Why Vertical LLM Agents Are The New $1 Billion SaaS Opportunities

This is our first ever experience talking to this godlike feeling, you know, AI that was all of a sudden doing these tasks that would take me, when I practiced, like a whole day, and it's being done in a minute and a half. The whole company, all 120 of us did not sleep for those, you know, months before GPT-4. We felt like we had this amazing opportunity to run far ahead of the market.

That's why you're the first man on the moon.

Yeah. (laughs)

Welcome back to another episode of The Light Cone. I'm Gary. This is Jared and Diana. Harj is out, but he'll be back on the next one. And today, we have a very special guest, Jake Heller of Casetext. I think of Jake as a little bit like one of the first people on the surface of the moon. He created, uh, Casetext more than, I think, 11, 12 years ago, actually. And in the first 10 years, you went from zero to $100 million valuation, and then in a matter of two months after the release of GPT-4, that valuation went to a liquid exit to Thomson Reuters for $650 million. So you have a lot of lessons about how to create real value from really, like large language models. I think you were of, um, you know, our friends in YC, one of the first people to actually realize this is a sea change and revolution. And not only that, we're gonna bet the company on it, and you were super right. So welcome, Jake.

Happy to be here.

One of the cool things I think about Jake's story and reason why we wanted to bring him on today is that if you just look at the companies that good founders are starting now, it's a lot of vertical AI agents. I mean, I was trying to count the ones in S24. We have l- literally dozens of the YC companies in the last batch were building vertical-specific AI agents, and I think Jake is the founder who is currently running the most successful vertical AI agent. It's by far the largest acquisition, and it's actually deployed at scale in a lot of mission-critical situations. And the inspiration for this was, uh, we hosted this retreat a few months ago, and Jake gave an incredible talk about how he built it, and we thought that it'd be super useful for people who watched The Light Cone who are interested in this area to hear directly from one of the most successful builders in this area, how he did it. So how did you do it?

(laughs) Well, first of all, like, like a lot of these things, um, there's a certain amount of luck. Over the course of our decade-long, uh, journey, we started investing very deeply in AI, uh, and natural language processing, and we, we became close with a number of different research labs, uh, including some of the folks at OpenAI. And when it came time for them to start testing early versions, uh, we didn't realize it was GPT-4 at the time, but what was, what was GPT-4, we got a very early kind of like view of it. And so, you know, months before the public release of GPT-4, you know, we, as a company, were all under NDA, all working on this thing. And I- I'll never forget the first time I saw it, it took maybe 48 hours for us to decide to take every single person at the company and shift what they're working on from w- the projects we were then working on at the time to 100% of the company all working on building this new product we call CoCounsel based on the GPT-4 technology.