Pick a vertical, sign up a top VC investor, create some buzz, generate traffic, and eventually cash out (hopefully) by selling to one of the larger more established companies. Is this just me or have the dot com days returned? Are the days of the first mover advantage back? Revenues don’t matter anymore? Monetizing eyeballs is a challenge for the future? Registered users are more important than business models? This was the formula in the dotcom days. It sure sounds like we are back in that kinda game again. Web 2.0’s poster child Mark Zuckerberg exemplified this mindset when he said recently (when asked about revenue generation), “We’ll figure that out later.” (Yikes! Maybe its time to read Net Gain again? ) Top VC firms appear to be backing this model once again inspired by the sale of Youtube, Flickr, Skype, Writely, Jotspot, Blogger (to name a few), all of which had no revenue model so to speak.
Avvo a community site for lawyers and those in search of legal services is one more company that expects to make money from ads. And of course, the rest “they’ll figure it out later”.
All of this being said, I love the idea behind Avvo.
The legal industry in the US is one vertical that has long been ignored and is desperately overdue for some disruptive changes – technological or otherwise. To some level legal outsourcing has started to happen but the actual use of the internet/technology to reduce legal costs hasn’t really materialized on a large scale. In a highly litigious country like the US where there is always a huge demand for legal services one would expect the cost of legal services to at least drop over time. Unfortunately, I have found this has never to be the case. Every year big law firm routinely sends out annual rate increase letters like doling out New Year cards. Top of the line corporate lawyers charge over $700 per hour! These rates are outright ridiculous especially when the tasks involved most often are no rocket science. The bulk of the legal work especially for startups, are very routine, mundane paper work. Unfortunately, these services are billed by the hour and prior effort estimates seldom work in the legal industry. (Because there are no yes or no answers, it is always “It depends”). Moreover, the time spent on email, phone calls, even photo-copying — every second is technically charged to client. How insane is that?
So without a doubt Avvo’s service is valuable. Its free (so far). You can search the database for answers to your queries, you can find lawyers, their ratings, you can post questions and get them answered by lawyers, etc. At a minimum this service will get some lawyers to respond to some queries for free in the hope of boosting their ratings and their business! Could you post your queries on LinkedIn and get a response? You certainly can. But the odds in Avvo are supposedly higher because it is a dedicated community unlike LinkedIn, Plaxo, Yahoo Answers etc.
Avvo seems to have a great PR engine going for it (NY Times, Techcrunch, Venturebeat etc have all covered the company at various times) like most dotcom companies. It seems to have also picked up investments from top VCs. It remains to be seen if Avvo can sustain the buzz, grow its traffic and ultimately park itself with one of the “biggies” for some mega bucks.
From a purely business standpoint, Avvo’s approach is not new. In theory, the same idea can apply to doctors, dentists, accountants, teachers, tutors, schools, you name it. Put all these verticals together and you have a Web 2.0 version of “Vertical Net” (or one of the many ghosts of the dot com days. “Exchange” was the buzzword in those days). The problem is that lawyers, accountants, doctors, etc. are usually picked with an eye towards a long term relationship. This also means that most people are strongly influenced and rely almost entirely on personal recommendations from those closely known to them. For the one-off services in the legal field, the legalzooms of the world perform a perfectly acceptable service and good value for money. So its a mystery as to where Avvo fits in to this spectrum and what secret sauce if any it has cooking. At the moment for all its value and good intentions Avvo is firmly in the Zuckerberg school of revenue generation. Given all the buzz behind Facebook, one can’t exactly fault them for it. Can you?
Disclaimer: I have nothing against lawyers. In fact, most lawyers I have met and/or have been fortunate to interact with are very very smart people. If they made a little less money, they might spur some innovations as startups will have more $ to work with! 🙂
Pakora Korner 
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