Building an AI-Native Software Company With Legora CEO Max Junestrand | Ep. 44

[00:00] I remember doing this interview in Swedish. There's a saying, like blood smock. And you taste the blood because you worked so hard. Yeah. She publishes the article in English. At LaGuardia, we wake up with a metallic taste of blood in our mouths. And people in the company go, holy shit, is Max a vampire? Or does he just floss badly? Like, what's going on? It's not like a culture that I think would quite work in San Francisco. Like, I don't know if that's something that you can do. Well, when we open our San Francisco office, they're going to taste the blood. Yeah, they're going to taste the blood. [00:30] of it. Well, this is going to be a cool new format. I'm here with my new partner, Chathan, and Max. Max, you're the founder CEO of LaGora, which is an amazing legal tech company that Chathan sits on the board of. I just feel really lucky to be doing this with both of you. You guys, thank you for making this happen. Thank you so much, Jack. It's great to be here. Okay. I want to start with the topic of competition. [00:53] Chatham, when you invested in the company, there were already competitors out there. This was, I think it was only two. It's crazy because Lagorre is like two years ago. It's a big company already. Almost 400 people. You know, but this, this, the seed was two years ago. And at the time of the seed, it was an early market, but there were competitors out there. And so I actually want to start with you, Chatham. Like what was in your head at the moment you invested? Were you thinking about the landscape around? Like, were you just, Max is so special that I don't care. Like what was going through your head when you did that?

[01:23] with me, Peter, and Max, actually in the other room. [01:28] And... [01:29] Interestingly, I had invested in two other legal software companies pre-AI. Oh, wow. And so there was a shape of the legal market that I intuitively understood because I participated in the market. And so I sort of understood the different kinds of lawyers who buy software. Do in-house lawyers buy software? Do law firms buy software? Sort of there was an intuitive understanding that I had. And there's sort of like two things that happen when you've like sold into an industry before. Either you end up hating it. [01:59] or you have some strong bias against it. So there was always this idea that there's opportunity for AI in the legal market. And there was a player in the market that had already raised at a billion dollar valuation. And when Max came in to chat with me and Peter, the thing that immediately jumped out was the clarity of thought that Max had [02:21] on why [02:23] The general foundation models had a lot of room to grow in intelligence and how that was going to be [02:30] a huge boon for the legal profession. [02:33] over the next couple of years. And so 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. Max, since you're here, can you explain what was that? I think it's worth to go back to 2023 and 2024 when I think part of the paradigm was you should train your own models.

[02:54] And like the general models aren't great and fine tuning is going to be really important. [02:59] For two reasons, we were like, fuck that, right? One, fine-tuning doesn't really seem to work, at least on the scale that we were operating, right? To train the new generational model, you had to put billions of dollars into it. And secondly, there was so much application that you had to build on top of the models to make them useful in your environment. And back then, I mean, just solving like basic data compliance, [03:29] great parsing and great chunking and all of these things, that was where the value was. [03:35] And there was another part of your experience, which was that you were actually embedded in a law firm. Yes. And so you were studying the shape of like what data law firms had in a way that was, you know, Bill talks about this a lot is like, does an entrepreneur strike you as a learn it all? And it was clear that the early Legoro team, when we invested with five people, they were just trying to learn everything they could about how the legal profession worked. And they didn't have any bias towards it. [04:05] you should share with everyone is because they were embedded in a law firm in a windowless conference room in stock home contact. Sounds great. They had a deeper understanding, I think, of like how a law firm [04:19] Like the data model of a law firm in ways that most of us didn't and I mean just to take it back even further like when we started um

[04:27] I offered to buy a lot of lawyers lunch on LinkedIn because I wanted to learn. So like literally cold write them and say, hey, I'd love to meet. I'd love to talk about like IP law. I'll offer to pay you your hourly fee and lunch. And they were all too nice to like make me pay for lunch. They'd often even are paying for it. Right. But that did, as Chetan put it, like I think it allowed us to work with customers from the very beginning. So the founding team at Lagora were all engineers. [04:57] Until... [04:58] nine months into the journey. When you had a lawyer join, had you already sort of like [05:03] set the plan and the goal for the company like was that done without experts and was that important to do without experts? So it's actually funny. I mean the the founding and this is a bit of the Legora untold. Like the first reveal the company formation was in 2020. [05:22] And there were four co-founders. I didn't know that. And I was not one of them. [05:27] Didn't know that either. Right. They were sort of working on this intersection between AI and law for three years with the early BERT models and even a Swedish trained version called Sweebert. It was impossible to work with. Not only was it not very intelligent, it was also blatantly racist. I said, I've been trained on like the Swedish like. [05:47] like forums. - Some racist data there. - Some racist data there. When the LLM's like 3.5 came, that was when the moment shifted, right? And so we turned this into a company, two of the co-founders left, I joined, and then we basically said, like, we're gonna work in the intersection between AI and law, we don't know what that product is, but we're gonna run like hell in this direction. And funny enough, the first lawyer who joined was a sort of soon to be customer of ours.

[06:15] So he was the CIO at one of the big firms in Sweden that we wanted to sell into. And he had built an early version of like a GPT plus the document management system. So basically like an LLM that could rag into the existing precedent and data that the firm was using. And he basically said, well, these guys are going to run faster than me. And if you can't beat them, I might as well join them. And that turned out to be a good decision. [06:45] real market has adopted AI. If I had thought, you know, in 2023, let's say, or 24, like what's going to really adopt quickly? Like, I don't know if personally, I would have seen it coming that lawyers would be near the top of the list. Yeah, I don't know. I mean, you've invested in stuff before, too. So I guess this is for both of you. But like, has it been a surprise over the last two years, the rate of adoption? Yes, it's been like vivid. But but second, and maybe more importantly, the law firm market is very interesting, because it's it's like this perfect [07:15] like pretty low differentiation. Like if you need to do a VC deal here in the valley, like you could go to any, [07:22] you know, the top five firms, and you're going to get roughly the same thing. If one of them starts leveraging Legora to offer a better service at a better price point faster, [07:31] all of them have to adopt it. So the equilibrium shifts down and then everybody has to move. So what happened in the law firm market was as soon as one big firm in a market sort of adopted Legora and went public with it, everybody else had to do the same. That's not necessarily the same in the in-house legal sector, right? Like if one big bank says it, another big bank doesn't necessarily need it. But was there something about the process

[08:01] as product to drive so much value so fast in a way that it did force that sort of prisoner's dilemma? I just think the legal sector was so underserved with great software for such a long time that there was this like a lot of built up problems that we could easily solve with LLMs, but they were really hard to solve like pre LLMs. I also think you guys had a great insight early on [08:25] which was that [08:26] there was like a deference and respect to the customers. That lawyers are really smart, they're extremely well educated, they're tech savvy. They're not programmers, but they're very tech forward. They use like the latest software, they use the latest devices. And so they were all going to be playing with ChatGPT and Claude. And so if you showed up with a legal AI product, it had to be better. [08:48] than the foundation model. Otherwise, they were just going to say, why are you deserving of my dollars? And Microsoft Copilot rolled out very quickly, like every law firm in the world is a Microsoft shop. Yeah. [08:58] Like everybody works with Outlook, Microsoft Word, and, you know, where they store their documents, basically. What have you found, like to the point of you have to be better than the models, if you had to break down like as a vertical AI application, [09:14] What have been the things that have allowed you to just be so much better than the models that it's worth, you know, the incremental investment? So I think in the beginning, there was a lot of just foundational problems with the models. Like you had to guardrail them very hard to make them useful. You had to build citations. You had to build good rag systems. You had to overcome context window problems. And there was a lot of rate limits issues. So you had to like juggle different models for different types of tasks.

[09:44] basic things to solve. I think as time has progressed, um, [09:48] Our product has moved further away from what the foundation models are and much more into this enterprise wide platform where, you know, we're going to transact billions of dollars of legal work on the platform. [10:18] extraordinary difference in level of intelligence and like instruction following capability. And so I see our job as let's provide the model the right environment and the right tools and skills to leverage. And then let's build a UI and an interface to the rest of the business so that they can all leverage it comfortably and with a lot of trust. I do think that, you know, the model capabilities improving so quickly makes us run faster because we have to be three standard [10:48] general capability. And that's like a very good motivator. [10:52] as somebody that's invested in a lot of software companies, like one of the unique things about an AI software company is that it's tactically built differently than a traditional software company. And I think it's becoming more known now. But when you guys first started and you guys built up this org, [11:11] the way you designed the org made a lot of sense for the product you were building and what you just described, which was like, we need to deeply understand model capabilities. And then we need to bring that to our customers in a way that's deeply differentiated, which, as you explained to me, meant we need to invest heavily in understanding the models, which then would lead to understanding what to build. But as models got better, your features may not matter in six months. Yes. And so talk about how that led to an organization that was

[11:41] Heavily technical [11:43] heavily engineering and researcher led and For as a company as big as you you are you have very few product people the number of product people you have essentially rounds to zero you have like a [11:57] leaders you have a couple of leaders but that's it i mean the founding team were three engineers and so you know the the most natural hires were let's grab all the smart engineers that we know from college and let's add them into the org and in the beginning you know we had to build our own agent framework because like langchin and these things that we initially built on like [12:18] couldn't get customized to the level that we needed back in 2024. As we understood more about the model capabilities, but also of the problems we wanted to solve, like let's take due diligence as an example. It's really hard to solve a due diligence task in a chat-based format because you need to review hundreds of documents. And hundreds of documents are never going to fit into the context window of a single model call, at least not back then and, you know, probably not now either. So we built this new product that we call Tabular Review, big matrix where you would [12:48] tens of thousands of documents and you'd throw in all the prompts and it started running all of them in parallel. And what we basically did was we just said, OK, three engineers, you're now on tabular review. This is your own company. Run. [12:58] Over 10% of the EPD org at Lagora are XYZ founders. [13:03] So our head of engineering, Jake, who joined, he was a solo founder in YC. Our VP product, Adrian, was also a legal tech founder in YC and happened to be both GC and a lawyer. And so as we progressed, engineering and product has sort of stayed at the core of who we are and what we do. And I also think that everything else is sort of an expression of that. Like we can only market what we actually build. We can only sell what we actually build. And product lead compounds.

[13:33] beginning, we did not show up first. [13:36] Like Legora was not the first product that many legal teams looked at because there were earlier entrants. So we knew that we had to show up and be best. And if you want to be best, well, then you need to invest in product, invest in engineering. And I think you need to build that culture of like reliability first. We actually had a time period in the company for six months where we didn't sell, basically, because we weren't ready to like hit the gas on onboarding a thousand lawyers a day. [14:06] and knowing that the product was going to keep up with that. So we took the early hits of investing in that. Talk more about that period specifically, you know, [14:15] The seed round you did with us was in March of 2024. The product went to GA October 1st, 2024. Yeah. And you called me. [14:24] early September 2024 and said, you need to come to Sweden because all of us need to sit in a room and just talk about where we are and what we need to do to get this thing out in a month. And, you know, we came and we sat the whole literally the whole company, which wasn't that big back then. Yeah. And so it was like the whole company. [14:44] the founders, chicken wings and beer. - Yeah. - And peanuts actually, those are the three things served. And there was a very open dialogue of like, how do we get this thing out in 30 days? [14:56] Because at that point, [14:58] because you were essentially, you know, weren't facing the market test. You were building. There were 10,000 things you could build.

[15:05] And the sort of outcome of that discussion was that we're only going to focus on three use cases. Yeah, that's right. So talk about... [15:13] Well, one, you know, you calling me to tell me to come to Sweden to have that discussion. And you actually showing up. Yeah, I did show up. Reflecting on it, that was one of the most important things that you did. [15:25] in the company and the founders that in the company was at that moment say we have 30 days to go we're just going to sprint at these three things not the 15 things that we could do. [15:36] Yeah. [15:37] So I think... [15:38] there was this feeling of like, [15:40] You get these LLMs. They're so powerful. We learn about all these use cases in the firms and with the clients that we work with. Let's go solve all of them. Like wrong decision. You can't solve 15 things at the same time. And so we had to kill a few darlings and we had to like really double down on the stuff that we thought was going to work. And we looked at on the market and we basically saw a few things that were really working like as a paradigm for LLMs in legal. [16:10] was embedding it deeply into Word and Outlook. So basically having Legora be accessible wherever the lawyer is already working. And we were still called Leia back then. Like this was very early. We took the entire company, we had like a town hall. And I remember showing some numbers where like a particular company that just had one of these features were doing more revenue than us. We were doing like 1.5 million at the time. That felt very painful because we thought that we had a better suite,

[16:40] because we were based in Sweden and we were sort of mostly selling to still European firms at the time. So we just said, let's do these three things. Let's do them better than anyone else. And it's going to be worth to buy our suite over anybody else's. And so I wrote this like very short product manifesto, send it out to the entire company. And we sort of rallied the troops. I think it was off the back of that, that we had our first quarter where we doubled revenue. So we went from like [17:10] Then in Q1, we had another quarter where we doubled, where we went from like four to eight. Whoa, okay, now we're talking. And it became time to launch in the US. We hired Patrick and Evan, who joined from a competitor, and we sort of had our first boots on the ground in the US. And then we felt like, okay, what we have is like a winning formula. So we just need to crunch it out everywhere. And now I think we're at another interesting point in time where we've built all these [17:40] But the paradigm... [17:42] from now onwards is humans are probably not going to work with all these tools. Basically, agents will leverage the tools that we built. So I remember early when MCP came, our CTO basically went, well, now Legora has two users. It's human users and agent users. And every new feature that we build has to be able to cater to both. And now we're seeing more people basically use our agent

[18:12] editing capabilities than humans actually going and using those features at all. Jason made a cool point to me recently, which is that because you we were talking about how, you know, companies that are pre-AI and companies that are just fully AI native just have to be built differently in various ways. And the fact that you didn't build a pre-AI platform, [18:32] company, I think gives you sort of like, you know, this unshackled mind to like, you're not even trying to think about some past alternative. You're just like, [18:41] Given what's in front of me, what should a company look like? And, you know, you talked about how like having YC founders inside the company has been helpful. And I'm sure there's like a lot there. But I'm curious about like, what are like the main tenants that you've observed? You know, because now you've probably hired a lot of people who did, you know, work and build companies pre-AI. What do you think are like the main tenants, ideas, cultural concepts that have been important to you just to like make it work in like a fully AI native world? [19:11] like you have to be willing to like kill the stuff that you've done in the past is very important. Because I think in more traditional software, you had to build the foundations and then you build the stuff on top of it and you sort of kept building the stack. And in that world, it was also very good to have like a technical architecture where one feature would rely on the same microservices as like other features. But the problem is in AI, like maybe that feature now

[19:41] so low that it's basically better to build your own stack for like each thing and now that we hire you know finance professionals or even like lawyers internally to lagora or we just hired our first like tax person i think they come with a set of ideas of like oh this is how i used to do it in my old company and everybody's forced to relearn i think and also question the [20:05] what their value is on top of the general model capabilities in a way which is like very painful totally brett brett taylor talked about this on this podcast too basically that like people are going to build something and six months later we might just kill that thing and everybody needs to be comfortable with that which i think historically would be a lot of painful internal conversations like do you have to change is that like a different culture for people i think it's a different culture [20:35] maximize for the company always. And I'm very upfront with every exec who joins L'Agora that in a way like, [20:45] You're joining with an expiration date. [20:47] And you have to continuously prove that you like scale out of that in a way because the company is scaling so exponentially. I don't know if it was Mark Zuckerberg or somebody talked about like, let's hire people with high Y slopes and not like high Y intercepts. I think about that a lot, mostly because. [21:04] I've had to do that. I did not join or start Legora with a lot of experience, but I've proven that at every new point in time, I've scaled with the business. And so other people in Legora needs to do the same.

[21:18] And I think that goes for every function. [21:21] I think an engineering team that's shipping the amount that we do [21:25] previously had to be [21:26] 500 people and now we can get away with being 50. [21:30] And I think there's even a question of like, do we need to be more than... [21:34] 100 engineers or [21:37] is the bottleneck here really important [21:39] knowing what to build and building it in the right way. [21:43] and designing an experience that works for [21:46] hundreds of thousands of people that we now have on the platform. I think the paradigm is shifting all the time. What's nice about our work is that engineering is sort of a... [21:57] a roadmap of what's going to happen in other industries too. Like I think the general models have come the furthest in coding, but also those organizations are very quick to adopt and shift. And so like engineering orgs are today looking slightly different and I think we can expect the same in legal organizations. Two things you brought up that you should be great if you could dive into. One is Lagora doesn't really have a long-term roadmap. Like you guys react and build [22:27] You know, [22:29] When you first got started, you had this like nearly weekly cadence where [22:34] that's how long you would roadmap to. And these days, it feels like you almost roadmap on a daily cadence. And so like, things change tomorrow, like you wake up, and it's like, we have to do something different. Talk about that lack of roadmap. And then also, the other thing that you've invested heavily in is just understanding model capability, and the sort of proprietary eval infrastructure you've built, where you've had these conversations with foundation model

[23:04] you [23:04] that they themselves are not aware of. I mean, on roadmap, like way back, every new model just like unlocked new things, right? And when we got early access to GPD, like 4.5, and you just realize that, holy shit, now it can finally draft like an end-to-end thing. And we don't need like all these harnesses and like things around it. That's amazing. Like, let's unleash it in a way that that works. By the way, to do that, you need sort of like a low ego organization. Totally. [23:34] - Yeah. - And you're like, okay, now the model can do it. - Yeah, you worked really hard for six months. We're deleting everything. - Yeah, it's incredible. - But I think a lot of the things that we have built, we know that we're gonna delete someday. - And I guess you kinda need people to opt into that at the front end for that culture to really work. - We've also talked about it as like, if we're here today and we start building for the future that's over here, like that's too far out. Like our customers are not gonna adopt that. They don't understand it yet. [24:04] And we need to take them on the path of being successful, which I think every iteration cycle now is shorter. Like back in 2023-2024, I think it was like slightly longer. Like you'd have a quarter or two quarters because the models weren't moving that fast. Every upgrade was pretty incremental. But now it's like flipped. Opus 4.6 flipped in capabilities. So now we have to revisit a lot of the things that we built. [24:28] Do you know what the next flip you're waiting for is? Like, is there a thing? So actually, I don't think... So it was funny. I was at the customer advisory board at Anthropic yesterday, which is... I'm wearing my, like, Dario shirt here. You look like Dario. Thank you. Most of that conversation was about...

[24:42] The models are now intelligent enough where they're no longer the bottleneck. [24:48] The bottleneck is all of the software around putting the models in an environment where they can execute and do work and humans can review that work in like a trustworthy way. They're seeing that across basically every single vertical and every single company. So I don't really think that we're waiting for new... [25:06] model capabilities anymore. There's nice things to have. It's nice to have better context windows. It allows us to do less garbage and context management. When you overflow the context in memory and so on, you have to deal with it to refresh it. So there's nice to have. But I think we're at a point now where [25:25] We just have so much building in front of us in terms of bringing the model capabilities into our world that that's where all of our focus is. [25:33] I think on sort of discovering what the models can do, we thought very early on that evals were going to be important and both building up like an exercise of building new evals, but also building out evals for all the use cases that we want to cover for. Because in the beginning, it was a lot of like, oh, how's good? How good is Sonnet? How good is Gemini? How good is GPT? And so we had to test them on the different evals. And a lot of our customers... [25:56] actually contributed this. So they would give us a manual tasks that they used to do and they tell us here's the evals and We're gonna call you when we can get to a hundred percent on these evals. I actually remember it was a funds related use case an LPA um

[26:15] Key Term Review. [26:16] report that a Danish law firm was spending like three [26:20] Three days on, basically, like an associate would spend three days putting together that report. In summer of 2024, we had like 60% accuracy on that task. By the end of that summer, we had 100% accuracy. And once you got to 100% accuracy, I mean, that task is done. Like it's over. I've adopted this mentality internally that if AI can do something, it will do it. [26:45] And so, [26:46] our product, we think a lot about solving legal tasks end to end. And once a task is conquered, it's done. We just strike it out. And we're on this path of solving more and more complex tasks. You start with NDAs. [27:01] But at some point you get to full on share purchase agreements, which are very complex, but we're going to get there. I think the question for for these organizations who are. [27:09] maybe more traditional and trying to keep up with the pace of AI is how do you do that while at the same time do your normal job? [27:18] I think a lot of the organizations that we work with really struggle with [27:24] keeping up with the technology uplift even like our developments and so we're you know we're struggling by getting all the latest models and then we're turning that into product and they have to adopt it and then their customers and it's yeah there's a question i think for both of you as i'm listening to you talk i'm sort of like you know i can sort of see the you know the hill climb that you're on where you've like attacked you know one part of it and the next one's coming and the next one's coming and you know one of the things i'm thinking about is for let's say a new startup

[27:54] be for them? Like, how do you possibly get into the mix fast enough or all of these things? Exit to LaGora. Exit to LaGora. That's a good one. How urgent... [28:03] is it to grow really big, really fast for Legora, given all of the dynamics around. Chetan, I'm curious, like, how do you think about this? Like, is it... [28:12] the same urgency as always, or do any of these dynamics mean that like getting to real scale, um, [28:18] is more urgent here than other places. - We can go back to sort of launch day, October, 2024. So when they launched, you know, roughly the ARR of the business was rounded to a million dollars. If you just go back into that moment, [28:35] you know there was this exercise of should we make a budget and [28:40] you know what we all decided around the table was there was no reason to make a budget because we don't know anything about the market we don't know if people even like our product we had instincts but like we just needed to go literally as fast as we could [28:54] to get the product is in many hands as we could. [28:57] because ultimately the whole theory of the company didn't work until we got product feedback. And so that was literally the aim. The aim was like, [29:04] get this out as quickly as possible in as many hands as possible. And I think one of the things that Max did, again, this is like, it's cliche to say it's first principles thinking, but it is, because it's like, the team was unbiased by how to build a software company. And so one of the things that you learned in SAS was the way you do pilots is like you would go in, do like a time trial pilot, where you would like give them access to the application. And the minute the trial was

[29:34] it off and [29:37] Then they would have to make a purchasing decision. A big thing that happened with Legora is they would go put Legora [29:45] into your organization and whatever you put into lagora they would like leave behind even if you didn't want it and so there was this idea that like hey you adopted ai you did stuff with ai you built some practices but you're not like whatever skills you built or whatever ip you built it's kind of yours and like we can leave that behind it's not a big deal it's like it's your skills it's your things that you've learned and then max went around and just gave people like 30 day pilot 60 [30:15] competitive pilots. [30:18] They would say, okay, there's a couple of companies on the market. We're gonna want to a B test all of them because it's really hard to pick just, you know, based on the feature set on your website and in those pilots. [30:29] I think we did an extraordinarily good job of delivering value. And so when the sort of 30 days were out, like if we shut it down, it would be a riot. Right. Like people would roar and they'd be like, we've never seen software adoption like this in a legal organization. We need this. And we, you know, we need it now. And in those pilots, we would demonstrate much better than any other company the value that the product and the service around the product could bring.

[30:59] who are now called legal engineers. It's a great term, I think. Forward deployed legal engineers. I was just going to say, what about FDLE? FDLE, it's right, FDLE. And they're amazing. Like they're the most tech savvy lawyers in different organizations who don't want to make partner because like, you know, that's one type of life. And they want to work in a tech company. And now they get to work with their practice that they're amazing at and technology. And then they get to work with the best legal organization in the world and like driving that change. [31:29] organizations. It's got to be sticky. I think Ligora is very sticky. We've ripped out our competition at many organizations at this point. What creates stickiness? So the stickiness is the... [31:41] Use cases and the cadence and you know if you've invested time in building up a workflow that like works for you Why would you want to switch so is it that is it is it it's usage? It's not a not? [31:53] No, not yet. [31:54] and not any real technical implementation, which is great, because our competition has been deployed in a lot of places that sees no real usage or very, [32:06] simple use cases, which means that we can go there, show them and display clearly in a pilot that we deliver much, much better. And then we can easily swap it. So we actually have a dedicated like migration team moving. [32:20] deployments over to LaGuardia. And I think this is where we often talked about not only product engineering velocity, which came naturally to the founders here because they were engineers.

[32:30] but also this idea of velocity of customer interaction, which was like, if a customer wanted to buy a certain way, wanted to do a pilot, [32:39] Whatever. Just don't add friction. That was actually the key on luck, which was like There was this idea of let's just go get this in everybody's hands and not to have any bias and so One of my favorite stories about max is that he came to San Francisco to sell a bunch of clients and then I [32:59] He texted me and he was like, are you free for dinner? So we met for dinner. And then he asked for a ride to the airport. And I casually asked, where are you going? Expecting to say Seattle or LA or something. And he was like, I'm going to New Delhi. I was like, why are you going to New Delhi? He was like, well, one of the largest firms in India wants to buy. So I figured I'd go give it to him. That's crazy. And so you know this. In SaaS, it was like, no, do the West Regional. Yeah. Then do the East Regional. Yeah. [33:29] And then eventually hire an APAC head and then it was like this thing. Yeah, and because this company did by the way There's gonna be like a year of engineering work to be even kind of ready to have said of India And because like this company in this team had never built a [33:45] a pre-ai software company they didn't know they weren't supposed to go sell in india early like one quarter into like selling the product so max got on a flight went to india and the customer in india bought so it was one of those things where like

[34:01] Because they didn't have the patterns, they were able to get big globally in parallel. You know what I also wonder on this? We talked about this a little bit, that being a Europe-based company means that you are multinational from the beginning. You have to. And I'm sure some of this is pre-AI, and I think a lot of it is. I also think there's a thing where if you started in Europe, you've already learned [34:31] that the cultures work and the way they purchase software and what the rules are and the regulations and these things yeah and so i'm curious if you thought about that when you invested and you're like well actually maybe coming to the u.s will be easier one day i'm curious your experience on that like i mean y combinator weren't particularly excited about backing a company in sweden yeah i remember the first interview with gustav and he and he's swedish like a swedish partner at yc and he goes uh so you're going to move to the states right and i go yes yes of course like that's the [35:01] to get the invite to go to YC. - No, I'm good in Sweden. You guys are opening a suite enough to YC. - And then I came to YC and I left three days later, 'cause I had so much business going on in Sweden, and I couldn't do work between 1:00 AM and 10:00 AM. [35:15] Like that was just impossible. But you know, yeah, like the Swedish legal market is smaller than Kirkland and Ellis. So, of course, you have to expand. Yeah. And naturally, we went to Finland. And then we went to Denmark. Then I was like, well, I think we got the hang of it. And the most important thing was like the first customer we got, Manheimers Fatting, the big firm in Sweden, their managing partner has such a good relationship with the other firms in other non-competitive countries.

[35:41] that he would just introduce me. [35:43] And I would fly down. [35:44] And I'd say the same thing as I told him like [35:47] AI is going to change the world. You're going to need a partner. I'm here. [35:51] Let's work. That sort of made it all start. But then... [35:56] The move to the UK and the US was like when we really started ripping. How different was coming to the US versus going to Finland? Not at all. I had a rule. So there's actually a few Swedish companies that tried to go to the US, but did so unsuccessfully, like Klarna. They tried many times before they actually made it work. And my rule was, if we can serve two of the biggest clients in the world or in the US from Stockholm, then we're ready. [36:22] And then we'll open an office here. So clearly got lib, like amazing Wall Street firm and Goodwin and Proctor and we served them both. We won their business in competitive pilots and we could serve them from Sweden. Like we did a lot of flights back and forth. But after they signed, we said, OK, amazing. Now we're ready. Let's open an office here. So one thing about the market structure of legal that we knew about here at Benchmark ahead of investing is that. [36:52] Legal has this unique market feature that it's a services industry. And in services industries, technology adoption is slow at first and then rapid later. So if you just look at any marketplace idea in a services area, it's like the marketplaces [37:10] are usually like supply constrained. And then the minute supply unlocks, all of the supply comes online into the market. And then you become demand constrained. And so if you study marketplaces, especially marketplaces around services, this is something that you just like

[37:26] fundamentally learn as like one of the rules of marketplaces. And so in legal, the market structure is such that like the initial adoption will be very slow and hard. But once it unlocks it, like really unlocks, there's some kind of like exponential viral coefficient that happens there. That's one part about the legal industry that's really interesting. And then how it overlays into [37:46] software in legal, that if you look at the most successful legal software companies, they were all started in Europe, pre AI too, by the way, I had a hypothesis that [37:58] Part of the reason why... [38:00] you get that way is that you're used to selling the multi-geography and multi-rule systems from day zero so for example lagora sold to a swedish firm yeah that makes sense and a spanish firm and a finnish firm and so yes they're like laws at the european union level like from the beginning yeah this needs to work for many people that's right and if you start in the us what you end up designing is that there's the federal legal system there's a state legal system and there's regional [38:30] literally different countries. - And different languages. - And different languages. And so you build all this stuff on day zero that you don't if you start in San Francisco. And one of the interesting things that Max showed us in the prototype in the first meeting, [38:45] is he had multi-language support already built, and he had multi-legal framework support already built. I remember. I demoed Sweden and Spain. That's right. And that was remarkably impressive, because it was a company with five people thinking global scale. Because they were forced to, because they couldn't serve the Stockholm legal market. Totally.

[39:15] it was like, let's go get the two big firms in every geography because we have to. And it was global from day one. And now, I mean... [39:21] LaGuardia, I think, has become a hub, like a technology hub in Europe. People from Germany, from the Netherlands, from Spain, from Italy, they're all moving to Stockholm, even in the winter. Talk about the culture part of it, which I think stands out. [39:38] Lot and so it's hard to describe to people what it's like to visit. I mean when you came back from the lagora visit recently You were like, oh my god, they are so good. Like something's going on there that I haven't seen before right sounded different I don't know if it's lagora specific or if it's like something that is, you know, happens in Sweden that can't happen in America But like you were affected by it. It's true initially even in the group of five or in that [40:02] Thank you. [40:02] group of 10 in September of 2024, a group of 15, however big the company was, there was like a common thread amongst everybody. They were like deeply technical, deeply intense and a desire to win. And they were like thinking globally from like day zero. [40:19] And because they were in Stockholm, they also decided to recruit all over Europe from day zero to bring people to the Stockholm office. And so what ended up happening is I think you end up becoming a magnet for anybody that wants to build at the forefront of AI with a level of intensity and determination. This idea of like wanting to win. So like what did it feel like to you on your recent trip? There's like a few hundred people in there. Like, yeah, what did that feel like? The level of engagement and buy-in.

[40:48] to the company mission was truly unique. And I think the company has done a great job with this idea of building for the company. And I really do think building an AI company is like a real test in ego. It's like you literally can't have an ego because you have to have this idea that [41:11] AI is just going to do this. It's going to be better than us at everything at some point. And they're going to it's just going to do this. The foundation model will do this capability. And I'm like puzzling through this. And it's really hard. And it's an amazing feature. And, you know, we have these high bars of quality and polish. So we're going to like ship fast, work really hard, build this amazing feature. And it's going to disappear within 12 weeks requires an extreme amount of buy in and an extreme amount of humility that like, [41:41] wave and we don't know where it's taking us but like every day we solve today's problems [41:45] And we don't worry about tomorrow because it's a different world. [41:48] There's a different type of energy, buy-in, cadence that comes with that culture. And I think that [41:54] it's really interesting the disadvantage of stockholm has now become lagora's advantage of being in stockholm which is that they're [42:03] talent population that they... [42:05] that they get to hire from is not just in Stockholm. It's all over Europe, and now it's all over the world. Because anybody that has that attitude, [42:14] is welcome to come join Stockholm. I think our competition is...

[42:19] you know, [42:20] has remote days, three days in office, everybody lives at six, like from from very early on, [42:29] We serve dinner at 8.00. [42:31] every day. [42:32] A lot of people in our region... [42:36] are sort of tired about like all these big American winners and we know that we have the talent and the grid and the prerequisites to build a generational company like yeah We had to go to the US to raise money because we want to work with the best business in the world but [42:52] Like there is a level of like, we can also do it. Right. And we have Spotify just on the street. How are you going to get this level of fervor in the US? I think we have. I think we have a very unique culture in our New York office. Is it different? Or is it very different? Like people, well, it's not different from Stockholm. Oh, okay. But it's, we seeded it with, you know, the culture carriers from Sweden. I came to New York and I spent, I think tactically, this was a really cool thing they did, which [43:22] you make everybody interview in Stockholm, and then they have to onboard in Stockholm? Oh wow, so you live in New York, you're gonna join the New York office, you're going to Stockholm. Onboard in Stockholm. Yeah. People who join in Sydney have to go on a 24-hour flight to onboard in Stockholm. So you can't onboard anywhere else but Stockholm. And then when they first opened the first international office, which was New York, [43:44] And actually London too, you did this with, which is like people that were based in Stockholm moved to those offices to set a cadence. It was like, it's all going to be the same as Stockholm. And like the Germans who joined LaGuardia, like they have to move to Stockholm and they'll work here a year and then they can move back to open the German office. Like you have to get it right. It's a fascinating thing where, you know, I've been part of many companies that have many offices and every office tends to take its own character.

[44:14] And I remember the founders of Lagora saying, we want every office to feel the same, which was itself a different way of thinking. Every time Max has had me visit the company, [44:27] I visit during dinner time, which is 8:00 p.m. Like that's when they have guests is like 8:00 p.m. And that's been the case in every office. And so that's another like thing that happened at this company. And it's interesting to me that it continues to scale, which is like you can continue to onboard in Stockholm because like every the 400 people that joined before you onward in Stockholm. Yeah. So you should, too. I mean, the only reason why we have that rule was because I did an internship at McKinsey. [44:57] And we'd have dinner at it. So I was like, I guess that's how you do this. Totally. It's also like in some ways doing the U.S. office in New York. Obviously, it's not like it's an outsider city. But from a tech perspective, there's a lot of people in New York like, I want to work at like a great tech company. And, you know, there's obviously been more there than in Stockholm, but it's still different than San Francisco. And so I think you could probably bring some of that cultural thing there as a result. Yeah. Now we just opened in Houston and we're opening in Chicago. It's all the big legal hubs. Is this correct? [45:27] do a reference with Daniel Ek? Yes. Yeah, and I think I heard this from you. You asked him about what is the culture at Leia? [45:34] And I think you said something like they're pretty intense. That's right. We were very upfront with that even in interviews and not intense to the point where it's like not fun, but

[45:47] like coming, like showing up as number, like being number two in this space. [45:51] is not an outcome worth fighting for. [45:54] Like then we might as well go do something else. Like we're only going to play here to win. You think number one, number two will just be vastly different outcomes? Oh, yeah. [46:02] Completely and it doesn't actually matter if that's the case or not, but that's the way I meant gives you the right mindset Yeah, yeah, like I think everybody's dialed into that and I mean, I remember doing this interview in Swedish and there's there's a saying That you like like blood smock and you know, like you taste the like you taste the blood and and Because you worked so hard. Yeah, and I basically told her in Swedish that yeah, you know, sometimes I wake up and you know, it's a Swedish say [46:32] and then and then she publishes the article in english yeah and the saying doesn't make any sense in english so it's like no it's like the lagora founders make wake up at lagora we wake up with a metallic taste of blood in our mouths and people in the company go holy shit is max a vampire or does he just floss badly like what's going on how do you feel about that now now it's become this thing like the americans are hashtag blood smock like it's everybody's in on it it's [47:02] I can feel the energy of it. It's not like a culture that I think would quite work in San Francisco. I don't know if that's something that you can do uniquely. Well, when we open our San Francisco office, they're going to taste the blood. Yeah, they're going to taste the blood. I love it. All right, my last question is you just raised a big round, which is awesome. Congrats. What has this been for the future? What's coming? Well, maybe first off, just to give you a bit of insight into the round, like every round at Lagora since Chetan has been a preempted round.

[47:32] to fundraise since you did the round. Yeah, it's been very pleasant. We actually also have a history of taking the... [47:40] like lowest term sheets and I remember taking like we were actually so this is funny like we were negotiating the number of shares that Chatham was gonna buy on Excel in front of us and he goes I've never ever bought a company where I didn't get 20% and I go well I'm never gonna do I live more than 17.5 and we sort of look at each other and go well I guess we're in a [48:03] in the middle of a stalemate here. It's like the immovable object meets the force. [48:09] And so we just put down Excel, we write down the exact number of shares, and we start going decimal by decimal. Wow. Until we're both. That is so legal coded. Yeah. Just the nerdy Excel. It was wild. It's perfect. So you end up investing like 9.521. And we're both equally unhappy or happy. That's great. I think we were both happy. That's a beautiful answer. Of course. We're both happy. [48:39] David, our CFO, who just joined from Vanta, he's an absolute monster. It was funny, we had our company-wide kickoff, and you get to pick the song you want to walk out to, and he goes... [48:52] Max? [48:53] I want Monster by Kanye West. [48:57] Okay, dude. And it's like the lights drop. [49:01] And I'm like, I have a big surprise for you, everyone. David is joining us, our CFO. And the speakers just explode. And I don't know if you heard the song. Yeah, of course. And everyone's like, holy shit, what's going on? And he comes up on stage, and he's just like, so much energy. And in the references, people refer to him as a CFGO. And I was like, that's amazing. So he and I did the round. It was super fun. It was the first time we went out to actually do a fundraise. We had a deck this time.

[49:31] totally oversubscribed. I think we ended up having like 1.5 billion in demand for the round. It's a lot. It was crazy, but we're super thrilled about Excel coming in and leading it. Some great participation from Manlo and Bain, you know. Well, it's awesome. It's a huge testament to what you've done and super exciting. I think you're just getting started. So Max, thank you for doing this. Chetan, thank you as well. And really enjoyed it. Thank you so much, Jack.