Document collaboration giant Dropbox has announced it is buying e-signature and workflow vendor HelloSign for $230 million, in its biggest acquisition to date. Founded in 2011, HelloSign is a relative newcomer to the still fragmented e-signature market but has established itself quickly, growing to an 80,000-strong customer base. Becoming part of Dropbox opens up a much broader market opportunity.

Its relative youth gives HelloSign many of the characteristics of the new breed of enterprise software vendors I wrote about last week, a pedigree that Dropbox shares. HelloSign has focused on ease-of-use and an API-first approach that has seen its service incorporated into other platforms, most notably Google's Gmail service, the Salesforce Essentials SMB package, and Oracle cloud content management products. It also has partnerships with Microsoft OneDrive and Box, and was a launch partner last November for Dropbox Extensions, a new series of partner integrations designed to add content-based workflow automation into the Dropbox environment.

All these partnerships are expected to continue after acquisition, as HelloSign says it will continue to operate as an independent brand as part of Dropbox. Meanwhile, Dropbox says it will continue to work with HelloSign competitors such as Adobe and DocuSign, who were also launch partners for Dropbox Extensions.

Workflow's the big attraction

The big attraction for Dropbox in acquiring HelloSign appears to have been its workflow capabilities, for which e-signature is a great complement — the most important workflows often involve a signature, whether it's an NDA, a sales contract or an employment offer. As HelloSign COO and Box alumnus Whitney Bouck told me when the company announced its Salesforce integration, speeding up these processes directly impacts a company's bottom line:

All business is based on mutually agreed terms, and that ultimately needs to be signed. If we can make that truly frictionless, then we’re taking all the barriers out so that people get to the point of value faster.

In addition to its flagship HelloSign e-signature and HelloFax virtual fax services, the company has been building out its HelloWorks workflow automation platform. In November, it launched a no-code, drag-and-drop workflow builder to make the API-driven developer platform more accessible to non-technical users. HelloWorks was key to the acquisition, Dropbox’s SVP of engineering, Quentin Clark, told TechCrunch this week:

What is unique about HelloSign is that the investment they’ve made in APIs and the workflow products is really so aligned with our long-term direction ... It’s not just a thing to do one more activity with Dropbox, it’s really going to help us pursue that broader vision.

My take

The first thing to say about this acquisition is to point out just how lucrative the e-signature business is, even without the workflow element. The maxim that "the deal isn't done until it's signed" is seared on my consciousness from my early experiences in sales. Removing the barriers to getting that signature make subscribing to an e-signature service a simple no-brainer for any contract-based business today. That $15 or so a month is amply repaid in time and deals saved. Multiply that figure by the number of business people in the economy that need to get signatures on documents and you can see that this is a massive market.

So Dropbox will easily recoup the $230 million paid for HelloSign just through its reach to millions of business users for whom it now offers a convenient e-signature service backed up by the Dropbox brand. Do I care whether my e-signature service is provided by DocuSign, Adobe, or Dropbox? Of course not, so long as it works.

I think this deal signals the end of the standalone e-signature provider. Just as EchoSign became part of Adobe's document management empire and HelloSign is now part of the Dropbox file sharing universe, I foresee the likes of OneSpan, PandaDoc, RightSignature, SignNow and all the rest of this highly fragmented market getting scooped up into end-to-end propositions. Perhaps DocuSign will survive as a provider to the enterprise market, serving organizations that want to wrap an e-signature service into their own custom workflow automation. But the mass market won't be interested in e-signature as a separate add-on when they can get it as part of a workflow solution.

Therefore the second element of value for Dropbox coming out of this acquisition is the workflow automation platform that HelloSign brings with it. While e-signature may be lucrative, it's workflow that's strategic. As I've written in the past, digital collaboration has to be channeled around some kind of structure for purposeful teamwork. This is why messaging platforms such as Slack have won so much traction — it's so easy to embed workflow automation into a messaging channel. Document-centric platforms have to add a workflow platform to stay competitive, as we've seen Box doing last year. It's not a surprise to see Dropbox making a similar move now.

HelloSign makes a great fit culturally, too — it has a similar viral appeal, which has always been one of Dropbox's strengths. In the enterprise market, Dropbox often flies under the radar because it's perceived as being a consumer brand. But it's a significant enterprise player and the power of that viral approach shouldn't be underestimated. Now add the ability to entrench itself in the business processes of its customers with workflow automation and you start to have a proposition that's not only appealing but also very sticky. Overall, this acquisition looks like an astute move by Dropbox.