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When Derek Schueren, the chief operating officer of tiny RecomMind Inc., crosses the Bay Bridge in his Honda Civic, he conquers a vast divide. On one side lies the startup’s scrappy offices in Berkeley, Calif.; on the other, its potential law firm clients in downtown San Francisco. One sunny day in March, Schueren drives to Heller Ehrman White & McAuliffe to make a pitch. In the past two years, Schueren has made plenty of pitches but few sales. Such is the life of a technology entrepreneur trying to sell to a demanding audience in a horrible market. RecomMind helps large enterprises make sense out of groups of documents by searching through and categorizing them. Built on brains and briefs (the paper kind), law firms are a key market for the company. In Heller Ehrman’s 31st floor conference room, Schueren, 25, and Patrick Tufts, 34, RecomMind’s ponytailed director of technology, sip soda and set up their laptop for a demo. Robert Meadows, Heller’s all-business chief information officer, arrives with his five-person tech team. Meadows tells Schueren he has exactly an hour to meet. The pitch begins: Schueren talks about “information overload” and “knowledge assets.” “I’d like to hear from you. What is your ideal world in terms of information management?” he asks. He doesn’t talk much about billing hours, serving clients or saving time. He doesn’t display any legal documents in the demo, either. To show the powers of RecomMind’s search tool, he uses a mock-up of a CNN Web site. “So many companies do the same thing. They don’t understand what legal is about,” says Martin Metz, the former technology chief at San Francisco’s Brobeck, Phleger & Harrison and chief executive of SV Technology Inc. Metz’s company is now helping Schueren develop a set of legal documents to use for pitches. Meadows and his cohorts pepper Schueren and Tufts with questions: How is RecomMind different from its competitors? How long does it take to set up a server? How quickly does it work? Can RecomMind crawl the Web, too? Is it easy to use? “You’ve got a little, tiny search screen,” says Meadows. “Let’s talk about that.” An hour later, Meadows takes off for another meeting. And Schueren is out the door shortly. He’s pumped. He thinks Heller may want to pilot RecomMind. Unbound optimism is a necessary ingredient for a company that became incorporated in April 2000, the month the Nasdaq began to tumble. While the startups of the 1990s were crashing around it, RecomMind had the unfortunate challenge of looking for venture money when there wasn’t any, and pitching to customers when they were reluctant to buy. RecomMind is alive today because its chief executive, Robert Tennant, is a generous angel of the financial type. In the legal technology market, vendors come and go. Red Gorilla, an application service provider for lawyers, for example, opened to much fanfare during the boom. The only remains of it now are a tattered neon sign outside its former headquarters in San Francisco. Niku Corp., a builder of extranets, actively courted the legal market when it boasted a market capitalization of about $3 billion. Today, Niku is a penny stock, and has abandoned law firms as a business. Many companies try to sell to lawyers, but don’t understand what makes them tick. Lawyers need technology that is easy to learn, but also flexible enough to work with their idiosyncratic ways. Many lawyers have clung to WordPerfect, for example, long after the rest of the world switched to Microsoft Word. Most litigators still use TIFF, an archaic imaging format, while the rest of the world has moved on to PDF. On the legal technology radar screen, RecomMind is just a blip. It’s a startup in a warehouse, longing for a presence in office towers. This story is about RecomMind, because RecomMind let us spend time with its staff as they made the rounds, but it could easily be about any other post-crash company, such as electronic discovery vendor Fios Inc., or application service provider Aspora.net, trying to win lawyers as clients. Of the few lawyers who know RecomMind, Schueren is its public face. He is its round-the-clock gatekeeper, organizer, and cheerleader. He even sleeps at RecomMind’s “company house,” about one mile north of Berkeley. Schueren doesn’t know much about lawyers. Like everyone else at RecomMind, he’s never worked at a firm, or sold to lawyers before, but he believes they are an anguished bunch. “There’s a great amount of knowledge at law firms, and it’s frustrating [for lawyers] not to be able to tap into it,” says Schueren. RecomMind can solve that frustration, he says. RecomMind works by searching and categorizing documents by concept. RecomMind can recognize the ideas behind a search, and break down the results with greater specificity than more traditional search engines. Let’s talk about Java. RecomMind recognizes that such a word has many meanings: island, software, coffee. It organizes its findings accordingly, arranging each document by category. It goes a step further and finds related documents that do not necessarily contain the word Java, like documents on violence in Indonesia, on coffee brands, or on Sun Microsystems’ dispute with Microsoft Corp. (Tellingly, when Schueren showed this last example to Heller, he didn’t know that Microsoft was a big client of the firm.) Two Palo Alto, Calif., firms, Cooley Godward and Wilson Sonsini Goodrich & Rosati, are testing RecomMind. Wilson Sonsini is running about 2.5 million documents through RecomMind. The firm wants to discover whether RecomMind can help lawyers find clauses, and e-mails that are scattered in different systems. It also wants to search Wilson’s knowledge management system, a database of frequently asked questions. “It would solve our problems, if we could search every source in the firm, and if we can search as fast as we want to,” says Phillip Hoare, Wilson’s chief information officer. Hoare has money in his budget to buy RecomMind, if it proves to be speedy, easy to use, and accurate. He hopes to know in the next month or so. RecomMind is in the mid-range of technology spending projects for large firms. To outfit 1,000 users would cost $150,000 to $300,000, depending on customization. A pilot like the one Wilson Sonsini is running would cost about $20,000. Heller Ehrman says it will bring RecomMind in for a follow-up pitch with lawyers. “Conceptually, what RecomMind showed me was really interesting,” says Meadows. “It does a lot of heavy lifting for you.” RecomMind is trying to fill a hole in the legal market. Law firms are looking for products that can search their documents both comprehensively and accurately. Other search engines, like Google, often return too many results, and don’t categorize documents the way lawyers want them categorized. “Google is still pretty broad and unfocused,” says Meadows. RecomMind is hardly the only company pitching sophisticated search technology to law firms these days. So RecomMind needs a big hit, a beacon client that will shine brightly. “If you’re not in big firms in New York, you’re not really going to make it,” says Mark Hadfield, the San Francisco-based co-founder of Workshare Technology, which makes a document comparison product called DeltaView. After DeltaView’s launch in early 2000, Workshare hooked New York’s Shearman & Sterling, and other firms quickly followed, says Hadfield. If RecomMind can’t make it selling directly to firms, it could conceivably become a licensing play instead, working out deals with other technology companies to embed RecomMind’s search capabilities. Summation Legal Technologies Inc., a trial software company, has set up a RecomMind pilot. And SV Technology, which makes a popular law firm portal, says that it will consider such a deal if RecomMind goes over well in initial tests. RecomMind came to law firms by accident. It was founded simply to help companies — any company, not just law firms — organize their electronic information. It has customers outside of the legal market, including bioinformatics company Viaken Systems Inc., and German media company ZDF. Late last year Schueren met Workshare’s Mark Hadfield. Hadfield suggested that RecomMind look into the legal market, because law firms were drowning in documents. “They were looking for a market, really,” remembers Hadfield. He gave Schueren the names of a few contacts. Law firms sounded great. But there was one problem: Schueren didn’t know anything about them. When he started meeting with lawyers, Schueren says, he didn’t know that lawyers billed their time hourly, or that firms were subdivided into practice groups. Schueren says he went through an entire meeting with a group of lawyers without knowing what the term “matter” referred to. Then Schueren took the Am Law 100 list and started cold-calling the top information officers at major firms. “It’s like you’re on stage,” he says. “You don’t get listened to unless you say something interesting.” Schueren keeps a methodical log of his customer contacts. He track each phone call, voicemail, and message. About 90 percent of the messages are never returned. On his computerized contact list, paying customers are marked in red. He has 12 of them out of about 200 sales leads. “If I can get everything to be in red, we’re rolling,” says Schueren. Three years ago RecomMind was not a dream but an algorithm. Jan Puzicha and Thomas Hofman, two German computer scientists working on postdoctoral studies, began developing the basic math behind the technology as a research project. In the spring of 2000, they thought about turning it into a product. At the time, Schueren was sniffing around for a business he could help build from scratch. He met Hofman and Puzicha through contacts at Brown University, from which Schueren graduated in 1998. Puzicha was doing research at the University of California at Berkeley, so the trio set up shop there. The team began to stake out funding. The tech boom had soured, and venture money was drying up. After a few months they found Robert Tennant. Tennant, 33, sold Beduin Communications Corp., a Java startup, to Sun Microsystems Inc., for about $20 million in 1998. As a co-founder, Tennant’s take was around $8 million — plus a job at Sun. But he became restless there. When Tennant and Schueren were initially introduced by a mutual acquaintance, they hit it off right away. Schueren came to Tennant’s San Francisco apartment seeking advice about starting a company. Tennant said he might be interested in investing, and Schueren brought him over to see the technology a few months later. “The original demo dropped my jaw,” says Tennant. “I said, ‘I can help you turn this into a company. How much money do you need?’” Tennant wrote a check to cover some startup costs, including office rent and computers. A few weeks later, he wrote one for $1.2 million. Tennant has made just one investment, of about $200,000, since then. Schueren says RecomMind is currently covering operating costs. Late last year, Tennant quit his job at Sun and began working full time as RecomMind’s chief executive. He and Schueren share a tiny office. Together, they oversee RecomMind’s staff of 20 — 10 in Berkeley, and 10 in Rheinbach, Germany. Tennant is a sailor — he tried out for Canada’s Olympic team; Schueren is a long-distance runner — he missed the U.S. Olympic tryouts because of an injury. Together they know something about speed and strategy — and moving forward, one step, or tack, at a time.

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