Venture Everywhere Podcast: Doug Bemis with Gabriela Isturiz
Venture Everywhere Podcast: Doug Bemis with Gabriela Isturiz
Gabriela Isturiz, General Partner at The Fund XX chats with Doug Bemis, co-founder and CEO of Syntracts in episode 53: Smart Syntracts.
Episode 53 of Venture Everywhere is hosted by Gabriela Isturiz, General Partner at The Fund XX, ex-legal tech founder with two Fortune 500 exits to Thomson Reuters and Roper Tech, now investing in and supporting startups. She chats with Doug Bemis, co-founder and CEO of Syntracts, a legal tech startup transforming legal contracts into actionable intelligence. Doug shares insights into how Syntracts is revolutionizing legal knowledge management. They extract precise, reliable information from any contract with the information staying on-premise. Doug also discusses how generative AI is influencing legal workflows and his approach to creating technology that respects law firms' need for high security and accuracy.
In this episode, you will hear:
Syntracts' shift to self-service enabling users to enhance accuracy and develop structured workflows.
Differences from traditional AI models with a focus on accuracy, rich metadata, and reliability,
Understanding the legal industry's unique constraints to navigate challenges effectively.
Addressing the problem of buried institutional knowledge in legal contracts.
Syntracts’ vision for providing legal tech tools that integrate AI and streamline information retrieval.
If you liked this episode, please give us a rating wherever you found us. To learn more about our work, visit Everywhere.vc and subscribe to our Founders Everywhere Substack. You can also follow us on YouTube, LinkedIn and Twitter for regular updates and news.
TRANSCRIPT
00:00:00 VO: Everywhere Podcast Network
00:00:14 Jenny Fielding: Hi, and welcome to the Everywhere podcast. We're a global community of founders and operators who've come together to support the next generation of builders. So the premise of the podcast is just that, founders interviewing other founders about the trials and tribulations of building a company. Hope you enjoy the episode.
00:00:34 Gaby: Welcome to the Everywhere podcast. I'm Gaby Isturiz, I’m a general partner with Everywhere Ventures, the The Fund XX. We invest early stage in women-led startups. And in my prior life, I was a founder of two high growth legal tech companies with successful exits to Thomson Reuters and Roper Tech.
00:00:54 Gaby: So I'm here with Doug Bemis. He's the co-founder and CEO of Syntracts, a legal tech startup transforming legal contracts into actionable intelligence. Thank you so much and welcome, Doug.
00:01:06 Doug: Great, excellent. Happy to be here.
00:01:08 Gaby: Super. So let's start out with your background. You have a fascinating background. You have a PhD in neuroscience. Then you went to be a CTO of several tech startups. And then you decided to start Syntracts. How did you start your journey in legal tech?
00:01:30 Doug: Thanks. Interesting to be in legal tech. Certainly now, the journey has been somewhat long, so I'm happy to talk about it. Whenever I think about what I'm doing, I try to break it down into, you know, there's a core set of things that are important to me.
00:01:44 Doug: So there's people I'm working with, I'll make sure that it's a passion of mine, and there's a real problem to solve. And so the PhD in neuroscience comes from the passion side. So I've long been very interested in understanding understanding.
00:01:58 Doug: So trying to figure out how it is that we, or any type of system can come to understand and utilize knowledge and information. And so my PhD was in that. So I used brain imaging to study language actually. So I've been in and around language for quite a while and started there with my career.
00:02:15 Doug: So having been in academia, I wanted to apply to something more directly useful to people. And so I transitioned over into industry. Like you mentioned, I've been CTO at a couple different startups, maybe most notably in the last time that AI came to the fore in the deep learning wave.
00:02:32 Doug: I was CTO of a startup that fused several different types of machine learning together to push forward the bounds of the state of the art then. What's exciting to me about the legal world is it has complex but constrained language.
00:02:45 Doug: And so to me, it's a very interesting place to try out new ideas about how you can understand language because it is a little bit constrained, but still complex and something people need to understand. So I've been always interested in legal. Now is the time, right?
00:03:00 Doug: So there's generative AI everywhere. So it was the time to jump in. If you're in and around language, machine learning, it's obviously hard to ignore. And taking the learning from last time, there's a particular technical approach that we take that I can talk about that I'm excited about to be able to give you a better approach to this as well.
00:03:19 Doug: So that's the passion side. The people and problem actually come from the same place. So my co-founder happens to be my best friend since I was three. So a guy named Chris Martin, we have known each other for a long period of time and he is in the legal tech world.
00:03:34 Doug: So he was a lawyer for a long time, an associate in big law and mergers and acquisitions, merging companies, and shifted over to lead the technology team at Latham & Watkins for the last six years, the merging technology team there.
00:03:49 Doug: And so he really knows the space and found a perfect problem for us to apply to. And so I get to work with him, build this up, be in legal tech and apply our technical approach there.
00:04:00 Gaby: How did this happen? Of course, you've been doing AI for a long time. You've been practicing and leading the innovation at Latham & Watkins. So you guys are over drinking a beer and say, let's do this, right? So how did it come to fruition?
00:04:17 Doug: We as Syntracts are a pretty pure mixture of legal expertise. We have a legal expertise team and machine learning. And that's how me and Chris are. And the way it goes is he understands, especially unique constraints within the legal world.
00:04:33 Doug: You can get into this, but very complicated to make things for lawyers, for law firms in a way that they can actually use. So he had a particular set of constraints. And I had an idea about how generative AI could be used a little bit smarter, essentially a little bit differently than normal.
00:04:48 Doug: And so we were just talking about this within the course of his job. And we figured out that, hey, this is actually a widely applicable problem allows us to push the technology, solve this problem. And so we should get going.
00:04:59 Gaby: Amazing. So what would you say is the main problem that you're solving for with Syntracts?
00:05:05 Doug: Yes, the main problem is right at the heart of what I care about generally. So I care about extracting information understanding from large collections of language. And so the problem that we're solving is that there is institutional knowledge within legal contracts that's buried and impossible to use.
00:05:24 Doug: And currently, the approach is to throw a lot of expensive lawyers to manually go through them and get the information out. So we are attacking for Big Law first, but generally the problem of organizing and then making actionable and useful institutional knowledge that otherwise is buried within your contracts.
00:05:46 Gaby: Amazing. So for the non-legal tech audience, can you add a little bit of color? So give us an example. There are dozens of areas of law, thousands of different types of contracts. Give us a little bit of a practical example how Syntracts could solve a problem in a law firm.
00:06:08 Doug: It's a very general approach. We are actually on purpose a platform to do this for any type of contract and any type of information, which is something we're quite proud of. But also specifically, what does this look like?
00:06:19 Doug: So generally, we deal in large transactional contracts. So our bread and butter are something mergers and acquisitions or credit agreements or LPAs. So things that are negotiated heavily in order to get to a particular agreement between parties.
00:06:35 Doug: And so that information is very important for law firms or for the people that have been on the side of negotiating them, because they need to know first what happened.
00:06:44 Doug: So generally, my problem is when these contracts have been negotiated, they end up in a file drawer, essentially. And then later on, people don't want to reinvent the wheel. So they generally may ask everyone, do you remember what happened?
00:06:58 Doug: And so the step one is just giving you access to what it is that you need. You may want to know, were we able to get to a buyer friendly agreement between these two parties?
00:07:09 Doug: So we wanted to negotiate exactly like we, as a firm to get to a particular place. We want to make sure that these constraints hold for how often you have to pay something back.
00:07:19 Doug: And so were we able to do that for these clients this often so that now we know, great, we can tell them we did that and we can know that in the future we were able to negotiate that way as well.
00:07:30 Gaby: So how do you make this actionable? So do lawyers go and say, okay, now I'm going to go to Syntracts and I'm going to start asking questions.
00:07:40 Doug: They don't directly interact in a question answer interface. Like I said, we're built a bit differently and our approach provides very precise and accurate metadata essentially on contracts. So the interface is actually disintermediated from the documents themselves.
00:07:57 Doug: So getting into the technology side a bit. I have a pretty strong belief internally that just using a large black box to ask questions generally of documents are not going to give the correct precision and accuracy that lawyers need.
00:08:13 Doug: And so we are putting a hypothesis forward that the right way to do this is to specifically and rigorously structure the data first. So to make sure that you extract all the necessary information, and then you're able to drive analyses and understanding based upon facts that people actually want, kind of reasons behind it.
00:08:34 Gaby: Amazing. So you are fundamentally transforming the way the lawyers will look at these contracts. Like you mentioned before, they have associates, they may have paralegals, they have human beings today, or probably less with some other AI solutions.
00:08:52 Gaby: But before they were throwing bodies at the problem, right? Getting them to read and analyze, do all the document review. How you guys are approaching this transformation from the traditional workflows to getting them to adopt technology? In your experience, how is that going?
00:09:15 Gaby: How much resistance are you getting into the adoption of new technology because if it's not broken, why are you going to fix it, right? And this type of mentality. Love to hear a little bit more, your experiences in terms of adopting and transforming existing workflows that worked out for them pretty well so far.
00:09:37 Doug: This is great. Obviously, we have ended up in a hot place in the legal world in Gen AI. So this is the current thought. I think from the 30,000 foot view is, there is a profession that takes a lot of time, uses a bunch of manual work, and it all deals, all in language.
00:09:54 Doug: And we have now constructed for us all a magic box that does magic with language, and we can put those two together and we will get the answer. So what's been interesting is the popularity of Chat GPT and these solutions has certainly filtered now to the legal world.
00:10:11 Doug: So partners, people at Big Law, people everywhere within the legal profession kind of understand they should be paying attention to this technology and they've been promised it will be life changing.
00:10:22 Doug: The practice has been a bit harder. So it turns out that lawyers care very deeply about precision, accuracy and reasoning. That's what they're paid for. And so what we have found is that the broad tools that are less accurate and more creative and generative are hitting a big barrier for resistance.
00:10:44 Doug: So like you said, they have a way that they do it, and it requires accuracy, precision, reliability. And so we are aiming to change their habits and workflows through working to give them that in a form that they can use.
00:10:59 Doug: So less like pure flexible question and answering, but more working within their law firms with their technology team to construct a set of reliable information that they can then easily and accurately pull from as needed.
00:11:12 Gaby: Amazing. So within the law firm, who is your buyer? It will be fascinating to learn a little bit more what segment within the law firms are you selling into. How is it going so far? What type of challenges have you faced?
00:11:30 Doug: So our segment is on the transactional side. So roughly there's different types of law. So litigation is more open-ended research to some degree and building cases. Transactional side is often built upon precedence more closely and the ability to negotiate smartly off of that.
00:11:46 Doug: So we aim at the transactional side of law firms. And our buyers are actually the growing and capable technology teams within law firms. So Big Law is transforming itself into as data driven as possible. And we work with those teams primarily to then outlet this information effectively to the partners in order to use effectively.
00:12:08 Doug: And so that has been going well, as far as we can tell. The sales cycle is what it is for Big Law. It will not be very fast, but generally the slowness that is often heard from Big Law comes a lot from inability to understand all of the constraints you're dealing with and getting surprised at different points.
00:12:29 Doug: There's a pretty high focus on data security, information governance, these types of concerns, and often you can proceed optimistically and hope that those may not be as strict.
00:12:41 Doug: But given that my co-founder has been in that world for a long period of time, he knows the roadblocks and we have tailor-made our solution to be usable by Big Law for any of their contracts.
00:12:53 Doug: So it can be installed on-prem, inside of their own VPC so that no data needs to leave their system, which makes us unique. We don't call OpenAI or anything else. We make our own models that then are small and precise and sit within their system.
00:13:08 Gaby: Which is a big differentiator of you guys. So what are the biggest challenges? This is pretty much the first time you are within the legal tech ecosystem. So what are the challenges that you are facing? Conveying your unique value proposition, selling to them, right?
00:13:29 Gaby: You mentioned long sales cycles. I think that you're getting used to that, but if you can summarize your experiences in the challenges, getting into legal tech and selling. What will those be?
00:13:42 Doug: My answer would have probably been a lot different a year ago. My answer now is trying to enable people to see through the noise. So there's a lot who do legal tech now.
00:13:55 Doug: Like I said, there's this 30,000 foot view and I think we're kind of all aware now, a very low barrier to putting together a nice demo that looks like it is going to do a bunch of stuff for you. And so I don't envy the law firms trying to sift through all of this.
00:14:11 Doug: And so our biggest challenge actually, we have several differentiators that we think are very important. Because very briefly, our approach is to fine tune using synthetic data.
00:14:21 Doug: And this allows us to be exceptionally precise, exceptionally secure, and exceptionally flexible in whatever you need to do. Being able to make sure that those are demonstrated to be like actual capabilities of ours, as opposed to things that we just say that we can do, which other people might have done, it has been kind of the hardest thing to get through.
00:14:43 Gaby: Incredible. So what type of tactics you guys are using to differentiate among these sea of AI, document drafting, reviewing, comparison, everything, and what is really resonating?
00:14:58 Doug: So the first thing is there can be kind of a direct and then a less direct approach. Essentially the direct approach is to find people that understand within their law firm.
00:15:06 Doug: So I'll be honest, not everyone within law firms always understands all of the constraints that the law firm has. And so if we find the right people who understand the constraints, we explain our differentiator, how we go about things.
00:15:19 Doug: And they're like, oh, you appear to be the only people that can solve this given the constraints. So that's good. So that's the easiest way. The other way is we are building out, increasing demonstrations of our capability.
00:15:31 Doug: Our approach really does afford us the ability to be exceptionally accurate and exceptionally flexible in what we do. And we are just trying to build that out and demonstrate for people how that can be helpful for them.
00:15:46 Gaby: Okay, so probably a little bit more flexible with a proof of concept so they can immediately see the value, right? Will that be your wedge?
00:15:55 Doug: Yeah, sorry, talking abstractions again, I could be kind of specific. So one thing that we do is since we don't rely on public data necessarily to do what we do, we can take private documents.
00:16:05 Doug: I mentioned these before, like the fund formation documents, LPAs. These are very private. People do not want to get those out. And we are able to use just a small amount of private data in an anonymized synthetic way in order to train a specific model for people.
00:16:21 Doug: And then they're like, oh, great, we can actually apply this to these documents. That's good. Cause those are our most important ones.
00:16:28 Gaby: Wonderful. So switching gears a little bit, I would love to hear you sharing with the audience. What are the learnings and your fundraising journey and how was that? When there's a good amount of capital going into legal tech, right?
00:16:46 Gaby: There is a tremendous interest to get into this space that probably five years ago, it wasn't as hot and probably sexy. So tell us a little bit about the fundraising journey and challenges and what you can share with the audience.
00:17:00 Doug: Yeah, I will say this mirrored a bit and prepared me a bit for the sales cycle into the legal world. So what I would say was at the very beginning when we first started. So we first started, this company is less than a year old, essentially now, and what we've been doing, we first started fundraising at the beginning of this year.
00:17:17 Doug: And at that point, being able to explain a clear problem, an interesting but unique use of the technology to solve that problem and explain it as big, the normal approach, works well to begin with.
00:17:30 Doug: We got an initial round of funding sets very early on. And looking around, we decided to extend our fundraise for more capital so that we'd be able to hit the long sales cycle. And what we saw is for sure competition that we would have to deal with and make sure that we stayed ahead.
00:17:46 Doug: So we went out for a second round to get up to where we wanted to be in the Q2-ish, so April or so. And it was a lot noisier. So that was where I first saw that basically everyone was being inundated with, we can do legal tech.
00:18:02 Doug: And there was a clear sense of not being able to, again, I don't envy the law firms or early stage venture trying to figure out what is an actual demo because it's very hard, you can make it look very nice, especially if you dress it up well.
00:18:17 Doug: So we had to retail our bits and make very clear exactly why we were different and what we were trying to do. And so again, our approach using synthetic data, using small models, being able to be flexible on-prem, these became more important and we were able to explicate.
00:18:33 Doug: We are quite different than any other legal tech or almost any other technology company that I've seen taking this approach. It's not easy. It takes the background that I had at the company and the people that we brought on board to be able to really drive this forward.
00:18:48 Gaby: Yeah, and you guys were pretty successful last round. Congratulations.
00:18:53 Doug: Ah, thanks.
00:18:54 Gaby: So what keeps you up at night as a CEO and co-founder of Syntracts?
00:19:00 Doug: Basically, the thing that we're finding most difficult is we have these advantages that solve problems for people. And we are trying to make that as clear as possible and try to cut through the noise.
00:19:14 Doug: And so the concern is that's the noise will win out at least for a bit and it'll take too long to die down. And so grab onto maybe shiny things and then figure out later that maybe that didn't quite get exactly what they needed.
00:19:28 Doug: So really being able to get out and explain very clearly and effectively to our customers, exactly what we do and why that's best and solves their problem is the current challenge we're focused most on.
00:19:41 Gaby: Yeah. Amazing. Looking at the future, what's your vision and where are you taking the product in the future?
00:19:49 Doug: Well, many places. So we are excited about the future. So the key thing is to be able to transition more and more into self-service as a model. So to make a true platform.
00:20:00 Doug: So currently we still do implementation for people to make sure that the models are trained correctly, synthetic data is created, but we're getting very close to being self-service. And so there's two stages that we see.
00:20:11 Doug: One is that where you just take it yourself and then you're able to iteratively improve to whatever accuracy you would like. The second is to be able to then build on top of this structured information to give more directed logical use cases and workflows to people. So building out and saying like, okay, great, let's take due diligence.
00:20:31 Doug: For example, if you want to understand a set of contracts and what happens if you acquire a company, we would be able to answer that given the structured nature of what we extract because it can deliver counterfactual reasoning.
00:20:44 Doug: It can say, if you do this this way, then this would happen based upon what the contracts say. So that's where we’re building towards.
00:20:51 Gaby: Amazing. So basically any area of a law firm at some point could extract value from Syntracts.
00:21:00 Doug: Yes, if we've actually been fully feeling a pull from large corporations that have tons of contracts as well. They have legal departments and so we've gotten inbound requests of, they have the same type of problem. We have a bunch of contracts. We need to understand what they're about to know how to function and how to function better. So we're working with them as well.
00:21:17 Gaby: Yeah, amazing. And what advice would you give to other entrepreneurs looking into start their companies in legal tech? You said you've been doing Syntracts for about a year and a half or something like that? Even less?
00:21:33 Doug: Yeah. So Chris and I again had been talking about it and had been thinking about it, but we got really moving about a year ago, a little bit less on it.
00:21:40 Gaby: Which is incredible. And then you were able to get the product out. You have already early adopters. You were successful fundraising. What is the advice that you can share with anybody, any other founders wanting to follow your steps?
00:21:6 Doug: So if you want to get into legal or something that looks like legal, that seems promising. My biggest advice is to have a Chris Martin as your co-founder. There's a reason legal has a reputation for being hard to sell into.
00:22:11 Doug: And I think we've seen other industries where more pure tech people have come in, say finance or medical and been like, oh, I see, there's some real things that are barriers here, even if you think they shouldn't be. So understanding that and really knowing how the world works within the industry is required.
00:22:29 Gaby: Right. Never underestimate expert subject matters especially in this industry.
00:22:35 Doug: Yeah, for sure.
00:22:36 Gaby: Amazing. So everybody's talking about the transformation of the legal as we know it. So what are your thoughts in this new wave for legal tech with the influx of AI solutions and Gen AI and those types of things.
00:22:55 Doug: I think it's real. It's kind of, obviously, but that's almost the biggest, most important point is it's become obvious to law firms and anybody in the legal world that their world will change. And that's actually a big shift from before, whereas technology was, afterthought is the wrong word, but it wasn't a focus.
00:23:13 Doug: People weren't thinking that things would change. So it really is hard to change it. So the biggest thing is it will shift over, it will use technology increasingly more. I believe that the view of what will change their workflows like other places might be different than people are imagining. Even more so than other places,
00:23:34 Gaby: How come so?
00:23:35 Doug: Yeah, because we came out with Chat GPT and you talk to it and it seems like it's incredibly smart, especially if you don't know much about what you're trying to talk about.
00:23:44 Doug: And so you're like, great, this thing is awesome. It will be my buddy and companion to do whatever it is I'm doing. So that's kind of general vision people have. I think legal is especially hard to bring that particular vision to light until some of the fundamental problems of the current technology are solved.
00:24:02 Doug: So if it cannot be rational, reasonable, and reliable, lawyers are not going to sit and do something with that. And so I think there will be a proliferation of this, especially at the associate level to help do work.
00:24:15 Doug: But our belief is that where you'll see this more is in increased adoption of these more specific workflow tools that give them information, but less in a buddy type of way.
00:24:25 Gaby: Yeah, totally agree. So as we wrap up, it's been fascinating with all the insights and congratulations on everything that you guys have achieved in such a small period of time.
00:24:39 Gaby: So I want to wrap up with a speed round. All right. What book are you reading or podcast, other than Everywhere Ventures that you're enjoying or do you love?
00:24:51 Doug: I love the Everywhere podcast. A book that I've been reading, I actually finished it, but it was Trillion Dollar Coach. So it's about Bill Campbell. He transitioned from being a football coach to being an executive coach. And so I like the concepts of how you make organizations and people function better.
00:25:09 Gaby: I love that. And so genuine and humble. I love that book. Love it. So I learned today that you have seven month old twins. But if you could choose with a family or without a family to live anywhere in the world where would that be?
00:25:25 Doug: Ah, yes, I love it here with my twins currently, but I think it's probably maybe misleading. I would live on a boat. I enjoy the water and I can see very many places that way. I think that might be dodging the question, but that's where I would live.
00:25:39 Gaby: No, that's awesome.
00:25:40 Doug: Then yes, I will go with it then.
00:25:43 Gaby: Your favorite productivity hack?
00:25:46 Doug: At Syntracts, we've carried this over to more of a group now, but I find it exceptionally important to have a very concrete, clear, small number of goals.
00:25:55 Doug: We actually all just choose one at the beginning of the week that we put out there and then circle back on and having the ability to cut through all of the noise that comes and look at the one thing you're supposed to be doing is very effective.
00:26:10 Gaby: Yeah. And a fun fact about you?
00:26:13 Doug: A fun fact about me, well, you got the twins already because I was a twin as well. So it's extra fun.
00:26:19 Gaby: Oh, oh.
00:26:21 Doug: I started playing the violin when I was two and a half. Transitioned into a guitar and a musician otherwise, but maybe that's a fun fact.
00:26:28 Gaby: Yeah. But you've got to get them early. Are you planning to do that with your children or?
00:26:33 Doug: I actually broke out the violin recently because they asked about it. And so it's been fun getting back into that and watching them try to hold a full size violin at seven.
00:26:42 Gaby: Amazing. Where our listeners can find you?
00:26:46 Doug: Probably most findable on LinkedIn, maybe with the rest of the world. That's the easiest way to find me and happenings. We're getting more and more out there. We are also going to be at legal tech conferences so people can find Syntracts with the legal tech fund that's coming up in other places as we move forward.
00:27:02 Gaby: Awesome. I will see you in Miami then.
00:27:05 Doug: Ah, excellent. Awesome.
00:27:07 Gaby: Then I'll be there. Super. Thank you so much, Doug. And again, congratulations on all your successes. Thank you for being with us today.
00:27:15 Doug: Thanks, it's been great talking with you.
00:27:18 Scott Harley: Thanks for joining us and hope you enjoyed today's episode. For those of you listening, you might also be interested to learn more about Everywhere. We're a first-check pre-seed fund that does exactly that, invests everywhere. We're a community of 500 founders and operators, and we've invested in over 250 companies around the globe. Find us at our website, everywhere.vc, on LinkedIn, and through our regular founder spotlights on Substack. Be sure to subscribe and we'll catch you on the next episode.