How A 27-Year-Old Built A $5.6B AI Company In 21 Months! - Max Junestrand

That's right. That's right.

Certainly not. I think the advice I got in Y Combinator was it's going to be easy to fundraise if you build a good company. I've tried to keep to that, but not everything else is easy just because you build a good company.

Well, so to take you all the way back to the time that even predates me, the seed that would eventually become Legora was founded in 2020 by four gentlemen who I was not a part of. So it was a psychologist, an engineer, a physicist, and a lawyer. And it sounds like the start to a good joke, but it's really just a start to a great company.

Exactly. And you know, 3 years later when GPT first came out, that became the real catalyst for forming the company. And so two of them decided to continue working on this full-time. Two of the other guys decided to jump and do other things. And then I entered the picture. And it was precisely then that I think language-heavy industries that had seen very low adoption of digital tools prior to this era finally started waking up. Coding, customer support, law, many others. And I think in those early years it was a lot about proving things out and solving foundational issues which today sound really easy and generic but it was things like context management, hallucinations, proper citations, how do you work with a large number of very unstructured PDF documents? And these are all just like solved problems now. But in the beginning, we had to build so many of these foundational building blocks to even put a good product into the hands of those first lawyers back in 2023. And after we did that, we started iterating. And I think a startup's secret power is really your short iteration cycles. And so in the very early beginning, I was focused on how do I maximize this in the company? How do I make sure that we have many cycles per day between meeting customers and building product and solving new use cases? And as the company has continued to scale, we recently became the fastest company in history to grow from one to $150 million in ARR.

Yeah. 18, 21 months.

Well, and I think we've certainly learned to fall in love with the problems that we're solving. And I've been smart enough to hire many much smarter lawyers than myself. And they come with not only the domain expertise about how to deploy software in the specific practice areas and organizations that we work with but also are able to see around corners where the technology might not be there yet but it's clear that it will be within a 3 to 6 month time frame. And I think when you're building products in this space, if you're building for where the models are today, you're failing. If you're building for them a year out, you're actually like too early. And so you need to be in this like sweet spot of 3 to 6 months. And you kind of need to play this momentum game where every quarter you're hitting the next milestones in the buildout of the company, in the buildout of the product, in your revenue, and in your metrics. And I think we just played that domino game very very well. And we've understood that in order to get to C, you also got to get to B. And because we were founded in Sweden, that started really early. I mean, today we serve some of the largest legal institutions in the world. The biggest one is actually bigger than the entire Swedish legal market, right? And so very early on we had to figure out how do you get into a new market? How do you enter them with a bang and how do you make the jump from Europe to the UK and then to the US? So, it's been many different periods in the company where I think we've had unique challenges which time and time again we've figured out a way to overcome.

Yeah. No. So I knew one of them from university and they decided they wanted to apply to the business school's accelerator and one of the requirements for that business accelerator was that somebody had to have gone to business school and I was the token business school guy who just did business school on the side while I was doing my masters in computer science but it was enough to get us in and when they reached out they showed me a demo which I thought was really exciting and I also told them why settle for a Swedish accelerator when we could apply to something like Y Combinator and I had worked at two previous YC startups and I think to give the US some credit like there's a lot of big ambition and big ideas that I think in at least Swedish society sometimes gets pushed down a little bit and so we made our YC application. We actually did not get in the first time. We then made some changes and got in the second time. And we took up this Stockholm based accelerator for the summer. And we quickly realized that three engineers with no lawyers adjacent to us was not going to be able to iterate to the optimal solution here. Back to the point around like how do you close that iteration cycle? And so I managed to get us in with the biggest law firm in the Nordics called Mannheimer Swartling. If you watch the Netflix series with Spotify, it's actually they're shooting parts of it there. The first lawyer at Spotify came from that firm. And so we made a deal with their managing partner that, you know, he didn't know that much about AI, but we certainly didn't know that much about law. And so we got a conference room in their building, moved in and worked out of there for the first nine months of the business.

And what I think that did for us was not only did it associate us with such a premier brand and prestigious brand in our market, but it actually forced us to have a very opinionated customer that was also quite demanding. And I think that demanding customers is sometimes the best thing you can have because if they're opinionated about what they want, then all you have to do is go build it. And I think that people can sometimes put the art of product building in a mist of mystery. But it's really quite simple. You just build the thing that provides value to the problem that they're trying to solve and then you get the feedback and then you iterate and you do that as quick as possible for as many times as possible and then you end up with something really great. And you know, from then that is still very heavy in our DNA this idea of co-creating solutions with our customers and I think it really formed and shaped much of the culture since.

They get discounted product. That's all.

Well, I think you know the winners get to write the history a little bit and so there's probably a selection bias, but I think we took that relationship deeply and then we brought that to other organizations since and now we're at this quite interesting point in our market where you know both the law firms are really adopting AI but so are also the enterprise and legal departments and so increasingly we are doing work with large legal departments who are looking to cut costs or drive efficiency and to do other types of things internally that they otherwise or previously just didn't have capacity for. And so from those very early days, yes, we were focused to hone in on one problem, but ultimately the product that we had back then was like a ChatGPT wrapper with better context management and that didn't hallucinate on European case law. Now we have a completely different product architecture even go to market service motion you end up building for the time that you're in and normally that time might have changed every year or so but in AI that's changing every quarter. And so I think for myself and I tell this to every new joiner as well you're certainly at the point today but if the company is scaling exponentially you are going to have to work very hard to keep up with that and to keep up with the new challenges that are coming and as we start to get into the first build out of the executive team the first set of impactful hires like this was a very important part of my philosophy.

I had to be able to take bets on other people who would come in and be founding engineers or founding go to market executives and to build up different parts of our business. Our top performing go to market or sales rep so far in the company's history dropped out of university. He's 24. And has zero prior experience doing any sales whatsoever. And now he leads part of our strategic accounts team. And our founding engineer had no prior engineering job, but used to work in a construction warehouse and selling wooden planks and then, you know, quit that to join us as our first engineer. And when you see people like that outgrow even their own expectations of what they would have been able to do, I think that gives you the confidence to go, all right, like we're certainly going to bring in experience where we need it. But there is a raw energy and passion and problem solving and a go that is very hard to just create on demand. You need to have it. And you know, not every hire works out certainly. And we were very good at getting the right people on the bus and the right people off the bus in a good way and often it's a mutual feeling when something is not working out.

Yes. Well, it's hard for people to say goodbye. Well, the first times was a lot harder than what it is today. I think reps build a muscle. But I still feel very bad going into a conversation like that. I think if you don't then something might be a little strange with you.

Yes. And you really feel when somebody joins who doesn't have it. Like it's hard to put a word on it but everybody feels it.

You know, the sort of data from application to getting an offer is something like 3%. And so, you know, like there's a lot of funnel that goes into getting those 80 people in sit here.

And we talk about recruiting as being a privilege and not an obligation.

Because we want people to put in more effort actually into recruiting than almost anything else they do.

Because it becomes the source multiplier of so much in the company. And I think in order to do that at the scale that we're now at, then you have to lead from the front. You have to show that you treat your executive hires in that way. I still interview every director plus because I think it maintains that bar in the entire company. And it's so easy to think this is just a headcount we need to fill. But you know, somebody mediocre could be taking the place of somebody exceptional.

Absolutely.

I got to experience a little of it when I was in college applying for jobs. I did an exchange semester in the US and then I applied for 400 roles and I got two interviews.

Yeah. 400. I'll not name the companies. All kinds. Engineering roles, growth roles, chief of staff stuff.

This is before you could write an agent to apply for all those jobs for you. Yes, I did them manually. It feels really lame now. And I did two interviews. One at a venture fund and then one at a startup who were building robots for mushroom farming. And I did two cases for each. I thought I did quite good at both, but then I got rejected and you know like that was probably for the best because then I started Legora instead that summer.

Correct.

Yeah, that could have been something. But how you get treated in those interviews versus I did an internship at McKinsey and when you go through that process it's like six interviews it's very clear. You go there, you know what you're expected, you know what they're looking for. Like it was a very good candidate experience, I think, versus some of those more pair companies. And I think as you build a machine around that, you need to build a brand and you need to build the expectation that even if somebody has a poor outcome in that they don't get a job, they are still going to recommend to their friends to apply to Legora.

Yes. Also how many people are you now?

We started the year 250.

So I think if it's important to your business to scale headcount which not all businesses have to today but we certainly do. If you think about the before and after of that what your dream picture of the after looks like you have to start very early to make sure that you actually end up there because I think if you just treat recruiting as something that you do a little bit all the time you don't really feel that your exponential curve might be going down or that you're dropping the bar because it happens gradually. And so I think you actually have to design this over a slightly longer period of time and you have to think about talent development in the company as well in a six-month timeline, not a one month timeline. We've had many Legorans who have been extremely successful after 6 months but wildly unsuccessful in their first three months. Like ramp is a real thing and sometimes you get a feeling that something is off and you know that's maybe a cultural thing but if it's just a performance thing I actually believe that most organizations are too afraid of giving clear feedback especially in Europe I think the US maybe it's a little bit more confrontative about these things but Sweden certainly is not a country where you search feedback and you give tough feedback. And so again, if that's not in the culture, you have to turn that into a ritual and you have to have a pretty tight performance management cycle and an exercise. And you have to really encourage managers to be clear with teams about how they're doing. And you know, some of our now best performers were given a low score and maybe it's the first time they've ever been given a low score in their life and they're like, 'Holy, am I a two? I'm not a five like on a scale of one to five. I'm a two. I really have to do something different here or I'm not going to feel good about myself in this organization.' And it's a little bit of short-term pain for a lifetime of better outcome that I think is a very fair trade-off when you put it like that, but it's hard to put in the work up front.