Brian Liu remembers the day he decided to start his own company. It was 2000, just four years after graduating law school. He and friend Brian Lee had come up with an idea for a tech company to help small businesses with legal solutions. The only problem? The Nasdaq crashed during the pair’s first venture-capital meeting, signaling the looming dot-com bust.
“When we showed up to that VC meeting and basically got the door slammed in our face, we had to think long and hard about whether we wanted to go through with it,” Liu recalls. “In the end, after beers and some food, we decided to move forward.”
In that decision, LegalZoom was born.
Fast forward 20 years, LegalZoom is a wildly successful business you very likely may have used yourself. Liu left the company full-time in 2012 to pursue new opportunities, and in late 2018, he launched BizCounsel, connecting business owners and attorneys with an affordable, monthly subscription model.
It’s no coincidence that the two Brians would eventually reunite—BizCounsel is a portfolio company at BAM Ventures, which Lee co-founded in 2014 and where he serves as a managing director. As part of this new series, spotlighting BAM portfolio companies, we sat down with Liu to learn more about his entrepreneurial journey, what it’s like starting a business in tough times, and how his company is handling the COVID-19 crisis.
Let's start with the topic on everyone’s mind—the COVID-19 pandemic. Companies all over the world are feeling the impacts of this virus and the economic disruption that has come with it. As someone who has been in business for decades, could you share some of your experiences weathering tough times?
One thing I’ve learned is that businesses that start during down cycles have a distinct advantage. It forces you to think about monetization and optimization from the get-go, as opposed to just thinking about how to raise your next round. You develop good long-term habits by focusing on metrics.
We learned those things when starting LegalZoom right before the dot-com bust. We had thought we were going to raise millions easily because we already had people like Robert Shapiro on our board, and I had friends who were getting money thrown at them left and right. But it turned out to be much more difficult.
What made you keep going during such a historically hard time for venture funding and business in general?
First, we knew there was demand for our service. Second, our business model was commerce-driven, meaning we’d make money on every transaction. And third, we decided to do whatever it took to make it work. We recruited interns from UCLA and paid them in stock and even bartered for key services.
What were some of your most memorable moments in those early days?
For the first year, our goal was to double our revenue every month, and we did that for 10 straight months. Then, we made the goal to reach $1 million in revenue in March 2003. We decided that if we reached that goal, we would take every employee, plus a friend, to Cabo. The team pulled together, everyone worked hard, and we made it.
From that experience, I learned that you have to set lofty goals and get everyone excited to reach them. So many times, it's only the executives who care about financial goals. For everyone else, it's just more work. Give your employees a sense that you really appreciate their work and effort, and you'll be surprised how much easier your own job is.
Now that you are going through another tough time with the COVID-19 crisis, how is BizCounsel dealing with it?
Our prime message has been "Legal Help Made Easy" for small-business owners. Our clients have needed contracts drafted, wanted to learn how to save money on taxes, wanted us to take care of legal compliance, so they didn't have to worry about it.
Now, their needs are completely different, and we have to pivot hard on our service offering. No one cares about employment handbooks right now. Instead, it's now all about, "How can I collect payment?" and, "How can I delay payment?" We're also going to have to become experts at all of the government-assistance programs and help our clients take advantage of them.
What advice can you offer startup founders right now, as they navigate this crisis?
Cut your burn, think about an early monetization model if you don’t have one already, and give your employees a sense of urgency, purpose, and appreciation.
Let’s switch gears now to some lighter topics, and talk about the Los Angeles startup scene. What has changed in the 20 years since you started LegalZoom?
I remember going to startup parties and events back in the early 2000s in LA and seeing the same 20 or 30 people every day. It was really great because I got to know all of them. Now the scene is much larger.
Founders in LA like to apply technology to real things like dating, online shopping, shoes, legal services, and so on. Up in San Francisco, you see a lot of tech for tech’s sake.
On the investment side, things are much better than they were 20 years ago. You don’t have to go outside LA to get funding these days, at least not angel investment for startups.
We’d love to hear more about BizCounsel. Why did you decide to start another law-focused company after LegalZoom?
With LegalZoom, the service helps businesses get off the ground, which is great, but I realized there wasn’t much help for them in the wider world once they’d been in business for a few years.
For business owners who’ve been around a while, the fear of using a lawyer is tremendous: 87 percent of small-business owners don’t have a lawyer they can rely on, so they often research law questions on their own, and do things like fill out their own forms. And I don’t blame them. Your standard lawyer will cost you $350 per hour, and you never know how much they will bill you at the end of a project.
As a business owner yourself, have you ever dealt with that?
Yes, just recently. I have a real-estate business, I hired a lawyer, and just got a $6,700 invoice for the month. And I didn’t even know what the lawyer did! Once you get a shock bill at the end of the month, you never want to get a lawyer again, which is what we are trying to help with BizCounsel.
How does BizCounsel work?
The main thing we are trying to do is to establish a relationship between the small-business owner and the lawyer. By doing that, we are trying to change the public perception of lawyers so they become business partners rather than a necessity of last resort.
We are changing the business model by providing a monthly subscription service for business owners that gives them access to a lawyer for advice only. When there is real work to be done, we ask our lawyers to quote flat fees as much as possible. Pricing transparency is key; knowing how much you will pay up front builds trust.
On the lawyer side, they get a portion of our subscription fees and agree to be on hand to answer questions from business owners. They make money when the client sticks around and asks for help doing specific tasks.
How are you finding lawyers responding to this model?
Some lawyers are really excited about it and see the value, while others are stuck in their old ways, which is fine.
What is the “old way” of practicing law?
Most lawyers spend only 20 percent of their days practicing law. Most of their time is doing admin work and marketing for their services. With BizCounsel, we are trying to re-engineer workflow by using technology and helping them with marketing, schedule-setting, and drafting agreements, so they can spend a greater percentage of their time doing actual legal work.
What are some of your hiring best practices?
I always try to hire people with skills different than mine, and I’m never afraid to hire people better than me.
Most importantly, founders want a diversity of skills and backgrounds. If everyone is only thinking one way and that one way doesn’t resolve a problem, you are stuck. I always advise founders to hire people from different backgrounds.
How can businesses successfully scale as they grow?
Hire great operations people. The best operations people I’ve worked with have some sort of military background. Those people, I find, are all about organization, structure, and discipline.
I consider myself a perfectionist, but one thing I’ve been surprised at is that the military isn’t about perfection. People who come from that background aren’t afraid to just go for it. They are also very camaraderie-focused and help tremendously in creating a culture where people feel that they have a purpose more than money and where people believe in what they are doing.
What are some of the benefits and/or challenges of being a second-time founder?
I find that you remember the good times and forget about the tough times. The second time around, I forgot how long some things took. You start wondering how you can cut corners and do things faster, but then realize that it can be very hard to cut certain corners and that things will just take longer than you expect.
Every startup wants to grow, obviously. What happens when entrepreneurs realize their companies have outgrown them—and it may be time to get out of their own way?
Oh, that’s a tough one. As a founder, you often hear things like, “It’s time to let the professionals run the company.” But I think it depends on every CEO. It depends what your goals are, and then it's good to look at what you are really good at. Ask yourself what you want to do and if you are still having fun doing what you’re doing.
When an organization gets so big that it isn’t fun anymore and you are just managing, oftentimes people don’t have as much fun. It comes down to bringing in operations people and getting them to buy into the culture. At the end of the day, you have to ask yourself if you’re ready to commit to another layer of management—or if now might be the right time to exit.
Founder + CEO, Alchemy 43
“Starting a company is basically synonymous with uncertainty. You never know what's around the next corner. It's the reason I love it so much and it's also the reason that it's so difficult. This moment looks like that, but exponentially bigger. So many things outside our sphere of control.
So it presents a new type of challenge for a CEO—instead of running a company, we now pivot to minimizing fallout. Making sure our company survives this and that our employees have a job to return to has become the primary focus of my days. It's actually interesting work. It's challenging in a novel way. In order to stay in the right mindset for this type of work, it's been very important to me to stay connected to people, friends, and family, as well as colleagues. Also, daily exercise and mental breaks in the evenings, which seem to involve a lot of baking.”
Co-Founder and CTO, PathSpot
“Right now, life is uneasy. As entrepreneurs, we're used to life being ‘hard.’ We're always hustling to close the next sale, push the next product milestone, recruit the next member of our team, or raise the next funding round. When we want better results, we can always put in more hours, go the extra mile, or push a little harder. When things are hard, just work harder and they get easier. But suddenly, that mantra feels flipped. Budgets are frozen, conferences are cancelled, and businesses are closed. There are new (temporary) roadblocks that we can't simply run through—there is a sense of ‘prepare and wait’ sweeping the startup landscape.
PathSpot is a system that validates hand-washing frequency and effectiveness, with a company mission of reducing the transmission of illness. Before COVID-19, a large part of our routine was education—generating awareness of our product and explaining why handwashing was the most effective way to reduce illness. Now, the problem has entirely changed. Handwashing is more searched and more discussed than it ever has been before. We're suddenly adapting to the new challenges of reduced and frozen budgets in our target market, and how to support a highly in-person, face-to-face industry with a hardware product, while fully remote and socially distancing. As we face new problems, our team is working around the clock to support our quickly growing customers with their hand-hygiene needs, and utilizing our data to try to prepare the restaurant community and public to have the tools necessary for handwashing tracking and efficacy, as consumers and employees are more aware, educated, and focused on transmission of illness.”
Co-CEO, Harper Wilde
“Life is a series of dichotomies. On one hand, I feel very lucky that those closest to me are safe and healthy. On the other hand, I have a deep sadness for the turmoil and loss that permeates daily life. I have confidence in the incredible team at Harper Wilde and our ability to rise to this unprecedented occasion, while also having concern about the unknown unknowns, which seem to have multiplied over the past few weeks.
Being a founder has, in some ways, prepared me for this emotional rollercoaster, where high highs and low lows are often felt in the same hour or even in the same moment. I'm trying right now to make space to acknowledge all of these contradicting thoughts and then push them aside to focus on what's right in front of me.”
Founder and CEO, Elliot
“Life as an entrepreneur, and human being, has never looked or felt more real. Due to today's circumstances, life's forced us all to take a hard look at reality and revisit what's important. While life's challenging, I'm grateful to have a team that's proven to be able to operate under duress, make decisions, and find solutions to complex problems. Moreover, appreciative in having investors that believe in our ability to persevere. For me, my life looks simpler and in many ways more genuine, given I'm using COVID-19 as an opportunity to strengthen key relationships and just get back to the basics. In short, life looks different, but sometimes different is good.”
Co-Founder + CEO, Mented Cosmetics
“Right now, my life looks a lot calmer than it did a month ago. Prior to quarantine, I commuted from Philly to New York every day, traveled pretty frequently for work, and spent most of my free time exploring new restaurants in Philly, where my husband and I moved less than a year ago. These days, I mostly travel up and down my stairs and occasionally to my terrace.
Being forced to slow down so significantly has given me a lot of time to focus on what's most important to me. I've rediscovered how much I love to learn (I've been learning three to four songs a week on piano), gossip (I've been having nightly FaceTime calls with my girls), and go for long walks. I've also been amazed at how resilient our team has been. We've launched a new product, hosted a fantastic Instagram Live, tested multiple new promotions—and they haven't skipped a beat. As weird of a time as it's been, I'm grateful for all of the little lessons that have come with it.”
Co-Founder, Great Jones
“It's a powerful time to be in the business of home cooking. We're very fortunate to be experiencing a continued surge in demand for Great Jones products, and we've expanded our services and content to give further support to home cooks. We've extended the hours for Potline—our free text service for real-time recipe advice—and we've leveraged our partnerships to host a daily cooking tutorial on Instagram. Recent participants include Dominique Ansel and Erin McDowell.
On a personal note, Maddy and I are leading daily standups with our team, as well as enjoying bi-weekly digital happy hours, where we can connect and check in on each other emotionally.”
“As an early-stage, high-risk consumer startup, chaos has been the norm for us. Without the ability to adapt quickly or even pivot, we would've shut down a long time ago. That being said, our terminal values, the core of what we're trying to change in the world, haven't budged at all. I think that's critical. You have to clearly delineate your terminal and instrumental values—the things you should be stubborn about and the things you should be radically open-minded about.”