How A 27-Year-Old Built A $5.6B AI Company In 21 Months! - Max Junestrand

0:00We talk about recruiting as being a privilege and not an obligation. Love it. Because we want people to put more effort, actually, into recruiting than almost anything else they do. Because it becomes the source multiplier of so much in the company.

0:21What would happen if we just told the truth? Welcome to TruthWorks, where we dig into the nitty-gritty of leadership and work. and what needs to change. I'm Jessica Neal. And I'm Patti McCord. Our journey together started in HR, but trust us, it's evolved into something wild, honest, and well, a bit rebellious. So throw out the handbook. We're here to redefine rules to work for us, not against us. Let's dive into another episode.

0:59Hi, everyone. Welcome to another episode of TruthWorks. I'm your host, Jessica Neal, here with my co-host, Peter Clark. Hey, Pete, what's shaking? Hey, Jessica, how are you? You're in New York. I'm in New York. Yeah. Yeah. And you're having fun with the team from... From LaGora. Yes. Interesting timing. Yeah. Yeah, I know. Interesting timing. And we just sort of spoiled it. But we have the founder here of Lagora today. And we're talking to Max. And Max's story is just, he's going to fill us all in, but it's just a great story. And he's actually somebody that I've really wanted to meet for a long time now.

1:40I think today is his birthday. I think. Yesterday. Yesterday? Oh, okay. Well, happy birthday. So you are now 27 years old, not 26 anymore. That's right. That's right. And, you know, you are building a pretty significant company and you have scaled like tremendously, not just with ARR, but also with people. So I'm so excited not to, you know, just hear about the Ligor story because it's a great story. We're going to get into that. But I want to know what you're learning, because I'm sure as you're finding out, building a company isn't as easy as it seems. Certainly not. I think the advice I got in Y Combinator was it's going to be easy to fundraise if you build a good company.

2:34I've tried to keep to that, but not everything else is easy just because you build a good company. Right, exactly. So welcome, happy belated birthday. And why don't we go back in time just a little bit, because I do think the history is important for people to understand. So take us back and kind of tell us a little bit about how this all started. also to take you all the way back to the to the time that even predates me the the seed that would eventually become lagora was founded in 2020 by four gentlemen who i was not a part of so it was a psychologist a engineer a physicist and a lawyer and it sounds like the start to a good joke but it's really just that starts to a great company what happens when you walk in the bar and exactly And, you know, three years later, when GPT first came out, that became the real, you know, catalyst for forming the company.

3:30And so two of them decided to continue working on this full time. Two of the other guys decided to jump and do other things. And then I entered the picture. And it was precisely then that I think language-heavy industries that had seen very low adoption of digital tools prior to this era finally started waking up. Coding, customer support, law, many others. And I think in those early years, it was a lot about proving things out and solving foundational issues, which today sound really easy and generic. But it was things like context management, hallucinations, proper citations. How do you work with a large number of very unstructured PDF documents?

4:20And these are all just like solved problems now. But in the beginning, we had to build so many of these foundational building blocks to even put a good product into the hands of those first lawyers back in 2023. And after we did that, we started iterating. And I think a startup's secret power is really your short iteration cycles. And so in the very early beginning, I was focused on how do I maximize this in the company? How do I make sure that we have many cycles per day between meeting customers and building product and solving new use cases? And as the company has continued to scale, we recently became the fastest company in history to grow from one to$150 million in ARR.

5:06Yeah, and you did that in two years, if I read correctly? Yeah, 21 months. Okay. And I think it's been a special time in our industry because it's been so underserved with great software. that the amount of, you know, greenfield opportunities to go and build were really crystal clear. And of course, you know, my role has changed tremendously in that. And now we're at the most exciting time in the company's history, I think. Yeah, that's so fascinating. You know, my dad's a lawyer, and so I have an affinity for lawyers. And he had his own law for a small law firm in our small town in Kentucky. But, you know, it is so interesting that These sort of, they seem not sexy, these underserved markets, but they're big markets.

5:57Well, and I think we've certainly learned to fall in love with the problems that we're solving. And I've been smart enough to hire many much smarter lawyers than myself. And they come with not only the domain expertise about how to deploy software in the specific practice areas and organizations that we work with, but also are able to see around corners where the technology might not be there yet, but it's clear that it will be within a three to six month timeframe. And I think when you're building products in the space, if you're building for where the models are today, you're failing. If you're building for them a year out, you're actually like too early.

6:45And so you need to be in this like sweet spot of three to six months. And you kind of need to play this momentum game where every quarter you're hitting the next milestones in the build out of the company, in the build of the product, in your revenue and in your metrics. And I think we just played that domino game very, very well. And we've understood that in order to get to C, you also got to get to B. And because we were founded in Sweden, that started really early. I mean, today we serve some of the largest legal institutions in the world. The biggest one is actually bigger than the entire Swedish legal market, right?

7:24And so very early on, we had to figure out how do you get into a new market? How do you enter them with a bang? And how do you make the jump from Europe to the UK and then to the US? So it's been many different, you know, periods in the company where I think we've had unique challenges, which time and time again, we've figured out a way to overcome. Well, tell us more. Yeah, tell us more. Like, you know, even, you know, starting out in Sweden, then, you know, making the jump to being global. What were the learnings in that? Actually, can we back it up just a little bit more? You're going to back it up?

8:02Okay. Yeah. So you said four co-founders and then two sort of carried on the idea. How did you get connected to them to that point? You weren't a lawyer, but what had you interested in the space? Yeah, no. So I knew one of them from university and they decided they wanted to apply to the business school's accelerator. And one of the requirements for that business accelerator was that somebody had to have gone to business school and I was the token business school guy who I just did business school on the side while I was doing my master's in computer science but it was enough to get us in and when they reached out they showed me a demo which I thought was really exciting and I also told them you know why why settle for a Swedish accelerator when we could apply to something like Y Combinator and right I had worked at two previous YC startups and I think Like to give the US some credit, like there's a lot of big ambition and big ideas that I think in at least Swedish society sometimes gets, you know, pushed down a little bit.

9:11And so we made our YC application. We actually did not get in the first time. We then made some changes and got in the second time. And we took up this Stockholm-based accelerator for the summer. And we quickly realized that three engineers with no lawyers adjacent to us was not going to be able to iterate to the optimal solution here. Back to the point around like, how do you close that iteration cycle? And so I managed to get us in with the biggest law firm in the Nordics called Mannheimer Svartling. If you watch the Netflix series with Spotify, it's actually they're shooting parts of it there.

9:51The first lawyer at Spotify came from that firm. And so we made a deal with their managing partner that, you know, he didn't know that much about AI, but we certainly didn't know that much about law. And so we got a conference room in their building, moved in and worked out of there for the first nine months of the business. And what I think that did for us was not only did it associate us with such a premier brand and prestigious brand in our market, but it actually forced us to have a very opinionated customer that was also quite demanding. And I think that demanding customers is sometimes the best thing you can have, because if they're opinionated about what they want, then all you have to do is go build it.

10:39And I think that people can sometimes put the art of product building in like a mist of mystery, but it's really quite simple. You just like build the thing that provides, you know, value to the problem that they're trying to solve. And then you get the feedback and then you iterate and you do that as quick as possible for as many times as possible. And then you end up with something really great. You know, from then, that is still very like heavy in our DNA. this idea of co-creating solutions with our customers. And I think it really formed and shaped much of the culture since. Today's show is sponsored by Manifest Law.

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12:06Yeah. And I mean, when I read that part of your story, I was like, that's actually quite brilliant. You like lived at a law firm pretty much. Yeah. It was great. Yeah. And immersed yourself in the problem. They're really pretty officers. Yes, they do. And, you know, I'm guessing they didn't charge you rent. Right. So that's great. Like a discounted product. That's all. Yes, exactly. So, but, you know, I think that intuition that you had, not. Not every founder has that, right, to immerse themselves so deeply in the customer's problem. Well, I think, you know, the winners get to write the history a little bit.

12:46And so there's probably a selection bias. But I think we took that relationship deeply and then we brought that to other organizations since. And now we're at this quite interesting point in our market where, you know, both the law firms are really adopting AI, but so are also the enterprise and legal departments. And so increasingly, we are doing work with large legal departments who are looking to cut costs or drive efficiency and to do other types of things internally that they otherwise or previously just didn't have capacity for. And so from those very early days, yes, we were focused to hone in on one problem, but ultimately the product that we had back then was like a chat GPT wrapper with better context management.

13:31And that didn't hallucinate on European case law. Now we have a completely different product architecture, even, you know, go to market service motion. You end up building, I think, for the time that you're in. And normally that time might have changed every year or so, but in AI, that's changing every quarter. And so I think for myself, and I tell this to every new joiner as well, you're certainly at the point today, but if the company is scaling exponentially, you are going to have to work very hard to keep up with that and to keep up with the new challenges that are coming. And as we start to get into, you know, the first build out of the executive team, the first set of impactful hires, like this was a very important part of my philosophy.

14:22Yeah, well, let's talk about that. So having, you know, sort of being 27 now, but, you know, in your 20s, how did you know that that was important? Like when you started building the company? You know, if I was going to be able to do a good job as a CEO and, you know, having zero prior experience to that role. Right. I had to be able to take bets on other people who would come in and be founding engineers or founding go-to-market executives and to build up different parts of our business. our top performing go-to-market or sales rep so far in the company's history dropped out of university he's 24 yeah and and has zero you know prior experience doing any sales whatsoever and now he leads part of our strategic accounts team and our founding engineer had had no prior engineering job but used to work in a construction warehouse and selling wooden planks and then you know quit that to join us as our first engineer and when you see people like that outgrow even their own expectations of what they would have been able to do i think that gives you the confidence to go all right like we're certainly going to bring in experience where we need it but there is a raw energy and like passion and problem solving and you know like like a go that is very hard to just like create on demand you need to have it and you know not every not every hire works out certainly and we were very good at getting the right people on the bus on the bus and the right people off the bus in a good way and and often it's it's a mutual you know feeling when something is not working out.

16:29Yeah. And you, did it, did it feel like it came natural to you to recognize those things or, or was there sort of a lesson, you know, or an aha moment maybe that you had along the way that allowed you to approach these things, you know, more confidently, like even when it's not working out, right? Yes. Well, it's hard for people to say goodbye. Well, the first times was a lot harder than what it is today. Yes. I think like reps build some muscle, but I still feel very bad going into a conversation like that. I think if you don't, then like something might be, you know, a little strange with you.

17:23i think on but on the opposite side i think you need to have an ability to like recognize greatness or like does this person have it yes and you really feel when somebody joins who doesn't have it like like it's hard to put a word on it but like everybody feels it Totally. And the minute you start to let that grow in your organization, it keeps on growing. And so I think we've built like a very self-selecting kind of team that all understand together that they can operate faster. They can do more if the whole team is bought in. And so now that's starting to happen at scale. We're at a point now where I used to interview everyone but there's just not enough hours in the day we just had a new batch of of new joiners and it was 80 people in the kitchen wow you know the the sort of data from application to getting an offer is something like 0.3 percent and so you know like there's a lot of funnel that goes into getting those 80 people in C tier.

18:38And we talk about recruiting as being a privilege and not an obligation. Love it. Because we want people to put more effort, actually, into recruiting than almost anything else they do. Because it becomes the source multiplier of so much in the company. And I think in order to do that at the scale that we're now at, then you have to lead in from the front. you have to show that you treat your executive hires in that way i still interview every director plus because i think it it maintains that bar in the entire company and it's so easy to think this is just a head count we need to fill but you know somebody mediocre could be taking the the place of somebody exceptional really man yeah absolutely i just want to say hallelujah i'm glad I'm glad you, yes, amen.

19:32I'm glad you are doing this because I think, I mean, Pete and I work with a lot of founders and a lot of them get there eventually on this sort of privilege, interviewing is a privilege thing. They don't always get it in the beginning. And, you know, and honestly, like one of the reasons why I was able to be so successful at Netflix is that Reed believed the same thing. And, you know, our philosophy was talent was the most important thing that we did. And we said, if you were asked to interview, that trumps a business meeting. Cancel your business meeting, do the interview. And most companies were the opposite.

20:17You know, and business meetings always trump the interviews and the interviews were the first thing to get canceled. so I'm just I'm just glad that that you are seeing seeing that and doing that it warms my heart absolutely yeah I got to experience I got to experience a little bit when when I was in college applying for jobs I I did an exchange semester in the U.S. and then I applied for 400 roles and I got two interviews. Wow 400? Yeah 400. Engineering roles? No all kinds. Engineering roles, growth roles, you know chief of staff stuff. Okay and this is before you could write an agent to apply for all those jobs for you.

21:04Yes I did them manually it was it was it feels really lame now and i did two interviews one at a venture fund and then on at a icy startup who were building robots for mushroom farming and i did two cases for each i thought i did quite good at both but then i got rejected and you know like that was probably for the best because then i you know started Legora instead that summer. Yeah, thank God. Yeah. But you could be building mushroom robots. Yeah, that could have been something. But how you get treated in those interviews versus I did an internship at McKinsey. And when you go through that process, it's like, you know, six interviews.

21:50It's very clear. You go there, you know what you're expected. You know what they're looking for. Like it was a very good candidate experience, I think, versus some of those more peau and peau. companies. And I think as you build a machine around that, you need to build a brand and you need to build the expectation that even if somebody has a poor outcome in that they don't get a job, they are still going to recommend to their friends to apply to Lagora. Another amen. Oh my gosh. I was going to ask a question. Classically, I do this question. It's not really a question, but only because you've literally answered the question, but we get that a lot too.

22:32Like, how do you maintain quality at scale? You know, this idea, like, can you help us with recruiting? We've tried, you know, everything we can. And it's like, but you haven't really, because like the key to success is doing exactly what you're doing, which is like from the top down, here's how you set the tone. Here's how you make it important to people. And at the same time, like this is out there, you say it, like people talk about it. and yet you know founders often will still struggle with it so i guess maybe my question is what advice would you have to a founder think you'd have about the scale like lagora and maybe it's just everything you've already said yes also how many people are you now we're 900 people today we started the year 250 wow so i think if if it's important to your business to scale headcount which like Not all businesses have two today, but we certainly do.

23:31If you think about the before and after of that, what your dream picture of the after looks like, you have to start very early to make sure that you actually end up there. Because I think if you just treat recruiting as something that you do a little bit all the time you don't really feel that your exponential curve might be going down or that you're dropping the bar because it happens gradually and so i think you actually have to design this over a slightly longer period of time and you have to think about talent development in the company as well in like a six-month timeline not a one-month timeline we've had many liguarians who have been extremely successful after six months but wildly unsuccessful in their first three months like ramp is a real thing and you know sometimes you get a feeling that like sometimes that something is off and you know that's maybe a cultural thing but if it's just a performance thing i i actually believe that most organizations are too afraid of giving clear feedback especially in europe i think the the us maybe it's a little bit more like confrontative about these things but sweden certainly is not a country where you search feedback and you give tough feedback and so again if that's not in the culture you have to turn that into a ritual and you have to have a pretty tight performance management cycle and an exercise and you have to really encourage managers to be clear with teams about how they're doing and you know some of our now best performers were given a low score and maybe it's the first time they've ever been given a low score in their life and they're like holy shit am i a two i'm not a i'm not a five like on a scale of like one to five i'm a two i really you know have to do something different here or i'm not going to feel good about myself in the in this organization and it's a little bit of short-term pain for a lifetime of better outcome.

25:58That I think is a very fair trade-off when you put it like that, but it's hard to put in the work up front. Yeah, no, it is. And I just would like you to talk a little bit about this because I advise and talk to companies about this all the time. But it's much easier to say, we want to give that feedback. We want to be transparent about it. We want to have a high performance culture, yet we don't really have one because we're not willing to actually go full on on this thing. And so most companies just don't ever get there because they aren't that clear about it. They don't demand it from the managers.

26:39They don't hold the managers accountable for the hires that they make and the fires that they make and the way that they lead their team. So how did you make it a ritual and how did you, you know, make it a reality? Because it's very hard. It's one thing to say it. It's another thing to like do it. Well, maybe the first trick here is, you know, I often think about hiring into my team as how can I hire somebody smarter than myself who's going to tell me what to do rather than the other way around. Yeah. And so I think we were exceptionally good in our first head of people recruitment that we did.

27:19He joined us when we were 50 people and joined from a much bigger organization. And he scaled a couple of teams at Klarna to a very large team and then had to, you know, boil it down to zero again and up and down like a balloon. Never easy. Never easy. but this is not something that has to be reinvented like we are reinventing what it means to be a lawyer in the age of ai we do not get to reinvent performance management and organizational design this is a solve the problem and so you know i'm i'm happy to take risk in product development or in our brand you know maybe you've seen jude law like those are exciting risks to take.

28:09Taking risks in your performance management program is a stupid risk to take. And so, you know, he came in. He's a very business-minded people leader. He's not HR. Like he's very far away from the traditional HR way of working, which was what I was looking for. And he pushed me and pushed others to say, this stuff is really important. We have to do it. we're not at the scale yet where we have to perform it you know at at sort of the you know olympic level but we have to start training the muscle now and that because we started training the muscle two years ago we're now in a pretty good state and i think that as a as a as a leader of a company or as a founder most often your job is not to do things but to bring in the right person to actually do that thing and to to make yourself redundant in as many of your roles as possible so that you can spend your time on where you really spike i think if you have product market fit like is very much the job and and here my my best friend and early hire wilgot who initially led this function as well he had legal char and finance when we were like 20 people and then he recruited an amazing head of finance leader, an amazing head of legal, and an amazing head of people, and then just completely made himself redundant and went and focused on the next big thing.

29:37And I think that is really the goal of any leader. Yeah. Yeah. Gosh. Wish there were more like you. But that should be the goal of a successful leader. Yeah. Exactly. Yeah. So talk to us a little bit about the transition of becoming global and what, But, you know, what's been hard about that and what's been easy? I think the hardest thing, I'm not the first person to say this, but, you know, making sure that communication and global culture gets built in the same way as when you're in the same room. It's really tricky. And again, you have to work for it. We put a lot of effort into our monthly town halls.

30:21They're like, you know, they're like a production thing. you know, like the music starts, everybody knows that it's time to get to the kitchen, every office globally tune in, except for Australia. I'm sorry, Sydney, that's a really rough time zone. It's tough. They got to enjoy the recording. Sometimes we do a guest show at 5am. And I think that has become like a way for everybody to kind of like know what the state of affairs. And then we've been pretty good at sending people around. And so one of the reasons why we are such a global and distributed team is because we have customers all over the world.

30:59But this also means that the sales team and our legal engineering team travel the world all the time. And they do a pretty good job of going to each other and sort of seeding what that culture is. When we started in the US, for instance, myself and our top five, six reps, you know, none of us were going to take vacation over the summer so we all just said let's go to new york for all of july and help that team like seed the culture and then that team realized that you know lagora doesn't really work nine to five this is like a nine to nine every day a week type of deal at least for that summer and so the the team there i think really got that feeling And then we're like, shit, if this is how hard they're working in Sweden, we need to bring that here.

31:48And now you can see those people, you know, hire the next set of leaders in New York and maintaining that very high bar. And so I think if you want to build a distributed team and a global team, you need to invest in that. We're very office first. We basically have zero remote work. And one of the reasons for that is we're moving so fast that I think it really helps the cycles. and you get to iterate faster but also because it builds camaraderie and it builds a team in the good times when we're going up that will serve as a cushion if there ever was a downtime or a downturn and i think your culture and you and your team is like a chest that you keep putting coins into and and it it's really important to invest when things are going well because there might be a day when you have to like you know open the chest or like what was it called it like a pig you're like kill the pig mash the piggy bank yeah yeah take all the coins right and and like the yeah and i just think you have to invest in that early on yeah no you gotta you gotta fill up the bank account yeah because at some point you gotta take you gotta take some some money out and that, you know, if you haven't done the work and filling it up, it's very painful to take it, take it out.

33:13So I'm glad you're focused on that. Yeah. All of this is very thoughtful. I mean, you plan for the organization too, right? I think there's a tendency in very product centric companies, right? To your point, focus on the product and the expense of other things versus sort of approaching every aspect of building the business in the same way, which is, I mean, you get the results i think my product like my product is the organization to an extent and you know i've done i've done the same job in product you know brought in people much smarter than myself to to make sure that we're building the right things at the right time and prioritizing correctly and the it's become i think clear from i recently did a like a talk at a university and when you talk to people at your old school and they say my dream job is to come and work at i don't only think that's because they think legal tech is cool or that they think our product is like you know solves problems for lawyers uh they they hear about it from their friends they hear about somebody who did an internship here and like had a whirlwind of an experience and they just go, I need to be part of that.

34:30And I think if you do that, then your ability to go solve all kinds of problems, not only the ones that you're immediately working on, is much easier. And here, I'm quite inspired by the companies that were so successful in their initial domains that they were able to, well, take Google. I mean, they started with the search engine and now they're building self-driving cars. Right. Like, that's a pretty far pivot. Yep. And you get into a Waymo and you're like, wow, this is the coolest tech demo I've ever had. And, you know, I'm excited for a European-founded company, albeit with a lot of American roots at this point, to also go and be that kind of place in the world.

35:16Yeah. Now, Patty McCord, who our listeners know, was the original chief talent officer at Netflix. And we started this podcast together. But she taught me what we want to build is the best place to be from. Yeah. And I just always carry that in the back of my head. It's like you want to be that company that is the best place to be from. Yeah. And it's great to look at it. Well, I love what you said, too, because I have a tendency to say this a lot. It's like, yeah, as the CEO, the organization, the company, that is your product at that point. Right. And then to approach it that way, too, if you're product centric, then think about it like, you know, we very deliberately build product.