Starting & Scaling Lawtrades With Raad Ahmed | EM Group Chat #217

Welcome back to Everything Marketplaces, where we talk about founders and leaders on some of today's top marketplaces. So this is episode 217, which is a group chat that we had with Rod Ahmed, who's the founder and CEO of LawTrades. LawTrades is the marketplace that connects companies with on-demand legal talent. So it's a great chat with Rod. We went back to the founding story and first steps for starting LawTrades. Rod shared some of the early challenges, walked us through how LawTrades has evolved. We did a deep dive into how they're leveraging AI, discussed how AI is impacting professional services. Rod shared lots of tips for founders, and we also had a great group Q&A. We did unfortunately run a few issues with the Zoom and had to make some edits, but I really enjoyed this conversation and you're going to find it a great watch to the end. So Rod, I've been following LawTrades and some of your recent posts about, you know, how you're leveraging AI. So it's great to have you join us here today for our group chat and want to start off by saying thanks for taking the time to do so in advance. So we have a lot that we're going to dive into with your journey building LawTrades and how you're leveraging AI. But I thought it'd be great if you could all start off by briefly sharing a background for those here that might not know you.

Hey everyone, my name is Rod. I'm the founder and CEO of a company called LawTrades. We are a marketplace for legal services. So what that means is we connect big businesses to a network of freelance legal talent. So you come onto our site, you post your request, you get matched by various lawyers, paralegals, legal ops professionals, whatever. You can interview them, hire them, and then manage that workforce, remote workforce experience through our platform. And We take a transaction fee, so similar to many other marketplaces. So you can kind of think of it as kind of like in a very simplified way, like Upwork for corporate legal. So our clients are like more skewed to the enterprise side. So we work with like companies like Coinbase, DoorDash, Airbnb, and all of those. And they choose us because it's more flexible, cheaper than a traditional law firm. And we get a bunch of lawyers that can basically become entrepreneurs on our platform and work for themselves.

It's a helpful overview. And now, you know, you've been doing it for what, since 2016, right? So could you kind of take us back to the founding story and the first steps that you took to start at the time?

Find a really good co-founder because that helps with longevity to keep going when you want to stop. So as long as you can kind of keep it fun, you could just, and you're making enough profits, you can just kind of do it for the rest of your life. So that's kind of like my plan. But I got the idea when I was in law school. So like when I was younger, I've always just like built stuff on the internet. like random websites, like during the AOL AIM days, I had a website where you could change your buddy icon. In law school, I built one of the first web apps on the Facebook App Store when they had it. So you could customize your cover photo image and that converted to about like 30 million hits per month. And I just ran some banner ads through Google AdSense and made like, I think at its peak, probably like $300,000, $400,000 per year while I was in law school. So I've always just like done stuff like on the internet and like figured out like clever ways of like making money by doing the least amount of work possible. So by the time I got into law school, I was just like, wow, this is like really hard. This is a lot of work. I gotta like physically drive somewhere and show up and like, you know, bill my hours and then like drive back home. And like, you know, it's, it's, I didn't seem like I was going to be like really good at it. So I just kind of tinkered with a few random ideas and it was, you know, this idea, LawTrades, like how can we get more lawyers to become freelancers? Like I was graduating with, you know, to like a pretty terrible legal job market. So I was just kind of like, all right, like what if I could help my classmates create a profile and they listed online and people just discovered them and hired them for like one-off, you know, projects or work. So it was either that idea or I was going to franchise a bunch of Redboxes. I don't know if you guys remember Redboxes, but there were these DVD vending machines that like you can go in and just like rent a DVD and return it. So I was like, this would be great at like my university. Like I could probably get like, I'm probably going to raise a little bit of money or use some money from my Facebook site and just get like 10 of them. And, you know, maybe one day I could make like, you know, like $300,000 a year from all of that, right? So I didn't pursue that. I was like, I'm going to do this other thing instead. And, you know, if you've done it long enough, you've gone through so many pivots and iterations. We started off with like sounding like, you know, like surfacing divorce lawyers and personal injury lawyers. And it was Zocdoc style where you had to put in a zip code and you'd find a neighborhood lawyer. And then we evolved it into something for startups because startups' legal needs were a lot more predictable than like, you know, figuring out when somebody would like fall at a grocery store and that they would need to find a personal injury lawyer. And then a bunch of stuff happened there. Like our competitors were getting sued. The Bar Association was suing a bunch of like tech companies that were trying to be like law firms but weren't. So we kind of left that space and went like enterprise and focused on selling to legal departments, which had like bigger budgets, spent a lot more. The engagements were a lot longer. So our LTV and all of that were improving. And now we're in this like kind of like post-AI world and like things are changing again. But that's kind of like the journey in a quick nutshell.

That's really cool to hear the founding story and then also to kind of how it's evolved. You know, you did mention as far as like the pivot to enterprise. So could you kind of walk us through, you know, what led to that and then maybe some of the learnings after? That's a common topic in the community with founders that are building in consumer and You know, looking to potentially pivot into enterprise?

I think we built like a pretty respectable business within the startup small, but you can almost consider them consumers. They're consumers with like maybe a little bit more money, but you pretty much should treat them like consumers. You need, you need a lot of them to make it successful, even if they're SMBs. So when we were doing it, we were basically competing with this company called LegalZoom that probably a lot of you guys have heard of, right? So they were the cheapest way to like get an incorporation done without a lawyer, and it's all like an online form. And our value proposition was like, hey, if we can easily connect you with a really good small business lawyer, you'll pay a little bit more to do the incorporation, but you'd have built this relationship for life with this lawyer that you can use for many other projects. So like, we'll do more of the sophisticated stuff that LegalZoom was not addressing. So we were doing it, I think at its peak, we were doing probably like $300,000 to $400,000 per month in GMV. It wasn't growing as fast as we'd like it to grow and it was unprofitable. So we needed to raise like more money to continue to compete with LegalZoom on Google Ads specifically. I think at its peak we were spending like close to maybe like $100 grand a month on just Google Ads and we're trying to beat out LegalZoom and all the other do-it-yourself stuff. But basically around this time that we went to fundraise, there was a famous founder that started also started a legal tech company as kind of like a ripoff of ours and like raised way more money, like $80 million. Like every investor that we spoke with, like, you know, we then shortly realized why they stopped returning our calls. And this company called Atrium was founded by Justin Kan, who founded Twitch and like sold it for like close to $1 billion. So we're like, ah, fuck, like, you know, like we're not raising any more money and we're bleeding cash and these small businesses aren't coming back in the way that we'd want them to come back because what ended up happening was the really good startups that we got, like the YC ones, the 500 Startups, whatever, they ended up growing. But then by the time they raised their Series A, their VCs would tell them to go use a Coolleaf and Wic or like, that was just like a thing. So we lost them out on that. And that was where like the real quote unquote real money was like doing a Series A financing or C financing or like they're about to hire 50 employees or whatever. But we missed out on that because the market was still like, you need to use— and it's still to this day kind of like that. That's why big law firms are like, still breaking record revenues is because there's something about the Hungry Girl prestige and brand that's difficult to change. Even if you're like a Harvard, you have like the best AI or whatever. So in any case, once we realized that we weren't going to be able to like raise more money and like keep this going, we're like, all right, well, we're going to need to like eat somehow. So like we better get like better customers that spend more money, basically. So at that point, we just kind of like went down our database. We're just like, all right, like, let's put on our customer research hat on, like, who is actually spending the most money? What do they do? Let's find out about them. And one of our first enterprise clients was this company called EquityZen, and they were basically a marketplace for selling secondary transactions. So you would be able to buy like shares in like OpenAI before they go public or whatever. And we had the general counsel use our project, you know, use our tool to start like multiple projects. And we're just like, what is a general counsel and why is he starting so many projects? So, you know, we called him up and he was just like, hey, look, like, I have overflow work that I need help in. I'm the solo lawyer at EquityZen. I'd love to hire more commercial contract attorneys that helps us review these like basic vendor agreements. Can I just hire them for like a couple of months and like pay you like a monthly thing for it? And we're just like, whoa, we didn't know that was possible because we build the product for startups. Startups want like an Amazon-like buying experience. This guy is like, I want to hire this person for like 3 to 6 months and, you know, he's going to pay us like, you know, like 6 figures for that, right? So that's like when like the light bulb moment went off that there was a customer segment here. There are, you know, every single company has what's the equivalent of a mini law firm. When you get big enough, you form a legal department. That's basically your law firm within the company. And that law firm is highly under-budgeted, understaffed, And basically gets the least amount of resources from a company, right? And you probably know why. Like, if you're a tech company, all of your fundraising and money is going towards engineering, design, product-market fit, product sales. Legal is like the last bit that's basically left over. So as a company scales, their lawyer headcount still stays the same. So we're able to find this niche of like, let's find these companies that are like scaling, but their legal teams are really small, and let's sell them on our lawyers. And let's rework the product to be less project-focused and more around like longer-term engagements and billing by the hour. And let's differentiate the supply side. Let's rebuild the product. Let's do a more white glove enterprise onboarding experience. And we just chipped away at it for, I don't, I can't recall how long it took, but it felt like eternity, but it probably was just like a couple of weeks. And we eventually got that together. And then the very next thing we did was like, let's find a community. Similar to probably like what you have with everything Markably, we found a community that had a bunch of like general counsels that worked in tech and they were like just like starting out around that time and we convinced them to let us like sponsor their events and webinars and all that stuff. And we had the foresight to convince them to give us an exclusive agreement with them. Because we felt like there was going to be competitors that are going to come out and we got that exclusive agreement. Their community blew up and grew like crazy. So we grew in that process. And, you know, that's kind of what got us to where we are today. But, you know, just looking at the numbers and being realistic.

These are the type of inside stories that we need to hear. So I appreciate, you know, sharing with us on that. So, you know, we did kind of COVID as far as like the demand side, you know, how that evolved to us or in that kind of pivot to enterprise. And you briefly mentioned as far as like the supply side and, you know, how you're building that up. But I guess like, you know, as you started to scale that, it sounds like community was key to that. But what are some of the other kind of strategies that you've taken to build the supply side?

Maybe it's a little bit different now because now we're supply constrained and that's always the best sign. I think that's like if there's like a universal rule, like for marketplaces, if you feel like it's really hard to like fulfill your demand and you're just like all you're thinking about is supply, that's like a very good sign. It wasn't always like that for us. We had to really just kind of build it brick by brick. We had to first understand that, like, a typical startup lawyer would not be the best supply-side talent for an enterprise, you know, supply-side provider. But there were competitors in our— in this space. It's not like we were the first ones to discover enterprise legal services done on a flexible basis. There are a lot of older school agencies, companies that's been around for 20+ years, very offline, but just kind of dominated it, right? So we would use LinkedIn to find people at those companies that worked there that kind of got the flex model. And then we were just like, hey, like, we're like, we pay you out more and it's much easier to get onboarded and you'll get hired the same day, right? So when you pitch them like that and you're basically like, I have a, you know, I have a, you know, $15K, $10K per month opportunity or even $5K per month opportunity waiting for you. You just got to click this link and create a profile, you know, it becomes easier to like, you know, build brick by brick the demand with the supply. And I don't know what everybody else's marketplace is like, but like, you know, at least for professional services, like they can work on multiple engagements at the same time. So you can get like liquidity faster as opposed to like maybe like one physical delivery person going back and forth and need to get like another one to go to the same address or whatever. You can just basically build your dashboard in such a way where somebody can pick up on multiple things and then there's like working through it. So like one lawyer could service like 5 of our demand-side clients, or if not more. And then obviously with everything with AI, you can kind of scale that up even more by removing more of like those bottlenecks. But it really, I don't know, I would say like, you know, you get the supply side, but then, you know, are they going to do a good job or not? Do you trust that? So it's like as much of like a relationship trust-building thing. as it is like, okay, like how many profiles did we like get created and how many of them were active? Like, you actually have to legitimately do like a good job. And if there's anything that I've learned, it's that like credentials and pedigree do not equate to a better lawyer or a better professional service provider. It's just people that are hungry, people that are desperate. Like, those are the people that you want like on your marketplace and they end up going to like not really the best schools, but like they end up making the most money on our platform.

Certainly you got to head nod with that. So And, you know, I wanted to shift to talking about how you're leveraging AI. So, you know, as a starting point, can you share, you know, how you've approached AI and then you kind of walk us through, you know, some examples of how you're leveraging it today?

It's always changing and always evolving. So I feel like I'm going through like another moment with AI. The first was maybe when like Open Claude or ClaudeBot came out. And, you know, there's basically different levels of which AI impacts like yourself personally, your company, and then like what are you doing from like a commercialization process, right? So I think that it always stems initially first from like yourself personally, right? Like, what are the best tools that you can be using as founder, as CEO, as like a leader within your company to just like get to whatever your definition is of winning a little bit faster, right? Whether that is helping you come up with better product ideas, whether that is You shipping code yourself and like, you know, and just to kind of like the short answer to that, I think the biggest unlock for me was being able to use right now specifically Codex is like what I've been like Codex pilled and voice pilled and all of that. Like I think it is like the, it's the best. It's like, it's literally the best. And I tried a lot of them, but like first step is like as CEO, as founder, if you're able to figure out a way, especially if you're non-technical, But even if you are technical, to push code and merge that directly as many times as possible in any given week, in my opinion, that is the single highest leverage app that you can do, presuming that you have the ideas, presuming that your ideas are good and you're not being delusional and you're battle testing them and you just know what needs to get done. And like as CEO and founder, like you will always only know, like you will, you will, you will always be like number one at that compared to your whole company. Right? So to like take advantage of that is like use Codex to just get those ideas out and like, and as quickly as possible with like minimal disruption to the rest of your team. But you are going to disrupt the rest of your team. Your engineers might get pissed off at you. Your other colleagues will be like, what are you doing? Like you're skipping all these meetings and all these discussion points. But if you are ruthless about that, like that is the single biggest game-changing thing that you can do, like as a leader in your company. So that's number one. Number 2 is like you want to obviously like build something on your product side that's tied to AI and marketplaces are like great for that. And I view that as 2 different buckets, right? Like what are all the existing things that your app is doing to onboard both sides and help them facilitate it? And where could AI like play a part in like collapsing some of those like funnel points or bottlenecks or whatever? Right. So for us, it like, yeah, a big part of it is just like, tell us what you need and we'll show you some lawyers. Like, okay, like through your own AI that's in your dashboard, can somebody do that step through AI and get there faster than the multi-screen process that you have currently set up in there? Right. And then, you know, when you take that to the next level, if you are actually controlling the work that actually happens on your marketplace, how do you sprinkle on your AI into different parts of the product where it's genuinely being helpful? Right. So we have LawTrades AI that's like built within the dashboard. But the secret sauce isn't that we have LawTrades AI and it looks like ChatGPT inside our dashboard. The secret sauce is like it allows our users to do very specific LawTrades-related things through this interface that they're already familiar with that looks like Claude, ChatGPT, and all of that, right? So maybe it's to log in work, maybe it's to update their profile, maybe it's to get a brief on the interview of the person that they're about to interview. Right? Maybe it's to redline a contract or whatever, right? So you're building specific things tied to what you've learned from your marketplace through the AI, and that I view as a differentiation right now. The downside to that is like it's very specific to just you. So you get, you get your user, you get your, you know, like 100 fans or 1,000 fans or whatever, right? But it's not really like a mainstream breakout success kind of thing because you still are building this marketplace, you're still making improvements. So then you have to activate this other part of your brain of just like, okay, well, like, what is our edge? And how can we use AI from what we've learned to really create something new for the market that even if you're not part of the marketplace, they can, they can take advantage of? And we have ideally some kind of edge in doing that in such a way that like the big labs, like, you know, are not going to do either because it's too narrow of an idea, or it's just so specific that they're just not going to be able to like figure that out in time, right? And that's kind of like more of like the big, you know, vision sort of like where does this go kind of thing? And that you iterate a lot on. But, you know, if I have to just give like practical advice, like how can you bring that back to like today? Like what are you doing today? Are people using more of your AI tool or less of it? Do they even care that it exists, right? Is that weekly active user number going up or down? And like what are they actually using it for? So you have a lot of these hard conversations. you have a lot of these meetings where you're just kind of like, like half the time it's like, what are we doing? Right? Because you're not building like the marketplace product, you're building AI. But the other part of it is like, oh shit, like someone just did this like really cool thing on our AI that like we've never seen before. Like, you know, like what if we like built out this other part of like that workflow like to there, like when maybe more users find out about that, I'm like, how do we communicate? So you're kind of like building like 2 products simultaneously, but they're all achieving the same goal, which is like make your workers as productive as possible and like, you know, wow your clients in some sort of way. So whether that was like software and screens that we did it before or through AI, it's still the same objective. You're still trying to maximize your earnings of everybody on your supply side and like get as many demand to, as much demand to basically come in. So like, that's like the 3 ways that I kind of think about AI and then The last piece that I'll say is that I think specifically for marketplaces, and we're seeing a lot of demand for this, is around evals and data. And like, you know, again, I'm happy to go deep or not that deep into whatever that is. But basically, the, you know, the thing to know is that the labs have more or less figured out coding. Right? Coding agents or whatever, like 80, 85%, like accuracy, right? What does that mean? It allows me to like use something like Codex where I just be like, with my voice, just be like, hey, build out this feature that automatically adjusts the lawyer's hourly rate depending on what the client sees. I'm just going to talk to Codex and it's just going to figure that out. For every other category, the AI does not work in that way, right? For legal, for science, for like teaching, for whatever, all those, what every other category in the economy, if you think about from like a service provider perspective, an investor, you know, a biologist or whatever. It's not doing that, right? So, and in order for it to do that, you can't find that on the internet because this lives within the minds and the memories of the workers and the professionals. And it was legal even more than ever because it's attorney-client privilege. So for the last 100, 150 years, they've been incentivized to not put this in any record or any sort of thing. It must stay private in their hard drives and in their Right. That's the monetizable. That's why partners get promoted because they, yes, they have, they have the, they can do legal work, but they have the business relationships, right? To like bring in all those clients. So we are now, I think, experiencing going through a period of like, you know, I wouldn't call it like hypergrowth just yet, but it's like if there was like a pre, like hypergrowth feeling of something we felt on like the last 2 pivots. We're just at the cusp of that. And it is because there is like just almost like an unlimited demand for this. And that is like also presenting its own little pivot within our company of how can we fulfill that? Because now we're talking about like hundreds of thousands of hires and they're no longer, it's not like they're doing work with the client that they're meeting. It's almost like they're doing work on behalf of the AI and like almost like we're the clients that's kind of like facilitating that. And so it's, it's a whole different thing. But data and training and all of that, I feel like is something that, you know, like it's going to be really big. And I don't know if you had other guests that like talked about that or went into any of those details, but it's just, it's kind of like crazy right now.

Certainly a huge opportunity. We actually had Ali from MicroOne as a past Group Chat guest. So we got to chat through that in a little bit more detail. Kind of go back. I'm glad you mentioned, you know, it starts with the founder and then I think The way that you kind of, you know, I think broke it down into like the 3 buckets is a helpful way to think about it. So I did want to, you know, kind of expand on this a little bit more. So, you know, like right now, you know, where is AI making the biggest impact for Alotrades?

Definitely in terms of shipping more features faster. Like, I think that aside from like a good sales and marketing team, which you need, you need distribution. I feel like the next sign of success for a company is your shipping velocity because you just get more shots, right? I just view it like it's like basketball, right? Like the more shots that you're able to take, probably the more shots that you're going to be able to get in and therefore win more points and therefore win the game, right? So as long as your team and your close crew or whichever, or it could just be yourself, like, I don't know the size of everybody's companies here or whatever, But like, as long as they are really dialed in on like being able to identify the right ideas and knowing why and what's a good idea versus a dumb idea, you can like, you can operate your company as if you have like 50 engineers or 100 engineers or 200 engineers. And honestly, that could actually be a disadvantage at that point. If you have hundreds of engineers, we just want to get a select few ideas out as quickly as possible. So I would say that again, if you're a founder, if you're the CEO, set up your Codex, connect it to your repo, try out small features, get your product analytics up where it's like recording all of your, you know, your user's journey, have it always digest all of that, all my granular, all my user videos, all the analytics every night, it's ingesting all of that. So by the time that I wake up, I see like a brief of like what really went down in the last 24 hours with real suggestions that I can pick or I can override. And I'm like, go there and go build that, go do it, right? And like, if you can get that to get to that, which you can do within, just do that by yourself, basically just watch some like YouTube videos, you know, and I get, I prefer Codex, but people can use Claude Code. I have OpenCLAW as well, but like, I've just been, I just, I love the voice feature. I love the, I love the, you just have to try it to really like, Understand, because it's not a transcription, it's this ongoing conversation you can have. And I don't know about you guys, but like, I get my best ideas when I'm like going for a walk or I'm like by the pool or something like that, or I'm just like out in the sun. So to be able to just be like, yeah, I'm going to take a 1-hour break from like this office setting. I'm going to go for a walk and just like clear my thoughts and clear my thinking. And like, and that can just be like a dump of just like everything that's annoying you about why your marketplace isn't growing. Like, It can, it can give you really good feedback back to take like one actionable step. So, you know, not to harp on that idea for too long, but I just view that as like one of the most powerful, biggest like unlocks for us. And then after that, it's like use AI to come up with a second business model, come up with a new revenue stream, right? The easy answer is just like, oh, I'm going to charge subscriptions or whatever, and then people pay $20 a month. You can do that. Great. I find that very hard and difficult. Like, and like, you know, to actually like turn that into like real money. So I've taken the approach of like, okay, like let's build out tools that enhance the law traders' output where it automates some tasks. So we get more stickiness there and the clients see like, hey, we do something that normally a law firm would take 3 hours, we do it in like 2. So I'm playing a little bit of a long game there, like chipping away at the work. And I can just kind of, you know, we can just keep working. You can eventually just have an agent that's just constantly queuing up features based on the data that it sees of like what lawyers are working on. Like, 24/7. Then it just becomes a matter of like compute costs and then do you go local or do you still, you know, stay on Codex? That becomes like the bigger question. And then what I would spend most of my brainpower thinking about is like, if you have a marketplace and it's human to human and there is a certain amount of like knowledge and expertise being shared, like Can you take some subset of those users and figure out an underserved need within these labs and within these AI companies that the AI sucks at? Can your workers break the frontier model on something that, because it's so niche, right? And through breaking that, like, can it tell you what you would have done instead? And if you can figure that out, And you can put that at scale, whether you go to like micro or directly to the labs or whatever. Start tweeting about that, start talking about that, start building a relationship with that. Like, the more niche you are, I think, like, the better it is. And that problem has not been like solved for yet, in my opinion. I think we're at like the first inning of like hundreds of billions of dollars I think will be spent in this, like, in the very near term. So I'm viewing kind of like a lot of trades as just like It's like different stepping stones to get to, like, you know, when you're like, not to use like the Elon rocket analogy, but it's just like each, you know, each, each launch makes you a little bit better and you get a little bit more firepower from like your, your trials and fails. And I feel like we're now at like that last bit of like, you know, going to take off. It took a little bit longer, you know, than I had expected, but I had fun along the way. But like, I'm like, I'm ready for it, you know?

Certainly. And that's actually a great transition into talking about the, you know, future of professional services in the age of AI. So if we kind of like zoom out, you know, What do you think professional services will start to look like in the age of AI?

So it goes without saying that, like, obviously, like, the AI chat experience is going to have some impact into the work, right? Like that you deliver for your demand-side customer, right? Like whether it's something as small as like, okay, I don't need to check my email and open up Gmail. I can just ask it and it can reply back to my clients, or whether that is doing a contract review or a lawyer redlines it. I think, I think less and less people are going to be doing the manual approach. to that than like getting a $20 per year, I'm $20 per month, like cloud subscription to basically do that. I think that the other side of it is going to be how comfortable workers feel working with the AI labs. and how you position that, it's kind of a weird thing, right? Because if people think that like when they're kind of training, doing the training data and running the AI, like they're basically like automating themselves out of a job, it's kind of awkward, right? And one can make that argument that like, why would I? Okay, you're just going to dangle this carrot of like, you know, a few thousand bucks and like what, like that's To basically, you know, put the final nail on the coffin for my job, right? And we definitely had, it's weird, it's awkward. We definitely had a few people that like, you know, didn't really reply back in the most pleasant way. But I think that, and I do believe this, I think that there's just so much work with trying to figure that out that it's almost like unlimited demand. Like it's almost just kind of like you've just, everyone has just Automatically created a new client for themselves, and it's these lands. And if you try to go through the taxonomy of like, let's say within legal, like every practice area across every industry, across every task within the industry, across every different scenarios, across you working solo versus in a collaborative way, it's like it's it's crazy. There's there's so many you know like that that that is in no way like a uh. You know, and they can make you a little bit less bullish on the AI labs as well. And maybe that's why, like, I don't know, like OpenAI is not going public is like they realize, holy shit, like we actually don't have a lot of this figured out and we need to buy a ton of training data to be able to like get this remotely close to like what we promised with AGI. But I think that path to AGI, if it does come, is it's a long one, at least from what I'm seeing like in the trenches. And I think that there's just gonna be a bit of a divide there, right? And there's gonna be more of a divide of like, you know, like, I don't know about you guys, like when you hire somebody, like if they're not really using AI like that, you probably are not going to hire them in your team, right, Mike? Like if you're just like, ah, like, you know, if you can't pull like a YouTube transcript of this and turn it into like tweets that you can like schedule out and like, you know, and like do something else with it on like LinkedIn, like you're probably not going to get hired on like the content team for like your community, right? And it's the same thing with like, like with the supply side of your marketplace, like if they're not using it. And one of the reasons why we built an internal AI tool is just like, you have to use this because we just know you're going to be completely irrelevant. So like there's also that big gap that's forming that I think is getting wider and wider. And wider. And I do think that like, if they are not evolving with it, both in terms of like, how does it like supplement my day-to-day work, as well as just like, how can I get a piece of this like training wave that's coming? They're just going to get like, I feel like left behind almost, so to speak. And like, you're just going to keep doubling down on the ones that just like are using it and can scale themselves out. And like, You know, in many ways that makes it easier if you're like running a marketplace because then your, your, your, your supply side can be a lot more concentrated and just kind of do the vast majority of the work themselves. But then the downside is just like, all right, well, like, what about everybody else? You know, at that point, because I do think like eventually I feel like the entire economy is just going to fragment out into like marketplaces, you know, and especially with AI, it's just all just going to be like niche, niche, niche, niche, niche, niche, niche. And then like each one is going to, I don't know, be doing like like $50 to $100 million in like GMV or whatever, and they're just going to be really good at that. And then like everybody else that's like outside of that is just kind of like, I don't know, that's, that's the weird part. It's the accelerating part that I think is like a little like concerning for, for just like, at least from my perspective, for like lawyers, because we won't even talk to somebody that hasn't like, you know, at least experimented with it, you know, let alone be anti-AI, you know.

And I think it's also worth mentioning, you know, just the nature of competition, right, in the space is becoming increasingly competitive. And it's, you know, easier than ever to kind of get started and, you know, scale with that AI right now. So, you know, how do you think about the nature of competition?

We have a lot of competition in this space now, like we had 3, 4 years ago when Atrium came out and they raised lots of money. And, you know, Atrium, I'm not saying that's going to happen to these companies, but they overraised, underpromised, and they went under.

Right.

And I think within legal tech, there is A lot of funding activity, a lot of companies that are kind of doing the same thing and not doing a whole lot in revenue. I'm not going to name any names, but like the multiples and the valuations in relation to their revenue is kind of absurd even at the seed stage or Series A. And I do feel like there is going to be a correction as there has always been every, every 3, 4 years in our journey, there's always been like major players that raise lots of money that then like die out. And like, we just ended up being like the cockroaches of legal tech almost. We've just been around for so long and like, we just kind of went through every single like, you know, like nuclear moment where everyone just kind of died out and we just kind of, you know, stuck along. And I think like, I think about competition in the same way, just working with like bigger numbers, but You know, at the end of the day, like, if you have control over your cash flows and your unit economics are healthy and you're profitable, which we are, and we're about to get to, like, you know, like, free cash flow as well, like, you can just ride that out. You know, you can just, like, as long as, like, you know, you should aim to grow, but if you can aim to just survive and, like, ride out those waves and, like, let other people, other competitors do the educating for you and let them figure out, like, what worked and what didn't, then you just take that idea. And just like embed that in and do it for half the price. Like, I don't know, that seems to be like the easier move on my part than like, let's raise like $100 million and invent the market and do all the education and go through the trial and error and hire hundreds of thousands of people. And I don't know, like, I just, I'm not, I'm personally, I'm not good at that, you know, clearly, right? Because I have still a small team, we're profitable. And, you know, we're growing, but, you know, we're not like doing like a billion in revenue. So there's clearly something they figured out that I didn't, which is fine. But, you know, I think that the more you can focus on yourself, the more it's like your core team, you got your AI fired up and you are just spitballing ideas and you are just being very critical to one another in an objective way of like why this idea sucks and why this is good and why are we gonna go all in it? And you can repeat that day in and day out, like let the competitors do what they're going to do. Like that's a superpower. And I don't know if everybody is doing that.

That's going to be really helpful. So we're going to get to the group Q&A because I know we have founders that want to come on. But, you know, right before we do, you know, what would be your top tips for founders starting marketplaces today?

I would probably like work backwards and figure out what the AI labs want and then build the marketplace around that. Like, that's how bullish I am about like how fast I think. I think like And I think that if you're able to like build a marketplace that's already revenue generating, that has that, and you're able to like add that onto there, I would just be like that, that, that, that would be the cheat code. That would be like the cheat code right there. And you're going to have to do it very differently, right? It's like, it's not just like they could— they can recruit people, they have recruiters, they can onboard people, they know how to pay out contractors, they know how to come up with a matchmaking algorithm. That's not really like the secret sauce. The secret sauce is within the actual work itself, like creating those evals, knowing what's the right thing to like ask them questions about, packaging it in such a way where, you know, that's where the model broke. So it's complicated. But if I wanted like a cheat code to getting like rich doing a marketplace, I'd probably start that way and then work backwards on all the other stuff after.

We actually have quite a few founders in the community that, that are, you know, exploring ideas around that. So, cool. So I'm going to go ahead and get to the group Q&A. I wanted to help ask a question that was sent in advance to kick things off, and it was around the AI matching. So, you know, how has matching evolved with the AI at LawTrades? And can you share what goes into a match?

I wouldn't say it always evolves. I think at its core, we're always just thinking about like, how do we get the most qualified available people at the right price point to our clients? And it's evolved in 2 ways. So we have like more of like an application flow, right? Where you post a job and we want people to answer certain questions before a client sees it. So there's a matchmaking algorithm that obviously figures out like who are the right people to like notify, and then people come and apply for a job. So if you're a client, you're like reading through the COVID letter, you're reading through their bid, and then you're making a selection in that process. And We almost internally, intentionally created more steps and friction into that process because of the customer demographic. These are enterprise clients. They want to read, you know, a thorough cover letter. They want to ask very specific screener questions. They want to have an interview with the person. You must facilitate the interview. And then after the interview, they need some time to think about it. And then they're going to maybe come back and like hit up your account manager, even though you have a hire button that you Put everywhere and highlighted everywhere, and they're never going to use that. They're just going to go to, you know, to your Sally, and they're going to go to whoever, and they'll be like, hey, can you just like hire this person? We're going to have to do it, right? That's the nature of the beast when you're selling to like big companies and you are a marketplace. Now, the other side of it is we recently launched LawTrades for startups again, right? So we're now back into the startup game, and we did that through the perspective of an agent. So it's basically our first version of the LawTrades agent. And what it does is you're basically talking to an agent and it's helping you source a lawyer. So you can essentially go to our AI and essentially type in like, hey, I'm Mike, I run this like community, I'm looking for a lawyer that's like worked with other communities before, we're about to hire 3 people, I need my employment contract reviewed or whatever. And like, you know, this is my budget or whatever. And that agent goes in and taps into our network and surfaces like the best couple of profiles for you. And I'll just drop the link here into your chat shamelessly because we just launched the landing page for it. So I want you guys to sort of see it. But this is probably the most interesting from a product perspective we've done on AI. And you can essentially like click a button, start a project, and like it'll source you the lawyer. You can hire them with your credit card. And then what's really cool, and it's kind of experimental, is like once you hire them, you get added to a chat room with your lawyer, yourself, and an agent, a LawTrades agent. So through that experience, you can have like a one-on-one dialogue with your lawyer, or you can summon up the agent to help speed up some of the processes. So let's think about after you hired somebody and you want to, you know, you hired a lawyer to do a trademark. So if you hired a lawyer to do a trademark, there's probably a certain amount of questions that the lawyer would want to know prior to filing that trademark. So we can queue up our LawTrades agent to be like, hey, collect all this information so the lawyer has everything it possibly needs to get this done as quickly and efficiently as possible. So you're kind of, kind of like exploring in this area of like, what is a client, a lawyer, and an agent multiplayer AI experience sort of like look like? And that's like our like little like, you know, LawTrades Labs experiment. It's not a portion of our revenue, but startups are more forgiving. You know, we can be like buggy about it, you know, but like we have like 2 people on the team and it's like, this is your mission. Your mission is to like grow this into $100K per month in GMV and like you can do whatever basically needs to get done. So I would say like for that, you know, matchmaking has changed. The whole product experience has changed all through chats, all through agents, right? And what we can do is we can learn from that experience because they're more forgiving to then borrow ideas back to our enterprise side and start doing it piece by piece, you know? So like, I found that to be like, you know, extremely valuable and like view it from the lens that you just— we want to think about like people's behaviors and habits, right? If everybody's using chat, do you really want to build a new interface that people have to— that's going to seem like so much work, you know, that's going to seem like, oh, I got to figure out this dashboard again. I got to sign up in this new way. I got to figure out where to click. Like, Just feed into people's habits. Don't waste time on the interface. Waste time on like everything that happens after ChatGPT stops working for the client, which is everything that happens after they hire a lawyer. You can't even hire a lawyer through ChatGPT, right? So that's where you want to focus on. That's your secret sauce of your marketplace. You double down on that, like, you know, that's where you have to go, I think.

Definitely check out the link and I'll make sure I share it in the AI community and add it to the recording after. So And another question that was added, it was around, you know, capital efficiency and growth. So how do you think about balancing, you know, capital efficiency with growth opportunities?

If you're at that stage where you're getting lots of demand and you're not trying to fundraise again and you're paying out your contractors, I'm actually surprised this topic doesn't get talked about more. But like running a marketplace, like at like, I guess the scale that we're at, like we're about to do like $2 million, you know, per month in revenue. Like you're basically running like a mini treasury within your company. You're like, you're moving around, you're like, think about it. Like you sign an enterprise deal, they have net 30, 60, 90 days to pay you. You have lawyers that are paid out every 2 weeks as their W-2s or contractors, and you're not able to pull that money until after you've already paid out like half a million dollars to your network. So you can't actually just keep growing your demand side, otherwise you're gonna run out of money. And you can't always, I mean, for us, we're just like, we want to keep as much equity as possible, but like, you can't always just fundraise and, you know, that dilutes your company, you know, every couple million dollars in GMV that you add, right? So we try to make sure, I guess our singular goal this year was to get to cash flow positive and free cash flow. And we basically work with different credit facilities that will fund our clients, fund our invoices. We're able to pull that money in exchange for some interest rate to then pay out our lawyer network and then hold on to our profits. And by holding on to our profits and bringing that upfront, we're able to reinvest that into our growth and pay off our talent number. Now, you know, the downside is like you're kind of like relying on these credit facilities. And, you know, like in the stage we are in, in the economy, you know, with like the credit bubble, the AI bubble, all this stuff that does keep me up at night. Because like, you know, if any one of those things just go, like, I want to make sure I'm at like a good place where I'm just like, you know, like we can do zero revenue for, you know, a period of time and it'll be okay. Or we're, you know, and all roads lead back to like, Being cash flow positive. And that is really an exercise because it's not based off of like the usual accrual-based accounting, which is probably how most people track their metrics. And like, this is what we accrued and this is what we— but it's like when you actually look at like, what is the cash coming in and what is the cash going out and what is that delta? Like that becomes its own whole operation. And if you're able to figure it out to such a point where more cash is coming in every single day than leaving, then I think that aside from doing Codex and like Christian Gold, that's like another superpower where like you, every new customer adds to your war chest to invest back into growth and new opportunities. So, you know, we're at kind of like a tail end of that, but like, I feel like getting that figured out sooner rather than later and like, and it forces discipline within the company as well. Right? Because you're just not going to go out there and be like, oh, we need to hire 5 people because we see like this AI thing being something. You're like, no, let's look at the cash flow. Unless that catches up and we add an extra, you know, $100K to the bottom line, like we should not hire somebody. We should try to do more with our agents. We should constrict ourselves. We should really— and that, I think, just like, that's the thing that breeds— that's the thing that creates creativity, in my opinion. It's the limitation. It's the barriers. It's like, there's a finite amount of time and resources and like you've got to just figure it out. And I'm like, and I think like coming from like someone that built a marketplace prior to any of this AI stuff, it's a miracle. That's a— that is like I would never think I would live to see the day where I can just like automate all this stuff.

Exciting time in the world of marketplaces right now. We're definitely betting on the future of them. Well, cool. So we're almost out of time. But, you know, huge thanks for taking the time to join us today for the group chat, you know, sharing about all of your experience, you know, building out LawTrades and, you know, helping answer some of the questions that we had during the group Q&A. And I wanted to ask my usual closing question, which is that if you could go right back to before you started Lodgeries, what would you tell yourself about marketplaces?

It's about longevity. So don't have expectations for like, if you fundraise, everything gets solved, or like in 3 months I got this solved. I would also tell myself to focus less on what other people are doing and don't worry about competition regardless of what the headline says and the fundraising and all of that. Like, stop beating yourself about Stuff you can't control. And 3, I would have doubled down more on like coaching my team. Like I would have invested more in my team. I would get like less frustrated and just be like, ah, I can't figure it out. I need to go like hire somebody that like does this. And I would try to push my team like further and like try to help them dig deeper. And yeah, if I had to be very honest, those are, those are probably be like 3 things that I would, I would tell myself.

Yeah, it's going to be super helpful. We definitely didn't touch on that team aspect, which we probably should have a little bit. But yeah, it's a great way to wrap things up here. And, you know, last but not least, time for a quick plug. Where can we all keep up and follow along with you?

Find me on Twitter, @R44DM. It's like a small group, so you guys could just like email me too if you have any questions or anywhere I could be helpful, like rod@hey.com or rod@lawtrades. Check out our little startup flow thing. I'd love to get product feedback for it or just like what you think, or especially if you have like any sort of like legal work that you're trying to get a lawyer to do. But I mean, more so just like, you know, feel free to reach out to me. I'm like, I'm here, right? Right back to emails pretty quickly.

So we really appreciate taking time to join us and I'll include a link in the recap post and the recording. So yeah, thanks for joining us and thanks everyone for the questions.