Founder Journey ft. Scott Stevenson

Speaker A: Sipped my ginger ale. I got the cranberry ginger ale.

Speaker B: I love it.

Speaker A: Yeah.

Speaker B: Canada Dry for a Canadian podcast. I love it.

Speaker C: Yeah.

Speaker B: Welcome, Scott, to the podcast. We're super excited to have you and talk about spellbook and your journey and just everything you've built. Uh, I want to ask an overarching question to kind of kick things off that I typically do. So why entrepreneurship and why want to get started in kind of the journey of building something?

Speaker A: Yeah. Uh, I consider myself a creative first. I think so. I always just like making things. Um, as a kid, I think the first thing I really wanted to make was video games. Um, I would play video games, and I wanted to make them myself. So over many years, I tried to learn, to program, to teach myself. Uh, I wasn't amazing when I was young, but that was kind of the first thing. And then I got into making electronic music, and I had this electronic music instrument company. Um, I love the sort of creative act and the creative pursuit. Um, and I was always interested in entrepreneurship as well, the kind of autonomy and the independence of it. But I think what makes it this really interesting creative act is that it's just one of the biggest and most impactful things you could create as this team of people, this machine that creates new value in the world and changes how things are done. Um, it's very, uh, it's like this creative, um, pursuit that, you know, can take a decade or two to really come to fruition. And, um, the challenge of that and, uh, you know, just really, really, uh, appealed to me and the impact of it. Yeah.

Speaker C: And when you. How do you come to realize that entrepreneurship could be a creative impact? And, you know, all these things you have, like, was it someone that inspired you? Was an entrepreneur, like, mentors, or was this. Was this life? Like, how did you come to thinking like this in this framework?

Speaker A: Uh, I was very plugged into the Internet from way too young an age. Um, so, you know, I was on these, like, message boards and things, like, long before I should have been, like, trying to learn programming and. Yeah, this is in the 90s, and at the time, everyone's talking about Bill Gates and Microsoft. I'm not saying that was my idol or anything, but as a young kid, people are talking about Microsoft and what's, uh, happening in the world of software and the Internet. Uh, it was very exciting time to grow up, uh, in the 90s with all of that happening and just being a consumer of that at such a young age. Video games, the Internet, computing. Um, I mean, it just so Deeply interested me and I was very interested to figure out, like, who, okay, who is behind this? Like, who. Who are the people, um, you know, building these things? Um, but the thing is, you know, I'm. I was a kid in Saint, uh, John's Newfoundland, on the. As far east as you can go. Literally probably as far as you could drive away from Silicon Valley. Um, you know, that's where St. John's is. Like, literally where it's the most eastern point in North America. And if you were to draw the line, it's like as far away from Silicon Valley as you could possibly get. So I had this, and it's. Newfoundland's an island. Um, so I had this very online kind of message boards and, um, the sort of 90s message board scene and bulletin board systems and stuff were just like an amazing way to kind of try to figure out what was going on in the world. And, um, just seeing people build things on there, seeing people launch apps and companies, and, um, watching what, you know, companies like Microsoft were doing back then, I think was, you know, somewhat inspired me to see this kind of path of kind of being like a tech entrepreneur or tech creator. Yeah.

Speaker C: And so when, when did you actually start? When was the first time you started something entrepreneurial or tried to be, you know, get inspired, uh, inspired and get all this education? When did you actually put it to use?

Speaker A: Yeah, Uh, I mean, I don't know how early you really want to go here, but like. Yeah, my first thing that I remember.

Speaker B: Yeah, as early as you can.

Speaker A: Okay. Yeah, yeah, okay. Uh, yeah, I think, yeah, in grade six, I was like, this would be the year, like 2000. Uh, I would have been 12 or 10, 11 or 12 years. 11 years old. My friend and I, uh, started a company called Eaglesoft. And, uh, we had floppy discs where we would make art in Microsoft paint and we would put it on the floppy disks and then we would sell basically these like, clip art discs, um, you know, basically to our parents and like, anyone who would buy them. And the art was pretty terrible. So that was like, you know, the first of many failures and terrible, you know, ideas that I've had. Didn't really go anywhere but like, uh, the itch was there from a young age to like, try to figure out, you know, how do you, how can we create things with technology?

Speaker B: Distributed customer. Yeah, exactly.

Speaker A: Yeah.

Speaker C: Maybe, like, maybe you don't have to go in detail all the attempts, but maybe just highlighting the few that shaped your thinking and, uh, how that eventually lead to what would become rallying now Spellbook.

Speaker A: Yeah. So first, I think I always thought of these also as creative attempts. So one of the first blog posts I ever wrote is a blog post called how to Finally Make Something. And it's about kind of my journey, which I think is similar to a lot of people who go through this of like trying to figure out how to not just be a consumer, but a creator. And um, I had a lot of different things I tried to create. Some were businessy, some were more artistic or like trying to create a game or something like that. Um, but uh, yeah, I tried to make multiple video games, multiple websites, um, uh, blog posts, I don't know, all sorts of things I tried to create, uh, along the journey. Most of it failed, um, until the first thing I ever finished was an album of music that I produced. It was electronic music. And there was this challenge called the RPM Challenge, where you try to record a record in one month, in the month of February. It's kind of like NaNoWriMo, which is like you try to write a novel in November, um, or as much of it as you can or something. Um, and uh, that was February 2013. I finished this like little album of music. It wasn't really an entrepreneurial thing. And that was the first time I ever finished anything. And um, the blog post I wrote, how to Finally Make Something is about this feeling of being a creative yearner, wanting to go from becoming a consumer to a creator, and how hard it is for 90, 95% of people to figure out how to make that leap. Like, everyone reads Twitter, reads TikTok, but how do you, how do you, how do you actually get into a habit of actually putting stuff out into the world? And I feel like I banged my head on that problem of just how do you become a creator? Um, for like a decade. And uh, in the blog post I talked about like what my mental hang ups were, you know, my mental hangups I had to get over to even just create anything on my own independently, outside of school or outside of my employer. Um, were, you know, I, I, I say like, I was very attracted to doing, um, uh, overly structured things. Like I would always do another tutorial. I'd read another book, um, I'd, I'd organize all my files and I would always, I was always working on the prerequisite work. And I think this is where the, the first part of my, my journey was. I was obsessed with doing all this prerequisite work. Do another tutorial, read another book, um, you know, uh, organize, organize, organize all my files. Um, you Know, how'd you go from

Speaker C: the pre to actual doing? So what was the big impact?

Speaker A: Yeah.

Speaker C: What was the mind shift there? Because you're right.

Speaker A: Yeah.

Speaker C: Lots of people always prepare, but never do or never try, so.

Speaker A: Exactly. Yeah, yeah, yeah. So, I mean, first I was very determined and I just kept thinking about it, like, what is wrong? Like, I've been trying to create stuff and put things into the world for like a decade now. This is what I wanted to do since I was a kid. And I'm still, I'm starting all these little things, but they're not really going anywhere. And I would just introspect what's going on, what is wrong with me? Why can't I do this? Um, and the big learning for me was this kind of realization. And I learned it when I finally finished that album of music of. In order to create something, you have to be willing to dive into the unstructured. And what we love as humans, especially because of how we're educated, um, is, um, structured work. We love like, a checklist or, like, there's no risk to reading a book. You know, you're going to read that book and you're going to put it on the shelf and you're going to feel satisfied. There's no risk to doing a tutorial. You're going to go through the tutorial, finish the project, and you'll feel accomplished. Um, you know, I think a lot of creatives obsess over tools. Like so many of my friends were into, like, film or music. And they would obsess over not the creation of the music. They'd obsess over, like, the music theory, but they wouldn't actually be composing music. Or they'd obsess over the camera equipment, but they wouldn't actually be going and taking photos because all of these things are kind of more, um, structured. Like, you can be like, oh, this is the best camera in the world. And, you know, here's the top five cameras and here's the best one. But when you actually get into the act of creation, the actual creative act, it's very ambiguous. It's very untethered. It's very unstructured. And I don't think our education system does a great job of preparing us to, like, dive into the unstructured and, like, build a framework ourselves and, and, and like, um, you know, this sort of anxiety that comes from, like, having nothing to really grab onto.

Speaker B: I don't think they accommodate well for, like, visual learning either. Like, for exactly kind of what you're saying.

Speaker A: Yeah, yeah, yeah, yeah, exactly like the intuitive learning, visual learning. And so, um, yeah, um, that was the thing for me where I realized we want the hook of the dopamine, of the structured tasks, we want the ten step checklist, we want. School trains us to be like, we want this ABC thing that we do and then we're going to succeed. But when you go to write a novel, you go to write music, you go to make software, um, the process is so wildly unstructured, um, and hard to predict and that, you know, we're. It can feel like walking through sludge compared to, you know, the kind of stuff you do in school where it's like, you know, you follow the 10 step process and you get an A. Um, if you write a novel, you're just walking to this, you know, ambiguous sludge where you can go in any direction at any time and you know, where do you start? Where do you end? How do you know if you've edited enough? I mean, it's really challenging and usually in the middle of any creative project there's this sort of like crisis moment where you're, you're just like, what the hell am I doing? Like, how am I ever, how is this ever going to be good? This thing sucks. Um, it seems like it's going to take so much work to actually, um, get this anywhere good. And usually at that point, you know, most people would kind of give up. And after banging my head on the wall long enough, um, and first, you know, the first thing was like building this little album of music, which wasn't even that good, but it was done. I finished it. Um, I was like, okay, you have

Speaker C: books we can put in the show notes.

Speaker A: I'll send it privately to you after. Yeah, I don't know if we can go in the show notes. Um, but, you know, like. And then I realized you actually have to practice the motion of going all the way. You know, even if the thing you output is not any good, um, you have to go through this. You have to understand that creative journey of like trudging through the. This sludge. Sir. Right, I'm, um, kind of going out. I'm very passionate about this.

Speaker B: Yeah, yeah, no, this is cool. And I, I like that you're kind of honing in on like, there's sort of, there is a creative aspect to like building anything. Like, you have to have like a vision in order to like implement something and you have to be a visionary with it. Um, I don't know if I'm jumping like too far ahead And Alex, like, feel free to jump in, but I, I think I'm just curious to know, like, it sounds like you were very much like arts creativity. Like, that was like a huge passion for you. Like, obviously you're building like, legal tech. Like, what kind of happened in between that eventually led you to like, this was the industry or the vertical that you were going to be building in.

Speaker A: Yeah, so I studied engineering. Um, my co founder, Daniel, uh, is the lawyer of the team. And, uh, my other co founder, Matt, was also an engineer but operated the company. Um, so my creative passions led me to build this musical instrument company, which was also another one of my, like, ten horrible business ideas. Um, where we, we built this, like, you know, new electronic instrument that was meant to kind of feel like an acoustic instrument, to have the soul of an acoustic instrument. Um, we did a Kickstarter campaign. You know, we built and sold a bunch of these. They're, they're pretty cool. You can still see it online. MU Music, mu music.comm u n e music.com and, um, yeah, I was building this and there wasn't a ton of traction though. Like, it was becoming obvious to me. I actually, I met, uh, the creator of one of the first digital drum machines. This was a hero of mine. And, uh, I was amazed. I have so much respect for what he had built. Um, but I was like, oh, how big is your company now? Like, this is, uh, Roger Lin is the name of the guy. Uh, he made the Lynn drum. So if you listen to 80s music, you hear this drum machine and all these tracks. He had built that sound and that machine. And I was like, I met this guy at a conference, uh, a hero of mine. And I was like, well, how big's your company? He's like, oh, we're two people. And, um, he had been doing this for a long time, uh, and had this huge impact on art and music. Um, but at the same time, I was like, geez, that's a lot of. He's done a lot of work. And to only now have a company of two people after all that, I was like, I think I want to build something a little bit more commercially, uh, impactful and more commercially viable. Um, and then I got a legal bill, uh, that took like half the cash out of our bank account. So we were building this company, we wanted to protect the ip, issue some initial shares, raise some angel money. Um, uh, and then one day we got a legal bill, which I didn't expect at all. I talked to some lawyers about doing some really basic Corporate setup, share issuance, IP protection, and then we got this legal bill. I won't get too much in the numbers, but that literally took half the cash out of our bank account unexpectedly. And, um, that really, uh, inspired me to think, wow, there's a really big problem to solve here. Um, how is any entrepreneur, you know, supposed to start. How many entrepreneurs can afford to start a company? Because the basics of legal work and contracting and accounting is just too expensive for them to get over. You know, a lot of people don't have a ton of money sitting around. A lot of small business owners, you know, aren't raising, like venture capital. Um, they're, or even the knowledge either.

Speaker B: Like all of it.

Speaker A: Yeah, yeah, exactly. Yeah. There's so many barriers to, um, launching a company. And so I became very passionate about the inefficiency of legal work, um, and uh, just how weirdly expensive legal seemed compared to everything else that I had ever bought in my entire life. It was the biggest bill I had ever seen. And it felt like such a small amount of value for the cost. Um, so I started to obsess over this problem of, well, how can we make this basic legal work, especially for companies, much more efficient? And when I started to look into it, I saw stats that 70% of entrepreneurs could not afford to go to a lawyer lawyer if they, um, encountered a legal matter because it was simply too expensive for them. Um, and I started to look into what lawyers were actually doing. And I met Dan, my co founder, and it turned out, you know, they're in Microsoft Word, like copying and pasting stuff. And like they actually hate the job as well. A lot of the time it's like not what they. The other side of the equation was talking to lawyers. They were like, yeah, I was really excited to practice law. I went to law school. I love law school. And now I'm just in Microsoft Word, copying and pasting between 10 word windows all day. And then I'm billing my client $800 an hour for that. Like, I don't feel that good about it. Um, so there was this realization that contracting hadn't really changed since the word processor. And there must be a way to make it 10. There must be an opportunity to actually make this like 10x more efficient, which would mean more companies can start faster sales cycles, um, uh, better hiring contracts touch everything. It's such a broad problem. Um, about 100 trillion a year globally passes through contracts. And the economy and commerce has sped up 10x or 20x over the past decade. Um, or 2, um, but contracts had not sped up. So contracts become this bottleneck in how we can work together, um, and how we can create companies and things like that. So just became super passionate about the scale of this problem. And it seemed of the last untouched problems by software, like software really hadn't accelerated contracts and legal work that much at that point.

Speaker C: So a couple questions about that story. How did you meet Dan? Uh, and how did you meet, uh, like how did your team meet? And then you found this problem? How'd you guys decide this is what we're going to pursue?

Speaker A: Yeah, so um, it was a bit of brute force honestly. Like got obsessed with this problem, uh, started toying around. Uh, I started thinking about it in the Ethereum smart contract, like the crypto version. I was like, oh, maybe legal stuff will all turn into like Ethereum smart contracts. That was like the initial idea. We never ended up building that. But I was like maybe contracts can turn into software and they'll all automatically happen and all the tools that we use in software we can use for contracts. Um, I actually reached out to probably 100 different lawyers being like hey, I need a lawyer to co found this company with. And uh, eventually I encountered Dan, um, through this search of, I literally brute force searched for a co founder. Um, and uh, we met through an Ethereum meetup. Um, yeah, it was Ethereum Waterloo and that was the first big kind of Ethereum hackathon. Um, we met through there and we met our first angel investor, Ethan through there. Um, and uh, we worked together on a trial basis to start to see like do we think we could work together. We didn't, we didn't make anything official for like three months because we're like, we don't even know each other. And investors will always say like you should start companies with people you know, not like some random person you just met. Um, so you know, we worked together in trial capacity for about three months. Um, I met in Toronto and uh, in Waterloo slash Waterloo. Um, and it went really well. Yeah, we were very aligned on the vision. Matt and Dan were already working together on something really similar and uh, Ethan was kind of the initial angel investor. He had worked on Cosmos was another um, crypto ah, project and he was really passionate about this as well. So we were able to get a little bit of money to start and um, launch uh, kind of the first version of the company from there and then we actually launched our first version of the product like three weeks into working together and then we shut it down like two weeks later. So there's A lot of, a lot of iterations. The story of Spellbook is a story of brute force.

Speaker B: Like, what was the first version? Just out of curiosity, like, just what we know now about it, like, what was the very first version that you launched?

Speaker A: Yeah, so the very first thing we launched, uh, we're like, okay, entrepreneurs need contracts. Let's just cut the lawyers out. We're going to, we're just, we're going to be like, um, kind of like a temp. A better template database. Like there's all these legal template databases out there. It's like we're just going to do that really, really well. Where, you know, you need an employment agreement and you're an Ontario tech startup you can come to, we call it Rally at the time, that was our original name. Come here, you know, say you need an employment agreement, put in some data and we'll go and generate the right employment agreement for you. And we'll say, this is not legal advice advice, but you'll.

Speaker B: Contract drafting.

Speaker A: Yeah, yeah, yeah, exactly. And we launched that, um, we really quickly got a bunch of like $5 a month signups from all these tiny SMBs and then realized pretty quickly, like, man, it's gonna take a lot of five dollar subscriptions to like feed ourselves. Um, like this is not. And like, we also realized was DIY anxiety. These people would sign up for the product and we could output a really good contract for them. But they still had no way to understand what all that legalese meant. So they wanted to like, still have a per. A person tell them that this was okay to sign. Right. And so, um, yeah, we had. So we're starting to realize, like, ah, this isn't really working. Even if we can fully automate a contract for someone, they still don't understand what it means, um, and they're anxious about signing it. So, uh, then, uh, a law firm approached us. Miller, um, Thompson was our first customer. And um, they said, hey, we saw what you're building and actually we would love to have this to supply these basic agreements to our clients, our startup clients, um, because it would allow us to service them much more cost effectively. So then we started pivoting the product for law firms to be able to kind of automate contract production for their clients, um, more efficiently. Um, and then there were a ton of iterations in between there before we finally got to Spellbook, which was our AI product.

Speaker B: Right.

Speaker C: So we can talk, uh, that journey, feel like you said earlier, that part in the middle where you're like, okay, I have to Just work through this.

Speaker A: Uh, go ahead, sir.

Speaker C: Like, you know, before you got spellbook, you know how you refer to when you're. You're using anything creative, there's that point where you have to. The sludge. So, yeah. Did I. Did I ever feel like the sludge.

Speaker A: Oh, yeah. We were in the sludge. You know, people call it the sludge or, you know, chewing glass and staring into the void. There's all kinds of metaphors people use. We were in the sludge for. For three years, really. Um, and Alex, you got to see part of it. Um, you know, as a m. Yeah. Investor, early investor. Good.

Speaker C: Yeah, look, I, you know, remember sludge, but, like, I never felt like you guys. The sludge slowed you down. So how do you. For other people, how do you work through that sludge? What was the mentality? How do you guys keep going?

Speaker A: Yeah, yeah. So a couple things, you know, one, we had to be set on this problem mattering. So, like, the thing that. The number one thing that kept us going is that we really believed legal efficiency was an unsolved problem that needed to be figured out and that it really mattered to a lot of people because a lot of people could not afford legal services, and legal costs were way expensive. Compare legal to accounting or to anything else the business procured. It's just really, really expensive. So we believed in the problem, and we never lost faith in the problem being real. Uh, so that gave us a ton of momentum. And then right at the beginning, when I started with Dan and Matt, when we made things official and started to paper things up, I was like, I think this is going to take. This is at least 10 years. We're going to have to try a lot of shit for this to really work. Um, I've looked at what it generally takes. Most other companies, most companies are not overnight successes. This is not going to be tomorrow. We do great. Like, we're going to roll the dice and we're going to try a lot of different things until we find product market fit. And I was like, I've been through. I had been through. I worked with another startup, um, called Nockland, that built network monitoring software that was kind of in the middle between the musical instrument company and this. Um, so I had seen the startup journey before and how, like, for most companies getting to product, true product market fit is really grueling and a lot of people don't realize it. So I. I told Dan and Matt they had not gone on a startup journey like this before. Although Dan had a beef jerky company, but it was a little bit of a different kind of different than a tech startup. Um, and I was like, look guys, we're signing this up. It's going to take at least 10 years for us to really get to anything close to where we really want to go. And um, we made that commitment up front. This is a ten year thing. Um, and we controlled our expectations. Just knowing that up front, um, and being like, yeah, this problem is big enough to dedicate 10 years of my life to. Life is very short. And 10 of the most productive years of my life because I was around 30 at the time. Um, when we launched, uh, making that commitment upfront was, um, very, uh, a huge part of it. And then our attitude always was, we are going to keep rolling the dice until we hit real product market fit. And we had read blog posts about what real product market fit looked like. And I think, um, I don't remember if it was, uh, Mark Andreessen or Ben Horowitz. One of them wrote something like, product market fit is like your product is being ripped out of your hands faster than you can keep up with. It's your servers are on fire. You cannot keep your system up. Um, that was our bar for product market fit. And it's like, unless we literally cannot keep up with demand, unless m. We hit that point, we're not going to call it product market fit. Um, uh, and we were like, we're going to have to try a lot of stuff. We're. And we're gonna, we're gonna play the odds by trying a lot of things until we finally get there.

Speaker B: So from there, when did you feel like you were starting to get traction and like maybe kind of reaching the product market fit? Cause I know it's like going from contract drafting and obviously it's, it's evolved like, uh, like quite hugely. So, like, when was that?

Speaker C: I'm reword this a bit differently because I got to see this journey. So, you know, you said like, you're experimenting, you're taking a lot of shots and trying m to get the product market fit. What was the spark that led to what would eventually become Spellbook? And then to Riley's question, how do you know?

Speaker B: Like, how do you know when you were hitting traction?

Speaker A: Yeah. Yeah. So, I mean, there was definitely some traction initially. So we knew we, we knew there was a thread we were pulling on. Like, yes, people wanted contracts and legal paperwork more efficiently. We knew that was there. Um, and then it came down to like, well, could we actually hook people effectively to try it? Could we actually keep people around? You know, if people bought the product, would they actually use it? Um, so, yeah, the first thing we built was kind of like templating for lawyers. Uh, you know, we actually sold our original product to like 100 firms. And we had some other angles on it. Like we have the shopify for law firms add on where, like, they could. Law firms could actually set up like a kind of like a storefront. Like you need an employment agreement. You know, put in all your stuff here and we'll generate an agreement on the back end, um, automatically, stuff like that. So we tried all these different things and we were growing revenue. Um, but it wasn't like this runaway flywheel running, rolling down the hill. It was like every sale we were pushing really hard for, um, every sale felt like pushing a boulder up a hill. And then the thing that we noticed was like, that why we didn't kind of go all in on our kind of original set of products, um, was really usage and retention. Like, lawyers liked the promise of the product, but in reality they found it very hard to build templates like the time to value, which, uh, is something we now obsess over. The time to value was just too long, which is like, how long does it take from going to buy the product to get to getting value out of it? You know, it would take lawyers maybe a month to get value out of it because it would take them so long to put together, like, their employment agreement template on our platform. And then even once they built the template, they'd be like, okay, I've got a client who needs an employment agreement. Great. And then they would go, uh, you know what? I don't really want to use the template. This is a bit too bespoke. Um, I'm just going to manually do it in Word. Um, there was a lot of issues we found with the initial, um, product. The other thing we found with the initial product was it was hard to get lawyers to leave Microsoft Word M and bring them into a web app. Um, and it was even hard to get them to log into anything. Um, they're not necessarily the most tech savvy audience and, um, they're very hooked into kind of their existing workflow. So we had a lot of learnings about, like, what they liked and what they didn't. Um, and we actually launched, you know, 100 landing pages. So the one of the most famous stories we have is like, our growth marketer Kurt, along with our product team, who built all the stuff to back these landing pages, we launched over 100 different landing pages with different value props and messages, um, over three years. And we knew for each of those landing pages, like, um, what good looked like, what was a good conversion rate, what was a good cost per click, what was a good cost per signup?

Speaker B: Um,

Speaker A: landing page 101 or 102 was spellbook, um, our AI product. Um, spellbook was a combination of everything we learned from all of our initial experiments plus, um, large language models. So we were the first company in the world to bring, uh, genai and large language models, um, to lawyers. Um, and uh, that came from a bunch of different points of inspiration. So one, we knew lawyers didn't have time to make templates, and we knew their work just ended up being really bespoke. Um, and then we knew that they don't want to leave Word. Um, they spend half their day in Word. They don't want to go somewhere else. And then I use a tool called GitHub Copilot, which was, um, one of the first popular generative AI tools out there that helps engineers write code. And, um, it sits right in the engineer's existing workspace and helps them draft, uh, code or change code, um, very quickly using large language models. And it was just this immediate aha, ah moment for me as an engineer using that product. And I was like, wow, this is what lawyers need. Uh, they need something like this, um, because they'll immediately, whenever they're drafting a contract, be able to, um, start, uh, drafting clauses using AI right where they are in Microsoft Word rather than going somewhere else. And so we launched that product. Um, uh, it wasn't a board objective or anything like that. Um, we built it, the first version in about two weeks. Um, and within three months after that, we had 30,000 lawyers on our wait list. And within three months after that, we had more revenue from our new product and from everything else we had built before. And so how we knew this was great was just we had doubled our revenue in three months. We had a 30,000 lawyer wait list. Lawyers were using it, they were sticking to it, um, they were telling their friends about it. Um, and there's this analogy I love about, um, uh, James Currier at NFX has this great article called Find the Fast Moving Water. And he talks about, you know, you found this magic when you get this physiological response from your customer where their pupils are dilating you. They're literally having like a physiological kind of drug like reaction from seeing your product because they're like, holy cow, my whole job is about to change. Um, when I use this product. So that's how we knew. We. We knew very quickly that we had hit something different. And we saw that our cost per signups and our ads were, you know, 10x better than we had ever seen before. Um, it was very, very clear.

Speaker C: Yeah. So I have a few questions based on this. Um, first, you were just, you know, let's call just before that. You're slow, you know, walking through the sludge, or whatever you want to call it now you've got signs of product market fit. How do you react to that? And how do you change the approach to building your business at that point?

Speaker A: Yeah, I think that's the easy part. Uh, the hard part was the sludge. Uh, I think I remember first board meeting. I don't know if you were there, Alex. I can't remember. You probably were. Yeah. When we presented the results, and we're like, hey, we launched this other thing, sort. We didn't tell you about it until now, but it's like it is now growing way faster than anything we ever built before. We think we should change the name of the company and just totally go in this direction. And I think everyone looked at the data and was like, yeah, that probably makes sense. Um, so we straddled for a little while where we set up Spellbook as a secondary domain. We kept maintaining the prior product, but within a few months, it was very clear that this new thing we built was going to grow much, much faster than what we had built before.

Speaker C: Maybe I'm wrong, but I remember, I think that was the second board meeting I think you brought up. The first board meeting was like two or three weeks after you launched. And you go, hey, we've got this project. This might be something. I remember talking to you about that often. Um, and then let's talk a bit about any decisions you made with that product. How did you. You talked about there? I think something very insightful, like how quick you got to the aha moment. So what did you do to make it instantly useful?

Speaker A: Yeah, uh, a bunch of things. Um, first, the biggest thing we learned from launching so many things to lawyers was that time to value is everything. And very few people obsess enough and really deeply understand how many details you have to get right to get someone hooked on a new experience. People are so distracted in 2025. No one has time to try something new. No one has time to digest a tutorial or a video or anything like that.

Speaker B: A lot of people don't want either. Like, they're just afraid to try new Things.

Speaker A: Exactly. Yeah. Lawyers are very afraid to try new things. A lot of the time their work is chaotic. They have a habit, uh, habits that they've solidified. And so, ah, honestly, you know our end, what we learned to do is like obsess over every detail. Like every extra click, every extra screen, every extra word is going to, is going to kill you. Um, as a product. Um, so we literally just did the exercise of what can we remove? What can we remove? How do we get someone to that first moment of value in literally like five seconds? Um, the other special thing we did was we actually forced all our customers to do an onboarding because we didn't trust them to even do this themselves. We're like, you are going to join an onboarding call and we are going to forcibly make you use the product until you see the value in it. We're not going to leave it up to chance. Um, we got that from Superhuman, the email company, um, where when you onboard with Superhuman, the thing that amazed me and their product hooked me. They totally changed how I do email. When you get on their onboarding call, they would make you, um, install it on your home screen of your phone. And I didn't even know you could do this. They make you plug your phone into your computer and share your phone screen to zoom to prove that you put Superhuman on the front screen of your home and they're like, you have to do this, you have to install it to your dock. We did a similar thing for lawyers. We're like, you have to install this to Word. Um, eventually we had a desktop app and you have to put it in your doc. You can delete it next week if you want, but you have to put spellbook in your doc, um, forcibly setting up all those triggers to make it really in reach and really easy to use. Then we also put it in Microsoft Word where lawyers were already. Our view on the product was, um, it's gotta be like an electric bicycle for lawyers. So lawyers know how to ride a bike already. Um, let's just give them an electric bike so they, they're still steering, they're still pedaling, but now they're just going up hills 10 times faster. You know that that was our philosophy for the product is like, keep it as an electric bicycle, not like, I don't know, like a self driving suv. That is going to totally change how they, how they work.

Speaker B: Okay, um, so you kind of touched on like again like the value. But I just one question because seeing as how it's like evolved, obviously as Most products do. What was a big technical challenge that you ran into? And, like, how did you, like, how did you solve for that as you were building it? What was the biggest challenge for you?

Speaker A: Yeah, I think the biggest challenge in AI is how fast everything constantly changes.

Speaker B: Yeah.

Speaker A: Um, there's new model. Especially when we started, there was new models being dropped, like, every three to six months. That would totally change how you would build these tools and what they could be capable of. Um, we developed a mantra. It was really a culture and an attitude that we had to develop, which was that, uh, telling our team that there's not going to be time to master anything because there's this Abe Lincoln quote where it's something like, if I had six, uh, hours to chop down a tree, I'd spend four hours sharpening the axe. Do you know that?

Speaker B: That quote? Yes.

Speaker A: I don't know if that's the exact quote, but something like that. Something like that, yeah. It's like, if I'm going to chop down the tree, I'm going to spend all this time sharpening my axe. Uh, but the question with AI is like, well, what happens if the chainsaws coming out in, like, six hours? Are you going to spend all that time sharpening your axe when the chainsaw is coming out? And then the electric chainsaw method? Yeah, yeah, so, exactly. And so the way I thought about, kind of mathematically is, like, you think about the axe. Like, if you were to master the axe and take really good care of your axe, you know, the axe was useful for, like, 8,000 years. Like, that was a really good investment. If you were to master using GPT2, uh, which was the first model we used, that was useful for maybe six months. And then everything changed. And so the biggest thing we had to teach our team is, like, you actually can't worry about mastering anything anymore because everything changes every six months. We have to be really comfortable, um, getting some level of proficiency of these tools, getting them out to our customers, putting good guardrails in place, but we're never going to master them because new tools are coming out tomorrow. Um, and so, uh, that was the biggest challenge, is getting the team to be comfortable moving at that speed of like.

Speaker B: And I think it had to be mastered.

Speaker A: Yeah, exactly.

Speaker C: And how's that reflected in the products you share with customer or the features you share with customer?

Speaker A: Yeah, I mean, it means that we're always on the leading edge because we're always willing to drop the ax and pick up the chainsaw. Uh, whereas we always have features and capabilities that no one else has. And often we're two years ahead of the market in what we build because we have this attitude of drop the axe and pick up the chainsaw as soon as the chainsaw is available, rather than getting really tied to the axe. Whereas you saw a lot of other companies worry about mastering these tools too much and they were fine tuning these models, spending in some cases millions of dollars to fine tune these AI models. And then GPT3 comes out and their model is completely useless. Um, people over invested, people kept over investing in tools that would then become irrelevant in six months. Um, and that meant that a lot of those companies actually that I know of went out of business, were trying to sell themselves now because they weren't able to keep up with the pace of innovation. Um, our approach meant was that we were always on the leading edge for our customers and our customers care about that. They want to take it to the ride that's going to lead the race. Um, and they want the latest and greatest kind of features as soon as they're available. Um, and even though we've changed how we do things in the back end of Spellbook all the time, we try to keep the customer experience as stable as we can.

Speaker B: So adapting versus perfecting is like, that is kind of the, uh, I think a lot of founders sometimes are thinking they have to be, you know, up to speed or perfect at something in order to execute. But yeah, I think it's just, it's moving so quickly that that's the key.

Speaker C: Talking about like, you know, you know, like a rocket ship and moving fast.

Speaker B: Yeah.

Speaker C: You recently announced, you know, a pretty large round, so maybe tell us a bit about that experience. What's the narrative you went to market with? How do you pull this round together? I think it's one of the bigger rounds that's been announced in Canada.

Speaker B: The bigger AI rounds? Yeah, for sure.

Speaker C: Yep.

Speaker A: Yeah. So we launched or we raised 50, uh, million U.S. uh, series B from Keith, uh, Raboy at Coastal Ventures. Um, yeah, this round was really a scaling round. Like, we've grown to 4,000 customers in 80 countries. We are the most used AI tool for contracting in the entire world. And contracting is a massive problem. Um, the positioning of this round, it was the easiest round we ever raised, to be honest, because all of our metrics are accelerating and going really well. Our growth is accelerating, our retention is, um, always getting better. Um, and, uh, I would say it was a heavy metrics round. It's like, look at all our numbers. Look what happens if we add more fuel to this fire. Um, there's a very kind of obvious trajectory. Early rounds are not like that, as you know, Alex, they're more qualitative and so on. But I think we just had really good numbers. Um, but the other, there was a qualitative element though. Um, I think what Keith was really fascinated by and compelled by is again, the scale of contracts as a problem. There's lots of AI for lawyers, but if you think about contracts, the market size of contracts, it's much bigger. You could think about our market size as being whatever price per seat is by the number of lawyers in the world, which is about 20 million. And that's a pretty big market size. But if you think about our market size as there's 100 trillion running through contracts globally every year and it's getting litigated on, these contracts are not airtight. Um, these deals are moving way too slow. Um, if you think about the problem at that scale, uh, the TAM is just absolutely gigantic. And so, um, we're starting to sell into customers now with 400 seats or 700 seats. These are not all lawyer seats. This is procurement, this is hr, this is sales. Um, if you think of all the things that contracts touch, um, you realize that there's this kind of massive market if you go really, really deep on contracts. So that was how we framed the pitch.

Speaker C: So I love how you framed it. I loved how it's metric driven and qualitative driven. You said it's easiest, but it's never easy. So what was the biggest challenge of getting this round together?

Speaker A: Uh, yeah, I guess you get kind of climatized to what hard and easy are. Your perception of what hard and easy are kind of gets, uh, twisted over time when you're doing this. But, um, um, yeah, I mean different people have different approaches to fundraising. Um, mine as a Canadian and probably more of a technical founder, so I'm more product and technical focused rather than really sales focused. Um, my approach is volume and quantity of pitches. So my approach is do as many pitches as possible because that's how I get better at pitching. Um, and that's how we maximize our chance of getting a, ah, good investor into the round. So what was most challenging for us this time is we basically did a two week sprint. Um, I did, I actually posted on Twitter, I was like raising our Series B. I'm going to be in New York for one week and then I'm going to be in San Francisco for one week. Um, let me know if you're interested. Um, and we actually got a huge. We were successful enough that we got a massive amount of inbound. Um, I'm still catching up with some of it, like, people who wanted to meet. So, you know, in New York, we set up a room in a hotel, and, like, we had, like, you know, a couple of days where like, 30 investors came in, and I did pitches one after another after another. There was days where I did, like, eight pitches in a row with barely a break in between. And then, uh, flew to SF and kind of did a similar thing there, although we went to more of the offices, um, there. But again, very high volume of pitches in sf and a lot of the investors we would get to come to us so we could fit in as many as possible. Um, and then what was kind of tough is when we were. I was really interested in working with Keith and Khosla, um, for a bunch of reasons. Um, and, uh, I pitched down at KB's office, and, um, they kind of said, well, Keith's actually interested in taking a call, but he's back in New York, and, uh, he wants you to pitch in person. So I had all these pitches set up in sf, uh, for the next couple days, and I just flew across, uh, you know, coast to coast in the U.S. which is not. Not an easy flight. Um, and, um, and now I had to go fly back. And I decided to take the flight back. Um, and, uh, I was a little tired at that point. Um, but, you know, it all went well and Keith, uh, ended up leading the round. Um. And, yeah, so the hardest part was. Yeah, that. Just, like, the volume and energy it takes to do two weeks like that and traveling, you know, New York. And, uh, I almost did.

Speaker B: Yeah.

Speaker A: And then, yeah, one of our other investors convinced me not to and was like, scott, don't do that. Like, you're not gonna. You're not gonna pitch forward.

Speaker B: Out of curiosity, just, like, how many investors you pitch to? Like, what is the, like, biggest, like, skepticism that you receive? Just that, like, just with what you're building. And, like, how do you, I guess, like, solve for that or, like, pivot to. To avoid, like, skepticism or reassure them?

Speaker A: Yeah, um,

Speaker B: just. AI, I feel like, is very.

Speaker A: Yeah, I think. Yeah. Yeah. I think the thing every investor is thinking about right now in software and AI in general is defensibility. Um, and, uh, that's the thing you have to have a really good answer for. And we did have a good answer, and we did have a lot of interest in the round, not just from Keith, but from others, but, like, that was the thing we had to answer really well. And um, there's a few ways we think about defensibility at sellbook, but one of them is we have this proprietary data set of like we see millions of contracts go through our system in 80 countries. So we know sensitive information.

Speaker B: Yeah, everything.

Speaker A: Go ahead.

Speaker B: Like I said, sensitive information within a contract, right?

Speaker A: Yeah, yeah. So we're able to know concretely like what the average commercial lease in New York City looks like or what the average employment agreement in software looks like. And we're able to have really good recommendations when you're reviewing a contract based on this data and we're able to actually cite this data. Um, so that's a really unique advantage and point of defensibility that we have amongst a couple other things.

Speaker B: Awesome.

Speaker C: And then you've raised this money. So what changes? What are you doing with it? What's enabled you do you couldn't do before?

Speaker A: Yeah, I mean it definitely is like a scaling round. So we're scaling a lot of the things that are already working. We're growing our sales team, um, we're growing very much into the in house legal market. So over the past year, you know, selling to large in house legal teams at corporations versus law firms has become actually our biggest, uh, source of revenue. So we're scaling into that at a degree that we couldn't previously. Um, and yeah, I mean we're continuing to scale our product team to build some really ambitious new functionalities. Um, one of them is around this idea of integrating the data more deeply into our experience. Like if you go to ChatGPT and you say, please review this employment agreement for me, it's going to tell you all this stuff that no one negotiates and it's going to tell you, oh, you're getting screwed. Change these 20 things, uh, uh, and it's going to be totally wrong and it's going to have nothing to really cite. Um, what uh, makes Facebook special and what's making it more and more special over time is our ability to cite data about like, yeah, this employment agreement you're about to sign, you were getting screwed over on this one term. We actually compared it to 1,000 similar agreements in New York City. And um, you know, you are in like the 99th percentile for this term. Like you really have. You really should get that renegotiated and that um, you know, building that type of functionality deeply into the product is something we're focused on. Um, our agents public associate is something we're investing really, really heavily in. So this is our agent that can do multi document transactional drafting. So something like a venture financing. Um, you're going to have a term sheet and then you're going to draft like a set of 10 documents and things like a share purchase agreement, investor rights agreement. And so these are really complex docs. Um, you might have to make around a thousand edits to get a set of docs like this in shape. It's um, actually a really, really challenging problem to draft docs of that length accurately with AI. So that's another thing that we're invested heavily in right now.

Speaker C: Cool. How about you? How do you change as a founder or a leader now? You've gone from prove it to scale it.

Speaker A: Yeah, um, I mean it's a totally new, uh, shift. It's a very different, I think once we crossed 100 people, um, my job became very different, um, because suddenly nothing happens by osmosis anymore. And um, things don't get absorbed unless you're really concise and crisp and pointed with your communication. And so you have to start designing your communication and your processes and your strategy for scale across the company so that everyone can kind of get it, um, really easily and everyone can roll in the same direction and that. I mean, yeah, that's like very deceptively difficult. Like everyone says this and I always heard this and I never really, it never made any sense to me. Like, to be honest, I never thought about management until we hit 100 people. Like we were just, until that, until that we were just doing stuff. We're all, we're making software, we're selling stuff.

Speaker C: Right?

Speaker A: There was no real managing happening. Tell 100 people. And then at 100 people I was like, okay, actually you really have to, at this scale, think about how do you motivate and align people, uh, on a mission, at scale. It's a really hard problem.

Speaker B: How do you do that personally?

Speaker A: Um, learning how to do it, uh, better. Um, yeah, I think, uh,

Speaker C: there's a

Speaker A: bunch of things, I think one, you have to have these bumper sticker rallying cries because so much detail gets lost in the chaos of 100 people. And so we had a team off site recently and um, we were talking about a bunch of things we wanted to improve in the company around really just speed of execution. And we're talking about why does speed of execution really matter? Um, why, how does it compound and what does Olympic speed really look like in startups? And we compressed all that down to this concept called Spellbook 2.0 where like tomorrow, uh, is day one of Spellbook 2.0. This is an excuse for everyone in the company to communicate more concisely to kind of. We call it comical speed. We think in the AI age, you should move so fast that it's almost kind of absurd and funny. Um, and so we created this concept called Spellbook 2.0, Spellbook 2.0 speed. And that's like a really compressed concept that I think really was kind of contagious amongst the team that everyone talks about every day. Oh, are we doing this at spellbook 2.0 speed? Or are we doing this at spellbook 1.0 speed? And so you have to think about how do you create these really short, uh, concepts that can capture the direction you want to take things? And these sort of bumper stickers that, um, are, can kind of spread across the company very, very easily. Um, so that's an example of something that we do. And then the other side of things is visibility, uh, and alignment. So how do you just. It used to be very clear what everyone was doing and what they were supposed to be doing. At 100 people, it becomes much less clear, uh, like, what am I supposed to be doing? What am I being scored? What is my performance being evaluated on? Um, what does it mean for me to win? What does it mean for my team to win? Um, so we just put a ton of effort into how do we make it as simple as possible for everyone in the company to know what they're supposed to be doing today and what their priority is and how they will be measured against that. So we've gone through a ton of iterations for just kind of like sort of like our OKR system and how we visually show that to people. I think if you get those two things right, you can communicate crisply and everyone has visibility easily within one click of what the heck they're supposed to be doing and how they're going to be measured. If you get those two things right, like a lot of other things, um, take care of themselves.

Speaker C: So I have two questions I want to ask before I leave. Um, what's the long term vision? Or how does spell become the platform? So we're sitting here five years or 10 years. How do you have world domination?

Speaker A: Yeah, great question. Uh, I have two answers to this question. Um, so one, we want to be the number one platform in the world that accelerates contracts and allows us to all work together, uh, faster. So every touch point of a contract should touch Spellbook. Whether you're drafting a contract, reviewing a contract, storing a contract, and at all of those points, we should push it and make it move faster so that we can all just kind of get to the point where we're working together rather than negotiating. Um, we should be in hr, we should be in procurement, we should be in sales. Um, we should be in the GC's office. Um, we should be in law firms. Um, anything that has to do with contracts, we should be there. And we should be the most authoritative source in the world for what is normal. If someone has a contract and they want to know if that contract is normal, the best place to go to figure that out should be Spellbook. Spellbook will be able to tell you in your industry, in your jurisdiction, for the deal size that you're working on how normal is your agreement. And we will be the most authoritative, um, on that information and will be the kind of the number one sort of AI copilot and tool set used to accelerate contracts in the world. And that's going to take us, it's going to take us a long time to kind of eat all that up. Um, yeah, there's another meta point of like, you know, where I think we could go in like 20 years? Um, I don't think I'll get into that now. I have a blog post coming out called High Frequency Software. I think software companies as a whole are going to totally change over the next 20 years. But I won't.

Speaker C: Messages. You've been putting messages out there? Yeah.

Speaker A: Um, yeah. Their messages out there, yeah.

Speaker C: And second question, you must be hiring. What are you looking for? How do people get in touch?

Speaker A: Um, yeah, yeah, I mean we're hiring right now for basically every, every role you can think of. Um, uh, some of top of mind. Like, we're definitely growing our marketing team, just looking for amazing growth. Hackers, writers, creatives. Um, we're hiring our, for a sales team, especially on the enterprise side. Um, we're hiring a chief of staff. So who will work with me and uh, my co founder, Matt, um, pretty closely. So that could be a really interesting role for someone, um, to get in touch. Just go to Spellbook Legal and click the careers um button and, um, we've got lots of postings there.

Speaker B: Okay, one last question. So a lot of aspiring founders listen to this podcast. Just like any quick advice you have for anyone building today or trying to fundraise today.

Speaker A: Um, give up. That is the number one lesson that we. I'm sure people hear that all the time, but it's hard not to overemphasize it. Um, uh, our whole story was of just trying a lot of things until it worked. We launched 100 landing pages until, um, we found product market fit in our seed round, which I didn't talk about. We pitched 80 investors until we got one investor to say yes. Um, uh, when I went to find a co founder, I messaged like 100 lawyers or a lot of lawyers on LinkedIn. So our whole story is just one of brute force and not giving up. So I think that's probably the most important thing, uh, for anyone who wants to start a company or fundraise or whatever.

Speaker B: Amazing. Thank you so much for your time. This is hugely valuable. We really appreciate it. Thank you, Scott.

Speaker A: Thanks for having me.

Speaker C: Thank you.