Chatting with Noah Waisberg, the co-founder of Kira Systems, at the 2018 Legal Geek Conference.
Kevin O’Keefe: I’m talking with Noah Waisberg, founder of Kira Systems. Co-founder or founder?
Noah Waisberg: Co-founder.
Kevin O’Keefe: Okay. What does Kira do?
Noah Waisberg: Kira helps lawyers find data and contracts faster and more accurate. One of the big things that a junior corporate lawyer does, for example, is due diligence, and that involves reading through contracts and looking for the same things over and over again. Our clients, which are basically a majority of the 30 biggest firms in the world, plus a bunch of others, do that work in 20 to 60, sometimes even 90 percent less time using Kira and they do it with the same or greater accuracy.
Kevin O’Keefe: So these systems, the processes and leveraging technology, the same way that any tech business would do it or any company would do it, become more efficient when you don’t need as many people to do the same thing or those people can do other things.
Noah Waisberg: Or those people can do other things. They can do more contract review. One of the real things in the contract review pre-Kira is that people are reviewing a super limited sample of the number of documents that they might have reviewed. Now with Kira they can give their clients a lot more assurance of what’s in there. A bunch corporates use our software too to help pull data out of their contracts as they’re putting it into a contract management system or trying to figure out what’s going on with data privacy now that the GDPR has come in or trying to figure out what’s going on with the contracts with Brexit. Tons of situations like that.
Kevin O’Keefe: Why you? How’d you get into this?
Noah Waisberg: I was previously a merchant acquisitions lawyer as well and I spent a lot of time reviewing contracts and then as I got more senior supervising people reviewing contracts.
Kevin O’Keefe: Where were you based?
Noah Waisberg: New York.
Kevin O’Keefe: And where is Kira based?
Noah Waisberg: Kira is based out of Toronto. I am from Toronto. Great place to run a company out of and a wonderful place to live with a family, but New York was a good place for practice nonetheless.
Kevin O’Keefe: When was that?
Noah Waisberg: Alex Hudek and I started the company together in January 2011. We were basically a two person company. We thought it would take us six months to raise money, four months to raise the software or, even if we raise money, we’d still have to spend four months building the software. And so it was like six months versus ten months, or four months versus ten months, and we decided to just start building the software because we thought it would take four months to do it. Six months later, the software did not work well and we realized we had no chance of getting money, so what are we going to do? I go to Alex, who has a PhD in Comp Sci from the University of Waterloo, asking, what are we going to do? My Comp Sci PhD co-founder says that sometime in the next ten years, we’re going to get the software to work and it’s going to be great. We did not think that would be a very appealing pitch. So we just kept at it and kept working and after two and a half years or so we got it to work properly, so about spring of 2013. But by then, you’re running a business for two and a half years, no one has given us any money by then, any revenue. It’s not like you can go out and raise money and say we’ve been running this business for two and a half years and no one’s ever paid us any money, but that’s gonna change.
Kevin O’Keefe: Yeah, tell me about it. When my company grew and grew, LexBlog, we got to the point where for awhile we were spending more than we were bringing in even though we have a large subscription revenue. So then it was the idea, okay, we should raise capital. When you’re 11 years old and you’ve been making a lot of money but now you’re getting much bigger, people are looking at it and saying, “We’d like you to get back to breaking even or above,” which was really eye opening for me, so I stayed self-funded through that time.
Noah Waisberg: We were self-funded until like six weeks ago actually. So we’ve grown, we went from like two people back in 2011, 2012 we were two people, 2013 we went deeper into our savings and hiring a couple additional people under the teams. We were up to four, but it was like, customers occasionally started getting us revenue and started using us on projects and saying they liked us, so things were going a good direction. Finally, summer 2014 things started to really change and we went from being like four people, I don’t know, four year ago, maybe by now we were up to five, to eight people by the end of that year, to 20 people by the end of 2015, to like 35 by the end of 2016, I was talking to one of our UK employees and he started this week last year, he’s employee number 57. We’re now at like 122 or something like that and the funding totally doesn’t come into that at all.
Kevin O’Keefe: So you were able to build this thing from self-funded? A pretty reasonably sized organization.
Noah Waisberg: So we just took in our first outside capital, again six weeks ago, it’s like 50 million dollars for a minority stake, right? Yes. We have grown the business a decent amount, but hopefully we’ve got way more to come.
Kevin O’Keefe: How did you survive? When you’re keeping your head’s down, you’re doing the work, I mean, what you said was two years just surviving on savings.
Noah Waisberg: My wife had a good job, she was a lawyer in a law firm, and so that helped a bit. I did have a bunch of savings, some generous bonuses in the law days and we kept our expenses low over the years. But then, as I mentioned, there was a point when we saw other companies coming into the space. When we were first thinking about it, we didn’t think people were ready to start buying software like ours, and then we reflected a little bit more and we said, well, you’re not ready to start buying software like ours. But at some point they are going to be ready. The worst thing would be if they chose someone else’s software instead of ours. And so we decided to go deeper into savings and spend even more, and we did. It meant that then our software was actually good and people started paying us for it, which enabled us to make the software even better, which enabled us to really keep performing very well against our competitors. People would try out our competitors’ software, they’d try out ours, and ours was just not comparable.
Kevin O’Keefe: You said a couple things in there. The idea that people will start to pay you for using the software, so you brought it to market by having people test drive the software, give you feedback, see if they become paying customers, I’m getting the gist of that. Is that about what you did?
Noah Waisberg: Yeah, totally. I spent a lot of time trying to line up people to try the software.
Kevin O’Keefe: It’s knocking on doors, it’s contacting people.
Noah Waisberg: Yeah, just trying, trying, trying, and reaching out. Lots of effort, lots of hearing no, and stuff like that.
Kevin O’Keefe: Were there times along the way when you guys were sitting there thinking, “Is this going to make it or not make it?” Were there points where you were a little bit more nervous than you might be another time.
Noah Waisberg: Listen, there’s definitely hard times, especially during the stretch when our software didn’t work, there was no prospects of it working any time soon. Actually, during that period we had our first child, so my wife went back to work at her law firm job, which, you know, she liked in its way, but it’s a pretty intense job and went back to that and I had in the meantime a negative salary and no prospect of that changing anytime soon. That was pretty hard, or that we’ve got the software to work and no one was paying us. That also was pretty, pretty hard.
Kevin O’Keefe: How do you get through those low times? If other people are wondering how you get through it? It’s not easy.
Noah Waisberg: So for me, I think two things. First of all, I believe that what we are building would work and be impactful and if we built it, they would come. Number two, we saw some encouraging signs, right? We talked to people, we’d go and talk to law firms and they would be like, “Oh, that’s interesting.” They wouldn’t say no, it just wouldn’t go anywhere. They wouldn’t necessarily move things forward fast. But we went and spoke to corporates, and I happen to have some relationships at some large corporates that I’ve done work with, and they would be like, “Wow, this is amazing.” I still remember someone at a place that was then a fortune five company, fortune six company, something like that, being like, “This is lightning in a box”. He was like, “This reminds me of something that’s lightning in a box.” So that was really helpful. And then number three, I tend to perform better in a team environment and I knew that Alex, my co-founder, was working really hard at this and I think we both knew that we’re going to try and push this as hard as we can.
Kevin O’Keefe: What do you tell the lawyers that might be sitting here today at Legal Geek, and they’re wondering in the back of your mind that, this idea they have that they really think would be great. Do you follow through on it? What are you doing? Right now, you guys look like an overnight success, but it’s not that way.
Noah Waisberg: It’s not, and I would also say that it mostly does not end up like that. There are a lot of ways that it might not have ended up here, where the outcome could have significantly worse. I think my expected value, it’s pretty high from staying in a law firm. I’m really glad that I’ve done this. I think if it hadn’t worked out financially, it would have been a really amazing learning experience, but I think you do have to be prepared to view it as almost an investment in yourself. For me, the way that I thought about it was I was kind of, as I thought about leaving the law firm, I thought about going to business school or something like that and I’m like, “That’s dumb,” you know, I could spend like 70 grand a year going to business school or I can take that 70 grand and and put it into–
Kevin O’Keefe: You have an MBA. And more.
Noah Waisberg: Oh, yeah, I’ve had to read a lot of books and stuff like that too, but you can really learn a lot by doing this, and I approached it as instead of doing more schooling, why don’t I just learn this stuff practically?
Kevin O’Keefe: You are pretty wise to look at it that way now. After my first company, it didn’t come out the way I wanted it to, we got it sold to LexisNexis, but somebody said that no matter what it is, you’ve got way more than a Harvard MBA or a Stanford MBA. And at first I said, “No I didn’t,” and they said, “No, you did.” I’d never run a business, I’ve never founded a business, I have no idea how to go out and get customers. You’re making it up because you didn’t go to school for this.
Noah Waisberg: Alma and I were just talking about how we remember going to ReInvent Law back in early 2014, and there was David Perla on stage doing the talk, and David Perla, it’s still very impressive, but you actually have stories to tell when like people were listening to Alma’s stories up on stage. You just go and do it, try to do it, and slowly it goes along. Teammate help a lot, too. One of the really excellent things for where we’re at as a business is, in the early days we were really, really, really lenient. When you’re spending your own money, you’re working from the living room, keeping expenses as low as possible. But as the business started to get bigger, we had more money to invest in it. Initially we were hiring, we’ve been able to really hire some very experienced people into the business, and that’s amazing. Some had been like a CFO or a head of sales, or a head of technology.
Kevin O’Keefe: Yeah, like “How do you know this stuff?” “Oh, I just do.”
Yeah, like “I’ve been doing this for fifteen years. This is what we used to see in this situation.” These people can teach you so much about how it works. And not just at that VP level, but also a lot of individual performers in the company which have taught me so much.
Kevin O’Keefe: Well, thank you very much.
Thanks for having me here. This was fun!