Within the winter of 2022, because the tech world was changing into mesmerized by the sudden, explosive arrival of OpenAI’s ChatGPT, Benjamin Alarie confronted a pivotal alternative. His authorized tech startup, Blue J, had a good enterprise constructed on the AI of a bygone period, serving a whole bunch of accounting companies with predictive fashions. However it had hit a ceiling.
Alarie, a tenured tax regulation professor on the College of Toronto, noticed the nascent, error-prone, but highly effective capabilities of enormous language fashions not as a curiosity, however as the longer term. He made a high-stakes choice: to pivot his total firm, which had been painstakingly constructed over practically a decade, and rebuild it from the bottom up on this unproven know-how.
That wager has paid off handsomely. Blue J has since quietly secured a $122 million Collection D funding spherical co-led by Oak HC/FT and Sapphire Ventures, putting the corporate's valuation at over $300 million. The transfer reworked Blue J from a distinct segment participant into certainly one of Canada's fastest-growing authorized tech companies, multiplying its income roughly twelve-fold and attracting 10 to fifteen new clients daily.
The corporate now serves greater than 3,500 organizations, together with world accounting large KPMG and several other Fortune 500 corporations. It’s tackling a crucial bottleneck within the skilled companies trade: a extreme and worsening expertise scarcity. The U.S. has 340,000 fewer accountants than it did 5 years in the past, and with 75% of present CPAs anticipated to retire within the subsequent decade, companies are determined for instruments that may amplify the productiveness of their remaining consultants.
“What once took tax professionals 15 hours of manual research to do can now be completed in about 15 seconds with Blue J,” Alarie, the corporate's CEO, mentioned in an unique interview with VentureBeat. "That value proposition—we can take hours of work and turn it into seconds of work—that is driving a lot of this."
When the dean's biography was fallacious: the second that modified every part
Alarie vividly remembers January 2023, when the dean of the regulation faculty stopped by his workplace for New 12 months's greetings. He requested her about ChatGPT and prompted the AI to explain her. ChatGPT confidently generated a biography. Some particulars had been correct. Others had been utterly fabricated.
"She was like, 'Okay, this is really kind of scary. This is wrong, and this has implications,'" Alarie mentioned. But that second of apparent failure didn't deter him. As a substitute, it crystallized his conviction.
The corporate's first iteration, launched in 2015, used supervised machine studying to construct predictive fashions that would forecast judicial outcomes on particular tax points. Whereas technically refined, it had a elementary flaw: it couldn't reply each tax analysis query.
"The challenge was it couldn't answer every tax research question, which was really the holy grail," Alarie mentioned. Clients cherished the instrument when it utilized to their drawback, however would rapidly abandon it when it didn't. Income plateaued round $2 million yearly.
Regardless of ChatGPT's infamous hallucinations, Alarie satisfied his board to make the pivot. "I had this conviction that if we continued down that path, we weren't going to be able to address our number one limitation," he mentioned. "Large language models seemed like a very promising direction."
He gave his crew six months to ship a working product.
From 90-second responses to three million queries: How Blue J tamed AI hallucinations
By August 2023, Blue J was able to launch. What they launched was, in Alarie's candid evaluation, "super janky." The system took 90 seconds to reply. About half the solutions had points. The Web Promoter Rating registered at simply 20.
What reworked that flawed product into in the present day's platform — with response instances measured in seconds, a dissatisfaction price of only one in 700 queries, and an NPS rating within the mid-80s — was relentless deal with three strategic pillars.
First is proprietary content material at huge scale. Blue J secured unique licensing with Tax Analysts (Tax Notes) and IBFD, the Amsterdam-based world tax authority masking 220+ jurisdictions. "We are the only platform on earth that takes in the best U.S. tax information from Tax Notes and the best global tax information from IBFD," Alarie mentioned.
Second is deep human experience. Blue J employs tax consultants led by Susan Massey, who spent 13 years on the IRS Workplace of Chief Counsel as Department Chief for Company Tax. Her crew continually checks the AI and refines its efficiency.
Third is an unprecedented suggestions flywheel. With over 3 million tax analysis queries processed in 2025, Blue J is amassing unparalleled knowledge. Every question generates suggestions that flows again into the system.
Weekly lively person charges hover between 75% and 85%, in comparison with 15% to 25% for conventional platforms. "A charitable ratio is like we're five times more intensively used," Alarie famous.
Inside Blue J's early entry partnership with OpenAI
Blue J maintains an unusually shut relationship with OpenAI that has confirmed essential to its success. "We have a very good relationship with OpenAI, and we get early access to their models,"Alarie mentioned. "It's quite collaborative. We give them a lot of really high quality feedback about how well different versions of forthcoming models are performing."
This suggestions proves priceless as a result of Blue J has developed what Alarie calls "ecologically valid" take a look at questions — drawn from precise tax skilled queries, with right solutions decided by Blue J's knowledgeable crew. This helps OpenAI enhance efficiency on advanced reasoning duties.
The corporate checks fashions from all main suppliers — OpenAI, Anthropic, Google's Gemini, and open-source alternate options — constantly evaluating which performs greatest. "We're not necessarily 100% committed to any particular provider," he defined. "We're testing all the time."
This method helps Blue J navigate a difficult enterprise mannequin: charging roughly $1,500 per seat yearly for limitless queries whereas absorbing variable compute prices. "We've pre-committed to delivering them a really good user experience, unlimited tax research answers at a fixed price," Alarie mentioned. "We're absorbing a lot of that risk."
Competitors amongst basis mannequin suppliers creates downward strain on API pricing, whereas Blue J's conservative utilization modeling has confirmed correct. Gross income retention exceeds 99%, whereas internet income retention reaches 130% — thought of best-in-class for SaaS companies.
Taking up Thomson Reuters and LexisNexis with 75% weekly engagement
Blue J faces competitors from established publishers like Thomson Reuters, LexisNexis, and Bloomberg, all of which introduced AI capabilities all through 2023 and 2024. But Blue J's engagement metrics recommend it has captured vital momentum, rising from simply 200 clients in 2021 to over 3,500 organizations in the present day.
The each day updates show essential. Whereas the tax code itself adjustments solely when Congress acts, the ecosystem evolves continually by way of IRS rules, new rulings, and court docket circumstances. All 50 states modify their tax codes often.
"Things are changing literally every day," Alarie mentioned. "Every day we're updating the materials, and that's just the U.S. We cover Canada, we cover the UK. The aspirations are truly global for this thing."
Alarie's ambitions prolong past constructing a profitable startup. As writer of the award-winning e-book "The Legal Singularity" and college affiliate on the Vector Institute for Synthetic Intelligence, he has spent years considering AI's long-term influence on regulation.
In educational papers revealed in Tax Notes all through 2023 and 2024, he chronicled generative AI's rise, predicting that "clients will become substantially more sophisticated" and that AI would push human consultants towards higher-value strategic roles somewhat than routine analysis.
Blue J's $122 million plan: From tax analysis to 'world tax cognition'
The Collection D funding, which introduced whole capital raised to over $133 million, will gasoline aggressive geographic and product growth. Blue J already operates within the U.S., Canada, and the U.Ok., with plans to finally cowl 220+ jurisdictions by way of its IBFD partnership.
Future capabilities might embrace automated memo technology, tax type completion, doc drafting, and conversational historical past sustaining context throughout periods—remodeling Blue J from a analysis instrument into what Alarie describes as "the operating layer for global tax cognition."
For all its success, Blue J operates in a site the place errors carry severe penalties. The hallucination drawback hasn't been eradicated — it's been minimized by way of cautious engineering, content material curation, and human oversight. Blue J has skilled its fashions to acknowledge once they can not reply a query somewhat than fabricate data.
The enterprise additionally faces financial dangers if compute prices spiral or utilization patterns exceed projections. And subtler questions loom about skilled judgment: as AI techniques turn into extra succesful, will customers defer to outputs with out ample crucial analysis?
From 15 hours to fifteen seconds: What Blue J's AI pivot teaches each trade
Blue J's transformation affords classes past tax software program. The corporate's willingness to desert eight years of proprietary know-how and rebuild on an initially unreliable basis required each braveness and calculated risk-taking.
The choice paid off not as a result of generative AI was inherently superior to supervised machine studying in all dimensions, however as a result of it addressed the suitable drawback: comprehensiveness somewhat than precision in slender domains. Tax professionals didn't want 95% accuracy on 5% of questions. They wanted good-enough accuracy on 100% of questions.
The development from an NPS of 20 to 84 in simply over two years displays relentless iteration knowledgeable by huge knowledge assortment. The content material partnerships created differentiation that pure know-how couldn't replicate. The crew of tax consultants offered area information mandatory to make sure reliability.
Most essentially, Blue J acknowledged that the actual competitors wasn't different AI startups and even established publishers. It was the outdated manner of doing issues — the 15 hours of handbook analysis, the institutional information locked in retiring professionals' heads.
"People are like, 'What does Blue J do? They provide better tax answers. Okay, I think we need that,'" Alarie mirrored.
As AI transforms career after career, that readability of objective might matter greater than technological sophistication. The longer term belongs to not those that construct probably the most superior AI, however to those that most successfully harness it to unravel issues people even have.
For a tax regulation professor who began with frustration about inefficient analysis strategies, constructing a $300 million firm marks an audacious endpoint. For the 1000’s of execs now answering advanced questions in 15 seconds as an alternative of 15 hours, it represents the way forward for their career, arriving sooner than most anticipated.
The wager on ChatGPT when it was nonetheless hallucinating biographies has turn into a validation that generally the riskiest transfer is to not transfer in any respect.
