Transcript Synced · select any line to jump ▾ 0:00 Speaker: Imagine if everyone thought you were too young to be taken seriously. You're in your early 20s, your co-founder is 19, and you're selling AI governance to managing partners with decades of experience. 0:11 Nam Nguyen: We had firms to tell us, come back in like 5 years, come back when you are Microsoft-sized. You know, we have to remove imagination from the equation, less vision, but actually more of the product. If someone made a remark during our demo about the product features on the first call, like, can we build it and integrate it and show that to them in the next day? 0:29 Speaker: A year later, YC-backed Form million raised and serving some of the biggest law firms in the world. 0:35 Thea Ngo: What do you think is one of the hardest days that you remember? 0:38 Nam Nguyen: It's like January in Poland. We're just getting a lot of nos back to back. 0:42 Thea Ngo: Pull back the curtains and show us what it's like raising as one of the hottest governance startups in San Francisco. 0:48 Nam Nguyen: My co-founder started taking calls on a Sunday night. Our round was essentially filled by that Tuesday night. Hi, I'm Nam, founder of Truth Systems, and this is Founders in Motion. 1:07 Speaker: Quick thing before we get started. We have a huge goal this year of hitting 10,000 subscribers. Yes, it's ambitious, but it lets us help more people build really great companies. So if you enjoy the content, learn something new, the best way to support us is by subscribing. Okay, let's get back to the video. 1:26 Thea Ngo: Truth System Started as a side project while you were at the Stanford lab, and now it's a standalone company, YC-backed, $4 million raised. What was the initial glimmer of the idea back then? What has the company become today? 1:41 Nam Nguyen: It was quite obvious to us that the biggest bottleneck for AI adoption was not going to be about capability, right? It was going to be trust. First couple versions, we actually tried to build AI guardrails, just like or packaged to developer tools and then tried them to even sell them to legal tech vendors. And I think on paper it made sense, but in reality, like no one was actually buying the product. We realized that the pain wasn't really with the vendors. It was actually with the law firms itself. For us, it was about like flipping the model around. And instead of like being just a point solutions, like being a lightweight vendor agnostic layer, now packaged as a browser extension that sits above and monitor all these different tools that the law firms have, it really became, you know, what Charter is today, which gives firms a single source of truth when it comes to AI compliance. And I think it's about turning from just trust us, but it's really also about making trust observable as well. So that's kind of how like the glimpse became iterable and ended up to the version of it today. 2:51 Thea Ngo: Just the entire industry as a whole, like AI security and AI governance have gotten a lot of interest in the last year. because now you have agents calling agents running like mega multi-agent schemes and how do you manage it? But also once you've managed it, you can unlock other use cases. 3:09 Nam Nguyen: Definitely. I think, you know, compared to where it was when we began and where it is now, I think to your point of like just the sprawl of agents and now that people really do see the values of LLMs in production, right? Like the question is no longer about productivity, it's really about what should it do and how, like, what kind of data should it be accessing? What we are trying to do is allowing them to add guardrails from a user behavior level perspective, right? So real-time inference, being able to do, you know, real-time classifications and interception. 3:47 Thea Ngo: You made a very intentional decision to start with lawyers. So lawyers are, in my experience, a little bit risk-averse. highly regulated industry and already being targeted by quite heavily funded players like Legora and Harvey of the world. Why lawyers? 4:09 Nam Nguyen: Why law to us is both such a natural and inevitable moment. Having our background doing research at a law school, like we came in, you know, having relationships and credibility already and trust was built organically. Like legal right now as a You know, industry, it's low leverage and entirely people dependent professional service. Managing partners, right? Saw these tools read and write nearly as well as junior associates do. At that point, the questions for them stopped being like, okay, like, does it make sense for us to buy technology anymore? But it became like, okay, if we don't disrupt ourselves, like, will we get cannibalized permanently? And I think that's why AI adoptions inside law firms is happening so far fast in this kind of market where speed without trust would break the system. It's kind of like perfect. for a company like ours to come in. 5:00 Thea Ngo: Here's what I'm super curious about. So you are in your early 20s and your co-founder is 19. So when you started pitching this concept to managing partners at major law firms, what was it like walking into those rooms, uh, as a young founder selling governance to people who spent decades in the industry? 5:22 Nam Nguyen: It was definitely like super, super intimidating. I mean, we had firms to tell us, come back in like 5 years. come back when you are Microsoft-sized. When you're that young, actually you don't get a lot of benefit from the imagination. For us, we realized that, you know, we have to remove imagination from the equation, less vision, but actually more of the product, right? 5:45 Speaker: Yeah. 5:45 Nam Nguyen: So what that meant in practice was just like shipping faster. One of the things that when you're young and you're energetic and you have the capability is that like the number one priority is to actually put the real software in their hands, right? So one of the things that we index on, you know, was that if someone made a remark during our demo about the product features on the first call, like, can we build it and integrate it and show that to them in the next day? That's kind of like how we earned a shot. It wasn't like persuasion, it wasn't, it was really just like relentless execution. So I think that's how we kind of allow the question to stop being, okay, are you credible? Are you old enough? But it kind of became like, okay, why shouldn't we try this? 6:27 Thea Ngo: So what were those first few kind of corporate pitches? 6:31 Nam Nguyen: Like, oh my God, it was, it was definitely rough. I'll say that, like, what we kind of learned was that the best pitches wasn't when we talked the whole time. Like, let's really measure the pain here and let's really like think through how can we problem solve around your situation the best that we could. 6:51 Thea Ngo: What was the first law firm that said yes to you guys? 6:54 Nam Nguyen: We definitely got a lot of warm intros from our research. So, you know, having that pipeline was definitely helpful, but our first real customer actually came from a cold comment on LinkedIn. I think one day we saw like a director of a law firm posted on LinkedIn and I think she was like very openly frustrated about the lack of guardrails and trust in AI. And I was like, hey, we know what people are too, you know? But obviously, you know, just really not pitching, but just kind of engaging with her content. We were able to score a conversation and it kind of turned into a 6-month sprint where every day we met with their team and we have to prove somewhere along the line that we were useful. And like by the end of that year was invited to their annual dinner. And you know, that's how you know, like you, you crossed the trust line. Yeah. 7:41 Thea Ngo: You've like entered the family. 7:43 Nam Nguyen: Yeah. Yes, exactly. 7:46 Thea Ngo: One point that I thought was super interesting when you mentioned with the internet, everyone is just one or two connections away. Like it's really not that hard to get in touch with people. And it's more about like, how do you intentionally cultivate every single conversation? Young founders have the advantage of using social media to like stalk potential law firms. And then cold outbound them and then convert them as a customer. So that's incredible. Um, okay, so maybe let's talk about the product itself. So you say True Systems can monitor and flag non-compliance in real time directly in your browser. So from an end user perspective, what does this look like on a day-to-day basis? 8:27 Nam Nguyen: We're really just sitting in the background and the only time you would notice that, you know, Charter comes up is when you might potentially be violating firm policies. But from the admin perspective— 8:39 Thea Ngo: So we don't want to see you come up on the browser. 8:41 Nam Nguyen: Exactly, exactly, exactly, right? Like, you know, we only come up like as a last resort, kind of reminding like, hey, like you could be potentially doing something wrong. Like, are you sure you want to continue? From the admin perspective, it was really about giving them that layer of observability. You know, having that detailed understanding of, you know, AI usage down to the logs level for every client and matter their attorney was working on. And then having that kind of flexibility to update and enforce policy comes down to real-time inferences. And like a lot of the work that we had to do in the early days doing guardrails was actually, okay, even if you're uploading a file, like 500 pages, can we make sure that that is, you know, being done and scanned through within a couple seconds? Some of the stuff that we're experimenting and even doing is like, Okay, can we distill them into smaller models to allow them to run in real time? Right. So being at the forefront and being kind of like an edge case company allows us to do a lot of cool experimentation from an AI research perspective. And I think that's definitely been one of the most like rewarding, but also like cool things that the team has worked on. 9:50 Thea Ngo: A hot take I have about this whole AI thing is the world is moving towards a lot of niche systems, a lot of niche models, rather than using the generalized LLM for everything. Just given, A, the blown-out in cost, and secondly, just how critical a lot of the applications have become. So did this idea kind of exist before your time at the Stanford Law Lab, or did it really take shape during your time working with Dr. Megan Ma, who's a major figure in like legal AI innovation? 10:23 Nam Nguyen: being surrounded by Megan and, you know, having such like incredible figures supporting the startup, like really surrounding ourselves with people who understood the practice of law is what shaped the trajectory of the team. You know, folks like Megan, but also like other advisors that we have, Nikki Shaver, who ran KM at Paul Hastings at some point, or Tara Waters before that, she ran digital teams at Ashurst, really helped us see how law actually works from day to day. And I think without that grounding, we might have built something perhaps clever, but I don't think it would've been usable or even capable of getting through the doors to work with law firms today. 11:00 Thea Ngo: So it really seems like that research experience helped you in terms of learning more about the problem space and like, how do you build for the problem space? So for someone that's listening, that's really interested in working with an AI research lab, what are some advice you have for getting into those very competitive programs? 11:19 Nam Nguyen: I saw one of your posts earlier about like, okay, like, you know, how do you get started doing whatever you want? And it actually does ring a bell. I didn't have much to my name. You know, I like was studying the discipline, but I think what we really indexed on the team that like, hey, like we were building things that were very related to that, you know, before like building guardrails, showing, you know, Megan, like the suite of stuff that we were doing back then before even joining her labs. So. Yeah, it was definitely a blend. Like we cold email Megan and, you know, by the time we were, by the time she responded, we already had something to show for her. 11:57 Thea Ngo: What I always say is you want to show that you can do the work, but just not for them yet. And then use that and show them the value that you can bring. Don't like cold email in the sense of like, I want 15 minutes to pick your brain because like they don't have 15 minutes for them. for you to pick their brain. They have 15 minutes to review whatever value that you did and then see if they wanna have a conversation with you. So you applied to Y Combinator 4 times in the past, I think you said. So what changed in your application or in you and your founding team that really made this one stick? 12:34 Nam Nguyen: First, like, you know, the conviction of the team, obviously having traction, and I think just kind of like clear vision of where the TAM is. With conviction, you know, it's not just about optimism. Like it's not like, oh, okay, like this is a great idea. I'd love to work on it. 12:48 Speaker: Right? 12:48 Nam Nguyen: Like for us, it was actually moving to Poland for 6 months and going heads down. Like there was no safety net, you know, no plan B. Like we don't know if we'd go back to school or try to raise around. But I think that kind of uncertainty really forced us to decide that, hey, is this something, is this company is something that we believe in? And Once we went all in, everything about the company really sharpened. Most obvious one is obviously traction. For us, it was really just start talking about customers, like how they were using it, how they were trusting us with genuinely high-stakes situation. I think traction really grounded everything. And then I think one of the last part where YC always asks is like, why do you think this would be a billion-dollar company? When you are able to paint that picture where like our company will solve anywhere AI touches sensitive data, like that's the problem space that we want to tackle. I think then you can present it as a billion-dollar opportunity. So in those previous applications, I think we have pieces of those, but finally in the 4th application, I think we had all of them together. And I think that's what finally made it stick. 13:56 Thea Ngo: So I've had a few YC founders on the podcast and they actually all say very different things. You guys had like a product and like certain traction, but there are some teams that like newly formed, only start working on an idea or like we're thinking through a couple ideas. So it really ranges. Okay. So you've also had a pretty intense fundraising sprint. So can you like pull back the curtains and show us what it's like raising as, um, one of the hottest governance startups in San Francisco? 14:30 Nam Nguyen: Previously applying to YC, we, you know, tried to go out and try to raise a pre-seed round as well. And I think before it was like actually very difficult, even for a while, like there was just, it was just not going anywhere. When we were raising at that point, finally, you know, all the 3 components that we were talking early of why YC accepted us, like that were components we knew very clear. So my co-founder started taking calls on a Sunday night and I think Our round was essentially filled by that Tuesday night as well. So I think in total, we were out in the market for around 48 hours for sure. 15:10 Thea Ngo: Must have been like such a weird experience. Like before when you were raising pre-seed, it was like so difficult. And now it's like, wow, like all this interest in me. 15:19 Nam Nguyen: Yeah, this is a very crazy moment for sure. It helped in customer conversation because we can kind of like reaffirm that we are serious company. It's very important to kind of remind ourselves where we actually are with our customers and kind of having them as their, our North Star for sure. When it comes to YC, it kind of becomes like a measurement of like how much could you raise and that, you know, battle could go until the end of the day. And it was for us, like the moment the money hit the bank, we were already on our first fly out to New York to meet with our customers. So I think that was the moment where it felt weird because that's when we know the journey has only began. 15:55 Thea Ngo: I think that's a really grounded way to look at it. And I think that's the way people should What do you think is one assumption that you had about customers, AI, or startup that turned out to be completely wrong? 16:06 Nam Nguyen: It's easy to think that startups usually would win via just relentless execution distribution in terms like compared to incumbents. But what, you know, Claude Code or having those coding tools is built as well as that, like incumbents also shipped a lot faster. Because of these different tools, right? So distribution matters that much more and it does favor the incumbents in the sense that they already have those existing relationships, right? So I think when you think through what long-term moats has been, it can't just be like, oh, okay, we ship faster than everyone. Like everyone ships fast these days. I think it's really about like how much deeper can you dig into the pain and then how much faster and like, like how much harder is those pains to solve and just trying to go for those problem sets instead. 17:04 Thea Ngo: Like distribution, it has kind of become a very important thing. Um, and yeah, like maybe it's even the thing that will keep the ERPs, the kind of gigantic SaaS tools alive because of the hostages that they have within their customer set. I can imagine you've had a lot of hard days, you know, because ups and downs for being a founder. Yeah, yeah, yeah, yeah, yeah, yeah. What do you think is one of the hardest days that you remember or that come to the top of your mind? 17:33 Nam Nguyen: Yeah, as you said, right, I think as a founder, you sign up to get punched in the gut every single day. So I could just end the answer By saying every day is hard, but yeah, I think probably one of the things that I remembered most was, you know, when we first began and it was like January in Poland when we started like fundraising our pre-seed, it was cold and, you know, like the, for most like fundraising outside of San Francisco is just not ideal. I don't really recommend. And, you know, we were just getting a lot of nos back to back. And I think I was coming up very close to the deadline that, you know, my parents like, okay, if there's nothing happened by this point, you should have to go back to school, right? And just kind of like dancing between those uncertainties of like, okay, like, will this startup live to see another day? Like, you know, can we make enough movements with customers in order to go and close those pre-seed rounds? And I think Going through that was definitely very tough, but I think it just kind of fortifies to me like why should you be doing hard things? Like why you should do the things that you do, and and kind of like honing into the fact that like to me like I just enjoy like solving hard problems. I enjoyed the fact that I was in Poland instead of in anywhere in the world trying to solve that problem, and at the end of the day just being able to solve it with people that I really enjoy solving those problems with. And that was my co-founder. So it kind of became the 3 abstractions I gave to myself during every single hard time, just being able to ask myself like, hey, like, you know, are the things I'm doing aligning with my core values? And it kind of fortifies my strength as a founder going through all this hardships that you're getting punched in the gut every day. 19:30 Thea Ngo: Something that I've heard so much from like other founders as well, like right before a moment of aha typically is like one of the biggest, like, almost like depression period of their life where they're like, nothing's moving, like, no, nothing, like, there's no traction, like, I'm finding it hard to close my pre-seed, like, is this startup gonna survive another day? And then you have like your little break and you're like, oh, I'm so relieved, and you're really grateful for it because you went through this like gigantic spike of emotion. There's something fun about being punched in the face like multiple times. A day, you know, like it builds character. 20:07 Nam Nguyen: Yeah. 20:08 Thea Ngo: So a bit of a personal question. True Systems started right after you and your co-founder went through breakups. So if someone is going through a similar personal transition, what would you tell them? 20:22 Nam Nguyen: For context, you know, both me and my co-founders started the company when we just kind of had like a lot of like time on our hand after our long-term relationships. And I think it was very funny, you know, that part of time because it was, you know, like what we were going through built that camaraderie too, right? But I think, you know, for people that were going through major personal life transition, one of the most important things is that it's kind of like your opportunity to turn the lens you have on life back to yourself, right? I think those difficult moments, regardless of those you know, it was a breakup or, you know, investor rejecting or, you know, being in a place where you weren't sure where your future was going to go. It was kind of turning back on yourself and really allowing yourself to express like what matters to me, like what does bring me joy, right? Like, yeah, there is a reason why it's a personal transition because it's unique to you. And I think being able to understand this is who I am and this is what like brings me energy and joy. And just kind of honing in on iterating through that, that's kind of like all you could do. Like really just being able to ask yourself like, okay, what can allow me to wake up and go about my day for the next day? And then I think those kind of like built the layers and strength for you to be able to keep doing the great work. 21:50 Thea Ngo: Whenever one of my friends go through like a personal, like life transition, I think obviously it's like very sad for them. But I'm really excited for what they can create in the future because they, those are usually like very breakthrough moments personally. And it really translates into like, it typically translates into like maybe building a new business or doing something completely different or like testing a new career or moving to a new country. And it usually turns out to be for the better. So, you know, like those moments really define kind of like your life as a person. Okay, so if Choose System didn't exist and money wasn't a factor, what do you think you would be? 22:34 Speaker: What would you do? 22:35 Nam Nguyen: Now, I would say I'd probably go back to school actually, because it's kind of interesting because, you know, going through the business, I also realized that I, the reason why I love startups so much, because I really valued interdisciplinary environments, right? Like being in a place where you can create, learn, and experiment at the same time. And I think, you know, when I'm meeting people in the business, I found like the most creative people I know were just really good at like connecting different fields and different ways of thinking. And I think in the age where AI do all the boring stuff, like the people who excel will be the creative people who can get these threads all together. And these are, you know, in jobs and personal connections. And I think school is just one of the few places that allows those kinds of exploration where, you know, you can fail without everything being on the line. So I think, you know, actually Paul Graham tells a lot of the people in our batch that people should fail. 23:36 Thea Ngo: You're such a YC founder. Do you know that meme where it's like quoting Paul Graham, any chance you get? 23:42 Nam Nguyen: Any chance you get. No, it was like, it was so crazy. It was like meeting your like, you know, idle for the first time. But yeah, right, he was literally telling everyone like, stay in school, you know, it is actually the last place where curiosity isn't penalized. So I felt like if I wasn't building truth systems, I'd probably keep learning and experimenting in an environment similar to that. 24:07 Thea Ngo: I think the best people in life in general are those that are so willing to learn and like explore new things and like be open to new ideas. When I was in school, I hated it and I wanted to like, you know, jump straight to like the career part. And now I'm just like, wait, I kind of want to go back to school. Like, this is too much. 24:26 Nam Nguyen: I shared that same sentiment. I felt like when I was in those like classes, like, why do I need to learn Git for? And then, you know, next thing, next thing you know, it will be biting you in the ass. So for sure, it's like, it's one of those places where I felt like I wish I took more away from it, but it also just reinforces that you could kind of like, be able to take those approaches of learning everywhere and having those opportunities to do so. 24:53 Thea Ngo: Yeah, okay, so kids, stay in school. 24:56 Nam Nguyen: Stay in school, kids. Stay in school. 24:59 Speaker: That's a wrap. If you like this episode, please hit the like and subscribe button. It helps us bring on more awesome guests, level up production, and bring on new series you'll want to watch. And if you want to hear more early-stage builder stories, check out our other episodes. Okay, see you next time.
▶
▶
▶