He runs 3 dinners a week instead of cold outbound—and closes $500K+ ARR deals. | Nick Fleisher, Co-Founder & CEO of Sandstone

Nick Fleisher (00:00:00) : McKinsey has this amazing policy where you can get a certain amount of time, essentially paid time off when you're leaving, to go find a new job. We quit and basically the same day raised our pre-seed from Sequoia. Pablo Srugo (00:00:11) : How much was the pre-seed? Nick Fleisher (00:00:12) : We didn't publicly announce our pre-seed, but our combined pre-seed and seed was $10 million. The worst mistake you can make there is just saying yes and doing everything that someone asks of you, right? And that's how you get led astray into doing things that aren't high value, especially in legal. Some company has some random workflow that no other company does. And so we made a point in every piece of feedback to say, can we find five or six other clients that we think of that actually have this problem? We had some early design partners that we fired, if you will, where we were like, your problems just aren't aligned enough to the market. We're not going to work with you. Most were like, why the hell are you hiring a salesperson when you arguably don't have PMF yet? And my justification is he was a product market fit finder. That was his job. It was not to go hit some crazy quota. It was to literally go, take what we're learning from the five design partners, and go demo with 100 clients a week. And just see if what we're doing actually resonates with them. Like, would they all go adopt this? Pablo Srugo (00:01:04) : What are your ACVs? Nick Fleisher (00:01:06) : It depends on the client, right? For the biggest Fortune 500s, it could be 500k to a million. For the 10 to 30 person legal team, it could be anywhere from call it 50 to 100k. Previous Guests (00:01:14) : That's product market fit. Product market fit. Product market fit. I called it the product market fit question. Product market fit. Product market fit. Product market fit. Product market fit. I mean, the name of the show is product market fit. Pablo Srugo (00:01:29) : Do you think the product market fit show has product market fit? Because if you do, then there's something you just have to do. You have to take out your phone. You have to leave the show five stars. It lets us reach more founders, and it lets us get better guests. Thank you. Nick, welcome to the show, dude. Nick Fleisher (00:01:46) : Thanks for having me. Excited to be here. Pablo Srugo (00:01:48) : So your founder of Sandstone just raised a $30 million Series A. It's this legal play that sounds a little bit, we're going to touch on this, but, you know, probably in the area of a spell book, of a wordsmith, which are companies that have been on the show before. Kind of this inbox plus AI for legal. So we're going to go deep into what the product is and what the company does. But before we do that, let's start where we always start, which is the product market fit moment. When did you feel like you found true product market fit? Nick Fleisher (00:02:14) : The first moment for us was really one of our early big clients. And it's rare for startups, at that stage we were pre-seed, to be able to work with Fortune 500s. And we had deployed with them for a couple weeks. This is kind of before we had like product telemetry and like understood usage at a reasonable amount. And we actually went on site and spent time with the GC and the legal team. And we're watching them open Sandstone. And you may be familiar with like a JIRA or Linear. Sandstone has a very similar interface for managing all your legal work. And we saw they had not just the one team we had initially set up for them, but a dozen. And a couple hundred tickets or items on each one. And so it was clear that they were using it a lot. And I think that was the first spark. But where it got a little bit more, you know, what I would say like, hey, this is real PMF is when we left that meeting in Boston, the GC or the person running the team had fired off six, maybe seven or eight intros to other GCs in Boston, suggesting that we get time with them and saying, this is a product that you need to be using. And to me, that's like, you know, when you're not even going to them asking for the intros, it's just happening. Right. That's like real PMF to some extent. And it's how you drive much higher growth. And today, like a significant portion of our business is just people using it and suggesting it to their friends. And in legal, you know, you've had other folks in legal tech on the show. It's all about word of mouth and community. Right. Like it's just a very close knit group. And so like that's our biggest lever for us. And so I think that for us was the first one where it was like, OK, this thing makes sense. Like people really want this. They see the value. If they're willing to like put their reputation on the line and email someone and say, hey, you need to be using this. Pablo Srugo (00:03:55) : Referrals, I think, are one of the best signals of true product market fit. And everybody gets like some referrals. But if you're getting a lot of referrals and that becomes like a big channel for you and in the early days you see sparks of it, you just think about yourself. Like which kind of products do you organically tell other people about? Like it's a lot of social risk to tell someone, hey, you need to try this product. So you really only do it with the products you genuinely love. And you feel like this is such like whether it's a productivity so useful or it's just like an amazing experience type of product. But it's got to be in one of those categories. And so I think that's one of the clearest signs, early signs, I should say, of product market fit. Nick Fleisher (00:04:32) : Yeah. It has to be like a completely net new category and product of something that like you've really never experienced. Right. Like the first moment you had Claude or ChatGBT and you told your like your family and friends about it. Or it has to be like something that takes an existing market. Like we play kind of in this contract lifecycle management market and like throws everything that you know about it out the window. And it's like, here's what good could actually look like. Plus really good service and support. Right. Like to us, one of the most important parts of building in the AI era, and I'm sure others have talked about this in the show. Like if you want to roll out a successful AI implementation or tool at a Fortune 500, a huge component of it is like, are we helping you understand the tool and roll it out properly? Otherwise, there's no value in vertical enterprise SaaS or AI. And that's a rabbit hole we could go down for sure. Pablo Srugo (00:05:21) : One of the questions that I get a lot of founders like asking or at least thinking about is, how do you drive more referrals? How do you drive more word of mouth? Is there anything you can meaningfully do on that sense? Because you mentioned a lot of your business comes through there. Or is it just about, well, you got to have a great product that people love and you just organically get that? Nick Fleisher (00:05:36) : I think great product that people love is like the lowest bar. But like then there's things that you kind of have to do on top of that. One is like, do you service your customers so well that like they build close relationships with your team? Like I was traveling this week in, you know, in the middle of the country. Five people on our team went and they all like had separate dinners and drinks and like social events with the client that they've just like built relationships with over time. Like not even about work and what we're doing. And so to me, that's like one way. And then the second is like we've hired and brought on people to our team really early who were stewards of the community. Like one of our first tactics when we launched was like we want to be like a place that the legal community feels comfortable going and like talking and spending time even if they're not users of Sandstone. Right. I think this is like one of the most critical ways to get word of mouth and referral is like you can't just be comfortable with the product and the service that it provides. But also like is this a community that's like actually net positive for legal or legal tech? And you can do that same thing in any vertical. So we've hired people who like have spent 20, 30 years building in this community and know the different areas of legal tech and GCs and legal ops. And I think that's like been a huge source for referrals and just building our network on the sales side. Pablo Srugo (00:06:50) : Well, we're going to talk at the end about kind of two tactical deep dives. And one of them is related to this because you're hosting like two to three dinners every single week with people that could be your customers. And you've got a whole kind of playbook for that. So we're going to talk about that. We're also going to talk about why you're hiring an AE so early. Most people do it well after a millionaire. You did much earlier. So we'll talk about that as well. But let's go through now the story. Right. So what was the first idea for Sandstone? When did that happen? Nick Fleisher (00:07:15) : Yeah. So I was at originally engineer, built mobile apps, ended up at McKinsey. At McKinsey, all of my work happened to be legal tech. It was just very random. My first client was the biggest legal tech and research company. Pablo Srugo (00:07:29) : When was this, by the way? What year? Nick Fleisher (00:07:30) : This was five years ago. Okay. This is pre-Gen AI. But legal started to have this moment where there was a lot more automation. And people were starting to say, we need to get our data in order. So we took this work with legal tech companies. And we started going to law firms and in-house legal teams and saying, your data is a mess. It's all over the place. You don't have any tech people within the org. Let's just go figure that out. And it was very nicely timed because then Gen AI became a thing. And all these law firms and big, massive legal departments were like, hey, we want our AI to work better. But our data is a mess. And so we pivoted into becoming sort of like a Gen AI consultancy for big law firms and legal departments. That was most of my work. But another chunk of it was actually helping McKinsey's legal team. And so McKinsey's legal team is a couple hundred lawyers. We would work with them and think about what they were doing and how it could relate to what our clients are doing. At McKinsey, if I needed a statement of work for a new client, I would message my favorite lawyer that I knew very well on Slack. She would take a couple of days to respond because she's a busy person. She would then forward it to the right person, usually through Slack or through email. And then 10 days later, that person would come back to me with a bunch of questions. After I answered those questions, a couple of days later, they would draft the statement of work and send it over to me. And so it was like this multi-week process to create something that was like, to one, connect to the right person, to two, gather the right context, and three, like create a pretty simple work product. But what I realized in that was like, most of the work was not in creating the work product, right? Which is where you think of like all the J&I applications. It was just like all the stuff before it. And so that's where the first idea was born, which was my co-founder, Jared, who's also at McKinsey. He's a lawyer. And we sort of said, why can't we just build a tool on top of Slack and Teams and email that can do that first back and forth, connect you to the right person, gather the context, and then just put it on their plate with ready to go work on the work product. And so that was, you know, V1. It was centralizing intake across all these different sources, finding the right lawyer in the legal department to work on it, and asking questions using AI with the business user to gather all the context before it hits the lawyer's plate. And like, we realized that was quite an unmet need. Like there were some intake point solutions, but none that were using Gen AI like that. And so we started rolling that out, you know, on the side with some of our friends. Pablo Srugo (00:09:54) : This is what year at this point, like when you actually decide that you want to build a solution for this? Nick Fleisher (00:09:59) : This is early last year. So 2025, early 2025. And over the summer, we're still at McKinsey. So call this May, June into July of last year. We were testing it on the side with our friends. And McKinsey Legal can come at me and be mad about that. But we had a lot of friends who were lawyers. And so we would ask them, hey, could you like implement this on your smaller legal team within a broader legal department and just see how it goes? There were two really interesting things that happened. One, like people started using it to just track and manage work. And we realized like legal teams never really had their version of Jira or Linear. Pablo Srugo (00:10:37) : Crazy. Like they don't have a CRM? Nick Fleisher (00:10:39) : No. So the first part was, okay, this is becoming from intake to like managing work. What we then realized is, to the point you just raised, they don't have a CRM and they don't have a single place to just manage all the context behind what's been going on. And so it expanded from just doing intake to actually the data that we have in Slack and Teams, Drive, SharePoint, all these places were integrated, is super rich for the legal team to be able to get the context on anything they're working on. So we went from just saying, let's do intake and work management to actually we're just a context engine or a CRM for the legal department. So when that request hits my desk and it's a sales agreement I need to review, we know everything about the counterparty, we can tell you who worked on the last negotiation, how it went, and we can then use that to help you answer the questions or review the new contract. And that's where the tool started to evolve from like intake front door to a real legal context engine, which is where clients are starting to get, you know, are getting more value today. Pablo Srugo (00:11:38) : You might not have an answer, but do you have a sense of why? Like there's plumbing businesses that have CRMs, right? Like how come a legal massive, massive business worldwide wouldn't have like a tailor-made CRM or even like a Jira-like, you know, internal kind of collaboration platform? Nick Fleisher (00:11:55) : Some law firms use like Salesforce and CRMs, not very successfully. And I think part of that on the law firm side is because you also have, and it was similar to McKinsey, you have partners who kind of run their own businesses. And so to get them all bought in on like this one shared unified instance is like really hard. On the corporate legal side, like where we work, which is like we only work with in-house legal departments, right? The Fortune 500s all the way down to legal teams that are two or three people. The problem there is they're just takers of the software of the rest of the business. Like historically, like a legal department is like this back office function. It's already a big cost. Why would we give them their own hub for managing work? In the early 2000s into like 2010s, like a market did get created or grew pretty significantly, which is contract lifecycle management. And I would think of this as like V1 of the legal CRM, which was, here's a place that the legal department has that is not part of the rest of the company. And it's where they store and manage their contracts. The problem with that is twofold. One is it's only looking at contracts, right? Legal teams do a lot more than contracts. Like they answer complicated questions. They work on HR matters. They work on many different things. And two, it's very point in time. So it's just looking at contracts that are like executed and signed versus like what are all the communications and processes that we're doing that lead up to that, right? So it's not actually the most helpful resource for AI because we're only looking at a snapshot of the data of the legal department. And so we kind of think of like what we're building now, this legal relationship management tool as like the second wave of contract lifecycle management. Pablo Srugo (00:13:32) : Why do you focus only on in-house? Nick Fleisher (00:13:33) : Twofold. One, when I was at McKinsey, a lot of my work was with law firms. And I just think they're a really tough market to not to sell into, but to expand into. And what I mean by that is it's easy to get into a law firm through the head of innovation. But to actually get usage at scale in a law firm is really hard because you're going to every partner in every practice area as if it's its own business. And I was just like, I don't want to do that. I think second, like on the in-house side, it's a massive market, right? Like it's just objectively a bigger market in terms of count of lawyers and amount of work to be done. And two, legal is our starting point. We plan to expand on the in-house side. If you imagine like everything in a company that's important goes through legal at some point, right? Whether it's a sales deal, procurement, hiring someone, firing someone. We are now this like context layer that tracks all of those decisions as they go through legal, which is very valuable for other departments and other parts of the org. And so like it's a great in or wedge into broader corporate and enterprise work. And so for us, it was just a more attractive space in market. I think the one other thing I'll add there is like a lot of our team comes from this role, which has been born over the last call it five or 10 years called legal ops, which is in corporate legal teams when you reach a certain size, you usually hire someone that's like your head of legal operations. Think of it as like rev ops, but for legal. These are the people who historically implemented those contract management tools and like did all that work setting that up. It's a very strong community and market and they are like unbelievable stewards and champions of new technology, but they are really fed up generally with contract management systems. That just felt like a great opportunity to like really get close with that community and build something that actually works for the legal ops role. Pablo Srugo (00:15:19) : So the bigger play is almost thinking of legal as the ultimate source of truth in a company, because anything that's above a certain bar of importance is going to make its way there. And only if it makes its way through there, does it become reality. Everything else is just kind of an idea that hasn't been really executed yet. Nick Fleisher (00:15:35) : Yeah, I think long term, like the biggest value we have is, you know, whether it's through our UX or through API or MCP, like accessing this context layer that we build on top of your legal department. Pablo Srugo (00:15:46) : You know, I mentioned before, like we had a wordsmith here on the show. A lot of what you're talking about, you know, they sell it in-house as well. They're trying to be like that front door. Is that a direct competitor to you or are you thinking about things in a pretty different way? Nick Fleisher (00:15:58) : Yeah, it's a great question. I think there's parts of our product and you could say the same about many other tools in the market that overlap, right? Like some of the work in answering questions on Slack and taking in work from there are definitely overlapping. But there's a couple areas where we look a lot more like your traditional contract lifecycle management tool with real AI on top, right? Like building out a robust repository of contracts and documents for the legal team, managing complex approval workflows within the legal department. This idea of collecting context from different systems, right? Like we don't think of ourselves as like just a Slack bot or a team spot to take in work. Like for us, it's about gathering context from ServiceNow, from Salesforce, from SAP, from all these different business systems to help you answer the legal questions. And so I would say like we've come at it from slightly different angles and we see people using them on like, you know, more basic quick Slack Q&A and us as like this, the whole work management and context management layer for your legal department. Pablo Srugo (00:16:58) : So tell me, like you're talking about that summer where you're doing this kind of in parallel. When do you take the leap and what leads you to take that leap to kind of drop McKinsey and go full time on this? Nick Fleisher (00:17:07) : I think it's at the point where you have enough customers or design partners using the thing or starting to show interest that like you're too busy. And that's kind of how I thought about it, which was like, I don't have the time anymore. We have five or six people that are companies that are starting to use it and I don't have the time to service them and be building this on the side anymore. Like it's time to quit. McKinsey has this amazing policy where you can get like a certain amount of time, essentially paid time off when you're leaving to go find a new job. And so I use that as my time to be able to build with Jared and like it's an amazing policy and setup, especially if you want to be a founder. We quit and basically the same day raised our pre-seat from Sequoia. The reason we were able to do that so fast is we kind of took these videos like we didn't have a deck. We just went in, we demoed. We took these videos that we had from all these conversations with our clients because we had been recording all of them. And we were like, here's why we need to raise money. Like we are too busy. Here's the product. Here's our why we're busy because of these customers we need to raise. And so once we had that pre-seed check, how much was the pre-seed? We didn't publicly announce our pre-seed, but our combined pre-seed and seed was 10 million. The pre-seed was a portion of that. Pablo Srugo (00:18:19) : Did you know someone at Sequoia before? Yeah. Nick Fleisher (00:18:21) : So I had been, while I was at McKinsey, I knew I wanted to get back into startups. I didn't know how, what that would form that would take, right? Like I was building stuff on the side, but I wasn't sure if I would be a founder or I would join something super early. And so I had been networking through someone at Sequoia to introduce to a bunch of their portfolio companies. And I had interviewed and talked to many different Sequoia portfolio companies. One of them was a cyber startup very early in Israel that I had become quite close with and was very close to joining. And their kind of final move was like, go meet our partner at Sequoia, this guy Bogomil, for a drink. He'll convince you to work with us. And it ended up being that like we spent two hours like talking about legal and all of the issues in the market. And then I was like, oh, I want to show you what I've been working on on the side. And that then spiraled into a bigger meeting where we actually raised the pre-seed. So it was initially a job application for another company turned into meeting a partner there. Pablo Srugo (00:19:16) : Let's be honest, Sequoia is probably like the number one brand in VC. Probably if you pulled 100 founders, like they'd be on the top is just about all their lists. Like if you're thinking about early stage founder who would love to raise from Sequoia, there's the relationship building. You want to get in the door somehow like you did. But, you know, many people just like, you know, they're just not close enough for that to like happen. What do you find is some of the things that matter most to Sequoia? Like, you know, take this with a grain of salt because at the end of the day, you can't just like will yourself to raise from a particular firm. You've got to talk to a lot of them and you've got to find somebody that believes and all these sort of things. But having worked with Sequoia and having a sense of what they care about and don't care about, what would be like your number one advice to someone who's like, I just want to raise from Sequoia. What should I do? Nick Fleisher (00:19:54) : Yeah. Well, I think my first push would be you shouldn't just want to raise from Sequoia. Like, you know, there's a lot of amazing firms out there and I love Sequoia and they've been great. But like, there's a lot of places to access capital that is going to be as helpful and for some founders more helpful than that. And so that's my starting point. In terms of like kind of breaking in or how to do it, I think the biggest thing is, you know, you started to touch on it, but like you have to find a partner that you are going to build a relationship with, right? Like as much as Sequoia invested in us, like it was really Bogomil investing in us, right? And frankly, he's also the reason that I took a check from Sequoia. Like he's someone who I would want on my board. I think the things that someone like that looks at are like one, it's so early in seed and pre-seed investing. Like it genuinely is all about the founder, right? Like the idea might completely change, right? And so it's like, you know, he always said to me, like, the reason I wanted you to work at my portfolio company is because in my interview with you, like the thing that I looked for was, is this someone that I would want to work for? Like if I had to work for this person, right, would I be happy doing it? Would I jump ship and go do that? And I think that's like one thing that you can show, whether it's through past experience or just how you carry yourself and talk about the vision, which is something to be, to be conscious of. I think the second one is like, we never went out and said we were raising. Like we raised because we had a problem where like we were too busy. Like I called him and I was like, I am too busy. I think I need to hire people. Like, should I raise? What do you think? To me, like going to the VCs without a deck and going to them with a demo and like customer problems is like way more compelling and way more natural than like, you know, spending all this time putting together a formal round at seed and pre-seed. And I know that that's so easy to say in practice because those things are like on the plate. But, you know, even with our series A, like I tried to not do a deck. It was like, I want you to like come meet the team, talk to customers and look at the demo because like that's what you should be investing in. Not like how well do I put together a fancy page? Pablo Srugo (00:21:47) : Well, I think the meta thing there is like be different. I mean, every VC is looking for the thing that's going to be a huge outlier. So if you can find ways to shine and be unique and then you do, you have to do it many times because you've got to find a believer and like somebody might be like, I don't like legal. And then it doesn't matter what you say. You know, they don't care or they don't believe or whatever. But you see, you got to do it enough times, but to get that serendipity factor. But I think if you can find a way to just shine and be different, that's going to do a lot for you, especially in the early rounds, pre-seed seed and series A. Nick Fleisher (00:22:16) : As much as it's important that you show that to the firms, like there's again, there's so many VCs out there, like you need to find a partner that is the right fit for you. Like it's so critical. Like Sequoia was so critical in our early hiring. They were so key in early customers. And a lot of that's because I found a partner there that like I wanted to get on the phone with every day. And like at seed and pre-seed to me, that's far and away the most important thing. It's series A, B, C, whatever. It doesn't really matter as much. Pablo Srugo (00:22:40) : So let's talk a bit about go to market, really early go to market. Like at this point, you've got some money. You're going in full time. How do you get your first few customers? Let's go deep on that. That's that's that every founder wants to figure that out. Nick Fleisher (00:22:53) : A couple of ways. One, we were very lucky to have been at McKinsey and I was lucky to have worked with massive clients there that we were close with. I think the second one is Jared was a lawyer. His sister's a lawyer in house. And you just kind of network through your family and friends and you get people to try shit and take a risk. Right. And so there's no perfect answer. Those were very scrappy. And then I think the other one is like taking that initial set of design partners and going to them and saying, hey, like who are five or 10 people in your network that we should show this thing to? Pablo Srugo (00:23:22) : What was your pitch to just on the design partners before you move forward? Like what was your pitch to them? Were they paying, not paying? Did they have like you need to show up for an hour a week? What was kind of the deal with them? Nick Fleisher (00:23:32) : Most of our early design partners were not paying, but we had aligned like, hey, we want you to use this thing for the next two months or three months. We're going to build around your use cases and really nail them. And then this is what we're going to charge you. And it was a dart on the wall, like random number that we came up with at the time. Pablo Srugo (00:23:49) : And did they have to meet with you like weekly or something like that to give feedback? Nick Fleisher (00:23:52) : For all of them, we set up a weekly meeting. We had a shared Slack channel. We still do this with most of our accounts, honestly, just because it's the best way to get feedback and buy in. They would commit usually to an hour a week. Shared Slack. They would review new parts of the product or when we would release them. Some of them would meet more than others because that's just what they wanted to do. They were super invested. And so some of them was multiple hours a week. I think the most important thing, though, from our side was going in person. We wouldn't have gotten any of these design partners early on if we hadn't met them in person. It's just impossible to do this stuff over Zoom. They're buying into us, right? We have a fancy demo. Great. The product's still maturing at that stage. They're buying into working with us and believing that we can improve with them over the next couple of months. The goal was, hey, how many of these design partners can we convert to full paying customers? Right? That kind of has to be the goal. But as we went through and added more and more design partners, we started to get to the point where we felt comfortable asking some of them to pay us for that time that we were giving in to improve the product around them because the baseline of it was good enough that they were going to get value from day one. Pablo Srugo (00:24:56) : I'm really worried because, listen, like you've been listening for like, what, 10, 20, 30 minutes now. Clearly, you like it. And the thing is, the next episode is way better and you're going to miss it. You're going to miss it because you're not following the show. So take your phone out and hit that follow button. Design partners is an interesting thing. Like it's the playbook now. Beta customers and beta side partners, whatever. It's been played for a long time. The big danger is it's usually I find most founders can get at least some beta design partners because ultimately it's free and you're like, I'm going to build stuff for you. It's like, okay, why not? Right? But the problem becomes you build something, you respond to feedback, you do all these things and you never really solve such a fundamental problem that all the other stuff that's supposed to come after, like the market pull, the payments, the referrals just don't come. As you're going through this, what are the tells for you? What are you looking for to make sure that you're solving like a true top priority problem and the stuff you're building is going to lead to true demand? Nick Fleisher (00:25:53) : The worst mistake you can make there is just saying yes and doing everything that someone asks of you, right? Like when you're working with early design partners, it's so easy to just say yes to everything. And that's how you get led astray into doing things that like aren't high value because it's like, especially in legal, some company has some random workflow that no other company does that they really want you to nail. And so we made a point in like every piece of feedback to say like, can we find five or six other clients that we think of that like actually have this problem in order to justify the value of doing, even from like our first clients. And we had some early design partners that we like, you know, fired, if you will, where we were like, your problems just aren't aligned enough to the market. And so we're not going to work with you, but we'll circle back when we feel ready. Pablo Srugo (00:26:35) : And in person, was this just a sales tactic or were you using this as a design partnership was happening just to get more understanding of the problems and more of the subtleties? Nick Fleisher (00:26:43) : I would say both. Like we very consciously know that it's a sales tactic. Like if you look at our win rates and our close rates, they are significantly higher in person by a long shot. Like it's not even close, but it's also the best way to learn of what's going on in a company. Like at McKinsey, we used to talk about like walking the halls. Like you were supposed to go to your client and just sit there and like be annoying. And we do that here too. Like I literally, you know, even still, I go to the clients and I'm just like being annoying, finding people for coffee. Some of these clients have security rules where they have to like walk around with you and it's really frustrating. But like it's the best way to one, learn their problems and two, build a relationship. And now like clients will text us things like, hey, this other part of the org is doing this. Like how do we solve that? Like it's not just like finding better ways to build product, but also like in the large enterprises, they're very complicated orgs to sell into. And like the only way you can really nail it is like if you understand the complexity there and you have to build the relationship to do that. Pablo Srugo (00:27:41) : I'm going to put you on the spot. Do you remember in those early days when you're going through these design partnerships and you're spending time in person, something important that you learned through that about the problem or about the workflows or whatever that matter, that made an impact like to product development or the way you sell or whatever it is. Some story you can share about why it's so important to be in person. Nick Fleisher (00:28:02) : Yeah. One of the biggest ones for us was we built these teams and Slack bots early on where you could drop the bot into a channel and it would triage and help manage and answer legal questions. And then it would pass it on to the right lawyer person to work on. And we were like, these legal teams told us they were working on this much stuff, but we're only seeing like this much come through Slack. And so we're sitting there watching these folks do their workflows on their computers. And we're realizing like their Slack DMs and their team's DMs, like their one-on-one messages are actually like so many unreads, like way more intense than any of the channels. And we realized like it was just a common behavior in some of these companies where like people would go to the lawyer that they knew best. And so that's when we like really invested in like building out the intake and triage capability from private DMs rather than just group channels, just because we saw people doing that. I think the second one is like most of our integrations have been through like us watching how people jump around different systems. So like it's obvious to say we need a Salesforce integration because everyone does the CRM integration. But like our biggest integrations today are actually procurement tools like Coupa and Zip. And we discovered that because we're sitting there watching someone drag an agreement out of Coupa, download it, drop it into Sandstone, then use Sandstone to work on it, and then drop it back into Coupa, right? And then we said, okay, like that's something we're going to automate. We sat there, we worked with them to figure out how to automate it through Coupa. And now that integration is powering like tens of thousands of contracts or agreements a month. A lot of times the clients or customers just don't, they don't know the art of the possible yet. I mean, so you have to kind of watch their current state workflow actually happen. Like even when we're doing remote sales and post sales, we make clients screen share, right? Like it's the most powerful thing just because you learn so much more than doing it on your own or like, you know, running it through a mock instance. Pablo Srugo (00:29:49) : When do you actually start, like you do these design partnerships, when do you start selling and go to market? Nick Fleisher (00:29:54) : We raised and we quit in July, August. We had all these design partners. We started to like really do real sales towards the end of the year. Like we wanted to see the design partners convert to feel like we had real product market fit. That's the same time where we saw that design partner go introduce us to a bunch of different accounts and say, hey, you need to work with this. That's like the end of 25. And then into 26, like we started to build a real pipeline and sell. Pablo Srugo (00:30:18) : Is that when you hired an AE? Nick Fleisher (00:30:20) : I hired an AE before that. We hired our AE like end of the summer, like September, August. Basically, as soon as we raised our pre-seed, I hired an engineer and a completely counterintuitive to what investors told us. And I think most were like, why the hell are you hiring a salesperson when you arguably don't have PMF yet, right? Like you have signs of it, but like you arguably don't. And my justification is like he was a product market fit finder. Like that was his job. It was not to go hit some crazy quota. It was to literally go take what we're learning from the five design partners and go demo with a hundred clients a week, like go crazy and just see if what we're doing actually resonates with them. Like, would they all go adopt this? Right. That was like us prepping for the storm of like, are we doing something that's actually scalable or like that five companies happen to have a problem or like have as their own pain points? Pablo Srugo (00:31:07) : This is like the first kind of we want to go deep on this tackle because this is like you said, it's very unconventional. Even me, like the number one thing I'll tell founders is go sell your first million yourself. Like is that product market fit finder job not supposed to be yours? Like why would you outsource that? Nick Fleisher (00:31:21) : I would say we were doing it as well. This was a situation where there was someone who was so exceptional in the market. He was the top sales rep the last two years in legal tech. Like he sold $10 million each year at a legacy contract management tool with a terrible product. He knew everyone in the market. I knew him through going to conferences and I saw him sell into McKinsey and get a meeting with the chief legal officer when even I couldn't get a meeting with the chief legal officer. And so it was just like one of those moments where I wouldn't have hired any other AE. It was someone that made so much sense for the market and for where we were that like I couldn't afford not hiring him. Right. Like sure. Maybe you could have argued I should have waited six or four months, but like the risk that he would not be on the market just wasn't worth it for me. Pablo Srugo (00:32:03) : Okay. So it was more of a person driven thing. Nick Fleisher (00:32:05) : It was definitely person driven, but I think what it ended up becoming was like actually very helpful. And like I still did all the sales calls. I still closed all of our deals. Right. But he was just more firepower to be able to do that at more scale. Pablo Srugo (00:32:18) : Did you guys do the deals together then? How did you how did you split things? Like where did he come in? Where did you come in? Nick Fleisher (00:32:21) : Most of our deals we did together. He did a lot of top of funnel and discovery and getting the initial calls. He he has a big following in the market. He would host these like wine dinners and coffee events with general councils. And so he was very good at like drumming up interest and building community. And then he would then bring myself and Jared in as we started to go further into the deals. Pablo Srugo (00:32:41) : And was that like his ability to bring top of funnel was because he was already in the space selling like I assume he brought in a lot of previous customers at top of funnel. Nick Fleisher (00:32:48) : I think that's one piece of it. The other is just he's an unbelievably personable person. Like he is so good at building relationships. One of our first clients that he signed was it was ridiculous. The first week he joined, he signed a five year deal with a client like paid five year deal off the bat over lunch. And we were like the whole office was like, what what just happened? Pablo Srugo (00:33:10) : I need to interview him. And how do you how do you do that? That's crazy. Nick Fleisher (00:33:13) : You should. But this GC at this company said to him like, hey, I, you know, I just want to make sure like I'm getting the best service here. Like, how should I trust you guys? And Oliver said to him, like, you can call me whenever you want. Like, I will pick up the phone at any moment. Like, that's how you know that you're getting the best tool and the best team here. And the guy did end up calling him in the middle of the night, like literally at like two, three. And Oliver like doesn't sleep. Like he it's not because he he works so much like he actually just like can't sleep a lot. Pablo Srugo (00:33:40) : What could be happening at 2 a.m. that he needs like this like a test or something? Nick Fleisher (00:33:44) : No, it was a test. It was a test. And Oliver picks up the phone. He's like, hey, what can I help you with? It's stuff like that where it's like building those relationships. And some of the like our fortune 500 deals take months and months to close. Like we have deals closing now. And like we've had deals closing over the last four or five months that like Oliver and I started incubating at the end of last year. And that's like people are saying tell us like how do you get how are you able to get such big deals? And part of it is just because we've been working on it for a while. Like we've been building relationships there. Like some of the fortune 500 clients we have. We've like multi-threaded with 50 stakeholders over the last nine months, the two of us. And he's flown to these places like over and over. And so like founders need to be selling, right? Most of my day is demoing and selling. But I think it's just allowed us to move a lot faster. Like when we launched and came out of stealth, we had a ridiculous, we had like 10 to $15 million of pipeline like already ready to go. Like that we had been warming and demoing. We had done hundreds of demos already. That's because Oliver was just an extension of us and he also knew the market and had all the right traits. It then sets you up for a very good sales culture going forward, right? Like we know the things that work and the things that don't. We've tested all the tactics. So like when you start to get into like the real growth curve, like you're not testing the waters and trying things out all over again. The other thing I'll say is like his role early on was very tied to product and engineering. Like he would do these demos. Liam, Jared, and I, the co-founders, we were all coding. And so us plus the early engineers we hired would just like listen to Oliver do these calls. We'd hear someone say something that was wrong or didn't look right. And we would just go start working on it. We had one little room in the office that was like had a door that was not really closeable so it wasn't silent. And so we would just hear him do these demos and we would just start working on it right away. Pablo Srugo (00:35:28) : One of the maybe classic pieces of advice tied to this is one of the reasons you don't hire an AE so early is because an excellent AE wants a product that's already got that traction that they can come in and be like, yeah, I'm going to hit quota. I'm going to destroy quota. Like if you're already selling this much, I can sell that much more. How do you get somebody like Oliver to join this early on? Nick Fleisher (00:35:47) : It has to be the right person that's willing to take the risk, right? Like you're as if you are a really good AE, right, who can sell five, ten plus million dollars of a enterprise product a year. You're making millions of dollars, right? So it doesn't actually make any financial sense to go to a startup pre-product. So you have to incentivize with equity and ownership, right? Like obviously a huge chunk is equity, but I think another chunk is the ability to like do more than just selling, right? Like you're going to get to work with existing accounts. You're going to help us strategize about where we go. Like it's just so different from a traditional AE role. And if you're into tech in the startup world, it's very interesting. And as a result, like, you know, not to over harp on one person, but like that first hire, like Oliver has done a lot of venture investing and helped a lot of other startups with their early sales process. He, after, you know, despite having a great comp set up here, like he personally invested in the business as well. And so that to me is also an interesting profile that we're starting to see more of. Like you see it at 11 Labs and some of these other companies where like either the early sales lead or like VP of sales is an investor as well and like very plugged into tech. It's another interesting persona and it's attractive to a subset of like really high performing AEs to that. Pablo Srugo (00:37:02) : Well, it's a very different setup, right? The classic setup is you as a founder go out, generate your leads, close your first million of ARR. And then once you've got something that's kind of working, find a way to make that somewhat scalable. And the way that I see that playing out usually is you hire these maybe top of final BDRs, SDRs that are like truly junior. And even on the AE side, you hire someone with a little bit more kind of experience, but you're not going out and hiring like the top AE in your industry. It's just not the normal thinking. And so you're kind of putting these pieces in the puzzle and saying like, if I can make it work with this team, I can make it work with anyone. And that's the way you kind of scale it. You went the exact opposite, which is part of it was serendipity in the sense that you knew Oliver and Oliver was there, right place, right time. Where you're like, let's hire the absolute best AE to just lead this for us. Let's make a package that's interesting and compelling enough to him and have him kind of drive all of that. It's kind of like intrinsically not scalable because there's only like one Oliver, but you then bet on Oliver to be able to create that, I assume the scalable piece of it, you know, later on. Nick Fleisher (00:38:07) : Yeah. And I think the best in class AE or seller is getting so much more scalable. Like I struggle to believe that we're going to go hire a bunch of SDRs, especially in our market. Like I was literally with a buyer yesterday at a fortune 50 who was like, I get flooded with LinkedIn's and calls and emails. Like it doesn't work for me. Like I need someone who's going to like come here and like build the relationship and like sell me like a real person, the thing that you're selling. Pablo Srugo (00:38:29) : What are your ACVs, by the way? Nick Fleisher (00:38:30) : It depends on the client, right? For the biggest fortune 500s, it could be 500K to a million. For the 10 to 30 person legal team, it could be anywhere from call it 50 to 100K. Pablo Srugo (00:38:40) : Okay. You're not selling 10Ks or 20Ks. I realistically, you're selling 100Ks and half a million. Nick Fleisher (00:38:45) : You can't afford to fly in person for a deal less than 30K. That's kind of like our rule of thumb is like if the deal is less than 30K, like it doesn't make a ton of sense unless it is a very sexy logo. Like that has to be also another, and we debate this a lot, right? Like, hey, it's a solo GC at like the hottest company in the world. Like go and do it. Who cares? Right? Because that everyone wants to be like that company. And so that 20K deal is going to generate you like millions in pipeline. Pablo Srugo (00:39:11) : But I say that mainly just to kind of contextualize because obviously the playbooks have to do with the ACV. So if you're closing five to 10Ks, this may or may not work for you because you can run volume, right? If you're closing 50K, 100K plus, you can't just run these volume. Like there's just not an infinite number of these people. So you got to be a little more thoughtful about how you go. Nick Fleisher (00:39:29) : Totally. I think the alternative would be like, you can also say, hey, we have 10 clients, 10 potential prospects that I can try to get a meeting with over a one or two day span in, call it wherever, the middle of nowhere in Florida, right? Even if those are all 20K accounts, like that's still worth my travel, right? Because cumulatively, like if I spend enough time with them, like it's worth it. And so you do kind of have to do some like backup napkin math. I think early on though, like you just want users, right? You want usage. I don't care if it's a 10K deal. I don't care if it's a million dollar deal. Pablo Srugo (00:40:00) : It's a good segue actually for the second kind of deep dive because we're talking about kind of how to sell effectively into enterprise small or large, right? Million being large and 50K being small. But you're doing this dinner cycle, like you're doing two to three dinners a week. So this is very much like a playbook that you're running. I mean, a lot of people do events, but it's here, there. They'll go to conferences and maybe do an event after the conference. Like that's pretty common. But to be running two or three of these a week is not something I hear every day. Tell me more about why you're doing it and how you're doing that and kind of what the outcome is. Nick Fleisher (00:40:32) : Yeah. We discovered early on, and this was honestly through this early tactic of trying to build community and brand before we had the perfectly scalable product. Like we said early on, like we want to be a place that like lawyers feel safe and comfortable like procuring from because it's a very small community. What happened as AI has become more easier to use and it's everywhere in sales tech is like outbound is just not as effective. And like people are flooded, right? You get crazy LinkedIn's emails. Like even I get calls from our competitors, AEs and SDRs because I signed up to trial their tools, which is just, it's hilarious. And so what we realized is like the best high ROI channels for us are things that are inherently not salesy and things that are low, low ratio of salesperson or person at Sandstone to clients. So like if we can do a 10 person dinner with two Sandstone people there, it's very effective. The reason is like we're talking about things that are not necessarily Sandstone. Like sure there's topics that might hit on Sandstone, but generally we're just talking about like what's going on in legal, how their jobs are like general topics and we're building relationship. And the second is like, we're not the only ones at the table. Like we usually mix in a customer or two customers, two or three high priority prospects, and then like four or five other people just from our network. That makes the conversation a lot more natural and it feels like a community. And ultimately it is right. Like we're trying to build a community of people that are either buyers or in our market. If you do a 10 person dinner like that and you have seven prospects there, it is very hard to imagine that they don't all do a first demo with you. Like if you're talking about just getting that demo, it's almost a hundred percent convert to demo rate. After that, like you have a much higher like buy-in with whoever was at the dinner, whether it's the head of legal ops or the general counsel, because they understand like you, your story, and they like kind of trust the business versus being just like yet another software vendor. And frankly, it's the same for me when I'm buying like sales tech or developer tools. Like I feel a lot more empowered to like stick with the tool. If like, I feel like I have a relationship with the founder, they slack me. Sometimes we go for coffee. Pablo Srugo (00:42:41) : It's a tension. Like it's the difference in cold and warm. I mean, it's an, it's a massive, massive difference. And the reason aside, like if you become warm versus cold, like it changes everything. Nick Fleisher (00:42:51) : So we've even found that it also just changes how we build because we, we get a lot more real insights from, from customers and what's going on in the market. Like we hear their stories of what they're doing. Like we've brought engineers to these dinners and I didn't bring this up. Like our first engineers were also selling, like we just, you'd have them go do sales calls just to see, you know, what they learn. I've had some of these dinners. We did one where like I was so scared. It was like a standing dinner or event, still pretty small. And I remember like being so nervous for 30 minutes of the event, I see like a GC at a big company is like cornered in the room with two of our most junior engineers. And I'm like, what the hell could they be talking about? Like, I might need to go over there and check it out. The engineers like ran out of the event. They're like, we've got something new we need to build. Like this is going to be game changer and we're going to email him a demo of it tomorrow. And I'm like, you can only do that through in person, right? That just would never happen on Zoom. It would only happen if we set up events like that. And those are the kinds of things that like that customer will be a customer for life if we deliver that thing for them. Pablo Srugo (00:43:47) : And so tell me a little bit more about the like, let's say I'm like, okay, you know what? This I'm sold. I want to do this. How do you do it? What's the process for not just running one event, but also then many events? Nick Fleisher (00:43:56) : The first one is like, you have to have the right people on your team who know the network loosely well, right? Like our team is maybe 35 people. Now we have 10 lawyers and we have a lot of people who come from the community, like they're ex-legal ops or they, you know, they've been in and around. They know like a baseline of contacts that you can start doing a dinner with. If you're a founder and you've never been in the space before and you just want to start doing a dinner, I would say you have to revert to LinkedIn and like going cold direct outreach. And we've done, I've done a lot of that myself. Like even on this call, I will have agents that have been running and doing outreach to a subset of GCs that like, I don't know yet. You would be surprised at the hit rate on those if you said, hey, I don't want to sell you my product, but I do want to like take your brain on what's going on in the market and run things by you and like just have a nice night. And by the way, there's going to be GCs, whatever your persona is from XYZ types of companies there. You'll get a pretty good response rate on that. And so some of it can be cold outreach. Some of it's just hiring the right people to build the right network. Once you do one or two, you can start to recycle and bring people back into events, right? You ask them to bring a friend, like almost all of these events we ask, hey, bring someone from your legal team or, you know, a friend from another legal team that you think we should need. And that's been super successful for us. So that's kind of how you think about like building the audience and the network of it. One other kind of hack that we found in terms of location is like either partnering with venues where like we build some sort of a long term relationship and deal just because dinners actually can be very expensive over time, especially if you're early stage. The other one is like there's actually like lawyers and GCs that own restaurants and bars and are like super keen to partner on community events. And like that's been a huge lever for us because they don't want to charge you because it's their community as well. Pablo Srugo (00:45:37) : And how do you translate from that to a demo like without being, you know, kind of like cringe where it's like, okay, cool. Now check my product out. You know what I mean? Nick Fleisher (00:45:43) : Honestly, most of the time, like after a natural conversation, these people will say, I would love to see Sandstone and I would love to do a demo. A lot of times it's not even us prompting it. That said, like I will still do a one-on-one message to everyone who came to one of these dinners and say, hey, thanks for coming. If you and your team have time, like I would love to spend 15 minutes walking you through Sandstone. It's very rare that they say no. They usually loop in the head of legal ops or the right person and like we do a demo. Pablo Srugo (00:46:09) : And do you have a full-time person now dedicated to this? Just doing these events because at two or three weeks, it's a decent amount. Nick Fleisher (00:46:14) : We do. We have full-time person kind of helping organize and manage them. But I would say it's like kind of on the whole team to be going. Part of the vision is like if we're building a community here, like everyone has to be partaking and like everyone should feel comfortable doing them. And so in terms of like who actually leads and goes to these dinners, we definitely rotate. The other thing is like we also work with some partners. So like in legal, there are a couple of communities that already exist where we can like pay to co-sponsor a dinner with them. And it's a very similar motion, but they just bring more attendees, right? And so we've started to do more and more of those, which means that we manage a little bit less of it. It's just it's lower ROI, right? Because we're spending more up front for potentially less targeted returns on the back end. But it's still very helpful. Pablo Srugo (00:46:53) : How many customers do you have today? Nick Fleisher (00:46:55) : Today we work with somewhere in the sort of 50 to 100 range of customers and it's growing every day. And so that's why I give it a range. Pablo Srugo (00:47:03) : And these are obviously like relatively large companies. You can kind of get a sense of the scale of it all. I'll end with this question that we typically end on. Like what would be your top advice, your most common advice for an early stage founder that's still in that early phase of seeing if they really have product market fit? Nick Fleisher (00:47:19) : Yeah, I think the biggest thing to me is spend time with your customers. Like today you can build so fast, right? You can build anything. Like you can completely pivot your entire tech stack, your entire vision overnight. Like go spend time in person with the customers that you want to serve and you will learn so much more about what you should be building. And like that paid us so many dividends and so much return early on. Before we knew what we wanted to do, we just spent time with our customers in person and like learn about their problems. I think most people race to like, hey, I can build the most like interesting, cool, compelling thing. But in a lot of markets, especially vertical, like it doesn't really matter if it's not something that they like really concretely need and want. And so like my push would be just go in person and spend time on the ground. The other piece of advice I would have is like don't hire someone because it's like you're supposed to or it's for the sake of hiring, right? Like after you raise that first seed or pre-seed, like you're expected to go hire a bunch of engineers and like some FDEs and like do that whole motion. Like you should hire people that are like truly, truly the best profile in whatever it is that they're doing. And like you should feel comfortable waiting for that talent to come around. There was an early point after our seed and pre-seed where we waited a while to start building out the engineering team. And part of it was just because we didn't find the best people that we're really excited about. And like it meant a lot more work on us early on and like it was stressful and intense. But like don't hire just because things are stressful and intense. Early on, you want to wait for the best people. Pablo Srugo (00:48:43) : Nick, it's been an absolute pleasure, man. Appreciate you jumping on the show. Nick Fleisher (00:48:46) : This has been fun. I appreciate you having me. Pablo Srugo (00:48:48) : Wow. What an episode. You're probably in awe. You're in absolute shock. You're like that helped me so much. So guess what? Now it's your turn to help someone else. Share the episode in the WhatsApp group you have with founders. Share it on that Slack channel. Send it to your founder friends and help them out. Trust me, they will love you for it. Bye.