Our guest today is LinkSquares’ Chief Legal Officer, Tim Parilla.
Tim oversees LinkSquares’ legal posture and acts as a strategic advisor to the company’s management and corporate counsel customer base. He previously spent seven years as General Counsel for DraftKings.
At DraftKings, Tim scaled the legal function and managed the company’s legal posture throughout numerous financing and fundraising rounds, litigation, and regulatory actions, at both the state and federal level, including the high-profile legal challenges the company faced in 2015 alongside the explosion in popularity of daily fantasy sports and strategic acquisitions.
Prior to DraftKings, Tim was General Counsel for Everest Gaming, a European-based online poker and casino operator, and was also a founder of a company in the cryptocurrency space. Tim has a J.D. from the Walter F. George School of Law at Mercer University and a B.S. from Oakland University.
In This Conversation, We Discuss:
- How LinkSquares achieved fast growth and the challenges that can occur
- How to prevent your company from making poor financial decisions
- How to find the balance between happiness and productivity with your employees
- What criteria to put in place around assigning titles
LinkSquares – https://linksquares.com
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That was super interesting. You are going to love this episode. Tim Parilla, the Chief Legal Officer for LinkSquares. This guy is more biz than most business people that have ever interviewed. Massively refreshing that he’s a lawyer, but he’s not a lawyer guy at all. As the Chief Legal Officer and the second command for LinkSquares, he oversees operations people, IT, and legal, helping take one company public, DraftKings at a $1.6 billion valuation before this. I love how controversy builds teams and he is going to talk about that.
He’s also going to talk about how LinkSquares has raised $140 million. $40 million as he was coming on as Chief Legal Officer, and then $100 million several months later. He’s also going to share thoughts on how companies should be giving out titles and compensation directly. Super intriguing. Great episode. You are going to love this one.
Tim, welcome to the show.
Thanks for having me.
I appreciate it. I’m looking forward to learning about your career and what got you into this role. Sometimes, I don’t even go into the whole like, “What is the company?” It makes sense to start there for you to tell us a little bit about what LinkSquares is, and then I’m going to backtrack into how you got into the role that you are in because you are in a unique role, as well.
LinkSquares is a contract management software company. We developed software for in-house legal teams that helps to streamline the contracting process and at the same time provide quantitative data around the work that the legal team is performing. We try to focus on easy-to-use software that is custom-tailored for the in-house legal team.
A lot of competitors and a lot of different folks in the legal tech space are targeting products that are maybe not built as uniquely with the in-house team in mind. It’s a great company. We are enjoying the growth that we have seen. I joined in March of 2021. In that time, we have increased our staff from about 70 to almost 400. Our revenue has more than tripled in that timeframe as well, which has been incredible growth. We are seeing massive market share gains on our side, as well.
It’s been neat to see the organization grow. It’s provided me with an opportunity to be more than a lawyer, which is something that I have always wanted for my career prior to joining here, I was the General Counsel at DraftKings. I started at DraftKings. There were about twenty people working there. I left about a year after the SPAC transaction that took the company public and oversaw the growth of the legal team and the government affairs function as well.
That’s rapid growth to go from 70 to 400 in a few months. Why do you think that happened? Can you tell us a little bit about maybe some of the stumbling blocks along those few months? People will think that growth is easy, but growth is difficult when it’s that fast.
Growth is difficult at that pace. For me, having the experience that I did at DraftKings and seeing that growth from 20 to about 2,500 when I left post-transaction was something that helped me to build a roadmap. When I joined, we were in the process of raising the Series B financing, which we closed in June of 2021. We raised $40 million.
We were at an inflection point. We saw the velocity of our product adoption, starting to increase. We said, “Let’s invest strategically into building and scaling the business. If we can increase the timeline of our product development and we can increase the horsepower behind our go-to-market motion, then we can capture more market share faster and try to put the company on a trajectory for very high rapid growth while also maintaining the various efficiency metrics that we use to judge the quality of our business.”
It’s not ARR at all costs. We are also looking and making sure our retention numbers are where they need to be. We make sure that we are doing the right things in terms of customer satisfaction, even CAC payback periods. There are a handful of different and gross margins are outstanding. A lot of people can buy a lot of ARR, but if your other metrics aren’t where they need to be, then it’s phantom. We have been able to maintain those metrics. Ultimately, we raised $100 million in our Series C in March of 2022, which is great. Seeing massive growth and our go-to-market motion works. People want our product, which is great.
A big part of that going from 70 to 400 is understanding how to structure a team and understanding how to turn your idea and your product market. Series A is proving your idea like a proof concept. Series B is making sure there’s a product market fit. Series C is turning that into a business. Series D and beyond is scale.
When you think about how you turn this product, this good idea with a good market into a business, it’s when you start to think about, “What’s the less sexy stuff? How are we making sure that we are scaling our IT team appropriately to make sure that everybody has internet who’s in the office? Make sure that everybody who’s remote has the tools that they need to do the job.”
You think about the people function. With that level of rapid growth, you got to make sure that 1) We are hiring the right quality of people. 2) We are retaining the people that we have. Over the last few months, our company has grown 5X. We are at a point where a lot of people who have been hired are passing their one-year mark. That’s usually when you start to see attrition.
The focus now is on employee retention as well. How are you building a good program to retain your key employees and motivate your key employees? How are you doing things like career pathing for people? Things that are product and industry agnostic in a lot of ways that a lot of folks don’t want to focus on. That’s what I have brought to the table. These are critical components of enabling your stars of the show, which I view as marketing, product, and sales. Those are your stars, but you need people in the background to support them.
Driving a lot of that structured growth is something that I have been passionate about and wanted an opportunity to be accountable for. Vishal, our CEO gave me that opportunity here. It’s been incredible. I’m also thinking about how are you using data not only in making your product decisions and adjusting your go-to-market motion, evaluating customer success, and things like that but how are you using data to help other parts of your organization to grow and scale.
I set up a data analytics team and there are different metrics. Our people team uses a lot of different metrics as far as this is how we need to grow. This is an inefficient way for people to manage in this type of industry. How many people are too many people? How many layers of management or too many layers of management given our size? Seeing as we go through building and structuring the organization. How we can track the performance of our team versus the financial performance of our company and see correlations? Very cool. It’s fun.
It’s weird. You are touching on the answers to the questions I haven’t asked yet, which is intriguing. You started off understanding the value of the client and the CAC and the return of that. You quickly switched to measuring everything around the people side of things and the labor efficiencies and not getting too wasteful. That was what I was going to ask. How does a company that’s raising effectively $140 million in a year, which massively changes the culture of the company and gives you the ability to grow?
There used to be something several years ago called predatory pricing. Now it’s predatory hiring, where companies can raise money literally. You can go out and buy up the talent, which is a huge strategic advantage versus the average company that wants to compete for the talent. They can’t. How do you prevent waste or be careful that you are not wasting money like throwing money out the window and like, “We overspent on twelve people,” or, “We hired too many.” How do you measure that? What do you think about that?
As an executive team, we are deliberate about how we hire. It’s not like, “I need ten developers.” It’s, “Why do you need ten? Where’d you come up with ten? What are the metrics that you are using to back into that?” For example, our contract operations team. There’s a certain number of customers that those people can onboard in any given time period. If we are looking at adding more customers, it’s a mathematical formula and we review it over time.
It’s not like, “In the next year, we are going to have X number of customers, so let’s hire this many people right now.” Let’s hire. See if it starts to shake or it starts to bend. Not quite break, but get close to breaking, and then let’s add one more unit. That will be the way that we test the metrics we are using to drive our headcount decisions. We are doing that over the entire organization. If you look at the revenue team, it’s a little bit different. They are not using the number of customers. They are using, “What must your per rep productivity look like?” If we are expecting to be at a certain level and we are anticipating the per rep productivity to be at a certain level is a mathematical equation.
With every hire, we have done that. We also take time to say, “Let’s step function up and grow into it.” That’s the way that we have done it. I don’t want to act like everything has been perfect and we have nailed that exactly. The point is that we have been deliberate about what we are doing and then we take the time to say, “Was that done correctly and appropriately? Are we looking at the right metric even?”
How do you manage the employee net promoter score, your employee happiness versus the need to grow, optimize, and be efficient, in terms of the revenue per employee, margin per employee, or labor ratios? How do you keep them happy but also keep them busy?
There’s no one answer to that. If you look at the sales function, which has been a major strength of ours, our product is far superior to anything else that’s out there on the market. Our marketing team is second to none. That helps to top the funnel on customer satisfaction. Having a dedicated team of sales professionals has been outstanding. You look at that team and they are very highly motivated people who want to work hard. They are super competitive and you carry your quota or you get carried out the door on that team. There’s a culture to that. That culture is not for everybody.
Similar to how a startup is done. We were talking before this. Maybe there are certain people who are good at the $0 to $50 million revenue range. That’s a very different company, that $50 million to $100 million. There are plenty of people that are great startup people but are not great big company people. There are great big company people that are not startup people. It is a startup culture.
Looking at the rest of the organization, I don’t want to say that it’s any different because everybody here is competitive and wants to work hard. There’s a sense of satisfaction that people get. That’s not coming in 40 hours and getting a paycheck. People are here because they want to be here. You will see it because we don’t mandate a return to the office for most orgs. We say, “We’d like it if you come in, but if you don’t, that’s okay.”
Our office is full. We have three more floors that we are developing right now. People want to be here. People want the energy. They see it. They are excited. It’s a lot of fun. That’s a personality type that we try to bring into the organization. As cheesy as it may sound, we have one of our values being you are all in. Another one is team-first. If you are not all in and if you are not team first, you are not here and you are sure not getting hired.
We create a culture of accountability, too. Where it’s like if you see someone who’s not being team-first or see someone who’s not all in, have a conversation with him. I have been in meetings where director-level people have looked across the table and have been like, “That is the least team-first thing that you could say.
To a VP or someone above them even?
Were you kicked out of law school because you were a too-business guy? You are the least legal guy I have ever spoken to. It’s incredible. You are giving me hope for lawyers again.
Thank you, I appreciate that. It’s a product of being fortunate enough to have never worked in a law firm. I also never reported to another attorney throughout my entire career. Right out of law school, I ended up falling through a stroke of luck and incredible generosity into a job at an organization that didn’t have an in-house attorney.
The CFO who became the CEO took me under his wing and helped me to understand the business side of it. I went to law school and learned a lot from a legal perspective and I worked with a ton of outstanding lawyers out there. I have learned a lot from a lot of great mentors. My career trajectory and growth as a professional or the muscle that I have tried to work on is that business side, even coming out at DraftKings and coming to LinkSquares is like I didn’t come to LinkSquares to do the legal work.
The legal work at DraftKings is about as exciting as it gets. We changed the law in nineteen different states now from a fantasy sports perspective. We built a regulatory framework around an industry. We were proven right in every single circumstance that our initial going into legal position was the right legal position. It’s been affirmed by the courts. It’s been affirmed by legislatures. There’s nothing more exciting than that. To see the Supreme Court overturn PASPA during that time and see states adopting sports betting was exciting legal work. It’s fun. I didn’t come here to review SaaS contracts.
It’s interesting because there’s a huge opportunity for more people in the legal profession to go into business. Just like so many from engineering have gone into business. With a lot of the engineering space has gone in, but I haven’t seen as many from the legal side move into the C-Suite as real operational people. Not a chief legal counsel. I have a friend who’s the Chief Legal Counsel for Panda. I have a close friend who is our Chief Legal Counsel. There’s something about the fact that you oversee legal, but you also oversee operations, IT, and the whole people side of the business, which is highly unusual.
That was one of the things that I talked to Vishal about. I said, “One of my favorite times at DraftKings were those early days when we were going from 20, 30, 40 people to 500 and working closely with the management team there.” We built out a fraud control department. We built out a compliance team right from nothing, which was great. Seeing like, “This is how the product team is scaling. This is how the analytics team is scaling.” All of that. That was what got me out of bed on a day-in and day-out basis and got me excited at DraftKings during that time period. It’s like, “This is so cool.”
Being able to go and do that again was something that Vishal and I talked about. He’s like, “You manage all of the GNA side of the business with the exception of finance. We got a great CFO. Our CFO is awesome and he is managing that well. I will have zero value that I will add, if I were controlling that function, too. Let him deal with that. The rest of the business is where my passion lies. Being able to grow and scale that and being able to provide the tools to the marketing team, the product team, and the sales and success team that they need to go and dominate the market.
I have got a question related to the culture side of things as well. What was it like for you coming into the organization when there were already 70 people there? How do you come in a senior role over top of a bunch of new people who no longer get to report to the CEO or they know? How did you make that move without upsetting the apple cart?
It was, easy. I came in and oversaw the legal function. The HR functions that were being done were effectively done by our Director of Accounting using Gusto. All the onboarding paperwork. You click through, put in your papers and that’s your HR team. There wasn’t anything else there from an operations perspective. I hired our VP of HR. I hired our Senior Director of IT. A lot of these functions weren’t in place when I joined. The people who were performing these functions in most cases were very happy to get rid of them.
They must have known that they wanted someone else to report as well then?
Yeah. Our CTO went from answering security questionnaires and issuing laptops to new employees to now living in the future and focusing on new products and the R&D side of the houses. It’s a waste of his time to sit there and figure out how to manage help desk tickets. This was a big part of our growth, particularly through 2021.
You mentioned something about you like controversy. Maybe you don’t go out and seek it, but you are okay with controversy in organizations because it builds a team. Is that how you said it?
Most lawyers are comfortable with controversy and conflict. If they are not, they should be. It’s what we do. I view conflict as a way to get to a resolution that needs to happen. The stronger or the larger the controversy, the more effort it takes to get through it. That’s when you see dependency on your team and who is team-first and who is all in or who’s committed.
You look at the controversy that DraftKings went through. I’m very happy to call Matt, Paul, and Jason, the founders, as well as the rest of the executive team there. It was during that time, close friends. We still are in touch. It was those times that brought us all together. It’s a job. When you are operating at this level, it’s not a job. You do this because you care about it, not because you are part of it.
When you are doing something that you care about with people who are similarly minded in terms of the goal orientation and methods to get there. You work hard toward a successful outcome. It builds that camaraderie. You are doing it as much for the person next to you as you are for the good of the business.
The controversy tests those relationships and it can deepen those relationships. It’s like the adage, “You should never marry a person with whom you haven’t had an argument.” The arguments bring you closer. They teach you a lot about the character of the people who are working beside you. I welcome controversy and challenges. A lot of companies and a lot of different industries are dealing with controversy right now as a result of the macroeconomic situation. The teams that are going to come out on top when the macro situation starts to correct itself are going to be the people who dealt with that controversy as a team and as a unit and put the team-first and the business-first.
What is your approach right now? You are fortunate that you have raised $140 million prior to the markets going for the crap. What is your position related to the economy right now? What are you telling the employees? How are you guiding the company through this? Are there any thoughts about that?
There are a couple of aspects of it. Having cash is great and having enough runway that we feel comfortable. No one has a crystal ball, but we have got enough runway where we are comfortable that the macroeconomic situation will be at least on the upswing, if not turned around in a meaningful way by the time we need to go and raise money. There’s an aspect of step-functioning growth as well. There’s probably a pretty decent argument given the size of our staff. Maybe we are a little bit bigger than we should be, but I can guarantee you that by the end of Q1, maybe even the middle of Q2, we are going to be on the other side of that curve.
As I said before, you hire, see when it’s going to break. Hire a little more and see when it’s going to break. That’s the way that we are approaching it. We are also very regularly data-driven and metrics-driven. With our revenue, we are looking at how are we tracking for year-end. Great. Are we meeting our goals? Yes or no. If we are, by how much? What does that do for Q1, Q2, Q3, and Q4 for 2023? Does it make sense for us to invest a little bit more in certain parts of the business because we are ahead of our goals? Let’s say we are missing the goals. What are we going to do?
Our runway is something that we have tied ourselves to. We will modify our business to fit that runway. It’s a decision that we have made to try to combat this macroeconomic turmoil that we are dealing with. Our employees are aware or everybody is aware of what’s going on in the macro environment. We have employees who have expressed concern, “How are we thinking about this? Is this going to impact us?”
Wayfair and a bunch of others doing Amazon’s massive layoffs. It’s a natural question for people to ask. For us, we haven’t over-hired given our revenue. Short of something extremely negative happening to our revenue, we feel very confident that the way that we have structured and are running our business is something that’s going to provide job security for our employees and the opportunity to even make more money and get a higher equity stake and continue to build the business and grow a good fundamental business.
There’s been a lot of discussion. We had a group discussion with our COO Alliance members around compensation and where we are right now vis-a-vis inflation and the needs of employees to keep up. What are your thoughts on that in terms of compensation? Are we having to raise employee comp? Should we be trying to teach employees to start living within their means and stop buying so many big-screen TVs? Are we somewhere in the middle? What’s going on?
What we are seeing is that at least over the last few years, it’s very much been a candidate’s market. Start to question with these layoffs, whether it’s still a candidate’s market. Our perspective is to pay employees fairly and they are going to work well for you. Build into your hiring plans the aspect of retention and also planned attrition.
What I mean by planned attrition is understanding that there are going to be some frictional moves. People are going to say, “Maybe the company is no longer a startup enough for me. I’m a person from 0 to 100 people and I tried to make this work. I’m going to go elsewhere.” People maybe come in and say, “I like this idea of a startup, but working in it is very different. I’m more of a company person. I’m going to go and do that.”
You have this percentage that you factor in and then you have the retention aspect. That all goes into your hiring plan as well. “How many heads should we be hiring for? There are backfills that we are going to need to deal with. Let’s think about that.” There are budgetary constraints, but there are also retention and raises for people who we want to keep around and make sure are going to be in it for the long haul. You got to plan it. From my perspective, companies that are in a position where they are not giving raises and telling people to sit and be happy with what they have are going to find themselves in a situation where their staff will leave.
What about titles? It’s pretty unique in terms of when you are with a small or midsize company. Titles don’t have as much structure as they do when the company is more established. How do you decide what titles to give out and what criteria to place around titles?
I look at titles and I try to align titles as much as possible with career pathing templates. You are looking at Individual Contributor Managers, Senior Managers, Directors, Senior Directors, VP, and SVPC. For example, within the legal function here. I’m the Chief Legal Officer. We don’t have a general counsel title here. That’s very specific on my part because I want everybody to recognize that Jonathan, our VP of Legal is a VP-level contributor. You had some of these different roles and titles and people are like, “What level are you?” When you start thinking about how are you evaluating someone’s performance, I expect something different from a VP versus a Director versus a Manager.
That’s where I’m going with this. How do you place those titles? Is it based on roles and responsibilities? What’s it based on?
I define the seat first and here’s where a lot of startups go wrong. Eventually have to do something uncomfortable, which is retitling people. “I get it. You used to be the Chief Marketing Officer, but you are operating at a director level.”
There were fourteen of you back then.
Yeah. You and your college roommate decided you’d be the CMO. Now, you have a business on your hands, which is great. An awesome opportunity to learn the joy of startups and the wonder of startups. I go by defining the seat and what that means. When you think about a level of expertise in your particular discipline, that’s only a part of the puzzle. The leveling shows what strategically are you doing within the organization and what is the organization expecting from you at a strategic level and an execution level. How are you working cross-functionally?
There are roles within an organization that shouldn’t be C-level roles. There are. It is what it is. I don’t want to pull anyone’s particular title out of it, but there are some roles that are not C-level roles because you are not contributing cross-functionally. You are not driving strategy. You are not originating a strategy that you have to drive across multiple functions. It’s not within your discipline to be a C-level executive, VP-level, or whatever it may be.
If you define this is what it means to be a VP at this organization. You are setting your strategy. You are working autonomously. You are executing on your own. You are holding others accountable. You have your sphere of influence across your peer group and those types of things. That’s in the job description. It’s like if you are not doing those things, then you are the wrong person in that seat. That’s it.
It’s a shame that so many companies missed that, but that’s part of the natural evolution of a company growing as well. You make the mistakes and you learn or you listen to some of the experts. I had to help a company. I helped coach them from 40 people up to 700 and then we had to retitle them at 700 because they weren’t listening at 40.
They had a whole bunch of people that were Senior VPs. I’m like, “They are not VPs.” You don’t pay a VP $120,000. That’s not a VP. It’s a director. They went through the pain. I want to talk about the fact that you took that one company public as well via the SPAC. What was that like? Any lessons in doing that? Was there anything that you guys learned through the school hard knocks or some of your successes?
I learned a ton through that process. I worked with outstanding external advisors, both on the finance accounting side and on the legal side. A ton of work. At its most fundamental level. What I learned is that your chief executive and your true business leadership are the secrets to it all. Maybe that’s not the case in every company and maybe that’s a unique thing for DraftKings. Between Jason, Matt, and Paul, the way that they drove the resolution was incredible and relentless. Seeing Jason’s strategic vision throughout that.
That was not a short process. You don’t SPAC in 60 days. As a part of this acquired SBTech. Then that combined company, which had 1,000 plus employees at the time. Then you have a gaming transaction. It’s a complex world that you had to navigate. Seeing Jason in particular, being able to go through and understand everything from the legal implications to the finance side to the sales and marketing side to get investors ready for this combined company to be a successful public entity. That was huge.
When I think about what those learnings were is that something that a lot of lawyers generally should understand is that you are nothing more than an input. At a fundamental level, you are an input. You are a subject of the business. You have to get comfortable. There was no legal wagging of the dog on the SPAC transaction.
The transaction took a particular form. It wasn’t like lawyers being, “This is how it goes.” It was, “Jason recognizes this is the lowest cost of capital and this is the most efficient way for this company to go to the next level. This is what business metrics are driving that decision. Lawyers get on board with it and figure out a way to get it done.” Granted, it’s not that cut-and-dry. It’s not like Jason was like, “Go screw.” He’s not that type of person.
As a professional, as an executive, you need that leadership and you need that laser focus and determination on, “Why are you doing this?” Making sure that every decision you make leading up to that, whether that’s an IPO, SPAC, or whatever that exit may look like. You are doing it for the right reasons. You don’t go public because you want liquidity. You do it because it’s the cheapest cost of capital. It happens that you get some liquidity for your shareholders, too. That’s great, but that’s not a reason to go public. You go public because of the fundamental business and you know that this is the cheapest cost of capital for you. Not only right now, but on an ongoing basis.
That’s interesting insights for sure. I want to go back to the 21 or 22-year-old Tim. What advice would you give yourself back then that you know to be true now but you wish you’d known when you were 21? Just starting in your career.
At 21 or 22, I probably would have said, “Don’t go to law school.” No. I’m kidding. I have enjoyed that. I would say just be confident that you are going to be able to figure it out. You may not have all the answers right away and nothing is going to go according to plan, but be able to be adaptable and have faith. If you work hard and maintain your integrity throughout your development, particularly your early professional development years. You think about maintaining integrity, a good strong work ethic, building relationships, and the importance of relationships in your career. Anything that you are going to face, you are going to be able to come out at least on a pretty good result, if not a great or excellent result.
Tim Parilla the Chief Legal Officer for LinkSquares. Thanks very much for sharing with us on the show.
Thanks so much. I appreciate the time. It was great chatting with you.
It was great. Thank you.