A Conversation with Bryan Pham for the Asian Hustle Network podcast
Bryan: At what point did you realize that you had product market fit and how did you
advertise this product?
Raad: It started out with my co founder and I knocking door to door with a square
reader and going on Yelp. We started charging people $300 to join the platform and
promising them clients, even though we had no ideahow we would get any. Then, we
realized that actually getting lawyers to pay for your services is a harder problem
to solve for.
So it started off as this SaaS subscription model and we allowed lawyers to upload
their real time availability. It was similar to a Zocdoc for lawyers where people with
clients can go in, click a slot, get a consultation, get the lead and they would pay us
in exchange for that. That wasn't really good at product market fit, It wasn't
sustainable. We were going after so many different practice areas from divorce
lawyers, to personal injury lawyers and we were spread too thin. Eventually we
focused around startups and small businesses.
We thought that we had product market fit at that time, but it really wasn't. Yet, it was
enough for us to get the attention of 500 startups because we were growing. We were
doing a few thousand dollars in revenue a month and it was picking up.
In terms of social network and how we marketed, I utilized Quora which is a Q&A
site to filter by all the legal questions that people were asking. I cracked open my
old law school textbooks and began answering hundreds and thousands of them for
free and I would link Lawtrades at the bottom for people to check it out. It resulted
in a lot of people visiting the website. I would answer questions like should I
incorporate as an LLC or a C Corp? I must have answered that in 50 different ways
on the site, but it eventually drove some traffic back to the main homepage.
What's cool about Quora is it also picks up with SEO. So if its a really
popular question, people can type it on Google and then Quora will usually be the
first answer there. So not only do you get Quora's traffic, you get Google SEO traffic
as well. That jump started a lot of our early growth and a lot of our early users.
Bryan: I know that you initially mentioned that you thought you had a product market
fit, but what was a real Pivot that caused the product market fit?
Raad: It's tricky because you can grow your company, get paying customers and just
assume that you have product market fit. Fundamentally, if your underlying unit
economics is not sustainable and your customers aren't constantly coming back to the
platformusing it more and more, it becomes really hard and expensive to grow your
product. You can be sort of tricked into thinking that you have product market fit,
which is what happened to us.
We were selling to startups and small businesses and eventually got into 500 startups,
which invested around 125K at the time. Then, we eventually raised a seed round
shortly after doing demo, which resulted in raising a little over 3 million dollars. It
was led by a big VC fund, Draper Associates. At that point, we switched away from
just posting on Quora because it wasn't scalable to continue running more ads on Google and Adwords.
At a certain point, we were spending close to 100 grand a month on Google Ads.
We were acquiring lots of customers and focused on growing the top line revenue in
the business, even though we were actually losing a good amount of money.
The problem with the early stage startup small business segmen, is the vast majority of
them go out of business within the first year.
If you think about when you're starting a company, the last thing you want to spend a
lot of money on frequently is a lawyer. You're trying to hire for engineering, you're
trying to market and spend money on a customer acquisition. When you're building a
marketplace start up, if your demand side usage isn't predictable and recurring, then
that doesn't provide a lot of incentive for your supply side to stay on board.
So at this time we were losing lots of cash, but we're growing top line revenue. We
were doing anywhere from 100 to 250k in monthly top line gross revenue. We knew we
were going to raise a series A and we were going to figure out this losing of money
thing later on. What ended up happening is we failed to raise our series A. At the
time, we didn't know why, but then we realized that there was a competitor that came
out that took our idea and raised around 70 million dollars. It just so happened that he
was a famous founder named Justin Kan who launched his company called
Atrium. He raised from every single VC that we spoke with and we realized why
everybody stopped answering our calls. Justin had close to a billion dollar exit doing a
legal tech company, so why would you trust a bunch of nobodies from Queens to be
able to compete with him?
This goes into the second phase of it, we were forced to get profitable. At that time, it
was a travesty me and my co founder stopped taking salaries. We laid off 80% of our
team, and we just had to get profitable.At this point we were all in on Lawtrades,
failure wasn't an option.
It was a blessing in disguise because it forced us to make this pivot into selling to our
true product market fit, which is legal departments in bigger companies. We now
work with companies like DoorDash, Pinterest, Opendoor and Angelist. We sell to the
general counsels within those companies who have a daily legal need. It went from
startups that might have an annual or quarterly legal need, to companies that use this
every single hour because their legal teams are small, but their companies are growing
and scaling.
It seemed we were doomed for failure, but it all made sense. We rebuilt the product
but we used pieces of it that worked for the small business side and tweaked it for
more longer term enterprise level engagement. Finally it all clicked and our LTVs
went from $1,000 to, basically close to a million dollars. We attracted an even better
supply and the revenue was predictable. Then we kept getting more customers
which attracted more supply and allowed us to become cash flow positive based off
that pivot.
Atrium and another competitor then ended up going out of business and we survived.
A a couple of weeks ago, we raised our Series A.
How we found product market fit