Taming Contract Chaos: Meet the AI That Transforms Business Operations

0:00Greetings everyone. I'm excited to welcome TJ Clark, co-founder and CEO at Library. TJ, welcome to the show. Thanks Ben for having me. Yeah, great to have you on. Looking forward to this conversation, but first tell us a little bit about your background. Ben, like you, I'm an Iowa kid. I'm also a recovering lawyer who became a business operator. I started my career cutting my teeth in travel at hotwire.com and then founded Turnkey Vacation Rentals in 2012, which we scaled to a national brand and sold to Vacasa. And then I stayed on there and ran our chief commercial operations. So sales, marketing, that type of thing.

0:38And travel teaches you that margins are brutal. They're messy businesses operationally. and that was really the setup for library, our current business. And the counterintuitive thing that I think about is that at scale, one of the things that kept me up at night wasn't our competition in our capital, which of course were factors, but it was that the contracts that were in our business that no one could find. And I signed them, I've litigated them, we've been burned by them. And so library was born out of this PTSD that I developed. I wanted this tool so badly needed in my past businesses. Okay.

1:21Yeah. Interesting. And usually it seems like, yeah, that, that pain point comes up somewhere in your journey. So I'm guessing just from operating businesses, plus your legal background that you said, yeah, this is something I have to solve later on. Yeah. And that's how we're here. Yeah. Yeah. So a library is an AI contract team for your business and it lives inside your business. And most people assume that contracts software is about storage of your contracts, but that isn't really how we think about it. We think about businesses spend a lot of time negotiating their contracts. And then a lot of times they end up in some filing cabinets.

1:58So it's kind of in our view, that's where they go to die. You become blind to what's going on in your contracts. And so we really want to do the opposite. We want to find all of your contracts. We want to read them for you, make them searchable in plain English so you can find them on a moment's notice. But really go further to let you know, here are your upcoming renewals, your price hikes, your auto renewals, places where you can save money. And do that on a proactive basis so that we're telling you those things versus you having to go find them or search around or miss opportunities. Yeah. And it's interesting that you mentioned fine contracts too, because we know they could be sitting in a OneDrive, they could be sitting in a Google Drive, but do you have something that helps a little magic there?

2:46Just kind of help search those drives to figure out where all the contracts that you may have. That's right. That's exactly how it works. And it's a natural problem. Anyone who doesn't know where their contracts are or at their fingertips should not feel bad because that's usually the sign of a growing business. And when you have sales looking at its issuing contracts and you have HR doing NDAs and you have IT that's procuring vendor contracts, they just end up naturally in different systems around your business. So no matter how hard you try, it's hard to keep them all organized and visible. And so our service is really simple.

3:23You connect it to the apps in your business where they might be hiding. So we can go out and read. We don't move anything. We read the PDFs that are in inboxes in your Google Drive or your Microsoft Outlook or SharePoint, DocuSign, and then we identify the contracts, organize them. We can identify about 70 different types of business contracts. We extract from them 300 different business terms, like the auto renewals or the effective dates, where they fully signed or partially signed, all the clauses and so on. So that essentially you're taking your contracts and turning them into digital information that can now be used by our AI agents to give you insights, like an expert procurement person would tell you or an expert contract manager.

4:12Yeah, interesting. Yeah, that's interesting. Like finding all of them, that's half the battle. And it's like once you've been through due diligence, you know after that. Yeah, I've got to keep every contract that we sign with vendors, subcontractors, employees, whatever it might be. you just realize the importance of contracts and due diligence. Yeah. Who are you targeting with this? And one, like what kind of company is it? Is it a horizontal play? And then what's your ICP that you're after? Yeah. So we have talked to a broad range of folks. We're early in our go-to-market motion. And it really seems like the CFO and the controller are the two people within the business that really understand or feel responsible for the pain of keeping contracts organized, understanding what's in them.

5:00The CFO, obviously you were one you understand, then like the financial forecasting, the expense forecasting, the revenue forecasting depends on understanding what your sales contracts say, your vendor contracts say, and no one likes contract surprises, least of which the CFO or the controller. Yeah. Yeah, that makes sense. And yep, I felt that pain as a CFO, really handling legal compliance and negotiating contracts, both internal and customer facing. And all right, so CFO controller. And then is there a certain company size before, say, Fortune 500, Fortune 50, where they may have a legal in-house team?

5:41I don't know if they have separate applications for that, but is there a sweet spot you're seeing as far as company size? Yeah, we think that we will play well with a business that has 50 employees up to probably 2 ,000 employees. We can handle really high contract capacity. We had a client this week that had us digest 150 ,000 contracts, but we're also friendly pricing. We're$70 a month for an individual user and we're$250 a month for a pack of five or a team of five that wants to use it. So we're very approachable from a price point, but we can handle a broad range of clients. And we like to think of our place in the market as being a sophisticated contract team that maybe a Fortune 500 business could have.

6:32But we're making that available to the rest of us because we feel like businesses can benefit by staying on top of their obligations. They can save money. They can reduce their risk and they can improve their compliance. not to mention the time and headache that they save by being able to find the information they need. Yeah, it makes a ton of sense. It just makes your compliance life so much easier. And I was going to talk pricing in a sec, but since you mentioned pricing, so it looks like a kind of a per user per month plus team packs. And I assume you've got some LL model, LLM models baked in doing all the AI analysis.

7:05So is this just a pure subscription model right now or is there any? That's right. Yeah, just subscription. Yeah, months to month. The first month is free for anyone who wants to try it out. You can take a look. We always think it's much more informative when you see what your contracts look like inside the system and you start to see your renewal schedules and your terms and start to get insights from the AI on what opportunities you have on your actual contracts. Yeah. And we really like that approach. which you can connect your apps and it takes about under a minute. And then we'll parse the, we'll find the contracts and parse them.

7:42And that only takes a couple of hours. So by the time you come back to work the next morning, you'll have your contracts fully organized and ready to use. And how are you, AI margins are up for debate right now. And if I was to say the CFO and he was, hey, we just onboarded this customer. They had 150 ,000 contracts. I was like, boy, that sounds like a lot of AI processing that could cost us money. So you've obviously done the math to figure out what models are we using? What's that compute cost going to be where we're still going to make money in the long run, even if they digest a bunch of contracts in the beginning?

8:13That's right. And we're early innings bed, so I wouldn't tell you that we figured out everything. But so far, we think the economics are pretty sound. And I'm a believer in the Moore's law around AI. I think the capabilities we're seeing then just increase all the time so they can do more. And we're already seeing the price coming down. Hopefully that trend will continue then. And then all of our colleagues can take advantage of this great resource. Okay. Yeah. And then I talked to a lot of AI founders who were just saying, we're just keeping it simple. It's just subscription pricing. Very easy for everyone to understand, which is always a bonus.

8:47So interesting. So let's talk fundraising journey here and capital raise. Look, look like you've raised a little bit, but first, what year did you found the company? We started last year. So$225 ,000. Okay. Last year we got started. And then we just finished our first capital raise, which was$1.75 million. And it was really proud of our cap table. It was driven by CFOs, general counsels, other startup founders who I've worked with throughout my career as well as some new ones. And it was great to have them on board as advisors and really confirming the product offering and believing that this was a common problem that could help CFOs and controllers.

9:32Yeah, definitely a common problem. And tell us a little bit about your fundraising philosophy here. So some early stage capital. So did you consider the bootstrapping route or did you know like when you founded this that, yeah, we're going to go that venture route? Yeah, it's a great question. We did a little bit of bootstrapping. And then once we started feeling like the market was telling us more about our product and service than we were telling them and the different customers that we were talking to, that's when I start to feel like, okay, this is something we really need to put some resources behind to bring it to market in a proper way.

10:08And that gave you the confidence to go to the two former people that I've worked for where we made money in our last couple of businesses. It's always good to go back to the angels where you've made money and ask them if they want to get on board, do it again. Yeah, it makes sense. And so this year, about a year in and raised that capital within this 12 month timeframe. So I'm guessing this was when you were pitching these investors or maybe these investors you have relationships with. It sounds like your operating history helped a lot in this raise then. That's true. At that point, did you have, say, a product to show or was it more just like, hey, here's what we're after?

10:47We did. And that's kind of the new standard. This is my fourth business. And so I would say the bar of what you have to deliver in order to raise money has changed a lot. 20 years ago, you could raise money with a PowerPoint deck. And now you have to have a product, I think. And a product, by the way, is the kind of like the new deck and it explains way more that you can show with agents. There's really no reason why you shouldn't have a product when you're going to your first raise. And I will say a lot of other businesses are coming with customers, even when things have really changed. The new standard is you got to have the product to demo and you're even better off if you have some customers.

11:31Okay, interesting. And that's generally what you hear. And that's really interesting at this stage where you'd hear before, maybe now Series B thresholds are now at the Series A level. Just those expectations have ramped up over time. And that's really interesting at this stage. Yeah. The world is going to be full of upstarts, I think, because of the capabilities with the agents. And finding product market fit and distribution will be the distinguishing factors, I think, for the winners in the next stage. Yeah, definitely so easy to mock up an app now or just have a simple working app where you can show that.

12:05And of course, back to the age old, like we still have to sell the product. We have to figure out how to sell it. So, which is a perfect segue to go to Market Motion. And CFOs, controllers can be kind of hard to find, kind of tucked away in their office. Maybe you don't want to answer the phone. So tell us a little bit about how you're finding your prospects. That's right. I think what we've observed so far, I like to do a one-to-one outreach. do some research on the company and then write to them like we're talking not in a canned way but in a conversational way and really try to selling is no one likes to be sold but where you can find someone who has a real problem that you can help them solve then that is really not hard that that kind of selling is not hard and so that's really been our approach and i think there's a lot of CFOs that are feeling this pain and understand it.

13:00And so getting them to connect with the pain has been really easy. And then we just explain, or we try to relate that there may be ways for us to help you with that. I think the other thing I think about a lot, Ben, is the future of where I think this is headed is do it for me skills. And so when you're talking to a busy CFO or a controller, maybe they've lost their procurement person, or maybe they would benefit by having a procurement person that they otherwise couldn't afford. And so we're bringing that procurement expertise, we're bringing the contract administration expertise to their team.

13:39And if you can do it for them, just like a person would have done, give them insights, suggestions, recommendations on opportunities that person on their team wouldn't have been able to provide, then that seems to relate very quickly because it's helping them reduce that workload and perform at a higher level. Yeah, yeah, definitely. Yeah. And I get so much cold email, which mostly is mistargeted, but still the right subject line and you speak the CFO language and say, oh, I wonder what they have to say. So still open that email. And I was going to ask about CFOs and vibe coding because CFOs are this education mode and just thinking about software renewals and what should I vibe code, but I'm guessing at this price point, it doesn't even make sense for me to just try to create this internally.

14:28That's how I think about it, which is it's really a turnkey solution. If you want to have a procurement and an expert contract manager on your team, that's what we do. Now, if you are using Claude and you want to go further and you want to build your own agents, we do have an MCP server so that you can do that. You can use us as a plugin to Claude and we hope to be in their connector stores. And so if you have other functions within your department that you're building on Claude and multi-steps that are specific to your business, you can absolutely do that. And then we're bringing your clean contract data to your agent.

15:11And then if you have systems in your business that you, your team likes to use Salesforce or other, your ERPs or other CRMs, then through the MCP, you can get your clean contract data into the systems that your team already uses and wants to use. And that has been, the existence of the MCP is just really magical. If you've grown up in a world of APIs and how hard those integrations were and all that scar tissue that we have from those days. Now it's just basically, we really just want to be a friendly player to whatever ecosystem that a company is already using. Yeah. No, yeah. That's so interesting.

15:48I just created MCP connectors for my software metrics apps because Claude is very hot with CFOs right now. Claude is the model de jure right now, or at least the LM de jure right now with finance teams. So really interesting. Yeah. We want to make that better, that experience better. If using your clean contract data would help you with the processes you're trying to drive with your own agents. then we want to be the party that can deliver you that information. Yeah. Yeah. Makes sense. And TJ, you've had a long history of operating businesses, scaling businesses. So I'm curious, you're a year in on the early stage side here.

16:23So what numbers or metrics are important right now as you guide the business? The one that we like the most right now, and then your North Star can change, you know, But right now, we want to focus on time to answers. And so if someone can ask library a question about their contract and get that answer in a very short amount of time, in minutes, and when they start getting that value out of the system, once they start using it, that's what we are really focused on, which is providing them with insights at their fingertips in a very short amount of time. Yeah. Yeah. Keeping that efficiency going.

17:06So time to answer. So yeah, of course. Yeah, that makes a ton of sense. And do you have a current headquarters location? Are you guys virtual right now? We're in Austin, Texas. We have a rather small team. Six of our seven people are in Austin, one's in Seattle. And yeah, we've been in Austin with our last business, Turnkey, and have most of those original early folks are with us for this ride too. Okay, very nice. So about seven, I was going to ask earlier with your GoToMarketMotion and talking about the one-to-one outreach. So is it, do you have a sales team or is it founder-led sales right now?

17:38It's me right now. Yeah, we have two motions. So the founder-led process, which I think it's inescapable. If you want to understand your customers and whether they like what you're offering or they are, and they're giving you the answer key, Ben, when you're talking to the market, They're giving you the answer key on what would help them by describing their pain and what would make it better. And that becomes your product. So it's really founder-led becomes product information. And then, of course, you get that feedback loop. And in my experience, that's just, as a founder, something you have to have in order to find, to really know whether you're at product market fit.

18:20And I think the last thing you want to do is go hire a salesperson too early before you have that. And then you'll say, why did that salesperson fail? And it's not their fault. It was your fault. Yeah. Yeah. And so with founder-led sales and a lot of companies at that stage with the founders operating the company, do you have any interesting apps that you're using software tools that are just helping you with that founder-led motion right now? It's pretty incredible, but that's not where to start. Incredible the tools that are available now. But I'm convinced that's not where you start. You start with trying to find you, Ben, the CFO, and talking to you in a real way to connect and understand the problem, the problems that you're facing, and whether we could help.

19:10And I think you have to do that yourself with good old email and a little bit of process and looking for the right people using LinkedIn and other sources, doing some good community networking and finding those people. And then once you have that motion down and you find that your message is resonating and you understand the pain of your customer and how you can address that pain, now the lead generation process and the tools available and sort of the Apollos of the world and the Hunter IOs and what you can do with Klau that you can build. once you're ready to have sort of marketing people helping you find the right leads.

19:52And wow, it is absolutely mind blowing. I'm convinced we have a process running on a client agent right now that's saving me or doing the same capacity that I had 30 people doing in my last company, when we had to find leads ourselves and we scaled up that team manually to find leads. Yeah, it's incredible. Okay. So interesting. So it sounds like don't go right to the apps, but it sounds like still do like those unscalable things, just the hard work, and then figure out through those conversations, a little magic there that you can go replicate. That's right. Because it's not any good to send a thousand outbound emails.

20:29If you don't know who your target is, you don't know the right message and what's going to resonate. And there's, I just don't think there's any way around that old fashioned elbow grease, if you will, to get to understand your customer and then make sure that based on what the customer is telling you that you're offering the right product. Yeah, a lot of learnings through those conversations. There's no shortcut, I think, to that. Yeah, who knows? Maybe in a couple of years, who knows? There is, I haven't found it. We'll see with AI. A couple more questions before we wrap up. This is an optional question, but give us a sense of scale, revenue range, AR range, users, give us a little sense of scale of the company right now.

21:08I assume revenue generating at this point, We are. We are. We don't want to disclose our revenue as the measuring stick just yet, but I would say that we've processed over 300 ,000 live contracts. We have a very good number of customers that are in a broad range of industries. So we have a clothing company, we have a lumber company, a transportation company, we have the biotech. And so we're learning from different segments of the industry right now and covering quite a few. Okay. Very interesting. So that horizontal play and of course the cfo controller persona right now so tj appreciate the time so what's we're halfway through 2026 so when you're about a year in so what's top of mind for you for the rest of the year was just kind of not nagging but just something that you're always thinking about at this stage of the business i think that the we're in an interesting time and the thing that i lose sleep about but also energizes me is the capability of the models and i what does Andy Grove say only the paranoid survive.

22:10And so that is a big deal for me in the capability of what they can do. But more importantly, with their growing capability, what can we enable for a client? And so the agentic future, you're going to be hearing, I'm sure you're hearing this all the time, but this is really interesting, which means to me a resource within the business that business could otherwise not have afforded, that they now can, that gives you insights and can even do tasks for you that like a worker could do. And I think about businesses that may have lost somebody. So if you have a hard time retaining people as staff accountants or procurement people and they turn over and now you're retraining them and it's kind of like telling you that maybe people didn't want to do those jobs in the first place and they're turning over a lot or maybe they're moving up into other positions that you can still have an amazing capability for that work that needs to be done within your business that is getting managed by higher level people and you're freeing up time for your people.

23:12No one wants a controller searching around in the business for contracts. That's not strategic. And so that's what really excites me about this category is what we can do with agents to help them save their time and their expertise for better higher level strategic tasks that business. Yeah, no, that's interesting. And I think on the flip side of that you don't want controller cfo searching for these this manual stuff but also now there's a little bit of that i don't know social pressure almost of like in the finance function that we have to stay up to date with what's happening on the ai side and not be seen as a little bit old school left behind that we're not adopting it's not fast adoption in the back office but there is some adoption we have to stay current with that yeah that's right and so we're trying to offer a prepackaged way to get an advanced capability within our UI.

24:03You can use Claude within our service if you don't have it downloaded or unavailable. And then I think a lot about like for a CFO or a controller who's leaning ahead on this, I do think about you can use agents in a very relatively safe way subject to your company's policies. If you have some basic controls in place. Don't let the agents write anything in your systems. Let them read and let them give you suggestions and then let humans say, okay, I agree with this or I don't. Almost like a manager would work with their team anyway, where they're checking on what are we doing and checking in. And so this structure is all evolving for us, but the one that resonates with me is like a teaming structure where you have agents that are doing a lot of the lower level work and grinding work, hard work, document discovery and analysis, but they're bringing to you insights as if you'd had a team of people looking at this stuff all day long, but they're not writing.

25:05They're not making changes. They're not making financial entries in your accounting system. It is control in a way that's still safe where you can have your people bringing you ideas and then you can still decide, ultimately, is this right for us? Yeah, I love that. Yeah, because even before AI, really the only way to scale the back office without more and more people was through technology. And it's no different today. So even now, yeah, with AI, so same story. So I love that. Love that. TJ, appreciate your time sharing your journey today. If listeners would like to learn more about library, where should we send them online?

25:37They should come to our website, which is thelibrary, L-I-B-R-A-R-I.com. You can get a free trial of our service just by signing up right online. and there's a way if you want to book time with me or founder-led selling, you could book time directly on my calendar off of our website. Yeah, now we know that goes right to your inbox. It's actually not on your calendar. Sure does. All right, well, we'll have that in the show notes at thelibrary.com. And just one last question you mentioned, is this a self-service signup process or can you trial it and then they need to talk to you or can they just bypass any conversation and just sign up?

26:15They can bypass. It's a completely product-led motion so they can go sign up straight away and try it out. And you'll see results within minutes and minutes to hours, depending on how many contracts you have. Okay, perfect. Or you can go time with us and we're happy to. Yeah, look on your calendar. Yeah. All right, perfect. If you'd like to learn more, check out thelibrary.com and we'll have that in the show note links. And again, TJ, appreciate the time today. All right. Thank you, Ben. Thanks.