Now, most companies from Sweden that are in our category would kind of say, 'Let's do Sweden. Let's maybe go to Norway or let's go to Germany if we're feeling adventurous or maybe the UK, right?' Like, and we just said, 'You know what? This product scales. It is comparably on the market extremely good. So, let's just figure out the motion of how to work with clients anywhere and let's hit the gas.'
Welcome to Not Another CEO Podcast. I'm your host, David Pletus. Every week we talk to inspiring leaders and get the true stories, the ups and downs, the lessons learned, and come away with actionable advice for our own journeys.
Today's guest is on a mission to revolutionize the way an entire industry works. His company has built the world's first truly collaborative AI for legal professionals. He's an engineer who's passionate about go to market. A visionary who's also laser focused on execution. His company founded just two years ago is already trusted by some of the biggest law firms in the world including Goodwin Proctor, Clearary Gotautle, and many more. It's the fastest growing company we've had on this show. Please welcome founder and CEO of Lorraa, Max Junstrand.
Thank you so much for having me, David. I'm truly delighted.
Thank you for doing this in person. Awesome. You flew all the way from Sweden for this.
No, I'm just for this. I'm in New York more these days.
Yeah, it's great. Okay, great. Let's get right to it. First question, what's the one thing that you've done, big or small, at Lora that's had the biggest impact and you do again if you're CEO of another company in the future?
I think when we started there were probably 500 other legal AI assistants that were started exactly at the same time and I think everybody was so incredibly focused on you know how do we package these models? How do we bring them into law firms? How do we bring them to lawyers? The thing that we did was we actually brought them. I ran sales for the first year and a half. We brought the company from zero to sort of two million in ARR just on founder-led sales with me and our founding team. And I think that's something that set us up for success because it allowed us to grow really quickly during Y Combinator, raised our seed round from Benchmark, then we got the premium from Redpoint, and then things just kind of started rolling. So that's something that if I started a company again I would probably look to do the same. I think doing sales in the beginning especially when you're new to an industry actually forces you to build a lot of empathy for the use cases, for the users and the problems you're actually solving. So not coming from the legal background I think that was a necessity for me.
And you are an engineer. I mean you started your career as an engineer, right?
Right. I actually went to engineering school and then COVID hit. I got really demotivated with engineering because we were 300 guys in hoodies just coding from home. So I took in parallel the business school in Stockholm and it's actually not the same system as it is here in the US. There's a separate university if you want to do business or if you want to do engineering. So I ended up going to both the schools in parallel. You actually had to hack the admission system a little bit to be able to do that. But it worked out really well because during COVID sometimes I would have overlapping tests that would be exactly the same time in the calendar. So I brought an extra phone and I recorded myself for both the tests and I just did them both at the same time. So it was a lot of fun and coming out of that I think I was quite prepared both for you know having a technical background for what this adventure would mean but also you know solid business understanding of.
The thing is so when I talk to a lot of technical founders and especially in the early days what I find with them is their natural tendency is to go where they're comfortable which is building the product which is coding which is all that and even when they have they know they need to do so I mean you can literally they will say I know I need to go sell. They just but I have to fix this. I have to do this. I have to code, you know. So my question to you is how did you did you have to force yourself or that to you? You just knew that that was was did someone say that to you or you just knew that that was a thing?
Really? I'm a very introverted guy. Before university, I used to play video games professionally. Like that's my comfort zone. Now after COVID and when I was in business school I think I started to realize the value of socializing, of working well in a group and I would actually force myself to go to the university every day sit with new people get to know them and kind of you know build out a network. And when we started the company given that I didn't have any prior background in the space I actually reached out to about 100 lawyers and I said can I pay you for your hourly rate and we'll go have lunch. And of course, they were all, you know, much too nice to take the rate. And, you know, most of them would even pay for the lunch because I was in college still. But then you force the muscle of reaching out and of being uncomfortable. And I think sales is a lot about being uncomfortable, right? But very quickly I found a lot of enthusiasm in it. And I think when I showed up, a lot of, you know, managing partners and CIOs would find this is the first guy who's truly enthusiastic about legal tech that I've met in the last years. Of course, we need to partner with him. Maybe the product isn't there yet, but it's going to get there. And I think that slope of change as well when you get in the door you prove yourself and you continue to overdeliver that's what's kind of earned our right to play. Even at this bigger firms, right?
I think and think the other part of this is that when you do it and people see you doing it.
Yeah. There is no one who can come after in terms of salespeople in terms of heads of sales who can say well you don't know Max you don't understand what this you know the managing director is going to say like they can't say that to you.
And I think it's very important that as a leader of a company, you, you know, one, know your strengths, but two, I mean, continue to prove them to the company itself, especially as a young CEO, right? I mean, you're hiring and you're getting people in who have done several journeys and they're taking companies from tens of millions to 500 million ARR or Stuart who just joined as a VP marketing. He did global product marketing at CLA and then it was VP marketing at Tink sold that for three billion and when he joined he said Max this is my third unicorn and then I'm done and I'm you know let's go for the journey right. And then to be very engaged in sales but also be very engaged in product and have a deep technical understanding so that you can talk with customers about it I think gives me a lot of.
Yeah, I love that. How so you get to call a couple million dollars of ARR, how do you transition from you doing the sales to hiring a team to do it and having other people.
Yeah. I mean, so look, our founding sales team are all very entrepreneurial and they're all in Sweden and none of them came from a sales background. So they were all consultants. They all came from either McKinsey, BCG or Axel, who actually he's an iOS engineer who just happened to speak Spanish and so he was responsible for the Spanish market and totally knocked it out the park. So we were able I think to kind of set the founding go to market motion and then of course now we've sort of perfected it and industrialized it a little bit. So our first sales managers came in at the beginning of this year and yeah I mean we're close to 8x-ing revenue since the start of the year already. So it's been a wild ride.
And do you did those founding AEs did they go with you?
Yes, we would take all the meetings together in the beginning and I think many of them have also made a very fast journey in a year from kind of BDR, SMB, you know, mid-market, enterprise and even strategics, right? Like we're having multiple conversations where the amount of impact and the size of the deals are growing so quickly because of the sophistication of the tech. Like when GPT came out two and a half years ago in November 22 to the point now there's been a huge uplift in the product quality and what you can actually achieve but I still think we're at a point in time where the products are and where the model capabilities are there's a quite big gap so there's a million things left to build and we just need time and a lot of focus to go and do it.
Right. And people want to get in. What I hear from when talking to law firms like they know they have to do this. I mean, they there's not really a question. I think it's in every industry, bro. I mean, people know they have to do it. And so, they're trying to find the person that they want to partner with to go on that journey.
The person, the company, the tech, the culture, all of it, right? And I think it's different for every industry in terms of what is really existential. If you look at law firms, I mean, your core delivery is legal services. And so there's a couple of reasons why I think it's existential. The biggest one is just the potential downside of the firm next to you on the street really figuring it out and you not figuring it out is incredibly detrimental. Right? If suddenly your bread and butter is transactional work and due diligences, now it's kind of a low differentiated service most of the time and the firm next to you starts to offer this at a quicker turnaround, better service, lower price point and you're not software powered. How do you meet that? Because you're already running the task at sort of low margin, right? There's no way that you can drop that. And so there's definitely something about doing it and implementing it now, but it's also about being ready for when the client appetite changes. And if you look at the way that enterprises think about this, so corporates like non-law firms, for them it's not as much of an existential question in terms of bringing AI into the legal department.
No, but it's a cost-saving mechanism and it's also a way to set certain pressure on your law firms by saying, 'Hey, we're already adopting this tech internally. We can already...'
I didn't even think I didn't think about that.
Now, how are you working as my trusted advisor to save me money and provide me with the best possible service at your price point?' That's even more pressure probably for the because if the clients are going to them and saying are you not using this because we are.
And there's a different sophistication in enterprises in terms of how they're working with this but if you look at private equity, private equity is typically quite sophisticated and they're looking at how they're going to adopt AI across their entire portfolio, you know, not at least internally for their legal services.
Wow. Um, one thing when you talk about having that passion, understanding the customer, all of that. I have this memory of like I met with a couple of these I was doing like a hundred customer meetings in a 100 days and I was asking them about like a bunch of different products that we were selling and thinking about buying and.
One customer told me they said, 'Oh, I looked at these two products to do SaaS spend management, which was like kind of this complimentary space.' And I said, 'And you chose that one? Their product is kind of farther behind the other one? The other one is larger. I'm just curious.' And they said, and you know, the company's doing tens of millions of ARR that they bought it from. And he said it was because the founder came to the meeting. This is a company doing, you know, tens of millions of ARR. And the founder came and got me so excited about the future and about the vision. I know the product doesn't do what the other one does, but I'm going to buy something not for six months or a year, but most of my contracts are for five, you know, three years, five years, seven years. And it was a really in it was just this click for me of of course I feel that of course as a founder like it's a big difference if I'm in there selling but there's something about I think people especially with AI I think they want to partner with the person who's authentically excited about solving their problem.
And also has a lot of incentive alignment right? Like to be very honest the only way our business works is if the law firms that we work with do really well as a consequence of AI, they need to grow. They need to do better so that they can work with us and we can be part of that uplift because look, law firms are amazing at legal service delivery, but they're not amazing at building software, right? Or at least 99.99% of them. And Lora is not amazing at providing legal services, but we're pretty darn good at building software for it. And so I think this is a very natural mix.
So one of the questions as you've expanded, how big now is the team?
And that's I mean from what I understand up from 50 in this time last year.
It's crazy. So you've hired a lot of people. Yeah. You seem to have a very strong view of how the customer should be treated with the product all how have you been able to scale that quickly? Is it outsourcing to all the managers and saying hey go hire your people go do like because that's what a lot of at least what I see with the hyper-growth is like let me hire the manager the VP the whatever and they'll go bring in their team. Is that how you're doing it that fast?
There's for sure a little bit of you know great people know great people and so the first thing we ask you is write up the 10 names of the people we should go bring into the business right and if everybody does that you grow very quickly. But the second part is being personally super engaged in driving our culture in scanning for what we think is excellence. And I think it was Mark Zuckerberg who said it in an interview or something but kind of like hiring for the Y slope and not the Y intercept, right? Because you could say, 'Okay, this company is growing incredibly exponentially.' And so you either want somebody with a really high slope, right, who you think is going to grow with the company exponentially, or you try and pick somebody with a really high Y intercept who you think is going to, you know, survive for a while, but typically that doesn't work. And so even with the managers coming in, I'm quite clear with them. I'm like, you know, the company's going like this. We're maybe here and you're a little bit higher because you've done a scale above us, but as we hit your, you know, Y intercept, you're going to have to continue scaling or, you know, somebody else is going to have to come and ride the ship from there. But I interview everyone. I interview every single candidate and every candidate except for engineering actually. And the reason why I don't interview in engineering is I actually think I'm probably the worst. I mean, one of the reasons why I became CEO was because I was the worst engineer in the founding team, I think, but no, Jake and Siga, my co-founder who run engineering. Jake is a previous entrepreneur as well. He just sold his YC company. We see very clearly kind of eye to eye in terms of what we're looking for. And that also gives us both the time and bandwidth to do what we need to do.
So, you interview anyone other than engineering? How much time does that... I've interviewed a couple CEOs who have said this to me. We've talked about this when we were preparing for this like and I wish I interviewed everyone.
Forever actually. We only got to, you know, 400 people or so. I wish I had interviewed everyone.
Did you see any, you know, deterioration in quality or?
Yeah, definitely. Because I think at some point I also believe well not I believe I know for a fact most people have never been trained how to interview.
When you put someone in to interview the experience they've had is being interviewed.
But no one ever taught them how to interview.
No. And I've thought a lot about this because I will have a lot of first-time managers that needs to be upstaged how to interview. Right. And even if you haven't been trained as the founder, you care so much about the company, it almost doesn't like you're not...
Excitement. Yeah. No, look, I think I spend probably a third of my time on it. And the but I don't do one hour interviews, right? I do kind of 20 minutes once, right? So they're short. They're to the point.
The final only final. Got it.
I'd say I probably accept something like 70%.
Got it. So, I'm just kind of like the final filter and then I tend to question some of the you know the hiring manager or the hiring team know what have we pulled together about this candidate and then we have a final conversation about it and I think it's very important that I speak last in those conversations because if I speak first then you completely ruin.
I love that I love that that is a really important to speak.
And I learned this because I spoke first once and then everybody just said, 'Yeah, I agree with what Max asked me.' And you can't have that, right? So that was feedback. I got that feedback early in my career where someone said, 'Well, if you speak, you're going to color the opinions of everyone in the room.' And I was like, you know, you don't really you don't you actually don't in the beginning, you don't think about that. But I think for founders, I actually think that's good for not just hiring, for almost all things is when you're in the room, let the team.
Yes. And it took me a while to realize this because I'm in Sweden, there's a cultural phenomenon or value that's called Jantelagen. It means that you shouldn't think you are something. And it's not very good for building a hyper-scaling business but it enforces this idea that you know your opinion does not carry more weight than anybody else's and so on. And so in the beginning I think I didn't realize that my words carried more weight in some types of some conversations but once you understand that then you sort of need to adjust your behavior.
What is the number one thing you look for when you do that 20-minute interview? What is the number one either that you look for or the attributes you've noticed makes the person the most successful.
I look for ambition because I think if you're really ambitious, you figure out things and you can tell if somebody's ambitious in terms of how they talk about things and in terms of how they talk about this opportunity. So you know the first thing I ask is I typically I just ask them to quickly explain their sort of life story and tell me about some problems that they've solved and why they've made the decision that decisions that they made. And then when we get to the point around often I interview lawyers, right? Like I asked them why they go why did they go to law school and why did they want to be best at debating class and you know why do they want to go to that firm and not that firm and if they just you know continue to say well I wanted to be at that firm because it's best firm and like I always want to you know be better in these things and I think that sends a very positive signal for the mission that we're on because again I'm looking for the hyper-scalers who are going to be able to come into the organization be very efficient and scale with the company as it continues to scale because every quarter this is a new company and so everybody needs to re-earn the right for their seat.
Right. One of the question you just said you hire a lot of lawyers can you talk about that? We didn't I'm curious about that what roles are they going into all?
Most of our client facing roles both in pre-sales and post-sales are lawyers.
Right. Yeah. So, well, so let's say we work with the M&A team at Clearary. If I show up and I, you know, try and teach that session and try and work with them on how they're going to rethink their M&A processes, I'm going to sound really stupid because I don't know the M&A lingo. I don't know the process. I don't know the clients. I don't know the work.
So, we're privileged that a lot of extremely talented lawyers want a different type of career. They don't want to make partner. They don't want to go in-house.
But they want to work with tech. And we give them a huge room and capacity to take everything from initial demos, use case engineering, running pilots to then running the entire deployments. And some of these deployments are huge. I mean, it's basically like coming in as a McKinsey consultant driving management.
It's massive. I think I like to think of it as when Excel came to auditors.
And you have to reteach everybody how to work with a computer and how to work with Excel. That's actually kind of similar to the work that we need to do, right?
And so these lawyers are doing and they must be excited. I mean I don't want to say anything about lawyers, but a lot of them don't.
Well, I mean, so look, there's lawyers who are amazing at what they do in their practice, and then there's lawyers who say, well, you know, I used to kind of be a I used to do a lot of paper pushing because that's the way this industry is set up. As a partner, you don't make money on the hours you bill. You only make money on the hours that the associates underneath you bill. So, you need to put a lot of associates to work in order to make money as a partner. So, when you're an associate, not all of the work is very glamorous. And so I actually think that technology like Lora makes the work of an associate much more fun and rewarding and intellectual.
Right. I like that. Um, in terms of the team, is it all between New York and Sweden or?
So, we're in we started in Stockholm, quickly expanded to some other countries in Europe where we have local support and then our second biggest office was in London and now our third biggest office is here in.
And is it an in-office culture or is it because that's all over the place? I mean,
Right, we're fully in office 5 days a week in all those places. You know all the places we have dinner 3 days a week in Stockholm we have dinner 5 days a week.
And is it hard to hire people with that or do you find that people want that?
I find that of course you know I find that the people who are joining really subscribe into that and there's enough of a talent pool and understanding of the generational opportunity that is building on LLMs at this stage that I mean the top of funnel to kind of accepting offers is right like there's I don't think you could be at a more exciting company frankly I mean there's like a couple of verticals that have very high degrees of product market fit. You know, take legal, take maybe, you know, vibe coding or you know, the cursor like these types of tools. Healthcare has some interesting applications as well with companies who are doing incredibly well, but and legal is you know, one of these. So, the other thing that makes legal very interesting is that there's been such a low degree of digitalization and forever basically.
Right. Exactly. And so there's a lot of skipping over you're leapfrogging.
Exactly. But no, you are really doing that. So you're leapfrogging a lot of the previous efficiency gain or you know change management that would have happened into a completely new paradigm. And this is extremely interesting from a product perspective from how you market a product like this and how you talk about the incentives because they are also slightly perverse. Right. Right. I mean, if you're billing by the hour and you're saying, 'Hey, let's try to rework this process with AI,' then you might not be billing as many hours. So, you got to rethink the way that your business model. This is literally my number one question when we talked is just I get that the law firm has to feel like the pressure from everyone else down the street and from the in-house but you are kind of telling them that you're replacing their hours with AI in a lot of ways.
Right. And I think the way that you should think about this as a partner in a law firm is maybe this is the opportunity to really get scale on my expertise, right? Instead of only being able to work with my pyramid of associates, I'm now able to do work that I could scale to, you know, hundreds or thousands of clients at the same time. And you're able to I mean effectively codify your expertise, way of doing things and truly get software scale on it because I think if you look at many financial institutions the sort of quota between people working with engineering and people working with financial services like they come together like quants, you know, they build products together, right? And the same hasn't happened in legal but it's starting to happen and it's starting to happen quite quick. So I don't think this is a sort of three-year thing out. It's rather a 6 to 12 months.
Actually, now that you just said that, I'm curious when what you just said makes a lot of sense with the quants and everything. Do you think that there will be people the Lora let's call it I don't want to say admin but admin are they going to kind of be that person on the ground taking you know because I don't know who that even is there people like that in law firms today that are driving the innovation agenda.
Of course, yeah. So they have CTOs.
Yeah, yes the big successful law firms have dedicated innovation departments.
So that's who you work through essentially. Got it. So there's a couple of different you know it looks different in every firm. Sometimes you work directly with a partner and you drill very deep like a top down motion. Sometimes it's we got to drive the AI literacy across the firm or maybe we got to do both in parallel right. And I think there's something to the point of you know everything that AI can do at some point it will do. And so as a law firm you are very incent or as a law firm partner you are actually incentivized to want to provide that service to your client although you might not make a lot of money on it. Like let's take a very simple thing red line of an NDA. Now this is something that law firms typically do for free to private equity companies. I mean nobody makes the money on redlining an NDA. But the reason why you still want to do that and why you might want to do it with the help of software is you want to own or continue to own that client interaction so that when you know KKR is thinking about their next big fund or their next big LBO or something, they immediately think of your friend.
Or when hits the fan and to litigate, who are you gonna call?
You remember the people that you send all those NDAs to, right? And you know, they're also the best litigators. Perfect. Let's go work with them. Right. Like it's sort of because the other alternative is they just take that work internally, right?
