15 ms·

Atrium shuts down, laying off 100

298 points by tempsy 7y ago

minimaxir 7y ago
This happened less than 2 months after a "pivot to tools": https://news.ycombinator.com/item?id=22040238 https://news.ycombinator.com/item?id=22040238
- gumby 7y ago
  Never really seen a "pivot to tools" work (after I tried it with one company, and it failed, I started noticing when others tried it too).
  - nharada 7y ago
    Why do you think it never pans out?
    - m3kw9 7y ago
      Prob cuz you are doing less with the same customers
    - deleted 7y ago
      [deleted]
    - itronitron 7y ago
      Using a tool often requires a lot more work than using (consuming) a service.
  - evanrich 7y ago
    Slack is an example
    - gumby 7y ago
      Good example! It wasn't quite what I thinking as it isn't really "our game startup failed; let's sell game tools" but still it counts.
  - mbesto 7y ago
    I see business services companies build tools in their vertical industry and become successful all of the time. You just can't take venture funding.
    - gumby 7y ago
      The question is over a pivot from "I'm going to provide product/service X at a profit due to my tool T" to "Well, I couldn't sell X so I'll sell T to other people who want X". If you couldn't make a go of it, is it really likely others will, or if they can that they will want your tool T to do so? This is different from either providing a service and successfuly using your own software to do so or providing a service and developing as well tools specifically for your customers. Slack was suggested by another poster as a company that pulled this off, though I'm not sure the communication tool was considered crucial to the game business.
      - mbesto 7y ago
        Fair. I guess it depends on what you determine as a success. 37signals was probably somewhat successful as a dev shop, but obviously not nearly as successful as a project management software one.
  - g_p 7y ago
    In the case of Atrium, it also sounded like their "pivot to tools" was trying to take many of their existing (ex) employees on the legal side, and convert them into clients of the tools. While the legal and tools companies were together, I'm sure the lawyers enjoyed the shiny tools. But after the "pivot", with the lawyers seemingly going it alone with some of the former clients, it seems likely to me that Atrium (the tool) just wasn't offering enough of a value proposition to make the tool company profitable. Venture money needs massive growth. Selling a tool to lawyers will get an amount of money per month proportionate to the number of fee-earners. And from the sounds of things, their tools weren't exactly going to be irreplaceable. Anyone got any direct insight as to if the tools themselves were compelling but the pivot failed, or if the tools didn't deliver?
  - aresant 7y ago
    I know several including housecall which is now housecall pro
- enra 7y ago
  The pivot never got started, they just announced it. Atrium was continuing their existing model/had the lawyers employed until March 1st.
wheelerwj 7y ago
wow.... that happened fast.
ol0gos 7y ago
Maybe Justin Kan should have focused less on his tweets and more on his company.
- blizkreeg 7y ago
  May be his tweets were a reflection of his inner journey and struggle with where the company was headed? Let's be kind. This is not easy.
  - ol0gos 7y ago
    I have been following Atrium almost since its inception after being flagged by Andreessen and Justin was from the beginning tweeting pseudo-inspirational thoughts. In interviews he seemed more concerned with the story (serial entrepreneur / Twitch founder aims to disrupt legal field) than the content of the company (why the hybrid model? how is this going to move forward?).
- smallgovt 7y ago
  I'm sure the amount of attention he dedicated to his tweets was vanishingly small compared to his startup. Why did his tweets trigger you?
- kubmit 7y ago
  Maybe you should focus more on your work and less on useless HN comments?
notlukesky 7y ago
Let’s wait for the full autopsy but perhaps a better strategy would have been supplying tools and software to lawfirms, aggregating data and knowhow and then pivoting to an “automated” law firm as a service. But hindsight is always 20/20
- rvz 7y ago
  This. With every 'failure' of a company there come those who don't know the full picture and begin with 'guesses', 'maybe's' and other 'reasons' why it failed. The sensible thing to do is to wait for the details. Because at the end of the war or a death of a startup, everyone is a field marshal analysing the failure afterwards.
- ol0gos 7y ago
  The hybrid model made little sense in VC-land anyways. Gross margins were not as high as a full SaaS model. The transition to a full software model was never clearly laid out and seemed more wishful than anything.
  - g_p 7y ago
    I always wondered if the hybrid model was an experiment at ways around regulatory barriers to lawyers sharing fees/profits, a la a global multinational leasing the very expensive brand, logo, and internal software from tax-haven incorporated HQ... It's not sending away profits, it's just licensing some incredibly valuable IP, honest! If the legal services arm was able to license the name and technology in a permitted way (like how a law firm can of course get their website and IT done by experts), it would seem to present an experiment at whether such a structure could act as a conduit to channel fees back into an investment vehicle.
- tempsy 7y ago
  I saw some reviews online here and there and it sounded like the biggest complaint was that it was expensive for what it was and it was never clear who would respond to a request and when (e.g. fungible lawyers taking random requests) Most startups will want to build a relationship with an actual lawyer, and having something like a LegalZoom for startups didn’t make sense for most.
noway421 7y ago
It sucks. Not even sure they should've called it so fast, why not keep going and try to figure it out till the money runs out. Investors would be OK with that. I wonder when Justin lost his conviction? I don't believe you can lose conviction in 2 month.
- tempsy 7y ago
  working at a zombie company that has no traction is not fun for anyone part of the “challenge” of being a famous founder is you can raise pre product. $75M seems insane for a company like that. Burn couldn’t have been that high, mostly rent and salaries, no heavy computation, etc.
  - baddox 7y ago
    Wouldn't rent and salaries (at least in the SF Bay Area) almost always be vastly more expensive than computation?
    - tempsy 7y ago
      Depends on the company. If it’s a marketplace like Uber then you’re burning a lot of operations. If it’s ML or heavy compute then AWS bills.
      - toomuchtodo 7y ago
        Honestly surprised a bunch of VCs haven't gotten together yet and built out their own compute for portfolio companies considering how much VC money gets shoveled into the AWS fire.
        acdha 7y ago
        Think about the hundreds of engineers they’d need to hire, purchases for hardware and software, security approvals, etc. that would all need to be spent up front with no guarantee that it’d actually be cheaper. Beating the major cloud providers requires some combination of large scale and/or cutting corners and most companies are not at the point where the infrastructure costs beat the staff time needed.
bfung 7y ago
Kudos to shutting down instead of dredging on. It's never an easy choice, but giving everyone closure helps everyone to move on.
- idoh 7y ago
  They shut down with 75 million in the bank a couple months after the pivot. I think there is more to the story.
  - teej 7y ago
    They do not have 75 million in the bank. They returned what's left of their 75 million raised back to investors.
  - deleted 7y ago
    [deleted]
  - bfung 7y ago
    Even if there was 75 million in the bank, what would they do with it? Burn it, keep trying to pivot, run out of investor goodwill when all the money is gone and nothing to give back? If Justin ever wanted to start another thing in the future, that would be a hard sell if this burn happened. Not trying to attack -- just typing out the questions and consequences to think about.
dustingetz 7y ago
what if a startup charged $300 per month for all you can eat email legal advice backed by a rich library of templates? they would instantly dominate and there are 6M small businesses in the USA alone
- berberous 7y ago
  You get what you pay for. $300 is 20 minutes of a good lawyer’s time. The economics don’t work.
  - m0zg 7y ago
    More like an hour of a good lawyer time. Mine charges $350/hr. But your point stands. I don't see how his work could be done with "templates". Most of the time I pay him for contract reviews.
    - slap_shot 7y ago
      High end firms can easily be $800+/hr for attorneys. I believe Wilson Sonsini was $1200/hr for an attorney I was recommended.
      - gnicholas 7y ago
        Top partners were already at $1,200/hr when I left the law in 2014. They’re now hovering around $2,000/hr.
        m0zg 7y ago
        You don't need a "top partner" for contract review.
        gnicholas 7y ago
        That’s true. But for a big enough deal, you want partners to be reviewing — at least at a conceptual level — the way the deal is structured. I’ve seen agreements that were 99% good, but a problem in the other 1% made the whole thing worthless.
gnicholas 7y ago
I swung by the Atrium booth at the Startup Grind conference a few weeks ago. A former lawyer, I was curious to hear their pitch. It was basically: we get you cheap lawyers, and we help them find new clients. I asked if all of their lawyers are based in the US, and they couldn't give me a straight answer. Eventually, when I said "well, of course they must all be US-licensed lawyers, right?" they said "oh, yeah, they must all be in the US then." It was not a confidence-inspiring conversation, and I can't say I'm surprised that they're shutting down.
- taneq 7y ago
  So it was basically Craigslist for lawyers?
  - Gorbzel 7y ago
    Put another way, it was doomed (good riddance). I've mentored aspiring entrepreneurs in the legal tech + services space for a number of years now and go out of my way to provide additional guidance (and some well intentioned ribbing) to those who pitch any sort of legal referral idea. The concepts are (without fail) derivative and lack novelty, equivalent to pitching "Uber rideshare, but for [INDUSTRY]" without more to sophisticated VCs. The problem is very real, but the margins are so thin that venture shouldn't be anywhere near it. Solutions should be non-profit and left to those heroes in the A2J space (whose funding should be significantly increased).
- eganist 7y ago
  Legal is a notoriously sluggish industry, one that's almost infuriatingly incapable of adopting change and technology. Atrium's original pitch was exactly the opposite of what most legal teams are used to interacting with, and I can't think of a single biglaw attorney (sorry for the anecdote) who had faith in the idea or its execution. The original concept, as a reminder: https://techcrunch.com/2018/09/10/atrium-legal/ https://techcrunch.com/2018/09/10/atrium-legal/ Now it's easy to say that this should've been obvious in hindsight. (Should've been obvious to me, anyway; I cold-mailed Justin and Nick years ago looking to build a specific function within Atrium to address concerns I'd heard on background about the service offering; I never did hear anything back about that.) But that said, I can't help but think the original pitch by Atrium was just too bitter a pill for the most conservative industry in the United States to swallow. Shoot, lawyers are bizarrely resistant to moving to e.g. Signal to preserve attorney-client privilege; given this, I have a hard time thinking of many who would trust ML models with understanding case-law.
burgerquizz 7y ago
Justin Kan got into a terrible motorbike accident few months ago [1] . He then went through lot of thoughts on meaningful life and such kind of things in his tweets later. Would that impact the performance / outcome of Atrium? [1] https://twitter.com/justinkan/status/1191821878567915520 https://twitter.com/justinkan/status/1191821878567915520
- arbuge 7y ago
  Looks like a bicycle accident, not a motorbike accident.
  - eshyong 7y ago
    Still, looks like a nasty injury. That's enough to make anyone ponder life
    - dmix 7y ago
      > Broke both elbows, lost a tooth & left a smear of my face on the road That's an injury that will keep you in bed, giving you a moment to really look if you're collectively as a company making the best effort on solving the right product/market fit. Which he clearly couldn't find, nor roll off some of the law-firm tools they built I guess? But the actual law firm of lawyers they got together is still running which is good, so it's not a total loss, plus some money back to investors. It's difficult to get proper perspective sometimes being a founder, you get mired in details and fantasy growth possibilities, and startup runners constantly need re-committing themselves for the tough fight going forward. It takes balls to finally admit defeat, especially with a solid track record. So ultimately I wouldn't be surprised if this gave an opportunity to step back and take some perspective, while he's stuck in bed in recovery mode.
choyle 7y ago
Techcrunch links to the wrong Atrium on crunchbase. Lucky for that company!
manigandham 7y ago
Legal industry is already tech-enabled. Templates, digital docs and signatures, OCR, AI/NLP/semantic processing, collaborative editing, and more are already used by modern law firms. There's no easy software-based efficiency left to find. The major work is still done by humans because of the liability, complexity and customization of every case. The next step requires a revolution in legal process, not just more software.
- patentatt 7y ago
  Disagree. I am pretty close to the Biglaw tech scene. While you’re correct that most firms would say they use all of those things, the actual implementation and execution isn’t there. It’s not even a nuanced critique, I mean maybe 1% of amlaw 100 revenue is even touched by anything in your list. There is a lot of work to be done, and great opportunity in the legal industry.
  - staticautomatic 7y ago
    Agreed. For all their tech initiative claims and hiring of in-house "legal ops" people and even developers, your typical attorney uses hardly any legal tech outside of e-discovery or billing.
    - deleted 7y ago
      [deleted]
    - manigandham 7y ago
      What else does a typical attorney need to use that would make a meaningful difference?
      - staticautomatic 7y ago
        I can only speak for teams of attorneys, and my experience is mostly working with litigators rather than transactional lawyers, but among other things: 1) It's shockingly rare to see use of project management tools, even simple stuff like Basecamp or Notion. When multiple people need to, say, review a draft of a filing in sequence, they're typically either keeping track of it in their heads or in a spreadsheet. "Excel is totally adequate for this" is wrong for a variety of important reasons. 2) Infrequent use of file indexing, even Windows' built in. I see firms using document management software running old versions of SQL with totally the wrong kinds of indexes and which usually take forever to find anything or crash in the process. 3) If they exist I haven't seen them in use, but a lot of teams would benefit from some middle ground between nothing and e-discovery software for searching across relatively large but not enormous collections of documents. A rudimentary on-prem or local CRUD app that could ingest a variety of shit, OCR it if necessary, dump it into Elastic, and let you FTS it would probably sell like hotcakes to small and mid-sized firms.
duxup 7y ago
It didn't really seem like they were doing anything an existing firm couldn't do efficiencies wise. And maybe already has /has found where it works or doesn't. And the customers who want legal help for cheap(er)...just don't seem like the people who you make money off of. Any customer concerned enough to know about this service probably wants more from it. Anyone that would be a good customer, might never find them / isn't doing much in that area anyway...
correlator 7y ago
Another "AI" hammer looking for a nail to solve bites the dust. I hope those 100 employees land on their feet.
- fastball 7y ago
  I dunno, I still think the legal industry is pretty ripe for some disruption.
  - correlator 7y ago
    I think it's ripe for useful tools. No need for disruption.
    - fastball 7y ago
      There is a lot to not like about the current state of the legal industry besides "poor tooling".
bogomipz 7y ago
The article states: >"It will return some of its $75.5 million in funding to investors, including Series B lead Andreessen Horowitz." Does this simply mean it will return all funding after paying out remaining invoices and salary obligations? Or is there some significance to the phrase "some of" here?
- Digory 7y ago
  The $75m was a 2018 series B. Atrium has been spending that money for 18 months, and probably quickly. So A16Z isn’t getting back anything close to $75m. Just “some.” Part of this seems like courtesy among the big boys who want to play again. I doubt Atrium wants to tick off A16z by making dubious claims to the remaining cash.
pontifier 7y ago
I contacted atrium in December to see if they could help me with an acquisition, but they didn't even want to take me on as a client because I wasn't big enough yet. I should have guessed there was some trouble behind the scenes. I ended up just going with my gut, doing my own quick study on aquisitions, and went ahead with the aquisition without a lawer on my side looking things over. I think it turned out ok... time will tell I guess.
- sjroot 7y ago
  I have a similar-ish story. I actually just spoke on the phone with a representative from Atrium just a few days ago; I was interested in having some policies written/reviewed. I was particularly interested in their "start-up" package which seemed to offer general counsel for those looking to grow their business. While I would have been happy to pay for this sort of concierge approach, I was also "declined" for being too small / not needing the specific services I suppose they were willing to provide. I imagine this kind of interaction with potential clients is one reason they got to this point.
planetzero 7y ago
One of the worst contracts I ever had was for a small company running a SaaS for divorce attorneys to help manage their cases. The main selling point was that it would re-create state forms on the web and allow an attorney to fill them out, print them, and manage a case. These forms would change many times a year and they were written using horrible PHP libraries that required every piece of the form to be drawn using coordinates. If one thing changed on the page (which happened often), all coordinates would shift and have to be re-written. Aside from this, the owner had the first version written by developers overseas a few years earlier and I was hired as part of the 2.0 team that consisted of more inexperienced overseas developers and resulted in even more of a mess than version 1. Some gems from the owner: She once put on her Linkedin profile that one of her accomplishments was the ability to hire developers on a volunteer basis or well below marker value. It was taken down within a day. I was finally let go and was told straight to my face that she was going to hire someone from India for 1/3 what she was paying me.
hardwaresofton 7y ago
> Atrium had attempted a pivot back in January, laying off its in-house lawyers to become a more pure software startup with better margins. Some of its lawyers formed a separate standalone legal firm and took on former Atrium clients. But Kan tells me that it was tough to regain momentum coming out of that change, which some Atrium customers tell me felt chaotic and left them unsure of their legal representation. It's hard to detect my own bias of course, but this seems like a really cynical move. I understand the need to improve margins but essentially trying the train our processes so we can fire you is off-putting and borderline offensive to workers. For positions closer to the furnace of automation and jobs that are generally dangerous that people don't take pride in it can be minimally destructive but law is not one of those professions. It's preferable to get into businesses that don't screw over anyone, but if you're going to screw over someone maybe don't screw over smart highly paid professionals that are providing your core value proposition.
- hef19898 7y ago
  Especially lawyers, who by definition aren't too bad at screwing over others legally themselves.
- brianTheDog 7y ago
  LMAO! The whole legal system is there to screw over the poor and allow the rich to do what they please.
- Felz 7y ago
  When I worked there a few years back, the spin was that it'd be letting the lawyers themselves get more done, by automating or easing rote but necessary tasks like reviewing company documents &etc. I think the story around what paralegals would do was more nebulous, though.
- jungong 7y ago
  Agreed - it does seem like a cynical move. Now waiting on Justin to share the story from his side.
justlexi93 7y ago
Justin Kan's hybrid legal software and law firm startup Atrium is shutting down today after failing to figure out how to deliver better efficiency.
smohnot 7y ago
These full-stack “cyborg” businesses are hard; seen them in many types of prof svcs; accounting, legal, recruiting, r estate, insurance. Very few have worked, Redfin as notable exception, though it took forever. The expected operational efficiencies are very difficult to come by.
Ice_cream_suit 7y ago
"The legal team seemed like 2nd rate lawyers who constantly made typos on legal forms" And "My experience with this was also negative - seemed like a good idea but post-sale often took weeks, even months to get results" https://techcrunch.com/2020/03/03/atrium-shuts-down/ https://techcrunch.com/2020/03/03/atrium-shuts-down/
thindarye 7y ago
https://twitter.com/justinkan/status/1066859955804762113 https://twitter.com/justinkan/status/1066859955804762113
robhunter 7y ago
One lesson that I think is getting buried here - hiring 100+ people when you're not yet at product-market-fit makes it really hard to try and get to product-market-fit. It's a lot easier to experiment, learn, and iterate when the team is small. Gets very difficult when you're 100+ so quickly.
- Digory 7y ago
  I’m glad someone took a gamble on an MVP that needed 100+ to pull off. We need more of that — 100 people is still a pretty small organization, even for law firms. We have lots of problems that need 100+ to solve. But the ability to pivot was obviously hamstrung. The team necessary for “plan b” didn’t have much overlap with “plan a.”
  - robhunter 7y ago
    "MVP" and "need 100+ people" seem like mutually exclusive things. In this case, I think the headcount was a bug rather than a feature.

298 points by tempsy 7y ago

This happened less than 2 months after a "pivot to tools": https://news.ycombinator.com/item?id=22040238 https://news.ycombinator.com/item?id=22040238

gumby 7y ago
Never really seen a "pivot to tools" work (after I tried it with one company, and it failed, I started noticing when others tried it too).
- nharada 7y ago
  Why do you think it never pans out?
  - m3kw9 7y ago
    Prob cuz you are doing less with the same customers
  - deleted 7y ago
    [deleted]
  - itronitron 7y ago
    Using a tool often requires a lot more work than using (consuming) a service.
- evanrich 7y ago
  Slack is an example
  - gumby 7y ago
    Good example! It wasn't quite what I thinking as it isn't really "our game startup failed; let's sell game tools" but still it counts.
- mbesto 7y ago
  I see business services companies build tools in their vertical industry and become successful all of the time. You just can't take venture funding.
  - gumby 7y ago
    The question is over a pivot from "I'm going to provide product/service X at a profit due to my tool T" to "Well, I couldn't sell X so I'll sell T to other people who want X". If you couldn't make a go of it, is it really likely others will, or if they can that they will want your tool T to do so? This is different from either providing a service and successfuly using your own software to do so or providing a service and developing as well tools specifically for your customers. Slack was suggested by another poster as a company that pulled this off, though I'm not sure the communication tool was considered crucial to the game business.
    - mbesto 7y ago
      Fair. I guess it depends on what you determine as a success. 37signals was probably somewhat successful as a dev shop, but obviously not nearly as successful as a project management software one.
- g_p 7y ago
  In the case of Atrium, it also sounded like their "pivot to tools" was trying to take many of their existing (ex) employees on the legal side, and convert them into clients of the tools. While the legal and tools companies were together, I'm sure the lawyers enjoyed the shiny tools. But after the "pivot", with the lawyers seemingly going it alone with some of the former clients, it seems likely to me that Atrium (the tool) just wasn't offering enough of a value proposition to make the tool company profitable. Venture money needs massive growth. Selling a tool to lawyers will get an amount of money per month proportionate to the number of fee-earners. And from the sounds of things, their tools weren't exactly going to be irreplaceable. Anyone got any direct insight as to if the tools themselves were compelling but the pivot failed, or if the tools didn't deliver?
- aresant 7y ago
  I know several including housecall which is now housecall pro
enra 7y ago
The pivot never got started, they just announced it. Atrium was continuing their existing model/had the lawyers employed until March 1st.

wheelerwj 7y ago

wow.... that happened fast.

ol0gos 7y ago

Maybe Justin Kan should have focused less on his tweets and more on his company.

blizkreeg 7y ago
May be his tweets were a reflection of his inner journey and struggle with where the company was headed? Let's be kind. This is not easy.
- ol0gos 7y ago
  I have been following Atrium almost since its inception after being flagged by Andreessen and Justin was from the beginning tweeting pseudo-inspirational thoughts. In interviews he seemed more concerned with the story (serial entrepreneur / Twitch founder aims to disrupt legal field) than the content of the company (why the hybrid model? how is this going to move forward?).
smallgovt 7y ago
I'm sure the amount of attention he dedicated to his tweets was vanishingly small compared to his startup. Why did his tweets trigger you?
kubmit 7y ago
Maybe you should focus more on your work and less on useless HN comments?

notlukesky 7y ago

Let’s wait for the full autopsy but perhaps a better strategy would have been supplying tools and software to lawfirms, aggregating data and knowhow and then pivoting to an “automated” law firm as a service. But hindsight is always 20/20

rvz 7y ago
This. With every 'failure' of a company there come those who don't know the full picture and begin with 'guesses', 'maybe's' and other 'reasons' why it failed. The sensible thing to do is to wait for the details. Because at the end of the war or a death of a startup, everyone is a field marshal analysing the failure afterwards.
ol0gos 7y ago
The hybrid model made little sense in VC-land anyways. Gross margins were not as high as a full SaaS model. The transition to a full software model was never clearly laid out and seemed more wishful than anything.
- g_p 7y ago
  I always wondered if the hybrid model was an experiment at ways around regulatory barriers to lawyers sharing fees/profits, a la a global multinational leasing the very expensive brand, logo, and internal software from tax-haven incorporated HQ... It's not sending away profits, it's just licensing some incredibly valuable IP, honest! If the legal services arm was able to license the name and technology in a permitted way (like how a law firm can of course get their website and IT done by experts), it would seem to present an experiment at whether such a structure could act as a conduit to channel fees back into an investment vehicle.
tempsy 7y ago
I saw some reviews online here and there and it sounded like the biggest complaint was that it was expensive for what it was and it was never clear who would respond to a request and when (e.g. fungible lawyers taking random requests) Most startups will want to build a relationship with an actual lawyer, and having something like a LegalZoom for startups didn’t make sense for most.

noway421 7y ago

It sucks. Not even sure they should've called it so fast, why not keep going and try to figure it out till the money runs out. Investors would be OK with that. I wonder when Justin lost his conviction? I don't believe you can lose conviction in 2 month.

tempsy 7y ago
working at a zombie company that has no traction is not fun for anyone part of the “challenge” of being a famous founder is you can raise pre product. $75M seems insane for a company like that. Burn couldn’t have been that high, mostly rent and salaries, no heavy computation, etc.
- baddox 7y ago
  Wouldn't rent and salaries (at least in the SF Bay Area) almost always be vastly more expensive than computation?
  - tempsy 7y ago
    Depends on the company. If it’s a marketplace like Uber then you’re burning a lot of operations. If it’s ML or heavy compute then AWS bills.
    - toomuchtodo 7y ago
      Honestly surprised a bunch of VCs haven't gotten together yet and built out their own compute for portfolio companies considering how much VC money gets shoveled into the AWS fire.
      - acdha 7y ago
        Think about the hundreds of engineers they’d need to hire, purchases for hardware and software, security approvals, etc. that would all need to be spent up front with no guarantee that it’d actually be cheaper. Beating the major cloud providers requires some combination of large scale and/or cutting corners and most companies are not at the point where the infrastructure costs beat the staff time needed.

bfung 7y ago

Kudos to shutting down instead of dredging on. It's never an easy choice, but giving everyone closure helps everyone to move on.

idoh 7y ago
They shut down with 75 million in the bank a couple months after the pivot. I think there is more to the story.
- teej 7y ago
  They do not have 75 million in the bank. They returned what's left of their 75 million raised back to investors.
- deleted 7y ago
  [deleted]
- bfung 7y ago
  Even if there was 75 million in the bank, what would they do with it? Burn it, keep trying to pivot, run out of investor goodwill when all the money is gone and nothing to give back? If Justin ever wanted to start another thing in the future, that would be a hard sell if this burn happened. Not trying to attack -- just typing out the questions and consequences to think about.

dustingetz 7y ago

what if a startup charged $300 per month for all you can eat email legal advice backed by a rich library of templates? they would instantly dominate and there are 6M small businesses in the USA alone

berberous 7y ago
You get what you pay for. $300 is 20 minutes of a good lawyer’s time. The economics don’t work.
- m0zg 7y ago
  More like an hour of a good lawyer time. Mine charges $350/hr. But your point stands. I don't see how his work could be done with "templates". Most of the time I pay him for contract reviews.
  - slap_shot 7y ago
    High end firms can easily be $800+/hr for attorneys. I believe Wilson Sonsini was $1200/hr for an attorney I was recommended.
    - gnicholas 7y ago
      Top partners were already at $1,200/hr when I left the law in 2014. They’re now hovering around $2,000/hr.
      - m0zg 7y ago
        You don't need a "top partner" for contract review.
        gnicholas 7y ago
        That’s true. But for a big enough deal, you want partners to be reviewing — at least at a conceptual level — the way the deal is structured. I’ve seen agreements that were 99% good, but a problem in the other 1% made the whole thing worthless.

gnicholas 7y ago

I swung by the Atrium booth at the Startup Grind conference a few weeks ago. A former lawyer, I was curious to hear their pitch. It was basically: we get you cheap lawyers, and we help them find new clients. I asked if all of their lawyers are based in the US, and they couldn't give me a straight answer. Eventually, when I said "well, of course they must all be US-licensed lawyers, right?" they said "oh, yeah, they must all be in the US then." It was not a confidence-inspiring conversation, and I can't say I'm surprised that they're shutting down.

taneq 7y ago
So it was basically Craigslist for lawyers?
- Gorbzel 7y ago
  Put another way, it was doomed (good riddance). I've mentored aspiring entrepreneurs in the legal tech + services space for a number of years now and go out of my way to provide additional guidance (and some well intentioned ribbing) to those who pitch any sort of legal referral idea. The concepts are (without fail) derivative and lack novelty, equivalent to pitching "Uber rideshare, but for [INDUSTRY]" without more to sophisticated VCs. The problem is very real, but the margins are so thin that venture shouldn't be anywhere near it. Solutions should be non-profit and left to those heroes in the A2J space (whose funding should be significantly increased).
eganist 7y ago
Legal is a notoriously sluggish industry, one that's almost infuriatingly incapable of adopting change and technology. Atrium's original pitch was exactly the opposite of what most legal teams are used to interacting with, and I can't think of a single biglaw attorney (sorry for the anecdote) who had faith in the idea or its execution. The original concept, as a reminder: https://techcrunch.com/2018/09/10/atrium-legal/ https://techcrunch.com/2018/09/10/atrium-legal/ Now it's easy to say that this should've been obvious in hindsight. (Should've been obvious to me, anyway; I cold-mailed Justin and Nick years ago looking to build a specific function within Atrium to address concerns I'd heard on background about the service offering; I never did hear anything back about that.) But that said, I can't help but think the original pitch by Atrium was just too bitter a pill for the most conservative industry in the United States to swallow. Shoot, lawyers are bizarrely resistant to moving to e.g. Signal to preserve attorney-client privilege; given this, I have a hard time thinking of many who would trust ML models with understanding case-law.

burgerquizz 7y ago

Justin Kan got into a terrible motorbike accident few months ago [1] . He then went through lot of thoughts on meaningful life and such kind of things in his tweets later. Would that impact the performance / outcome of Atrium? [1] https://twitter.com/justinkan/status/1191821878567915520 https://twitter.com/justinkan/status/1191821878567915520

arbuge 7y ago
Looks like a bicycle accident, not a motorbike accident.
- eshyong 7y ago
  Still, looks like a nasty injury. That's enough to make anyone ponder life
  - dmix 7y ago
    > Broke both elbows, lost a tooth & left a smear of my face on the road That's an injury that will keep you in bed, giving you a moment to really look if you're collectively as a company making the best effort on solving the right product/market fit. Which he clearly couldn't find, nor roll off some of the law-firm tools they built I guess? But the actual law firm of lawyers they got together is still running which is good, so it's not a total loss, plus some money back to investors. It's difficult to get proper perspective sometimes being a founder, you get mired in details and fantasy growth possibilities, and startup runners constantly need re-committing themselves for the tough fight going forward. It takes balls to finally admit defeat, especially with a solid track record. So ultimately I wouldn't be surprised if this gave an opportunity to step back and take some perspective, while he's stuck in bed in recovery mode.

choyle 7y ago

Techcrunch links to the wrong Atrium on crunchbase. Lucky for that company!

manigandham 7y ago

Legal industry is already tech-enabled. Templates, digital docs and signatures, OCR, AI/NLP/semantic processing, collaborative editing, and more are already used by modern law firms. There's no easy software-based efficiency left to find. The major work is still done by humans because of the liability, complexity and customization of every case. The next step requires a revolution in legal process, not just more software.

patentatt 7y ago
Disagree. I am pretty close to the Biglaw tech scene. While you’re correct that most firms would say they use all of those things, the actual implementation and execution isn’t there. It’s not even a nuanced critique, I mean maybe 1% of amlaw 100 revenue is even touched by anything in your list. There is a lot of work to be done, and great opportunity in the legal industry.
- staticautomatic 7y ago
  Agreed. For all their tech initiative claims and hiring of in-house "legal ops" people and even developers, your typical attorney uses hardly any legal tech outside of e-discovery or billing.
  - deleted 7y ago
    [deleted]
  - manigandham 7y ago
    What else does a typical attorney need to use that would make a meaningful difference?
    - staticautomatic 7y ago
      I can only speak for teams of attorneys, and my experience is mostly working with litigators rather than transactional lawyers, but among other things: 1) It's shockingly rare to see use of project management tools, even simple stuff like Basecamp or Notion. When multiple people need to, say, review a draft of a filing in sequence, they're typically either keeping track of it in their heads or in a spreadsheet. "Excel is totally adequate for this" is wrong for a variety of important reasons. 2) Infrequent use of file indexing, even Windows' built in. I see firms using document management software running old versions of SQL with totally the wrong kinds of indexes and which usually take forever to find anything or crash in the process. 3) If they exist I haven't seen them in use, but a lot of teams would benefit from some middle ground between nothing and e-discovery software for searching across relatively large but not enormous collections of documents. A rudimentary on-prem or local CRUD app that could ingest a variety of shit, OCR it if necessary, dump it into Elastic, and let you FTS it would probably sell like hotcakes to small and mid-sized firms.

duxup 7y ago

It didn't really seem like they were doing anything an existing firm couldn't do efficiencies wise. And maybe already has /has found where it works or doesn't. And the customers who want legal help for cheap(er)...just don't seem like the people who you make money off of. Any customer concerned enough to know about this service probably wants more from it. Anyone that would be a good customer, might never find them / isn't doing much in that area anyway...

correlator 7y ago

Another "AI" hammer looking for a nail to solve bites the dust. I hope those 100 employees land on their feet.

fastball 7y ago
I dunno, I still think the legal industry is pretty ripe for some disruption.
- correlator 7y ago
  I think it's ripe for useful tools. No need for disruption.
  - fastball 7y ago
    There is a lot to not like about the current state of the legal industry besides "poor tooling".

bogomipz 7y ago

The article states: >"It will return some of its $75.5 million in funding to investors, including Series B lead Andreessen Horowitz." Does this simply mean it will return all funding after paying out remaining invoices and salary obligations? Or is there some significance to the phrase "some of" here?

Digory 7y ago
The $75m was a 2018 series B. Atrium has been spending that money for 18 months, and probably quickly. So A16Z isn’t getting back anything close to $75m. Just “some.” Part of this seems like courtesy among the big boys who want to play again. I doubt Atrium wants to tick off A16z by making dubious claims to the remaining cash.

pontifier 7y ago

I contacted atrium in December to see if they could help me with an acquisition, but they didn't even want to take me on as a client because I wasn't big enough yet. I should have guessed there was some trouble behind the scenes. I ended up just going with my gut, doing my own quick study on aquisitions, and went ahead with the aquisition without a lawer on my side looking things over. I think it turned out ok... time will tell I guess.

sjroot 7y ago
I have a similar-ish story. I actually just spoke on the phone with a representative from Atrium just a few days ago; I was interested in having some policies written/reviewed. I was particularly interested in their "start-up" package which seemed to offer general counsel for those looking to grow their business. While I would have been happy to pay for this sort of concierge approach, I was also "declined" for being too small / not needing the specific services I suppose they were willing to provide. I imagine this kind of interaction with potential clients is one reason they got to this point.

planetzero 7y ago

One of the worst contracts I ever had was for a small company running a SaaS for divorce attorneys to help manage their cases. The main selling point was that it would re-create state forms on the web and allow an attorney to fill them out, print them, and manage a case. These forms would change many times a year and they were written using horrible PHP libraries that required every piece of the form to be drawn using coordinates. If one thing changed on the page (which happened often), all coordinates would shift and have to be re-written. Aside from this, the owner had the first version written by developers overseas a few years earlier and I was hired as part of the 2.0 team that consisted of more inexperienced overseas developers and resulted in even more of a mess than version 1. Some gems from the owner: She once put on her Linkedin profile that one of her accomplishments was the ability to hire developers on a volunteer basis or well below marker value. It was taken down within a day. I was finally let go and was told straight to my face that she was going to hire someone from India for 1/3 what she was paying me.

hardwaresofton 7y ago

> Atrium had attempted a pivot back in January, laying off its in-house lawyers to become a more pure software startup with better margins. Some of its lawyers formed a separate standalone legal firm and took on former Atrium clients. But Kan tells me that it was tough to regain momentum coming out of that change, which some Atrium customers tell me felt chaotic and left them unsure of their legal representation. It's hard to detect my own bias of course, but this seems like a really cynical move. I understand the need to improve margins but essentially trying the train our processes so we can fire you is off-putting and borderline offensive to workers. For positions closer to the furnace of automation and jobs that are generally dangerous that people don't take pride in it can be minimally destructive but law is not one of those professions. It's preferable to get into businesses that don't screw over anyone, but if you're going to screw over someone maybe don't screw over smart highly paid professionals that are providing your core value proposition.

hef19898 7y ago
Especially lawyers, who by definition aren't too bad at screwing over others legally themselves.
brianTheDog 7y ago
LMAO! The whole legal system is there to screw over the poor and allow the rich to do what they please.
Felz 7y ago
When I worked there a few years back, the spin was that it'd be letting the lawyers themselves get more done, by automating or easing rote but necessary tasks like reviewing company documents &etc. I think the story around what paralegals would do was more nebulous, though.
jungong 7y ago
Agreed - it does seem like a cynical move. Now waiting on Justin to share the story from his side.

justlexi93 7y ago

Justin Kan's hybrid legal software and law firm startup Atrium is shutting down today after failing to figure out how to deliver better efficiency.

smohnot 7y ago

These full-stack “cyborg” businesses are hard; seen them in many types of prof svcs; accounting, legal, recruiting, r estate, insurance. Very few have worked, Redfin as notable exception, though it took forever. The expected operational efficiencies are very difficult to come by.

Ice_cream_suit 7y ago

"The legal team seemed like 2nd rate lawyers who constantly made typos on legal forms" And "My experience with this was also negative - seemed like a good idea but post-sale often took weeks, even months to get results" https://techcrunch.com/2020/03/03/atrium-shuts-down/ https://techcrunch.com/2020/03/03/atrium-shuts-down/

thindarye 7y ago

https://twitter.com/justinkan/status/1066859955804762113 https://twitter.com/justinkan/status/1066859955804762113

robhunter 7y ago

One lesson that I think is getting buried here - hiring 100+ people when you're not yet at product-market-fit makes it really hard to try and get to product-market-fit. It's a lot easier to experiment, learn, and iterate when the team is small. Gets very difficult when you're 100+ so quickly.

Digory 7y ago
I’m glad someone took a gamble on an MVP that needed 100+ to pull off. We need more of that — 100 people is still a pretty small organization, even for law firms. We have lots of problems that need 100+ to solve. But the ability to pivot was obviously hamstrung. The team necessary for “plan b” didn’t have much overlap with “plan a.”
- robhunter 7y ago
  "MVP" and "need 100+ people" seem like mutually exclusive things. In this case, I think the headcount was a bug rather than a feature.