He Bootstrapped to $55M ARR—without ever having to hit 100% YoY growth. | Stéphan Donzé, Founder of AODocs

Stéphan Donzé (00:00:00):
Very, very close to your customers. The zero to one phase, in my case, but I think it should be the case for every company. All of the closings, all of the sales are done directly by the founder. You are in touch, you are involved in every single deal. Then the one to ten phase, you start sticking back in year two, having team manually. But if you don't manage every single deal in zero to one phase. You're not in touch with your customers, you're gonna lose. We had about forty percent growth until the $10 million mark. So we did $1 million the first year, two and a half, then the next was five something, then seven something, then $10 million. That was our trajectory to 10.

Pablo Srugo (00:00:42):
So you're doubling year over year.

Stéphan Donzé (00:00:43):
We are doubling every two years.

Previous Guests (00:00:45):
That's product market fit. Product market fit. Product market fit. I called it the product market fit question. Product market fit. Product market fit. Product market fit. Product market fit. I mean, the name of the show is product market fit.

Pablo Srugo (00:00:57):
Do you think the product market fit show, has product market fit? Because if you do, then there's something you just have to do. You have to take out your phone. You have to leave the show five stars. It lets us reach more founders and it lets us get better guests, thank you. Stéphan, welcome to the show, man.

Stéphan Donzé (00:01:12):
All right, glad to be here. Nice to meet you.

Pablo Srugo (00:01:14):
So you, I mean, you bootstrapped AODocs over. I guess, 10 years to a $55 million top line company, 250 employees. It's not like, typically here on the show, we have mainly VC backed companies. This is a totally different journey, but it's funny. I kind of always have this thought in my head, like when you're, at least in the early days. When you're bootstrapping, and when I speak to bootstrap founders. They are often, maybe jealous is the wrong word, but kind of like looking at those funding rounds. $10 million raised, $20 million raised, and like, oh man, it'd be good to have, you know, $10, $20 million bucks or whatever. But once you make it through that hump, right? And you have tens of millions in revenue, and you own the entire company. Or you and your co-founders own the entire company, kind of who's laughing now. I think is that kind of situation.

Stéphan Donzé (00:02:02):
Exactly, and I think our biggest problem not being funded was the visibility. Because when you announce a big round of funding, naturally you have TechCrunch and all the price. They love those stories and it's a natural point, talking point. But for us, we can communicate on signing a new customer or hiring new people. But no round of funding initially, it was tough for us to be visible in the price and like you said, sometimes you feel like, okay. Not like losers, but you're missing something. But in fact, it's very sane in the sense of we don't throw money out of the window. We know why we do things. Having a little scarcity makes you make good engineering choices, good investment decisions and at the turn of the 2022, 2023. When the VC funding came down. Now it was really interesting for us, because there's so many people out on the market. Who suddenly were in VC funded company who missed around, who were available. So we benefited a lot in the last two years, just in terms of recruitment. From being able to say, yeah, we're profitable, we're growing and profitable. We spend money in a sane way, right?

Pablo Srugo (00:03:25):
It's funny how we talk about that almost like the exception. But it's actually, ninety-nine point whatever percent of businesses are actually built, you know, this way. Like bootstrap, maybe erase some debt later on to accelerate something, raise a little bit of money. But in general, you're supposed to, you know, that's right. Cool listen, so when did you start this company?

Stéphan Donzé (00:03:44):
So AODocs started in 2012, but the product group started a little bit earlier. So we started as a services company, cloud integration company. At some point in the journey, it made sense to add, to turn the company into a product company. Because we saw there was a technology wave. The public cloud technologies coming from B2C, to the B2B, and there was a population of early adopters. Our initial customers from the cloud integration services were natural early adopters for products. Actually, they asked for it. So we saw this opportunity to build something new on a technology that people, some population of early adopters allowed. And so there was the perfect combination of funding, ID, population of early adopters to launch something. We knew it was almost risk-free to start in this venture.

Pablo Srugo (00:04:38):
What was? Maybe just give me your background, your co-founder's background, and kind of the context there in terms of the services company you'd built. 

Stéphan Donzé (00:04:44):
Sure, so me initially, I'm an engineer. My first part of my career was in a search engine company named Exalead. This one was more traditionally funded, right? It was never profitable, it has been funded by rounds and rounds of VC money, and then acquired in 2010 by the Dassault Systèmes. A big system integrator.

Pablo Srugo (00:05:05):
And this is a company based where?

Stéphan Donzé (00:05:07):
In France, It's France. I moved to the US in 2009 to develop that business in the US. Then we got acquired. Then I stayed a bit with the soul and then I started AODocs in California, in 2012. So my background is in engineers. My co-founder, so the other person funding the company is the initial investor of Xelit. So we used some of that money to start to acquire the services company, on which we pivoted to AODocs. So the founders of the services company left. We, this investor, acquire, it was very small at the time. So we're talking a couple of million dollars. The initial services company, and then we pivoted the services company into a software retail, like it is today.

Pablo Srugo (00:05:57):
What did this services company do? What? Why did you? What made you interested in acquiring in the first place?

Stéphan Donzé (00:06:01):
It still exists, but that services company in Revivol. R-E-V-I-V-O-L, is deploying initially cloud collaboration. So Google, Google Gmail, Google Drive in the enterprise and then Office 365 starting in 2015. And now is moving to other technologies like identity management, security, cloud platform and so on. So we were this company was the first, let's say, partner of large corporation who wanted to move their technology to the cloud, and as such. These companies were the perfect prospects for an early stage software SaaS business like Geoduck. So we always had a strong complementarity between the cloud migration business. Whose specialty is to move companies to the cloud, and the cloud software. Which replaces on-prem systems. So the expertise we built on the services side to do large scale migrations to the cloud is extremely important and useful to the software business as well.

Pablo Srugo (00:07:06):
What made you want to buy that business in the first place?

Stéphan Donzé (00:07:08):
Well, to us, it was a sure bet in the sense that there was a wave behind it. There was Google investing a lot to bring their technology, the early stage GCP, the early stage Gmail and Google Drive in the enterprise. To bring it to the enterprise. So they were putting a lot of money on the table, subsidizing deals, helping customers migrate and there were not many partners. Because the traditional integrators, the Accentures and the Cagencies, and the likes. They were not ready for it. So it was like land driving, right? It was something, and it was a good way also to take sometimes to find the right ID of software product. Because the service company would be in touch with the customer, talking to them and we had literally that discussion with my partner in 2011. I don't know exactly what I want to build, but I know if I talk to the customers for a few months and we find a common product. We'll find something, it's guaranteed and it took not even months. It took weeks to understand that these customers, they wanted to go beyond just email and calendar, and files. They wanted to put all of their critical assets in the cloud to gain an advantage. So okay, what you want is actually document management in the cloud, right? Not just collaboration. Yes, that's what we want. I knew I had the idea because, I was in touch with real customers. It's not something I had in my backyard or in my basement, you know, completely disconnected from the market. I was talking to these companies, one, two, three, four people in the same way. They tell me the same thing. I know I have the idea and I know that it doesn't exist because, it's based on an entirely new technology that's just coming to the market. So I have a kind of a head start. So we invested in that company. Because we knew it was at the forefront of a new wave and we would have. It would give us a unique point of view to detect the right idea.

Pablo Srugo (00:09:15):
So it was by design, you wanted to build a product company. This was just one kind of a means to an end for you.

Stéphan Donzé (00:09:21):
It's easy to rewrite history after the fact, right? So it's hard to know at the time what we were thinking.

Pablo Srugo (00:09:26):
Everyone sounds smarter looking backwards. That's right. 

Stéphan Donzé (00:09:29):
What we knew was if you want to do capitalism. Okay, software you don't get the same multiple as services, right? If you develop a services company, you will get a multiple on EBIT. If you build a software company, you will get a multiple on the revenue. So it's not the same, but when you don't have the perfect idea at the beginning, investing in a services company is risk-free. Because you know that by design, a services company is always profitable. So worst case happens, you have to downsize, but you don't have any risk of sinking millions of dollars in something that nobody will want to buy. So it was a safe bet, it was an observation point, it was all of this at the same time. In hindsight, it's been a great observation point. Did we have this in mind at the beginning? Maybe not, but we knew that someday, if we wanted to make money. We would have to turn it into a product company.

Pablo Srugo (00:10:21):
And was it specifically Google? Because the partnership strategy, as far as I know. Microsoft tends to be the strong partnership-driven, kind of go-to-market. 

Stéphan Donzé (00:10:29):
At the time, Microsoft was nowhere in the cloud. We're talking 2010, 2011. We're talking Outlook on premise, Microsoft Word, Office 365 wasn't even a thing. So Google had easily five years of advance on Microsoft. Microsoft caught up, right? 2015, 2016, they came in and we started integrating Office technology as well. But Google were the first and at the time they were the only one. So we started with them, it was logical and they had a vision. Google was different, and I was attracted to them because of that. Google was saying, forget about applications, forget about things running on your laptop, everything should be in the browser. That's why we built Core. So that was the vision. While at the time, AWS was like, okay, you can bring your SAP to my servers and it's going to be cheaper. But it's the same SAP, right? It's just cheaper virtual servers, and Microsoft was saying, whoa, whoa, whoa, don't worry. You can keep our crew in Excel, and nothing would change. So Google was the one preaching change, and that's why we were initially attracted to them. But now we are doing everything. We're doing Google, Microsoft, you know, all cloud technologies.

Pablo Srugo (00:11:37):
Tell me more about this document management use case. It's not immediately obvious what that really means in practice.

Stéphan Donzé (00:11:44):
So what we do is we help companies properly control their business critical documents. Meaning the documents on which you cannot afford a mistake. Google is our customer. They use us for the construction, design, maintenance plans of their data center. If you make a mistake in one of those documents, your data center crash, or you have a delay in construction that could cost millions of dollars. Same with Veolia, they're building water treatment plants with our software. We're working with airplane manufacturers who get their airplanes certified. So all of these different documents that we manipulate are the ones that need to be preserved for 10 years, 20 years. You need full traceability on it. You need to guarantee that there is no mistake. We're not talking about your file server and your attached files in Outlook. It's really documents on which you cannot afford a mistake. So we put processes on this document, we put traceability, we use AI to assign automatically to the right person, to review them, to detect mistakes and things like that. But we're talking business critical documents.

Pablo Srugo (00:12:50):
Yeah, walk me through maybe back then. What does that look like? Was there an on-prem version of this and you're just kind of bringing it to the cloud? Is that the problem you identify or what exactly? You know, you told me you heard a lot of things from customers firsthand. What were you hearing? 

Stéphan Donzé (00:13:04):
Again, we're in 2010, 2011. These customers have adopted, they have bought the vision that if you move your company to consumer-grade cloud technology. You will gain speed, you will gain agility, because you do everything in your browser. You can work anywhere on any device, you're not attached to a certain internet network. So they say, okay well good, thank you, Google, we buy the vision, we like it, and so on. We as a company, we need more than just email and calendar. We have our mission critical files that are in Documentum, IDM filenet. You know, old school SAP, old school enterprise software stock on prep. Mr. Google, what is your solution to bring these files to the cloud along with my email and the rest? And Google has no solution for this, because they have no structure in their product. So that this is where we come in. What I understood having those discussions with these companies was that they needed a container. That's compatible with critical documents, but that has the same characteristics as Gmail and Google Drive. It lives in the cloud, it's fully SaaS, it's fully serverless, agile, everything. And this didn't exist because a hundred percent of the document management market was, and still is today almost, on-prem. On-prem traditional Java server, like WebSphere and all of that old school kind of technologies. So they, and I know how to build it. Because I come from a search engine. I have built an enterprise search engine all my life, so I know how to build it. So this was the starting point, right? This need to go one step further than what Google was providing in the cloud.

Pablo Srugo (00:14:50):
And what's the main? Like between document management and version history. Which you get on Google or whatever. I mean, at least these days. What is it just the depth of traceability? Is it the access? Is it like, what are some of the main things that go into kind of document management?

Stéphan Donzé (00:15:03):
It's the consistency. It's the guarantee that everybody would apply the same process in the same way. In Google or in Notion, or in SharePoint, or in those tools, the user is in control. So as you probably know, two different people will give different names on the same files. Because they have different minds or they would do things not in the same order, or the version history. Nothing guarantees that your successor will manage it the same way or will change it. So if you want a document to be certified or to have a guarantee that 10 years from now. When you have a litigation on this project. You can prove that this information was given to this person, at the right time and with the right thing. And why those two people have left the company since long ago. How do you do that? So you need some stronger, like database grade guarantees of this version history of these processes of this traceability. Because it spans over multiple years. One of our customers sums it well in our interview. Document control, what we do, protects the company now from problems that will happen in five years or in ten years. When everybody has left, it's new people, it's the successor of your successor. So you need to guarantee that this person. Five years down the line, will be able to retrieve the information with a strong guarantee that it's correct.

Pablo Srugo (00:16:23):
And so once you decide. And you're hearing these things, and you see that opportunity. How do you set it up? Do you kind of spin this off? Do you? How all in do you go? What's the setup?

Stéphan Donzé (00:16:33):
So usually, most companies have something in place. They have an old system, so they need a migration, they need to convert their old data to the new data. So we have all of these services. We have the tools to take the information from file servers, from Google Drive, from OneDrive, from SharePoint, from wherever it is and move it. It's very similar to what you do when you deploy your CRM and you deploy Salesforce. You import the existing data, you deploy SAP, you import your existing invoices. So it's kind of the same process. We start with an assessment, okay, where are your documents today? This is trustable, this should be thrown away, this should be transformed in a certain bit and we bring it into our system, and we help. And we configure it in the way that matches your business processes. So it's not, it's something more for mid-size to large companies. Very small teams don't have the problems we saw. When you are 10 people, 20 people, you know who does what, you know where is what, you don't have that. But when you scale to 500,000, 10,000 people, then you need that consistency. You need those processes. Otherwise, it's a mess.

Pablo Srugo (00:17:40):
But I mean, how do you split your time? Let's say, between services which you're doing. That's your main business at this stage, and do it in building out. This new product and kind of taking this forward?

Stéphan Donzé (00:17:52):
So, in the beginning, like the early, the very first, it's interesting. The very first customer of AirDogs was initially a customer who wanted to move from Lotus Notes to Google Drive, and it was purely a services engagement. And that's how, where I started as like, Oh, wait a minute. Why don't we use this new software that we're building right now as the target of your migration instead of moving it to just Google Drive? And so we turned this services engagement into a license agreement. We sold them a three-year license agreement with the money they had set aside for the service. And we said, okay, look don't worry. This product is kind of beta, but we're going to make it work, and we take your money. Instead of taking it for doing the services, we take it as a license, and we'll do the service for free. And so that really was the bootstrapping moment. Where we started turning the project that were coming one by one, instead of reinventing the wheel each time. We started building the product. So it was over the course of two years, our first million dollars of revenue was in year two. Year one, we did about $100,000. Year two, we did about a million revenue.

Pablo Srugo (00:19:08):
How big was the services business, at that time?

Stéphan Donzé (00:19:11):
Let's say we went from a few hundred cases of services and zero of software year one. To year two, still a few hundred of services and a hundred of ARR. And then year two we were, that's probably in 2014. The second year that the software revenue started to exceed, the services revenue for that particular business unit.

Pablo Srugo (00:19:35):
I mean, it was really quick. It was kind of obvious pretty quickly that, that was the big play.

Stéphan Donzé (00:19:40):
The chance we had was, that the community of companies who were adopting the Google Enterprise technologies were very, very tight. They had mailing lists, chat groups, and so on. They were talking to each other all the time. So when one of them adopted our product. Immediately they informed everybody, hey, there's something new in town, you should try it and so on. So our first crop of customers in the second year, so 2013. Was very quickly, came to us because word of mouth. Word of mouth gave us our first set of audio editors. Most of those companies are still customers today. We got them in 2014. 12 years later, most of them are still using our product and they have expanded a lot. So it's a big success.

Pablo Srugo (00:20:28):
And how come at that time, you've got this kind of $100K to a million growth. Like zero to one in a year kind of thing. B2B SaaS, I mean, I remember 2014 or so was starting to peak. I mean, it was already kind of becoming a big wave. Why not just spin this off and start raising money, and go for this unicorn story? What was the thinking?

Stéphan Donzé (00:20:47):
It was a real question at the time. But I think it's partly our culture, partly our desire for independence. We had already a good growth fueled by this wave of transition from on-prem to cloud. So the big question was, okay, if we raise $10 million. What are we going to use it for? And we were like, look, when our roadmap is already set. We know that we have our own money, we have a few million dollars of money from the services business, we can spend it. So there was no obvious need for that and at the same time. There was, we didn't want to give away our independence. We come from traditional funding company, my first half-life, let's say and keeping our independence. And being in control was something strong to put in front of the risk, of bringing external interests. So we didn't really need it, and we wanted to stay independent. 

Pablo Srugo (00:21:55):
You didn't really want it.

Stéphan Donzé (00:21:57):
I don't regret that choice. No, I mean, if we had needed it, we would have done it. We had.

Pablo Srugo (00:22:01):
Well, couldn't you. For example, just as a throwaway comment. I mean, obviously going to the cloud was this huge, and still is frankly, funny enough. But it's been a long-term thing that every CIO has been talking about for a long time, and then people are starting to do it. Could you have not written that way more aggressively, being in every event. Like whatever big, you know, booths. All these sort of things, and just kind of been like the document manager for the cloud. But just with a louder bang, you think? Would that have moved the needle? Or it was just kind of like the market was where it was and you would have been pushing on a string a little bit.

Stéphan Donzé (00:22:33):
No, it would have. I mean, in retrospect, it would have moved the needle a bit. I think we were also, I mean, we are. Let's say, a French-European culture. We like to be, we don't like to oversell our product. So that's probably our biggest flaw compared to.

Pablo Srugo (00:22:52):
I mean, you're like us Canadians, man. Yeah, we look at the US like, how could we bang the drums louder?

Stéphan Donzé (00:22:56):
I'm ninety percent R&D, ten percent marketing and not ninety percent marketing, ten percent R&D. 

Pablo Srugo (00:23:02):
Right.

Stéphan Donzé (00:23:03):
And in that world. Bringing money to market a product that's not completely finished and we still had technical issues. And working on it, and so on. So it didn't feel right, and maybe it's a mistake now. I don't know, I mean it's hard now. I would like to go to the part, where we did raise money and see

Pablo Srugo (00:23:21):
Sure, yeah, that's impossible.

Stéphan Donzé (00:23:22): 
What is our ARR, but.

Pablo Srugo (00:23:25):
Things have worked out. Let's say that.

Stéphan Donzé (00:23:27):
I don't really regret it. Because like you said, we are independent, we own the company, we don't have external investors and so on. So it's good, I mean, we built something that's growing and profitable, and independent, and people are. Now it's attracting people for sure. It was not true two, three or four years ago. But now, that story. Telling that story to people who have been all their life in VC-funded company. Who have fueled their growth only with VC money and not with real customer revenue. And who still have a doubt about. I mean, actually my product was really nothing. Because nobody really bought it, right? It's just VC money. So now we know that what we did is useful. Because a hundred percent of the money we got comes from customers paying for it. So it's a different kind of satisfaction, right?

Pablo Srugo (00:24:16):
I think, I mean, that's the thing about being different. It takes, I think, longer than any of us would hope when you are different to get the value of being different. But once you, if you make it to that other side. That's when everything starts to accrue. Like now, I mean, probably for a long time. Especially I would imagine in those peak years where like 2019, 2020, 2021, and you're trying to recruit. And, you probably can't match the salaries, you can't match the hype, all these sort of things, and then things come down. And you're standing stronger than ever sort of thing. And all of a sudden it's much easier than it's ever been.

Stéphan Donzé (00:24:45):
I mean, it's the story where, when the tide goes away. You see who was swimming naked.

Pablo Srugo (00:24:51):
Swimming naked, that's right.

Stéphan Donzé (00:24:53):
We have the full scuba gear.

Pablo Srugo (00:24:57):
And walk me through those early years. Kind of a topic that's being talked about a lot recently is kind of this 996. This all in, like, if you're real about building a massive unicorn, massive company. You've got to, you know, be working like 24/7. I'm actually curious, in venture. It's interesting, like on the one hand, because you have money. You have more resources, you could structure things better. But the flip side is, because you're trying to go as fast as humanly possible. You tend to just kind of go all in. What were the first years like in this services product hybrid setup? What was the kind of work life situation like?

Stéphan Donzé (00:25:32):
Yeah, we were very much grinding hard. I mean, we have to win for different reasons. In the VC world, you have the stress. The milestone of the next round of funding. Okay, I have six months of runway, I have to accomplish this, okay fine. But in the bootstrap world, you have the same kind of pressure for different reasons. I have to win that project, because otherwise I'm dead. We relied on a relatively small number of very large customers, right? In the first years, we were doing one or two. I'm talking about service business, not just the software business. But on the software or service business, we were doing a couple of million dollar scale services project a year. You win it, you lose it. If you lose it, you know you have nothing to eat for one year. Tough life, right? But that's real life. So when we have to win RSP, when we have to delegate our project on time, on budget. When we have to make it work, or we have this huge migration that's in for both the software side and the services side. I mean, it's everybody on deck, everybody on the bridge. We deploy our first couple of large customers, we deploy. My team was like four days a week on site in New Jersey or in Switzerland, or like far, far away from home. And back home for the weekend, catch up with email on Monday morning, you're back at the customer sites for, and you come back at Thursday evening at midnight. And then you have three days to catch up with your real work and go back. That's the life, right? I mean, it's not 996, it's 997 and all. So yeah, it's, I mean there's no magic, right? If you want to build a company, you have to hard. At least in the beginning, VC funded or not.

Pablo Srugo (00:27:19):
On the services side, you mentioned multimillion dollar contracts. On the product side, what did the. We're still talking like six figure, what were the ACVs like in those early days?

Stéphan Donzé (00:27:26):
It varied, my very first customer. The one I was talking about was $50K over three years. So that gives you, it's not zero, it's good. The first crop of customers, the ACV was in the range of, 20 to 50, and then the year after we went up a bit. 2014, 2015, we were in the range of $100K and the typical contract was $100K a year. And now today, about that I mean, we have our larger customers are in the multi-million dollars per year, and the smaller ones are $5,200.

Pablo Srugo (00:28:02):
You told me about how you landed that first customer. Maybe tell me about another early customer, but maybe one that was a pivotal moment or an inflection point for you guys. If you remember any of the stories of how you might have landed, some of those early customers. I'm curious to hear, I mean, enterprise sales is like notoriously hard. A lot goes into it. So I'm curious if you have any of those stories for us.

Stéphan Donzé (00:28:22):
Yes, I mean, we. So like I said, the first set of customers we go through word of mouth with this community of big companies that were talking to each other. But it doesn't, it's not because you're recommended by their colleagues that you automatically win. So, we went into situations where, okay, my friend, Jack. Told me to talk to you, show me your stuff and I was going to do. Prove me how do you say? And to get those first 100K contracts. We had to apply our technology to their files. Which is very funny because we asked that customer. It's a big tech company in California, I won't name them, but they make hard drives. They gave us, we asked them, okay, give me a sample of your files and we'll show you how it works. And they said, please don't give me something too confidential. And because, we're gonna use it for testing, and so on. So they sent us this big zip file with, I don't know, a few tens of thousands of files and it was their freaking HR record. We had all of the performance reviews, the disciplinary actions. I'm like, this is an atomic bomb. Guys, make sure to delete everything once we're done showing them how it works, it was insane. So, that was really funny, but we had to essentially do the project before they signed the contract. I mean, that's the quid pro quo, that's the trade-off you have for those early customers. They want you to do a POC, but the POC is the entire project and when you're at the end. And say, look, now you see it works. Oh yeah, now I believe you, I signed the contract. So my first two, three, four big projects. We had to do the project before not even being paid. Before they would sign the contract that would allow them to pay you. But that's what it is and that's why you have to. That's why you have so much pressure. Because if you fail the project, you're not getting paid at all.

Pablo Srugo (00:30:25):
And in terms of what you were building. How much of this was just taking what's already proven and working on-prem. Just building it for the cloud. Like, just duplicating it? Or was there a lot of newness that you were adding on top?

Stéphan Donzé (00:30:36):
It's a hundred percent new and that's the reason why we succeeded. Is that since there was no existing software, we could build it from zero with the right architecture. The architecture for the cloud is very different. You have to be stateless, service-oriented, very modular, and so on. If you start, and my competitors, the open text and the documents, and the old products. They have that problem. If they want to take their product to the cloud for real, they have to rewrite it entirely. You cannot adapt an on-prem server to the cloud, or you can put it in a virtual machine. But it's a fake cloud, it's not real new architecture. We were starting from the blank sheet, so we were able to go directly on the right architecture and we built it progressively. Customer by customer, adding features, improving it. We started from just.

Pablo Srugo (00:31:28):
But were the features the same? The architecture is obviously different and built up from the ground. But are the features just, hey, these are the key features in on-prem. We just got to bring those over to the cloud. So it was kind of like pretty boxed, pretty known what you had to do.

Stéphan Donzé (00:31:40):
Yes, I mean, document management is nothing new, right? The problem of document management. Even when you do it manually on paper, on clay tablets in Babylon 5,000 years ago, it's the same thing. You need to make sure that the information is not lost. You need to make sure unauthorized people cannot access the information. You need to make sure you have traceability everywhere. So the basic, the functional definition of the product was clear from day one. That's the good part of being in a well-known market. But who are building it? What was new, was the architecture. The fact that we are able to tell customers. You have a cloud product, but the files you're putting in the product. They're actually in your environment, because it's in your Google Drive or in your Azure, or in your S3. And so you have this kind of have the cake and eat it at the same time. You have the benefits of the SaaS, but your data remains in your environment. That's being able to say that requires completely new architecture. You can't do that on-prem, because the data is in the product or outside. It cannot be in and out at the same time, you see what I mean?

Pablo Srugo (00:32:49):
One of the things that I'm curious about. These days there's a lot of talk about how with AI you could build a massive. Do kind of like this one and done. You raise it around, you hire a few people, and then after that maybe you don't need to raise again. Because you can do so much with a few people. And the counter to that is. If you do that and the opportunity is good enough. Some venture-funded competitor will come in and they'll eat your lunch somehow. They'll out-market you, out-spend you in recruiting, whatever. Did you guys have that at all? It seems like you were one of the first moving kind of document management to the cloud. Were there any venture funded competitors that you had to go up against?

Stéphan Donzé (00:33:20):
To some extent, yes. But all of the venture funded competitors in the document management market. They focus on a specific vertical. So for example, CLM, you take legal documents management. Which is a very specific kind of document management. This sector, which we try to get in. There are so many competitors. We were at a trade show in Las Vegas focused on legal teams. There were 20 different CRMs on the floor. All of them VC fund and so on. Okay, fine it's not for us. There are so many different things we can do. On the opposite side, now we're looking at insurance. In the insurance market, there's not so much technology. Because it's a tough problem and you need to have a real document management foundation. So I think this is a very good area for us. But in some verticals, yes, it's completely saturated. But no VC funded competitor. I mean, it may be Box if you think, but Box is a different story. It's a model company and now they are listed on the stock market. But there are very few generalists like us, who are on the platform play. The horizontal document management as infrastructure kind of thing that we do.

Pablo Srugo (00:34:31):
I'm curious if you have, you know, again touching on this enterprise sales motion. You've been in this now for well over 10 years and you came at it from like as an engineer. At least that's my understanding in terms of background. What have you learned about enterprise sales? What would you say to an early stage founder that's asking you, maybe a pretty generic question. But like, hey, I've got this product. I think it's solid, blah, blah, blah. But, because one of the one of the issues I find with enterprise sales is. Startups are every day like you said you need to eat either, because your bootstrap or because you need to show progress for your next round. Whatever, like, either way you don't have three years to wait to get on some budget or whatever. And yet enterprises move slowly. It's great if you get them, you know, it's huge ARR great retention but you got to wait it out. What's your thinking about enterprise sales? What are some kind of your top maybe lessons learned about that sales motion?

Stéphan Donzé (00:35:21):
I think there's two things that you can't have at the same time. You can have a fast decision time, or you can have very high stickiness. You can't have both. Enterprise are very aware of the risk of the vendor looking and so the more critical you are to an enterprise. The more prudent they will be in adopting a product. But then the more value you get, and the more retention you will have. So if you're like us, you're patient and you're not obsessed about crazy high growth. You go in for the most business critical use cases and you know that to get this customer will take you a year of say cycle. But once you're in, you're in for 10 years and you have a huge ARR. Or on the opposite side, you want a lot of customers fast and you want self-provisioning, and shadow IT, and blah, blah, blah. And you will get a lot of customers fast for a small ACV. But then your retention rate would be much lower. Because you won't be able to touch the business critical things with your product. So it's either or, I have no example of a fast growing product that's also touching the heart of the enterprise. It doesn't exist, because the enterprise knows that if the plug or system to their core business. They're in for a long time, so they have to be prudent in acquisition. So we chose the top-down path, right? Long sales cycle, but high resilience, high retention, high value. It's a decision, but you have to be aware of that. You won't be able to have fast customer acquisition and high retention. It doesn't exist at the same time.

Pablo Srugo (00:37:07):
And if you go for that critical use case in the enterprise long sales cycles. What are some of the most effective tactics that you've shared? Over that year, how do you get the champion? How do you touch the right decision makers? What is it that you're doing? And what are some of the things that that you might pull out? In terms of something that a founder could go out and think about and start doing today?

Stéphan Donzé (00:37:27):
I think it's very important to have multiple touch points with the company. Because a decision like this, it's always multiple people. You have the tech guy, you have the IT guy, the finance, the ROI. The people who have the ZETO power, but no decision-making power. You have to be aware of this and every time one of our deals relied on a single person. We were blindsided, because this single person, no people. You have to realize that the people who work for the company, that you're trying to sell to. They also have a very narrow field of vision. And they will tell you, yeah, sure. I'm sure this deal is good and so on, but actually they see only a small part of the picture. So you think that because they work for General Motors. They know everything about General Motors, oh, that's bullshit. If you don't have three different people who tell you the same thing, you cannot believe it. So that's the hardest part about enterprise sales. Is how you get your spy network in place, in the target company to really know what's going on. Because if you rely on a single point of contact, you're sure to fail.

Pablo Srugo (00:38:36):
And then maybe just give me a sense of that picture. Year one was a hundred, year two was about a million. How fast did you get to like $10 million in revenue? 

Stéphan Donzé (00:38:44):
We had about forty percent growth until the $10 million mark. So we did $1 million the first year, two and a half, then the next was five something, then seven something, then $10 million. That was our trajectory to 10.

Pablo Srugo (00:39:00):
So you're doubling year over year.

Stéphan Donzé (00:39:02):
We were doubling every two years. Yes, well, every year and a half. 

Pablo Srugo (00:39:04):
Every two years.

Stéphan Donzé (00:39:05):
Kind of like the more the monster and I think it's a good place. It's not traumatizing when you double every year. Nothing is stable in the company, right? 

Pablo Srugo (00:39:16):
Yes, that's right.

Stéphan Donzé (00:39:17):
You have new people every morning, the organization changes every day. It's very traumatizing for the employees. You can do this over a few years, but if you do this in a long time. It's like everybody's lost. Doubling every two years, okay. It's cheap, fast, but you have more stability. I mean, I think it's a really good place. Now we're below that, but because to get the company started, it was good.

Pablo Srugo (00:39:43):
What's funny, doubling every two years. Which in Ventureland we kind of take for granted. Even though most companies don't actually get there. It's kind of like you're supposed to do that no matter what. If you think about it, that means every year and assuming your employees are also doubling every two years. Every year, sorry, half of your company is new that year. So just from a culture setting standpoint at 30 to 60, it feels okay. At 500 to 1000, it's tough.

Stéphan Donzé (00:40:06):
That's why I say it's a bit traumatizing for the organization. Because everybody's lost. What's the point in learning the new process, because six months from now, it will have changed. So at some point, you need some form of stability.

Pablo Srugo (00:40:22):
Perfect. Well, listen, Stéphan, let's stop it there. I'll ask the three questions that we always end on. The first one is, when did you feel like you had true product market fit?

Stéphan Donzé (00:40:33):
I think it was in that second year. When I saw one customer recommend me to another customer. Hey, you should try this because it really works and it really solves a problem. When you have someone recommending you to someone else, on their own. Without pressure, you know, you might be on something.

Pablo Srugo (00:40:54):
And was there ever a time, where you thought things just maybe wouldn't work out? Or maybe the company would fail? Especially in Bootstrap? Like, you know, obviously the money's got to come in at the right time.

Stéphan Donzé (00:41:04):
Yeah, it was not so much the question of money. But at some point in the beginning, we were building on Cloud Platform. In the first years, we were building on Google's infrastructure, and we didn't know everything about how it behaves. Because there are lots of undocumented issues and we run into one of those issues. Because we were using it in the wrong way without knowing it. Because there was no documentation. So we had to work with Google to solve a problem that was happening at the customer, and the customer was pissed at Google because of us. And I was like, ooh, I'm tiny, Google's big, they can decide to slap us and make us banish, right? So being the mouse partnering with the elephant. You never know if the elephant might not just step on you by accident. So that was our big stress in the first years. Whatever the money is, if something happens and they decide to kill us. Even by unit tokens, then we could die. Then as we grew, this problem became less stressful, but the first years, yes.

Pablo Srugo (00:42:10):
And then last question. What might be again after like a decade or so of running this business. What will be one of your top pieces of advice for specifically an early stage founder. Who's in that kind of zero to one phase?

Stéphan Donzé (00:42:22):
I think you need to be very, very close to your customers. The zero to one phase in my case, but I think it should be the case for every company. All of the closings, all of the sales are done directly by the founder. You are in touch, you are involved in every single deal. Then the one to ten phase, you start sticking back in year two, having team manually. But if you don't manage every single deal in zero to one phase. You're not in touch with your customers. You're going to lose being your ivory tower or lose contact with reality very quickly.

Pablo Srugo (00:42:58):
Perfect. Well Stéphan, thanks so much for jumping on the show, man. It's been great having you on.

Stéphan Donzé (00:43:02):
All right, my pleasure. Thank you very much.

Pablo Srugo (00:43:03):
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