How 20 customer interviews enriched Lexoo’s strategy

By July 15, 2014 4 Comments

We recently invested in Lexoo, a marketplace connecting SMEs with legal services. We were attracted to the opportunity because there are an increasing number of freelance lawyers who are doing equivalent quality work for startups at 20-30% of the cost of working with a big law firm. The founder, Daniel van Binsbergen, is an impressive individual so we backed him to build a marketplace to help SMEs and freelance lawyers find each other. You could think of it as like Elance or oDesk for the legal sector.

Lexoo is one of our very early stage deals, and as was the case with our other early seed deals SnapTrip and Parcelbright the CEO worked with our Product Partner Dharmesh to conduct a structured set of customer interviews. Taking inspiration from Rob Fitzpatrick’s The Mom Test we are careful to ask questions that reveal customers’ true feelings and motivations and avoid vanity conversations.

And the findings were remarkable.

It turns out that the price of legal services is important to SMEs, but that there are some bigger issues at play. Most people hate buying legal services because they don’t know what they need, don’t really know what questions to ask, and are afraid that if they make a mistake it will cost them big time down the road. Moreover, recommendations from friends don’t work very well because most people aren’t sure whether their friends really know a good lawyer from a bad one and because it’s hard to ask difficult questions or negotiate with a lawyer that’s been introduced by a friend.

These findings have transformed Lexoo’s strategy. The plan had been to be efficient at matching SMEs and lawyers and build some workflow into the platform to make it sticky – e.g. for invoicing. Now we will build education into the platform so SMEs can be smart in their procurement of legal services and get over the difficulties described above. Daniel likes to give the following example:

SMEs use lawyers a lot to review employment contracts, but the cost of doing so can vary from £300 to £1,400 depending on the complexity of the situation (options, founder status, restrictive covenants etc.). On Lexoo we will build functionality so our customers can work out where on the range they should position themselves and understand the questions they should ask. And then we will connect them with a range of suitable lawyers.

Lexoo will now be adding much more value to it’s customers. That’s exciting!

Finally – some of you who read this blog helped out with the customer interviews. Thank you!