Build A Successful SaaS Startup In 2025 | Expert Advice From Co-Founder, Common Paper (EP# 49)

Jake, thank you so much for being on our podcast. We were introduced, um, maybe over the last year by one of our investors from NHS, and I had known of you well before that because we're really happy CommonPaper users, and I just think what you're building is, is so useful, so needed. Let me, let me tell a little bit of your story, and then I want to hear it from you. You're a multi-time founder. You've, you've had an amazing story in tech. You studied finance and entrepreneurship in college. I think you cut your teeth for Insight. I've worked for an Insight company, so I have a little bit of sense of what that was like. And then you founded your first company, which is RJ Metrics. I think you were there for nearly 9 years as the COO before it was acquired by Magento. Then you founded Stitch, which was also acquired. And then you founded Common Paper in 2021. So I think this is your third company. Maybe there are more in there that we don't know about, but what's the journey in your own words? How did we get to now?

Yeah. Well, thanks for having me. First of all, it's good to catch up and good opportunity to tell the story. Yeah, you did leave out my high school landscaping business, which, you know, depending on how you measure, maybe the most successful, impactful one of all. But yeah, I feel like I've been super fortunate in my career, like where I've gotten the opportunity to work on really, you know, the things that I was most interested in or motivated in at any given time. So yeah, like when I was in college, the thing that sounded most interesting to me was like tech startups. I would just like, while I was taking breaks from doing my homework, I would go like read Slashdot, which Hacker News didn't exist back then, but it was a lot of the similar stuff. And I just found technology and like the intersection of technology and business really interesting. So it seemed to me like a VC firm would be the best way to like be in that every day.

Can you say why? Like, how did technology and venture-backed technology become interesting to an 18, 19, 20-year-old?

Yeah, it's tough to say exactly why it was interesting to me. I guess maybe one piece of it, like, in terms of the business side of it, my older brother always read Forbes magazine, and when he was done with that, I would take them and then read them too. And that sort of just got me interested in that side of things. And then like, I just think computers are cool. Like I took like, you know, a programming class in high school. It was magic that I could make this thing do stuff that I wanted. I was never a particularly good engineer. I never had like a job programming professionally, but like I remember like in making web pages in high school, like trying to like set up affiliate scams to make money and stuff like that. And I did like, like sign up all my friends for these pyramid marketing things, just like The intersection of like doing stuff on the internet, making a page that anybody could see, and then like converting that into dollars somehow. And I probably like worked really hard and made $600 throughout high school doing that. So like my effective hourly rate was like nothing, but that was just like magic to me. So I think that was just always really interesting. And then in terms of like that developing into something that translated into an actual job. You know, I spent a lot of time in college thinking about like, what, what do I want to do? And I actually like started like potentially on like a pre-med track because I was always really interested in science, but I was much more interested in the applications of it rather than basic research. It just suited my personality more. And then I like I think whatever, I really just saw what I was drawn to. And it was that closing the window on my homework and opening a new tab and opening Slashdot. It was literally that moment where I was like, oh, this would be great. This thing that I'm doing to take a break, if that could be the main thing for me, that seems like the ideal if I could swing it. And I do think there were, I attended a lot of guest lecturers and speakers when I was in college. And I think I must have like heard some VC come and speak and that's how I like knew it was a thing. And then I, once I decided, then it was like a year or two trying to figure out like, okay, how do I do that? Because there were my, the conventional wisdom that I was aware of at the time was that like, yeah, you have to like be a successful founder first. Or have some like successful career in something else and then later become a VC. So I was originally thinking, okay, how can I as quickly as possible have the minimum effective dose of success so that I can then do the thing that I want? And there was exactly one VC firm that was doing on-campus recruiting at Penn at that time, which was Insight. And like the way that they did this was we all had folders., and the employers would like drop flyers in our folders. And so I saw that flyer and I was like, cool, I'm going to do like absolutely everything in my power to become, uh, a summer or early, like an intern at this company and then get a full-time job there. Uh, and I had like effectively organized all of my classes and extracurricular activities to be well suited for that just because this was the stuff I was interested in. So I was like on the committee that gives grants to students who are working on inventions. And I was like, I had taken the venture capital finance class and I had taken the like entrepreneurial innovation class and all that stuff. And like how much of that stuff was directly translatable to the job? Like it varied, but I think on paper I looked like somebody who was like very committed to this path. Fortunately, I got it and it was a really good experience. I think after spending 2 years there, it was great and I'm super valuable for it. And I like, one of my biggest lessons was that's not what I actually want to do. And the core of it is just like, I spent 2 years talking to founders of all businesses in all shapes and sizes. And I was just a lot more excited about their job than my job. And like, I learned so much. And like, several of like my best friends are people that I met at that firm. And including like my co-founder for RJ Metrics was someone I met at that job. And like many of our early customers at RJ Metrics were Insight and Insight Portfolio companies. So it's like gigantically useful for me. But like even when I was talking to the founder of a company that like was not setting the world on fire, I was just like so into it. I just like loved hearing about it. I loved like the mundane parts. I loved the exciting parts. I loved like learning what was working and what wasn't. And so I had like decided like, okay, I want to be on the other side of this phone call because we didn't have Zoom at that point either. Um, and I remember having a conversation with my boss at the time, this guy Larry Handon, uh, where we went out to lunch when I was like in my second year, and he was just like asking me what I wanted to do in my career. And, and I shared this with him, and he was like really helpful thinking about like, okay, well, we have these portfolio companies, they need people in this thing, like, do you want to try to slot into one of these positions? And that was interesting, but I think I just wanted something much earlier. I wanted to start with something that was either literally did not exist yet or was in the very early getting off the ground stages. And so I was thinking about ideas. I was actually taking some online classes to brush up on the newer programming languages because I had learned C++ in high school. And then Bob, my co-founder at RJ, who was also one of the analysts at Insight, he shared with the rest of us that his idea for RJ Metrics, and that was like, at that moment I was like, oh yeah, this is awesome. And I love him and I respect him. So this is an easy decision. I just need to convince him that I should be his co-founder for this. And that's how I made that transition.

When you look back at that realization that you wanted to go be a founder, or at least really early stage, do you look at it and say, I was really attracted to the risk profile? I was really attracted to company building, or I was really attracted to like going in depth into a problem for a really material amount of time?

That's an incredibly smart question. The answer is yes to all three. Like, those are like really a good synopsis to like kind of how a lot of my professional interests— interests— like, I remember taking on the first day of the Risk Profile, uh, like an options pricing class, or it was, it was actually just like one day of options pricing in another class in college., and it talked about like, if you have effectively like the option to sell something to, to get out of it at a certain price, you would always rather it be a really high variance, um, because your downside is limited. And I felt like I took the GMAT like right after I graduated college. I knew I could always just go back and get like an MBA or some other graduate degree. And I felt like that was like a reset button available on my career anytime I wanted to press it. So my downside was limited. Like, my brother has a couch. I knew that no matter how bad things happened, like, I would have a place to sleep. And I am like super fortunate in that respect that like I didn't have people depending on me. I did not have a crushing debt load. Like, all that stuff is— I'm super grateful for. And I know not everybody has those advantages, but I just felt like for me, I do have them. So based on that, what do I want to do? And I want to do something, therefore, something that has as high of an upside and variance as possible. Because my downside was capped. And my favorite part of Insight was like learning about these businesses and business building, but also the diligence process of like when we do go really deep on something and you do the research on the company's numbers, you do the market research, the competitive analysis. Like we also just like try to understand the founders, like them as people. And so I love that. And so this just seemed like all the stuff I like going way further down that direction.

Awesome. So RJ Metrics, what happens?

Yeah. So RJ Metrics, that was, and it was Bob's idea to basically productize a lot of the analytics that we were doing manually for due diligence on companies. And it started off, we were selling mostly to VC funds and their portfolio companies. Eventually we morphed into focusing much more on like e-commerce businesses specifically. And it was like a full stack data analytics and BI company. We would collect the data, analyze it, chop it up, present dashboards and stuff like that. It, yeah, it was like an amazing experience. Like our biggest partner, we had like a little spreadsheet of thinking like who might buy us someday. And Magento was literally number one on it. It took, I think maybe 6 years from the first time we met them to think when they said like, hey, we think we should buy you. And we were like, oh cool. I hadn't thought about that. Maybe. But yeah, like it was ultimately a better business to be inside their company. I think there's a lot of stuff. That was great about what we did and lessons learned. I think there were also things where like it could, we made some mistakes where it could have been a much bigger outcome than, than it was. But like, it's hard to feel anything but grateful for that experience. And so when we were talking to Magento about the acquisition, we had already created this second product that was like basically just the data integration pieces of RJ Metrics. And it was based on a trend we saw among our most sophisticated customers that they were like, wanted that piece in a more modular way. And we actually had gotten conviction that this was the bigger long-term opportunity. But Magento was talking about acquiring the whole business. We sort of knew that, um, like we were much smaller than them. This second product was a tiny part of our revenue. And like there was a very clear strategic rationale for the original product. And so we just were pretty confident this was going to die inside Magento. And that seemed like such a waste to us. So we decided to try to structure the deal. Unfortunately, we were successful where Magento would acquire the original business. We would spin out this second product that was like 2% of our revenue into this new company called Stitch. Three-quarters of our team went to Magento, maybe 20-25% of our team came with Stitch. And that's Bob went to Magento. I went with Stitch. And then, yeah, ran that business for a couple of years. Scaled it actually much faster than we were scaling RJ. We were right that it was the bigger opportunity. And then, yeah, as you said, it was acquired by Talend a couple of years after that.

Very cool. Okay. So acquisition one, acquisition two. Now on to— into the beginnings of Common Paper, right?

Right. Yeah. So I stayed at Talend for almost two years. First, just as like leading the Stitch business unit. And then when we functionalized, we created like a new Talend-wide growth team that I led up for the, basically the second year. And that was also like a valuable experience that taught me I didn't want to be there where like, I like the people, they're helpful. I'm grateful they acquired the company and lots of stuff. But just like, I think I went from, at that point we were whatever, 30, 40 people to a 1,500-person company. And that was just not for me and not, not, you know, that they're bad or something like that. Just, yeah, not my, not my cup of tea. And then I took about 4 and a half months off. My wife and I took a road trip around the US with our dog and it was a lot of fun. And I had been thinking about an idea around contracts for like a decade at that point. And it was really like just a lot of things about contracts with our customers at RJ and Stitch and Talend that really just pissed me off and seemed like insane. And it was the idea that was like scratching in my mind that wouldn't let go. And like I have, you know, back then in my Evernote, I had a couple of different notes about startup ideas. And just like the note about the contracts thing was like twice as long as everything else put together. So it was very obvious that this was the thing that I kept coming back to and kept iterating on and kept thinking about doing research. So yeah, I was like, it would have been painful for me to not work on it because it was like the thing that I couldn't stop thinking about.

That's awesome. Before we go in depth on Common Paper, you mentioned that you made some mistakes with RJ Metrics. What were those mistakes and how do you look at them now as the degree to which they're instructive for other founders?

Yeah, I think probably the biggest thing, I mean, there's a million mistakes we made, but I think the biggest thing is that we did not appreciate how big of a deal Amazon Redshift in particular and columnar databases in general, like what the implications of that would be. Because what made RJ Metrics great and what gave us really good product market fit originally was the like tightly integrated nature of what we were doing. And so like there was no one else that could go to our target customer that could give them like this amazing, really in-depth, high-value dashboard so quickly. And we could do that because all the pieces were connected. We knew what their data model looked like. Like I could tell them what we were going to do for the implementation before we got access to their system because I knew what their system was going to be and I knew how our system worked. And so that really like helped us take people from nothing to really high value insights really quickly. That like integrated architecture went from being a strength to a weakness once the like and like the database was just one component of what we had. But like once the rate of improvement of these databases started going really quickly, the important thing started to be around like, can you swap out to this better database and can you re-architect so that more stuff happens in this database? And then so this thing that was our really big strength became a really big weakness. And the company that, or at least a company that got that right was Looker, where they've like shared their seed funding deck. And there's one slide in there where like there's one bullet that Lloyd Tabb put, which I think like if I had to boil down what he got right and what we got wrong, there's a bullet in there that says columnar databases are the shit. And Lloyd knew that and we didn't. And like they made a bunch of decisions and architectural things and they did a lot of stuff really well. But that was like, because they were just a thing that sat on top of any database and we were a full stack, including a database we managed to you, they were able to ride that wave and we weren't. And I think if I had to boil it down, like we didn't see that early enough. Eventually we saw it. And that's one of the things that led us to really bet on Stitch and why that was successful. But yeah, that was, I think probably the key.

Do you synthesize that now as like, we didn't see early enough how the competitive set would change, or was it, as a better description, we didn't see early enough how the ecosystem would change and how the underlying technology would change?

I think it's more the latter, and that influenced the former. So like, the whole industry changed as a result of the fact that columnar databases are the shit. Like, it was like Redshift, like, totally changed the game. And then Snowflake and BigQuery were even better. And so it was like so much evolution, and then like the right way to like where your workload should go changed. And so all these decisions we made, and then like, you know, maybe Looker would have been successful if Redshift had never come out, but I think it wouldn't have been nearly as successful and they would have needed to solve that problem another way where like that, that made a bunch of bets on their end right. That made a bunch of bets on our end wrong. And so that made them a stronger company. And there's other folks there, there's Mode and Sisense and other folks that have benefited from that. But I think they're like, the purest example.

It's one of the— I think it's a great story and it's very instructive towards the idea that really breakaway companies often do come up with like an insight.

Yeah.

I think— take us to Common Paper. What's the insight behind Common Paper?

Yeah. I think if I have to boil it down in a similar way, the core insight is that contracts are interfaces between companies. And they have historically been modeled like digital pictures of pieces of paper. And they are better if they are modeled as APIs because that is the right way when you have an interface between companies, between systems and data needs to go in and out of them and they need to influence things. They need to be influenced by things. Like we have a way that that works in non-contract areas. And I think bringing that model to it is sort of the key, excuse me, unlock to it. And the way that we make that a reality is through the standard agreements. So I guess the other insight is like, maybe the bullet on our slide should be standard agreements are the shit, the way Lloyd's was, columnar databases are the shit. So like, if anybody who has raised money on a SAFE and also raised money not on a SAFE, will know that, uh, and the SAFE, for anybody who doesn't know, stands for Simple Agreement for Future Equity. Um, it's like a standard contract for early stage fundraising. And like, you could raise $5 million on a SAFE, and it is way easier than selling like $25,000 worth of software. Uh, because the SAFE, all of your investors have done 10 deals on the SAFE already. Your lawyer has done 10 deals on the SAFE. Their lawyer has done 10 deals on the SAFE. Um, it's actually way more than that. And everyone, it's, it's sort of like, there's a question if you're not using it. And you can make tweaks and you can change the exact terms, maybe add a side letter, but there's lots of examples of how that is awesome. And I'm in a house in Philadelphia right now. I bought it using the Pennsylvania Agreement for Residential Sale, and my neighbor bought their house using the same contract, and my neighbor on that side bought their house using the same contract, and it just is tremendously easier. But where my parents live in North Jersey, there is no standard contract. And so both sides need a lawyer and they argue about it, and it's time-consuming and it's a big frictional cost to doing business. So we had this insight that first of all, standards are amazing and it would be great if they were expanded to this new area where there isn't standardization so far. And that potentially unlocks the ability to treat contracts like APIs because what the standard means is that you can have a consistent data model across all the contracts. And so even though the dials are turned and the blanks are filled in differently, it's the same thing for any, you know, B2B software sale and same with an NDA, same with an SLA and a DPA and a partnership agreement. And that's sort of the key thing that we're trying to make happen. And that I think is like, again, if you boil down our insight, which hopefully is right.

It's awesome. And so let me just play it back. It's like you observed that there really wasn't a standard for at least B2B SaaS contracts.

Yes.

You also observed that the contract is really this interface between businesses and that means that there's probably a really common data model that the contract could hold to create all this interoperability between these businesses. And maybe just to try to see if I can articulate an example, it's like, if I am Vendor A selling to Vendor B, I'm probably using like a CRM or like a quoting tool, and I issue a quote using my products and price books, but then I'm going and building out some bespoke contract. Those two pieces are not speaking to each other at all. Beyond the fact we're not even speaking to the end customer yet, but those pieces aren't speaking at all. It seems like that might be, at least if I'm understanding correctly, where you're headed, where like all of that's interoperable and it's facilitated by common paper.

That's exactly right. And like there's— people will do custom integrations where they build out the specifics of their quoting tool to the specifics of their contract. Similarly, like SLA monitoring and then billing and insurance tracking and compliance. And there's like a million things upstream and downstream of the contracts that are influenced by it. And most of the time they're totally disconnected. Sometimes people invest a bunch of work to like tie those things together using something that's really specific to their company. But if there's a consistent data model and API into the contracts, then you can build that integration once and it benefits everybody who uses that standard agreement. The other thing was I realized I maybe was like sharing this backwards because this is sort of like the, the how we solve it and why we are different. This wasn't the original insight. The original insight was how much this process sucks. And it sucked like before we signed the contract and after we signed the contract because at RJ and Stitch in town, like I, I felt like the, the beginning of a relationship between a vendor and a customer should be a really happy time. Like the customer has self-identified that they have a problem and they like believe in the vendor as the solution to that problem. And they've decided they want to work together and the vendor is super happy to have a customer. That's their, their whole business. And then the next step is to get in a fight over the contract. And it's sort of like, you know, negotiating your divorce during your honeymoon. It's just like not, not the way that things would ideally work.. And so there's this like fighting over whose template to use. There's the actual redlining process back and forth. It delays the actual sale. And then finally, when we get the deal closed, like we were a data company at like each of those 3 steps, we could answer tons of questions about our business in like seconds. But like some questions it was almost impossible or at least extremely difficult to answer. Like at Stitch one time we wanted to redo our homepage and we wanted to think, okay, whose, whose logo do we have approval to use? Took us a week and a half to answer that question because we had like hundreds of contracts all spread in Dropbox folders. Somebody had to like open those up, look through those PDFs. And like that just seemed insane to me that like, again, it's getting the data in and getting the data out is mind-numbing. And those are just like two examples, getting data in and out. There's like a better way to do this thing, at least there are.

I'm interested in vision. And when you were telling this, when you were building the story for investors, when you were raising initial money for the company, Yeah. Were you telling the story of, look, there's an opportunity to standardize this in B2B SaaS, and from there you can standardize this in a host of different industries, and it's sort of a progressive TAM expansion by industry, or were you telling sort of a different expansion story?

So yes, that's part of it, that there is sort of a future act of this business that is in other industries. And like in my original customer development calls, like there's a lot of, there's a lot of other industries where I talk to people and the problems rhyme. We believe that there's, there's like an IPO scale opportunity in just B2B software.

In B2B software.

Right. Cause it's, it's the contracts, it's managing the contracts. And then it's all the things that sort of branch off those contracts. But yes, and like we've, we've already widened the aperture a little bit where like when we started off, it was just B2B SaaS. We had lots of people asking us, but for obviously on both sides for like professional services agreements. So we've expanded that so that, you know, like agencies, consultancies and things like that. And then the other big request we were getting was for like, okay, you have SaaS, but what about on-prem software? So like we support that now as well. And so we continually get pulled into like adjacencies. And so it won't be sort of like a light switch on off now we do other things, but like as we add standard agreements, we'll have more coverage.

So there's a multi-product journey here that can lead to a very big business in one industry alone.

Correct. Correct.

Yeah. What has been the biggest surprise since founding the company?

Yeah, so I should mention my co-founder for Common Paper is Ben. He's someone that I met originally. He was at RJ Metrics. And we have obviously learned a lot and a lot of things worked out, some like we hoped, some not like we hoped. I think probably like the biggest surprise so far at Common Paper is what a big unlock it was when we like targeted our customer acquisition and our like product energy on early stage startups. Because when we, we knew that this would be sort of like a long burn, like this is not something where like you make a product, someone decides to use it and they go, because like standardization is something with like a cold start problem.. And so it's like, how do you get critical mass? How do you develop that flywheel? And like, we believed it would be a more durable thing once we got that going, but it takes longer to get started. That decision to like focus on startups in terms of user acquisition was just like, I was really surprised how big of an unlock that was. And that had tons of downstream decisions about how we built our product, which standard agreements we prioritized. How we talked on our marketing site and things like that, all that. So yeah, like if I had known that, we would have been doing that on day one. But that in reality was a year or so in that we made that refinement.

Had you initially thought like growth stage or lower enterprise?

Yeah. And we were, we sort of thought it was like, and I still believe this is just as applicable up and down the stack. And like I was talking to large public companies, I was talking to mid-market companies and talking to early stage. So I thought the right segment was B2B SaaS, but like once we step back and we said, okay, where are we actually having success? Who does this message resonate with the most today? It's the early stage folks. So what would it look like if we quadrupled down on them? And the vision is still absolutely, we will get everybody up and down the stack, but this is where like how we refined our initial wedge. And we have acquired customers now that are 20x larger than when we acquired them as a customer. But yeah, that was sort of tightening our aperture.

I'm interested in your psychology for a second. It sounds like you knew you were going to go— you described it as a long burn, but it's effectively we're steeling ourselves to try to operationalize and productize a standard. And I wonder if you agree with this. I almost feel like there's something sort of similar to the idea of category creation in that direction. And category creation is fraught with risks. Creating standards is fraught with risk. Have you at any point in the business felt like, I'm worried that this is, this is not going to have a fast enough take rate for us to go build the standard? And how, how did you deal with that if you felt that?

Yes, that's, that's smart. I actually hadn't thought about the parallel with category creation, but that's actually a really good point. I wouldn't say we are doing category creation, but I think it's a similar sort of like risk profile and like big payoff if it works, but increased or lower probability of success. And there absolutely have been points where like, I, I, I'd never questioned whether this should work or whether it could work eventually, but I definitely like, there were periods where, I mean, there were periods where we just like, we could not get anybody to use our stuff for free. And like we were just like, we would look at our charts and be like, ah, yes, someone closed the deal last week. And then the next week it was like, well, fuck, no one is logging in. And, you know, it's just like, you know, we, it's tough. It's tough. And like, I think there's also, you asked about my psychology, like I recently was stressed out and my wife asked me what was going on. And I was like, oh, you know, they're just like, so much customer support the past day or two. I feel like we're not getting back to them fast enough. We're not fixing their bug or adding their feature or whatever. And I'm like worried we're letting people down. And she's like, weren't like a year or two ago, weren't you really stressed out because nobody was using the product?

I was like, yeah.

She's like, isn't this a better thing than that? I was like, yeah, that is right. So like, I think to me personally, to some extent, I'm just get stressed out about stuff. But yeah, there definitely were some periods where I was just like, I think this needs to be a venture fund business because we need to make this big investment up front and it does have the opportunity to have this huge, huge outcome. But part and parcel of being on that venture trajectory is like, can you show the acceleration and velocity? And for a while we weren't.

When did you start to believe?

I think I think I always like deep down believed, but I, I started to, it started to become a rational belief rather than an irrational belief. I would say maybe a year ago, year, year and a half ago, I think something around then, like, and it was, I don't think it was like one particular thing, but just like looking at all of our charts I think once we started to have people making money on our system and then making increasing amounts of money, that was just like, okay, that's real. And I'm not counting on— because in the early days when we were doing customer support, customer development calls, almost everybody was like, oh yes, this should exist. I hope you succeed. I don't think you're going to succeed, but I want this to happen. And people were supportive but skeptical. And the difference between people being nice and supportive versus just saying these people are trying to make money and they are using our stuff to make more money, that gives me confidence that this is going to work out. And these are actual data points where I'm not counting on their benevolence or the fact that they like me personally or or they're Ben's friend from his prior job. These are just people trying to grow revenue for their company. And so we didn't even have a sales contract at first. We started with NDAs. So once we added the sales contract, once that started to get used, once it started to get used for bigger deals, just as that chart looked better, that's sort of what gave me more and more confidence that this is going to work.

Strangers on the internet are using us.

Exactly.

Oh yeah.

That's, that's a big thing too. When it like expanded past our our personal networks into just sign up, use it. They get paying customers and they become a paying customer for us. That's big.

Really appreciate the story and the insight. You know, the subject matter that's obviously near and dear to this podcast, Sartis, pricing and packaging. And I'd love to go deep with you on that subject. And, you know, maybe, maybe kind of as a jumping off point, like obviously you kind of view this as a multi-product journey, which will of course mean you've got to be really thoughtful around pricing and packaging. Can you start by just telling us about the journey with pricing and packaging Common Paper so far? What's that journey looked like?

Yeah, so in the early days, we were, we couldn't get anybody to use it for free. And so we were like not focused on monetization because we were like, well, we have not made something that people want yet. So like whether we charge $100 or $1 million didn't seem to move the needle. We got a lot of questions about pricing, so we threw up a pricing page. That was not super well considered and we did not build a billing system. We did not have the capacity to collect money from people. And every once in a great while, someone would trip from the free tier to like the limits of the free tier. And they would like ask us like, wait, am I going to get like cut off or something like that? And we were like, no, no, you're one of our most important users. We'll give you a free comp this month because like we had no confidence that at that moment we had something where it would be repeatable. It wasn't worth it for us to build out, to do the work to make it, that's like put up a paywall effectively to get like $50 or whatever we would have gotten for that. We have gone through, I think it's now probably like 4 different changes to our pricing. We started off with a model that was based on the number of customers our customers had. Um, and what, uh, and, and I could take credit for this because this was my idea. I had a lot of good reasons why I thought this would work, and it was tremendously wrong. It was like a catastrophically bad idea.

So for all your good reasons, did any of those good reasons include at that time you'd gone out and asked customers if they agreed with the thesis?

I did talk to some people about it. And I think I mapped, I think I probably over-indexed to like a philosophical idea of like where their value was and under-indexed on just like how easy would it be for them to understand the specifics. Because just like, yes, like people did feel and they still feel like The value is that you help me close deals and get customers and make money. And that's what, that's what counts. But there's so many nuances to like what counts as a customer. And there are like, that is not how most other products charge. And there was just like, we were in so many conversations with people where they were like, hey, why, why does it show 31 customers? I have 27 customers. Or like, are you counting person XYZ? Like, yeah, I have a contract with them, but they never paid. So I don't consider them a real customer. And like, these like things. And so it was just like so many conversations about it. And like, if we spent the time with someone, we could explain to them the nuances of how it works. And like, they would think it was like reasonably fair. But also some people's customers are paying them $200,000 and some people's customers are paying them $200 a month. And so just like using that as an index, if you have that range, is tough. So we switched from that model around counting customers to something that's just counting seats, like how many people are logging into the product. And all those questions have gone away. Like, we probably reduced the number of questions about our pricing by 80, 90%. Not everybody likes it because, you know, some people are paying more or less under the old position. But I think on balance, it's just like they're comfortable with it. We decided we wanted to have a free tier because, again, we were focused on, you know, making it really easy for startups to work with us. We've had a couple experiments with like what the actual per seat numbers are, what we include in free versus we have a startup plan and we have a growth plan. And then we have like a talk to us enterprise plan. We've increased prices over time for new customers. We've like grandfathered in the old customers. And we also had like an annoying process where we were trying to, in a high class way, get 100% of people off the old pricing model because like we had a bunch of code for figuring that out that like we wanted to get rid of. And so like we didn't fire anybody as a customer, but like we strongly tried to incentivize them. And then eventually we said, okay, we're going to switch you over. Here's exactly what the implication is. And so, you know, people who were paying less are thrilled and the handful of people that are paying more, not 100% of them stuck around, but it was worth it to us just to get rid of a ton of complexity.

Migrations are fun, aren't they?

Oh my gosh. Yeah. As you know, in particular, it can be a rat's nest. And it's also like each of those changes in our pricing model were hugely, hugely impactful. But it was, I mean, some were easy. When you were charging X and you want to charge 2X, that's not that hard. But rethinking the packaging, or just like the dimension you price on is obviously going to be a big lift.

Maybe just two things I want to touch on and I'll see if I can summarize. I mean, it seems like a big part of the story for Common Paper with pricing and packaging has been an initial price metric that in theory made a lot of sense in terms of it was aligned with value, but in practice it was high cognitive load for the customer to understand therefore presented real friction in your ability to defend the price, drive easy adoption, things like that. And so you shifted to a price metric that is more familiar to the market, almost like the market's price metric is anchoring to your price metric.

Yeah.

Is that a good replay of one of the key parts of the journey?

That is. And it turns out, in terms of a proxy for value, it's actually— the original one was actually much worse than I realized. And the simple thing that everybody else does, I eventually realized is a much better proxy for value because if your customer, if our customer is closing $200,000 deals, they have one salesperson working on that for a really long time. If they're closing $500 deals, that salesperson is churning them out. So like it actually is a leveler of like how much are they investing in their go-to-market team? Because that's typically who has seats on our our system so that like all we were, we were too clever and ended up in something that was both had high cognitive load and was actually not a great proxy for value.

And it seems like another part of this is you eventually raised prices. And I'm curious if you can talk about the extent to which you raise prices based on gut versus you raise prices based on, you know, a reasonable amount of conversations with customers about willingness to pay and maybe a reasonable amount of like analysis across the customer base and different different segmentation, different cohort analysis, elasticity stuff.

Yeah, it was, um, I would say it's based on anecdota. So not cohort analyses. Uh, we haven't done like a true split test on pricing, but like we had a lot of people who either when they found out what the price was and they were like, oh really, that's it? Or like some people who are like, I would honestly feel better if you guys charge more. Like, just like, you know, I take any individual thing like that with a big grain of salt and like based on what my relationship with that person is, whether we just met or whether there's someone who's like, you know, an investor or an RYC batch or something like that. But we had a lot of data points of people that were surprised by how much we were giving away for free and how little we charged. And so we were acquiring a ton of paying customers when we decided to do that. Paid tier and we were like over the moon about our rate of new paying customer acquisition and sort of meh on our rate of actual ARR growth. So like eventually it was like, well, this is pretty obvious, like what, you know, how to potentially at least try. And like the chart, like it definitely, this is as close to a rigorous analysis we've done. The chart of like new paying customers per month was going like this. That was like the, You know, the rate, and then when we increase prices, it went down, but then it's like, it has the same slope now. It just had like a Y reset like that. And then, you know, on balance, we, our rate of revenue growth is way higher. And like, we have basically caught up on that new customer acquisition to where we were before. So it seems like it's a no brainer. I think there's still more tweaking to be done. I think like facilitating the upsell path, there's like all kinds of things that I think could be improved, but it was, it was definitely the right move.

Really cool. Maybe the name of this episode is Pricing via Anecdota.

Yeah, I like that. Either that or Standards are the Shit. That's, those are your two options.

One more question on pricing, and that's a look towards the future. So, you know, you anticipate a multi-product journey. You've begun tiering. I'm curious to know, like, how you see pricing and packaging evolving as a discipline at the company. And I'm, I'm curious about it through two lenses. One, more of a strategic lens, like how will you create a function around pricing so that this is sort of like an ongoing conversation and more than that, an ongoing conversation that produces actionable change. And then secondly, like the extent to which you operationalize this, is this like cross-functional pricing committees? To what extent will engineering be involved, product be involved? How will you think about all of that and how will you approach all of that? Yeah.

So we, we're still a small team, so we don't have any committees and any big decision like this will certainly be cross-functional. I would not say we have like a really finely honed process around this today. It's sort of like Ben or me or someone else on the team thinking like, seems like we're, seems like we're getting a lot of feedback like X or seems like we're doing great on this thing, but not great on that thing. And then that comes up and we just like decide to prioritize it. I do think that it's like obviously super high leverage. And like, I think ultimately for pricing related things, it makes sense for the product team to be the ultimate owner of it with me and other folks as like a really significant stakeholder.

Why? And the reason I want to dig here is I've now done 50 of these podcasts. And one of the questions I love to ask is, where should pricing sit?

Yeah.

And there's always a, there's really different answers, but the two most common answers are, it should sit in product or should sit in finance.

Well, it's easy for us since we don't have any finance people. I guess. And I mean, like, if I'm the closest thing we have to finance and like, I sort of see my role as the CEO of like, if a decision is not getting made, then I would be like the residual claimant on decisions and force it to get made and either make it myself or force someone else to. But I think, first of all, ideally I'm making as few decisions as possible. And also I do see it as part of the product. And maybe in the future, if we have a finance team there, I would see them playing a very big— when we have a finance team, they would play a very big role in that. And like we have like engineers on our team making spreadsheets and doing SQL analyses to support or reject some pricing analysis. So like we have like, we are doing financey things to help with that. But yeah, I think of it as like this is an important part of the product. It is both like messaging to the customer and incentivizing them to use stuff. But I think it's very tied up in like what stuff we build for if we are not getting the usage we want or the conversion we want or the upsells we want, like, I think we can solve that by making the product better or like educating the customer or changing the price. I say just, yeah, same different levers on the same goal.

Thank you for all of that. Very instructive. This has been so much fun. And the question I always like to close with is, is there like a singular moment that you view as really an inflection point in your career? Like it was the moment at which point a lot of other stuff pivoted.

Hmm. The thing that pops into my mind, and I don't know for sure that this is the moment, but it was really impactful and like my head exploded. It was the early days of RJ Metrics. I had a sales call with this guy I'd never heard of. Named Mark Lore or Loree, I don't know, the CEO of diapers.com. I had gotten introduced to him and like he definitely didn't know who I was and like I like wasn't, you know, he wasn't really on my radar at that point. And it was, I was like pitching him on using RJ Metrics and I wasn't doing the best sales call in the world and I was just talking for a little while and then I told him it would cost $500 a month. And he like chose that point to cut me off and say, first of all, I'm not going to buy your product. You know, like we have a team of people doing the stuff that you're talking about. And it's a really core thing for us and we're great at it. And the fact that you're telling me your product costs $500 a month means that to me, either you don't know what you're doing from a business perspective or your product sucks because we are spending like half a million dollars a year on this. And it's like really, really core to us. And so like just that signal was enough to tell him like we were sort of clowns. And I think he was right. Like we were clowns on this dimension at that respect. And I don't know that I would have closed them if I said the price was $50,000 a year instead of $500 a month. But that was really eye-opening to me to know that I'm saying something with my price and I'm conveying something and that a low price can reduce confidence. And that was actually something that in the early days of Common Paper, when I think we were giving too much away for free, people were like, this is legal stuff. I want to know this is sort of legit. And like, I want to feel like you guys are a real business and you have a real obligation to me. And that like, so that, that has informed our pricing and we're not trying to be something that is $50,000 a year for an early stage startup. But I think that has influenced both, you know, how we price and package that RJ and then at Stitch and then at Common Paper. I don't know that I have it right now, but hopefully If I talk to Mark Lurie again, he would not call me a clown. And instead he would say, oh, okay, I think that pricing is like reasonable.

I love that story. That story is so perfect for this podcast and this audience. So thank you. Thank you for that.

My pleasure.

Where can people learn more about Common Paper and reach out to you?

Sure. So we're just commonpaper.com. I'm @JakeStein on Twitter, @JakeStein on LinkedIn and most other stuff. You can just email me, jake@commonpaper.com.

Jake, thank you so much. Awesome.

Great to talk with you, Fynn.