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Justin Kan Shows How to Integrate Customer Acquisition into Fundraising

The Twitch founder hopes to revolutionize the legal profession by creating new efficiencies in the legal system

Justin Kan has founded numerous startups, but struck gold when he founded Twitch, which was acquired by Amazon at 170 people. Since then, he’s invested in dozens of other companies and is now focusing on Atrium, a tech-focused law firm looking to disrupt the legal industry. Atrium has already done over $500m in primary financing for their 240 clients around the country. He shares with us how his years in startups helped him land in legal and how they growth hacked their way up.

How are you, Hustle Con? It’s me, Justin here to teach you something. I’m going to teach you one thing at least and we’ll see what that is. All right. Cool. I won’t belabor you on background, I started a lot of companies. The one that worked was Twitch. I also invest in a lot of companies and seen every side of the market, and that really informed this new business that I started called Atrium. I want to tell you about atrium and I want to tell you about some of the growth hacks that I used to get us going because it’s been about exactly a year now in June. We celebrated Atrium’s first birthday June 12th I think, so you can wish me a happy birthday. 

All right. So why did I start Atrium? Well at first I was very brain damaged from Twitch. And when you start a consumer startup, as many of you probably will find out, people don’t really want to pay you. They don’t want to pay you very much. So when I was thinking about what should I do next, what startup should I start? I really, really wanted to do something where you get paid. And so there was one constant in our entire Twitch journey which was no matter how we were doing as a business, the amount we paid our attorneys always went up. And that’s sadly true. 

And so I was like, “That seems like a very interesting business to do.” At the same time I was a partner at YC, I felt like I’d stopped learning, I’d stopped leveling up, and I wanted to build something into a big industry where I felt like I could continue to scale. Because we grew Twitch, it was about 170 people when Amazon acquired it. I want to build a big business, something bigger than that, and I felt like the legal market was something that would support that. And then lastly, I’d been an experienced client. I like to say I was an involuntary power user of corporate legal services. And so I was like, “Well I know what people want and I feel like I can deliver it.” 

And what did they want? Well here are the problems I faced with legal really quickly. Pricing seemed like playing Russian Roulette. When I would open those legal bills sometimes there was a highly variable response time when I was working on a very important thing, like an M&A or a fundraising round. The quality of service was super high but oftentimes when we wanted to do something else that wasn’t as important we’d be waiting for a long time for a response. The quality itself was very variable, oftentimes there were mistakes because there’s a lot done by hand. And then there’s very little transparency into the process. I didn’t know what the steps were for anything I wanted to do, like a fundraising round. What are the steps from getting … Legal is not the end state, I wanted to get money in the bank or I want to sell my company. I always wanted to do something and legal was just a blocker, and when there was no transparency into what was happening I was very frustrated.

So we decided to solve that with a couple different strategies. Moving everything to fixed pricing so we have a incentive to make things more efficient over time. Increasing role specialization so that we can increase response times and right-size all the legal work. Building all this technology to do stuff behind the scenes to actually lower costs. And then we’re starting with startups, that’s you guys in the room, because that’s what I know. And startups, they might start small but eventually if they become the next Airbnb or Uber, they end up spending a lot on legal.

And so to get to the good stuff, here are the growth hacks. When I started the company there were a couple things that I did to really kickstart the process and grow it pretty quickly. So to date, Atrium has done over $500 million in primary financings for clients. We have over 240 clients here in Silicon Valley and around the country. And I think we’ve done a pretty good job. We’ve scaled from a team of four people to 80 people in this last year. So done some things okay but there’s still a lot to do. All I see is problems and there’s a long road ahead of you. 

One thing I should say is no matter who you are, it never gets easier. There’s a lot of nervous laughter but that’s actually true. So if you feel stressed out, if you feel like you’re struggling with your startup, might be early days, but you should just know that I’m feeling the same pain somewhere in the world, probably in San Francisco. I’d probably banging my head against the table on something that’s not scaling exactly right. I thought it would be easier actually this time so that was my mistake. 

All right, onto the growth hacks. So the first one was when we started off, I was like, “Will anyone hire a startup law firm?” And in fact, lots of people were like, “Nobody will ever trust their sensitive legal work to a new startup that’s unproven.” And so what we did was we ended up hiring top talent and trying to leverage their credibility. So first thing I did was I realized we couldn’t start Atrium without a expert senior attorney who had a ton of experience. And I ended up … because I’ve been on the client side but I’ve never been on the legal service provider’s side. So I spent a lot of time, months and months, and months talking to different partners, seeing who was interested in innovating in the space, people who had been successful in their careers at other firms. 

And eventually I decided to co-found Atrium with my current co-founder, Augie Rakow, who was a partner at Orrick on the emerging company’s VC practice. And so Augie had a great book of business. He was known as someone who was very interested in innovating but also really founder friendly, and great at building client development. And so we got along super well. We ended up meeting because he actually represent my brother’s company, Cruise Automation, through their sale to GM for $1 billion the year before. And so we sat down a lot, got to know each other and really put a lot of pre-work into building this business together. Then after that, Augie broke the dam and we were able to hire a bunch of talented attorneys from top firms here in Silicon Valley. 

And so when we went to founders who were able to say, “Hey, we can offer the same levels of service that you can expect from other firms.” And I think that that was a huge piece of the puzzle because we were legitimately able to say, “Hey, if you are going to go with this other firm, we can do the same amount of work but we promise we’re going to fix the pricing and we’re going to improve our quality of service, we’re going to improve our response time. We’re going to lower your cost because we have built this technology that’s going to streamline the delivery of service.” And it worked. That was not obvious to me that it would work at first but it did, which was really good. 

So what was the second thing we did? We decided to try to help founders with additional value outside of just the legal services. So in the very beginning, literally a year ago, we were sitting around and we were like, “How are we going to get any clients?” I started off the whole thing by just posting on a forum for founders, actually it was on the internal YC forum, and I said, “Hey if you are thinking about going through a fundraising process soon,” like a series A financing, series B financing, something like that, “I would love to get customer feedback from you. I just want to learn about how you’re thinking about that process and do some customer development for my new company. And in exchange what I’ll do is I will help you on your pitch. I’ll give you some pitch feedback because I’ve raised about $80 million in fundraising from venture capitalists and angel investors and seed investors so far. And I think I have a lot of firm beliefs on how you improve the narrative and your pitch narrative. And I could probably help you out. So let’s do a trade.” 

And so I did that with one of my friends actually who has this company called MessageBird, which helps people send … it’s basically a SMS and phone API. And sat down with him … He had a great business, his business was growing super fast. They were on track to do I think $80 million in revenue that year. And I sat down with him and he was like, “I can’t get any traction with investors. What’s going wrong?” And so helped him out with his narrative and two weeks later he had a term sheet, ended up raising 60 million bucks. So it wasn’t quite as simple as that but I did really help improve his process. At that point when he had the term sheet, I was like, “Hey, we have this law firm if you’d like to maybe you could consider using it.” And he excitedly was like, “Yeah, sure, I’d love to give you guys give Atrium a try.” And that’s how we kicked it off. 

So we eventually did a bunch of experiments over the summer helping people out and we decided to professionalize it. We said, “Hey, we can batch process this by running a free bootcamp every quarter, I think it’s ended up being every couple months, and so that’s what we do. We called it Atrium Scale and we help founders raise money, and figure out what their fundraising strategy is because it’s effectively a lead gen event for our Atrium services. So that’s worked pretty well. In fact, we’ve had over I think 60 founders go through our bootcamp over the last six months and I think about a quarter of them ended up raising series A or series B.

Okay. So growth hack number three, our own series A fundraising. So when we went out to start this business we thought maybe I can jumpstart it by having all of our investors, or our future investors because there weren’t any investors yet. Maybe I can jumpstart it by having all of them basically become our channel partners. And so the way we created our round was we ended up raising money from one lead who set the terms, that was General Catalyst. And then we ended up … Basically, well I guess we used our credibility and hustle to get in the room, which I turned up talking to about a hundred investors total. And I was pitching nonstop day after day, and got everyone to participate with us a little amount. $100,000 or $500,000 just trying to raise a small amount from everybody in Silicon Valley.

And the reason I wanted to do that was twofold. Number one, I didn’t want people to block us. Just like I was worried founders would be nervous about having a new firm, I thought investors would be super nervous, right? Like, “Why innovate here if the founder is the one that’s bearing the pain? He should just suck it up and maybe the existing firm that I’ve heard about,” right? I was worried about that. So I went out and I tried to pitch everyone in Silicon Valley. 

And then the second reason that I thought that that would be useful is that we would be able to ask them to refer us to their portfolios, and really make those investors believe that they could help us grow, and they’d have a direct influence in helping us be more successful. And so we ended up doing that. And here’s some of the results. I’ve already talked about that one, Atrium Scale has grown pretty well. We’ve been able to grow that from this large base of startups here in Silicon Valley. We’ve ended up raising a round from almost everybody in Silicon Valley. We had participation from all of these different top tier investors. And they’ve done a great job of referring us to this portfolio of over 240 clients who have tried Atrium today. And in fact 25% of those guys come from our investors. 

All right, so last up, how I can help further. You can email us at Atrium if you need any sort of legal help. Atrium Scale, I encourage you all to apply if you’re thinking about raising venture fundraising in the future. It’s been pretty effective so far.And I think there’s one last thing. We have a special discount for any of the founders in the room today. If you just look for someone in an orange t-shirt and go find him to claim it. So that’s all I’ve got for you today. Thank you very much. And I’ll talk to you later. Bye.