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How the struggle to get a flight refund helped grow this buzzy “robot lawyer”



Tried to cancel a flight in the past couple of months? The customer service was no doubt a nightmare.

Look to your right. Now look to your virtual left. Yours is an experience shared by many, if not most, as the pandemic has upended routines and left a spate of unwanted gym memberships, boarding passes, and concert tickets in its wake.

The struggle of getting a full refund has translated into growth for DoNotPay, the buzzy “robot lawyer” that, for a $3 a month subscription, helps customers parse through legalese to win refunds for cancelled flights or break up with their nearest sports club. 

DoNotPay announced today that investors led by Coatue Management closed on a $12 million Series A round in a mere two weeks over Zoom. Other investors including Andreessen Horowitz, Founders Fund, Felicis Ventures, and Day One Ventures participated, valuing the startup at about $80 million.

At its core, DoNotPay uses bots, hinging on the standardization of terms and conditions as well as laws, to send emails and letters to companies or government bureaus on behalf of the consumer, allowing it to expand into data privacy, robocallers, and even medical bills. The company has seen its user base surge several fold, from 10,000 to 20,000 subscribers before the coronavirus to over 50,000, says CEO and founder Joshua Browder.

As I wrote in my report on its Series A round, DoNotPay arbitrages the disconnect between what consumers know about their legal rights (often very little), and what companies tell them (sometimes even less). One example: Airline travelers complained early on about receiving vouchers instead of full refunds when the pandemic grounded flights indefinitely. Citing rules from the Department of Transportation that require airlines to issue refunds on nonrefundable fares, even in the event of a delay, DoNotPay sends messages via bots directly to the airline calling for full repayments.

Investors are betting the company’s fortunes will last beyond the pandemic: “There will always be consumer problems in the world for DoNotPay to solve,” says Matt Mazzeo, partner at Coatue. Read my full story here.

A SPAC whale: Hedge fund titan Bill Ackman is raising the largest SPAC, or special acquisition purpose company, ever. As a reminder, so-called SPACs raise proceeds through an IPO to acquire another company, with the amount raised representing a fraction of the actual value of the acquired company. Ackman’s Pershing Square Tontine Holdings could raise as much as $6.5 billion, according to a filing with the Securities and Exchange Commission

Which… leaves a pretty small universe of companies it could try to take public. The company’s filing cites some potential candidates. Specifically, it points to “large, high-quality, private family-owned companies” and “private equity portfolio companies” whose cash flows have been negatively impacted by the coronavirus. Perhaps the most interesting of all is that the filing also cites “mature unicorns” as a potential target. Ackman is known for investing in profitable companies. This also isn’t his first blank check rodeo: Pershing Square a co-sponsor of Justice Holdings, a SPAC that acquired Burger King for $1.4 billion in cash in 2012.

Lucinda Shen
Twitter: @shenlucinda

Lyron Foster is a Hawaii based African American Musician, Author, Actor, Blogger, Filmmaker, Philanthropist and Multinational Serial Tech Entrepreneur.

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