Spellbook raises $50M to bring AI contract review to 4,000 law firms — tripling revenue this year

of uh of uh Technology Brothers since the very beginning. So, thank you for riding with us and excited to get the update on Flux. You guys have been uh cooking uh over the last uh nine months or so. And without further ado, our next guest is in the Reream waiting room. We'll bring Scott in to the TVPN Ultradom.

How are you doing, Scott? Good to see you. Fantastic. Uh thanks for having me. uh give us give us an introduction on yourself and the company and then we'll get into the news. Sure. I'm Scott Stevenson, co-founder and CEO here at Spellbook.

Uh we launched one of the first Gen AI products for lawyers back in the summer of 2022 uh a little before ChachiBT. We're an AI contract review tool. So we allow 4,000 law firm and uh in-house council teams to uh draft and review contracts uh with AI. Uh my background is in engineering.

My co-founder Daniel is the the lawyer of the team and uh yeah, we're based in Canada. Give us the news today. Uh we've raised 50 million um led by Keith Boy. Oh yeah. Keith uh he's a lawyer, right? Yeah. He he he was a lawyer. He was a former lawyer. Yeah. He knows that. He doesn't love to admit it. Yes.

Um what's it like uh what's it like building a point solution these days? We've we've uh I feel like this month that there's just been so many different announcements for for different legal AI tools.

Some are are legacy platforms that are launching AI features and have a bunch of different workflows across the the law firm. We had Crosby on uh yesterday who's taking a different approach obviously building the act the entire firm.

And then we talked to other we we we we had someone on the show last week who was building uh you know AI legal but just in ambulance chaser agents basically. Yeah. Personal injury uh which is a very small niche. So when I hear cursor contracts that makes sense but it's like a different slice of the market.

How do you settle there? Why are you confident about that slice? Yeah sure. So I I guess there there's a couple questions there. Like one yeah we like being a point solutions. So we think of our product often as like a toaster. Like there's a lot of broad AI solutions for enterprise right now.

For the beginning, we're like we're going to be a toaster for contract review. So really easy to use, really easy to adopt. You know, we don't even do a sales call most of the time. It's just like welcome aboard. Let's let's get you using Spellbook in 5 minutes.

Um I think there's a bunch of advantages and I think there's a lot of opportunity to build these kind of I would say like point solution products. Um and there's a lot of very like broad AI solutions out there. um why we chose contracts specifically.

Um yeah, I mean the story of how I started the company is I had a small business before this and then one day I had a a legal bill that took like half the cash out of our bank account to do some like very minor things. Now I didn't have much cash. I was like a a new grad.

Um but uh you know I thought that it was hugely painful to just do like simple transactional work um as a small business and I thought you know we could do it uh much more efficiently.

Um but then the reason we settle on contracts is because the contract market size and and the contract pain goes way beyond just lawyers like 30 trillion is estimated to flow through contracts in the US alone every year. Um it's happening very inefficiently. There's a lot of risks.

There's a lot of litigation from bad contracting which uh you know Keith used to clean up as a litigator. And um you know when when you look at the actual overall size of contract pain in not just for lawyers but in procurement and HR and sales um that market size ends up being really really big.

Whereas if you if you just look at the market size of you know x number of lawyers times y dollars per month um it's actually a much smaller market than when you look at like the the overall pain of contracting and you know I see like the millions of transactions that happen around the globe every day and contracts often being the bottleneck and you know what is it worth if we could speed up all those transactions if we could remove that bottleneck.

I think um so much of commerce of the last 20 years has sp has sped up like we have credit card networks, we have you know we have stripe uh we have digital payroll um but contracts have largely remained the same except for Microsoft Word um and so they've become a bottleneck.

So our our mission is to make contracts move at the speed of commerce so we can all transact and work together much more efficiently.

How often is a a lawyer or a firm signing up for Spellbook when they have like when they're bringing basically like, "Hey, we we we have this contract that we're working through right now. We're trying to create or or provide feedback on. We want to use Spellbook like this afternoon.

Are you a what's like the time to value between signing up and actually being able to leverage the product? " Yeah, I mean it's it's it's close to zero and and that was our design philosophy from from day one is that a lawyer should be able to adopt this almost instantaneously.

Um so yeah, I mean they they can adopt it in almost 5 minutes without having to do a big roll out or a ton of training and we've optimized almost the whole company with with that in mind. Yeah. And do law I'm not uh nowadays engineers at every software company have the ability to just sign up for tools themselves?

Are law firms at that point yet where they have some amount of discretionary software budget that they can allocate as they see fit or are they still uh or is it still maybe like you know Silicon Valley engineers in in the 2000s? Uh it it depends on the segment. So 70% of lawyers work for small and mid-size law firms.

So uh when you envision lawyers, you usually think of big law, but actually 70% of lawyers are working at these much smaller firms where they actually have a lot of autonomy. They have access to a credit card. They might be one of the founding partners of the firm.

Um so in that segment, yeah, it's very much you can do self-signup. Um and then we also serve in-house council teams. Uh in on in-house council teams like we have customers like Nestle and eBay. um you know the decision-making power is still very concentrated.

Um I think like with with whiz one of the reasons why they cited it was such a great motion is because you know the the buying the decision-m power for was like with the the CIO or chief security officer and you know they're sort of the technical buyer they're also the user they're also the check signer.

Um, similar thing happens uh in these in-house legal teams where there's often a GC who's the user, they're the check signer, uh, they're like the sort of the the domain expert and they're the champion allin-one.

So, you still get these, I think, really fast um, buying cycles in these large enterprise in-house legal teams as well. What does growth look like? Uh, we are growing very quickly. Yeah. Um, so we launched Let's give it up for very quick. very quickly. Yeah, quickly. Put it in your Excel.

Yeah, we launched we we launched in 2022. We have 4,000 customers today. Um we're tripling this year. We're over tripling this year uh for sure. Um you know, hopefully even more. Um yeah, it's been uh it's been pretty wild.

Yeah, I think yeah, over the last two and a half years, I think we did something like 7,000% growth. Uh something like that. So yeah, it's been it's been up and to the right. Up to the right. Well, congratulations. Well, I'm sure we'll have you back on again soon for the C. Have fun out there.

Thanks very much on the show. We'll talk