If you've ever overpaid for a legal document, sign up for Docracy, First Round's newest investment

After funding GroupMe out of last year's Techcrunch Disrupt Hackathon in NYC and Docracy this year, it won't take long for people to catch on to First Round's secret plan--to get invited to judge every single hackathon in the country.  I can't wait until next year! 

I met Matt and John, the developers behind Docracy, during last year's Techcrunch Disrupt, when they were working on something a little less professional.  It was a mashup of Foursquare and Face.com that rated the quality of a party based on the visual results from a facial analysis using the Face.com API.  "Nerd Alert" didn't get funded, unfortunately, but I'm pretty sure that was a major oversight on the investment community.  :)

The one thing that struck me about these guys was how great they worked with others.  I got to watch them over the course of a weekend and see how they helped others, accepted feedback.  They absolutely seemed like the kind of people I'd want to work with and who could create a great culture at a startup.  When I saw them at this year's Techcrunch Disrupt Hackathon, I was excited to catch up with them and even more excited to cast a vote for their new project to win the competition. 

What I like about Docracy is that it follows some patterns of successful startups that have generated gamechanging businesses:

1) It leverages crowdsourcing to disrupt an established business where there is a lot of pain and frustration.  Who doesn't feel like the legal overhead of starting a business is far too costly?  Plus, I'd make the argument that Docracy's initial userbase will be people who otherwise wouldn't have went to a lawyer at all, going without documentation or using something probably not appropriate for them.  There's also no reason why you can't pay your lawyer to draft a document, put it up on Docracy for the sake of transparancy, and fork it when you need to make private adjustments for individual situations.

2) It has a single user proposition, like playing the Foursquare game, saving your Flickr photos, or keeping interesting stuff you see in Pinterest, it works even if there's no community.  On Docracy, you can just use it to store your documents in the cloud, use free e-signing instead of faxing signatures back and forth, and keeping track of your executed copies.  Being useful for the first and second users is critical if you're ever going to have a million users. 

3) It gives away for free most of the value that it's competitors, because of their high cost structures, can't afford to.  LegalZoom, which just got $66 million in funding, has over 500 employees, many of whom are writing legal docs themselves.  That's why it has to charge for its documents.  Craigslist, on the other hand, has about 30 employees and is doing about the same amount in revenue--meaning that most of the stuff you can do on Craigslist won't cost you anything.

4) It will seemlessly brings social value add to an otherwise solitary, inefficient experience.  Anyone who has done a startup has asked on Twitter or a listserv for an employment agreement, NDA, software license agreement, etc.  We hardly read or understand any of this stuff when we get them, but we don't want to have to pay a lawyer to overchange us for a boilerplate agreement.  We figure, probably rightly so, that an employment agreement that has been used a bunch of times by another startup will just do fine.  Well, what if we could work together as a community to derive *the* standard employment agreement for hiring a developer--and discuss and debate various terms?  

First Round is excited to work with Matt and John, and their first hire, Veronica, on building Docracy into the your first stop for free legal documentation.  They're looking to meet potential partners, law schools, professional associations--anyone who has a stake in producing standardized, transparant, and fair legal documents for everyone to use.  Reach out to me and I'll be happy to make an intro.

Also, very excited to work with the teams at Vaizra and Quotidian and angel investor/cool-guy-at-large Rick Webb.