Founder Profile: Streamlining Legal Document Preparation With Woodpecker Founder & CEO, Alex Melehy
- Jul 20, 2018
Key Deal Stats:
Raising platform: NetCapital
Valuation Cap: $1.107M
Raise Type: Seed
Security: Common shares
At time of publication, July 20th, Woodpecker had raised $0.5K
Law firms have a combined annual revenue of about $302B in the US. Although some gargantuan firms may constitute a significant portion of that number, there’s about 450,000 registered practices that exist. The nature of the business limits the opportunity for tech expansion, but the market is certainly receptive to process streamlining that can expedite tedious labor.
Alex Melehy is a product and engineering specialist who has developed a simple tool to decrease document prep time and increase law firm efficiency. It’s a complementary solution, but the simplicity is a great fit for a traditionally hesitant market. I sat down with Alex to ask a few more questions about the company and their current raise on Netcapital.
This conversation has been shortened and edited for brevity
Could you tell me a little about Woodpecker as a business?
Alex: Woodpecker is a Microsoft Word add-in for small to midsize legal firms. There is an the entire ecosystem of apps available to augment Microsoft Office products, all accessible through Microsoft’s add-in store, AppSource. Once a user downloads the add-in, they can use it to standardize and automate their frequently used Word documents.
The problem in smaller firms is either the partner or a legal assistant will handle the majority of the document prep, but the margin for error is huge. Document versions continually change, and misspellings or incorrect information are a big deal for court filings and contracts. Our goal is to streamline the document preparation process through automation.
Woodpecker is a custom document templating and standardization tool that allows a user to take an existing document, create and insert custom fields, and share the standardized document across their organization. Another user can then open this document in Word, open up Woodpecker alongside it, and update any new information without having to make manual changes within the document. On average users experience an 80% decrease in document prep time (from 30 minutes to 6 minutes).
Another one of Woodpecker’s major selling points is that it doesn’t seek to supplant user’s current processes and workflows. There are a lot of legal tech solutions out there that specialize in document management and formatting, that often require a ton of upfront time and money spent implementing the solution and training the organization. We want to meet attorneys where they’re already at on a day-to-day basis (Microsoft Word) by providing a solution that doesn’t force them to migrate to a new platform or change their workflow in a drastic way. Not to mention, Woodpecker’s focus on useability and integration with a tool that users are already familiar with (Word), avoids the need for an large upfront training effort.
Could you tell us a little about your background?
Alex: I come from a background of product management and engineering. I worked at an ad-tech company called Fiksu, for some time, building out a real-time-bidding (RTB) product that ran programmatic ad campaigns and utilized various machine learning models to predict the likelihood of users converting on any given ad unit..
I found through a ton of research and talking with folks in the legal profession that the existing solutions for legal document prep and automation were painful to use, unaffordable, and required too much of an upfront effort from small firms that had no time or budget to spare. There was definitely an acute need for a better solution, so I developed an initial version of the app myself. It was clear that this market was being underserved by current offerings, so we became laser-focused on provide a cutting edge software product to an underserved segment of the legal market, at an affordable price, with no implementation or training overhead.. Down the road, we’ll look at expanding to additional verticals like Real Estate, Insurance, and Consulting.
What does the market look like for other document automation solutions and how do you differentiate?
Alex: A lot of the document management and automation platforms out there are geared towards enterprise-level clients and larger firms that have more resources to spare. These tools aren’t as accessible for small-medium sized firms, so these firms often get left with either co-opted solutions that aren’t really meant for their use cases, or resort to handling the document preparation process entirely manually.
Since Woodpecker integrates seamlessly with Word and isn’t a separate, standalone web-platform, there’s no need for users to migrate to a new suite of tools or alter their existing workflows. . We’ve seen that because our offering avoids upending firm’s existing processes, firms are much more likely to adopt Woodpecker, simply because of the low barrier to entry. Another differentiator that Woodpecker has is its free tier, which is fairly uncommon in the market. Users receive a free 14 day trial of the Woodpecker paid tier (Woodpecker Pro) upon downloading the add-in. After 14 days users are able to upgrade to a paid subscription for continued access to the Woodpecker Pro feature-set, or can stay on the free plan for access to a limited feature-set.
Our major differentiators focus on our feature-set, no migration, and ease of implementation. Woodpecker can be rolled out to everyone in a firm in 2 minutes thanks to our integration with the Office 365 Admin Center.
How are you monetizing the platform?
Alex: Our pricing model currently has three tiers: Woodpecker Free, which is free for life and has a limited feature set, Woodpecker Pro, which provides access to the entire feature-set, and Woodpecker Business, which is tailored to medium sized firms who require a larger number of seats and resources.
Do you have a sense of who’s using the free version and has anything surprised you with how they elect to use it? What incentivizes them to upgrade to the Pro version?
Alex: The free version allows users to create up to 5 fields and only provides access to our “single line text” field type. Some documents only require a couple of fields (“name” and “date” for example), but the document can get more complicated as a user implements “conditional fields”, “single select” fields, and other features that the app offers.. Typically users upgrade to Woodpecker Pro because they experience a huge amount of time savings in terms of legal document drafting and prep.
Users typically utilize the Woodpecker Free tier for fairly basic use cases. Often these user’s only require a few fields and use the app less frequently, yet they still love the time the app saves and how intuitive it is.
What are your opportunities for scalability and have you planned out an exit strategy?
Alex: Our long term goal is to cover the small to midsize legal market and to then expand vertically into Real Estate, Consulting, etc. We’ve found that legal folks are typically spending most of their time within Word over other Office products and platforms. Once we expand to other verticals, the viable platforms for Woodpecker start to open up. As of now, our exit strategy is geared towards an acquisition by one of the larger document management players in the space.
What stage are you at in development right now?
Alex: We’ve been live in the Microsoft Office app store (AppSource) since last fall and are currently running a production version of Woodpecker which is being utilized regularly by our growing user base. Additionally, Woodpecker is used everyday by a growing number of firms on our Pro tier. So far we’ve seen a growing and consistent user base comprised of both paying and and free users. We’re at a really cool stage now where we get to start building out the laundry list of awesome features that users have been asking us for.
Do you see yourself going down the VC route? Has there been movement from VCs in this space?
Alex: We’ve seen that we really aren’t the right fit for most VCs at this stage, although VC may be a better option for us down the road..
The plan is to grow Woodpecker into a profitable and sustainable company generating revenues between $30 - $50M ARR.. So far we’ve found success with individual angels and platforms like Netcapital.
How do you plan on utilizing the capital?
Alex: The majority of it will go to developing and solidifying our go-to-market strategy. We are currently going through a methodical process of experimenting with various channels and developing ROI and CAC metrics across these channels. The majority of the raised capital will go towards figuring what works in our GTM strategy, and the other portion will go towards the continued development of the product.
How many customers currently use the add-in?
Alex: Right now we have about 150 paid seats across 30 paying firms. Woodpecker has around 350 average monthly active users including users on our Free and Pro plans. Both tiers of users are growing month over month, and our inbound conversion rate is around 5%, where a typical SaaS app has a conversation rate closer to 2 or 3%.
How hard is it to sell into old school legal organizations?
Alex: They often say that legal professionals are a really difficult market to reach, but it’s not impossible.
It’s definitely harder to sell something where the cost is passed onto a client, so fortunately for us, Woodpecker usually falls into a separate budget category for our target market and is viewed as a tool for ongoing firm productivity rather than a case specific solution. Additionally, we’ve found that smaller and medium sized firms respond well to tools introduced from trusted sources and channels.
Many thanks to Alex for taking the time to speak with KingsCrowd. You can find find Woodpecker’s raise on Netcapitalhere