Harvey's Winston Weinberg: From Law Associate To $11 Billion Legal AI Startup CEO

0:00Winston Weinberg:Most folks in tech do not appreciate how complex legal work is. They think that, oh, if you can just automate, develop, you know, code development, you can for sure automate law immediately right after, right? People think what lawyers do is easy. It's not. It's incredibly complex. And there's a reason that lawyers get paid the way they do. Welcome to the Upstarts podcast, our weekly show where we talk to emerging startup founders about their upstart moment. Upstarts are challengers who punch above their weight to take on the status quo and improve the world, all while building a big business, too.

0:33I'm your host, Alex Conrad, founder and editor of Upstarts Media. I'm delighted to be joined today by Winston Weinberg, co-founder and CEO of Harvey. Winston, thanks for coming on the show.

0:43Winston Weinberg:Thank you. Thanks for having me. This podcast is brought to you by Mercury, banking redesigned from the ground up. Harvey is a company that was only founded in 2022 by you and Gabriel Pereira, but you already have over$200 million in revenue, an$11 billion valuation. You work with a Fortune 500 and a lot of leading law firms. When you go back a little bit in time to you're in law school, did you think, oh, I want to be an entrepreneur? I'm not going to be a lawyer for long? Or what was the thought process? So I definitely wanted to be a lawyer for a long time. I was not the best student and what kind of changed everything for me was my sophomore year of college I got a US an internship at the US Attorney's Office and the US Attorney's Office is like I think still the coolest job that you can possibly have and I did well in the LSAT and I went to a good law school and what I always wanted to do was actually go start at you know a law firm I worked at a Melvinia Myers in LA which is a fantastic law firm and really get at litigation especially.

1:43Winston Weinberg:And I wanted to work there and then go back and be a US attorney and then actually start my own firm. If we talked to the associates who started with you at the same time, would they be like, this Winston guy, he quit before paying his dues, before really going through it? Or would they be like, oh, from day one, we could tell he's restless, he's gonna be doing something else? Yeah, it's a really good question. I think that they would probably think that I was going to do something, not in tech necessarily but i do remember you know when i first got access this was the public version right of gbd3 this was uh in late 2021 and early 2022 is something around that time they made an api opening i did uh for gbd3 and so it was all public and i was messing around with that and i do remember showing it to a lot of associates and a lot of folks didn't really think it was that good.

2:39Winston Weinberg:But I think at that moment, they thought that I was going to do something around this. Okay, so we're in 2022, GPT-3 is out, and you're seeing AI capabilities. And are you confident that your law firm, other law firms will be able to just plug this in? Or what's kind of the next moment in your thought process? Yeah, yeah. So I wasn't, it wasn't good enough to do a lot of the work that I was doing. It was only good enough in the sense that if you chained all of these different prompts together basically do like chain of thought prompting if you could do that then you for every single task you could get it to work but the reality is if a task took six hours probably chaining all those prompts together and getting the correct context in the right spot probably took like five so it wasn't it wasn't a good enough um the systems weren't good enough and a bunch of the prompt tuning and things like that instruction fine-tuning hadn't actually been integrated into the platform yet but what we thought was maybe will try consumer law first because that maybe is easier.

3:36Winston Weinberg:And so we went on r slash legal advice, which is basically a lot of people asking questions and they usually end with who can I sue, right? And we grabbed a bunch of landlord tenant questions in California, we grabbed 100 of them. And then we got three landlord tenant attorneys. And we didn't say anything about AI. And we just had this chain of thought that was like, okay, based off of all these different statutes, apply this fact pattern to these statutes, right? Or vice versa, and give them to the attorneys. And all we did was say, would you send this answer with no edits to the consumer that asked the question?

4:10Winston Weinberg:And 86 of that 100 questions, three out of three attorneys said yes, with no edits. And we grabbed that and we actually packaged it together. And we emailed Sam Altman and the general counsel at OpenAI at the time, his name is Jason Kwan, and said, hey, did you guys know that your models for this get illegal? And that's basically how we started. That's so interesting because you're asking OpenAI, do you know how good this is? Were you prepared for them to say, yes, we do. In fact, this is going to be important for us, so back off. Correct. That's 100 % what I thought they were going to say. You've got to think about a lot of the testing at that time at OpenAI was mostly researchers.

4:49Winston Weinberg:So I think there was a lot of, wow, these models aren't good at all, because they weren't using them for kind of what everyone else in the world is going to be using these models for. So I think they needed to give it to a lot of people and explore those capabilities in order to get a better understanding of like in the real world, how good are these models? So you get an answer that actually, okay, maybe this isn't strategic. There is an opportunity here. Was the obvious next step, I'm going to start a company? Yes. It didn't, I mean, a lot of this was me trusting in my co-founder, right? Who was a researcher for a very long time.

5:23Winston Weinberg:I massively trusted him. And he said that these models were going to get better. And it wasn't that hard if you kind of just sit there and mess around with the models for I mean, at the time, I was spending probably 50 hours a week doing that. And then my full time job, which is much more than 50 hours a week. And you get a little bit of an intuition of okay, if the models could improve by just this amount, what would be the outcome here, right? And a lot of it is just if I can give them less instructions and less context and they can still basically breach that reasoning gap to get a correct answer, all of a sudden the productivity and all of the use cases that you can do just skyrocket.

6:02Had you had any company building experience or studied entrepreneurship? What was giving you confidence that you could just go straight from law school, one year of associate to CEO of a company?

6:14Winston Weinberg:Ignorance. No, I'm dead serious, right? Like, I had no idea how hard it would be. I didn't know. I'd never managed anyone before even, right? Like, I was a junior associate. I'd never managed someone. I'd never built a company. You just have to learn these things. And I think something about being an application layer company that is a real benefit of it, no matter what happens to your company, is you have to basically learn everything that would normally be something you have to learn in two years, three years, every couple of months. We have been doubling revenue at about every six months about, right?

6:51Winston Weinberg:And when that happens, the type of leader you have to be, the type of company you need to be, that just drastically changes. And so a lot of what you have to do is how can you scale yourself and how can you figure out how to build a better company on a super short timeline? Like you do not have time to actually kind of take a long, long time to develop these skills. It's kind of like the best way to learn a foreign language is to just literally go to that country and be forced to learn that language because you're working on something that's really very important. You are just forced every week, every day, every hour to learn how to do something.

7:28Winston Weinberg:And you fail every single time. Like almost 98 % of the things that I try first, I fail. Right. But you just have to learn from that and keep going. Did you think that law firms and your fellow lawyers would be receptive to Harvey? Did you think it would be an uphill battle to sell to them? I thought it would be a very uphill battle. And then I thought that once you get to a critical mass of lawyers thinking that this is the future, then it would snowball. And that's basically what happened. The thing in the beginning that I think we did well is we made every demo as personalized as possible. And so I was a litigator.

8:03Winston Weinberg:And so one thing you can do as a litigator is most big law firms, they operate in federal court. So all of these filings are public. And so I'd find the last thing that they had filed, the last brief or arguments that they had made. And then I do a demo that is arguing why that brief isn't good or something like that, right? And a lot of the times, obviously, the brief was really, really good. But it instigated something in the litigators where they were like, oh, wow, I'm going to pay attention to this screen. I'm gonna watch every single token every single word that comes out of this Because this is something that I just worked on and you challenged me It's very risky because sometimes it would hallucinate and be wrong right in the beginning But when it did work you saw wow I can see that this is actually quite good in this domain I've read that you were still only three people when you got your first two customers And they were in London and you had never been to London.

8:55Yep. How the heck did you pull that off?

8:58Winston Weinberg:I think so weirdly, the UK law firms and professional service providers adopted this technology faster than the US ones. And the main reason for that is a lot of the US banks sent bank letters to the law firm saying, do not adopt generative AI in the beginning. And the UK didn't do that as much, right? I think that's the number one reason. And because of that, our first two customers were there. And yeah, when we onboarded A &O Sherman, it was Alan and Overy at the time, we only had three people and we onboarded 4 ,000 people. I mean, we just didn't sleep for three days, right? I mean, you basically have to, we would take rotations of basically people making sure that you're responding to support tickets and things like that.

9:42Winston Weinberg:It was very, very, very hard. And I think in the beginning, we got a little bit of flack for being like secretive and having a wait list. And the reality was we were onboarding a 4 ,000 person customer. And then we were onboarding quickly after that a 5 ,000 person customer. We literally didn't have the bandwidth to even do demos for anyone else. Was there just sort of like a very streamlined or pared down version of the product that was going to be the use case that would make 4 ,000 or 5 ,000 people happy? Or how were you thinking about how to sort of create a good impression? Yeah, that's basically what you did.

10:13Winston Weinberg:So in the beginning, what you did is you went by practice area by practice area, and you came up with a use at least one use case that was super relevant to that practice area right um like a closing checklist for if you work in m a right things like that and that took a lot of domain expertise right and i think that domain expertise is actually going to become even more important as the company scales i assume that vcs were like oh ai in a new vertical that's really exciting so maybe fundraising wasn't as hard as some of our guests in areas like nuclear energy or other other areas? It was really hard in the beginning because basically the thought process went like this.

10:47Winston Weinberg:It was legal is an area that everything needs to be 100 % accurate. The model's hallucinating. This isn't going to work, right? And I think that was probably the number one thing that people said. The number two thing that people said is it's impossible to sell to law firms specifically, and lawyers are very difficult. They don't buy technology, right? The thing that I think people were wrong about with both of those is one, how professional services work is they're actually structured to have review flows. So what happens is, you know, the client asks a question, right? And then the partner gets that question and they decouple that question into 10 sub questions, and they pass that down the chain.

11:26Winston Weinberg:Then the junior associate does a first pass. And then the second year does it, then the third year, then the fourth year, then the fifth year. And so you actually have a built in review flow mechanism into how the law firm operates. Same with other professional services, Deloitte, et cetera, that's how they work, right? And so it was okay to have hallucinations because you already have a checking process in the flow and in the nature of the business, right? And then number two is I think the reason that lawyers haven't been interested in technology is because there hasn't been a technology in the past that impacted the practice of law.

12:01Winston Weinberg:Very little technology, right? And so because of that, a lot of the technology that existed in legal tech was about the business of law, invoices, timekeeping, things like that. And so I don't think lawyers had the experience of, is there an incredible technology that can change how I personally work? And that's, I think, the piece that was missing. And I think that's what I thought you were going to say is because when I think of the lawyers, I think these are highly educated, proud, and possibly cynical people as just a group, at least the lawyers I know, including my own father, they see, oh, chat GPT, that can do some basic things.

12:39Maybe it's helpful or not. Why is this random startup that is maybe using AI models going to unlock something for me that my 20 years of experience can't already do?

12:49Winston Weinberg:Well, and I think that's right. And I think what happened is people started to think about it more as this isn't automating me. What this is doing is automating some of these tasks that I don't, like that isn't where my value is, right? And if you think about actually like, what is the value of a law firm? What is the value of a lawyer? It is actually to do the task. It's not all the little pieces of the task that get done. It is do the deal, right? And the highest value, like when you're paying one of these partners, I actually like we're a consumer of legal services. We don't just do everything actually in RV.

13:23Winston Weinberg:And when I'm actually working with a law firm, a lot of what I'm paying for is the partner's judgment. And it basically gets bundled into this bigger group of like junior associate pay, all of these other things. But really what I'm paying for is the judgment. Should you buy that company? How could you buy that company? What is the best way to do this negotiation? Right. And what ends up what's weird about the industry and what I think is going to change is partners charge like the best partner in the world, something like 3000. Right. Then the junior associate who just got out of law school, who doesn't really know what they're doing is$1 ,100 an hour.

13:57Winston Weinberg:So really what happens is you bundle all this work into a pyramid, but really what you're paying for actually is the top of this. And so I think some of these pricing mechanisms will change. Okay, so funding maybe initially you faced skepticism. You're also onboarding these customers that are many times bigger than you. When you think back, what was the hardest nut to crack or sort of the upstart moment where you felt like you were most back to the wall? I got a punch above my way now. It's actually more about company building. In early 2024, I think what my co-founder and I did wrong or what we were thinking about was, is there a way to one-shot the company?

14:36Winston Weinberg:That's what we were thinking. For the non-AI members of our audience, what do you mean by one-shot? Are there a couple strategic plays that you can do that just make it So you are automatically successful. And I think this is a mistake that a lot of founders make. And I think it taught my co-founder and I a pretty big lesson. And so what we did is we thought that there was this company. And if we acquired that company, it would kind of change the trajectory of our company. Right. And so we went out and we tried to buy it. And we ended up basically flying out somewhere to try to buy this company.

15:11Winston Weinberg:And we tried to buy it for about the same price that we were valued at. Oh, wow. And the idea was, and the company had about 10 times more people than us, if not more. And the idea was we would go out and buy that company and then come back and figure out how to finance it. Kind of like old school, like private equity, like leverage. How big were you at this time? We had been valued at 700 million. Okay. Was your board okay with this plan? Were they freaking out? They were super hesitant on it. If we could be honest about it, we were super hesitant about it. And I think for very good reason. And what ended up happening is we were able to kind of like lock up the company.

15:51Winston Weinberg:We came back and we tried to do the financing and we couldn't quite pull it off. Right. We got close, but it would have required taking some debt. And we felt uncomfortable taking the debt. After that, I remember my co-founder and I had a week of just kind of like, what is the future of our company? And like, how do we build this? And for whatever reason, it broke us into every business is actually just how do you scale a company? It's how do you hire the best people? How do you create the best culture? How do you actually scale all of your systems? How do you come up with very good roadmaps that are long term but also flexible?

16:28Winston Weinberg:And I know all this stuff sounds kind of like, of course, that's what you're supposed to be doing. but it took that moment of us trying to kind of one-shot something to realize, no, running a company is just, you work 100 hours a week for 10 years and you just slowly build it. And that's how it works, right? And you improve along the way. And that kind of changed the entire trajectory of the company. The next six months after that, we hired a lot of leadership. We scaled our systems. I wasn't doing every deal myself, like a bunch of those things. And I think that actually probably gave our investors more conviction in the future of our company than anything else, because we turned that around.

17:10Winston Weinberg:And we've had way more failures like that, by the way, like way more. But I think that those failures like reset you and you realize, oh, there is actually only one way to do this. And it is consistency and execution at scale. Do you ever kind of play the parlor game with your co-founder? How would our business look different if that deal had gone through? It would have been much worse. The business would have been much worse. Why do you say that? We would have over-indexed on using that acquisition to build the business instead of build the best team and build a new age business. It would have been a huge mistake.

17:46Winston Weinberg:We have come into other positions where you've had an option to do things like that. and instead we have done the harder thing, which is no, you need to just fix all of the normal systems that are internally at your company. And again, I know it sounds kind of stupid. Of course, what you're supposed to do is just work 100 hours a week, eat glass and just kind of suffer through it. But I think sometimes as a founder, you have the like, oh, there's a quick, easy way to win this. And if you learn over time that there isn't, that doesn't exist. And what really makes a company successful is hiring the best team, doing all this execution at scale, culture, and that compounds.

18:25Winston Weinberg:That, I think, is the big learning. And it took me a while to learn that, and I still relearn that every day. When you start hiring these executives to maybe build the business up now the modular way, the internal way, did you feel like you knew what you were looking for? How did you manage to bring in the right folks? because almost definitionally, these people would probably have more experience than you did at that time. Yeah, so the way that I've done this is I have never hired for a role that I have not run that part of the organization for some period of time, ever. Like I have never hired a C-suite position where I have not actually ran it myself first.

19:05Winston Weinberg:And because of that, there are some problems where it usually takes me a lot longer to hire a C-suite role. Because you're picky or? Because I want the experience of running that role first. Okay, because you need to feel like you are fully up to speed and you understand the workings. Exactly. And you don't need to be the best at it. And then I want to do that and then find someone who is better than me at it, which there are tons, right? But then it's much easier for you to understand who to hire, and it's also much easier for you to understand is this person scaling or not. And that, I think, is a massive skill set that all application layer company founders need to know is can you sense if someone isn't scaling?

19:44Winston Weinberg:Do you have a good ability to say, this is the things that they should be doing to set themselves up for success in six months? Are they doing that? And are they going to continue to scale into the next level, the next level, the next level, the next level? Have you found that people need to be passionate about law to be good Harvey employees? Or what makes them believe in it? Yes, I think they do. I think they need to be passionate about a couple things, but it's not just law. It's how bullish are you on the models getting better. I would say that other than the actual labs, we have from the beginning been the most bullish on the models getting better.

20:21Winston Weinberg:I am actually surprised at how long it's taken for the kind of takeoff period that we're in right now. And we've been planning the business kind of all around that. But going back to the interest level in legal specifically, the way that we've done it actually is we brought in a lot of lawyers. And so I remember that one of the first things we did is we brought in a bunch of the lawyers that did the Dell take private with the tracking stock and everything like that. It is incredibly complex. And the thing that engineers and lawyers have that are very similar is they both like solving incredibly complex problems.

20:56Winston Weinberg:That is like what gets them up in the morning. And I think a lot of people that are outside of law, they don't realize how complex these problems are. Like they don't understand like how difficult it is to pull off a reverse triangular merger or do a fund formation with 74 LPs and they're all in these different jurisdictions and you need to keep all of the data in Luxembourg for tax reasons and things like that. right and i think that if you you the empathy that you develop here the user empathy is actually the level of you teach the engineers the level of mastery that these best these top lawyers actually have and that makes them extremely interested in how do you solve solutions that you know a automate part of those tasks but b also help them work better as a busy founder at upstarts i don't get much free time.

21:41So imagine my horror when, on a rare weekend getaway to a quiet cabin, I woke up to a message that someone was using my Upstarts card to make multiple thousand-dollar transfers. Thankfully, Upstarts banks with Mercury, meaning I was able to block the transactions, freeze the card, and upgrade our multi-step approvals all from one dashboard, faster than it took to buy the cider donuts we ate to celebrate. You expect quick support from your other software tools. Why should banking be any different? Visit mercury.com to learn more and apply online in minutes. Mercury is a fintech company, not an FDIC insured bank.

22:17Banking services provided through Choice Financial Group and Column NA, members FDIC. I find it really interesting that you say that you all are so aggressive about believing in the capabilities of the models, because I personally feel like you could be an upstart on two fronts there. There's the people who don't agree with that and think, okay, these tools are not going to transform legal work, or they're not going to help me that much, and these guys are overpromising. Or the models are going to be so good that OpenAI and Anthropic and the labs can just do this themselves. And Harvey and its competitors will be a great moment in time, but five or 10 years from now, we'll just use Anthropic or OpenAI to do the same things.

22:59So I feel like you have to maybe overcome skepticism on both fronts there? Totally.

23:05Winston Weinberg:I think it's evolved over time. The second one is the one that I think about the most by far, right? Because the first one, I mean, both of them, you can just prove out over time, right? If the company keeps being successful, and you aren't eaten by the model labs, you prove it out over time, people keep adopting your product, you prove it out over time, right? For the first one. But the second one, the way that I think about this is like, our company is going to have four stages. And we're definitely going through all of them. And and we'll iterate through all of them as well. One is like productivity suite, right?