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Building Trust Through Product: How Term Scout is Creating a New Category in Legal Tech

Trust rarely scales easily in enterprise software. But in a recent episode of Category Visionaries, Term Scout co-founder Otto demonstrated how his company is turning this challenge into an opportunity by reimagining how businesses interact with contracts.

The old playbook for legal tech startups typically involves heavy investment in sales and marketing to drive rapid adoption. Term Scout chose a different path – one focused on building deep product trust before scaling distribution.

“We spent a lot of time focusing on just product and technology and the $7 million that we raised, the vast majority of it has gone to building great products, getting the subject matter experts to make sure that the data integrity is really high,” Otto explains.

This product-first strategy emerged from a critical insight about their market: In the high-stakes world of enterprise contracts, trust isn’t just a nice-to-have – it’s everything. As Otto notes, “We know that if you’re going to rely on us to make a decision about whether or not to sign a contract, that’s a really high trust relationship, really high stakes relationship.”

Term Scout’s approach to building this trust is notably different from many AI companies rushing to leverage large language models. “We’re kind of more like a small language model. We want a much smaller data set, but much higher quality signal in that data set,” Otto explains. This specialized approach allows them to answer the specific questions that experienced attorneys need when evaluating contracts.

The results of this strategy are showing up in their go-to-market motion. Rather than relying on heavy marketing spend, Term Scout has grown primarily through word of mouth, particularly in enterprise accounts. “Most of our growth candidly comes from word of mouth… We have one happy customer that shares it. You have IBM who has a certification on their contract. Their customers see it.”

This organic growth has allowed Term Scout to effectively create an entirely new category around contract certification. As Otto describes it, “On the contract certification side, though, we’ve really created a category. And that category is all around using objective data to help people… Like real objective third party data to prove it. And in that particular space, there’s really no one else.”

What’s particularly instructive about Term Scout’s journey is how they’ve turned what could be seen as a weakness – lack of marketing investment – into a strength. “We made a conscious decision to invest really heavily in product and therefore less heavily in marketing,” Otto shares. “We just hired our first full time marketer this month.”

The company is now processing around 6,000 contracts monthly on their platform. While this represents significant growth, Otto maintains perspective about the scale of the opportunity: “6,000 a month is actually nowhere close to a big dent, but it’s a number that we’re proud of for where we are as a company.”

Looking ahead, Term Scout’s vision extends beyond just enterprise contracts. “Contracts touch people and businesses equally. They don’t discriminate, right? Any person or business that participates in the economy is necessarily signing lots and lots of contracts,” Otto explains. This hints at much larger ambitions: “For me, the solution should bridge the gap. It should work for everyone.”

For founders building in complex enterprise spaces, Term Scout’s journey offers valuable lessons about the power of focused execution. Rather than trying to boil the ocean, they’ve shown how deep expertise in a narrow domain can create powerful network effects. As Otto puts it, “We need a neutral, independent third party to help us get to contract faster. And what we’re trying to be is that neutral, independent third party for both parties, for both sides of the transaction.”

In an era where many startups rush to market with minimum viable products, Term Scout’s story suggests an alternative path: building minimum viable trust first, then scaling through the credibility that creates.