Y Combinator Startup Podcast
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.
00:28:12 · Max Junestrand, Gustaf Alstromer
[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. [00:29:14] S1: I spoke to some founders yesterday, and we spoke about sort of like the next categories where the LLMs are not sufficiently good yet, but they will be. And it made me think of what you just said when you were playing around with Bard in What the early would you what give you the confidence to build a legal AI product on a model that wasn't that wasn't good enough? It was good, but not good enough. And there's many other founders probably in this audience who are thinking about the same problem but in a different domain. Maybe like, I don't know, mechanical design or some some some other part of... Somewhere where the models are just not good enough.
00:29:50 · Max Junestrand
[00:29:50] S0: So I I think the sort of tribal knowledge when we got started was that you have to fine tune a model. Right? In 2023, 2022, that was really like the name of the game. Yeah. I even remember, I think it was Bloomberg who spent, you know, millions and millions and millions of dollars billing like a Bloomberg Law model. Our view was partly because we didn't have enough money, and partly because we truly believe that to be right. You know, the models will keep improving. Right? Like, I'm sure Sam is going to come up on stage and say that later today. Yes. And so by just betting that the models will keep improving and what you should be focused on is how can you deliver that... The value that the models generate to your market, that was the crux for us. Yeah. Even with the first generation of ChatGPT, that was unusable in law. Partly because the model wasn't good enough, but partly because it actually didn't support private conversations, European data hosting. I remember the first sales I ever did, we basically said, we are like ChatGPT, but we are compliant in Europe. Like that was the pitch. That was not a very strong pitch, and know, ChatGPT would figure out how to do that later on. But at the time it was good enough, and so I think we recognized that you don't have to build for the world over here, like you need to build for the world today, and maybe like one step ahead. Yeah. And it's kind of like this ladder where you should maximize the opportunity now, make sure that you get really good relationships with your customers, and so that you can also have that conversation with them. Because if everybody's betting on this exponential uplift in model capability, the Legora platform will continue delivering more and more value. I think that we have built 1% of all the software that we will build over the company's history, and probably the the product will look very different from what it what it does today a few years down the line.