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 selection. His authorized tech startup, Blue J, had a good enterprise constructed on the AI of a bygone period, serving a whole bunch of accounting corporations with predictive fashions. But it surely had hit a ceiling.
Alarie, a tenured tax law professor on the University 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 determination: to pivot his total firm, which had been painstakingly constructed over almost 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 Series D funding spherical co-led by Oak HC/FT and Sapphire Ventures, putting the corporate’s valuation at over $300 million. The transfer remodeled Blue J from a distinct segment participant into one among Canada’s fastest-growing authorized tech corporations, multiplying its income roughly twelve-fold and attracting 10 to fifteen new prospects every single day.
The corporate now serves greater than 3,500 organizations, together with world accounting big KPMG and a number of other Fortune 500 corporations. It’s tackling a vital bottleneck within the skilled companies trade: a extreme and worsening expertise scarcity. The U.S. has 340,000 fewer accountants than it did five years ago, and with 75% of present CPAs anticipated to retire within the subsequent decade, corporations 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, mentioned in an unique interview with VentureBeat. “That worth proposition—we will take hours of labor and switch it into seconds of labor—that’s driving a whole lot of this.”
When the dean’s biography was flawed: the second that modified every little thing
Alarie vividly remembers January 2023, when the dean of the regulation college 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 have been correct. Others have been utterly fabricated.
“She was like, ‘Okay, that is actually sort of scary. That is flawed, and this has implications,'” Alarie mentioned. But that second of apparent failure did not 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 might forecast judicial outcomes on particular tax points. Whereas technically refined, it had a basic flaw: it could not reply each tax analysis query.
“The problem was it could not reply each tax analysis query, which was actually the holy grail,” Alarie mentioned. Clients liked the device when it utilized to their drawback, however would rapidly abandon it when it did not. 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 deal with our primary limitation,” he mentioned. “Giant language fashions appeared like a really promising course.”
He gave his staff 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 Net Promoter Score registered at simply 20.
What remodeled that flawed product into at the moment’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 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 one of the best U.S. tax info from Tax Notes and one of the best world tax info 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 Office of Chief Counsel as Department Chief for Company Tax. Her staff consistently exams 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 instances extra intensively used,” Alarie famous.
Inside Blue J’s early entry partnership with OpenAI
Blue J maintains an unusually close relationship with OpenAI that has confirmed essential to its success. “Now we have an excellent relationship with OpenAI, and we get early entry to their fashions,”Alarie mentioned. “It is fairly collaborative. We give them a whole lot of actually top quality suggestions about how effectively 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 right solutions decided by Blue J’s professional staff. This helps OpenAI enhance efficiency on advanced reasoning duties.
The corporate exams fashions from all main suppliers — OpenAI, Anthropic, Google’s Gemini, and open-source alternate options — repeatedly evaluating which performs finest. “We’re not essentially 100% dedicated to any specific supplier,” he defined. “We’re testing on a regular basis.”
This strategy helps Blue J navigate a difficult enterprise mannequin: charging roughly $1,500 per seat yearly for limitless queries whereas absorbing variable compute prices. “We have pre-committed to delivering them a extremely good consumer expertise, limitless tax analysis solutions at a hard and fast value,” Alarie mentioned. “We’re absorbing a whole lot of that danger.”
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 internet income retention reaches 130% — thought-about 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 vital momentum, rising from simply 200 prospects in 2021 to over 3,500 organizations at the moment.
The every day updates show essential. Whereas the tax code itself modifications solely when Congress acts, the ecosystem evolves consistently by means of IRS laws, new rulings, and courtroom instances. All 50 states modify their tax codes usually.
“Issues are altering actually every single day,” Alarie mentioned. “Daily we’re updating the supplies, and that is simply the U.S. We cowl Canada, we cowl the UK. The aspirations are actually world for this factor.”
Alarie’s ambitions lengthen past constructing a profitable startup. As creator of the award-winning guide “The Legal Singularity” and college affiliate on the Vector Institute for Artificial Intelligence, he has spent years considering AI’s long-term impression on regulation.
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 quite than routine analysis.
Blue J’s $122 million plan: From tax analysis to ‘world tax cognition’
The Series D funding, which introduced whole capital raised to over $133 million, will gas 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 means of its IBFD partnership.
Future capabilities may embody automated memo era, tax kind completion, doc drafting, and conversational historical past sustaining context throughout classes—remodeling Blue J from a analysis device into what Alarie describes as “the working layer for world tax cognition.”
For all its success, Blue J operates in a site the place errors carry critical penalties. The hallucination drawback hasn’t been eradicated — it has been minimized by means of cautious engineering, content material curation, and human oversight. Blue J has educated its fashions to acknowledge once they can not reply a query quite than fabricate info.
The enterprise additionally faces financial dangers if compute prices spiral or utilization patterns exceed projections. And subtler questions loom about skilled judgment: as AI programs turn into extra succesful, will customers defer to outputs with out adequate vital 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 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 fitting drawback: comprehensiveness quite than precision in slim domains. Tax professionals did not 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 large knowledge assortment. The content material partnerships created differentiation that pure know-how could not replicate. The staff of tax consultants supplied area information crucial to make sure reliability.
Most basically, Blue J acknowledged that the true competitors wasn’t different AI startups and even established publishers. It was the outdated method of doing issues — the 15 hours of handbook analysis, the institutional information locked in retiring professionals’ heads.
“Individuals are like, ‘What does Blue J do? They supply higher tax solutions. Okay, I feel we’d like 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 resolve 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 hundreds of pros now answering advanced questions in 15 seconds as a substitute of 15 hours, it represents the way forward for their career, arriving quicker than most anticipated.
The wager on ChatGPT when it was nonetheless hallucinating biographies has turn into a validation that typically the riskiest transfer is to not transfer in any respect.
