“I was working at a very large Wall Street law firm at that time in their Los Angeles office, and they were charging me out at $350 an hour,” Liu says. “I realized most people can’t afford that amount, and most people don’t have somebody that they could turn to for writing a will or getting a power of attorney.”
In 2001, Liu partnered with Brian S. Lee and Robert Shapiro to found LegalZoom.com, an online legal services company that would provide documents and services to the everyday person in a quicker, more accessible way.
The idea was an instant success, and the company has grown its revenue 4,500 percent in the last five years.
Smart Business spoke with Liu about focusing on what you’re good at and using honesty to build a reputation.
What things can hurt a company’s growth?
Companies make a lot of different mistakes at the very beginning because I think naturally you have this feeling that you’re an entrepreneur and you want to try a lot of different things. The main thing is that, when you’re starting a company, focus on what you’re good at.
There are so many other ideas that pop into your head that are somehow linked to your product. But don’t get distracted, because that core business is what’s really going to propel you forward.
We almost made that mistake. We tried to create a software product, and it took literally six months of effort, sweat, tears, all of our resources, and it just really diverted our attention. Luckily, we got back on course.
How can a company build a good reputation?
The partners that we do have, we (are) brutally honest with them. People run into problems a lot when they over-promise, and it doesn’t get done at that particular time. Brutal honesty will make people respect whatever you say.
Finally, on the consumer side, for everything we do, if you make a mistake and inevitably, everybody makes a mistake one way or the other just deal with it directly, head on, and don’t try to cover anything up. Apologize, and then fix it.
How can bartering help a business?
When we were starting out, it was a very difficult environment to raise money because it was a dot-com bust, and we were a dot-com company. What we ended up doing was really doing a lot of bartering for services.
We designed our Web site purely for stock options. We bartered some services for a case of wine for employee bonuses. Our next-door neighbor was a graphic design company, so we helped them with some trademarks and with setting up their own corporation in exchange for their graphic design services.
When we found somebody that had a service, especially a service that we wanted, we asked them if there was any way that we could exchange some of our services for (theirs).
How did your role change as the company grew?
When we started out, I was doing everything from customer service to order fulfillment to being the janitor. It was a great experience because you’re so close to the customer that you know what exactly they want, what they need.
As the organization grows larger, I become a little bit out of touch not out of touch, but (I don’t have) day-to-day interaction with customers. I realize that those people who are really dealing with customers every day, they have a lot of good ideas. So we want to encourage that, foster that.
What advice would you give to other CEOs trying to grow their companies?
Don’t overspend, and always have good contingency plans. What happens is that people are really over-optimistic, and then they spend and they do things based on these optimistic projections.
I say always reserve 20 percent in the tank in case things don’t meet up to those optimistic projections. You still have something to fall back on.
There’s only one really good piece of advice that someone gave us, and that is that when you reach a certain size, once you reach about $5 million a year in revenue, at that point you’ve got a good chance of making it, except you have to be prepared, because everything will change at that time your whole organizational structure, the way the employee relations are, not knowing a lot of the different people any more.
HOW TO REACH: LegalZoom, www.legalzoom.com