Verbit CEO Tom Livne (courtesy photo)
Earlier this year, I had the chance to interview Tom Livne, the founder and CEO of Verbit. At the time, the legal-tech oriented Verbit had just secured $31 million in Series B funding to continue growing its AI-powered transcription and captioning service, which had already turned into a category-leader in just three years since the company was founded.
When I spoke to Livne in February, Verbit’s story had followed the traditional model of start-up success. Then March came, and the world shut down. But while most industries were in a scramble to deal with the new challenging reality of coronavirus, Verbit suddenly found itself deeply in demand. Like fellow pandemic success story Zoom, Verbit’s live-captioning and quick-turnaround transcription technology are tailor-made for a world where business has moved from the boardroom and courtroom to the webcam and chatroom.
Verbit was doing well before the pandemic, and it is now poised for exponential growth. What’s remarkable is the way it got those extraordinary results wasn’t from a happenstance encounter with Mark Zuckerberg or Tim Cook at a Silicon Valley espresso bar; it was from good old-fashioned business discipline and hard work.
Figuring It All Out
After finishing his service as a former special forces paramedic and paratrooper in the Israeli Defense Force, Livne trained as a lawyer. Livne worked closely with entrepreneurs and told me he quickly realized “I don’t want to be their advisor. I want to be the entrepreneur myself.”
As a junior attorney, Livne found himself frustrated with the slow turnaround time and inaccuracy of traditional court reporting technology. Livne thought of speech-to-text as a natural solution to this problem. But timing is everything, and in 2012, when the idea that became Verbit was born, the time wasn’t right. Speech recognition software simply wasn’t mature enough to significantly replace or supplement traditional court reporters, and Livne himself didn’t have the business skills or experience to bring such an idea to market.
Livne left the law, and one MBA from Yale later found himself working at Leumitech, an Israeli tech banking and investment firm out of Tel Aviv. While there, an engineer approached him with an idea that became AppInsight, a mobile application security tool. Livne told me “it seemed like an opportunity, and I was opportunistic.” He joined AppInsight as a co-founder to help it launch, but he had no personal passion for the project or background in the field. Livne told me that was a mistake. AppInsight found initial funding, but Livne’s co-founder fell ill, and Livne chose to return the investors’ funding rather than press forward on a project he didn’t feel passionate enough about to work on alone.
Livne took away from this first failed attempt at entrepreneurship that passion isn’t just a bonus: it’s a necessity. We spend too many long hours building the companies and teams we lead to not care deeply about what we’re doing.
Verbit Takes Flight
The time was finally right for Verbit. Armed with business training and tech investment connections from his time at Leumitech and AppInsight, Livne had the personal tools to build his start-up. Livne dusted off his old idea for an automated transcription service. “For transcription, I did have that passion, because I had been a frustrated customer.”
By 2017, the tech had finally caught up as well. Speech recognition software remained underdeveloped for Verbit’s purposes, but advances in machine learning and AI meant the software could now train itself over time to get better. Verbit paired its AI speech recognition software with human editors. The AI currently does roughly 90% of the legwork, and the humans correct and edit the remaining 10%. Each round of corrections makes the AI smarter, better, and faster at its part of the job for future transcriptions. While Livne believes human review will always be part of the process, Verbit’s AI will continue to automate more and more of the process as it develops.
Success came rapidly once the prototype was up and running. Initial friends-and-family funding was enough to get a viable product to market and obtain paying customers. While Livne had a background in the legal field, Verbit doesn’t target law firms, which are notoriously slow to adopt new tech. Instead, Verbit targeted court reporters themselves, building out a suite of software to automate their transcription work. Having an actual revenue stream was a game-changer when it came to fundraising: Livne said it changed their pitch to VCs from “why you should invest in us” to “why we should take your money.”
Livne told me in February that education was one of Verbit’s most important verticals, specifically captioning and transcribing web-based teaching. Demand for web-based teaching solutions has grown by orders of magnitude in the COVID-ified world, so those Series B investors (and Livne himself) must be feeling pretty good about their investment right about now.
Lessons Learned
I asked Livne what advice he would give to fellow entrepreneurs or businesspeople, and his “secret sauce” is really no secret. Verbit is the product of time- and battle-tested principles being embraced and executed with precision and dedication.
Correct course quickly. Livne figured out early on that he didn’t want to continue to be a lawyer. Rather than waste years bemoaning getting his law degree and begrudgingly moving up the law firm ladder, Livne figured a new path. Mistakes happen; it’s correcting them that matters.
Find the right problem to solve. When looking for an opportunity or a business idea, “you are looking for a problem with high friction and low efficiency.” Figure out what isn’t being done well, and then figure out a new way to do it. Making others efficient is a great way to build a market.
Try passionately or don’t try at all. If you’re not passionate about what you’re doing, you’re not going to get it done. Find something you care so much about that you’ll devote the hundreds of hours it takes to get an idea off the ground. Even great ideas perfectly executed will experience failure and roadblocks, and passion is what will see you through.
Timing is everything. The best idea in the world won’t survive bad timing. Striking too soon or too late can be equally fatal. Move intelligently and with commitment.
Teams matter more than anything. You need people with the right background, who are committed to the problem you’re trying to solve, and who have the resilience to deal with setbacks. “It’s all about the people you hire, surround yourself with, and learn from.”
None of this advice is revolutionary. We’ve all heard these chestnuts before, but it’s good to be reminded from time to time that the reason we’ve heard them before is because they work. Whether in building a tech start-up, growing a law firm, or building out an individual attorney’s book of business, good ideas, dedication, team-building, and execution matter more than anything.
Get those right, and the opportunities will come.
James Goodnow
James Goodnow is the CEO and managing partner of NLJ 250 firm Fennemore Craig. At age 36, he became the youngest known chief executive of a large law firm in the U.S. He holds his JD from Harvard Law School and dual business management certificates from MIT. He’s currently attending the Cambridge University Judge Business School (U.K.), where he’s working toward a master’s degree in entrepreneurship. James is the co-author of Motivating Millennials, which hit number one on Amazon in the business management new release category. As a practitioner, he and his colleagues created and run a tech-based plaintiffs’ practice and business model. You can connect with James on Twitter (@JamesGoodnow) or by emailing him at James@JamesGoodnow.com.