McAfee

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This year’s Fortune 500 marks the 68th running of the list.

Fortune 500

This year’s Fortune 500 marks the 67th running of the list.

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McAfee (MCFE): Company Profile, Stock Price, News, Rankings

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McAfee | Fortune

McAfee (MCFE): Company Profile, Stock Price, News, Rankings | Fortune

Venture capital and private equity trailblazers Heather Kennedy Miner and Elle Lanning have made their mark on companies like KIND, Cava, Lululemon, and McAfee by applying strategic growth strategies to turn them into powerhouse market leaders. In this session, they’ll share their battle-tested frameworks for identifying investments with the potential for hyper-growth, and the hands-on operational tricks of the trade that can propel any company to sky-high value and scale.

OPERATING STRATEGIES THAT POWER COMPANIES TO SCALE UP, UP, AND AWAY

Conferences

No. Our next two speakers have invested in some of today's most innovative companies. Think of Cava, Lululemon, Kind, snacks, many more. Their expertise is first identifying uniquely high growth potential companies and then expertly scaling them to become the powerhouses that they are. Please welcome to the COO summit, Heather Kennedy Miner, Chief operating officer at Advent International. And Ellie Lanning, president of investing at Camino Partners. They'll be interviewed by Fortune's senior writer and co-chair of the COO summit, Lilah McClellan. Oh. Hello, thank you. So before we start, I just want to say a little bit more about who we have on stage here. Um, so Elle, uh, sorry, Ellie, you, um, who here has heard of Shark Tank, the TV show. OK, that's everyone. Great. So. Um, you, today we all had Kind bars in the lobby, which is great. So you worked at Kind with Daniel Lubetzky, who is the newest sort of permanent judge on Shark Tank, and and now you're running Communal Partners, which is an investment platform connected in some ways, right? Yeah, I would say Shark Tank is his connection to the true entrepreneurial community and Uh, investments at Camino are much greater scale. OK, great, thank you. And Heather, you spent two decades at Goldman Sachs. You had a CEOO role there and now you have a CEO role at Advent International, um, which is an investment, private equity investment firm with 91 billion under assets under management, um, and you're in charge of growth overseeing 320 investment professionals, right? Is it? Yeah, Advent has over 16 offices around the world, 90 billion of AUM, 100 portfolio companies, 650 employees, of which 350 are investment professionals. So we have very different perspectives. I think it's going to be great. Um, let's just start with the first principles. How, how do you identify which companies before we talk about scaling, how do you know which ones are worth scaling, which investments are worth scaling? Yeah. So I've spent my career in consumer and demand businesses and on the operating side and now I'm looking at it from the investing side um I think it starts with really an individual or a team that is very clear on the problem that they're solving um and then from a kind of KPI that I look at often early on is gross margin. Um, and maybe counter to kind of software and technology, I expect gross margin in a consumer business to be really strong out the gates because that signals that the consumer is saying and will pay for a solution you're providing. You should be able to scale that gross margin over time, but you're probably gonna have to invest it back into price and other things to reach a growing consumer base, um, but that we look at as an indicator of kind of ready for growth. OK, so it's very sector specific for you OK. Um, and how about that. So at Advent, um, we are very sector specific. We cover consumer health care, industrial, business and financial services and technology and are known for deep subsector expertise in places like payments and chemicals, um, where we like a sector, we get a sourcing sell we. We often bring in a former CEO that's been in that business and we'll do deep dives to really identify companies that we want to spend more time with. And then as we start to unpack those companies, it's really understanding their market position, their pricing power, the competitive landscape. Can they enter new markets? What is their value proposition? And then ultimately, as you think. About that growth forward and that trajectory, it's what does their operating infrastructure look like and do they have the flexibility to scale with limited incremental cost and then of course, do they have the funding and the capacity to actually execute all of that for us, we take a very operationally intensive approach to our portfolio company management. We have a value creation plan for every portfolio company that we partner with and so what it means is we're very willing to get our hands dirty and think through those dynamics. Great. Well, so let's talk a little bit about that. So now scaling CEOs trying to scale a particular project or business. What strategies have you seen really work for inventive companies that you work with? Yeah, so I would say, I guess I'll, I'll start it with a problem that we see often that is focused on can slip into a real growth strategy, so. Um, again focused on more consumer and demand businesses, but we see often a over diversification of demand generation strategies. So whether that's starting within your, you know, sales and marketing teams really wanting to put too many irons in the fire almost, and what we talk about is doing enough trial to really understand where you should pour more water and so we talked to. Our companies about the differentiation of kind of a peanut butter spread strategy where you're, you know, spreading your dollars across everything and really trying to shift that to a champagne tower strategy where where you're, you know, if you can all visualize the champagne tower, really finding the strategies of greatest return and maxing out your dollars investment and time in those and only then going to the next tier. So you don't have to be so well rounded all the time, maybe in life but not in, not in scaling, correct, um, and from a COO's perspective, what, how would you answer that question? Look, I think in all of our roles as COOs having a really well defined operating plan is incredibly important, and that needs to follow the strategy of the firm and needs to be very clear around priorities and goals. And so what are the product priorities, the distribution priorities of the organization. Um, is following and then ultimately who's responsible for achieving those and how are those um measured? I think ultimately then it's about people process technology right that's all of our day jobs is how do we make all of that happen for me something that's incredibly important is the data piece of this. How are we measuring. Are the KPIs and then ultimately you know thinking back to reporting that out and making sure that the teams have full transparency around how we're progressing towards those goals. OK, thank you. I'm going to be coming to the audience to take your questions in a moment, so please be thinking of what you'd like to ask. I'm wondering for COOs, is there a mind shift mindset shift between sort of keeping things running day to day and then figuring out how to scale a business? What is that mindset shift in your, how would you approach that? Yeah, so I, I think, um, you have to be thinking of both, right? I think a lot of the we used to within kind we called it, you know, making sure the trains were running on time. I think that's where you really have to lean on team and your number one job there is clarity and decisiveness and moments. Of escalation and then I think you know your role is really to be more focused with the executive team on charting where those next investments are gonna be and where you're readying to move the resources you know that flow up to you too for continued growth. OK, great. I fully agree with Ellie. I think the majority of my job needs to be strategy. One of the things that we did organizationally last year is set a new strategic ambition for the firm, and we articulated it to our LPs, to our people. What that has allowed us is to really identify growth priorities. And then who's responsible then for executing on those growth priorities if if the organization is operating as it's such, the trains running on time should be happening, right? And obviously if you need to reengineer processes or implement new technologies or swap out talent to make sure that that's happening, you can do that, but. I think from our perspective the growth angle has to be consistently top of mind, particularly in a private equity industry that is maturing and that is more competitive and so making sure that we understand how we are positioned to win. No time to snooze here, do we have any questions from the audience? Yes, uh, a mic will be coming your way and let us know who you are. Um, when you get it, thank you. Yes, hi, uh, I'm Moha Chima. I'm the CEO of CoreLogic. Um, the question is for if you think about companies helping companies, uh, your Porco companies improve their evaluation and the role of AI, um, not just in efficiency but as well as getting price and other value. Do you have any early successes or how you were helping the companies get there as well in, uh, leveraging that as well? Yes, AI is on my list as well, um. I can start. We have a group of 50 individuals globally known as our portfolio support group who work alongside our management teams to execute value creation plans. Within that team we have future ready and AI specialists who really understand power lanes and what's happening, playbooks that we have. have worked in one portfolio company that can then transfer to another. We then have a separate team of data scientists who are able to use both, you know, third party data but also on-prem data from our portfolio companies and then we think through operating efficiency, go to market strategy, how do we improve straight through processing. Power pricing as we think about where you actually want to price various dynamics and so we're using AI within portfolio companies you know we're starting to use it within Advent as well, but ultimately, as we all know, we're at early stages here and thinking about use cases from one portfolio company and how we ultimately can transfer that to another. Great. And what about AI for you? Is it, is it something that you're looking for in every company that you might invest in or not quite? No, well, I would say on the investor side every company is somehow embedding AI in their pitch whether it's really kind of true to their business or not so I, I believe it kind of creates equal parts skepticism and excitement. I think the way we're thinking about it both within Camino and then the way we are trying to help our partner companies think about it. Is being pointed and prioritized and so really looking you know I think the greatest kind of thing it can do in the early days is lift up the human powered work to be judgment um and kind of context and so you know we on the investment side spend a lot of time combing through data uh looking at companies looking at how they might stack up we have you know data feeds we pay for we have proprietary data we get from companies. And augmenting that and being able to produce the what is for uh then human uh and kind of judgment based team to then be able to say what could be um is where we see it having a lot of power. OK, that's helpful. Any other questions from the audience? Yes. So I'm gonna try and link uh earlier panel discussion here. Uh, just want to point of view from you guys with the uncertainty or the changes, policy changes that we're seeing. How are you navigating it being In your decision making whether in terms of adding a portfolio company or cross leveraging portfolio companies and I'm referring to essentially tariff changes or if you take take into consideration the uh the quick technological advances that are happening in different industries so we had a really nice morning discussion so I'm just curious how you're leveraging it in your portfolios essentially. Great, and we only have about 2 minutes, so I'd love to. Thank you for that great question. Go ahead, um, so I would say, you know, it's, you know, these are very dynamic times that's certainly been the theme of everything that I've heard about and so building agile teams and cultures that, you know, we don't necessarily believe so much in playbooks because you grow out of them in you know in a day or. Um, and so we really try to look at applied learners and right now, you know, we have a number of businesses that are exposed to um. Whatever the day the tariff may be and we're trying to create kind of cross learnings and a lot of optionality right in terms of kind of how can you think about ways the company may bear some of that ways your customer base may bear some of it and ways that your end you know consumer or customer may bear that and sharing successes really quickly. Um, we certainly are trying to make sure it, it's not stopping us from, uh, being front footed on investing. I think we actually think that this is a great time and great opportunity for people who aren't gonna be kind of paralyzed by uncertainty. That's such an important question. Do you have a 30 seconds, sort of 1 minute? Look, I think ultimately it is such a case by case dynamic and we are micro investors at Advent. We have to be macro aware, but we are. Highly analytical and decomposing the entire dynamic around supply chain and around the customer demand chain and the implications, but we're doing deep dives on all of our portfolio companies to understand potential implications, and it's very hard to paint a broad brush. I think we feel good that we have the analytical tools today, but of course new information is coming out every day and it's hard to predict. And so being agile and responsive is incredibly important in this environment. That's a great note to and Don, thank you so much. I hope you all have time to meet and mingle in the hallway as well to continue some of this. Thank you.

Andrew McAfee, Principal Research Scientist, MIT; Inaugural Visiting Fellow, Technology and Society, Google

CFO Collaborative Boston Dinner: What will the CFO role look like in 2024

CFO Collaborative Boston Dinner: What will the CFO role look like in 2024?

Good evening, everyone. Thank you so much for coming. Welcome to Fortune CFO Collaborative. I'm Cheryl Estrada, senior writer at Fortune and Writer of the CFO Daily. And it's my pleasure to welcome you here tonight together with Alan Murray, CEO of Fortune Fortune CFO Collaborative has been building a community of Finance Chiefs to help you navigate the changing landscape. We've covered lots of ground in the past few years from the economic shock waves of the pandemic to digital transformation talent challenges, esg cybersecurity, the future of capital investment and many other major issues facing CFO S. Today, we are delighted to bring you tonight's dinner session with our founding partner Workday and our sponsor Deloitte. I think tonight is another critical one for, for CFO S across every sector. That that theme is what will the CFO role look like in 2024? We'll, we'll explore the evolving role and scope of the Chief Financial Officer in this era of automation, including generative A I CFO S are continually reimagining the scope of their responsibilities and even taking on additional C suite roles. Over the next couple of hours. We will hear from experts and finance leaders about what the future holds. Lastly. A brief reminder before we begin that the opening interview tonight is on the record. But when we dig into our dinner conversation later, that part will be off the record. So let's get started. It's my pleasure to hand things over to Fortune's Alan Murray together with Andrew mcafee, principal research scientist at MIT, an inaugural visiting fellow at Google's Technology and Society and author of the new book, The Geek Way. Each of you will be taking home that book with you tonight. Thank you. Thank you, Andy. Have a seat. This is a very long table and I, I don't know if anyone told you before you accepted this invitation that these are, these are working dinners. We will have a one table conversation tonight. So, so those of you at the far end, prepare your vocal chords you're gonna need and I wanna watch Alan manage one conversation over dinner with this crowd at a table. This big, I wish that there will be a quiz. And if you speak out of turn, you have to down a full glass of wine. That's what we call a perverse incentive in economics. So see, they're already misbehaving. Yeah, we're in some trouble. So I'm I'm really happy that you kicked us off this evening. I've read the Second Machine Age, which is a great book. I read more from less, which is a great book. I haven't read the geek way. It's a great, it's a great book. Don't continue the fact that's where we are and we're gonna talk about the geek way because I know you're promoting a book. But before we get to it, why else do you think I'm here because you love us? That's also true. You love being with us and because this is a great crowd, I mean, really, how, how often do you have the opportunity to be with a crowd of CFO S from great companies like this? I wake up, I wake up every morning looking for that opportunity. Um So look, uh uh I wanna start before we talk about the book, talking about Generative A I because you're a technologist and I'm not, but from afar, I've never seen anything like this for business. Correct? Uh It, it, it, it not only, I mean, I had never heard the words a year ago. Yeah. And today every CEO I talked to is trying to figure out what to do with it, how to adopt it. We've never, we've had technologies that have come on pretty fast, but usually in the consumer space, we've never seen anything explode in the business sector. Uh What, what does that tell you? How should the people around this table be thinking about generative A I and how quickly to move? Uh I, this is gonna be a boring conversation because I agree with everything you just said. No, that's good. That's a great start. We'll find something to disagree about this. This is um weirdly powerful, but maybe even more important. It's weirdly fast. This stuff is going to diffuse throughout the economy. It's going to separate winners from losers and it's going to turbocharge the winners faster than you. And I have been expecting based on the past 25 years of technology which have been pretty fast. Right. And the there are a few reasons why it's so fast. Most important one is that it deals with us on our terms that we finally have this other entity on the planet that understands this, that understands language and can deal with us without us having to master some new to be trained. No, like we do this and it it understands and responds. The other thing is that it's useful in every corner of the economy. Let me give you three super quick examples to show how many different sectors it's valuable in and how flexible it is. There is a great story in the times just a while back about how doctors are now using generative A I not to diagnose maybe that's a bad idea because of hallucination. But to capture the, the notes that the conversation during a patient meeting and summarize, summarize and transcribe them into transcribe, summarize and then upload into the electronic medical record system. Uh that takes about two hours a day before generative A I for the average doctor, it's now down to 15 minutes. That's, that's literally hours back in the day for a physician. And one doctor quoted in the article had a great phrase. She said she's not doing this while she's trying to have. She said you can focus on the patient. It lets me be fully got the patient. That's, that's number one. Number two, there was just a really good study public where they gave generative A I to half of a bunch of consultants at BC G and not the other half. And all they did was sit back and wait to see what happened. And this, these are highly skilled, highly educated, highly trained people. The gap in creativity and quality of anything that you care about across 18 tasks was big and it was very, very quick to appear. And then the final one, this is the weirdest one to me. Uh My co-author Eric has a colleague out in Stanford, a professor who had a doctoral, an international doctoral student and he said, hey, write up what you've been doing for the past few months or whatever. And the person gave him a page full of notes and because English was not the first language, the professor like didn't understand what the person was trying to say. So he uploaded into chat GP T and said, summarize this and got a clean English paragraph getting across the point this guy was trying to make. So, so this, this is weirdly flexible and powerful. Never. And, and no technology has exploded that fast into the enterprise. But you're talking to a table full of CFO S here. Part of their responsibility is for risk in the enterprise. And I keep having conversations with people who say, hey, wait a minute, is my data safe? Uh uh Is what, what about IP? Am I going to create something here? And then 10 years down the road discover that I've inadvertently stolen someone's IP. And as a journalist, I gotta say, the hallucinations thing is not small. It's really pretty scary. I mean, II I had it right. I said, somebody asked me for my bio, I said, write a bio for Alan Murray. It had me writing a book that didn't exist. Uh It's, it's crazy. So, and I've heard companies say as a result of that a little bit different than what you just said, which is, hey, you know what given these risks, I'm not sure I want to be first. I think maybe being a fast follower would work. OK? In this case. So what do you say to those people? Uh That's a recipe for long term decline. Wow. But this is, this is not a good move so far. It's not a category of technology. We're sitting on the sign is a great strategy. Every risk that you just articulated is real of those. I think hallucination is by far the biggest one, there are use cases where you don't use this stuff yet. You can only imagine. I, I have a research collaboration with Google so I can talk with, you know, a little bit of knowledge about them. You can only imagine how hard the tech giants are working on. All the problems that you hallucination. Fixable. I mean, Mark Andriessen was quoted somewhere saying, oh a hallucination is just another word for creativity as a journalist, you know, or a lawyer or people who are in industries where precision matters, it depends on, it depends on who you talk to. Every smart person I talk to who, whose opinion I respect on this says this is a real problem. It's very, very deeply rooted in the technology. So the fact that we're going to tweak gen A I and have it not, you can't just say don't halluc don't lose anymore. But what you can do is backstop it and put guardrails on it and combine it with other kinds of systems. There's a phase that we're going through right now called Rag A Retrieval Augmented Generative A I where it knows when to go query a database and get something back from it. These are not trivial technological challenges at all, but think of the incentives for getting them right? I just stick with this one more minute and then we'll get to the geek way. But uh Rag, right means you, you query a database, you get some document for the database. And then pull it from that document. I've seen reports that even then you can end up with hallucinations. Can these technologies are, they're, they're super powerful and they're weird. We do not understand them yet. This is not a reason not to. So why shouldn't people around this table say uh I think I'll wait until you work that problem out because then you are behind on the learning about them. Then you're behind on the experience curve, you're behind on the learning curve. You're not missing it. You're missing out on the committee benefits that come from the risks are they're real, but they, they are manageable. And I've noticed that that too many companies when something new comes along, look for a reason to say no, I think that's a bad strategy which is actually a perfect uh pivot to the geek way. What explain to the folks here what the geek way is. The geek way is a way to run a company that has sprung up over the course of the 20th century, largely traded in Silicon Valley because a bunch of geeks started running companies and they found themselves in these super turbulent, uncertain, highly competitive weird environments. And I think a lot of them realized that the industrial era playbook wasn't helping them run companies for this environment. So they did what geeks do. They dove in deep on a problem, they experimented, they iterated and they came up with a set of practices that as I look across them are weirdly consistent and they're better. And when you look at the head to head battles between the upstart geeks and the incumbents of the industrial era. And how many of those battles has the incumbent won or even held steady? Well, I think we now have some stories where the incumbent is doing. Ok. Uh um You know, the way Marriott got back its control of the customer that we all 10 years ago, we all thought that would be gone to Expedia or whoever it would be. And now more than 50% of their bookings come through their app. So there's, there's one I'm sure. OK. Hold on. Like if you're, if you're, if your glorious success story is bookings via an app, come on. All right. So you say this, but think about this, right? When Netflix announced its intention to start producing its own content and streaming it out the head of what was then called Time Warner said it's a little bit, he was asked about the threat. He said it's a little bit like is the Albanian army going to take over the world? I don't think so. What does somebody give me a good example of an incumbent company that has beat back the disruptor West coast? And he has a bit of a love affair with these West Coast guys. I don't know why you live here in Boston. I really, this is not, this is not hometown cooking, right? This is the other side of the country. Give me some other good examples of, of legacy companies that have uh beat back the competition. Anybody want to throw one out? We'll get to it. The s the silence is really interesting. Right. Damo. Have you looked at the real market value of the, of the incumbent automakers versus, versus one market values? No fair. That's not, that's what else would you look at the continued existence? Is, is a really, really low bar. This is awesome. We get to argue, what's your, you know, what, what, what about the banks? What about the big banks? I mean, yeah, we thought we thought they would or do you need a license from regulated industries? So the two big industries that, that have not been geeked out I think are health care and finance because of regulation. It's not, it's probably not a coincidence that there's the dentist regulatory thickness there. So you, you say in the book, there are four principles of this geek way you want to elaborate on those, the easiest somebody here wants to be a geek yet. It's better, better than sticking with the industrial era playbook, right? The So my four principles that I talk about are science, make decisions based on evidence and argue a huge amount about it. Ownership, push down authority to devolve authority to an uncomfortable level. Uh speed, iterate, don't plan and ownership uh and openness be willing to admit when you're wrong and pivot and, and you know, do and don't, don't be so defensive. I thought data evidence was, that was the first one. That's the first one that's science. Yeah. So uh uh speed is probably the easiest one to conceptualize it's the difference between planning out a project in advance versus just trying stuff and seeing what works. Let me, let me use the space exploration industry. The best exemplar of this iterative approach to learning and doing things is clearly spacex these days, the all of the legacy companies in the space industry should be shame faced with embarrassment about their performance since SpaceX occurred 21 years ago. Now, hold on, let me, let me hold on. Here's what SpaceX has done. It's the company that has built commercially viable reusable rockets. We didn't think that was possible. They've got 100 new launches so far. They're the only organization on the planet. The only one that could drop thousands of rugged portable high bound satellite internet terminals into Ukraine. When did it? And they are the only company that is my interview or your interview. You asked a great question. Now, you got to listen to the answer and they're the only American company qualified to take human beings to the space station. NASA is not qualified. NASA is not qualified to take human beings. Interestingly, and I think you say this in the book, they kind of did it by moving fast and breaking things. I mean, not with people in them, with people in them. Exactly. But that's the important part. You can, you can take this kind of fast, loose and out of control approach to making things that are mission critical. You don't have, you don't have to fail. It's a rocket. We can't play. No. SpaceX blows up all kinds of rockets. They have killed many, many fewer astronauts than NASA. Yeah. Yeah. Other great. This is why I get excited about the geeks. We like, I, I feel so let down by the incumbents in industry after industry, you can't come up with one good example of somebody. I mean, because a a lot of the incumbents are still there that we thought that is what we thought would be low bar, that is a really low bar. So Jeff Bezos has this great quote when somebody, he talks about Amazon as a day one company and someone said, Jeff, what does day two look like? And he goes, oh day two is stasis followed by irrelevance, followed by a long slow decline and only then death. And by the way that sometimes happens in Silicon Valley. Yes, I mean, we've seen some of that. You've seen a ton of it, right? But my, my point is a different one. I'm not saying that today's top tech companies are gonna be permanently successful. I think that's not accurate. The people who displace them are not gonna be following the playbook that we developed and I taught at business schools during this time. They are not gonna be following the playbook that we built up during the 20th century. They are not OK. So before, before I let you go and we turn to the table conversation, talk about what all of that means for the CFO because that's what we're talking about tonight. How the CFO role is changing because of technology and the speed of change. Uh The short answer is, I don't know. The, the longer answer is uh if you are in the, um if you're, if you're in the business of finding reasons to say no, uh that's not, that is becoming a less good business to be in. And I don't think that's the business that most CFO S are in anymore. It might have been the business they were in 10 or 15 years ago, but we'll have that as part of our conversation and I'd be interesting to get everyone's perspective on that. So I think risk tolerance needs to shift again. You can blow up rockets and build safe crew capsules. I think the tolerance and the, and the definition of risk needs to change the risk of not being agile and not reforming your, not changing your practices based on today's environment is a deep, deep risk. You have totally succeeded in our goal, which was to say something provocative to get the table conversation. So, thank you very much. Well, thank you all have a seat.

[ MUSIC ] So I wanted to start off by talking about this ongoing SEC crackdown in inital coin offerings. There was the big news this week, they made two arrests of the co- founders of an ICO called Centra that was backed and promoted by people like Floyd Mayweather, DJ Khalid. David, you've invested in companies that have done ICOs. What do you make of all this? Well crypto's a wild space, up and down the whole stack and certainly one of the most wild spaces of it all is initial coin offerings. Very little information given to buyers. Not a lot of regulation really none in the U. S. up til now. Investors aren't protected, not a lot of disclosure. So it's kinda a messy space. It's inevitable that a bunch of different U. S. regulatory authorities are going to put some rules and regulations around this and. And hopefully go after bad actors. There have been a number of bad actors in the crypto space. So this is good. The space should be cleaned up. But a lot of times we lose sight of the fact that there is an incredible innovation happening in the space that the notion of pre- selling coins can serve a really interesting purpose to diversify access or democratize access. To technology and allow other people to participate in wealth creation that they wouldn't get to participate in. So we hope you don't through the baby out with the bath water here. But it's important to get some regulation around this stuff .>> I got to say we've seen some of these celebrities posting the Instagram the Snapchat they got like Champagne bottles they're popping off, fat stacks of cash on private jets, it's crazy and it's really not a good look I think because they're duping consumers, people who don't know any better who think look my favourite star is getting rich. Which I'm going to get rich too if I invest in this thing .>> And it's not just celebrities either. We say John Macafey from the anti- virus software .>> Debatbly a celebrity .>> Yes, well he's actually taking getting paid $ 105, 000 per tweet to promote an ICO. So can you really trust somebodies opinion whose really just makijg money to promote it to other people ?>> Yeah pump and dump schemes for stocks, particularly penny stocks I remember during the dotcom days in 1999, 1998, there were all sorts of [ UNKNOWN ], IPOs, and companies that were pursuing reverse mergers to become publicly listed and then pump up stock prices. And they really had no business being public nor do they have a business. So this behavior happens whenever there's Wealth creation, an easy money and it's also paints the entire space negatively. But we wanna find ways to get this bad behavior away from the ecosystem as quickly as possible. And it's not just the regulator source stepping in here, we've also seen big tech companies, Google, and Twitter [ UNKNOWN ] block cryprocurrency ads. Actually, Google said this week that Chrome extensions will no longer be able to mine cryptocurrency Even Mail Chimp has blocked all cryptocurrency newsletters. I think there are bad actors in the space. And so as a platform, like if you're Google or a email platform like Mail Chimp, you want to keep your platform clean, and get the bad actors off of it. Sometimes that takes some work. It's just a little bit too convenient for my taste to see a platform ban an entire ecosystem or entire market segment just because they don't wanna spend the time figuring out who the bad actors are. We're talking about Highly centralized platforms who in theory have the most [ UNKNOWN ] from the advantage of decentralized technologies and platforms. So- Even that's what entirely would block chains in cryptocurrencies afford to route around big centralized entities. Yeah. So it kinda underlines the point of why Alternative structures for platforms are needed, because on a whim a single platform can ban an entire market. [ MUSIC ]

DJ Khaled and Floyd Mayweather recently promoted Centra, which has been charged with fraud by the SEC.

Are ICO Celebrity Endorsements Fair Play?

Finance

Initial coin offerings are controversial.

Should Celebrities Endorse Cryptocurrency ICOs?

[ MUSIC ] Welcome to Balancing the Ledger, where we'll be talking about the latest news in fin- tech, cryptocurrency, and blockchain technology. I'm Jen Viechner. I'm Robert Hackett And today we're here with David Pakman a partner at venture capital firm Venrock. Thank you so much for being here David. Thanks for having me here. So I wanted to start off by talking this on going SEC crack on initial coin offerings. There was teh big news this week, they made two arrests. Of the cofounders of an ICO called Centra that was backed and promoted by people like Floyd Mayweather, DJ Khaled. David, you've invested in companies that have done ICOs, what do you make of all this? Well, crypto's a wild space, up and down the whole stack and certainly one of the most wild spaces of it all is initial coin offerings Very little information given to buyers, not a lot of regulation, really none in the U. S. up till now, investors aren't protected, not a lot of disclosure. So its kind of a messy space. It was inevitable that a bunch of different U. S. regulatory authorities were going to put some rules and regulations around this and And hopefully go after bad actors. There have been a number of bad actors in the crypto space, so this is good. The space should be cleaned up, but a lot of times we lose sight of the fact that there is incredible innovation happening in the space, that the notion of pre- selling coins can serve a really interesting purpose to diversify access or democratize access. To technology and allow other people to participate in wealth creation that they wouldn't get to participate in. So we hope that you don't throw out the baby with the bath water here, but it's important to get some regulation around this stuff. I mean, I've gotta say, we've seen some of these celebrities posting to Instagram, to SnapChat. They've got champagne bottles they're popping off, fat stacks of cash on private jets It's crazy, and it's really not a good look, I think, because they're duping consumers, people who don't know any better, who think, look, my favorite star's getting rich. I'm gonna get rich too if I invest in this thing. And it's not just celebrities either. I mean, we saw John McAfee from the antivirus software. Debatably a celebrity. Yes, well, he's actually getting paid $ 105, 000 Per tweet to promote an ICO. So can you really trust somebody's opinion who is really just making money to promote it to other people? Yeah, pump and dump schemes for stocks particularly penny stocks have been around as long as stockes have been around, I remember during the dotcom days 1999 and 1998, there were all sorts of Unseemy IPO's and companies that were pursuing reverse mergers to become publicly listed and then pump up stock prices and they really had no business being public nor did they have a business. So this behavior happens whenever there's wealth creation and easy money and it also paints the entire space negatively. But so we wanna Find ways to get this bad behavior away from the ecosystem as quickly as possible. And it's not just the regulars who are stepping in. We've also seen big tech companies, Google and Twitter have said they're going to block cryptocurrency ads. Actually, Google said this week that Chrome extensions will no longer be able to mine cryptocurrency. Even MailChimp has blocked all cryptocurrency news letters You know, I think there are bad actors in the space, and so as a platform, like if you're a Google or an email platform like MailChimp, you want to keep your platform clean and get the bac actors off of it. Sometimes that take some work It's just a little too bit convenient for my tastes to see a platform ban out an entire ecosystem an entire market segment. Just because they're having -, don't want to spend the time who the bad actors are. We're talking about Highly centralized platforms who in theory have the most to lose from the advent of decentralized technologies and platforms That's entirely what block chains and cryptocurrencies are for to route around big centralized entities Sure so it kind of underlies why Alternative structures for platforms are needed because, in a whim, a single platform can ban an entire market. Let's talk about Ripple as well. There are some reports this week that Ripple has attempted to kind of buy its way onto cryptocurrency exchanges like Coinbase and like Gemini. Sure, there's a lot of pay to play going on in this space right now it seems. Exactly. What do you make of that? Well, first, I think it's important to say that Ripple is a legitimate company with legitimate investors, a really experienced management team, and is trying to solve some legitimately hard problems and bring change to a regulated industry. So hats off to them, they've made a lot of progress. I think the truth is, that there's more western users on Coinbase than any other exchange in the world. And so, liquidity is favored by folks who operate a currency. So you can see why XRP would want to be traded on coin base. I don't know anything about how the pay to play came to be, whose idea was it, and has it been effective before, I don't know. Works out well for the cryptocurrency exchanges. Right, and so, and maybe to other exchanges. Yes, it's worth pointing out that, you know, many of the exchanges, Exchanges at least not in the US are taking a minimum of one million dollars just to list. I have heard it can be as high as five million or more. Absolutely and being on a cripto currancy exchange it is make or break for all these cripto currencies. They are the king makers and they are the gate keepers here They are what allow the broader community to access these assets. Yeah, these companies can probably make that money back. For them it's a good investment because once they sell their coins to the general public on that exchange then really it's a huge profit opportunity for them. Nikki pointed out, used the magic word, they're gate keepers today and gate keepers tend to charge rent. or a toll on users. So benefits of the advent of Krypto is that we have fewer gatekeepers. In fact, the long term threat to centralized exchanges are decentralized exchanges where anyone can trade with anyone else without some gatekeeper in the middle. So, I don't have any problem with the fact that centralized exchanges take advantage of their market position and charge. Quinbase doesn't, but other exchanges who charge To be on the exchange that is fine but I think this yet another reason why we want decentralized tech and decentralized exchanges So let's switch gears a little a bit and talk about VenRock. You guys have some news you are announcing, you are partnering with an investment group that focuses on crytocurrencies and tokens named CoinFund. Tell us about that. Yes we've been spending a lot of time in the crypto ecosystem for some time. And wanted to partner with this team that have been making investments and actually helping architect a number of different crypto economies and crypto token based projects. That's called CoinFund. And we've made a strategic partnership with them. There are a lot of crypto traders in the market. There are a lot of cryptocurrency hedge funds. This is different, and in fact to us it looks a little bit more like venture capital, because these guys are a team of well respected crypto enthusiasts who have really helped architect a number of different projects over time. and their long term focus is I think aligns them a little bit more with venture capital. Venture capital is often called patient capital because we work in early stage investor that takes 8 to 10 years for companies we have invest in to hit maturation or exit. And that's a lot different than some of the activity that we have seen around ICO's and crypto. Very liquid. You can get in and out whenever you want. is more aligned to the kind of stuff we do and we're using to partnership to learn more about really quality companies that are building important decentralized platforms. We talked earlier about how there are a lot of projects out there, plenty of scams and plenty of letimate very interesting projects. How do you go about deciding what you are going to invest in? How do you place your bets and where are you looking to place them? Well, I think it's sort of what do you bet on when? So what will be the sequence? I think traditionally, whenever there is an opportunity this large, that is as complex or multi- layer as cryptocurrency and decentralized systems are, the first place you look is at the infrastructure layer. You need to build out the infrastructure first, before things at the application or service layer can exist. So we spent a lot of time looking at Protocols around decentralized compute, decentralized security, decentralized bandwidth. Look, in this country we have the FCC deciding to negate net neutrality, that's an example of centralized authority making decisions at almost the protocol level of what people can Have to pay for and dont have to pay for. We dont like that. We'd rather see the internet not have those types of roadblocks. So- That could be prettty troubling for some of these projects thata re trying to get off the ground. Yeah. For sure. If you'd banish the big guys and dont allow the small guys to enter markets. That's again the king maker. You pointed out that venture capital tself is effectively a gatekeeper industry. And I completely agree with that. And I'd actua;; y like to see that undone. I dont believe that A small group of people should make the decisions about which projects can raise some money and get off the ground. That's what we saw last year there was more money raised through ICOs I think than even in fin- tech venture capital, traditional venture capital that is. And I think that's exciting that as long as the scams aren't there, as long as it's legitimate teams going after legitimate problems then Sink or swim, let's see who succeeds. I'd like to see a world like that, so we are making investments that are supportive of that. Certainly the vaule oportunity is there, if they can succeed. Unfortuneatly we haven't actually seen that lately. This week the bitcoin price for about a week now has been struggling to break $ 7000. Does that worry you are at all? As I mentioned before, we're really patient long- term investors. I'm not worried bout the price of a single cryptocurrency over the next day, week, month, year. We're wondering what happens over the next five to ten years. Can we have fundamental change to a number of different markets because of a distributed ledger, a token economy that All participants can take part in. Those are pretty transformative and exciting. I just, I dont know if they'll work out. I dont know which teams will succeed. Our job is to make some bets and backs some teams that hopefully could navigate it but I'm not too worried about short term price changes. Well now all you've gotta do is get DJ Khaled on board and you get John McAffee for the low price of one hundren and five thousand dollars per tweet That's great Well that's all we've got time for today thank you David so much for being here, i'm Jen [ UNKNOWN ] I'm Robert Hacket and for more balancing the ledger please come to fortune dot com, we'll see you next time. [ MUSIC ]

Other topics in today’s episode include Centra fraud charges, John McAfee, Google, Facebook, and Ripple.

Balancing The Ledger: Venrock Announces Partnership With Crypto Investment Team CoinFund

Topics include Centra fraud charges, John McAfee and Ripple.

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