Special issue: a chat with Ali Zahid

Happy Monday! Last week, I sent Ali Zahid - YC alumn and the founder of LegalMate - a really nerdy message on LinkedIn.

Ali was kind enough not only to reply - but offered to chat with me about his parents’ ambitions, his journey into the startup world, angel investing, being a non-lawyer in legaltech and more.

Ali’s journey is way too interesting not to share with you - so today’s issue is a write-up of our conversation from last week. Enjoy!

For most second generation immigrants, Ali Zahid’s story is familiar.

Born to Pakistani parents, both of whom were surgeons, Ali jokes that he was “destined to become a doctor.” His collective ancestral destiny, though, never quite resonated with his individual reality.

“I just couldn’t imagine myself being one,” Ali shrugs over Zoom.

Nor could he imagine himself chasing the traditional career paths his peers were pursuing. So Ali tossed away the rolodex of steady professions offered to him by family and friends and, after a three-year stint studying biomedical computing (“I didn’t find it that interesting”), dropped out of Queen’s University. He convinced his brother, Sohaib, to ditch his parent-approved plans as well and, together, the duo started their first company: Vanhawks.

A Toronto-based software and hardware company, Vanhawks manufactured a smart carbon fiber commuter bike equipped with performance tracking, security sensors and interactive feedback.

The company’s mission statement, according to its Kickstarter campaign, was to imbue “archaic bicycles” with the same digital finesse that keeps us connected in other aspects of our lives. 

Ali describes what happens next with a rushed humility, charting the rise and fall of Vanhawks within the the same breath: “we went through Y Combinator” – an accelerator that boasts the likes of Airbnb, Atoms, and Coinbase as alumni - “raised a bunch of money” - over $1.6m – “but it didn’t work out as well as the other startup stories. We ended up selling Vanhawks to a car parts manufacturer in 2017.”

His journey with Vanhawks - equal parts exhilarating and tumultuous - may have validated Ali’s entrepreneurial streak, but the exit ultimately left him feeling directionless. In his own words: “I didn’t know what I wanted to do with my life.”  

Six years ago, Shopify went public in Toronto in a blockbuster listing dubbed as “one of the greatest IPO success stories” in Canadian history. Early investors in Shopify are notorious for the returns they’ve made in the aftermath.

Case in point: if you had invested $10,000 in Shopify in 2015, a six-figure sum would be sitting in your bank account today. 

For Adam McNamara, the first VP of Product at Shopify and one of Ali’s best friends, this presented a slight problem. “He comes from a very small town,” Ali says, “so after being so fortunate with Shopify’s story, he wanted to give back to the community and help start the next wave of companies.”

Off of the back of this altruistic instinct, Ramen Ventures was born.

Ali, Adam and Joshua Tessier - Shopify’s first Head of Engineering - pooled their capital together and launched a $10 million angel fund to invest in early-stage tech startups working on “crazy-sounding ideas” that serve the planet, the people, or (ideally) both. 

For Ali, angel investing was a triple win. It gave him a two-year period to pay it forward to Canadian entrepreneurs, closely examine the interweaving strands that make up the DNA of a ‘successful’ startup (thoughtful investor updates, distribution over product, a good founding team), and ultimately led him to his next opportunity at Unsplash - one of Ramen Venture’s portfolio companies. 

Unsplash, a company dedicated to sharing stock photography, was a dark horse at the time; relatively unknown, but “one of the fastest growing companies I’ve ever seen,” Ali says. As the company’s Director of Partnerships, Ali was hyper-focused on distribution (a lack of which he admits contributed to Vanhawks’ struggles), and, along with his team, spearheaded the company’s deals with Google, Facebook and Mailchimp.

“It was a lot of fun” - until rumors began to swirl that Unsplash was getting acquired.

Feeling the return of the itch that ignited his desire to break free from family tradition to start Vanhawks, Ali left Unsplash and set out to become an entrepreneur for the second time. “I just missed building stuff.”  

At first glance - other than their shared maple heritage - Shopify and Clio are companies that run across two completely different axes.

One is an e-commerce platform, the other a case management system; to the unanalytical eye, the overlap between them seems minimal. Ali disagrees wholeheartedly.

When he found out his old roommate from university was working for Clio, his mind immediately drew parallels between the burgeoning legaltech company and the early days of Shopify.

“Sure, the minutiae are different,” Ali admits, “but they’re actually very similar companies. At the end of the day, they both work as an operating system for small businesses. Clio was expanding their app marketplace at the time, and I remember Shopify’s app marketplace was a big deal when it first launched. There are now a couple of billion dollar companies built on top of Shopify’s app ecosystem - which blows my mind.” 

Seeing an opportunity to get in early with a business on a growth trajectory that paralleled Canada’s ultimate tech darling, Ali founded LegalMate - a company creating “bespoke productivity solutions” for law firms using Clio’s software.

Currently, the company offers two products: LegalMate Financing - a buy now, pay later initiative for legal fees not dissimilar to the Klarna’s and Affirm’s of the retail world - and LegalMate Allocate, a cloud-based solution that makes it easy to allocate fees across legal teams. 

The overall focus, Ali says, is access to justice - especially with LegalMate’s buy now, pay later arm. “Imagine buying a house without a mortgage,” he says. “It’s the same with legal services.” The legal industry is notoriously besotted with the billable hour - a pricing model that muddies the cost of legal services and, at its very core, shifts the risk of pricing entirely onto the client’s shoulders. 

Ed Walters, CEO of Fastcase, provides perhaps one of the best explanations I’ve ever read on how opaque this approach to billing is. Imagine going to a restaurant, he says, and asking the waiter about the price of the lobster. This is the response you receive:  

… and so on and so forth. This is the legal services market. Even though clients don’t know the total price until they receive the final bill, they’re hooked into paying 100% of that bill from the outset.

Introducing a buy now, pay later platform, says Ali, takes us one step closer to flexible billing and the “deep transparency” that accompanies it. As part of this push for transparency, LegalMate also shares a client’s financial profile with their attorney. The result is a “client-centric” approach that prioritizes empathy over profit. 

Not long after, our conversation shifts towards being a non-lawyer in the legal tech world.

“I never thought I would be working with lawyers,” Ali laughs. I joke that we switched career paths (I ducked out of law, he opted into it) and he tells me his non-traditional background has, contrary to my expectations, worked to his advantage when it comes to distribution. 

“I’m like that annoying kid who sits at the front of the classroom and raises his hand all the time. I don’t have any biases and I don’t know how things are done.” This ‘baby viewpoint,’ as Ali calls it, lets him poke holes in the status quo, leaving room for new solutions to fill the gaps.  

Ali is far from the only non-lawyer to break into the legaltech space; cross-pollination between computer science grads and the legal tech industry is becoming increasingly commonplace.

Jack Newton, the CEO of Clio, studied computer science in university - as did Josh Treon, the CEO of Nomio, the startup I work at. There’s much to be said about the similarities between coding and contracts - just take a look at Stanford’s computable contracts initiative - but I’ll unpack this in another issue. 

For now, it suffices to say that innovation in law is ripe. Ali and I agree that services like LegalMate will infiltrate the legal industry from the bottom-up. The elite band of top firms are too focused on profit: “the more they can charge, the more paintings they can put up in their offices, the better they are.”

As a result, buzzwords like ‘AI’ and ‘data’ get tossed around with little weight; it feels like eating a meal made up entirely of empty calories. It’s usually the smaller law firms, Ali says, that adapt to change quicker and more substantially.  

At this point in the conversation, I realize I’ve been throwing questions at Ali for almost forty-five minutes and begin to slightly panic at the thought of being the reason he goes through the rest of his Tuesday suffering from Zoom fatigue. So I leave him with one final question: what’s next for LegalMate? 

“We’re a very early stage company,” answers Ali, “so right now we’re just building and giving out loans and helping people.”

Sounds good to me. LegalMate already embodies Ali’s DNA of a successful startup: product, distribution, and a mission-driven founder obsessed with improving humanity one tech tool at a time.

P.s. thanks to Ali for chatting with me, and to Shaad Khan for editing this :) Read Shaad’s unfiltered thoughts on life, VC & tech @ hypothesis house.