An E-Sign of the Times

Dear Readers: This is part of an occasional series of articles looking at different tools small businesses are using to help automate their administrative and back-office tasks. These aren't the only tools in their field, but an example of what some small firms are doing to make their daily operations run more smoothly.

A 2000 law gave digital signatures the same legal weight as those made with ink on paper, and Jason Lemkin is predicting that 2009 will be the year that electronic signatures and e-contracts become boring "in a good way."

Lemkin is the CEO and co-founder of EchoSign, a 16-employee business largely serving small and medium-size firms with a way to offer simple, electronic, binding contracts.

The service offers basic contract documents like a rental agreement, which a user can edit and upload it to the EchoSign Web site in a way that's similar to uploading an attachment to an e-mail.


Jason Lemkin's e-signature company aims to help small firms do more business online. (Courtesy of EchoSign)

"Our idea was to do for small and medium businesses what the shopping cart had done for e-commerce in the '90s and make a way for businesses anywhere in the country or world to close a contract," said Lemkin, a serial entrepreneur who began his professional life as a corporate attorney working with startups. Today, about 80 percent of Palo Alto, Calif.-based EchoSign's customers are smaller firms and about 20 percent are segments of larger firms like Dell, SAP and Dun and Bradstreet.

Lemkin said he realized that in 2005 a large part of the business world was doing business via e-mail plus attachments, but there was still a lot of printing and mailing of contracts, insertion orders, human resources paperwork, ad orders and other documents requiring a signature.

"We wanted to do something more exciting than faxing online," said Lemkin, who started parenting Web site Babycenter.com and a firm that brought nano-sized batteries to market for things like implantable medical devices. "We love the boring, mundane and high volume. We're not trying to automate the big contracts, we're trying to automate the boring contract that you use to bring home the bacon."

He said the service can be an important tool for sales because "the more friction you take out of the sales process, the better chance you have of closing the deal." EchoSign's data show that the average amount of time to sign a contract via its service is 42 minutes. It stores the documents on its secure servers unless a client requests otherwise.

The fee structure ranges from free for five monthly e-signatures up to $99 monthly for more users, unlimited use, storing and tracking, and although it's not the only company in the field, it's one of the only ones to focus on small firms, according to Lemkin.

People generally are very receptive of electronic contracts because they've been e-mailing each other and talking to each other about a product or service beforehand. "It's not like these contracts are just being sent out like spam," he said.

About 30 percent of EchoSign's customers use its service outside of the United States since almost every developed country has an "e-sign" law similar to the one in the United States. But before rushing to pick up your digital pen, be aware that while many countries have made digital signatures legal, they won't necessarily be deemed exactly the same as what's been signed in the United States.

According to Lemkin, countries that accept the U.S. law are Canada, Mexico and the United Kingdom as well as the Benelux (Belgium, the Netherlands and Luxembourg). Australia also has a set of laws that are very similar to the U.S. electronic signature law.

Lemkin says U.S.-based firms can also do business with other countries using EchoSign's fax-back option allowing an e-signature and then a fax of the document with a signature between parties.

If there's a payment problem, a small business will have a binding contract that they can give to a collection agency if necessary, said Lemkin.

Here are links to some other "cool tools" I've written about recently:

* MuseWorx was formed to help small firms efficiently and effectively swap large files online.

* Cloud computing enables small firms to let someone else deal with computer servers and other technology infrastructure.

* Start-up Shoeboxed offers a way to digitize, analyze, store and export paper receipts.

* SuccessFactors offers online human resources tools for small businesses.

By Sharon McLoone |  January 16, 2009; 2:55 PM ET Tools and Tips
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