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Unrelated to open source, but DocuSign is literally one of the examples i list when explaining why the tech sector is over bought. They've tripled their market

Unrelated to open source, but DocuSign is literally one of the examples i list when explaining why the tech sector is over bought. They've tripled their market cap since the beginning of the pandemic, and while there is some merit to work from home, their moat is laughable. There are plenty of alternatives to DocuSign that should make share holders terrified... Adobe Sign, Panda Docs, HelloSign - i wouldn't even bet against notarize.com Someone is going to roll a decentralized ID system on blockchain and tank this whole sector...

ryanSrich 5y ago
This is a good reminder that HN is a horrible place for investment advice. Rarely, very very rarely, does the tech being differentiated ever matter. At Docusign’s level, it’s much more about sales and marketing. They’ve been the market leader for years, and even if they slip to 2nd or 3rd place, they’re still a massive multibillion dollar company. I think engineers and technical people often have a hard time truly grasping how absolutely gigantic certain markets are (I struggled with this for years). Docusign’s market is unimaginably large.
- adam_arthur 5y ago
  Competition and ease of replicability matters a lot in the long run. "Weak Competition" or legacy players are largely irrelevant, which is an important distinction to make. I have no doubt in 10 years there will be numerous ways to sign documents electronically and margins will be thin. Think about cloud storage and other areas with a high amount of competition. All of these things will trend towards margin compression in the long run, almost by definition of being in a competitive/free market. Cost of switching matters a lot too. It's easy to move from DocuSign to some competitor. It's more difficult to move from managed MongoDB to managed Postgres, due to having to define some translation layer. The thing is that we're just early in the digitization cycle so all these first movers becomes pseudo monopolies. That won't last for more than a decade or two. Highly likely that stock performance for a lot of these 20-100x sales stocks will be very poor over the next 10 years. But you may get a good stretch of high returns in the short/medium term. Think about when Ford created the assembly line. Did that give them a forever Monopoly on cheap production of cars? There's this attitude that competition doesn't matter in technology, but we can clearly see in things like laptops, routers, hardware etc, that margins became very low after market got saturated. It's only just the last few years that things like DocuSign were even possible to create. This is especially true for software where once it's built, marginal cost to deliver value is extremely low. Theoretically, a well designed and cloud native/managed version of DocuSign could be run by just a handful of people in the long run. Do people really expect that nobody will accomplish this in the next 10-20 years? Where there's margin, there's opportunity.
- rightisleft 5y ago
  Circling back on this - "DocuSign shares plunge nearly 40% after the company gave weak guidance". Just saying...
  - abledon 5y ago
    yes! I was thinking of this thread reading the news today... what a coincidence
- hodgesrm 5y ago
  This. I would add that tech people and many others also fail to grasp some of the real market barriers to entry. (Well sometimes.) To cite a single example: corporate procurement systems. It's like trench warfare to get enrolled in many companies, but once completed your sales team can then recite the following incantation: "we're an approved vendor." The effect on sales can be magical. ;) Disclaimer: I use Docusign and have done so for years. It's transformative in a way that's similar to password managers.
- neilyio 5y ago
  Curious… what helped you cross this conceptual gap?
  - imajoredinecon 5y ago
    Working at a startup with a solid but not dramatically-better-than-the-others product, but an amazing sales org, did it for me. (Said startup is now worth many, many billions of dollars)
  - ryanSrich 5y ago
    Mostly by building a product and competing in a market where the leaders have horrendous products. HR, Compliance, Corporate Training Software, Healthcare, etc. In terms of pure tech and UX, its almost a disqualifier to have good tech or good design as ironic as that sounds.
  - deleted 5y ago
    [deleted]
nemo44x 5y ago
A better business would be to sell an API that is legally sound for signing documents. Then everyone could implement the functionality in their own tools as a feature.
- humanistbot 5y ago
  Docusign effectively does this with all of its integrations. If you run on Salesforce, it's really well integrated. And if not, they have a great API. You can programmatically generate an https link and send that to your customers as part of your existing workflow. You email them a link or even just open up a new tab / overlay a browser. They can log in with various SSOs, they sign the form, then come back to the next stage in the workflow. Edit: see https://www.docusign.com/products/apis https://www.docusign.com/products/apis
  - nemo44x 5y ago
    And there we go - why DocuSign is a 50b business. Sounds like OP doesn’t understand the complexity.
    - rvnx 5y ago
      Can you replicate DocuSign if you were given 50B USD ? Well, then you know if it's overvaluated or not :o)
      - rchaud 5y ago
        I could replicate Dropbox with rsync with far less than that (h/t to BrandonM).
      - hamburglar 5y ago
        What most people posting here don’t realize is that they couldn’t replicate docusign’s 50 billion dollar business with a copy of the source code and a time machine.
rubyfan 5y ago
I hear this a lot, blockchain is going to replace X accepted industry solution. I always go back to, who’s going to invest in actually building the new blockchain solution and for what reason? Big companies pay other big companies like Docusign to figure it out for them and they pay a premium for not having to deal with it themselves. Blockchain as a technology really doesn’t offer a lot of practical advantage over traditional tech in a three party signature system. When I hear startups sell on the fact that their solution uses blockchain and is somehow inherently better for it, I turn and walk the other direction. Same for AI/ML, BigData, etc.
- wallacoloo 5y ago
  > I always go back to, who’s going to invest in actually building the new blockchain solution and for what reason? blockchain is really hot with VCs these days, so that’s who. why? the rewards for a document signing product are large — as evidenced by new traditional companies entering the space (HelloSign). basing a new competitor in this space off of blockchain offers differentiation. despite being less mature or feature rich, you get prime access to one area of the market that none of your competitors can easily serve. that is, you get your first, profitable, customers way faster and they become a core source of revenue to build out from there.
  - rubyfan 5y ago
    I’m not sure what point you’re trying to make. That there is money to be made on industry solutions is not in dispute. The point in dispute is that decentralized blockchain based solution makes any sense. Other than to attract VCs who don’t know any better to give you capital, blockchain offers no competitive advantage to an upstart or really a competitive threat to the incumbents. Further I see no desirable “differentiation” for a customer to be interested. It doesn’t in fact even solve a customer problem. It’s just noise.
    - wallacoloo 5y ago
      > Further I see no desirable “differentiation” for a customer to be interested. It doesn’t in fact even solve a customer problem. document signing is just another form of attestation (“i agree to the terms outlined in this document, effective on <date of signing>”. blockchains are really good at providing tools for attestation. the specific customer advantage? it’s extremely difficult for your counterparty to claim that he didn’t sign your term sheet if he changes his mind. you just point to some record on the blockchain and say “this has your digital signature on it. it says you agreed to those terms, and it was published at <date/time>”. obviously, DocuSign solves this problem of attestation, by custodianing the documents and putting meaningful reputation on the line in order to remain trustworthy. OTOH, it’s not unheard of to see for-profit companies cash out their reputation (e.g. big brands which sell the brand/logo to cheap manufacturers once the company stops innovating). attestations on a large blockchain (like Bitcoin or Ethereum) augment that reputational cost with a financial cost: even if Docusign decided to cash out their reputation, it would cost billions of dollars to reverse the attestation: a significant barrier. so it depends on how much you — or the parties you deal with (ex: courts) — trust Docusign. it’s not inconceivable to me that at least a handful of customers might say “i don’t completely trust that any document middleman will not lie about my counterparty’s attestation down the road. but i do trust that blockchain B is secure enough to prevent reversals, so this blockchain-based document signing service might be a better product for me.”
bubblethink 5y ago
You severely overestimate the technical ability of people and underestimate the general resistance for all things new. It's not that docusign is rocket science. But once you get various government departments and universities to use your thing, it's hard to move away. Their moat is their customer base.
- amelius 5y ago
  Brand value, in essence.
- jillesvangurp 5y ago
  Market inertia is a perfect breeding ground for startups to disrupt things. We're talking about companies paying large amounts of money for a service that has a marginal cost that is effectively zero; or it could be if somebody did it properly. The main issue is actually not doing it properly, but figuring out a business model that makes that worth doing. It's a key issue with standardizing and decentralizing a lot of things and getting them done. Technically feasibility isn't the issue. But why would you invest in it? It takes effort and where's the profit if you let go of all the control points and let others freely copy the software or implement their own. There's no upside to dedicating your life to that. You see the same issues with federated chat systems; or identity systems; or payment systems. The incumbents have no incentive to fix these things as they make money from the status quo and for outsiders to first fix it and than make no money makes no sense. Occasionally somebody tries of course with varying degrees of success. But it seems hard to convince businesses to switch to relatively unknown OSS stuff. And of course OSS and industry standards don't just magically happen. Somebody has to pay people to work on OSS. Or at least has to care enough to dedicate non trivial amounts of time and effort to get things going. Mostly this isn't even a technology problem. You actually need lawyers and other skills to do this properly. The tech is mostly pretty trivial. Lots of off the shelf OSS stuff you can repurpose for this. I'm sure that's what Docusign did probably. I bet most of their expenses are sales, legal, and marketing rather than tech.

ryanSrich 5y ago

This is a good reminder that HN is a horrible place for investment advice. Rarely, very very rarely, does the tech being differentiated ever matter. At Docusign’s level, it’s much more about sales and marketing. They’ve been the market leader for years, and even if they slip to 2nd or 3rd place, they’re still a massive multibillion dollar company. I think engineers and technical people often have a hard time truly grasping how absolutely gigantic certain markets are (I struggled with this for years). Docusign’s market is unimaginably large.

adam_arthur 5y ago
Competition and ease of replicability matters a lot in the long run. "Weak Competition" or legacy players are largely irrelevant, which is an important distinction to make. I have no doubt in 10 years there will be numerous ways to sign documents electronically and margins will be thin. Think about cloud storage and other areas with a high amount of competition. All of these things will trend towards margin compression in the long run, almost by definition of being in a competitive/free market. Cost of switching matters a lot too. It's easy to move from DocuSign to some competitor. It's more difficult to move from managed MongoDB to managed Postgres, due to having to define some translation layer. The thing is that we're just early in the digitization cycle so all these first movers becomes pseudo monopolies. That won't last for more than a decade or two. Highly likely that stock performance for a lot of these 20-100x sales stocks will be very poor over the next 10 years. But you may get a good stretch of high returns in the short/medium term. Think about when Ford created the assembly line. Did that give them a forever Monopoly on cheap production of cars? There's this attitude that competition doesn't matter in technology, but we can clearly see in things like laptops, routers, hardware etc, that margins became very low after market got saturated. It's only just the last few years that things like DocuSign were even possible to create. This is especially true for software where once it's built, marginal cost to deliver value is extremely low. Theoretically, a well designed and cloud native/managed version of DocuSign could be run by just a handful of people in the long run. Do people really expect that nobody will accomplish this in the next 10-20 years? Where there's margin, there's opportunity.
rightisleft 5y ago
Circling back on this - "DocuSign shares plunge nearly 40% after the company gave weak guidance". Just saying...
- abledon 5y ago
  yes! I was thinking of this thread reading the news today... what a coincidence
hodgesrm 5y ago
This. I would add that tech people and many others also fail to grasp some of the real market barriers to entry. (Well sometimes.) To cite a single example: corporate procurement systems. It's like trench warfare to get enrolled in many companies, but once completed your sales team can then recite the following incantation: "we're an approved vendor." The effect on sales can be magical. ;) Disclaimer: I use Docusign and have done so for years. It's transformative in a way that's similar to password managers.
neilyio 5y ago
Curious… what helped you cross this conceptual gap?
- imajoredinecon 5y ago
  Working at a startup with a solid but not dramatically-better-than-the-others product, but an amazing sales org, did it for me. (Said startup is now worth many, many billions of dollars)
- ryanSrich 5y ago
  Mostly by building a product and competing in a market where the leaders have horrendous products. HR, Compliance, Corporate Training Software, Healthcare, etc. In terms of pure tech and UX, its almost a disqualifier to have good tech or good design as ironic as that sounds.
- deleted 5y ago
  [deleted]

nemo44x 5y ago

A better business would be to sell an API that is legally sound for signing documents. Then everyone could implement the functionality in their own tools as a feature.

humanistbot 5y ago
Docusign effectively does this with all of its integrations. If you run on Salesforce, it's really well integrated. And if not, they have a great API. You can programmatically generate an https link and send that to your customers as part of your existing workflow. You email them a link or even just open up a new tab / overlay a browser. They can log in with various SSOs, they sign the form, then come back to the next stage in the workflow. Edit: see https://www.docusign.com/products/apis https://www.docusign.com/products/apis
- nemo44x 5y ago
  And there we go - why DocuSign is a 50b business. Sounds like OP doesn’t understand the complexity.
  - rvnx 5y ago
    Can you replicate DocuSign if you were given 50B USD ? Well, then you know if it's overvaluated or not :o)
    - rchaud 5y ago
      I could replicate Dropbox with rsync with far less than that (h/t to BrandonM).
    - hamburglar 5y ago
      What most people posting here don’t realize is that they couldn’t replicate docusign’s 50 billion dollar business with a copy of the source code and a time machine.

rubyfan 5y ago

I hear this a lot, blockchain is going to replace X accepted industry solution. I always go back to, who’s going to invest in actually building the new blockchain solution and for what reason? Big companies pay other big companies like Docusign to figure it out for them and they pay a premium for not having to deal with it themselves. Blockchain as a technology really doesn’t offer a lot of practical advantage over traditional tech in a three party signature system. When I hear startups sell on the fact that their solution uses blockchain and is somehow inherently better for it, I turn and walk the other direction. Same for AI/ML, BigData, etc.

wallacoloo 5y ago
> I always go back to, who’s going to invest in actually building the new blockchain solution and for what reason? blockchain is really hot with VCs these days, so that’s who. why? the rewards for a document signing product are large — as evidenced by new traditional companies entering the space (HelloSign). basing a new competitor in this space off of blockchain offers differentiation. despite being less mature or feature rich, you get prime access to one area of the market that none of your competitors can easily serve. that is, you get your first, profitable, customers way faster and they become a core source of revenue to build out from there.
- rubyfan 5y ago
  I’m not sure what point you’re trying to make. That there is money to be made on industry solutions is not in dispute. The point in dispute is that decentralized blockchain based solution makes any sense. Other than to attract VCs who don’t know any better to give you capital, blockchain offers no competitive advantage to an upstart or really a competitive threat to the incumbents. Further I see no desirable “differentiation” for a customer to be interested. It doesn’t in fact even solve a customer problem. It’s just noise.
  - wallacoloo 5y ago
    > Further I see no desirable “differentiation” for a customer to be interested. It doesn’t in fact even solve a customer problem. document signing is just another form of attestation (“i agree to the terms outlined in this document, effective on <date of signing>”. blockchains are really good at providing tools for attestation. the specific customer advantage? it’s extremely difficult for your counterparty to claim that he didn’t sign your term sheet if he changes his mind. you just point to some record on the blockchain and say “this has your digital signature on it. it says you agreed to those terms, and it was published at <date/time>”. obviously, DocuSign solves this problem of attestation, by custodianing the documents and putting meaningful reputation on the line in order to remain trustworthy. OTOH, it’s not unheard of to see for-profit companies cash out their reputation (e.g. big brands which sell the brand/logo to cheap manufacturers once the company stops innovating). attestations on a large blockchain (like Bitcoin or Ethereum) augment that reputational cost with a financial cost: even if Docusign decided to cash out their reputation, it would cost billions of dollars to reverse the attestation: a significant barrier. so it depends on how much you — or the parties you deal with (ex: courts) — trust Docusign. it’s not inconceivable to me that at least a handful of customers might say “i don’t completely trust that any document middleman will not lie about my counterparty’s attestation down the road. but i do trust that blockchain B is secure enough to prevent reversals, so this blockchain-based document signing service might be a better product for me.”

bubblethink 5y ago

You severely overestimate the technical ability of people and underestimate the general resistance for all things new. It's not that docusign is rocket science. But once you get various government departments and universities to use your thing, it's hard to move away. Their moat is their customer base.

amelius 5y ago
Brand value, in essence.
jillesvangurp 5y ago
Market inertia is a perfect breeding ground for startups to disrupt things. We're talking about companies paying large amounts of money for a service that has a marginal cost that is effectively zero; or it could be if somebody did it properly. The main issue is actually not doing it properly, but figuring out a business model that makes that worth doing. It's a key issue with standardizing and decentralizing a lot of things and getting them done. Technically feasibility isn't the issue. But why would you invest in it? It takes effort and where's the profit if you let go of all the control points and let others freely copy the software or implement their own. There's no upside to dedicating your life to that. You see the same issues with federated chat systems; or identity systems; or payment systems. The incumbents have no incentive to fix these things as they make money from the status quo and for outsiders to first fix it and than make no money makes no sense. Occasionally somebody tries of course with varying degrees of success. But it seems hard to convince businesses to switch to relatively unknown OSS stuff. And of course OSS and industry standards don't just magically happen. Somebody has to pay people to work on OSS. Or at least has to care enough to dedicate non trivial amounts of time and effort to get things going. Mostly this isn't even a technology problem. You actually need lawyers and other skills to do this properly. The tech is mostly pretty trivial. Lots of off the shelf OSS stuff you can repurpose for this. I'm sure that's what Docusign did probably. I bet most of their expenses are sales, legal, and marketing rather than tech.