Within the winter of 2022, because the tech world was turning into mesmerized by the sudden, explosive arrival of OpenAI’s ChatGPT, Benjamin Alarie confronted a pivotal selection. His authorized tech startup, Blue J, had a decent enterprise constructed on the AI of a bygone period, serving tons of of accounting companies with predictive fashions. But it surely had hit a ceiling.
Alarie, a tenured tax legislation 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 long run. He made a high-stakes resolution: to pivot his whole firm, which had been painstakingly constructed over almost a decade, and rebuild it from the bottom up on this unproven expertise.
That guess 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 one in every of Canada's fastest-growing authorized tech companies, multiplying its income roughly twelve-fold and attracting 10 to fifteen new clients every single day.
The corporate now serves greater than 3,500 organizations, together with world accounting big KPMG and several other Fortune 500 firms. 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 as soon as took tax professionals 15 hours of handbook analysis to do can now be accomplished in about 15 seconds with Blue J,” Alarie, the corporate's CEO, stated in an unique interview with VentureBeat. "That worth proposition—we are able to take hours of labor and switch it into seconds of labor—that’s driving loads 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 legislation faculty stopped by his workplace for New Yr'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, that is actually type of scary. That is fallacious, and this has implications,'" Alarie stated. But that second of apparent failure didn't deter him. As an alternative, it crystallized his conviction.
The corporate's first iteration, launched in 2015, used supervised machine studying to construct predictive fashions that might forecast judicial outcomes on particular tax points. Whereas technically refined, it had a elementary flaw: it couldn't reply each tax analysis query.
"The problem was it couldn't reply each tax analysis query, which was actually the holy grail," Alarie stated. Clients cherished the software when it utilized to their drawback, however would shortly 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 have the ability to handle our primary limitation," he stated. "Massive language fashions appeared like a really promising route."
He gave his group 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, "tremendous janky." The system took 90 seconds to reply. About half the solutions had points. The Internet Promoter Rating registered at simply 20.
What reworked that flawed product into at present's platform — with response occasions measured in seconds, a dissatisfaction charge 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 large scale. Blue J secured unique licensing with Tax Analysts (Tax Notes) and IBFD, the Amsterdam-based world tax authority masking 220+ jurisdictions. "We’re the one platform on earth that takes in the very best U.S. tax data from Tax Notes and the very best world tax data from IBFD," Alarie stated.
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 group continuously 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 consumer charges hover between 75% and 85%, in comparison with 15% to 25% for conventional platforms. "A charitable ratio is like we're 5 occasions extra 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’ve got an excellent relationship with OpenAI, and we get early entry to their fashions,"Alarie stated. "It's fairly collaborative. We give them loads of actually prime quality suggestions about how nicely completely different variations of forthcoming fashions are performing."
This suggestions proves worthwhile as a result of Blue J has developed what Alarie calls "ecologically legitimate" take a look at questions — drawn from precise tax skilled queries, with appropriate solutions decided by Blue J's knowledgeable group. This helps OpenAI enhance efficiency on complicated reasoning duties.
The corporate checks fashions from all main suppliers — OpenAI, Anthropic, Google's Gemini, and open-source alternate options — repeatedly evaluating which performs greatest. "We're not essentially 100% dedicated to any explicit supplier," he defined. "We're testing on a regular basis."
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 extremely good consumer expertise, limitless tax analysis solutions at a set worth," Alarie stated. "We're absorbing loads of that threat."
Competitors amongst basis mannequin suppliers creates downward stress on API pricing, whereas Blue J's conservative utilization modeling has confirmed correct. Gross income retention exceeds 99%, whereas web income retention reaches 130% — thought of best-in-class for SaaS companies.
Taking over 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 counsel it has captured important momentum, rising from simply 200 clients in 2021 to over 3,500 organizations at present.
The every day updates show essential. Whereas the tax code itself modifications solely when Congress acts, the ecosystem evolves continuously by IRS laws, new rulings, and court docket circumstances. All 50 states modify their tax codes recurrently.
"Issues are altering actually every single day," Alarie stated. "Each day we're updating the supplies, and that's simply the U.S. We cowl Canada, we cowl the UK. The aspirations are really world for this factor."
Alarie's ambitions prolong past constructing a profitable startup. As writer of the award-winning e-book "The Authorized Singularity" and school affiliate on the Vector Institute for Synthetic Intelligence, he has spent years considering AI's long-term influence on legislation.
In educational papers revealed in Tax Notes all through 2023 and 2024, he chronicled generative AI's rise, predicting that "shoppers will turn into considerably extra refined" 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 complete capital raised to over $133 million, will gas aggressive geographic and product enlargement. Blue J already operates within the U.S., Canada, and the U.Ok., with plans to ultimately cowl 220+ jurisdictions by its IBFD partnership.
Future capabilities might embrace automated memo technology, tax kind completion, doc drafting, and conversational historical past sustaining context throughout classes—remodeling Blue J from a analysis software into what Alarie describes as "the working layer for world tax cognition."
For all its success, Blue J operates in a website the place errors carry severe penalties. The hallucination drawback hasn't been eradicated — it's been minimized by cautious engineering, content material curation, and human oversight. Blue J has educated 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 methods turn into extra succesful, will customers defer to outputs with out enough crucial analysis?
From 15 hours to fifteen seconds: What Blue J's AI pivot teaches each trade
Blue J's transformation presents classes past tax software program. The corporate's willingness to desert eight years of proprietary expertise 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 appropriate 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 advance from an NPS of 20 to 84 in simply over two years displays relentless iteration knowledgeable by large knowledge assortment. The content material partnerships created differentiation that pure expertise couldn't replicate. The group of tax consultants offered area data mandatory to make sure reliability.
Most essentially, Blue J acknowledged that the true 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 data locked in retiring professionals' heads.
"Persons are like, 'What does Blue J do? They supply higher tax solutions. Okay, I feel we’d like that,'" Alarie mirrored.
As AI transforms occupation after occupation, that readability of function could matter greater than technological sophistication. The long run 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 legislation professor who began with frustration about inefficient analysis strategies, constructing a $300 million firm marks an audacious endpoint. For the hundreds of execs now answering complicated questions in 15 seconds as a substitute of 15 hours, it represents the way forward for their occupation, arriving quicker than most anticipated.
The guess 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.
