The Story of Term Scout: Building the Future of Contract Intelligence
Sometimes the best startup ideas come from experiencing a problem firsthand. For Term Scout founder Otto Hanson, that problem emerged during his time as a corporate attorney, where he witnessed the inefficiencies of contract negotiation up close.
In a recent episode of Category Visionaries, Otto shared how his journey from entrepreneur to lawyer and back again shaped Term Scout’s mission to make contracts simple and useful.
From Entrepreneur to Attorney and Back
“I worked in startups early in my career, got beat up by lawyers a lot and decided that if I was going to be a good entrepreneur, I needed to have some legal background,” Otto explains. This led him to make an unusual mid-career pivot – leaving entrepreneurship to pursue a law degree.
After becoming what he calls a “minimally viable attorney” at a large corporate law firm, Otto experienced firsthand the challenges of high-stakes contract work. “As a corporate attorney in particular, you’re really in the middle of people’s make or break business transactions, the really big ones, the mergers and acquisitions, the VC financings, and you’re the guy that’s slowing everything down and keeping them from closing.”
The experience was enlightening but grueling. “There’s also just a tremendous amount of pressure to get every single I dotted and T crossed, and my body didn’t deal with the stress of that environment very well,” Otto shares. But this challenging experience revealed a bigger opportunity: making contracts more accessible and efficient for everyone involved.
Building a New Approach to Contracts
Term Scout’s first attempt at solving this problem looked very different from their current solution. “The first idea that we toyed with and actually launched was kind of like a Yelp type app where attorneys could register, prove that they were an attorney… create a public review of a contract that you were reading.”
The idea seemed promising until they tested it. “Literally inside of a day, we had five different attorneys review the same contract on like, ten key metrics… and the results were all over the place. Like, one attorney gave it a five on privacy, another attorney gave it a one on privacy.”
This early failure led to a crucial pivot. Instead of crowdsourcing contract reviews, Term Scout decided to build their own rating mechanism with in-house expertise. This approach has led to impressive growth, with the platform now processing about 6,000 contracts monthly.
Creating a New Category
Rather than just building another contract review tool, Term Scout is creating an entirely new category around contract certification. Their goal is to become a trusted neutral party in contract negotiations, using objective data to help both sides reach agreement faster.
This approach is already showing results with major enterprise customers. “We’re seeing more than 40% of customers are starting to sign that contract without negotiating,” Otto notes, highlighting how their certification can accelerate deal closure.
The Future of Contract Intelligence
Looking ahead, Term Scout’s vision extends far beyond enterprise software contracts. “Contracts touch people and businesses equally. They don’t discriminate, right? Any person or business that participates in the economy is necessarily signing lots and lots of contracts,” Otto explains.
The ultimate goal? “We hope three years from today… when you go to open up a contract from someone, you have instantaneous, accurate and reliable data that tells you this is exactly what this contract means. This is how good or bad it is for you.”
This vision could transform how we all interact with contracts, from business deals to personal agreements. As Otto puts it, “If we’re successful at making that happen, we actually think that most contracts will actually just move to market, contracts will get better and better, and the world will be just a slightly better place.”
For founders, Term Scout’s journey offers a powerful reminder: Sometimes the best way to solve a complex problem is to experience it firsthand, even if that means taking an unconventional career detour along the way.