Russ: This is The BusinessMakers Show, heard here and online at thebusinessmakers.com. and it's featured guest time on this show, and I'm in Hollywood, California at the corporate headquarters of Legal Zoom, and my guest is Brian Liu, co-founder, chairman, and former CEO of Legal Zoom. Brian, thanks for having me, and welcome to The BusinessMakers Show.
Brian: Thank you. Thank you for having me on, Russ.
Russ: You bet. Even though I am certain most of our audience knows Legal Zoom, let's just make sure, and why don't you tell us about Legal Zoom?
Brian: Well, I hope everybody knows Legal Zoom, but it's still pretty surprising to me when I run into people who've heard about us. And we are an online legal document service, and what that means is you can go onto Legal Zoom and you can start a business, you can form a corporation, an S-corporation, an LLC, file a patent to trademark, even make a will or a living trust all online and without the need of an attorney. So you can save a lot of money-that's the real proposition here of Legal Zoom.
Russ: Okay. Well, I was aware of you back in the very beginning, and I couldn't help but think then and wonder now if you got pushback from the legal industry.
Brian: We really didn't; though obviously, when we started, we feared the worst and we're always quite wary of that. I, myself, I'm an attorney, and three of our four co-founders are attorneys, so we've always done everything that we could to be as straight up and by the book as possible to make sure that attorneys wouldn't be angry. I mean, for example, one thing that we never did is we never go out of our way to say bad things about attorneys, which is-some people would do that. I mean, it's an obvious, cheap hotshot-and it may work, but that's not what we did.
Russ: So when you say "by the book", what are some things that you have to sort of stay away from?
Brian: Well, what I mean is just being as straight up and as straightforward as possible in terms of telling people, "We're not a law firm here. When you go to legalzoom.com, Bob Shapiro isn't going to be filing your incorporation papers for you.
Russ: Okay, okay.
Brian: Basically, we're a self-help online legal service.
Russ: And nobody's going to give any legal advice from here, right?
Brian: No. You don't come to us for legal advice, but if you need some simple filings done, we are one of the largest-if not the largest-online incorporation companies. I mean, last year, we helped start 100,000 new businesses.
Russ: Whoa. Cool.
Brian: So-
Russ: Well, that's compatible with the cause here at The BusinessMakers Show. That's-
Brian: Yes.
Russ: -cool-real cool, real cool. Well, take us back to the very beginning. I believe right in the beginning, it was you and Brian Lee, and I read stories about-it was during the dot-com bust and-
Brian: Right.
Russ: -you were eating a lot at-uh-at McDonald's and even ordering the kids' meals is what I read-read that in one story.
Brian: That, and Top Ramen-those were our favorites. Dominos was a reward.
Russ: Okay.
Brian: That was-that was definitely a treat. What happened-I mean, it was the equivalent of-you know-right now, trying to start a hedge fund or a-
Russ: Right.
Brian: -well, stock advisory firm.
Russ: Right.
Brian: We basically came up with the idea in late 1999, but it took about five months for us to come up with a business plan and get everything started. So by the time it was March of 2000, we were ready to quit our jobs. At that time, Eddie Hartman had come on board, Bob Shapiro had come on board, and we thought, "This was going to be great. We're going to raise-you know-millions of dollars because the Internet was so hot. It's a great idea. We've got Bob Shapiro who's going to add a lot of credibility to our company, and this was going to be a piece of cake, raising the money." So within two weeks of us giving notice, that's when the stock market collapsed.
Russ: Did you know right then that it was gone? I mean, there were some of us, I think, that kept thinking it was just a little blip and it was going to come back.
Brian: It wasn't obvious to us at that time, well, until that late afternoon because that very late afternoon-I still remember, it was April 14th of 2000-we had scheduled a meeting with our first venture capital meeting, and it was a family friend. About five, six o'clock, we drive over there, and say, "Hey, is so-and-so available?" He comes out and says, "Brian, what are you doing here?" I said, "Hey, Uncle Denny, we had this meeting arranged months ago." He said, "Don't you understand? It's over. It's over. Dot-coms are over." And he kicked us out.
Russ: Oh, my goodness. Okay. Well, now, you're talking about, too, before you left your jobs, you and Brian Lee, and of course, Mr. Shapiro, were all attorneys. He's still is a practicing attorney-
Brian: Right.
Russ: -but you and Brian Lee had great jobs at law for some time-
Brian: Oh, absolutely.
Russ: -right?
Brian: Absolutely. I worked at Sullivan & Cromwell, which is a big New York based firm. I worked at their Los Angeles office. At that time, I had left that job and had been working at a large money management firm in their legal department here in Los Angeles. And so-you know-Brian Lee had worked at Skadden, Arps, which is another very big law firm, and he was working at DeLoitte & Touche in their accounting department as well.
Russ: Wow. I'm curious. Did you both start practicing law, knowing that you might not be practicing law?
Brian: Oh, absolutely.
Russ: Okay.
Brian: Absolutely. That's-I think that's why Brian and I hit it off so well the very first week of law school because we looked at each other and said, "Hey, what are you doing here? You're not going to be an attorney." It's like, "Yeah. What about you?" And that's-and-uh-that's why we became close friends.
Russ: That's great. We're talking with Brian Liu, co-founder and chairman of Legal Zoom, and we'll be back with more with Brian after this. You're listening to The BusinessMakers Show, heard here and online at thebusinessmakers.com.
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Russ: This is The BusinessMakers Show, heard here and online at thebusinessmakers.com, and continuing on with Brian Liu, co-founder and chairman of Legal Zoom. Well, Brian, you were just sharing with us that it's kind of like you went to law school to become an entrepreneur.
Brian: Right.
Russ: Well, would you actually recommend that to aspiring entrepreneurs?
Brian: No. I'll tell you how I thought about it, which is this: I figured I could've gone to business school, but I didn't have as much business experience at the time. And then I looked around and especially at that time, I was thinking about entertainment-that's the business I was in before I went to law school. I was looking around and I saw a lot of people working at talent agencies or even as the vice presidents of these studios. They had law degrees, they didn't have business degrees. So I figured I could do just as much with a law degree.
Russ: And where did you go to law school?
Brian: UCLA.
Russ: And what about undergrad school?
Brian: UC Berkeley.
Russ: Okay.
Brian: I studied biochemistry, by the way.
Russ: Well, I know exactly-
Brian: Nothing to do with law.
Russ: So you've got biochemistry, law, and you mentioned the entertainment business, too. Well, what was-
Brian: Yeah.
Russ: -the entertainment business?
Brian: I was in Taiwan after college, spent a couple of years there. And it was just a job that I had gotten into because one of the parents of a kid I was tutoring, he was in the entertainment business, and he knew somebody else was looking for a native English speaker in a local entertainment company and we were the local distributor for Disney and all of their films, Buena Vista International, and I did marketing.
Russ: Cool.
Brian: It was fantastic.
Russ: Well, I do want to get a little bit more into your background-your early days-but it seems to me like it was a major, huge step in the right direction when Mr. Robert Shapiro joined Legal Zoom.
Brian: Oh, absolutely.
Russ: Well, tell us about that.
Brian: What happened when we started was that Brian and I knew that we had worked at great law firms and we knew that we were good attorneys, but nobody in the U.S. had heard of Brian Liu or Brian Lee. And most people-probably 95 percent of people or 98 percent of people-haven't heard of the law firms that we worked at, even though they were two of the best in the U.S. So-
Russ: Right.
Brian: -we knew that with legal documents, people had to trust that the documents would work; they had to trust the people behind the company. So we went out and made a list of attorneys-famous attorneys-that people would be able to trust and that people would recognize. And Bob Shapiro was at the top of that list, happened that he lived in Los Angeles, so one night, Brian Lee actually cold called him.
Russ: Cold called him.
Brian: Yes.
Russ: And got him?
Brian: Yeah. Lo and behold, he answered the phone.
Brian: And before he hung up, managed to convince him to at least take a quick meeting with us.
Russ: Cool. Well, there you go, audience. Those cold calls work sometime.
Brian: Yeah.
Russ: Was it the first meeting? I mean, what-did it feel like he was definitely going to sign up and do it?
Brian: Well, we were really nervous, so we had prepared weeks for this meeting, and we were shaking. But-uh-we explained the business, we explained what we were trying to achieve, and-you know-he said, "Look-you know-I get pitched all the time on new businesses, and this is one of the first that I've heard that has seemed to make sense. It makes sense with my values of what I believe in, and I think it makes business sense, so let's continue this conversation." And so we scheduled a follow on, and then after a series of meetings, he agreed to join us.
Russ: Cool. Cool story. Wow.
Brian: Yeah, and we hadn't even quit or jobs at that time. And the great thing about Bob joining us was when Robert Shapiro joined us, it gave us the confidence to then say, "Okay. We're really going to take this seriously. We're going to leave our jobs, and let's make this our full-time-this is the full-time activity that we're going to pursue and we're really going to-you know-make this happen."
Russ: Wow. It-and it seemed like you probably almost had to after he agreed-
Brian: Yeah.
Russ: -to be part of it.
Brian: Absolutely.
Russ: Well, let me ask you this, Brian: I mean, most everybody that we've had on the show that started a company will eventually run into some extremely difficult times-
Russ: -where trials and tribulations-where they almost didn't go forward. Have you guys had experienced any of those-
Brian: Oh, yeah.
Russ: -at the beginning?
Brian: Yeah. Well, probably about five or ten of them.
Russ: Yeah. Do you feel like, perhaps, now that you've got this volume up where you're going and you're actually doing pretty well in this economy that you're beyond that point where you have to fight for survival.
Brian: Yes and no. I guess when I sit back and think about it, we don't have to fight for survival, necessarily, but every day is a challenge and every day, I think we've got to be as scrappy as we were when we started. We have to take nothing for granted, and we have to be as smart and as savvy as-you know-the very first couple of months when we started.
Russ: And now, when you say "we", that's quite a few people now because you're-
Brian: Right. It's-yeah, it's-
Russ: How many employees do you have now?
Brian: Over 300.
Russ: Wow. So right now, obviously, you're all over the media, so I would expect you're at an all-time high, but how many transactions do you do on a regular day?
Brian: On a regular day, we're doing over 1,000 transactions.
Russ: Well, for me, when I look at your product offering, I can divide it into the business category and the personal category, how do those two break out these days?
Brian: It's a little bit more tilted towards business. Traditionally, it's always been about half personal, half business; lately, it's skewed a little bit more business. And I'll tell you what's interesting is that during this period of economic difficulties, that part of our business-new business formation-is growing faster than-than personal. And I think it's the fact that people might have gotten laid off and, in a way, people are looking for new opportunities. They see opportunities and the entrepreneurial spirit is really alive and well in the U.S., and I'm really happy for that.
Russ: That's so cool. We're talking with Brian Liu, co-founder and chairman of Legal Zoom, and we'll be back with more with Brian after this. You're listening to The BusinessMakers Show, heard here and online at thebusinessmakers.com.
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Russ: This is The BusinessMakers Show, heard here and online at thebusinessmakers.com, and continuing on with our featured guest Brian Liu, co-founder and chairman of Legal Zoom. Well, Brian, tell us about yourself. Where-where did you grow up, and what were you like as a young guy, as a teenager?
Brian: Oh, great. I-I grew up in Seattle, a city called Bellevue, Washington, and-
Russ: Okay.
Brian: -I moved there from Taiwan when I was five years old. And what was I like? I'll tell you one thing that people always tell me when I haven't seen them for many years-they always say, "Brian-you know-you really haven't changed much." And it can be 10 years, it can be 20, it can be 30 years, and they all say the same thing.
Russ: Well, that's good.
Brian: And I-I-and I don't- Yeah, I guess it's good.
Russ: Yeah.
Brian: I started thinking, "What-what was I like as a kid?" And I mean, I was a good student, but I-you know-I got into my fair share of trouble, like-
Russ: Okay.
Brian: -like anybody else, but-
Russ: Okay.
Brian: s-because I was a good student, I often was able to get away with things.
Russ: Oh, yeah. Good. Listen to that, all you young people in the audience, there's an advantage to being a good student-
Brian: Oh, yeah.
Russ: -for sure.
Brian: People never suspect that you're the one who did X or Y.
Russ: Was there any kind of entrepreneurship going on within you when you were young?
Brian: I'll tell you a funny story. Well, a good friend of mine from my childhood days, Randy Kessler, we started a company that wasn't even a company-it was just a business-where we made these buttons and they were anti-Michael Jackson pins. And we would go to hard rock concerts, like the Scorpions or Iron Maiden, and we would go over there and sell these buttons. And right when people were going into the concert, we're like, "Hey, who out there hates Michael Jackson?" And everyone goes, "Yeah, we hate Michael Jackson." We're like, "Well, right. Buy one of our pins." And it was-it was just, "I do not like-" with a heart-with a line through it, "Michael Jackson."
Russ: Wow. Cool. You should have trademarked that, wow. That's cool. What about your family? What-did you grow up in an entrepreneurial family?
Brian: My dad started a company-an independent agency-in the shipping business when I was relatively young, but otherwise, we don't have a family history of entrepreneurship.
Russ: Well, Brian, was there, like, an inspirational moment-a mentor, a teacher, a movie, a book-that really sort of played a role in getting you to where you are today?
Brian: You know, actually, there is. At that time, I was working at a law firm, and I didn't really see myself as an entrepreneur, but I had a good friend who had left his job at DIRECTV and started a company that was an online marketplace for independent films. And so when I talked to him, I thought, "Well, this is an interesting idea," but I didn't think it was going to be that great. But then they received millions of dollars from a very big venture capital fund, and I thought to myself, "Wow. If he can do that, then why can't I?"
Russ: Well, let's get back to Legal Zoom today. Now, we also have had a lot of venture capitalists and-and investment bankers and-and private investors as guests on the show. And we always ask them, "Well, what do you think is the-is the greatest attribute of entrepreneurs?" And invariably, they'll all say it's really good to have a person that started a company that shows that they're okay with relinquishing the reins at some point in time.
Brian: Uh-hunh (Affirmative).
Russ: And based on the research I did, you were CEO until 2007-
Brian: That's right.
Russ: -is that right? So you ran that position for seven years-
Brian: That's right.
Russ: -and now you're chairman and a CEO came in. was that easy for you to accept and did it just make all the business sense in the world to you?
Brian: Yes and no. Easy to accept in a certain way, yes, because I know my particular strengths and I know my particular weaknesses, and one of them, well, in terms of interacting daily with investors and speaking to investors, the details of finance and accounting-that's not my strength.
Russ: You wanted to be with customers and employees.
Brian: Yeah. Me, I-I believe providing a vision for long-term growth of the company and strategic direction, a marketing vision, a marketing really positioning-that's really what I think I do the best.
Russ: Cool. So describe for us the ideal exit strategy-if there is one-for Legal Zoom.
Brian: I think, ideally, it's what every entrepreneur dreams of, and that's they want to take a company public.
Russ: Okay.
Brian: And I think, for us, it's-it's a very real possibility, and it's great because it makes sure that Legal Zoom continues as a brand and as a vision for helping people get affordable legal documents. An IPO is-is really publicity-it's marketing as well.
Russ: Okay. Well, Brian, what made you think it was going to work?
Brian: People spend-Americans, anyway-spend over 100 billion dollars a year on law, but they don't know who to turn to. Uh-something happened when I graduated from law school, and that is all my friends and family-my parents, my relatives-came out of the woodworks and they started asking me, "Brian, Brian. Now that you've finished law school, can you help me-uh-write a will? Can you help me start a business or file a small claims?" So right then, I realized-you know-people have these needs, and they don't know who to turn to, and they certainly did not want to spend the 300 dollars an hour that my law firm was charging me out at as a first year because-you know-we-I didn't know anything coming out of law school.
Russ: How close is the product that Legal Zoom offers today? How close is that to the original vision that you and Brian Lee had?
Brian: It's actually very, very close because when we started, we didn't aspire just to be simple legal documents-that's not what we really envisioned. We envisioned using that as a springboard to something-uh-much more, and really positioning Legal Zoom as a brand where people go to when they have any legal need. We're moving in that direction right now by expanding our services. We're doing attorney-assisted services, for example, where we feel that some documents, it's more difficult for you to do entirely on your own, and we're working with different attorneys to still create something that's innovative and affordable. That, overall, is our mission is to create new, innovative, and affordable legal solutions so that all Americans-you know-regardless of socioeconomic status have the-you know-protection and the benefits of the law.
Russ: Brian, so it's interesting-this advanced service that you mentioned-it still-it seems to me like it's tied to a document and it's like, maybe it's a complex document procedure in which you would have attorneys that would agree to help them present it.
Brian: That's right.
Russ: That's cool. Okay. Well, Brian, before I let you go, I have to ask you this question: Let's say we have an aspiring entrepreneur that's listening to your interview right now and is all jazzed up about what you've done, and-and even how you explained why you knew it would work. What kind of general advice would you give somebody like that?
Brian: When you're starting any business, be ultra, ultra practical in everything that you do. Always take the more conservative and sure route; don't take too many chances; and most importantly, don't overspend. What I've seen is that most companies-the reason they fail isn't because they didn't have a good idea. They had a good idea, they had a good service, but they simply overspent.
Russ: I really appreciate you-uh-spending some time with us, Brian.
Brian: You're welcome.
Russ: We've been talking with Brian Liu, founder and chairman of Legal Zoom. And you're listening to The BusinessMakers Show, heard here and online at thebusinessmakers.com.
