Y Combinator Startup Podcast
00:15:50 · Max Junestrand
And that was exactly what was going on. We were working on too many features. We had to rebuild everything for the product launch that we were going to have after the summer, after the sales freeze. And we had to build a platform where it was adaptable to foundations that were constantly changing, both with the underlying models, but also with the frameworks that we were using to build agentic workflows like LangChain, etcetera. And so in October 2024, we wrote down what we would call the Layup Product Manifesto. This was basically gathering everything we had learnt, putting it into one very simple document that we shared with the entire 25 strong person team back then, and that we would rally the troops around. At the time, we were doing about $1,300,000 in annual recurring revenue, and many of our competitors were doing 10 times that, with products that only had one of these features. And I also think that's a function of having started in Sweden. The market is not big enough to house a real unicorn, or a decahorn, or something even bigger than that. And so one of the earliest questions we got from YC was, when will you move to The United States? When will you make the jump? And it was off the back of this product refocus, that we were able to not only compete out the competition on product, but build enough momentum to make the jump over to The US and start to compete for the biggest logos in our markets. And I think as engineers and as tech people, we often overemphasize the reliance on product and on the tech. But if there's anything I've learned in these past three years, it's that it's all about the people. And building product is one thing, but building a company is a very different thing. And we made many early mistakes around this. One of the hiring patterns that we had to unlearn was looking for fancy logos on resumes, or what we like to call, like why intercept? If you think about somebody's skill curve, it might start out really high, but if they don't have a good trajectory upwards, they are going to have a really hard time working in a company that is scaling exponentially. And so instead, we started to look for people like us, who wanted to work insanely hard, with a very high growth potential, and we doubled down on that talent over and over again. Our top seller today is 23 years old, and he sold over more than $10,000,000 worth of Legora.
00:19:09 · Max Junestrand
And he had no sales background, he jumped out of university, and by continuously doubling down on that type of talent, I think we have built a very unique culture at Legora. And one of those things has been about bringing and building cultural fit. Up until the point where we were around 500 people, I interviewed every single candidate outside of engineering. Now I interview every director in Upwards. But what we have done is we have set the cultural foundation in the business, where it self selects for itself. We have three values at Legora, lean in, fight for excellence, and grow together. And together they make LFG, let's fucking go. That also sends a signal to leaders and others who join the company who are coming from more perhaps established backgrounds, where joining a company where the values includes profanity, quickly sort of tells them what this is about. Another very complex cultural thing starting a company in Scandinavia is something called Jantelagen, or the law of Jante. This is very foreign to our American friends, But in Swedish culture, this basically means that you should not think that you are somebody, or you are not more important than anybody else. And your ideas are not better than anybody else's. And I think a part of this humility is good, and it supports a culture where the best ideas win, and where people earlier in their careers feel empowered to speak up. But it's very hard to build one of the fastest growing enterprise companies in the world, if you think that you aren't somebody, or if you don't think that you are better than anybody else. And so we have had to really create a nice cocktail of US, European, and Asian culture all in one to create a global company that is Legora today. And so I really think that building a strong company culture is the best guarantee to attract and keep the best people. Another way that company culture gets expressed at Legora is through articles like this one that ended up in Sifted. For us, there is only winning. Everything else is losing in a winner takes all market, or winner takes most market. And the company has to run like there is no place for number two. I think it actually would be fair to say that when Legora was founded, it really had no reason to exist. We were one of many legal AI companies.
00:22:20 · Max Junestrand
But because of this mentality, and because of not feeling like we're safe, even though we have achieved extraordinary numbers by any normal measures, we continue acting like professional swimmers who are looking down in our lane, while the competition is looking sideways at what we're doing. And at Legora, we have had to build a culture to really support that ambition. So starting, you know, years behind some of our biggest competition, and having to build this intensity in a country where most people want to go for fika at 3PM, which means having a cinnamon bun and a coffee, or, you know, go home at five. One of the ways that that has been done is to create cultural values and cultural moments that really distinguish us from many others. And so in Swedish, there is a saying, you can wake up with a taste of blood because you're so excited about something. And I was doing an article in Swedish, and I used that saying. And I didn't know that the interviewer was going to release that article in English. So when this came out, it got lots of fun reactions. One of them was, is Legora made up of vampires? The second one was, you guys need to floss better. Many good ideas, but this has now turned into the word blued smock internally, which means that, and we just keep going at it. And I think part of having our HQ in Stockholm has worked to help us keep this. Everybody globally from the company makes their onboarding in Stockholm, which is a lot nicer in summer than in the winter, but that has created the same vibe in any Legora office, regardless of where you walk in, all over the world. And I think one great example of this was, we had a very big law firm in The US, that our competition was working with, but that law firm had a specific problem around being able to draft certain types of documents based on incoming term sheets. And our competition had promised that they were going to solve that problem for them, and they hadn't. And so one of our US based engineers, legal engineers, lawyers, learned about this use case, got on a flight to Stockholm, spent a week with our engineers, solved the problem in Sweden, and then went back to The US, and delivered it to the customer. And I think that Swedish base has become one of Legora's real superpowers.
00:25:28 · Max Junestrand
And so to round things off before we jump into the q and a, I'm sharing this stage this weekend with people who have built things at a scale that I haven't yet gotten close to. And so I will leave many of the big lessons for them. But what I can tell you is that three years in, it's a little bit smaller than that. Most of what actually mattered in the company and in Legora so far did not revolve around signing a big client, or closing a new round of financing, or opening a new big office in Manhattan. It happened in, you know, a windowless room without much oxygen, or on a call on our way to the airport, a Slack channel at 2AM, trying to fix a bug before a big presentation on Monday. And nobody puts that in a pitch deck, but that is what makes the company. And you shouldn't wait around for those big moments. You have to love the hustle. And I think if I can leave you with anything, it's that even though we started in a small law firm in Sweden, I was born in the Swedish Archipelago with a class of 10 other people. I had... Thought I had a big plan for my life, and I I was going to go to McKinsey after school. But when GPT 3.5 dropped in our knees, we truly made that into our thing, and we captured what I believe to be our generation's generation's Internet moment. And so, you can just do things. Legora and myself is living proof of that. So with that, we're going to jump to q and a, and I want to invite a very good friend, our partner from Y Combinator, Gustav Omstremer. Gustav, we're really becoming professionals at this time.
00:27:37 · Gustaf Alstromer, Max Junestrand
[00:27:37] S1: This is not the first time we're doing this. No. [00:27:39] S0: That's great. It's good to see you. [00:27:41] S1: You too. [00:27:42] S0: Good to see you. [00:27:44] S1: Thanks for the talk. That was awesome. Really good. [00:27:47] S0: Thank [00:27:47] S1: you. And always, thank you for coming back and speaking to YC and to to founders here at Startup School. [00:27:53] S0: Of course. Glad to be back. [00:27:54] S1: I wanted to ask the first question, which is one that I've gotten from a lot of founders who ask about you, which is you guys are three founders or were three founders who were not lawyers. [00:28:04] S0: Yeah. [00:28:06] S1: And you started the best legal AI company in the world. Does domain expertise not matter that much anymore?
00:28:06 · Gustaf Alstromer, Max Junestrand
[00:28:06] S1: And you started the best legal AI company in the world. Does domain expertise not matter that much anymore? [00:28:12] S0: So there's actually a story of a Swedish VC who was very bullish on doing the pre seed of Legora. Yeah. But they ended up not doing it because we did not have any lawyers in the team. And I met them at the airport. I met one of the partners from there at the airport quite recently, and they were very very bitter. And Legora or Legora turned out to be the lesson for them that perhaps domain expertise is not what you need to succeed. I think that you need a willingness to learn about the market, which we did very very early by, you know, exposing ourselves and spending lots of time with lawyers, like as much as we possibly could. Yeah. But I don't think you need domain expertise. Probably, you know, dependent on on the market that you're going after, like maybe if you're building in quantum computing or in fusion, that's a good idea. But legal was easy enough for us to pick up as we went along.