Harvard in Tech Spotlight: Russ Heddleston, co-founder and former CEO of DocSend and head of commercial for DocSend at Dropbox
I spoke with Russ Heddleston, co-founder and former CEO of DocSend and now head of commercial for DocSend at Dropbox. In March of 2021, Dropbox acquired DocSend for $165 million.
Russ grew up in South Dakota and studied computer science at Stanford where he received his bachelor’s and master’s degrees. During school, he worked at many tech companies from Trulia (when they were just 5 people)! to Microsoft. After graduating from Stanford, he joined Greystripe, a mobile ad platform, as an early hire and went on to run their engineering team.
Russ then went to Harvard Business School. While there, he interned at Dropbox when they were just 15 people. Also while at HBS, he started his own company Pursuit with two friends from Trulia. Pursuit was a social referrals product that improved how companies sourced referral candidates. Pursuit raised a seed round, and after a year, they were acquired by Facebook.
At Facebook, Russ ran product management for the pages team, working on things like timeline design. He was able to see Facebook go public and work directly with many senior leaders in the company.
After a couple years at Facebook, Russ reconnected with 2 of his friends from Greystripe who wanted to start something new. It’s quite rare for people you know and trust to be on the market, so Russ decided to co-found what later became DocSend with them.
Russ shared his advice on formulating startup ideas, designing user focused products, finding product message fit, and cultivating lifelong relationships.
Validate the hypothesis. Reflecting on his time building Pursuit, Russ realized he didn’t validate his assumptions in enough detail. As an engineer, he wanted to build. Not building felt unproductive and uncomfortable. But this bias toward action led him to build the wrong products and business.
When founding DocSend, Russ and his co-founder spend time first making a list of ideas and subsequently going through the exercise of proving that each idea was a bad one. Playing devil’s advocate in this way helped them really think through the assumptions underlying the validity of each idea. You can never prove that an idea is great, but you can come close to proving that an idea is bad. Failure is the likely outcome for any startup, so look toward ideas with a somewhat cynical eye and try to spot the pitfalls before you begin to build.
After narrowing down their original ideas list, Russ and his co-founders decided on DocSend. DocSend would empower document senders with control and transparency, letting them forward and share documents with greater security and peace of mind. Elements of their idea existed in other products, but they were usually very enterprise focused and didn’t have great bottoms up, self-serve adoption potential.
Russ spoke with people at big tech companies to ask whether they had thought about building something like DocSend. They expressed an interest but admitted they likely wouldn’t build it until at least a couple years from now. Russ knew that anything slated for a couple years out wouldn’t ever be built. As an early stage startup founder, Russ had more to gain and less to lose in building the DocSend product. In contrast, big tech companies are hesitant to drop everything to build something entirely new in a less proven vertical. While they could build a DocSend, they likely wouldn’t, at least not in the immediate future, and that gave Russ a start.
Have personal runway. Russ was able to build DocSend more comfortably than he had built Pursuit. By the time he founded DocSend, he had more savings and was in a better financial and life position to be taking risks. His DocSend co-founders felt similarly. They decided to devote at least a year to seeing if DocSend had potential, and after only 6 month they realized people liked the product and were using it frequently. So they decided they needed a team and went out to raise their seed round.
To raise their seed round, Russ set aside a 2 week window to take fundraising meetings and lined up these investor meetings a month in advance. If he couldn’t get a term sheet, he would try again in a few months. DocSend wasn’t desperate for capital so they approached fundraising from a greater position of strength and had more personal peace of mind through the process as well.
Ultimately, they received a term sheet from what later became Uncork Capital. Uncork had actually turned down Pursuit when Russ was fundraising for that company, but they liked his thoughtfulness around lessons learned from Pursuit and what he was building at DocSend. After Uncork invested, Russ received tons of investor interest to join the round. He had to turn away some investors and ended up increasing the valuation and round size to accommodate a few more checks.
Don’t focus too much on UX before product market fit. After raising their seed round, DocSend launched publicly at TechCrunch Disrupt. They had previously been in beta and redid their entire app based on the feedback from the beta users. In this process, Russ learned to not spend too much time making the app pretty until you know it’s something that should be built.
After launching, DocSend saw amazing usage. The product was still free, and many founders were using it to share their decks with investors, including Howard Hartenbaum at August Capital who took notice. He preempted DocSend’s Series A and invested $8 million.
Focus on the positioning, not just the product. DocSend’s growth was overall quite up and to the right, but day to day, it often didn’t feel that way. The team tried many different verticals and pricing structures, including selling to enterprise sales teams where the competition ended up being too intense. Moreover, enterprise software just wasn’t in the DocSend team’s DNA; they preferred to sell directly to consumers. In 2018, they were spending quite a bit and not yet profitable.
At this time, Russ did over a hundred interviews with DocSend’s highest usage customers. These users were quite diverse in finance adjacent spaces from bankers to accountants to CFOs. People surprisingly liked chatting and sharing their thoughts about the product. Their feedback made Russ realize there was room to charge more and DocSend had the wrong positioning.
With these insights in mind, DocSend shifted to offering the personal plan, standard plan, and finance plan. The finance plan was most costly but actually didn’t incorporate additional features. Interestingly, the finance plan pricing actually drove more people to the standard plan because the finance plan’s price anchored people to a higher number and led them to see the standard plan as more of a bargain. But more people also bought the finance plan itself. They felt they were sharing their most important documents via DocSend and were willing to pay for the security. DocSend continued to add value to the finance plan, and when they realized there was interest from a wide range of verticals, they rebranded it to the “advanced plan.”
There’s a big focus on product market fit, but not enough of a focus on message market fit. Finding product market fit alone is not enough. You also need to understand what makes your end users want to buy your product. This is where positioning, marketing, and pricing comes in.
By the end of 2018, DocSend became profitable. They raised $5 million from Kyle Lui at DCM. They also received a $20 million term sheet, but that other investor would have wanted them to pursue an enterprise route, which was not in their vision and DNA. They wanted to focus on consumers and making the product as self-serve as possible.
The funding gave Russ and team a lot of confidence. They kept growing through 2019 and 2020, reaching 19K customers.
Know your bottlenecks. DocSend grew largely through a product-led motion. It was incredibly capital efficient, engaged tons of word of mouth, and had great virality (interestingly, word of mouth was a bigger source of growth than virality).
When DocSend was considering different acquisition offers, they realized that capital alone wasn’t sufficient to add value to their business. It’s difficult to spend money effectively on product led growth, and too much capital can be detrimental if the business grows too quickly.
With Dropbox, DocSend saw a shared vision of creating a more secure file sharing system and the ability to truly partner to unlock their next level of growth through working with Dropbox users.
Combine user interviews with user data. Both the qualitative and quantitative are crucial to building a holistic understanding of your users. People often don’t know what they want or will unintentionally describe something they want that they actually don’t want. Combine user conversations with actual product data for an ultimate source of truth.
For example, DocSend built Gmail and Outlook integrations because they realized the number of clicks was too high for many users otherwise. They also noticed that people wanted to send one link to multiple documents. They saw people building hacked together versions of this, so they decided to build this feature formally into the product. Similarly, they realized people wanted to embed DocSend links (Russ actually heard of a company paying high fees to a developer just to build websites with embedded DocSend links!), so they launched DocSend Spaces. Russ realized many users were using DocSend to send NDAs, so they built out eSignature to help people use DocSend more seamlessly for online signatures with fewer back and forths and redlining.
Follow the thread of your users. Russ recalls Chris Cox’s advice of watching users run into walls and building product features that break down these walls for them (which was Newsfeed for Facebook).
Prioritize people. Looking back on his time at HBS and Stanford, Russ highlights the importance of the network. He met engineers and business operators on campus who he would later hire or otherwise work with. At HBS, he met Kyle Lui who later led the last private round in DocSend before their acquisition. Russ’s early experiences at Dropbox were critical in forming the foundation of trust that paved the way for a successful acquisition.
Keep in touch, leave a good impression, and do the right thing. Careers in tech are long, and the tech world is surprisingly small.
