Rachel Wong: Law ChatGPT AI Revolution, Bastardized YC SAFE & Founder Legal Templates with FD Lite - E384

· Singapore,Founder,Podcast Episodes English


“The world is evolving. People are starting to recognize that we got to keep up, and we've got to figure out how we can service people more effectively. It's not to say that lawyers have not serviced people effectively from the start, but the times have changed. We are now servicing people who are much more highly educated. I'm always challenged by my clients. They say ChatGPT can produce the term sheets, and it looks great. So why should they trust me? Helping the consumers understand the risk factors they need to be aware of, what they need to look out for, and helping to justify the value that we're bringing on the table would be helpful.” - Rachel Wong

“We’d have to stay away from using language like “inter alia”, “ipso facto”, which were very sexy in the 1950s and 1900s, but now, it's more towards the plain English movement as well as helping the people who sign the documents fully understand what they're signing. We can use the YC SAFE as an example. I never thought that there would be a document that people would just copy-paste and use widely as a template in private negotiations where it’s not mandated by the industry like in insurance and banking. There are standard template documents that the industry has decided that they want to use.” - Rachel Wong

“The first trend that I predict is that lawyers will become more specialized. Industries evolve in a certain way. To give an example, it will be like law firms doing mergers to become larger law firms, and then being one-size-fits-all law firm. Then, the industry typically evolves to become more specialized. The underlying rationale behind it is twofold: the first thing is that economics kind of doesn't make sense at some point when they're too big. The second thing is that consumers also require something a bit more specialized over time. They're no longer so open to generic lawyers. So, if I'm looking for maritime legal advice, I want to go to a maritime lawyer rather than going to a big shot that does everything.” - Rachel Wong

Rachel Wong, startup lawyer & Founder of Founders Doc, and Jeremy Au discussed three main topics:

1. Law ChatGPT AI Revolution: Rachel discussed how ChatGPT is revolutionizing the legal profession and changing the way lawyers interact with clients and how they draft and amend legal documents. Rachel explained the significance of legal AI companies, such as Litera, in enhancing the efficiency of drafting processes for lawyers by clearly understanding and addressing their specific needs.

2. Bastardized Y Combinator Safe Agreement: Rachel delved into the complexities of the Y Combinator (YC) Safe Agreement and its impact from various perspectives including economic and control rights. She discussed the maladaptation of the Safe Agreement over time in response to economic shifts and the dynamics of negotiation power between startups and investors.

3. Founder Legal Templates: Rachel noticed increased demand by clients using online templates and AI for legal document amendments. They have launched FD Lite, a platform designed to make legal documents more accessible and affordable, especially for startups in the early stages of fundraising.

Jeremy and Rachel also covered the regulatory hurdles for legal entrepreneurs, increasing defensive specialization vs. commoditization within the legal sector, the expanding role of in-house legal teams, and the importance of making legal documents understandable to non-lawyers.

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(01:25) Jeremy Au:

Hey, Rachel, really excited to have you again on the show. We had a wonderful time both on your previous time that you shared about your personal journey and also the second time where I was interviewed on your Founder's Doc on YouTube. So we'll place the link there. It was a great conversation. And I was like, you know what, we have so many other topics to talk about. And so I wanted to kind of hear that again. So could you share a little bit about yourself for those who don't know you yet?

(01:46) Rachel Wong:

Yes. Thanks for having me back, Jeremy. I hope you had a good time at the podcast that we did together. My name is Rachel. I am a startup lawyer and I'm an entrepreneur. I wear many hats. I don't even know where to start, but I'm just generally having fun, having fun with solving a couple of problems.

The first problem that we're trying to solve is how do we improve internal legal tech solutions, i.e., how do we make the internal system of any legal service provider more efficient? How do we solve the kings that I typically see as inefficient? The second problem we're trying to solve is access to justice. I think previously we launched Founders Doc at a time when founders were not supported so widely. Now, a lot of lawyers want to support founders because they're seen as very cool, very profitable, and whatnot, but at the time that Founders Doc was launched, founders were the people that most lawyers were not so keen to service. So we've solved that problem, and I think now it's no longer a problem. And now we're moving into the third stage of solving access to justice, which is how can we make legal documents, reasonably good legal documents, available to more people at a reasonable price point? So that's something that we're working on.

(02:55) Jeremy Au:

You know, we were just joking that it's only a matter of time before you're featured on the cover of The Sun magazine as a lawyer turned entrepreneur serving the startup sector. So, I'm looking forward to that future.

And before the article comes out, they will ask you how you became an entrepreneur, right? I want to ask you that question. I think we never dove into that, which is that there's a lot of people who are lawyers, or at least they study for the bar and they become lawyers. And then, of course, we know the story. Again, newspapers have the stories of lawyers who end up baking cupcakes or becoming a chef, right?

And also, there's the story of people who turn away from law, but what's interesting is that you've taken law and you decided to become more entrepreneurial with it. So launching a podcast, building a business, consulting. So, could you share a little bit more about what it is to be an entrepreneur in the legal context?

(03:39) Rachel Wong:

Yes, I think the first hurdle that entrepreneurs in the legal space face is always regulatory hurdles because the legal sector in a lot of countries is highly regulated. So I mean, part of the process is trying to sense what the environment is. How do you explain to stakeholders what you're trying to do, whether you're aligned with the objectives that stakeholders want to achieve.

So if you take, for example, UK versus another jurisdiction at this point in time, you can see that UK is actively promoting legal innovation. They are allowing law firms to IPO versus this structure is not available in a lot of countries at this point in time. So I think being in tune with the regulators is something that's helpful.

And the second thing is perhaps the mindset, because I think the mindset of most lawyers is, hey, we want to follow precedents. And if you want to steer away from precedents, you have to justify why you're trying to do that. This is, comes from the concept of learning case law, and this applies both for US lawyers and common law jurisdiction lawyers. So the mindset is, hey, let's follow what we've been taught unless there's a reason for us to steer away from that. So there's also maybe a bit of resistance from lawyers sometimes to adopt technology too quickly because of the risk that they're going to be exposing themselves to. And it sort of steers away from our sort of training as lawyers to follow precedent.

I think the world is evolving. I think people are starting to recognize that we got to keep up and we've got to figure out how we can service more people and how we can service people more effectively. It's not to say that lawyers have not serviced people effectively from the start, but the times have changed. In Singapore, for example, we are now servicing people who are much more highly educated. I'm always challenged by my clients. Oh, the CheckGPT can produce the term sheets, so, you know, it looks great. So why should I trust you? So, helping the consumers understand what are the risk factors they need to be aware of, what they need to look out for, and helping to justify the value that we're bringing on the table would be helpful.

And when I'm talking about this set of consumers, I'm really talking about the small medium enterprises, the startups, the guys who are not so high up there in the sense that your typical DBS domestic still has a panel of lawyers that are very ready to service them. I don't think that legal service on their end has evolved too much. Although I do think that another trend that lawyers need to be aware of is the expansion of the in-house legal team. For example, Shell has thousands of lawyers. They are essentially maybe, some people say they are like a law firm because they hire so many lawyers. So, in this new era whereby we have increasing in house lawyers, we have people who are more educated, we no longer have a monopoly over legal templates or legal knowledge.

(06:15) Rachel Wong:

How do this new age of lawyers reframe how we value add to the industry? And that is important because at the end of the day, the reason why law and lawyers evolved was to increase access to justice and show that it's a symbol of justice in society. It sounds really odd because I think, currently, justice in society means access to information, access to full clarity on what's going on, full visibility, full transparency. And that's why we had the Web3 and crypto evolution that arose recently. But I think there's still a lot of goodness in having a very sound legal system that's governed by the government. And I think lawyers are part of that process. So, how do we figure out this new jigsaw puzzle? It's something that we're all figuring out.

(06:57) Jeremy Au:

There's so many different threads to pull on. I mean, one of, like you said, there's ChatGPT, that's one. Two is, I think in-house law. And then third I think is, I'll say the reaction of the legal society, I guess, not just legal society, but the society of lawyers, in terms of to those changes, right? So I guess let's talk about the first one.

So, what are you seeing on the ground, which is people using ChatGPT to negotiate or discuss with you their legal process? What are you noticing about those? How do you think that will change as well?

(07:24) Rachel Wong:

Yeah. So I think what I'm seeing on the ground is many people using templates from online. So ChatGPT, in my opinion, isn't that novel, because before ChatGPT came about, there were people who would give me templates from online, and be like, okay, this is in English, it looks kind of right. Why can't I just use that? Which is very fair and then I think that now with ChatGPT, what ChatGPT allows them to do is they can prompt ChatGPT like, oh, please take this template and amend this, you know, based on what we're discussing. So that is the evolution that ChatGPT has brought to the table, which is now they can, ChatGPT can be in the process of helping them amend the documents.

(08:02) Jeremy Au:

How do you think that's going to accelerate? I mean, for me personally, you just triggered my head that when I was a founder, I had to consult the Brad Feld book called Venture Deals to explain pro rata, right? And all these various, you know, term sheet deal terms. And then I literally would just ask like, is this more favorable towards me and what should I negotiate for, right?

So that's what I was always trying to look for. I guess that's going to accelerate further. How do you, do you think is, but anytime she's relatively simple, right, as a structured document, it feels like maybe it applies to even more structured law in the future like partnerships, contracts, employment agreements. What do you think about that as well?

(08:35) Rachel Wong:

I think there's definitely a move worldwide towards plain English. So I mean, prorata isn't something that you wake up as a baby and like, Oh, I know what a prorata is.

(08:43) Jeremy Au:

No, I did. I woke up in the morning saying pro rata. That's my first word. I looked at my dad. I said, pro rata, you know, just kidding.

(08:51) Rachel Wong:

There we go. Yes. So I think definitely there's a move towards using more plain English. I think even for me as a lawyer, there were times when I look at documents in different, outside of the area that I am specializing in and I'm like, I don't understand what this is saying. And we are now having customers who want to understand what is going on.

So, yeah. I do think that we would have to stay away from using language like inter alia, ipso facto, which was very sexy in, you know, the 1950s and 1900s, but now it's more towards the plain English movement, as well as helping the people who sign the documents fully understand what they're signing. So definitely a movement towards plain English. Second whether or not there could be a more, a more standardization towards documents. I think maybe we can use the YC SAFE as an example. I never thought that there would be a document that people would just copy paste, copy paste and use widely as a template in private negotiations where it is not mandated by the industry, i. e. In insurance and banking, there are standard template documents that the industry has decided that they want to use. But I think YC SAFE is probably one of the few instances where I see a lot of startups and a lot of VCs recognizing that this is a document they want to use and then just using it as it is. Without any sort of like top down approach of saying, Hey, you got to use this.

So that for me is quite interesting. But then on the flip side, right? I also have startups who say, Oh, VC funds who say, okay, we're going to use the YC SAFE, but we've got to have a side letter and a side that says 15 pages long. Then it just kind of like bastardizes all the clauses in the YC SAFE. So I think humans, being humans at the end of the day, they still want some of their intentions they still want to flag the negotiating power they have on the table so, it's definitely better because more startups can just download the YC SAFE, fill in the stuff and then get it going, but at the end of the day, I think where the documents, where people want to reflect the negotiating power on the table or where investors want to have a bit more rights there's always that side letter that comes along with it. So yes, it's a very interesting evolution for me.

(10:58) Jeremy Au:

I like the phrase, bastardize YC SAFE. Let's talk into the incentives behind that, because I've done both, right? I've been both the founder and user of YC SAFE. And I've also been on the VC side, writing side letters. So, I think from my perspective is that on an objective basis, the YC SAFE, especially the new version that came out, that's primarily post money safe, has two major attributes.

I think the first is that, first of all, it's very simple. And it doesn't give any control rights, information rights, or pro rata rights to investors which is, I think, good from a founder perspective because you get more control, in a sense. But it's bad for investors whose fund strategy and economics don't work unless you have those things. Like, hey, I need to know what's happening in the company that I put money in. I need to know and have the ability to put more money in the future into the company, but conversely, I think that the post money savings is a quite dilutive to founders because of the post money way it's done, which is an interesting design choices that YC made, which makes sense for their economic model, which is as an accelerator, pushing out lots of folks and making sure that, I think they're optimizing for that spread of startups that they have but it doesn't obviously work for most VCs out there that are investing and doesn't come across as something that's super obvious to founders about what they're actually signing, because like you said, it's a default safety numbers. It's easy. And I don't have to pay a lawyer like Rachel.

So, you know, I did a side letter, comes right, because all the investors are like, Oh, we can't, we can do a YC SAFE, but we need a letter. So. I guess what are your thoughts about that? Do you think that's going to evolve further? Or how do you think those side letters are playing out from your perspective?

(12:28) Rachel Wong:

Well, I think the evolution comes from the startup drying in capital. It's always a reflection of the economic times that we're in. So I think in the past five years, we've seen a huge boom in startups where the negotiating power's on the start founder but now, to be honest, it's probably a very dry season. A lot of startup founders are wrapping up their businesses and I think until the Fed reduces the entrance rates, and there's a new boom factor, this might continue for some time, but maybe from a statistical perspective, I do see the due volume dropping quite significantly in terms of the terms that's being negotiated. I still see the YC SAFEs being used, but perhaps now the negotiating power's on the side of the investors and they would ask for either chunkier sid e letters or they might just go straight to having shares from day one.

And just being very like, talking in legal, terms, the YC SAFE actually hasn't been that bad for some of the investors because by virtue of the fact that they're not shareholders yet. They're actually debt holders, which means that they get the first rights technically when the startup starts winding up. So they're actually ranked higher than shareholders. At the end of the day, it kind of plays out.

I think there are two problems that still need to be solved. The first key problem is when startups enter into the price round how we can sort of like, figure out the terms of the shareholders agreement with some sort of like fairness amongst all stakeholders, because some startups would sign like 15 SAFEs, and then there might be one safeholder, which is like unhappy with the term that the lead investor wants, then how do we resolve these differences? Currently, the YC SAFE does not provide for that.

The second one is on maybe information rights. I do think on your point, it is fair for them to have a bit more like quarterly updates at the very least, when data in the, in the SAFE instrument. And I guess the third one is the winding up. Currently it's a bit unclear, sometimes, what to do when the startup is running low in liquidity so maybe a bit of provision and clarity over that could be helpful even though I see their difficulty, which is every jurisdiction has different winding up and insolvency processes so it may be difficult for them to standardize these things across the board but these are things that most startup founders won't want to care about. going to care about doomsday. They're not care about caring about And they're not going to care about the next price round because all they want to do is like look, we just want to start building, building, building and then head towards the price round and all they care about is valuation.

But then there are all these little details that crop up on the flip side though. I do see some of the guys who signed the YC SAFE at very early stages, absolutely benefiting in the price round for the successful startups. So, I think the YC SAFE was always intended to be an economic benefit. So you put in 50,000, 100,000, 200,000 at the understanding that I'm economically going to benefit very well if you guys move to the next stage. But it's also an instrument that's to be used by people with high amounts of liquidity, like they're able to say, Okay, 15,000 is the cost of my weekend meal. And if I lose it, I probably will not care and cry too much about it.

(15:30) Jeremy Au:

Yeah. I think the awkward reality is that the instrument is better for some people and worse for other people depending on what you want. So like you said, I think it gives you more protection from the downside to some extent, but it doesn't give you any of the control rights that you need. Anyway, it's an interesting thing. I think it's beneficial for angels as well because angels are not represented by legal counsel. And they normally don't have the ability to do pro rata as well, but for syndicates and for like professional VSCs, you know, the pro rata rights are really important to give them the ability to double down on a winning portfolio company.

So what's interesting, going to the second trend here is like you talked about, the change in the legal structure in society as well. So in my head, I think there's a bunch of legal tech companies. I think you'd probably make an argument that Carta is taking on a domain that's quasi-legal in the sense that there's cap table management, which was historically done to some extent by lawyers, as well as the fund management side.

And then you see kind of like all these legal tech platforms that pop up. And then you see, I think also large law firms consolidate as well. So how do you see those trends happening?

(16:26) Rachel Wong:

Yeah. I think the first trend that I sort of like maybe predict is that lawyers will become more specialized. So I think it's a study that people have done as well, but industries evolve in a certain way, which is the first expanding consolidate and monopolize things. So to give an example, it will be like law firms doing mergers to become larger law firms, and then being sort of a one size fits all law firm. And then the industry then typically evolves to become more specialized. The underlying rationale behind it is twofold. The first thing is that economics kind of don't make sense at some point when they're too big. And the second thing is that the people, the consumers also require something a bit more specialized over time. They're no longer so open to generic lawyers, i. e. ,if I'm looking for maritime legal advice, I want to go to a maritime lawyer rather than going to a big shot that does everything.

So that is the two sort of like evolutionary changes that I think I will be seeing. And if I could just add a third it's just the blur between the lawyer and the non-lawyer is going to be a bit more gray over time. Let's take wills, for example. Wills were typically done by lawyers, but now we see a lot of platforms doing wills as well. And these things have different implications in different countries. Some countries have taken the position that, Hey, wills can only be done by lawyers. It's not something that the non-legal service industry can do. And then some people have taken the position that no, this is going to be the other way around for my country. And then, back to basics I think wills are something that everybody should have a right to. I think there's a lot of practical problems trying to execute a will at the moment. So I definitely think this is a problem that needs to be solved, but these are some of the sort of like trends that I see. Yeah.

(18:11) Jeremy Au:

Yeah, I think it's a fair point about wills. I remember about 10 years ago, I went to do my will. And I walked in and they were like, Oh, what do you want? And then I was like, Oh, I want that if I die, I want my internet accounts to be handed over to my sister. Then, the lawyer was like, Oh never heard of that before. How many accounts do you have online? I was like, a hundred, 200

(18:31) Rachel Wong:

A hundred!

(18:32) Jeremy Au:

I mean, it's like, you know, Reddit, Gmail, Facebook, and then the face changed. And I was like anyway, we just gave up on the clause and I just kind of moved on with life because it was too novel at that point of time, the concept of that. But I thought it was an interesting realization in my head, that it was a very you know, like you said, old school way of turning up at the office, waiting for the person, explaining, getting a thing, and then they give me a nice wheel, and then they put a round envelope, they put a wax seal on top and then now there's a lot of digital wheels, right?

(19:00) Rachel Wong:

Yes, and I'm just going to share with you before you do a digital will. That will still need to be wet-inked signed with a witness. So technically speaking, you can't do a digital will, which I think a lot of people do not know. They're like, docusign the will, yeah,

(19:12) Jeremy Au:

Docusign the will. The internet saw a witness. I'm just kidding. but I think that's, that's interesting, right? So how else do you think the legal tech, I mean, I think there's legal tech that's happening through these, like they said, these platforms that are Carta and wills, like they're kind of hiding off the general stuff that's a little bit more templatized to some extent, and then how old excuse and I think, but how do you think about technology being adopted by law firms? You know, because there's a lot of legal tech startups now that are like, not trying to be direct consumer, but trying to be I guess, B2B. Right. So how do you think about that?

(19:43) Rachel Wong:

Yeah. I mean. I didn't get paid by them to say this, but I think one of the win cases of legal tech adoption is maybe this company called Litera. So they provide software tools for lawyers to draft, but I think they were very successful because, either the person who founded it or the team that designed it, they got into the nitsy itsy details of what the lawyer really looks for, and it's really things that's not sexy. It's not things that you see Harvey Specter doing on Suits. It's changing the smart quote to straight quotes. That kind of thing keeps us awake. Making sure the clause references are updated, autonumbered, that kind of stuff. So, I think Litera did a really good job and get sort of like easing the drafting process for lawyers. And the last I checked, they're doing quite well. But I think it's quite a number of other legal tech companies struggle.

Maybe I can divide them into a couple of categories. The first category is legal tech solution providers that's driven by large law firms. So we've got the international law firms with a bit more cash driving these processes locally. I mean, I think Raja and Tan have been a big champion of legal tech innovation as well. And I, I think, this is definitely something that a space that needs to be watched because the traditional struggle has been the partners are not so open to looking at these technologies because they are used to doing what in a certain way, just to sort of like lay down that process, it would be like, they receive a draft from their associate, they mark it up in, you know, maybe wet ink, and then they say, hey, put the changes through this process, if you tell them to say, hey, no, instead of marking up on a hard copy, can you now mark up on Microsoft Word? I think having spent 25 years marking out a hard copy, they'll be like, it's difficult for me to read and have that kind of attention to detail on a computer screen, so I'm not used to that. So that's one part of it, like, inertia to change, because, I mean, these processes were things that have worked, and they're like, you know, I don't want to try something new and then make a mistake, and then lawyers always get into a lot of trouble when they make mistakes.

The second point is on technology, innovation, right? So in the past, trying to build a maybe natural language AI model is very difficult. It's going to cost a lot of money. When I first started my training contract. I was like, I was doing a due diligence report and I was just like, this is impossible that we cannot run the documents through an AI and for them to tell us what, which, where the clauses are and we're manually looking for these clauses. But then the times have evolved such that now AI technology is very advanced. A lot of the technologies are plug and play. There is this new thing called no code automation, no code coding. So that is something that has helped legal innovation because no longer do you have to spend 50 million to go and figure out something. You can just plug and play these solutions and just to sort of like where the the party had is, sort of like us working with IMB, DM in law.

There was a digital plan, sort of like roadmap for lawyers in Singapore that they were trying to encourage lawyers to look at, which is to say that, hey, there are some legal tech solutions, which we think are going to be helpful for your law firm maybe consider using them. So I think this evolution of, you know, both technology being more plug and play. As well as them, you know, partners being more open to it because it's that simple to use. It's not so complicated. It's not going to cost me so much money. These two changes, I think it's going to accelerate the development of legal tech adoption in the industries.

(22:53) Rachel Wong:

The second group category I would say is the guys who are VC backed. Your typical startups which have backings through VC,, founders. I think the main issue was, in the past, these companies sort of like didn't really understand the problem that lawyers are facing. So it's probably set up by a person who was in practice for two to three years. And then he's like, oh, she's like, you know, I do not want to deal with this nonsense anymore. I'm going to solve this problem. But sometimes it takes a bit more time to fully digest and understand the problem before you try to solve that problem. So what happened was that they propose solutions, which kind of work, but didn't solve the problem enough to incentivize people to use it. Yeah, so the solution they provided were just too minuscule in improving our lives that there was no incentive to adopt it. But I do think that's changing as well. I think people are starting to understand and respect that, hey, if you want to solve someone's problem, you need to sit in their shoes and look at world from their eyes. And that's evolving as well.

And then, I guess the third category, sort of like evolution is the law firms themselves, not even setting up a innovation hub or anything, them trying to evolve and being a new type of law firm. And that's what I see in Australia. So, in Australia, we have law firms who are trying to crack at things from a different perspective. They're trying to be more than a law firm sometimes. And these things, the legal industry as a start up industry has traditionally been one of the slowest in my opinion. I think that will change in the coming years because of all these changes.

(24:23) Jeremy Au:

Yeah, it's interesting. There's a, you know, local startup called Tesseract, right? And so the founder, she was previously on the BRAVE podcast that we'll link to here. And she was talking a little bit about the legal tech side and some of these challenges. And the other side of it that I noticed is that you're right. I have met law firms and I've met innovation, team hubs, and it's interesting because I was like, what's your job? And the job is like, we have to help our lawyers solve solutions, I guess, vet them, trial them, tcascade hem. So I thought it was quite interesting. I felt like it was one of the few times I met somebody whose job was just like very specific, right? Because normally I'm just saying like, it's like you and I, our job is we have to do the work and we innovate at the same time. We don't split it up into two different people. I mean, I always joke, tell and tell people it's like, if one person's job is innovation, that means your other person's job is conservatism. Right. You know.

(25:10) Rachel Wong:

I think you hit the nail on the head. I think the innovation hubs in the law firms, most of the time it's yeah, they're trying to persuade the general crowd to use it, so the mindset has to be right. The mindset has to be one of like, Hey, I want to try. , But the other problem is when you're really in practice you're kind of running against time all the time. Like, the client wants something yesterday, every day, so you don't really have that space or time to innovate or even try out the new tools so I think that's the struggle but i'm sure they'll figure out ways to overcome these struggles.

(25:37) Jeremy Au:

On that note, I know that you are going to be launching a new product soon. So I'd love to hear what you're planning to do.

(25:44) Rachel Wong:

Thank you, the new product is called FD Lite. I mean just to explain the genesis of how this terminology came about is Founder's Doc, which is FD, light, which is a lighter version of it. The whole idea is to lower the price point for access to legal documents and to make these documents more accessible to more customers rather than, you know, the guys who can afford to pay high amounts of legal fees.

So in that sense, from that sense, we are serving a new market, i. e. people with what traditionally not going to be serviced by any lawyer. Now they have the ability to maybe consider using this as a potential solution. I think the first game changer about FD Lite is, when you book a Grab car, you can choose which grab car you want to have. You can choose just Grab, Grab share or premium Grab. And now you can do the same thing with our new product line, which is you can go out to an employment agreement, for example, and say, hey, I want something super, super basic minimal legal coverage, and I don't have a lot of money to spare, or I just do not like long documents. I want to buy the most basic document.

And then our second range is the standard, which is what we think is, you know, what people would expect from a document. So for example, for employment agreements, you would expect maybe confidentiality, or you would expect that, you know, the IP assigned to the company, that kind of stuff.

And the third is the complex documents. So that one's like maximum legal coverage, the most expensive one. But, you know, maybe if the founder feels super in Singapore, they want that document. So that's the first innovation that we've made, which is like, Hey. We are not going to set that price point for you anymore, you can choose from these three price points that that, that we offer and, and you get what you pay for, which is, you know, up to you.

The second thing that we're changing is we have many of clauses. So, To the maximum extent that we can try to do this, what we do is for the basic, complex, and standard documents, we lay out the clauses, which the key clauses that's going to be set out in the document. So, when you click basic, it's not going to be like an opaque box. You're going to be looking at that basic document and you'd be like, okay, this is what I have now. Actually, I have a big fear this guy that I'm employing, I feel like you know, he's not telling me like enough things. I feel like he probably has another full time employment contract somewhere else then you say, okay that's the standard or complex document cover non compete, which is what I want then, okay, I'll buy that one. So I think that's the second key distinct feature that we have, which is like, you know, the menu of clauses is laid out there for you.

And I think the third distinct feature is currently most of the templates are factual questionnaires, i. e., when you produce a document, the document is more or less drafted, and what they are asking you is things like what's your name what's the starting date, these are all factual questions. Currently, what we're trying to do is we're asking legal questions to figure out which document on our back end is the best for you. So to just use an example, let's use the example of a share vesting letter. For share vesting letter it can kind of work in, in three ways, broadly speaking. The first thing is you issue the shares first, and then those shares that you issue is subject to reverse.

The second way is you issue the shares only after the milestones are met, which is, you know, maybe like, your advisor, 5 percent shares, you don't want to issue it so fast. He has to give you the advice first thing you issue it to him.

And then the third kind is a bit of a complex one, but it's it's vesting plus exit event needs to occur. So these three documents, right, all these three scenarios, we all call it share vesting lesser, but actually the clauses that go inside it will be different because of the mechanism that is behind it.

So then we're going to ask them the question like, Hey, how are these shares? What's the method of vesting that you envisage for your grantee? And then from there we produce, give them the template that we think is a suitable one. So within the fine frameworks of what we think is right, we ask those legal questions and then we go down to the basics, which is what we try our really really hardest best to do, which is, a . we try to dumb down the terminologies. Even with our best efforts, my friends are still telling me that my videos are too technical.

I try my best to like, lay, like, like, speak in simple English, but sometimes it's a little bit. I need to improve. And then the second thing that we still try to do our best is we try to create like a good consumer experience, which is, we are not gonna try to bombard them with a hundred questions. We just boiled down to the key questions, which we think is going to influence the template that we think we should provide them. And from that perspective you know, hope to just get them a document that is 75 percent right. If you want 100 percent right document, you will have to then go find a lawyer. So that is the thing that we're building at the moment and we're hoping to launch it this year.

(30:18) Jeremy Au:

Amazing. And last question here is who is the best type of customer you think for this kind of product? What kind of attributes?

(30:25) Rachel Wong:

Yes I think the key people we're trying to reach out to were the guys who were like raising below a million. Because when you're raising like 500, 000, you can't actually justify five or 10, 000 in legal fees and every penny counts. So that was the first key market I wanted to reach out to, which is, you know, people who were a bit more tight on cash. But then, having this evolution also allows anyone to use it. So you could be, have raised 3 million and you just want a document like maybe let's go for something a bit less complicated. Maybe your intern agreement, right? I want an intern agreement. I raised 2 million, but I don't want to find a lawyer for that.

Then you can go to the platform, you can kind of use it to generate an intern agreement that you think is suitable for your company. So. I think it increases transparency and it definitely gives consumers a bit more choice. But in startup terms, we call this MVP, we're a proof of concept stage.

So we'll launch it, we'll see how the market responds, whether they like it or not. And then, you know, if they do like it, then we're going to do more of these FD light products. If they don't like it, then we'll just go for more holidays. So that's the other bright side.

(31:29) Jeremy Au:

Great. Where do we find this place? What's the hyperlink?

(31:32) Rachel Wong:

Yeah, yeah. So on the founders doc website, we do have a link that goes to FD Lite. But once we launch it, it will be on fdlite.sg. So these templates are just only for Singapore companies at the moment.

(31:46) Jeremy Au:

Awesome, we can hyperlink that the transcript below as well. So, on that note I'd love to summarize the three big takeaways I got from this. First of all, thank you so much for sharing about the technology that is reshaping how lawyers are working with clients, right? So, I think we talked about how, for example, ChatGPT is changing the way that people are negotiating and discussing documents, but also changing how lawyers are drafting and changing these documents.

Secondly, thanks for talking about the bastardization of the YC document. I guess talking about it from both sides, right? Like why it works from an economic perspective and why it works from a control rights perspective. Also taking the prism from the founder's perspective versus the angel investor perspective versus the VC perspective.

Lastly, thanks so much for sharing about FD Lite. I think ties very nicely into what you're observing that's happening across. the region in terms of the goal requirements. And it's amazing that you're building out FT light for founders who are more lightweight approach, especially for the first million dollars of funds being raised.

On that note, thank you so much, Rachel, for sharing your perspective.

(32:40) Rachel Wong:

Thank you for having me and it's been a wonderful session. Love to see more of your videos and remember to subscribe to BRAVE Podcast.