RateMyInvestor Founder Series: Episode 6 with Evan Schneyer (Outlaw)
1. How did you first get started in the world of entrepreneurship?
I started my first company, a freelance collective called Living Breathing, ten years ago. LB is thriving now, though I’m personally too busy to take on any client work these days. My first tech startup was Wanderfly, a travel discovery site which I co-founded just a year after LB and sold to TripAdvisor in 2012.
2. Tell us about your current company and the inspiration behind it.
I’m currently working on Outlaw, a SaaS platform that massively improves every aspect of the contract lifecycle, from templated document generation to cloud-based redlining to mobile eSigning. My co-founder Dan Dalzotto and I started the company because we both have tons of experience with contracts but we were sick and tired of seeing terrible contract processes cause deals to fall through.
3. Why do you think you’re uniquely positioned to succeed in this space?
I’ve signed hundreds of contracts and closed tens of millions of dollars worth of business in my career, so I’m probably the most legally fluent non-lawyer you’ll meet. But as a coder at heart, I see contracts as the structured objects they ought to be: strongly-typed variables, access-controlled metadata, clause-specific versioning, n-tier parent-child relationships and so forth. Generic word processors are woefully inadequate for handling such highly structured data because they were never built for it, and that results in an awful user experience for the actual parties trying to reach agreement.
So while Outlaw offers a familiar (though simpler and more beautiful) UX for contract senders and recipients, this is possible because we’ve actually built a proprietary structured data format and workflow engine under the hood. This foundation makes it trivially easy for us to add in-demand features like an immutable audit log in the short term (launched a few weeks ago), cloud-based redlining (launching in the next few weeks), and ML-powered contract language optimizations in the longer-term.
Ultimately our tech itself is our competitive advantage. It enables us to empower our customers with such a seamless contract UX that they close more deals.
4. How much funding has your company raised?
We raised a $500K initial seed round late last year from friends, family, angels and former Wanderfly investors. We’re incredibly capital efficient and have only spent a fraction of it so we’re good on cash, but we’ll likely be raising a larger seed in the next few months to focus on sales & marketing and accelerate revenue growth.
5. Tell us about a time where you received a no from an investor.
Hah, so many war stories to choose from! First off, I should mention that investors almost never outright say “No.” They say, “This is super interesting and I’d love to talk again in X months once you’ve achieved Y…” But what’s implied after that ellipsis is, “…without my capital.” In other words, that’s frequently the closest you’ll get to a “No,” and some of the most anguishing pitch experiences are the ones that take 3–4 discussions only to end up at that same point.
With that said, I pitched a prominent NYC-based angel last year who gave me that line toward the end of our first meeting. But I already knew from about five minutes in that it wasn’t a fit, because before I’d even finished my thirty-second spiel on the problem and solution, he asked me, “How will you make this a billion-dollar business?”
I came away feeling completely disgusted. It wasn’t about his lack of interest (I’ve got thick skin at this point), but more due to a sense that the actual business and the specific problems we’re solving were completely immaterial to this guy. It was purely about money to him: we could have been pitching a subprime mortgage platform aimed at exploiting low-income families, and he’d have gotten way more excited if that meant I could answer the billions question right from the start.
It’s widely known that VCs need to see a capital “B” at the front of addressable market calculations to get excited.
But anyone who lobs this question in a first meeting, and to a founder who has only just recently achieved first revenue, is either yanking your chain and trying to end the meeting fast, or is so out of touch with the actual process of creating a valuable business that they’re going to be a terrible capital partner. Either way: steer clear!
6. How did you get your first investor check? And what advice would you give to first-time founders looking to fundraise?
First checks very frequently come from close friends and family; as an entrepreneur friend once said to me when I was learning the fundraising ropes, “The only people who will give you money at this stage are people who love you.”
So as long as these friends and family are accredited investors who have that money to lose, and not an uncle who is taking a second mortgage on his home, my recommendation if you have this path available to you is: ACCEPT THE MONEY! It’s easy to feel like an investment is somehow less valid when it comes from someone close, but at a very early stage, and especially for first-time founders, if the people who know you best are willing to trust you with their money, that’s a huge vote of confidence. And I think many VCs and angels see it that way too.
If you don’t have the friends and family route available, my advice is to keep seeking out new investors until you find true believers. Many of the professional investors in Wanderfly made their commitments during or right after the first meeting, based on their first impressions of the founders and the product. If you find yourself getting up to four or five meetings with the same investor still with no answer, move on. The best seed-stage investors don’t require a lot of work; they share your vision from the start and are excited to get on board. I’ve written more about this here.
7. What would success for your company look like by the end of 2018?
Three things, all related. First, a more operationalized sales funnel. Any well-built SaaS play is by definition a money-making machine: you plow cash into customer acquisition and get back a multiple over time in annual recurring revenue. We’re already seeing this in action and the numbers are great; next step is to operationalize and scale.
Second, assuming we do move forward with another seed round, I want to see that round closed swiftly, oversubscribed, and most importantly, I want a few great VCs on board as real partners. This is partly for the additional capital to grow faster, but it’s also partly for the legitimacy and endorsement that comes with having top-tier investors in your corner.
Finally, I want some great PR. Outlaw already has a best-in-class product, but the world doesn’t know it yet. Advertising helps, as does organic growth from customers using the product. But I’d love to have a couple of big tech publications (FastCo, Entrepreneur, TC, Wired, etc) do feature articles on what a major leap forward Outlaw represents in legal tech. I learned from Wanderfly that good PR can catapult credibility and seriously move the needle for the business.
8. What is your favorite blog/newsletter and why?
Jason Calacanis’ blog. He’s quite outspoken and I know he rubs some people the wrong way, but I love how he’s not afraid to take a stand, and I usually think his analyses are spot on.
9. How can our readers get in touch with you? (twitter, email, telegram, etc.)
If you’re interested in learning more about the platform: Book a demo here
Did you enjoy this article? Check out our other founder series interviews!