Competing Against Industry Incumbents

What percent of developer salary would you be willing to spend on AI tooling for them? I don't want to say infinite, but for me it's a question of opportunity cost. We're in a competitive environment. So many things that we can do. The cost of Honestly, just work harder than the eight hundred pound gorilla. People underestimate this. Like no one the in the eight hundred pound gorilla is extremely excited to be there. This is 20 Product with me, Harry Stebbings. Now I'm so excited to welcome Jacob Lurettson, CTO at Lagura to the show today. Lagura is the fastest growing enterprise company in history. They hit a hundred million in ARR in just 18 months . They're gonna finish this year at 250 to 300 million. I'm pushing them to do 300 million because hey I'm an investor and it's easy to throw peanuts from the side. But Jacob is one of the best product minds I've had on the show, specifically from the last crop of product leaders in this AI generation. Time to get the notebooks out. 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But he's just exceptional and I know the bar of talent that he has. And so I know that this show is gonna be amazing. So first thank you so much for joining me. Yeah, of course. Thanks for having me. Now we were just chatting and you said Lagura is the first kind of big company or like company of this size that you've worked at. And I was thinking, is that a blessing or is that a curse? How do you think about that? I'd like to think that it's a blessing. I just have to be really humble about it. So essentially I don't have any priors coming into how to build an engineering org. Building an engineering org in 2026 is very different from doing it in 2024, maybe even. And so I think in that way it's really good that I come in naive and I'm like, okay, let's try to do it this way. And if it doesn't work, we keep iterating, just like we keep iterating on our product, we keep iterating on sort of our organization and our processes. And I just work with the team. Like what's what's working well, what's not working well. How do we solve that? Just like any other problem. Aaron Powell Dude, how is it different building a team in Andrew product in twenty twenty six versus twenty twenty four and years prior? Everything's just changing all the time right now. You know? The productivity is through the roof, processes are up in the air. You can be huge teams, you can be tiny teams. Productivity is through the roof. Yeah. If we unpack that, why is it through the roof? Well just AI tooling. It's simply like what do we use internally? It's cloud code, it's cursor, use it. Yeah, yeah. We still have cursor users. The cursor harness is quite good. You know, there's there's some personality differences in on our team, but but a lot of people still use cursor, some use cloud code, some use pie because cloud code's harness is is annoying sometimes. We allow people to do both. Okay, and so we have like efficiency against that. And so we just ship more? We ship more, we ship faster, we debug things faster, we iterate faster, everything is faster now. And each engineer can produce much more than they could previously. And that just has a ton of ripple on effects throughout the org, basically, and how you structure it. I mean I think it a way I like to think about it is when you build software, there's kind of like three phases. There's phase one, which is the product work. You know, what what are we building? Translate user pain, user dreams, nightmares into something tangible that we can try and we can iterate on and we can figure out if it works. Then once you have that, you know sort of what you want to build. Then you build it, you write the code, and then you review the code and you merge it and you get it going. And number two was the primary bottleneck for the past hundred years almost. So like the rate limiter was how quickly can you write code? That is now super cheap. So that's sort of been compressed. And so the the bottleneck now is like the two other ends, which is review. How can we do that much more efficiently? And then it's how can we actually do the product piece much more efficiently? Because you know, if you believe that code is cheaper to write, then naturally the two other things are bottlenecks. And that means one of the focus areas is how do we do the product work as efficiently as possible. How do you think about that then? That's a great question. Part of that is how do we make our PMs as efficient as possible? How do we sort of take all the working with clients, synthesizing what they think, our own strategic priorities, our own taste and opinions of our vision of where you know our product is going. How do we make them do that as efficiently as possible and hand that over to engineers as efficiently as possible? I'm not sure if I've solved that yet, but I do think it's like that's the way that I'm thinking about it. It's constantly what's the bottleneck to our velocity? And then we try to solve that. You said about the uh the kind of review being one element of it. That could be a bottleneck. Do we see AI code review becoming the dominant I think so. I think that's one of the solutions. We do AI code review today. And it's in its nascent phase. That's like when I was fat when I was young. My mother used to just say I was big boned. It's in its nascent phases sweet. Rough it just still but no I complete I I I think think that that''ss right. part of it is we have AI review bots. You can have like security review, you can have different specialized reviewers, they do about tons of review and they sort of iterate with the AI coder and it's like kind of weird 'cause you see this pattern where it's like agents fighting each other until they arrive at something. But even then, I think current review tools are not good enough. I think we need something new. I keep telling people at all events that I'm at, like if you're gonna do a startup, please do something that solves the review th ing. Because no one wants to look at the all the lines of code. What's important is what's the impact on systems architecture, what's the impact on systems design, stability, security boundaries, how does it sort of take our system in the right direction, that's the kind of stuff that you want to review. And if that doesn't change, then maybe you don't have to review it at all. Just you know, unleash the agent. But if it does, if there are some strategic trade-offs, then you want a human to be like, yeah, this is the right direction to take. Aaron Powell Is that the future of engineering being systems design, systems architecture, and then bluntly code creation, code maintenance is actually completely done by AI? No, I think so. I think so. I think that's right. The job of an engineer is changing from typing a bunch of code to sort of one layer above it, which is what does the system look like? And then you can have AI running around inside each of the pieces of the system, but you sort of have engineers thinking about the higher level one abstraction above, which is like what does the system look like? What are the bets we're making in different places? Do we want to invest into doing something here that we can reuse a bunch of places over here and it's gonna make everything much more stable? That's one of them. I think the other thing that engineers are doing more and more, which is an explicit role with us soon, which is like kind of the meta-engineering of making agents really effective. So you know how you have developer experience teams that they might help write custom linting or custom developer setups to make developers efficient. We kind of need to have the same team for agents. Like how do we make agents really, really effective? How do we make sure that we can enable agents to independently self-improve the system? Can we gather data in a really good way so that we can just unleash agents and say, hey, increase conversion rate on my e-commerce store? And it can just like go and run experiments. That sort of setting up the loop so agents can just like run and optimize. I think that's going to be a the actual job of a lot of engineers. How do you think we do that? I I I spent a lot of time with Jason Amkin and Anthony Midha, who's amazing. But they they both told me that fundamentally uh you know in a world where agents are the pickers of software, the API quality that we have is the core determinant of what agents will choose software based upon. How do you think about how we make agents more effective? Is it a simple question there of data and making sure we're the best at that? How do you think about that? We have to set up the guardrails really effectively. This is actually something that I'm thinking about right now. So our code base is starting to get large. Happens. It's a good problem to have. We're starting to be a lot of engineers. We're also starting to be a lot of agents that are working on this together. And so you start to think about how can I mechanistically enforce the system to behave a certain way. And so I'll try to give an example here, which is you can have custom rules, for example, which is like the agent tries to do something, and we tell it, no, you can't do that. You know, there's like, for whatever reason, you can't do that because we want the system to be in this way. And I think that type of guardrail setting we'll see everywhere. And so if you're a big enterprise and you're rolling out AI tooling and you you have agents that build your own internal software, you know, you have AI tools that build your HRAS system and your you know ATS system and whatever else. You probably have some engineers that are just setting up the like this is where you get the data, this is what you can do, this is what you can't do, and then you can just let agents run amok inside of that system, basically. Aaron Ross Powell You mentioned the expansion of the Lagor code base today. What percent of code created today is AI generated versus human generated I actually I took a look recently and it's clawed and cursor on the top and there's like I think it's like two percent between them so they are really, really close. And then it's you know miles above the next engineer. So they're way above fifty percent. Do you worry that we will see a next generation of security threat with the amount of AI generated code that bluntly opens vulnerabilities we didn't know we had? Aaron Powell Yes, absolutely. This is uh very top of mind for me. And that's why we still at Ligora and and probably in a bunch of other enterprise software, we we still review human PRs, every single one. Just because we have to be sure. I think that's inefficient. I want to you know get some risk scores in there and change that so that we can run really fast. But fundamentally, I you I think you're right. I think threat actors are extremely efficient now, which means like they can try so many different things and they can keep running at it. And so we need just as um good defense and I'm not sure if we're there yet. I definitely don't think we're there yet. Which is why we see so many hacks. And so whenever I see the hack on Twitter, I'm like, oh poor and they're just gonna make a weekend is thoroughly ruined Yeah, yeah, yeah. I I had a security and s oh not me. One of our vendors had a security incident just yesterday. We just rotated all out. I mean just you know, to be clear, this was internally doesn't doesn't affect any of our clients or anything like that, but it's just I think Yeah, yeah, no, I totally get that. I interrupted you when we spoke about the efficiencies earlier that comes with AI. You mentioned the second was the processes that change. How do processes change? Be it PRs, be it Aaron Powell Well actually postmortems is a great example. We run them really efficiently now. It's great. If you have an incident, now you just unleash an SRE agent, an a sort of an incident agent, and it will just super quickly figure out what's going on, look at all the locks, look at all the metrics, telemetry, and it's it's really, really good. And so like instead of having a bunch of engineers wake up in the middle of the night, you still have some waking up in the middle of the night, but they are really well equipped and the postmodern basically almost writes itself as well. So that's actually a great example of something that we can run really efficiently. But I think more broader in sort of the software development lifecycle with AI PMs can prototype super, super fast, which is really, really great because that means you can front load a lot of the work so like a PM can start however long before once he or she has the you know smallest inkling of an idea that we might want to do this, they can prototype it and they can just go to user stack and they can test it and they can iterate themselves. They don't even need to bring in engineering until they have something that's like clearly super valuable. And then we can switch and we can say, okay, now we take this from prototype to something that's like actually fits in the system and is super reliable. Do we skip the design stage in a world where prototyping and getting to V1 is so much easier? Aaron Powell Yeah, that's a great question. Probably some companies will skip the design phase. I think we can skip the design phase on functionality. You don't need to necessarily have this long you know discussion where you said ten people and you figure out where should the button be. I do think design still has a place, but it's you know one level above the individual feature thing, the individual stuff that we build, it's the design language that we choose to have, it's the taste, it's the opinionated stance we have of who we are and like what does Legora look like, what's the navigation, what's the hierarchy, but it's more for consistency, UX UI sake, and and for taste sake, rather than functionality. Do you still use Figma today? We still use Figma, yes. I know where you're going with this. I think as soon as you start building a a system that's larger than something very small, you want consistency and you want to have a design language and all that kind of stuff and so you need somewhere to store what your button looks like and what your like pages look like and what's this and what's that. And for us that's Figma. But do you think that's the case moving forward? I don't mean anything against Figma, but it's like that's like a storage feature. Trevor Burrus Yeah, no, exactly something else. Yeah, you're right. Then the question is: is it faster for designers to take a prototype to something Aaron Powell We mentioned the wonderful word earlier, that's like the word of the moment, which is taste. Taste is what separates us. How do you think about the don't worry, taste is what the differentiator will be. Is that true or is that bluntly Silicon Valley and tech BS that's trying to protect us? I think taste is important. There's different flavors to taste fun intended. It depends on what you mean with taste. I think you know in tech, taste is like we have an opinionated stance on something. I think if you don't have taste, then you let AI slop converge to sort of grayness and and everything looks the same and everything's just like you need to have taste to have sort of an opinion and it stands in the world. This is who we are, this is what we do, and and we don't do these other things, and that's not for everyone. I think to me, that's what taste means. It's like this is who I am , this is who we are, and and some of you are gonna hate it, and that's okay. Because you need to have some edges. You know, if you're just like letting AI rip, you're gonna look the same as everyone else. When the cost of copying is quicker than ever. Does that change how you think about product? You're in a very competitive space and blind people can copy you very quickly. Does that change how you think about product? No, not really. The important thing for us is that we're building something that our clients get a lot of value out of. And we build that as fast as we can, but we don't build it faster than that. There are there are tons of people that are vibe coding, you know, there's people that are vibe coding Lagora, there's people that are vibe coding Salesforce and and and DockerSign and other companies. It's very quick to get to the ninety percent where it looks the same and and in like eighty percent of the cases it it works similarly. It's the other ninety percent that are difficult. You know, it's like ensuring all the edge cases work and all the unhappy paths and all the audit locking and all the R back and all the weird scenarios that you end up at at a certain scale. That's what's difficult. So no, we just we keep focused on how do we create the most value for our clients and sprint towards that as fast as humanly possible. My girlfriend is a lawyer and wonderful, but they're not the fastest in terms of adoption and usage. I'm gonna get in huge trouble for saying that. I was not talking about her, I was just talking about the legal profession. Um you can build product so much faster than your customer can consume it. Yes. How do you think about that? That's a great question. We have this notion internally that there's the speed of AI, there's the speed of our product, and then there's the speed of humans. I think that's part honestly of the beauty of what we're doing is that we're translating the immense speed of AI development into a user base that's been historically underserved. We're sort of taking them along on for the ride. Sometimes it can be frustrating, but it's also really rewarding that we can actually take this huge base of people and we can really change the way that they work and their efficiency and their productivity and we can remove buttloads of awful work that they've spent their time doing and focus on the more strategic, more important work. What have you not done that you wish you had done? An email client would have been really cool. I would have loved to build that. I vibe code one just for fun. We're probably a few ways you know, we're a little away from that because there's other high priority things, but I think an email client is where lawyers sit a lot. Do you vibe code internally within Lagora for customer presentations for you name it? Constantly. Is that the future of enterprises or is that bluntly Lagora at the very precipice of innov It will be the future. I don't know when, but it will be the future. And just so we understand, like, what does that mean? You build sites for slaughter a maze so you can pitch to them and Clifford Chance so you can pitch to them. No, but it's it's way broader than that. It's like we have a a t a team now that's internally enablement, which is just like reimagining you know, again from first principles with all the stuff that we have today. If you're building the most efficient company to go from let's say two hundred to a thousand employees, what does that look like? And that means obviously, you know, cloud coworking similar things for everyone, but it's also like, can we just build a bunch of the tools that we need ourselves? Can we just vibe code a bunch of the tools? Can we vibe code our HR system? Can we vibe code our talent acquisition system? Can we vibe code our payroll system? Like so many things where tools exist out there, but you always need to customize them so much and they always basically never really work and we just build them now because it's so cheap to build. Aaron Ross Powell What have you been able to vibe code away? Well we've added a bunch of things that are additional or additions to vibe coding. So a great really stupid example is Ryan who joined from Canada. We have a team of people joining from Canada. They're all moving to Sweden. And he vibecoded an app to help everyone migrate. So it's like very specifically if you're Canadian, these are like all the laws and all the steps you take. And there's like it's interactive and you can see how far you've made it and it's awesome. And it saves so much time for an entire team. So it's like the you can build the big systems, but even just all the small ones that you can build really add up. I was with a a friend who is a public company CEO the other day and he was like, you know, my chief of staff took three weeks off and basically vibe coded Cooper and we replaced Cooper and it's works and it's brilliant. What do you say to people who are like, that's ridiculous? Why would you ever bother vibe coding and taking months to do an HR system when you could just buy it off the shelf. It really depends on the system. Let's say there's two axes to systems. There's there's the the horizontal one, which is like how big is your product surface area, and there's the the the vertical one, like how complex is it? So if you're deep, you're essentially your surface area. It looks quite simple. It's simple app, but it does a lot of complex stuff. It hides away a lot of complexity to the user. And there's the other one, which is your very, very shallow app, which is like tons of things you can do, but there's not that much complexity. If it's a shallow app and it requires a lot of customization from you, maybe you just build it. That's probably actually the right thing to do. If it's very de aep one, there's just too much stuff for you to build and it's not viable for you to do. Aaron Powell We we mentioned PMs and like their proximity to customers and then that delivery mechanism back to engineering, which is kind of always what PMs did and did best. Does the role of the PM change in the next few years? Yes. And no. I think there there are certain people that are or a lot of people are saying that product and engineering are converging. It's becoming one thing. It's like one person can do the product work and build the engine like build the system and ship it and everything. And I think for some companies that's true. I think for companies where you really need PMs, it's not true. Or it can be true, but it's inefficient. And I'll tell you why. So we were talking about product you know, you do the product work first, the scoping, then you build it, and then you you you ship it and you review it. And then a company like Lagora, we're always focused on the bottleneck and the bottleneck is no longer coding, which means the bottleneck is the product work. And so you don't want your product people to do engineering. Because like the the opportunity cost of that is really high because what you really want them to do is the product work. Like talking to customers, figuring out, doing the synthesis, that's the bottleneck. So if if your PMs are coding a lot, if they're spending fifty percent of their time coding, we're missing out on so much product work. So that's how I think about it right now. And for certain companies, if you're doing developer tooling or doing consumer where engineers intrinsically have a good sense for their own or there are their own clients, you maybe don't need a PM at all, because like you haven't needed a PM before AI either there. So I don't think that changes with and with without AI. PMs can now do engineering that changes with AI , but it's not always efficient to do it. It's like a matter of opportunity cost. And there's handover cost, which is if I do all the product work and then I give a PRD and I give it to an engineer, then like you lose efficiency there. It's good if PMs do some amount of vibeing cod to like show very high fidelity here's a prototype, this is exactly what it looks like. Then it's just a handover call. Exactly, yeah. Exactly. But they shouldn't spend a lot of their time engineering. Because if they just like focus on actual engineering, we lose out on uh on the product work. I'm your little brother coming out of C S at university. What would you advise me to be best placed in the next three to ten years? So if I were to advise someone on social media marketing, I'd say, Hey, you need to be full stack you need to be able to create the image get it out and amplify. Yep. Similar thing I think I think actually the most important thing is you need to learn how to learn. You need to to to figure out how you constantly reinvent yourself and and and and keep learning and and improve. Because the things things change all the time right now. It's it's every week there's something new you should be doing or you need to change your way of working or whatever. The most important thing that you can do for yourself is figure out how you keep at the forefront of what's happening all the time. And if you can do that, if you're adaptable enough and you are ambitious enough, then the rest kind of works out. Because if you can just learn faster than To what extent does the quality of Ligora as a product depend on the quality of the underlying models? Much less than most people think. The value of Ligora is there's so much more around it. Whether it's like the the primitives that make sense for legal that make it more efficient to work with AI, or it's all the enterprisey features, or it's the optimal rounding between models. We wouldn't exist without the models. And every time the models become better, our product becomes better, our agent becomes better. But let's say you took away a model from Ligore, people would still pick Lagore. So they don't buy it based on the model. How has model usage changed for you over time? It changes a lot. I mean the best model changes biweekly. We've been between OpenAI and Anthropic. We keep evaluating all the different models. Do you do you use like fifteen at the same time for different tasks? Not fifteen, but yeah. Maybe ten. Yeah. Yeah. So for each task we will evaluate what model is best at this. Latency, performance, not so much cost. Eventually it will be cost, but latency and performance is most important. Performance needs to be here. How much can we increase latency without dropping in performance? By building our agent and our other AI features in a way that you can decompose the problem, you can use really efficient . You can have latency or performance at the fastest, but it may not be the best output. Or slower, but fucking great output. Yes. Yeah. Which one? Uh I have to choose. Yeah. Uh almost always mature. Almost always performance. Performance is more important. Almost always. If you're a lawyer , you can wait two seconds more for the output if it's better. You can probably wait an hour more for the output if it's better. What do you I'm just fascinated now. What do you think about the future of open source as we do move more and more to a focus on cost. How do you think about that? I think open source is having a great moment. It really, really is. There's so many great open source models now and they're really easy to run. There's great inference providers that let you run really efficiently. We are moving very close to being able to do things on device. I mean transcription can can run on device, it can run on my iPhone. I have local transcription on my Mac. When I when I do flights and there's no Wi Fi, I have local models running, so I can keep coding. But it's just like a Gwen model that runs and helps me code. So I think open source is going to play a huge role. I hope it continues to to to evolve the way that it currently is. And I think it's an important thing that we have open source model for sovereignty reasons and for like security reasons. We should have great open source models. Aaron Powell Can I ask what worries you today? A lot of people are worried about the open source Chinese models, which was kind of thinking about it. More broadly, what worries you when you look at the landscape that we've discussed? I really hope to see European and American open source models. They've been lacking. And I think it would be really, really good to have some. Game theoretically we won't end up end up in a great place if there's a duopoly or monopoly on the models for obvious reasons. You know, you do want to have some competition. Does Europe have any place to play in the model race today? It should, but it doesn't yet. How far do you think are we in the efficiency frontier on training. Are we like one percent of the way there or is it like, ah, we're ninety percent and like we might eke out some little bit more. It's a great that's a great question. One thing is just like the current architecture, how long does that you know, does that plateau? Do we need something new? I mean there's uh one uh a model released two days ago uh that's subquadratic, which is huge context length. That's super exciting. I don't know if I trust the benchmarks yet. You know, we we need to validate that, but there's architecturally innovations going on still and I don't know, maybe the the current LLM architecture is not the r the one to take us all the way. Aaron Powell What role does not exist today that you think will be very common in five years' time. I think the internal AI system s role thingy for enterprises. I think IT will can have like a flowering moment here. And you know, go from being internal IT that's like setting up your computers and whatever to to maybe have assisted team that's building a ton of internal tools that just make your life so much easier. If enterprises don't create that role, I will get really annoyed because there's so much efficiency to gain there. Do you have to have FDEs to have usage in enterprise? You work with relatively sticky lawyers. Yeah. Do you have to have people show them, Here you go, hey you go We currently do, yeah. But I think that's just that's an education thing. In five years maybe we don't at all. That's the price you pay from being for being, you know, on the forefront. You ha you have to educate and you have to help and that's why people want to work with us also. Are you ready for an unfair one? Yes. What've Harvey done better than you from a product perspective or an engineering perspective? They've been more aggressive with hiring. I have not been aggressive enough with hiring. Because I've I've always tried to have a very, very small, very lean team, which I believed a lot in. I consistently underestimated how many people we need to be. I had this slide that I drew up a year and a half ago that I showed the entire company and it was you know the three hundred Spartans versus the Persians. And it was like Ligora and the three hundred Spartans and I said I'm pretty sure I said we will cap out at twenty engineers or those something something like that. Which is like way undershooting it. Um how many engineers do you have today? Today we are about eighty. Yeah. You got that wrong on twenty, didn't you? Yeah, I got that really wrong. And we're way too we're way too small still. As a result of being too small, you are too slow or you're not able to build what you want to build? Second. There's loads of features that we you can push basically staff a team to build that we scan. Yes. We're really good at this. First we're extremely selective with hiring. Maybe that's also why we're slower at hiring. So we hire really great people and the ramp up time is extremely fast. How do you make ramp really fast as specifically as possible? Anything that you do? I can tell you what we probably should do. Because like the reality is things move really fast. You need to have so we have a developer experience team, relatively new. Again a mistake I made. I should have staffed that earlier. And they are making everyone's life so good. What do they do? So they make sure that our local development setup works really, really well. It's super fast. It spins up really quickly. We have our own background coding agent that they built that allows each engineer to have like ten different agents running concurrently with like all of our local development, a browser, all the iteration stuff. They're building custom review agents, they're building features so that it can wait and CI and wait until everything looks green and all the reviews are good and then raise it to a human, the efficiency gains there are huge. And they will then also build tooling that helps onboard people. And so it can just be like make sure you have really good README files in your repository so that uh a new engineer will just ask their cloud code or their cursor about all their questions. Like that's remarkably effective. So it's just like even just AI tooling makes it faster to ramp. How many do you have in developer experience and when do you think you should have done it? Aaron Powell We have three people now, which is too few. I should have done it when Opus four point five came out, I think. Because that's when I should have done it before that. But then, you know, the the productivity of each engineer to next essay. And so if you can make everyone twenty percent more efficient, it's it's even more games. How does hiring engineers in Europe differ to hiring in the US? There's a few different ways. In the US, people are less risk averse. So like they'll they'll be ready to jump on a lot of things to to to test. I think in Europe people are more risk averse. People in Europe generally are more I don't want to call them mission driven or loyal, but they're like they really buy into the company that they work for and work with. So it takes a lot of time to convince them. But once they're convinced, they really stay. That's great. And US is more transactional. I think so. Yeah. Do you find the attachment to equity different? It's actually something that we had to sort of educate people on in Sweden . And in Europe I think it's it's people are just not used to the venture thing. They don't know how to value equity the same way. Like you have to really This is how it works, this is what it means. If this happens, then you get this much money. But you don't get it in cash. It's not like Exactly. Yeah, exactly. I do it with our team and they're like, wait a minute, you're giving me half a million dollars? Not literally, but like in the future. So that's been a little bit difficult for us, right? But I think it's uh that's part of just creating the the the ecosystem, you know, in in ten years the next startup that comes out of Stockholm hopefully won't have this problem. Everyone is encouraged to use as many tokens as possible. I'm on the board of public companies and they're like, oh I'm I'm hearing about like token maxing and tokeness. What do you advise a CEO in terms of intelligent usage of AI and should we just be pushing tokens as much as fucking possible? So a few different things on that. I think one, having a leaderboard, a lot of people say this. Get to get a leaderboard, bring up token usage at performance reviews, uh and that leads to token maxing, which is people just burn tokens just to look good. That's a really stupid way to do anything. Do hack days, do demos, have people show everyone else how efficient they are and like how much better they're doing and reward them for being effective and efficient and having more output, not for necessarily using AI, but like AI will be the way there. That's one of the points. I had another point for enterprises. This is actually where I think Cursor has a reason to live, a reason to exist, which is if your options are codecs and clawed code and a ne utral third party, uh and you all be you know, you pay consumption based, cursor can help you optimize your token spend a lot. Because they can optimize your usage, right? They can route them to the cheap open source model or Aaron Powell Well can they now post acquisition by Grok? Aaron Powell Well we'll have to see if they if they're not going to be able to I respectfully disagree and that's why I actually think both cognition and factor y will do very well because they're model independent. But if you Okay, because you think now that they're tied to X. A hundred percent. Yeah. I was a bit surprised and a bit sad to see the the acquisition. Why? Because I thought that they could if they stayed independent they had a really cool a really cool story. But I I I mean I see the synergies. Obviously they don't have enough compute, they can't train their own models, they probably have to train their own models. I just think it's a shame that the industry is is vertically integrated in that way. Do you think IDEs are dead? I think the current shape of an IDE will die, yes. I don't know what the new the next ID is, but it's not reading lines of code. It's maybe it's graphical, honestly. Like maybe it's the systems, the the the the the architecture that you look at and you review and you you plan it there and then like agents run off and make sure that whatever you're planning actually is is what's being made. I don't think it's lines of code. What percent of developer salary would you be willing to spend on AI tooling for them? Aaron Powell I don't want to say infinite, but for me it's a question of opportunity cost. We're in a competitive environment. You know? Are you? Yeah. The cost of not doing it is extremely high and it's almost outweighs any sort of token cost. The budget on tokens is mostly a question of opportunity cost. Is it worth us spending a ton of tokens to learn if it may be gives us twenty percent efficiency. For us, yes, we have a really high opportunity cost. What did you do that you wish you hadn't done? You know, not investing in developer experience fast enough. Definitely a problem. Underestimating our growth., also a problem Now I make sure everything we built will scale to one hundred x the usage. I used to say 10x, and then that was not enough. And so now everything needs to scale to 100x. What changes when you're building for 100x versus 10x? I'm sorry I'm very naive No, that's not naive at all. It doesn't always have to change, but there's certain limits that you often will put in place. Just be like, yeah, this probably is good enough for the next three months or like yeah, okay, we can if we have these if we bound the problem in this way, which is maybe ten X, then we can do XYZ. But maybe that doesn't hold if you're a hundred X. And so sometimes you need to think about I think particularly in problems where there's burstiness to it. So a tabular review is one of our products where you can bulk extract from many documents and many many cells. And there's a very big difference between ten thousand cells and a hundred thousand cells, just like on the load of the system, because it spikes immediately. And so that's one of those systems where there's actually a difference. And so what do you do in that case where the spike is so immensely different? Yeah. What does that mean you subsequently do differently? We have to think about the experience if ten people do that crazy thing at the same time and we still have a bunch of other users that we want to have a good experience. So we need to think about fair queuing basically, which is like okay, if you're running a hundred thousand cells, you're probably okay waiting a bit. You can go grab a coffee and that's fine, but if you run ten cells at the same time, th those should be really fast. If I ask you really unfair one , if I give you access to a superior model for six months ahead of anyone else or superior engineers for six months ahead of anyone else, which would you rather have? Engineers. For sure. Because the models, they change all the time, they get better all the time. But if you have really good engineers, you can build a system that exponentially improves. And that's worth a lot more. What do you know now that you wish you'd known when you started day one? Honestly, wish I'd known how quickly we were gonna scale. I don't think I was ready for this journey. I became ready really quickly because I got slapped in the face every three months. Do you buy that people are destined for certain stages of companies? I'm getting very personal. If I was you now I'd I'd have in my mind like am I the CTO that takes this to public company? It's a very fair question. No, I don't buy that. I think to me it's a question of how quickly can I solve problems? Am I the person that can solve the problems that we have right now the fastest? Or can someone else solve them faster than me? We have a great culture in Ligora in that no one has any ego. I've told this to I currently have two engineering directors. I've told both of them when I hired if there comes a day when you I when I think you'll do better than I will, then we swap or I do something else. I have very little and they also have very little tied into their title or their role. We are here to build something huge and that's the most important thing. I continuously evaluate myself on my job performance. If I don't do well, I try to rectify that really, really quickly. And I haven't been able to not rectify it yet, but maybe they'll come today. What's the secret to hiring the best engineers with no ego? And how obvious are they? They're obvious if they have ego. Even just when you negotiate salaries and titles. I don't know about you. I always say great people want more money. Yeah. They don't mind so much about the title. I think that's right. Absolutely right. Most of the people that we hire, we don't even talk about the title. We talk about the the difficult problems that they're going to work on. How important is it that you're together in Stockholm? It's been very important. For running really fat I mean, this is we talked about the handover cost. Yeah. If you have a PM and a designer and an engineer and they just sit together, you can almost not even have the handover. You can just be like run at this problem and do it together, the three of you, then it's done. But if you have them siloed and there's handover in between, you lose so much efficiency. Jump on a Zoom call lacking clarity. Yeah, this doc is not well written enough. You have to do another meeting and then you have to do three reviews of the document and then someone else has an opinion that, you know, sees it somewhere and writes a comment somewhere and then you have to talk about that. How do you factor that into the best engineers like to be remote? Well, we're very opinionated about who we are and who we aren't. If you're a great engineer and you want to be remote, then you probably also want to work on very isolated problems. That can be fine. We'll we'll we probably have those and we probably will have those, but they're not for us right now. We'd rather find the people that want to solve the same problems with other people. How many engineers will you have in two years. Well by the end of twenty twenty seven. You're eighty today. Yeah. I'm gonna say a number that's too low. I'm gonna WhatsApp it to you on the thirty first of December twenty twenty seven. Were you wrong? I don't know. Three hundred? Two hundred? Uh two hundred and three hundred are different. You gotta put your name on one. If I have to put my I want to say the lower number, let's say two seventy. Two seventy. Okay, so we're gonna have a hundred and ninety more. Yeah. Can you retain A only talent with a hundred and ninety more? That's essentially adding two and a half a week. That possible . I think so. I'd rather miss my number and have A players than hit it with B players. As soon as you have people that you don't trust or that the team doesn't trust, the A players won't stick around. You're buying more companies than I'm doing podcasts these days. And you're laughing 'cause it's true. It's not true. My question to you is do you have to buy companies to get the truly, truly a talent in a lot of cases today? I don't think so, but it's faster. Because if you find a really good person who a really good founder, they're able to attract really good talent. And so you have a small group of five people that are just a talent and then you get five in one week. You know, if you have to get to every week. And that's much faster than going to all the big companies or even the startups and trying to convince them to lure come over. People also w like if if you have a small start up of five, eight people, they want to work with each other. Aaron Powell Do you just shed their code bases then? Or is it like pure aqua highs in a lot of cases? Aaron Powell . If they've worked on adjacent things or think it's in a similar field or even unrelated but similar technology will take all their learnings and we might rebuild it into Lagora. I think that's what happens in most cases. But they become fully embedded into the team. It's they're all Ligorians working on the Lagora code base and then they might bring some learnings. Is integration hard? It's surprisingly easy if you hire people with low ego. If you if you get five great engineers that don't care about their titles or where they sit in the org chart that just want to solve problems, it's surprisingly easy to integrate Aaron Powell When you've got engineering hires wrong, what did you not see that you wish you had team? Aaron Powell When this goes wrong, it's actually because of my gonna be a little bit introspective here. It's probably because of my own I don't have you know I've not run an engineering team this big before. And so I start doubting. I'm not confident enough in saying this person who's more senior than me has seen more than me is wrong. It's happened once or twice when there's a very, very senior person. We talk and they talk about all this sort of orc building and orc design and like how they think about all this stuff. And I sense that something's wrong. And I kind of know that all the time, but I in the end I end up convincing myself that no, they probably know more than me. Or like they they've figured it out or whatever. Two weeks in, four weeks in, six weeks in, you start to figure out they didn't know how fast do you know if you've made a mess hire? A month. Then you know. And then you give them really strong feedback. I give really strong feedback after two weeks. What really does strong feedback mean, Jay? Really strong means uh you're not gonna stay if you don't change this? Has anyone ever recovered from a you're not gonna stay if you don't change this? No. But they need to get the chance. And if they do, they stay? What is the hardest role to hire for today? This is a great question. All of them. No. I think senior management is extremely difficult to hire for. Senior management. Horizontal senior management? Engineering directors. Maybe that's always been difficult. We only have really technical people, also being managers. And so anyone who's seen scale typically also is not no longer technical. Do we still have managers? And what I mean by that is like you know one of my dear friends, Jason, I'm here from Sasha. He's like, anyone on LinkedIn who talks about their team, fire them. Fire them straight away. We don't want managers who manage other managers who manage other managers. If you can't do full stack, get out, pick up your severance and go away. Do we still want like senior managers? Well, you can build a company of super senior engineers that can do everything and and you'd probably don't need to manage them at all. Uh especially if there's like really strong if they know what they're trying to achieve. The codex team, for example. Like they all know what they're building, they can just like run at it. And they don't need anyone to tell them that they're doing well. But if you have a more complex product that can go in many directions and you have to do constant prioritization and you have a a suite of engineers and a team of engineers so so the way that we have engineering teams is relatively small teams, let's say six people, PM and an and an engineering manager. The engineering manager is super technical. Spends most of their time coding. They're not like a people hold each other's hands and like sing songs. But but it's still important that I have someone that's accountable to the team health. Are people doing good jobs? Are people having fun? I can't walk around and judge everyone. You know, are they are they doing well? And so I think it's important to have someone who's accountable. And that's how we run it, Is Max on every new product feature? Uh on big ones, yes, on small ones no. Is that right? It's worked for us. His time. Max is an amazing salesman. So big launches, big things here he's involved early and for the duration of the project. But for small things, that's like the reason you hire great people is that you can let them do this. The thing with Max is specialist, you know he so believes what he says. Often when you you're being sold, you kinda know you're being sold too. No no like there is no way that he sees himself being wrong in his bones. Absolutely. And also like, you know, I think that was that was just brilliant. We've we naturally hate them because they're shit, but sifted. Um did that piece um with the uh Taste of Blood piece? Yeah. Did everyone in Lagora just go, oh my god. Yeah, that was that's hilarious. Yeah, yeah. There's uh there's screensavers now that say blood smoke on like the it's like becoming this internal meme. Did you guys like the Jude Law? I loved it. You know I've sat on that secret for like nine months. Did you think it was done well? I think so, yeah. Yeah. What you you asked I guess if it was not done well. I think the Jude Law idea was great. Did it do well for you guys? Do you think it was a good idea ? No, no, crazy well. Yeah. It's it's wild. People see it everywhere, which is great. People talk about it a lot. Yeah, no. Which is like the the goal of the campaign, right? It's like we we need to get everyone talking about us. Do we're gonna do a quick fire round. So I say a short statement, you give me your immediate thoughts. Does that sound okay? Yeah, that's the So what have you changed your mind on most in the last twelve months. You can have hiring. Hiring. Hiring? Yeah. We need to hire more. As long as adding it someone is net positive, we should add someone. What's the most underrated AI company today, do you think? Lagora. D ude. I'm an inva I'm an investor and even I'm like, no shit, dude. You're gonna give me another one. I had to say it. One for me would be whisper flow. Like the pain of removing whisper flow for me is Whisperflow is great. I think we're gonna get more local models though. Whisperflow is not local. So you're probably gonna get a similar whisperflow. Well maybe they should just go local. But the tool itself is great. Finish this sentence. The biggest threat to Lagore is not Harvey, but dot dot dot The thing that's gonna kill us is if we don't keep reinventing ourselves. This sounds really boring, but I think we talk a lot about staying in our swim lane, focusing on our product and our users, and the entire environment is moving so much. If you had had me on this podcast a year ago, you know, it would have been very different. So I think the the main thing that's gonna kill us if we don't if we lose the ability to constantly react and readjust and reinvent ourselves. You just worked with Jude Law in terms of brand campaigns. What sports team would you most like to see a Lagore across? Could be F one, could be football, could be MBA. F one would be great. I'm a big F but F if F one would be awesome. Strategically would that be awesome? You do golf very strategically. We do golf the Yankees we we sponsor in New York, which is also great. You sponsor the Yankees? Yeah, you didn't? Aaron Judge? Fucking hell. How much does that cost? That I can't tell you. But I would want you know the team that I would want us to sponsor? My local FC Copenhagen football club, that would be a childhood dream. They're doing really bad right now though. So it's probably really cheap actually. It's called exposure. Yeah. You would get nil. Yeah. I mean the Champions League. No. They're not even top of the Danish League. You should be C T . What is one thing you believe about the future of law that most people would say Aaron Powell If I had to get crazy, I think there's lots of um analogies to coding in in law. It's very text based. Sort of the the A agent AI features are are similar. If I believe that coding we're gonna look less at source code and more of like one layer above. I have to say the same thing about law. Like eventually lawyers will not be nitty gritty about the language of the contracts. They will work a level above, which is maybe like what's our negotiation stance? Like what what risks are we okay, which ones are we not okay taking, and not sit and type into Word? Aaron Powell What's the biggest advice to a founder competing in a business slash industry where there is an 800und-po gorilla. Honestly, just work harder than the 800-pound gorilla. People underestimate this, like the 800-pound gorilla. No one in the 800-pound gorilla is extremely excited to be there. I think I think that's just like if you're competing against Google Maybe maybe she tries really hard, but if you're a small, lean team, you work really hard, you can do really remarkable things. Yes. Yeah. I think it's gonna be above that too. I don't yeah, but I don't wanna I don't wanna get it. I don't know . I don't know. I don't know numbers. I don't mean a max and Patrick. I don't know. Uh David's gonna call me really mad soon. Dude, this has been such a pleasure. I've loved having you and you've been fantastic. Thank you. Thank you. This is my first podcast ever, by the way. But before we leave you today, you know what's wild? We have AI superpowers now. 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