AI Law Firm Hits $100M But…

In this episode, Neil and Eric break down the rise of AI hype versus real usage, using Harvey AI, Microsoft Copilot, and ZoomInfo as case studies. They discuss $8B AI valuations, low user adoption, retention challenges, and why paying for AI does not equal value. The conversation covers venture capital incentives, SaaS economics, AI theater, and what actually drives ROI in sales, marketing, and engineering. The key question: are companies buying AI for results or optics, and when will real value show up? Key Takeaways: -AI revenue ≠ AI usage -Valuations are outpacing adoption -Monthly recurring value matters more than ARR Chapters: (00:00) Harvey AI valuation surge (01:06) AI usage vs paid licenses (02:20) VC incentives vs PE reality (04:06) Retention and adoption issues (06:22) Copilot enterprise usage data (07:58) AI impact on sales teams (10:01) ZoomInfo AI ROI breakdown (16:25) AI SEO vs traditional SEO

• 0:00Speaker 00

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• 0:38Speaker 01

  Uh huh. They raised a lot of money.

• 0:40Speaker 00

  If you want to check how much they raised real quick, I'm going to tell you something. So Harvey just hit $100 million ARR, okay, $8 billion valuation. 50 to top, M Law 100 as customers. I guess that's the top law firms.

• 0:53Speaker 01

  Their last round, October 29, 2025, 150 million at an $8 billion valuation.

• 0:59Speaker 00

  Okay, so Akash Gupta, and then who backed them, by the way?

• 1:04Speaker 01

  I don't know. And before that, they raised $300 million at an $8 billion valuation. I think a lot of the who's who is investors in it. Sequoia led the $3 billion, or $300 million round.

• 1:16Speaker 00

  Andreessen, Kleiner Perkins?

• 1:18Speaker 01

  Probably in it. Yeah, I can't see all of them, but.

• 1:20Speaker 00

  I see. Kotu's in there too. Yeah, Andreessen's in there, Kleiner Perkins, Sequoia, Kotu, and EQT.

• 1:25Speaker 01

  Elad Gil, he's in a lot of popular companies as well.

• 1:28Speaker 00

  Yep. Cool. So the reason I'm calling this out, Akash Gupta tweeted this out. So again, 100 million in ARR, $8 billion valuation, 50 to top, M Law 100 as customers. But here's a problem. So you know Microsoft Copilot? When you look at usage for Copilot, you look at Office 365, so 400 million users have paid for Copilot subscriptions two years after launch. Less than 2% of people of those users actually use it. And this is the same thing that you're kind of seeing with Harvey too. People aren't really using it, they're just paying for it. And I think what the point here is, how is Harvey going to grow into it? Because you have a lot of people that are just paying for this stuff and not using it. And I remember maybe two weeks ago or so, someone was talking about how they bought these like, this kind of.

• 2:10Speaker 00

  Satire. It was like, um, I'm a CMO and, uh, you know, I bought two thousand, uh, Microsoft team subscriptions, um, or like AI subscriptions to make it seem like I'm doing something with AI. And then when someone asked me, I just say, hey, progress is moving up and into right. We're, we're looking at usage, right? And so it's a lot of, uh, I almost want to say it's almost theater. Um, it's almost AI theater. That's what I would say it is to, to make people feel like they're doing something with it.

• 2:33Speaker 01

  Yeah. And I'm not saying Harvey's a bad company. It's probably a great company, but you're not worth eight billion dollars when you do a hundred million in revenue, even if you're doubling every year. It's just, it's, it's too much. Even if you're tripling every year, your valuation is just astronomically high. Because a hundred million in revenue does not mean a hundred million in profit. And I was watching, um, uh, Orlando Bravo, I believe his last name is from Tomo Bravo. Uh, the big private equity fund that gobbles up most, uh, SaaS companies. Like, look, the problem with AI is the valuations. It's not that these companies are bad. It's like, if you have a 10 billion dollar valuation and you have a hundred million or 50 million in revenue, he's like, you know how much more revenue you had to add to get to that 10 billion number?

• 3:15Speaker 01

  He's like, it's just really unrealistic. And he's like, people are just overpaying for this stuff. And I, and, and I think it works for venture capital. I'm not trying to bet against the Sequoias or the COTUS. Because they can make a lot of bets in their fund and they can have one or two winners and that's all they need to make a crap load of money. It's just like you invest in one Google, one OpenAI or one, um, whatever it may be, right? Uh, WhatsApp over there, right? And it's like, they're fund makers. Not only do they make funds, they return so much. Everyone becomes rich off of it. And then the other deals, whether they win or lose, it doesn't matter. And that's a model of venture. But, um, the Tomo Bravas of the world play a different game in which they need most of their deals to work out because they're buying,

• 4:00Speaker 01

  you know, based off of revenue and profit and they're allocating large amounts of money and they're doing later stage. So.

• 4:06Speaker 00

  I'm gonna read some of the numbers here while you cough. So, uh, so I was coughing right before. So, um, if we look at trajectory for, for these guys over here. Okay, so $5 million seed round in November 2022. Okay. And then it rolled it out to 3,500 lawyers by early 2023. Then $21 million Series A, then $80 million Series B, then 300 million Series D at a $3 billion valuation. That was this year in February. Then the $300 million Series E at $5 billion four months later, and then 160 million more at $8 billion in December. So $760 million raised in 2025 alone. Now, a former Harvey employee claims that retention hovered around 35%. Um, and then you have, um, on our, so Reddit,

• 4:48Speaker 00

  um, r/legotech practitioners report that usage concentrates among junior lawyers and return use is low. A Harvard Business School case study from March 2025 explicitly states that while Harvey had successfully focused on aggressive customer acquisition, retention was now the key challenge. And so all that to say is I hope it works out for them. I think they're smart people. They've got, they've got the runway to figure it out. But I, I just, I, I feel like we're seeing more and more of this happening with, whether it's like Copilot or Harvey or something like that. You want to make sure whatever it is that you're building with AI. Someone earlier asked us like what we're doing with AI. You want to make sure it's sticky and people are coming back to you. So that's the name of the game. It's not monthly recurring revenue. It's almost monthly recurring value.

• 5:26Speaker 01

  Yeah, wha- what do you mean, um, by Copilot? What were the stats again from Copilot? Cause it's included in your Office subscription, right? Or your Microsoft subscription?

• 5:36Speaker 00

  Yeah, so what I'm seeing here is this. Microsoft cut Copilot sales targets by 50% last month after enterprise customers refused to move beyond pilots. Less than 2% of Office 365's 400 million users have paid Copilot's subscriptions two years after launch.

• 5:49Speaker 01

  So we've tried company-wide a few of these different versions, whether it's, you know, GPT, or you want to use Gemini for your corporation or Copilot. We find a lot of people use them, but not as much as one may think. And I've even went in there with a few of my people. I'm like, why aren't you using it heavily? Let me see what you do on a daily basis. And I told them in advance, this won't, you know, affect how I judge you or anything like that. I'm just trying to understand how people are using it so that way I can get better, uh, penetration throughout the organization. And what I found is when they showed me how they used it, it wasn't bad. It was just, it would create a lot of slop for them. And then they're just like, man, the amount of time it takes to fix it.

• 6:31Speaker 01

  It doesn't mean that it won't eventually penetrate into the corporate world. I just believe the technology isn't there yet where a lot of people can rely on it for majority of their tasks, at least in marketing, right? I'm not saying it won't get there, but that's what it is as of now.

• 6:48Speaker 00

  Yep. So anyway, I mean, I think we're going to see a lot more of this in the interim. Um, I do fully, and I, I think you believe this too, that it will get there. Um, I just think sometimes you don't want to put the cart before the horse. And don't get me wrong, I'm the first one to be extremely excited and optimistic about AI. Neil's a little more pessimistic when it comes to new things, but it's good. It's good to have a balance. So speaking of AI, this, um, I read this, this tweet over here from Jason Lenken. So basically AI infused teams are three times more productive. So Jason Lemkin, okay, five things every CRO, CMO should know. Um, he did a, I guess, so top five. AI agents are better than middle of the pack SDRs now, not the best, but better than average. That's enough to change everything. Number two, deploying the first agent is your job. If you haven't trained one yourself, you're becoming obsolete.

• 7:32Speaker 00

  Number three, pick two vendors, not 10. Each agent takes 30 days to train. Bake offs of eight to 10 are impossible. Number four, don't sign until you've talked to your forward deployed engineer. Deployment support greater than features. What a forward deployed engineer means is they just have an engineer that's helping you with setup and onboarding. Uh, and number five is AI infused teams are now three times more productive. Kyle's team at Owner, I think it's Owner.com is proof. Three million dollar quotas now. And so I'm curious from, from your side right now, um, what are you testing with new sales stuff? So I'll give you an example. I'll, I'll start from our end. So we use, um, we use like a blue texting link. You know how when you get a text on iPhone, it's, it's blue, right? So we have, uh, we use, we use a tool called link, L I N K, L I N Q.

• 8:14Speaker 00

  And our response rates on that are 70%, uh, I think it's not even higher. So imagine you have a lead come in and they get a text to their phone and it looks like an I, iPhone. We have people, prospects that actually thank us for texting them because they believe it's real, right? So that's one example. And then we're also looking at what other, we built some agentic workflows internally. We use to quickly qualify people and move them along and even visitors too. I think like Salesforce just acquired qualified GTM or something like that, like earlier this week. And that's one of those agents that will scan your entire website, look for ICP fit and try to nurture people, even though they haven't raised their hand. So what are you guys doing around that right now?

• 8:53Speaker 01

  Sure. So a lot of the stuff you're talking about, like sending text messages, emails, we were already doing beforehand. What AI has done is just help make the content better and more personalized at a faster rate.

• 9:05Speaker 01

  I went over some of these numbers with one of our divisions and one of our divisions in the United States saw around a 13 to 14% increase in sales in revenue per rep from AI. We haven't seen what, or maybe I'm misunderstanding what Jason Lemkin, I believe his last name is, is saying, in which people are getting three X more efficient. We're not, we are seeing more efficiencies. We're seeing more revenue. He's not, he didn't claim that people are seeing three X more dollar value. It just sounds like people are able to do more. We haven't seen like 20, 30, 40% lifts in revenue per sales rep because of AI yet, at least.

• 9:47Speaker 00

  So let me frictionless growth marketing hosted by Sonya Thompson is brought to you by the HubSpot Podcast Network, the audio destination for business professionals. Frictionless growth marketing hosted by Sonya Thompson shows how modern brands grow by removing the friction in their marketing and customer experience that pushes customers away every single day, often without leaders even realizing it. Each episode delivers practical insights, real brand examples and conversations with marketing leaders, showing brands how to win with the new rules of growth, identity-driven marketing, cultural relevance and frictionless customer experiences. Listen to frictionless growth marketing wherever you get your podcasts. Let me show you this. Zoom info is, I want, maybe. There's two Zoom, two Zoom info topics this week because I think they're suing Apollo,

• 10:29Speaker 00

  which is one of their competitors. We can talk about that, but I also want to bring up this piece over here.

• 10:33Speaker 01

  Other to Zoom?

• 10:35Speaker 00

  Zoom info.

• 10:35Speaker 01

  Oh, Zoom info. I thought you meant Zoom, the.

• 10:39Speaker 00

  Yeah, yeah, yeah. The sharing.

• 10:41Speaker 01

  Yeah, the video.

• 10:43Speaker 00

  Yeah, yeah. Okay, so Henry here, who's the founder of Zoom Info. So last quarter, we spent about 1.4 million dollars on AI tokens, an all time high, and the ROI wasn't what we expected. So basically, he spends 1.4 million on tokens and he's revealing what the, the sales ROI is, okay? So here's where the spend went and here's where it actually moved a needle. So he actually, I don't know. This is like a fake invoice due made by like ChatGPT because why would you have it all in one invoice? But anyway, I digress. So he says, number one use case for the 1.4 million in spend on AI. It's telling the reps who to call today and why. So we're using AI to sift through millions of signals and tell reps who to talk to today and why. The signals that we found matter. Job changes, so new decision makers equals new opportunities.

• 11:27Speaker 00

  Buying committee changes at intent signals, active web research and pricing page visits. The big ROI drivers are helping our customers with daily prioritizations so that they don't have to go fishing for actionable info. So at Zoom Info, we've seen a 25 to 32% increase in meeting quality and op creation when AEs are sourcing using our AI tools. Win rates also jumped from 16 to 20% to 30%. What do you think about that?

• 11:48Speaker 01

  That's not bad if it's holding true, but he's saying his tools. So he's trying to pitch his tools to the market.

• 11:55Speaker 00

  Yep.

• 11:55Speaker 01

  I'm curious what other people are really seeing versus a company talking about the results from their product. Because I think the results are going to be more better when he types it out versus what people see.

• 12:08Speaker 00

  Fair point. Number two, writing outreach that doesn't sound automated. Fair point. These things would all be built into Zoom Info. So we're moving from 20 segments of 1,000 to 20,000 segments of one. Not quote unquote VP of IT at Enterprise Insurance Messaging, but John at State Farm, who we talked to last year, who competes with three of our customers with context pulled in automatically. Customer ROI here ultimately comes from better response rates and higher close rates by being more relevant. Buyers care when you show you care. I would say the things we're talking about here, Neil, with what he's talking about, is how do you apply this for your own company and maybe not look at his numbers as much? Because to Neil's point, his numbers are for his own product.

• 12:44Speaker 01

  So, so let me say this, okay? This is just my gut inclination. I have no data on this.

• 12:51Speaker 01

  You know, and when you look at Zoom info, if their air product was helping people close twenty, thirty percent more, do you think their growth in their SaaS product would be crazy because people are just generating a lot more revenue?

• 13:03Speaker 00

  Absolutely.

• 13:04Speaker 01

  Okay, when I look at their quarterly revenue from September twenty twenty five over September twenty twenty four, they had four point seven four percent growth. Um, June twenty twenty five over the previous year was five point two five. Um, March was negative growth, negative one point two four, December twenty twenty four was negative two point three one. They're close to, if you average it out, close to just being flat.

• 13:29Speaker 00

  You know what's interesting? So I think this is very, the very beginning for them. I think maybe let's look at this. I, I think last week's video, um, I think we'll see a lot of this AI ROI start to come into place, maybe twenty twenty seven will be a lot more pronounced. So I think the jury's still out because it sounds like they're just getting into this because I'm looking at number three over here and this is them using it internally. So turning sales calls into usable data and you and I already do this, but every sales call, so ours and customers is recording using Chorus and becomes structured data, objection patterns, competitor mentions, deal risk, coaching moments. We found the benefits of this are huge. Twenty five to thirty percent faster ramp time for new reps and ten to fifteen percent larger deal sizes through better discovery and value articulation. The average rep sells more like the best rep.

• 14:12Speaker 00

  And again, guys, I think in my mind, I just look at this top four as how can you apply this for yourself? I think that's the most practical thing. Go ahead.

• 14:19Speaker 01

  Well, I'm just looking at their stock and when I look at their twenty three revenue numbers is one point two four billion, twenty twenty four was one point two one, so a little bit of a decline. Twenty twenty five is closer to the twenty twenty three numbers. Now the year's not done, but um, it looks like they'll be, you know, closer to twenty twenty three numbers by, I call it a few percentage points. That's my rough guess.

• 14:40Speaker 00

  What if they just started on this, this journey?

• 14:42Speaker 01

  It, it could be, but I just don't see it. They would be pushing it really hard to the public markets and creating this narrative and they would update their revenue forecasts. Because when, when you're a publicly traded company, you let people, you, you give them hints or you let the analysts know like what range you think your revenue is going to be in the next, uh, you know, next quarter, the quarter after. And that starts getting incorporated into the stock price.

• 15:11Speaker 00

  Okay, last part, last point over here. So I think jury's out. I think we'll see how things turn out in 2027. We'll come back to this, hopefully. Last part here is speeding up low value engineering work. So every engineer at ZoomInfo has Intellige and VS Code with client. AI handles the unglamorous stuff. So boilerplate, boilerplate code, refactors and test coverage. We've seen 25 to 30% faster execution on these routine tasks, which frees senior engineers to focus on system design and real product innovation. Our biggest lesson so far has been that if your data's foundation is garbage, AI just helps you move faster in the wrong direction. You won't get AI working quote unquote until you have contextual customer prospect data centralized and you can actually build on top of it. So yeah, here we go.

• 15:53Speaker 00

  We're still early and we're trying to build a lot of things, but these have been the highest ROI drivers by a mile. For a lot of you, you've listened to this stuff on this podcast already, but I think it's a good reminder. These things are worth testing. That's my key takeaway from, from this segment.

• 16:07Speaker 01

  Yeah, and maybe ZoomInfo is only doing it with one division of their business because they have many divisions. And if it works so well, they'll roll it out and then they'll start seeing more revenue gains. But I'm with Eric. And when I say I'm with Eric, I'm with Eric on the notion that most businesses are going to know better by sometime in 2027. What AI is really doing for them from a cost savings and revenue generation aspect. I think we just need a little bit more time. And on a random side note, you know, Christian's the one who got ZoomInfo their money.

• 16:37Speaker 00

  Who's Christian?

• 16:38Speaker 01

  Christian Skiller from Cascadia, the investment.

• 16:42Speaker 00

  Is that the one that we met at dinner?

• 16:45Speaker 00

  What am I? I don't know. I don't know who you're talking about.

• 16:47Speaker 01

  No, that's another guy from, he's a venture capitalist. I introduced you to Christian a long time ago. He's an investment banker, but he's the one who got them their money.

• 16:53Speaker 00

  Oh, cool. Nice.

• 16:54Speaker 01

  And it wasn't ZoomInfo. It was like discover.org or something like that. They bought it and then they changed the name because ZoomInfo had a stronger name in the market.

• 17:01Speaker 00

  Yeah, yeah, makes sense. Okay, so.

• 17:06Speaker 00

  Did you, did you see the Google rep that said AI SEO is basically the same thing as traditional SEO?

• 17:12Speaker 01

  Uh, no, but I kinda agree. There are some nuances. But even if there's nuances, it doesn't matter. It's like saying SEO isn't the same five years ago as it is today for Google. Because of course, algorithms changing, you have to adapt. It's the same thing. SEO is very similar. It's just you have to adapt and pivot.

• 17:29Speaker 00

  Yep. So there's not much for us to add here, but I, I think I got this from, um, so Rusty Brick, you know Rusty Brick, um, was it, was this, what's this like?

• 17:37Speaker 01

  Barry Schwartz, Search Engine Roundtable.

• 17:40Speaker 00

  Search Engine Roundtable, exactly. So the tweet is now deleted, but he actually showed a picture of, um, a guy talking at, um, I think Nick is one of the Google reps, um, and he basically said, look, it is SEO on optimizing for AI search. Nick Fox said, it is the same as what you do for optimizing for web search and Google search. It is SEO. Build great sites and great content, he said. Nick Fox said, the way to optimize to do well in Google's AI experience is very similar. I would say the same as how you do to perform well in traditional search. And it really does come down to build a great site, uh, build great content. And so to your point, I would say there's nuances. Um, every two, three years or so, SEO becomes different and there's like a big thing that happens. And, but that, that's, that's no different than the paid channels. That's no different than a lot of these channels.

• 18:24Speaker 01

  Yes, cuz you could say, oh, paid advertising is not the same. It isn't the same. Now you spend money on Instagram to sell products where they purchase on Instagram without ever leaving, right? You weren't doing that years ago. Does that mean Instagram is no longer, it's, it's no longer ads? It still is. It's like SEO is. It's just adapted and the tactics and the strategies you have to do, adapt because there's multiple platforms and algorithms change.

• 18:46Speaker 00

  Yep. And live shopping, okay. Oh, short form came out. Okay. Now Instagram's different, right? So these things always evolve. I think it's the people that complain that those are usually the ones that don't want to evolve. So, okay, guys, that's it for today. Uh, Neil came in sick. Thank you, Neil, for doing this sick and we'll see you guys next week. Um, hopefully we'll be in person. So, goodbye.