Lex, an AI-powered writing tool, today said it has raised a $2.75 million seed round led by True Ventures. The company has been spun out of Every, which Lex’s CEO Nathan Baschez helped start.

Baschez described Lex as a “modern writing platform,” emphasizing that ‘modern’ in this case means inclusive of AI. In the CEO’s eyes, the use of AI in writing tools is the continuation of the centuries-long arc of improvements to the practice of writing.

According to Baschez, most writers today do not use AI in their workflow. That claim tracks with what I have heard from my friends in the larger writing community. Lex, then, has to not only build a solid writing service in a market that has a number of incumbent and low-cost tools, but also get writers interested in using technology that some folks expect to take away their jobs.

So how does Lex meld AI into a writing tool so that writers would want to use it? After testing Lex, digesting its onboarding material and speaking to the company, it appears that the service wants to create a super-clean writing interface that has a fair number of features that power users — people who write a lot, I suppose — expect. The AI is included as a way to extend and smoothen out the user’s workflow.

In practice, you get formatting tools and markdown-based shortcuts that let you easily add sub-heads and the like. The AI steps in when you either slow down or if there’s a halt in your writing process. “If you ever get stuck,” Lex explains to new users, “just hit CMD+Enter or type +++, and GPT-3 will fill in what it thinks should come next.”

You can also ask Lex’s AI questions inside of comments, which is neat. You can ask it to rewrite something to be shorter, or, in one example the company shared, get it to check if a particular sentence is extraneous or not. Lex can also generate headlines for documents, a feature that I’ve seen other AI-imbued digital tools offer.

So is this yet another tool that will help writers avoid writing? Sorta. Baschez’s introductory material explains that the AI tools will at times generate “rubbish,” but that the founder is “finding [its AI-generated output] really helpful” to get him unstuck when he’s not sure what to write next.

Lex’s “AI roadmap” says more features that will add the ability to “rephrase a sentence, generate a summary, and more” are coming.

What about privacy? Given that Lex is a writing tool, should writers worry about their words being absorbed into the system? Baschez told TechCrunch in an email that Lex is “not using any user content for training,” though he added that the company may want to “train (or fine tune)” its own models in the future.

When it does reach that point, the CEO said the company intends to be “very transparent about it and careful not to include anything our users wouldn’t want included.”

That seems reasonable. For now, with OpenAI’s models, Baschez thinks the company’s privacy policies satisfy “most users’ needs.”

The AI stuff is cool, but there was one thing about this app that made me want to keep using it: It has no historical baggage. I find it odd that many modern word processors like Google Docs and Word retain a bias towards pagination — the UX is intended for printing out documents onto letter-sized paper. Lex, in contrast, does away with all that.

That’s not a small point. Baschez told TechCrunch that because he is building something that “can afford to be a little bit more focused [and] opinionated” than existing writing tools, he can excise cruft that often clutters writing tools. Small tweaks such as these, I think, can make the writing experience feel less like a digitized real-world process and more like you’re using a tool meant for writing today.

From idea to startup

It’s not hugely surprising to see Lex being spun out from Every, a subscription media service focused on technology and productivity topics. Baschez told TechCrunch that after taking parental leave, he had a “real itch to write software again,” which led to him tinkering with GPT-3 and coming up with the concept for Lex.

Lex started as a nights-and-weekends project, and initial interest was strong, per Baschez. With a simple YouTube video and a few writers on board, Lex signed up around 25,000 users in its first 24 hours. That initial burst of interest also caught TechCrunch’s attention. An AI-powered product getting early traction is almost catnip for investors in today’s market, so it’s understandable that Lex was able to raise capital so soon.

But Lex doesn’t intend to go on a hiring spree. Instead, Baschez intends to “keep the team really small until [it is] painful.” ‘Hire when it hurts’ is not a new approach to keeping headcount low, but it is one that we haven’t heard of much in recent years. An active focus on limiting burn means the company’s modest fundraise should keep it going for a “really, really long time,” Baschez said, and the company intends to start charging for its product in short order.

What will it cost to use, though? That’s a question worth pondering. Before the generative pre-trained transformer-led AI revolution, the venture and startup communities talked often about the gross margins AI-powered software products would be able to command. They hoped that while it would be expensive to train and run AI models, those costs would decline over time and could be offset by a larger number of customers, limiting their impact on profitability. Indeed, they prayed that software companies might be able to retain their SaaS-like gross margins.

But today, we know that some popular large language models (LLMs) charge usage fees. If you want to make a bunch of API calls using your AI implementations, those costs can add up. Of course, you could use open source LLMs instead, but that’s not always a good idea for startups, which may prefer commercially available tools over building an in-house LLM function. In turn, that means that the cost of hosting users won’t be insignificant. Ergo, Lex will not cost something like $2 per month.

Still, Baschez doesn’t think that Lex’s paid tier will cost much more than a couple $10 bills. And if it builds an enterprise plan, Lex will soon resemble a pretty run-of-the-mill SaaS company.

So what?

There is no shortage of AI-powered digital services, but what I like about Lex is that it makes for a good writing tool that is fast, simple to use, and uses AI to help writers instead of trying to supplant them. With cash on hand and clear product-market interest, Lex could be an interesting startup to watch.

https://techcrunch.com/2023/08/23/lex-ai-writing-tool-seed-round/