Avsnitt
-
(0:00) Intro.
(1:23) About the podcast sponsor: The American College of Governance Counsel.
(2:10) Start of interview.
(2:40) Patrick's "origin story."
(3:41) His time at Skadden and Olshan Frome Wolosky (leading shareholder activism legal practice).
(4:38) Joining Vinson & Elkins to co-build shareholder activism practice.
(6:40) Distinguishing between large, mid, and small cap activism.
(10:14) Reference to Lazard's 2023 Annual Review of Activism and Patrick's 2024 trends to watch out in activism.
(13:39) On ESG activism, and the impact of Exxon Mobil case ("[I]t was more of a capital allocation campaign, rather than ESG"). Distinguishing the Starbucks ESG campaign (targeting Starbucks' labor relations).
(18:29) Separating E, S, and G activist campaigns. "The 'S' is inherently political"
(20:29) On the evolution of Universal Proxy Rules for director elections.
(27:06) On the "lifecycle of a campaign" (activists' letters, withdrawals, settlements, proxy fights, etc.)
(31:36) The impact of institutional investors and proxy advisors (ISS and Glass Lewis) in shareholder activism. *Reference to the Problem of Twelve episode with HLS Prof John Coates.
(37:50) The importance of shareholder engagement (with large institutional investors and proxy advisors).
(40:55) On company or board preparedness for activist campaigns.
(44:45) Books that have greatly influenced his life:
If I Die in a Combat Zone by Tim O'Brien (1973)Thinking Fast and Slow by Daniel Kahneman (2011)David and Goliath by Malcolm Gladwell (2013)On Shareholder Activism:DisneyWar by James B. Steward (2005)Railroader by Hunter Harrison (2018)The Splendid and the Vile (Saga of Churchill) by Erik Larson (2020)(47:53) His mentors.
(49:00) Quotes that he thinks of often or lives her life by.
(49:55) An unusual habit or absurd thing that he loves.
(50:35) The living person he most admires.
Patrick Gadson is the Co-Head of Vinson & Elkins’ Shareholder Activism practice, which advises public companies in competitive proxy solicitations, strategic investor relations, and corporate governance.
You can follow Evan on social media at:
Twitter: @evanepstein
LinkedIn: https://www.linkedin.com/in/epsteinevan/
Substack: https://evanepstein.substack.com/
__
You can join as a Patron of the Boardroom Governance Podcast at:
Patreon: patreon.com/BoardroomGovernancePod
__
Music/Soundtrack (found via Free Music Archive): Seeing The Future by Dexter Britain is licensed under a Attribution-Noncommercial-Share Alike 3.0 United States License
-
(0:00) Intro.
(1:10) About the podcast sponsor: The American College of Governance Counsel.
(1:57) Start of interview.
(2:40) Leah's "origin story."
(3:41) Her time at IBM.
(4:48) Her founding story of TaskRabbit (Boston, 2008).
(12:43) The evolution of her board at TaskRabbit, and how to think about (startup) board composition and scaling.
(20:31) First CEO succession (after $12m Series B in 2012).
(25:10) Her return as CEO, raising a Series C, and adding 3 strategic independent directors.
(26:13) On hiring Stacy Brown-Philpot as COO, and successor to CEO role.
(30:45) Distinguishing between startup directors (management, investor, and independent directors).
(36:01) Transitioning to investing as a general partner at Fuel Capital. Motto: "We're on your corner, not in your kitchen"
(40:55) On the role of CEO coaches (vs board directors or advisors).
(42:44) About YPO. "It has been a hugely influential organization for me."
(45:21) Her thoughts on boardroom diversity. Reference to the LCDA.
(48:42) Innovation in the boardroom, risks and opportunities of AI.
(51:29) Books that have greatly influenced her life:
Founders at Work by Jessica Livingston (2007)Books by Adam Grant.(51:51) Her mentors.
(52:25) Quotes that she thinks of often or lives her life by.
(52:50) An unusual habit or absurd thing that she loves.
(54:15) The living person she most admires.
Leah Solivan is a General Partner at Fuel Capital, a Silicon Valley-based seed stage venture capital firm. Prior to that, she was the founder, CEO and Executive Chair at TaskRabbit.
You can follow her on social media at:
Twitter: @labunleashed
You can follow Evan on social media at:
Twitter: @evanepstein
LinkedIn: https://www.linkedin.com/in/epsteinevan/
Substack: https://evanepstein.substack.com/
__
You can join as a Patron of the Boardroom Governance Podcast at:
Patreon: patreon.com/BoardroomGovernancePod
__
Music/Soundtrack (found via Free Music Archive): Seeing The Future by Dexter Britain is licensed under a Attribution-Noncommercial-Share Alike 3.0 United States License
-
Saknas det avsnitt?
-
(0:00) Intro.
(1:10) About the podcast sponsor: The American College of Governance Counsel.
(1:58) Start of interview.
(2:43) His role at EY and appointments at Harvard's Safra Center for Ethics (ELSCE), MIT and Boston University.
(5:23) Defining AI. Reference to the 1956 Dartmouth AI conference.
(8:29) GAI, AI market and valuations.
(11:31) On AI Ethics for business and AI governance. Reference to Harvard's Danielle Allen.
(15:10) On the concept of Multistakeholderism and AI Ethics. Hippocratic Oath for AI: "Do No Harm to the World."
(19:10) Board Committee Structure for AI. "[Only] 67 of the S&P500 companies have some sort of board technology committee." NACD report on board technology committees. "You may get a financial boost from doing that" "I think that'll be 50% greater a year from now."
(22:39) On board oversight. A deep dive on evolution of Caremark duties.
(31:09) On AI regulation.
(34:41) Geopolitics between the U.S. and China on AI.
(37:44) On OpenAI's board fiasco. Unusual structures such as OpenAI, Anthropic, Inflection AI and xAI.
(44:02) Recommendations for directors using AI.
(47:40) The intersection between Web3 and AI.
(50:00) On his EY Podcast: Better Innovation.
(51:15) Other thoughts for directors: university partnerships and risks of employee use of GAI.
(54:22) Books that have greatly influenced his life:
Tennis related books.The Fish that Ate the Whale by Rich Cohen (2012)Disrupt Yourself by Whitney Johnson (2015) *(55:47) His mentors. At EY: Kate Barton (EY Global Co-Chair, Emeritus).
(56:18) Quotes that he thinks of often or lives his life by: "Start where you are. Use what you have. Do what you can do." (Arthur Ashe) and "No matter how far you travel in the wrong direction, you can always turn around." (Winston Churchill).
(56:53) An unusual habit or absurd thing that he loves.
(58:04) The living person he most admires: Billy Jean King.
Jeff Saviano is the EY Emerging Technology Strategy & Governance Leader.
You can follow Evan on social media at:
Twitter: @evanepstein
LinkedIn: https://www.linkedin.com/in/epsteinevan/
Substack: https://evanepstein.substack.com/
__
You can join as a Patron of the Boardroom Governance Podcast at:
Patreon: patreon.com/BoardroomGovernancePod
__
Music/Soundtrack (found via Free Music Archive): Seeing The Future by Dexter Britain is licensed under a Attribution-Noncommercial-Share Alike 3.0 United States License
-
(0:00) Intro.
(1:12) About the podcast sponsor: The American College of Governance Counsel.
(2:00) Start of interview.
(3:10) Amy's "origin story."
(6:23) Her time leading Comcast Ventures, and how Corporate Venture Capital (CVC) has evolved.
(9:08) Why SF/Silicon Valley as a tech hub for Comcast Ventures.
(11:19) Her first public company board experience (with Adobe).
(13:15) Differences on serving on public and private (venture-backed) boards. "Much more hands-on in private companies."
(15:27) Differences between young and old public companies. Her experience on the board of On Running. "[M]y one advice to future board members or existing board members is to learn how to listen. And you're listening for different things, again, depending on the stage of the company."
(19:42) On "adversarial boards."
(24:10) On OpenAI's board fiasco. Trust in CEOs and boardrooms. Private companies and founder misbehavior. "You never fire fast enough." "You know when things are off."
(32:35) On the current AI investment cycle.
(36:16) On the state of San Francisco as a city and tech hub.
(39:35) On women sports, and her involvement with Bay FC, a pro women's soccer team based in SF/Bay Area.
(43:09) Her thoughts on the debate and politicization of ESG and DEI.
(46:41) Books that have greatly influenced her life:
The Innovator's Dilemma by Clay Christensen (1997)These Truths by Jill Lepore (2018)21 Lessons for the 21st Century by Yuval Harari (2018)(47:52) Her mentors: Ralph J. Roberts (founder of Comcast).
(49:02) Quotes that she thinks of often or lives her life by: "Old men ought to be explorers" (T.S. Eliot) and "A house divided against itself cannot stand." (Abraham Lincoln)
(50:20) An unusual habit or absurd thing that she loves.
(51:07) The living person she most admires: Liz Cheney and Taylor Swift.
Amy Banse is a Venture Partner at Mosaic General Partnership, a VC firm based in SF Bay Area. Amy has over 30 years of experience starting, investing in, and building businesses at Comcast and as a board member on numerous public and private companies, including Adobe, Clorox, On Running and Lennar Corporation.
You can follow Evan on social media at:
Twitter: @evanepstein
LinkedIn: https://www.linkedin.com/in/epsteinevan/
Substack: https://evanepstein.substack.com/
__
You can join as a Patron of the Boardroom Governance Podcast at:
Patreon: patreon.com/BoardroomGovernancePod
__
Music/Soundtrack (found via Free Music Archive): Seeing The Future by Dexter Britain is licensed under a Attribution-Noncommercial-Share Alike 3.0 United States License
-
(0:00) Intro.
(1:04) About the podcast sponsor: The American College of Governance Counsel.
(1:51) Start of interview.
(2:54) Terry's "origin story."
(5:18) The start of her legal career with O'Melveny & Myers.
(8:35) Her time at Howard Rice and her current role at Arnold & Portner (the firms merged in 2012).
(11:34) Her book ESG, the Professional's Guide to the Law and Practice of ESG, published by the American Bar Association.
(14:55) On the evolution of the purpose of the corporation and emergence of ESG.
(17:28) Environmental risks and opportunities (the "E" in ESG)
(21:00) Her take on the new SEC Climate Disclosure Rules. "It's arguably, to me, the Sarbanes-Oxley of its generation in terms of a regulatory shift."
(24:21) On the legal challenges to the SEC Climate Disclosure Rules.
(28:11) Social risks and opportunities (the "S" in ESG).
(33:31) On the ESG backlash. Reference to FT article ($13.3bn pulled out of BlackRock). Larry Fink's 2024 Chairman's Letter to Investors.
(37:50) Challenges to CA's board diversity laws (SB-826 and AB-979)
(42:14) Challenges to Nasdaq Board Diversity Rule.
(44:14) The Theranos Governance Story with Tyler Schulz (event hosted by BASF).
(46:22) BASF's Truth and Power Distinguished Speaker Series.
(48:47) Future corporate governance trends: ESG is increasingly intersectional (i.e. sustainability and AI)
(52:29) Books that have greatly influenced her life:
My Life on the Road by Gloria Steinem (2015)Lady Justice by Dahlia Lithwick (2022)(54:04) Her mentors: Larry Rabkin (former partner at Howard Rice) and her Dad.
(54:57) Quotes that she thinks of often or lives her life by: "To have courage for whatever comes in life - everything lies in that" (St Teresa of Avila) and "You have to see it to be it" (Billie Jean King)
(55:55) An unusual habit or absurd thing that she loves.
(56:14) The living person she most admires: Gloria Steinem.
Terry Johnson is a partner at Arnold & Porter and the 2024 President of the Bar Association of San Francisco and its Justice and Diversity Center.
You can follow Evan on social media at:
Twitter: @evanepstein
LinkedIn: https://www.linkedin.com/in/epsteinevan/
Substack: https://evanepstein.substack.com/
__
You can join as a Patron of the Boardroom Governance Podcast at:
Patreon: patreon.com/BoardroomGovernancePod
__
Music/Soundtrack (found via Free Music Archive): Seeing The Future by Dexter Britain is licensed under a Attribution-Noncommercial-Share Alike 3.0 United States License
-
(0:00) Intro.
(1:27) About the podcast sponsor: The American College of Governance Counsel.
(2:14) Start of interview.
(3:30) Mary's "origin story."
(5:32) Her start as a whistleblower lawyer at Philips & Cohen. The advent of US Whistleblower reward programs (CFTC, SEC, IRS, Transportation, Treasury, and DOJ soon).
(7:50) The Theranos case and her representation of Tyler Schulz.
(14:02) More about the SEC Whistleblower Program.
(24:52) The Facebook (Meta) case and her representation of Frances Haugen. On the rise of whistleblowers in Silicon Valley: The Tech Worker Handbook (created by Ifeoma Ozoma, a whistleblower at Pinterest). The Silence No More Act (CA SB 331). Reference to Mark MacGann, the Uber whistleblower.
(31:00) On the health hazards to whistleblowers. Reference to New England Journal of Medicine article on impact in whistle-blowers in cases of major health care fraud. Unfortunate death of Boeing Whistleblower. The Personal Toll of Whistle-Blowing (New Yorker Magazine).
(37:52) On FCPA cases, and role of whistleblowers in foreign corruption enforced by the SEC and DOJ. Reference to the Billion Dollar Whale book.
(47:19) Future trends on whistleblower cases and corporate governance practices (elevation of Chief Compliance Officers).
(50:50) Advice to board members: embrace whistleblowers and encourage speaking up. Reference to this study: Evidence on the Use and Efficacy of Internal Whistleblowing Systems.
(52:37) Books that have greatly influenced her life: children books by William Steig (inspired her parenting).
(53:17) Her mentor: Lisa Foster.
(54:53) Quotes that she thinks of often or lives her life by: "The arc of the moral universe is long, but it bends toward justice." (Martin Luther King, Jr)
(55:53) An unusual habit or absurd thing that she loves.
(56:18) The living person she most admires: whistleblowers generally, "I call them Truth Tellers and Up Standers".
Mary Inman is a partner at Whistleblower Partners LLP, a new boutique law firm specializing exclusively in representing whistleblowers under the various U.S. whistleblower reward programs.
You can follow Evan on social media at:
Twitter: @evanepstein
LinkedIn: https://www.linkedin.com/in/epsteinevan/
Substack: https://evanepstein.substack.com/
__
You can join as a Patron of the Boardroom Governance Podcast at:
Patreon: patreon.com/BoardroomGovernancePod
__
Music/Soundtrack (found via Free Music Archive): Seeing The Future by Dexter Britain is licensed under a Attribution-Noncommercial-Share Alike 3.0 United States License
-
(0:00) Intro
(1:02) About the podcast sponsor: The American College of Governance Counsel.
(1:49) Start of interview.
(2:37) Katherine Henderson's "origin story."
(5:05) Amy Simmerman's "origin story."
(8:02) The origin and focus of their Delaware Corporate Law and Litigation Year in Review.
(9:14) Caseload of Delaware Court of Chancery judges.
(12:51) Cases involving director oversight duties ("Caremark duties"). Reference to the Blue Bell case (2019). "Mission critical risk areas." Reference to Section 220 Books and Records Demands.
(19:56) Duty of Oversight Applies to Officers (McDonald's case). Dismissal of case against directors (McDonald's II).
(23:13) Controlling Stockholders and conflicts of interest. (DE reconsiders scope of the MFW Doctrine in Match.com case)
(24:57) Distinctions between public and private company litigation. Reference to the NEA vs Rich case.
(30:36) On Delaware vs other states. Reference to the TripAdvisor case (Delaware company seeking to reincorporate in NV).
(36:55) Innovations in AI Governance. The example of Anthropic AI (use of PBCs and LTBT).
(43:24) On shareholder activism and validity of stockholder agreement-based restrictions over corporate governance matters (Moelis case).
(45:13) Securities claims on misleading risk disclosures.
(46:55) What are the 1-3 books that have greatly influenced your life:
Amy:Obedience to Authority by Stanley Milgram (1974)Steppenwolf by Herman Hesse (1927)Katherine:The Feminine Mystique by Betty Friedan (1963)(48:02) Who were their mentors, and what they learned from them.
(49:00) Quotes they think of often or live their life by.
(49:52) An unusual habit or an absurd thing that they love.
(50:35) The living person they most admire.
__
Katherine Henderson and Amy Simmerman are partners at the law firm Wilson Sonsini Goorich & Rosati.
You can follow Evan on social media at:
Twitter: @evanepstein
LinkedIn: https://www.linkedin.com/in/epsteinevan/
Substack: https://evanepstein.substack.com/
__
You can join as a Patron of the Boardroom Governance Podcast at:
Patreon: patreon.com/BoardroomGovernancePod
__
Music/Soundtrack (found via Free Music Archive): Seeing The Future by Dexter Britain is licensed under a Attribution-Noncommercial-Share Alike 3.0 United States License
-
(0:00) Intro.
(2:27) About the podcast sponsor: The American College of Governance Counsel.
(3:13) Start of interview. [Interviewer: UC Law SF Professor Abe Cable. Reference to his article "Does Trados Matter?" (2019)].
(4:17) Summary of the Trados case by Vice-Chancellor Laster.
(9:44) Concept of "residual value maximization." Distinguishing between standard of conduct and standard of review.
(16:17) Explaining standards of review: 1) Business judgment rule, 2) Enhanced scrutiny and 3) Entire fairness standard. The impact of conflicted transactions.
(23:55) Distinguishing governance standards from public companies and Silicon Valley-style private startups.
(28:10) Social factors or dynamics that make Silicon Valley VC-backed startups a relatively lower risk environment for litigation.
(31:07) Why directors should always try to maximize the value of the corporation for the residual. Emotional commitment and engagement in many cases.
(33:31) "What made Trados a difficult case and a litigable case was that this really was a sideways situation where the value was in the vicinity of an area where the common could take."
(36:36) How to think about maximizing the residual value. *reference to Credit Lyonnais opinion by Chancellor Allen (1991).
(39:04) Other trends or cases that present some litigation risk for startup corporate directors. "I don't know if there's anything super new. What we tend to see is sort of old problems recurring because these are really problems of human nature. And so things are cyclical."
Redemption Rights. Example of cases: Thoughtworks (2010), ODN Holdings (2017)280G [and 409A] Valuations. "I would really like to see people treating [those valuations] as a more substantive exercise than merely as an exercise in marketing to your employees (for employees' morale)."(45:54) The importance of outside or independent directors. "I really think that somebody has to be in the room asking the proverbial dumb question, which usually isn't a dumb question. Usually it's the question that needs to be asked."
The Honorable J. Travis Laster was sworn in as Vice Chancellor of the Court of Chancery on October 9, 2009.
Professor Abe Cable joined the UC Law SF faculty in 2011. He is the Faculty Director of the UC Center for Business Law San Francisco.
You can follow Evan on social media at:
Twitter: @evanepstein
LinkedIn: https://www.linkedin.com/in/epsteinevan/
Substack: https://evanepstein.substack.com/
__
You can join as a Patron of the Boardroom Governance Podcast at:
Patreon: patreon.com/BoardroomGovernancePod
__
Music/Soundtrack (found via Free Music Archive): Seeing The Future by Dexter Britain is licensed under a Attribution-Noncommercial-Share Alike 3.0 United States License
-
(0:00) Intro.
(1:10) About the podcast sponsor: The American College of Governance Counsel.
(1:57) Start of interview.
(4:00) Alexandre's "origin story." His time as Commissioner of the Brazilian Securities and Exchange Commission (CVM) (2020-2023).
(7:34) On his OECD background note on Institutional Investors' Engagement in Latin America (2023).
(14:56) Local institutional investors and pension funds engagement in Brazil. *reference to E118 with John Coates: The Problem of Twelve, Index Funds and Private Equity.
(17:23) On stewardship codes.
(19:58) On internal stewardship teams at asset managers and passive investors.
(21:05) Challenges of shareholder activism and dispersed ownership in Brazil.
(25:53) Enforcement and Cooperation between U.S. and Brazilian regulators. *Reference Enhanced Memorandum of IOSCO.
(28:03) On the governance of State-Owned Enterprises (SOEs).
(34:24) The geopolitical landscape and where Brazil stands vis-a-vis China and the U.S.
(36:38) Fintech developments in Brazil. *Reference to Pix from Brazilian Central Bank (Open Finance Project).
(39:19) The future of corporate governance in Brazil, and prospects to join the OECD. Private right of action for enforcement?
(41:29) Book that has greatly influenced his life:
The Economic Structure of Corporate Law by Frank H. Easterbrook and Daniel R. Fischel (1991)(42:08) His mentor: his father.
(42:47) Quotes that he thinks of often or lives her life by: "No need to hurry but do not waste time" by Jose Saramago. "I'm neither an optimist nor a pessimist, I prefer to be a hopeful realist." (Ariano Suassuna)
(43:44) An unusual habit or absurd thing that he loves.
(45:34) The living person he most admires.
Alexandre Rangel is a former Commissioner of the Brazilian Securities and Exchange Commission (CVM) (2020-2023) and Consultant of the OECD (2023). He’s currently practicing law at Rangel Advogados.
You can follow Evan on social media at:
Twitter: @evanepstein
LinkedIn: https://www.linkedin.com/in/epsteinevan/
Substack: https://evanepstein.substack.com/
__
You can join as a Patron of the Boardroom Governance Podcast at:
Patreon: patreon.com/BoardroomGovernancePod
__
Music/Soundtrack (found via Free Music Archive): Seeing The Future by Dexter Britain is licensed under a Attribution-Noncommercial-Share Alike 3.0 United States License
-
(0:00) Intro.
(0:55) About the podcast sponsor: The American College of Governance Counsel.
(1:41) Start of interview.
(2:21) Richard's "origin story." His position as Chair of WSGR's public company practice and Chair of the Nasdaq Listing and Hearing Review Council.
(7:30) On the origins and focus of WSGR's 2023 Silicon Valley 150 Corporate Governance Report.
(12:00) What findings were most surprising or unexpected in this year's report? Discussion on ESG disclosures.
(14:40) On ESG backlash and regional differences. Importance of (institutional) investors.
(15:36) On some SV150 companies leaving their CA HQs (both to other states and decentralizing with no HQ). Impact of diversity disclosure laws (SB-826 and AB-979) and taxation.
(18:48) Incorporating in Delaware vs other states (prompted by Elon Musk's desire to re-incorporate from DE to TX). FYI 143/150 (95%) of the SV150 are incorporated in Delaware.
(23:25) On evolution of virtual meetings (board and stockholder meetings).
(26:15) On evolution of board committees structure and focus (ie. ESG/sustainability, Cybersecurity/privacy, Human Capital, Technology, AI).
(32:13) Impact of Nasdaq Board Diversity Rule. *5th U.S. Circuit Court of Appeals upheld the rule (October 2023). Gender diversity in SV150: 33% boards, 22% C-level execs, 5% CEOs.
(36:09) On Dual and Multi-Class Share Structures in SV150 (~30% of SV150 have them. ~91% have sunset provisions).
(39:40) Shareholder Activism in SV150 (~8%) and impact of new SEC Universal Proxy Rules.
(44:24) Looking ahead, what key governance issues should SV150 companies be preparing for in the next few years? Climate disclosure rules (EU, CA, SEC, investor requirements, etc) and AI.
(47:00) Increase in antitrust and other regulatory enforcement. "We are in a high enforcement regulatory environment."
(49:24) Book that has greatly influenced his life:
The Prophet by Kahlil Gibran (1923)(49:50) His professional mentors (WSGR):
Steve BochnerKatie MartinJose Macias(50:35) Quotes that he thinks of often or lives her life by: "If you start right, it's easy to end right. But if you start wrong, it's very, very difficult to get on the right path and end right" by Joseph Smith.
(51:10) An unusual habit or absurd thing that he loves.
(51:58) The living person he most admires: his parents.
Richard Blake is a partner at Wilson Sonsini Goodrich & Rosati and the leader of the firm's public companies practice. He practices corporate and securities law with a focus on public company representation, corporate governance, and public offerings.
You can follow Evan on social media at:
Twitter: @evanepstein
LinkedIn: https://www.linkedin.com/in/epsteinevan/
Substack: https://evanepstein.substack.com/
__
You can join as a Patron of the Boardroom Governance Podcast at:
Patreon: patreon.com/BoardroomGovernancePod
__
Music/Soundtrack (found via Free Music Archive): Seeing The Future by Dexter Britain is licensed under a Attribution-Noncommercial-Share Alike 3.0 United States License
-
(0:00) Intro.
(1:36) About this podcast's sponsor: The American College of Governance Counsel.
(2:23) Start of interview.
(3:33) On the collapse of SVB and its impact to Silicon Valley and the VC industry.
(9:05) On the state of private markets. *Reference to Aileen Lee's post on Unicorn update (2013-2024).
(14:35) How VCs are approaching tough conversations on shutdowns, downrounds and/or recaps in this down market cycle. *Reference to Scott's book Secrets of Sand Hill Road: Venture Capital and How to Get It (2019).
(19:10) On the evolution of secondary markets (including founders taking secondaries) and the idea of staying private for longer ("SPL").
(24:15) On startup compensation practices (stock option vesting schedules, RSUs).
(26:21) On a16z's expansion to NYC (~80 employees) and internationally to London.
(28:52) On geopolitics challenges, including China.
(31:06) On the crypto industry (Web3) and its regulatory challenges.
(34:37) On AI as an investment thesis.
(35:30) On some of the novel corporate governance structures used by some leading AI companies (PBCs, LTBTs, etc). On the OpenAI board crisis.
(38:37) Fraud in private markets.
(41:44) On ESG and DEI in the venture-backed startup market. *Reference to a16z Cultural Leadership Fund and Talent x Opportunity (TXO). How LPs think about this, both in the US and abroad.
(44:45) On California as a tech hub and some of its "exodus".
(46:35) Corporate governance matters for late stage companies, independent directors and "overboarding" in the VC context.
Scott Kupor is an investing partner focused on growth-stage companies building in the bio and healthcare industries, manages the firm’s investor relations team, and is responsible for the firm’s growth initiatives.
You can follow Scott on social media at:
Twitter (X): @skupor
LinkedIn: https://www.linkedin.com/in/scottkupor/
You can follow Evan on social media at:
Twitter: @evanepstein
LinkedIn: https://www.linkedin.com/in/epsteinevan/
Substack: https://evanepstein.substack.com/
__
You can join as a Patron of the Boardroom Governance Podcast at:
Patreon: patreon.com/BoardroomGovernancePod
__
Music/Soundtrack (found via Free Music Archive): Seeing The Future by Dexter Britain is licensed under a Attribution-Noncommercial-Share Alike 3.0 United States License
-
(0:00) Intro.
(1:28) About the podcast sponsor: The American College of Governance Counsel.
(2:14) Start of interview.
(3:09) Nick's "origin story."
(6:36) On his first startup IMix.com (focused on music streaming)
(7:55) His pivot as an equity analyst at Sanford Bernstein.
(8:32) His focus on investing in and advising internet companies.
(9:56) His time at Google (2010-2022), first in Canada then as Chief Evangelist.
(13:21) His time at Chief Growth and Strategy Officer at Coveo, a Canadian AI company (2022-2023).
(14:44) Joining the boards of the Toronto Stock Exchange, iA Financial Group, McEwen Mining, and Alida and advising boards on AI. Teaching at the Rotman School of Management, Northwestern and the Canadian Institute of Directors (ICD).
(16:55) Defining AI. The types of AI: 1) Computational AI, 2) Sensors AI, and 3) Generative AI.
(21:22) The future of Generative AI: Big Tech or startups?
(24:42) On whether the investment mania in AI is justified. "This technology wave is likely to be much more significant than the internet." "It's the most important technology wave that I have ever seen in my career."
(26:19) How corporate directors should think about opportunities and risks of AI. "The most important thing in governance for a board, in my view for AI, is making sure there is movement." Other risks: 1) Use of confidential information, 2) Creating a private version of AI, 3) Hallucinations (fake information by AI), 4) Issues of bias. Corporate training.
(35:07) On where AI fits in board committees, and on surge of AI experts on boardrooms. *recommendation by Nick: Coursera class on prompt engineering (Vanderbilt University).
(39:51) On AI regulation by the US (EO by President Biden), EU, Canada and others.
(46:03) The US-China race on AI - geopolitical implications. *reference to Marc Andreessen's article Why AI Will Save the World.
(50:03) On OpenAI's board fiasco and some of the unusual governance structures of leading AI companies.
(54:45) Books that have greatly influenced his life:
The Little Prince by Antoine de Saint-Exupéry (1943)1984 by George Orwell (1949)(55:50) His mentors: #1 his mother, #2 McKinsey & Co.
(56:33) Quotes that he thinks of often or lives her life by: "You miss 100% of the shots you don't take" by Wayne Gretzky.
(57:30) An unusual habit or absurd thing that he loves: Keeping track and data of his healthcare. He recommends the book "Outlive" by Peter Attia. Two tests that he recommends: Cleerly heart scan using AI and Galleri test for cancer detection. Tracks VO2 Max.
(1:00:04) The living person he most admires: Anders Tegnell (Sweden's state epidemiologist).
(1:02:18) Recommendation for corporate directors on where to get started on getting educated on AI.
Nicolas Darveau-Garveau is an AI and digital transformation expert. He was Google’s Chief Evangelist and worked as Chief Strategy and Growth Officer at Coveo, a leading AI company. He currently serves on the boards of the Toronto Stock Exchange, iA Financial Group, McEwen Mining, and Alida.
You can follow Evan on social media at:
Twitter: @evanepstein
LinkedIn: https://www.linkedin.com/in/epsteinevan/
Substack: https://evanepstein.substack.com/
__
You can join as a Patron of the Boardroom Governance Podcast at:
Patreon: patreon.com/BoardroomGovernancePod
__
Music/Soundtrack (found via Free Music Archive): Seeing The Future by Dexter Britain is licensed under a Attribution-Noncommercial-Share Alike 3.0 United States License
-
(0:00) Intro.
(2:21) About this podcast's sponsor: The American College of Governance Counsel.
(3:08) Start of interview.
(3:50) On collapse of SVB & other banks. Lessons for board members. *Reference to video from Stanford Rock Center
(12:00) On the state of private markets and unicorns. Downturn and shutdowns in VC-backed startups. *Per Pitchbook: “Approx 3,200 private VC-backed U.S. companies have gone out of business this year. Combined, those companies raised north of $27B.”
(15:32) On the growth of AI. "The pixie dust."
(18:25) On OpenAI's board fiasco and the company's controversial structure.
"The fundamental problem is with the idea that you can achieve what OpenAI wanted to achieve in terms of guardrails. That's the fundamental point. The second problem is the structure. The structure was all wrong. And the third problem was the people. These were the wrong people to be serving on these boards with the wrong structure, or seeking an objective that can't be obtained." *reference to public choice theory, impossibility theorem by Ken Arrow.
*Reference to innovations in corporate governance structures of AI companies (OpenAI, Anthropic, xAI).
(26:07) On geopolitics of AI: China not bound by same guardrails.
(28:56) On the crypto industry and its regulatory challenges. The case of Ripple vs SEC.
(33:11) Fraud in private markets (ie Elizabeth Holmes, SBF, Trevor Milton and other high profile convictions).
(34:18) ESG/DEI backlash and the politicization of corporation governance. "This is situation where less is more."
(38:27) Biggest winner in business in 2023.
(40:32) Biggest loser in business in 2023.
(42:46) Biggest business surprise of 2023.
(45:43) Best and worst corporate governance trend from 2023.
(47:24) The biggest corporate governance trend to watch out for in 2024.
Joseph A. Grundfest is the William A. Franke Professor of Law and Business Emeritus at Stanford Law School and Senior Faculty of the Rock Center for Corporate Governance. He is a former Commissioner of the SEC and co-founded Financial Engines with Professor William F. Sharpe, the 1990 Nobel Prize winner in Economics. He formerly served as a director of KKR and Oracle.
You can follow Evan on social media at:
Twitter: @evanepstein
LinkedIn: https://www.linkedin.com/in/epsteinevan/
Substack: https://evanepstein.substack.com/
__
You can join as a Patron of the Boardroom Governance Podcast at:
Patreon: patreon.com/BoardroomGovernancePod
__
Music/Soundtrack (found via Free Music Archive): Seeing The Future by Dexter Britain is licensed under a Attribution-Noncommercial-Share Alike 3.0 United States License
-
(0:00) Intro.
(1:28) About the podcast sponsor: The American College of Governance Counsel.
(2:15) Start of interview.
(3:16) Yifat's "origin story."
(6:20) Yifat's bio and positions at the University of Haifa and Technion - Israel Institute of Technology.
(8:00) About Elizabeth Pollman, Professor at the Penn Carey Law School at the U. of Pennsylvania.
(9:57) About their article, Ousted (2023).
"We use that term broadly to refer to being forced or pushed to step down from the CEO role, specifically that managerial role, despite having significant control. And what we're arguing is that there's a whole bunch of countervailing forces and factors that can work to limit the durability of the founder CEO's power and ultimately can lead to them resigning from that managerial role."
(11:58) Examples of countervailing forces and factors to the founder/CEO power. Differences between public and private companies. Influence of voting rights.
(15:20) Influence of margin loans (backed by founder stock) and secondary sales in corporate governance. *Reference to E41 with Maureen Farell on Cult of We (Aug 2021).
(19:31) Conflict with regulators, investors and other stakeholders (example: Uber). *Reference to Elizabeth Pollman's article on Regulatory Entrepreneurship.
(22:19) On employee pressure in corporate governance.
(23:00) On OpenAI's board debacle (involving Sam Altman's ouster and reinstatement).
(29:31) Other founder/CEO cases referenced in Ousted. *Mention of E64 with Keir Gumps, involved in Uber's governance clean-up. Cases of Elizabeth Holmes (Theranos) and Sam Bankman-Fried (FTX). On externalities from lack of corporate governance in startups, particularly unicorns. The impact of the Power Law in VC-backed companies.
(36:26) Take-aways from their article Ousted. Gap between academia and practice.
(40:04) Elizabeth Pollman's article Startup Failure. *Reference to E3 with Elizabeth Pollman on Startup Governance and Regulatory Entrepreneurship (May 2020).
"[I]t's really important that law and culture facilitate the efficient flow of the failure of venture-backed startups and that failed startups can do so with honor because that's what sustains our system in a big way, out of which comes these few successes.
But we also have to have a way of dealing with lots of failed startups (ie. M&A, acquihires, ABCs, and liquidation)."*Reference to my newsletter describing a time of "downrounds, shutdowns and recaps" on a monthly basis.
(44:28) Yifat Aran's article The RSU Time Bomb: Regulating Startup Equity Compensation in the Unicorn Era. Triggered by Stripe's downround in March 2023 (raising $6.5 billion at $50 billion valuation).
(52:51) On current equity compensation practices and the private/public market divides.
(54:51) Consequences of startups staying private for longer (SPL) or forever.
- Rapid fire questions for Yifat Aran:
(58:31) Books that have greatly influenced her life:
The Death of Ivan Ilyich by Leo Tolstoy (1886)(59:56) Her mentors:
Dorit Beinisch (Former President of the Supreme Court of Israel)Joe Grundfest, Stanford Law School.Elizabeth Pollman, Penn Carey Law School.(01:02:30) Quotes that she thinks of often or lives her life by: "I believe that you can achieve everything, but you aren't likely to achieve everything at the same time."
(01:03:13) An unusual habit or absurd thing that she loves: chic flicks and gummy bears to write papers.
(01:03:46) A living person she admires: Arthur Rock.
Elizabeth Pollman is a Professor of Law and the Co-Director of the Institute for Law & Economics at the University of Pennsylvania Carey Law School. She teaches and writes in the areas of corporate law and governance, as well as startups, venture capital, and entrepreneurship.
Yifat Aran is an Assistant Professor of Law at the University of Haifa. She is also a lecturer in the MBA program at the Technion, Israel Institute of Technology, and a research fellow at the Rutgers Institute for the Study of Employee Ownership and Profit Sharing. She is primarily interested in corporate law and governance and securities regulation, with a focus on venture capital and entrepreneurship.
__
This podcast is sponsored by the American College of Governance Counsel.
You can follow Evan on social media at:
Twitter: @evanepstein
LinkedIn: https://www.linkedin.com/in/epsteinevan/
Substack: https://evanepstein.substack.com/
__
You can join as a Patron of the Boardroom Governance Podcast at:
Patreon: patreon.com/BoardroomGovernancePod
__
Music/Soundtrack (found via Free Music Archive): Seeing The Future by Dexter Britain is licensed under a Attribution-Noncommercial-Share Alike 3.0 United States License
-
(0:00) Intro.
(1:21) About the podcast sponsor: The American College of Governance Counsel.
(2:08) Start of interview.
(2:49) Larry's "origin story."
(4:49) About the Internet Security Alliance (ISA). Founded in 2000 by former Congressman Dave McCurdy, former chairman of the House Intelligence Committee. Larry joined as CEO from the beginning.
"The ISA view is that we need to look at not just how the attacks are occurring, we also need to look at why the attacks occur.
Because unless we understand why the attacks occur, we're never going to be able to create a truly sustainable system.""Cyberattacks are cheap, easy to acquire, they're incredibly profitable, trillions of dollars a year in damage. The business plan is fabulous, same attacks all over the world constantly. It's hard for on the defense side, we're defending an incredibly porous perimeter. It's hard to show return on investment to things you've prevented, and there's no law enforcement. We prosecute maybe 1% of cybercrimes. So it's that imbalance in the economics of cybersecurity that ISA focuses on."
"The reason that we have all these attacks is because it is such a profitable endeavor to do these attacks."
(10:19) China's threat in cybersecurity.
(12:07) About the NACD/ISA Director's Handbook on Cyber-Risk Oversight.
(15:36) On the evolution of the Directors' Handbook since it's first version in 2014. International editions, and adding a 6th ESG principle ("the systemic resilience and and collaboration principle").
(20:20) On the cost of cyber crimes: expected to cost the world ~$8 trillion dollars in 2023 (per the WEC).
"The narrative is that the export controls and sanctions and de-risking coming out of Washington DC is simply pushing China to be more self-sufficient." "This has to be seen as a temporary measure, that gives us time to resolve the actual conflicts that exist."
(24:40) Principle 1: Cybersecurity from IT risk to a strategic, enterprise risk.
"We would argue that cybersecurity should be considered in the same sense by a board, that they would consider finance and legal. So the board does not make any decision, any important decision, without consulting with legal and finance. We would argue in the 21st century, there's not a single important decision the board makes, major decision, that does not have a cybersecurity component to it."
(27:12) Principle 2: Legal and Disclosure Obligations.
(28:05) Principle 3: Board Oversight Structure and Access to Expertise.
"[I]t is probably not necessary, it may not even be a good thing, to have a cyber experts, so to speak, on the board. We think that this is a full board responsibility."
(29:43) Principle 4: Enterprise Framework for Managing Cyber Risk.
(31:03) Principle 5: Cybersecurity Measurement and Reporting.
"[T]he core definition of what a cyber risk is, is how much money is this going to cost our firm over a certain period of time.
That's a definition of risk. And you need to be able to figure out what this means to the business. [T]here is all sorts of spending, you know, in cybersecurity. We are now seeing exhaustion with that. We're seeing boards saying, hey, we're not going to increase your budget by 200% every year. Can't do it."(33:53) On the SEC mandating cybersecurity experts in the boardroom..
"ISA's number one legislative agenda is we need much more cybersecurity people. You know, one of the reasons that we can't have a cyber expert on every board is we don't have enough cyber experts for every board."
(36:53) On SolarWinds' CISO enforcement action, and the case of Uber's CISO conviction.
(41:40) How should boards think about China risk ("digital silk road")
"I think it was General Alexander who commented that the theft of intellectual property from cyber means is the largest single theft in world history."
(45:36) Regulating Artificial Intelligence (AI) and OpenAI's case.
"Dave McCurdy used to say that Congress does two things well, nothing and overreact. So we're in that do nothing space with AI now. We don't want to overreact."
(49:28) Three other issues for boards to consider: 1) The cybersecurity personnel shortage (we currently have a shortage of about 750,000 cybersecurity jobs we can't fill); 2) We should create an economic cyber security model; and 3) Challenges to Government regulation of cybersecurity.
(53:08) Books that have greatly influenced his life:
Working by Stud Turkel (1974)(53:47) His mentor: his father.
(54:49) Quotes that he thinks of often or lives her life by: "This argument has the added benefit of being true" by Henry Kissinger. "The Godfather is never afraid to demonstrate his friendship first." from The Godfather book by Mario Puzo.
(56:12) An unusual habit or absurd thing that he loves: "(Post COVID) I spend an hour a day just with my son, an hour a day just with my wife and an hour a day working out for my own health."
(58:00) The living person he most admires: Barack Obama.
(59:43) About his new TV show "Fixing Cybersecurity" (launching in January 2024).
Larry Clinton is the President and CEO of the Internet Security Alliance.
__
This podcast is sponsored by the American College of Governance Counsel.
You can follow Evan on social media at:
Twitter: @evanepstein
LinkedIn: https://www.linkedin.com/in/epsteinevan/
Substack: https://evanepstein.substack.com/
__
You can join as a Patron of the Boardroom Governance Podcast at:
Patreon: patreon.com/BoardroomGovernancePod
__
Music/Soundtrack (found via Free Music Archive): Seeing The Future by Dexter Britain is licensed under a Attribution-Noncommercial-Share Alike 3.0 United States License
-
*Prior episodes reviewing Succession:
Season 1: E98 (May 22, 2023)Season 2: E102 (June 26, 2023)Season 3: E109 (Sept 11 , 2023)0:00 -- Intro.
2:12-- About the podcast sponsor: The American College of Governance Counsel.
2:58 -- Start of interview.
3:54 -- On the influence and leadership style of Logan Roy. The "ultimate corporate governance challenge."
6:41 -- Comparing the (fictional) Roy family with the (real) Murdochs and Sultzbergers. "Why is Logan trying to sell Waystar? The answer is simple. He knows his kids can't cut it. So, his way of getting out of this whole dilemma is to sell the company, give the kids billions of dollars, you know, as their share for their stock, and then let them all go their own way."
09:47 -- On dual-class share structures. "[In the media business] just because you have dual shares doesn't mean you will always be protected from the vagaries of the marketplace." (example: the Bancroft family with the WSJ).
13:06 -- On the role of media and politics. Joe Nocera: "My line on succession is using succession to understand corporate America is like using the Simpsons to really understand small towns."
18:42 -- On corporate money in politics: "Forget Presidential elections. The real thing that happens in real life is that companies give lots of money to congressmen and senators who are on committees that they care about and who are willing to do their bidding. That's how it works. And that's why the little guy always gets screwed in these things, because they don't have the potency. They don't have the money. They don't have the access. And in terms of influence, it's not just media. It's all kinds of companies that are doing this for their own interest. And that's the way the world works. Is it nice? Is it good? No, not necessarily, but that's how it works."
19:57 -- On fraud and stockholder litigation. The overstating of subscribers in India by GoJo.
24:05 -- The role of the board of Waystar Royco in the takeover negotiation with GoJo. The example of Twitter acquisition by Elon Musk, and HP-Autonomy. Joe Nocera: "Companies overpay all the time because the CEO wants to build his empire, because they think there's something there that turns out not to be there, because they're in a competition with another company and they got to have this victory. Overpaying is very normal and then you have these multi-billion dollar write-downs blah blah blah."
28:23 -- Comparing Lukas Matsson to Elon Musk. "The rise of the ungovernable CEO."
30:34 -- On obstacles to women in the workplace. The cases of Shiv, Geri and Ebba. Kate: "It's an extreme version, but these are real issues that real women face all the time. I don't know that there's a corporate governance solution to it, other than culture, right? You know, it all comes back to culture and how you build culture."
36:35 -- On corporate culture: Joe: "In the modern age, the Rupert Murdochs and the Logan Roys are anomalies. I mean, you've got a situation now where David Solomon at GS is being widely criticized. Why? Because he's a harsh boss, he's a brutal boss, he makes demands, he's not an empathetic person. And nowadays companies want leaders that can nurture and lead by example and can get people to do things because they want to do them for the person or the company rather than they have to. And so, and then, you know, nowadays they can't even get the employees to come to work."
39:12 -- On ESG and the politicization of corporate governance. Joe: "Why did the ESG come along in the first place?
A lot of the reason is because the employee base at a company like Kellogg's, or Procter & Gamble, or Xerox, or IBM, they're mostly socially liberal. They're pro-choice. They're pro-environment. They're pro-BLM. And a lot of this movement began in the first place because companies wanted to make their employees happy. They wanted to give their employees a sense of a higher purpose than just, you know, banging out copier machines. And so ESG evolved. You go to a company like General Mills or Kellogg's and you walk down the aisle [...]And all on the walls, you're going to see, you know, come and help build a house for the homeless next Saturday. Or, you know, we're going to be the greenest company in the world in five years. Here's what we need to do. Or blah, blah, blah. People inside these companies are not complaining about it. They like it. [T]he conservative movement has made a big deal about this and they've gone after Larry Fink at BlackRock, but to me, 90% of it is bullshit. It's just, you know, ESG is a way to make your employees happy. That's all it is. And for the conservatives, it's a lovely way to bash corporations."43:54 -- On the last boardroom scene, voting for the GoJo takeover.
46:36 -- Take-aways for corporate directors from the Succession show. Kate: "I think it's a tremendous cautionary tale for directors and officers and leaders of companies in terms of the core part of governance, which I believe is, how do you make decisions? How does a corporation make decisions?" "People, process, policies." "What's the structure for decision making? Who gets to make the decision? Joe: "Of the many tasks a CEO has, one of the most important is to find his successor [...] a CEO should have somebody lined up."
52:30 -- Final thoughts on the show. Joe: "I do think that some founders subconsciously want their company to fail after they're gone. They want this idea that only I could have built this and nobody can succeed me and do it as well as I did. And that's what I think was going on in season two. And I think maybe that's what's going on throughout Logan's, the four seasons that we watched Logan." Kate: "Logan Roy did nothing to make his children the kind of serious people who could take over for him. He thought there was only one him and the company dies with him. And it turns out that's probably kind of true."
Kate O'Leary is the Global Executive Litigation Counsel at General Electric.
Joe Nocera is a distinguished business journalist and author.
You can follow Evan on social media at:
Twitter: @evanepstein
LinkedIn: https://www.linkedin.com/in/epsteinevan/
Substack: https://evanepstein.substack.com/
__
You can join as a Patron of the Boardroom Governance Podcast at:
Patreon: patreon.com/BoardroomGovernancePod
__
Music/Soundtrack (found via Free Music Archive): Seeing The Future by Dexter Britain is licensed under a Attribution-Noncommercial-Share Alike 3.0 United States License
-
0:00 -- Intro.
1:26-- About the podcast sponsor: The American College of Governance Counsel.
2:13 -- Start of interview.
3:47 -- Ker's "origin story."
7:41 -- His history with the American Chamber of Commerce in Shanghai (AmCham).
9:42 -- About his book “Selling to China. Stories of Success, Failure and Constant Change.” (2023). "We felt that it was important to remind people why we're doing this in the first place, you know, what's good about our relationship with China. We wanted bring the commercial issues back into the conversation."
13:31 -- On the current idea of “uncoupling” or “de-risking” the US economy from China.
"I think it is good to talk about 'de-risking' rather than 'decoupling'." "I don't think a complete decoupling is realistic and it's certainly not in the interest of either side. But I think the de-risking term is helpful, in the sense that it aims at communicating the intent. {The intent] here is not to punish China or isolate China or decouple from China, but it is to protect our interests, whether they're military interests or strategic economic interests."
16:46 -- On whether the US policies and sanctions towards China are effective.
"The narrative is that the export controls and sanctions and de-risking coming out of Washington DC is simply pushing China to be more self-sufficient." "This has to be seen as a temporary measure, that gives us time to resolve the actual conflicts that exist."
21:21 -- On the US responding with its own industrial policy to catch up with China (e.g. in batteries and EVs).
"We've got to be careful not to slip into outright protectionism and allow this to change who we are as a country and how we've been successful as an economy." "[I]f we get into a situation where we are indeed trying to limit China's economic rise, and literally keep China economically contained, that is a dangerous path, and it's a bad narrative, because it inevitably leads to conflict."
"I'm basically conservative when it comes to economic issues and fiscal policy, but I have actually been saying for quite a long time that the US needs to get over its aversion to industrial policy and put some planning in place."
30:38 -- On China’s private sector.
"[B]eijing actually kept a remarkably light hand [in the development of the internet industry]. I give the Beijing policymakers full credit there for knowing that they needed to stay out of the way and let that happen." "Now we've seen the pendulum swing back the other way."
"Jack Ma was going around visiting countries and he would almost be treated like a head of state. I think Jack Ma must have, because his company is publicly listed in New York, he might have confused himself with a Western CEO. He's not. China is China and the West is the West, especially in the tech sector. So yeah, he's been disciplined as have some other tech leaders."
36:21 -- On the fate of TikTok in the US.
40:38 -- On the recent APEC meeting in SF, and his take on Presidents Biden and Xi Jinping meetings.
"I put it in the category of huge success that the meeting happened, that Xi Jinping actually showed up." "It's critical that Xi and Biden meet face-to-face because of the Chinese political system, it is so concentrated at the top."
46:09 -- On the risks of a military conflict between the U.S. and China over Taiwan.
"We should not underestimate [China's] willingness to take the island and take it by force. I think at some point you have to just take them at their word. If you listen to the domestic media and domestic speeches that Xi and others make in China, it's quite clear that they're highly motivated to take the island and willing to." "[But] I don't think it's imminent, mostly because of the difficulty of taking the island and of the probability of success on the Chinese side."
"I think the probability of an accidental conflict [is] high. And until the agreement of the last week or so, the ability to de-escalate and de-conflict, low." "In other words, without that military-to-military hotline, there would be no way for it to de-escalate."
50:35 -- How should boards think about de-risking its China exposure.
"They should be thinking about what are the hard assets that they have, both in mainland China and in Taiwan? What I'm hearing boards do is that some of them are converting their businesses to more asset light. So, in other words, converting a wholly owned subsidiary to maybe selling off some of the shares to make that into a minority investment or a full asset light model might be literally selling factories and hard assets and then maybe licensing them back or something like that to where they wouldn't have to literally write them off the way many companies had to do in Russia when that took place, and you saw large companies writing off literally billions of dollars of assets off their balance sheets because they could no longer have access to them."
"Again, I don't think that we are on the brink here, but it would be wise to have plans in place in the case of, especially in accidental conflict."
52:27 -- Books that have greatly influenced his life:
Free to Choose by Milton Friedman (1980)All books by James Clavell. [*we cover here his thoughts on Hong Kong]No Ordinary Time: Franklin and Eleanor Roosevelt: The Home Front in World War II by Doris Kearns Goodwin (1994) ("great companion book to The Rise and Fall of the Third Reich by William L. Shirer (1960)57:24 -- His mentors:
Robert "Bob" Theleen (a local San Franciscan, former VC and Chairman of AmCham Shanghai)Bob Chang (his boss at the Boston Consulting Group in SF)RT Peng (another boss he worked with in Taiwan)58:36 -- Quotes that he thinks of often or lives her life by: "Don't ever let what you can't do stop you from what you can do." by John Wooden.
1:00:20 -- An unusual habit or absurd thing that he loves: his daughter.
1:01:21 -- The living person he most admires: Arnold Schwarzenegger.
Kerr Gibbs is an EIR at the University of San Francisco. Prior, Ker served as the President of the American Chamber of Commerce in Shanghai and worked in various roles giving him broad exposure to US-China relations and business issues facing American companies operating in Asia.
__
This podcast is sponsored by the American College of Governance Counsel.
__
You can follow Evan on social media at:
Twitter: @evanepstein
LinkedIn: https://www.linkedin.com/in/epsteinevan/
Substack: https://evanepstein.substack.com/
__
You can join as a Patron of the Boardroom Governance Podcast at:
Patreon: patreon.com/BoardroomGovernancePod
__
Music/Soundtrack (found via Free Music Archive): Seeing The Future by Dexter Britain is licensed under a Attribution-Noncommercial-Share Alike 3.0 United States License
You can follow Evan on social media at:
Twitter: @evanepstein
LinkedIn: https://www.linkedin.com/in/epsteinevan/
Substack: https://evanepstein.substack.com/
__
You can join as a Patron of the Boardroom Governance Podcast at:
Patreon: patreon.com/BoardroomGovernancePod
__
Music/Soundtrack (found via Free Music Archive): Seeing The Future by Dexter Britain is licensed under a Attribution-Noncommercial-Share Alike 3.0 United States License
-
0:00 -- Intro.
1:26-- About this podcast's sponsor: The American College of Governance Counsel.
2:13 -- Start of interview.
2:45 -- John's "origin story." His time at WLRK and at the SEC.
4:15 -- His focus at Harvard Law School and Harvard Business School.
4:39 -- About his book THE PROBLEM OF TWELVE: When a Few Financial Institutions Control Everything (2023). Publisher: Columbia Global Reports.
"Around the year 2000 [Index Funds and Private Equity Funds] began a sustained takeoff and the book is motivated to tell the story of how that happened and then more importantly what's happened since 2000 with 10-15% compound annual growth every single year for both kinds of funds which is much bigger and much faster than the economy or the capital markets or corporations."
"The problem of twelve is just trying to get a catchy way to get people to understand that it's not just growth, that'd be one thing, but it's concentration."
11:22 -- On "What came before: the Twentieth Century's Public Company" and the rise of private markets.
"Actually, the public markets have gotten bigger, even though the number of companies has fallen. It's not like they're shrinking, which sometimes is the way people talk about it. But what's different is their autonomy is declining. So in 1990, the board of a public company and its CEO were the centers of power. If anything, the CEO was probably the most dominant player and the board was kind of a check. The shareholders were kind of out there, but they really only mattered in a hostile takeover. That was it." "[By year] 2000, 2010, and definitely today what I just described is not true. Boards are now more powerful than CEOs in general. They have a greater influence over setting strategy today."
"[The] power started and ended with the CEO in the boardroom. And that really has, I think, dramatically declined and continues to decline as a way of describing how the US economic system works."
15:39 -- Evolution of US boardrooms since the 1970s.
"I think of boards as becoming more important during that period because businesses were stumbling. As long as CEOs were successful in running their empires, I don't think the pressure to provide a different governance system would have been nearly as powerful."
"Jay Lorsch at HBS wrote an early study suggesting that boards really were not doing much. Jay was very much part of the movement to get boards to be more active, because he thought that was better than the alternatives of either continued stagnation in economic activity or worse solutions, which other people were proposing."
20:19 -- On the impact and evolution of Index Funds.
"[T]he key thing is scale. It's not as if there's like 55 different index funds all competing with each other. No, there's really just a small number of families [ie. the Big Four, BlackRock, Vanguard, State Street and Fidelity] that are achieving these scale levels. So that's the basic problem of the book."
"[W]hen Jack Bogle set up Vanguard, he wasn't setting out to take over half of all the stocks in the country. It took him 30 years just to get to 2%. It's just a side effect and so the system was not designed with that kind of concentration in mind.
"[W]e're now having to go through a period where we've already started and it will continue for people as these things continue to grow and get even bigger to really rethink where should the governance power sit. Should it sit, at the board? Should it sit at the fund portfolio manager who doesn't really exist in an index fund, it's just a guy who has a list? Should it sit with a corporate governance professional that the fund advisor hires, that the fund then gives the power to? Or should it be something more complicated, some set of interactions between different people over time? And I tend to think that last thing I said is the right answer, but getting exactly the solution is hard, which is why I didn't call the book The Solution to the Problem at all, because I don't really have a perfect solution."
27:12 -- On the polarization of corporate governance and the ESG backlash.
"If it had not been climate, which is Larry Fink's, of course, major focus that generated most of the pushback, it would have been something else."
"State Street a few years ago made a point of saying publicly that if the boards that they voted for were not sufficiently diverse and they had some specific criteria, they would withhold votes from the nominating committee chair. And you can see in the data, if you look at the way boards are formed, the impact of State Street's intervention."
30:35 -- On the pass-through voting initiatives.
"If you look at the websites that BlackRock and Vanguard and State Street all have up about what they're doing, they're not really passing the votes through or even getting close to it. They're going to let their own investors once a year pick a policy from a limited menu of policies, and then they're going to look how many people pick which policy, and then that will inform how they vote. So they're keeping the votes, but they are going to let people kind of give them an indication of more or less how to vote overall. And so that's some degree of trying to address the problem of twelve."
"I think in 10 or 15 years most people will do one of three things: 1) They'll let BlackRock keep voting the way they want to, with their money, and who cares? They're just not paying attention to governance, and that's their right. They can just ignore it; 2) a group of people will be pushing BlackRock to do even more of what they're doing now, to be even more green or left or however you want to think about it; and 3) there will be another group of people who'll be pulling the other way, and then BlackRock will probably be in there, be splitting their vote to some extent on some of the more high-profile issues."
On Exxon's proxy fight with Engine No.1.
37:28 -- On antitrust and concentration of power in index funds.
"Antitrust traditionally would just look at the activity of investment as the right thing to think about concentration and not the governance impact. That's really not part of antitrust law. That's again part of why I wrote the book to get a different focus on this. [But] there are people who want to change antitrust law, they want to take concentration in governance and somehow relate it to portfolio company concentration."
"There are claims for example that the index funds caused the airlines to be more collusive than they would be anyway. Or the banks or take your pick and maybe there's some truth to that but it's kind of indirect and I think it's going to take a lot of work to make that feel like you're being directly responsive to the problem and I'm not sure it'll get there in the end."
"There are also people who just want to change the basic understanding what antitrust is about, introduce politics into it again, and say this is a political problem and therefore we should use antitrust. There is a lot of resistance to that."
39:39 -- On the private equity industry.
"The biggest PE complexes not only have equity capital that they manage, they also have debt capital. And so in a difficult interest rate environment, that's a nice place to be. You have resources that you can tap on the credit side as well as on the investment side. And so I think, again, as with index funds, we're seeing greater concentration of greater growth driven by slightly different economies of scale, but I think still real, that allow the biggest players to sort of sit at the intersection of lots of different capital market activity. And that lets them leverage the information they gather across a much bigger base [and] grow faster than their competitors. I expect the big PE players are going to continue to do better than PE overall and better than the overall economy, even if they may run into some challenges in the next few years."
43:05 -- On PE driving ~25% of all M&A activity. "PE complexes in a lot of ways are sort of replacing a role that banks used to play, but without any of the regulation."
46:25 -- On the governance distinctions between PE-backed companies and public companies.
"[PE-backed boards are often] more focused and effective."
"[T]he PE world by design is with almost no public disclosure. There is disclosure sometimes of some things from the PE fund or advisor to LPs [but] the information flows [generally] are quite weak. And they're weakest in some respects around conflicts, which it should be the other way around. The conflict should be the place where the people with the equity at stake ought to be told the most and yet often that's the place where the system does not, in my opinion, live up to its billing. Part of the reason for that, it's not often appreciated that most of the money in PE funds comes from other funds, meaning, and in particular comes from pension funds who are overseen by well-meaning people, who often are honest and straightforward, but frankly are not up to, in my opinion, the task of overseeing a PE complex and their advisors. There's an industry association, the ILPA, that sort of tries to help coordinate across PE fund investors, the positions they take on disclosure and conflicts."
54:58 -- On SPACs.
"[T]here's a lot of companies right now that are going through some difficult governance challenges in the current economic environment in which the SPAC structure and the board that it brought in might be at odds with the sponsor or other people that were associated with the SPAC."
"If you're on a board or advising a board of a company that's associated with a SPAC, this is the time to really lean in about your conflicts, because the conflicts are absolutely really acute right now because of the interest rate environment."
*On SPAC Law and Myths (Feb 2022).
56:19 -- Books that have greatly influenced his life:
City of Capital: Politics and Markets in the English Financial Revolution by Bruce Carruthers (1996)Wolf Hall by Hillary Mantel (2009)Mars Trilogy by Kim Stanley Robinson (1990s)58:38 -- His mentors:
Tom Noble (College advisor and History Professor)Craig Wasserman (WLRK)1:00:14 -- Quotes that he thinks of often or lives her life by: "Without contraries is no progression." [Poet William Blake]
1:00:43 -- An unusual habit or absurd thing that he loves: U.S. Soccer.
1:02:25 -- The living person he most admires: Tina Fey.
John Coates is the John F. Cogan, Jr. Professor of Law and Economics at Harvard Law School, where he also serves as Deputy Dean and Research Director of the Center on the Legal Profession.
__
This podcast is sponsored by the American College of Governance Counsel.
__
You can follow Evan on social media at:
Twitter: @evanepstein
LinkedIn: https://www.linkedin.com/in/epsteinevan/
Substack: https://evanepstein.substack.com/
__
You can join as a Patron of the Boardroom Governance Podcast at:
Patreon: patreon.com/BoardroomGovernancePod
__
Music/Soundtrack (found via Free Music Archive): Seeing The Future by Dexter Britain is licensed under a Attribution-Noncommercial-Share Alike 3.0 United States License
You can follow Evan on social media at:
Twitter: @evanepstein
LinkedIn: https://www.linkedin.com/in/epsteinevan/
Substack: https://evanepstein.substack.com/
__
You can join as a Patron of the Boardroom Governance Podcast at:
Patreon: patreon.com/BoardroomGovernancePod
__
Music/Soundtrack (found via Free Music Archive): Seeing The Future by Dexter Britain is licensed under a Attribution-Noncommercial-Share Alike 3.0 United States License
-
0:00 -- Intro.
1:14-- About this podcast's sponsor: The American College of Governance Counsel.
2:09 -- Start of interview.
2:41 -- Abby's "origin story."
4:11 -- Her time at Hambrecht & Quist. Distinctions between IPO market in the 1990s and the current environment. Her time as a CEO of a venture-backed e-commerce company. Her time at Russell Reynolds (7 years).
10:36 -- The history, mission and current focus of her company Boardspan, founded in 2014. "To help boards succeed."
"[The focus is a mixture of] a traditional service business [board recruiting] and a very modern brand new IT business, around assessments and information gathering and marry those two." "And I think that was the hardest part quite honestly, is how you marry both the service and a software business and deliver both at the same time."
14:24 -- On high performing boards and board culture.
"We developed a framework to talk about high -performing boards. [It is] really simple. I call it OARS, which is like rowing a boat, just to make it easy for people to remember. 'O' stands for oversight, 'A', accountability, 'R' is risk mitigation, and 'S' is strategy."
"We all know that board work is a team sport. So, if board members are not aligned, it's really hard for them to do their work.
It's not an individual sport and everybody knows that."17:24 -- Differences in board dynamics between public and private (venture-backed) boards.
23:28 -- On the importance of board committees.
"Committees are where the vast majority of the board's work is done, and they're really important. I often refer to them as the workhorses of the board.""I just want to remind your listeners that committees don't make decisions. They make recommendations when it comes to the major actions. And so it's not that control is transferred to a committee, it's the leaning on them, the leverage, the expertise that is transferred.""If a board member really wants to have influence on a particular issue that a committee is undertaking, then join the committee, don't discount their value to the board."26:42 -- On board evaluations. "[W]e are big believers in having objective data. Now, objective data can be quantitative and qualitative, but you still want that objectivity as a way to sort of lead you onto a path of growth. So we like the number side because it helps put a stake in the ground. You can measure progress and critically, you can benchmark to peers, which is something that we find and hear back from our clients is absolutely invaluable." "We have found the act of doing an evaluation with a third party is the biggest step forward."
30:48 -- On the Board/CEO relationship. "It's the most important relationship of all. And personally, I'm not a believer that the board's job is simply to hire and fire the CEO. I think that's, in all due respect, an old school perspective."
34:25 -- On the role of the Chair or Lead Independent Director. "The role of the chair, independent chair or lead independent is critical. And that's true whether it's a large public company, a small private company and everything in between, because they're often in that role of helping to facilitate the board's contributions, the board's role." "Figuring out where's the line and how [the board can] add value, that tone gets set by the partnership between the CEO and the chair."
36:53 -- On CEOs moving to Chairman role. "It is really hard for people to take off one hat and put the other one on. So it really has to be discussed."
40:02 -- On the evolution of boardroom diversity. "Another metaphor I often use for boards are tapestries, meaning that you're kind of weaving together different threads. I referred to the team sport earlier, but perhaps the better metaphor really is it's a small symphony, not a big one, but a relatively small symphony where you're bringing different skills, perspectives and ways that board members can contribute that makes the group as a whole stronger. And back to our prior conversation about board chairs, they're the conductor of that symphony and that's an invaluable role. But it doesn't mean that that conductor or any one other person who plays the violin is a great percussionist or a great woodwind or something like that. So it's about bringing all of these together. We've made a lot of progress in board diversity."
43:04 -- Abby's take on ESG and the ESG backlash ("green hushing").
45:59 -- On the question of single issue directors from a board composition perspective. "[Y]ou and your listeners are well aware of the QFE requirement to have a qualified financial expert. I do believe that at some point we're gonna see those requirements in other areas. Now, cybersecurity might be one of the first ones where we see a "QCSE" requirement." "I think people need to remember that a good board member grows with the board [...] and they can grow and figure out how to contribute in other ways."
49:45 -- On geopolitics in the boardroom. "We use a really simple model with our clients and it's based on concentric circles. And at the very center is management's expertise. If this is an existential issue, if you're doing the vast majority of your production in China or getting resources from China. [I]f your business's success is dependent on that, then you should have the expertise at the management level. It needs to be on there. The level of the board's knowledge that's required is influenced by how critical of an issue is it."
51:30 -- On impact of AI in the boardroom. "People are sort of trying to figure out how to stay current, knowing that what is current next week probably wasn't current this week. I kind of liken it to everything, everywhere, all at once."
53:04 -- Books that have greatly influenced her life:
Crossing to Safety by Wallace Stegner (1987)The Prophet by Khalil Gibran (1923)Everything by Jane Austen53:56 -- Her mentors: the late Dan Case (H&Q), Christina Morgan (formerly with H&Q and JP Morgan) and current mentor is Mary Cranston (featured in E80 of this podcast)
54:49 -- Quotes that she thinks of often or lives her life by: "I often get asked by people for career advice. And so I will share what I share with everybody which is: like what you do, like who you do it with, and feel fairly rewarded by that work."
55:12 -- An unusual habit or absurd thing that she loves.
55:50 -- The living person she most admires: Barack Obama. "My fantasy dinner table has both of Obama and Bruce Springsteen joining me."
Abby Adlerman is the CEO and founder of Boardspan, a provider of digital governance solutions for boards across all sectors.
__
This podcast is sponsored by the American College of Governance Counsel.
__
You can follow Evan on social media at:
Twitter: @evanepstein
LinkedIn: https://www.linkedin.com/in/epsteinevan/
Substack: https://evanepstein.substack.com/
__
You can join as a Patron of the Boardroom Governance Podcast at:
Patreon: patreon.com/BoardroomGovernancePod
__
Music/Soundtrack (found via Free Music Archive): Seeing The Future by Dexter Britain is licensed under a Attribution-Noncommercial-Share Alike 3.0 United States License
You can follow Evan on social media at:
Twitter: @evanepstein
LinkedIn: https://www.linkedin.com/in/epsteinevan/
Substack: https://evanepstein.substack.com/
__
You can join as a Patron of the Boardroom Governance Podcast at:
Patreon: patreon.com/BoardroomGovernancePod
__
Music/Soundtrack (found via Free Music Archive): Seeing The Future by Dexter Britain is licensed under a Attribution-Noncommercial-Share Alike 3.0 United States License
-
0:00 -- Intro.
1:27 -- About this podcast's sponsor: The American College of Governance Counsel.
2:23 -- Intro of Webinar (and speakers) by Nancy Easterbrook, Executive Director of SVDX.
5:33 -- Start of webinar by Dan Siciliano, Chair of SVDX.
6:40 -- Some differences between private (VC-backed) and public boards.
9:23 -- The role of independent directors in venture-backed companies.
14:00 -- Specific issues in VC industry: preferred vs common shares and impact on director fiduciary duties and dual-fiduciary duties. The Trados case (2013).
18:14 -- An edge-case proposed by Heidi Roizen: voting as a director vs voting as a shareholder. The "sanctity of the preference stack" vs management carve-out.
23:44 -- How "bad" directors can negatively impact companies and the proper use of special independent committees to "cleanse transactions." The role company counsel. Funding managing incentive plans (MIPs).
29:39 -- Two lessons for independent directors from Heidi Roizen: 1) "avoid messing with waterfall distributions" and 2) run a thorough process.
33:52 -- Important take-away from the Trados case: fiduciary duties are owed to the common stockholders.
40:00 -- The Basho case (2018), where a VC investor was ordered to pay ~$20m in damages for using contractual consent rights granted to it as a preferred shareholder together with “hardball” negotiating tactics to force the company to the brink of insolvency and leave it with no choice but to accept “oppressive” financing terms. Inside rounds vs outside rounds.
42:27 -- Other thoughts to encourage independent directors in venture-backed companies from Heidi Roizen. "You have to understand the payouts." "As a VC: lead, follow or get out of the way." "We can either be the crusher, or the crushee, but either way something is going to get crashed here." "Sometimes (...) the best thing you can do is say, look, I'll get out of the way.
You guys do what you want. We're in the risk business (...) almost half of our deals don't return the capital we put in. And so to be assholes about stuff is a bad idea. You may win the battle, but lose the war, right? You may, you know, twist somebody's arm and get your couple million back, but no entrepreneur is going to want to work with you anymore."49:09 -- On director education for venture-backed companies. New program to launch from UC Law SF and Cooley in San Francisco in March 2024! *For more details: contact Evan Epstein at [email protected].
51:03 -- Why there are so few independent directors in venture-backed companies? Heidi Roizen: "I think they're undervalued by both investors and entrepreneurs." On board education: Heidi recommends Brad Feld's books, including Venture Deals and Startup Boards. Book mentioned by Evan: Founder vs Investor (by Zalman and Neumann).
56:03 -- Heidi's recommendation for independent directors of companies running out of cash: "If the company you're on the board of has only a year or less of runway, you already should be speaking up. If your company has nine months or less of runway, you should already be beginning a process to be sold. And if your company has four months or less of runway, I would resign from that board as an independent. I would speak early, speak often, and if nobody's paying attention to you, I would actually get off that board." "[A]ll the problems happen when you have bad process and when you run out of money."
59:06 -- The enhanced role of the board in this downmarket. Heidi: "Structured deals are board for startups."
__
You can follow Evan on social media at:
Twitter: @evanepstein
LinkedIn: https://www.linkedin.com/in/epsteinevan/
Substack: https://evanepstein.substack.com/
__
You can follow Heidi on social media at:
Twitter: @HeidiRoizen
LinkedIn: https://www.linkedin.com/in/heidiroizen/
The Startup Solution: https://threshold.vc/podcast
Threshold VC: https://threshold.vc/
__
You can follow SVDX on social media at:
Twitter: @svdx1
LinkedIn: https://www.linkedin.com/company/silicon-valley-directors'-exchange/
Website: https://www.svdx.org/
__
You can join as a Patron of the Boardroom Governance Podcast at:
Patreon: patreon.com/BoardroomGovernancePod
__
This podcast is sponsored by the American College of Governance Counsel.
__
Music/Soundtrack (found via Free Music Archive): Seeing The Future by Dexter Britain is licensed under a Attribution-Noncommercial-Share Alike 3.0 United States License
You can follow Evan on social media at:
Twitter: @evanepstein
LinkedIn: https://www.linkedin.com/in/epsteinevan/
Substack: https://evanepstein.substack.com/
__
You can join as a Patron of the Boardroom Governance Podcast at:
Patreon: patreon.com/BoardroomGovernancePod
__
Music/Soundtrack (found via Free Music Archive): Seeing The Future by Dexter Britain is licensed under a Attribution-Noncommercial-Share Alike 3.0 United States License
- Visa fler
