Uncapped with Jack Altman
· Jack Altman, Max Junestrand
[00:00:00] S0: This is going to be a cool new format. I’m here with my new partner, Chetan, and Max. Max, you’re the founder and CEO of Legora, which is an amazing legaltech company that Chetan sits on the board of. I just feel really lucky to be doing this with both of you. Thank you for making this happen. [00:00:00] S1: Thank you so much, Jack. It’s great to be here. [00:00:00] S0: I want to start with the topic of competition. Chetan, when you invested in the company, there were already competitors out there. This was only two years ago. It’s crazy because Legora is a big company already. [00:00:00] S1: Almost 400 people. [00:00:00] S0: The seed was two years ago. At the time of the seed it was an early market, but there were competitors out there. I actually want to start with you, Chetan. What was in your head at the moment you invested? Were you thinking about the landscape around? Were you just thinking Max was so special that you didn’t care? What was going through your head when you did that?
· Jack Altman, Chetan Puttagunta
[00:00:00] S0: The seed was two years ago. At the time of the seed it was an early market, but there were competitors out there. I actually want to start with you, Chetan. What was in your head at the moment you invested? Were you thinking about the landscape around? Were you just thinking Max was so special that you didn’t care? What was going through your head when you did that? [00:00:00] S2: The first meeting that we had with Max was with me, Peter, and Max in the other room. Interestingly, I had invested in two other legal software companies, pre-AI. So there was a shape of the legal market that I intuitively understood because I participated in the market. I understood the different kinds of lawyers, who buys software, do in-house lawyers buy software, do law firms buy it… There was an intuitive understanding that I had. There’s two things that happen when you’ve sold into an industry before. Either you end up hating it or you have some strong bias against it. There was always this idea that there’s opportunity for AI in the legal market. There was a player in the market that had already raised at a billion-dollar valuation. When Max came in to chat with me and Peter, the thing that immediately jumped out was the clarity of thought that Max had on why the general foundation models had a lot of room to grow in intelligence and how that was going to be a huge boon for the legal profession over the next couple years. He had this very strong viewpoint that there was something about legal data that the general models were going to serve in a very unique way.
· Chetan Puttagunta, Jack Altman
[00:00:00] S2: The first meeting that we had with Max was with me, Peter, and Max in the other room. Interestingly, I had invested in two other legal software companies, pre-AI. So there was a shape of the legal market that I intuitively understood because I participated in the market. I understood the different kinds of lawyers, who buys software, do in-house lawyers buy software, do law firms buy it… There was an intuitive understanding that I had. There’s two things that happen when you’ve sold into an industry before. Either you end up hating it or you have some strong bias against it. There was always this idea that there’s opportunity for AI in the legal market. There was a player in the market that had already raised at a billion-dollar valuation. When Max came in to chat with me and Peter, the thing that immediately jumped out was the clarity of thought that Max had on why the general foundation models had a lot of room to grow in intelligence and how that was going to be a huge boon for the legal profession over the next couple years. He had this very strong viewpoint that there was something about legal data that the general models were going to serve in a very unique way. [00:00:00] S0: Max, since you’re here, can you explain what that was?
· Jack Altman, Max Junestrand, Chetan Puttagunta
[00:00:00] S0: Max, since you’re here, can you explain what that was? [00:00:00] S1: It’s worth going back to 2023 and 2024 when part of the paradigm was that you should train your own models and the general models aren’t great and fine-tuning is going to be really important. For two reasons, we were like, fuck that. One, fine-tuning doesn’t really seem to work, at least on the scale that we were operating. To train the new generational model, you had to put billions of dollars into it. Secondly, there was so much application that you had to build on top of the models to make them useful in your environment. Back then, just solving basic data, compliance, privacy, and great file uploads and great parsing and great chunking and all of these things, that was where the value was. [00:00:00] S2: There was another part of your experience, which was that you were actually embedded in a law firm. So you were studying the shape of what data law firms had in a way that was… Bill talks about this a lot — does an entrepreneur strike you as a learn-it-all? It was clear that the early Legora team—when we invested it was five people—was just trying to learn everything they could about how the legal profession worked and they didn’t have any bias towards it. The other thing Max said, which you should share with everyone, is that because they were embedded in a law firm in a windowless conference room in Stockholm— [00:00:00] S0: Sounds nice. [00:00:00] S2: Sounds great. They had a deeper understanding of the data model of a law firm in ways that most of us didn’t.
· Chetan Puttagunta, Max Junestrand, Jack Altman
[00:00:00] S2: Sounds great. They had a deeper understanding of the data model of a law firm in ways that most of us didn’t. [00:00:00] S1: Just to take it back even further, when we started, I offered to buy a lot of lawyers lunch on LinkedIn because I wanted to learn. I would literally cold write them and say, “Hey, I’d love to meet, I’d love to talk about IP law. I’ll offer to pay you your hourly fee and lunch.” They were all too nice to make me pay for lunch, and they’re often not even paying for it. But as Chetan put it, I think it allowed us to work with customers from the very beginning. The founding team at Legora were all engineers. The first lawyer didn’t join until nine months into the journey. [00:00:00] S0: When you had a lawyer join, had you already set the plan and the goal for the company? Was that done without experts? Was that important to do without experts? [00:00:00] S1: It’s actually funny. This is a bit of the Legora untold, first revealed here. The company formation was in 2020 and there were four co-founders. [00:00:00] S0: I didn’t know that. [00:00:00] S1: And I was not one of them. [00:00:00] S0: Didn’t know that either. [00:00:00] S1: They were working on this intersection between AI and law for three years with the early BERT models and even a Swedish-trained version called SweBERT. It was impossible to work with. Not only was it not very intelligent, it was also blatantly racist because it had been trained on Swedish forums. [00:00:00] S0: Some racist data there.
· Jack Altman, Max Junestrand
[00:00:00] S0: Some racist data there. [00:00:00] S1: When the LLMs like 3.5 came, that was when the moment shifted. We turned this into a company. Two of the co-founders left, I joined. We basically said we’re going to work in the intersection between AI and law. We don’t know what that product is, but we’re going to run like hell in this direction. Funny enough, the first lawyer who joined was a soon-to-be customer of ours. He was the CIO at one of the big firms in Sweden that we wanted to sell into. He had built an early version of a GPT plus the document management system, basically an LLM that could RAG into the existing precedent and data that the firm was using. He basically said, “These guys are going to run faster than me, and if you can’t beat them, I might as well join them.” That turned out to be a good decision. [00:00:00] S0: Are you surprised by how strongly the legal market has adopted AI? If I had thought in 2023 or 2024 about what’s going to really adopt quickly, I don’t know if I personally would have seen it coming that lawyers would be near the top of the list. You’ve invested in stuff before too, so I guess this is for both of you. Has it been a surprise over the last two years, the rate of adoption?