The world of legal contracts is tedious at the best of times, something Noah Waisberg knows all too well. Initially a corporate lawyer, he saw an opportunity to leverage artificial intelligence and machine learning to automate much of the mundane work associated with contract review.
Thus Kira Systems was born. Initially, Waisberg bootstrapped the company to become a go-to choice for the world’s top law firms while building a team of over 100. Now, with a $65 million investment from late 2018, the company is poised to grow to new heights.
Speaking with Peerscale, the lawyer-turned-founder explained Kira’s founding story, why he took investment, and how his membership with Peerscale changed his perspectives on learning.
How did Kira Systems get started?
I got together with my co-founder in 2011. Previous to founding Kira Systems, I was an M&A lawyer at a very large law firm in New York City and I spent a lot of time reviewing contracts. As I got more senior, I was overseeing contract review.
Doing that work, I realized three things:
One – People spend a ton of time reviewing contracts.
Two – Despite the fact that top grads, from the best schools and the best training programs, were doing this work, people still make mistakes. It’s human error prone.
Three – When doing this work, people tend to look for the same things over and over.
We saw an opportunity to build software to help. We thought it would take us four months to harness machine learning and apply it to this problem. It would have taken us six months to fundraise, so we decided to just build the software.
What hurdles did you hit as you built the software?
After six months the software wasn’t working well – and had little chance it would work well. My co-founder’s new estimate to get working software was 3 months to 10 years. At that point we didn’t think we could raise money – it’s not a compelling pitch to say to a venture capitalist “the software will work sometime in the next 10 years.”
Instead we just kept building.
By 2013, two and a half years later, our software was helping early customers take 20-90% less time to do contract review with the same, or greater, accuracy.
But we had a problem: no one was paying us to use our software.
Again, we didn’t think this was a compelling VC pitch, so we just kept working.
How did you get to revenue?
We added a feature where people could teach the software to find new information by themselves as opposed to having to go through us. That turned out to be very appealing to early adopters.
In the meantime there was a large early adopter who needed something like our software. It was a high-value problem to them and they were willing to spend money on it.
Towards late 2013, we started getting revenue. By summer 2014, we started to connect with the market and get real sales. In early 2014, we were a four person company. By the end of 2014 we were up to eight, all off revenue. We grew more in 2015 and 2016, adding customers as well. By the end of 2016 we were up to about 35 people.
Now we have the majority of the 30 largest law firms in the world as subscribers and grew to over 100 employees when we took our first outside funding round in summer 2018. Now we’re up to about 140 employees as of early 2019.
When and why did you bring on investors?
The deal closed August 2018. We decided to take on investment for a few reasons:
One – We thought valuations for a company like ours would be pretty attractive. It seemed like a good opportunity to de-risk things for the company as well as for my co-founder and me.
Two – We have this longer term idea of what we can build and we thought of a bit of extra capital would allow us to think more long-term.
Three – We saw what was possible. We saw a recession could come. We felt like being well-capitalized if that happens.
The other thing we were not initially thinking about was that our investor had ‘done this’ a lot before. It turns out going from 35 to 110 people is a very hard process that you screw things up during. We realized this investor had a bunch of companies with similar experiences in their portfolio. After doing reference calls, I came to think our probability of success would be higher on the virtue of these investors giving us guidance.
What’s the biggest challenge you’re facing now that you’ve raised?
I think people management is always hard. There’s a lot of questions about when you need to hire people and what the right skill sets are. There are different people we hired where we were thinking about our needs at the time… and maybe not being thoughtful about how our needs are changing.
One of the quirks with our company is that when you double in size, someone who might have been perfectly good at their job is no longer a fit. Managing a 10 person team versus managing a 30 person team requires different skill sets. It’s a different job.
How has Peerscale and your peer group helped you navigate these challenges?
It’s been helpful listening to the problems that other founders and CEO’s are faced with. It allows me to extend my knowledge beyond my own, and apply their learnings so I don’t have to make the same mistakes myself.
There’s no great way to learn how to be a CEO. But when I interacted with other CEOs of companies around my size, I found it a really valuable learning experience. I was primed to take advantage of peer learning.