unicorns

3 Epic Insights From Hunting Legal Apps on Product Hunt

3 Epic Insights From Hunting Legal Apps on Product Hunt 2560 1600 Raymond Blyd

In “Who will beat Law Firms?” I mention that Product Hunt had just 22 legal apps. That number seemed a bit low, so I went back to see if I could find more. And what I found was Epic. Here are my 3 main insights while collecting legal apps on Product Hunt.

Product Hunting

Product Hunt (PH) is a site were new products get submitted and Product Hunters can upvote them. This creates a daily list of most popular products. The main difference between startups syndicates, crowdfunding or other marketplaces is:

a) PH primairily hosts  real products you can start using right away;

b) And this makes the PH experience, one grounded in practice rather than promise,

First, I did a couple of searches with keywords like “legal” or “law” but my results missed some valid products. I then expanded my keywords and browsed other collections, which is another cool feature of PH. These collections broaden my horizons and boosted serendipity. This resulted in a tangible “Legal Tech Hunt” collection with 65+ apps which nicely offsets my fantasy “Legal Visualizations & Designs” board on Pinterest.

My Cool is Cold

What struck me was the fact that cool products had little upvotes. Premonition uses AI to find the best lawyers, how cool is that! It had only 1 vote ?…so I gave it one more.  ROSS, an AI powered Attorney, did ok so I guess AI may only be suitable for judging the law but not the lawyers. But it’s not just me, legal industry darlings like Ravellaw or Casetext got relatively little love from Product Hunters. I initially found 22 apps because I was looking for particular legal characteristics. Eventually, I  found more legal apps when I stopped looking for legal apps.

Insight: I view products from the perspective of a Practitioner of Law and not as a Consumer of Law. Therefore, I subconsciously love the things that would only work for me.

epic 2

Practical is Popular

Topping the collection are straightforward legal apps for entrepreneurs. The top 3 are products which basically replace lawyers and empower consumers of law. Actually, 2 of them look similar to a well-known Legal Unicorn. The rest of the list is sprinkle with simple tools that help you avoid lawyers and court battles e.g. Clear helps you find and clear potentially damaging social media posts. Or Clerky which makes startup legal paperwork painless. These products make legal complexity invisible and anybody can use them right away.

Insight: Product hunters like practical, simple and fast. Their psychology towards legal services has evolved and so have their product preferences.

epic 3
Blockchain is Epic

I’ll be honest, I’m no expert on Bitcoin nor Blockchain but I think it’s awesome. I’m not the only one getting all warm and giddy ? at the promise this technology embodies for the legal market. Examples like Ascribe or Bitproof help protect Intellectual Property with Blockchain. Any Intellectual Property Attorney, with enough alcohol running through their veins, will admit that copyright law in a digital space can actually not exist. Computers copy, it’s how they operate on every level. So if the law states it’s illegal to copy then we would never be able to use the Internet. No lawyer nor contract can protect you from actual digital theft, but cryptography can. It’s Epic.

Insight: Technology is not only making legal protocols invisible, it’s making them redundant in a digital space.

epic 4

Summary: Legal professionals may not be the best at picking the hottest apps. Hunters (and future CEO’s) prefer the most practical apps to accomplish business goals and personal fulfillment. In the end, technology will make the need for legal protocols obsolete. Now before these exquisite specimens get sued into extinction…Come hunt with me…

Legal Tech Hunt

[icon name=”pinterest-square” class=”” unprefixed_class=””] Legal Visualizations & Designs

Corrected: Do Legal Unicorns Exist? Yes, They Will

Corrected: Do Legal Unicorns Exist? Yes, They Will 698 393 Raymond Blyd

Sometimes we make bold statements just to challenge our own assumptions. Dare ourselves to look closer and see if our reality is just a lie. While charting 912+ legal startups I wrote: “I did not spot a unicorn…yet“. How would I know what a legal startup unicorn looks like? What is a unicorn anyway and could these ever roam in a legal startup landscape?

What is a Unicorn?

A unicorn is a venture-backed private company worth more than a billion dollars…on paper. For argument’s sake, let’s pick the top unicorn valuation ($47+ Billion) and benchmark this amount against the market value of the #1 rank company in the world ($270+ Billion)*. A unicorn would be about 17 % the value of the industry pinnacle. With this number we can now measure a unicorn in any industry. So when a startup valuation ventures into the 15-17%  bracket of the industry leader in revenue or market value, it becomes a Unicorn.

An additional observation: the name Startup implies that it’s a young company. Meaning we’ll need to set a time constraint so we’ll state that they shouldn’t be older than 5 years.

unicorn2

*Note: Apple has the biggest market cap however its numbers are just too crazy to use as a benchmark.

What is a Legal Unicorn?

Looking at the list of the biggest players in the legal service market, the #1 Law Firm has a reported $2.5 Billion in revenue. So according to my scientific ratio a legal startup with a $45.9 Million $459 Million  valuation would be a Legal Unicorn. You can also do this exercise on neighboring industries such as legal information providers. However, this would raise the bar to $214.2 million $2.142 Billion but I shall not dwell on this track. For this exercise, we’ll stick with looking at companies trying to displace the Practice of Law e.g. Law Firms not the Business of Law e.g. Legal Information Providers.

Do Legal Unicorns Exist?

When I said: I did not spot any unicorns, my reasoning was clouded by ego devoid of data…and this happens often ?. I believed I would know it when I see it, even when camouflaged and hidden in the 912+ legal startups on Angel.co or anywhere else. Now that I devised this yardstick, I can more accurately assess if my intuition was correct. So between 40-50 million dollars valuation a legal startup would reach Unicorn status. Do we currently have legal startups with valuations in this range?

To answer this question, I needed to descent into this absurd world of venture capital, fundraising,  Pre-money or Post-Money Convertible Notes etc. In short, there seems to be no limit on valuations, yet there is a sanity on the willingness to fund. And the logic reveals itself in so-called rounds. Herein lies the key to my argument: funding usually starts with seeding after which follows a series A, B rounds and so forth. I stated that there are few rules on limits but it appears that each round of funding has a virtual ceiling e.g. 100k-$1million usually is considered Seeding. And between $1 million- $5+ million is considered to be Series A. Now stay with me: when you are entering in Series funding than investors expect at least a 10x return on investment. Example: a successful $2 million series A round will put a company at a minimum $20 million valuation.

However, companies aren’t bound by this limit and they can set their valuations much higher e.g. Buffer raised $3.5 million at a valuation of $60 million post-money. By this reasoning, if a legal startup receives $2+ million or more in VC money, it’s roaming Legal Unicorn meadow. And if they are able to get between $500k – $1+ million then we can call them Legal Centaurs.

Yes, eventually we will have Legal Unicorns [icon name=”trophy” class=”” unprefixed_class=””]. One example: Shake raised a total of $4 million before it got acquired. This would put its valuation between $40 – $70 million, according to our Buffer Theorem.

There is one more thing: above I briefly mentioned age but did not elaborate on how it equates to the value of startups. Looking back at my previous post, I was searching for a correlation between the creation of legal startups vs economic events. I may have been looking at it all wrong…bold statement ?.

[updated: July 8, 2015. Thanks to Ron Friedman for pointing the error of my ways ?]

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Who will beat Law Firms? An Interactive Chart

Who will beat Law Firms? An Interactive Chart 1920 1080 Raymond Blyd

Updated: Dec, 2015

In my previous post I wondered: If the increased demand for legal services is shifting away from law firms, where is it heading?

Some believe it’s mostly heading back to corporate counsels and law departments. But that’s basically rebuilding a law firm within a company. Moreover, it seems wasteful to me to produce expensive legal solutions for a single company and not reuse it for others. There may be another option and I’m curious to see if it could replace Law Firms?

Legal Startups

Venture Capitalist are rolling dice in a global casino in search for unicorns, centaurs and sacrificing dinosaurs. I listen to them explain why incumbent businesses will go extinct and be replaced by startups. So I went charting the landscape of legal startups and across databases such as CrunchBase, Kickstarter and Wefunder. I even checked out Dutch crowd funders such as Symbid to see if I could find a category “Legal”. While CrunchBase seems to have the largest database (2,191), it also includes DLA Piper which I hardly consider a startup. So I settle on Angel.co [icon name=”angellist” class=””] and thus began a journey with unexpected turns but rewarding discoveries*.

Numbers

The question which initially fired my legal Producthunt (22) was: Did the 2009 crash or any other event influenced legal startup activity? I’m undecided, but it has been a steady growth of new startups on Angel.co from 2010 (2) through 2014 (337).

[chart id=”1935″]

There are approximately 900+ registered startups and in the last couple of months we’re averaging one startup every day. The most popular month is February (Average: 27) and but if the chart below is any indication, we have a nice streak (July, August, September) ahead of us.

[chart id=”712″]

Note that Angel.co has two categories: Legal  and a newer one: Legal Tech. Startups can register multiple tags so there was overlap between the two categories. In the above chart, both categories are included.

I questioned if this division of tech vs traditional is normal or unique among ‘dinosaurs’ such as finance. It seems the 80/20 rule is more pervasive than we think. [update: June 15, 2015]

[chart id=”1513″][chart id=”1510″]

Since Legal Tech is the freshest category I was curious to see if growth would be more dramatic but it looks too early to judge.

[chart id=”1533″]

Observations

I’ve been reading weekly alerts ever since I registered with Angel.co and here are a couple of observations:

  • Compared to other industries, it seems the Legal Startup scene is still in its infancy with 900+
  • Specifically, Legal Tech is just 150+ compared to Fin Tech 1500+ and growth seems slow.
  • The sheer volume may not be enough to produce unicorns and thus attract high rollers.
  • The most popular models seem to be Management (149) and Marketplace (72) e.g. Legalzoom
  • I was hoping for more Compliance (40) e.g. Lawbot.co or Access to Justice (20)  startups like Modria. Models which replace not support legal processes.
  • This leads me to believe that the majority of legal startups don’t chase markets that can not afford legal services. Not even the ones that can afford, but mainly the ones that benefit from the complexity of legal services.

Back to my initial question: Will startups beat law firms? I did not spot a unicorn…yet. I believe the numbers need to go up to attract more Bondrew’s and investments. I wish the legal startup scene would stop chasing its tail and finds its tennis ball.  That’s why I applaud any initiatives that stir passion and reignite the practice of law.  So while I’m certain disruption is imminent, it may not go as fast.


*This was a labor of love over the last 4 months. Along the way, I learned to use API’s, understand JSON and even getting JSON feeds into Google Spreadsheet. But my proudest achievement was born out of a simple desire to display the numbers above in interactive charts [icon name=”bar-chart” class=””]. I thought I could only do that by controlling the platform so I needed to build my own site.  I was probably wrong to think I could not do it any other way, but I’m glad I was [icon name=”child” class=””].

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