With Scott Orn

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Scott Orn

Scott Orn, CFA

Sarah Schaaf of Headnote on Modernizing Legal Payments for Law Firms

Posted on: 05/31/2017

Sarah Schaaf

Sarah Schaaf

CEO - Headnote

Sarah Schaaf of Headnote - Podcast Summary

Sarah Schaaf of Headnote retraces her journey from Google Lawyer to legal industry startup founder. Headnote makes billing and collections easy for lawyers. It’s a huge pain point for lawyers and the company has already handled over $1M in its very short life. We discuss the value of an incubator (NFX) and how it helped Headnote’s team pivot to the right idea. Finally, we talk about working with your spouse and how rewarding and challenging that can be.

Sarah Schaaf of Headnote - Podcast Transcript

Scott Orn: Welcome to Founders & Friends podcast with Scott Orn at Kruze Consulting, and before we have this fantastic podcast with Sarah Schaaf at Headnote, I want to just talk about a couple of things; first of all, Founders & Friends podcast is brought to you by Kruze Consulting, the number one startup accounting firm in the world, we have 160 clients, we have 25 team members, we have I don’t know if I want to say mastered, but we’ve pretty much nailed the startup accounting process, taxes, monthly financials, valuation, helping you get on payroll, helping you get on benefits, anything you really need we can do for you. So, if you need something, give us a call or if your friend at a startup might need a little help, we can really destress the situation, it’s actually very rewarding, so give us call. And secondly, this podcast is brought to you by Zenefits, Zenefits your all in one HR service in the cloud, they’ve virtualized everything so your offer letters, your PTO tracking, even just getting your benefits and monitoring everything, all done in the cloud, love it, it syncs with a lot of different payroll systems, they have their own payroll system as well, but Kruze Consulting uses Zenefits, we really like it, great people there, great support, so thank you Zenefits. And I think that’s it, enjoy the podcast with Sarah, she’s fantastic and that’s it. Welcome to Founders and Friends podcast with Scott Orn at Kruze Consulting, and our very special guest today is Sarah Schaaf of Headnote. Welcome Sarah.
Sarah Schaaf: Hey Scott, thanks for having me.
Scott Orn: I’m super excited about this podcast, because you have a really interesting background, you started the company based off a pain point you’d experienced, and there is also a giant pivot in the company’s history, so we have a lot to talk about, and you are a husband and a wife team. So this is like right up my alley, it’s going to be awesome. Do you mind just starting off and tell the audience your background?
Sarah Schaaf: Yeah definitely, so I’m an attorney by trade, I spent the majority of my life working in and around the legal industry, my folks both were attorneys that were entrepreneurs, and it was the family business, that’s what you did, summers, vacation days, days off of school, you went and worked in law firm.
Scott Orn: Were you a paralegal, for your parents?
Sarah Schaaf: I was everything but
a paralegal: receptionist, messenger, file clerk, you name it. They were like put us to work. And then I went to law school myself, and enjoyed it tremendously. I’ve since heard if you love law school you don’t like practicing, which I found to be true. I made my way kind of through the ranks until I was at the legal department at Google, and then decided to leave to do something on my own, something big.
Scott Orn: What is that, what is Headnote?
Sarah Schaaf: So Headnote is kind of all of my life experience realized, and together in one pretty package, and it’s essentially like [02:57 inaudible] for the legal industry. So we have created one ubiquitous payment platform where everybody in the industry, attorneys, their clients, all of the legal vendors that they work with can easily pay, transact with each other automate payment.
Scott Orn: Getting paid is a real pain in the ass. Does it track time and things like that, too? What’s kind of the payment, it’s obviously super important, we’ll talk about that but, what other kind of functionality does it have?
Sarah Schaaf: Yes, so the payment is obviously super important. There’s some massive kind of issues in our industry, around the lawyers’ need and requirement to have a trust account and operating account, and trust accounts are not allowed on all major payment platforms, which I am happy to talk about why; but we essentially used Fintech to solve that solution, so now you can bring 100% of your payments online. The types of payments that go to trust accounts are like retainers, any time that you take a payment that you haven’t yet earned, a fee in advance of any kind, you have to put it in your trust account. So we’ve created a really simple way for our lawyers to do both trust and operating accounts online, almost no behaviour change, also we’re building out the time tracking feature. Right now, you can use any other time tracker you are currently using with it, it automates the collection process, which is hugely, hugely important in our industry; completely reduces the payment time, like 60 days to a matter of hours and gives you real time activity tracking for your clients, data about your AR over time supercool.
Scott Orn: I am like foaming at the mouth right now, we’ve actually started doing some stuff on our own where we use Stripe now, things like that, so we pay a lot of lawyers’ bills for our clients. I feel so bad for them, because I’ll see the invoice will be like- literally their clients are paying February invoices right now, we’re recording this in the middle of May, so the February invoice comes out sometime in late March, it sits around for two months and finally gets around to paying it, so the cash conversion cycle is like, it’s horrendous, I don’t understand how they can even live, how do they pay their bills?
Sarah Schaaf: Right, it can be really hard especially given that 75 percent of lawyers today are working at firms of 20 attorneys or less, there’s more independence and small firms ever, they have more need for that cash than the large firms, they have less admin help to help them actually get paid faster, so it’s a massive issue. And if you’re waiting that long to pay your attorney and they’re using like a coreporter or a paralegal service or some other freelancers, they are now going to have to wait an additional 30 days after you pay to get paid, so we’re looking at like 60 to a 120, 180 payment day cycles.
Scott Orn: It’s totally insane, and the back office for the stuff must be just horrendous; and then the other thing I’ve kind of found is the longer something goes unpaid, the more temptation there is on the entrepreneurs, God bless the entrepreneur, but they have a tendency to try to renegotiate the fee, because it’s like- it’s become abstracted to them, they don’t even remember what that work was, they literally don’t remember.
Sarah Schaaf: That’s part of what we’re doing also on the client side, it’s that you usually get a bill at the end of the month or the project and in the moment, you needed that done, you will call an ASAP urgent and subject line like lawyer have to have this done, this is massively important, and then when you get the bill, like 4, 6 weeks later, you’re like what the hell, what was this, like I don’t even remember this, you really needed it in the moment, building tools that can help the client have real time transparency, you can actually approve charges when they’re done, so from the lawyer side there is actually collection, a system of record for that collection history. Trying to just speed it up and give everybody a little bit more transparency into what they are paying for when, what’s happening.
Scott Orn: That’s huge. Do you guys handle the engagement letter stuff too, can they do the engagement letter through your platform?
Sarah Schaaf: Yeah exactly, so we actually have just finished that feature, so you can templatize your own engagement letter, because no lawyer wants to use one that’s not their own; change the field send it out, it’ll track that and do the retainer request and then you can automate the process of getting that signed and engaged as well.
Scott Orn: I look forward to Headnote for account, that’s going to be exciting, this is all the things we need too, I was even laughing when I asked about the engagement letter; I should also say we’re a proud investor in Headnote, Vanessa and I, and then also you’re a client of Kruze Consulting, and when we were doing the engagement letter for Headnote and Kruze Consulting, your lawyer was like really, really focused on something, I don’t even remember what it was right, and so we had an attorney engaging like three times I was like ready to shoot myself, I think you were ready to shoot yourself.
Sarah Schaaf: I totally wanted to shoot myself.
Scott Orn: I was like, why are we doing this, and I have been thinking for a long time, we need to have our engaging letter like on a web form, it just would make things so much easier.
Sarah Schaaf: I totally forgot about that, that was really funny.
Scott Orn: So, that’s an amazing product, clearly in need, I know there’s a need, because I again pay a lot of invoices for our lawyers; what’s been the reaction as you went on the market?
Sarah Schaaf: The reaction’s been fantastic, we have some incredibly passionate early users that are doing more than we thought they were going to do by now, we have attorneys tracking to send million dollars of invoices out themselves this year, as solo, so we see a real need. And we’ve had our users, we’re in beta and we’re going to be launching soon, publicly. We have over a million dollars of invoices that our users have sent out, so they’re using it, they like it, it’s exciting.
Scott Orn: That’s awesome. What’s the feedback, like have they said anything specific or they are asking for more features like I would be?
Sarah Schaaf: That’s the tough part, right, you always have to balance, like what are we going to actually build, what’s the real need, like what is this actually going to help them with, the mom test right, they all think they want it but like do you really want it, would you really use it?
Scott Orn: Do you test them like okay, we are happy to build that, but it’s another like one percent, you know, see how they react to that?
Sarah Schaaf: Absolutely, massive upsell opportunities, I mean we’re seeing some people who are in like more cash based practices, like criminal lawyers, they get like lots of cash sometimes if they’re like criminal defence attorney or certain areas of the law, they’re just really more cash based, immigration law, than credit card online, they’re using the tool as a tracker as a way to automate the process, kind of as in different ways than we anticipated, so it’s been really interesting. In general, they are paying us constantly because they just want more sooner, so it makes us need to move faster and prioritize who we are going to respond to and how we’re going to do those features, but they’re engaged.
Scott Orn: You have the greatest problem a startup can ever have, which is people love it so much they want more, like most startups go through two years of trying to find what the pain point is and how to solve it, you guys have done that real quickly.
Sarah Schaaf: Yeah, the product market pay, yeah, now we have to keep up.
Scott Orn: So as you built the company, maybe talk so we kind of alluded to a pivot here, like tell the whole story, actually before we get there, like talk about the leap from leaving Google, which is a super prestigious company, stock options, free lunch, all that kind of stuff to doing your own thing.
Sarah Schaaf: Right, so, yeah the pivot, I mean, as it sounds from our conversation so far, like oh yeah it will make so much sense, it was so not linear, there is massive zig-zags along the way. So, you know, growing up in this family of lawyers and then going to law school and then practicing, and I graduated in 2008, which was kind of epically weird timing in any industry, but the legal industry was going through this massive change because of the crash, it was the first time the industry really felt the pain of the recession or downturn. So I had this weird experience of being like a first year on the front lines at a law firm, but having you know ten plus user experience at a firm prior.
Scott Orn: You knew how the law firms operate.
Sarah Schaaf: Yeah, and I was like this is weird, like this is actually like overhead had been so drastically cut and staffing, and like the amount of tasks the lawyer was responsible for were totally different than they had been a few years prior; and most other people working around me who were new like me were like, yeah okay, I guess this is how it is, and I was like this is actually odd. The other thing I remember that I now find so funny is that, you go into a firm and you are first year and you are getting talked to about a seven year partnership track, and like this is how you get there, and all the first years are in their suits and they’re sitting there like nodding their heads, and then we would go get a drink after work or something get a coffee, and we would all be like I don’t want to be a partner, they would be like me too. Nobody, you know that’s half of it is like this 2008 change, and then the other half is like the millennial you know I’m a gray haired millennial, which is kind of a funnyhanging onto the bottom run of the ladder, but the mentality was like we’re just doing it because this industry hadn’t changed, they think we want to be partners and spend 20 years in this firm and we’re all like we’re just getting experience, we can figure out what we want to do. So I kind of rose through the ranks at two different firms, and then ended up at Google, actually it was like super, I took a like really low level position in the legal department, because I was just like I’m burned out, like I had a couple of years of grinding and wanted to start a family and was just like, you know it was an opportunity to take 9 to 5, or 8 to 4, I mean it’s Google, you can choose your hours, this isn’t an engineering department, it was actually like kind of chill compared to the big firms that I was at. And after spending a while there, I just figured out that I still wasn’t happy, and I just knew what a happy lawyer looked like, it’s my parents, they’re like the two oddest happiest lawyers in the industry, and I was like I don’t feel like that, and I always thought that if I could get into one of these kind of amazing companies then I was going to be happy, but if you’re at you know Google, even in this kind of stress free position, I was like this is not the right profession for me, and I got to get out. And so I left, and everyone thought I was like totally nuts, but I just knew that I was really close to not being able to get out of the industry, or least of being a lawyer. And so, the first thing that I wanted to do is something completely opposite, I mean I was just like I’m not meant for this industry, I’m like the black sheep in the family, everybody else loves it, my husband is also from a family of lawyers, most of them love what they do, and I was just like this is not the right for me; I’m a consumer, like I’ve always been a consumer, I want to do something like sexy, like consumer stuff; and that was really when you and I met, it was like I want to do something that’s totally a problem that I as a consumer see and then I want to solve. And I was at the stage of my life where I was having a family, and so that was kind of my real first dive into the entrepreneurial pool was doing something that was essentially like a rent the runway for high end stuff for your family, and it is, it is still a great idea, it was a great idea that people just didn’t use the way that they should have based on the need that was out there.
Scott Orn: So you could rent like stroller, baby clothes, right things that like you are only going to use for three months?
Sarah Schaaf: Right and like a lot of that gear that you literally need for like a month, and they are couple of hundred bucks?
Scott Orn: What was the url, it was the best url?
Sarah Schaaf: The first name for it was foxy mama.
Scott Orn: Foxy Mama, I want to buy that url.
Sarah Schaaf: You and my dad, were like I thought that foxy mama was a good idea, and it was, these are all like really good ideas and the good thing about that journey is that it actually got us into an effect skilled, which was kind of a total trajectory changing moment for us as a team, and they essentially trained us and mentored us and helped us figure out that that wasn’t going to be, it was going to be a lifestyle business at best, that the e-commerce is so hard to get investment, especially when you don’t have the background and that founder market fit, that we all strive for and it was kind of like ok, we have this capital that we’ve raised-
Scott Orn: You actually built the prototype and ran a bunch of tests, oftentimes people will come to me and say is this a good idea, and I’ll be like, I think whatever it is, it’s either a good or a bad idea, but you don’t know until you actually build the prototype and try it, and I had a similar experience trying to build a landing site, and my minimum viable product, like people just didn’t like it, and it was like this really tough moment, but it’s also kind of refreshing, because you’re like you make a 50 thousand dollar mistake, a one year mistake, instead of a 10 year mistake; and so kudos to you for actually going through that whole process, building it. And I am sure the audience can hear this, you’re very peaceful about it, you’re like it just didn’t work, right, what are you going to do?
Sarah Schaaf: Yeah, and I can’t change how people are reacting. I will say from that experience, I wish I would have followed a little bit more of this kind of lean start up mentality, it actually doesn’t have to be perfect to get a pulse, yeah and I did have especially in a consumer, the branding, at the end of the day, it doesn’t matter how ugly it is if it converts, and putting lipstick on a pig is not necessarily going to make people want the pig any more, so now when people come to me and talk about ideas and the first thing I say is like, you should test it, and they are like okay well I’m going to work with this branding person, I’m going to do this, and I am like no, you could literally do something in Photoshop or whatever, just like pull something off the internet, make it as good as you can and go out there, if they love it, they’re going to love it. And for us, looking back we spent too much time trying to make this a perfect experience without knowing, if you build it they will come, they are not going to necessarily just come.
Scott Orn: My favourite story about that, one of my other investments, my friend Ben Munoz, literally started this company called Nadine West, which is doing really really well, it’s a consumer subscription service, all he did was set up three different ideas and do Facebook ads, and the Nadine West Facebook ads converted, they were three complete different businesses, no website, nothing, you just look to see who is clicking, and the conversion was astronomical, and he was like okay that’s the business I am going to start.
Sarah Schaaf: I don’t know if you remember, but you introduced me to Ben and I went off to Austin, and hang out with him and talked to him a little bit, and saw their facility, and that’s a really good example. I met his business partner, his girlfriend’s name is Nadine, they literally were like this was a url that was available, like they did not overthink it. And we build Expectantly, it had really good clickthroughs, that was the part that was really confusing, was that it tested like through the roof, and then people wouldn’t actually convert, and then we had to go out, we actually went out in front of Babies “R” Us, and we’d stand there with our iPad and just ask people questions, like these are a customer like what are you guys why wouldn’t you use this, why would you whatever, and what we found out was that there is this whole subset of the population that actually act or in the resell value on Craig’s list when they buy it, a big big big portion. We thought that that was more of a like I guess I’ll do it when I’m done with that, they’re actually looking at this as like I’m going to get 30 or 40 percent of the retail value back, so in order for you to make this worth my while, you’re going to have to actually save me that 30 or 40 percent plus an additional 30, 40 percent, so there was just things we learned, that we had to get out there and hit the pavement, and then it was how to make the decision fast.
Scott Orn: So then, I mean that’s amazing, then you got in the NFX, which was an incubator.
Sarah Schaaf: Yeah, accelerator, yes exactly.
Scott Orn: Can you talk about that a little bit?
Sarah Schaaf: Yeah, so I’m obviously a huge fan of NFX, James Currier who is kind of like legendary entrepreneur in the valley, he is one of the partners. Stan Chudnovsky is his business partner and also NFX partner, he’s now heading Facebook messenger, he has a product for Facebook messenger, and is just a brilliant engineer, Pete Flint who is one of the founders of Trulia and Gigi Levy Weiss, who is one of the top Israeli investors. And they have an investment hypothesis that if you don’t have network effect to the core of your business, you just don’t have a real business. And so, part of what was an issue with Expectantly, and when we really dug in is that there wasn’t enough network effect. That’s one thing I love about Headnote, is that there is just this incredible network effect potential, but an NFX will accept you know very limited companies, you have to have an invite to be able to apply, and I actually remember now, I wrote to one of our advisers Porter Gale, who’s the ex CMO at Virgin, and kind of this amazing connector, it was like you should apply for this program, and he was like maybe I don’t know, I don’t know if it’s our thing, and I’m busy and this and that, I said you should think about it. And she said Raj Kapoor, my friend Raj can get you an invite code, they have like a mentor every class, so I wrote to Raj who I did not know, who’s now really close friend and adviser to me and he was the CEO of Snapfish, and he had started Fitmob, which merged with ClassPass, he’s now the chief strategy officer at Lyft; I did not know him, and just wrote him this, just kind of ask if I could get the invite code and he said okay, and I went through the interview process and I remember my last one as with James Currier, who is the sweetest guy you’ll ever know, but he can be a really tough cookie. And he just kind of leaned
backScott Orn: I already know what is coming is going to be great.
Sarah Schaaf: He put his hands behind his head kind of like you know chilling out, and he said I don’t know what to do with you, and I like what do you mean, I just met him, and he’s like- at the time there was me and two other co founders, he said you guys are three not so young, non techies, and I just don’t know what to do with you.
Scott Orn: Underlying that he already knew like he didn’t think the model would work?
Sarah Schaaf: Yeah, and he did say to me how long are you going to go try for this business? And I was like as long as it takes, and now I know that was totally wrong answer, because the right answer is until I know it’s not going to work, and then I’m going to be resilient and figure out what my next thing is. But yeah, that was like that ended up being a huge thing for us, they helped us learn so much, they helped us figure out what we were really good at, and Headnote was a direct response to that.
Scott Orn: So how did this go, was it like two months at NFX and then you figured it out? Give me the timeline.
Sarah Schaaf: Man, that was a stressful summer, let me tell you that, that was the last summer, it was the longest summer, there is just nothing like social pressure to really, I mean that’s the basis of law school, right, like Socratic method, you prepare because there’s a small chance but real chance that you will get called on in front of your peers and you will look like an idiot, that applied to NFX completely, like it’s a very intensive program in Palo Alto, you know it ends up being 4, 5 days a week and then in between that, you’re doing the things you talk about to test, God forbid you go back two days later without data, like this is not a like well try it next week, it’s like leave right now and go try that. So it really taught us about speed and we learn pretty quickly that this was not going to work, and they did not say to us this isn’t going to work, they were like-
Scott Orn: A little bit like being a parent, like you want your kids to figure it out on their own kind of thing.
Sarah Schaaf: Exactly, and like it’s your decision what you want to make, it’s your call what decision you want to make with this info. And so, they were very like nice and gentle, they also were kind of like, yeah, you guys do what you want, and you’re just probably not going to get as much of their attention until you figure out something that’s interesting to them. And so, right away we kind of figured out we did the testing, we didn’t really like shit, this is just, it’s just not converting, like it’s this great idea that everybody loves but nobody’s using, and anyone who has kids is like God I wish I would have had that, but then when you’re in the moment, there’s all these different behaviours we learned about that result in you not really wanting to change your behaviour that much, and changing your user’s behaviour is the hardest thing that you can do, we all know.
Scott Orn: Meanwhile, you got these poor lawyers not getting paid for three months.
Sarah Schaaf: Right, meanwhile there ‘s 437 billion dollar industry that’s just sitting there like no one knows anything about why this is like this, and I have now what we refer to as domain expertise, but I’m pushing away, and at the same time, even when I met you, I kept saying when people say what do you do, I’d say I’m a lawyer, but now I’m doing this like I couldn’t mentally break away from this identity that I had wrapped, my identity was wrapped up in it, and I wasn’t ready to leave all the way, I just kind of needed a break and so when the opportunity came up that was like, ok what do we know and what are we really good at, and what pain have we seen. It was so obvious that it was the legal industry, it was like I cannot believe that we have been grinding at something that we are learning on our feet, like don’t learn on your feet.
Scott Orn: My story is so similar to yours, and I was doing a job I liked, doing venture lending at Lighthouse, but like I was just never really that fulfilled, and I grew up on a family of entrepreneurs, so I knew exactly what entrepreneur is like, and Vanessa was doing it, and I was just not like that rewarded, but I knew the pain points on the other side, because I had been negotiating the start up CFOs, yeah and I saw how shitty everything was, and how chaotic all the financials were, and I was like you know, and I was telling Vanessa this constantly like, you should start your own business, you should do this, you can kick ass; and then finally, she got to a point where, she’s the risk taker, and I joined her later, but I was like I feel so much more awarded because I’m doing, I’m helping the people who needed the help, and we’re doing it in an incredible way where it’s really benefiting them, and it’s like I was just like you, I liked the industry I was in, I seemed to be on the other side of the industry. It’s so similar to you.
Sarah Schaaf: You had to tweak it a little bit, and now I’m like, oh I m so at home I really like, I know the stuff in my bones, and I like love this customer, is the customer that praised me, this is my life like I’ve spent more time on lawyers than anyone else my whole life, so I know how they think, and I know the vendors and I just know how all of these pieces fit in with different personalities, gravitate towards different kinds of work; so now it like all make sense, but there is definitely that period of like a year that, looking back was this blip of like why would I do that, but it got me, it was another step in the path.
Scott Orn: Once you can commit to an idea, it’s very powerful, like when you are a hundred percent committed, and it’s working, everyday you just wake up and you know exactly what you’re going to do that day.
Sarah Schaaf: Yeah, the most exciting, the most like scary, stressful and exciting thing every single day, we closed pretty, for industry standards nice sized ground, with the top ten investors that I have not announced, so I am not going to talk about it, which you and I have talked about and you know, but you get to that the next thing you wanted and now it’s like I got there, now there’s just so much more to do, but this was part of my dream, it was just to get here, so how can you not be happy every day.
Scott Orn: Yeah, that’s awesome. Well, it’s an awesome story, I sincerely like, I’m so excited for lawyers to have access to this tool, because it’s like, I just see it, I honestly don’t know how they fund the working capital in these businesses, it’s got to be insane.
Sarah Schaaf: Yeah the whole thing is terrible.
Scott Orn: This is just going to make everyone’s life so- and the idea that you can approve, we actually institute something like that, we make people email us back, and say this is approved now.
Sarah Schaaf: Yeah, I’ve noticed that you do that, but then it also says, if you don’t approve this in thirty days it’s automatically going to go for, which is awesome.
Scott Orn: Yeah it’s like, there’s no reason for this stuff to sit out there for three months, and people will tend to kind of postpone whatever they don’t need to deal with, so this is awesome that you’re doing. We’ve been going for a while but I want to talk about the husband and wife. So, Thorn is a great guy, so how is it working together, what have you learned about each other? This is a load of questions, because I have a strong opinion on this.
Sarah Schaaf: It’s great, most people, and I’m sure you get this all the time, are like that’s so great you guys do that I would never want to do that with my wife, with my husband. I will say that I met you know Kevin Hartz kind of early in this journey, you know within maybe year ago or so, and nine months ago, and him and his wife Julia started Eventbrite, and are this like insanely amazing couple.
Scott Orn: I’ve heard really good things about them.
Sarah Schaaf: I don’t know her, he’s great and Cyan Banister I’ve met and her and Scott have had this great, so I have a thing with husband and wife teams Theo and Kara who started Hint Water, like, there is these amazing the Houzz team are husband and wife, so it’s less like strange, but I’ll tell you, I’ve been in meetings, at like two, three partner meetings in, and some partner will be like oh, I didn’t notice that before, that’s a deal breaker for us, and I am like, no problem, I always mention it in the first meeting, whether people hear it or not, and I would rather know right then too.
Scott Orn: The deal breaker thing I think is a mistake, in that I can see it being a deal breaker we actually talked about this at Lighthouse, you worry that like someone could be stealing money or something like that.
Sarah Schaaf: If someone’s not performing like are you really going to get rid of, are you really going to find someone else for that role?
Scott Orn: Yeah, but if you work like independent counting firm, like us, then there’s no stealing money we know exactly what’s going on, and so it seems like that’s an old fashioned way of looking at it. But it is stressful, so did you guys go through like any moments where you’re like holy shit…?
Sarah Schaaf: Yeah, I mean, the thing with us is that Thornton had spent the ten years prior to us starting our company working at startups, varying levels of success, some he started himself, some he was a very early employee, some had exits, some you know they literally would like shutter the doors. One day, because google started doing this, and we got to shut down, so we saw kind of the whole rollercoaster wasn’t just good stuff, and knew what we were getting into, but I just watched from the sidelines for ten years, it was like that just seems so exciting, so he was really like what inspired me to have the courage to do it. And so for us, it was very much like it wasn’t an accident, it was like we want to start something together, we’ve met when we were 18, in college.
Scott Orn: I didn’t know that!
Sarah Schaaf: Yeah, we were friends for like 6 or 7 years before we started dating, good friends. And then dated, moved in like within six months, dated, never ever broke up anything, got married we’ve been married for five years, it’s 12 years we’ve been dating, we have a son, it’s like we went from friends to dating to husband and wife to parents to business partners, it’s just like another hat, and another way to get to know each. But it’s hard, and I and like I tell people very openly, like we have a coach that we see together.
Scott Orn: I was going to ask that question, because actually Vanessa and I did some of that last year, and it was very helpful. The happiest I think I’ve been, was walking out of some of those meetings, because what I found, is that your personal life bleeds into the business life, but it was more of a learning how to work with each other and learning how to hear each other, and learning how to fight in a productive way, it is a weird concept but it’s actually true. And so, we have the coach, the coach would ask me a question or ask Vanessa a question and she would answer and I wouldn’t quite understand what Vanessa was saying and the coach would explain what she said to me, and I would be like oh that makes perfect sense, that’s what I feel too. It’s totally like marriage counselling, and then it was the same way the other way.
Sarah Schaaf: Different processing speeds, like you have to be able to respect that sometimes someone is like I’m just not at your speed right now, I need to take my time to do it, because then you’ll have that moment of like get there, get there where I am, and it’s super helpful. We’re super proactive in that way like nip it in the bud, and it’s definitely something to be proud of I think.
Scott Orn: The other interesting thing is, you’re like the front person for Headnote, Vanessa is the founder, she’s the front person for us, too. It happens way less now, but sometimes we haven’t in the early days, we would sit in a meeting and whoever the CEO was, they’d be looking at me, and it would be so uncomfortable for both of us, because I would be like this person, I would be like shh Vanessa the founder of the company, da da da. And that actually created some problems for us too, because she would be like I don’t understand why these people are asking you this question when I’m clearly the one who actually knows what I’m talking about. And I would be I don’t know either, it’s not my fault.
Sarah Schaaf: Absolutely and I think, I was just talking with somebody else about this, a day or two ago, yeah and I think there’s like this you start trying to exude a little bit more masculine energy when you’re like in those meetings, and then you have to figure out how to kind of turn that off when you’re at home, because like you know, we have a really balanced relationship, people probably would be really surprised to know that at home like it’s pretty much like mostly Thornton’s world, and like I’m living in it, and then at work you know we’re trying to work together and it’s very much like deferential to a lawyer, right like he grew up in a family of lawyers too and worked at their firms, so he knows this customer really well, but at the end of the day, if it comes down to like what a lawyer say, how do they talk, what would they call this, that’s a Sarah question.
Scott Orn: Yeah, we’re the same way. I don’t know if I quite have, I don’t think it’s Scott’s world at home.
Sarah Schaaf: I’m sure Thorn would be like yeah right, yeah right.
Scott Orn: That’s really cool. The cool thing about being a husband and wife team is that people seek you out, and actually tell you their stories, and I like that and it’s cool as more people starting businesses. Vanessa always says because we’re going to have kids eventually, I’m always like how level of intensity is the kids versus this, and she’s like oh, after this the kid will be easy. This is way harder.
Sarah Schaaf: Yeah, you guys will be fine.
Scott Orn: I hope so, okay well we got to wrap it up. Tell everyone where they can find Headnote and just kind of give the quick tour again.
Sarah Schaaf: If you are someone in the legal industry an attorney, a client or a vendor that wants to have more transparency and do what you’re paying for, or speed up your payment times and automate collections and everything else you hate about your job, then go to or send me an email directly,, or live type chat us on our website.
Scott Orn: Love it, Headnote, huge fan I am an investor, Vanessa is an investor but we see this pain point, it’s huge, people need this, I am so glad you are solving it. You are bringing joy, you’re allowing lawyers to pay their mortgages, this is amazing, just this cash conversion cycle needs to be fixed, this is huge, awesome. Alright Sarah thanks for coming by.
Sarah Schaaf: Thanks Scott, bye bye.

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