it on Heroku back then, that it had fake data loaded into a Postgres database, and it would load, very few routes worked. Very few buttons actually you could click on, but it was a clickable prototype that looked high fidelity enough to actually give a "lightweight" demo and get feedback on, how do you deal with file name organization. What's the process that you do after a deal gets signed? Where do you store these things? What metadata do you care about? What data would you love to know about every contract you've ever signed? "Oh, I want to know the effective data, who the parties are, and termination rights, limitation liability, whatever it is," and so it was a little clickable prototype that was actually pretty cheap to build. Someone we knew just hacked it together. I think we paid them $3,000 or something. It was an easy bite to get started, start not only just prospecting people for a call, but then prospecting people for a call, and then showing off this little prototype, and continuing to refine it. Just continued refinement, refinement, refinement. Then we got to the point where it was like 50 conversations in, I'm feeling pretty bullish about, it's time to build some software now, and the underpinnings of building a Rails app from scratch. All right, let's go now. It's, now it's time to actually build something so. Phil: That's amazing because you went with like 25 conversation that, okay, you didn't have software, all the next 25 conversations, then you are showing them this high fidelity prototype that you build in Ruby on Rails. Now you actually start to build the first version of the product. Walk me through, now, it's time to build the first version, how did you do, how many developers do you put on, and how long did it take you to go all the way to the first customer? Vishal: From my time at the tech company we all met at in Boston, Backupify, they had invested in using a offshore team. I actually had worked with a offshore team pretty regularly in my working operations inside the company, and I felt really comfortable just working in a remote workforce. I'm a two-degree engineer, but I didn't spend my life coding, I spent my life more product managing, so like requirements, and UIs, and writing functional specifications, all really familiar to me. We did a little search for Ruby on Rail developers. I knew that I wanted to pick Rails because I think it's the most widely distributed web application framework in the world. I didn't want to pick any weird, mean lamp stack, flash-in-the-pan technology that 16 people on earth are experts in. The likelihood I could hire one of those 16 experts is probably pretty low. How do we make it easy to hire people who know how to code in Rails with React front ends and Postgres backends? Standard stuff. Not get obsessed with technology or anything like that. I also have lots of friends who are exceptional software architects and developers that, "Hey, man, I just need your advice on something. What do you think? This, that, the other thing. Do we need AWS right now?" It's like, "No, DigitalOcean. You can just host on there. It's like $20 a month. It's easy. You don't need AWS now. AWS will be overkill." That's how we got started, is we found a really great shop, Ukraine, and they just got to work. We had a freelance, a UI designer that my co-founder knew, came up with some mockups. I was writing functional specifications in Google Slides, and we used Pivotal Tracker to get started. Just watching my tickets just start getting built, and QA it, and then deploy it to production, and just get the underpinnings done. That's how we got started. It was really great because a dollar in offshore stretches way further than a dollar in America. I think they had two full stack developers, one QA person, one dedicated project manager to interface liaison with me. They ended up then adding a third developer as we continue to like, "Yes, okay, hey, keep going. This is working good. Can go a little faster now?" That's how we got started, kind of humble means there. Phil: That's awesome. I would like to dive deeper here because I think here, for everyone that's listened to this show, and me as someone that have built more than 100 SaaS product, I really like what you did about, let's not overthink technology. Like you say, your background was in product, and so how can you get the product out of the door, and what is the technology that's going to allow me to focus on the product and not in the technology? I think a mistake that so many founders make is that they want to build their product, "What is the hottest new thing?" "Oh, the hottest new thing is MING, the hottest new thing is Go." There's always a hottest new thing, but what you have to think about is, what is the technology that's going to get out of the way, so it can build, sorry, my French, a fucking product? [laughter] Phil: I want to build a product. Sometimes people let technology get in their way. Ruby on Rails, it's amazing. Shopify, a huge SaaS company, is building Ruby on Rails. Basecamp is building in Ruby on Rails. It's just like it's a full stack from work that allow people to take a product to market and don't let technology get in the way. I think you get to decide when you start a company if you going to be product-led, technology-led, or sales-led. It looks like you guys decide to be product-led and just decide on a technology that would allow you to be that product-led company, right? Vishal: There was no trophy for the trophy case that we picked the most complicated JavaScript framework that does single-page apps, and no one knows it because it's so new. We didn't want to do that at all because the thing that I started thinking about is when this thing actually starts working, and then we need to hire people, W-2 employees that work at LinkSquares as the company, what is the highest likelihood or chance that we're going to be able to hire two, three engineers? It's like, hire it in the stack that is the most common, that you'll get the widest net. Developers are amazing. They can come in and say, "I've never coded in Django and Python, but I coded in Rails, so with some elbow grease and some time, I'm going to learn how to do this." Even why do that? Just hedge your bets that you'll find more Rails developers than any other web developers you will on the planet, and just start simply. We weren't doing crazy fancy single-page experiences with React. We weren't even doing that. It was like Vanilla Rails 101 and scaffold. Running the scaffold to actually build the folders for you. Phil: Here's the reality too. Less than 1% of the SaaS products ever make over $10 million. I think the reality is because people are focusing the wrong thing, and you guys, it's one of those SaaS that actually made over $10 million. Is that correct? Vishal: Yes, way more than $10 million of annual recurring revenue, which has actually been a testament to a lot of amazing work being done here at the company and a lot of people working really hard, making it possible. Yes, we're tracking almost a $50 million ARR by the end of this year. That's a whole other part of the business, which is scaling go-to-market strategy. How do you do it, and how do you make your plan every quarter, and all that stuff? Phil: The reason I bring that up is because we were talking about being simple, and building the Rails application from the beginning, Vanilla JavaScript because people think they have to over-optimize. I would like to ask you, what have you had to change in your product? Of course, I believe that was the right approach because you build something simple that took you to market, but now that you have a company that it's making $50 million in revenue, how much of that foundation in Ruby on Rails were you still able to use? Are you still very simplistic approach, or do you have NSPA at this point? Could you tell me, how did the technology develop as you took your SaaS from 0 to $50 million? You're going to talk more about how you've done that in a little bit, but just talking about the technology still, how did that change? Vishal: The original GitHub repo that did the scaffold the very first time is still the code repo that gets checked into, so it's still alive and well. Phil: Nice. Vishal: I think what we've learned is as the application got more complicated, and we also added other bigger capabilities to it, we started to learn state-of-the-art current in other ways. One of our friends, Aaron, who's a very incredible chief technology officer, he told my CTO, Eric, about how he's building an entire web application, completely serverless. When we heard it, we were like, "Serverless? Bro, what are you talking about?" Even Eric, my CTO, who's a genius AWS expert, Rails expert, JavaScript expert, he's like, "Man, tell me more. What are you talking about?" It's like everything is a Lambda function. Instead of a background worker that goes into a Sidekiq here. It's like, huh, that's really interesting.' As we were going on the journey, it was like, "Okay, cool. Aaron is doing this." Let's see how Aaron does with it." Then we check in with Aaron, and we say, "Aaron, what's going on, man? How's the serverless world running?" He's like, "Actually, it works really great here, and we had some issues on these use cases," so it's like, "Oh, that's interesting." Then when we became an AI company really and had to build an AI pipeline, it was like we had this knowledge of serverless applications, and how Aaron had used it. We actually then ended up using some of that serverless technology. In a roundabout way, I'm telling you a story that, don't chase shiny things. You definitely don't want to be the first person to test something out because then you're just going to get stuck in a place you can't get out of. It's like we're half in on this thing, but we're not subject matter experts in it. I need to keep learning how to use it better. Maybe it's a brand new technology. I don't know when AWS came out with Lambda functions, but I don't think they started with that on Day 1 that they launched the service. It's like they're way out ahead, but we know someone who is actually using it, so we learned from them. Then it was like, "Huh, okay, cool. Maybe in this one application of our AI processing pipeline, we could use maybe serverless technology in this," and we ended up doing it. Then I think as you grow up inside the business, shipping the code is like 5% of it. Then 95% of it is product marketing, and pricing and packaging, and who's going to get this new thing that you build? Existing customers, are they going to get it for free? Do they have to buy into it? It ends up being a release is 5%, 10% the software, 90% everything else, which makes it a lot more complicated. You have to think through some of these things in more detail. We ended up then exploring other technologies like Elasticsearch. How can Elasticsearch make the experience for our users even better? Again, we've always run the product philosophy on two things. It's got to be usable. When people use it, it's got to be snappy. You got to believe that you're interacting with an amazingly sophisticated, intelligent piece of software. When your internet is slow, it's like, "Man, this internet is slow." When the web app has to load, it's like a spinner icon, no one likes that. Where are opportunities we can make really snappy, awesome experiences? How can technology do that? Then the other thing we always try to solve is make the damn thing look expensive. The product's job is to make it usable, make it snappy, and delight the users, obviously, solve their pain points. Product's other job is to make it look expensive so your sales team can go sell it at a decent price. If it looks like a 1990s Toyota Corolla with rust on the bumper, it's going to get priced like a 1990 Toyota Corolla with rust on the bumper. If it looks like a Rolls Royce Phantom, that's the answer. Phil: How do you make it look expensive? Is that UI/UX, or how do you make a product look expensive? Vishal: Yes, brand look and feel. It feels and looks modern. Then you start thinking about using things that create that kind of modern experience. Like, where can you use Elasticsearch in memory searching, which is very, very snappy? Where can you use single-page applications so the page never has to reload? The data is just coming in in real-time. How do you do polling and querying in real-time, behind the scenes? Less background workers and spinners and where are opportunities where you can just give the data back to the user faster? All about snappiness. We love snappy, things that are snappy. Then you have the look and the feel, the brand. A decent and accomplished UX designer can actually go a long way to make your product look great. We did a brand refresh. Like when we started the company, we had a brand, we had a certain logo, and we retired that logo. We created a new logo, we created a new font script. We did that in 2020, then we just did it again. We've changed not the logo, but the fonts we use, the colors we use, how we use them, get more specific on guidance and consistency. We use orange as one of our primary colors, and it's like, you can't use orange on every single button. We use orange when it's an important thing like a creation action or like a deletion action. Use other colors that supplement it, and again, in the hands of a great artist, like a UX artist, you can actually create, with the same effort as you create ugly-looking products, you can probably create beautiful-looking products. Thinking about usability, thinking about lazy loading versus things like big tables. How are you going to deal with big tables, the user experience? Thinking through those things. Phil: To summarize what we discussed about building the product, we talk about, start simple. It's amazing how even that first repository that you built is still there. It's still the same code base. You start simple, you move to market quick. As you grew, you start too, over that same base, but you're like, "What other technologies can I add on top of this? You add Lambda functions, you add Elasticsearch, and you probably have other APIs and other tools that you add to improve that product. Then you kept making a beautiful UI, make it look expensive. I think those are great takeaways on how to build it. Let's switch gears because I feel like build is 30% of the battle, and we cover building a lot. Let's talk about marketing. Vishal: Yes, I love it. Phil: Now you have a product, we build a product. How did you get your first 10 customers? How did you get your first 100 customers? Let's start there. Then I would like to go on your journey up to a million dollars and up to $10 million. Let's talk about marketing now and growth. Vishal: Jason Lemkin is a big SaaS pundit. The founder of SaaStr and had created EchoSign, sold it to Adobe. That's where Adobe Sign came from. Having read some of Jason's blog posts early days, being a SaaStr fanboy, Jason always said that initial traction is 10 customers who didn't know you, didn't do you any favors. It's not your dad's golf buddy's son. Nothing like that. They're completely anonymous strangers buy your product, 10 of them. In order for us to do that, we did the cold email approach. Wrote a four-email sequence, very tight copy, not very long, very, very punchy, strong call to action. We bought one single license to ToutApp. The only company in the sales automation world who would sell us one license was ToutApp. Outreach turned me away, Salesloft turned me away, but ToutApp would sell us one license. That's all we had the money for. I think in my Gmail today I have something like 800,000 emails in my Gmail, my personal work Gmail because we ran all the mail merges through my Gmail using the mail merge technology for high deliverability. We just started doing that, and then Customer 1 was someone in the Boston area that I had a direct connection to. I knew the company in Boston, and they fit the core philosophy. The reason, how I figured that out was, in their lobby, they had about 200 customer icons of the world's biggest brands. P&G, 3M, huge, massive multinational conglomerate. I'm like, "You got to have this contract problem. Every single one of these customers probably negotiated a third-party paper deal with you. They will never sign your contract." I had an intro to the former CEO. I knew her, I just prospect her, I sent her an email, "Hey, how's it going? Hey, I got this thing going, can I talk to someone [unintelligible 00:28:00] the company? She's like, "Sure, you can talk to the CFO. I think he's actually looking for something like this." "Hey, awesome." We walked in there, we had the product is working. We were very early on the AI journey then. It was more like a searchable repository, like a tech space search repository, Google Search repository. They said, "We love it. We're ready to become a customer. We're not your first customer, right?" "Of course, not. No, come on, God, are you kidding me? We've got millions of customers. Just kidding." They said, "How much does it cost?" My co-founder and I, we hadn't talked about how much it was going to cost. With a straight face, deadpanned face, we said, "It's $1,000 a month, it's $12,000 a year." He said, "Cool. Let's get you into the buying process and a procurement process. You got some paperwork to fill out and security." Other things we didn't even realize we had to do. Then it's like, hey, we worked on it for a couple of weeks, three, four weeks. Worked really hard on it. Then we had our first customer in April 2016. Phil: Nice. Let, let me stop you here. You and your co-founder personally closed that first customer. You guys were first involved in that meeting. It's amazing, the story. Now, how many of the future customers, was it still you guys closing? Like up to how many customers? The first 10, the first 100, how many of those customers was you guys personally closing the deal? Vishal: First year selling, we did five customers. We were halfway to that Jason Lemkin inflection point, which is 10. The next year we had gotten up, we added 20 more. We were up to 25 and involved in every single deal mainly because there's no one else. The company was so small. We had our first employee January 2017. He's still with us now. Now he's my VP of sales right under my CRO. We taught him what we knew. I don't know. "This is what we say. This is how we do a lightweight demo. This is how we ask questions. This is what we've learned," I don't know, "Five, six opportunities that we've had and closed." Then that third year, we hit the $1 million to $4 million journey. We tripled our revenue, and quadrupled, depending on how you measure it. We did 124 logos, and that's, we had other reps that we taught how to sell from the original foundation of how the founders got 20-ish customers with a rag-tag crew, just trying to figure out how to message it and buy. We're getting better. We're speaking that language of the legal team, asking better questions every single time. We're taking lots of adverts, generating as many pipeline opportunities we possibly can. We're going to need a lot of adverts. Conversion rates were not where they were now. That year, 124 logos, we stepped away from running the demos, running the calls. Then we focused on running the deal desk. What is a deal desk if you don't know? Security, getting through questionnaires, reviewing security policies. We're going to store some of the most sensitive informations out of the company. Order form creation. How do you make a good-looking order form that has all the stuff in there? You do all the scenarios, like, they want to sign today, we need you to sign today, but they actually can't start for two months, so you're actually doing a 14-month deal for the price of 12. You have to do the [unintelligible 00:31:41] math on that, just helping get the deals in. We have the joy of negotiating against general counsel, so our terms of service always gets redlines on it. It's not like a clickthrough product that people are really friendly with. This is their turf negotiating contracts with them, so we had to deal with that muscle. Like, hire a great outside contract attorney, work them like a dog, end of the quarter, like, "Hey, man, can you do these 15 redlines?" Every single customer would redline back in the day. Then we transitioned to running the deal desk and helping. You're getting on a call, "Hey, I'm the founder of the company. This is the vision. You're messing around with the right people. You're here, we're going to crush it together." Doing more of the support work deal desk. With my co-founder, we ran the deal desk through, I'd even say 2021. 2021, I was still doing it. Then, in 2021, I hired my chief legal officer, and he was like, "Dude, I got it now. I got it." It's like, "You don't have to do this anymore. You've done a great job, but I can do this with one hand tied behind my back." I'm like, "Thank God you're here." It's like you transition. You're doing the work, then you're helping the people doing the work, then you're running the deal desk, and then now it just runs 24 hours a day basically, whether I'm in the office or not. It's been a real joy to see it grow up fast too. Phil: Congrats. I know it's hard for us to, as a founder, take ourself out of a job, and you're working and trying very hard to accomplish that. Yes, that's a great journey. I think it's an amazing site too, that the first 24 clients, 25 clients was you guys that closed those deals because you learn, and then you could teach your VP. Then you could replicate because no one sells like the founder. That's just the reality. Any good founder should be the best salesperson of the company. That's amazing. Now, let's talk about how you guys scale the marketing side. Did you kept doing cold email all the way, or did you do anything different? Like, other channels, did you incorporate as you were growing and trying to bring new customers? Vishal: Sure. Cold email was a real effective strategy that kept working. We used that as the foundation of our go-to-market motion. Cold email, remember we don't have tons of money. We're not going to burn it on paper click advertising that may have a 1% clickthrough rate. We don't have the money to spend on paper-click advertising. I had known this because I had worked in marketing operations before, how hard it is to build a, A, organic page 1 rank organically on keywords takes years. That's not going to turn a high ROI. It's going to turn a high ROI now like seven years into the journey. That's cool, but that's not something you can get immediate results on. Paper click advertising is very expensive with very, very low clickthrough rates and not the right strategy. We didn't have the money to do it. I loved event marketing. At the company I worked at Backupify, we were big into going to find our buyer at conferences. I had learned about event marketing is so much fun. You're in a booth, people are coming by, you're handing out swag, you're having conversations, a natural fit for a extrovert like me. I'm an extrovert engineer. I don't even know if that's possible, but I loved working the booth, and I actually started work in the booth a little bit too, being attached to marketing. We sponsored our first couple trade shows, and they just had amazing, amazing ROI, like, spend a dollar bring home $3, $4 of annual recurring revenue. I was like, "This is great." I remember we sponsored our first trade show. We dressed up with doctors' coats, we had Operation in our booth. We had little pill bottles of prescription for LinkSquares solving all your headaches of contract management. We were three people. Me, my co-founder, and my first employee. We just had a hell of a time just standing in the booth for 12 hours, working the opportunities, doing demos, talking to the community. "Oh, have you heard of LinkSquares?" "No, I haven't." We loved doing event marketing. That is still a huge ROI channel for us now. Then starting the basics of a content marketing strategy. We used the scalable content model, which is, we write three blog posts about a topic. Then you take those three blog posts, you write an introduction and a conclusion, you give it to a designer, they package it into an ebook. Then you write a bunch of ebooks, and then you package a bunch of ebooks into a complete guide. Then you take a bunch of complete guides, and you package them into the compendium of contract management, whatever. Then we ended up needing content up and down the funnel. Top-of-the-funnel content is warm and fuzzy. Anything is a top-of-the-funnel kind of content topic. Like, how do you get started with e-signature or whatever? How do you structure your legal team? That's like a top-of-the-funnel kind of content. Then we ended up needing middle and bottom-of-the-funnel content. More like product marketing materials. I need a overview of the product and screenshots in a PDF so someone could take it home and read it, look at it, show someone inside the company through the buying process. Then eventually, product marketing had to keep going and getting bigger. We're making more features. This is why I said that software is only 10% of the journey. It's like, everything you build, if you don't have a way to document it, give it to your sales team, give it to your customer success team, put it on your website, make a video, put it in your knowledge base. It doesn't exist. Then we needed lots of product marketing material, here's the value prop of the analyzed product, here's the value prop of the funnel, here's some case-- Then we started doing case studies. Happy customers. We'll do a case study, we make a case study page on the website, start bragging about how great this sophomore is. "Hey, look at this person, look at this company, they're kicking ass with our software. You can do it too." I just kept on going that way. Just chip away at it. Then, thank God, I hired my CMO, Juliette. I worked with her at the same tech company that we all met at. Me, my co-founder, my CTO, my CMO, my CRO, and now lots of other people. That core five of us, we all knew each other. 10 years ago we were all up-and-comers, and then 7 years after that, they had continued to rise in their career. Chris and I became founders, and it was just wonderful. Then I hired a marketing expert, and I'm like, "You got it?" She was like, "I totally got it." I'm like, "Awesome. Now let's get to work together." Phil: That's awesome. Just to summarize, and I think that's cool because it's the same team, you go in as a founder and you do it for a little bit. Then you keep doing it, and then eventually you were able to bring someone that's able to take that from you. To summarize what you guys done, you started with cold email, it was cheap, it was easy. You guys understood. From there, went to event marketing. Then you got into content marketing and as marketing start to get more and more complex, you guys start to get bigger, you brought more outside people. Now you have a CMO that's over all the marketing. It's cool to see, and also, I feel like cold email is such a powerful tool that many times people forget about because it's not sexy. Go back to our conversation about technology. People want to go what sexy, not what works. It's amazing that you guys really did what worked for you guys, which was cold email, event, and moved from there. I want to switch gears again. Vishal: I'll just add one last thing. It ends up becoming who your buyer is and how they buy. The general counsel of a company is not someone that loves to take free trials. It's not someone that really trusts anything. They're going to negotiate the terms of service before they put any of their data in it. They're protected. They're really risk-averse people. They're in charge of being risk-averse for the company, like a PLG strategy, a product-led growth strategy, it won't work here. It has to be more like a consultative sale. Your buyer is super educated, Juris doctorate. They're basically got a very, very advanced degree. They're very, very sophisticated buyers. It's not like a bunch of people in another department that are just like, "Whatever, we're just buying software today." They're very sophisticated buyers and you need a very sophisticated sales process too. It's the match of how you go into market, it's all about understanding how your buyer buys and what are they willing to do and no. General counsels don't really read blog posts or eBooks. Now they do. They read our stuff but it's different than the marketing community. There's so much great content on marketing generally, marketers actively go seek it. That's why HubSpot built the company that they did here in the Boston area where we're from and inspire us, but it's all about the buyer. They needed more sales-led strategy, handholding, consultative, one-on-one. You're not going to be an idiot if you buy this or you're not going to look at idiot to your boss. We're going to make sure you win, it's all about knowing your buyer again. Phil: For sure. There's no silver bullet. I think that's the reality. That's why I want to make this podcast because the listeners can hear different stories. That's what works for you guys in your space. You have to understand your buyer. POG wouldn't work for your buyer. There's never a silver bullet that's not, this is going to always work. Thank you for bringing that up. I want to switch gears for a product again. We went over engineering marketing, but let's talk about the product itself. We didn't talk so-- because your product solves such a complex problem. I want to talk with you about how did you come up with the ideas, when did you bring AI to the picture? What strategies did you come up to build a product in such a complex where you are right now? It's a complex product to build. Vishal: Contract management is actually like a 25-year-old category. It actually has generations of different providers who started at different parts of the journey. We consider ourselves to be generation three, the newest generation but there's a bunch of generation one companies are 20 years old right now. They had focused on pre-signature contract workflow technology, like drafting agreements, managing versions, redlining technology, approvals. That is so saturated in this market. There might be a thousand providers that provide that capability. It's a dime a dozen. It's almost a commodity. We started on the post signature analytics and that was how we also went to market because we had a different value prop like, "Hey, what are you doing with contracts that you've already signed, how do what's inside them? Do you have projects that you have to go and review them?" The answer was, "I don't know what's inside them. It's a mess. I have to review them all the time. It's a nightmare." Then it's, "Great, I have something that can make your life a lot better. Here's the analyzed product." Eventually, we went back and built the pre-signature product, that's been in market for almost three years now. They had a very high technical feature bar because again, you're competing with products that are 20 years old. They've maybe rightly or wrongly built a lot of features for it, like who uses them all, who knows, but the buyer's perspective is, "You're missing some of the things that I could buy in the market from other people." Man, this product's only a year old. Back in the day, "We'll continue to make it better. Do you want to buy the dream?" The analyzed product, the post-finish product got to kick ass day one. There's no product in the world like that and so a little bit of that buyer journey, buyer psychology, factored into it too. We ended up taking the AI journey because companies were like, "Hey, I like the repository and I like that I can run my own Google-like searches, like words, pairs of words, stuff like that. I cross all my contracts, get how many contracts have this sentence in it? That's very valuable to me. Then people are like, why do I have to search it, why can't the the system just tell me what's inside it?" I was like, Dang, that's AI." That is natural language processing. That is the ability for an algorithm to read a document like a human and extract data, create data based on what it's reading what it's seeing. That AI journey was like, I'm not a AI expert, but I'm pretty good at reading things on the internet and figuring things out. We started slow. One of our employees, our second employee, one of his best friends was a professor of NLP AI at MIT. I was like, how convenient is this. We bought a bunch of beers one night and applied in with beers and pizza and we just asked them lots of questions from an academic perspective, because AI is like an academic topic. It's studied in academia by PhDs. It's like, hey man, how do you get started when you get more research funding and whatever you're trying to test some new algorithm theory or whatever. It's like, we start by building our own annotation system. We need to be able to label data. First, we need data. The second thing we need to label it in a specific way to train an algorithm. I was like, okay, then we built our own annotation system back then. Annotation as a service is like a SaaS offering now, but annotation as a service seven years ago it didn't exist. To take the AI journey, first thing we needed to build an annotation system to be like, this is the effective date next contract. This is the effective date, next contract. This is the effective date. That's a boring crazy work. I used to spend all my nights just annotating effective dates. That's when we got started with thousands and thousands of them, 50,000 of them, whatever, 100,0000 of them. Then I raised $4.8 million. We did our seed round. We had lots of traction. Things were going well, we need to keep investing in the AI journey. Then we needed to hire PhDs. We needed to hire our own data scientists, machine learning experts and they're not going to work for free. They're in the most in-demand sought-after skill in the planet. Being a data scientist, being a PhD and we knew we needed to invest in this. I raised the money to be able to do it and we hired a great PhD guy and a great machine learning engineer Kiran. Who was actually our intern from Northeastern University of my alma mater computer science wizard, wiz kid, and ragtag crew created that amazing pipeline that we went to market that ended up being on that year we grew from one to four million. A big part of why we did it, innovation in the product side. We nailed something that's really, really, really, really hard and really, really complicated. Which is like, how do you read all these documents efficiently and you can't spend a million dollars a month with AWS either? You got to do it very efficiently if you don't have the cash for it. They created some amazing, amazing technology that ended up fueling our sales team and keep the mission running and raise another round of capital and keep going. Phil: That's great. What a use case for AI to be able to go read and categorize those contracts and be able to give that information. I think you guys found the perfect use case for the stage AI was when you guys are starting and it keeps developing, I'm sure it's getting more powerful every day and you guys can keep using and improving your product because AI it's getting more powerful. When did you know that you had a product that people love, something that could scale a product that you took to 50 million? When did you know this product, I have product market fit, people love my product, when did you know that? Vishal: Classically, it doesn't really matter in this published on the internet, it doesn't really matter how long it takes for a company to get to one million of ARR. That doesn't matter. It's immaterial. UI path, really famous company, public company now. It took 14 years to get to a million of ARR. It took a long time for them. The journey from 1 to 10 is actually benchmarked. Like Bessemer Venture Partners, given that they're very, very famous venture capitalists in B2B software, they have all the benchmarks of all their companies they bet on that then have gone public. All this information is then published, private companies then publish it when they go public. The benchmark 1 to 10 million, there's been so much pattern matching on what did Twilio look like? How fast did they go 1 to 10, what did Shopify, what did Box, what did all these great pillars, cloud companies, why did they do it? How fast do they do it? That benchmark is between 24 and 36 months. The pattern matching that you can become the next Box is growing from 1 to 10 million in less than 36 months. That means you have to basically triple one to four and then triple again or two and a half. Again, 4 to 10 and that keeps you on a two-year pace that you're doing it really quickly. We knew we had it the year we went-- The year we got to 1 million ARR, it was amazing. Wow, what an accomplishment, but we now know the underpinnings of how to take it faster and triple the revenue, quadruple the revenue. We knew we had it when in 2019, we did 124 new logos our new customers in one year.. Started to do like, okay, we have the biggest month ever. We did 30 new customer deals in 30 days. Mind-blowing. We were working 24 hours a day practically, and everything was breaking. There were 20 people in the company. Onboarding was in a queue. 10 customers are waiting onboard. We only have two people doing onboarding. It's hire someone, hire someone in the onboarding. [laughs] The app is struggling because it's got more data now than ever before. It's like this table is just taking six seconds to load. [laughs] Someone put pagination on this now. The lazy load is too slow like whatever. Just started solving the problems and then running the business on unit economics. Oh, how is our gross margin? Ugh, the gross margin starting to get worse. We got to find more efficient ways to get customers implemented. Technology invested in it. That's how we really knew. Then also fill the renewals. When someone invests in you one time, it's one thing and someone comes back and says, "I love this software. Hey, I use it all the time." It's a great piece of software. I'm here for another year, I want to sign up for another year. It's like, "Hey, that's kick-ass. That's great. Let's do another year together and let's figure out how we can keep helping you." When you start getting into your first renewal cycle, you're really going to test your worth in the world. Without renewal cycles, you artificially think everything is going great. Then the other thing is we use NPS. Every six months we still do NPS of all of our customers, Net Promoter Score. How likely are you to recommend LinkSquares to a friend or a colleague? That's the default now for the world and how they assess happiness and you start seeing people like 10, another 10, 9, another 10. Okay, this is great. "Hey, could you do a case study for us, or if we need you in the sales process, would you do a reference call for us?" Start building that evangelical base of customers that just love your product. That's when you know you're really hitting it hard. You're doing the right things. Phil: For sure. I like how you measure. I like what you talk about, like about velocity at that point. You touch on units economics, managing your business by unit economics. What does that mean for you and how do you do that? Could you go deeper on that? Vishal: Sure. SaaS companies have potentially lots of metrics that could be used to understand the assessment of how the business is performing. There's a small subset that actually have meaning that you should be tracking all the time, which is like year-over-year ARR growth. Either you started at one and you ended at four. Congrats. Needed to 300% year over year, awesome. That's an easy one. Things like the cost of customer acquisition and more specifically cost of customer acquisition payback. That inflection point where they crossed over from you spent money to find them, now they're actually "profitable". They're past that window. The benchmark is like younger companies under 12 months. That means you have a very efficient motion. 12 months has always been the benchmark you're in one year get the CAC payback. Then there's instances where your CAC payback can be over 12 because you're investing more heavily in sales and marketing to push the brand out or grab logos or create canvassing of a market landscape. Push the product out further, canvas more customers in this market or subsegment. CAC payback, gross margin. Gross margins look really important. It takes into account your customer acquisition and then your costs are good sold. You can tell a lot about a company that's running at 95% gross margin is basically like there's no cost to implement this customer at all. Those are more like self-service businesses like Trello. You couldn't find a human being to talk to you about Trello, God, anywhere. You sign up for self-service, it's a lightbox tour, and it teaches you how to use the product. Hey, this is a card and a list and you're on your own now. Here, have fun. Data companies and regular SaaS companies can be like 60-90% in that window. AI companies tend to be even lower than that because you're using humans to supplement and gross margin is so, so important. It really tells you how you're operating holistically. Then we looked at with things like productivity, how much do we pay someone base and commission if they make their quota? Then how much is that quota? Is that ratio like 3:1 or 4:1 or every dollar you pay a sales rep, are they giving you three, $4 ARR? Are we tracking that? Then we're tracking gross and net retention, which are really important. Gross is just 10 customers up for renewal. How many did you get? Can't be more than 100%. Net is like how many customers are up for renewal and did you expand your existing customers too? Net retention can be way over 100% and many times is great SaaS companies that is way over 120, 130, or 140%. With those in mind, you have a holistic look at the company, then you get better at trying to forecast this for next year. Then when you make your forecasts, can you make your actuals match your forecast? Then once you start doing that quite well, you can actually start controlling the future from, like I say this inside to my executive team. I say this for everyone, at the end of the day, a SaaS company is the customers obviously, but it is what the spreadsheets from a financial perspective say you are. How much cash you're burning, what's your productivity, what's your gross margin, what's your ARR growth? What's your cost of sale, what's your cost of goods? You're rated on what those financial spreadsheets are. The good news is there's so much published benchmarks. [unintelligible 00:56:08] does a great job. They publish the benchmarks of every stage of company. 0 to 1, 1 to 10, 10 to 25, 25 to 50, over 50, 50 to 100 of like where the gross margin should be, where the CAC payback should be. It's all on the internet. Keybank does a great one too. State of software. Battery does a great one software report. There's lots of outlets to know how to measure yourself too. Phil: I agree, but so many times it's so funny how many things we touch on this as a founder. We just talk about knowing your numbers and knowing those benchmarks. I'm going to put the links for the benchmarks that you mentioned in the show notes. We talk about products, talk about technology, and talk about marketing is just so much that you need to know to run a successful SaaS. Thanks for sharing everything. We are getting to the end of our hour together, but I have a couple of closing questions for you. [laughs] The first one I have, it's could you share an "oh shit" moment in the early days of your SaaS? Vishal: The first "oh shit" moment was someone asked us to fill out a 1400-question security questionnaire and I never answered one security questionnaire in my entire life. It was like the back end of the security questionnaire is a deal for you, but you got to [laughs] do this security questionnaire. I called someone I used to work with who did this professionally. I was like, "Dude, I will do literally anything for you to help me answer these 1400 questions and for you to teach me how to do this next time." He was like, "I'm all over it, man." He is running a consulting agency doing exactly this. I was pretty pleased with cherry on top. I'll pay for your dinner, we'll buy beer, whatever you want, man. We sat down and we did it. It took hours and hours and hours. It took hours. That was one of the moments where I was like, whew, God, that was exhausting. You don't even know what you don't know. You don't even really know what you don't know until you need to know it. The people on the other side are like, "Are you done with the questionnaire yet?" I'm like, "yes, we're right on." We're just polishing it up. Proofreading it for grammar and I'm just like answering 100 questions as fast as I can. It's pretty wild. That was one of those moments for sure. Phil: I remember the first time I had to go to that moment too. We have some bigger customers. We work with Box, we work with ADP, we work with Apple, and then the first time they're like, "Are you guys suck too?" I'm like, what, are we suck too." [laughter] They send me a bunch of questionnaires and I'm like, "Yes." For sure that's, but especially in the space that you are where all your customers are big, I imagine that was very early on. If you could go back in time and meet yourself in 2015 and tell yourself something, what would you tell yourself about how they would help you if you're a business? Vishal: Quit sooner, go full-time sooner. I went full-time in January 2016. I had spent time working at night and on the weekends doing the product bill while my co-founder went full-time first. You should have gone in all in faster and had higher conviction that you're going to build something great here and believe in yourself more. Believe that you can figure this out and you can spend more time learning faster. That's definitely one. Also, tell myself in 2015 that raising capital, it will be very, very hard. It'll be harder. You think it's hard. It's like 50 times harder than what you think is hard. It's going to suck, Vishal. It's just going to suck. It sucks every time, it's hard, it's tiring, and consumes your life, but it can be done. Future self would be like, "Hey, you did five rounds of capital financing. You raised $161,500,000. Great job. You're going to do it, but you're going to go through hell to get it. [laughter] That's what I would tell myself. Phil: Yes, that's great. Let yourself know there's a light in the end of the tunnel and move quicker. What book do you recommend for every SaaS founder? Vishal: For sure, Predictable Revenue, you're trying to run an inside sales team. Predictable Revenue is where it came from. That's the story of how this guy Aaron Ross built it directed inside sales motion for Mark Benoff at salesforce.com. That is the modern playbook that you see at every single B2B software company is running some sort of playbook around that original philosophy. The follow-up to that is the Sales Acceleration Formula, which is Mark Roberge's book. He was a CRO of HubSpot, original founder of HubSpot one of the founding team. Did 0 to 100 million. Again, same concepts, you're using technology, you're selling over the phone, you're selling on Zoom, you're using data, how do you be more efficient, those are like foundational. I've been reading the Frank Slootman book, Amp It Up, and Frank is just an absolute animal. Took three companies to be public monster decacorns-like. He wrote a personal biography of all the things he's learned in his journey with ServiceNow and then some other hard tech company and then now most recently with Snowflake and his learnings and musings of being frank. Tat's a great book. You will get amped up after reading it. Phil: [laughs] I haven't read Amp It Up, but it's nice that you just talk about Predictable Revenue because it's basically was a strategy that you use when you're talking about growing your company. You start with code email outbound, and that's everything that we learn about in that book. I'm going to definitely try to read Amp It Up. If anyone listened to the show, I agree with you. If you haven't read Predictable Revenue, it's probably the first book you should read to think about how you're going to promote your product. Vishal: Especially if you didn't grow up on a sales team, it's like who is the CEO of the company? Did you come up from finance or did you come up from marketing or did you come up from engineering? If you came up from engineering, trying to be CEO of like a cloud software company, you're going to have to learn a lot about sales in a hurry. You're going to be doing the sales. I never really sold anything. Thank God my co-founder really had and it's like you need someone that can either supplement you or you got to be the person to do it. Phil: Yes, for sure, and so we talk a lot about the origin story of LinkSquares today. Where's the company head right now? What's the future looking like for you guys? Vishal: Future's looking really bright and we just love working with the general council community, the in-house legal team community. We have a really fantastic contract management product and we're really excited about offering more products to the same buyer in the years to come. The company that influences me the most is someone who's right here in my hometown in Boston, which is HubSpot and they're such an inspiration to us. We have lots of ex-HubSpotters that work for LinkSquares now. If I had to track one company I want to be when I grow up is like HubSpot, they made it to 1 billion of ARR, now they're almost at 2 billion of ARR and it still seems like they're having the most fun they've ever had and what is a product strategy? 10 products to the same buyer. I look forward to doing that. Same thing with LinkSquares. Again, maybe in the time machine, my future self can tell me it's going to be hard. [laughter] I'm predicting that it's going to be pretty hard. Phil: That's awesome. Oh, thank you very much for your time today and I wish you good luck, keep growing the company. It's pretty amazing what you guys got and thanks for being in the show. Vishal: Yes, thanks, Phil. Thanks for having me. Voiceover: SaaS Origin Stories is brought to you by DevSquad. To find out more about how we help entrepreneurs launch new products and help larger businesses plug in a ready-to-go development team, visit devsquad.com. Add us to your rotation by searching for SaaS origin stories in Apple Podcasts, Google Podcasts, Spotify, or anywhere else podcasts or found. Make sure to click follow so you don't miss any future episodes. Thanks for listening and remember, every SaaS hero has an origin story. [01:04:49] Announcer: SAS Origin Stories is brought to you by Dev Squad. To find out more about how we help entrepreneurs launch new products and help larger businesses plug in a ready to go development team, visit devsquad.com. Add us to your rotation by searching for SAS Origin Stories in Apple Podcasts, Google Podcasts, Spotify, or anywhere else podcasts are found. Make sure to click follow so you don't miss any future episodes. Thanks for listening and remember, every SAS hero has an origin story.