Avvo, New $10M in Hand, Tears a Page from Expedia, Amazon Playbooks

Anytime a consumer Internet startup raises $10 million, it’s big news, especially around Seattle these days. So you’d think Avvo would want to tell the world about what it’s doing with all that money, which it just raised in a Series C investment round from DAG Ventures, Benchmark Capital, and Ignition Partners.

But founder and CEO Mark Britton is staying mum about how the $10 million will be used, other than to say it will “expand and enhance” the company’s products. I tried to get him to say what that means. Maybe Avvo will buy each of its two million unique monthly visitors a drink (joking)? Or pick up Cliff Lee’s 2010 pitching contract for the Mariners? No dice. OK, so Avvo, which runs a free legal services website with lawyer ratings, profiles, and a legal advice forum, is trying to maintain a low profile to keep its competitors in the dark.

Is this one of the best funded, but most boring startups in Seattle? No way. Just when I’m about to give up on learning anything revealing about the company and just ask him for a good lawyer joke, Britton launches into a very interesting historical narrative about where Avvo really comes from; the challenges of making consumer ratings work; and his lessons learned from working at Bellevue, WA-based travel site Expedia and observing Seattle-based Amazon from across town.

First, an update on how Avvo is doing, and why it chose to raise money now. Britton says the company is “approaching cash-flow positive quite quickly,” and that he and the company’s board discussed whether to use sales to fund its new initiatives (which shall remain a secret). “We think we have some really big ideas about how we can continue to expand on our success. One of our big initiatives has been sitting on the shelf for a year. We could not help but feel now is the time to pursue these initiatives. We could have financed them with excess cash flow, but as the Web proliferates, there is tremendous opportunity cost” in not expanding with a large new investment, he says. “We’ll meet in the next week, and we’ll put a stake in the ground for when we roll out these different elements.”

Britton has some unique perspective on how the Web has affected the legal industry and consumer behavior. Before founding Avvo, he was senior vice president and general counsel with Expedia—he was there from the early days—and prior to that, he was an attorney with Preston Gates & Ellis (now K&L Gates) when he first moved to Seattle from Washington DC in 1997 (he’s from Montana). Back then, lawyers didn’t even e-mail documents to clients or to each other; today they use document sharing sites on the Web. Due diligence used to be done by calling people on the phone; now it’s done using search engines and Web documents. “While I think the legal profession still has long way to go, the Web has fundamentally changed how lawyers practice law,” Britton says.

The genesis of Avvo came in early 2006. “I saw a very big need for the legal industry to take a significant step into Web 2.0,” he says. “Public records were being digitized, and with that comes lots of transparency. There is an increasing appetite for people to see advertising [online] backed up by objective information. Lawyers are about full disclosure, it’s part of the culture.”

Britton hadn’t really practiced law since 2003, yet he found himself still helping friends and family with their legal issues—in particular, evaluating lawyers. So he had the idea to create an … Next Page »

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