Why don’t more small legal tech companies use bank loans to fund their companies? Most are chasing angel and venture capital when funding may be down the street.

I was over to LexBlog’s bank this afternoon for what feels like an annual checkup. I am happy to report, all good, the bank was impressed with the bottom line from last year. I asked that they come over and tell Mrs. RL.

We do a line of credit with our bank that was turned into a term loan a few years ago that’s renewed annually. We pay interest monthly and make regular principal payments throughout the year to reduce the balance.

I have always liked banks. Straight talking and down to earth people who are in business to make loans to business people. Today, the home loans are gone to the large aggregators of home loan lenders it seems.

Small banks matter. I sat down with the CEO, in addition to our loan officer, today. Our bank is a $100 million bank, not a $900 billion one, like Wells Fargo.

Why small bank loans for legal tech companies?

• Keeps you focused on business (producing and selling), not raising capital.
• Keeps you lean and mean. You’ll not spend money on things you don’t need – you won’t have the money.
• Keeps you focused on developing cash flow. Banks need to see you can cash flow payments on a loan. They cannot lend on collateral or a guaranty alone. Until you get cash flow, or least a forecast of cash flow based on a history of revenue, ie growing subscription revenue, scrape buy. Don’t quit your job. Or as one lawyer I know did, work in large law for a number of years and save what you can. He has accumulated enough savings to survive for two to three years in his new venture.
• You learn to build a small business. Venture capital companies may call it a “lifestyle company,” but a small company doing millions a year and feeding twenty to thirty families is something to be proud of. It’s the stuff that this country is made of.
• You have a ready source of capital for hiring or small acquisitions.
• It’s cheap. You’ll pay as little as three to four percent interest.
• You build a real relationship with real people in the banking industry. You are going to want those relationships over your business lifetime.
• Many lawyers have a history of working with small banks for working capital or the funding of cases. Borrowing from banks is in your comfort zone.

You’ll need to collateralize the loan. For most people, that’s a second mortgage on the house or condo. That can eliminate folks without real estate. You may need turn to a guarantor.

The amount you are borrowing needn’t be a large sum, it probably should not be. It could be $50,000 to $200,000. In today’s world, with open source solutions, cheap hosting, people working on contract and the like, such sums can go a long way.

I get to a fair number of legal tech conferences. Good people with decent ideas sound like they are in the HBO show, Silicon Valley, rather than in real life when it comes to funding companies. Rather than talking like you are in the funny papers of tech startups, why not just build a business with funding down the street?

Swing on over to the LexBlog website and you’ll see that our marketing website has been replaced by the contributions from law bloggers from around the world.

Gone are highly profiled slogans, packages of services, testimonials, profiles of team members, our values and the history of the company. All of things we’ve come to expect of corporate websites.

In their place, insight and contributions from legal professionals. Blog posts representing a conversation – what legal professionals have read, oberserved or heard and their accompanying engagement.

As my COO, Garry Vander Voort says, we’re not so much about what we say we are, we are about our bloggers. Legal professionals who are blogging tell our story.

Almost twenty years ago the authors of the Cluetrain Manifesto wrote that markets are conversations.

A powerful global conversation has begun. Through the Internet, people are discovering and inventing new ways to share relevant knowledge with blinding speed. As a direct result, markets are getting smarter, …and getting smarter faster than most companies.

These markets are conversations. Their members communicate in language that is natural, open, honest, direct, funny and often shocking. Whether explaining or complaining, joking or serious, the human voice is unmistakably genuine. It can’t be faked.

LexBlog has always been about conversations. Rather than advertisements, email marketing, brochures and conference booths,  we’ve, or perhaps I should say I have blogged to grow our company,

There’s nothing wrong with traditional marketing, it just wasn’t LexBlog.

Truth be told, when sitting in my garage starting LexBlog, I asked myself how the heck was anyone going to hear about my company. The minute I thought about buying an ad in a publication such as the ABA Journal, I said “What I am thinking, I need to put my money where my mouth is, I need to blog to grow my business.”

I read about blogging, digital media (as we called it then), the Internet and legal marketing. I blogged what I read, offering my take. What it meant, how I disagreed and how I agreed.

I met people along the way. I came to realize that Winer, Searls, Weinberger and the other signatories to the Cluetrain, were right. Markets are conversations — or as I described it, marketing is a conversation. By engaging others in a real and authentic fashion you built a name and a business.

I came to strongly agree with Cluetrain.

Most corporations, on the other hand, only know how to talk in the soothing, humorless monotone of the mission statement, marketing brochure, and your-call-is-important-to-us busy signal. Same old tone, same old lies. No wonder networked markets have no respect for companies unable or unwilling to speak as they do.

But learning to speak in a human voice is not some trick, nor will corporations convince us they are human with lip service about “listening to customers.” They will only sound human when they empower real human beings to speak on their behalf.

We’ve had a website for almost fourteen years. But from now on we’ll be known by legal bloggers. Bloggers publishing on LexBlog’s managed WordPress platform and now, bloggers publishing on their own platforms.

We’ll focus on curating the best in legal blogging from around the world. Where there are gaps in the network, we’ll recruit bloggers.

The current LexBlog site is just a start, admittedly a rough start. Our editor-in-chief and publisher, Bob Ambrogi just joined LexBlog this last week. He is already working with the team on improvements to the site. Our tech and products team will be developing a new solution for the curation of legal blogs that we’ll use for the site later this year.

What we do know is that The New York Times wouldn’t have a front page marketing packages for advertsing and subscribing. The Times leads with stories by talented reporters. Like the Times and other news and information sites, LexBlog will lead with stories from talented legal bloggers.

We’ll of course communicate with the outside world, sometimes using the mediums used by other companies. But we’ll not forget the theses of the Cluetrain, the first ten of which are below.

1. Markets are conversations.
2. Markets consist of human beings, not demographic sectors.
3. Conversations among human beings sound human. They are conducted in a human voice.
4. Whether delivering information, opinions, perspectives, dissenting arguments or humorous asides, the human voice is typically open, natural, uncontrived.
5. People recognize each other as such from the sound of this voice.
6. The Internet is enabling conversations among human beings that were simply not possible in the era of mass media.
7. Hyperlinks subvert hierarchy.
8. In both internetworked markets and among intranetworked employees, people are speaking to each other in a powerful new way.
9. These networked conversations are enabling powerful new forms of social organization and knowledge exchange to emerge.
10. As a result, markets are getting smarter, more informed, more organized. Participation in a networked market changes people fundamentally.

To the conversation — and legal bloggers.

Christmas comes a few days early at LexBlog with the announcement that lawyer and leading legal journalist, Robert Ambrogi, is joining LexBlog as our publisher and editor-in-chief.

Bob is one of the better known legal journalists in the country. He served as editor-in-chief of the National Law Journal and was founding editor of Lawyers USA.

Bob’s blog, LawSites, may be the most widely followed and respected legal technology publication in the country. More than one entrepreneur has told me it was Bob’s coverage that made for the success of their comopany.

In addition to writing and speaking about the Internet, social media and legal technology for nearly 20 years, Bob is the author of multiple books about law and the net. He has also co-hosted the award-winning podcast, Lawyer2Lawyer, at over twelve years, the longest-running legal podcast.

This Fall, Bob received the Yankee Quill Award, presented by the Academy of New England Journalists “to honor extraordinary newspaper men and women for their lifetime of achievement and distinction in New England journalism.” Among other things, they recognized Bob’s relentless commitment to the public’s right to know while serving as executive director of the Massachusetts Newspaper Publishers Association.

More important than all is the one constant I heard when sharing word of Bob’s joining LexBlog with business confidants. “Integrity. No one commands more respect than Bob.”

Bob’s a good friend. I have learned s lot from him, not only on blogging, journalism and technology, but more importantly what it means to be a blogger, journalist, lawyer and publisher. It’s not just the words you report. Integrity, professionalism, freedom of the press, hard work, passion and care come to mind.

I am excited to bring Bob to my colleagues on the LexBlog team where by leveraging innovative technology, he’ll help define a new model in legal publishing. Legal information, news and commentary from citizen journalists, blogging lawyers, for lawyers and members of the public. He’s as passionate about blogging as me, if not more.

Our blog network produces close to as any pieces a day as the New York Times. It’s time time to take that from a byproduct of a company with the most successful legal blogging solution to a force in legal publishing. No one is more capable of leading us all there than Bob.

I am excited to bring Bob to blogging lawyers, whether on the LexBlog network or not. He’ll be shining a light on you and your work as well as guiding you on the best practices in legal blogging.

Over a dozen years ago, when LexBlog was a door on two file cabinets under a hardware light in my garage, I emailed a rockstar in legal publishing and blogging. I asked if he had time to talk some day. To my delight, he did.

It was Bob. I don’t recall the details of our conversation, other than to remember that he was a good guy that I looked forward to learning from and getting to know.

Wow. Some times you get lucky.

Stay tuned to our open discussion at Donuts.LexBlog.com about how we’ll build this publishing arm of LexBlog — or for that matter, LexBlog itself.

Every company talks about being real, open and authentic and nobody does it it, my company, LexBlog included.

Being real, open and authentic requires a a company letting the outside world know what makes the company tick, what they’re working on, what they’re learning, what they’re struggling with and so much more.

This message, communication and engagement obviously has to come from the company’s team members – its employees. It sure can’t come from marketing, communications and PR – that would be lipstick in this situation.

With technology, enabling open and authentic dialogue is a snap. A blog and Facebook come to mind.

A blog works best as it enables a company to capture this historical “team diary,” enables indexing on Google for shared research, easy subscription via RSS and email and social sharing by the team and the public across Twitter, Facebook and LinkedIn.

So a blog it is for LexBlog – donuts.lexblog.com. Everyone of my teammates will have the capability of openly sharing what they’re working on. Tech, editorial, products, sales, support/success, operations and accounting, all are in.

No one is going to question each other for sharing too much. God knows, I am open as all get out about what LexBlog is working, what I’m excited about and where we’re challenged – on the road and, when I make the time, online. Let “being smart” be your guide.

The inspiration for donuts comes from blogging – as it was and still is – a conversation. Robert Scoble (@scobleizer) and Shel Israel (@shelisrael) authored the book, Naked Conversations: How Blogs Are Changing the Way Businesses Talk with Customers, eleven years ago.

The book is about how blogs, bloggers and the blogosphere is changing how businesses communicate with their consumers and other stakeholders. Rather than marketing speak, have an open dialogue with the outside world – or at least those who listen in.

And enabling the world to listen in is what being an open and authentic organization is all about.

Thirteen years ago, Scoble and three fellow Microsoft employees created Channel 9 for their company.

Microsoft was viewed as the evil empire. With Channel 9, Microsoft customers could listen in just as passengers on United Airlines could listen in on an unfiltered conversation in the cockpit via its audio Channel 9.

Channel 9 enabled Microsoft employees to share thoughts and work via blog-like posting and other media. Channel 9 enabled a conversation between Microsoft employees and its audience of customers, developers and the media – bloggers and traditional.

Rather than public relations, marketing and its chairman, Bill Gates, Microsoft could have a real voice through its employees and listen to people as real people themselves.

Customers/developers could nurture relationships with Microsoft employees, share input and feedback with Microsoft developers and ultimately, shape future product development.

When it came time to buy, customers (often technology companies and their developers) were buying products they knew were coming, that they helped shape, and from people they trusted and from a company with whom they had a real relationship.

Microsoft employees learned through this dialogue. First they shaped their thinking through writing and by attracting people with similar interests they grew a “learning network.”

The “Channel 9 Doctrine” is inspiring and can guide our efforts at “donuts.”

1. Channel 9 is all about the conversation. Channel 9 should inspire Microsoft and our customers to talk in an honest and human voice. Channel 9 is not a marketing tool, not a PR tool, not a lead generation tool.
2. Be a human being. Channel 9 is a place for us to be ourselves, to share who we are, and for us to learn who our customers are
3. Learn by listening. When our customers speak, learn from them. Don’t get defensive, don’t argue for the sake of argument. Listen and take what benefits you to heart.
4. Be smart. Think before you speak, there are some conversations which have no benefit other than to reinforce stereotypes or create negative situations.
5. Marketing has no place on Channel 9. When we spend money on Channel 9 the goal is to surprise and delight, not to promote or preach.
6. Don’t shock the system. Lasting change only happens in baby steps.
7. Know when to turn the mic off. There are some topics which will only result in problems when you discuss them. This has nothing to do with censorship, but with working within the reality of the system that exists in our world today. You will not change anything by taking on legal or financial issues, you will only shock the system, spook the passengers, and create a negative situation.
8. Don’t be a jerk. Nobody likes mean people.
9. Commit to the conversation. Don’t stop listening just because you are busy. Don’t stop participating because you don’t agree with someone. Relationships are not built in a day, be in it for the long haul and we will all reap the benefits as an industry.

Hey, donuts is just starting. One post from Garry Vander Voort, our COO is all we’ve got so far. But I am optimistic, I’ve got a heck of a talented, caring and passionate team. I can’t wait to turn their thinking loose on you – and your thinking loose on us. .

Why “donuts?” It seemed obvious, with all our products named after doughnut types from a Seattle donut chain. Maybe Josh Lynch, our CTO, can chime in with why donuts for product names.

Want to have some fun, put your passion for social media (Twitter, Facebook, blogging and more) to work, learn a heck of a lot and become a rockstar in your own right?

I am looking for a paid intern to work full time this summer and part-time during the school year. Who knows, maybe you become a full-time team member later on, as many interns have at LexBlog.

You could be law student, journalism student or any student with outstanding communication skills. What you will be is passionate, hungry and driven to succeed and to make a difference. You’ll bring ideas we’ve not tried before and a desire to do all things different.

You’ll be working closely with me to do, among other things:

• Shine a light on the good work being done by blogging lawyers across our LexBlog blog network
• Highlight innovation and technology across the legal profession
• Highlight access to legal services and access to justice causes
• Engage and nurture relationships with bloggers, law firms, bar associations, professional associations, reporters and other influential legal industry leaders
• Work in an around my blog and others, as well as do some blogging of your own

Ideally, I’d like a student in Seattle. Your passion and enthusiasm would be contagious in our office, you’d get to get to know some fine team members of mine and you’d learn what working, innovating and playing in a small entrepreneurial company is all about.

But who knows? Maybe you come to Seattle for part of this summer and work from your school’s home during the school year.

Drop me an email. I look forward to talking.

PS – Maybe you’re a recent grad looking to learn, get some experience and to make yourself so indesensable we hire you.