Outsell for Startups podcast Q&A: Nicole Shanahan of ClearAccessIP

‍

‍

“The pace at which inventors and engineers are creating is much faster than it’s ever been. To be able to keep up with that and to adequately address the IP needs of organizations,” according to ClearAccessIP founder and CEO Nicole Shanahan, “you really need to connect the two in a way that is seamless.”

How fast are we talking? How much cash is at play? Well, Nicole told us $400 billion is spent annually acquiring IP, and that there are roughly 32 billion concepts out there.

I had the pleasure of interviewing Nicole on the latest episode of Outsell for Startups. She’s a talented individual with a background as a legal technology founder, a consultant attorney, and a resident fellow at the Codex Stanford Center for Legal Informatics., and she’s doing a lot not just in the world of legal, but also in IP, AI, and neural networks, which just makes for an all-around interesting conversation.

If you’ve ever filed a patent or managed IP, you know it’s very painful, very time intensive, and costs a lot of money. The ClearAccessIP platform can manage all of your company’s patent filings and all of its internal IP, and it can also handle the deal flow for that IP (licensing out that patent to another company). In the past, this has been very complicated, but ClearAccessIP has made this process incredibly simple — from beer umbrellas to neural networks.

I had a great conversation with Nicole and I hope you all enjoy it as well.

Key Points

Founded: 2016

Number of Employees: 20

Transcript

Ben: Why the interest in law? You could have gone in any direction so why this one?

Nicole: That’s a great question. As early as I can remember, I’ve wanted to be in the law. When I was five, I would dress up as a judge instead of a princess. Then, by the time I was 12, I knew I wanted to do intellectual property. I had a relative that was doing damages awards for a consulting agency, and I just thought that was the coolest thing, that you could own ideas. It really just went from there. I begged my way into my first job at the age of 19 at a patent office in Seattle. Then, the rest is history.

Ben: Can you talk a little bit about the journey to today?

Nicole: So, that was a very interesting journey, because I always thought my life, at the age that I am now, would be in a sparkly office at a law firm. Certainly, I’m as far from that as you can get. I’m in a sweaty startup office in Palo Alto. I sit in a team of engineers today. I think the reason why I’m here versus down on Page Mill Road at a law firm is I realized early on that if I was going to really, really do intellectual property the way I wanted to early on, I would have to work in legal technology, effectively. The reason being is I learned at one of my first couple of jobs managing docketing systems that the amount of data that law firms were managing was far greater than they were staffed to manage properly. Meaning, every time I went and I started a new job, it seemed like everyone hated their docketing system and that the back office data management was below what the partners wished. So, I oftentimes took it upon myself to go and fix those systems. That’s when I started to involve myself with many vendor companies, vendors that sell software to law firms and corporations. Then, I started working with their engineers. I realized that there is something bigger happening. I think that thing was that the patent world, the IP world, is getting more complex, and our ability as professionals to do patent law with really high standards is becoming harder.

Just to make sure everybody’s in the loop, a docketing system is used by attorneys to alert them of upcoming filing deadlines and statutes of limitations on any kind of specific legal actions, motions, or any cases that an attorney could be working on. The system’s a pretty critical tool in preventing professional liability claims and any claims that are really going to be made against an attorney.

Ben: Going off that was there a specific moment in that time where you realized there’s a gap here?

Nicole: Yes. I think there was a turning point. I was working at a law firm, and I had read an article about a company called RPX Corporation that was going to slay the patent troll. I read all of the marketing material from the company. I looked into what they were aiming to do. I was very much inspired by that mission. I immediately applied for a position, got it, worked there for a year, and during that time, I realized that data is really at the heart of how we transact ideas, how we transact with the patent office, how we transact with each other, how corporations transact with each other. I spent a lot of time just doing a deep dive into all of the information systems, and I made the conclusion that there needed to be something new that was available to everyone. It couldn’t just be a proprietary system that one company held.

Ben: Today, we have ClearAccessIP, and what is ClearAccessIP?

Nicole: So, ClearAccessIP is an end-to-end data infrastructure for intellectual property. From cradle to grave, we have developed automation solutions to reduce the cost of obtaining, building, managing, and transacting IP assets.

Ben: In the past, this whole process and just dealing with, let’s say, one patent is incredibly expensive and timely. Me just dumbing it down for myself, you’ve essentially just streamlined that process and made it really easy to manage.

Nicole: Yes. We are the first company to combine into one single system IP management, oftentimes referred to in the industry as IPM, with patent search. Our current method of doing things today is: you go and buy a docketing system, and then, you hire a bunch of docket clerks to manage that system. If you want to do patent search, you have a separate vendor system that you can purchase that you run searches on, and then you get these one-off projects. It’s a very disconnected way of looking at strategic management. On one hand, you have clerical professionals just managing data all day. Then, on the other, you have maybe patent analysts or maybe patent attorneys running the searches as they need, on an ad hoc basis. The reality is that innovation in technology changes every day. The pace at which inventors and engineers are creating is much faster than it’s ever been. To be able to keep up with that and to adequately address the IP needs of organizations, you really need to connect the two in a way that is seamless. You cannot connect the performance of your IP management system with the performance of your patent search system if they’re two separate systems. So that was the first thing we did, was to connect those two.

Then, the second thing we did is we tried to build as much automation into both sides. Rather than inputting the same search field into a patent search system, you put it in once, and every week, the results update for you. It’s reading directly off of your IPM. So instead of having to separately go to your docket staff and asking, “Hey, can you send me a spreadsheet of latest statuses?” the two are always talking to each other.

Ben: You mentioned some points around automation and searching. Is there an AI component to this?

Nicole: Yeah, absolutely. We don’t use the term AI lightly here. When you walk into our office, we’re almost all engineers. When you’re an engineer doing this stuff every day, you generally don’t throw around the word “AI” lightly.

Was that challenging? I talk to a lot of founders that have a technical background and have experience in AI, but you are coming from a legal background. Was that challenging, jumping into that world?

Typical of most people in the legal profession, I’m very risk adverse, so I actually spent two years after law school in a legal technology fellowship at Stanford, where I spent a great deal of time in the computer science department learning about machine learning, automation, and AI. So, I didn’t come into ClearAccessIP with no knowledge. I was fortunate enough to have a bit of background. That being said, learning how to become a product manager and communicating with engineers and communicating in a way that you understand the fundamentals of software engineering while understanding and accomplishing goals for the user is a balance. I think that that’s just something you just have to force yourself to learn. I love it, so it wasn’t so much forcing as it was just I was excited for the opportunity.

I live in that world, because I come from product management and founding my own companies in the past. It’s tough, at first, to manage the technical aspects and have them translate to the business goals. It’s definitely an attuned skill you have to develop. Is the business model a subscription-based model?

Nicole: Yes. We have two products. One is called ClearAccessIP Core, which is that end-to-end workflow product that connects the docketing IP management with the patent search and analytics. Then, we have a separate product called Expert Research, which is really geared towards big bulk research projects, like I need to map 60,000 patents to 85 product definitions. Expert Research is more project oriented versus workflow oriented.

For one of those, or it could be both of those, do you have a good use case?

Okay, great. If you’re a corporation, let’s take a mid-sized corporation, and you have the need to develop pretty sophisticated IP, you would use our ClearAccessIP Core product was your invention disclosure repository. The minute an engineer completes one of those, you then have the ability to create what’s called an IP Deal Room to analyze its validity, novelty, the landscape of that invention disclosure to make the decision before you file whether or not it’s valuable to file. I was just talking to an attorney from Quinn Emanuel, a large IP-focused law firm here in the valley. He and I were chatting with each other about how weak the IP strategy is for the average corporation today, meaning they’re filing stuff that they have no idea if it’s the right thing to file, if it’s the strategic thing to file. 400 billion a year is spent on acquiring IP, and less than 4% of all issued patent assets ever is read for its value. We know that there’s a large amount being invested in IP. Probably, most of it’s being invested in blindly. ClearAccessIP Core helps you really look strategically at the value of that IP before you make that investment.

Then, even during, as you prosecute the process of working with the United States Patent Office to get a patent grant, we do all of the automated management of all of that back and forth, all the communication, the actions, and we tie that in, again, with the analytics engine that can help you really structure your workflow more wisely.

As you were getting this company started, do you remember the point in time where you realized this business had legs?

I would say at a startup, you have to oftentimes put yourself in the shoes of where you’ll be four or five years down the road. I would say that we probably hit the point where we were like, “This is not just a great product. We got everything working.” I didn’t know that our neural network would work. For the tech savvy listeners, we’re the first company that fully vectorized the entire patent corpus. The United States patent corpus is, we’ve learned, 32 billion concepts. 32 billion unique, human-generated concepts, and that number is growing exponentially. The day that I went into the office and one of our data scientists was like, “Hey, it finished processing, and it’s 32 billion concepts,” I knew, at that moment we had a really fun and bright future ahead of us.

That’s amazing. You’re pulling all this data and you’re looking at the flow of ideas. Besides the 32 billion concepts, are there any other key points or surprises that you’ve seen just learning and going through this?

‍

One funny example is we found some really silly patents along the way, such as a beer umbrella. I have a big list of all these funny patents. On a more serious note, what we’re seeing is there are enormous overlaps between software and hardware. We have a tensor flow visual of the patent corpus, and you see all these lines that connect high-level concepts. The amount of lines being passed between pharma and software, and consumer electronics and software, and data … You just see software connecting to pretty much everything else.

What does the competitive landscape look like?

There’s been an enormous amount of consolidation happening with the legacy systems in both IPM and search. We’re seeing private equity kind of taking interest in owning many of these larger companies that have been around for decades. I would say that as we look to our future, we’re so passionate about creating a new standard rather than just creating another legacy system that we don’t really spend too much time thinking about it. We think about it as, okay, who’s out there who could be really a great potential partner that would see value in working along one of our solution’s verticals.

Is the company venture backed or bootstrapped? How did the company get established?

It’s been a combination of personal funds as well as investors. Mostly seed stage investors.

How fast is the company growing?

So, the company is growing … I mean, if you look at where we were 12 months ago, we’ve had 200, 300% growth quarter over quarter. That is in sales revenue, which is great. I do not believe we’ve lost any subscriber yet to date.

What would you say currently is the greatest challenge that the company faces?

I think that the culture is the biggest challenge, the culture around what this industry is accustomed to, how they’ve been conducting themselves for decades. I know that some lawyers that we’ve spoken to don’t really know how to even access their docketing system. They’ve never looked at it before. This reliance on clerical staff and the reliance on I guess outsourced services is a challenge when we’re bringing in something that actually is very easy to use. It’s as easy to use as logging into a bank account online, but there is a bit of a shift that happens when you bring this level of automation into an organization that is very traditional.

On the flip side of that, what’s the culture here like at the actual company?

It’s fun. We’re very much a Palo Alto company. I mean, I’m looking at our ping pong table right now. We are a group of people that really try to juggle bringing in new science into the product. There’s a very academic component to the culture here, so we’re constantly reading papers coming out of various computer science departments at top universities. We’re always kind of trying to do things new, and that is a very fun place to work, I think, is a place where people are experimenting.

You’re already kind of leading a race on the technology front and being innovative. Then, you have to stay up with that and keep up-to-date with the most recent findings, the most recent technology, and make sure you’re still cutting edge.

Yeah. It’s not obvious how to do breakthrough machine learning. Natural language is really challenging. The way patent documents are written is very different than how novels are written, for instance. So to train a machine up on specifically how patents are written and then have it evolve with the new … Every week, there’s several hundred new patent publications. So we’re folding those in as they’re released. It’s a fun challenge.

If we look at just AI in the legal space for a moment, what do you think the profession looks like for lawyers in the next five years or so? What are your thoughts on how that’s going to change?

While I was a fellow at Stanford, this was the main theme of the center I was part of, the Codex Center for Legal Informatics. I think that law is kind of one of these last frontiers for AI possibly, and that’s because the human complexity of law is quite high. One of the things that I think about when I look at the future of law is how much of it becomes legal practice, and how much of it becomes ideation of implementing good policy. I think it actually can fundamentally change how we even think of what law is. What I’ve been hearing from top academics that think about this all day, every day is that the law firm is going to be very few lawyers, and they’re going to be using technology to address far more clients. What you’re going to have is probably a trimming out of the entire junior associate demographic and even mid-level associate demographic. It will be kind of individuals that are highly, highly specialized in very specific areas of law, less generalist, and far greater use of technology.

Where do you see ClearAccessIP in the next year?

Our goal is to talk to as many law firms as we can, talk to as many in-house counsels and corporations. There’s a book out there called Edison in the Boardroom, and it’s all about IP for the boardroom. We’re hoping to talk to, also, as many CEOs as we can about what the future of IP’s going to be and how to leverage this technology to advance their C-suite goals.

Where do you see the company in the next five years?

I oftentimes talk about setting a new standard, right? Setting a new standard around how we communicate IP, how we transact it. Five years from now, I definitely believe that we will be setting the bar for that standard.

What would you say is your greatest learning so far? If you had one lesson that you learned, what would it be?

I think it’s, very broadly speaking, agility. You have to be very agile. As somebody who’s running a company that is trying to do something breakthrough in machine learning, whose primary market is made up of individuals that have at least two degrees, sometimes three or four degrees … We’re selling into departments being run by very smart people. So the ability to be agile, sincere, while remaining very, very focused on development.

You had the opportunity, I imagine, to be part of a big law firm with a great salary and have a great office, like we were talking about, and you chose the startup route. Do you think about that?

There are few topic areas that I would live the startup life for, because it’s a really tough life. IP is really cool, because it touches medicine. It touches consumer. It touches information. It touches every piece of innovation. It was, for me, an easy decision, when it came down to it, to risk not being able to pay my credit card bill or car payment. This is years ago now, when I had made the decision, so I had a lot of law school debt. It was not an easy decision, but it was obvious, in some ways. All the pieces were there. I think the time as a fellow at Stanford, sitting in the CS department, was so valuable, because I had to answer the question, is technology where it needs to be for us to accomplish this mission? All of the recent developments in machine learning have indicated that, absolutely, we can accomplish these things now. We wouldn’t have been able to five years ago.

Thank you for reading this CEO Q&A interview with Nicole Shanahan . This write-up is only a portion of the full interview. To hear the full interview, please listen to our podcast “Outsell for Startups.” You can find it on iTunes, Stitcher, and Sound Cloud. You can also find more information on Outsell for Startups at our website. Thanks for reading!