Mance Harmon is CEO and co-founder of Hedera Hashgraph, a platform that presents itself as a faster and more secure alternative to blockchain. While many founders would be intimidated by the thought of re-imagining blockchain, Harmon has quite the pedigree. A former scientist in the US Air Force, he was charged with building simulators to predict and managed nuclear missile attacks, before heading into the world of cybersecurity. There he accrued more than 20 years of leadership experience, founded two startups, became a senior executive for product security at a $1.7B revenue organization, and researcher of Machine Learning at Wright Laboratory. In this interview Harmon explores his journey from ICBMs to DLTs and why building something that matters instead of something makes a lot of money is the right way to go.
How did you first get into blockchain and the decentralized web?
I began my DLT career as CEO of a company called Swirlds, which provides a platform to build decentralized applications (Dapps). We leveraged the hashgraph algorithm, which my business partner and friend, Dr. Leemon Baird, invented in 2015. Hashgraph is an enterprise-grade distributed consensus algorithm for the creation of faster, fairer, and more secure Dapps. Leemon started working on Hashgraph in 2012, and when he perfected the algorithm in 2015, that’s when we knew that was our next move.
When did you set up your company?
We set out in 2015, initially only focused on private, permissioned ledgers, and got our initial traction in the Credit Union industry with CULedger (Credit Union Ledger). In 2017, we decided to build a public network with the same technology— the hashgraph algorithm—and that’s when we set up Hedera Hashgraph.
Focus on creating fundamental value, not speculative value. As the industry matures, only those projects that are creating true, fundamental value will survive.
What need does it serve?
Hedera addresses the issues of performance, security, stability, and governance found in other public DLTs. Blockchain’s poor performance means that bitcoin and ethereum can only process 7-10 transactions per second and can take an hour to confirm transactions. On top of that, the price per transaction is often more than one dollar. The Hedera public DLT achieves tens of thousands of transactions per second with 100% confirmation of transactions within a few seconds, at a fraction of a cent per transaction.
Usually, public ledgers with higher performance have to sacrifice standards of security. Hashgraph is unique in the market, with the highest standard of security possible. The algorithm is uniquely resilient to categories of denial-of-service attacks that competing platforms are not.
Anyone building a Dapp on a public ledger has a significant risk of forking, where the record splits in two, leaving the Dapp without a single source of truth. Through a combination of legal and technical controls, Hashgraph is guaranteed to never fork. While it behaves like an open-source project, it is actually patented. This hybrid approach is critical. Lastly, Hedera’s governance model is designed to be the most decentralized of any public network. We’re creating a council of 39 global, blue-chip organizations across 18 industries worldwide. So far we have partnerships with Nomura Holdings, Swisscom, Deutsche Telecom, DLA Piper, and Magazine Luiza. These are not merely marketing relationships, but rather, the council members are formal members of the Hedera Hashgraph LLC.
Have you launched other companies before? What were they?
Even before co-founding Hedera Hashgraph, I gained valuable entrepreneurial experience by launching two tech companies. I founded BlueWave Security in 2005 and served as CEO until the company was acquired in 2011. At BlueWave Security, I led the development of hardware and software security applications. Prior to that I founded and led a company called Trio Security from 2002 to 2004, where my team and I developed and marketed enterprise-grade security solutions for mobile devices, with a focus on digital identity.
Can you give us a summary of your career thus far, how did you get here?
I began my career with the US Air Force, as a research scientist working for the Air Force as a senior scientist of machine intelligence. It was while on this assignment that Leemon Baird and I first began collaborating, and became close friends. I then taught Computer Science at the Air Force Academy and was the course director for Cyber Security.
Shortly after that, I managed the development of a missile defense simulator used by the United States to study how to protect its citizens and allies from intercontinental nuclear ballistic missile systems. I then left the Air Force and entered the security industry, founding and leading two tech startups, and serving as the senior executive for product security at a $1.7B revenue organization.
I moved to being head of architecture and labs at Ping Identity and from there entered the DLT field as the CEO of Swirlds, a software platform designed to build fully-distributed applications where we first employed the hashgraph algorithm.
What have been the biggest challenges you’ve faced in building a business in this space?
As with any emerging market, the technology often develops at a faster pace than the regulations around it. We are seeing that same progression in the DLT and cryptocurrency space, and that is probably the biggest challenge that we and many others in the space are facing.
What’s the best piece of advice you were given when it comes to being an entrepreneur in this space?
I read a book by Dee Hock, the founder of the Visa, called “One From Many”, from which I drew inspiration when designing our governance model. Dee was able to bring together a group of financial institutions in the 60s, under a structure where no single entity had control, to deliver a service that has benefited millions of people worldwide. That same concept applies even more to the decentralized web, and became the basis for the Hedera Governing Council.
Did you know?
Outside of work, I enjoy the simple pleasures in life: watching a movie with my wife of 26 years, playing a nightly game of billiards with my 17-year-old son, and reading a nightly Bible story to my 8-year-old before bed.
What advice would you give to someone setting up a business in the decentralized web?
Be patient enough to do things the right way. I know it can be frustrating to see other organizations running fast and ignoring regulators, but we strongly believe they are doing this at their own peril, and it may cost them their entire business in the long run (and this is already playing out for some organizations). Focus on creating fundamental value, not speculative value. As the industry matures, only those projects that are creating true, fundamental value will survive.
If you built your business all over again, what would you do differently?
I’m not sure I would do things any differently. Many of our beliefs, which at first have seemed counter to the ethos or idea of a decentralized web — patenting the consensus algorithm so the ledger cannot fork, being governed by a council of the largest enterprises — have seemed crazy to others in this space upon initial review. But over time we are seeing more organizations coming around to our way of thinking, and understanding that we have purposely designed the technology, legal protections, and governance model to ensure continued decentralization for the long term.
What project or projects are you most excited about (that aren’t yours!)
There are a number of projects in the ecosystem that we’re excited about, building great applications that really utilize the power of distributed ledger technology. Some of these include:
- Red Swan (started by some folks from Cushman Wakefield, tokenizing millions of dollars’ worth of real estate assets);
- Almond.org, which is a free app that helps individuals reduce their carbon footprint, rewards conscious consumption, and helps responsible brands grow their business
- EarthID, a decentralized identity management system
- Rightory, which helps manage IP rights transparently
- Hearo.fm, which helps artists get paid directly.
There are companies doing interesting things that help build out the ecosystem. These include companies like Chainlink, which builds distributed oracles to make sure distributed ledgers can access real-world, real-time data; Carbon (stable currency); and Hash Name Service. Importantly, we believe that organizations are eager to use a mix of public and private ledgers.
Be patient enough to do things the right way.
What is (or what will be) blockchain’s ‘killer app’?
The ‘killer app’ for the wider DLT space will be, in my opinion, payments. First, we will see this come to light in the form of international remittances. The need for a borderless currency is evident in both emerging markets, where alternatives to fiat currencies are in high demand, and developed markets, where leading financial institutions such as Central Banks are exploring international payments. The second driver will be micropayments.
Data privacy has become a priority for enterprises and their consumers. When we think of content consumption online, consumers can either pay overpriced monthly subscriptions, or exchange their personal data for the service. Countless enterprises have come under fire for misuse of this data, which they rely on for revenue. DLT will transform this revenue model. For the first time, we have the possibility to implement extensions on these content sites so that users can pay tiny amounts for the content they consume in real time — fractions of cents in the form of cryptocurrency — with no middle man and instant confirmation of transaction.
What’s the difference between setting up a company in the decentralized space versus regular business?
There are a number of differences between decentralized and traditional businesses. I think one of the biggest differences is the fact that the decentralized space makes a business global by nature. You cannot simply be concerned with a regional or national market and have to consider audiences around the world. Simultaneously, while keeping your eyes on your inherently global business, you must navigate complex regulatory environments. Every jurisdiction in the world has different rules for cryptocurrency, and indeed emerging technology of any kind. Another enormous difference is the impact of decentralization on the business model.
How would you describe blockchain to someone who has never heard of it before?
To anyone unfamiliar with the industry, I would describe blockchain technology as a replicated database that records information across a network of computers, rather than storing that information with one centralized authority. Blockchain and other distributed ledger technologies can remove the need for ‘middle men’ from a wide variety of industries, increasing transparency, saving time, and reducing costs.