Speaking with Michael Chasin, the CEO of Lexicata, on his journey from Uber driver to legal tech CEO, at ILTACON 2018. 

Kevin O’Keefe: I am with Michael Chasin, and you’re the founder of what?

Michael Chasin: Lexicata.

Kevin O’Keefe: And what is Lexicata?

Michael Chasin: So Lexicata is essentially a CRM and client intake software built for small to medium-sized law firms.

Kevin O’Keefe: And how’d you get that idea?

Michael Chasin: So a bunch of pivots – there’s been a few pivots. Long story short, my business partner, Aaron and I were in law school and we were trying to come up with an idea for a business and we basically realized that it’s a lot harder to come up and find lawyers than we realized, and we were in law school at the time, so we said if we’re struggling to find a lawyer, we need to figure out a way to find a lawyer.

Kevin O’Keefe: Where were you going to law school?

Michael Chasin: At Loyola Marymount in Los Angeles.

Kevin O’Keefe: So you were in law school and you were thinking “we’d like to start a business.” You weren’t thinking “how do I get a job at a law firm.” What made you wired like that?

Michael Chasin: I come from a family of entrepreneurs. My grandpa started a pawn shop, my father was doing real estate, my mother was doing real estate which, by itself, is kind of like an entrepreneur, just your own little small shop. And my brother started his own shop. We’d always done things as a kid. The first thing we did – I sold Furbies outside of Toys R Us when it was Christmastime. I’m Jewish, so I’ve got nothing to do on Christmas, or the day before Christmas, so I would sit there and sell Furbies, for like $400 a piece. So that was the first entrepreneurial venture I really had.

Kevin O’Keefe: When you went to law school, did you go with the idea that you’re going to start a business?

Michael Chasin: So yeah, that was a tough one. Basically, I graduated in 2009 and that was right as the crash was happening and there were some jobs available, but not ones I really wanted. And either said I could go start my own thing right now, I can go to law school, or I could go into real estate with my family or something and I basically decided law would be a really good background for starting a business, and what else am I going to do to ride out this crash? So I went to law school kind of with the anticipation of eventually I want to start my own business and I thought maybe a law firm was almost its own form of business, or I could go and use the knowledge elsewhere.

Kevin O’Keefe: Yeah. And as an aside, I practiced law, but now I’m in business. I look at law degree as a great thing to help, just in your thinking, and relationships with people, and whatnot. I don’t know what you think, but after getting a law degree and going, “okay, what does this thing do for me?”

Michael Chasin: Yeah. So I mean, it’s tough. I get that question a lot because I get a lot of young entrepreneurs coming to me saying, “hey, you went this path. Is this the right move?” And frankly it’s hard to give the advice. It’s a lot of money to go to law school. If you got free or your parents are paying for you, then by all means knock your socks off, go to med school too, you’ll learn some stuff there too. It’s a tough justification for the cost, but it is a really, really good education investment. I’ll tell you this though, past the first year, it’s worthless, so it might be worth it to spend 50 grand, go to your first year of law school and then say, “ah, I’m good.”

Kevin O’Keefe: I guess we’ll get off that aside, because I have a different opinion. I found it worthwhile all the way through. But going back to when you say a “pivot.” I assume that means you got started on something and then you realize that may not work, let’s pivot to something else. How’d that all come about?

Michael Chasin: So originally we started with that idea of basically a market place to find lawyers and clients that was called LawKick. That actually went pretty well for about a year or two. We raised a few hundred thousand dollars from outside investors and you know, had hundreds of lawyers using it, but there were a couple fundamental problems. So basically a pivot always arises from, “I see a different problem as a result of the first thing you were trying to solve.” So we saw two problems with the market we were playing with. One was the lawyers were providing a really bad experience. We would send the clients to a law firm or a lawyer and the lawyer would send them paper PDFs, they would send them one message and never follow up, and it’s kinda the same way I would get irked when I would send a referral and the clients would get a bad experience. So they would say, hey, the website is great, but the lawyers are terrible. So that was the first problem. It’s almost like sending someone in an Uber, but asking them to pay with cash. It’s of not a frictionless experience. And the second thing was on the lawyers. The lawyers weren’t willing to pay for the leads we were sending them. And when we figured it out, it was really, the leads were good, the lawyers were just bad at converting them. So we realized, okay, this problem needs to be fixed before we can fix the other problem. And that’s where the pivot arose. We said, okay, this business model is tough right now. And there’s a need that needs to be fixed first.

Kevin O’Keefe: So you were doing this with your buddy from law school. How’d you guys get by? You’re out of law school, you got an idea. A few hundred thousand is not a lot of money, but it takes a lot of time to raise and screw around with all this stuff. How’d you deal with all that? How’d you get by?

Michael Chasin: So on that couple of hundred thousand dollars we raised, we used pretty much none of it for ourselves. It was all for employees, for the office, whatever. My business partner at the time had more of a background in product design and development, so he had started his own kind of shop for building iPhone games and apps. So he was making residual income from that. So thankfully he had that. And then for me, I had been working at a business consulting firm so they kept me on as a consultant part time, and then I was also driving Uber.

Kevin O’Keefe: This is a great story here, because you read online all the time about how Bill raised all the money, and I’m always thinking “you know, there’s a lot you have to figure out about what your business is.” You don’t need the money until you figured all this out. I mean, you went out and drove Uber to supplement another job that you were working, while you were working on this, and you had another buddy doing app work. Are you guys still working together now?

Michael Chasin: Yeah, yeah. Still partners.

Kevin O’Keefe: So how many years later is that?

Michael Chasin: It’s been six years.

Kevin O’Keefe: So when did you reach the low point. When did you think “is this ever going to work out?”

Michael Chasin: So many times! There was one night in particular I remember as vivid as can be. It was probably about four years ago, before we started Lexicata. Basically what had happened was we had started doing the pivot and we had one software developer that we were paying, I think a thousand dollars a month, full time. He had just graduated from one of these bootcamps, didn’t know what he was doing, built the first version of our software, and then about two months in, we weren’t charging or anything, and he basically was like, “Hey, I just got a job at Scorpion, the marketing firm.” And I was like, “look man, you can’t leave us. We’re nothing without you. We don’t know how to build this stuff.” And he was like, “look man, I’m sorry. I want more. I’m not looking for a startup life, this was cool but -” and we were like “whatever they’re paying you, we will match it. We’ll give you healthcare!” We couldn’t afford any of it, but it didn’t matter. He was gone. So the night that he quite was probably the lowest point in my life. I literally just sat on my rooftop, drinking beer, and thinking “what the hell am I going to do?” But necessity breeds innovation, right? Or at least, you know, survival. So the next day I get into work and my partner and I are looking at each other like, what the hell are we going to do? And I said, “you know what, I’m a salesman, let me sell.” He’s like, “nobody’s going to buy this crap,” It was honestly crap at the time, but it was something, so I went for it. The first day, I sold a year subscription for like 99 bucks. And though, “okay.” Next day I sold another year for $195 – just making up prices at this point. And fast forward a couple weeks later and we’ve made a couple thousand dollars, and I realized “oh, maybe this is something people actually pay for. And that was the first lesson of a startup: charge earlier than you want to, because you never feel ready. The product never feels ready.

Kevin O’Keefe: It will never feel ready and until you get customers they can’t tell you what’s working for them. And then once you get the money, it feels like wind in your sails. “Oh my God, I built somebody and that somebody will take money out of their pocket to buy it.” You made that turn real fast, but when did you know you were going to pull this off? Because right now Lexicata’s got a pretty good name right now in the marketplace. You hear of the company regularly, you’ve done a nice job. When did you first feel like, okay, we may do this?

Michael Chasin: I’d say about three or four years ago. So when we first started Lexicata, we originally had the idea of using it as a revenue driver for the original business. We said “we’re going to do this to try to generate maybe $10,000 a month to fund the other company to keep us alive long enough to ride out whatever business model we need to figure out.” When people started saying “I can’t live without it,” we thought it was more of a luxury than a necessity. And then when one of our lawyers basically said “I started using your software and I doubled my revenue in two months,” and I was like, “holy crap, really?” Like I didn’t even know we could do that. And so that was the turning point. Then we started no longer taking annual payments, and we were able to only take monthly payments, because we could afford to. That’s when the shift occurred.

Kevin O’Keefe: What would you tell somebody, you know, either back in law school, who’d like to start something, or maybe it’s a lawyer practicing that’s going, “I want to go out and start a company,” – what would you tell them?

Michael Chasin: You’re never ready. I have a lot of friends that I’ve pushed, not necessarily in entrepreneurship, but in their own practice. They’re not happy, they’re not making enough money. It’s like, look man, you’ve got the tools. Nobody knows what they’re doing anyways, everyone’s faking it till they make it, right? And I’m proof of that, you know, for the first year of doing it. Just don’t wait, because the only way you’re going to learn and figure out how to run your own business is by doing it, and the only way to get a crash course is by failing sometimes, and you’re going to fail, and that’s fine. Your goal is just to succeed more than you fail. And when you do fail, really understand why. I think a lot of people try to ignore their failures because it makes them feel bad. But I think the true strength of a real entrepreneur is figuring out why you failed and never doing it again or leveraging it into success.

Kevin O’Keefe: And you don’t have to quit your day job to get started. I’ve found the technology costs are a lot less than they were 20 years ago when I did my first company.

Michael Chasin: So I’m kinda torn on that one because I’ve given that advice for a while and I’ve talked to a lot of entrepreneurs that say don’t quit. So it’s tough. I think it depends on what the idea is. It depends what your financial situation is, what your family situation is. I was relatively single at the time I had a girlfriend, but very not serious. And so it was easy for me. I was supporting myself, so if I wanted to live off Ramen, I could live off ramen. It didn’t matter. But I think, with anything in life, if you’re going to succeed, you almost have to be all in. And so I think it’s fine to do that for a little bit with the intention of saying “within three months” – and I wouldn’t give product milestones as the reason why you quit – I think it has to be like “I’m going to give myself three months” because, again, necessity breeds innovation. And if you give yourself a timeline, you force yourself to make that decision and you force yourself to go faster than you want to.

Kevin O’Keefe: Thank you, sir.