He made 0 sales for the first 8 months. Now he does $200M+ ARR. | Ryan Anderson, Founder of Filevine

Ryan Anderson (00:00:00) :
We got them live and then I thought, OK, let's do more conferences. Let's buy some ads and it was all self-funded. We just plowed money into it, and dude, crickets. No one called, no one responded to our emails, no one took our calls. The customers we did have barely talked to us. You know, we didn't know if they were even using it. I think we sold literally zero new customers, April, May, June, July, August. In September, I think we sold one and it was kind of a friend but they bought and then again, zero.

Pablo Srugo (00:00:32) :
What did you find was some of the biggest differences between that, you know, the zero to one and the one to ten?

Ryan Anderson (00:00:38) :
Well, one thing we did is build a broader product. You know, initially, we were really focused on law firms and of course, that was our best customer base. But I knew right away that that wasn't the way to build a big company and I also knew that if we could build a big company. All of our customers, even the ones that we had sold to initially, would benefit from that. There was a moment where I probably had fifteen, twenty customers, I was still practicing law, and I was conducting a deposition. And my phone started going absolutely bonkers. So I turned my phone off and finished the deposition, and I turned it on when I got done. And I've got twenty or thirty texts from all these customers and friends. And they're like, Filevine's down. And they were mad, and one of them said, Ryan, I don't think we want to admit to you but we rely on this now. That's when I knew.

Previous Guests (00:01:22) :
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 (00:01:35) :
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. Ryan, welcome to the show.

Ryan Anderson (00:01:51) :
Hi, Pablo. How are you?

Pablo Srugo (00:01:52) :
Good man, good. I'm excited to have you here because, as you know, LegalTech has been on a tear lately. So we have a company in our portfolio called Blue J Legal that's on the tech side. We had Legora here on the show. Harvey wasn't on here, but obviously very well known in LegalTech. But a lot of these companies are relatively new. Blue J isn't, but you know, Legora's only two years old. You've been around in LegalTech way before it was cool. So your journey started in 2014, right?

Ryan Anderson (00:02:19) :
That's exactly right.

Pablo Srugo (00:02:20) :
Since then, obviously you've grown tremendously. You've just raised $400 million at a $3 billion valuation. You're doing well over $200 million in revenue. So things have worked out, but it's been, frankly, most successful startup journeys. Which is to say that it takes a long time. These are, you know, ten year plus journeys. But let's start at the beginning, right? Tell me a little bit about kind of what you were doing in that 2013, 2014 era, right before you started Filevine.

Ryan Anderson (00:02:47) :
Yeah, so I started off as a lawyer. So I think almost every lawyer, they start off in their career and, learn a little bit about the practice of law and then sort of decide, OK, where do they want to take their career. And I always knew that at some point I would probably start my own law firm. And so I had done that. And we were in the relatively early stages, but we were growing. As kind of more cases came in, as more work came in, as you started to hire people. I noticed that it was just getting increasingly difficult to just manage my tasks and I know that sounds really simple, but at the end of the day, there was just a lot of things to do. A lawyer might get tasked from any number of different sources. It might be a judge calling, that would be a very important thing to do immediately. It might be a client who is asking for information about their case. It might be another lawyer on the other side of your case. It could be a lawyer you're working with. It could be somebody internal, whether it's coming in through email, text, whatever and so throughout the day, you're having to handle everything. And being a lawyer is kind of an interesting job because no matter where the information comes from, you're responsible. So, like, Pablo, if I shoot you a text and say, hey, I need you to do this thing. You could just ignore it and nothing will happen, right? But if you send your lawyer a text and say, hey, I've got a critical piece of evidence I need to show you on my case and that lawyer misses that text, and then, goes into court without that piece of information. They're in deep trouble and so it's super serious. And it's sort of a naturally anxious person, but also somebody who likes to do a good job, conscientious, wanted to do a good job for my clients. I wanted to set up a system that helped me manage my tasks and I had set up something that I thought was pretty good. It was basically a big Google spreadsheet, and I had some basic interactions, really simple automations I had built between my email and Gmail, and Google Sheets. But that just was not cutting it for me and I had used other software. I won't mention it here, this isn't to denigrate another competitor, but there was other software that we actually had at the time, and that company is actually still around. And a competitor of ours today, in fact. And I just noticed that their task management component couldn't even come close to managing sort of the burden that I had.

Pablo Srugo (00:05:01) :
Just for context, how long have you been running your firm and how many people were there?

Ryan Anderson (00:05:05) :
Probably years. So I would say about two, three years.

Pablo Srugo (00:05:08) :
You know, it's interesting. The stuff you mentioned around, people love to hate on lawyers, frankly. But if you think about it, they have to be exceptionally reliable. They're nothing but reliable and it's true that unlike many other jobs where you can plan. I'm not saying you can't plan, but you have to be very reactive because all of a sudden M&A comes in, or like you said, a judge or a client has an issue, and it's like, if I reach out to a lawyer on something. I need an answer now, not, hey, next week when I get to it.

Ryan Anderson (00:05:34) :
That is so spot on. It's an insight that I think a lot of people don't realize is just how much incoming there is. When the inbound information has downstream implications for the court system or for your clients, the outcome of their matter, the channeling for them. It's a really big deal and lawyers get sued all the time by their clients for messing things up. So it can be a very stressful job. So that's a really good point. Actually, your question around timing is important because I'll tell you, for what Filevine does, I actually don't think most lawyers really. I mean, I shouldn't say this because we have a lot of lawyers who are very, very small, two, three people, individual, you know, shops. That's not the predominant thing. What we do is handle much larger law firms, though and that makes sense because that was the problem I was solving. Once I had, I think it was about five to six people, and that's always sort of been my bar. I tell people, you need our product when you have a management problem. Up until then, if you can just sort of handle stuff as it comes in on your own or with one or two people and you sort of know everything. Sure, you can buy our software, it'll probably help you at the margins, but you don't have to have our software. But if you have a management problem and you're a lawyer, you need something like Filevine or you're going to be in deep trouble really quickly. So, yeah in any event, I had all these issues and wanted to kind of do a good job. And I'd gotten to know a developer who actually had another friend who was a developer. As I spoke to these guys, one of them in particular sort of got interested and said, hey, I'm not interested in doing this long term but I've got a few weeks between now and my new job. I believe he had a job lined up at Amazon, I think is where he was going at the time and his name was Jim Blake. And he said, why don't I go and kind of just shadow you, learn what you do. You can walk me through your issues and sort of how you would solve the problem. And, then if you don't mind introducing me to friends and others. And I did, I introduced him to other friends.

Pablo Srugo (00:07:20) :
And your ask for him was like, hey, come solve my problem or you were thinking already, maybe we can build a product here for to sell.

Ryan Anderson (00:07:26) :
I was, like, I had always had an entrepreneurial streak. I had started businesses when I was a teenager. For me, there was a debate in my head for a long time about whether I wanted an MBA or a job as a lawyer. I really like lawyers, I liked being a lawyer, there's a lot good about a lawyer, I could get into that. But yeah, I mean, I had a sense that I was going to start a business with this. Just because I knew how stressful it was for me and I also knew what the state of the art was. No one was doing anything about this and so he just kind of shadowed me. We kind of got together on a whiteboard, your typical whiteboard session that very rarely actually happens. But we did the very prototypical get up on a whiteboard and kind of map out what we needed it to do. The basic workflows and after he'd done that for a few weeks, he came back into my office, and he literally had a stack of notes, and that stack of notes had a bunch of schematics on them. What I would now recognize as a very thorough PRD, but at the time I didn't know what I was looking at and I was just a lawyer. And he shows me them, and there's all the screens that people would need, and sort of click here, and it goes to the screen and does this, and here's how you would assign a task, and here's your calendar, and all that kind of stuff. And he said, this is a system that I know how to build but lots of people could build it based on this documentation that I give them. So give that to them, and you'll be off to the races. Somebody can build this for you.

Pablo Srugo (00:08:41) :
He just didn't want to start a startup? What was holding him back?

Ryan Anderson (00:08:44) :
He knew I couldn't pay him. He had a $200,000–$300,000 a year job with AWS. He wasn't interested in what I could do for him. But Pablo, I may be only really good at one thing, and that one thing might be recruiting. And so I knew that if Jim walked out of my office, the chances of me finding somebody that curious and that passionate who could put all those pieces together was pretty small. And he had the added benefit of being somebody who I didn't know that well, but had come to really like even just over a few weeks. You know, just a very thoughtful, funny, kind of really curious guy and really smart, and already kind of later on in his career. I think by the time we met, my guess is he was probably forty-five years old and so, you know, he'd been around. He'd built some pretty large scale products at the time. I had no business hiring him and I somehow convinced him to not take the job at Amazon.

Pablo Srugo (00:09:35) :
How? I mean, that's the key word. I mean, you're good at recruiting, so let's dive a little bit. How do you get a guy who's got so many things going when you're not funded, when you're not a repeat founder, you don't have any. I mean, you have credibility as a lawyer, but not necessarily as a tech founder. How do you get him to join you?

Ryan Anderson (00:09:49) :
Boy, that is a really good question. So first of all, I think I demonstrated just a lot of persistence. Whenever he needed me throughout the process of learning about the product, I was always there, able to answer questions for him. We spent a ton of time together over those few weeks. So I think he got to know me and grew comfortable with me. I didn't plan on pitching him right there and then in that room. It just wound up happening that I pitched him to become my co-founder at that moment. I remember one line that I used with him. I said, I don't know everything that we're going to need to do together. I'll probably make a bunch of mistakes, but I will be relentless. I think he bought it, and I think I have been. So...

Pablo Srugo (00:10:22) :
It worked out.

Ryan Anderson (00:10:24) :
Yeah, so I mean, that was one of the things I told him. I got to be honest though, Pablo. Jim, who became one of my lifelong friends. I mean, there would be no more important relationships to me outside of family than that of Jim Blake. But the man probably quit, or I say tried to quit. I don't know, twenty, thirty times over the course of the next three years. Every few weeks, he'd be like, "Look, we got this feature out, but you need to know that's the last. I'm not doing this anymore." And I would reel him back in so many times. And it wound up working really well for him. And obviously, the company was successful, and he did real well. I would say we were very good friends to this day, we would be. Sadly, Jim had a pretty serious kidney disease and actually passed away.

Pablo Srugo (00:11:10) :
Oh, shit.

Ryan Anderson (00:11:12) :
Yeah, so just super, super sad. But anyway, one of the best people I've ever met and a truly incredible human. People at Filevine still remember him. Everyone just has deep respect for him. So anyway, an incredible guy.

Pablo Srugo (00:11:24) :
And then so once you got Jim on board, how do you start splitting your time between. I mean, because you got your own business that's a functioning business and this new idea.

Ryan Anderson (00:11:33) :
Yeah, I would say I ran both concurrently for about two years and so, you know. I mean, the good news is we were doing a lot of building in that time. We technically launched the product in March of 2015. You can actually, somewhere back in the stacks, there's a Facebook post of me going out to our first conference and saying, we're launching Filevine today. And it was late March of 2015, and the product wasn't very good. We did get some initial success at that conference but, you know, of the first customers we sold there, I can't believe how many have stuck with me. That product was, it was terrible.

Pablo Srugo (00:12:05) :
What did the product do? That core first product and what gap did it fill relative to what other, because you mentioned there's other products already, obviously LegalTech then was already a thing. That, you know, they did not cover. What gaps were you filling?

Ryan Anderson (00:12:16) :
Totally, I mean, just to be clear. MyCase was out already, Clio was out already, there were tons of dark management systems. There were tons of, I mean, there were a million legal tech products already out. There weren't as many in the cloud, but the cloud was already a thing. So, you know, we were on the cloud, but back then that meant something. But it wasn't like we were the first ones even there. So the main thing we did was this task management problem that I had. So you could assign a task to somebody, and importantly, you would know if that person hadn't completed the task on time. It had basic sort of, what we wound up calling projects. But I think the right way to think of it is like in Salesforce, it would be like an opportunity or a matter. So it had that basic interface, kind of just your basic CRUD stuff. But it didn't have a calendar, it didn't have reports, it didn't have document generation, and just have. If you listed the ten basic features that we needed to have to build the product that we wanted, we maybe had two and those two were pretty bad.

Pablo Srugo (00:13:09) :
But meaning task management? That was the core of where you started, OK.

Ryan Anderson (00:13:13) :
That was the core, yeah. To this day, I think that's our strongest feature.

Pablo Srugo (00:13:15) :
What happens at the, I mean, this conference is the first time. Is that the first time that you kind of show this to potential new customers?

Ryan Anderson (00:13:21) :
Yeah, I'm sure I had friends and family, and stuff like that. Yes, this was the first time people that I didn't know were taking a look at it, for sure.

Pablo Srugo (00:13:29) :
And what happens relative to expectations? When you went to that, how high was your mental bar?

Ryan Anderson (00:13:35) :
That's a really good question. You know, a lot of people ask me quite a version of this question that is somewhat similar to what you just asked, which is sort of, how did you know it would be successful? Or did you think it was going to be successful? And I've just never really thought of the world that way. Honestly, Pablo, I mostly just think, how can I make this successful? I just assumed that with enough iteration, I'll be able to get there and that's probably more what was going through my head. OK, we're going to show this to people. Hopefully it goes well, hopefully they like it but I knew it needed tons of work. I was just hoping people would be interested enough to try it out. That was sort of where my head was at.

Pablo Srugo (00:14:08) :
And what was the outcome?

Ryan Anderson (00:14:09) :
It was awesome. We actually sold eight law firms at that conference, which was incredible. I mean, we probably go to conferences today and you'll sell a lot of firms.

Pablo Srugo (00:14:16) :
I'm sure your ACVs are higher now, though.

Ryan Anderson (00:14:18) :
Yeah, right? But yeah, so we sold eight law firms at that conference. I implemented them all, flew all over the country getting these folks on board, and sat in a bunch of law firms. Either offices or conference rooms and got folks live. And most of the time it worked out OK, but I definitely got yelled at a few times by people saying this thing totally sucks and isn't close to ready. But yeah, we got most of those folks stood up. A bunch of them are still customers to this day, which is kind of extraordinary.

Pablo Srugo (00:14:46) :
And after you kind of deployed to those eight. How close was your vision of the way the product should work and the reality of how those customers expected the product to work?

Ryan Anderson (00:14:57) :
There were vast gaps in the product. All of our competitors had a calendar. All of our competitors had reports. All of them had the ability to manage their contacts. We didn't even have that ability. I mean, it was very basic. It really just handled task management.

Pablo Srugo (00:15:12) :
Which was a gap? To be clear in the other, like, the other projects didn't do that?

Ryan Anderson (00:15:15) :
Yeah the other ones weren't good at that. They weren't good at that.

Pablo Srugo (00:15:18) :
OK.

Ryan Anderson (00:15:19) :
So, you know, from that perspective we were doing one thing better than most people.

Pablo Srugo (00:15:23) :
What's your next move after that? Do you start just selling more? I mean, you have eight. Do you just try to get to fifty and a hundred?

Ryan Anderson (00:15:29) :
So that conference was in March. We sold those eight customers, we got them live, I think almost all of them got live. Maybe one or two kind of fell out of the process. But we got them live and then I thought, OK, let's do more conferences, let's buy some ads, let's buy a bunch of Google ads. I think probably a typical thing for most founders and it was all self-funded at that point. So we plowed money into it, whatever little money we had and dude, like, crickets. I mean, no one called, no one responded to our emails, no one took our calls. The customers we did have barely talked to us. You know, we didn't know if they were even using it.

Pablo Srugo (00:16:04) :
How much were they paying, more or less?

Ryan Anderson (00:16:06) :
The first customer I sold, I sold at $25 a user a month.

Pablo Srugo (00:16:10) :
OK.

Ryan Anderson (00:16:11) :
Which my sales team still, they can always spot a Ryan Anderson deal because way too little money. Yeah, so it was a four person law firm and they were paying me a hundred bucks a month.

Pablo Srugo (00:16:23) :
How long are you trying these different ads and whatever, and just not getting anything back?

Ryan Anderson (00:16:29) :
Months, I think we sold literally zero new customers, April, May, June, July, August. In September, I think we sold one and it was kind of a friend. But they bought and then again, zero, October, November, December.

Pablo Srugo (00:16:46) :
I have to assume this is what didn't help your co-founder want to stay. He probably was quitting every month.

Ryan Anderson (00:16:52) :
I was depressed, I mean, you can. My wife, I would tell you, like, oh yeah, Ryan was desperate. I was so mad. I was like, you've got to be kidding me. We've worked on this probably, you know, it's taken a year to build it at least, and we can't get anyone interested in this thing at all. It was super depressing.

Pablo Srugo (00:17:09) :
Is your firm, by the way, taking a hit just from a mental energy space?

Ryan Anderson (00:17:14) :
That's a good question. I mean, maybe to a degree. So, no, not too terribly. It wasn't a big financial strain. It was just emotionally really challenging because I wanted it to work so badly. As I had mentioned earlier, I have an entrepreneurial streak. I knew that I wanted to build a business and building a law firm is definitely a business. But it's a different kind of business and we poured a lot of energy into this product. I had thought it was going to work. It was solving my problem.

Pablo Srugo (00:17:41) :
Well, that's the part that is actually almost more frustrating. Because when you're building for a customer that isn't you, it's a little bit easier to think to yourself, well, maybe I just missed something key. Maybe I just missed something, what did I miss? But when you've built a product literally for yourself, and you know that there's thousands of law firms just like yours. And for some reason you can't get them to buy, I can imagine that being just like, what, you know?

Ryan Anderson (00:18:06) :
So at one point, what I would do is I'd do kind of my law job in the morning, and then I would go to a different office. Just mentally, I thought I need to be, not in my law firm. So I would go to a different office that I leased out. It was the Filevine office, but it was really just one room that I rented from somebody else. 

Pablo Srugo (00:18:22) :
Nice.

Ryan Anderson (00:18:23) :
And I had a phone, with a Filevine number on it and a whiteboard. And I literally just wrote the names of law firms up along with, sort of, the managing partners and people that I could reach out to, and I cold called. So here I am, a lawyer, I've been practicing for several years. It's pretty successful, we were, you know, I was a successful attorney and I have these lawyers be like, "You don't understand me. Listen, son, you don't understand the practice of law. You don't know what you're talking about. This could never solve my problems. You need to go hire a lawyer and show them what the software really needs to do." I mean, it was brutal.

Pablo Srugo (00:18:57) :
Cold calling is the great equalizer, man. Everybody is the same behind a cold call.

Ryan Anderson (00:19:02) :
To this day, when I talk to the SDR team. Because we're mostly in person, and the SDR team is one hundred percent on-site every day in the office. So, I’ll go talk to them sometimes and tell them, I did this. I didn't do it for a year, I did it for months, where I would cold call on my own, and I wasn't good at it. I'm not so sure that we got a single deal, but I did do it for months and months. It was hard.

Pablo Srugo (00:19:25) :
And what happens? I mean, now we're what? We're 2016 at this point?

Ryan Anderson (00:19:28) :
Yeah, so now you're 2016. So rolling into 2016, we were still kind of nothing was happening. It was over the Christmas holiday, nothing was happening and a guy who was kind of helping us out with marketing on the side. Just like a side hustle type guy, said, hey, I think we can get you onto Instagram ads and at the time, there weren't that many people doing ads on Instagram. And, certainly no tech companies and definitely no legal tech companies. And a lot of our customers, you know, had Instagram profiles, and all of a sudden Filevine starts appearing in these Instagram ads. And they had never seen that before. And that was kind of a relatively new and novel thing. And the phone started to ring. Yeah, I remember one person just called and said, hey, is this Filevine? I was like, yeah and he goes, I think I need your product, and it was unbelievable. You know, all of a sudden we start getting deals and one person called us up. He was a prestigious lawyer who had done a lot of big trials, but he just ran a three-person law firm down in Alabama and he's like, "Look, I'd really like to take a look at your software, any chance you're in Alabama anytime?" And I'm like, I'm actually inclined to be there next week, which of course, you know, was totally false. And I got on a plane, and flew to Birmingham, Alabama, and met with this law firm, and sold the three-person deal. And that was, call it, maybe late January, I guess, of 2016. And it really felt like that was a demarcating line. So, you know, maybe we had $20, $30k in ARR in 2015. In 2016, we went from $20, $30k in ARR to $100k. And then in 2017, we went from $100k to a million. And so, you know, clearly something happened at that point, and we hit something of a vein, and people started really liking the software. So, I mean, it was very encouraging, but boy, those seven to eight months in the summer of 2015 were just brutal.

Pablo Srugo (00:21:17) :
Well, even the $20k to $100k era, obviously it's better than before. But it's still slow in the world of tech and startups. I'm just curious, because obviously there's new marketing channels now, you've got ChatGPT that's going to do ads. So there's always the new channel that a startup could take advantage of. Was it, I'm curious on, let's say, Instagram versus Facebook for you back then. Because I know you were doing Google Ads, and I assume Facebook Ads. Was it just a pricing thing that all of a sudden made sense, or was there something about the format that had better click-through rate or anything like that? Do you know?

Ryan Anderson (00:21:50) :
I would love to tell you that I was deeply involved in our marketing decisions. I understood how much we were spending, but I literally think this was just some SEO guy who was like, hey, maybe I get these guys on Instagram and he just did. There wasn't a lot to it. I didn't even know we were doing it. I just know that the phone started to ring and email started coming in. And it was definitely from that. I remember in one day, after getting zero leads every day for months, we got like fourteen leads in a day and it was all from Instagram. And I do think there's something to what you just said, though. Where a marketing channel kind of works for a while and then stops or works much less efficiently after a while. With the exception of one marketing channel, which we can talk a bit here about in a minute. But yeah, Instagram definitely worked for us for a time. I don't know how much we do with it today.

Pablo Srugo (00:22:37) :
When did you decide to go all in on following?

Ryan Anderson (00:22:41) :
Yeah, so as we started to grow in 2016, I remember telling the people at my law firm, hey, I need to go do this. I think it's going to work. I had a trial that I was set to do in October and I told my team, I'm going to do that trial, and that's it. It was scary, I think it was scary for them. You know. they were a bunch of smart people and they kind of took the firm from there. But yeah, that was a trial in October 2016, and that was effectively the last time I would say I did a day of practice law.

Pablo Srugo (00:23:10) :
Yeah, what made you take the leap? Because it's still, I mean, Filevine is still small. It's not even supporting one person's salary sort of thing.

Ryan Anderson (00:23:16) :
Really good question. You know, I mean, first of all, we were getting a lot of inbound from investors at the time and we did a raise in 2017.

Pablo Srugo (00:23:23) :
Right after basically, like six months after you went all in?

Ryan Anderson (00:23:25) :
Yeah, I wasn't, we weren't broke, right? I mean, it wasn't like, don't get me wrong, my wife definitely kept looking at me like, what are you doing? You know, she, I mean, she would see, I'm sure I had spent hundreds of thousands of dollars of my own money over the course of a couple years. Maybe two, three years and so, you know, she was definitely like, is this going to work? And, so she was nervous. I was never that nervous just because I saw the growth and I did have an early mentor who wound up doing our angel round. And he kept on saying to me, hey, look at your usage, and we could talk more about that. But that's kind of been in our DNA from day one. See what users are doing in your system and so we did. Jim, my co-founder, put in all these, you know, what today something like Pendo would do. But he put in all these sort of activity logs in our system, and I could really tell what people were and weren't doing. And so I could tell they were using it. And eventually we put those usage numbers into charts, and I was looking at them every day. And every day, not only were they going up because we added more customers, but the individual customers were using it more. And so I was pretty confident that there was something to this. Also, we were clearly addressing a need, especially around this complex task management for lawyers that really hadn't been addressed. Our competitors at the time, they weren't even thinking about it. They were focused on what I would call more like practice management. Which I would call the business of law, like handling the accounting and your website. And they didn't really care that much about the management of an actual legal case. And that's what we cared about. And it seemed to resonate. And about that time in 2017, we were getting a bunch of inbound from investors and finally agreed to do a deal with a group called Album Investors here in Utah.

Pablo Srugo (00:25:06) :
Is that the angel round or the institutional round?

Ryan Anderson (00:25:09) :
So we did the angel round and then right on the heels of that. Within like a month or two, we did the seed.

Pablo Srugo (00:25:14) :
How much did you raise in each?

Ryan Anderson (00:25:15) :
So the angel was $800k and then the seed was $2 million.

Pablo Srugo (00:25:22) :
OK, tell me a little bit about raising that seed. Was that a kind of process or just the right place, right time, somebody came inbound and kind of did it?

Ryan Anderson (00:25:28) :
It really wasn't too much of a process. Looking back on it, I wish I had conducted a process. You know, our angel investor had a successful startup in his own right and hadn't raised much money. He'd done one round of funding and then sold for $400 million and so he'd done really well. And so he's like, "You don't need money. I'll give you a little money just to keep you guys going, but you don't need money. Don't worry about that." But man, the inbound was coming a lot and this one group had this Album Ventures. Had said, you know, they wanted to meet, and then eventually they just started showing up at the office. And literally, John Mayfield, who is still a board observer today, he's no longer a voting board member, but has been with us on this journey now for a long time. Literally just would kind of show up and hang around the office. And I remember him sitting down on a chair, and the chair broke, because I never. And he was just very committed to doing the deal. As you might imagine, you know, my wife was getting sick of it coming out of our own pocket and eventually said, "OK, let's do this." And it wasn't hard to get it to come together. The business at that point, you know, was approaching a million dollars in revenue, right? So.

Pablo Srugo (00:26:35) :
OK, this is what? Second half 2017?

Ryan Anderson (00:26:37) :
Yeah, yeah, yeah, right. So by then, it was kind of, it looked like it was going to work to pretty much everyone who was looking at the business. They might have done some customer calls or something like that, but I think they could tell it was going to work. They also knew my angel. We hadn't been introduced by the angel, but they knew who he was and I think that gave us a little credibility.

Pablo Srugo (00:26:53) :
I'm going to ask you for a small favor. Tiny little favor. In fact, it's not even, now that I think about it. It's not even really a favor for me. I'm actually trying to help you do a favor for you. Just hit the follow button. You won't miss out on the next episode. You'll see everything that we release. If you don't want to listen to an episode, you just skip it but at least you don't miss out. So maybe let's dive a little deeper into this $100k to a million piece. I would say there's a lot of founders that can get to $100k, just will themselves to $100k. A million gets a little harder than that. One to ten, you know, I think is a big, big leap. So, but let's do that. The first one first, like you're at a $100k or so, you jump in full time. You know, you have a little bit of angel money before you raise the seed round. How many people, by the way, on the team at that stage? 

Ryan Anderson (00:27:36) :
I'm trying to think, probably, I don't know, ten to fifteen. It wasn't big. 

Pablo Srugo (00:27:40) :
And tell me a bit about, go to market that you used back then. I mean, you mentioned Instagram as one channel, but what else? How were you running that?

Ryan Anderson (00:27:47) :
So, for us, and maybe it was because I was so scarred from trying to do my own cold calling. And just being beaten down by a bunch of lawyers who didn't want to talk to me. For us, I always believed that in-person was going to make a difference and again, I sort of had a little A-B test. We had gone to this conference and signed up eight customers. And then I had cold called ten thousand people, and no one took my call. And so I thought, OK, in-person makes more sense for lawyers. And there is this thing with our industry in particular, and I bet this is true of a lot of industries. Lawyers have to do something called continuing legal education and I know most professionals have something similar. And that's almost always done at a conference, mostly because they can write it off. It's a free vacation. So they'll go to Hawaii or Vegas or Florida or something and, spend a few days in a hotel, and go listen to speakers to get their continuing education. And then, of course, there's always a vendor hall. And so we just kind of spent a lot of money, way more money than we should have, building a decent booth for one of these vendor halls. And I would go to every one of these things. And there's a ton of, like, to this day. I mean, just to give you a sense of the scale, we will do two hundred fifty events at Filevine this year.

Pablo Srugo (00:29:00) :
Wow, that's basically every working day.

Ryan Anderson (00:29:02) :
Every working day, yeah. Every week we're going to two or three of these things.

Pablo Srugo (00:29:06) :
Crazy.

Ryan Anderson (00:29:07) :
There are weeks when we'll go to six or seven across the country.

Pablo Srugo (00:29:09) :
And obviously some are massive, some must be tiny as well.

Ryan Anderson (00:29:12) :
Some are really big. Yeah, we call our tier one events. They're huge, you know, there's five thousand lawyers there and then there's some that are really small, and kind of community based.

Pablo Srugo (00:29:21) :
Do you have a sense, by the way? Specifically back then, but what is it about in-person that worked so much better than cold calling? It's not immediately obvious why it would be such a big difference.

Ryan Anderson (00:29:32) :
Yeah. I mean, the best thing is somebody clicks a Google link or maybe now, an AI link that says they're interested in buying. Now you have a buyer with intent. Of course, that's always going to be better. But at least in a conference, when they walk by your booth and stop for a second. They're at least interested enough to have a conversation with you and, you know, I got good at discovery. I mean, I will tell you, I learned to do it all. So I read every book I could on product. Then I read every book I could on, engineering for non-engineers and then I read every book on sales. I probably read thirty books on sales and so I learned how to do good discovery.

Pablo Srugo (00:30:10) :
Are there any, by the way. That jump out that you remember that are especially good?

Ryan Anderson (00:30:14) :
Solution selling. It is like an old school, you know, if you look at this book. It's going to look mid 90s. It's one hundred pages, but straight up. That book is still, I think, the best book on how to do discovery questions that I've ever read. Now, you know, I don't read them anymore, thankfully. That's not something I'm dying to do again. So maybe the state of the art has changed since I did it. But, you know, you could probably pick that book still up on Amazon. Solution Selling is awesome and I had read it cover to cover. I had trained my team on it. So I could ask a good discovery question, and because I was a lawyer, I knew, right? I knew that I could say, somebody says, so what does the software do? And I say, "Well, hey, have you ever missed a deadline?" And lawyers hate that question, because they all missed a deadline, and they're all super embarrassed about it. And so I would say, "Have you ever missed a deadline?" And they would look at me and be like, "Well, you know, yeah, that has happened." And I'd say, "Well, you know, tell me what happens when you miss it." Oh, well, it's horrible. I mean, you know, got to tell the clients. You got to call your insurance company. I'm like, "Well, you know, we solve that." And all of a sudden, they're listening and so you could have that kind of a conversation at a booth. And they're almost primed. I mean, the mere fact that they walk in the exhibit hall tells you they're looking to improve themselves.

Pablo Srugo (00:31:27) :
Yeah, there's some kind of early adopter signals in there.

Ryan Anderson (00:31:29) :
Yeah, that's right and that has been true for us throughout. So to this day, events are a huge part of our Google market.

Pablo Srugo (00:31:35) :
I assume now you have cold calling, all the stuff is on top of that, too?

Ryan Anderson (00:31:39) :
We do it all. Yeah, we do cold calling, you know, we're trying to do as much AI BDR type stuff as we can. But yeah, we still have a ton of cold callers. We still go to conferences and of course, we have a huge SEO and, you know, paid search budget as well.

Pablo Srugo (00:31:51) :
This is a, I doubt you know the answer to this. But do you remember, like, maybe high level. The ROI of your events back then? People want to know when is an event worth it, right? Is it one to one ARR to spend? Is it, you think about LTV? How did you even think about it?

Ryan Anderson (00:32:04) :
Totally, we always kept really close on those metrics, and still do to this day. So we always wanted to make sure our magic number was a one, and it has. You know, Filevine's been very efficient on that from the early days. The nice thing about a product like ours, it's not product-led growth but the ASPs are bigger and so, you know, if we go to a conference. It can sound pricey, and I think people get a little hung up on the sticker shock. Because, OK, you know, you fly a couple team members out there, you put a booth on a truck. I mean, they're like, we forget, there's logistics involved in going to these conferences. And I mean, one of our early conferences, we just, we didn't know how to do it. We just rented a U-Haul. It turns out there's people who do that. Anyway, so yeah, I mean, by the time you build the booth and stick it on the transport, and fly everybody out, put them on hotel rooms, it can feel like a lot of money. Let's say it's twenty grand to make that happen for a small event. Now we spend way more than that. Let's say it's twenty, twenty-five grand. Well, all I really need is probably one or two customers paying me, you know, $25, $50 thousand a year and that event is well worth it. Especially with our retention rates, we've always had amazing retention and so it was easy. The math was always really easy on it.

Pablo Srugo (00:33:15) :
Is that the benchmark? The minimum would be one to one spent ARR sort of thing?

Ryan Anderson (00:33:20) :
That's right, we always thought. Yeah, we have to be able to prove that we can get a minimum spend ARR of one to one and that was not just on the marketing side. But also we took into account, like fully burdened, how much we were paying those reps for the time that they're there.

Pablo Srugo (00:33:31) :
And you were doing that even back, like we're talking 2017? You were getting those numbers?

Ryan Anderson (00:33:34) :
I mean, I don't know if I was that early. If I was that attuned to typical SaaS metric.

Pablo Srugo (00:33:39) :
But you probably would have been, because it's high level. You would have been like, well, what is it? $20K to go? You think what you're, it's not that sophisticated either. You know what I mean?

Ryan Anderson (00:33:45) :
Yeah, I was watching it, right? And it was my personal money, in 2016 and early 2017. I was still, literally putting my own dollars into it. So I was watching pretty closely.

Pablo Srugo (00:33:53) :
And so you grew through mainly events then? Like, that first year?

Ryan Anderson (00:33:56) :
That was our main vector of growth for a long time. Events and paid search, for sure. Yeah, we definitely did a lot of paid search. I mean, paid search is awesome. Somebody's clicking something, saying they want a demo of your product. That's an amazing way to build, you know, a revenue base. But yeah, we still do a lot of events. That was a main area for us and we flew all over the country doing them. I did personally, sometimes my team will ask me to go to an event, and I still do go to some. In fact, I've got a couple that I'm going to over the coming months. But I've been to hundreds of these things, literally hundreds. So that's good.

Pablo Srugo (00:34:27) :
And what was happening on the product side? You mentioned, obviously, at the beginning of 2015, it was very, very rudimentary product. How much did the product evolve by the end of 2017?

Ryan Anderson (00:34:37) :
I would say by the end of 2017, we had built a lot of the basics, kind of table stakes features that our competitors had that were preventing us from growing faster. So for us, that meant a calendar. You might imagine where to add a calendar. By the way, a calendar is, I don't know if you've ever built one, like, way trickier thing to build. Especially for, you know, as our customers got bigger, it's easy to have a calendar for two or three people. But when you need to have a calendar for one hundred people and we started selling firms that were that big. By 2017, we were selling some larger firms. You know, a calendar that can manage that many people and has visibility. Like, these people can see this part of the calendar, and these other people can't see this part of the calendar, and they're dispersed all across the country, and your client needs reminders based on this, you know, on this appointment. It was incredibly tricky and of course, they all wanted that calendar to also sync up with their Gmail or Outlook calendar. Which also proved pretty tricky but yeah, we had built the calendar, we had built what still forms the basis of a competitive advantage for us today, I believe. Which is what I would call, back then, it would kind of be a no-code interface to build out Filevine. We were the most customizable system on the market for a very long time. That's still true that we are. Candidly, in the age of AI, I'm not sure how much that matters. We could talk about that later. But, you know, in 2017, 2018, I would say all the way up until the past year or two. The customizability of Outline has been a huge moat for us. Almost no one's built a system quite so configurable. Credit to Jim on that.

Pablo Srugo (00:36:03) :
And then talking about, kind of, that next. You know, wave, that one to ten journey. Maybe just the first question, are you changing your ICP at all? I mean, you're talking about these 10, 20k ACVs. Do you start moving up to the 100, 200k, or do you just keep, rinse, repeat that kind of mid-market type?

Ryan Anderson (00:36:19) :
You notice pretty early on that the smaller customers, and if my smaller customers listen to this, you know I love you. 

Pablo Srugo (00:36:27) :
You still love them, yeah. 

Ryan Anderson (00:36:28) :
Yeah, I love them but they actually are far more demanding, candidly and honestly. The thing I'll say, and again, I would say this to them if they were standing right next to me. A lot of them have beer money and champagne tastes. So, you know, they're paying $1,000 a year or even $1,000 a month and they're like, "Why don't you have full-on enterprise-grade reporting?" They can give me any report I want with fifty columns, you know, click of a button. Your enterprise customers will actually totally understand. They'll be like, oh, well, that's actually really hard. You can't run a seventy-five column report of a million rows in the cloud. That's actually impossible, but SMP customers are like, "I don't know, it seems like that should be easy." So the bigger customers are more sophisticated. They have resources to help you bring their teams live and onboard them, and train them. Usually they'll have trainers on site in the firm. If integrations need to be built out, they'll help and of course, the deal sizes are bigger. And so, you know, just across the board, those were just better customers for us. So we aggressively try to move up market.

Pablo Srugo (00:37:31) :
Did it get more competitive?

Ryan Anderson (00:37:32) :
Yes, the most competitive it got, and there's definitely phases of the Filevine journey. So we should definitely talk about how that's changed today, sort of what I view as our competitive set. But around, I think, 2018-ish, we had our biggest competitor kind of come on the scene. It was a group called Litify, which still is in existence today. Out of New York, they raised a really large Series A, $50 million Series A. Which is way bigger than our Series A.

Pablo Srugo (00:37:58) :
You guys raised what, like $8 million?

Ryan Anderson (00:38:01) :
Yeah, yeah, yeah, something like that, yeah. They had a large law firm backing them and Tiger Global. Which at the time was just a really well-renowned group, and they were built on Salesforce. And they were out sort of telling this story like, OK, sure, law firms need a system like Filevine, but to build it the way it needs to be built. You really need it on Salesforce, and that was a tough kind of battle. Because, of course, Salesforce did have all this enterprise-grade reporting and every permission you could possibly think of, and calendars and sort of all the things you might want. It wasn't really configured to lawyers specifically, but, you know, this group had built what they felt like was a configured system in Salesforce for lawyers. Those first few days when we heard about that funding and then started seeing them come up in deals, that was definitely scary.

Pablo Srugo (00:38:50) :
And this was on this path to ten? Like, you were somewhere in the single-digit millions?

Ryan Anderson (00:38:53) :
I would say it was in the latter half of the path to ten.

Pablo Srugo (00:38:56) :
How did you end up winning?

Ryan Anderson (00:38:57) :
Yeah, I mean, to be fair, I think they would admit that we won. I mean, I just think that's sort of obvious today. They sold for a pretty small amount of money to a private equity group, and the company's still around today. And you know, I'm not trying to be negative about them, but we don't see them come up in deals anymore. I think it's pretty fair to say that we won that market. I think we did it in a number of different ways. First of all, we had some inherent advantages because we had built our system. Jim Blake and his team of intrepid coders that I had no business having on my team, but somehow, you know, Jim was able to recruit them. Had written every single line of code, and that wound up being really important. Because for as good as Salesforce is, it's Salesforce and there's a bunch of limitations to that program. And so while they sort of initially maybe jumped ahead of us in sort of feature sets, and all the things that our customers might want to have. They also hit a wall pretty quickly, and their development slowed down a lot after they sort of weren't able to take advantage of all the stuff that Salesforce already had, and we just kept on going. And so from a pricing perspective, we controlled our pricing, we controlled our roadmap, and the system looked like a system built for lawyers. Meaning Filevine did and so lawyers would look at it, and it immediately felt familiar to them. It felt like something that had been built for them, whereas Salesforce had clearly sort of been jiggered to make it kind of feel like it could work for lawyers and, you know, over the course of the next three, four years. They were in every major deal against us and I think our win rate was something like eight to nine out of ten.

Pablo Srugo (00:40:27) :
Oh, wow.

Ryan Anderson (00:40:28) :
Won over and over and over again.

Pablo Srugo (00:40:29) :
Mainly on features, like on capabilities? That's what you're winning on?

Ryan Anderson (00:40:32) :
No, I would say on fit. So customers just, I think, felt more familiar in our platform. It felt like this is a lot of just ease of use. It was easier to navigate around. Salesforce has quite a learning curve. A lot of the features that our competitors had were integrations, really. So, you know, they would say, "Well, we have X feature that you need." For instance, you know, Filevine built its own e-signature tool, Vinesign. It is a ninety-eight percent attach rate for our customers. Pretty much every customer drops DocuSign or Adobe Sign or whatever it is. They drop that, and they buy our e-signature tool for a bunch of good reasons. Like, it's embedded into Filevine, it's a completely seamless experience, it's really amazing and, a customer would say to Salesforce, "Ok, we want any signature feature," and they would go, "Great, here's ten integrations you can choose from." None of them really do it quite like Vinesign, and it's not seamless. It's janky but it's right there. By the time the Salesforce competitors would line up the five or six integrations you needed, that didn't quite work right, and Filevine's all were sort of embedded in this bespoke environment for law firms. First of all, they were more expensive than us, and all of our features just worked. And you didn't have to go buy them, and maintain all these outside integrations.

Pablo Srugo (00:41:46) :
And did you find this difference was bigger, the bigger the customers. Like, is it bigger enterprise than its small customers or across the board?

Ryan Anderson (00:41:53) :
I would say the bigger the customer, the more likely we were going to be in a pitched battle with Salesforce. But again, even there, we tended to win those deals and even the few we lost, a huge portion of those have come back. So yeah, I mean, I think if you were a ten thousand person law firm, if you were like one of the biggest law firms in the world. You might be more attracted initially to something like Salesforce, potentially. But again, over the course of years, they just didn't actually have as many features as we did. Even with the integrations, because we controlled the roadmap. We were also able to stay well ahead of trends. So in the early days of AI, we were much quicker to bring out those kinds of features and we can also do things that were completely novel. Filevine was, and to this day, has the best complex document assembly in the industry. Sounds like a boring feature, and it is to a non-lawyer but lawyers put together these big, huge documents that have tons of different inputs and all sorts of contingencies for what should be in, what clause should be under what circumstances, and which data points should be in. In these documents, we built a tool that just does that and you just weren't ever going to be able to build that in Salesforce. It was going to be impossible and so because we control the roadmap. Because it was all our code, we could build a system that lawyers actually really needed instead of trying to put something together to make it kind of work, sort of.

Pablo Srugo (00:43:10) :
And then I have one more question about this time period. And then I want to talk about AI, because things are changing so much. But I know a lot of founders personally that get to a million in ARR, and when you get to a million ARR. You almost, it's kind of a naive thing, but you almost figured out enough that you kind of take it for granted that you're going to get to the next step. You'll get to $10 million. Like, why wouldn't you? You're going to have more resources, more customers, more everything and yet, most probably don't get there. And even of the ones that do, many, you know, they get there with this decreasing growth rate that creates all sorts of problems. Obviously, Jim, because you grew way past $10 million, like we said, to hundreds of millions in revenue. What did you find was some of the biggest differences between that, you know, the zero to one and the one to ten? What changes did you have to make to make that second phase work well?

Ryan Anderson (00:43:54) :
Yeah, so first of all, going on market definitely helped. But we had a good market, and we still do have a good market. Legal is such a large market. It's kind of a deceivingly big market. But one thing we did is build a broader product. You know, initially we were really focused on law firms and, frankly, law firms that sort of were similar to the one I came from. And of course, that was like our best customer base initially. But I knew right away that that wasn't the way to build a big company and I also knew that if we could build a big company, all of our customers, even the ones that we had sold to initially, would benefit from that. So it was really important to me that we built a broad system that could handle. I mean, legal is a niche and so owning that niche felt like a reasonable focus for the business. And, that meant we should be able to speak to other kinds of lawyers and law firms. And the intuition around that, I think, you know, was somewhat set by me because I could just tell the market size wasn't going to be big enough. But also Jim Blake, who was calling customers, noticed that the variance in what they wanted was really quite extraordinary. Even within certain practice areas, while you would think the work was rote, it wasn't. I mean, it would shock us that a law firm doing the same kind of work as a law firm in the same jurisdiction, in the same state, doing that same kind of work. Maybe even of a similar size, would have pretty different ways of doing things and so his intuition was, "Hey, we probably have to build a system that is very customizable." I'll tell you that had some downstream negative impacts we could talk about and made implementations harder, but our system could speak to a very broad set of use cases. And so that also positioned us well when we were up against Salesforce. Because we could go just as broad as they could and be kind of just as configurable. And that meant we started landing a lot of government agencies. And to this day, government is a major source of revenue for us. It's one of our biggest sectors and one of our fastest growing. And so, during COVID, the kinds of law firms we could sell to. Actually, a lot of people advanced really quickly during COVID and sort of brought forward a lot of revenue. It was the exact opposite for us. We sold to trial lawyers in an area where trials stopped literally for some of our customers for a year or two. There were no trials and so the only kinds of customers we could sell to were corporations who did have money in that era and governments who did. Because there was a lot of money going into government agencies and our product was broad enough that it could speak to those groups. And so we just didn't bump up against those TAM limitations that I think other founders hit. And again, I would love to tell you that was my insight. I knew we were going to hit those problems, but Jim was the one who said, "Oh, this product needs to be really customizable." And man, we lean on that set of features all the time still in Filevine.

Pablo Srugo (00:46:45) :
Obviously, I mean, the whole world's changed, like basically post ChatGPT and GenAI. Legal tech is an area that seems to have changed maybe even more than others. You've got some point solutions like, let's say, BlueJ Legal and Tax. You've got Spellbook that's doing stuff like inside, you know, Word documents and then you've got platforms like Harvey or Legora. How have you adapted to that? Are you guys competing with some of these? Do you integrate with them? What's the positioning like? And then do you just start building a bunch of AI features yourself? How do you play it?

Ryan Anderson (00:47:14) :
Yeah, so it's a really good question, and I'm going to give you probably a little bit more fundamental answer. When we looked at what AI was going to do to legal, we took it very seriously and if there's a quality of Filevine in our culture that I love, and I think is unique to us. Our ability to adapt and be nimble in the face of changes is one of those. Our intuition was that AI was not just going to be an iterative change or even a ten, twenty, or fifty percent change to how lawyers practice, but a complete transformation. I wouldn't even call it like a step function, I would call it just almost a complete reimagining of how lawyers work and work with technology. And, you know, we noticed that really early on and started planning for that moment. And so what wound up happening is a lot of those early competitors that I mentioned, candidly, we don't even see them anymore. Because no one, lawyers today are really, they get it. They get that AI is going to change their workflows completely and so while they still need case management systems. And we're super happy to sell them case management systems. The vast majority of people come to us for legal AI and that is the dominant thing we now sell today. More revenue comes from legal AI than it does from our case management system, which is extraordinary, right? And the truth of the matter is, whereas just a few years ago, the dominant way somebody would use our system is by entering data via a keyboard and then extracting data via some sort of report on a screen. Today, all that's gone away. Most data is ingested into Filevine now via a vectorized database. When documents come into Filevine, we are employing, we think, best to breed and kind of bleeding-edge tactics around how to pull the most relevant information from those documents. And frankly, from phone calls and notes, and text messages, and our client portal discussions, and all the various ways the data came into Filevine. We no longer want to say to a law firm or law firm staff, "Hey, all this unstructured data, you need to go now put it into fields in Filevine." Those days are over. That is the current state of things for us. We're going to do all that for you and the good news is we can. So right now, you just don't have to do that kind of thing nearly as much as you did before and, you know, I think we're going to get to a state where it's rare that somebody goes and enters a field by hand in Filevine. I don't think that's far away. I think that'll happen this year but that doesn't mean they're not there, right? It's all there if you need it. So you can go to this UI and see this screen, and look at all these data points about your matter, but it's all entered via AI.

Pablo Srugo (00:49:53) :
But do you compete with the Harveys and Lagoras?

Ryan Anderson (00:49:55) :
That's one hundred percent. That is our competitive set today. So it's no longer the case management systems, it is one hundred percent these other AI tools. But that's basically all we compete with. That is where I would say near one hundred percent of my mental attention is. The company Litify that I mentioned, those are irrelevant to me on a day to day basis. The only companies we really think about are legal AI companies, Harvey, Legora, who we think we stack up much better than. You know, from our perspective, Harvey and Legora were GPT wrappers when they started. And I think they're basically still GPT wrappers today. I think they know that that's a problem, by the way. That that doesn't provide a very significant moat and they're trying to become more systems of record, and operating systems for legal. That you hear them both talk about this in their podcasts and kind of publicly. We already have that. Filevine already built the operating system for legal. So now it's reimagining in an AI-native way. How lawyers want to interact with an operating system, and that's the journey Filevine's on today.

Pablo Srugo (00:50:51) :
Did you do anything structurally, the upside of your position is you've built all this product and you have distribution. That they have to go get. The downside, that I've seen many times on and obviously, through out history. It's a lot easier to build fast when you're starting with nothing, like a blank slate. Did you do anything structurally or top down or whatever to just kind of make sure you can not just keep up, but, you know, build at that pace in this kind of AI world?

Ryan Anderson (00:51:23) :
Yeah, let me answer that first culturally, and then second, I'm going to give you some insight into what we've done technically. From a cultural perspective, and actually that's the harder part of the problem here. You have a bunch of people who are very proud of an incredible system that they have built, that makes a ton of money, has high gross margins, and ninety-five percent retention. The GRR is incredible, NDR is one hundred thirty percent. The team that built this product has every right to feel like they built a world-class product. Because they did and yet, significant components of our underlying data architecture, and I would say the majority of our UI. Maybe eighty, ninety, ninety-five percent of our UI will change and is in a process of changing. And structurally, we believe that our AI team, and it's large now. It's, I think, 60ML and AI engineers, they all want to interact with our data layer, and have that be an AI-first data layer. Which means it needs to be in Python and it also means that that data layer has to be deeply intertwined, and sort of native to all of the things that Filevine does. So what we have found is you simply can't call the old APIs that are sitting in Filevine and just connect those up to an LLM. You can, but you're not going to get nearly the results you want. So all the best practices around structuring deep data layers literally had to be rewritten and we've done that. It was a massive effort. We embarked upon it about a year ago we started, and it's now paying significant dividends. And today, not only are AI products bringing in more revenue than our sort of typical SaaS products, but they're growing much faster. Lois, which is what we call our legal operating intelligence system. That product is growing about ten percent week over week. Yeah, I mean, it's an absolute rocket ship.

Pablo Srugo (00:53:14) :
Wild at any scale, but especially at your scale.

Ryan Anderson (00:53:17) :
Yeah, it is wild at our scale. It's absolutely shocking how fast it's growing and we see. When we see what customers do with the system, they go there first. I'll just leave you with one note, Pablo, on this topic. We have found that our customers go to our AI assistant to ask questions about things that are sitting in the UI right in front of them. So let's say the question is, what is the deadline for me to file this complaint? It's literally sitting there in front of them and they will, instead of looking at it, they will ask Lois, OK, you know, what are the deadlines in this case? Or when's my stash of limitations? They prefer to interact with AI. So it's an extraordinary world. It's cool because it's way easier to train, way faster to train. It feels way more personal. You don't have to teach everyone where all the tools are and all the screens are, what buttons to click. It's all really intuitive and it's going to make lawyers so much more productive. I mean, we're seeing them just rave about this new world they're living in. They're seeing thirty, forty, fifty percent increases in the speed with which they can complete some tasks.

Pablo Srugo (00:54:20) :
It's awesome, so let me stop you there. I'll ask the last three kind of rapid fire questions. When was the moment when you felt you'd found true product market fit?

Ryan Anderson (00:54:27) :
For AI, six months ago. For our initial product, there was a moment when I was probably. We probably had fifteen, twenty customers, I was still practicing law, and I was conducting a deposition. And my phone started going absolutely bonkers. So I was in, I was literally doing the deposition as a lawyer. So I turn my phone off and finish the deposition, and I turn it on when I get done. And I've got like twenty or thirty texts from all these customers, and friends, and they're furious. And they're like, Filevine's down. And I said, gosh, you know, I kind of joked, I'm like, I'm so sorry, this thing I built in my garage isn't working for you right now and they were mad. And one of them said, "Ryan, I don't think we want to admit to you, but we rely on this now." That's what I knew.

Pablo Srugo (00:55:08) :
Was there or is there ever a time where you actually thought that things wouldn't work out and that maybe you'd follow it would fail?

Ryan Anderson (00:55:14) :
Never, never, I just knew I could keep iterating. I still don't feel that way. We're going to win legal AI. I just know we will.

Pablo Srugo (00:55:20) :
And then last question, what would be some of your top piece of advice for an early stage founder that's looking for product market fit?

Ryan Anderson (00:55:27) :
I still think iteration is the key. Iteration is so tricky, especially now because customers have very little patience for a product and so if you put something out that isn't good. Getting them to take another look is hard. But I still think it's the right way. You know, the customers that bought early and the customers that now test that are AI early. They are so meaningful to us and I will basically go to war for these folks. You know, I shouldn't say this publicly, but like if they ever asked for a discount. I would immediately do it because without them, I wouldn't have known what was and wasn't working. Those early customers, if they're willing to use your product and suffer through the pain of it. You will learn vast amounts of information from them. So just cling to them and learn from them, and even build for them for a while. They're just absolute gold in building a product.

Pablo Srugo (00:56:13) :
Love it. Well, Ryan, thanks so much for taking the time, dude. It's been awesome.

Ryan Anderson (00:56:16) :
Yeah, thanks, dude. It was awesome, I had a ton of fun.
 
Pablo Srugo (00:56:19) :
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.