John Morgan built the legal tech platform Litify for his own firm's needs. He then leveraged his massive case referral network by requiring partner firms to adopt Litify. This created a captive market for his software and streamlined his core business operations, establishing a powerful, self-reinforcing flywheel.
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To overcome the cold start problem in a network effects business, especially in a conservative industry like finance, a powerful strategy is to create a coalition or consortium model. By giving early adopters ownership and governance rights, you align incentives, build trust, and transform would-be competitors into enthusiastic evangelists for the new network.
For a service business with more demand than capacity, flip the sales model. Instead of you doing the work to secure funding or partners to onboard a new client, make it a requirement for the client to secure those resources for you. This leverages their desperation and turns your prospects into your sales team.
Instead of building a consumer brand from scratch, a technologically innovative but unknown company can license its core tech to an established player. This go-to-market strategy leverages the partner's brand equity and distribution to reach customers faster and validate the technology without massive marketing spend.
Avoid pursuing prosumer and enterprise motions simultaneously. The optimal sequence is to first build massive bottoms-up love and brand trust with individual users. This creates internal champions within target companies, providing crucial momentum and turning a cold B2B sale into a pull-based motion.
Companies can build authority and community by transparently sharing the specific third-party AI agents and tools they use for core operations. This "open source" approach to the operational stack serves as a high-value, practical playbook for others in the ecosystem, building trust.
As AI and no-code tools make software easier to build, technological advantage is no longer a defensible moat. The most successful companies now win through unique distribution advantages, such as founder-led content or deep community building. Go-to-market strategy has surpassed product as the key differentiator.
A new ecosystem is emerging where law firms are not just end-users of Harvey's AI but also channel partners. They are leveraging their expertise to help their in-house legal clients adopt and implement the technology, creating a new, high-margin line of business for themselves as tech consultants and implementers.
A key competitive advantage wasn't just the user network, but the sophisticated internal tools built for the operations team. Investing early in a flexible, 'drag-and-drop' system for creating complex AI training tasks allowed them to pivot quickly and meet diverse client needs, a capability competitors lacked.
John Morgan's breakthrough vision was to conceptualize his firm not as a traditional practice, but by asking, 'What if Google was a law firm?' This led to a platform strategy of total market coverage ('everywhere for everybody') and building a massive referral network for cases they don't handle in-house.
Move beyond selling features by offering a "Business Process as a Service" (BPaaS) solution. This involves contracting directly on the business outcomes clients care about, such as cost savings or revenue optimization. This model delivers an end-to-end capability and aligns your success directly with your customer's, creating a powerful value proposition.
