How Fastcase Beats Huge Competitors with an iPhone App & Nimbler Search

If you love a David vs Goliath business story, Fastcase will win your heart. With just 20 staffers, the site serves a

Quick Overview

If you love a David vs Goliath business story, Fastcase will win your heart. With just 20 staffers, the site serves a total of half a million paid subscribers, and its free iPhone/iPad app is one of the most popular in the legal niche. How can an Internet start-up take on an established $6.5 billion dollar information industry niche, stealing accounts away from the big boys? Keep reading…

Target Market

The primary target market is small law firms in the US who don’t want to pay heavy fees for Westlaw or LexisNexis access for legal research. The secondary market is larger law firms seeking “more elegant” search results for legal research.

Content Model

Fastcase aggregates the same content its competitors do. The content — US court documents — is in the public domain, and much is already freely available on the Web, if you have time to comb through search engines. “It’s very commoditized.”

That doesn’t mean aggregating it into one database is easy. There’s an enormous amount of content and it’s coming from 50 states in a variety of formats.

Precision is critical, so scanning printed docs would not be good enough. Instead, Fastcase has three separate typists convert printed documents into electronic format. Each of the three types the same document, then the three versions are compared by computer and the two that match best are merged to serve as the final electronic document.

In order to organize this mass of content, Fastcase’s competitors, Westlaw and LexisNexis each have “8,000 underpaid paralegals sitting in cube farms trying to make sense of the cases.” Walters likens this to the old days of Yahoo! when the search engine had human editorial staff looking at each web site before it was added to the directory. Why not omit the humans and use a Google-style algorithm to provide search instead? “Cases cite each other,” Walters notes. “We look at the citations and bake that into search results. It’s search results as voted on by the judges themselves. It doesn’t require human intervention.”

The team added two more twists on the typical content database model:

1. Advanced search tools.

Users can customize their search in a dozen ways, adding one sort to the next, so for example you can sort for date and relevance, not just either/or. Results can also be displayed as cool charts and graphs that show you at a glance how certain search results are more important than others. “We are the leader for data visualization. You’ll see a lot more of this in the future – no more lame static lists of text links.”

2. On-call reference help.

“Content is a service business. This idea informed me and my team quite a bit.” The site has a team of expert attorneys (not paralegals) on call for subscribers who need help with research from 8am-8pm Eastern Time Monday-Friday, plus 24×7 live person chat and “we check emails late at night — we have a few at midnight, at 1am…”.

The service is used relatively infrequently, (“we only get a few calls per hundred thousand subscribers”) but the perception of value it imparts is critical. “They like knowing it’s there even if they only use it once in a blue moon. You can pick up the phone and be answered on the first ring. People’s time is precious.”

Revenue Streams

In total more than half a million lawyers now pay, in some way, to access Fastcase.

Individual subscriptions are $95 per month or $995 per year. “That was our bread and butter for a long time.”

Fastcase also sells group subscriptions — sometimes to a limited selection of the data such as just local appellate cases — on a state-by-state basis through 17 state bar associations as well as “dozens” of voluntary bar associations for as little as a few dollars per head. The bar association foots the bill and promotes Fastcase access as a membership benefit. Each state’s bar association membership only costs $250-300 per year, so Fastcase offers the associations a considerable discount per head. Lawyers in the states only getting a slice of the data are great Fastcase upsale opportunity for a full individual membership.

Over the past two years, Fastcase has begun to crack into the Law 250 — selling group subscriptions to law firms with 1,500 or more lawyers. Sales to these enterprise accounts grew by 400% in both 2009 and 2010 respectively. This is astonishing success because Fastcase didn’t intend to target this market, figuring that the big competitors had it all sewn up. But then the market came calling to Fastcase.

Do new group or enterprise accounts ever cannibalize existing individual subscription sales? “We only get a very few refund requests when new groups join. Some monthlies cancel. Most annual subscribers just let it run out when their term is over. ” So, no, it’s not a big problem at all.

Marketing Tactics

Individual subscriptions are sold directly online. Group and enterprise accounts are mainly sold through field sales reps based in Northern California and New York. (The main office with all other employees is in downtown Washington DC.)

Walters says to pick the best sales reps look for people who fit in with your corporate culture and who have a gung ho attitude. “We’ve hired rock-star reps who were a bad fit for the company. You can coach product and industry, you can’t coach attitude.”

The site’s main marketing tactics include:

  • iPhone & iPad Apps

Fastcase’s iPhone and iPad apps, launched in Febuary 2010, started as an R&D experiment. “Mobile research is the future, but mobile will not ever replace desktop research. So we decided let’s make it free.” The apps include access to all of the content of the site, but less complex tools and search functionality, and of course no on-call reference support.

Offering all of your content for free could be an open invite to cannibalization. “We were definitely running a risk.” But, the R&D team figured it was a limited risk. “We thought the apps would have maybe 10,000 users ever.”

Their estimates were completely wrong. “We had 10,000 users in the first two days. It was completely off the charts beyond our wildest drams successful. Then Apple noticed it and put it on its homepage of the Appstore for a month. Every second of every day for that month we had a new user. It was madness.”

Luckily the team had built in tracking so they could tell if app users converted to desktop subscriptions. “We may have lost three subscriptions due to cannibalization this year, but scores of people found out about and moved to the desktop edition.” In fact, 6-7% of app users wind up buying. Plus, Fastcase hopes that student users (who are more likely to use iPhone than iPad) may become paying subscribers several years down the road when their careers kick in.

  • Trade Shows

“We go to 60-65 legal conferences per year. Sometimes we have booths, and increasingly we’re speaking. Sometimes we just go there and walk the floor. We sell on the floor, get credit cards. We’re swiping away. It makes it easier to see ROI.”

  • Social Marketing

“Social is NOT a panacea, but LinkedIn Group and Twitter participation matters. It’s a useful tool for publishers to meet friends where they live, to communicate with them where they live.”

“Relationships are not started on Twitter or LinkedIn for the most part. Twitter or LinkedIn is what you return to after you meet the person offline. It builds on the relationship. We follow what they say. We participate, we add value. We do more listening than talking. We answer questions, celebrate their successes, help the community. A group of like-minded people plays out in all kinds of ways….”

The site runs two official Twitter feeds (which also feed a Facebook page), one for corporate and one for the company blog. Walters also writes on @ejwalters, where he mixes professional notes along with personal fascinations, such as a link to a great article about Penn Station.

  • Search Engine Optimization

The team switched the corporate site’s CMS to WordPress a couple of years ago, so that it could be updated by non-technical staff more easily than the old “static” site had been. Now the site is continually updated with new webinar dates, blog posts, press releases, press mentions and the like. Since the change, the site’s Google rankings and traffic have gone up significantly.

  • PR

Before becoming an attorney and then co-founding Fastcase, Walters had a summer internship at the Washington Post and then later worked for a while in PR. So, he’s unusually educated about using PR to build a business. “Most sites do PR too early,” he advises. “They get a big splashy article in the New York Times four-months prior to launch and then there’s no revenues.” Walters waited until 2007 to launch PR efforts — eight years after launching the company and four years after the subscription service first went live. By the time he sought press, he had a better story about a profitable service with hundreds of thousands of paying customers that was growing faster than competitors.

The press now cover Fastcase frequently — check out the frequently updated lists of stories about them on their site. Walters also answers reporters’ queries faster than most sites we know of, which also helps.

Technology and Vendors Used

Almost all of Fastcase’s tech is developed in-house by a team of half a dozen programmers. Their tech is their key to success, so outsourcing would be stupid. But, they do use a few vendors, including:

SalesForce – CRM SaaS Fastcase uses to manage and track leads for its sales reps
http://www.salesforce.com

GoToWebinar – Webinar SaaS Fastcase uses
http://www.gotowebinar.com

WordPress – CMS used to power Fastcase’s corporate site.
http://www.wordpress.com

About Edward Walters

Walters and co-founder Philip Rosenthal were lawyers at Covington & Burling when they came up with the idea for Fastcase in 1999 while searching for cases on the Internet. The initial service launched in 2003, after years of content aggregation, software programming and several million dollars in investment.

Walters advice to other would-be entrepreneurs, “Some founders think things are beneath them. When you are starting out, nothing is beneath you. You do every job in the company, especially sales. It’s really important. I can be an idea person, but the first few sales will be made by the founder.”

Subscription Site Insider’s Quick Analysis

At $6.5 billion gross sales and counting, the legal reference industry is enormous. Fastcase has likely only begun to crack the surface of how deeply they can sell into mid-sized and larger firms. Plus, they’ve still got some bar associations to sell into. We think, especially given the founders’ energy, they’ll continue to grow exponentially for the next half decade.

Now it’s time for subscription ops to catch up. For example, Walters admitted to us Fastcase still processes all credit card transactions through a middleman gateway at Authorize.net. As we’ve revealed in the past (see link below to Paul Larsen’s workshop on card processing) if you’re selling more than a million dollars a year, you probably should be using a direct connection to an acquirer such as Chase Paymentech instead.

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