How This Creator Entrepreneur Used Legal Horror Stories to Build an AI Startup Doing $400K in ARR

0:00Kristina Subbotina:This creator is building an AI law firm. Introducing Kristina Subbotina. Kristina spent almost a decade as a startup lawyer, but while working with founders every day, she kept seeing the same thing. Traditional legal was too slow and too expensive for the pace at which startups actually move. So in 2023, she left big law to fix it. She launched Lexi, the legal operating system for startups, a platform that handles everything from incorporation to fundraising to exit, powered by AI. Big law quality, startup speed at half the cost of traditional law firms. And her secret weapon is content. Christina creates videos about real startup legal horror stories, which has helped her build an audience of tens of thousands of founders and investors.

0:40Kristina Subbotina:That audience is what helped her sign over 100 clients and reach 400 ,000 in ARR, all without spending a single dollar on ads. And on today's episode of the Hot Start podcast, Christina tells the full story. Christina, thank you so much for coming on. Thank you so much, Scott. Very nice to meet you. And thank you for inviting me. Yeah, of course. I'm excited to talk about like startup legal horror stories in a little bit. But before I do that, I'm curious, like when did you actually start creating content online and what inspired you to start posting? Yeah. So I've been a corporate startup lawyer for almost a decade.

1:12And I worked at two venture-backed startups, Big Law. Then I started my tech-enabled law firm. And then I started a venture-backed company, Lexi, which is a legal operating system for startups and venture investors. So in this frame, my first attempt to create content was before Big Law, when I was working at a small boutique law firm in New York, and I wanted to expand and I wanted to share my legal knowledge. So I started creating YouTube videos, mostly, and some Instagram posts. But when I joined Big Law, they didn't allow doing that. So after leaving Big Law, I went all in on creating content.

1:51And it started from an interesting idea and kind of a push from one of the clients. And now who's a friend, he was a general partner of A16Z. And he kept pushing me like, hey, Christina, you need to create content. Hey, he would say like, you are a star. You need to create content. And he would be very persistent for about five months, you know, like just persistent. And one of the times when he actually went, when Elon was buying Twitter, he went to help him and he was super busy. But even during that time, he kept sending me content ideas. He's like, you can do this and that. I'm like, dude, I'm not texting you because I feel like you're very busy.

2:30But here you are finding content ideas for me. I'm not even a content creator yet. So I think his persistence and inspiration kind of helped me to like, OK, I at least need to give it a shot. And the premise that he communicated to me was simple and powerful. Founders don't know what they don't know until it becomes a problem. So meeting founders where they are and talking about legal horror stories in a way that is easy to digest, that hooks their attention in the first three, six seconds. I think that's a true skill and mastery. And when I first started sharing content, it was more, you know, boring, professional, and it didn't work.

3:11But once I started dancing on TikTok, recording Bentley business class, Chanel, all of those things while providing insane value, like real checklists that I use in practicing law while at Cooley, real templates and real legal horror stories and unwinding how can you prevent those. So entertainment form paired with real value creates virality and people's trust at scale because they know that, okay, I'm sharing something that I'm charging$1 ,100 an hour for legal advice. Yeah, I think it's so funny and so great actually that your friend was able to spot that you were actually a great content creator.

3:53Because indeed, so many people actually have the knowledge of a startup lawyer and can share that. But not so many can do that in an entertaining way. And coming up with the great hooks to actually keep people's attention. And what's funny is that I've been following you for a little bit. And even I still fall for your hooks. Like I think a couple of days ago, you had this hook of like, I'm a startup founder and I pay myself a million dollars a year. And I was like, what? That's insane. And then officially I went to slide two and I was like, this is a real story. I was like, oh, damn, she had me also with the hook.

4:23Yeah. And some people probably think all of the problems happened to me. And I saw some comments, people saying, how can you be a lawyer and give legal advice if you are messed up? And I'm like, it's not me. Some of the situations, they happened to me. So, for example, like recently I got this claim from one of the state agencies because one of my ex-consultants, without knowledge, filed this complaint and it was unintentionally. But for some of my clients, those people file claims intentionally. So I broke down how can you prevent that claim from being a pain in your investor due diligence. So I think it's a mix of very few things happened to me, but it never was a pain.

5:11But I know that because I structured it the way to prevent pain. And I know when people don't structure it that way, how it becomes a real legal horror stories. But 99 % of the cases, they're real stories. And they're usually a combination of three or five stories because these are the common legal mistakes founders make. And I obviously removed the confidential information. So I mix and match different stories in one story. And one millionth salary, that is a real story. I represented a lead investor counsel, and I spotted that salary early on in the due diligence, which was very helpful because throughout the month while I was doing legal due diligence, the investor and the founder were negotiating.

5:56Obviously, it's not reasonable salary. and the lead investor went to previous investors, started asking, how come did you agree to the salary? Did you know about that? And funny thing that they ended up being okay with that. So it actually stayed in, but I definitely brought value to the investor highlighting that. Hey, quick one before we get back to the episode. If you love conversations like this one, you would love The Fame Game, our weekly newsletter in which we break down how celebrities and creators build billion dollar brands.

6:24Kristina Subbotina:Sign up for free via the link in the description. And now back to the episode. Yeah, and like you talk obviously only about these legal horror stories. Is there like a favorite legal horror story that you have or one that's like so insane that you've heard recently? So insane. I don't know. There are like so many of those. I think the insane part was when a founder used Claude to prepare a sale agreement for his company. And he sold the company using a template from one of the big law firms. And he asked Claude like whether that's reasonable, whether that's okay. And Claude said, yes, good to go.

7:01So he signed for this non-compete for five years. And the relationship between that acquirer and that founder didn't work out. So it became this toxic relationship. But that investor rented an office and an apartment for the founder. He started physically chasing the founder. The founder had to flee, literally physically escape to a different city. And obviously he cannot afford not working for five years. So he asked us, what do we do? And I represented the startup for which he wanted to work for. And obviously that's a risk. So we were trying to see how to mitigate that. But the moral of the story, don't sell your company, just using Claude.

7:44And all of the things that you put in Claude or GPT is discoverable. It's not confidential. That's why at Lexi, for example, we have the chat where our clients, founders can brainstorm. And all of that is confidential because you're using the lawyer's tool. And whenever you want to run your brainstorming by a lawyer, you can just press run it by a lawyer. And it becomes not just your stream of thoughts. You can actually have a lawyer sign off on things just to make sure this does not become a problem. Yeah. So let's talk about Lexi. So what is Lexi exactly and what is also the founding story behind it?

8:22Yeah, Lexi is legal operating system for startups and the investors. So essentially platform where you have your cap table, data room and all of the corporate records. So it's a system of record for companies. And you can think of it as a general counsel that starts from zero and stays with the company throughout their lifecycle, IPO and post that. And throughout the life cycle, in the beginning, just the founder. Then it's a CFO or VP of people. Then you add in-house counsel. Then you add multiple law firms. And all of them share the context about the company because Lexi has started the company or did the first due diligence or the fundraising.

9:05So it has all of the information. And it makes the work of a lawyer very efficient because Lexi takes a first step at preparing everything and collecting data points and documents from Data Room, Google Docs, Dropbox, Sign, Email, Slack, everything in one place. And it's self-updating. So whenever you, let's say, you hired a consultant, you promised to issue equity, Lexi will prompt you, hey, you promised equity, let's issue, do you want us to handle it? once we handle that, hey, we're updating the cap table. That way you have the self-updating system of record that allows AI agents that we're training to be the best in class in law to do the legal work with accuracy like never before because they have all of the context.

9:53Yeah, so you're kind of combining a software and a services business, if I understand correctly. Yeah, it's a software as a service. And overall, I think in the age of AI where software is commoditized. It becomes cheaper and cheaper to build it. I think that's the mode that companies would have to build. And as we see, many tech companies now acquire law firms, they acquire services businesses to provide a service to get the job done. And that's why when I started Lexi, so before Lexi, before end of last year when we raised our proceed round, I run tech-enabled law firms. So we were automating things on the back end, but the client didn't have that platform and agents.

10:36So we get the job done versus some of the legal companies. They just give you the tools and like, OK, like you do that. Someone else still has to review what you've done with the tools. And especially for entrepreneurs, we have cognitive overload with everything. Yes, you can do your own legal in the very beginning. very likely it's going to cost you more. You want peace of mind and speed at a price that doesn't cost you an arm and a leg. And Lexi comes at around 50 % cheaper than big law. Although we do have big law firms on the platform. So if you want to work with a bunch of law firms, you can.

11:16We currently have five law firms on the platform, which is a network of specialists. So let's imagine we handled hiring for you, very simple employee hiring. Then something is not working out with that employee, they're suing you. So we helped to avoid that employee. But for the lawsuit part, we have amazing specialists with 20 years of experience representing employers in lawsuits. So he joins your platform, he joins your account, sees all of the records, everything that has happened, and helps you and guide you through that process. So Lexi handles a lot of the standard things with a network of specialists that handle complexity.

11:57Yeah. Okay. Very interesting. So like you just mentioned that like you want to build kind of the best AI agents in law. Like what kind of defines that and what is like the difference between your and like other entrepreneurs we're also building in this space? It's LLMs and AI agents are similar to humans. Let's imagine you and I, we have the same intelligence, aka we run on the same model Opus 4.8. So we are naturally smart. What do you think would be the difference between the quality of our output? What would affect the output? Output, I think like experience. Exactly. So input, trash in, trash out.

12:37So what data we are trained on would determine our quality. I think all humans are great AI agents. It's just they are trained on different data and that determines their value and the quality. So we train our clients, top-notch startups and investors in Silicon Valley. And our lawyers are ex-Big Law, ex-Cooley, ex-Fullsons and senior lawyers. Our specialists are the world's best specialists. So the quality of the data and the quality of the training, you cannot get it anywhere for free. And because we're not selling tools, we are actually a law firm underneath. We can train the agents the same way how you train humans.

13:25If you think about training a lawyer, first year, you're learning skill, emails, scheduling, marking up the documents. Well, agents do that better than humans because they're able to do it faster, not mess up the numbers. So agents right now, like junior associates, and they are being trained consistently. They do it 24-7. They don't sleep. They don't get sick. They don't burn out. They do forget some things. You have to build them correctly. But you just build skill after skill after skill after skill. And it's like with a human, you're raising an intelligent being that expands the skill. Yeah.

14:07And what do you think that the profession of a lawyer is then going to look like in the future? because like so many people are saying like AI is going to actually replace lawyers. Like where's your kind of stance? No, I don't believe it. I think lawyers for longest time have been working way too hard. Mental health issues with lawyers. Also, a lot of people burn out. Like I left Cooley. I didn't want to be a lawyer because it's just insane how much we work. High stakes. And you have to operate at the top level in the world at all times. And I'm like, I'm not a robot. I'm a human. So I don't believe that AI will replace lawyers.

14:44I believe it will empower, multiply, and it will enable lawyers to operate at the speed that now builders operate. Now you can create a product during the weekend. I created V1 of the platform of Lexi and I created our website. Just because I'm a builder, I know what needs to be built and we have an engineering team, but I still was able to build everything in a matter of days. That's unprecedented. For lawyers, they need a safe way to sign off on things, to approve, to review. And that's what Lexi is building, to allow builders to build companies in a frictionless way, while lawyers need to have a safe way to protect the builders.

15:29That's the lawyer's job. And similar like with engineering, do you think software engineers will disappear? No. we're hiring. Like I'm struggling to hire a senior AML engineer. It's just the job changes. For example, now the junior software engineer job is to be a product builder, knowing what to build and it has to look good. You no longer write code. So I think for lawyers, they no longer will draft. They no longer will create contacts from different places. They will review, approve and be there with clients, knowing them, strategizing with them, and doing what lawyer is meant to do. And I think the only maybe negative but inevitable consequence, I think, would be the expectations will rise.

16:19If at Cooley, for example, I would do three financings at the same time, and it's a lot, now you might be able to do 10 financings. And if you're doing three, like, why so little? But it's similar how we used to not have LexisNexis electronic libraries. You used to have a library. You had to go there or you didn't have computer, right? So when you go off work, you finish your day, no one is expecting you to respond immediately. Now the expectation for a lawyer to respond within 3.5 seconds and deliver everything fast. So I think those expectations will continue rising. Yeah, very interesting. And you have built a platform that has tens of thousands of followers.

17:02How have you been able to leverage that to start in Skillexi? Yeah, I think that's one of the secret sauces. That story that I shared with you that my friend, Shram Krishna, he pushed me to create content and just giving value at scale. I think that's the first principle of sales. Give value, don't sell. And when you use content, it's similar to what AI does to products. It multiplies your input. You are productizing your knowledge, essentially, with content, and you're able to reach a broader audience, and it's evergreen. So, for example, the past six months, we were not accepting new clients.

17:39We were not selling. And it all came from my previous clients and some organic followers from my Instagram stories, not even real posts. And we intentionally limited the number of clients. So that came just because I built that trust. and the relationship with the audience. And now when we're scaling and we started on Monday, we came out of stealth. And since then I've been giving like the interviews every day, reels, multiple posts a day. So it's a different game of scaling. But for six months, it allowed me to get to 400K ARR since January just because I did the content before. Yeah, no, I love that.

18:20And do you have insights in kind of the audience? Like are those only like startup founders or like people working with startups or whatsoever? Yeah, it's mostly entrepreneurs, startup founders and investors. And it's mostly in the United States, San Francisco, New York, Los Angeles. Yeah. Do you already have creators as clients as well? Yeah. We had a European kid as a client. I would not say that we have a lot of content creators as clients because that's not our niche. We mostly work with high growth startups. So if a creator has a company that is high growth, then that's perfect. So it's the company that is a client, not the creator.

19:03Yeah, no, that makes sense. I had RSXC on my podcast a couple of weeks ago. So it's funny that you actually know that. Yeah, like, yeah, obviously many celebrities and creators are now launching their own companies. What do you make of that trend? I love it. So what I'm observing with content creators, and I'm very bullish, that they're the new celebrities. Hollywood is dead and content creators are it. They're having definitely a moment because what they do, they sell trust at scale. And the beautiful thing about it, if you think about it, it's democratizing that attention economy. So before you had to know someone who knows someone to break through Hollywood.

19:43Now you just create good content from your living room, anywhere in the world. And you become famous, you can make money, you can create product. So now I think the play field is leveled and you don't need much other than hard work. And I don't know, talent, I think hard work beats talent, but whatever the quality of your output will determine your success. And I'm loving it. And that creators now create products in addition to content. I think that's so great because you have to have ownership in order to be wealthy. Brand deals are cool. But if you think about some of the creators, Alex Earl, I think she took instead of cash, she took some of the shares in Poppy and that became, I don't know, 100x investment.

20:32So you have to own equity. It's another second first principle, right? If you want to build wealth, you have to own equity. Before we continue, I wanted to share something quickly. At Hot Start PC, we exclusively invest in brands founded by celebrities and creators. Think Selena Gomez, Jake Paul, Katy Perry. If you are an accredited investor and want to co-invest alongside us, we just launched Hot Start Angels, allowing you to invest in the same companies we backed, starting at just 5k per deal. Interested? Sign up at hotstart.vc slash angels or find a link in the description.

21:05Kristina Subbotina:Accredited investors only. And now back to the episode. Yeah, I think even if you look at someone like a Selena Gomez, 81 % of her wealth comes from Rare Beauty. So even though like singing and performing gave her that platform, it was actually Rare Beauty who actually contributed for 81 % of her net worth. So yeah, you already mentioned talking about like the scalable aspect that you guys work more with scalable companies. My frustration often with a lot of these celebrities and creators is they have a massive platform, they have an engaged audience. And then the best thing that they can come up with is like another white-labeled supplement or apparel company or whatsoever.

21:41Do you think that in the future we're going to see more creators like yourself and Aris who are actually building scalable tech companies that can also be venture-backable? A hundred percent. It's just hard. You have to become an entrepreneur. So for example, in order to build Lexi, I took a break from content for six months. So if you're making a living being a content creator, it is a different skill set. And one of my friends, Alicia Levin, she has a couple of million followers. So she's now creating a product and it's a different skill set. But she works really hard creating a content. Like every reel takes her like tens of hours.

22:23It's art, right? Like with artists, I think it's different. He's more, he doesn't put like so much effort into his content. So it's like improvisation. And when he was helping me in the beginning, he's like, don't overthink, put the camera here and just record it and then edit. And the way he edits, like crop, crop, crop. So he's very chill with his content. That's why he has time for story time, which is his company. But for those content creators for whom content is a full time job, it's really hard to learn a skill of becoming an entrepreneur, especially a tech entrepreneur. So, for example, I had to learn how to be a product manager.

22:59Then I'm coding, an engineer. I mean, vibe coding, but still I had to learn. Hiring, managing people, raising capital on top of my initial strong skills, legal and sales. So it's kind of like a unicorn of a human or octopus with multiple legs, right? And you have only 24 hours a day. And that is hard for people. But I think that is the direction. Yeah, in addition to the skills, it's also about time, right? Because like, let's say you're 100 % full time content creator, every post that you kind of do brings you more followers, brings you a bigger USP to actually launch your own company. However, if you now launch a company, you kind of need to dedicate time to that.

23:45You actually needed to stop with content creation for six months to focus on that before you can actually start talking about it. And like, even if you then combine both, you can't post as much as you did before. So you can't actually bring in less customers that you were able to do before. So I'm curious, how do you balance the two? How do you balance between being a creator and an entrepreneur at the same time? I don't. I fail at everything. so you left coolly because the job was too hard to take another job in law that is even harder extreme jobs that are similarly hard yeah exactly that is an entrepreneurship in a nutshell i think it is a matter of prioritization what is important right now and it's really hard for example one of the mistakes that i made that yesterday we discussed with my head of product and ops for two months, I completely stopped taking clients and the revenue obviously dropped when you do that.

24:40And it is not good for the business, but because I struggled balancing and I always prioritize existing clients. So I rather not take new clients if I can deliver what I think is great in terms of timeline, because quality, I will never sacrifice the quality, but the timeline, what I think should be the standard was suffering. So I stop it. That's why it's really hard to balance. I would say focusing on what is important right now. For example, for the first five, six months developing a product, hiring the team was the focus. Then fundraising and knowing that something has to give in order to take more and hiring a players.

25:26I think that's the part that I wanted to emphasize because I struggled with that a lot. Hiring A players takes a lot of time. I think Ben Horowitz, he was saying, one of the stupidest pieces of advice I heard, hire A players. And he's like, well, now I know that advice. I wanted to hire dumb people, but now, of course, I'm going to hire A players. But I think it was a good advice because it's very easy to start questioning yourself and settle for less and compromise because you're overwhelmed, you need help. I would say do not compromise. Do what you can to build the relationships with just smart people, curious, excellent at what they do, who have taste.

26:11For example, one of our advisors, our technical advisors, he's a senior EML engineer at LinkedIn. How I like spotted him, we met at a dog park. He was throwing the ball really far. And I was like, and he didn't have any tools. So like he naturally, he just like the throw was really skillful. And it's like, this guy has some excellence in him. So I came up to talk to him, turned out senior AML engineer. He helped me to hire the team. And now he joined as an advisor. So finding people who are excellent and something, staying in touch with them, hiring a players takes time. My head of product and ops took a year of building, like from meeting her, building relationships that she joined as an advisor.

26:58Then she left her job, started part time, then switched to full time. It takes a long time. But if you sacrifice and compromise and hire B players, they're going to hire lots of C players. And soon you will have just a weak team that will take you down. Yeah, no, I love that story and analogy. So I think that's a great example. You mentioned that you actually launched on Monday. So I'm curious, like what's next for you in the next couple of weeks? Yeah. So we are posting content twice a day right now, moving to three times a day. We are doing podcasts. So we hired another thing, like I hired a team and not one team, but different people.