Kevin O’Keefe: I guess I know who I’m talking to. Who are you?
Jack Newton: I’m Jack Newton, the CEO of Clio.
Kevin O’Keefe: How old is Clio now?
Jack Newton: Clio turned 10 this past Monday, so a really auspicious anniversary for us where we had our 10 year anniversary of launching Clio to the world.
Kevin O’Keefe: The spirit of what I’m doing here is interviewing legal tech founders. You’re a little bit of a larger scale, and a lot of people are here because of you. How did you and Rian Gauvreau come up with the idea to do this thing?
Jack Newton: To do Clio was, like many startup stories, filled with a lot of serendipity. I’d describe myself and Rian circa 2007, when we came up with the idea for Clio, as being two hammers looking for a nail. We saw this huge technology wave that was coming, which was cloud computing. Salesforce was just starting to take off, and we saw that it was this once in a lifetime opportunity to capitalize on this tech launch, technological transformation wave that will be disruptive in an industry. And then we started looking at industries that would have the opportunity to be fundamentally transformed by this cloud computing technology. And Rian happened to have exposure to legal by virtue of working at Gowling, which is one of the largest law firms in Canada, over a thousand lawyers. And he got to see how lawyers use technology, or maybe better put, don’t use technology, and the kind of opportunity that creates. And that was the light bulb moment for us, realizing that, number one, the legal industry was unbelievably ripe for a disruption at that point. The on-premise options that were common at that point were adopted at a very low rate. They were not widely used by law firms: they were expensive, they were too hard to implement, they were unreliable and they were hard to use. So we looked at that opportunity and said, “what if we could make all of this available via the cloud? What if we can make it easy to use? What if we could make it simple, and what if we could make just managing your law practice with a simple web-based application a lot easier than the existing solutions on the marketplace?” And we got to work and launched Clio about a year after we came up with the initial idea.
Kevin O’Keefe: But it’s not like you came up with this whole idea while you were in this big office, and you had all these people or whatever. You were living where, then?
Jack Newton: I was living in Edmonton and Rian was living in Vancouver. So I’ll walk that story back a little bit. We met each other when we were eight years old in grade three in Edmonton, Alberta.
Kevin O’Keefe: And what did you want to build then?
Jack Newton: Snow forts! It was a very cold place in northern Alberta, and we became good buddies over the course of growing up together. Eventually Rian decided to go to UBC in Vancouver, and I went to the University of Alberta, in Edmonton. We, we always wanted to build a company together. We had this entrepreneurial drive. We launched a couple of ideas that never worked, and eventually came up with this idea for Clio. For awhile Rian was working on the company in Vancouver and I was working on the company in Edmonton, and only when we started really scaling did we realize like, “hey, maybe we should get everybody under one roof and start building an office?” Our first 10 employees were completely remote, working from home. We were bootstrapped and eventually got everyone into one office.
Kevin O’Keefe: Weren’t you working in your house?
Jack Newton: I was working out of my house.
Kevin O’Keefe: And you guys had your first child?
Jack Newton: We had our first child shortly after we launched Clio. So Clio’s first two years I was working out of my house. We were bootstrapping, Rian was working out of his house, and we were also moonlighting. We were working day jobs and working on this thing in the evenings and weekends. Our girlfriends at the time, and now wives, could barely tolerate us. You know what it’s like, it was the grind, and it was a lot of hard work and a lot of uncertainty, but we were lucky in that I was a software developer by training, Rian is also a very technical guy, also has his MBA, so we were able to, with very small capital investment, build the first version of Clio, Because we were able to build it ourselves. Which is a different story for many legal tech startups that need to hire external folks to build a product for them.
Kevin O’Keefe: But at some point somebody heard about you guys, and all of a sudden you were out looking for money, you needed money. How did that all come about?
Jack Newton: Yeah, that’s right. So, we initially wanted to build a bootstrapped lifestyle business, honestly. When Rian and I came up with the idea for Clio, and launched it, we thought that a terrific outcome would be if this thing got big enough that it could throw off a couple hundred thousand dollars a year that we could divvy up and live off of. And we had no idea and, initially, no intention to build a company of this scale. We just didn’t think the market was there for it. And once we launched, we realized, number one, this market is enormous and way bigger than we ever thought it was in the first place. And we discovered that there’s this unbelievable latent demand for technology in the legal space. We actually think we discovered that “lawyers don’t like, or don’t adopt technology” was a bit of a false narrative. What we discovered is they just don’t want to adopt shitty technology, and they’ll gladly embrace great technology. They don’t want to embrace expensive, hard to use and unreliable software. And who would? So we realized this is was a massive opportunity. We started looking to raise venture capital. Our timing was slightly off, though, because we started to do that in 2009, 2010, on the heels of the financial collapse of 2008 and virtually no venture capitalist in North America was writing checks at that time. And we were demoralized, honestly. We looked for capital for months and months and months and got what I consider the most frustrating kind of feedback, which is, “you’ve got a terrific pitch and an unbelievable market opportunity, we’re just not writing checks right now because we’re scared the economic system as we know it is going to collapse.” I remember at the time, walking through an airport and the cover of The Economist was a picture of all the World Banks going down a drain, and thinking “I could not have picked a worse time to start a company.” But looking back, I realized that it actually built a lot of resiliency into Clio as a company. We’re used to the good times, and we’re used to the bad times. But that’s our funding story. One of my favorite Clio stories of all time actually is, you know, being in the midst of this very frustrating fundraising process and getting a cold email from a guy named Christoph Janz, in Germany, who had just exited his company – he sold it to the MySpace guys, actually, he had a company called Pageflakes – and became an angel investor. And he cold emailed us and just said, “my name is Christoph Janz, I’m from Germany, and I discovered your product on a website called web2.0central.com. Which, by the way, was a blog that my friend Reg in Edmonton ran, and he asked me one day, can I write a blog post about you? And I said, sure. Didn’t expect anything to come of it. Thought, worst case scenario, I get a bit of Google juice, and an inbound link to our domain. Christoph says, “I discovered you on web2.0central.com. I love your product. I’d like to talk about investing in you.” Now, we were on one of the very early incarnations of Google Apps at that point, and Google promptly sent this email to the spam box, I think because it came from a web.de email address, and it talked about investment opportunities, so it probably just checked all the boxes for a Nigerian scam email, and Google put it away. And Google put it away. Two weeks later he sends another follow-up email because we inadvertently slow played him and says, “by the way, guys, I’m really interested. I’d love to jump on a call and figure out if we could do a deal.” And again, straight to the spam box. And in what I can only describe as an act of God, Rian while he’s on hold with some vendor and just bored out of his mind, wonders “I wonder what’s in my spam box,” which I don’t think he’s ever, ever asked or done since, and just stumbles across this email from Christoph, and forwards it to me and says this, “this looks legit.” I follow up with Christoph and we jump on a call and, he said, “look, I just became an angel investor. I just finished my first investment, which was in a small little company out of Copenhagen called Zendesk, by the way,” – so he invested in Zendesk when it was four guys in a bar in Copenhagen, obviously now a wild success story – and his second investment was in Clio and he ended up leading our million dollar Series A, and that got us to our $6 million, Series B, and that got us to our $20,000,000 Series C, which was led by Bessemer Venture Partners, which is one of the most highly regarded venture firms in the US. And you know, we finally made it. We got through that funding gauntlet, but it was a struggle.
Kevin O’Keefe: Yeah. It’s quite an evolution to go from here. Like you’re saying, God, we could actually feed our families with this thing, maybe, to going up to other levels along the way. You have so many people here.
Jack Newton: We do. We have about 100 people, yeah.
Kevin O’Keefe: But people that I asked who are legal tech entrepreneurs: how’d you get started? And they answer, “Clio.” And it’s in all different ways. One was an accountant and knew about Clio. I said, “how did you know about Clio as an account? Was it through clients?” He goes, “no, it was me. I was building out a niche where i could do work for law firms, and I was looking for people who were influential in the law, and Clio was the obvious party.” He was thrilled, he goes, “I was one of two [preferred partners for integration] That totally made my thing take off.” It was TrustBooks, and now he’s able to put together a product that can integrate into it. You know, you talk to immigration people, where are you getting your work from? Clio. One person looked at me, when I asked, and said “is there any other place?” Like, why would I have to go any other place? The reach that you have is incredible. I mean, how many customers do you have now?
Jack Newton: We have over 150,000 legal professionals on the platform. So I think what you’re describing is the fact that for a lot of companies that pool of 150,000 customers is the most qualified and the most vetted customers you could hope for. You don’t need to go to a conference. The way we built Cleo was blood, sweat, and tears of going to – and I’ve seen you at way too many of these events, so you know – every CLE conference across the country. Every little town, going to state bar annual meetings, going to ABA TechShow, going to, you know, every stripe of legal conference, talking with the whole spectrum of lawyers. Some don’t understand technology, some only want on-premise somewhere software. And the lucky maybe one out of two lawyers we talked to understand technology, want to embrace the cloud, and want to become a Clio customer, and that that’s how we built Clio over the last 10 years. But for these companies coming onto our platform, we’re able to say, “look, they already get technology, they already get the cloud, they’re already in the mindset that you see at this conference, of being growth-oriented.”
Kevin O’Keefe: And they trust you.
Jack Newton: And they trust us.
Kevin O’Keefe: So they’ll know you personally by name and Clio. So they’ll go, “if I come here and I get affiliated with this company, this company casts enough trust that I’ve got a chance to get customers.”
Jack Newton: That’s 100 percent correct. We take a huge amount of pride and realize what an honor that is, but also something that we’ve got to live up to. That’s a really high bar.
Kevin O’Keefe: I remember seeing you, as I was slugging around at conferences, eight or nine years ago. You had a card table about this big, and whatever the stock thing is that you could roll in your suitcase and put up behind it.
Jack Newton: Oh yeah, I mean we did the blocking and tackling for those first at least five or six years. I remember schlepping that 100 pound display booth across airports all over the US. I remember almost running into a tornado driving between Arkansas and Missouri. I’ve got a lot of tales of those early days of Clio. But I think, you know, for me, number one it helped create a connection with customers that I still enjoy today. I think I really helped build the knowledge of what the typical struggles of a law firm. And one of the pieces of advice I give legal tech founders is that whoever can get closest to the customer wins. And it’s one of the things we’ve put a lot of energy into over the years. It’s just getting really close to our customers and understanding what their needs are. But importantly, also getting really close to their customers. in turn, which has been one of the big themes for us at this year’s conference, which is, you know, we need to help lawyers understand what their clients want and what their clients need in a much more clear way.
Kevin O’Keefe: How do you instill that in your employees, that type of approach? Where they become so customer-centric, or is that innate?
Jack Newton: So in our values, we have seven values at Clio, in our first value is customer success comes first. It’s indoctrinated in every employee, every decision that gets made at Clio, we start off thinking about the customer and working backward from that. And we make it part of our hiring process. We make it part of our firing process. If somebody is not living our values, we need to see evidence that they either do or have the possibility of living our values when we hire them and if they’re not, it’s one of the most common ways that we kind of talk about somebody in terms of not being a fit, and unfortunately maybe making the decision to move them out of the organization, because they’re just not living our values. And our number one value is customer success comes first and then we live it, we invest in it. We fly every single one of our product managers down to this conference, to interact with customers. One of the reasons we do Clio Con is that we’ve got a third of our staff here that come away from this conference, energized, passionate, and more psyched than ever to go and tackle this, and embrace both the challenge and opportunity we have to transform the legal industry after interacting with customers on the ground. We send our team all over the United States to go and sit down and embed themselves in law offices, work with our customers and, in some cases prospective customers, to really understand what their pain points and needs are. And we describe every decision we make as being a customer-focused decision and use that as one of the main decision points as to what direction we should go on, on a given decision.
Kevin O’Keefe: Yeah, I mean you’ve covered the highs and lows of not raising and money, and then it and pulling it off, but it’s people’s dream stories, what you guys have accomplished in ten years. The way people look up to you at this conference and want to talk with you about things, and relate. When you did the videos last night, honoring the recent awards for startup law firm of the year, and you’ve got videos of people down in San Antonio, and you’re recognizing public service awards for a law firm in Vermont, it’s really quite incredible the dent that you guys continue to make. I have a friend here, a little bit older than me, that I wouldn’t have thought, “is he really going to go to Clio?” I asked him, what do you think?” He goes, “this is great.” And I said, “why do you think it’s great?” He said, “This is so different than other things I go to and I’m looking for things that can help me improve, it’s going to allow me to be more efficient it.” For him it’s like Christmas, going around and looking at all the different people doing different things that he can talk to. It’s really quite phenomenal. I don’t know that you and Ryan could have envisioned when you’re sitting there talking about doing this lifestyle business.
Jack Newton: Oh, we had no clue. We had no clue. And I think that it evolved organically. You were at the first Clio Cloud conference at the hotel in Chicago. We were able to get 200 of our super fan customers out and I felt like we put on this unbelievable conference that was a 10 out of 10 in terms of detail and everything else. And I actually was just looking at a video of it, in fact it was in the opening reel that we showed to launch this year’s conference, and I look back at that and think like, “wow, that was actually a pretty humble beginning.” We didn’t even have an elevated stage for speakers and certainly no production value. None of the things we brought to bear here. But I think with this conference we’re trying to do a few things. We’re trying to remind lawyers why they’re doing what they’re doing. And I think it’s so easy to get lost in the noise and lose touch with why everyone here became a lawyer in the first place for it.
Kevin O’Keefe: You reinforce that.
Jack Newton: Yeah, by telling the stories – not our stories, but theirs. And we view our role as a piece of software, which is all we are, is to enable lawyers to have superpowers and do their job better than they ever were able to before. So when I look at the amazing work, for example, that the California Innocence Project is doing, just knowing that Clio is this foundational system that they use that supports them in doing their amazing work, that’s hugely validating for me and the team to see that, and it’s enormously energizing. I had somebody come up to me yesterday and say, with no sense of hyperbole, “today was the best day of my life.” He felt transformed from this, from the keynote talks he gave. I had another customer come up to me and tell me that the keynote, that we opened up with, was the first time he felt energized about the idea of practicing law in the last decade. And to have that kind of impact. You know, this this isn’t a conference about selling Clio, it’s about transforming the industry, and hopefully transforming the lives of some of the people here. If we can do something small to inflect the trajectory of, you know, a bunch of individual lawyers, then maybe we have some hope of inflecting the trajectory of the entire industry, and having that permanent transformational impact that we want to have as a company.
Kevin O’Keefe: It’s very inspiring. It’s inspiring for me personally. Just watching you guys, getting to know you, getting to know your team, it’s very rewarding.
Jack Newton: And by the way, thank you for being one of the early supporters of Clio. I remember you were one of the first legal industry people I met when I came to that first LTNY in 2009.
Kevin O’Keefe: You are the epitome of what I tell founders. Go out and engage people. You can’t just sit there and come up with this perfect software and say, okay, where do I get the suitcase to go out to a conference? Nobody knows you, there’s no trust. One of the things you did was you identified who – influencer might be a highly-charged word – but, you know, people that people trust in the industry, to share what’s going on, and you came out and met us, and so we didn’t know who Clio was, per se, but we knew Jack Newton, and we knew he’s got this guy, Rian, who he’s co-founding this thing with. He bought me a beer, seems like a nice guy. And that was about it. So then at that point in time, I could hear what you guys might be talking about. Whereas, you know, you get deluged with so much other stuff that comes out, if you don’t know the people, where’s the trust? You built tremendous trust right from the start. Even when it was like you and a suitcase –
Jack Newton: I’m not even sure there was a suitcase
Kevin O’Keefe: Yeah, I mean this was even before conferences and the card table. Before you even launched the company. before you launched you were going out and talking with people.
Jack Newton: It was just, I think, with the humility of knowing I was a complete outsider to the legal industry. I wasn’t a lawyer, I didn’t know anybody in the space. I remember asking somebody that I trusted, I said, “who should I get to know in the space?” and the two names they mentioned were Bob Ambrogi and Kevin O’Keefe, and I flew to that first Legal Tech New York, and emailed both of you, and you were both gracious enough to say, “sure, I’ll meet you for a beer.” And I formed, number one, important lifelong friendships and relationships that, secondarily, have been important aspects of us just understanding the space and helping get the word out about Clio.
Kevin O’Keefe: So important for the other founders.
Jack Newton: And we talked about that. I mean, two things, with both you and Bob. Bob wrote the first blog post about Clio ever, and I still hold it up in the occasional townhall saying, “this is where Clio was born to the world.” And the video we showed in the opening reel, of you and Rob interviewing us at that first ABA TechShow, asking “What’s this whole Clio thing all about?” and you helped get the word out.
Kevin O’Keefe: And you came back and said, “hey, I think we got some more leads from the YouTube video than by staying in the booth.”
Jack Newton: Exactly, exactly.
Kevin O’Keefe: And then we kind of went away from the media for awhile, and that was kind of a mistake, because I watched that up there today and I realized that that got us out there today, just by going out and being inquisitive.
Jack Newton: Well it got you out there and to us that was our moment. I remember being interviewed by Kevin O’Keefe as this, “I’d better be ready for this.” I really felt an obligation to do a good job with that interview and to show up, and it was just one of those things that got the snowball rolling for Clio.
Kevin O’Keefe: I don’t command as much respect, because you don’t have the black suit and white shirt and the narrow tie anymore.
Jack Newton: I know, I dressed it down. You knew me for the first eight years, me having anything more than a t-shirt on is dressing up, so this is as good as it gets these days.
Kevin O’Keefe: Thank you very much.