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Raymond Blyd

  • Raymond Blyd

Did Legal Grow in the Last Decade? Here’s an interactive map
Did Legal Grow in the Last Decade? Here’s an interactive map 1020 574 Raymond Blyd

Did the legal industry grow in the last decade? Yes & No, depending on which continent and which metric we measure. Here’s a new interactive map to explain.

Numbers before Names

If you are new to this site, here’s what we do: since 2014 we have been collecting data on companies aligned to the legal industry and producing monthly analysis. In July 2015 our analysis showed that 2010 had only 2 startups while 2015 had 337. The question: did the 2009 recession inspired the growth of legal? The answer was inconclusive. In July 2016 we noticed new companies popping out like popcorn. We’ve been recording records being set and broken all through 2017. And then those records stood, and they could not be broken.

In July 2018 there were new records being set in terms of venture capital invested. In our latest video, we showcase the investment numbers from 2019. Along with the capital came a startling number of investors interested in legal. We’ve witnessed amazing early exits but also unexpected endings and spectacular pivots. According to our calculations, it takes about five years for a typical legal tech company to hit market fit. It takes five more to hit profitability. Nevertheless, the CAT scans did uncover niches and sectors that produce hockey stick growth as seen in this video. Funny enough, these examples aren’t grabbing headlines or getting chatter on the channels.

Overall, our industry is in a better shape with more companies getting created and more capital available than in 2009. We have more experts and events cheering the entrepreneurs. Yet, there’s a tendency to dwell on the names and not the numbers that drive our future. That’s why we’re very selective in our examples, and avoid making subjective claims like “Best” or “First”. We stick to more measurable qualities like “Most” or “Average”.

Method in Madness

To gain a better understanding of the past decade, we aggregated 6,590 companies founded between January 2010 and December 2019. These are companies in LegalTech, RiskTech, Tax, Law, and CivicTech. Here’s a primer on each:

  • LegalTech & Tax: tools used by legal and tax professionals to manage their practice, research and process laws;
  • Law: marketplaces which help boost the volume of valuable work for professionals;
  • RiskTech: tools companies build to evaluate and secure data in order to comply with the law;
  • CivicTech: tools to create and protect citizen’s rights and privileges.

These markets impact the way society handles conflicts and manage safety. Basically, they supplement or replace the role of legal in many facets of our lives.

In order to wrap our head around the question of growth, we elected to split the decade into two parts: First and Second and use three dimensions:

  • Total number of companies in a given market and region;
  • Sum of total capital raised by all ventures in any given market and region;
  • Average Valuation: the number of companies divided by the sum of all capital.

Average Valuation (AV) has some drawbacks as a marker. If one company raised a lot and similar companies raised zero, they all get the same valuation. However, we use AV because it’s the closest proximity to an exact amount of cash needed to mount an offense against your challengers.

Not only does AV provide a reality check, but it also offers some indication of growth. For example, the valuation for Law ventures globally reached $5.3 Million in the first part of the decade. This occurred when everyone was madly chasing the ‘Uber’ model in every sector. In the past five years, the valuation dropped to just around $350K.

Sharing is Caring

You can look up and compare over 870 cities..for free. Now you can zoom in from a global scale all the way down to a local level and measure a decade of growth in each locale. If you find something, please do share it with the community #legaldecade.

We’ll go first.

Here are some of our most notables of the decade:

  • London only rose to the top in the last five years, before it was 3rd behind San Francisco and New York;
  • Paris & Chicago seem to be declining giants overall;
  • Tel Aviv is top in Asia but second to Sydney if we add Oceania as a continent;
  • Singapore jumps to second and Tel Aviv drops to 3rd in Asia and Oceania combined for the final five years;
  • Beijing had the most prolific growth in both numbers and valuation;
  • Africa: while Kenya rules, South Africa has the most companies able to raise capital.

How did we uncover these? Check out the clip below

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Want to try it yourself? Here’s Decade. We’ll keep it fresh all through February so enjoy and share.

Personal note: we lost two inspiring souls in innovation and basketball last week. Decade is our way of honoring their spirit.

  • Raymond Blyd

The Fourth Catalyst in Legal: Claims
The Fourth Catalyst in Legal: Claims 1920 1080 Raymond Blyd

Contract, Copyright, Cannabis were the first three catalysts for the legal industry and now we’ve spotted a fourth in this illustrious line called: Claims.

TLDR: The catalyst behind all C’s is a technology break-thru to process volumes of legal work. Contrary to the other C’s, the volume in Claims are transactions with a financial and emotional value.

The Genesis of C

DocuSign rode the first catalyst of contracts all the way up to a public offering. They are still the only legal tech company we’ve seen in recent memory to list on a public stock exchange. Better yet, DocuSign is one of the best of the 2018 IPO class with a stock price almost double its initial value. Now, there are over 1080+ companies with Contract Tech trying to follow in their footsteps.

This is different for the next two C’s: Copyright and Cannabis. We tipped-off our followers on Copyright in the past. We noticed the high seed capital these startups receive. They have the most VC capital in legal tech, the quickest exits and fetch the highest acquisition prices. And all of these records came during the audio streaming wars but before the video streaming wars began.

Here’s an interesting stat: the money spend to create original scripted television exceeds the defense budget of Australia. As the writer puts this so eloquently: it cost “Jeff Bezos $6 billion to take his new girlfriend to the Emmys“. Now, how do you manage copyright? We found 125 young companies with $1 Billion CAT aka ‘capital allocated to’ Copyright Tech. These companies represent just 10% of new companies. Yet, as illustrated in the video below., they managed to raise 39% of all the new capital in legal tech.

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It gets better in Cannabis Tech with only 35 companies and a $1.02 Billion CAT. It seems well respected legal counsels still feel uncomfortable sharing at a soirée that they help sell weed. Trust me, you’ll be the life of the party if you do. We did aim to break the taboo with our analysis and maybe I should have struck a more serious tone. Now recent data indicate a slow down in Cannabis ventures citing the high costs of legal, license and compliance.

The Fourth Wave of C

However, we are here to discuss the fourth wave. The ‘Claims’ category surfaced from the CAT scans we’ve been performing on the legal industry. Claims are a special species within the law. Some examples: you are entitled to cashback within 7 days after purchase. Another is when you have been unlawfully terminated, you can claim for monetary damages. The highest seed capital raised by a European legal tech company is processing labor law claims.

Most claims aren’t easy to exercise. They are also difficult to identify. Here’s where the machines play a part as pointed out in “Who are your Challengers“. Not only with spotting claims but also processing them. Like recovering your ticket price upon delay of your flight or refunds on taxes paid on travel purchases. In the lather, one company was able to raise $12.3 million in venture capital to help recover taxes.

Once you know you have a claim, it may take a little capital to extract it. That’s why there is a burgeoning insurance industry surrounding these risks. Another avenue is to sell your claim to litigation funders, who will proceed to monetize your right. This happens when claims are bundled in a class-action suit against an entity. These are the cases we see in newspapers like data breaches, equal pay, sexual harassment or environmental accidents.

It starts with the discovery: where to spot claims? Courtrooms are a good place to start. A use case for AI is when litigation funders or insurance companies employ it to discover claims and calculate outcomes in court cases. One way of identifying claims in court records is simply looking for the numbers. By checking the amounts in damages awarded, one can start speculating on the value of certain types of claims.

Triple D

To summarize the above, the business of claims centers around three areas:

  • Discovery;
  • Damages and;
  • Dispute.

Translated into questions: Do we have a claim? How much can we claim? And how do we settle it? We touched upon the companies that discover and recover claims. They received some substantial investments along with most of the spotlight. However, these companies operate at the tail end of an conflict after the damage is done. Most of the value actually lies in helping to avoid claims from materializing.

That’s why companies that suffer from employee or customer claims went looking for ways to suppress claims. Many used the legal quick fix of forced arbitration or mediation clauses in contracts. Some employed alternative or online dispute resolution platforms (ADR – ODR). ODR platform classics like Modria, in turn, benefited by getting acquired. More recently, companies have been developing smarter solutions on Blockchain. They are able to program ODR directly into payment platforms.

CV equals VC

As noted as early as the Roadmap analysis, payment platforms are set to become the next network to rule our lives. And to prevent claims on these platforms, they need legal tech components like:

  • Fraud detection;
  • Identity management;
  • Contract management;
  • Conflict resolution and;
  • Brand protection.

That’s why Amazon now offers a legal marketplace to support merchants with copyright and trademark claims.

We’ve found about 567 Claim Tech companies with $3.34 billion in CAT, who address claims with tech. While the overall growth of new legal tech ventures is slowing, the C areas are growing., especially Claim Tech.

Now it’s ironic these legal business catalysts all start with a C. Perhaps the underlying message came from the ultimate C. Customers! No silly, Citizens. The largest source of disputes globally stems from estate or custody battles. In those conflicts, the emotional claims far outweigh the financial ones. So when an investor is calculating the market, they should not only count the volume of claims or the value but also look at the void it fills within our society.

Resolving claims is a vital legal process that powers world peace and a fair society.

  • Raymond Blyd

Who are your Challengers?
Who are your Challengers? 1920 947 Raymond Blyd

Google launched a bank, Apple has a credit card, Facebook wants you to pay with or without their own money. Are they Legal Industry challengers?

Ready, Aim, AI

Big tech companies are striking at the heart of the financial industry: transactions. The finance institutions are hitting back by becoming the biggest investors in AI companies according to HBR. These AI companies will help them better assess risk in terms of missed opportunities, compliance or fraud. Risks are hidden within documents describing these transactions. These technologies mimic the traditional eDiscovery platforms that legal professionals use to uncover legal risks in documents. Practically it’s LegalTech applied as RiskTech. By the way, aren’t accountants or tax professionals hired to spot risk in finances?

What we may finally be experiencing are the effects of software eating the world..and especially the world of professional services. The first symptom is the struggle to identify the competitors. This problem gets worse because every industry is becoming fluid and the barriers to entry are eroding. Once the pain is located, one can aim and train AI on it. This opens the door for any tech company to venture into any market. And it’s well documented how very adept tech companies are at raising capital.

Every business needs to grow. Companies can achieve growth within their market or in an adjacent one. If growth becomes harder in your current market, you’ll notice the luscious green grass at the neighbors. The grass your neighbor still cuts with a toenail clipper while there is a fleet of Robo lawnmowers sitting idle. This is why big tech can go after finance. That’s why accounting software is looking at legal billing and eDiscovery providers also do contract management.

Competitors

Many centuries-old banks are reluctant to view tech companies as competitors so someone coined the term “challenger bank“. We’ve noticed a similar stance within the legal industry. Law firms don’t compete against legal tech companies and legal tech companies only compete for the adoption by lawyers. However, data paints a stranger picture. Here’s a breakdown of the forces the data implies to have the most impact:

  1. Non-consumption & adoption;
  2. Automation & AI;
  3. Competitors & challengers.

We discussed the cost of acquiring customers is set to become exorbitant which will drive down consumption and adoption. The next big nemesis is automation. IBM’s latest prediction is that 100% of jobs will be impacted by automation. Here is where the world gets weirder: automation in legal usually originates from outside the industry. The most successful Dutch legal research platform was originally a medical search engine. The largest contract managers started as extras of a customer relationship management (CRM) platform. Most of this stuff wasn’t created by lawyers for lawyers. They challenge our belief of what the competition should look like and where it comes from.

Challengers

The companies that operate in the legal industry will face two sets of adversaries: competitors and challengers. Here’s a rule of thumb: you will see the competitors coming, but you won’t recognize the Challengers right away.

Competitors are usually the incumbents with an established name they bankrolled with marketing and sales. They are listed in Google search between the ads you can’t afford and you read about them on the review sites you refuse to pay for. Your competitor is the first name that comes to your customer’s mind when they see you. They are the ones you have a prepared response for once you’ve entered into a sales conversation.

Challengers come in two sizes: large and small. Large challengers are big players looking for a new game. They have already gathered feedback from your customers but haven’t yet revealed their new offering to them. Small challengers are the nimble startups looking to disrupt. The small challengers are talking to the investors and are a raising war chest of cash. You would never mention a small challenger to your customer. If they do enter the conversation, we get into a ‘dismiss and defend’ mode.

How We Play

Why are challengers so difficult to spot? Here’s where data comes into play. Matching companies based on how they describe themselves is a real challenge. Every founder will aim to differentiate and that seeps into how they articulate their solution. Owler and CB Insights solve this by using the Spotify method of customer recommendations. That approach works when you have a large and engaged audience. In new segments, this approach delivers diminishing results.

And there is an extra complication when identifying large challengers. Some are so far removed from the legal industry that it takes a while before they pierce our bubble. The other factor is their size: they create so much noise making it difficult to capture the signal. Many, like me, were pleasantly surprised Google’s play for contracts this year. Yet we’ve found a frequency and are able to lock-in on their signal.

Here’s how: there are 163 contract managers at Capterra. We’ve registered 1076 private companies dabbling in contracts at various stages. Not only the ones that review or draft, but also handle the ‘before’ and ‘after’ of a contract. From the procurement, negotiation, and signature stage all the way up to the dispute and entity management of contracting parties. Whenever this is in the construction sector or content licensing, these ventures provide a wealth of data on trends within a particular area. Challengers free up more capital and reveal new opportunities.

Ultimately companies thrive with many challengers but little or no competition. So before we ‘dismiss and defend’ let us ‘discover and distill’ the data from our challengers.

  • Raymond Blyd

DoA: Data on How Many Legal Tech Companies Rise & Die
DoA: Data on How Many Legal Tech Companies Rise & Die 1920 1080 Raymond Blyd

[updated November 3, 2019: Clearspire]

Around 992 legal tech company’s sites vanished since 2015. About 328 may be in trouble as well but the good news is that the world founded 2.4 new startups every day in that same time span.

In April we announced embarking on a dark quest: to figure out how many legal tech companies were still alive? The concern was that there were more companies vaporizing than were materializing. We started in 2015 and have collected over 11000 links to companies, projects and, communities worldwide. We ran them all thru a custom build ‘Linkwasher’ which followed a cycle of cleaning, deduplicating and testing on repeat.

If you are wondering what there is to clean about URLs? Plenty. For example, many sites upgraded to a secure sockets layer (SSL) and redirect to an HTTPS-protected domain. Others changed their top-level domain or pivoted to a different name. Asian sites often offer an English version that wreaked havoc on our “washing machine”. While in the USA, some use Cloudflare geo-blocking to prevent non-US visitors from accessing their site. We’ve spoken to them, and they have their reasons. The fact is that the legal industry is in a constant state of flux which is on full display in these links.

So how did we determine the health of a venture? If they are still available on a domain. Those who have a glass-half-empty mentality may argue that many sites are zombies waiting to expire. We took a more optimistic approach and surveyed the machines that run the internet. Server responses can vary wildly. Some servers respond rudely or didn’t want to respond at all. Others are lazy and take their time. Maybe man and machine aren’t that different after all. Eventually, we got answers, and we threw the responses into four big buckets.

Surprisingly, the majority of sites provided a server response of 200 which we considered excellent. The second-largest group was reachable with some redirection and responded with a 300 message. The smallest group responded with something within the 500 range, which indicates trouble with the site itself but the domain should still be there. Finally, the third-largest group came back with nothing, 404 or a GoDaddy domain for sale ad.

In the above analysis, we excluded the Fintech and Wealthtech sites and just worked with the Law, LegalTech, CivicTech, Tax and RiskTech categories. There are more revealing details when you divide these up into companies we registered as bootstrap and haven’t raised capital versus those who did. At a glance, the largest failures raised their cash with an initial coin offering. Remember those ICO fields of dreams? Yet, regularly funded companies also folded and I applaud those like Dealwip and Tali coming forward to share their stories. Note that both of these ventures are still in our ‘Excellent’ column but will inevitably move into our ‘smaller’ ones to the right.

Both stories remind me of the Atlantis of legal tech startups Clearspire: a well funded and much-praised company that disappeared. Clearspire was mentioned as recently as this October even thou they shuttered 5 years ago. This proves the challenge of finding the truth. Both we and machines do our best to represent the world but the reality is always more colorful.

Here’s the good news: we may have lost well over a thousand legal tech ventures in the last five years, but the world also founded 4298 companies with $22.7 Billion in venture capital. If we perform a simple glass-half-full calculation, this comes down to 2.4 new startups each day aiming to impact the legal industry. To reiterate, this includes RiskTech and CivicTech companies as well as Tax and Law. Better yet, according to the Status – Live dashboard, this rate slightly increased to around a 2.7 daily average in the last year. Other metrics like seed funding are trending up as well.

So dead or alive, all companies collectively made an impact on the legal industry. Even in their brief existence, they showed us all the different paths that can lead to a fair society. Therefore, we have to erect a museum where we can honor and learn from them.

..working on it…

  • Raymond Blyd

Recession Survival Guide for Legal Tech Companies
Recession Survival Guide for Legal Tech Companies 962 514 Raymond Blyd

These uncertain times make an economic recession a growing probability. If a downturn is imminent, here are three practical steps to ensure survival.

I witness the highs of the late nineties and 2000. Then the Dot-com bubble burst and the Great Recession hit. Working at companies at the receiving end of both events gave me a close-up experience. I got a couple of pragmatic lessons being inside a startup and an established company during these storms. Here’s my balanced view within this spectrum.

Economists usually monitor consumer optimism for signals of a slump. There is another clear sign which is the mood of entrepreneurs. Their mission turns from growth at all costs towards surviving at any cost. They are the first to see orders slip, deals delay and their pipeline dry up.

To stave off insolvency, businesses start looking at where to cut costs. Low hanging fruit in cost-cutting are ‘nice-to-have’ subscription services. Especially “innovation” services that promise to deliver savings in the future suffer first. Here’s where the legal industry is specifically vulnerable since contracts are just that: a promise of future safety. Litigation will also take a hit as more businesses will try and steer clear of unpredictable costs in dark times.

The Intellectual Property market, especially patents and trademarks, will be considered luxury expenses for most companies. Across the board, cost-cutting will eventually influence every layer of legal work. Business owners will look at their core operations and customers to evaluate every dollar they spend. With this backdrop, let’s explore 3 measures Legal Tech companies can undertake.

Become a Benefit not an Expense

Being a cost-efficient company is a no-brainer but being perceived as one by your customers is more important. If your customer is doing everything it can to stay afloat, they may want to see the same. Remember when American automaker CEOs flew in on private jets to beg the US government for a bail-out? Once you see it, it’s hard to forget.

Even when you offer a high-value subscription product, the service will get customers fleeing in a recession if the price is too high. Lowering the price or offering discounts will see you enter a race to the bottom with your competitors. One way I saw some survive is switching to a freemium model whereby churning customers may opt to stay with a lighter version. There are two upsides: you maintain your customer in another capacity, and they become cost-conscious about your product.

**Update March 23, 2020: Freemium vs Extended Free Trials:

For those who opted for an “extended free trial” instead of a “freemium” version. The difference lies in the balance between the cost of acquiring a customer (CAC) and sustainability. Even if you converted 5% or 10% to a paid subscription, you may have lost 90% of users forever. Remember, ‘free users’ may be the best source of objective feedback for improving your product.

Make Friends not Foes

The freemium model was also a suggestion by Mary Meekers as we reported earlier. According to her data, the cost of acquiring a customer is already at an impossible threshold. This is especially true when trying to acquire a new legal service customer.

If a freemium model is not an option, then a strong relationship with your best customers is essential. First, figure out which customers are able to pull your company out of an economic apocalypse. Those customers should get exceptional customer care to the point they consider you a friend. When the costs cutting decisions are being made, there is always an emotional connection to the vendors that provide more value than is being paid for. Having been part of both ends of this conversation, I have witnessed this first hand.

Discover your Diversity

Remember, some of the most successful companies were started during a recession like Microsoft and FedEx. Some even thrived during a recession such as Amazon and AirBnB. Which brings us to the final and most pivotal point. The survival of a legal service provider like a law firm depends on two factors: one is the health of their customers and the other is the demand for their legal expertise.

For Legal Technology companies these factors work out slightly different. Usually, law firms heavily rely on specific expertise to service a certain set of customers. If altogether new expertise is required, they will struggle to fulfill that need. Example: if Thomas Cook was your biggest customer, and you aren’t into Bankruptcy Law, you’ll probably join them.

Therefore, smart legal technology should resist becoming too niche and stay flexible to fulfill new needs. Amazon is the most powerful example of this approach. They quickly scaled from selling books to selling virtually everything with the same platform.

To find out which outcomes to consider all you need is some data and your intuition. There are data-driven tools available to help scope sectors, segments, types of customers and evaluate similar products in other sectors.

For example, Legal Design studios normally focus on law firms and designing contracts. A rudimentary CAT scan suggests, that serving corporations in designing compliance is a 5x larger market. Legalpioneer discovered one design company operating in RiskTech which raised $10 million in venture capital.

To summarize this survival guide:

  • Be cost conscience;
  • Care for your customer;
  • Diversify your portfolio.

The legal industry now has the luxury of having their own data analytics providers. So if your intuition tells you to brace for impact, there is data to deploy your airbag.

  • Raymond Blyd

CAT scan: Calculating The Market for Any LegalTech Company
CAT scan: Calculating The Market for Any LegalTech Company 1920 1080 Raymond Blyd

How do you measure the market size for any venture? There is everyone’s way and there is a precise way.

How Zune?

According to Harvard Business Review, it’s notoriously difficult to measure markets especially new ones. The article describes how factors like customer passion are ignored in the calculation. For instance: Did you know that 11% of the population suffers insomnia whereas 26% wants to improve their sleep. So if you stumble upon a cure for insomnia, you better off marketing it as just “improving sleep”. Simply because it’s what more people are passionate about.

Another emotion our distorting market estimation is confirmation bias. The failure of the Microsoft Zune music player is a textbook example. Microsoft used the iPod as a confirmation for the projected growth of the portable music market. The reality was that Apple cannibalized its own iPod on purpose with the introduction of the iPhone.

The Zune was a minor mishap compared to Bill Gates biggest mistake: predicting Android and the opportunity of an open mobile platform. Google bought Android for a reported $50 million and went on to capture a $400 billion market. One stunning detail from that story was the fact that Google’s acquisition in 2005 was a defensive measure against Microsoft’s mobile operating system. The winner-take-all open mobile market came into existence only after the closed iPhone ecosystem launched in 2007.

So we should be aware that measuring a market based on existing products, is betting against change.

Fathom TAM

Let’s look at how we can calculate a product market size. Here are three approaches:

  1. Total Addressable Market (TAM);
  2. Jobs To Be Done (JTBD);
  3. Capital Allocated To (CAT).

Total Addressable Market (TAM) is calculated from the number of consumers for similar products or the revenue of those products. But here’s a dirty little secret: almost everyone copies or crowdsource a TAM number from somewhere else. Therefore, that number will be difficult to match to your product since there is no way to validate the underlying data. Worse, a TAM number may not consider evolving consumer behaviors like what happen in the Zune example.

That’s why there’s this other formula: Jobs To Be Done (JTBD). A theory derived from Clayton Christensen famous ‘job of a milkshake’, which he explains in this 4-minute video. By correctly identifying a ‘new’ need, you can deduce the number of potential customers. There is a more detailed look at this method here: Market Sizing with Jobs-to-be-Done.

The beauty of this approach is the ability to envision the change. The JTBD method for market sizing helps reveal new consumer behaviors and expose our biases towards the past. So in the case of Android, the job was to enable handset manufacturers to compete independently with the iPhone. However, JTBD would not have predicted that the size of this opportunity would be $400 Billion since the iPhone hadn’t yet changed the mobile landscape.

Numbers versus Nonsense

How do we get closer to a more precise estimate of an evolving market? By looking at venture capital. A capitalist invests their money in the opportunity to double, triple or even have a 10 times return. They are continuously looking for markets where that might happen. Once they invest in a market, we then get a total amount of capital for that market.

To test this theory, let’s stay in the legal industry and pick intellectual property law (IP law). Traditionally IP Law focus was on protecting data we generate for a commercial purpose. Data we generate and want to keep private doesn’t have such an established set of legal rules for protection. A few tech monopolies like Google and Facebook became extremely profitable because the law didn’t offer much protection on private data.

As the saying goes: we became the product.

IPTech is the use of technology in support of the enforcement of IP law and the monetization of data. We identified IPTech as one of the most lucrative segments in LegalTech. IPTech can also be deployed in defense of your brand, reputation, and privacy. We discuss ways ventures used Blockchain or Biometrics to offer these protections. In that sense, we identify IPtech as RiskTech. Now we discovered that IPTech as RiskTech is way, way bigger. How big? Over three times the size of its counterpart in LegalTech.

Legalpioneer tracked $5.84 billion of capital allocated to 473 IPTech companies. Then we noticed that $1.52 billion of venture capital was allocated in an area were just 50 RiskTech companies operate. The difference becomes apparent when we calculate and sort on the average value per area. One company that employs IPTech as RiskTech is valued at $30 million per company. One LegalTech company in the IPLaw space average value is about $10 million. To see this visualized, just follow the dotted line in the graph below.

IPTech as RiskTech

It’s insomnia versus a sweet snooze

CAT scan

The above example shows how a check on Capital Allocated To (CAT) a market segment or company has the potential to uncover the real needs of consumers. The nature of private companies enables them to pivot and mirror consumers movement in near real-time. A CAT scan sheds light on where investors are taking on new bets and exactly how much is on the table.

The best way to instantly reveal new behaviors is when running continuous CAT scans across areas. That’s why we set up the Ambition dashboard to check major movements in real-time. We also discovered an interesting byproduct of CAT scans called “green pastures”. By running more granular topics and categories, scans will also reveal the areas where little or no funding is registered. Better yet, CAT scan also reveal when these green pastures are suddenly flooded with funding like in the Contract space.

We performed about 18 custom CAT scans for boot camps, startups and corporations around the world and I would like to show my gratitude to all. The insights we shared were invaluable.

So are you wondering what unique ventures are attempting to crack new markets? Where are the ‘green pastures’ in the Contract Management space or is it saturated? And is Security the new black? If one of these questions intrigues you or you have a different question, reach out to us. We have 2 scan slots still open for August so pick a topic or a company and together we’ll explore the future.

  • Raymond Blyd

Meet my first investors
Meet my first investors 1911 832 Raymond Blyd

Life is a collection of choices and starting a company is one of the biggest you will ever make. Especially if you already started a family.

There are two major considerations when you choose to become an entrepreneur: you are not only betting your future but the future of your family’s as well. The other consideration: your startup is your baby and so it will become a family member. This means you’ll have to constantly balance priorities between ‘family members’.

First Pitch to Spouse

There’s this rather funny exchange about the difficulty of choosing between your partner and your company. Ask yourself what’s easier to replace: a good business with revenue and growth or a fiancé? That could be an easy call. However, it’s different if you have a happy marriage of 15 years with beautifully adjusted preteens.

In that scenario, your significant others are also your early investors. Therefore, you’ll have to treat them as such. They are your silent board members with a stake and return on investment of 10x “Happiness”. Your loved ones also need an exit and it isn’t cash.

Your time spend and the Quality is determined by the voting rights of those silent board members. If you are a fair founder, they get supervoting on how you spend your time. If board members love you, they will use their veto with discretion.

Part of the Family

So I took Legalpioneer out of the garage and into our home and said: here’s our new baby, will you help me raise it? You can help me pick out the clothes, dress it up, and we can go to parties together.

After an initial euphoric reception, I dutifully mentioned the disclaimers: it means you will also have to share some toys. Food, shelter, privileges and my love are guaranteed under any circumstances, but we may need to be flexible on allowances and daddy time.

Since we’re still in euphoria, I’m unsure how this strategy will play out in the long run. However, as a father first and founder second I’m committed to teaching both babies to Love and Live the things they are passionate about. And good things don’t always come easy.

Vesting Happiness

The recent loss of Avicii made me pause at a simple fact: happiness is an invaluable asset in any human life. It is something which is virtually impossible to buy. My very first post on this journey was a manual to love the things I may hate about building legal technology.

My family makes me Happy and so does making beautiful products that will help us outsmart robots. Similar to great advice from Jeff Bezos, you shouldn’t balance but rather integrate both to measure your success in each.

If you decide to make your startup your destiny, make sure to recruit your family first, give them the right to veto and share the joys of the journey.

Author note: this article was written right after the passing of Avicii in 2018.

  • Raymond Blyd

According to Mary Meeker, we should be rooting for Kim Kardashian West
According to Mary Meeker, we should be rooting for Kim Kardashian West 1920 1200 Raymond Blyd

The legal counsel business model is nearing a catastrophic end due to a looming economic event. Unless we follow Kim’s example.

Every business has but one real competitor according to Clayton Christensen and it’s called “non-consumption“. Traditionally, legal services came prepackaged with a law incentivizing you to procure it no matter the price. Case in point: Europe’s GDPR legislation hatched an entire privacy protection industry which collected $24.1 Billion in venture capital.

Still, its anyone’s choice to hire a lawyer or to do-it-yourself (DIY). The number one weapon to combat DIY is advertising. Businesses buy ads to push people into a purchase.

The current Cost of Acquiring a Customer, known by the acronym CAC, is nearing an unsustainable rate according to Mary Meeker. Soon you have to pay more to market your products then you are able to earn from your customers. No need to be an economist to realize that’s a formula for disaster.

Especially for programmatic ads. The most expensive programmatic ads are those for legal counsel services. Why? While any lawyer, on paper, can earn more than $800 an hour, only a few do. The reason is that only a rare selection of legal services merit such a price. Looking at you, mega-merger lawyers.

Then why does it feel like we need to pay $800 an hour to become an attorney? The law of economics dictates you can’t charge such a rate for getting someone out of a parking ticket. Yet, most attorneys need to ask a lot in order to manage a decent living.

The main cause is the hefty investment it requires to become a legal specialist. To get a prestigious education in law, most will plunge themselves in debt. Among the richest private companies in the Legalpioneer dataset is SoFi: an online personal finance company that provides student loan refinancing. End of May they quietly raised $500 million bringing their total in capital raised to $2.1 Billion. Yes, quietly.

It’s a myth one can easily repay any study. Especially one that doesn’t properly train you to be efficient.

One person, with the means to pay but not the patience to go through a bloated legal education, found a way. You only need to pass the bar to approach the bench. Kim Kardashian will take 18 hours a week apprenticeship to pass the California Bar exam. This will allow her to plea cases for inmates by 2022.

Solving injustice does not require an Oxford law degree, it requires determination. No need to bribe anyone or donate millions to get in. Looking at you, Dr Dre. We can skip the AI, bypass the VC and realistically boost A2J if we do the following: make education affordable and inject law in every curriculum. This will enable most to avoid courts and receive justice at a fair price.

Mega-merger lawyers can save wrongly accused from death row. However, the costs of producing legal expertise may eventually force them not to. That will be a sad side effect of a rising CAC.

So, Go Kim! We all need you to succeed for society’s sake. With Mommy’s marketing skills and Daddy’s legal DNA, you’ll be a precious addition to the profession.

The current US President believes you’ll be the best of the West and I agree.

  • Raymond Blyd

Hey Google! What’s your Legal Endgame?
Hey Google! What’s your Legal Endgame? 1160 725 Raymond Blyd

Early April Google snapped its finger and unleashed their A.I. on corporate contracts. What’s the Endgame?

While watching the cool voice services being unveiled at Google IO, I couldn’t shake the one they did a couple of weeks earlier at Google Next on documents understanding A.I. It slowly dawned on me why they entered the legal industry specifically through contracts. This move can be viewed from a couple of angles but here’s the one I see really moving the needle.

Shortgame

Let’s address some concerns many echoed when the news first hit about Google doing contracts. Can the Legal Industry trust Google with corporate data? Wouldn’t they just sell it to the highest bidder and post ads alongside your contract like in Gmail? In the short term, that would backfire right away. The legal industry can not relinquish data in that fashion, lawyers are bound by ethics.

However, here’s the paradox: 2 of the top 4 most expensive keywords globally in Google AdWords are the ones lawyers buy. If you run a traffic check on any of the popular LegalTech companies sites that recently raised large sums, you’ll notice that a significant chunk of their traffic isn’t organic. Like many other businesses, they heavily rely on AdWords, Twitter, LinkedIn, and Facebook. So even when professionals have ethical standards, the unit economic reality remains harsh. The Legal industry needs Google to prop up volume and drum up demand.

So as creepy as it may sound, showing ads on your corporate data is as crazy as renting your couch to a stranger. In the future, an algorithm can anonymously pick the name of the most suitable professional or firm to handle a certain legal matter. Of course, you’ll have to opt-in and adjust the permissions on your corporate data like any other privacy setting. From the perspective of a consumer of legal services and the eventual file owner, this will be different. They may not mind an objective mathematical suggestion of the best legal provider. Especially if the suggested provider is cheaper than your current one.

Midgame

At the other end of the spectrum sits Data Security. One of the most famous data leaks in human history (Panama Papers) originated from a reputable law firm. Attorneys may be adept at securing legal risk but IT ones aren’t their forte. The medical industry has elaborate laws like HIPAA to handle health data, while the legal industry operates on a pinky swear. Data breaches can happen to anyone but many rely on Google, Apple, Microsoft & Amazon (GAMA) to secure documents. They possess enough engineering expertise and financial firepower to protect our files against breaches or ransomware. Professionally, we’ll be reluctant but remember, personally we already entrust GAMA to secure our most intimate photos.

Another argument states that Google may not have the expertise to handle the legal heavy lifting. Google’s goal is to have everyone play and apply their A.I. on any data. And if they want their machine to take the lead in legal they need to feed it as much legal data as it can. Specifically of the ‘dark matter’ variety meaning data behind corporate firewalls.

That is why Google partnered with corporate data custodians that could provide it with access to dark matter.

  • Accenture ($119B);
  • Iron Mountain ($10B);
  • DocuSign ($4.5B);
  • Box ($2.7B);
  • UiPath ($440M);
  • Taulia ($176M) and;
  • Egnyte ($137M).

Combined with Google ($890B), they represent about $1.3 trillion of consumer trust in them handling documents of any kind. Now, why would they pick contracts and agreements?

Longgame

One reason Google and others choose contracts is their immediate impact on a company’s bottom line. All companies need to track income or manage their spend and most of those numbers are buried in contracts. The Legal Industry tends to get wrapped up in the minutiae of legal problems. However, companies have more pressing practical issues like is this a profitable deal or am I being defrauded.

As we hinted in our previous post ‘Breach‘, the new players aren’t so much interested in legal hazards but rather the financial analytics. We provided some samples of Sales and Enterprise startups managing customers contracts. In the last months, some curious new services latched on this trend of managing subscriptions. G2Crowd recently launched a service called Track to manage software spend, usage, contracts, and compliance. Similarly, Product Hunt offers Founders Club: a single membership with access to a group of tools and services. In short: a single contract to manage others.

Bottom line, more players are getting into the ‘contract management’ game to support better financial decisions. This ever-expanding group understands that the facts and figures matter just as much as the legal clauses. Better financial management starts with good contract insights. Yet, getting into corporate contract management may not be the most lucrative space.

Endgame

We live in a subscription economy where both our professional and personal well-being are tied to periodical payments. Instead of purchasing stuff, we are moving to a licensing model for our everyday needs. We all feel the soft squeeze of fees impose by these subscriptions. And that is because recurring revenue became an I.V. drip for most companies.

So the bigger market for contracts isn’t corporate, it is consumers. They may not have the means to acquire elaborate vendor management expertise but the same principle applies. That is why credit services, insurance companies, and personal finance apps will bypass banks and go straight for the contracts. Yet understanding these particular documents still mostly resides with a human legal professional, not a machine. And due to the massive scale for this need of understanding, makes this endeavor economically unsustainable.

Let’s forget about the technology or the industry for a second. Picture yourself in your living room when you suddenly get a spark: can I lower my insurance costs today? Where can I stream Avengers: Endgame for the lowest price? Or how about all my vendor contracts that have 90-day payment terms?

Your smart speaker wakes up…

  • Raymond Blyd

CannaBiz: aRe wE hiGh yEt?
CannaBiz: aRe wE hiGh yEt? 1920 774 Raymond Blyd

How can a strictly regulated industry become the fastest growing and among the most lucrative? Hold this bud while I explain..

For those of you who have never indulged in some weed and are curious about the experience? Stop reading now and Watch Bob Ross (R.I.P) for about an hour. Once you’re totally relaxed, you can return to reading this post.

So, founders got curious.

Standard advice to any founder was to never build products in regulated markets…That attitude is about to change…The most exciting billion dollar companies in the last 10 years have been launched in heavily regulated markets.

Steve Blank and Bradley Tusk

I lifted this wisdom from Steve Blank and Bradley Tusk. We see this theory of investing in regulated markets play out in the Legal Industry as well.

[ Fun fact: I found 224 synonyms for Ganja. ]

Now, investors and corporations are interested.

According to CB Insights, a total of $2.2 Billion was invested in marijuana in 2018 alone. Maybe because the market size is everyone over the age of 16 with anxieties. Since we are living in an increasingly uncertain age, there is little doubt that smoking herb will be a hit. Before the recreational use of Cannabinoids was only legal in a few circumstances around the world. Now acceptance is growing and the largest economy on our planet just legalized Kusk. So it is safe to assume that demand will outstrip supply very soon.

[ Fun fact: In Switzerland, you can get a little THC in any supermarket or tobacco store. ]

Why should the Legal Industry care?

We recently processed 10.000 of the fastest growing companies worldwide ranked on LinkedIn employee growth and Indeed job listings. Within this list, we identified the companies impacting the legal industry (1009) and noticed a small number (44) are distributors of Hemp. Here’s the insight: there were no Law Firms or Legal Tech companies within the top 20 fastest growing companies. However, we did encounter two handling the Purple Haze respectively Canopy Growth – #5 and Medmen – #14 .

To provide some context: the first LegalTech companies we found ranked in spot #771, #912, #1305 on the list of 10.000. Rejoice! All three were so-called, “A.I.” infused ventures within the LegalTech space. Nevertheless, if growth is measured by the companies hiring as mad, the Trees are reaching the sky. No wonder there is a thriving cottage industry of services all catering to La Cana. We see News Trackers, Legal and Compliance services, as well as Human Resource providers all focused on one substance. Both Wurk – #59 and Vangst #2121 are riding this high on the staffing front.

This brings me to my first point: a high growth but regulated industry needs skilled labor. Legal professionals are best positioned to help unravel regulation. Lawyers would be the stable underpinning for this blooming business. One reason the cryptocurrency craze was so chaotic wasn’t the lack of laws but the absence of legal sense. If you read up on all the crypto crashes, most likely cause was a security gap in the “smart contracts”. Usually, these ‘loopholes’ were the result of logic an engineer would use but a lawyer would never agree too.

[ Fun fact: Uruguay and Canada are the only countries were farming, distribution and, sale of Sinsemilla is legal. ]

Puff, I digress…where was I?

My second point: the Dutch may be the foremost experts in the authorized sale and distribution of ‘the Dutchie’. The Netherlands were legal pioneers in decriminalizing the possession of Pot back in 1972. While many still think this is a bad move, stats and society have proven otherwise. Every first-time tourist to the Netherlands will confess, Dutch Coffeeshops are one of the safest places to chill. And that is by an intricate legal design of do’s and don’ts. Maybe this expertise can become Holland’s next big export.

Reality is that the legal industry earns the bulk of its income servicing other businesses. Therefore growth for the legal industry needs these businesses to not crash but to safely reach a new high.

Now, don’t Bogart and pass it along..on the left-hand side.

[ Fun fact: I had way too much fun writing this post. ]

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