Digits CEO Jeff Seibert on Founder-Market Fit and Social Dilemma

0:00On Builders, I speak with investors, founders, founders, and operators to understand what was their path to success. And my guest today is Jeff Siebert. He's founded three companies. He's currently the CEO and founder of Digits. He's held super interesting operator roles at Twitter and Box, and he's been a producer and advisor for important documentaries like The Social Dilemma and Chasing Coral. We talk about Digits, of course, and also his three times a week all-hands meetings, why he left Twitter, and the importance of founder market fit in starting a company.

0:40Hi, Jeff. How are you? Good to see you. John, great to see you. Doing well. Great to be here. Thanks for being on the podcast today. I'm really looking forward to talking to you about your company, your previous experiences. But I kind of want to start here. You founded multiple companies. First one, you're CEO and founder of Digits. When you decided to start the company, what, if anything, did you deliberately do differently based on your experiences founding other companies? Yes. Great question. So Digits is my third venture-backed startup. I started a document collaboration company way back in 08, right out of school at Stanford.

1:17I started a mobile crash reporting company, Crashlytics, in 2011 in Boston, and then started Digits in 2018. and the big difference is the prior two head offices and digits we decided would be fully remote from day one in 2018 or way pre-COVID. And even our investors sort of called me insane. They thought I was nuts. I like to think now I've sort of been proven right that we survived COVID without a hitch. And it's been an amazing way actually to scale the company with really top your talent. That's interesting. I took my first remote job in 2018. And I actually found certain parts of it challenging at the time because every single one of my communications was, I call into a conference room, somebody loops me in.

2:06It was all audio. I was not doing video calls until 2020. That's probably not how you started out. You probably were all video calls from day I presume? Yes, but also live voice chats on Discord. We experimented with so many things. So this came from my experience at Twitter. Before Digits, I was head of consumer product at Twitter. And in the consumer org, we had teams in 11 offices around the world, massive team. And what really struck me, unfortunately, was the sort of second-class citizen effect of those not at headquarters, because you would be in meetings at Twitter's office in San Francisco.

2:42And of course, you'd have the folks dialed in, like you just said. And they would struggle to get a word in. They'd be a big face on the TV screen. And meanwhile, everyone's just focused around the room. And it really struck me that it's such a challenging way to build a business because you have to fly to headquarters to feel seen. The team wanted me to fly and visit the offices. It's just a lot of overhead that doesn't ultimately help the customer. And so when we started Digits, we were really strict on like, okay, we either need to all be in one office in one place, or if we can't foresee that happening, we have no offices because I wanted everyone on the same level playing field.

3:22The advantage was we got to design the entire business from day one to be remote. And so we have done a lot of sort of weird things that you probably wouldn't do in a sort of office-based culture. For example, I run an all-hands every 48 hours, and I have for seven years. Oh, wow. And as the all-hands, I think about our all-hands. We call them town halls. We do them monthly, and we've got sort of a routine. So what is the routine? Are you running everything? Are you taking live Q &A? Maybe give us a rundown. Yeah, so it's Monday, Wednesday, Friday. We run the entire business on a weekly sprint.

4:00And so on Mondays, it's actually a very short meeting. It averages 20 minutes and each team lead runs through and shares their team's goals for the week. And then I do open Q &A. And then on Wednesday, same format, we run through and do check-ins and every team shares their status towards their goals and who needs help or if they had to adjust scope or whatever. And then I do open Q &A. And then on Friday, it's a longer meeting. It's about an hour 20 and we do full kindergarten style show and tell. Every single team at the company shows off what they did that week. And then we end with a full company retro.

4:36So 15 minutes sharing what we call anchors and breezes, what slowed you down, what sped you up that week. And we do that publicly across the whole company so that we're sort of sharing lessons learned and seeing what we can do better next week. And then I end with open Q &A. Did you know that Builders is sponsored by business.com? I'd love to tell you about a new free membership from business.com for small business decision makers. It's called business.com plus, and it's designed to address the pain in selecting new products and services. What is the pain you might ask? It's things like knowing which vendor is best for your specific business, negotiating pricing, having access to someone who can answer questions for you.

5:15The new membership business.com plus handles all of that with a dedicated advisor, pre-negotiated pricing and solutions tested and reviewed by experts. Check it out at business.com slash plus. That's business.com slash P-L-U-S. Did you learn that? Did you invent that? What caused you to want to do that? You're seven years in, I think, to Digits. And was it something you did from day one or did you evolve to get there? It's been an evolution, but the basics were there. So we actually started this process and crashed Lytics in 2011, where we had the Monday and Friday meetings. So we did a weekly kickoff and then a Friday show and tell.

5:59And that was great, even though we were all in the office together. And so then this was an iteration on that, adding the Wednesday, because I just felt like I wanted to see the team more than just Monday and Friday. It was too far apart. I wanted another check-in time. Well, I want to talk about Digits and what it's designed to do. So I've kind of got two questions like what does what does digits do? But I also have another question, which is as far as I can tell, the three companies that you founded seem pretty distinct from each other. And so is there a through line on those three companies that I'm not picking up on?

6:33I'd be interested in that, too. Yeah, let me start there. So the through line is I'm obsessed with saving people time with really hard to build tech. And so they've all been problems I had that I felt were wasting my time. And so the first one came out of my college experience. We were emailing PowerPoints back and forth in our student groups and class projects and so on. And I was so fed up with that. I was like, why can't I just edit the PowerPoint online? Of course, this was 2007-08. Google Slides did not exist. And in fact, you could not really display any files in a web browser. Even like Box at the time, you would click and upload the file and then click and download the file.

7:12That's right. I remember that. And so we built some of the first tech that ever existed to render documents in a web browser. We supported 100 different file formats, Word, PowerPoint, PDF, Photoshop, Illustrator, et cetera, et cetera. And you could live mark them up and comment in your browser, which was pretty cool at the time. Then with Crashlytics, the problem was mobile apps crashing. I'd been working on an app and I ended up spending my nights and weekends trying to figure out why it was crashing, what was going on. And so I built a tool called Crashlytics that basically detected the exact line number of code that the app developer needed to fix and then tell you.

7:46And so it could tell you in two seconds, no matter where your app crashed anywhere in the world, what bug had happened. And so that was a rocket ship. We launched right as mobile was ramping. We went from zero to 100 million phones in 12 months. We ended up getting acquired by Twitter. And then through that journey is what I got obsessed with, with the problem that became digits. And what really struck me at Crashlytics and then at Twitter was the difference in data quality between product engineering and finance. And on the product edge side, you have Google Analytics, you have A-B testing tools, you have Grafana, you have all this server log analysis, right?

8:24Like you know exactly what's happening. And all of those tools are effectively real time and effectively free to set up. And then on the finance side, I, as the founder, am waiting two to three weeks for my accountant to send me a black and white P &L and balance sheet and like Excel workbook. And I was like, something's clearly wrong here, right? Something's broken. And at first I thought this was just a startup problem, small business problem. And I was like, oh, big companies must've had this figured out. So at Twitter as head of product, I remember I went to corporate finance and I was like, I want to run an event for our consumer team.

9:01What's the budget? And their actual answer was, oh, we haven't run those books yet. Can you give us three weeks? Oh my gosh. And I was like, wait, you have a hundred people in corporate finance. Like, what are you doing? And so that was the seed. So when I left Twitter in 2017, took some time off, started researching the space. And as we studied it, talked with hundreds of accountants, The problem is not the accountants. These accountants are very hardworking, really earnest folks. They really want to help business owners. The problem was the software. And so they were struggling using a ledger and all of the major ledgers had been written 20 to 30 years before and had really outdated database architectures, sort of outdated approaches.

9:47And so the way you think of a monthly close in accounting is you are spending hours pushing data into this ledger, getting all your bank feeds and statements and so on and so on. And then it briefly sits there in the ledger. And then the accountant spent hours pulling the data out, exporting it to Excel, pivoting it, analyzing it, trying to figure out what happened. And then they send the reports to the client. And that ledger isn't actually adding a lot of value in the middle. And so that was the sort of founding premise of Digits is let's reimagine accounting in the age of machine learning. And so in 2018, of course, AI wasn't a thing, it hadn't been branded yet.

10:23But machine learning was. Twitter was a major developer and proponent of machine learning, and we released the algorithmic timeline and so on. And so I had seen the power of the tech and realized that if you actually sort of re-architect accounting software to be ML native, you can automate pretty much the whole month end close. And so that's what we're doing with Digits. That's amazing. You know, you're talking about the Crashlytics story and going from zero to 100 million phones in 12 months. And so you probably realized very early, maybe much earlier than you expected, that this thing was going to scale.

11:02When was the first time you had that feeling at digits, like you had hard data that says this thing can and will scale? I think it was January of 24. So a little over a year and a half ago, I posted on LinkedIn. I think we have product market fit. And it had been a long journey. So we started the company in 2018. We basically spent five plus years just heads down building. And as I said, I love really hard technical problems. The challenge with general ledgers for accounting is they're extremely complex. You have to be super disciplined and get everything correct because you can't afford to make mistakes in accounting.

11:42And it basically has to be feature complete because nobody's going to use a half-baked beta accounting platform, right? You're just not going to bet your business on that. And so we spent years just building. And it was a slog, particularly towards the end of that journey, because it's just so much to build and you're not seeing the excitement of the market and so on. And in January of 24, we had gotten enough together where we started onboarding some businesses and they used it and liked it and it like did their accounting. And that was sort of the light bulb of like, I think we've finally gotten there.

12:15And it has been a rocket ship since then. I mean, we did a million in beta revenue. We launched publicly in March, you know, thousands of businesses paying for digits. So it's been just a crazy ride since. Wow. Congrats. That's awesome. I'm sure there were times where you weren't sure, you know, you were headed in the right direction because that's a pretty long build. It was a very long build. How are you approaching marketing? I talk to a lot of folks who try to sell to small and medium-sized businesses. That's notoriously difficult. What's been your approach to that? We have the self-serve product.

12:51Small business owners can go on and sign up. A lot of the distribution and our major focus is through accounting firms. And so when you speak with business owners, they obviously care about accounting, but they largely don't have a background in finance or accounting. And they often aren't making the tool choices. When you go and hire an accountant, the accountant is sort of telling you what to set up and how to run your business. And so we have seen tremendous interest from accountants and accounting firms. And that's our primary go-to-market motion. Okay, I got it. And is there a special way to reach those folks?

13:29Or is it done through LinkedIn, paid? What's your approach to reaching those folks? Yeah, it's a really fascinating profession. And it's been really cool getting to know so many folks in the profession over the past seven years. It's relatively small. There's 42 ,000 CPA firms in America. They show up at a few major conferences a year. There's very tight networking groups. There's mastermind groups. There's Facebook groups. And so it's really been a word of mouth and building real trust and relationships in the community versus trying to blast them with ads. No one likes that. Interesting. That's great.

14:04When you think about where you're focused now that you're in hyper growth for digits, where do you see yourself personally focusing over the next year? Ooh, so it's funny because my whole background is product engineering and I absolutely love coding. I was deep in our architecture and spent the first few years of digits coding alongside the team just because there was so much to build. And now it's definitely transitioned more and more external facing, building brand awareness, speaking with these large accounting firms, showing them the sort of power of the product and how it can help transform their practices.

14:36So my focus for the next year is primarily on the go-to-market side as we scale that out. Well, you're obviously very interested in the process by which you build companies, focus on technical problems. And I'm curious because I know you're an active angel investor. What types of businesses, or maybe it's founders, fit your personal investment thesis? What do you look for when you're making an investment? Yes, it is definitely biased by my own approach. And so I primarily invest in software businesses. I like seeing real R &D efforts, not sort of wrappers around other platforms or sort of simple web apps aren't that interesting to me.

15:14I like really understanding like why the tech was hard in that space and like what gives you an advantage. And just to name some big companies folks will know, like Figma has incredible tech behind it. Airtable spent a lot of time trying to figure out their architecture. Like those are really impressive type businesses where they're really pushing the bounds on software. And then I also focus on what I call founder market fit, which is you don't have a product yet. You haven't launched, right? But why do you as a founder have a unique advantage in this space? And it's not always obvious. And so like I get the question, of course, like, why are you in accounting?

15:51You have no background in accounting. That is totally true. The underlying algorithms at Digits are very similar to what we're using at Crashlytics. We were classifying crashes at Crashlytics. We're classifying transactions here. It's very similar data approaches. And that, I think, gave us a unique take on the space. And so that's what I look for in founders is like, whatever it might be, why do you think you have a leg up over anyone else trying to compete with you in the space? Yeah, it's so interesting you say that. I think a lot about like lateral thinking, like, you know, something in apps crashing could be applied to the accounting world in a way that nobody's thought of yet.

16:29And you can have a novel approach. That's really, really cool. I totally agree with that. I think, you know, understanding a little bit about your background, you're very interested in how the world works. And you've been involved in several projects aimed to either better understand society or to protect and improve society. I'll name a few. Probably folks have heard about the Netflix doc or project Social Dilemma. And then also one prior to that on coral reefs. How did you get into the world of media and I think I could call it filmmaking? And what have you learned? Do you feel like it's a scalable way to influence society?

17:11I do. And so I got very lucky in sort of getting involved in this. One of my very good friends in college was Jeff Rolowski, who became this amazing director producer of documentaries. And so he did Chasing Ice and then Chasing Coral. I've been passionate about climate change for a long time. that's been one of his core focuses. And so it was an honor to get involved in helping produce those films. And then Social Dilemma was a fascinating story because as head of product at Twitter in 2015, 2016, it was very, very nascent. There wasn't a lot of discussion yet in Silicon Valley of like, what could the potential downsides of these platforms be?

17:48And I was invited to a dinner by Tristan Harris, who was Google's design ethicist. and basically he laid out a case to me and Facebook's head of newsfeed, the inventor of the hashtag, a bunch of folks who were very influential in sort of social media at the time. And Tristan laid out this case of like, he actually believed these platforms were negative and had the potential to polarize folks, spread misinformation, et cetera, et cetera. Everything today we take for granted. In 2015, 2016, this was crazy. No one had been talking about this. And that dinner was actually one of the reasons I ended up resigning as head of product.

18:25And so I realized that unfortunately, it's fundamental to the business model. Even as head of product to Twitter, you can't change the fact that the platform is designed to serve ads, and that's how it's supported. And unfortunately, to serve ads, you need to keep people in the product scrolling so they see more ads. Well, the way to do that, it turns out, is to show them content you directionally agree with, because otherwise you would quit the app, but you find slightly outrageous because that keeps you curious and scrolling for more. And so the combination of those two attributes is you get polarized along whatever viewpoint you currently hold, because you're seeing more and more outrageous content.

19:03And it's simply to show ads. And so when, of course, now it's all algorithmic based and so on. And the algorithms basically realized this and got better and better it better. And TikTok is probably the ultimate example of now showing you content that you just keep looking at. And so that was a real eye-opener. And so I ended up resigning. We produced the documentary because we wanted to sort of get the word out. And it did actually have a great success. Over 100 million families have watched it. It spurred a whole bunch of congressional hearings. And now, as you know, it's pretty much common knowledge that these platforms have this challenge.

19:41And so I'm really pleased with what we were able to do there. Are there reasons, and I think that our family and our friends' families have all seen it, are there reasons to be optimistic over the next couple of years? I would say yes and no. So I am optimistic that kids, I believe, are actually getting more and more used to it, and they are themselves aware of the downsides. And so there's sort of a natural defense mechanism forming. And I'm on the side, I'm the chair of the technology committee of my high school as part of the board. And so it's been really interesting working with the student body and the current class presidents and so on to understand their perspective.

20:22And there's definitely broad student awareness of the downsides, which is great. What I'm concerned about is AI opens up a whole nother chapter of this. Yes. That's potentially far more damaging because scrolling is one thing. If the software is talking back to you and it's motivating, it's motivated to keep you using it to drive more engagement. That's really, really dangerous. And so it'll be really interesting to see what happens over the next few years. No doubt. Any plans for a sequel? Discussions, but no, no current plan. We'll see. We'll see. All right. Well, Jeff, thanks so much for talking with me today.

21:02Best of luck with Digis. I really enjoyed our conversation. Well, thank you so much for having me, John. This was fantastic.

21:13Did you know that more than 20 million professionals and business owners visit business.com and Business News Daily? Why? It's the best place for resources, advice, and information about how to grow your business. And if your goal is to reach our audience, you should become one of our lead partners, sponsor a section of the site, or sponsor even this podcast. Reach us at business.com slash connect. That's business.com slash connect.