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On this episode of the ‪@WhatWorked‬ podcast, Tyler Rachal and Mike Wu sit down with Ryan Wenger, Cofounder & CEO at Inhouse. Are you interested in building a company? Listen to this episode to hear Ryan debunk some common misconceptions about startups.

We covered a ton of great topics:

• Avoiding risk by starting a business as a side project
• The interview techniques to hire effectively
• How AI is changing the legal field for law firms and SMBs

Find Ryan's myth-busting article at https://ryanwenger.com/

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Transcript edited for clarity:

Tyler Rachal

Alright, we are live with another amazing episode of What Worked. Mike and I are thrilled to be joined by, I don't know, when do you start calling yourself a successful entrepreneur, Ryan? Is it when you sell your first venture? Is that kind of the line?

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Ryan Wenger

I'll let you know when that happens.

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Tyler Rachal

I think if you're a true entrepreneur, you probably always feel like a little bit of a chip on your shoulder. You're like, I still haven't made it, but, to us, Ryan has definitely made it. I want to introduce Ryan from InHouse, his latest venture, which we'll talk about here shortly. But Ryan, if you don't mind introducing yourself to the What Worked podcast audience.

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Ryan Wenger

Thank you for having me, Tyler Mike. So I founded a company called WhereTo and before that WhereFor and I was a corporate lawyer before that. I could tell you a brief kind of history of how I sold both those companies. I can give you a quick rundown of those three legs of my journey. When I was a lawyer, I worked at a big law firm and always wanted there to be a budget based search engine. So I built, as a side project, a company called WhereFor.com, which allowed you to put in your budget and it would show you where you could travel for that much money. So it was just a side project that I did alongside my career as a seventh year attorney at a law firm. We got millions of users a week from that product after launching as a side project.

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We got a phone call from a Fortune 10 company executive that wanted me to build a business travel platform because she was so enamored by what we did in consumer travel that she wanted something that would work for large international companies. Totally different product, but she thought if I could do something innovative in the consumer space, I could do even better in the business travel space. So that was WhereTo, my second company. That one I raised about 12 million venture capital for, scaled it. We reached about $80 million in revenue and sales going through the platform by 2019 and sold it to Flight Centre Travel Group in 2020. Flight Centre Travel Group is a 17,000 person travel conglomerate with like 60 offices. Stayed on for three years as part of the earn out situation and then left this last year to go back to square one and build my new startup.

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Tyler Rachal

Yeah, and you kind of yada yada’ed over the fact that you dealt with a global pandemic 

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Mike Wu

While you were working in the travel space.

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Ryan Wenger

Right.

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Mike Wu

That's a big part of the story.

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Tyler Rachal

..and you had a travel company. Yeah, so that's a pretty big deal. I'll also highlight, obviously I've read up on you, Ryan, and your success. And there's one thing in particular that I would love for you to talk about, because I think it's very relevant to anyone out there that has a business idea. I thought that you did an expert job in testing your idea, right? So as you initially had the idea for WhereFor, and I think that the common path is most people think they need to go and they need to build it and then see if people are gonna actually use it, but you didn't do that. I feel like you were very wise with your time and your money.

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Ryan Wenger

Yeah, I mean just because you care about something doesn't mean other people will. So the first thing you do when you have an idea that you're passionate about is test it like an experiment. And you don't need a lot of money to do it. You run to a lot of people that like I just need $25,000 to do my idea and you don't you typically need zero or maybe a few hundred dollars. 

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So we built a landing page to test my hypothesis. My hypothesis was that people would want to book by budget, instead of destination. You could say, Expedia, all the websites work the same. You put in a destination to figure out how much flights and hotels cost. But I figured there were a lot of people like me that had a very limited budget, but wanted to go as far as they could. So before building it and raising real proper money for it, we just built a landing page where you put in your budget and the dates, and you, of course, provided your email. On the next page, it would say thank you for registering. And we started to build a large pre-sales list by building that list and validating that lots of people wanted there to exist this product.

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Tyler Rachal

I can't emphasize this enough, I love the way in which you approach that. You had an idea that came from learned experience. This is something as a travel enthusiast you wanted for yourself. I think that's one of the hardest questions that, most times, entrepreneurs spend so much time really just staying in a vacuum where they go have conversations with their friends. That's the validation they do. But one of the most incredible tools that's available to every entrepreneur or aspiring entrepreneur is pretty much anybody can put ads on Meta, Facebook, and Instagram. And just see, will people actually click? Will they actually give their information up for access to this thing? So I thought that was really cool..

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Ryan Wenger

Ads are great for that. And then AI has even made it cheaper and easier than when I did this 12 years ago. AI can now build a website, can build a landing page, can build ads for you. So it's never been cheaper and easier to test your ideas.

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Tyler Rachal

Yeah, knowing a little bit about you and really where you sort of got the bug, is it safe to say even during law school, you were always thinking you'd eventually build your own company? I mean, did you kind of always want to be an entrepreneur?

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Ryan Wenger

You know, I always wanted to be a lawyer. It just drove me from being a little kid, I wanted to be. But at the same time, I always loved technology. I built a website for my dad for his bookstore when I was in junior high school in the late nineties. And then I applied for a patent when I was in high school in the aeronautical space. So I've loved tech. I was a nerd, you know, I'd go home instead of sports, I'd go home and tinker with technology, but my career path was always to be, to be a lawyer. And I'm very fortunate that I was able to leave the one that was less good of a fit on me and take the one that took me to where I am.

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Mike Wu

I know you're from New York, Tyler's from the East Coast too, I am as well, but the three of us all went to USC. 

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Tyler Rachal

Fight on, baby.

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Mike Wu

I feel like, for me at least, it was kind of a random college choice and people always wonder why I did that. To me, you sound like you were a unique kid. You had a patent, you applied for a patent when you were a teenager. That sort of thing, so then you're probably had some rhyme or reason around going to USC. I don't know, did you? I'm curious what brought you to Los Angeles.

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Tyler Rachal 

And when you talk about New York, let's clarify, this is not New York City. You're from Woodstock, which I mean, Ryan, you're the first person I've met from Woodstock.

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Ryan Wenger

Yeah, well the town sign of 3,000 people had to be repainted when I left. So it's not surprising that I'm the first. Yeah, I'm from Woodstock, New York. Small hippie town that at the time I felt terrible living in, but in retrospect it was a nice kind of liberal, diverse, interesting place. I went to USC because I got a full scholarship there. I visited the campus and it was just gorgeous, everything about it. Yeah, simple as that.

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Mike Wu

Yeah, I have similar reasons. To be honest, it was the campus visit that sealed the deal for me. But my interest was just the flashiness and the flair of Los Angeles. On TV, there's a lot of reality shows that were taking place in LA at the time and I'm from Florida, South Florida. And so Hollywood definitely drew me. And then I saw the campus and it was just sold on the college experience at SC.

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Ryan Wenger

Yeah, campus does it.

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Tyler Rachal

The campus doesn't specifically, I'll just say this is probably a really dumb reason. I could not get those fountains out of my mind. I don't know why I was just so drawn to the fountains, but it was just this California day as I'm touring around the sound of the bubbling fountains and seeing a bunch of kids. I don't know, I think it was like middle of December and they're all going to class in shorts coming from at the time the Massachusetts area. I was like, you know what? This looks pretty good. It looks pretty ideal. But yeah, just curious, Ryan, as someone coming from that background, and you mentioned your parents owned a bookstore. Is that what you said? 

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Ryan Wenger

Yeah.

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Tyler Rachal

Very cool. And just to make a little segue here, you wrote an incredible, I guess blog post would be the best way to describe it, about debunking five specific myths about being an entrepreneur. And as I've gotten to know more about you and your background, it makes complete sense why you wouldn't kind of follow the same path that everyone thinks that you should follow. So I'd love to hear that from you. What are those five myths and how did that sort of play out when you were building WhereTo, which you ultimately sold?

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Ryan Wenger

I'll try to remember as many as I can and describe how I came to them.

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Tyler Rachal

I'll keep you honest too, I can read them off to you. Would that be helpful if I read them off? 

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Ryan Wenger

Cool, cool. Let's see how good I can do. So the first myth that I like to bust, the worst one,

is to keep your idea secret. You meet so many people who have a great idea and they don't want to tell anybody because they're afraid someone's gonna steal it. And it is just the furthest thing from the truth. To be a great entrepreneur, you need to come up with a great idea every single week for five years. So your first idea is not gonna be what makes you successful. It's gonna be execution. So I told everybody, so my first company was WhereFor.com. The idea started like 10 years earlier when I was at USC and I told everybody. I told probably over a thousand people the idea while I ended up going to law school and becoming a lawyer and going that route, I just couldn't get it out of my head so I told everyone. And then over the course of time, those people became my employees and my investors and a lot of the things good that happened came from me putting it out there instead of hoarding it. So definitely myth number one to bust is do not conceal your idea. Number two, should I try to guess the second one?

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Tyler Rachal

Yes, and I'll give you a hint. It's very much in line with the ideas piece, which I couldn't agree more about. You know, we've all had that friend who's like, Hey dude, I want to tell you about this startup idea I have, but I want you to sign an NDA. And I'm always like, dude, as a founder, you don't need to do this. But yeah, it's right in line. Number two is right in line with ideas.

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Ryan Wenger

Right, right. The second one is the idea that your ideas has to be perfect, it’s absolutely myth. Your idea just has to be something you're passionate about to get you going. The thing with WhereFor was that I asked a bunch of really smart people for feedback on it and often experts and they gave me all the reasons why it wouldn't work. And each time I heard one of those experts speak on it, it literally set me back like a year or two because I bury it deeper inside myself and I would go and do my law career. In retrospect, we just got around each of those problems. And the problem with asking experts for feedback on your idea is they're just calloused. All they know is like the bad part. And, and it's of course helpful to know that stuff so that you can work around it, but it's not a good reason to bury your ideas because you hear some experts say it's shitty.

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Mike Wu

Yeah, that feedback, receiving so much feedback on your idea can be pretty painful and it's definitely changed. And I didn't realize that I was often a person before trying to start a business, I was a person sharing my feedback and trying to poke holes in other people's ideas. That's kind of how I was trained with my past line of work. Whether you're like underwriting a deal or you're trying to solve some challenges as a consultant. But now, on the other side of the table, I'm very mindful of not trying to do the same thing. Because I know how emotionally taxing that can be when you are just faced with the million things that can go wrong. As an entrepreneur, you know there are a million things that can go wrong. You don't necessarily need to be reminded about it all the time by other people.

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Ryan Wenger

Yeah, that's right.

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Tyler Rachal

Yeah, I thought that was one of the most honest parts about your post, Ryan, that I think a lot of people don't share for many reasons, ego or whatever it is. But we've all had that experience, I know I have, where I've shared an idea or I've talked about our business, Hireframe, with somebody. And it's kind of funny. Sometimes the cuts that they cut the deepest come from people that aren't even really qualified to give that type of feedback, but there's just something about it. And I really appreciated the fact that you said you literally lost a year because you got this feedback and you kind of thought, I don't know if I’m putting words into your mouth here, but what's the point? 

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And I liked the word you used as well, I'm pointing to my hands. You talked about being calloused, right? And I can say that as a founder, when someone talks to me about their idea, I'm definitely biased in the sense that I'm oftentimes thinking about the pain points of my business. And that comes out very much, it's the filter that I view any business where I'll talk about things, like have you even thought about what's your distribution strategy? And that's because I'm trying to figure out what my business's distribution strategy is. So all this, all this is very, it resonates a lot.

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Ryan Wenger

It came to me through a lot of pain and time delay. So if I could help anybody avoid it, I'm happy about that. Another myth that I'd like to bust wide open is that startups require that you drop out of something. We have this concept, typically from Hollywood, that you have to drop out of Harvard, Stanford, or your career to build your concept, your company. I think that was more true in the 70s and 80s, you picture Steve Jobs tinkering in his garage. But as products have become cheaper and cheaper to build, it's more and more of an opportunity to make it a side project, which really de-risks it. So my recommendation, strong recommendation unless you can afford it, is for people to do the thing that makes money. For me, it was being a lawyer. For other people, it might be an accountant or a consultant. And make it your side project to validate your idea. And only when it reaches a certain threshold of success is it de-risked enough for you to leave.

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So the way I did that was, I mentioned the landing page. That was like step one. And then I raised about $50,000 from my boss. He was interesting, even though he's a lawyer, one of these rare lawyers that would be willing to take risks and understood business. So he invested $50,000. I still made it a side project. Got millions of users using the product. Used that money to actually build the thing and get some ads. Got traffic, a million users a week on the product. Used that to raise a couple million dollars. We got Rob Dyrdek, he was one of our first investors and a few others in LA. And only at that point where I had maybe $2 million in the bank did I quit being a lawyer. And the beauty of that is I was able to pay myself pretty much the same salary as I was making as a lawyer. I think that's the best path to do it is to make your idea a side project. Determine for yourself what success has to look like and only when it reaches that threshold do you quit what you were originally doing.

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Tyler Rachal

Yeah, and obviously I'm teeing you up here for the next one, but I can't help but give you the devil's advocate here. When it comes to starting anything, most people, and especially at where you were at in life, so you were a lawyer and you were working on this as a side hustle, were you married at the time? It's obviously a personal question, but…

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Ryan Wenger

No.

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Tyler Rachal

Not married. Okay, that is a little bit helpful. But I just think about, you're in a very established career making, I imagine, a pretty good salary. But there's a lot of fears naturally people have when they think about starting a company. The common thing that I hear everyone always say is they say, I didn't pay myself anything for three years, or people say six years. And as someone with a mortgage, two kids, you know, if I were to do it all over again, that scares the shit out of me. So, I don't know. What do you say to that?

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Ryan Wenger

I think that that's treated like a badge of honor that's worn by trust fund babies that actually is meaningless. This is like a mistake I think investor VCs make is they think that the person who dropped out of that successful career has de-risked the investment for them because their conviction is so high. But how different are the thresholds for someone that doesn't have savings versus someone that does? So that badge of honor is bullshit that I think if you can do it, more power to you, but if you can't, it shouldn't stop you from pursuing your dream.

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Mike Wu

What did having that salary mean to you? Why was that an important point? Because I think most entrepreneurs would have just followed the conventional way and just raised capital from investors, tell them they're going to take a $40,000 a year salary so they can reinvest in the business. Where did your conviction around this concept come from? Why was this important to you?

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Ryan Wenger

I owed $120,000 in student loans at the end of law school. So I had that substantial nut. And then just the cost of living in LA, you don't want to live in a great city and not eat. So that was a requirement for why I needed to make money to pay the bills. h.

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Mike Wu

Did you ever get any pushback from potential investors you pitched about that?

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Ryan Wenger

Yeah, so that's the second thing is if you've raised a million dollars or two million dollars, a salary of like $140,000 is a really small percentage of your budget. So I think you need to work with investors to help them understand that. I mean, you just need to create a budget that has room in it for user acquisition, for technology, for hiring good people. And then if after that, there's a salary that's a little bit higher than what they read about, that's okay. For a lot of investors, it's a sign of a lack of conviction. When I think the reality is people have different needs that they need to meet with their salary. And it's all about having a holistic budget that accounts for all that.

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Mike Wu

I really like that you mentioned, everyone's circumstances are unique to them, so there shouldn't be some standard salary that a seed round entrepreneur has, because everyone's got different circumstances. 

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Ryan Wenger

I mean, think it has to be within a range, like it can't be crazy.

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Mike Wu

There's a range, yes, exactly. There's a benefit from the investor's standpoint, to have a founder who's focused on growing the business and not worrying about that student loan, Fannie Mae, knocking on the door looking for interest payments.

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Tyler Rachal

Yeah, totally

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Ryan Wenger

Right, right, right. In fact, when you raise a series B back when I was doing it, and today I think it's even if you raise a series A, a lot of investors will encourage the founder to take some money off the table to sell a little bit of their equity on the secondary market so that they don't feel pressure to sell the company for a nonspectacular amount. So it's a known thing. And I think you could just take that little earlier in the journey. The other thing I'd say is that traction trumps everything. So if you built a kick-ass product that's making a lot of revenue or getting a lot of users, that gives you leverage in negotiations to command the salary that you need.

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Tyler Rachal

I'm going to tee up your last and final myth. And I do want to kind of do a review here of all of them because they're really good. And for anybody who hasn't seen this post, we'll link this post at the bottom of the episode description. It's awesome. But the fifth one, stick to what you know. I can't help but think about a dude coming out of Woodstock, lawyer by trade. You mentioned you're getting a million users, I think you said per week. What does a dude from Woodstock, son of a bookstore owner, know about getting web traffic? Like, how did you have the stones to say, I can do this?

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Ryan Wenger

You know, it's a great question, and the truth is it's that iterative approach that is the answer. I didn't have some sort of grandiose confidence that I could run a company and scale it. I just had confidence that I could get to the next milestone. And I said to myself that if I could do X, that the proof's in the pudding. It doesn't require a leap of faith. As a lawyer, I'm an evidence-based person. So each step of my journey, when I successfully did the next thing, it gave me the obvious confidence to keep going. And I kept doing that. I built the product that got millions of users, used millions of users to raise money successfully from a top tier VC, used that to build a great team. And you'd have to be, you know, illogical at any of those points to say like, can I do this? Like you just did it. So it's the iterative approach that I think is the answer for most people.

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Tyler Rachal

Yeah, you're, you're, you're naivete, but I'm sure that this is something that, it's a working theory for me, but I think it's alive and well in almost every successful entrepreneur, or I would say everyone. It's that pragmatic approach to ambitious goals is this sense of I don't have the answers, but I can figure it out. There's the common thing I talk about dispelling for me, myths.

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is that light bulb, that eureka moment. Everybody loves that, right? You mentioned Facebook and the movie, The Social Network, right? Everybody loves that scene where Justin Timberlake playing Sean Parker is like, call it just Facebook, drop the ‘the’. And the reality is those moments are just, they're so actually insignificant in a company's journey. There's just so rarely these eureka moments. It's like, you're just trying things out again and again. 

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And Mike and I have used in past episodes of What Worked, we've talked about this, this analogy of being a boxer, right? And it's like, you're a boxer. And you kind of almost have to be crazy to get back into that ring, knowing that you're going to get hit in the face. But there's something about an entrepreneur, you just say, if I train a little bit more, if I work on my head movement, if I do these things, I'm never going to fight the perfect fight, but I'm gonna, I'm gonna win, right? It's kind of that mentality. So yeah, I really appreciate that. 

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I do want to switch gears here a little bit. And I want to ask you some questions about when you were building this first venture, what did you learn about a couple of things that are really key, we talk about all time as it relates to Hireframe. Let's first start with the obvious one. What did you learn about hiring? You took your business from just you, to five employees, to eventually, I think you guys had 30 when you sold. What did you learn along the way?

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Ryan Wenger 

Yeah. And then over a hundred when I left Flight Centre.

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Tyler Rachal

wow, okay, got it. Cool.

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Ryan Wenger

Hiring is one of the most important things building a startup. And it's also one of the hardest. You don't just come out of school knowing how to interview and hire, so it took trial and error. But the system that I ended up going with, that I learned and developed over my years, is when you need to hire somebody, you basically work backwards from the business objective, every step of the way. So you start with what is the business objective? What's the thing that your company needs? Why are you hiring for it? Grow revenue, you develop technology, develop IP, core business objectives. Document it, and then figure out what are the characteristics of a person that is gonna likely succeed in that objective. Like what are their traits? Okay, that tells you who to look for. Like what companies do they work at? What experience level are they? But then the next step is the interview. 

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So in the interview process, you have to translate those traits into anecdotes that you need to pull out of people. So the question is, how do you learn whether somebody's actually good at those things when you're just talking to them? And the only way to do that in an interview is to get them to talk about situations that are like the things you're going to do. So you take those characteristics and you're like, okay, tell me about a time that you had to overcome this challenge. Each of those traits should have one or two stories that you hear that will tell you whether that person actually has experience or not. And when you're pulling from large companies, people often will do just little pieces of a project. So on their resume or LinkedIn, it'll say they are responsible for growing revenue 10x or launching this major feature, in reality they had a tiny piece of it. So getting into those stories about exactly what they did and what they learned will teach you what kind of experience they have. 

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And then let me tell you, there's one question, my favorite interview question. I learned this in a book, I don't remember what it was called. The question is, okay, Tyler, what was your boss's name at your last company? And then you pretend to write down the name of that person and then you say okay you know okay Mark Thomas was your boss if I call him and I ask him about you what will he say is your what do think he'll say are your weaknesses?

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Tyler Rachal

I don't have any. Yeah, I love that question.

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Mike Wu

I think it's from Topgrading. 

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Ryan Wenger

Is that where it is? It's flipping on its head. Instead of asking the person ‘what do you think are your weaknesses?’, which is the worst question. By flipping it to say, what will your boss say is your weakness is, it really forces it. And then giving them some sort of impression, like you're going to ask that person, which you should if you can, It really keeps them honest.

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Tyler Rachal

Yeah, I love that. And the anecdotes one, I think, is brilliant. You mentioned that they talk about parts of a project, right? And usually they're just going to kind of give you the baby. They're going to say, yada yada, I transformed this part of our company and it achieved X results. The part that I actually find most compelling oftentimes is the friction or the speed bumps they hit along the way. And what I want to hear about is somebody in the executive team saying, no, in fact, I don't think this is a good use of our time. Here's the deliverable we're trying to achieve, et cetera, et cetera. And I love hearing about those parts of the story, which is like, here's how I made the case. I use this information. Here's who I talk to. It's that interpersonal skills that oftentimes is important to me. And then I was going to ask you, there's one other piece that I think you had mentioned before, which is taking sort of all of that. So you mentioned documenting traits, understanding what is the objective of this position, asking for anecdotes. But you also mentioned creating a scorecard, right? Which is something that I did a lot at my past company, but I'm curious, what was your approach and how did that change too as the company got bigger?

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Ryan Wenger

So the scorecard is where you take the objective and the characteristics and you turn it into a document that can be attached to the job description. So that on day one, they know exactly what their job is, like what they need to hit. And that becomes an artifact that you can reference, of course you do annual reviews, but you could do a six month review and your manager could say, let's go over this scorecard. How do you think you're doing at each of these things? And then you give your own score. So it becomes a really strong tool to point people in the right direction and give them something that can be measured.

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Mike Wu

That's awesome. Ryan, so I think for the audience and for us, you've laid out a really great plan. You think deeply about the business case for the position, and then you document, you describe what you're looking for. Then you go out and find the types of people that you're looking for, and then you assess them with certain interview questions, different interview approaches, and then you score them. And despite that, it's still one of the hardest things that as an entrepreneur you have to do is hiring. It's so hard, there's so many obstacles. It's the challenge that we love here at Hireframe. It's a never ending learning experience of trying to get better. How do you work on this skill yourself on an ongoing basis to get better at hiring and talent acquisition and that sort of thing?

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Ryan Wenger

Certainly like increasing your surface area, it's a numbers game at the end of the day. So the more you're out there, the more people you meet, the higher your probability of meeting a great person is. So that's one trick is to increase your service area of success, like networking events, being on LinkedIn, liking people's posts, sending stuff out, thought leadership, like any of that stuff to increase the number of people that you come across, will increase the quality of your candidate pool. It is really hard and you make mistakes. I think another principle that I've found true is like hire slow and fire fast. Take your time, don't get too excited about someone that interviews great, talk to their references. If you can, give them a test, those are usually pretty easy to come up with. If they're an engineer, it's really easy. If they're a designer, you can give them a design challenge and give everyone two days to do it.

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For my current co-founder, we did that and he's been incredible at InHouse. So I met him on LinkedIn. Aarshay Jain is his name. He came from Spotify. He hit all my marks that I was looking for. He went to Columbia and studied data science, got a master's there. I was looking for an Ivy League data scientist to build proprietary AI. And he worked at a large successful company, Spotify, which tells me that he’s seen it done correctly. You want people that have seen it done the right way, which typically happens at top tier companies. And we met blindly, I messaged him and he messaged back cause he happened to be looking for a co-founder to build something.

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So we still didn't know if we were going to be great partners. So we did a one month project where I paid him to build a prototype and we tested each other out for that month. And at the end of the month, we knew each other pretty well and decided we were going to both go full-time on InHouse and both work together. We've been working together for one year. He actually lived in India when I met him, he moved from New York city back to India during the pandemic. And so I didn't have a chance to meet him in person. It was just kind of the rapport over video and how good it was working with him. And it's been phenomenal. And he came out for the first time a month ago and stayed here for two weeks. And we were like, this is actually not that different than our video interactions. We just feel like we knew each other so well. So I'm sure I'll make a lot of mistakes going forward but I feel really good about having met Aarshay, I feel like it's the culmination of a lot of learning, and a lot of mistakes.

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Mike Wu

I have something that I've been kind of toying with when it comes to hiring. It's related to hiring friends and family. This might be a debunker. I won't tell you which way I've changed my mind about this recently, but I'm curious, do you have a take on Do you like hiring friends and family? Do you think that's a good thing or do you think it's a bad thing to do?

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Ryan Wenger

It hasn't worked for me. I've had a very hard time with it.

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Tyler Rachal

Uh oh, hot take incoming.

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Mike Wu

But you've done it. I feel like every founder has done it in some form or fashion.

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Ryan Wenger

I think it depends on your personality. I think you have to be really wary of it because it could easily, like 50 % of companies I've read, fail because of founder issues. So you’ve got to imagine for any loved person, do you want a 50 % chance that you're going to have a real problem with them?

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Tyler Rachal

It's a good point. Yeah.

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Mike Wu

Totally. That's a good point.

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Ryan Wenger

It's often the lazy way. My brother, my spouse is this thing that I need. Let me hire them.

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Tyler Rachal

This is teeing Mike up for an epic hot take here. So Mike, you've got to give your hot take now. This is great.

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Mike Wu

Yeah, I've recently changed my mind about this, Ryan. I was a hard no at hiring friends and family for a long time just because it's conventional wisdom that people, more experienced entrepreneurs like yourself, tell less experienced entrepreneurs, like me, from your battle wounds. I think what I've learned about hiring friends and family, just people that are close to you, where there is a lot of risk, right, there's like personal relationship risk.

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The benefits are there's a lot of pre-existing trust in that relationship, you already know the person versus doing your best to get to know someone in a two interview process or even a one month practice working session. So, know the person, you know their character first and foremost, and then you know about their skills and abilities too. 

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How I try to mitigate the risk these days when we do explore hiring someone we already know. It's all about expectation setting. Setting very, very clear expectations and also just being very thoughtful and careful about if this doesn't work, because there's a likelihood that this doesn't work, what does that look like? And having an open dialogue about that, that at least helps mitigate some of those things. Luckily we haven't had a huge blow up and this hasn't like come back to bite us in the butt yet. I'm sure it will at some point in our...

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Tyler Rachal

Stay tuned.

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Mike Wu

If we're around long enough, it will happen. I hope it does happen in that sense. But I'll keep you posted Ryan if I change my mind back to your camp.

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Tyler Rachal

I will add some very specific refinements.. Obviously I'm very aware of Mike's stance on this. And I will say there's definitely some important details here, which is of course we're hiring, it's gotta be merit based, right? So I do have a lot of friends that have hit me up over time about, you know, they say, hey man, I just wanna work with you. And it's a lot of people that I've met, from past jobs, right? Which is very normal and they definitely know the space. But I'm not extending that opportunity to anyone who is not fit for the roles that we need at Hireframe. And that's half the battle. I don't know if that's something that you experienced, Ryan, but a lot of it with founder hiring stuff, it actually starts with what do you actually need? That's one of the most common things. There's like this shiny object syndrome where classic examples, like I just listened to a podcast on AI in recruitment, Mike, we need someone to just do AI building here or whatever it is. And there's so much work that goes into really understanding what your core objectives are for that year. And, and to your point, Ryan, to kind of bring it back full circle, you have to ID those, attach it with a scorecard. It has to be directly tied to this role that you're hiring for. 

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And the other thing I'll say too, just to kind of give an important clarification on Hireframe’s stance on friends and family is really where we've seen the benefit. And I think this is two different things is that ultimately Hireframe is a service company. And I think that there's a very distinct profile of person that, to bring it back to Ryan, your thoughts around hiring anecdotes and that sort of thing, is that there's specific life skills that people that are successful in service companies have that I think are a little bit different than a company where you have a product. And a lot of our challenge is figuring out who those people are. And I think that friends and family are actually like a nice little filter for us. It's like, hey, this is a known person that we know they excel in these key traits that we know are critical to doing a good job here. Anyway, that's why it's still a hot take nonetheless. Nepotism is alive and well at Hireframe. No, it's not.

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But, yeah, I was going to switch gears here a little bit, because I want to give some attention to what you're building today InHouse. And would love to hear Ryan, I'll say, as Hireframe’s unofficial chief legal officer, a title, which I would love to give up to be honest with you. You reached out to me on LinkedIn and I was like, yeah, I want to hear all about this because it sounds like you've identified a real pain point that I have. So would you mind talking a little bit about the pain point you've identified and how you're solving it with InHouse?

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Ryan Wenger

Yeah. So lawyers cost $500 an hour plus, sometimes up to $2,000 an hour. So if you want a contract as a business person, you want a contract drafted or you have an employment question, you're talking a thousand dollars plus for an answer or for that document. So those types of crazy costs, nowhere else in the world is it like that, have led 60 % of US business owners to forgo lawyers completely. They do their own legal work 100% or they call a friend of a friend and you know borrow five minutes or they borrow a template from a competitor and try to change the names. It's not surprising that another legal statistic: one out of three companies in the US are sued every single year. It's not a coincidence. These things are related, right? There's massive risks, especially in a litigious country and state. There's massive risks for people, mistakes that they're making that are just waiting for that company to become successful, to blow up. 

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So with that background, coming out of being a lawyer and then also building a SaaS company, and AI coming out and just being the  biggest change in decades, maybe in our life. I looked for an opportunity to bring these all together. And I found that with InHouse. So with InHouse, we built a custom AI that does basic legal work for small businesses. And then because it's not a hundred percent reliable and because the law still prohibits AI from being a lawyer, from being presented as a lawyer, we loop in real lawyers in the process to oversee the work product. So InHouse is an in-house counsel for small businesses. It costs up to $150 a month for unlimited legal work for the AI to draft bespoke contracts, review and markup agreements. You get notes, you get red lines from your customer or competitor. You could upload it to InHouse and get instant feedback on how it compares to industry standards and what are some reasonable suggestions to make. Or you can ask your legal questions. And for that price, it includes a lawyer that looks at everything and checks it and verifies, it gives you a green light or a yellow light or red light to tell you how reliable it is. inhouse.so or inhouse.app is the domain we just purchased. We've had about 650 businesses use it in our beta phase, and we're launching our full version this month.

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Tyler Rachal

Yeah, and I’ll just say that as a user, this is a PSA to anybody else out there who is similar to Hireframe. You're a small business that has dreams and aspirations of becoming a big business. In my opinion, the attorney model is just kind of broken. As a founder, I'm so hesitant to pursue it because it kind of feels like they really are only interested in you if you can hit a certain level of billable services. I think that's where there's just a big disconnect because not every business really needs that or can afford that. My PSA to any small business is get in with InHouse while you can. For that price, Ryan, when we first met, I told you the story about when Mike and I got a simple service agreement drafted by an attorney here in Los Angeles that was referred to us by a friend, super nice guy. It costs, think $4,000 and we effectively threw it in the trash. It was just such garbage. And the guy even admitted to Mike, he said, yeah, I kind of downloaded a template online, off of some service that he paid for, which made us feel great about the $4,000. So, 150 bucks is nothing when you think about having that type of access and having something that is specifically built, because I do feel like a lot of people are doing this today, just with chat GPT and they're learning on their own. 

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This begs the question, thanks for stating exactly the problem you're tackling. You mentioned that the law today prohibits AI functioning as a full-fledged attorney, right? I am curious where you see this going, AI legal. Cause if you think back to for example, when Uber came out, it was novel, just the idea of using your phone to hail a taxi, right? To hail a ride. And now Waymo's are ever present in Los Angeles, completely driverless cars. So what's the equivalent here in law? What's the hailing a car from your phone and then driverless cars, Like what's the equivalent in AI and legal?

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Ryan Wenger

Yeah. I think the complexity here is that lawyers have a monopoly, it's lawyers themselves that create the rules for the law industry. So in order for AI to ever be authorized to practice law, humans have to say, yes, they have to say eliminate my job, AI is better than I am at this stuff. So it was really hard to imagine that. I suppose legislation could come out that like a statute will trump internal industry regulation, like the bar association. So I suppose it's possible that they would come out and say that they can be used. It's just hard to imagine that ever happening.

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So I think for foreseeable future, lawyers are going to be lawyers. But the industry is changing rapidly. There's lots of tools like mine, sort of, but built for lawyers. And they're using it to pad their margins currently. They're like using AI in the backend to draft the first version of their legal brief or to build or review a contract. And then they're just giving the final touches. Are they passing that savings on to people? Are they being honest? I don't know. Probably sometimes. Yes. Sometimes no. So it's already happening. There's already a convergence of lawyers and AI. We're going a different route. We're trying to go, you know, directly to businesses to consumers and give similar technology to them and guarantee that they save the money.

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Tyler Rachal

Follow-up question, and I'll try to think about how to word this simply. But I think about, in my past company, I worked a lot in content moderation. So if you think about Facebook, Instagram, et cetera, Twitter or X or whatever you want to call it, there's a lot of content moderation that's happening behind the scenes to basically protect the integrity of the social network, right? And AI hit content moderation very hard several years ago, where that work was largely done by humans. And AI took a lot of that volume and solved it with machines. What you did see though with content mod is that there's also simultaneously, there's like an ever growing volume of content moderation because of the fact that we're just using social media so much. So I guess my question here for AI and legal is that with the introduction of AI, will we see kind of a transformation of the legal industry where lawyers will start, you mentioned the one thing is like, they're maybe doing their services more efficiently, but not passing on the cost savings. Do you feel like they'll also find new applications for their services with the birth of AI?

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Ryan Wenger

100%. The story I thought about when I first started thinking about this question was ATM machines. When ATM machines came out, the tellers were super worried that they were going to lose their jobs because ATM machines were literally doing their job better, right? It's faster, easier. You don't have to deal with a person. You get cash out. What ended up happening is the number of bank tellers multiplied several fold after ATMs were released. Why? Because that technology made banks so profitable that they were able to expand into other areas that did require people.

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So you end up standing in line, not just to get cash out, but to do, you know, to take any one of those new services that the banks have gotten into because of that efficiency. So that will happen for sure with lawyers. Like we were going to do less discovery where you bill 50 hours for like going through boxes of documents and we'll find places to be more creative. I think it's hard to imagine the industry increasing the way that tellers did, so I don't think that'll happen but I do think we're gonna you know we're gonna contract there'll be less of us. Big law firms are already hiring about 50 % less summer associates and those that are in the industry will be focused on more creative sophisticated niche jobs.

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Mike Wu

I do think there will be some market growth for companies like ours who, like you mentioned earlier, Ryan, are withholding from pursuing legal services. And now that it's much more frictionless with InHouse, we are going to access legal counsel through InHouse. So think there's some growth there. I was curious about what you think about how this will impact law school. Do up and coming law students or lawyers, attorneys, do they have to have a different approach to this? Do they need to, I don't know much about law school, but I hear it's a lot of memorization. Do you need to memorize a bunch of stuff anymore? Or does law school need to be three years? Can it come down to two years?

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Ryan Wenger

I don't think it's going to change much. For the bar exam, you do sit there for three months and memorize 5,000 pages of information. But before that, for the three years of law school, you're really learning just core analytical principles. They are things that I think are good for anyone to know and use rather than memorization. A lot of the cases that we are reading in law school are like 100 years old, 50 years old, 150 years old, because they're just teaching you principles that equip you to be a critical thinker. So I don't think law school will change very much because those things you're learning, it turns out they don't teach you how be a lawyer. You graduate from law school, you don't know anything about actually practicing. It's the practice of law that's really changing by AI. I don't think it's what the law is or how it's developed.

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Mike Wu

That's interesting.

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Tyler Rachal

Are you trying to tell me that legally blonde is not an accurate depiction of law school? I'm just kidding. The follow-up that I was going to ask is I've actually seen more of this because I have a few friends that are attorneys and I'm seeing them getting to, the best way to describe it is it's a more like incentive based services where they're looking at, and I'm curious if AI is going to increase this boom of this. An example would be any type of engagement where there is some type of fee structure, but it's largely like you're looking to take a piece of some type of outcome. I know that the first thought people probably have is like lawsuits and I guess class action lawsuits. But I'm thinking that a negative one that I have is, Ryan, I think you and I talked about this, but I've been seeing a lot of PE firms that have been acquiring the music catalogs of these legends of music. So Stevie Nicks sold her catalog, Bob Dylan sold his catalog. And when I would see these numbers, I would say, don't get me wrong, Bob Dylan is a legend. But paying $600 million for all these songs, I didn't quite see the angle. And it seems like the angle is these PE firms are buying it. They're retaining these large law firms who are then basically trying to find opportunities to sue for copyright infringement and that sort of thing. So I don't know if you feel like AI is going to increase that because you could kind of be more entrepreneurial about the pursuits you take because it's being done in a cheaper way.

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Ryan Wenger

Yeah, it's an interesting idea. It's hard to imagine, where is the copyright infringement happening these days? I feel like Spotify and Apple have made it so cheap and easy to buy. I'm probably being naive, but it's kind of hard to imagine there being compared to the 90s when it was ripped tapes and then of course, like Limewire and everything.

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Tyler Rachal

No, without a doubt, I think that the infringement is not really happening. I think what is now available is technology that allows you to analyze songs in a data-centric way where you can find similarities. And if you think about it, I'm going to butcher this because by no means, there's some great fact that I'm forgetting, but the greatest songs of all time typically all have the same chord progression. Dust in the Wind is the same chord progression as I'm sure I'm going to goof this, but many other songs. And so that's kind of the notion is that the technology can allow you to say, Hey, that latest song by God, I want to say Nelly. Nelly is on my brain. Let's think of a more recent artist, but whoever, right? Latest song by, you know, Rihanna, right? They could find this little similarity to sue by. So I don't think the infringement is happening, but I think that people are exploring these legal gaps, if you will, opportunities. Yeah. 

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Ryan Wenger

Yeah, yeah, interesting.

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Tyler Rachal

Anyway, that's my side tangent. But I do want to take this opportunity to sort of wrap up, because we've taken a lot of your time, Ryan, and this has been amazing. Can't stress this enough. Anybody who's listening, please do read his blog post. And then, Ryan, I got to ask you, how do you want people to reach out to you? How do you want them to sign up for InHouse, hopefully? And what are some things that you like to talk about with people? You mentioned you're an avid LinkedIn network person. I got to know you through LinkedIn. What do you want people to find you about?

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Ryan Wenger

Yeah, thanks for asking all that. The website is inhouse.app. The blog is ryanwenger.com. It’s just my name.com where it has that post that takes you through stuff. With InHouse, we actually have a free tier to start with. So companies or people that have very infrequent legal needs, we want them to still use it and try it out. So you could actually use it to periodically generate contracts, review stuff, or answer questions for free. So I encourage anyone to try it out. You can reach out to me in my email address, ryan at inhouse.app. That's about it.

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Tyler Rachal

Wonderful. So we got a lot of friends and audience members that are listening to this that I probably have not retained legal counsel for their company. So you'd be, I'm just going to say bluntly, you'd be stupid. Just plain dumb to not use, at least try out the free version and give Ryan some feedback. And then also check out the blog post, but thank you, Ryan, so much for being on What Worked. And we're very excited to see the new version of InHouse that's going to be coming out shortly.

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Ryan Wenger

Awesome. Thanks for having me guys. A lot of fun.

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Mike Wu

Thanks, Ryan.

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