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00:00:00 Imagine if everyone thought you were too young to be taken seriously. You're in your early 20s. Your co-founder is 19 and you're selling AI governance to managing partners with decades of experience. >> We had firms to tell us come back in like 5 years. Come back when you are Microsoft sized. You know, we have to remove imagination from the equation. Less vision but actually more of the product. If someone made a remark during our demo about the product features on the first call like can we build it and
00:00:28 integrate it and show that to them in the next day. >> A year later YC backed 4 million rays and serving some of the biggest law firms in the world. What do you think is one of the hardest days that you remember? It's >> like January in Poland. We're just getting a lot of nose back to back. >> Pull back the curtains and show us what it's like raising as one of the hottest governance startup in San Francisco. My co-founder started taking calls on a Sunday night. Our round was essentially
00:00:55 filled by that Tuesday night. Hi, I'm Nam, founder of Truthsystems, and this is Founders in Motion. Quick thing before we get started, we have a huge goal this year of hitting 10,000 subscribers. Yes, it's ambitious, but it lets us help more people build really great companies. So if you enjoy the content, learn something new, the best way to support us is by subscribing. Okay, let's get back to the video. Truthsystems started as a side project while you were at the Stanford lab and now it's a standalone company,
00:01:34 YC backed, 4 million raised. What was the initial glimmer of the idea back then? What has the company become today? It was quite obvious to us that the the biggest bottleneck for AI adoption was not going to be about capability, right? It was going to be trust. First couple version, we actually tried to build AI guard rails like or packets to uh developer tools and then tried them to even sell them to legal tech vendors. And I think on paper it made sense, but in reality like no one was actually
00:02:08 buying the product. We realized that the pain wasn't really with the vendors. It was actually with the law firms itself. For us, it was about like flipping the model around and instead of like being just a point solutions like being a lightweight vendor agnostic layer now package as a browser extension that sits above and monitor all of these different tools that the law firms have. it really became, you know, what charter is today, which gives firms a single source of truth when it comes to AI compliance.
00:02:39 And I think it's about turning from just trust us, but it's really also about making trust observable as well. So that's kind of how like the glimpse became iterable and ended up to the version of it today. just the entire industry as a whole like AI security and AI governance have gotten a lot of interest in the last year because now you have agents calling agents running like mega multi- aent schemes and how do you manage it but also once you've managed it you can unlock other use
00:03:09 cases >> definitely I think you know compared to where it was when we begin and and where it is now I think to your point of like just the the the sprawl of agents And and now that people really do see the values of LMS in production, right? Like the the question is no longer about productivity. It's really about what should it do and how like what kind of data should it be accessing. What we are trying to do is allowing them to add guard rails from a user behavior level perspective. Right? So real time
00:03:43 inference >> being able to do you know real-time classifications and interception. you made a very intentional decision to start with lawyers. Um so lawyers are in my experience a little bit risk averse, highly regulated industry. Um and already being targeted by quite heavily funded players like Lora and Harvey of the world. Why lawyers? >> Why law to us is is both such a natural and inevitable moment. having our background doing research at a law school like we came in you know having
00:04:21 relationships and credibility already and trust was built organically like legal right now as a you know industry it's low leverage and entirely people dependent professional service managing partners right saw these tools read and write nearly as well as junior associates do at that point the questions for them stopped being like okay like does it make sense for us to buy technology anymore but it became like okay if we don't disrupt ourselves like will we get cannibalized permanently and I think that's why AI
00:04:50 and options inside law firms is happening so far fast in this kind of market where speed without trust would break the system it's kind of like perfect for a company like ours to come in >> here's what I'm super curious about so you are in your early 20s and your co-founder is 19 so when you started pitching this concept to managing partners at major law firms what was it like walking into those rooms uh as a young founder selling governance to people who spent decades in the industry.
00:05:23 >> It was definitely like super super intimidating. I mean we had firms to tell us come back in like 5 years come back when you are Microsoftsized when you're that young actually you don't get a lot of benefit from the imagination. For us we realized that you know we have to remove imagination from the equation. less vision but actually more of the product, right? Yeah. So, what that meant in practice was just like shipping faster. One of the things that when you're young and you're energetic and
00:05:52 you have the capability is that like the number one priority is to actually put the real software in their hands, right? So, one of the things that we index on, you know, was that if someone made a remark during our demo about the product features on the first call, like can we build it and integrate it and show that to them in the next day? That's kind of like how we earned a shot. It wasn't like persuasion. It wasn't It was really just like relentless execution. So, I think that's how we kind of allow the
00:06:21 question to stop being, okay, are you credible? Are you old enough? But it kind of became like, okay, why shouldn't we try this? >> So, what were those first few kind of corporate pitches like? >> Oh my god, it was it was definitely rough. I'll say to that like what we kind of learned was that the best pitches wasn't when we talked the whole time. Like let's really measure the pain here and let's really like think through how can we problem solve around your situation the best that we could.
00:06:52 >> What was the first law firm that said yes to you guys? >> We definitely got a lot of warm intros from our research. So, you know, having that pipeline was definitely helpful. But our first real customer actually came from a cold comment on LinkedIn. I think one day we saw like a direct director of a law firm posted on LinkedIn and I think she was like very openly frustrated about the lack of guard rails and trust in AI and I was like >> hey we know we know people are too you know
00:07:19 uh but obviously you know just really not pitching but just kind of engaging with her content. We were able to score a conversation and it kind of turned into a six-month sprint where every day we met with their team and we have to prove somewhere along the line that we were useful and like by the end of that year was invited to their annual dinner and you know that's how you know like you you crossed the the trust line. Yeah. >> You've like entered the family you know. >> Yes. Exactly.
00:07:47 >> One point that I thought was super interesting when you mentioned with the internet everyone is just one or two connections away. Like it's really not that hard to get in touch with people and it's more about like how do you intentionally cultivate every single conversation. Young founders have the advantage of using social media to like stalk potential law firms and then compound them >> and then convert them as a customer. So that's incredible. Um okay so maybe let's talk about the product itself. So
00:08:15 you say True Systems can monitor and flag non-compliance in real time directly in your browser. So from an enduser perspective, what does this look like on a day-to-day basis? >> We're really just sitting in the background and the only time you would notice that you know charter comes up is when you might potentially be violating firm policies. But from the >> So we don't want to see come up on the browser. >> Exactly. Exactly. Exactly. Right. like you know we are only come up like as a
00:08:47 last resort kind of reminding like hey like you could be potentially doing something wrong like are you sure you want to continue from the admin perspective is really about giving them that layer observability you know having that detailed understanding of you know AI usage down to the logs level for every client and matter their attorney was working on and then having that kind of flexibility to update and enforce policies comes down to real-time inferences and like a lot of the work that we had to do in the early doing
00:09:17 guardrails was actually okay even if you're uploading a file like 500 pages can we make sure that that is you know being done and scanned through within a couple seconds some of the stuff that we're experimenting and even doing is like okay can we distill them into smaller models to allow them to run in real time right so being at the forefront and and being kind of like an edge case company allows us to do a lot of cool experimentation from an AI research Arch perspective and I think that's definitely been one of the most
00:09:47 like rewarding but also like cool things that the team has worked on. >> A hot take I have about this whole AI thing is the world is moving towards um a lot of niche systems a lot of niche models rather than using the generalized LLM for everything just given a the blown out and cause and secondly just how critical a lot of the applications have become. So, did this idea kind of exist before your time at the Stanford Law Lab or did it really take shape during your time working with Dr. Megan
00:10:19 Ma who's a major figure in like legal AI innovation? >> Being surrounded by Megan and you know having such like incredible figures supporting the startup like really surrounding oursel with people who understood the practice of law >> is what shaped the trajectory of the team. you know, folks like Megan, but also like other advisers that we have, Nikki Shaver, who ran KM at Paul Hastings at some point, or Tara Waters before that, she ran digital teams at Ashers, really helped us see how law
00:10:50 actually works from day-to-day. And I think without that grounding, we might have built something perhaps clever, but I don't think it would have been usable or even capable of getting through the doors to work with law firms today. So it really seems like that research experience helped you in terms of learning more about the problem space and like how do you build for the problem space. So for someone that's listening that's really interested in working with an an AI research lab. What
00:11:15 are some advice you have for getting into those very competitive programs? >> I saw one of your posts earlier about like okay like you know how how do you get started doing whatever he wants and it actually does ring a bell. I didn't have much to my name, you know, I like was studying the discipline, but I think what we really indexed on the team that like, hey, like we were building things that were very related to that, you know, before like building guard rails, showing, you know, Megan like the the
00:11:43 the suite of stuff that we were doing back then before even joining her labs. So yeah, it was definitely a blend. Like we cold email uh Megan and you know by the time we or by the time she responded we already had something to show for her. >> What I always say is you want to show that you can do the work but just not for them yet. >> And then use that show them the value that you can bring. Don't like cold email in the sense of like I want 15 minutes to pick your brain because like
00:12:12 they don't have 15 minutes for them for you to pick their brain. They have 15 minutes to review whatever value that you did and then see if they want to have a conversation with you. Do you apply to a Y combinator four times in the past I think you said. So what change in your application or in you and your founding team that really made this one stick >> first like you know the conviction of the team obviously having traction and I think just kind of like clear vision of where the town is with conviction you
00:12:43 know it's not just about optimism like it's not like oh okay like this is a great idea I'd love to work on it right like for us it was actually moving to Poland for 6 months and going heads down like there was no safety you know, no plan B, like we don't know if we'd go back to school or try to race around. But I think that kind of uncertainty really forced us to decide that, hey, is this something is this company is something that we believe in? And once we went all in, everything about the
00:13:12 company really sharpened. Most obvious one is obviously traction for us was really just start talking about customers like how they were using it, how they were trusting us with genuinely high stake situation. I think traction really grounded everything and then I think one of the last part where YC always asks is like why do you think this would be a billion dollar company when you are able to paint that picture where like our company will solve anywhere AI touches sensitive data like that's the problem space that we want to
00:13:41 tackle I think then you can present it as a billion dollar opportunity so in those previous applications I think we have pieces of those but finally in the fourth application. I think we had all of them together and I think that's what finally made it stick. >> So, I've had a few YC founders on the podcast and they actually all say very different things. You guys had like a product and like certain traction, but there are some teams that like newly form only start working on an idea or
00:14:10 like we're thinking through a couple ideas. So, it really ranges. Okay. So, you've also had a pretty intense fundraising sprint. So, can you like pull back the curtains and show us what it's like raising as um one of the hottest governance startup in San Francisco? >> Previously applying to YC, we you know tried to go out and try to raise the preede round as well. And I think before it was like actually very difficult even for a while like there was just it was just not going anywhere when we were
00:14:44 raising at that point finally you know all the three components that that we were talking early of why YC accepted us like that were components we knew very clear. So my co-founder started taking calls on a Sunday night and I think our round was essentially filled by that Tuesday night as well. So I think in total we we were out in the market for >> for around 48 hours for sure. >> Must have been like such a weird experience like before when you raising precine it was like so difficult and now
00:15:17 it's like wow like all this interest in me. >> It's a very crazy moment for sure. It helped in customer conversation because we can kind of like reaffirm that we are serious company. It's very important to kind of remind oursel where we are actually are with our customers and kind of having them as their our north star for sure when it comes to YC it kind of becomes like a measurement of like how much could you raise and that you know battle could go until the end of the day and it was for us like the moment the
00:15:46 money hit the bank we were already on our first fly out to New York to meet with our customers. So I think that was the moment where it felt weird because that's when we know the journey has only began. I think that's a really grounded way to look at it and I think that's the way people should look at fundraising. What do you think is one assumption that you had about customers AI or startup that turned out to be completely wrong? >> It's easy to think that startups usually
00:16:11 would win via just relentless execution distribution in terms like compared to incumbents. But what >> you know cloud code or or having those coding tools is built as well is that like incumbents also shipped a lot faster because of these different tools right so distribution matter that much more and it does favor the the the incumbents in the sense that they already have those you know existing relationship right so I think when you think through what long-term modes has been it can't just be like oh Okay, we
00:16:48 ship faster than everyone. Like everyone ships fast these days. I think it's really about like how much deeper can you dig into the pain and then how much faster and like like how much harder is those pains to solve and just trying to go for those problem sets instead. >> Distribution has kind of become a very important thing. Um, and yeah, like it may is even the thing that will keep the ERPs, the kind of gigantic SAS tools alive because of the hostages that they have within their customer set. I I can
00:17:22 imagine you've had a lot of hard days, you know, because ups and downs for being a founder. >> Yeah. Yeah. Yeah. Yeah. Yeah. Yeah. >> What do you think is one of the hardest days that you remember or that come to the top of your mind? >> Yeah. as you said, right? I think as a founder, you sign up to get punched in the gut every single day. Um, so I could just end the answer by by saying every day is hard, but yeah, I think um probably one of the things that I remembered most was, you
00:17:54 know, when we first began and it was like January in Poland when we started like fundraising our preede. It was cold and you know like the for for most like out like fundraising outside of San Francisco is just not ideal. I don't really recommend uh and you know we were just getting a lot of nose back to back and I think I was coming up very close to the deadline that you know my parents like okay if there's nothing happened by this point you have to go back to school right um and just kind of like dancing
00:18:26 between those uncertainties of like okay like will this startup live to see another day like you know can we make enough movements with customers in order to to go and close those preede rounds >> and I going through that was definitely very tough, but I think it just kind of fortifies to me like why should you be doing hard things like why you should do the things that you do and and kind of like honing into the fact that like to me like I just enjoy like solving hard problems. I enjoyed the fact that I was
00:18:59 in Poland instead of in anywhere in the world trying to solve that problem and at the end of the day just being able to solve it with people that I really enjoy solving those problems with and that was my co-founder. So it kind of became the three abstractions I gave to myself during every single hard time. just being able to ask myself like hey like you know are the things I'm doing aligning with my core values and it kind of fortifies my strength as a founder going through all this hardships that
00:19:29 you're getting punched in the gut every day. something that I've heard so much from like uh other founders as well like right before a moment of aha typically is like one of the biggest like almost like depression period of their life where they're like nothing's moving like no nothing like there's no traction like I'm I'm finding it hard to close my preceeded like is this startup going to survive another day and then you have like your little break and you're like h
00:19:57 I'm so relieved and you're really grateful for it because you went through this gigantic spike of emotion. There's something fun about being punched in the face like multiple times a day, you know, like it builds character. >> So, a bit of a personal question. Truthsystems started right after you and your co-founder went through breakups. So, if someone is going through a similar personal transition, what would you tell them? For context, you know, both me and my co-founders uh started the company
00:20:28 when we just kind of had like a lot of like time on our hand after our long-term relationships. And I think it was very funny um you know that part of time because it was you know like what we were going through built that camaraderie too, right? Uh but I think you know for people that were going through major personal life transition one of the most important thing is that it's kind of like your opportunity to turn the lens you have on life back to yourself right I think those difficult moments regardless of those you know
00:21:03 breakup or you know investor rejecting or you know being in a place where you weren't sure where your future was going to go. It was kind of turning back on yourself and really allowing yourself to express like what matters to me like what does bring me joy right like >> there is a reason why it's a personal transition because it's unique to you >> and I think being able to understand this is who I am and this is what like brings me energy and joy and just kind of honing in on iterating through that
00:21:35 that's kind of like all you could do like really just being able to ask yourself like okay what can allow me to wake up and and go about my day for the next day. And then I think those kind of like built the layers and strength for you uh to to to be able to keep doing the great work. >> Every one of my friends go through like a personal like life transition. I think obviously it's like very sad for them >> but I'm really excited for the what they can create in the future because they
00:22:03 those are usually like very breakthrough moments personally and it really translates into like it typically translate into like maybe building a new business or doing something completely different or like testing a new career or moving to a new country and it usually turns out to be for the better. Um, so you know like those moments really define kind of like your life as a person. Okay. So if Truthsystems didn't exist and money wasn't a factor, what do you think you would be? What you
00:22:35 would do >> now? I would say I I'd probably go back to school actually >> because uh it's kind of interesting because you know going through the business uh I also realized that I I the reason why I love startups so much because I really valued interdisciplinary environments right like being in a place where you can create learn and experiment at the same time and I think you know when I'm meeting people in the business I found like the most creative people I know were just really good at like connecting
00:23:05 different fields and different ways of thinking. And I think in the age where AI do all the boring stuff like the people who excel will be the the creative people who can get these threads altogether and and these are you know in jobs and personal connections and I think school is just one of the few places that allows those kind of exploration where you know you can fail without everything being on the line. So I think you know actually Paul Graham tells a lot of the people in our batch that people should stay
00:23:37 >> to a YD founder. Do you know that meme where it's like Paul Graham any chance you get >> any chance you get. No, it was like like it it was so crazy. It was like meeting meeting your like uh like you know idol for the first time. But yeah, he was literally telling everyone like stay in school. You know, it is actually the last place where curiosity isn't penalized. So, I felt like if I wasn't building Truthsystems, I'd probably keep be learning and experimenting in an
00:24:07 environment similar to that. >> I think the best people in life in general are those that are so willing to learn and like explore new things and like be open to new ideas. When I was in school, I hated it and I wanted to like, you know, jump straight to like the career part and now I'm just like, wait, I kind of want to go back to school. Like, this is too much. >> I I shared that same sentiment. And I felt like when I was in those like class it was like why do I need to learn git
00:24:32 for and then you know next thing next thing you know it will be biting you in the ass. So for sure it's like it's one of those places where I felt like I wish I I I I took more away from it but it also just reinforces that you could kind of like be able to to to take those approaches of learning everywhere and and having those opportunities to do so. >> Yeah. Okay. So kids stay in school. Stay in school, kids. >> That's a wrap. If you like this episode, please hit the like and subscribe
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