20 VC FF 027 Risk, Incentive and Opportunity in Starting A Company with Daniel van Binsbergen, Founder @ Lexoo

In the final episode of 20 minutes VC's feature with Forward Partners, host Harry Stebbings interviews Daniel van Binsbergen, CEO and co-founder of Lexoo, a London-based online marketplace connecting businesses with lawyers. Van Binsbergen shares his journey from being a senior associate in law to starting Lexoo, which has raised over £1 million, including investment from Forward Partners. He discusses the initial non-technical, manual approach to Lexoo's service, the importance of aligning with investors who share genuine excitement for the venture, and the challenges and surprises encountered while fundraising. Van Binsbergen also touches on the legal industry's slow adoption of technology due to misaligned incentives and risk aversion. He advises aspiring founders without technical skills to focus on market innovations and emphasizes the steep learning curve and exhilarating experience of being a founder.

• Daniel van Binsbergen is the CEO and cofounder of Lexu, an online marketplace that connects businesses with lawyers.
• Lexu was founded in 2014 in London and has raised over 1 million from investors including Forward Partners.
• Daniel was previously a senior associate at an international law firm working in London and Amsterdam.

"Daniel van Binsbergen is CEO and cofounder of Lexu, an online marketplace that connects businesses with lawyers. Founded in 2014 in London, Lexu has raised over 1 million from a number of investors, including forward partners."

This quote introduces Daniel van Binsbergen and his company, Lexu, providing context on its foundation, purpose, and financial backing.

• Daniel noticed a demand for lawyer recommendations from friends in business.
• Friends were aware of the high costs at larger firms and sought more affordable options.
• Daniel kept a list of qualified lawyers who charged lower rates due to lifestyle choices.
• There was a lack of transparency in the legal market regarding pricing and quality.
• Lexu was created to offer a curated marketplace for quality legal services at transparent prices.

"So that was more or less the aha moment where I thought, hey, there's something here. There's a massive lack of transparency in a huge market."

Daniel explains the realization that led to the creation of Lexu, identifying a gap in the legal market for transparent pricing and services.

• Daniel anticipated a salary reduction when leaving his law career for a startup.
• He saved his salary raises to build a financial cushion and prevent lifestyle inflation.
• Daniel viewed the startup experience as an investment in personal growth and future opportunities.
• He believes that the perceived risks of starting a business are often less severe in reality.

"Doing a startup means you learn so much that I felt that I'm really investing in myself, and after having done a startup, I would feel I would have way more opportunities than if I just stayed in the law."

Daniel discusses his view of entrepreneurship as a learning experience and investment in oneself, rather than just a financial decision.

• Daniel suggests that a strong internal drive can be a sign to pursue entrepreneurship.
• He advises taking the leap and figuring out challenges later, as reality may be less daunting than anticipated.
• Daniel believes that the universe may align to support those who pursue their goals.

"And in my view, it's always better to just do it and figure it out later if it doesn't work. Because the risks you think of, of things going wrong will always be slightly less bad in real life than you might imagine them ahead of time."

Daniel offers advice to potential entrepreneurs, encouraging them to take action on their ambitions and not to overestimate the risks involved.

• Daniel acknowledges that not having children made it easier for him to take risks.
• He believes that even with a family and financial responsibilities, he would have pursued his startup ambitions.
• The fear of future regret was a motivating factor for Daniel.

"I think I would. Just because I did feel that sense of future disappointment weigh on me a bit, I thought, what if I don't do it and I stick in the law, and then in 30 years time I'm cl"

This incomplete quote suggests that Daniel would likely have still taken the entrepreneurial risk despite potential family and financial responsibilities, driven by the desire to avoid future regret.

• Daniel van Binsbergen expresses that if he were close to retirement, he might regret not taking risks in his career.
• He values the idea of "going for it" and trusts in his ability to find employment if a risk doesn't pay off.

"So I think I would have just gone for it, knowing full well that if it doesn't work out, I would trust I'd be able to find a job somewhere."

This quote highlights Daniel's belief in taking career risks and having confidence in his employability should those risks not lead to success.

• The legal industry lags in technological advancement due to misaligned incentives, risk aversion, and partnership structures.
• Hourly billing models in law firms discourage efficiency and innovation.
• Lawyers are trained to spot risks, making them cautious about adopting new business models.
• Senior partners, who often have the most influence, may resist changes that could reduce short-term earnings but offer long-term benefits.

"So most law firms still bill on an hourly model, whereas a lot of innovation takes place in industries where the person doing the innovation will be able to reap the rewards."

This quote explains the disincentive for innovation in law firms due to the prevailing hourly billing model that profits from inefficiencies.

• A shift in the legal industry is driven by a new generation of lawyers who prioritize different career goals.
• Younger lawyers are starting their own practices with innovative billing methods, such as fixed fees and risk-sharing.
• Competitive dynamics are pushing traditional law firms to innovate as clients compare services and costs.

"And I think once that trend is continuing, clients are waking up as well. They will then compare, let's say, an Allen overe lawyer with an ex Alan Ovary lawyer working on a much lower overhead basis."

Daniel discusses how competition and client awareness are catalyzing change in the legal industry, leading to innovation and new business models.

• Lawyers may not be the best founders due to their focus on risk over opportunity.
• Legal training can hinder entrepreneurial spirit by emphasizing potential problems over growth.
• However, a legal background can provide advantages such as contract familiarity, negotiation skills, and organizational abilities.

"I always felt a bit frustrated by having to only look at risk instead of opportunity."

Daniel reflects on the limitations of a legal mindset for entrepreneurs, suggesting that while legal training has benefits, it may also instill an overly cautious approach.

• Lexu was started with minimal technology due to Daniel's lack of technical skills and the need for trial runs before building a full solution.
• The initial version of Lexu consisted of a simple form on a bootstrap theme that collected requests, which were then manually processed by Daniel.
• The focus was on solving the client's problem, not the sophistication of the technology.
• Automation and technological development occurred only when manual processing became unsustainable.

"So how we started out, it was just a bootstrap theme. It was like $15 off of one of these theme websites."

Daniel describes the humble technological beginnings of Lexu, emphasizing the importance of starting simple and focusing on the problem rather than the technology.

• Daniel left his job to commit to starting Lexu, recognizing that he wouldn't be able to start a business while working long hours.
• He suggests that committing to entrepreneurship may be necessary to succeed, even if it involves significant personal risk.

"So I recognized I wasn't ever going to really start something unless I committed."

This quote underlines Daniel's decision to leave his job as a necessary step to fully dedicate himself to launching his business, Lexu.

• Daniel van Binsbergen realized that to pursue his business idea, he needed to commit full-time.
• He quit his job to focus on customer development and creating a prototype.

"But I just recognized I was never going to do it unless I actually quit."

The quote emphasizes the commitment required to transition from idea to execution, highlighting that part-time efforts were insufficient for Daniel's goals.

• Daniel advises non-technical founders to focus on business ideas that don't rely heavily on technology.
• He suggests market innovations, like his company Lexu, which provides access to specialized solicitors.
• Emphasizes the importance of starting manually rather than waiting for sophisticated technology.

"I would suggest to focus on a business idea where the tech isn't necessarily the big solution."

This quote suggests that non-technical founders should look for business ideas where technology is not the central component, thus avoiding the barrier of needing advanced technical skills.

• Daniel met his investors through personal connections, specifically a friend who introduced him to Romaine, the CEO of Utelli.
• Romaine introduced Daniel to Forward Partners, who invested at the idea stage, which is somewhat unique.

"So I got introduced to forward, had a number of meetings with them, and, yeah, signed the seed deal a year and a couple of months ago."

This quote details the process of how personal networking led to an introduction with Forward Partners and eventually resulted in securing a seed investment.

• At the time of meeting with Forward Partners, Lexu had only about five to ten clients.
• Lexu's monetization strategy involved taking a 10% commission from the lawyers for each inquiry submitted through the system.

"I think I had only had between five and ten clients submit an inquiry through the system."

The quote indicates the early stage of traction Lexu had when they first met with potential investors, showcasing that significant traction was not necessary for securing funding with Forward Partners.

• Daniel was surprised by the excitement and genuine interest from investors.
• He observed that committed investors are driven by opportunity rather than fear of missing out (FOMO).
• Investors conduct due diligence to identify potential issues rather than to be convinced of the idea.

"The people that end up investing are the ones who are genuinely excited about the idea and about what you're doing from the get go."

This quote reflects Daniel's realization that investors who are likely to commit are those who show immediate excitement and interest in the business idea.

• Daniel found it challenging to answer investors' questions about cost per acquisition and lifetime value, as he hadn't considered those metrics before.
• He needed to quickly prepare detailed financial projections after his initial meetings with investors.

"They ask a lot of questions that I had not known to even think about."

The quote illustrates the unexpected depth of questioning from investors and the need for founders to be prepared with financial and operational insights about their business.

• The relationship with Forward Partners has been hands-on, providing office space and access to a team of specialists.
• This support allowed Daniel to quickly advance his business in the first year.

"They're quite hands on, especially during the first year, because we share office space with them and they've got quite a great team of subject matter specialists."

Daniel's quote describes the supportive and collaborative environment provided by Forward Partners, contributing to the growth and development of Lexu.

• Daniel reflects that he would have worried less about knowing the exact path to success.
• He acknowledges the unpredictability and the learning process involved in building a business.

"I think I would have maybe stressed out a bit less about not knowing the exact path to making Lexu a big business."

This quote suggests that looking back, Daniel would have advised his past self to be more comfortable with uncertainty and the iterative nature of building a business.

• Recognizing that the entrepreneurial journey involves unknowns and learning to handle them over time.
• Importance of having a clear long-term vision ("true north star") and a practical short-term plan.
• Understanding that the path reveals itself incrementally, every six months or so.

"And I think what I've learned in the past year and a half, that as long as you have a true north star of where you want to end up, even if it's a bit fuzzy, and you know what you need to do in practice over the next three to six months, then you're fine, because the path for the next six months keeps kind of revealing itself."

This quote emphasizes the importance of having a long-term vision and a short-term plan in entrepreneurship. It reassures that it's normal not to see the entire path at the beginning.

• The "mom test" as a method for obtaining genuine feedback from customers.
• The book "The Mom Test" by Rob Fitzpatrick is highly recommended for customer development and feature releases.
• Asking about customers' problems and current solutions is better than asking about the product directly.

"It's called the mom test because it teaches you how to ask your customers questions in a way that even your mom, who would always say that your business idea is great, you would actually be able to get useful feedback from her."

This quote explains the concept of the "mom test" and its value in getting honest feedback by focusing on customer problems rather than the product.

• Admiration for founders like Brian Chesky of Airbnb for their continuous learning from a diverse set of influencers.
• Seeking knowledge from outside the tech industry is beneficial.

"What I really like about his approach is that he seems to seek out people he wants to learn from, so he never rests on his laurels, really."

The quote highlights the importance of continuous learning and seeking mentorship from a variety of sources, as exemplified by Brian Chesky.

• Blogs by Seth Godin and James Altucher for philosophical insights.
• Mattermark Daily Digest and Founder's Notebook for actionable entrepreneurial advice.
• VC insights from Mark Suster, Fred Wilson, Brad Feld, and Nick Brisbane at Equity Kicker.

"What I also read every day is for actionable stuff from entrepreneurs. I check the Mattermark, Daily Digest and founder's notebook."

This quote lists the resources Daniel van Binsbergen uses for daily, actionable advice, indicating their value for entrepreneurs.

• Trello for personal to-do lists and tracking monthly and quarterly goals.
• Microsoft's Sunrise calendar app for efficient scheduling and meeting organization.
• The importance of tools that streamline workflow and improve productivity.

"I think the ones I use most often is Trello. I mean, we do a lot in Trello. It's not just my own to do list, but we actually also put all our monthly and quarterly goals in there as well."

This quote reveals Trello's significance in Daniel van Binsbergen's workflow for organizational purposes.

• Transitioning from a lawyer to a founder brings a significant increase in excitement and learning opportunities.
• Every stage of business development presents unique challenges and accelerated learning experiences.

"Like my life got ten x more exciting. So I think that's one great thing. But most of all, it is the learning curve."

The quote captures the enthusiasm and rapid learning that comes with being a founder compared to previous professional experiences.

• Lexu has identified the problem it's solving and is ready to scale up.
• Plans to expand in the UK, Europe, and the US over the next five years.
• Personal development and continuous learning are key goals for Daniel van Binsbergen.

"I feel that we've really hit our stride. I mean, we figured out what the problem is we're solving and our solution works. So it's all about scaling up."

This quote outlines the future business strategy for Lexu, focusing on scaling up and expanding its market reach.

• Thanks to Daniel van Binsbergen for joining the show.
• Promotion of the 20 Minute VC platform and resources, including the newsletter, Twitter, and an ebook from Loyalty Bay.
• Loyalty Bay's offerings to increase website conversions with a free trial mentioned.

"Thanks so much for having me. I had a great time."

The quote is a polite acknowledgment of the podcast experience, reflecting the positive interaction between the host and the guest.