How to Deliver Quality Results with AI with Jason Boehmig of Ironclad

Welcome to Inks, the Founders project with Alexa von Tobel. I'm Alexa, the founder of LearnVest, author of New York Times best selling book Financially Fearless and second book Financially Forward. I'm also the founder and managing partner of Inspired Capital, a venture firm focused on the entrepreneurs of the future. Each week we sit down with a top founder to share their story of guts, inspiration and drive. Hi everybody, I'm your host, Lex Fontopel. And this week I'm excited for you to meet Jason Baymay, co founder and CEO of Ironclad, a leading legal software provider that helps businesses create and manage legal contracts. Jason founded Ironclad in 2014 to break through the barriers and bottlenecks he encountered daily as a corporate attorney at Fenwick and West. Today, Ironclad has over a thousand customers, including large organizations such as MasterCard, L', Oreal, Asana, Dropbox, Glassdoor and Thumbtack. Most recently, the company was valued at $3.2 billion. Before Ironclad, Jason was a corporate attorney working on early stage venture financings as well as complex corporate transactions for several well known technology companies. He also served as an adjunct professor of law at the University of Notre Dame Law School. And with that, let's welcome Jason. Hi Jason. Thrilled to have you. Let's just start from the beginning. For all the listeners that are out there, in your own words, what's Ironclad?

Yeah, great to be here. Thanks for having me. Well, Ironclad deals with business contracts. I'm fascinated with the business contract. It's something that literally every business on the planet makes and manages contracts like it's the definition of a business in some ways. We help companies create contracts fast. We help them understand what's actually in those contracts so they can do business better. And then we help them be safe with all the regulations and compliance and policies that companies may have as part of their risk management.

That's amazing. Go back to the origin story and tell us how you ended up coming up with the idea. And what was that aha moment?

I never thought I would be a startup founder. I thought that I would work as a lawyer who used technology in their practice. And as part of that process, just using technology in the practice of law. I worked at this great law firm called Fenwick and West. It's now Ironclad's outside counsel. And I just started like on the nights and weekends coding stuff that would help me be a little bit more efficient lawyer. Over time, the just the accumulation of little attorney life hacks turned into something that I just didn't feel was really in the market. And I got fascinated with this pervasiveness of the business contracting issue. It's something that companies across every industry, like we work with professional sports teams and hospitals and technology companies, like they all have the same fundamental problem with their contract. So observing that contracting problem and then these little life hacks. And I actually think the exact aha moment came one day when I had built this little Visual Basic script that would redline a series of documents which is basically like make a diff of those documents. And attorneys have to do this all the time. I had to do like a packet of 25 of them. It took me maybe 17 clicks to make a single red line through this old software we were using. And I built this Visual Basic script that let me run the script, go get a, a cup of coffee and come back and it was all done for me. I had sent that around the firm and someone sent it back to me and I was like, wow, this is actually useful enough that other people are using it in their practice of law. Even though I'm a bad developer, I wonder if there's some stuff that I could actually make that would make people's lives easier.

What happened that gave you the conviction to say let's go do this full time? Like how did that leap happen?

Part of it was just the day by day experience of seeing that automation could actually be useful in the practice of law. Because. And the second piece was looking at one of my favorite questions investor has ever asked me is not like what do most companies do to solve this problem? But what are the best companies in the world do to solve this problem? At the time in 2014, the best companies in the world solving the contracting problem were spending a lot of resources to build something in house. So Google had built this in house contract management system called Simba. They had gone and looked in the market, but the best they could do was put Google engineers who could be working on their core business on building an in house contract management system that met their needs. And Cisco was spending a bunch of money automating their contract creation. So they had an automated NDA tool back in, you know, 2014, 2013 era, which was way ahead of the time. We're now seeing most companies invest in automation and contract management, now seeing what they were doing, that there wasn't something in the market that was solving their needs and it was worth putting Google engineers and Cisco resources to work. Plus the law firm experience was what really kind of got me to take the leap of faith, with my 250k of student loan debt.

As of last year, you powered more than 1 billion contracts on the platform. How did you get there? How did you really begin to build the product up in terms of the customer acquisition?

Our first go to market goal ever was to be the number one contract lifecycle management system in soma, which was where our office was in San Francisco. And we wanted customers that we could walk to, customers that we could learn from. It just gave us the focus that we needed so we could build the account list. Like what technology companies are within five blocks of our office. Who do we know that can introduce us to those technology companies? Because one of the issues with contracts is the market's massive. And so just having that geographical focus, like somewhat artificially early on really helped us. And then once we were soma, you know, it was like San Francisco. Once it was San Francisco, it was technology industry, and once it was technology industry, it was kind of like companies of a certain size. And so we just kept expanding that circle that we go after. But being focused has really been essential. And like even doing artificial things to find that focus.

How have you worked to foster the community around Ironclad?

So that actually ties into that geographic focus where we were just like, oh well, we can have a dinner in soma. If our number one goal is to be the number one contract lifecycle management in soma, let's invite companies in soma, their legal teams out, out to dinner, and that'll be a way we can start engaging with them. What we learned from that is particularly within in house legal teams, which is our, our target audience. They really want to learn from each other. It's not like, you know, a product manager might not want to meet with a product manager at a rival company because they're in like fierce competition among their products. The legal teams are really not something different companies differentiate on. There's sort of like industry best practices that are good to know and good to trade notes on. So we just found that people were super collaborative and super open and super open to meeting other people even in the same industry. It also somewhat unintentionally turned into a great go to market technique because we would have happy customers at these things and they were very willing to talk to people that just showed up for the first time about what a great experience they were having with Ironclad. So community is something we've been built early on. The thing I'm most proud of with Community is at the time we were getting started, there was this organization that we heard about from every single customer. It was called Clock. It's the Legal Operations Professionals Industry Association. And I mentioned Google earlier as well. The founder of the legal ops department at Google and the founder of Clock, this amazing industry organization. She was like the keynote speaker one all of the people that we were interacting with knew who she was and she over the pandemic joined Ironclad to head our community function where she was previously running the legal operations department at Google. So just like kind of scaling one thing into the next there and Daisy training that series of events into eventually getting, getting her to join was pretty fun journey.

Jason, one of the things that I find so interesting about Ironclad is that the more contracts stored on the platform, the smarter the platform becomes. Tell us a little bit about how you thought about that product development and how did you harness that?

You know, if you think about what an attorney is doing, their attorney is basically training an algorithm. And it's kind of a custom trained algorithm based on the deals that that attorney has seen. So if you want to go hire a really expensive M and A attorney, what you're really paying for is the deals that that M and A attorney has seen. So like they'll know how Facebook has negotiated this thing. Now they're not going to disclose the confidential information, but you're paying for that trained algorithm that lives in that attorney's head. What's wild is particularly for in house attorneys, if that attorney leaves your company, that algorithm also leaves your company. What we are fundamentally doing at Ironclad is maintaining a company level algorithm for the legal work and the transactions that that company has seen. And what's really cool about it is there's a rate limit for, for the amount of deals that an attorney can see. You know, one attorney can only work on so many deals per day or quarter. Ironclad is seeing every attorney's deal and seeing every deal that the entire company sees. So we're really kind of training that algorithm. And if a particular attorney were to leave, another attorney can come and slot right in and know exactly how that company operates. Where it might take you months or years even to really get trained on the specific preferences and history of the way a company negotiates things. What we found is that can really have a huge business impact. So with some of the AI features which I'm sure we'll talk about that we've been shipping, you know, we've got contracts on the platform that are used to take like 40 minutes to review. And that's an attorney's time that are now taking two minutes because we're summarizing all of the information.

First I want you to talk about your vision for AI within Ironclad. And then I want to talk about a little bit about how this is going to change the legal industry in total. So let's first talk about Ironclad. How are you thinking about AI within the product?

We kind of think about AI as how do we deliver a specific result, either higher quality or faster. We're really seeing two areas where that this is game changing technology. So Area 1 is in contract creation. So that's kind of the result I just mentioned earlier, where we're actually delivering both. You're getting faster and you're getting better at the same time. There's no false trade off between those two. And what that looks like is we're really surfacing the information to an attorney so that they don't have to do a lot of the foundational work that they used to have to do. We're kind of servicing all of that work for you in an interface. We're surfacing the red line. We're surfacing the history of that transaction. We're saying information about how your company has negotiated that in the past. We're surfacing some of your risk management information in real time. And so you're able to do that much faster and make a much higher quality decision in the contract negotiation. And then the second bucket is really around surfacing into a central place all of the information, which is the company's operational information that exists in the contracts. If you think about where contracts are stored at most companies, it's like in, in a drive, you shove them all into and like if you need to go look up something, you know, there's a manual exercise for that. So with Ironclad, what you can do now is you can just like drop that drive into. If you already have them digitized, you can just drop it into Ironclad. We will scan it all and we have 197 fields that we will pull out. So we'll pull out like the expiration date. We'll pull out the indemnification force majeure. Remember that time in Covid when everyone had to go look up force majeure provisions? That's all automatically scanned in. So those two are kind of game changing for the function both in terms of how companies run and how attorneys that work at companies are able to operate.

Let's fast forward a decade, tell us some of your predictions and like give us some of the Wilder runs. We want to hear, like, the full range of things that you think are going to be possible.

So let me start with the human story of that one, which is something I'm passionate about. The legal profession, everyone thinks of it as like this, this really kind of, you know, elite profession. And it is in many ways because it's very intellectually demanding. It's also has a real dark side in that it's some of the lowest job satisfaction. There's like, highest rates of suicide, like alcoholism. It's not a good profession. And if you've like encountered someone who's like, do not go to law school, that's what's driving that statement. And part of the core emotional reason why I started Ironclad is I don't believe it has to be that way. I think lawyers used to be more counselors and advisors and less paper pushers. And the paper pushing has become so necessary to the profession. Like, I do need to change all 37 instances of a particular term in order to make that legal decision. And what we're really doing is giving lawyers the augmentation to return to a more enjoyable and a more impactful practice of law. A bold prediction is lawyers will be happier, more fulfilled people through technology. They will also be better at their jobs. And that's, that's maybe another prediction, which is something that I didn't predict was how applicable this particular version of generative AI that we've wound up with is to business contracts and the legal profession. I would have thought we'd be laggards in the adoption of this. And we are one of the most, if not the most interesting commercial applications of generative AI. These are structured pieces of information. They're knowledge work. And AI is very good at doing, like assisting attorneys with negotiation and pulling data out of a large corpus of PDFs. Essentially, Kai and I, my co founder, we set out to make lawyers 10x more efficient when we started Ironclad. We now think that might be more like a thousand times more.

Wow.

And that has some pretty interesting implications, right? Like our main customer, we do sell to some law firms, but our main customer is corporations, because corporations have lots of contracts and we think that's where the rubber meets the road. I think the implications for law firms who are not our primary customer, but obviously this is an adjacent industry, are pretty dramatic. So if you think about the way that a normal law firm works, it's two or three partners that bring in all the business. Those are called the rainmakers. And then you have the rest of the firm that essentially does the work. And that's been a symbiotic relationship, like the rainmakers need the workers. What if the rainmakers can do all of the work themselves and they can be a thousand times more efficient at their job? You start to have this, like, break in the. The way that most law firms work in that the workers become less valuable to the rainmakers. And you might see, you know, all of the. The AmLaw 250 or the, the 250 largest law firms in the world by revenue also have the most attorneys, because that's how you. You bill. But what if you had an AmLaw250 firm that was made up of five people? That might happen. And that's pretty wild.

Jason, I have to ask this question. So in the future, what do you feel like a lawyer will have to be good at?

Judgment. There's a lot that goes into judgment, but this, this is, I think, what the true value and also is a really rewarding profession. I'm sure you get this as an investor, like you're helping people through some of the biggest moments of their lives to take a funding round or like to sell a company or to go public. And being along for that is pretty exhilarating. I haven't done the investor side, but I know a little bit about it because that's what I loved about being attorney. I was representing those founders through the biggest moments of their life and helping them think through it and helping them guide through it. And AI is never going to do that or never going to do that as well as a human will be able to do that.

I'm just interjecting. I sold my business and our lawyer, Chris, literally was the most important human getting me through that, and he was fabulous. And there were a lot of important judgment calls that we had to make. So, yes, exactly.

Like the Chris is. You want Chris there, and Chris is never going away from that. Now, Chris probably worked a bunch of Friday nights, like, pulling together some contracts that everyone forgot about and were lost in someone's Gmail. We don't want Chris doing that. You don't want to pay Chris for that. He doesn't like doing it. So let's get that off his plate and get him back to like, being your, your counselor during that critical moment in your life. And that's kind of the change that we're helping to unfold.

Do you need to be a lawyer in that future world? Like, can the AI do all of the law and actually do all of the thinking and Then it's simply about somebody translating it.

I don't know. It's a provocative, really interesting question and I think I could see both sides of it. And to give a really lawyer answer, I think on the case where the, the human needs to be, there is like, there's so much context that goes into the judgment that it feels hard for even a machine to synthesize. We live in a common law system and like the history of the law is really important. It's not just reading the statute, it's actually going back and trying to reason about the historical conditions that a certain court case was written in, because that becomes relevant. And I don't think we are quite there yet, even with something as advanced as GPT4. That said, like, all of my predictions about what's not possible with AI seem to be getting broken. You might talk to me in a few weeks or a few months or a few years, and I'm like, yep, we don't need that thing that I thought we, we needed. I think we certainly need the human element and the human interface. And in order to be a good human element and a good human interface, you need a lot of context on the historical foundations for that, as well as the ability to read what's important in a given situation and what, what we're really trying to solve for. So I think there's an element to being a good lawyer that is almost thinking for the client and understanding what they really need and maybe even pushing back on the client a little bit. Whereas an AI sort of blindly follows the client like the best attorneys, steer the clients in a way that's truly in their interests.

Give us a sense of the task that AI can do instantly when you.

Are negotiating a contract with Ironclad. Ironclad might, for instance, flag this proposed clause is out of policy for your company. Here's a suggested clause that we know is in policy and makes sense within the context of this contract. And then we will actually help get that clause into the document because the document, it's almost like a code base and you need to maybe conform this clause that's approved to actually work with this code base. Maybe it needs to tie in with a defined term earlier in the document and it needs to reference section 17.2 later in the document in order to be truly effective. So we'll actually draft that language for you and you just kind of hit accept. Whereas before you'd have to do a lot of manipulation of the document to make sure that it actually worked.

Do you think we're going to have fewer lawyers in the future or more lawyers in the future.

I think we'll have roughly the same, but I think we'll be covering the legal issues better. So in other areas of law, folks talk about the access to justice gap, which means that, like, a lot of legal issues don't actually have the ability to interface with a lawyer. And I'm sure, like, everyone listening to this has encountered a time when it would have been nice to have a lawyer, but you didn't actually hire a lawyer. And I think we will have less of those type of situations. I think it will be easier to obtain the services of a lawyer in a way that economically makes sense for everyone. By making lawyers more efficient, we will eliminate that gap.

Wow. That actually is like, such a hopeful, exciting thing to think about. And also people who, like, never get to access a lawyer, but deserve one.

Yeah, they're expensive.

Yeah. That's amazing. And we'll be right back after a message from our sponsors.

Jason, I want to transition a little bit to you. 1. Did you always know you would be a founder, or was it sort of deep in you that you always wanted to start something?

Yeah, I grew up in Pittsburgh. Like, my grandfather worked in steel mills and military veteran. My dad is actually a minister, Episcopalian minister, and my mom is a elementary school teacher. I had no idea what Silicon Valley was like, what technology was. And I basically, my college, like, looking at colleges journey was what colleges are. On the way to this place. We would go vacation in South Carolina for a week a year. And so Wake Forest University was like, on the drive to vacation. I looked at that. I didn't apply anywhere else. I had a great experience there where, like, kind of the world opened a little bit more. And I studied economics. I went to go work on Wall street after I graduated. So I worked at Lehman Brothers, of all places. And. And it was there that I kind of like, I lived in New York. I just had so many experiences that I never even knew were out there in the world. And I started reading. Two things happened. I started reading Hacker News back in, like, 2006. Y Combinator, maybe 2007. And I was like, wow, there's a whole industry of people that are, like, just quitting their jobs and starting companies, and they're doing some pretty interesting stuff. I started getting really interested in going back to law school. It was throughout going to law school that I kind of realized I need to move to Silicon Valley. Like, I'm passionate about the change of my entire life is going to be Technology, you know, it's the fundamental characteristic of the time that we live in is this technological change. How exciting would it be to actually work in that industry? And I was in law school, so I was like, well, I'll just be an attorney that uses this really cool change that's happening.

I want to go back. Was there something that you attribute to your childhood, your parents, something that you would like repeat again in the future and want other parents to do for their kids?

The interesting thing about my dad being a minister, I don't know how applicable this will be to anybody else, but it's a personal story of mine is that like the family is involved in that profession. There's like a Christmas Eve candlelight service is a thing that a lot of churches will do. A lot of candle wax drips to the floor after those services. And guess who like cleans up the candle wax on Christmas Eve. It's like the pastor's family. And so there's just this deep connection of like, we are in service to this community. And I took that attitude of service from my parents like very deeply. And so it shows up at Ironclad. And I'm so proud of the culture we've built here because we do the little things and it's like permeated. We're 500 person company and I want to say like almost all 500 people, if not all 500 people, have this service mentality. A lot of our leaders talk about being in service to the team. We go above and beyond to take care of our place because it's ours. So like people do the dishes. They don't actually have to do the dishes, but people will clean up after themselves and do the dishes. And if someone doesn't, someone will be like, hey, you know, we clean up around here. If there's a way to get service mindedness in as a kid that seems.

Really valuable, like taught yourself to code, to then go and actually make yourself a better lawyer. But you clearly have like a work ethic and a drive in you. Where does that come from?

I don't know if I have introspected enough to understand where my drive comes from. That is a really great question that I'm going to think about. But I definitely, I don't know. I have a chip on my shoulder. I've got something to prove. My co founder does too.

How do you manage stress? Like what is the key ingredient to managing stress?

Well, a couple tools. So one is perspective. One of the ways I find perspective is through poetry actually. So I mentioned going to Wake Forest, and my company knows this. So I start off every year at Ironclad. I start off with a poem that I read to the company, and I went to Wake Forest, and Maya Angelou, the famous poet, retired in Winston Salem and would teach a class at Wake Forest. The first day of class, she walks in and she recites this Latin phrase from the poet Terence, which I don't quite have command of the Latin, but the English translation is, I am a human being, therefore nothing human can be alien to me. She basically challenged you to. That you can understand any other human being's experience. I think, like, just being able to step into that perspective of, like, I can understand Robert Burns, like, walking around Scotland looking at roses. Like, I can understand him, and I can understand Maya Angelou, who had just, like, so many different and often, like, horrible and tragic life experiences. It helped me just have perspective in life. And that's why I try to start off each year with. With a poem.

My second and last question on that is, what do you hold as sacred?

The beginnings of a family? For me, so I got married over the pandemic.

Congrats.

Thank you. And we got a dog, which is just like this. Not a parent, but, like, just the smallest level of responsibility beyond the two of you. And the first concept that comes to mind when you sacred is just. Just some of those moments and, you know, learning from my wife and learning from my dog and just the simple things.

I love that. Thank you so much for sharing. Okay, we're going to go to the quick fire round. I'm going to ask you a question. First thing that comes to your mind. Quick answ Answer your best interview question that you like to ask to get to the heart of who somebody is.

First job. I like to see what they've learned from a job. So, like, literally, one of our early employees, their first job was shoveling shit on a farm, literally. And they learned stuff. They, like, had a positive outcome. And think about how many people would have, like, just instantly complained about a job that is literally shoveling shit. So I kind of like to see what people have taken away from jobs.

A quote that you live by. Like, a quote that is sort of deep in your DNA.

So Kobe Bryant, who is just like, I am so inspired by, has a quote. It's on my Twitter profile. But basically it's. He got to the NBA, he was really nervous, and then he was like, you know what? A lot of people don't love the game. If you love the game, you've already Won. So that's my favorite quote. If you love the game, you've already won because you'll keep getting in the gym. You'll keep asking the questions, like you'll find the right answers.

Biggest pinch me moment to date in the company.

I think it's having Jay Z's venture fund on the cap table. I mean, there's lots of cool customers and things, but I'm just like, oh, that's pretty cool. I grew up listening to Jay Z and there's a real use case. Contracts are a major problem in the music industry. So the fact that arrive, which is Roc Nation, basically you go to the Roc Nation offices when you're there, it's pretty cool.

Favorite book? A book that's changed your life. Any book, anything.

A book I've always liked just Marcus Aurelius Meditations. I have a certain love of this genre of book that was never intended to be a published book. Was just people's notepads. So there's a couple of cool ones from history. There's like Pascal has one and I always try to find those ones that were just like people's personal notebooks.

If you were to think of a category of innovation that is not AI and is not legal, what is something that you're excited about right now? Something that's just like happening in the world that you think is really fascinating?

We are starting to think about what the next version of governance is. And so I kind of think that. I love that there was a whole generation of philosophers. There's like America really is an outburst of European philosophers like John Locke and Rousseau, and they influenced this founding of a nation and there were a lot of new principles at play there. I kind of think that we're in that era of Locke and. Or we're entering that era of like Locke and Rousseau, Voltaire, that are going to make it possible to create new versions of what I. I don't even want to use the word state because maybe it's not a state, but like new ways of interacting as a body of people. And I'm. I'm like absolutely fascinated by that.

I love that. Jason. Jason, first of all, what an absolute pleasure. You're just a fascinating guy. And I don't know what I just took from this interview is there's just like a lot of love and heart behind who you are and how you lead. And so I'm just so grateful that you shared that with us today. Everybody out there, if you want to learn more, if you are not already using, Please check out ironclad app.com. it's just wild how much they've grown. And you can join us next week for Ink, the founders project with Alex Montoval. Jason, we're absolutely rooting for you. Thank you sincerely for coming on today. This has been awesome.

Oh, this is incredible. Thanks for having me. Great questions.