The Life of a Startup: From Idea to Sale

Episode Notes

Transcript

Law Technology Now

The Life of a Startup: From Idea to Sale

04/06/2018

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Intro: You are listening to the Legal Talk Network.

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Bob Ambrogi: Hello. I am Bob Ambrogi.

Monica Bay: And I am Monica Bay.

Bob Ambrogi: We have been writing about law and technology for more than 30 years.

Monica Bay: That’s right. During that time we have witnessed many changes and innovations.

Bob Ambrogi: Technology is improving the practice of law, helping lawyers deliver their services faster and cheaper.

Monica Bay: Which benefits not only lawyers and their clients, but everyone.

Bob Ambrogi: And moves us closer to the goal of access to justice for all.

Monica Bay: Tune in every month as we explore the new legal technology and the people behind the tech.

Bob Ambrogi: Here on Law Technology Now.

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Monica Bay: Welcome to another edition of Law Technology Now on Legal Talk Network. I am Monica Bay and our guest today is Alma Asay. Welcome to the show.

Alma Asay: Thank you so much Monica. I am excited to speak with you today.

Monica Bay: Me too. But before we get started we would like to thank our sponsor, Thomson Reuters. Its demystifying artificial intelligence will be done in seven single steps. AI will create change, but managing change doesn’t just happen. Visit  legalsolutions.com/ai to learn more.

Alma, it’s a delight to have you. You and I have known each other for quite a long time, and Alma, you have had some very exciting things happening lately, including selling your startup. Tell us about that.

Alma Asay: Yes, we sold Allegory, my legal tech startup last fall to Integreon, a major legal services provider, very exciting outcome. As you know, I started Allegory in 2012, coming off being a litigator at Gibson, Dunn for six-and-a-half years and built up the software, built up the business, and was very excited to reach an exit, the elusive exit for a startup founder last fall.

Monica Bay: Tell us a little bit about what it is, what it does and why is it important for legal?

Alma Asay: Of course. So Allegory is a litigation management platform offered in the cloud or on-premise and it connects all the people, documents and data that matter to winning a case. So it’s used everyday by litigation teams within law firms and then it also has a lot of power for corporate counsel, so providing corporate counsel with more insight and oversight over the day-to-day happenings in the litigation, driving efficiency. So Allegory automates a lot of everyday litigation tasks.

So the same way that e-discovery tools came in and became standard on litigations, because you would no longer have associates and paralegals doing work that wasn’t legal work relating to e-discovery, the same is becoming true on the substantive litigation side. So more and more corporate counsel are asking their law firms questions about how litigations are being managed, wanting more control over the case file, so when they switch law firms or at the end of the case they feel like they have control over that case file and they know where things are, they can make sure that retention policies are followed and also reporting.

So for corporate counsel, more and more pressure is being put on them to be able to report on what’s happening across their many, many litigations and having a tool like Allegory that their outside counsel are using throughout the course of the case just makes gathering those insights much more feasible and faster.

Monica Bay: Who are some of the competitors and tell us a little bit more about how it all works?

Alma Asay: Our primary competitor is obviously the status quo, which is really file and shared drives. There are two legacy tools that have been out there; CaseMap and Case Notebook, and the analogy we use there is if those are rotary phones and Allegory is a smartphone, they do occupy the same space, but they are vastly different tools, which makes total sense given the time periods in which they were created.

In terms of modern technology, we really have two competitors; Opus 2 Magnum, which is primarily a transcript tool out of the UK, but has broadened and now they say that they do the entire litigation.

And then a tool called Everchron out of Los Angeles, with a similar back story. The founder was an attorney at Irell, and I think they started a little later than we did, but really it’s those three tools that are out there in the market. And as this area has really heated up, those are the three tools that firms and corporate counsel are looking at.

Monica Bay: What’s your sense about are people in the big firms finally grabbing on to this? Has it taken a long time to get there and how did you get them to say yes?

(00:05:03)

Alma Asay: It’s certainly taken a lot longer than I anticipated. When I first came up with the idea in 2011, it seemed obvious that this is where things were going, after e-discovery that this would be the next big wave, because once you bring that efficiency to the e-discovery side, the volume of data is impacting the traditional scope of litigation as well and it seemed obvious that corporate counsel and law firms would need to start turning to that, and how do you manage the many more key documents and the many more witnesses and depositions that are being caused just by living in a digital age.

And so at the time it seems obvious and I am very excited to have written it out to the point, where the industry has caught up and it is happening. It’s really amazing to sit in meetings with corporate counsel and they are telling me outright that they have started asking their law firms, how are cases being managed. These are questions that weren’t being asked before in the same way. That once upon a time corporate counsel weren’t asking their law firms how e-discovery was being conducted, and so now the questions are happening. They are not getting satisfactory answers from their law firms and that’s really starting to expedite the change.

But to give law firms credit, there are a number of law firms as well over the past many years who have been very proactive about this change and realizing that they can’t be the best lawyers they want to be when they are hunting for information rather than having that information at their fingertips and being able to come up with the answer and apply their brilliant legal analysis to that information and that that’s where they should be spending their energy.

So I thought starting out that the idea of getting top firms as our first clients seemed like a pipe dream, but in fact those were the most receptive firms and lawyers because those are the ones who care so deeply about winning cases and are so talented and want to spend their time actually winning cases that they were incredibly receptive to the idea of brain and technology that would help them get there.

Monica Bay: That makes a lot of sense to me and with all the changes that’s going on and so many competitions, especially in the high end ones, that doesn’t surprise me at all. Was there any big surprise for you during this process?

Alma Asay: Oh, everything. Everything along the way has been a surprise. We can probably spend hours going through all the surprises through the past few years.

I would say the one that’s been resonating most lately and something we have been working on is lawyers, and Monica, you and I have talked about this, how perfect is the enemy of done, and when you leave a law firm you really have to train yourself that not everything has to be perfect; you just need to get it done, and that was a hard thing for me as well as other lawyer entrepreneurs.

But where I am going with this is when it comes to new technology, in our everyday lives there is no technology that’s perfect. And we live in a world where technology is constantly adapting, building on feedback, getting better, getting better, but as the world changes you can never quite keep up.

And what’s interesting about lawyers as clients is they want the technology to be perfect. I mean I can’t count the number of questions — or times that I get the question, is it done? And technology will never be done, or at least you hope not, because that probably means you are not in business anymore.

And a colleague of mine stated it perfectly, which is it’s almost as if you walk into a grocery store with a list of 10 items and because they only have eight of the items, you just leave everything there and walk out, and that’s sometimes how I feel selling technology to the legal industry, because if it’s not perfect, meaning it doesn’t have everything, including all the sort of idiosyncratic features that this particular case team wants, then the fact that it gets them 80% there isn’t always enough to stop them from going back to the old way that only got them 5% of the way there, and that’s been really shocking.

Monica Bay: Was it difficult for you to decide to sell and are you still working with them? What’s going on for you and where are you going?

Alma Asay: So I am absolutely still working with them. I am now the Chief Innovation Officer at Integreon, and in addition to absolutely still being involved in Allegory, obviously there is a much larger team and a lot more resources we can pull in to cover things that I was doing at Allegory, all the way from sales, to the minutia of running a business like invoicing. So I also get to spend more time being out in the industry, seeing what’s happening, making sure that I am showing up at conferences and really keeping an eye on who is doing what, because things are moving so quickly, and then coming back and making sure that Integreon is keeping up as well.

(00:09:56)

As for the decision to sell, it kind of came out of the blue, and when it did, I put it on a fast track, because startup founders already have a million things they are doing and I was fundraising, and I was trying to run the business and sales and everything else, and I just thought, now is not really the time to get sidetracked on something if it’s not going to fly.

So people are often shocked to hear how quickly we got this done, but really it was, okay, if we can get it done in this amount of time, then I think this is a great idea and it makes sense, both professionally and personally for me, at this point in time, but if we don’t get it done in that amount of time, I am not going to keep working on it because I have got other things to do.

Monica Bay: And tell us who you ended up with?

Alma Asay: So we sold to Integreon, which is a major worldwide legal services provider, really an expert in legal process outsourcing. So in my world, I knew them as providing managed document review and e-discovery services, but they have a whole breadth of services, including contract management and business enablement services, so outsourcing word processing and marketing for law firms.

So it’s really cool to work at a company that has such a large scope of services and see where Allegory can fit into all of that.

Monica Bay: So switching the discussion for a few minutes. Last year you were chosen as a Legal Rebel from the American Bar Association’s ABA Journal. Your headline was Couch surfer stays on the track for CEO success. Tell us about that, I was just thrilled when I saw that you got that.

Alma Asay: Thank you Monica. So this question reminds me that we haven’t caught up in too long. So I was so honored with being awarded Legal Rebel. Obviously it’s really great to have that kind of recognition for innovation from the American Bar Association.

And you know me, Monica, I can’t help but be honest, I wasn’t thrilled with the headline or the kind of description in there of how I bounced around. So it was the only headline that rather than describing what the person did or is doing kind of characterized the person and I embrace my life of traveling all around and it’s something where after the acquisition people asked me if I had settled down and I was like why.

So I have this wonderful network of friends and family, who have guestrooms and have welcomed me over the years and given me the opportunity to be in many different cities, but meanwhile spending time with friends and family rather than constantly going back to an empty apartment in New York, where I was before.

I can’t remember the last time I slept on a couch. So I think sometimes couch surfing has this negative connotation and it’s certainly not how I would describe what I have done for the past few years. I really think it’s a positive thing to do and I know a lot of other entrepreneurs who actually do it as well.

It’s different, so I think sometimes it’s hard for people to understand the concepts of not quite having a home. But I look at it the other way, which is having many homes, but often 13:02, and like I said it was extremely thrilling to be awarded the Legal Rebel and be in this class of people to whom I look up and just think are doing wonderful things.

Monica Bay: Well, I have to laugh because when I read that I thought it literally meant a surfer and that just made me smile so much, because I am a California girl too and I grew up in California and soaking up the sun and I just loved that thing. I just laughed so hard. I thought it was just hilarious.

And now that you have said you are talking about being on a couch, it makes it even better. So I would say own that, I think it’s absolutely great. It just made me smile.

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Monica Bay: And we are back with Alma Asay. Alma, you have really been very, very visible as a woman in Silicon Valley, and as you have said, throughout the United States. That’s not an easy thing to do and we still are facing with 20% of women in tech in Silicon Valley, and I think that’s just as bad, if not worse, throughout the United States and in other places. I am hoping that the MeToo explosion is going to help us in big law too. But I am curious as to your experiences and what do you think we need to do to get more women in our area?

Alma Asay: I wish I had the magic bullet for this. It’s such a chicken and the egg. I think we need more women role models who are out there and who are open to sharing their stories and open to mentoring women who are coming up the ranks, not feeling like, well, I went through it so they have to go through it.

And it really is a difficult thing as long as VCs are so locked down, because you have these women and they are building brilliant businesses and have operations down, have the idea, have the strategy, but if you don’t have the money, a lot of times you are not going to get to that next step in the way that a lot of these male-led businesses are able to do because they get all of the funding, and it is incredibly frustrating.

And this may not be a straight gender thing, but it’s incredibly frustrating to watch some of the things that do get funded versus some of the brilliant businesses that I see and to know that they aren’t getting funding and therefore might not make it to the next step, and therefore aren’t able to set an example for how successful a female-led business be because they aren’t given the opportunity.

And I think for the women who have made it and are at that level, they are so in demand that they are stretched very thin. So until we find a way to get more women involved at the VC level, on the tech side and in partnerships within law firms and have women creating this safe, open space and setting themselves up as role models, I think it’s going to be very, very difficult.

And that’s not to say that men aren’t wonderful at creating safe spaces and creating a place where women can go for mentorship and opportunities, but it’s a different thing when you actually see the women ahead of you succeeding and can get tips on how to succeed because there are definitely obstacles along the way, in business, in legal, and when you don’t feel like there is someone like you to go to and ask for advice on how to deal with things, you are really just getting advice on how someone who is very different from you would have dealt with those things. So it can just be an extra challenge on top of everything else.

I know I have talked more about the problem than the solution, but I think what I try to do is just be someone who is not afraid to go out there and speak my mind and talk about the challenges that I have had and talk with women who either on the legal side or the tax side who are facing things that seem to be in their way and encourage them to be open. And mostly to speak up and not to be afraid to speak your mind or to leave because there are just so many opportunities out there, which I think sometimes isn’t apparent when you are in these situations.

Monica Bay: I think that’s excellent and keep doing it because we really need to get the young women opportunities as much as we possibly can. And speaking of opportunities, you are going to be on a wonderful panel that is going to be on the 4^th of April. Tell us about the Legal Tech Founders: Then and Now.

Alma Asay: Thanks Monica. This is a panel that I am really excited about. I just realized that your last question kind of leads into this one. Years ago I used to look around and see people up on stage or see people on panels and think, how do you get up there, how does that happen. And one of the things that I have learned along the way and really it took a while to learn is the power of asking and it’s not something that women are always great at.

So after I sold my business I would have all these individual conversations with newer startup founders about what that was like, what the process was like, how we got there, so many questions, and I just thought I am getting these questions all the time, wouldn’t it be great to do this in an open forum where everyone could kind of be a fly on the wall. And nobody is necessarily going to suddenly have that idea who is creating a conference.

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So I emailed Roland, and again, it’s just the power of asking, I emailed Roland and I said I have a suggestion for a panel, what do you think? And I had spoken with Daniel recently before that about the sale of his business and of course his story is very different, but he went through a lot of the same challenges. I have known Michael for years and we all sold our businesses within the last year and yet, I have known these guys for years and we kind of came up together.

And then I recently met Ryan and Haley who started their businesses in 2016 and I just think they are absolutely dynamite and what they are doing is incredible and they were two of the people who were asking these questions, because they are very smart, forward-thinking, they want to know what comes next.

But it’s interesting because on the surface it seems kind of ridiculous to say then and now, it has only been a few years and yet when you look at all that’s happened in legal innovation over the past few years, it has really been a sea change.

I mean when we started in 2012, the first conference that I went to was Legal Tech, Industrial Legal Tech as a startup paid $7,500 for a booth, just like any well-established legal tech company. There really wasn’t a legal tech community or this focus on startups within law schools or within law firms.

So I think Haley and Ryan are terrific examples of this, because Ryan, his company P.I.N.G. took part in the recently launched Mishcon MDR LAB and Haley is in part funded by Nextlaw Labs. And so their journey is very different from the journey that Daniel and Michael and I had just a few years ago, where none of this was happening and it was kind of like starting from scratch, and there’s been so much change over the past few years. So I think that will be a cool dynamic.

And then I am just excited to be able to have an open conversation about what the acquisition process is like, because I think it very much is a black box and I didn’t see a lot of people talking about it and I had no idea what I was getting myself into. And so I just thought that this might be something that would be helpful for other people launching startups, especially legal tech startups, and so we can get the word out and put as much information out there as possible on the good, the bad, the ugly, all of it.

Monica Bay: The Legal Tech Founders will be on the 4^th of April and can you tell us again who the people will be, and I know that it is in Stanford Law School, free.

Alma Asay: Yeah, it’s at Stanford and it’s free and it will be myself Alma, the founder of Allegory, which sold to Integreon, Daniel Lewis, the Founder of Ravel, which sold to Lexis, Michael Sander, the Founder of Docket Alarm which sold to Fastcase. Those are the then founders of a few years ago. And then, Haley Altman, the Founder of Doxly and Ryan Alshak, the Cofounder of P.I.N.G.

Monica Bay: And of course on the 5^th of April will be CodeX FutureLaw Conference, I think it’s their sixth year now, so a lot is going on at Stanford.

Unfortunately, we are running out of time, I could talk with you forever, as we have often done, but can you tell our audience how to reach you.

Alma Asay: Absolutely. You can reach me at  HYPERLINK “mailto:[email protected]”[email protected]. You can also just Google me. I seem to be the most stalkable person on the planet, as the only one with my name. I welcome people reaching out and I love to hear people’s stories and I would love to offer whatever help I can by sharing my own stories. So please do reach out.

Monica Bay: This has been another edition of Law Technology Now on Legal Talk Network.

If you like what you heard today, please rate us in Apple Podcasts. We will see you next time for another edition of Law Technology Now.

I am Monica Bay, signing off.

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