Speaker 1:
From the library of the New York Stock Exchange at the corner of Wall and Broad streets in New York city, you're Inside the ICE House, our podcast from Intercontinental Exchange on markets, leadership and vision and global business. The dream drivers that have made the NYSC and indispensable institution of global growth for over 225 years. Each week, we feature stories of those who hatch plans, create jobs and harness the engine of capitalism right here, right now at the NYSC and at ICEs exchanges and clearing houses around the world. And now welcome Inside the ICE House. Here's your host, Josh King of Intercontinental Exchange.
Josh King:
The role of the Chief Financial Officer has evolved over the past decades. It's a job that's no longer focused only on building a fortress balance sheet as Jamie Diamond came to calling it. A modern CFO has his or her hands on many levers of the organization overseeing the function of everything from long term strategy to data security and everything in between. Here at ICE, we just made a pretty big announcement. Our longtime CFO, Scott Hill, who is our guest here Inside the ICE House back on episode 105 said he is going to retire after 14 years in that job as of May 14th, to be succeeded by my friend Warren Gardner, who has served as ICE's head of investor relations since 2017. Warren has big Texas shoes to fill. And the good thing is he knows it. Scott joined ICE back in 2007 when it was a much smaller company.
Josh King:
I checked this stats today. The company's share price started in the 20s that year and this week, it's set up around 114, and Scott's played a big role in that growth. One data point I know he's proud of is as a revenue multiplier that saw 574 million in the first year become over 6 billion in 2020. Scott's a great example of how a CFO is responsible for more than just finance accounting, audit, control, IR and tax. During his tenure, he was at various times overseeing our global clearing business, human resources, marketing, PR, and other areas of the company.
Josh King:
He's also part of the small leadership team that saw ICE make its most high profile acquisitions, including the New York Stock Exchange in 2013, Interactive Data Corporation in 2015 and our biggest deal yet buying Ellie Mae in 2020 for $11 billion. Our guest today on the show, Ken Goldman, the president of Hillspire LLC, is part of that elite group who has risen the rank of CFO of a publicly traded company, not once, but by my count nine times spanning a career at that level that goes back to when George H.W. Bush was the 41st president of the United States.
Josh King:
And if I'm wrong on that number, he'll correct me, each company, part of the pantheon of technology names that have made Silicon Valley what it is today. Our conversation with Ken Goldman on his career, building elite leadership teams and the growing role of family offices in the investment community. That's all coming up right after this.
Speaker 3:
Whether it's markets, exchanges or networks, connection makes everything possible. The connection between data and technology, innovation and expertise, and most of all, between people and opportunity. For over 20 years ICE has transformed markets, products and processes to make things work better, faster, smarter. From modernizing energy and commodity trading, to revolutionizing the bond markets, whether it's the world's largest stock exchange or the dream of home ownership, we do more than see the big picture. We create it. You may not know our name, but we bet you know our network. ICE, make the connection.
Josh King:
Our guest today, Ken Goldman is president of Hillspire LLC. One of the most active family offices in the world. At Hillspire Ken is responsible for its financial and administrative functions along with real estate, aviation and maritime activities. Previously, he held the CFO role at a number of companies, including Yahoo, Fortinet and Siebel Systems. And during a professional career, spanning more than 40 years, Ken has helped take three companies public as its CFO and served on 40 corporate boards of which 10 of them have gone public while he was a board member. Ken, welcome Inside the ICE House.
Ken Goldman:
Josh, I don't think you didn't leave anything for me to talk about. You did all my bragging for me. So, that's great. I've actually been in seven public companies, not quite nine, but the three IPOs were three different decades. And I was thinking I could make another one, but I'm not sure I want to give up some of my personal freedom that I have now in terms of my calendaring, that I would have to give up to be a CFO, but happy to go wherever you want to go on this conversation. And thank you for the introduction.
Josh King:
We've got many more things to brag on you about, Ken. Over your career you've served as CFO for several companies, as you said, at different stages of development over the course of three different decades. We've got a new CFO taking the reigns in May of a company that's been public now for 15 years. What advice would you have for my friend, Warren Gardner is he fills Scott Hill's cowboy boots?
Ken Goldman:
What I've always found is there's always a couple things. One is you have to realize as much as you might have said some nice things about me. You really only as good as what you do now. And you have to sort of always be in a position to prove yourself and show that you do add value. So, what I always look for when I change jobs and I'd say the same thing here is find some things where you think you can add some value. In the case of Yahoo, which unfortunately doesn't exist as we know it was acquired, the operating was acquired by Verizon. There are a few things that I saw there that really weren't very well done. And I'll start with you who approves what. We had a system there where the only things that came up to the CFO to approve were 5 million and over.
Ken Goldman:
And I said, this makes no sense. I went from 5 million to a hundred thousand. Did that for a number of reason. One is I need to know, I think it's very important for a CFO to see the rhythm of what's going on in the business. And so one of the ways you see the rhythm is you see things to review and approve. And I might not necessarily reject anything, but it gave me a sense of where the money was flowing. And so it was very helpful. Second of all, by looking at that, I found areas where I could help negotiate, because I have a lot of experience, been around a while and I have a sense of how to negotiate and sometimes best negotiating is just asking a number of questions. The other thing I have tried to do in my career is align myself with the operating people.
Ken Goldman:
I think sometimes CFOs spend too much time with investors. And what I like to say is that is very simple. Investors love you when the numbers are great and when the numbers aren't great, it doesn't really matter how great you talk. So, you want to really focus on the operating results of the company. That's how I grew up in finance. I like being very close to the operations. And so I spent disproportionate amount of my time on that. I would say another thing to think about is making sure you have alignment with the board. It's very important for the board to feel the CFO is someone they can trust. Very, very important. And so getting to the trust of the board, that they know you call it the way you call a spade a spade, you don't necessarily counterman your CEO.
Ken Goldman:
On the other hand, you do have an independent fiduciary responsibility to give your own opinion. So, managing the board relationship very, very important. Last thing I'll say is, is getting really close to the auditors. So, yes, the rule role has changed of CFOs. In the old days, you would never see folks coming out of investment banking, going into CFOs. They're now doing that a lot. So, yes, the role has changed. However, you need to ensure the basics are there. And so making sure the controllership function is rock solid and general controls are really good. So, making sure whoever your audit partner is being very close to them. And so they have confidence in you and vice versa. Those are some of the things I always say, really basics and basics matter.
Josh King:
We're going to course through your career and learn some lessons along the way. But first I just want to get your reaction to some of the trends we've seen over the past year. I mentioned that Scott Hill's from Texas, there's been a big migration from your adopted home state of California, to the lone star state. McKesson was one of the early names making that move, Tesla, one of the latest. You're a Boston guy, Ken. What does California need to do to hold onto its tech talent?
Ken Goldman:
Yeah, I was just on a call before this with a friend of mine who used to be in California. He's now in Jackson Hole, a couple other people. He mentioned that I know are also now new residents of Jackson Hole. I have a bunch of buddies that have moved to Colorado. I know people move Texas, know people who moved to Florida. And I actually was listening to a conversation with the mayor of Miami of all things.
Josh King:
Mayor Suarez is all over the map, trying to get everyone to come down to South Florida.
Ken Goldman:
Well, I'll tell you, he said a variety of things, but when you say, what do we need, sometimes just having appreciation for business and for being thankful of business and not being arrogant about business is helpful. When someone told me, I asked them why they were leaving. They said it wasn't so much the taxes, it was the, words they used were, it was the narrative and governance of the state. And so being business friendly, opening your arms up to people who have done well and not necessarily applauding them, but appreciating them as opposed to demonizing them. We have of approach here lately that we sort of demonize people that have been successful as opposed to appreciating people that have been successful. I think, believe it or not, that goes a long way. Sometimes even as much as the tax strategies, some of that strategies. Texas has their arms out, bringing people in. Florida has their arms up bringing people in.
Ken Goldman:
It's a welcoming environment. I would lie if I say tax adult means something, but most of these people are so well off. I think people are more than willing to pay their fair share, more than their fair share, as long as they feel appreciated. And two, I might add if they feel that money is being well spent. You go to Florida, actually going to be in Florida next week, things work, the DMV works. The roads are in great shape. I mean it's just a well run state. I was listening to the mayor. He said they only have 550. 550 is probably 550 too many, but only 550 homeless people. We have 550 homeless people on a street corner in San Francisco. Now what you want to do is you want to create shelters for them. You want to create food for them. You want to create healthcare for them.
Ken Goldman:
I think if you tell people you need to spend X, Y and Z to make sure these people that have been left behind have home have food, have basic necessities, all in, all in. I just read where the Bloomberg philanthropies is creating a, just gave a hundred million to the Harvard Kennedy school and business school to study and support the great mayors, because that's great mayors create great cities, and they help create great states and so forth. And we have lost track. In my opinion, we have lost track of a lot of that in California. What's keeping California afloat, so to speak is we have a critical mass of very smart people. We have the venture community here. We have the lawyers, we have the bankers here. We have a great climate. We have a critical mass to keep it going, but we're certainly are not doing everything we can to support those people that want to create companies here.
Josh King:
In addition to all that, Ken, you also have a lot of family offices in California and over the course of our 225 episodes of Inside the ICE House so far, you are our first family office president on the show. So, let's start there. And depending on the study, Ken, between maybe four and $6 trillion in assets are now managed by family offices. What's so appealing about that structure that it's seen such growth?
Ken Goldman:
And I've gone to a lot of family office conferences. Actually one has been very good at [inaudible 00:13:41] has done really great in terms of how they support family offices. But as I've been sort of getting a little bit more focused on this, I've learned that there's no basic setup approach for family offices. They're all run. I assume they all, but there's different ways to do it. Some may be focused just on the investment side. Some may be just focused on the philanthropy side. Some may have certain aspects of the family's activities including their personal properties or whatever they have. But it just differs.
Ken Goldman:
In the case we have everything of the family is inclusive of a family office, but there's others where they may segregate certain aspects. I know a good friend of mine, his family office is basically just focused on investing in philanthropy. We have a very large group. I have a lot of direct reports. I have a very, very, very senior group of competent people who work in the group with me. Some of them work directly for me, some really work effectively for either Eric or Wendy directly. And it's just a great group. Great, great group.
Josh King:
Back in may, Ken, you said that the asynchronous nature of remote work is not going to be sustainable. A view that really is shared by many CEOs. Have you begun to transition Hillspire back alma station and has your thinking on remote work evolved now that we're really entering year two of the pandemic as of this week?
Ken Goldman:
Well, it's an interesting question. We actually have a meeting weekly with a senior group to discuss this. I think the world's different, I think, where they use any video conferencing product, Zoom or whatever. And you bring central in terms of a board that I'm on. We have a great video conferencing product. The world today is much more amenable to being able to connect via video conferencing. And so the idea that you'll go to, I'll go to New York to go for a two hour meeting and come back. I just don't see that happening. However, we do believe and we have actually had this conversation that we are better off by being in the office more than otherwise. We have also said that we're going to basically want people to have a vaccine before they come back.
Ken Goldman:
I guess the good news or bad news is I'm old. And the good news of that is I've now been vaccinated. So, I can go out and sort of, I guess, I can go out and party, but we want people to be vaccinated. Are we going to require people to be all in the office five days a week? I doubt it. We will create calendar flexibility. We do believe we have nice offices. We do believe people should be in the office as much as possible, but I don't see us. I just can't see us saying you have to be there five days a week. I think some of these companies have been too quick to say they will allow a 100% remote some of the employees.
Ken Goldman:
I don't think we quite know how comfortable we will be with our future habits until we see it work. They'll have the best of all worlds. They go back to a lot of the good habits they liked, but where they don't need to do, as I said before, an hour or two hour meeting to go from San Francisco to New York, they won't do that either.
Josh King:
Over your career, Ken, you've seen countless number of challenges like this, good and bad, hitting the economy. Eric Schmidt himself was instrumental in advising president Obama, as he navigated the worst days of the financial crisis back in 2009. As you see the world starting to turn the corner on COVID, as you get your vaccine, you have a sense of what the recovery's going to look like overall?
Ken Goldman:
Well, yeah, just to sort of add to what you just said. Eric was also involved in reimagining New York and how to reopen New York and how to make New York better coming out of the virus. And that's the old saying, don't waste any crisis. So, how can we come back after the crisis in a better than we go in? I would say here's the yin and yang to your question. And I actually had an internal disagreement a little bit as to how different people think. I think the yin part is there's a lot of pent up demand. We've given a lot of stimulus to people, which I think in terms of giving money to people that are down on their luck, so speak, because they [inaudible 00:18:20]. On the other hand, I think we're going, in my opinion, we're going too far on some of the state and local and stuff.
Ken Goldman:
Yes, there's slack in the economy for labor for now. You see a lot of demand desire to increase the minimum wage, which I get. So, I think you would have humongous budget deficits at all levels. So, I think you're going to see interest rates go up. At some point I think you're going to see inflation go up. And we've talked about that for 20 years and some people disagree with me say, no, we've talked about inflation going on for 20 years and hasn't happened. But I think two things, the big deficits, bunch of deficits and the humongous pent up demand, I see the seeds of inflation coming back. You see, as I said earlier, you see that on oil and many other commodities are at a very all time highs as well. If I would put my worry hat on, my worry hat is on interest rates.
Ken Goldman:
I said this a few weeks ago and this is all public. We did a investment grade debt Fortinet just a couple weeks ago and really picked a good time. And the 10 year treasury was 137 and 136, it's now 155. Mortgages are over 3% and now [inaudible 00:19:36] mortgage are over 3%. So, those are concerns I think is whether we're going to create competition for investing dollars with debt costs. And therefore that will come against, that will A, will stop the great housing cover we have and being, it will it'll affect the stock market. And reality is stock market and consumer confidence are so, so correlated. I think if the market goes the other direction, that has a direct correlation to consumer confidence.
Josh King:
You've been wearing that worry hat on and off throughout your career, Ken. After growing up in Peabody and getting degrees from Cornell and HBS, you headed west young man. What initially brought you out to California?
Ken Goldman:
I was an engineer at Cornell as an MBA, focusing on finance at Harvard. And just to sort of add to something, you've mentioned you're from Newton. I went to public schools and Peabody, graduated very high in my class. I was, I think maybe 15% of my class went to, it was a blue collar town, went to college. So, I wanted to go to the best school I could possibly get into that had engineering in liberal arts and that was Cornell. And so then I had, when I graduated HBS, I remember this like it was yesterday. I interviewed a lot of different companies, oil companies, Xerox and Rochester, New York, and then Fairchild, which was out in the West Coast. And I just had this streak of risk taking to me, which said, I own nothing.
Ken Goldman:
I had one, I had a car, an old car, that was it to my name. I knew one person out here. And I said, geez, why don't I go into technology where I can combine my engineering background with finance? I'm not a salesperson. So, banking is not my gig. I looked at one for those on this call and know Boston, route 128. Back then that was the epicenter of technology. But for whatever reason, I felt that Silicon Valley would be the place to be. I happened to like semiconductors. That was one of my focus areas in engineering school. And so I said, why not come out? And here's the point of the couple key points. One is the guy that interviewed and hired me was a corporate controller at Fairchild, Henry Montgomery. And the fact that someone at his level would take the time to meet and interview me made a big difference to me.
Ken Goldman:
And by the way, which I continue now. And so I love talking to students and hiring and recruiting students. I think I actually would talk to a group of Northwestern MBAs the other day. And so I really enjoy explaining to them how excited I am about the CFO corporate career. And so the fact that this guy, Henry Montgomery, took interest in me, felt it was a big deal. So, we had three interns. Actually one of the interns just reached out to me on LinkedIn, found me on LinkedIn. And we have two conversations this week to talk about how we can do some things together. It's unbelievable. This is after 40 years. And so I just felt this was the area to be at. And so I would say, here's the one thing I really want to embellish on is I've always been comfortable in my own skin.
Ken Goldman:
I've always felt confident that if it didn't work out, I could find another job. So, I always did things the way I felt were right, and never wanted to worry about being fired. Now it turns out I've never been fired, but I've always felt I was going to do it right. And if it didn't work, it didn't work. I didn't get a job. And I've always gone to where I felt the action was. And so I felt that was initially semiconductors. Then I had an opportunity to take a chance and get into database software. And I've been an [inaudible 00:23:31], I've been an application software and network security and so forth. The point is, if you really want to get ahead, you need to be comfortable taking risk. And that's how I've been, at least the modicum of success I've had, I ascribe to the ability to basically in the case of semiconductors and then I had the opportunity to go to Sybase.
Ken Goldman:
That was the only job I've ever gotten through a recruiting firm. And I knew it was a big risk, because I'd never been in software, but I knew I had to move from semiconductors, otherwise I'd be considered just a semiconductor expert. I find after a few years, if it's not working and I see some better opportunity, and I think it's the right time, I go do that. I take the risk. So, yes, I might fail. That's always a downside, but you could also easily just fail by doing the same thing over and over again.
Josh King:
I mean, taking risks is one thing, Ken, but it also probably matters a lot about how the brain is wired. I mean, listeners to our show are well acquainted with the engineering background of ICE's founder, Jeff Sprecher, the president of the New York Stock Exchange, Stacy Cunningham, both engineers, university of Wisconsin, Lehigh. You have an engineering degree from Cornell. I came across an interesting stat about engineers as we got ready for this conversation. 75% of trained engineers find a career doing something other than that. Why do you think engineers find success outside of their discipline so often?
Ken Goldman:
The thing about engineering is it teaches you how to think, it teaches you logic. There are many very successful Cornell engineers that are in venture capital today. And it's a great career between, because engineering tends to be numbers oriented and finance, which is obviously numbers oriented. Frankly, I remember for me, it taught me a couple things. One is how to react in pressure, because these tests and all of a sudden you realize there's only a few minutes left and you haven't answered the questions. I also, in engineering school, I was my first year, I met my roommate, by the way, turns out he's from Newton as well. I looked at him and he had gone to a good public school. I went to not so good. And he was doing great in school and I wasn't.
Ken Goldman:
And I felt that I was just as smart as he was, so it bugged me. And so all of a sudden my confidence changed and I started doing much better in school. So, getting confidence in yourself, but engineering, because you have to solve equations and problems, it gives you that confidence factor. And so I think, yes, I think engineering is a great discipline that you can venture from there, so to speak into a number of fields, maybe business, I know some people go into law and some people go to medicine, but it's a great proving ground, if you will, for your success of career.
Josh King:
I think, Ken, VSLI was the first company that you brought public as a CFO. The markets in the world were very different back in 1983. Tech companies were in their infancy and exchanges like the New York Stock Exchange were governed by rules that would not even allow them to list based on not being profitable. What are your memories and were there lessons that you've used since from those VSLI days?
Ken Goldman:
I actually have a list of every lesson learned from each company I've been at. And some of these things I just don't forget. The first lesson is being the right place at the right time. I got the job as seventh employee of [inaudible 00:27:05] as VP finance, which ended up becoming CFO there, because of a contact I had that was someone I worked for at Fairchild, who referred me in. I was young 30, 31 years old, and I was referred in and got the job through his reference, which was how all basically, other than one job, all my jobs have come through referrals. And so the network effect is I find very, very important on referrals. And that was important. I remember we had a change in CEOs and I had to make it through that. But here's really the lesson I learned at that particular company is, and I think it is relevant to a lot of companies today.
Ken Goldman:
We never got to a really profitable business model. And so as we scaled the company, we kept on scaling expenses pretty much the same rate as revenues. And so I think the challenge for companies today, where the market allows you to lose a lot money initially, is that's fine. But do you have a model that ultimately when you get to medium later stage will allow you to make a good profit. And so I think knowing how the business model works is really important, we were in a custom business, custom semiconductor business then, and it was a business that was not inherently able to make good money, because when products went into volume, they got a second and third sourced.
Ken Goldman:
And when they didn't go into high volume, you couldn't really make any money on it. So, it was basically a business model that wouldn't scale to high profits. And so thinking about your business model early was the real key lesson there. After knocking my head against the wall for eight, nine years there, I realized it wasn't, in fact, lack of trying. It was the fact that our business model really was not going to be successful.
Josh King:
You've mentioned various folks who you've met, made connections with, helped you along the way. While you were at VSLI Tech you crossed paths with one of our prior guests on this podcast and the legend of Kleiner Perkins, John Doerr. How did that friendship help your career and what did it teach you more about the value of making these connections?
Ken Goldman:
We got to know each other pretty well. I then went to Cypress Semiconductor after that. He was on the board of Cypress. So, he and I got to know each other more there, by the way, it was a great board. We had [inaudible 00:29:37], we had L.J. Sevin, we had John Doerr. Just a great board. I then went to Sybase, which as I recall, I'm not sure it was KP company or not right now, but then he hired me to @Home Network in which he was the founding venture guy. I was a founding CFO. CEO and I came in the exact same time. So, I worked there until frankly we made an acquisition and then a new CEO came in and let's just say, I realized that, that CEO and me didn't agree on how to run the company.
Ken Goldman:
And so I decided to leave and went to work for [inaudible 00:30:18] who had been trying to hire me for a long time. That was not associated with John and neither was Fortinet, but I've had several times where I worked with John. I've been to all their funds. So, ASmallWorld is a company I've been sort of helping a little bit called [inaudible 00:30:36] and John's a major investor there. And so we've done some good things there. And so I've gotten to reconnect with John. We're good friends. I think that he's as smarter as any venture capitalist I know. He's just wonderful. He's a good man. We've been usually wonderful, I think, to each other, if I can say it that way.
Josh King:
You mentioned Yahoo a couple times, Ken, you helped engineer the sale of Yahoo to Verizon, which is NYSC ticker symbol VZ in 2017 for 4.8 billion, which is minus the substantial investment in Alibaba and Yahoo, Japan that in separate transactions would sell for another 44 billion two years later. With the advantage of hindsight, where those exits the best case scenario for a tough spot?
Ken Goldman:
Unequivocally, no. What we should have done, which we wanted to do is we should have spun out the operating business as a public company and spun out the Alibaba as a separate public company, which is what it did at, we had a board, which frankly was not aligned to ... We have, unfortunately, we have activists involved and there are some very, very good activists. And there's some activists that frankly just want to muck things up, if I can say it that way. I think if we had kept, if we had spun out Yahoo as an operating business, we would've done, in my opinion, much, much better. [inaudible 00:32:00] and the team were doing a fabulous job, forget it, take me out of the equation. In terms of you recreate the business, as a business we had to get mobile.
Ken Goldman:
When we joined there, we had no mobile products whatsoever. So, we had to basically change the entire business model to go mobile, which we did, but it took us a while to do that. And yes, could you always do some things better and faster? Absolutely. But I would say the lesson learned there is to really have a board that you have to be both, and I've heard this over and over again from a number of various astute people, a board that's both independent and collaborative and collegial. And so it's a funny mix, but it's really important to be ... I'm not saying it'd be all one mind at all, but to have a board that works really well together and really supportive of doing the right thing. Hey, if you don't like this, if you think the company's the wrong direction, then certainly the prerogative is to move the CEO out and CFO for that matter.
Ken Goldman:
But until then you need to be on the same page. If you don't have a board that really works well together, it just, it really puts a company at a very significant disadvantage. And I'm very excited with all the boards of mine. I look at the progress we've made at GoPro over the past year. It's phenomenal in terms of changing a business model. And we were only successful because we had a board that worked really hard with the operating team and the company and Nic Woodman team did a great job. One of the reasons why I have a dual class stock has been used by a lot of technology companies going public is so they have the wherewithal to run the company in a way that's conducive to what they think makes sense and not have activists come in and try to change the mix.
Josh King:
As we begin to wrap up in our conversation, Ken, let's focus just a little bit more on boards. Two years ago ICE launched the New York Stock Exchange board advisory council to match public companies that were seeking to diversify their boards with candidates looking to become board members. How should diversity be considered when forming or adding members to a board?
Ken Goldman:
The studies have been very clear that diverse boards, diverse management teams are more successful, do better on share returns than non-diverse boards. So, to me, that's the carrot. The carrot is diversity is conducive to better performance. And so therefore is you should create diversity amongst your management team, your employee base, and your board. And I think to measure that is important as the old saying, "What you measure gets managed." So, I'm all far being able to display that in your proxy, in terms of charts to show your diversity of your team. I know in the boards I'm on that we are very actively looking to increase our diversity and the diversity. By the way, diversity comes in a lot of different ways. Diversity is tenure on the board. There could be how many, is there a 5, 5 to 10, 10 to 15 years on the board.
Ken Goldman:
Diversity is geographic background, diversity is what industries you've been in and functions you've been in. Diversity is your gender, underrepresented minorities. So, diversity covers a number of factors and they all weigh on having a, in my opinion anyway, a very successful board. You could be in the old days, audit did all the work, comp did some work, and non gov, that's where your [inaudible 00:35:49]. You didn't have to do too much, that was where people joined boards so you didn't have to be too busy. Turns out with all the rule as on CBNA compensation is every bit is much as hard as audit committee.
Ken Goldman:
Matter of fact, I would argue harder, because in audit committees you have clear rules and regulations that you can assign yourself to run by as opposed to compensation, which is much more qualitative, if you will. But non gov in terms of the succession planning, in terms of governance and DEI and ensuring all these things are done well relative to board recruitment is now I'm on the non gov for NXP, and we have meetings upon meetings upon meetings as we're adding to our board. So, yes, I'm answering your question a way that I like the carrot approach more than the stick. Maybe you need to stick to help out sometimes, but the carrot approach to me on the question you asked is diversity is conducive to better performance. It's all you need to know.
Josh King:
A couple of years ago you spoke at a CNBC event on how quickly CFOs and their teams are expected to finish the diligence on potential deals. You had this word of caution, I'm going to quote you, "Anything that requires me to make a gut judgment call in hours or days, I do worry about someone trying to sell me something." Does technology, like what you're now doing at Monsoon blockchain corporation, or IBM's Watson, make it possible to move quickly with all the information you need?
Ken Goldman:
I always hate need your, and I get this all the time and any job I've been at is need your, if I don't do this now, we're going to lose this or this is not going to happen, blah, blah, blah. And so, yes, I do worry about that. I think it's a little concerning in venture today, because there's a rush to get, because if you don't fund this, XYZ is going to fund it. So, there is a lot of that going on today. I still think, by the way, I still think business is funny, you learn a lot on business school, on cashflow, DCF, do all these analysis before you make a capital investment, before you make an acquisition. The reality is unfortunately, and I hate to say so from this guy, you can always sort of make the numbers work.
Ken Goldman:
Now, do you need to test the assumptions more? Yes, you can do all the analysis you want, but if you're in the business, you need to expand. A lot of it comes to instinctual judgment. I like a term called pattern recognition where you have a sense of seeing things. You have a good sense of it. That gives you the confidence one way or the other. So, I think pattern recognition is really important. I think business judgment, the old saying business judgment rule, I think business judgment is very, very important in how you think about things you do. So, while you want to have a set of numbers and mainly because numbers forces you to put down your assumptions. And so as you come back and review how successful something is doing, you can go back and look at your assumptions and see if they're playing out the way you thought they should or not.
Ken Goldman:
So, that's really important. But I think ultimately the business judgment, the pattern recognition you have from your experiences, your intuition. I think those are all extremely important attributes, which is why I'm going to come back to this. Why on a company it's nice to have people that have been around 20, 30 years experience. I mean, you mentioned prior CFO, I think you said he'd been there 14, 15 years. That's wealth of institutional knowledge. That is wonderful. Absolutely wonderful. So, on boards, I'll come back to boards, one of the things that you go when you get a company that's gone public, venture [inaudible 00:39:54] has gone public, as it's going public, primarily of all the board members are venture capitalists. Well, over time they're going to want to spin off, because they want to work in their other companies, but the more I can keep those venture capitalists on the board, the better we are. Because they have the institutional knowledge of how things were created and organized and so forth.
Ken Goldman:
And so that's a real good balance. So, to keep them on as long as you can, as you add new board members, to me is a plus versus just assuming you want them all to leave and you want to have "all independent board members". You mentioned John Doerr earlier. He had a saying of, he would always say no conflict, no interest. And so yes, if you're a board member and you're a big investor. Yeah, could you say you have a conflict? Yeah. But you have a lot of interest in the company. And so that, to me, that's always great. So, anyway, that's how I thought of it in terms of boards and in conflict and interest and so forth.
Josh King:
As we wrap up, Ken, you grew up in Peabody, Mass. It's not far from Gloucester. The heritage of the Gloucester fisherman is long and deep. One thing beyond everything that you and I have been talking about at Hillspire is the Schmidt Ocean Institute, working to advance the frontiers of global marine research. One of our recent guests, Jonathan Rothberg operates a floating lab, aboard his ship, The Gene Chaser. Paul Allen renowned for his work in this area. What's the status of the Schmidt Institute's work? And for a kid who grew up in the north shore, is it particularly gratifying for you?
Ken Goldman:
Yeah, it is. It's a boat we have, Falcor. It does all these oceanography studies. It's spent recently a lot of time off the coast of Australia and New Zealand. It's an area that our principals have a lot of interest in. They've done a lot of work on sea beds and coral and plastics and so forth. We have wonderful people there. That's one of the benefits I've had in this job is the people I've gotten to meet the person running that operation. And she's phenomenal. We did a launch [series 00:42:13] for her. It took us like eight months to hire her. We found the best of the best. And we do really interesting research oriented work. Much of it is effectively nonprofit. It's a fact that the principles have the wherewithal to do something like that because of their collective success.
Ken Goldman:
We have some very, very smart, dedicated, passionate people who believe in our mission. And that's really what you want to have in any enterprise. It turns out I'm on a number of personally, a number of nonprofits, an example is RFK Human Rights run by Kerry Kennedy, which is working on the legacy of Robert Kennedy. I'm on a board of [inaudible 00:42:59] society because I happen to be an animal lover. I'm on SASB, which happens to be creating ESG standards and metrics. And so I applaud these ... So, SOI, which you mentioned is effectively a non profit doing a lot of oceanography work. I applaud people that are doing this work. They're purposely mission oriented and passion. And I applaud those people. And I am so pleased and honored, frankly, to be involved in these kinds of organizations.
Ken Goldman:
I don't like to use the word giving back and it sort of, it gives a sense, someone says like, I have to, because I was taking before so now I'm giving back. And I don't like that term. You actually mentioned earlier about family offices, I and many others have the wherewithal and opportunity to do well. And I think the thing I'll just sort of go off, digress a little bit here. My wife and I talked about yes, we give a lot to, on a relative basis, to institutions that supported us, whether it's our respective universities, whether it's my wife who's in medicine. So, whether it's various hospitals. On the other hand giving more to thinking about how to handle, how to help people that are in need, not just from the pandemic, but just in general how do we think about inequality and helping people?
Ken Goldman:
I'll leave on this, because it really means a lot to me. People want the dignity of a job more than, for the most part, more than the handout. So, how can we create a thriving economy in which people have the ability to get dignity, a job. Housing used to be 60, 70% of the people in this country at a home, they don't today. I do they create it, how do we get homes for people? I would hope that we can find a way to get away from all of our partisanship and find a way on both sides, as I think both sides would fault, said that way, to get to where we can get people where we really help the people in need.
Ken Goldman:
So, to your question about family offices. Family, that's another area where I think family offices will play a big part. There are many families that they've been very fortunate and I think you'll find many of them coming out and really helping folks that need the help there, better spent money than a lot of the government money being spent. So, anyway, I'm just giving you my own opinion, but that happens to be my opinion.
Josh King:
And on that note, we'll leave it at that. Ken Goldman, thanks so much for joining us Inside the ICE House.
Ken Goldman:
Well, thank you. You've done a lot of research on me. I congratulate you. You brought back some good memories of different places where I have spoken. So, the spontaneity of being able to talk like this, I enjoy, because I don't have to do a PowerPoint and I find it much more interesting and sort of hopefully helpful.
Josh King:
Well, maybe our next meeting will be on board the Falcor.
Ken Goldman:
That sounds great. Thanks, Josh.
Josh King:
Thank you so much. That's our conversation for this week? Our guest was Ken Goldman, president of Hillspire LLC. If you like what you heard, please rate us on iTunes so other folks know where to find us. And if you've got a comment or a question you'd like one of our experts to tackle on a future show, email us at [email protected] or tweet at us @icehousepodcast. Our show is produced by Pete Asch, with production assistance from Brian Hopkins and Ian Wolff. I'm Josh King signing off from the library of the New York Stock Exchange. Thanks for listening. Talk to you next time.
Speaker 1:
Information contained in this podcast was obtained in part from publicly available sources and not independently verified, neither ICE nor its affiliates make any representations or warranties express or implied as to the accuracy or completeness of the information and do not sponsor, approve or endorse any of the content herein. All of which is presented solely for informational and educational purposes. Nothing herein constitutes an offer to sell, a solicitation of an offer to buy any security or a recommendation of any security or trading practice. Some portions of the preceding conversation may have been edited for the purpose of length or clarity.
