Founder Stories: Yuriy Zaremba, AXDRAFT
Interviewed by Paula Pärnaste
Yuriy Zaremba, the founder and CEO of AXDRAFT, strongly believes that if you don't have some kind of high-level professional experience, you can’t build a great company – unless you are a true prodigy. The idea for AXDRAFT is based on some real struggles he was facing as one of the top lawyers in Ukraine, the same unnecessary hassle that all lawyers experience daily. The idea took off and today, as a YC graduate, Yuriy is sharing his story and practical tips with others in this interview, and more personally, on our F2F Skillsharing Platform. Together with his team, he’s also a member of our LIFT99 Kyiv Hub community supporting us building the next generation startup ecosystem in Ukraine.
Let’s start with your elevator pitch – the YC version.
AXDRAFT helps lawyers draft mistake-free documents 7 times faster. We have more than 40 customers, 15K MMR and growing revenue 20% a month with 8 people in the team. We’ve just recently graduated from the Y Combinator and raised 1.1 Million from one of the leading VCs in Silicon Valley. We are on our trajectory to raise the round A in mid-2020.
There’s a great article by Michael Seibel, the founder of YC, “How to Pitch Your Company”, outlining 7 key aspects that you need to cover in your investor pitch. We built our pitch around these aspects when preparing the YC video. A video structured in a way that investors want it to be was a very important factor of us getting into YC.
An interesting thing happened to us during the YC program though. When we were close to the demo day, we had traction and significant growth… but it wasn't in the US market. That turned out to be a problem – we were told this would undermine our chances on the demo day.
So we needed to fix it, generate growth in the US market. Fast. We quickly came up with a plan and launched a platform with free legal documents for startups on Product Hunt. We pitched it on the demo day, instead of the B2B product that we’d been working on for 18 months.
Even though we pitched a totally different product, we still fundraised for that “old” idea. The strategy was, that a product with a great US traction would give us more investors’ contacts and a chance to tell them the full story – make them like us personally, and our product, so the non-US revenue wouldn’t be a show stopper for them. And luckily it worked.
What is one thing that people should know about you before talking to you?
I’m a very demanding person. I have very high standards for my performance and the results that I want to achieve.
How does that apply to your leading style?
I lead with high expectations. I like to compare it with a sleight of the dogs, where everyone needs to run at the same pace. If one team member does not follow the pace it will damage the whole company. As a leader, I try to motivate the team to stay on the same pace and make it clear where we are going, why it’s important and how we are going to get there with the whole team’s effort.
If anyone does not want to keep up with the pace, they don’t belong to the team. I'm very radical about that. I’ve already had to let 6 people go during the few years of AXDRAFT. I'm a strong believer in the “hire slow, fire fast” concept.
How do you choose the right people then? How do you know it’s a match?
When I interview people I ask them questions about different areas of their life. I also ask them when was the last time they worked really hard. Once you get a feeling of what people consider to be hard work, you can understand what kind of effort they are willing to put in.
For example, I interviewed someone yesterday and her answer to that question was: “That time when I did a three-day bike marathon.” That’s a pretty good sign.
I’m very transparent during the interview and make a disclaimer that I am a demanding person and we often have a very intense work schedule. Because then when I have to fire people, I can tell them: “Sorry, it's not you, it's me. I'm just this crazy person who wants to work all the time and surround himself with other crazy people.” I don't want to feel crazy – I want to feel normal.
Tell me the story of how AXDRAFT started?
It was back in 2017. As a lawyer I had to deal with many routine tasks daily, spending a lot of time looking for necessary clauses in different documents, copy-pasting, proofreading, etc. So I was wondering, “Can't you just build a library and then answer questions and get proper clauses!? That would make so much sense!”
I decided to act on that idea and I reached out to my brother Oleg, who is a software engineer – that’s an extremely lucky coincidence. He was instantly interested and was willing to create the very first prototype. The way it worked was that you had to fill in 10 fields and you got a fully completed 10-page lease agreement on your desktop. I was so impressed and thought it was like magic! The document generation button is still called “Magic” in AXDRAFT, although many investors think it’s stupid.
So my brother and I became a team and continued working on the prototype in our free time, thinking about new features based on my experience working as a lawyer, implementing them and testing them.
As soon as we had something more or less decent, we just reached out to my network of lawyers and asked for their feedback – which turned out to be extremely positive.
Then a big corporation reached out and said they want to use our software. That’s when we realized this could be more than just a side project and we decided to give it a shot.
A piece of advice here is to have a proper prototype before “selling” it to anyone. Everybody takes about MVP, intense testing, etc. But first of all, you need to really understand your customer and why you're selling it to them. A prototype has to have a minimum token of value – it needs to show not the minimum thing you were able to create, but the minimum thing that provides value to the customers.
Let’s say you’re working on a payment system. Your MVP is not a website showing the UI of the system. It has to be making payments. That's the minimum token of the value of your prototype.
In our case, I couldn't show an empty website to sell it to a law firm – they would have just laughed at me, and that would not have given me any valuable feedback. Once we had that minimum token of value and we spoke to the first five customers of whom four said they would use the product, we understood that this has to be made into a real product.
What is your unique expertise/skill?
I think my superpower is that I learn fast. The job of a CEO is to learn fast and to do things that are most critical for the company.
What is one achievement that you are very proud of?
The team that we have assembled. I'm really proud of it because we are very synchronized in terms of values. Plus everyone is extremely proactive and they get the job done really well.
It has happened a few times that someone talks to my team and then comes to me and tells me that I have an amazing team. That’s a really valuable metric.
Name one failure that has grown you as a founder?
I think many mistakes are inevitable due to the lack of experience and knowledge. One of the mistakes I made was when I was fundraising money for AXDRAFT for the first time and we gave away way too big share of our company. Back then I thought that's perfectly normal because... well I have nothing, I earn nothing and people are giving me a lot of money – in Ukrainian market standards. I just didn't know what the European or the US standards were.
Even though the deal wasn’t great I was lucky with the investors and we were able to fix this mistake later on to enable further growth of the company.
Then we got investors in Europe and signed an extensive 20-page agreement protecting minority shareholders rights. From my point of view, thinking as a lawyer, it seemed great and absolutely acceptable because they are giving us money and of course they should have some assurances that I won't sell the IP underlying the company.
But when I went to the US I was told I’m not going to fundraise a cent with that kind of limitations. They said in Silicon Valley founders do what they want because everything is built on trust and reputation. If you misuse someone’s money you will never get funded again. But if you build a startup and you burn it, then there is a good chance you will get the money for another startup, because you will be an experienced founder.
So I had very lengthy negotiations with the European investors to explain to them that I'm not planning to screw them and I just want to enable further growth, that we need to do this together. I was extremely lucky with my investors once again and it all worked out in the end. But it was definitely a great learning experience.
The advice here is when you are fundraising, plan long term and don't get greedy or arrogant. That's not how you succeed. And research more about fundraising, talk to somebody like me who can guide you through this process.
What is the next big milestone for your team?
Getting to the series A metrics. The seed stage is like a grey area: the team looks promising, the product looks ok… and you put your trust on that. Series A turns everything black and white. You either have the numbers for the series A, $1M ARR, consistent 15% MTM growth, more than 100% net retention rate, etc. which are very mathematical and very easy to calculate. You either have them or not.
What to do you besides building AXDRAFT?
I try to cut myself out from work more than I used to. I realized not doing it made me less focused and I became very easily distracted.
I read a lot of Sci-Fi and I have some physical routines that I do every morning. I used to dislike physical exercise until I read about the One Push-up Challenge and thought “anyone can do one push-up!” So I started doing one push-up a day, which obviously was never just one. I did more and more each day and added a few other exercises into that routine. And of course family time – I love my family.
What is one book all founders should read?
My most recommended book is Tools of Titans by Tim Ferriss. It’s the most actionable book I've ever read. You just open it at any page, read it through and you have 3-4 pieces of advice.
If you weren’t a founder (or a lawyer) who would you be?
I always wanted to be a surgeon. I still read a ton of medical books, like popular science medical books, because I'm genuinely curious about human biology. Or I’d be a teacher. Not a school teacher but a person who’s done something remarkable and is sharing that experience to empower other people to do something remarkable too.