TLO – In Intensive Care or On the Mend?

TLO explained this week’s massive layoff (2/3 of their staff of 2000 was “temporarily” laid off), with this brief and ambiguous statement: “Some projects had TLO off course from supporting our core research and investigational products which are growing nicely. The layoff was a necessary adjustment.”

Hmmm. What were the projects? Was it competing in the law firm sector? Which products are growing nicely? How can they continue to operate with just 1 office in Florida, a staff of maybe 50 people, less than 25,000 customers, no real marketing effort except for any remaining telemarketers at the home office, and a product they offer to law enforcement for free and sell to paying customers at $.25 per search? 

Founder Hank Asher named the company TLO (The Last One) – as in his last entrepreneurial effort. The massive layoff hints at a need for a fresh infusion of capital. With that in mind, what are the options? Asher was flush with $750 million from the sale of his previous venture to LexisNexis, yet how much (if any) of that was seed money for the TLO venture is unknown, as the company is privately held. How about a potential white knight? Asher has successfully sold his previous ventures, so who might be interested in partnering with TLO? I’d scratch LexisNexis, as it already owns Accurint (a variation on one of Asher’s previous products), and Thomson Reuters, as it already has its own CLEAR public records database.

How about Bloomberg Law? Bloomberg certainly possesses the necessary cash and has demonstrated a willingness to spend it on content from third-party sources. Yet I’m not sure TLO would be a good fit. Given Bloomberg’s recent high profile deals with BNA, the Georgetown Law Center and its contract with the giant law firm, DLA, TLO’s appeal to the lower end of the legal market seems out of synch.

What about the probability of new player entering the market to either partner with TLO or acquire it? There isn’t a need for another vendor except at the low end of the scale where TLO operated. The flip side of the argument is Bloomberg Law, who entered a tight legal database market where its competitors were firmly entrenched with sizeable market shares. Bloomberg dove in anyway, and started turning the sector on its ear. Yet for Bloomberg, the cost was heavy. It used its financial resources, name recognition, put its reputation on the line, gave up its trademark Ubiq terminals and built an innovative web platform, recruited big-name talent away from its competitors, bought third-party content and integrated it into its own database, and made big, high-profile deals, such as the one  with DLA.

TLO, on the other hand, offers a vast database of records and a powerful search engine that allows the user to get surprisingly good search results with a minimal amount of information, as well as the ability to narrow results using features like a 5-year age range search or a search involving a subject’s connections with multiple cities. Its search interface mimics Accurint, and its Google maps and photos of real and personal property are often only Florida-specific. TLO still touts its ties to law enforcement and national security, rather than reinventing itself in a way that would be more appealing to a broader base, including corporations and law firms.

What was more troubling was their approach to undercut the competition with $.25 searches and $5 reports. The volume necessary to generate enough revenue to sustain the company boggles the mind.

Readers, what do you think? Is there something I’m missing? I’d love to hear your comments


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