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article imageQ&A: Open platform for small business legal agreements Special

By Tim Sandle     Jun 25, 2018 in Business
Monax Industries have devised an open platform for small businesses, allowing them to create, prove, and operate their legal agreements. Digital Journal speaks with the startup's CEO.
Monax Industries has devised a free and open-source universal blockchain platform. On this platform anyone can construct their own secure, low-cost, run-anywhere applications using blockchain and smart contract technology.
To discover more about the platform, Digital Journal spoke with Casey Kuhlman, the CEO of Monax. Prior to co-founding Monax, Kuhlman was the head of legal information systems at the U.S. Open Data Institute. He is an avid participant in open source software development.
Casey is Monax Industries  CEO. Casey has been a lot of things: open data evangelist  international ...
Casey is Monax Industries' CEO. Casey has been a lot of things: open data evangelist, international development practitioner, lawyer, hippy, and Marine.
Casey Kuhlman
Digital Journal: Why did you set up Monax Industries?
Casey Kuhlman: We set up Monax because we saw an enormous possibility in this idea that blockchain and smart contract technologies could be leveraged in a wide variety of business contexts to lower coordination costs across corporate and technological boundaries. We also were very interested in the idea of what the technology could do to move forward legal and governance systems within a globalized, networked market.
When we started the company, the idea that blockchain could be used by businesses, much less that it would have value, was largely a laughable idea within the zeitgeist of that moment. Blockchains, at that time, were thought of as simply: bitcoin. Within the company, we saw the technology from a wider lens than simply a "new internet money." The problems that needed to be addressed in order to build the new internet money that was bitcoin, we saw as being a technological basis for addressing some huge problems within a wide sector of businesses. Namely, these problems of coordination across company boundaries that I've mentioned previously.
DJ: Was there are space for this?
Kuhlman: At the time we began, there was no market, nor any technological basis for this idea. In this sense, we were the prototypical "too early" company -- but someone had to be first. We started building initially in two directions. From a technical perspective, we started at the base of the stack and we were the first to market with what became known within the ecosystem as a "permissionable blockchain" (or a blockchain which has a permission layer within it allowing certain participants to perform certain actions within the context of the network). This piece of technology was eventually moved into the Hyperledger Project of the Linux Foundation where it has found a home and a loyal following of a broad range of users working on different problems of coordination.
Secondly, we needed to address the market challenges and make a market for the technology. This effort was the harder of the two tracks. Of course, software is just software and a builder of software has nearly complete control over what one does to build that software and bend it to one's will and designs. Markets and people are very different, and this market making effort was much more out of our control. However, slowly but surely the market evolved in a direction suitable for us. Today, the idea that blockchains are an enabler for businesses to solve various problems of coordination across company boundaries is settled within the ecosystem and is non-controversial.
DJ: What is the function of your Monax platform?
Kuhlman: Our technical platform has evolved dramatically over its life time. As the company has moved steadily up the stack from the deepest reaches of the backend ever closer to the users we have refined and evolved the base platform dramatically. The software platform has largely retained the same goals over the years though: to provide a permissioned-based smart contract enabled blockchain platform which makes it fast and easy for entities and individuals to build interesting things. The platform -- currently known as Hyperledger Burrow -- has been architected and implemented to be fast, light-weight, and suitable for a wide variety of business cases. In our current instance, that business case is the Agreements Network.
DJ: How do you build a blockchain in this context?
Kuhlman: To build a blockchain-based contract management system like the Network, one needs to build a flexible, lightweight blockchain client that can be crafted to suit the specialized needs of that contract management system. For us, Hyperledger Burrow offered the safety and security of the eldest of the permissioned blockchains which has been tested and operated by a range of entities from the biggest companies in the world to small, agile startups seeking to build innovative solutions to problems the world faces.
We leverage the smart contracts layer of the blockchain platform to build the functional protocol for the Network. These two layers working in concert is what allows us to offer into the marketplace a no code based solution to the various problems identified earlier on.
DJ: How is blockchain important to your model?
Kuhlman: Blockchains are absolutely integral to the solution that we envision for two reasons: platform certainty and platform participation. The certainty of outcomes that blockchains provide is one of the most vital components to the success of the suite of solutions we envision will be built on top of the Network. This is only possible because the base blockchain network operates at a high level of certainty across corporate and technological boundaries.
To provide a bit more clarity as to what I mean we need to identify that the ideas of digital solutions that manage contracts is not a particularly a new idea. Contract management systems have, indeed, existed for decades. However, they have for the most part, failed to scale and succeed in the market. When we talked to customers across industries -- particularly in the early phases of their blockchain journey -- one of the key factors that these businesses identified to us time and again was the absolute requirement to understand where particular contractual relationships were within their pipeline. In other words, what have "we" agreed to do, what have "they" agreed to do, and what has actually happened. Leveraging the properties of what this technology can achieve to answer these questions around risk to increase certainty and understanding has been one of the largest transformative effects within industry.
Our hypothesis and learning from those discussions and pilots was that contract management systems historically have failed to scale in the market because they have not offered the fundamental feature suite that businesses were seeking. Namely, the ability to understand with clarity and certainty what has been agreed to, what has been delivered, and what (if any) delta exists between these two. Within the context of the Network, we call these execution processes and fulfillment events. Within the emergent ecosystem behind the Network, participants have an ability to track these fundamental characteristics of contractual properties. This offers a value proposition which is a step change from previous generations of contract management systems and is only possible because we leverage blockchain and smart contract technologies.
DJ: How have you tested out the platform?
Kuhlman: The various iterations of what we have been doing have been tested in a wide variety of scenarios over the years. Big banks have implemented end-to-end bond management applications on our base blockchain platform. Big insurance companies have implemented end-to-end reinsurance management applications. A number of startups have built innovative solutions on the base blockchain platform. All of these efforts and feedback have made the Hyperledger Burrow software better, faster, more stable and easier to operate.
On top of the blockchain platform, we have been refining a suite of smart contracts which will be the base functionality needed by the Network. In the current iteration of the platform which is focused on providing the underpinnings of the Network, we are extensively testing it with key network participants.
DJ: Have you tested this out?
Kuhlman: The law firms we have worked with so far are deeply interested in being able to gain leverage behind their knowledge assets using technology and they are some of the most forward-thinking law firms around. The law firm network participants are helping us to test the base functionality that the platform has put in place to provide a no-code solution to many of the entities that will engage with the platform. This functional testing is helping us challenge our assumptions regarding a range of contractual edge cases. While we do not expect the base Network to be able to address every challenge that a contract management system will need to overcome, we do want the Network to operate at a baseline of resonance for the mainstream of legal agreements contemplated to leverage blockchain technology.
The second set of participants that are helping to test the network are predominantly legal tech startups. These startups face a broad range of legal operations challenges which can be solved by integrating blockchains into their overall solution. These startups helping us to found the Network are varied in their approaches and the solutions they currently provide into the market and are varied in how and why they are interested in leveraging the Network. The areas that they are helping us to test are largely functional but also technical in nature. Do the Network APIs provide the right level of abstraction and functionality for easy integration of the Network's capabilities into a modern software company's stack? Is the Network sufficiently easy to join for a technology company seeking to participate in the network? These questions and others are being addressed in combination with these founding participants.
The final set of participants that are helping us to test the network are more focused on the deep technical aspects of what we are doing. These participants include a range of companies who will largely seek to provide services onto the platform from information retrieval to payments integrations and the like. These folks are helping us to refine the deeper technology behind the Network to make sure it is stable, secure and will sufficiently scale with time.
DJ: Which sectors are your targeting for your software?
Kuhlman: The Network, on which the Monax application is built, is targeted at the generalized use case of legal contracting. It is architected in such a manner that a very wide and broad range of contracts can be operated on it. The network is lucky enough to have appeal across a broad range of legal services providers and legal technology companies -- each of whom are pursuing their own use cases in various, sometimes overlapping, sectors.
At Monax, we are focused on building an application that resonates with small- to medium-enterprises (SME) that have highly-networked business models which require a decent amount of complexity in the operation of their contractual agreements. In particular, we are focusing on three sectors within the SME market.
DJ: Why this market?
Kuhlman: First are content creators such as small bands and independent artists who are at an extreme disadvantage vis-à-vis the large distribution platforms. These individuals and entities have all the problems of networked small businesses without any of the traditional support. They are similar in many ways to technology startups but without the investment and support infrastructure that many startups acquire along their journey.
Second are technology startups who need to optimize investor capital and are keen to move beyond simple paper documents one signs and puts in a drawer. These businesses are keen to move in the direction of scalable systems that can be automated and want to build their legal function to support such a growth pattern.
The third sector is innovative companies with a fleet lease based business model. These companies have legal needs that are highly complex and require multi-faceted, multi-party, highly-dynamic contractual backbone that can adapt to their evolving needs in financing, insuring, and delivering their product into the market. Companies that are building autonomous cars, robotics and drones all have a very similar suite of legal needs that fit this criteria and our blockchain-based solution is capable of solving a huge swathe of their problems.
In a follow-up article, Kuhlman discusses how technology is disrupting legal contracts. See "Q&A: How technology is shaking up legal firms."
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