Joe Grundfest: "The Biggest Governance Trend for 2024 is the Corporation as a Piñata."

5 snips

Jan 9, 2024

Joe Grundfest, expert on governance and board members, discusses various topics including the collapse of SVB and other banks, downturn in VC-backed startups, growth of AI, OpenAI's board fiasco, crypto industry challenges, fraud in private markets, and the politicization of corporate governance. He also touches on the geopolitical aspect of AI and the regulatory concerns.

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Introduction

00:00 • 3min

Governance Trends and Lessons from the Banking Crisis

03:08 • 9min

Survival strategies for companies in the private markets

12:02 • 17min

Cryptocurrency Market and Regulation

28:44 • 8min

University Governance Issues and the Age of the Harvard Corporation Board

36:38 • 2min

The Success of Taylor Swift in Business and Personal Appreciation of Her Music

38:19 • 2min

The Biggest Loser and DOJ's Decision

40:27 • 10min

(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.

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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