How Lexicata CEO Michael Chasin grew Lexicata to $3.6M revenue and 3K customers in 2018.

good morning everyone my guest today is Michael Jason he's a see he's the co-founder and CEO of the legal tech company lexicon of the world's number one client in taken CRM software for lawyers with thousands of law firms on the platform across 20 plus countries the company helps bridge the technology gap many law firms face as more and more professional services move on to the cloud before this company he founded law kick in 2012 a leading online marketplace for seamlessly connecting clients to the perfect lawyer for their needs after daddy became innately familiar with the fact that lawyers often struggle to manage their leads effectively that's when he launched Alexa cotta in 2014 Michael are you ready to take this to the top yeah I got alright man so this is like a tough space lawyers are cheap and it's hard to sell to them tell us what the company does and how you make money yes what are the SAS platform essentially what we are is a you know kind of like Salesforce for law firms is the easiest way to kind of describe what we are right they are very difficult breed to to work with they're very argumentative and they are very educated in their craft however they're not as educated like ways of running a business or technology so it is definitely a struggle implementation is a big thing that we really focus on from a service standpoint so that's a big thing that we emphasize here and what's the revenue money is to your place asks with that it's a pure place ask revenue model exactly it's a combination of multiple monthly and annual subscriptions and then because of the difficulty with lawyers we do have like an onboarding fee that kind of varies depending on the size of the firm but we started about 50 bucks a month for a single user and we go all the way up to like you know thousand bucks a month depending on the size of the firm and then you could do an annual plan plus you know at least a couple hundreds per setup up to a few thousand and what would you say the average customers paying you per month average okay got it good and then give me more the back story here when did you launch the company I think you said 2014 right yes so this was originally a kind of a pivot from logic I know you mentioned thousand twelve we launched like a law kick especially what law kick was was kind of like a oDesk or a TaskRabbit for law firms so basically on a DUI I'm forming my business I need to go find a lawyer and effectively what we figured out was it didn't matter how many leads we said to these firms they just had such a crappy process for following up and tracking people and then they also had a very paper driven process so they were you know require PDS and printing and all this nonsense we said before we can fix the problem of getting more lead for the clients or to the lawyers we didn't fix the fundamental issues so we started in about 2000 like we started coming up with the idea like late 2013 and then like Jude 14 was really when we like built the product and started to move and have you bootstrapped its own Center have you raised yeah when we first started the company that was law kick we raised a few hundred thousand dollars and we basically we're close to that of money and that's what kind of like forced the pivot and since then we've been completely bootstrapped off the opposite so so how much money did you raise in the beginning I've just about like a hundred eighty or two hundred thousand okay and did you keep those investors on or did you actually basically shut that other company down and clean up yeah that would be pretty dirty I think I like a divot so we kept so it basically the whole idea and the idea chain are at the path change which is basically me and my co-founder Aaron to people who stuck on we didn't have a big team up first anyways and yeah we just rolled those investors and we just kind of do a DBA or lexicon smart yep smart and how many customers have you scaled to we have long and then you know average three to four users prefer okay got it and so I mean so when you say a few thousand are we talking a thousand or nine thousand or fifty thousand ah I get the like the low thousand like three thousand all right okay got it very good and then you said I think you said I feasted on average like call it two seats purr purr purr purr logo about three three okay good well I think you said earlier each one pays what call it 100 bucks per month so it starts a what 300 grand a month something like that right now yeah something around there yeah we're in a few million range like right right and if you take that back in year ago help me understand growth what were you doing in July 2017 yeah I'd say we've more than doubled like year over a year pretty much for the last few years since we're bootstrapped it's a tough industry you don't get that kind of scalability you get like consumers and obviously we're not Enterprise it's hard to like move the needle with any one customer so it's just like a slow like a grind and burn type of thing and really we've been getting a lot of our a lot of our acquisition partner channels so it's a lot harder religious like market to law firm because they're not really a huge online business like you know like a SAS company would be or Enterprise company would be so it's really hard to like really scale really quickly at this pace yeah well still if you it sounds like if you grew hundred percent you over a year and you're 300 today and so I'll call it a 150 a year ago that's still pretty healthy growth for a bootstrap company in this space yeah definitely at the year before that I think we had a bottle like a hundred seventy percent growth or something that's great that's good well no thoroughness it's easy to go from $1 to $3 right all right to me I mean you just mentioned some of the difficulties with acquiring these guys what is your cat today fully weighted yes honestly we don't really have this super high attack it's bitchin you know it's very low like it's like you know $50 range mainly because we don't do a ton of marketing because it's just hard to like find these people so our attack is only gonna really involve a few things one is gonna involve conferences we spent some money in sponsoring conferences and those types of things she was obviously sales people a commission and then for the most part we're not really spending much money on marketing and I mean we're probably spending between something like you know one to three thousand dollars a month on like pure like marketing and Facebook Ads those things we're trying different channels but yeah it's pretty low crack but obviously it's artificially low just because you know if there is it like a whole whole lot of ways that you can market besides just branding efforts in our space what's the team size today so right now there's about 18 of us okay and where's everybody based LA everyone there we don't do any like got fully remote people all our devs are here we don't outsource anything that's great okay good so so call it a $50 attack on hundred dollar per month price point means you're getting paid back in about a month rice is super quick yeah yeah very quick especially with that onboarding T we have like a minimum like about a foreigner onboarding to be so we're pretty much you know making money on people immediately yeah and what it turns critical in this kind of business what's your turn really low it and it's dropping it's dropping really quickly so I'm pissed or it's been about two for two and a half percent per month and right now we're dropping sub two now so no we're like the mid one and that's and that's the logo churn or revenue Sherman that's gonna be that's gonna be customer churn like the by logo or by number of logos lost or by the actual revenue they represent logos not revenue it tends to be pretty even the bigger firms actually if anything it's lower because our we've had to retain a bigger firm on a longer basis the the ones highest are gonna be like these solo practitioners who are one-person shop to like we probably get like five purpose above who literally can shut down their business yeah and hey I'm just gonna go become a full-time mom I'm retiring or joining a bigger purse so when you look at net revenue retention annually pretty high yeah we're over a hundred how far with that I assume you're over 100 percent how far above a hundred percent I honestly I don't know that number table exactly I'll pop my head but that's lightly above okay and when you are driving expansion revenue what's what's the biggest factor driving that expansion is a number of seats new product add-ons what is it so right now we don't have different tiers just because like we're kind of one of the first ones to really do this in the space so where was the first one we do this in the space so essentially it's a lot of Education so we're not trying to like make the sales for complex so we don't want different tiers and things like that so when it comes to like upselling it's gonna be in terms of number of users and growth a lot of people I think one of the things that a lot of you know software in fact companies in general struggle to do is get people to really buy it completely in the first fell swoop right so a lot of our firms will say hey I have 30 employees that might be the number of users I have eventually but to start with like a little guinea pig microcosm of like...