By Jim Lundy
Dan Springer, the CEO of DocuSign, announced he was stepping down last week. After a few years of strong growth, the company posted a big earnings warning. This growth warning occurred at a time when other Digital Transaction Management (DTM) providers are showing record growth. DocuSign Chairman of the Board Maggie Wilderotter will serve as interim CEO while a search for a new CEO begins. This blog analyzes what happened at DocuSign – and how things got this bad.
DocuSign Chairman Maggie Wilderotter is serving as the Acting CEO after Dan Springer was forced out.
DocuSign Analysis – the Competition is not standing still
Our take at Aragon is that Dan Springer inherited a fast-growing sales machine when he took over from Chairman and CEO Keith Krach in 2018. That DocuSign Sales engine helped drive growth and until recently they were on track. However, the CEO is responsible for setting the stage and having a playbook for future revenue growth. It is clear that Dan Springer did not do many of the things he should have done.
Issues such as acquisitions that never got fully integrated, price increases, and better products from competitors. This means that the market has caught up to DocuSign – and buyers are looking elsewhere. The bottom line – the DocuSign Agreement Cloud was a good campaign, but DocuSign salespeople were still basic e-Signature deals (and lots of them).
What led to Dan Springer’s ouster – DocuSign Warning on Growth forecast
While Dan Springer tried to blame economic conditions for the significant earnings warning our take is that there are many more factors that led to this strong warning. The earnings miss in early June combined with growth guidance of only 7-8% which was half of the 15% it had given earlier – was enough to force a change.
So as mentioned above – there are a number of factors that point to the slowdown at DocuSign – it isn’t the fall in the stock price. Stock prices rise and fall – it was the combination of execution misses that led to Springer’s ouster.
We wondered when DocuSign Chief Product officer Grant Peterson, a holdover from the Krach era, was recruited to Conga last year – if that was a foreshadow of future issues at DocuSign. Looking back – it clearly was.
Culture Matters at every Company
One observation we have is that under Dan Springer = the engaging culture that former DocuSign Chairman and CEO Keith Krach created at DocuSign was not the same – and this too led to many departures over the last four years. It wasn’t just employee engagement – it was also customer engagement. When customers don’t feel they are being looked after, they look elsewhere.
What is next for DocuSign?
The immediate need is twofold – finding a new CEO is job one. Competition for the kind of growth oriented CEO is very tough in Silicon Valley – Maggie and the DocuSign Board have their work cut out for them. The second, which will not be easy, is salvaging all of the upcoming renewals with customers – and closing more new business. When customers constantly get pitched to upgrade, sometimes they grow tired of that.
Bottom Line
The Bottom Line is that Springer did not fulfill all of his responsibilities at DocuSign. The market is still very healthy for Digital Transaction Management (DTM). We expect a seasoned CEO to be hired at DocuSign who will right the ship – a key focus on forward-looking products will be key. It is very clear that the DocuSign Agreement Cloud was more hype than reality.
Editors Note: There are many other things that led to this point of DocuSign floundering in the market. Aragon will be publishing a full SWOT analysis of DocuSign later in Q3 (available to Aragon Clients).