Wall Street or Silicon Valley: Who will Compass turn to next?

From left: David Snider, Robert Reffkin and Maëlle Gavet

Standing on stage at Dogpatch Studios in June, Robert Reffkin rang in his 38th birthday by channeling his inner Steve Jobs. Clad in a black suit and T-shirt, the CEO of Compass addressed a pumped-up crowd of 300 agents at the former warehouse located along San Francisco’s once-gritty waterfront. A popular venue for photo shoots and parties, the space has been used by Google, which once rented out the building to debut a new tablet. Compass was there to celebrate the official opening of its first office in the city.

Compass had been growing fast – perhaps too fast, Reffkin admitted.

“I believe every company needs to know their mission,” he said. “I know, if I were to ask 10 people in this room, ‘What’s Compass mission?’ I’d get 10 different answers. For that, I am sorry.”

By now, the company is used to playing the industry boogeyman. And for good reason. In just four years, it’s become the first residential brokerage to leap past a $1 billion valuation, expanded to nine markets across the country and recruited some 1,500 agents, many of them headline names. Its competitors curse it, sue it and predict its untimely demise.

Having a bullseye on its head hasn’t hurt Compass’ ability to attract investor attention — it’s raised over $225 million in venture capital to date. But as it tightens its grip on the U.S. and eyes international expansion, questions persist about how the company will deliver returns to the early backers who propelled its growth.

At its current size and valuation, Compass may be too big to be acquired, leaving additional funding rounds or the public markets as the most viable routes to further expansion. But much-hyped tech companies such as Snapchat and Blue Apron have taken a hammering after they’ve gone public, unable to meet investor expectations for growth and revenue. And the industry’s eyes are on another player that’s going the public route, Redfin, which despite strong growth is still hemorrhaging money. Will Compass be able to avoid a similar fate?

“The public market is the great equalizer — now, you have to be clear about your economics,” said Charlie O’Donnell of venture capital fund Brooklyn Bridge Ventures. “You can’t tell some future story about how much you want to make. It’s about how much you’re making today.”

The new guard

In an interview at Compass’ Fifth Avenue headquarters, Reffkin predicted the firm would have an international presence within 18 months. He declined to specify which cities Compass would go to, but global gateway markets such as London, Singapore and Hong Kong, which already send referral business to Compass agents in the U.S., are a likely target.

The firm says it’s turning a profit in several markets, and that top-line (gross) revenues grew threefold last year to $180 million. It’s filled its management ranks with executives seasoned at public companies, and wants to go even bigger.

“The markets we operate in right now represent about $14 billion of the $75 billion [real estate] industry,” said CFO David Snider. “By next year, we should be in a third of that addressable market.”

To see these plans through, Compass has been beefing up its management team, adding half a dozen senior executives. The hiring spree, sources said, is a trademark gambit of Wellington Management, the investment manager that led Compass’ $75 million Series D round last year and is known for shepherding its bets into the public markets.

In January, Compass hired Maëlle Gavet, a top executive at Priceline Group, as COO. Gavet now oversees technology, product and marketing, with Snider moving solely into the CFO role. The same month, Julie Binder — who worked at public company ADT — came on as head of communications.

And there have been a slew of other hires. Pooneet Kant, who ran strategy and expansion for the Midwest at Uber, was tapped as director of strategy and business development, while Amy Middleton, a Sotheby’s alum, joined as director of marketing. On the real estate side, Allison Yazdian was hired to run Southern California. And connecting the agents and product developers, Jenifer Vandagriff was hired as the head of user experience, which involves conceiving new products for agents.

Some Compass stalwarts were pushed aside to make way for the new blood. Christina Allen, who became head of product in October 2015, is now serving in an advisory role. And Compass is hiring someone above Ciara Lakhani, who has been with the firm since 2014 and is currently head of people and culture. The firm has grown large enough that it needs someone with more experience, insiders said. Lakhani is said to be involved in the search.

It’s a common pattern seen at venture-backed firms, which feel pressure to innovate and constantly re-up talent to keep up with their explosive growth. Facebook CEO Mark Zuckerberg, for one, is well-known for taking this approach.

“Even though everyone he [Zuckerberg] brought in was strong, he replaced people as he figured: this is what I need to be at this level of scale, this is what raising the bar at this level of the game is,” LinkedIn founder Reid Hoffman recently told tech website Recode.

Co-working giant WeWork, which recently hit a $20 billion valuation and is expected to go public, also recently reshuffled its team, promoting Jennifer Berrent to the role of COO.

The value proposition

On paper, Compass is worth over $1 billion. But that valuation is based upon potential future earnings and the size of the “total addressable market,” a term telegraphing the potential revenue available for a product or service, rather than the current revenue.

The size of the real estate market, and the fragmented nature of its players, has been a major draw for investors, said Snider, a former Bain Co. analyst.

“In my time at Bain looking at businesses, it was rare to find an industry as large as residential real estate brokerage where you have a very fragmented competitive landscape where no one brokerage is top three in three of the biggest markets and where even the largest incumbent doesn’t leverage one unified system brand or platform to drive major competitive differentiation,” he said. “That narrative is attractive to investors across sectors.”

His argument is that the largest incumbent in the national market, Realogy, is a company with a series of separate brands – including Coldwell Banker, the Corcoran Group and Sotheby’s International Realty — and so cannot market itself cohesively at scale. It’s the same argument for consolidation that’s been made at multibrand behemoths such as Procter Gamble and Unilever. On the flip side, some advertising and branding analysts have argued that the future will be ruled by a bevy of smaller brands, not just a few giant ones.

Even Douglas Elliman, which has one unified national brand, does not trade publicly under that name. Rather, it trades under the name of its parent company Vector Group. By not having its own ticker, Snider thinks it’s missing out on a valuable branding opportunity.

“An attractive set of consumers if you’re selling real estate are the people who watch CNBC and Bloomberg,” he said, “and there’s little name recognition there. A true consumer-facing brand gets the notoriety of being outside the exchanges when it goes public and the attention that goes with that.”

But others made the case that Realogy, which has a market cap of $4.66 billion, has the largest market share in the country precisely because its brands target diverse parts of the market. Last year, the company sold more than 350,000 homes across the country, generating revenue of $5.8 billion. Net income rose 6 percent year-over-year to $213 million.

“Realogy does the most transactions in the country,” said Jason Deleeuw, an analyst at Piper Jaffray who covers the stock. “Their brands on the low, middle and high end across the nation have helped them achieve their leading market share.” The company’s Achilles’ heel, he said, has been the softening luxury market as well as agent poaching by rivals — including Compass.

Compass has been able to woo brokers — and sell investors — on its promise to outperform its competitors by making agents much more productive. It cites figures showing that agents who join from another firm saw up to a 32 percent increase in business in their first full year at the company.

“This is the entire growth engine of our business, the thing that we are universally obsessed with is this number — 32 percent,” said Rob Lehman, Compass’ chief revenue officer.

Its competitors, however, have scoffed at those numbers.

Many in the industry caution that Compass could face headwinds if the market takes a hit and investors get spooked. But Snider claims that Compass is strong enough to withstand any issues, since the company has zero debt.

“Realogy and even smaller companies in the sector will leverage debt to grow — all of our growth has come from equity,” he said. “Because we’re able to convince our investors that the value of our equity is higher and higher, it’s meant that we have an ability to grow without risk. Even if the market goes down considerably, we have huge cash reserves.”

But if Compass wants to keep tapping public or private investors for cash, it has to get better at telling the story of what separates it from its competitors, sources said.

“When you have these firms that are kind of tech companies but they don’t look that much different from old-school firms, it’s hard,” O’Donnell, the venture capitalist, said. “The more mature they get, the more they have to prove that their model is considerably better than that of a traditional company. At some point, that comes home to roost.”

“Is there something definitively different about their processes, their IP or how they’re attracting customers?” O’Donnell added. “Are they really making more per agent than the older firms?”

In a blog post about Redfin’s IPO, management analyst Rob Hahn said Redfin has an advantage over Compass when it comes to narrative.

“Redfin spends millions building its website, generating traffic and leads, to send to employee agents,” he wrote. “Compass spends millions bringing top-notch superstar elite agents into their company.”

“Today’s large, established mainstream brokerages know how to compete against Compass,” Hahn added, “because Compass is playing the same recruiting and retention game they are. They have no idea how to compete against Redfin, because Redfin isn’t playing that game.”

Coding productivity

Compass’ business model has changed substantially since it launched in 2013 — it originally wanted to pay agents on salary and divide the market by territories. But two things have remained consistent: its aggressive recruitment and its technology evangelism.

While many of Compass’ competitors claim its technology is far from groundbreaking, Gavet said all its offerings are based in hard research. Compass evaluates each new tool by soliciting feedback from agents and measuring the adoption rate of new products. To be considered successful, a tool should be used by more than half of the firm’s agents, she said.

“We’re not here to create shiny tools,” she said. “Shiny is great, but shiny is not bringing in money. We’re very much a for-profit business so whenever we make an investment in a tool, whenever we hire another engineer, we always link it to, ‘OK, how is that tool going to help the agent?’”

Some recent efforts include real-time market reports and Collections, a Pinterest-like platform that lets agents curate listings and share them with agents. Gavet said 70 percent of Compass agents use Collections weekly.

Compass wants to eventually have an end-to-end system that integrates the entire real estate transaction, from lead to closing.

“That is a herculean effort,” Reffkin said. “Right now, there are 270 software providers that are doing a big piece of this big puzzle and I think there’s an opportunity to build an entire platform in one place.”

Gavet believes it can scale up those efforts without breaking the bank.

“It’s not investment in a vacuum,” she said. “Once you’ve created a tool for one agent, it works for 1,500 agents, 3,000 agents, 10,000 agents. We can multiply the number of agents without having to recreate the tool.”


With the public markets for tech firms lukewarm, some industry insiders now think Compass may have to keep raising equity to fuel its growth.

In 2016, IPO deal volume was down 36 percent to 112 IPOs, and the amount of capital raised sank 37 percent to $21.3 billion, according to Ernst Young research. And this year hasn’t been an active one for real estate IPOs, which peaked in 2013 when 21 companies raised over $6 billion in initial public offerings, according to Greenwich, Connecticut-based Renaissance Capital, which provides pre-IPO research.

The one IPO making headlines, that of Seattle-based Redfin, may do Compass more harm than good, since the company has had to publicly disclose its losses. It too had been spending heavily on technology and recruitment.

Last month, in documents related to its IPO, Redfin said it hasn’t turned a profit since it launched in 2004. “As of March 31, 2017, we had an accumulated deficit of $613.3 million,” the company disclosed. “We expect to continue to make future investments in developing and expanding our business, including technology, recruitment and training, marketing, and pursuing strategic opportunities. These investments may not result in increased revenue or growth in our business.”

Snider said Compass will not have to rely on the public markets, since venture capitalists, despite a pullback in investments across several sectors, still fancy real estate.

“I think it’s clear that there’s a lot of investor excitement — more than there has been in the last five years — about real estate as a sector for investment, with valuations that are reflective of either pure-play tech or tech-enabled businesses,” he said, noting that several prominent New York real estate families, including the LeFraks, Rudins and Wilpons are eying new opportunities in the real estate technology sector. LeFrak is already an investor in Compass.

Snider also noted that Airbnb’s latest funding round gave the company a $31 billion valuation, while WeWork is valued north of $20 billion after the co-working startup raised a $760 million Series G round this month, on the heels of an investment by Japanese banking giant Softbank in March. The implication is that “there’s a lot of room to run,” he said, “especially when you’ve got sources of capital like SoftBank with $100 billion funds.”

Can DECENT’s ‘Crypto-Fuelled’ Blockchain Revolutionize Content & Data Distribution?

Blockchain, the distributed ledger and innovative technology behind the crypto mogul Bitcoin that was created by Satoshi Nakamoto in 2009, has been attracting much attention for its growing potential and the wide range of applications. The technology is breaking out of the financial sector and testing its functionality in new markets.

Highlighting the uptick in the space, over $1.4 billion (bn) has been invested in blockchain technology in just three short years according to a report from the World Economic Forum. And, quite incredibly it has been projected that by 2027 around 10% of global gross domestic product (GDP) will be stored on blockchain platforms.

Companies in fields like distributed cloud storage, digital identity security, smart contracts and online voting are clawing at the chance to integrate this technology into their products and services to see just how far the blockchain can take them.

Decentralized and open source core features of the blockchain combined with the highest levels of encryption and security have enthralled businesses in many areas and in so doing are captivating many supporters. Not surprisingly a rising number of innovators are seeking to implement blockchain technology into their products and processes.

(Image credit: Shutterstock).

Digital Content Distribution

Whether it can now also be exercised to wrest full control of digital content and data distribution over the Internet back to the people from the big corporations remains to be seen. But that is what some are attempting with a blockchain-based content distribution platform by tech pioneers dead set on revolutionizing data distribution on the Internet.

The objective is put simply in terms of creating a “user-friendly content sharing network, which enables an effective and hassle-free way to upload, purchase and share content.” Amid all this disruption you might be thinking should you too be joining the blockchain gang?

Digital content distribution is been a sector that has highly favoured large corporations who control the price of media and take their meaty cut. This leaves the content creators with little or no choice in the matter and an inadequate share of the revenue. But moves are afoot to try and change matters, applying blockchain technology and fuelled by cryptocurrency.

Recently I wrote on Forbes about the Hollywood film industryand touched on aspects of giving more back to the artists and creatives through the blockchain and libertarian film making, as espoused by start-up 21Million.

A long overdue correction you would think, giving freedom and power back to the people. And, surely that would strike most folk as fair and equitable, although I would suspect the big boys in the corporate world won’t exactly lie down without a fight.

Zach LeBeau, the CEO of SingularDTV who is involved in the 21Million project and their recently launched initial coin offering (ICO), has high hopes to pave a way for artists to freely display their content. The concept here is an entertainment economy with blockchain technology and decentralized computing.

According to LeBeau the start-up’s goal would “empower artists and creators” with powerful tools to manage projects from development to distribution.

Now Swiss-based tech company DECENT is on a mission and tooled up to do just that. Its technology, for example, has been courted by the porn industry, with Naughty America approaching the firm over technology to protect its intellectual property and stem the piracy of its content.

The start-up company, which is lead by Slovak co-founders Matej Michalko and Matej Boda and had international offices in Bratislava, Slovakia, Shanghai in China and an RD Blockchain hub in Yerevan, Armenia, is aiming to “revolutionize data distribution” on the Internet by integrating blockchain technology into a new and innovative content distribution platform.

The Founders 

Michalko, who has been involved in the bitcoin space since 2011, quickly realized that blockchain technology could have the potential to change the modern world. At that time he met Boda, who was fascinated with new technologies and while doing some bitcoin mining of his own, he began to visualize the use of blockchain technology on a larger scale.

The founders of DECENT understood the unprecedented potential behind blockchain technology and wanted to build something that could be integrated into the everyday life of people – without any limitations.

Shortly after starting their collaboration, the DECENT Network, an open-source, decentralized content distribution platform, was born.

The platform utilizes blockchain technology to ensure trust and security. Since being established in 2015, DECENT has garnered an increasing level of support from the community for their innovative platform, which is touted as being designed for large-scale adoption.

The Funding 

Last September DECENT initiated their initial coin offering (ICO), which lasted for eight weeks and raised 5,881 bitcoin (BTC), which at the time was worth around $4.2 million. The funds raised have been allocated to finance all product development costs, marketing, organizational and legal expenses needed to prepare for the launch of DECENT Network on June 30.

The positive outcome of their ICO supported the team’s view that the community believes in a blockchain content distribution platform. But tackling a massive project with the intention of revolutionizing data distribution on the Internet is no easy endeavour.

In order to fulfil its goal DECENT has assembled a team in software development and architecture together with an extensive community of ambassadors and advisors from across the globe.

The Goal 

DECENT boldly asserted that it wants to “ensure worldwide adoption” of its Network and integration into everyday life. Well, who wouldn’t? But that aside there is still much work that needs to be done before that dream can become a reality.

To meet these requirements, the team has created their own solution. They have built a new platform based on blockchain technology, which permits third-party developers to build their own applications using the DECENT Network as a foundation.

Any industry that holds content can benefit from the use of DECENT Network’s blockchain technology because it supplies a user-friendly, stable and immutable method for storage and distribution, allowing for what is described as “thousands of use cases” that will be built on this technology.

For example, the use of DECENT Network as a distribution platform for academic institutions around the world would provide a safe, secure and accessible way to store and share educational content – including essays, reports, lectures and even whole text books.

Additionally, supply chain and logistic companies could utilize such technology to track product origins and keep an unchangeable record of distribution channels for all merchandise. Charity organizations can be protected against fraudulent donations and increase support by way of a transparent and immutable transaction ledger build into DECENT Network’s blockchain platform.

Michalko, CEO and co-founder, emphasized the impact of the platform that will “liberate everyone from unnecessary middleman controls, fees and manipulation.” By eliminating middleman constraints and censorship, the DECENT Network gives full control of digital content back to the people.

In continuing developments, this Friday (July 14) the company announced that the first third-party application built on top of DECENT Network, PUBLIQ, a free of charge application for digital content specifically news and articles, was being launched.

On this development Michalko contended: “PUBLIQ is a perfect example of a well-designed project using our technology for the purpose in which it is intended, to bring content to the consumer without middleman controls or third party censorship.”

Explained as an “innovative adaptation” of the DECENT Network is the addition of a social aspect where authors (content creators who share their digital work on the platform) will build a lifetime reputation, based on ratings from content consumers (users who purchase content on the platform), and which is stored via the blockchain.

Crypto Token DCT

DCT is the cryptocurrency of DECENT Network and the fuel that makes it run. Determined by the result of the ICO, a total of 73.29 million DCT tokens will be in circulation. And, following DECENT’s official launch, DCT will be obtainable in a number of ways.

One way to receive DCT is by individuals selling their own, authentic digital content to interested consumers directly on the DECENT platform. It can also be given as a reward for miners, creators of blocks in the blockchain, and seeders, distributors of digital content.

Cryptocurrency market exchanges will ultimately decide whether or not to list DCT. However, it understood on that score no official announcement can be made until after DECENT’s launch.


The first application to be built over the top of DECENT Network’s blockchain platform, called DECENT GO, was also recently announced and touted by the firm as demonstrating some of the capabilities the network has to offer.

They boldly described it as a “Google Play-like Digital Marketplace built on top of the DECENT Blockchain Network, which allows content publishing and buying on a peer-to-peer principle.”

According the Slovak founders the premier application behind DECENT GO intends to showcase the advantages of the network’s blockchain-based content distribution platform and its “adaptability to act as the underlying technology supporting a new marketplace application.”

So, can it prove to be the breakthrough technology that it is being hailed as? If anecdotal evidence from the crypto fraternity is anything to go by the upcoming launch of the DECENT Network is eagerly anticipated. But given the record breaking amounts raised with ICOs over recent months the whole area is on a hot streak.

There is worldwide recognition of blockchains and the technology that in effect serves to provide an irrefutable record of transactions – with proof of ownership and provenance – and is increasingly being applied to various cases. This includes privacy of information, digital content storage and distribution, transparency of records and transactions. And, of course utmost security and encryption of data, is happening as we speak.

Michalko and Boda’s vision of integrating blockchain technology into the regular, daily routine of people from around the world could be approaching quicker than one might have anticipated.

As companies from tech giants to start-ups put their manpower and resources towards blockchain technology research, more and more organizations all over the globe are positioning themselves to take advantage of this exceptional technology.

A case in point for example, Samsung SDS, is reportedly seeking blockchain technology to add security to their credit card division while LG, along with GoPro have looked to utilizing the tech’s immutable ledger and time-stamped records to solidify warranty documentation. These major developments and many more in the works could mean blockchain integration will form part of the norm for everyday activities.

While DECENT’s blockchain-based content distribution platform could be paving the way for a new age of technological innovation from a team who assert they are “dead-set” on revolutionizing data distribution on the Internet, the $64bn question remains how long it will take and what challenges it will have along the way. Carpe diem.

Follow Roger, who has penned various investment stories over the years, on Twitter @AitkenRL, LinkedIn,ForbesGoogle+. He is involved with the Campaign For Fair Finance in the UK. 


Charles W. Bachman, Business Software Innovator, Dies at 92

His software was crucial to converting the G.E. manufacturing-control system from an idea to a reality, an impressive technical feat given the limitations of the primitive computers at the time.

In 1973, Mr. Bachman received the Turing Award from the Association for Computing Machinery for his contributions to database technology. The award is often described as the Nobel Prize for computer science. In 2014, Mr. Bachman visited the White House to receive a National Medal of Technology and Innovation from President Barack Obama.

Mr. Bachman was the first Turing Award recipient who did not have a Ph.D. The earlier winners of the prize, which was first issued in 1966, had academic backgrounds, mainly as mathematicians or physicists. Mr. Bachman had degrees in mechanical engineering, a bachelor’s from Michigan State College and a master’s from the University of Pennsylvania.

Mr. Bachman spent his career in the business world at a series of companies large and small, including Dow Chemical, G.E., Honeywell and a start-up backed by venture capital in the 1980s.

Yet it was the application of computing to business problems — rather than business itself — that Mr. Bachman found appealing.


Continue reading the main story

“He was always an engineer at heart,” said Thomas Haigh, a technology historian at the University of Wisconsin-Milwaukee who interviewed Mr. Bachman for an oral history project and studied his work. “He was motivated by the joy of tinkering with complex systems and making things work better.”

Newsletter Sign Up

Continue reading the main story

Charles William Bachman III was born on Dec. 11, 1924, in Manhattan, Kan., the second of four children of Grace Marie Cary Bachman and Charles W. Bachman Jr. His father was the football coach at Kansas State College, and later at Michigan State.

The younger Mr. Bachman grew to be a sturdy 6 feet 4 inches, and he inherited his father’s fondness for sports, but his real passion was building and fixing things. “I was always going to be an engineer,” Mr. Bachman told Mr. Haigh in 2004.

Mr. Bachman graduated early from high school, took spring and summer courses at Michigan State and then joined the Army in 1943, serving two years in the artillery corps in New Guinea, Australia and the Philippines. Antiaircraft guns at the time used simple mechanical computers to target a plane’s predicted flight path, a rudimentary primer for Mr. Bachman’s later work.

After the war, Mr. Bachman returned to Michigan State to complete his undergraduate degree in 1948. The following year, he married Constance Hadley, shortly after she graduated from Michigan State. They were married for 62 years. She died in 2012.

Besides his daughter Chandini, Mr. Bachman is survived by a brother, J. Cary; three other children, Thomas, Jonathan and Sara Bachman Ducey; five grandchildren; and a great-granddaughter.

Mr. Bachman began his engineering career with big companies that were starting to use computers — Dow Chemical, G.E. and Honeywell, which bought G.E.’s computer business in 1970. During that time, Mr. Bachman took a leading role in computing organizations, which were establishing standards for how data is represented, shared and modeled.

Later in his career, Mr. Bachman worked for smaller companies and started one of his own, Bachman Information Systems, in 1983. The start-up focused on a technology called computer-aided software engineering. It was intended to make creating software easier by offering programmers graphical tools instead of requiring them to write code line by line. His company attracted funding from two leading venture capital firms, Venrock and Kleiner Perkins Caufield Byers, and it enjoyed some early success. It sold shares in a public offering in 1991, and its stock price surged for a while.

The young company had some impressive technology. But it failed to catch the shift to personal computers running Microsoft’s Windows software and lower-cost applications programs. The remnants of Bachman Information Systems went through a couple of mergers and eventually sold to a larger corporation.

“Charlie was always the architect, not a managerial C.E.O. type,” said Jonathan Bachman, a software project manager who worked with his father for years. “And a lot of what he designed lives on, in a new guise, today.”

Follow Steve Lohr on Twitter: @SteveLohr.

Continue reading the main story

Keysight Centre of Excellence at Vignan Varsity | Vijayawada News …

Refrain from posting comments that are obscene, defamatory or inflammatory, and do not indulge in personal attacks, name calling or inciting hatred against any community. Help us delete comments that do not follow these guidelines by marking them offensive. Let’s work together to keep the conversation civil.

LegalTech Firm Introduces Native Token, Launches Sale

Agrello, a legal technology platform combining agent and blockchain technology, launched a token sale July 16 for its native token called ‘DELTA’ which will be traded under ‘DELT’. The token scale, scheduled to go until August, has a 10,000 bitcoin limit. According to inside sources, the project might already be more than one-third of the way to reaching its goal.

“DELTA tokens will be required to employ the Agrello platform and to perform various actions in the system, such as the deployment of new agreements or the usage of blockchain and contract repository resources,” wrote the project in its blog.

Two days ahead of the opening, the team held an AMA in which for over two hours the team discussed the implications of blockchain for the legal industry. CCN was there in order to catch some of the most compelling parts of the talk ahead of the token sale, which was covered by Hacked late last week.

“The idea behind Agrello is to take the tedious work away from users, and let users and organizations collaborate in a peer-to-peer fashion, and allow them to focus on more decision making and creative work,” said Agrello Chief Scientist Alex Norta in the AMA. “And really all the repetitive, annoying work is offloaded to the smart contract and agents…Value and information transfer logistics can very quickly explode in terms of cost and time needed. So, if you lock that off into a smart contract, you are definitely saving a lot.”


The Chief Scientist explained how Agrello – which doesn’t have much competition in the blockchain-based legal tech sector – has built definitions, exceptions, management and compensation procedures into smart contracts. “And the idea then is really you have agents on top to engage in dispute resolution and negotiate and engage in a socio-technical way with humans involved in final decisions, if that is wished, to basically resolve conflicts,” Mr. Norta explained.

When misbehavior happens in the Agrello system there is a voting mechanism built in to deal with it. “Maybe agent gets voted out and replaced or maybe context just changed,” says Mr. Norta, who has spent 16 years researching digital contracting. “And because of contextual change it’s necessary to change an obligation. So, this gives quite a bit of complexity management and flexibility to the approach.”

Although Agrello has gained attention due to its incorporation of agents around blockchain technology, it’s not exactly AI, and the team made this clear over the two hour discussion. “These are actually software-programmed agents, and the idea is there is this declaration,” says Chief Executive Officer Hando Rand. “…The agents are programmed to understand those obligations, understand the lifecycle of contract execution, and they know how to go forward based on obligations.” Mr. Norta detailed the technicals behind the agents employed by Agrello.

“…We use these BDI agents to support users during the setup phase, during the enactment phase and for conflict resolution,” he said. “But, for somebody who is fully into artificial intelligence, they might rather consider this machine learning or deep learning.”

Basically, instead of I, Robot styled AI, Agrello offers pattern recognition in large data sets. “If Agrello is used over a period of time, a lot of data gets accumulated from customers and so forth about the collaborations, our forms provided, what conflict resolutions are carried out and all that,” says Mr. Norta.

A lifecycle management layer allows Agrello to govern its ecosystem of smart contracts. “[I]f a contract needs to be adjusted, in a consensual way, then this lifecycle management layer caters for the setup, the negotiation phase, the rollout, enactment, exception handlings and compensations management and determination,” describes Mr. Norta. “That way, we realize governance for smart contracts, which is very vital.”

Mr. Rand added: “With this technology, it is possible to process a lot of logistics through our technology, which gives information about contract execution and dates for resolution,” he explained. “And it’s possible to integrate this with devices for automated execution and so on.”

Featured image from Shutterstock.