#on startups

Since we launched our product in February, life has been absolutely crazy. We knew getting documents notarized was a pain point for consumers and businesses alike, but we had no idea how significant the interest in Notarize would be. And for us, it has been extremely rewarding as we help people execute the most important transactions of their lives.

So, we’re excited to announce that we’ve secured $8 million in Series A financing led by Polaris Partners with participation by Founder’s Fund, Ludlow Ventures and other individual investors! This funding will allow us to further grow Notarize and serve new business markets, such as mortgage and financial services to name a few.

In just four months, we’ve notarized thousands of documents for our clients and the feedback has been incredible. We were featured by Apple as one of the Best New Apps on the entire App Store. We launched Notarize for Desktop. We’ve received hundreds of applications from notaries in Virginia, virtually all of them coming via referrals from the amazing notaries already on our platform. Hundreds more have applied from other states [even though they cannot operate on our platform … yet!]. We’re working with the National Notary Association, the country’s largest and most prestigious association to support our notaries as they serve a national audience. We’ve partnered withBryce Hall, the preeminent notary training provider in Virginia. We’ve spoken with several other countries interested in enabling remote notarization for their own citizens. And, Adam and I have visited with federal, state, and local leaders across the country to ensure people understand how Notarize operates and to discuss making our platform available to notaries in other states.

Given the importance of the documents executed on our platform and the constituencies that rely upon them, it’s no surprise that our mission touches so many industries and organizations across the country.

We’ve heard from law firms and legal-tech startups, the country’s largest lenders and title companies, commercial construction firms, mineral and gas companies, banks and the financial services industry, the auto industry, state and federal agencies, fertility and adoption clinics, and on and on. Via inbound inquiries, we learn of a new vertical every day. All of these companies tell us that notarization is the top challenge in their operations – it’s often described as the last impediment to a truly digital solution. And we hear industries have been waiting for a solution like ours to emerge.

When a document requires notarization, everything stops.

People can’t afford to waste hours of precious time to track down a notary. Organizations can’t afford to lose customers or wait weeks to get crucially important documents back. And, Notaries Public can’t afford to put themselves in harm’s way as they travel to meet customers in unknown and potentially unsafe situations. What’s more, industry expects increased security and transparency in important transactions. In every other aspect of their business, they benefit from digital audit trails and secure transmission. None of these concepts exist in the standard notary market. It’s simply inexcusable that such an important process is so horribly outdated.

The latest round of funding will help us to scale our operations to solve these problems for everyone.

We’re also thrilled to announce several new members to the team.

Dan Tangherlini has joined as Principal of Government, Operations. Dan was formerly the Administrator of the GSA and CFO of the U.S. Treasury Department. At the GSA, Dan was responsible for all federal real estate and contracting. He saw firsthand how technology can fundamentally streamline how government operates and how industry can better interface with government. He’s been an invaluable advisor to Notarize for many months and we are thrilled to have him on the team.

Michael Chodos has joined as General Counsel. Michael has had a remarkable career as an attorney, entrepreneur, and public servant. He’s been involved in countless startups and he’s also helped the national entrepreneurial community in his capacity as the former Deputy General Counsel and Associate Administrator for Entrepreneurial Development at the U.S. Small Business Administration. The SBA is one of the largest loan guarantors in the country and Michael has a keen understanding of the importance of streamlining and reducing fraud in these transactions. A deep understanding of the law is not only important for our operations, but for our product strategy and development. We’re thrilled to welcome Michael’s leadership to the team.

The team will be expanding significantly in Boston and the DC / Virginia area. If you’re interested in improving how people execute the most important transactions of their lives, we’d love to hear from you. We’ll be publishing several open positions in the coming weeks.

To our new and existing investors, thank you for your support.

Now, back to work… there are a billion more documents to notarize this year!

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Teddy and I as we sent out final closing documents for the Series A. 

Let’s be honest: No one likes getting documents notarized. The moment you’re told that a transaction requires a notarized signature, your heart drops and your mind starts racing, wondering where, when and how you’re going to get this done. And yet, we collectively notarize over 1 billion documents in the U.S. each year.

That’s one billion moments of misery annually.

And the pain doesn’t discriminate.  Many of life’s most important transactions come to a screeching halt the moment notarization is required. Consumers suffer from the difficulty of finding a notary and then traveling to get there, often taking off work to get the job done. Businesses experience excessively long wait times to get documents returned, if they come back at all.  (One company told me they lose 60% of all new customers the moment they request a notarized form). Notary agents are subject to unsafe visits to people’s homes and dangerous or unruly customers. I’ve heard so, so, so many stories of pain and frustration from all points in the notary process.  

Yet, despite these challenges, notarization is incredibly important. It is a critical process to prevent fraud, identify a signer, confirm the person is signing under their own free will, and record the transaction. However, if we were to design a solution today to achieve these fundamental verifications, we would never create the antiquated system currently in place.

We would design something safe, secure, convenient, affordable and ubiquitous.  Which is what we did.

Today I am proud to launch Notarize, a software platform that improves every aspect of the notary industry and process, from the inconvenience of finding and meeting an agent in person, to the lack of identity verification tools, to archaic paper journal record keeping.

Notarize is the first on-demand remote electronic notary service. It allows people in all 50 states to have a document legally notarized from their iPhone 24 hours per day, 7 days per week. The next time you need a document notarized, simply download the app, prove your identity, fill out your document, and connect with one of our licensed Virginia electronic notaries via live video call. Sign before the agent and they’ll notarize your document instantly.

I started Notarize because I had one too many bad notary experiences. In my case, the last straw was a notary agent who forgot to sign my document just before I went on vacation. I didn’t learn of the error until I was gone. I knew “there has to be a better way!!”

Developing that better way required a sharp focus on innovating both in the areas of technology and public policy. In researching the process, I discovered that the Commonwealth of Virginia had passed a law in 2011 to become the first state to allow remote electronic notarization. And all 50 states must accept these remote notarizations as a matter of law. Building upon these policies, and with cooperation from the Commonwealth of Virginia, we’ve spent the past year developing an amazing product to fundamentally transform the notary process for consumers, businesses, and agents. Technology and policy have converged and Notarize is bringing notary into the 21st Century.

Building a startup is incredibly difficult and the process stresses every founding team’s relationships. As the company grows, it’s understandable that difficult and unforeseen events test a team’s commitment to the company and each founding members’ values and ideals. Unfortunately, many teams’ relationships aren’t derailed by black swan events, but are destroyed by foreseeable stresses. This is unfortunate and inexcusable.

I always advise an early stage company (that shows promise) to meet with an attorney. A competent attorney will structure your company appropriately, but they will also force the team to have a series of difficult conversations. These are invaluable as they force the team to discuss what will happen if a founder underperforms [or even dies] and how various decisions will be made in times of great stress or difficulty.

I also advise that founders draft a compact to each other. My co-founders and I didn’t do this as formally as I now advise, but it was incredibly important in hindsight. Anecdotally, we all agreed that we could work for six months without funding or income of any kind. We raised money almost exactly six months after starting the company… proof that deadlines are great forcing functions.

So, without further ado, the Founders’ Compact template.

Do each of us commit to making a full time effort? 

Assuming a full time effort, how long can each person work on the company without funding or a salary of any kind? Related, how long will each of us? [Ideally everyone will agree to the same timeframe]

In the event the company does not raise funding by each person’s deadline, are we willing to allow people to work part time? If so, under what circumstances? And how will that impact ownership

Who will be chiefly responsible for fundraising? What will everyone on the team do?

What happens if someone doesn’t produce? 

Who will be CEO? Will everyone be on the Board of Directors?

What key milestone are we all committed to working toward first? 

Assuming we do raise funding, what are our salary expectations? What are our attitudes toward raises? Do we agree that founder cash compensation will be below market? Do we all agree that equity is our primary compensation and that we, as founders, may be paid less than some employees? 

What will our hiring practice be? Must all founders agree on early hires?

Do we all agree our goal is to scale this company as quickly as possible or do we hope to bootstrap this business?

You’d assume that every serious set of founders is already having these conversations, but many are not. It is amazing how many teams raise money and suddenly have wildly different views on salary; some view a seed round as a personal cash comp bonanza, others don’t.

I am not advocating for all of the positions listed above, but I did mean to be provocative. Someone should lead this process. By making bold statements like those listed above, you will solicit visceral responses from your co-founders. I’d argue that virtually every startup sets out with the founding principles listed above, but some don’t.

Even if you don’t have an attorney or can’t afford one, it’s easy to talk about your values and aspirations as a team. Sure, it’s not as fun as talking product, but it may save your ass in the future and it will help to establish a culture of communication. 

Entrepreneurs don’t realize how transparent their bluffs are. Every single week a team tells me a variation of “you only have a week to present a term sheet because other firms are closing in fast.” Yet, virtually every single one of these teams emails me weeks later, stalled in their process to raise funding.

A big part of being an entrepreneur is to Act as if (caution: vulgar).

Your small team of three needs to project that it’s capable of scaling Everest, but this clip [and the movie] should also serve as a cautionary tale. Too many people think the game is just to start a company “and then you’re a f#***ing millionaire. It’s just that simple.” It’s not. And raising funding is much more complicated than bluffing and acting as if it’s in the bag.

Entrepreneurs tell a common set of lies when fundraising and each is incredibly easy to spot.

Entrepreneur: Another firm is about to put in a term sheet. Investor: Really! Fantastic! I’m interesting in co-investing. Can I speak to them? Entrepreneur: Umm, well. **Hissing sounds as the bluff deflates**

Entrepreneur: We’re over subscribed. Investor: Really!! Bummer. I’d only be interested if I could do most of the round. Entrepreneur: Umm, well, I guess I could make room for you. **Signaling the round isn’t even 50% subscribed**

And don’t forget investors can just wait to see what happens.

These mistakes kill a conversation. As an investor, I want to support someone who will appropriately act as if when dealing with their partners and customers. If they’re so obviously trying to pull the wool over my eyes, I doubt they’d do well as they pursue their actual business. The bluff does real harm as it undermines credibility.

I played a lot of these games myself. The tide turned when I finally got real.

So, how do you gain momentum toward your syndicate? Be transparent and push people toward conditional commitments.

When speaking with an angel investor, tell them: “I’m trying to raise between $500,000 and $700,000. Assuming I get to the minimum, would you be willing to commit to $25,000?” If they say yes, then ask “can I tell other potential investors about your conditional commitment?” If they say yes, then ask “can I use you as a reference?”

The condition (hitting the minimum) reduces the hurdle for the investor. You're not asking them to be your first and only investor, you're asking them if they'll join a group of other investors. 

This allows you to visit the next potential investor and say, “I’m raising between $500,000 and $700,000 and have $25,000 committed, assuming I hit the minimum, of course.” The investor will ignore the comment about the minimum as all deals require the minimum be hit in order to close. If they want to verify the commitment, they can call the first investor.

Market sizing is an incredibly important task for both entrepreneurs and investors. It helps you decide which markets to prioritize and helps you better understand how your application [or someone else’s] is fairing in a particular area.

At Spindle, our application needed to be enabled and launched city by city. This is an increasing trend. Uber, Lyft, Drizly, Washio, Spoonrocket, and countless other services need to launch their transportation, alcohol, laundry, or meal delivery service incrementally. Like Spindle, expanding these services requires significant effort in each city. It’s incredibly important to prioritize which cities you tackle first. And once off the ground, it’s equally important to know how much of the market you’ve captured.

When we were trying to create our prioritized city list at Spindle, we looked at every possible piece of data: population, population density, income, inbound migration [Marc Cenedella of The Ladders told me that inbound migration equalled new people looking for jobs/things to do/etc - good tip!], age, and other demographic information. We had a mountain of things to consider, but still felt we had no real insight.

Although we knew how many people lived in a particular city and how many people were of a certain age, the data was disjoint. We lacked the ability to perform complex queries that would consider multiple factors. Applications are often directed toward very specific sets of early adopters and we needed more granular data.

Enter Facebook Ads Manager.

While experimenting with buying ads, it struck me that Facebook’s Ad Manager is the key to market sizing. Facebook’s penetration is so great that it’s safe to assume they represent the US internet population. They know which devices people use and which interests and behaviors people have. What’s more, it’s all easily queryable. Facebook will tell you how many people match your criteria in each city. Because these people are actually acquirable via Facebook ads, I believe this is a tremendous way to prioritize cities.

Let’s say you’re building a dating application that enables people to meet while trying restaurants they both want to visit. You’re located in San Francisco, but think there might be a better city to launch your application. You’re early version is iOS only.

Visit Facebook’s Ad Manager and select App Installs. Under Audience > Platform select iOS only Under Interests select Family & relationships > Dating Under Behaviors select Purchase behavior > Buyer profiles > Foodies For age, let’s say you require 18 minimum * There are other interests and behaviors you can select, but these are sufficient for this exercise

Now that you’ve identified the type of people you’re targeting (dating foodies), where should you launch?

Under locations, entering a few cities will reveal:

San Francisco, CA + 10 mi = 4,800 people

San Jose, CA + 10 mi = 1,960 people 

San Diego, CA + 10 mi = 4,400 people

Los Angeles, CA + 10 mi = 10,200 people 

Portland, OR + 10 mi = 3,200 people

Seattle, WA + 10 mi = 3,400 people

Now you know which cities have the most people that match your criteria. San Francisco and San Diego are roughly equivalent, but I can guarantee you the cost of acquiring a user in San Francisco is higher than in San Diego.

Once you reduce your list to a few cities, the next step is to run some test ads in each city. Within about 24 hours, you’ll be able to estimate the cost per install for each city. From there, you’ll know which city has the most people and is cheapest to pursue = your launch city.

Finally, these numbers give you a way to benchmark your success. If your dating+dining app launches in San Diego and has 2,000 active users… you’re doing much better than you might have realized without this data.

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I've spent the last year meeting with entrepreneurs at varying stages. I've been struck by how frequently a company's product practices and product organization are lacking - and how they're in complete shambles more often than you'd think.

It's a boring position to take, but I am proud of and thankful for my experience as a PM at Microsoft. I learned a great deal about software development practices as a whole... and how to develop, articulate, and shepherd a product vision. Sure, Microsoft takes it too far and slows down development, but there's a ton of good in knowing how to lead rigorous product exploration and development.

The lean startup movement combined with lower costs of development has been fantastic, but it has come at the cost of best practices. Whether it's poorly written code or poorly considered product road maps, many of today's companies are cutting corners across the board. Taken as a whole, this is fine because the ecosystem lets a thousand flowers blossom and we celebrate the few that survive. My point isn't that these companies should be judged, but I've observed that these companies face serious challenges as they mature.

We are all familiar with the concept of technical debt. I believe startups have debt across every discipline and product debt poses as great a risk as technical debt.

Like a movie with an interesting premise but no real story (Hot Tub Time Machine), many startups shoot out of the gate with early, but limited traction and raise money. As these companies begin to scale, they can quickly find that their product isn't as appealing as broadly as they had imagined. Their story starts to fall apart. There are an infinite number of challenges with an equally large universe of solutions. Although founders brought the initial inspiration to the table, many often lack the skills to understand their customers' competing needs, maintain the big vision, and balance this tension to prioritize development efforts to refine and grow a product. What’s more, product problems typically arise at the same time teams have just scaled. With an elevated burn rate, it’s extremely important to make the right product decisions.

While I've been surprised by how many companies have these problems, I've been equally encouraged by how many founders openly acknowledge them. In almost every case, hiring “a great VP Product" is the solution they've identified. Unfortunately, this also presents enormous risks.

Given today's startup environment, truly great product leaders are either starting their own company or being chased by top tier companies. If you want to hire one of these people, good luck. Get in line. Presuming you have the tenacity to prevail, a few words of advice...

There are two gaps you need to fill: product management and product vision. It's important you understand what your organization lacks and how a candidate fits in.

Many startup founders believe they're the visionary and only want help with product management. As the engineering team grows and is capable of completing more tasks, a startup will say, "we need someone to manage the list!" This comes with its own risks. The problem with lists is that they put things in an order. The problem with inexperienced people taking over the list is that they become a target for other employees to get their pet projects prioritized. Before you know it, you've handed over prioritization to someone else and the politics are out of control. If you do go this route, it's extremely important to maintain a leading role in prioritizing tasks and maintaining your position within the company as the setter of the road map.

Fewer founders admit they need help with Vision than ought to. Putting YOUR talents aside, I would argue that most people are not capable of defining a winning vision in a hyper competitive market AND managing a company's operations and strategic relationships/opportunities. Some founders (ie David Karp at Tumblr) offload operations to focus exclusively on product. Others remove themselves from day to day product to focus on operations and high level strategy, interfacing with the product team by setting strategic milestones. As a founding CEO, you need to be great at one of these disciplines and should relinquish the other. At any startup, someone needs to have the entire product in their head. If it was you, but you've become too busy and can no longer do it, it's time to supplement yourself and hire for operations or vision.

Hiring for vision is one of the hardest things you'll ever do. First and foremost, it's incredibly important that the person isn't just a project manager who wants the VP Product role. Domain expertise is a must, but I believe curiosity and fearlessness are most important. A good VP Product will research the hell out of your business and your competitors. They will know your customers intimately. They will be bold in their recommendations. One of the most dangerous mistakes a startup can make is to hire someone for vision that is too timid or too focused on project management. In these scenarios, the founder will relinquish vision and task prioritization and the new VP Product won't grasp the baton. The company will seem to be making progress, but they’ll be working off a task list that fails to advance the company strategically.

Any healthy product organization should be able to answer three questions:

Who are you building your product for and what is their pain?

What would address your customers’ pain and improve their lives?

What will you actually build?

Unfortunately, many startups can answer the last question, but fall apart on the first two. Their task list is a poorly considered jumble based only on gut instinct. At the earliest stages, it can be great to throw a half-formed concept against the market to see what sticks. But this will only take you so far.

Big companies teach employees to think about their products in terms of a Market Requirements Document, Product Requirements Document, and Technical Specification. By no means am I advocating that a startup should be this rigorous, but they should understand why these documents are written in this order. They’re a tool for understanding your customer’s needs, coming up with ideas to meet them, and then planning a release to get there. Working in the other direction is foolish.

I see it time and time again… an entrepreneur with an amazing vision and a beautifully designed app, but no plan at all to get the app to its successful state.

Too many entrepreneurs imagine how amazing their app will be at scale. For example, there were several geo targeted local Q&A apps that launched a few years back. They all shared the incredible vision that you could ask anyone a question at the exact right time and place. These teams focused like mad on the interaction between asker and answerer. They focused on amazing UX to discover relevant nearby Qs. If there were ever tons of questions, these apps would have been brilliant. Despite all of this hard work, most of them never succeeded in getting people to actually ask and answer questions. We see this time and time again across so many different types of products.

Products are usually built by teams. Teams use their products together. Although it’s great to eat and breathe your own product, it’s dangerous to focus only on what your product will do once people are bought in. Because you, the developing team, never needed to be convinced of your product’s value… it’s especially important that you focus on everything that must happen before someone actually does what your product intends. If you’re focusing on everything someone can do once the product is alive and populated with other people and content, you’re headed for a bumpy road.

I’m finding that many entrepreneurs get frustrated when they’ve fallen into this trap. They pitch the massive vision. I get it. Sticking with the example above, it would be incredible to target questions at people by time and place. But anyone can say that. What are you going to do to earn that opportunity and create that experience?