Following is the Q&A with Daniel Kwon, CEO of FirmaChain. Questions were submitted by members and the team of Inflow-Crypto Club through e-mail and Telegram Group.
1. Could you please make a short introduction?
We are FirmaChain Pte. Ltd., an up and coming startup that consists of young and talented people, striving to make things better through blockchain technology and user-friendly interface. Our current project, under the name of E-Contract, aims to create a platform service for blockchain-based electronic contracts.
2. How did your idea come to fruition, what problem did you notice and what problem are you solving?
We started with noticing a serious problem in the way modern contracts are designed. Face-to-face paper contracts are susceptible to forgery, and cloud-based electronic contracts are susceptible to hacking. We believe that contracts go beyond just maintaining business relations. They are instrumental to molding all forms of economic, legal, and social interactions—they shape the entire span of human interactions. We think it is a task of importance, to come up with something better, because we deserve better than what we have now.
3. Who is your target audience, are you B2C or B2B and can this change in the future?
E-Contract works best when businesses have to deal with large volumes of contracts, whether B2B or B2C. The template function helps when businesses have to produce large amounts of mostly similar contracts, and the web editor can be used to edit contracts and deal with the varying and unique circumstances that can occur. Of course, this does not mean that individuals or businesses with smaller loads of paperwork cannot benefit from the convenience and security offered by E-Contract. However, businesses in fields that deal with a lot of contract paperwork such as insurance, construction, travel, renting, franchising, real estate, etc. will make the most out of our product.
4. What’s the difference between Firma Chain and E-Contract?
5. What stage of development are you in?
On the front-end side, E-Contract was fully released as a B2B & B2C service on Jan.9, 2019, and we have started providing service to our corporate partners. Language options of English and Chinese will be added shortly, and the release of a mobile app version is coming up next.
On the back-end, blockchain side, E-Contract supports blockchain-based document hash verification, which allows contracts to be checked for forgery. All session data, including contracts, are stored on a centralized storage system, though fully encrypted. However, our ultimate goal is to develop the Decentralized Data Storage(DDS), a unique technology that we conceived to move everything to blockchain. We have yet to begin developing the DDS as we have devoted all of our resources to launching E-Contract.
6. What makes you think that the product will be adopted and your customers will use it, do you have any market research to confirm what you are doing is going to be adopted?
- Global market: The global market for electronic contracts is expected to grow annually by 35% to $9.073 billion by 2023. The current leader in the global market, Docusign, reported an annual revenue of $516 million (₩560 billion) in 2017.
- Korean market: The Korean market for electronic contracts is expected to grow annually by 8% up to $4.5 billion (₩5 trillion) by 2020. The current leader in the Korean market, Modusign, is earning an estimated annual revenue of $2.7 million (₩3 billion).
- Security is still an issue when it comes to cloud storage, evidenced by the frequent data breaches reported in the news. Contracts tend to contain sensitive information, so there always an interest to keep them safe and protected. In the future, blockchain will most likely replace current centralized modes of storage, and we expect Firma Solutions to lead the charge.
- The Korean government is pushing various policies and lifting regulations to achieve 70% proportion of electronic document usage by 2021.
- “Paperless” is a growing trend among companies, not only in Korea but also internationally, especially in China.
- Electronic documents in Korea are predominantly created for domestic use and are thus incompatible with international standards. We see a business opportunity here in that we can make electronic contracts more accessible both to Koreans and to non-Koreans through our platform. We aim to target Korean businesses that need to settle contracts internationally.
- There is an opportunity in the middleground between electronic signature and Enterprise Resource Planning (ERP), in that E-Contract is more suited for business purposes than is electronic signature and is more flexible than ERP because of SDK.
- Some of the high-profile businesses we have come to contact with have already expressed interest upon hearing the details of E-Contract, thus confirming our speculations. The key features they found interest in are the convenience and time/cost efficiency that E-Contract can bring when they strike deals, and the adaptability/flexibility the service provides due to SDK and our developers who can swiftly add/modify features per request.
7. Do you have any partnerships from real-world business, any in the pipeline?
Ace Construction Co., Ltd.
Revenue : $283 million (₩320 billion)
Employed : 300 / Located : South Korea
Industry : Construction
Description : Ace Construction is the leading construction company in the domestic market for Knowledge Industrial Centers. It is responsible for at least 1 million square metes of the construction share. Ace Construction has held the #1 IT building constructor position for the past 10 years and the innovative IT industrial complexes constructed by Ace Construction have been major contributors to the development of the local economies. Currently, Ace Construction is diversifying its portfolio as it is expanding into the fields of civil engineering, housing, and sustainability. They have recently finished receiving their work order for the following year, capped at $821 million with an estimated revenue of $478 million.
Strategic partners of Ace Construction (Also partners of the Firma Solutions ecosystem): Jinhwa E&C Co., Ltd., Dongjin E&C, Dongseo E&C, Buil Construction Co., Ltd.
Total revenue : $30 million
Industry : Construction, Consulting, etc.
Revenue : $115 million (₩130 billion)
Employed : 120 / Located : South Korea
Industry : Video Production, Distribution, Marketing, Commerce
Among all 2017 startups in the Social Commerce and Contents Marketing industries, none was as noteworthy as Blank corp. Based on an aggressive business model that consists of persuading consumers and selling products using social media marketing, Blank has successfully launched 18 brands and over 250 products in a short period of time.
GoodTimeWith.Me Co., Ltd.
Revenue : $700,000 (₩800 million)
Employed : 10 / Located : South Korea
Industry : Marketing Research
Established in 2014, GoodTimeWith.Me is a global marketing company that specializes in “Influencer Marketing.” GoodTimeWith.Me has launched products and services for various startups in the global market. The company also hosts KBEAT, a service that tracks performance based on marketing campaign K.P.I. and offers careful analysis of R.O.I.
ReviewShare Co., Ltd.
Revenue : $133,000 (₩150 million)
Employed : 12 / Located : South Korea
Industry : Portal Website, Internet Information Mediation, Marketing Consulting
ReviewShare is a Korean marketplace platform for reviews—the very first of its kind. While reviews were bought and sold via marketing companies or intermediaries in the past, ReviewShare has revolutionized the market through its initiative, as advertisers can now recruit and manage reviewers directly through the platform. The developers at ReviewShare intend to implement new features such as live chatting, APIs, and recommendations based on big data in the coming year.
Finector is a research startup company that functions as a financial connector for other blockchain-related startups.
8. What will be the use of the token and what needs to happen to appreciate in value?
FCT is a utility token necessary for using Firma-related services. FCT can be used (i) to pay the service fees for the DApp, developed using the Firma Network; (ii) to be exchanged as FDR, a currency needed to use the Decentralized Data Storage; and (iii) to store short strings that require a stricter integrity standard.
FCT has innate value since it is necessary in order to use Firma Solutions’s services, including E-Contract and the future Decentralized Data Storage. The problem then is twofold: a) adopting measures for token value appreciation, and b) making sure that the services provided by Firma Solutions stay along a constant priceline even if FCT value fluctuates. For the first half of the problem, we are expecting FCT value to naturally rise as more clients use our services, and on top of that, we are planning to burn tokens and control the supply and price of FCT. For the second half of the problem, we are planning to adopt a flexible pricing structure that will take into account the price volatility of FCT in the market.
9. What are your business plans, expansion, and adoption?
Our immediate goal is to strike E-Contract deals with more than a hundred firms that are willing to use electronic contracts as part of their business initiative. Our long-term goal is to settle deals with over
1,000 firms and finalize the development of the Decentralized Data Storage by Q4 of 2019.
The size of the domestic market for electronic contracts is at least 1.2 million contracts per year, with a growth rate of over 8%. As the current market is dominated by cloud-based platforms, we intend to gain advantages as the first mover in the market that offers blockchain-based electronic contracts.
We estimate that around 10,000 firms strike an average of at least 100 deals per month. We deem these 10,000 firms to be the key target companies in this rapidly growing market for electronic contracts. We intend to acquire a 1% share of the market by attracting 100 of these key companies (100 firms * average of 100 contracts per firm per month = 120,000 contracts per year). From this 1% market share, we expect an annual revenue of over $260,000 (₩300 million).
In the long term, we intend to acquire 10% of the market share by targeting over 1,000 key companies.
(1,000 firms * average of 100 contracts per firm per month = 1.2 million contracts per year). From this 10% market share, we expect an annual revenue of over $2.6 million (₩3 billion).
Based on the partnerships we have established and our plans to target key businesses in the real estate, patent, and e-commerce markets, we expect to grow our revenue structure quickly enough to reach the break-even point of $35,000 (₩40 million) within 3 months of operation.
In the long run, we also plan to tackle the rapidly growing global market and achieve over $103 million in sales and $82 million in revenue in the first 3 years of operation. The major obstacle is to amass $1 million dollars as soon as possible, either through net profits or investments, in order to cover the costs of developing the Decentralized Data Storage.
10. Who is your biggest competition and what makes you different or better?
The market for electronic contracts is already populated, especially with Modusign leading domestically and Docusign leading globally. These competitors raise our barrier to entry as clients have already become accustomed with these companies, whereas we are relatively new in this market.
However, we believe that Modusign and Docusign have glaring issues that will likely threaten their dominance. For instance, both Modusign and Docusign have vulnerabilities in their security measures. The e-mail address is the only requirement to sign a contract, and cellphone-based verification is not enforced. Both platforms use cloud-based data storage, which has proven time and again to be susceptible to hacking and server damage. We believe these vulnerabilities will prove to be problematic for these companies in the future, especially in the wake of legal disputes. Meanwhile, E-Contract has taken care of these issues by having clients verify their identity prior to signing contracts and storing valuable data in the failproof Decentralized Data Storage.
Furthermore, contracts cannot be directly edited on Modusign or Docusign, as the only option is to upload prebuilt PDFs. On the other hand, E-Contract offers a one-stop interface through which users can draft contracts from start to finish. Users also have the option of using templates to speed up and facilitate recurring contract processes.
One of the biggest advantages that E-Contract has over its competitors is that its storage is blockchain-based (in the future), and therefore it has a long-term cost advantage over services that use cloud-based storage. While the Decentralized Data Storage requires a high upfront development cost, it requires virtually no costs in terms of maintenance. This allows us to offer E-Contract to customers at an incredibly low price (down to 20~30% of what is offered by competitors) once the technology is fully developed.
Another distinguishing factor is that we are planning to develop a unique technology: the Decentralized Data Storage was conceived to counter the threats inherent to cloud storage such as hacking and server breakdown. It is a decentralized file storage system where storage space is distributed among the participants by means of a market economy. Though the Decentralized Data Storage requires resources to be pumped in during its development, once it goes live, it give us a clear advantage: we do not have to pay to maintain a centralized storage unlike services that use cloud storage.
We are aware that there are other blockchain-based electronic contract solutions being developed in the market. However, we are way ahead of the pack as our service is fully functioning and has been released. Especially, our user interface beats the competition through its convenience and sleakness.
11. Which exchanges will your project be listed on?
There are three exchanges on the table for discussion. LAToken has confirmed our listing.
12. What are the most important roadmap milestones ahead and are you on track with them?
Q1 Firma Solutions R&D
Q2 ICO Website and Whitepaper Version 1.0 Release
Q3 Launch of E-Contract Prototype
Q4 ICO Pre-Sale Start
Q1 IPFS-Applied E-Contract Service Release & Point of First Sales
Q2 Target 100+ Enterprise Solution Contracts
Q3 Decentralized Data Storage Test-Net Activation
Q4 Decentralized Data Storage Main-Net Activation, Firma Network Release After Final Updates
Q1 Target 1000+ Enterprise Solution Contracts on Firma Network and SDK Release
We are well on track in terms of the sales aspect of E-Contract. as we are in the process of striking deals with some prominent corporations in Korea. The next most important milestone is the development of the Decentralized Data Storage, which will require a great amount of funding and manpower. We are currently looking for funding and are recruiting experienced developers to help us with this task.
13. What is your biggest current problem and hindrance that you are working on?
We are facing two large obstacles at the moment. One is establishing presence in the electronic contract market, domestically and internationally. We are opting to form a domestic presence first before tackling the international scene. The key to finding success in the domestic market is striking deals with the more prominent firms in Korea. As we are currently in discussions with some of the biggest corporations in Korea, we believe that this obstacle will soon be cleared.
The other obstacle is securing enough funds to proceed with developing the Decentralized Data Storage. While ideally we could use the funds procured from the initial sales of E-Contract, we can tackle the task head-on by receiving investment. Thus, gathering enough investment to speed up development is our second obstacle.
14. How did you deal with regulatory aspect of your project, is everything 100% clear regulatory-wise?
- Recent amendments to Korean law (Electronic Signature Law Article 3 Paragraph 3, Electronic Document and Electronic Trade Law Article 4 Paragraph 1) support the legality of electronic contracts instead of paper documents.
- We have recruited a legal expert to our team and have ascertained the legal binding power of our contract procedures.
- We have established legal advice partnerships with the following law firms:
Yoon & Yang Law Firm
Revenue : $101.5 million (₩114 billion)
Employed : 450
Industry : Law, Legal Services
Yoon & Yang LLC is one of the leading law firms in Korea providing the highest quality legal services with experience and expertise in corporate affairs, international transactions and all areas of litigation. Since its establishment in February 2003 through the merger of two leading firms in Korea, Yoon & Partners (which was recognized as a world-class law firm in the areas of corporate advisory, M&A, antitrust, IP and finance) and Roh & Yang (which was recognized as a top litigation law firm), Yoon & Yang LLC has achieved unprecedented growth as a result of the successful combination of the specialized practices of the two firms. In March 2006, the firm merged with Kim Shin & Yu, a pioneer and leading law firm in Korea for decades in international transactions and a wide scope of practice areas.
Duane Morris & Selvam
Revenue : $466 million (Duane Morris)
Employed : 800 (Duane Morris)
Industry : Law, Legal Services
Located : United States, London, Singapore, Vietnam, Oman, Myanmar, Shanghai and Taiwan
Duane Morris & Selvam LLP is the joint law venture between US-based international law firm, Duane Morris LLP, and Selvam LLC, a Singapore-based law firm. With more than 800 legal professionals in offices across Asia, the United States, the Middle East and Europe, the firm helps companies conduct business in and out of Asia, the United States, Latin America, the United Kingdom and beyond. In addition to the excellent skills of its lawyers, clients benefit from the cultural fluency and key relationships that the firm has developed over many years of providing quality advice throughout the region.
15. What competency does your team have to see through with the project?
Daniel Kwon (CEO)
ANT Holdings, DNA Bank COO, DNA data analysis algorithm (Developed/Patented)
Jae Chul Kim (Chief Strategy Officer)
Lawyer / Patent Attorney at Baeksang Law Firm, Member of E-Commerce Dispute Committee, Mentor of SW Maestro Course in 2012
Young Yoon (General Manager of Business)
Business Development Team Lead at PatiGames, Product Manager of Global Business Division at NCSoft, Game Operation Lead at Nexon Europe Business Team
Bullisay Park (Chief Architect — Blockchain)
Software Maestro 5th Mentee, Bluehole A Crew Team IO Cell Lead Developer, Zero Risk Marginal Profit Algorithm for Cryptocurrency Trading (Developed)
Jack Lee (Chief Technology Officer)
Bluehole A. Crew Development Director, Fandom/Client Developer
Ben Park (Blockchain Developer)
Bagelcode Developer, Embargo–Embedded System Mock Hacking, Coinone Inc Cryptocurrency Visualisation Algorithm Developer
Jason Park (Blockchain Developer)
Github Star Ranking 7th Place
Jason Piao (Blockchain Developer)
Coinbase Incoming Software Engineer Intern
Design and Marketing
Jason Yoon (General Manager of Marketing & UI/UX)
Blank corp. UX Consultant, ANT Holdings UI/UX Manager
Timothy Kim (Marketing Manager)
Blank Corp. CTO, Summer Corp. CTO
Dana Kim (Digital Media Designer)
Smarteen App Challenge Mentor, Osquare Media Team
Wan Kim (Global Business — China)
Shaanxi Banghe Industry Limited Company Construction Sales Team, A.C.E. Store Manager, Wanny’s CEO
Simon Lee (Global Business — North America)
Hanwha Corporation Risk Analysis Team Associate, Balbec KPL Korea Research Team Associate, Columbia U. SEAS’14
Robert Han (Community Manager)
Fandom UI & Service PM, TheIdeaGroup StockVisor Data Mining PM
Alex Ye (Global Community Manager and Business Development)
Samsung Electronics Global Legal Office Intern, Deloitte Korea HR Consulting Intern, Columbia U. CC’18
16. Any closing thoughts that you would like to communicate to investors?
Contracts are unreliable at best. But they don’t have to be. We at FirmaSolutions believe we can come up with a better solution using our talent and insight. We believe that blockchain is the new ink to write the contracts of the future. We want to offer the world a better way to build trust.