Ep 254: In the Wake of KKR's Acquisition of CLM Company Agiloft, CEO Eric Laughlin Discusses Its Past and Future

This episode delves into the major acquisition of Agiloft by KKR, discussing the company's journey under CEO Eric Laughlin's leadership and its future prospects in the legal tech space.

1. Strategic Growth: Eric Laughlin discusses how targeted strategies and a strong focus on upper-middle market and enterprise customers fueled Agiloft's growth.
2. Importance of Culture: Laughlin emphasizes that a supportive internal culture has been crucial for maintaining high customer satisfaction and employee morale.
3. KKR Acquisition Impact: The recent acquisition by KKR is viewed as a vote of confidence in Agiloft's market leadership and its potential for further expansion.
4. Technological Innovation: Agiloft's integration of AI and other technologies into their platform has been a significant factor in their competitive edge.
5. Future Prospects: Looking ahead, Agiloft aims to expand its global reach and explore potential acquisitions to enhance their service offerings.

1: Introduction to the Episode

Eric Laughlin and host Bob Ambrogi set the stage for discussing Agiloft's growth and the impact of KKR's acquisition. Bob Ambrogi: "Today, we delve into Agiloft's journey and its burgeoning role in the legal tech landscape."

2: Agiloft's Evolution

Eric reflects on his journey at Agiloft, emphasizing the strategic decisions that propelled the company's success. Eric Laughlin: "Our approach focused on enterprise-level service has solidified our reputation as a CLM leader."

3: Discussing the KKR Acquisition

The conversation shifts to the specifics of the KKR investment and its implications for Agiloft's future. Eric Laughlin: "KKR's investment is not just financial but a strategic endorsement of our vision and execution."

4: Future Strategies and Innovation

Eric outlines future strategies, particularly around AI and global expansion, which are expected to drive Agiloft's next growth phase. Eric Laughlin: "Integrating AI deeply into our services is pivotal for staying ahead in the tech-driven legal market."

1. Embrace Change: Leverage acquisitions and investments to fuel growth and innovation.
2. Cultivate a Supportive Culture: Build a workplace environment that encourages risk-taking and supports employee well-being.
3. Integrate Technology: Continuously seek to integrate the latest technologies to enhance service offerings.
4. Focus on Customer Satisfaction: Ensure that delivering value to customers remains a core business strategy.
5. Plan Strategically for Growth: Use strategic planning to target market segments that offer the highest growth potential.

Last month, KKR, a major global investment firm, announced that it had entered into an agreement to acquire a majority stake in Agiloft, the contract lifecycle management company. As part of the deal, the growth equity firm FTV Capital, already an Agiloft investor, is making an additional investment, and another growth equity firm, JMI Equity, is joining as a new investor.

The deal was a feather in the cap for Eric Laughlin, who joined Agiloft as CEO in 2020 after leading the Pangea3 business at Thomson Reuters. When Laughlin stepped into that role, Agiloft had been in business for 30 years, and he succeeded a predecessor who had been CEO for nearly all that time. He came aboard just as the company had raised its first-ever outside funding round, tasked with the mission of taking the company to its next level of growth.

During his tenure, the company has earned a reputation as a leading innovator in the CLM space, including in its development of features based on artificial intelligence, and it has significantly grown both its workforce and its global customer base. Laughlin has also strengthened his own reputation as a leader who believes that employee experience is as important as customer experience.

In March 2021, not long after he joined Agiloft, Laughlin was our guest on this show to talk about his plans for the company. On today’s episode, he returns to discuss how Agiloft has grown during his four-year tenure and to share his thoughts on the contract lifecycle management landscape, now and into the future.

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Speaker A
On the whole, the goal is more of the same. Instead of peeking around the corner of CLM and saying, hey, we're agile off here we are. Now this four years we're standing on a much stronger foundation and we're able to say, we are a leader. Here's how we serve large customers. And now let's jump off from there.

Bob Ambrogi
Today on last month, KKR, a major global investment firm, announced that it entered into an agreement to acquire a majority stake in Agiloft, the contract lifecycle management company. The deal might be seen as a feather in the cap for Eric Laughlin, who joined Agiloft as CEO in 2020 after leading the Pangea three business at Thomson Reuters. When Loughlin stepped into that role, he succeeded a predecessor who had been CEO for nearly 30 years. And he came aboard just as the company had raised its first ever outside funding round, tasked with the mission of taking the company to its next level of growth in March 2021. Not long after he joined Agiloft, Laughlin was my guest on this show to talk about his plans for the company. On todays episode, he returns to discuss how Agiloft has grown during his four year tenure and to share his thoughts on the contract lifecycle management landscape now.

Speaker C
And into the future.

Bob Ambrogi
This is Bob Ambrogi, and youre listening to Law next, the podcast that features the innovators and entrepreneurs who are driving whats next in law.

Before we get to that conversation, please take a moment to learn about the sponsors whose generosity supports this podcast.

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now onto my conversation with Eric Loughlin.

Speaker C
Eric Laughlin, welcome to Lawnext.

Speaker A
Great to be here. Good to see you, Bob.

Speaker C
Yeah, and I should say welcome back because you're actually on this podcast way back in 2021 at a point when you were not even a year into the job of CEO at Agiloft. The company's probably changed a lot since then. The market's surely changed a lot since then, and the CLM market specifically, and the legal effect market more broadly. And I know there's been some recent news that we're going to talk about here as well, or not.

But I wonder, I'm going to assume that not everybody listening today listened to that earlier podcast four years ago.

So I wonder if we could just kind of start with a little bit about who you are in your background, how you ended up in this role as CEO at Azure Loft.

Speaker A
Sure. Well, thanks for having me on again. Actually, I do remember that conversation and all those initial conversations after taking this job at Agilofthe. You know, I've been in the legal tech space most of my life. At first accidentally because the consulting firm I was working for was happened to have Thompson Reuters as a client, but then on purpose, you know, for a long time. I spent 13 years at Thomson Reuters at a variety of jobs, but all focused on products that serve M house counsel. So definitely, you know, that that's been my focus for my career. And, you know, one of those jobs was meeting Pangaea three. In that role, I started to get to know Agileft. We were working on a lot of contracts projects. Agiloft was starting to take on some larger customers and we did a joint project together with Honeywell. So I got to know the team, I got to know Colin Earl, the founder, and I got to see the product because my team actually got to use the product during that project.

I got to see the promise of Agilofthe. I also had this realization that I've been in this industry for a long time and no one's ever heard of agile.

So there's something special here to have a product so, you know, so performant, but a company so little known in the legal tech space, so it really piqued my interest and I ended up getting the invitation from Colin and his management team to come in and lead the company as he went on his path to retirement. So it was good to get to know the company before I even joined.

Speaker C
I. Yeah, it's funny how for, and I've been in the space probably, maybe, probably longer than you have, even if not certainly as long anyway. And it is funny how there's perception among many in the legal tech world that this is all new, that it's all just happened in the last few years and the legal tech wasn't even a thing beyond maybe ten years ago. Angelo was a 30 year company when you stepped into it, and 30 plus years, 34 or so years now old. I mean, what was the company that you stepped into and what was your mission as you took on that role?

Speaker A
Yeah, so Agile has a long history, and as many sort of founder led, bootstrapped companies are, it spent the first 15 years of that 30 year history. You're talking about working on various projects, sort of thinking about what to do with the company.

It wasn't until the late aughts, I guess, that Colin decided to go all in on creating a no code workflow platform.

And he wasn't thinking about legal tech at the time.

His just basic thought was enterprise software sucks.

That was his driving thing. And the reason that it's difficult to be successful implementing enterprise software is because it's too hard coded, it's too difficult, it's too custom.

He created a no code platform in order to create a ton of flexibility, to have amazing workflows, to have a really rich and flexible data set that could apply to any business problem. And as a good entrepreneur, he also then realized as people were starting to use his platform, that the contracts use case was really rich and very complicated and in some ways very tied into that enterprise, the problem set that he was trying to solve for. So he realized that and focused the company on contracts. By the time I arrived in 2020, it was still a small company, less than 100 people at the company.

As I said before, a little unknown in the legal tech space, but it certainly had been serving contracts customers for a while and thinking of itself as a CLM player. But when I got in, it was really clear to me that I had inherited this amazing platform, but there was really a company built around that platform that could allow it to grow and specifically that could allow it to serve large enterprise customers.

My goal was, let's focus on this upper middle market and enterprise customer set who are adopting end to end CLM, who care about this as an enterprise tech enterprise software platform, and can really get the most out of CLM and the most out of something like Agiloft.

That was my job coming in was growth in a specific target market and really figure out how to do that without taking hundreds of millions of dollars of venture capital. So there was a lot of challenge in there.

Speaker C
Yeah. Although interestingly, as I recall, at that point, the company had never taken an outside investment.

It was during, I think during or right around the time that you, during your first year, right around the time that you came aboard, that it took its first outside funding. It was $45 million at that point. So that was a major change.

Speaker A
Yeah, and I don't know how much we talked about this at the time, Bob, but it's become sort of more clear now that what we did there was. So FTV Capital came in and made that series A investment. So probably the oldest company I've ever heard of to get a Series A, series A from FPV in July of 2020, and most of that went to a secondary to help the founders have a nest egg to retiree. We got just a little bit of primary capital to help build the business, which was very different than what most of our CLM competitors at the time were doing, which were taking actual VC investment entirely primary investment, and putting that on the balance sheet to grow. I knew that there was this amazing market, I knew I had an amazing product. I knew I needed to build a team around taking advantage of that and do it in a really financially responsible way. I just didnt have the cash to throw $50 million out of the window every year. So it was an interesting challenge.

Four years later, here we are, and we grew 40% to 50% consistently every year, almost every quarter. Incredibly consistent. We are primarily serving upper middle market and enterprise customers.

Large customers are more than half the business at this point. I think we've established ourselves as having a really good reputation for actually taking care of our customers and delivering on what we say it feels like.

It's interesting bookends for me, coming in, having the FTV investment and then now having this KKR investment that you alluded to earlier. Right, maybe I should catch people up on that just in case they didn't read that news.

Speaker C
Yeah, let's do that.

Speaker A
So we just announced 45 days ago that KKR made a majority investment, is now the majority owner of Agilofthe, alongside another growth equity fund, JMI, and then our original growth equity fund, FTV. All three of them are staying in as investors for the company.

And actually, Bob here, my first conversation after we closed the deal, it actually closed on Friday. And so I wake up this morning in the next four years. We were talking about the last four years, but I've sort of woken up today and talked to you as my first conversation in the next four years. So it's pretty exciting.

Speaker C
That is pretty exciting.

We did talk a little bit right after you announced that it was going to happen, but it's great that it's happened. I'm curious in terms of what you said about the challenge that you faced four years ago and moving forward, getting to this point in that you didn't have deep cash reserves perhaps to reach into, and yet you did have this challenge of growing the company, making the company, marketing the company, growing its reputation and developing the product. So, you know, you clearly met that challenge. What was the secret to doing that?

Speaker A
I have to.

Let's see if I can condense it into a couple of things. I think what was really important and probably the most important thing for us was that the North Star for us had to be, we have to be very good at delivering for our customers. Doesn't matter how good you are at marketing or how good you are at selling, it's eventually going to come out. If it's not a quality product and not well delivered, you're not going to be able to be efficient over time. And so the first thing we do is just to make sure that every time we sell a customer that we are doing the right thing for that customer and that we're delivering. And I think our platform really helps with that. Right. Our ability to flex into exactly what that customer needs to do and to deliver for them. Obviously, there's a lot of goodness in doing good things for your customers. Right. The referral networks are a lot cheaper than the marketing that you do out in the world. That certainly helped us a lot.

We did have to obviously get out into the market and talk about ourselves. And Agilott was very quiet before I had to put myself a little bit in the uncomfortable position of being the brand for a little while. Nobody had ever heard of Agilott, but people in the legal tech world were willing to talk to me and so I could talk about Agiloff. You certainly helped us with that, doing all the things to sort of help people to get to know what the company was all about and then delivering on what we promised. Then internally, I think it was really important for me to focus on what is the culture that I want to build within agile often. How can that help us sustain really good growth rates but not a ton of capital?

I focused on one word which was supportive. How do we make a very subcortive internal culture?

The idea, which somebody later told me, oh, Eric, you're talking about ex Cx. But the idea was if we can create a really supportive internal environment, that way those employees, our team, and feel good about themselves can go out and take risks and do the right things for our customers.

Everything centered, whether it's internally or externally, around that. Then from an investment perspective, I just had to be very careful about not overextending ourselves. We're going to put a good market team in place that's capable of talking to large customers. We're going to focus our products on just the most important things, integrations, AI, making sure that we're taking a really human centric approach to implementation. Those things that feel like real basics. Bob, we just had to make sure that hit those things really hard.

Speaker C
Yeah. And ex Cx is employee experience equals customer experience for wondering how to translate that little formula there.

Speaker A
Yeah. Ex equals Cx. The employee experience equals the customer experience.

Talking with a customer one day about, she was asking about our culture and I was explaining, talking about this and that, and she goes, oh, you're talking about Ex. Well, Cx. And so I've just adopted that from her. I love the expression. I think it's something that, it feels really powerful internally because it's something that, who doesn't want to feel great about their team and who doesn't want to support their team members? Who doesn't want to feel supported? And then does that really translate into the customer experience? I guess our track record would say yes. At the last customer advisory board meeting we had, everybody always gets a turn to go around and say, give Eric advice. What should the CEO do differently?

Multiple people, as we went around last time, said, whatever you do in this next phase of business, don't change the culture because it works for us. It works for us as customers to feel what it's like to be supported from you guys. So I feel like that's not something that requires a lot of capital. Right. That's something that just requires a lot of commitment.

Speaker C
Yeah. And it can't be overlooked that you were stepped in and were doing this during a time in which the culture was probably being forced to change in some ways because of the pandemic. So how did that play into all of that?

Speaker A
Yeah, I started working with the founders in March of 2020, and then I took the job full time in July.

And so obviously, we all remember those as the early days of the pandemic. I was ready to go virtual myself, Bob. I was ready, and I certainly embraced it. And we have embraced it. We do not have an office and won't, at least in the near future. I sort of got lucky in that I had been working virtually for the last three or four years before that, and I'd experienced that. I liked it as a life that one can live.

But I also saw a lot of pain because I was working at, still working at Thomson Reuters. I was virtual living in Seattle, and my team was in Minneapolis and in India and in Europe. And so I saw this idea that there are haves and have nots in this world. There's the one guy or gal sitting out on an island and then people gathering in the office. And that wasn't very fun.

And so it really gave me a strong, you know, commitment to being 100% virtual and saying, we're going to build a virtual culture no matter what. We're not going back. So I got lucky to sort of seize the opportunity to the pandemic and just go all in on that.

Speaker C
I think the other way that maybe the world has changed a little bit over the last four years is specifically with respect to the CLM market, which was maybe still it is younger stages four years ago, although already in full throes of development in a lot of ways. But I wonder what your perception is of how that market has evolved over the last few years and kind of where you fit now within that landscape.

Speaker A
Yeah, I mean, if you look at it from a competitive perspective, or maybe a different way to look at that is from a customer choice perspective, there are a lot of choices, and I think know four years ago we, there were announcements every week, about $100 million of funding here and there, and sort of the new companies that were popping into CLM. If you walk around an association conference, you can't help but stub your toe on a lot of CLM companies of some sort. For me, what the difference between now and four years ago is that if you were a customer, instead of having you now have 25, 30 choices, and that's great. But if you're a serious end to end CLM customer who cares about the data story within the company and really is thinking of this not just as a small efficiency tool, but as an important part of the enterprise tech stack, there really only are a few choices out there. And so in some ways, that customer choice has gotten easier. There's that sort of old sort of truth about grocery stores and sort of CPG marketing, which is like if you go to a grocery store and there are too many choices, you don't make a choice.

But once there are only two or three choices, it's much easier to make a choice. You select the one that's right for you.

And I think right now for customers that we serve, there are much more clear choices.

It's been Conan and it's in some ways an easier process because of that. I do think there are many technology companies that are focused on CLM that won't make it over the next couple years, and we'll see who they are. But I do think the leaders have emerged at this point.

Speaker C
You want to tell us who you think will make it or won't make it?

Speaker A
I can tell you who won't make it. I feel pretty good about our chances of making them up.

Bob Ambrogi
When Laughlin took over as CEO, Agiloft had been in business for 30 years, which you might say qualified it as one of the elder enterprises of the legal tech industry. Yet during his tenure, the company has earned a reputation as a leading innovator in the CLM space, including in its use of artificial intelligence. So how has the company changed since he came aboard? We'll find out in just a moment. But first, please take this opportunity to learn about the sponsors who make this podcast possible.

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welcome back to Lawnext. In the crowded CLM space, Agiloft has earned a reputation as a platform that is at once intuitive to use and innovative in its features. When KKR recently announced its acquisition of a majority interest in Angeloft, it credited both Laughlin's leadership and the team he has built since joining the company four years ago. As we return to the conversation, Laughlin discusses more about how the company has evolved during his tenure and what the KKR investment means for the company's future development and growth. Let's get back to the conversation.

Speaker C
Yeah, you know, it's interesting because you said earlier in the conversation that you may have been the oldest company to get a series a raise. It's also interesting and given, again, given the age of the company that I think it's perceived in the market as a highly innovative company right now. I just had a conversation the other day. You know, you may have seen the news. Taylor Thompson Reuters rolled out their latest iteration, their co console drafting, where their contract drafting interface. And I was asking them about whether it has a particular feature and they said, no, that's a good idea. I said, well, you know, Agiloft does that. They said, yeah, we're aware that Agiloff does that. Yes, we aware.

Yeah, we know, Eric. And they're doing good stuff there. So I guess that was a, I guess that was a compliment coming.

Speaker A
Well, I appreciate that compliment from, or at least the awareness.

But yeah, you know, it's, it's interesting. There's an old company right underneath the hood here, but the product isn't super old. And when you think about the people, it's actually quite energetic and youthful, at least from my perspective. Most of the people who work at a lot today weren't there five years ago because we've grown so much that the culture of what we do and how we build product and things like that has changed and sort of modernized in some ways. So I hope people do feel that and see that in the innovation that's happening. And when you look at something like generative AI where you can't hide, you were mentioning the tosser Reuters drafting work. You can't hide, you have to embrace generative aih. And contracts happens to be a great space to embrace generative AI. And I think we certainly have. In some ways, we felt like generative AI was a great time for us to catch up to some of the people who had an early start on AI.

So the slate has been wiped clean here. Everybody gets a new shot at being the leader in this and let's be a leader in generative AI. And our take is a little bit different than everyone else's. And I think that's what innovation is. Innovation is trying to stand a little bit differently than other folks, have a different perspective, do something about it. And our perspective on generative AI is that from an agileft product development perspective, we need to do two things. The first thing is that we need to make sure that we are developing use cases that are very robust, that solve real problems. They're like the drafting use case that you talked about or redlining use case you talked about. The second thing is that we need to acknowledge that generation is inherently a much more democratic form of AI and of innovation.

And we shouldn't get in the way of our customers doing amazing, innovative things using generative AI. In fact, we should encourage them, we should bring them in. We should give them the tools to use generative AI within the product in the way that they want to. So we launched generative AI prompt Lab recently just to do a quick advertisement for Prompt Lab. The idea behind PromptLab is, is that you can use any data point you have within your CLM, that you can use our prompt templates where you can create your own and whatever the resulting, you can test them within the interface, you can use our GPT fine tuned model, or you can bring your own. Then whatever results from that prompt, whatever results from that, you can put that anywhere you want in any workflow using the inherent flexibility of the agile op platform. So the idea there is that, yes, I can come up with 13 use cases and my team can build them. But our customer community can come up with 1300 use cases and they can share them amongst themselves and they can refine them and they can marketplace of ideas can really win out there. If they can do that, if they can take advantage of all those interesting ideas on the agile platform without waiting for us to develop them, then they're going to get faster to success. And so that idea that they're just, it's not all about us. We're not the only ones who can be innovative, I think is what's going to help us be innovative.

Speaker C
Yeah. Just for the benefit of listeners, that redlining feature that I was talking about is I still think it's very cool. I haven't seen anybody else do it and maybe I'm exaggerating what it does, but the basic idea is that you get in counterparty agreement, you've got your playbook of what certain clauses should look like. So many of the contract review softwares out there will say, okay, well, your playbook says this, theirs is that. So we'll take yours and stick it in there. And that's the red line. And what you've done is developed a tool that, that's trying to find a compromise there between those two versions so that perhaps you can shortcut the negotiation process a little bit.

Speaker A
Yeah, yeah. One of our main sort of, you know, things that we talk about as team is that we have to be data first and human centric. Right. Which sometimes sounds diametrically opposed, but this is where human centricity comes into play. Right. In a human negotiation between you and me. Now, Bob, you and I never have anything to negotiate about, but should we?

The way that we mark up a document and we negotiate, because I never throw out everything you say and just put in my own stuff. Like you would laugh, you'd think that was ridiculous.

Speaker C
You're not going to get anywhere that way.

Speaker A
So the technology has to sort of integrate our two thoughts in a way that sort of gets, you know, get somewhere, but doesn't, doesn't throw out the whole thing. And I think that human centricity is important in the way that we build the product as well as in just sort of the flexibility we give customers to develop their own prompts, to develop their own tools and ideas.

Speaker C
Yeah. So I know that you're not saying what the dollar amount of this KKR investment was, but presumably you now have a little bit deeper pockets to dig into.

So what does this mean, and as of Friday, as of Monday morning here, what does this mean now moving forward for you and for your customers?

Speaker A
Well, it's certainly a vote of confidence right after four years of work and accomplishments with our customers. It certainly is a vote of confidence from world class investors that Agilop is a company that will be, is, and will continue to be a leader in the CLM space. KPR, as you could imagine, does a lot of external research before making an investment like this. They're a sophisticated investor. And so when they did that, as outside in research, they really echoed some of the things I've already talked with you about, that our customers are being successful with it, that they actually like the experience that they're having with us. And so I guess that's the baseline, which is our customers can feel good about that, our current customers can feel good about that, too, and our future customers can as well. But when you think about what we want to do with it, we certainly have to continue to innovate in a way that makes sense for our customers. We can certainly open up global markets to ourselves in a way that we couldnt in the past, just with the reach that the KKR has in the capital.

Certainly it opens up the idea of acquisitions.

Weve been entirely organic, but this certainly opens up the idea of inorganic growth. And for me, I think it's really important that I've been a part of conservators. I understand acquisitions, the good, bad and the ugly.

And it's important that anytime that we do something like that, it has to really work for our customers. It can't just be adding new customers. The idea of someone going in and just collecting all of the clms and putting them under one roof, I think is a really terrible idea. I think the idea of seeing where you can add new workflows, new technology, new ideas that our existing customers can take advantage of, those are good ideas for potential small acquisitions.

So this opens that up. But, yeah, I think on the whole, the goal is more of the same.

But instead of peeking around the corner of CLM and saying, hey, we're agile, here we are.

Now this four years, we're standing on a much stronger foundation, and we're able to say, we are a leader. Here's how we serve large customers. And now let's jump off from there. Let's push off from this place of strength.

Speaker C
Yeah. And how much of that, more of the same development is focused on AI? We had a, I do a Friday kind of podcast with a group of other legal tech writers, and Joe Patrice from above Law was on the show Friday and talking about an article he just wrote, kind of saying with regard to AI, like, what if this is as good as it gets. I mean, there's been so much talk about how generative AI was going to shake up legal, and there's some say.

Bob Ambrogi
Maybe we've kind of reached a plateau.

Speaker C
Maybe there's not a lot going on. What do you see as sort of the future and the potential here?

Speaker A
Yeah, I guess I don't agree with that, that it's the. I think there's a lot to go. I guess. To answer your first question, when we think about our product, roadmap, AI and ease of use are the two things that we talk the most about has to take advantage of build AI that takes advantage of the data within the system. Then ease of use just means there's a lot of user adoption still to go in this market, and we need to make sure that we're really getting that right for our customers.

But on the AI side, I think first and foremost about the data layer that we're all trying to take advantage of. I think as an industry and as a company, we have to really take care of the data layer that matters there and then take care of the use cases. And I see improvement possibilities in both of those. On the data side, there's a few things that have to happen, but one is we're really trying to educate our customers. To think about being data first means taking care of the four data types, the contract content itself, the process data, the things that you do through a contracting process, the performance data, so the round trip data, what happens in actual real life, in your business life after the contract is signed, and then decision support data, how do you collect all that in a way that makes sense so you can make decisions in the contracting process. If you get that sort of data structure and you populate that data now, the ability to use it with generative AI is massive. So that's step one for us.

Speaker C
How much of those four cycles are you able to help them with?

Speaker A
We do all four, and I think that's something that differentiates us. And the thing that we think is really important is you cannot do all four without having a really good integration game, without having really good user experiences in different systems that they use in your procurement system, in word, in outlook, in your CRM, as a company, we have to be really strong in our integration game to make that true.

If you think when you get back to generative AI now, we can take advantage of that, of that data.

So as I said before, I think for us, generate AI, it almost requires that we do some of the work ourselves in creating new use cases and getting out of the way and letting customers do some of their own innovation.

If you just look at how much, how different that is a year ago versus today, it's hard for me to believe that we don't have years and years of improvement on the horizon for that. Customers are going to get more and more used to the idea of whether it's not trusting the AI entirely, but using it in a way that they can take advantage of.

Speaker C
Yeah. Are you seeing, and if so, how are you addressing concerns from your customers about using generative AI, either with regard to potential security issues or this hallucination issues we all talk about?

What's that conversation between.

Speaker A
Yeah, I mean, two things. One is that because we can build pretty flexible workflows, we work with the customers to say, how are you going to take advantage of in quality control, the data point that's being spit out of AI? When you think about what it spits out, it spits out lots of different content, but in the end, it's spitting out a piece of data that you now need to have some confidence in quality control around so you can build workflows to make sure that that happens.

I think that's critically important. I think the other part is that there's some, especially in large enterprises, they obviously have their own data policies, and they have their own policies around what AI they can use. And so back to this idea of flexibility around innovation. We're allowing our customers to hook in their own versions of GPT, their own OpenAI accounts that have already been blessed by their it teams.

It's all about removing barriers, and one of the barriers is it is only comfortable using a thing that they've already approved. So we're allowing them to hook in the thing they've already approved into Agile Auth, and use that instead of ours.

You can still send the same prompts through it, you can still use the same data through it, but now you're sending it through your version instead of ours, and there's a level of trust there. So I think, well continue to find ways to break down those barriers that people are putting up against it.

Speaker C
You said earlier that the investment by KKR is a vote of confidence for the company, and I assume it's a vote of confidence that the company is going to continue to grow and expand and make more money. So how do you do that? How do you build your market?

Speaker A
Yeah, well, I guess to start with, we're so blessed to be in a market like CLM where it is growing on its own already, but it's also.

Speaker C
As you said, stub your toe. If you look around at a legal convention or something into a CLM company.

Speaker A
Yeah. But just from a market perspective, I see two things. I see that over the last four years, we probably doubled the amount of customers in CLM, probably double the penetration, but it's still below 50%. When we do our external work, it's still below 50%.

The other piece that's, I think, critical is you can say that there are 30% to 40% of potential customers have CLM, but the vast majority of them are not using it across all departments.

For us, there's a focus on reaching out to new customers and bringing them into that end to end CLM full and working with our existing customers to make sure that every single department that can be using CLM is using CLM. Obviously, the legal, procurement and sales side use cases are critically important. We see a lot of marketing and hr departments using agileft. There's a lot of contracts floating around the company that don't fit into those first one or two neat boxes.

Expansion within that helps drive growth. I think international markets obviously drive growth. We support large global customers now, but our Agiloft team is primarily in the US and the UK, so you'll see us growing internationally. And there are other markets that we think, whether it's manufacturing or life sciences, professional services, technology, some of our core industries, we can go a lot deeper into those industries and serve those customers in new ways. I think that we're so early.

In some ways, we're clms, been around for a long time. In some ways, CLM still feels early. What is CLM? Bob? This sort of. This high level question.

The edges around CLM are still a little fuzzy to me. And so in specific industries, or just for a generic customer, when does the CLM process start and when does it begin? Or how far back into procurement process does CLM really start? I think that's one of the things that will change over the next four years is this sort of taking advantage of the fuzziness around the edges of CLM and seeing what that expansion looks like four years from now. I'd love to have that conversation.

Speaker C
Does it need a new name?

Speaker A
I don't know if it needs a new name. I just think people are going to this idea that CLM is at the same level as CRM, ERP and procurement systems, top level enterprise stack. If you look across that enterprise stack there, obviously there's a lot of overlap and there's a lot of data flowing back and forth. If you look at the partnership that we just signed with Oracle not too long ago. They obviously see CLM at that level or they wouldn't be partnering with us. They think it's critically important. And once you put it at that level, now you can see what functions, what workflows work better, in which system, and you can make real trade offs there.

CLM is just a legal efficiency tool by itself. You're never going to make a trade off between, you want some procurement workflow in Cuba or do you want it in your CLM? But once it's an enterprise system at that level, you can start to make different trade offs.

Speaker C
Yeah. Does generative AI make it easier to move, expand beyond the particular stack you're into, into other stacks? And does that make the field more competitive?

Speaker A
That's an interesting question. I haven't really thought about it that way, Bob. I've been thinking more about the sort of interesting things that you can do to make yourself more efficient. I think the thing that is going to be really interesting that maybe goes in the direction that you're talking about, Bob, is how can we use generative AI to actually not just take advantage of efficiency within a workflow, but to create all new workflows? You might say, I want to create a workflow that connects my CLM to my ESG processes. How much easier does that become using generative AI? That certainly will allow us to expand more quickly.

Speaker C
Yeah, I think I was thinking more. I mean, I see some of the, you see some of the not smaller but more specific genai products that are coming out that are kind of like we do drafting, we do discovery work, we do summarization. They do a bunch of different little tasks that might previously have been separate products or separate companies. They don't necessarily do any of them all that great. So it's not like they're necessarily going to take it away from any of the more major companies.

But as this technology evolves, who knows what the possibilities are.

Speaker A
It will be interesting to see how the next couple years goes as a company.

As I mentioned, I think we're starting from strength now in this next couple of years, but certainly we're not starting from a place of cockiness. That's just not in our mojo.

We're always going to be looking around and understanding what other people are doing and understanding what our customers are really looking for. It'll be interesting to see how the next four years goes.

Bob Ambrogi
How do the next four years go?

Speaker C
What else are you thinking about looking ahead to over the next four years? For agile often, and I guess for yourself as well. What goals are you setting for yourself?

Speaker A
Yeah, certainly growth is important for our new investors. They want to see us take advantage of the maturity in the market and become a much larger scaled company. I think that one of the things that's very interesting that we've built over the last couple of years and that we really want to expand now is when you think about that agile officer, CLM and enterprise technology stack, we have to have very good relationships with the rest of the technology stack to make it work.

That idea I mentioned the Oracle partnership earlier, that we need to be a very connected ecosystem I think is really important. And it's important for us not to just think of ourselves in this legal tech world because we can have all the great partnerships we want in there, but that doesn't really help our customers with their procurement.

Thinking about that connected ecosystem is really important and it's something that at the scale we're starting to build into, that we can have those conversations with larger employers. So I'm excited about that. I think that'll be helpful for our customers. I think thinking about how you go from having a CLM data strategy to an enterprise data strategy and the CLM data is just part of it. I think it's going to be really interesting for us and for the next, for our customers. Is all this data just going to go into a large data lake? And now you get to develop new interesting use cases that merge different parts of the business and get to a really much more practical application of what's happening with this contract. How is it playing out in real life? And then do I need to change the contract next time it comes around?

I think that sort of application to the actual business world, not just the contracting world, is really exciting and something that will play out over the next couple of years.

Speaker C
You also said earlier that this is the first media conversation you've had since closing the deal on Friday.

Woke up this morning and I have to assume that that deal sucked a lot of the air out of your, out of your time over the last months or even years. I don't know how long it took to do that.

So having closed it on Friday and then having woken up this morning in this new world, what are you most excited about? Just getting started on?

Speaker A
Yeah, I mean, the fun thing right now is, and you're absolutely right, I'll just start with, you're absolutely right, it sucked more of my time and energy than I kind of thought it would. So it's been pretty all consuming for some time now. I like this moment right now. So I've woken up this sort of, you saw me earlier cleaning off a bunch of deal paperwork off of my.

Speaker C
Desk before we started recording off my desk.

Speaker A
Now this is done. So what do we do now? The fun thing is we actually get to say, sit down with my team and say, okay, a little bit of fresh start. Right?

What does this look like four years from now? What are all the things we want to do? Some of the things you and I already talked about. We get to get together with the board. I know it doesn't sound fun to get together with your board, but we have actually a great board between FTV and JMI and KKR and say, this is our vision. And that vision setting process is actually pretty fun.

It's a really, I don't know, it's a happy time to just dream a little bit and then put the pieces in place. And I think the difference between doing it this time and doing it four years ago. Four years ago, I put a number out that I said to my team, I want to hit this number in four years. Let's go for it. And we hit it. But I wasn't coming from a place of confidence. I was coming from like, oh, that sounds like a big Harry audacious goal.

Let's throw a big number out there. The fun part this time is we just know our business so much more intimately and we know our customers much more intimately that we can go through this strategy process in some ways just knowing more and in some ways being able to actually go through it with our customers, with our customer advisory board, we can bounce ideas off them in a different way. They can understand, they understand where our strengths and weaknesses are in a real material way, and they can help us think through if the things that we're talking about actually help them. So I liking this part of the process right here. It's a lot of fun.

Speaker C
Sounds like fun. Well, Eric, we're just about out of time. Anything else that you wanted to bring up that I haven't asked you about during this time?

Speaker A
Oh, that's a good question. I mean, I don't know. You and I have talked in the past about just what it's like to be a CEO, what it's like to have sort of gone through this process. And as a non founder also, I think is coming in has been interesting. So I was thinking about that over the weekend a little bit and thinking about probably the first time you and I talked, wasn't, was it four years ago. It was probably 14 years ago. It was at least a decade ago.

And what journey I've gone through there and what I would want to tell people about it, right? Because I think, I hope that a lot of people get to go on this journey that I've been on. And the thing that sticks out most to me is that when I first started to be a leader, when I was probably in my early thirties or something like that, at Townshend Reuters, I was a little self centered, to be clear, and I was a little too performance oriented. And I think the thing that's been really interesting to learn about myself is that I actually really enjoy the idea of culture building or the process of culture building and not being as self centered as sort of being a little more giving and that it just comes back so much more to you when you sort of approach things that way. And that the cool thing about performance is that it turns out that when you love the people you work with, you're oriented towards performance immediately. And so the idea that my performance is supportive of my colleagues, important, right? I'm going to do something well because it's important to me to do it. I'm going to do something well because they're doing their best and I want to make sure that their work doesn't go, you know, gets leveraged by my work, gets enhanced by my work. I want to do the same things for my customers. And that all comes from this idea of sort of, instead of being self centered and starting with performance, that performance is the result of all the sort of, you know, things that you've worked on.

And, you know, I think for me, the journey to where we are today has been a little bit about that, just sort of getting out of my own head and thinking that I was going to be the one who was driving performance and sort of say, that's not at all. I have to start with something completely different, and that will be the result. And, you know, I know a lot of different people listen and watch your reporting podcasts. And I hope that when I'm sitting here today, that my employee, if they watch it, they're like, yeah, that's right. That's what Eric's like in real life, right? He is supportive and sort of thinks this way. And I hope that somebody who's thinking about working watches this or listens to this and says, oh, that sounds fun. Like, that sounds like a good place to work. And I hope that a customer watches it and they say, that's the kind of partner that I want to work with. And so for me, a little bit of the leadership journey has been a realization that this does work for me and it works for us, our company. There's lots of different types of companies out there, but it works for us and we're going to stick with it.

And the idea that coming into this new four years with KKR and JMI and others, we made it very clear in our process we want to be ourselves and be this kind of company. And that's what's going to get us over the next growth humps in the next four years. And finding a supportive partner on their set was really important. That said, okay, yes, we're going to keep the whole management team and you keep doing what you do. That was an important part of the learning. You can be yourself. You can find the partner, find the investment partner that believes in that, too, and then get together. And now you could ask me at two years or four years from now if that played out.

Speaker C
Well, no, it sounds like an important lesson, and I'm tempted to say, okay, customers and employees, if he's full of crap, send me an email and I'll, you know, I'll write all about it.

Speaker A
Send me an email, right.

Speaker C
But no, I, you know, as you say, I've known you for a long time and I don't think you're full of crap about that. I mean, I know that to be the kind of person you are and the person you are. So that's good to hear. And I think that's valuable advice to share for other founders and CEO's. Well, I appreciate so much your taking the time today to talk with me. It's been great to talk.

Speaker A
It's been great to catch up. Always a pleasure.

Speaker C
My sincere thanks to Eric Loughlin for.

Bob Ambrogi
Returning to Lawnext and joining me today to talk about what's been happening with Agiloff since he joined the company four years ago and since we last talked in 2021.

I hope you enjoyed the conversation. If you'd like to share your own thoughts or comments on today's show, please do so by messaging us on LinkedIn or X or by emailing me directly, ambrosimail.com. and if you're a fan of Law next, well, please leave us a review wherever you get your podcasts. Lawnx is a production of Lawnx Media. I'm your host, Bob Ambrogi. I hope you'll join us again next time for another episode of Law.