Home ShopTalk Signing on the Net’s Bottom Line

Signing on the Net’s Bottom Line

On the Internet, “process” is product. Consider DocuSign. The Seattle-based company is well on its way to digitally replacing the time sensitive process of obtaining a signature — superseding, in sequential order, the fax, Fedex, the carrier envelope, the “sign here” sticky note, the signature, and the return receipt — in sum, the entire process of signing any kind of documented transaction. It’s doing it all with the ease of a secure, 24/7 Internet-based transaction.

In essence, DocuSign has streamlined a process which has been the poster child for anachronism. “The electronic process comes to a screeching halt at the printer,” points out CEO Court Lorenzini. “Today, more than 98% of documents are generated electronically, yet they are still being output to paper to capture a signature.  Moreover, after the paper is signed, most documents are then rescanned or imaged for storage and maintenance. It’s an anomaly in an otherwise electronic process, and DocuSign was built to fill that gap.”

Through a process of copious patent searching and piecing together intellectual property acquired from other companies, DocuSign developed a new solution for e-signing built entirely as a Web service.

With no software requirements or digital certificates required , the entire process is managed from a central server on the Internet.  To send a document for a signature, you simply choose “Send a Docusign Envelope,” from your list of printers. Your PC automatically connects to the DocuSign service via the Web and walks you through the sending process. There are even virtual ‘Sign Here’ sticky notes that act as buttons to initial or sign the document.

The system is smart. It can report back whether the document has been opened or looked at, inform who has opened, reviewed and signed it and then notify all parties with a completed version of that transaction, a locked PDF file that is a signed, completed, distributed copy of that transaction.  Authentication occurs at three levels according to the sender’s preferences — e-mail, a secondary access code, and a third level ID check based on challenge questions pulled from a public records database.

The Puget Sound had a decisive role to play in the evolution of the electronic signature thanks to congressional representative Jay Inslee. In 2000, President Clinton signed the E-sign Act – which was spearheaded by Inslee – into law. The Act standardized the legitimacy and transferability of e-signatures across all fifty states.

Clearly the time is now for DocuSign. So let’s explore the next frontier in transacting signatures online with Court Lorenzini post haste.

Seattle24x7: Court, can you give us a bird’s eye view of DocuSign?
Court: The 50,000-foot view of DocuSign is that we exist in order to facilitate the process of obtaining and recording a signature.  The way we go about it is unique in that we approach the problem from one primary perspective —ease-of-use.

Seattle24x7: How have electronic signatures evolved both legally and governmentally?
Court: In the early nineties, the Uniform Electronic Transactions Act, or UETA, laid out a set of standards for electronic transactions, i.e., electronic signatures, but left it up to the individual states as independent governing bodies to adopt it in whatever form they felt was relevant to their constituency.  Some 42 out of 50 states adopted some form of the UETA specification.  Unfortunately, they all adopted it differently and there were state to state variations.  Since businesses don’t operate exclusively in one state, it wasn’t practical for people to put electronic transactions to work for them.

That all changed in 2000 when President Clinton signed the E-SIGN Act into law. Washington state congressional representative Jay Inslee was a driving force behind the bill. Effectively, E-SIGN superseded UETA. It said, no matter what the state, you cannot invalidate a contract simply because it is signed electronically. It specified that contracts are contracts, and they should be interpreted under contract law, which is centuries-old.  The simple fact that it was signed electronically would have no bearing on whether it was interpreted as legal or not.

Seattle24x7: What have been the historical barriers to signing from an electronic perspective?
Court: The history of this industry dates back to some very esoteric mathematics that were done at UC Berkeley around public key encryption.  From there, you witnessed 15 to 20 years of evolution in PKI technology, all of which was aimed at authentication, but it has never been friendly for humans to use.

While technologically advanced, the system was costly to implement and difficult to comprehend or actually implement on a day-to-day basis.  Historically, it was also relegated to transactions between businesses that were highly regulated and whose transactions were very routine.

Seattle24x7: So you began to consider the consumer perspective?
Court: We did not see anything addressing the signing platform that addresses business to consumer.  We said to ourselves, “There’s our challenge.”  How do we provide a fast, easy usable solution for business to consumer transactions.  That was the beginning of what we were trying to solve.

Seattle24x7: A few Puget Sound companies had begun working on this in the nineties. You were able to utilize some of their intellectual assets?
Court: When we began the company, we went out and did a fair amount of patent research and located some patents that were not in use. The company that we acquired the majority of the patents from was formerly known as DocuTouch. who had spent around $15 million over the course of a couple of years building a solution.  When DocuTouch went under, their assets were acquired by another company called Net Update.  We subsequently identified and acquired those patents from them.

Seattle24x7: What are the principal ease-of-use features and attributes which led to reformulating the product?
Court: The way we approached the problem was to build the entire solution as a Web service. The previous assumption was that the parties who wanted to be involved in a signing would be willing to acquire the special software and the digital certificates associated with their physical machines. We flipped that idea on its head and reasoned there had to be a better way to produce this as a Web tool, with no software required at the end points.  And minimal software if required at all.

Seattle24x7: You centralized the process at the server level?
Court: The breakthrough was that all of the processes that one would go through to acquire a signature can, in fact, be managed at a central point through a server functioning across the Internet. People can simply gain access to documents and place signatures as well as provide authentication through that server.

It changed the assumption that the document itself had to be locked.  In that mode, a user would sign a document, lock it, send it to you; then you would have to unlock it , sign it, re-lock it and forward it on to the next person.  What you end up with is a document that may have multiple signatures on its but it’s floating around in the ether.

Our process established a central server into which all documents that need a signature will go.  From there, all you need is a Web browser to access that server, put documents in, take documents out, sign them, review them, grant access to them, etc., all without actually having to move to documents around.  That was the major difference in our intellectual property.  The idea of being able to sign using server-based technology over the Internet.

Seattle24x7: How has adoption of the product been going?
Court: The product was introduced in March of 2004.  Thus far, we have hundreds of users and are doing a fair number of transactions.  In our latest release, we incorporated a number of pieces of information as well as feedback from our user base.  Our goal is to scale, up from thousands to hundreds of thousands and millions of transactions.  We want to become the de facto standard.  Rather than sending a FedEx overnight package, you would use DocuSign. Instead of sending a fax for acquiring a signature, you’d use DocuSign.  That’s our vision.

Seattle24x7: What are the key markets which DocuSign is targeting?
Court: We really believe we’ve got a significantly important solution for a number of industries: financial services, healthcare, insurance, real estate, mortgage, leasing, lending.

We have existing relationships with a number of associations, one of which is the National Association of Realtors who have a software tool that they utilize for generating purchase and sale agreements, disclosures, etc. We have a strategic partnership with that organization. Altogether we have 14 different distributors as part of our sales network.  A distributor for Docusign is a third-party vendor or software provider who has incorporated Docusign services into their core platform.

Real estate mortgage transactions have been the fastest to adopt.  We’re seeing a very rapid adoption now in a category I would call salesforce automation, meaning the execution of sales agreements between two parties.  What’s interesting is that they are starting to incorporate it with their web sites, so you have an application for a service, fill out the form or purchase agreement online, and Docusign will shoot you that agreement through e-mail.  You can sign it delivered back to the company, and within moments of the time the person was on the web site, they’ve executed the purchase agreement.

Seattle24x7: DocuSign doesn’t actually store the documents yourself.  Your fee is earned on the transaction?
Court: That is correct.  We are not providing a storage functioned today.  When a document is sent, we generate what is called an envelope. Think of it like a FedEx envelope, you can “enclose” multiple documents in the envelope from any source.  It could be an Excel worksheet, combined with a Word file, combined with a screen shot from a legacy application, all of which can be placed into one Docusign envelope.  That envelope gets packaged and sent like physical mail and an envelope that is sent for signature costs around five dollars round-trip.

Seattle: DocuSign is clearly an idea whose time is now. Do you have a sense of that timing in terms of connecting with your user base?
Court: Speaking as an entrepreneur who survived the Internet bubble, it’s essential that technology and demand intersect at the right moment in time. DocuSign has greatly benefitted from the esignature pioneers of the middle and late nineties, but only now are all the pieces in place to make electronic signatures an integral part of the fabric of the Internet. DocuSign is lucky to have found the right solution at the right moment in time for a need that has yet to be met.” [24×7]

Visit DocuSign at http://www.docusign.com

Larry Sivitz is the Managing Editor of Seattle24x7.