Posted on: 02/16/2018

Evan Meagher of Logikcull on Instant Discovery for Modern Legal Teams

Evan Meagher

VP of Finance - Logikcull


Podcast Summary

Evan Meagher, VP of Finance at Logikcull and another 2nd-time guest (!), stops by to discuss SaaS Startup life. Evan helps run Logikcull which has become a major player in the Legal Discovery software market. In fact, Logikcull just closed a $25M round and is poised for even faster growth.

Podcast Transcript

Scott:

Welcome to the Founders & Friends podcast with Scott at Kruze Consulting, and before we get to an awesome podcast with Evan Meagher, Logikcull, just a quick shout out to KruzeTax.com. It is our new self-serve tax site. Self-serve in the sense that you can upload all your documents, answer a bunch of questions, and then our amazing startup CPAs actually prepare your tax returns. So the CPAs are the ones who are preparing it, signing it, sending it over to you. This is in popular demand to our tax only service. Last year we decided to make just a dedicated website to make it super easy for all the startups out there who just need their taxes done. It's kind of surprising, there's a lot of folks out there who maybe handle their own bookkeeping, or do their own thing, but everyone needs to file a tax return. So check out KruzeTax.com, very proud of it. We have a bunch of feedback, people are even calling it "slick", that makes us feel very good, so KruzeTax.com, and now for a really funny podcast with Evan, funny and informative. And by the way, Evan Meagher's ... When I alluded to Evan having to postpone the podcast in this one, it's because his company was raising $25 million dollars for NEA, so kudos to Evan, congratulations to the whole Logikcull family, and I think you're going to really like this podcast. Thanks. Welcome to Founders and Friends podcast with Scott Orn at Kruze Consulting, and my very special guest today is Evan Meagher of Logikcull. Welcome, Evan.

Evan:

Hey, thank you for having me, Scott. Every time, this is now my second time on the podcast, every time I do slightly correct your pronunciation of my name. It's Meagher.

Scott:

Meagher.

Evan:

But close enough. Rhymes with car, bar, star, far.

Scott:

I think it's Joe Mauer that's throwing me off.

Evan:

Yeah, that's probably it.

Scott:

Like the baseball player.

Evan:

Yeah.

Scott:

Also, you slipped this in. The second time on the podcast. You were going to be my first guest to ever come back for the second time. Like those are the big moment, we exchanged emails about it. And unfortunately, business is so strong at Logikcull, you actually had to postpone the podcast.

Evan:

Yeah, just by 24 hours I think. Or 48 hour? Twenty-four hours.

Scott:

24 hours, and I did another second timer yesterday, so you just missed out on the arm, but tell me what you're say-

Evan:

Yeah, I'm Buzz Aldrin, man. No one remembers he was the second man on the moon. You know?

Scott:

But you were saying the Alec Baldwin thing?

Evan:

Oh yeah, I feel like what we really need to do is make it like you know, this really prestigious thing like Alec Baldwin, every time he visits SNL, he's hosted it like nine times, and they have a new, I think it's like a smoking jacket or robe for him. He's like in the seven-timer's club or the 10-timer's club, whatever it is. Hopefully I'm not on this 10 times, hopefully Logikcull is the last job I ever have before I die, because it's great.

Scott:

Well you can just come back and do the update on Logikcull, that's fine-

Evan:

Update on Logikcull, that's fine-

Scott:

Yeah.

Evan:

Well and then-

Scott:

I will have a very special gift for you next time, I will think about that somehow-

Evan:

Yeah.

Scott:

... In getting on.

Evan:

The trifecta.

Scott:

So thanks for coming back again. So since we last talked, well first of all, let's talk about the rock band stuff 'cause I was actually just complementing Evan, he's got a very strong voice, which you can probably hear coming through ... So we did a mic check and it was awesome, and I always do my check, but he did it really well, so what's the update on rock bands?

Evan:

Yeah, we actually talked about it when I was at SigFig, we did the podcast the first time. It's funny, we played together for about 18 months. We were lazy, 'cause we didn't want to be a cover band, so we didn't want to get a gig until we wrote enough covers, and then finally we were like, "If we don't get a gig on the calender", writing songs is a pain in the neck, it's hard-

Scott:

Yeah.

Evan:

... So we finally got one, we played one gig. We had played together literally like 12, 18 months, and then like the next week, first gig went okay. And it was fun, we had a great time, and then one of the guitarists was like, "Hey man, my wife says we're spending too much time, I've got to duck out of the band." We finally have a band name. And he left, and so we literally, the last two weeks we've been auditioning guitarists and a replacement guitarist, and we just extended an offer. So Kevin Phillips, if you're out there, this is Kevin Phillips, he's a salesperson at DocuSign, Kevin, I emailed you the job offer this morning. The terms are that are you will get one fifth of the zero royalties we will ever earn, and fortunately you will be able to maintain your anonymity among young, hot rock-and-roll men or women. In San Francisco, we don't judge. That's the deal.

Scott:

That is amazing, so zero dollars, a lot of time and energy, and but you do get to be a rock star-

Evan:

Yeah.

Scott:

... Which is pretty cool.

Evan:

But completely anonymous.

Scott:

Yes. That's awesome, I love it. You guys have a whole cadre of songs now or?

Evan:

Yeah, a half dozen.

Scott:

That's awesome.

Evan:

Yeah.

Scott:

Is it on Sound Cloud or anything? Where do you listen?

Evan:

We're on YouTube. If you look on YouTube for Western Nephews is the name of the band.

Scott:

Western Nephews. Interesting.

Evan:

Pablo Neruda reference apparently-

Scott:

Oh.

Evan:

... I didn't know it. Just google "Western Nephews Hotel Utah", you should find us on YouTube-

Scott:

Hotel Utah, that's a good-

Evan:

And I say that with a little bit of shame. ... That's a venue- Yeah, it's a good venue.

Scott:

Yeah. Do you have anyone on YouTube playing your songs? Like covering your songs yet?

Evan:

Oh, that's next level man. Actually you know who I want to do it? There's this ... We're totally digressing-

Scott:

Yeah, this is awesome, this is great-

Evan:

By the way, Scott's going to edit all of this.

Scott:

No, I won't.

Evan:

That's fine. There's this gal, I saw some of the first videos, I think she's like 15, playing the 18-string traditional Chinese, or maybe it's the traditional Korean, there's a version in each culture, like lute. You know, just like-

Scott:

Yeah.

Evan:

... Horizontal, it's not like you play a guitar, but it's basically like a stringed, a lute, but it's laying across a table. And she does like Stevie Ray Vaughn and Jimi Hendrix and AC/DC-

Scott:

Wow.

Evan:

... Breathtaking.

Scott:

On the lute?

Evan:

Yeah. It's really ... Super plugged for that. If we can get her covering one of our songs-

Scott:

So Western Nephews, I'll reach out to her manager, and let her know.

Evan:

Yeah.

Scott:

It may not have quite the amount of traffic, but it's close.

Evan:

She's awesome. Actually, you know what? You can totally clip out all the dead air as I look for her. 'Cause this girl needs-

Scott:

She deserves to be known.

Evan:

She deserved to be named, yeah-

Scott:

In the Founders and Friends podcast world.

Evan:

Exactly.

Scott:

Maybe I'll have her on the podcast.

Evan:

Yeah, oh, she's amazing. And she's got a pretty big YouTube following. If you look on YouTube, G-A-Y-A-G-E-U-M.

Scott:

Gayageum?

Evan:

Gayageum? I think she's Korean, and it's amazing.

Scott:

I'll check it out.

Evan:

Alright. Stevie Ray Vaughn, Jimi Hendrix, AC/DC, Rolling Stones.

Scott:

Maybe we could get her to do the intro music for the podcast.

Evan:

You know, again, we're digressing a ton. The one thing when we made this offer to this guitarist it was like, "Hey by the way, we have had one paying gig." And then by the way, this is now my marketing. Our one paying gig was the head of marketing for Logikcull, Robbie Hilson, great marketer, and he's also our number one fan of the Western Nephews. He reached out of the blue, he's like hey, we're getting out podcast back up and running, would the Western Nephews write a custom jingle-

Scott:

Wow.

Evan:

... For us. And-

Scott:

I would do that for Kruze Consulting too.

Evan:

Well here's the thing, as well, I'll tell you exactly what I told Robbie, "Let's just talk turkey here." Commercial jingles are actually quite expensive. The average one runs around $10,000.

Scott:

Wow.

Evan:

And "Nationwide is on your side", that's four notes, by the way. Supposedly they paid a lot more, like 50, 60, 70 grand.

Scott:

That one's amazing.

Evan:

Yeah. So that's big business, so I'll tell you what Robbie, I will do this for four bottles of OK whiskey. Okay, and then we retreated on that and we had to include a bottle of decent tequila. And we did it and it's now-

Scott:

Did that get past the VP of Finance?

Evan:

I approved the expense. But you joke, but if you do our tax returns, or whoever does our audit, I will disclose that as an inside transaction because it's a relatable transaction, 'cause it's awesome.

Scott:

Well I could buy four bottles of OK Whiskey, so-

Evan:

And one bottle of decent tequila.

Scott:

Okay. Okay.

Evan:

We actually have been-

Scott:

Is it done yet?

Evan:

Oh, it's done. It's locked.

Scott:

I want to listen to it.

Evan:

I have it but you can look it up for yourself, it's called the Cull Cast. C-U-L-L C-A-S-T. Yeah, Logikcull is spelled funny if we can get to it in a second, but yeah, we actually have been engaged for another company to write theirs as well. So if you're out there spending money on whiskey bottles, we're available is all I'm saying.

Scott:

Maybe you should charge cash and then buy your own whiskey bottles. Pocket the difference.

Evan:

Doesn't that lose some of the romance?

Scott:

Maybe. Okay. Logikcull. Tell us about it. I know the company's doing really well.

Evan:

Oh, well thank you. Yeah, and you know what's nice about having this conversation that now that I'm not at SigFig is you know, I was this Chief Compliance Officer, and so I had ... We were in a regulated industry.

Scott:

You had to be careful what you said.

Evan:

Yeah, yeah.

Scott:

We actually had to edit out some of the stuff you said.

Evan:

Yeah, because you don't want it to sound promissory.

Scott:

I remember you made fun of a very large bank-

Evan:

Did I?

Scott:

... For about a minute-

Evan:

Oh man.

Scott:

... And I thought it was podcast gold and then we had to take it out.

Evan:

Did I really?

Scott:

Yeah.

Evan:

Oh man. Well glad-

Scott:

I'm not going to say who it was.

Evan:

I'm glad that's been edited. Well good.

Scott:

Now you can just shoot from the hip.

Evan:

Yeah, exactly, patchoo patchoo. Yeah, so no, we're not in a regulated industry, although the security concerns are profound. So basically, what does Logikcull do? First of all, I would like to spell Logikcull, because it is not a, ironically logical spelling. The company was originally Logik Systems, L-O-G-I-K, and then we evolved from a service model to a software product and so that software product effective culls documents. So it's actually spelled L-O-G-I-K-C-U-L-L. Very counterintuitive, but I give our CEO a hard time about the spelling every once in a while, but it's working for us, so what the hell.

Scott:

That marketing guy must be really good if he's making all this happen.

Evan:

Yeah, to get the SEO working, right?

Scott:

I guess it's probably helpful for the SEO.

Evan:

Maybe? I will say the K followed by C is not typically featured in non-Slavic language.

Scott:

Yeah, yeah, yeah.

Evan:

So whatever. But yeah, so what do we do? So eDiscovery software. Ediscovery is the broad category of what our software does. At a very high level, you could call it a very sophisticated search and document management tool with a very specific use case that has actually expanded over time. So basically, in the U.S. Legal system, if you've never been sued, I mean I know Scott gets sued all the time.

Scott:

Thank God we have strong indemnification.

Evan:

Yeah, exactly. I'm just kidding, Scott doesn't get sued. No, but in the U.S. Legal system, when you are party to a lawsuit, there is this phase of the process that's called discovery, and that's the search for truth.

Scott:

It's kind of what the NFL's nervous about with Kaepernick, because if they start searching all those emails, and the owners are sending an email around saying, "Don't-

Evan:

Don't hire this guy.

Scott:

"Don't hire Kaepernick", they're in trouble, right?

Evan:

Yeah, and so discovery is what we use, at least in theory, in the U.S. legal system to level the playing field. Once you argue a case on its merits, well we have to agree what the merits are. As both parties have to come to some agreement, which again, they may dispute, but you have to determine what the facts are. Let's say I'm a disgruntled employee of huge, global, multi-national conglomerate X, right? And I hire my friend Scott, Esquire to represent me and he filed a lawsuit. All of this, by the way, is my right. If I've been wronged-

Scott:

Yeah.

Evan:

... The U.S. Legal system exists to try to give me justice, and I claim that I was discriminated against for X reason or I was not paid overtime for Y reason or whatever. The truth is out there, as I believe the X Files-

Scott:

Yeah.

Evan:

... Said, and but if I'm just Evan, I'm just some guy. In this alternate ego, I'm going to be Evan Mauer, just for this, my more litigious evil twin. Dude, but I don't have those documents, right? I'm just and so it's unfair that one side would have access to all the information, and the other side has access to none-

Scott:

You could present a regular case if you knew what they had said internally-

Evan:

Exactly.

Scott:

... About you.

Evan:

You know, the truth shall set you free, but we need to find the ... discovery is the process of the search for truth.

Scott:

Yeah.

Evan:

And so basically, what my attorney, Scott, Esquire is going to do is they're going to lob a request list after the lawsuit's been filed and then responded to, we're going to lob a request list in for ... I want every document that pertains to overtime policies in the Birmingham, Alabama store where Evan Mauer worked between the dates of, you know-

Scott:

Yeah.

Evan:

... And these requests are quite voluminous, right?

Scott:

Yeah.

Evan:

Because we want to see if there's really a smoking gun that says, you know, an email from Evan Mauer's supervisors, and by the way, it's Evan, and I'm really perpetuating this mispronunciation. The supervisor's saying, "Hey, we don't pay overtime." Well obviously that bolsters my case, right?

Scott:

Yeah, yeah.

Evan:

That's the smoking gun. Well so, that's easy enough, but right away, a couple problems emerge. Number one is that a lot of this data is probably very sensitive, right? Also a lot of it is probably subject to privilege, for example, client-attorney privilege, there are things that I discuss with my attorney that-

Scott:

No one else can-

Evan:

... That's the deal, otherwise you wouldn't be able to get good legal advice.

Scott:

Yeah.

Evan:

And massive conglomerate X has that same right the same way I have that with Scott, Esquire. Additionally, there's another issue that data, we're talking about exchanging data. Effectively there's a marketplace here where data gets ... I request data from massive conglomerate X, massive conglomerate X requests data from me-

Scott:

I never thought about a marketplace, that's really smart. That's a great way to think about it.

Evan:

Yeah, the data gets shared. Now, here's the trick. How has this traditionally been done? Well, it's actually how Logik Systems evolved, and they were really a professional services organization, which still exists. It's called an eDiscovery vendor, and what they do is okay, you ship me all your hard drives-

Scott:

And paper.

Evan:

... And paper, and I scan the banker's box. Now fortunately, most stuff is digital by now, but not all.

Scott:

Yeah.

Evan:

I scan in whatever paper, you ship me your hard drives, and then I upload them to my servers, and I have an army of professional service provider employees who code and tag every document, like well this pertains to this, I'm going to tag it, this is tagged as privileged and therefor we don't have to produce it.

Scott:

Yeah.

Evan:

This is tagged as pertaining to Evan's employment at the Birmingham Alabama location between these months, these documents pertain to discrimination, these pertain to overtime, whatever. That's massive-

Scott:

Yeah, it takes a lot of manpower.

Evan:

Tons of manpower, and it gets even worse. So number one, data is most insecure and vulnerable when it's on the move.

Scott:

Oh, interesting, I hadn't thought of that either.

Evan:

Yeah.

Scott:

Yeah.

Evan:

So we always, like one of our big marketing campaigns that Robbie Hilson, who's getting name checked a lot today, has done is we've tweeted photos of-

Scott:

Banker's box on the corner?

Evan:

On the corner, and like on a dolly, and it tips over and it's like, "Oh that's marketing gold." That's not secure.

Scott:

Yeah. That's such a good point.

Evan:

Oh yeah, and I will actually name this bank because this is public information. Just recently Wells Fargo Advisors, which is interestingly an arm with which we helped negotiate a partnership while at SigFig, my last company, they are the high net worth kind of advisory arm of the Wells Fargo Bank-

Scott:

Yeah.

Evan:

For like wealth advisory. They got in a bit of trouble because they did what's called a production, which is they produce a bunch of documents that were requested by the other side in some ... Could have been a third party subpoena, could have been a litigation, could have been anything, could have been internal investigation, I don't know the details, and they shipped them to the wrong person.

Scott:

Oh my God.

Evan:

And the wrong person usually just say oh, what's this, instead this wrong person received them on a CD, and again, that's just proof, right? Data's most insecure when it's on the move, and he went to the New York Times and said well look what these knuckleheads did, they shipped me a CD with their 50,000 most affluent clients-

Scott:

Oh my God.

Evan:

... With their security balances, their social security numbers, addresses, phone numbers, like whoa. This is very bad.

Scott:

Yeah.

Evan:

And that stuff happens when you deal with-

Scott:

Yeah, there's just so much human interaction, there's a chance for error.

Evan:

Human error-

Scott:

It's why we try to automate everything here.

Evan:

Exactly.

Scott:

Like we use all the tools to do that.

Evan:

Do you guys still use a paper ledger or do you use a cloud-based account?

Scott:

We use a cloud-based account. Integrations and other software tools that do other automation.

Evan:

Yeah, when one of your partners or one of your customers says, "Okay, here's my financial data", do they ship you a zip drive?

Scott:

No. No.

Evan:

Like no. But that's how the old vendor model works, and Logikcull was that for many years. And here's the last thing that I'll say to one of these problems is that there are many different strategies in a lot of industries. In the discovery game, there is effectively one strategy.

Scott:

Low cost.

Evan:

No, in terms of like from the litigation perspective.

Scott:

Oh yeah.

Evan:

It is well, let's bury these clowns and see if they can find it.

Scott:

Yeah.

Evan:

So they request ... Even Meagher's got Scott, Esquire, sole proprietor, and there are really 50 documents that we need. Conglomerate X will give Scott $50 million and let's see if he wants to put himself out of business paying a paralegal to sort through $50 million dollars.

Scott:

If you can find the three smoking guns that we know are in there.

Evan:

Yeah. And think about that problem in the context of that was a problem 50 years ago. Actually, my Dad, he was an attorney, he was in litigation, a litigator, he settled what was at the time the largest construction litigation case in Massachusetts state history. Now, I think it's been eclipsed by Big Dig stuff, but it was behind this convention center.

Scott:

Yeah.

Evan:

Had all sorts of issues, and he represented the Bond Brothers Myers, it was a joint venture that was the General Cont- by the way, I'm probably getting details wrong and my Dad will be mad, but I'm still fluffing him up because he you know, he closed, it was a huge win for him blah blah blah. Hopefully I'm not saying anything I'm not supposed to say. But it was a huge case, and that was back in the 90's, 80's or 90's when they did the Hynes Convention Center construction project. Massive litigation, tons of counter-claims, very complex litigation case. He settled it, but he went up against Hynes Convention Center Authority, it was a governmental entity for the single purpose, it was created for the construction of this massive facility, and they employed white shoe law firm, Palmer & Dodge, which ironically, I would later work for when I was a summer associate, so it's a small world after all. You know, they just tried to bury him in documents. But that was in 1980's-

Scott:

How did he cope with that? He just ...

Evan:

Elbow grease.

Scott:

Yeah.

Evan:

And he had a star witness, a guy who he became very close to and sadly passed away during the course of this almost decade-long litigation-

Scott:

Oh man.

Evan:

... They became very close, and he just had an encyclopedic memory. And actually, one of the problems is they just tried to bury him and he said, "Yeah, it was a huge case, 75"-

Scott:

He probably spent a ton of money-

Evan:

Yeah, time and money, he was like, "Oh, 75,000 documents." That's, I'm trying to think the conversion, that's probably around 25 gigabytes. But now, it's 2017, think of all the things that record digital data now.

Scott:

Yeah.

Evan:

Drones, your thermostat, your nest, your iPhone, your Wi- so data is exploding.

Scott:

Yeah.

Evan:

We're producing petabytes upon petabytes of data per second. It's crazy.

Scott:

Yeah.

Evan:

You know, we have these digital recording devices on everyone's wrist, I mean it's ridiculous, right?

Scott:

Podcasts even.

Evan:

Yeah, so podcasts, exactly, and everything is discoverable. So all of this is a long-winded way of saying, just by definition of the things that we now record and digitize, the haystacks are exploding in size, and the needles aren't getting any bigger.

Scott:

Yeah.

Evan:

So what Logikcull does is instead of having the data be insecure and in a banker's box on Market Street that I could literally just go smash and grab, it's like we put in a closed loop system where people can exchange eDiscovery data. It's interesting, it's a marketplace, but it's a highly contentious one, but the exchange still needs to happen, and so we give them a venue in which to do that securely, safely, and easily.

Scott:

Do you provide the search tools and all that kind of stuff?

Evan:

Exactly, that's why I say, it's effectively, when I say "cull", we call it Logikcull, and therefore the Cullcast, when someone tries to bury you, our software effectively tries to prevent that because you know, you can run your very sophisticated Boolean and all sorts of fuzzy logic, and there's a lot of complex search functionality that allows you to cull out 90% of the documents, 'cause I forget what it is, a human can review some number of documents per minute. Well if you can cut 50 million documents down to a couple hundred thousand, well you just-

Scott:

Huge, yeah.

Evan:

One great example, one great news case just recently is women who were assaulted and victimized by Dr. Nassar, the gymnast's medicine-

Scott:

Oh yeah, yeah.

Evan:

We have this great quote from one of the attorneys that is representing that kind of class ... This big suit against the doctor, that ne'er-do-well, and for all his ... Really terrible crimes that he committed over the course of decades, and this attorney basically said, "We are going to use Logikcull to find justice for these young women because we highly expect that when we get the documents that we request, that there will be a smoking gun evidence that people knew about this."

Scott:

Oh my God.

Evan:

And that's a smoking gun, and that just makes you feel like well, we all want to do well, but it's also good to do good.

Scott:

Yeah. Also, it's about changing the incentives for people to speak up.

Evan:

Yeah, yeah, exactly.

Scott:

That's amazing. So you guys, and your business model is pure Sass, right?

Evan:

It's actually a vault, yeah, good question. That was interesting. I signed up, I always tease my CEO, Andy Wilson about, "I signed up." And with Pure Sass, which like from a perspective, it's pretty easy. They have runts, price is agreed to, you know, on the golf course by three, right? Not so much. What we found was that there's this big, long tale of the marketplace for whom a traditional Sass subscription paid upfront would never make sense. 'Cause you put yourself in the attorneys, you know, Scott, Esquire, right? He doesn't want to sign up for a 12 month subscription 'cause-

Scott:

They kind of do it like pay-as-you-go or something like that, right? That's how they want to do it?

Evan:

What if Scott does a great job, settles the case in six months, now he's got six months more of payment for a tool he might not need?

Scott:

Yeah.

Evan:

So it's just entirely pay-as-you-go. Now, we still offer subscriptions, some of our government clients prefer that, City of New York, City of Boston, City of Chicago, San Jose, our customers, and they like budgetary predictability, they kind of know what they're usage is.

Scott:

This is something we think about a lot too, is there a way to make it so that you can structure a subscription that works for the pay-as-you-go people too? Almost like MailChimp, you know how MailChimp has the thresholds or maybe you could do something on document search or something like that.

Evan:

We've done that actually. By the way, I don't know if your microphone picks this up, but I'm like eating greasy Chinese food-

Scott:

I was about to say-

Evan:

... As we speak, sorry for that.

Scott:

You can do a lot of things when you're the second time around.

Evan:

Yeah. That's right.

Scott:

Get away with a lot of stuff.

Evan:

Yeah, in the two-timers club, membership has its privileges. Okay? And I'm going to give another, I'm going to buzz market, I think it's China Buffet on right near the office.

Scott:

Yeah.

Evan:

Very delicious. I'm buzz marketing it done today, I don't know. See and we have experimented with that, and we've had people flip from a subscription to say I'm going to go usage based because it's easier to allocate costs back to my end client, for example.

Scott:

Yeah, yeah.

Evan:

But also 'cause there are ethical implications for well, implicit in a subscription is effectively a bulk discount, but then if I'm a law firm and I'm representing 10 clients, you just going to divide that subscription by 10 or how frequently used it, some finger in the air like oh, I kind of used Logikcull more this month for client X, I'm going to pass ... That's tricky.

Scott:

Yeah, that's hard.

Evan:

But also, you know, we've had people go from paid to subscription and say oh, pay-as-you-go is effectively like a paid trial and I love the tool and I'm going to use everything.

Scott:

That's what we have, we have people who are ... They don't like the monthly variability-

Evan:

Mm-hmm (affirmative)-

Scott:

... Or it's just too hard for them to review in depth invoices or things like that, so they ask us to go fixed, which is effectively a subscription, so that's actually something we're doing right now.

Evan:

We have people who do both.

Scott:

That's why I asked that question actually, I was interested in how you do it.

Evan:

We also interestingly, and this is challenging from a financial modeling perspective, but no one's going to cry over finance being frustrated, or challenged I should say, not frustrated, challenged. We have people who have a subscription for their one-use case, and then a pay-as-you-go account for this other use case, like their internal investigations.

Scott:

Yeah.

Evan:

'Cause eDiscovery is what we came out of, as a vendor, which is entirely litigation-focused, that's kind of where the Logik Systems as a basically a professional service as a vendor evolved, but the tool is now used for a variety of related or similar use cases like City of Boston uses us entirely for Freedom of Information Act for process.

Scott:

Oh, that's cool. Yeah.

Evan:

'Cause their process at City of Boston used to be like okay, we get an FOIA request, and literally Sully and Murph from Brockton go into the back room, they start scanning documents, they redact, oh they print them actually, they manually redact the privileged stuff-

Scott:

Oh my God.

Evan:

... With a Sharpie or a WhiteOut, I mean this is bananas, right?

Scott:

Yeah.

Evan:

And then it's like oh no, let's just do that with a tool. 'Cause you have to respond to an FOIA request within a certain amount of time.

Scott:

Yeah.

Evan:

So and FOIA requests are just exploding-

Scott:

For good reason probably.

Evan:

Yeah, exactly. To that end, we have a ... I talked a lot about law firms doing it, easy for litigation, to large cities using it, both for litigation and Freedom of Information Act requests, we also have a lot of nonprofits that use it for litigation. I think it was Earth Justice-

Scott:

Why, do they get sued or something or-

Evan:

No, Earth Justice-

Scott:

Oh they're suing government for not-

Evan:

Yeah.

Scott:

Yeah, that makes sense.

Evan:

So Earth Justice, I believe it was Earth Justice said, "We're using Logikcull to" quote unquote, "Go to war with the Trump administration."

Scott:

Wow, that's a good endorsement.

Evan:

Yeah, and they credit us with ... I mean they don't credit the finance guy, just to be clear. They credit the engineers that built it and so invested in the tool and everything, but I used "us" loosely. But they credit us with helping them save a species of Mexican wolf.

Scott:

Wow.

Evan:

It was cool stuff, yeah. Sierra Club's a good customer, Trasngender Legal Defense and Education Fund. We've got some really-

Scott:

That's awesome.

Evan:

... Cool nonprofits that we work with.

Scott:

Yeah.

Evan:

So anyway, yeah, it's an interesting company because it's 13 years young, and 'cause we're ... You know, five years they were this vendor, this professional services vendor and they had built some tools internally to automate all of this, and then the problem is again, you wake up one day, and I give Sheng Yang, is the CTO and co-founder and Andy Wilson the COO is co-founder, it takes a lot of courage to wake up one day and say okay, we built this profitable, growing, but really not that fun, professional services business, and it's making money. But at the end of the day, long before they had ever heard of MRR or ARR or LCV or Sass at all, they woke up and re-looked themselves in the mirror and said you know what? We can't justify getting out of bed for less that $100,000, so we are not democratizing access to justice, which is kind of our mantra-

Scott:

Yeah.

Evan:

... Around the office.

Scott:

But if we build a software tool that did it-

Evan:

Exactly. Like the only people who can afford us is conglomerate X, like Scott, Esquire can't afford us, so what if we took the tools that we built internally, spent four years basically making them more customer-facing, so that you could kind of DIY the discovery process instead of needing a vendor like us who won't get out of bed for less than $100,000, and in the process, we will kill this profitable service business that we've built and transformed ourselves into a software business.

Scott:

That's amazing. Good for those guys, that's awesome.

Evan:

It took some moxy.

Scott:

The do it yourself thing is just such a trend too, it's everywhere. I feel like it's because Sass is easier to build now, generally speaking. I mean I'm sure you guys were doing some crazy, crazy search stuff that would be ... You know, there's got to be like 10 MIT engineers doing it, but yeah, everyone ... And people prefer to do it yourself. If they can do it themselves, they'll do it and that's, it's just how it is. It's a awesome place to be in the software life cycles right now where things are sophisticated enough to get the job done, but easy enough for people to do it themselves.

Evan:

Yeah, totally, I mean that's ... The coolest thing about it at this point is that with these four up principles that we live by and it's just really refreshing honestly, it's like number one, do the right thing. Honestly, it's not usually that complicated. People know what the right thing is to do.

Scott:

Yeah, yeah.

Evan:

It's just that sometimes it's hard to do the right thing.

Scott:

Yeah.

Evan:

Number two, start with the why. Why are customers doing this, why did we build this tool, and that really was to democratize access to justice really. Three, customer first, always.

Scott:

Yeah.

Evan:

I usually get the order wrong, maybe that's number one. I think do the right thing is number one, at least that's the one I always lead with, and then last, pursue powerful simplicity. 'Cause like-

Scott:

I like all of those.

Evan:

... You just got to go complicated.

Scott:

Yeah.

Evan:

And the more you can iPhone, one button. Google, one search box, you know, the more you can simplify it.

Scott:

Yeah. We're trying to do the same thing. I actually, 'cause we have a huge customer service focus too, like we've always been like that, but now we talk about it all the time and do presentations on it, and it really is working, it's really exciting, and it just makes sense for everybody. The clients are happier, our team is happier 'cause they're getting more recognition from the clients because we're telling them. It's almost like one of those things when you tell the clients how customer-service oriented you are, they start noticing it more, does that make sense?

Evan:

Mm-hmm (affirmative).

Scott:

And then our team likes it because they are getting recognized more, it's a really good feeling.

Evan:

Yeah, so I mean we talk about it in every all hands like, okay, what was your customer first moment-

Scott:

Yeah.

Evan:

... Or hey, what should we do here? Well, what's the customer first answer? That's cool, it's really, I mean it's just a good bunch of people man.

Scott:

You're really, I mean I could tell, people can probably tell by your voice, but you're really enjoying it.

Evan:

Oh, my best man, who I already, Kayvon, you're on the hook, I'm just buzz marketing the heck out of this ... He runs Metric Connective in New York City, Kayvon, if you're listening, I'm going to introduce you to Scott, maybe you could use his services. He just said like Evan, I can hear it in your voice man, we actually went on a great vacation with him and his girlfriend, Justine, who's lovely. He was like I could just hear it in your voice, it's like yeah, it's awesome man.

Scott:

What are your guys big initiatives for 2019? What are you trying to get out there? It sounds like you're growing pretty quickly now.

Evan:

Yeah, year over year growth has been great, we've got a lot of cool product release, like feature releases that I think are big, you know, on the maybe less exciting side, on the finance side, we're in the middle of a big ERP transition-

Scott:

Oh, what are you switching to?

Evan:

... Away from ... Yeah, NetSuite.

Scott:

NetSuite the best. Yeah.

Evan:

Away from an ERP system that will go nameless.

Scott:

We recommend NetSuite too, our big clients, we put them on NetSuite usually as part of the transition.

Evan:

Yeah.

Scott:

And you probably know this, but you can get some really nice pricing if you work with the NetSuite channel partner, things like that.

Evan:

Yeah, we did, I think that our pricing is pretty good. I will say, Patrick McCafferty, if you're listening, you did a great job. He's a great sales rep. Buzz market Patrick. Larry Ellison doesn't need me to buzz market Oracle NetSuite, but whatever, I just did.

Scott:

NetSuite is just literally the best solution for like mid-

Evan:

Oh, totally, I mean we see it all the time, it's the best for the midsize market.

Scott:

We were down to that or Intact, and honestly, ultimately, I put my ... I have this fantastic CPA who is my comptroller, I have referred to her as my Jerry Rice, which in this comparison, yes, I am Joe Montana. I just want to own that right up front, he said with some humility. No, but she's great and I ultimately said, "Hey Vin, this is your call", 'cause ultimately, I live in Excel. I'm not I'm not a CPA, I'm going to live in Excel, all I care about is does it spit out the data I need, and you're going to be spending the time in the tool, and she ultimately was like, "Man that's "

Evan:

I think it's the right call.

Scott:

Yeah, I haven't second guessed that decision at all, so.

Evan:

Awesome. So that's a big move-

Scott:

So a lot of features-

Evan:

Yeah, we're probably going to have to move offices, 'cause we're growing real fast.

Scott:

That's a shame.

Evan:

Let's not talk about this at all.

Scott:

Anymore. That's a shame, terrible.

Evan:

We have a beautiful office that's got

Scott:

Shh.

Evan:

Okay, I didn't say anything.

Scott:

And then are you guys global? Are you selling in Europe and stuff like that?

Evan:

Yeah, we have customers in 34 countries.

Scott:

Wow.

Evan:

Which is crazy. The Aussies love us, who knew.

Scott:

Aussies love us too. They're good people.

Evan:

It's cool.

Scott:

There's a lot of Aussie in-bounds.

Evan:

Yeah, the Aussies love us and what's funny is that they rave about our customer service, which is great I mean they ought to if we're customer first, but the time zones don't line up well, but so the Aussies love us. Yeah, we don't have an international focus sales team. I always joke with Andy that one day I would like to be responsible for opening Logikcull Paris, because I like croissants. And live there for a little while, so we'll see. But right now, we're actually spread out across the United States, we have engineers in 10 different states, but our headquarters in San Francisco.

Scott:

What are some of the ... You join a fast growing Sass company as VP of Finance, what have you learned in the last year? It's been like a year, right?

Evan:

Yeah, 10 and a half months, yeah almost a year. A lot, I would say the complexity and the sheer amount of time I spend on incentive compensation plans is far more than I ever expected, but it's really important. There has to be a logic there in terms of what some of the collective individual goals, and they ought to align with the company goals, so a lot of moving pieces.

Scott:

It's hard, like I told you before we started taping this, I spent the first half of my day doing eight performance reviews, and there are super important people and a lot of times conversations discussed and it's hard to ... 'cause most people at our shop, where they're client services and do a ton of accounting and finance work, but they also, the people I was doing today are our top people, and so they typically have a functional area they work in too. Like something that improves Kruze Consulting, and so it's hard to map billables plus this qualitative and quantitative contribution in the functional areas to compensation.

Evan:

Yeah.

Scott:

You kind of know it, you kind of know they're doing a great job, but it's how do you come up with metrics or ways to incentivize them to keep doing a great job.

Evan:

Yeah, I mean I have a philosophy, which I'll share, but this advice is kind of worth what you paid for it, which is zero. I was never one of those MacKenzie guys, but I do like a good two by two matrix. The only stuff that makes sense for incentive comp is stuff that is in the top right of a two by two matrix. And that is like on one axis, is this easily quantifiable, 'cause if it's not easily quantifiable, then you're only going to cause frustration in calculation and distribution of incentive compensation. Along the horizontal axis is the difference between bad and good and good and amazing of the performance of that task, does it have a material impact on the company's performance. And so an example is putting out lunch, right? If you do a fantastic job at that or a bad job, I mean, the company's not going to suffer. I mean all else equal, every task is valuable, and not casting dispersions on the person that puts out lunch, but really the difference is negligible in terms of performance.

Scott:

Yeah.

Evan:

But sales is the most obvious one, the more you sell, that is directly flowing, so it needs to be easily quantifiable and the difference between mediocre and good, good and great has to be the actually drive success on the company level, and I think one of the challenges we find is that if we put stuff that doesn't meet both of those characteristics into incentive comp, it gets muddy and then you can almost face a situation where someone forgets, like oh, I actually receive a base salary, it's like don't just chase the stuff that, you know what I mean?

Scott:

Yeah.

Evan:

So that's the challenge.

Scott:

I always find that MBA oriented people tend to be the best at breaking those kind of systems, like it's kind of what you're saying, like they optimize for the variable instead of thinking about their broader contribution, so it's not only kind of who you're talking to, and how they think, and really explaining it to them, but it's probably one of the hardest things we do here too is making sure everyone ... and also, I think I'll contradict your lunch example a little in that every job that people are doing is important-

Evan:

Totally.

Scott:

... It's super important to take pride in what you do and the best junior accountant at Kruze Consulting makes a huge impact on the people who are comptrollers and CFO, VP's of Finances because makes everyone's like easier, and also reflects the professionalism that we have as a company. When the junior people are doing like our lights out professionals, you know you're working with someone good.

Evan:

Yeah.

Scott:

And not that you were saying that, but it's like so everyone's important, and but that means that the compensation discussion or incentive structures have to apply to everybody, not just like maybe 20% of the population, it has to apply to everybody. It makes it exhausting actually.

Evan:

In that case, I would say that satisfies one of the ... Like the junior accountant for example? Like oh no, that satisfies one of the metrics in that it definitely ... Or one of the quadrants in that it definitely does drive success on the company level, it's just not quantifiable.

Scott:

Yeah, yeah, yeah, yeah.

Evan:

So anyway.

Scott:

I hadn't thought about the two by two thing.

Evan:

I tell you, moving into Sass, I've spent a lot more time thinking about incentive compensation schemes than ever before, so that's one thing I've learned.

Scott:

That's a good thing to think of, well keep going, you're listening good.

Evan:

Another thing I've definitely learned is you've got to sell to the marketplace in the way that they want to buy.

Scott:

Yeah. It's such a great point, yeah.

Evan:

Buyers buying differently. I've made reference to governments and nonprofits, like those guys, I'm grossly generalizing, and we have government clients who are on a usage based model, and we have law firms who are on a subscription model, but at the end of the day, you can't force the way you want to sell onto ... If it doesn't align with the way the company-

Scott:

Such a good ... That's such a great point, yeah.

Evan:

It's just common sense, but like you know, people fall in love with a you know, it's got to be a three year paid up front contract, it's like well ... In our slightly unusual, if not unique use case, like the matter could settle and I don't want to be left holding the bag.

Scott:

Yeah.

Evan:

It doesn't matter what kind of discount you offer that person.

Scott:

Yeah, we have the same thing and that's what I was saying, like we have actually a lot of clients that want subscription from us because most of our clients don't vary that much on a month-to-month basis at all, and so they know that, and they don't want to waste the time of reviewing all of their invoices and things like that when there's very little variability and it just kind of makes sense, so actually, it's interesting. We're thinking through the same exact stuff, but then you have other people who do want to ... They may need a highly specific invoice or they may need a highly specific something and if you can do it easily and it makes sense and you're not throwing a wrench in your system, you've got to accommodate them.

Evan:

Yeah, I mean-

Scott:

Those are wise words.

Evan:

I think it just, and by the way, I can't claim to have come up with that, I think one of our board members had pointed that out-

Scott:

That's just like experience and being around the block. In all probability, that board member worked on many companies that broke their pick trying to try you know-

Evan:

Learn from mistakes, right?

Scott:

Yeah.

Evan:

You know, that's just part of the customer first approach, it's like well, okay, if they want to pay this way, let them pay you know, like you take my money, like okay? You know?

Scott:

Yeah.

Evan:

And I guess lastly, I guess I'm pretty long in the tooth at this point, so the people you work with and specifically who you report to is the most important thing.

Scott:

Yeah.

Evan:

It's all, honestly, it's almost all that matters, I mean if we were not performing well, at the end of the day you still have to earn a living and you need to have a job and so ... But like all else being equal, I'd rather just work with great people at a company that's doing okay, then people that maybe I didn't like as much at a company that's doing great. Now fortunately, a lot of those-

Scott:

Usually they go in tandem though. Usually the people who are really special who you love working with, they're people who move the needle big time and usually if a company can get enough of those people, then it does well.

Evan:

Yeah, it's true, I mean it's definitely the-

Scott:

No, I'm saying, I'm just saying-

Evan:

It's true-

Scott:

... Life is too short to work with people you don't respect or you're not learning from, but the good people do tend to congregate.

Evan:

Yeah, and it is maybe chicken and egg too, there's not a lot of clubhouse fights on 100 win baseball teams. You know what I mean, like winning solves pretty much everything.

Scott:

It does, it does.

Evan:

But that said, oh, just working with good people man is the best, dude. Like I just, I work way too much, I'll be working this weekend, getting out of bed and being excited to get to work is cool.

Scott:

I'm the same. I mean we're sitting here on a Friday afternoon, I think it's what, January 29th or 28th-

Evan:

December, but-

Scott:

December, sorry, sorry. That's how hard I've been working in a dead week where most people take it off and we've been ... This is a lot of credit to Vanessa, like we're pushing through all these process improvements and notifications to our clients and things like that when everyone else is on a beach somewhere. It actually feels good. It feels like we're really ... I think we're helping our clients and they don't even realize it, and that's actually super satisfying to me, like no one knows we're doing this except when they see one email out that says, "These are the things we're changing or this is what we're doing to make your life easier." And you're doing the same thing.

Evan:

I'm just trying to make it happen.

Scott:

Yeah, that's awesome. And where is the company going from here, like you guys, it's the ... You're in the rinse and repeat mode basically now? Like figured out the core value prop and now it's just how do we make it better, how do we add the futures that are keeping people from buying?

Evan:

Yeah, I think we hit a milestone earlier this month that basically made us feel like okay, we've attained that kind of initial scale, and we you know, Robbie Ellison, his name comes up a lot, on the marketing side, I feel like we've really, we're landing accounts quickly and the sales team is rock and rolling, and that's great, and I feel like it might make sense to kind of ... Once you figure out that model, you know, until you figure out that model, then it doesn't make sense to pour gas on the fire 'cause it's just-

Scott:

You just waste money, yeah. Actually makes it harder to figure out-

Evan:

Exactly.

Scott:

... You're distracted.

Evan:

And you might be covering an inefficient machine with just more fuel-

Scott:

Totally.

Evan:

But when the machine gets to a certain level of efficiency, then it might make sense when we're fueling the fire. So I think we'll be growing quickly, hopefully.

Scott:

That's awesome.

Evan:

That's exciting, and I think we'll be growing, be hiring a lot of people, and-

Scott:

Next year when we do this podcast or maybe nine months from now, I want to talk about that, like how do you hire smartly?

Evan:

Oh yeah.

Scott:

Des and I were just talking about this the other night. At the time we were recording, we're at 30 people and we have four more people starting next week, so we'll be at 34. We've had this luxury of growing fast, but growing slow enough to really absorb people-

Evan:

Yeah.

Scott:

... And give people the chance to prove themselves, and find their own identity and so we haven't had ... We hear everyone's voice still, it's a great feeling, but when you're venture-backed and you're hiring even faster, I want to know, this is like a honest question, like how do you preserve the culture, how do you make sure everyone actually knows what they're doing, how do you make sure they're actually doing their job, things like that, like basic stuff.

Evan:

Yeah, well I mean the thing is you're probably growing really fast, but you know, when you're 18 people, growing 10% a month is just two people-

Scott:

Yeah.

Evan:

... And so you can still digest two people.

Scott:

Yeah, and that's what we do, exactly.

Evan:

But you know, I think we have 13 people starting on January 8th, and that's like whoa. And this happened at SigFig honestly, I think I probably learned some lessons there and when I started at SigFig, we were 30 or 29, when I left we were 130? Something like that.

Scott:

Wow.

Evan:

And now I think they're 200, I think they're doing great and rocking and rolling. The way I always look at hiring is Type I versus Type II errors. And that's like false positives versus false negatives. Right? It's like would you rather take a chance and hire 10 people knowing that two of them might not work out, or if you only hire five well then assuming you don't improve your selectivity, like maybe you go four for five, five for five, but you really missed on four-

Scott:

Other people that could have helped, yeah.

Evan:

Three or four really good, so what's more painful?

Scott:

Yeah. That's a really good way of looking at it. So like the opportunity costs of not hiring more good people outweighs a couple of bad apples.

Evan:

But I think that's true only if you match that with the ... I'm not a callous individual who wants to just like fire and be a chainsaw Al Dunlap here, a little buzz market there, that was a deep cut.

Scott:

I know who Al Dunlap is.

Evan:

Do you?

Scott:

Yeah.

Evan:

'Cause you took Jim Shines

Scott:

No, 'cause I followed the stock market for a long time.

Evan:

Right on, well there you go.

Scott:

That guy used to just go into any consumer product company and fire as many people as he could.

Evan:

30%, yeah.

Scott:

To try to make the stock go up over two years. And then sell the company.

Evan:

Yeah, that's exactly what he did until he got caught for security fraud.

Scott:

That's not you. Thank God.

Evan:

That's not me. Especially not the channel stuffing and securities fraud, 'cause I don't do that. But you know, but if you, anyway, another big tangent here, but like yeah, if you're going to have that like well I'd rather hire the 10, knowing that one or two might now work out, you can't be afraid to say hey, you know, this wasn't a good fit, and you know, best of luck with future projects, you know?

Scott:

Yeah.

Evan:

And that's hard to say because no one likes to fire, you know, firing people, but if you want to go through hyper growth, you have two options. Choke your growth by making sure absolutely sure that everyone works out, and by the way-

Scott:

It won't.

Evan:

... Not everyone will. Or go for it, but be really diligent on the ... we hope like whatever our percentage of hit rate is is kind of exogenous to the model, right? It's like you might be able to increase it as much as possible, but you're still not going to be 100%. So you just have to be diligent on the back end saying okay, we hired 100 people, 90 of them worked out-

Scott:

This is what worked.

Evan:

It's 10 people you've got to terminate.

Scott:

Yeah.

Evan:

It sucks, but you've got to do it.

Scott:

I know. I think it's though, that's why I'm curious to learn-

Evan:

And by the way-

Scott:

How do you know-

Evan:

I'm not telling you like illogical, we are growing very quickly, we've had a pretty good hit rate with hires and I don't think that we as an organization have any philosophy at this point, it's like get great people. You heard me rave about the people, so obviously we're doing something right, so I don't want to advertise like oh, Logikcull, that's the place that they hire fast and fire fast, no, no, no, I'm not saying that, but you do have to make a decision somehow as an organization, and that's something that-

Scott:

And that's what I want to figure out, how do you do that?

Evan:

That's something that we will grapple with-

Scott:

I figure you'd figure that out this year.

Evan:

Yeah, probably, I mean I think we'll grow, we'll hire a lot of heads, hopefully they're all successful.

Scott:

Yeah, that's awesome. Anything else? Put a plug in for Western Nephews?

Evan:

I'm putting in a plug for the Western Nephews, we don't have a gig yet, although Kevin Phillips, if you're out there, you didn't expect it, we were trying to recruit you via podcast. If you guys know Kevin Phillips-

Scott:

We'll get this edited very quickly.

Evan:

Exactly, number two, yeah, it's always just a pleasure to come chat.

Scott:

I'm looking forward to number three-

Evan:

I expect, I absolutely expect some podcast jingle business.

Scott:

I would love that.

Evan:

And just to, and by the way, to put a bow on our conversation about what eDiscovery is, I talked about like how discovery is a search for truth, how it gives people access to justice, and how you have to cull through all the nonsense and documents they give you, which is basically called d-duplication, 'cause the same email-

Scott:

D-dupe-

Evan:

D-dupe, that's actually our CEO's Twitter handle is IDDupe. So just as a buzz marketing for the Western Nephews ability to write custom jingles, I will tell you that the lyrics, which I sing, in Logikcull podcast are in the search for their intentional cheesy as hell. In the search for truth, you're going to have to D-dupe, access to justice at last, so listen up, it's Cullcast.

Scott:

Wow.

Evan:

If that doesn't get me hired by 10 Silicon Valley startups looking for a custom jingle for five bottles of decent okay liquor, then I don't know what's wrong.

Scott:

It's like Nationwide and then the Logikcull podcast jingle. Those are the two perfect podcast, perfect jingles.

Evan:

We are the tin standard.

Scott:

Very good, very good. On that note, Evan, did I mess it up again? More?

Evan:

Meagher. Far, bar, car, star.

Scott:

Just so everyone knows, it's spelled M-E-A-G-H-E-R, it's like a weird spelling.

Evan:

It makes Logikcull a perfect match. Totally non-phonetic spelling.

Scott:

Evan, thank you for coming on the podcast, second time, amazing, and great job. Thanks.

Evan:

And thank you. Alright, later. Page33 | 35

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