The Exchanges

Q And then which founder do you most look to emulate, would you say?

A Well, um, there are a number actually. I suppose there's so many giants in the industry now, but one of them I might mention is Brian Chesky of Airbnb. What I really like about his approach is that he seems to seek out people he wants to learn from. Um, so he never rests on his laurels really, and there aren't just people in tech. So, you know, I, I, I read he, he would interview a former CIA director or Warren Buffett or Disney's CEO, uh, Bob Iger, um, just to ask how they solve common problems, and I think that must give them a way, you know, wider range, um, of influencers than, uh, would otherwise be the case.

AI assessment note: “one of them I might mention is Brian Chesky of Airbnb”

Q And then jumping a few stages here, we've heard a little about the founding and the origins. Moving on to the funding side of the business, obviously it's, um, Ford Partners Feature Week. So you've raised investment from Ford. How did you meet your investors in Ford?

A So it's a funny story, actually. So I play squash once a week, um, uh, with a friend of mine who is a banker, but he lives in the street and is befriended with, uh, with, with a guy called Romain, who is, uh, the CEO of Utelly and just a generally great guy. Um, so my, my squash buddy introduced me to Romain and said, uh, oh, you should definitely meet him for coffee. He'll have loads of suggestions. So I did. And, um, Romain liked the idea and is pretty close to the guys at Forward. Um, so introduce me, uh, and I wasn't actually actively looking for investment at that stage. Uh, I thought I'll, I'll first, you know, bootstrap a bit, uh, further down the line because I thought that most investors would need to see significantly more traction, um, before investing. And, and I think Forward is quite unique in that they are willing to come in at, at the idea stage, uh, basically. So I got introduced to Forward, had a number of meetings with them and, um, Yeah, signed the, um, the seat deal, uh, a year and a couple of months ago.

AI assessment note: “Romain liked the idea and is pretty close to the guys at Forward. So introduce me”

Q And I'd love to chat now a little about Lexu, uh, an extremely interesting company, obviously operating in the legal space, uh, a sector, I think it's fair to say, is probably about a century behind the rest of consumerized technology. So why is there this big divergence between the advancement of tech and the lacking progression of the legal space?

A I think there are a couple of reasons. Um, one is that the incentives Are in the wrong place. Um, so most law firms still bill on a, on a hourly model, whereas a lot of innovation takes place in industries where the person doing the innovation will be able to reap the rewards. So if, if you introduce a new efficiency in a law firm, which means that you spend less time on a task, uh, funnily enough, the law firm will actually make less money. So as a result, that, that has been, I think, a big Freshhold in, in, in, uh, law firms investing significant sums of money to, to, um, become more efficient. Another element is that lawyers by nature are slightly more risk adverse, um, than, than, than other, uh, business people might be. So, uh, lawyers are very good at spotting risk. I mean, they're, they're often paid to spot risk for a living. So they will often spot risk as well when it comes to innovations to their own business model. So that, that's another reason. And the fact that, Um, virtually all law firms are run by a partnership, and, and it's often the most senior partners that have the heaviest voice, uh, in that partnership, and they're also closest to retirement, so, you know, a senior partner might vote against a proposal that would mean less earnings, you know, in the near term, but, you know, with a potential huge upside 10 years from now, if they're going to retire in…

AI assessment note: “I think there are a couple of reasons. Um, one is that the incentives”

Q And working in the legal profession at the time, there's, to be honest, a lot of security both in job and salary. So were you nervous to lose that security by taking the leap into the startup world and becoming a founder?

A Yeah, it's an interesting question. I, I always knew I'd have to take a big step back salary wise. And even when I was practicing as a lawyer, I knew that I, I, I was going to take the leap. So what I did is I made sure my lifestyle never really got out of control. So, um, you know, when you start work as a lawyer, they, they already pay you a pretty decent salary. Uh, and then they give you a significant raise every year. So what I did is that every year that when I got that raise, I would save a hundred percent of that raise To make sure that I, I build up a little bit of a war chest. And also, uh, it meant that I would have to, um, keep being used to my, you know, trainees, uh, salary, uh, and, and never get that, let that go out of control. So that was one thing I did. I suppose it never really felt like that much of, of a risk. Doing a startup means you learn so much that I felt that I'm, I'm really investing in myself. And, um, you know, after having done a startup, the, the, I would feel I, I would have way more opportunities than, If I just stayed in the law.

AI assessment note: “I suppose it never really felt like that much of, of a risk.”

Q And I'd love to chat now a little about Lexu, uh, an extremely interesting company, obviously operating in the legal space, uh, a sector, I think it's fair to say, is probably about a century behind the rest of consumerized technology. So why is there this big divergence between the advancement of tech and the lacking progression of the legal space?

A I think there are a couple of reasons. Um, one is that the incentives Are in the wrong place. Um, so most law firms still bill on a, on a hourly model, whereas a lot of innovation takes place in industries where the person doing the innovation will be able to reap the rewards. So if, if you introduce a new efficiency in a law firm, which means that you spend less time on a task, uh, funnily enough, the law firm will actually make less money. So as a result, that, that has been, I think, a big Freshhold in, in, in, uh, law firms investing significant sums of money to, to, um, become more efficient. Another element is that lawyers by nature are slightly more risk adverse, um, than, than, than other, uh, business people might be. So, uh, lawyers are very good at spotting risk. I mean, they're, they're often paid to spot risk for a living. So they will often spot risk as well when it comes to innovations to their own business model. So that, that's another reason. And the fact that, Um, virtually all law firms are run by a partnership, and, and it's often the most senior partners that have the heaviest voice, uh, in that partnership, and they're also closest to retirement, so, you know, a senior partner might vote against a proposal that would mean less earnings, you know, in the near term, but, you know, with a potential huge upside 10 years from now, if they're going to retire in…

AI assessment note: “I think there are a couple of reasons. Um, one is that the incentives”

Q And then which founder do you most look to emulate, would you say?

A Well, um, there are a number actually. I suppose there's so many giants in the industry now, but one of them I might mention is Brian Chesky of Airbnb. What I really like about his approach is that he seems to seek out people he wants to learn from. Um, so he never rests on his laurels really, and there aren't just people in tech. So, you know, I, I, I read he, he would interview a former CIA director or Warren Buffett or Disney's CEO, uh, Bob Iger, um, just to ask how they solve common problems, and I think that must give them a way, you know, wider range, um, of influencers than, uh, would otherwise be the case.

AI assessment note: “one of them I might mention is Brian Chesky of Airbnb”

Q And do you think that's changing in a large scale now?

A Yeah, and I think what's, what's driving it is that, I suppose, my generation of lawyers don't necessarily want to become a partner at a large firm. That, that isn't necessarily the highest goal anymore. So, all of a sudden, you're getting a large number of, of high quality lawyers who Starting their own practice, billing in a, in a way more innovative way, often fixed fee, um, sharing risk with their clients, and they are much more open to, to innovating because, you know, they're running their own practice and all those other constraints don't apply to them. And I think once that, that trend is continuing, um, clients are waking up as well. You know, they, they will then compare, uh, let's say an Alan Overy lawyer, uh, with an ex-Alan Overy lawyer working, uh, on a much lower overhead basis. And it, it, it's that, uh, Competitive dynamic that is now also causing larger firms like Alan Overy to, to really innovate.

AI assessment note: “Yeah, and I think what's, what's driving it is that”

Q So let's talk about the origins of Lexi now. So I believe we started in a completely kind of non-techy manual way. Uh, we heard a little from Dharmesh about kind of The simplistic technology behind, let's see, at the beginning. Why, why was that, and, and how did that come about?

A Yeah, part of it was that I didn't have the technical skills, um, and, and the other part of it was that, although I had a vision in my head of ultimately, uh, the problem I wanted to solve, I didn't necessarily know the best way, uh, to solve the problem, and, and fortunately, uh, I didn't go, go ahead and, um, You know, build a full-scale solution without having, um, done a lot of trial runs. So, how we started out, it was just a bootstrap theme, you know, it was like 15 dollars off of one of these, ah, ah, theme, ah, websites, and it just had a simple form, and it said, you know, it explained, ah, what we did, and it said, if you, if you want quotes from specialized lawyers, just fill in the form, and whatever they fill in that form just ended up in my inbox, and that was the extent of the tech we had, and then I would Contact the lawyer, send them a Word template, ask them, can you fill in this Word template with your quote? You know, I would collect the responses, drag and drop them into one Word document, and convert that into a PDF, and then I would attach that PDF to the client saying, well, here's your report, um, with, with all the quotes in it, and the crazy thing is that the clients just said, okay, great, you know, that solves the problem, so that was quite interesting for me to witness, that you don't really need fancy, uh, tech if, if you're solving the problem, …

AI assessment note: “part of it was that I didn't have the technical skills”

Q And then jumping a few stages here, we've heard a little about the founding and the origins. Moving on to the funding side of the business, obviously it's, um, Ford Partners Feature Week. So you've raised investment from Ford. How did you meet your investors in Ford?

A So it's a funny story, actually. So I play squash once a week, um, uh, with a friend of mine who is a banker, but he lives in the street and is befriended with, uh, with, with a guy called Romain, who is, uh, the CEO of Utelly and just a generally great guy. Um, so my, my squash buddy introduced me to Romain and said, uh, oh, you should definitely meet him for coffee. He'll have loads of suggestions. So I did. And, um, Romain liked the idea and is pretty close to the guys at Forward. Um, so introduce me, uh, and I wasn't actually actively looking for investment at that stage. Uh, I thought I'll, I'll first, you know, bootstrap a bit, uh, further down the line because I thought that most investors would need to see significantly more traction, um, before investing. And, and I think Forward is quite unique in that they are willing to come in at, at the idea stage, uh, basically. So I got introduced to Forward, had a number of meetings with them and, um, Yeah, signed the, um, the seat deal, uh, a year and a couple of months ago.

AI assessment note: “Romain liked the idea and is pretty close to the guys at Forward. Um, so introduce me”

Q Daniel, thanks so much for coming on the show today, and I'd love to get the ball rolling by finding out how you came to found Lexu. What's your origin story?

A Sure, so, um, I used to be a lawyer, uh, so I practiced as a finance and M&A lawyer for about five and a half years, first couple of years in Amsterdam, then the last couple of years in, in London, and I noticed that being a lawyer, uh, means that all your Capitalize friends in business usually ask you for lawyer recommendations. Now quite often they were aware of the larger firms and, um, that they would be able to get quality legal advice there, but similarly they were aware that they'd be paying through the nose for that. So they, they always ask me, do you have a recommendation? So I, I started to keep a bit of a short list of lawyers that I knew that trained at the, at the larger firms and were really good, but who for lifestyle reasons had either started their own practice or joined a smaller boutique firm. And generally speaking, they would charge themselves out for half their previous hourly rates. So I, I, I would tend to give my friends, uh, a short list of those lawyers, uh, and then quite often a week later they'd be back and saying, oh, that, that lawyer seemed great. Uh, they quoted 3000 pounds, uh, and then they would ask me, is that good? Is that bad? Um, and, and it started to dawn on me that there's really no way of knowing, uh, what you should be paying, uh, for legal advice. And also that lawyers tend to quote, you know, very different amounts for the same j…

AI assessment note: “that was more or less the aha moment where I thought, hey, there's something here”

Q And do you think that's changing in a large scale now?

A Yeah, and I think what's, what's driving it is that, I suppose, my generation of lawyers don't necessarily want to become a partner at a large firm. That, that isn't necessarily the highest goal anymore. So, all of a sudden, you're getting a large number of, of high quality lawyers who Starting their own practice, billing in a, in a way more innovative way, often fixed fee, um, sharing risk with their clients, and they are much more open to, to innovating because, you know, they're running their own practice and all those other constraints don't apply to them. And I think once that, that trend is continuing, um, clients are waking up as well. You know, they, they will then compare, uh, let's say an Alan Overy lawyer, uh, with an ex-Alan Overy lawyer working, uh, on a much lower overhead basis. And it, it, it's that, uh, Competitive dynamic that is now also causing larger firms like Alan Overy to, to really innovate.

AI assessment note: “Yeah, and I think what's, what's driving it is that”

Q So let's talk about the origins of Lexi now. So I believe we started in a completely kind of non-techy manual way. Uh, we heard a little from Dharmesh about kind of The simplistic technology behind, let's see, at the beginning. Why, why was that, and, and how did that come about?

A Yeah, part of it was that I didn't have the technical skills, um, and, and the other part of it was that, although I had a vision in my head of ultimately, uh, the problem I wanted to solve, I didn't necessarily know the best way, uh, to solve the problem, and, and fortunately, uh, I didn't go, go ahead and, um, You know, build a full-scale solution without having, um, done a lot of trial runs. So, how we started out, it was just a bootstrap theme, you know, it was like 15 dollars off of one of these, ah, ah, theme, ah, websites, and it just had a simple form, and it said, you know, it explained, ah, what we did, and it said, if you, if you want quotes from specialized lawyers, just fill in the form, and whatever they fill in that form just ended up in my inbox, and that was the extent of the tech we had, and then I would Contact the lawyer, send them a Word template, ask them, can you fill in this Word template with your quote? You know, I would collect the responses, drag and drop them into one Word document, and convert that into a PDF, and then I would attach that PDF to the client saying, well, here's your report, um, with, with all the quotes in it, and the crazy thing is that the clients just said, okay, great, you know, that solves the problem, so that was quite interesting for me to witness, that you don't really need fancy, uh, tech if, if you're solving the problem, …

AI assessment note: “part of it was that I didn't have the technical skills”

Q And working in the legal profession at the time, there's, to be honest, a lot of security both in job and salary. So were you nervous to lose that security by taking the leap into the startup world and becoming a founder?

A Yeah, it's an interesting question. I, I always knew I'd have to take a big step back salary wise. And even when I was practicing as a lawyer, I knew that I, I, I was going to take the leap. So what I did is I made sure my lifestyle never really got out of control. So, um, you know, when you start work as a lawyer, they, they already pay you a pretty decent salary. Uh, and then they give you a significant raise every year. So what I did is that every year that when I got that raise, I would save a hundred percent of that raise To make sure that I, I build up a little bit of a war chest. And also, uh, it meant that I would have to, um, keep being used to my, you know, trainees, uh, salary, uh, and, and never get that, let that go out of control. So that was one thing I did. I suppose it never really felt like that much of, of a risk. Doing a startup means you learn so much that I felt that I'm, I'm really investing in myself. And, um, you know, after having done a startup, the, the, I would feel I, I would have way more opportunities than, If I just stayed in the law.

AI assessment note: “I suppose it never really felt like that much of, of a risk.”

Q So what was then the most challenging or surprising elements of the fundraising journey for you? A previous lawyer, you know, you'd never done the journey before. What surprised you or was challenging about the experience?

A Well, what surprised me is how, how excited they were. Um, I always felt that I would have had to sell, uh, a lot more, um, and we've just closed, uh, another investment round now, and, and, and I've noticed this again, that the people that end up investing are the ones who are genuinely excited, uh, about the idea and about what you're doing from the get-go, and they're, they're doing their due diligence to, to find out, um, you know, why they maybe should not invest, uh, to, to find out if there's anything wrong that they spotted. Whereas, Some other investors, they might initially think, well, I don't know, why don't you convince me? You know, you might spend just as much time on those investors, you know, they might have, have three meetings with you, uh, hoping to be convinced, and I, I feel that they might be driven more by the fear of missing out, um, whereas the investors that end up actually committing tend to be driven more by, by, by the, the sense of opportunity. So, I think I got really lucky with Forward of being introduced to investors who immediately got the concept and, um, And we're genuinely excited.

AI assessment note: “what surprised me is how, how excited they were”

Q And we, we spoke there about lawyers and their assessment of risks themselves. Do you think lawyers make good founders or do you think having such an in-depth knowledge of the legal complexities of a situation can actually make you too risk averse? Do you, so do you think then being a lawyer is a good stepping for a founder or, or not?

A Yeah, maybe not actually. Maybe not in the sense that if, if I just listened to most lawyers who were giving me advice, Uh, when, when I started out, you know, it might just be friends or colleagues. They, they focused on elements that never turned out to be any problem. And, um, you know, they might miss, uh, the blindingly obvious problems of, you know, having to grow and, and, and things like that. So I don't necessarily, I wouldn't advise any, you know, potential entrepreneur who's now in high school to, to follow the legal route to, to, as a stepping stone to becoming a lawyer. Having said that, it, it, it doesn't hurt. I, I, I suppose it, it depends on your mindset. Like, I, I always felt a bit frustrated by having to only look at risk instead of opportunity, um, so, um, what I do like about my legal background is that it, it, it has made me, uh, less afraid of contracts, um, I think it has made me a better negotiator, and it has made me probably more organized, uh, than otherwise I would have been.

AI assessment note: “Yeah, maybe not actually.”

Q And then say you're founding Lexu again, is there anything you'd do differently, or anything you wish you'd known at the beginning, or something someone had told you before you started the process?

A I think I would have maybe stressed out a bit less about not knowing, you know, the exact path to making Lexu a big business. So when I started out, you know, there are so many parts of the journey that you don't know yet. Or you don't know how, how to handle. And I think what I've learned in the past year and a half that, you know, as long as you have a true north star of where you want to end up, even if it's a bit fuzzy and you know what you need to do in practice over the next three to six months, then, then you're fine. Uh, because the path for the, for the next six months keeps kind of revealing itself. So, you know, six months in, I could kind of see what the next six months should be, even though I wouldn't have been able to see that when I started out. So I think it would have been helpful if somebody Had told me, like, don't, don't worry about that, that's normal, um, and you'll figure it out.

AI assessment note: “I think I would have maybe stressed out a bit less”

Q And we, we spoke there about lawyers and their assessment of risks themselves. Do you think lawyers make good founders or do you think having such an in-depth knowledge of the legal complexities of a situation can actually make you too risk averse? Do you, so do you think then being a lawyer is a good stepping for a founder or, or not?

A Yeah, maybe not actually. Maybe not in the sense that if, if I just listened to most lawyers who were giving me advice, Uh, when, when I started out, you know, it might just be friends or colleagues. They, they focused on elements that never turned out to be any problem. And, um, you know, they might miss, uh, the blindingly obvious problems of, you know, having to grow and, and, and things like that. So I don't necessarily, I wouldn't advise any, you know, potential entrepreneur who's now in high school to, to follow the legal route to, to, as a stepping stone to becoming a lawyer. Having said that, it, it, it doesn't hurt. I, I, I suppose it, it depends on your mindset. Like, I, I always felt a bit frustrated by having to only look at risk instead of opportunity, um, so, um, what I do like about my legal background is that it, it, it has made me, uh, less afraid of contracts, um, I think it has made me a better negotiator, and it has made me probably more organized, uh, than otherwise I would have been.

AI assessment note: “Yeah, maybe not actually. Maybe not in the sense that”

Q And a lot of founders fall at the pitfall of, um, not having the technical skills. Something that you overcame, seems, with ease. So what would you advise fellow founders who do not have the technical skills to, to build a detailed prototype of their idea? What would you suggest?

A I would suggest to focus on, um, A business idea where the tech isn't necessarily, um, the big solution. You know, it could be a market innovation, like, like Lexu innovates in the market by, by giving you access to specialized solicitors you might otherwise not find, but it's not, the technical background isn't necessarily, you know, what sets us apart. We don't have patents or anything like that, um, to protect it. That might come in the future, but that's not necessarily Uh, necessary to get it off the ground. So I would definitely focus on an idea where the tech isn't, um, um, you don't need the tech to, to get going. So, you know, most marketplaces don't require that sophisticated tech in the beginning. You, you can get going, uh, in, in a very manual way. So I would always focus on finding a business idea where the manual first approach works.

AI assessment note: “I would suggest to focus on, um, A business idea where the tech isn't”

Q So what was then the most challenging or surprising elements of the fundraising journey for you? A previous lawyer, you know, you'd never done the journey before. What surprised you or was challenging about the experience?

A Well, what surprised me is how, how excited they were. Um, I always felt that I would have had to sell, uh, a lot more, um, and we've just closed, uh, another investment round now, and, and, and I've noticed this again, that the people that end up investing are the ones who are genuinely excited, uh, about the idea and about what you're doing from the get-go, and they're, they're doing their due diligence to, to find out, um, you know, why they maybe should not invest, uh, to, to find out if there's anything wrong that they spotted. Whereas, Some other investors, they might initially think, well, I don't know, why don't you convince me? You know, you might spend just as much time on those investors, you know, they might have, have three meetings with you, uh, hoping to be convinced, and I, I feel that they might be driven more by the fear of missing out, um, whereas the investors that end up actually committing tend to be driven more by, by, by the, the sense of opportunity. So, I think I got really lucky with Forward of being introduced to investors who immediately got the concept and, um, And we're genuinely excited.

AI assessment note: “Well, what surprised me is how, how excited they were.”

Q And then say you're founding Lexu again, is there anything you'd do differently, or anything you wish you'd known at the beginning, or something someone had told you before you started the process?

A I think I would have maybe stressed out a bit less about not knowing, you know, the exact path to making Lexu a big business. So when I started out, you know, there are so many parts of the journey that you don't know yet. Or you don't know how, how to handle. And I think what I've learned in the past year and a half that, you know, as long as you have a true north star of where you want to end up, even if it's a bit fuzzy and you know what you need to do in practice over the next three to six months, then, then you're fine. Uh, because the path for the, for the next six months keeps kind of revealing itself. So, you know, six months in, I could kind of see what the next six months should be, even though I wouldn't have been able to see that when I started out. So I think it would have been helpful if somebody Had told me, like, don't, don't worry about that, that's normal, um, and you'll figure it out.

AI assessment note: “I think I would have maybe stressed out a bit less about not knowing”

Q And a lot of founders fall at the pitfall of, um, not having the technical skills. Something that you overcame, seems, with ease. So what would you advise fellow founders who do not have the technical skills to, to build a detailed prototype of their idea? What would you suggest?

A I would suggest to focus on, um, A business idea where the tech isn't necessarily, um, the big solution. You know, it could be a market innovation, like, like Lexu innovates in the market by, by giving you access to specialized solicitors you might otherwise not find, but it's not, the technical background isn't necessarily, you know, what sets us apart. We don't have patents or anything like that, um, to protect it. That might come in the future, but that's not necessarily Uh, necessary to get it off the ground. So I would definitely focus on an idea where the tech isn't, um, um, you don't need the tech to, to get going. So, you know, most marketplaces don't require that sophisticated tech in the beginning. You, you can get going, uh, in, in a very manual way. So I would always focus on finding a business idea where the manual first approach works.

AI assessment note: “I would suggest to focus on, um, A business idea where the tech isn't”

Q And what would you advise people then who maybe want to make that leap, but aren't sure if it's worth risking everything? Maybe they've got a family or a mortgage. What would you suggest to them?

A Yeah, I suppose I don't have any kids yet, so in that sense, maybe my, my position was a bit easier, but I tend to think if you feel in your gut that you'd be really disappointed in yourself if you didn't give it a go, then, you know, part of you has already made the decision, and it's, in my view, it's always better to just do it and figure it out later if it doesn't work, because the risks you think of, of things going wrong will always be You know, slightly less bad in real life than you might imagine them ahead of time. And it turns out that if you actually go for something, the universe somehow seems to line up and, and, and help out in ways where, where you didn't anticipate it.

AI assessment note: “it's always better to just do it and figure it out later”

Q And what would you advise people then who maybe want to make that leap, but aren't sure if it's worth risking everything? Maybe they've got a family or a mortgage. What would you suggest to them?

A Yeah, I suppose I don't have any kids yet, so in that sense, maybe my, my position was a bit easier, but I tend to think if you feel in your gut that you'd be really disappointed in yourself if you didn't give it a go, then, you know, part of you has already made the decision, and it's, in my view, it's always better to just do it and figure it out later if it doesn't work, because the risks you think of, of things going wrong will always be You know, slightly less bad in real life than you might imagine them ahead of time. And it turns out that if you actually go for something, the universe somehow seems to line up and, and, and help out in ways where, where you didn't anticipate it.

AI assessment note: “it's, in my view, it's always better to just do it”