Welcome to the Boardroom Governance Podcast. I’m your host, Evan Epstein. In this episode, I talk with Dan Siciliano, a tech entrepreneur, corporate governance expert and former colleague from Stanford Law School. Dan is now serving as an independent director on the board of the Federal Home Loan Bank of San Francisco, Chairman at the Silicon Valley Directors’ Exchange and Director of the Latino Corporate Directors Education Foundation. He’s also starting a new fintech startup, which we talk about in this episode. From 2000 to 2015, Dan was also co-founder, CEO and ultimately Executive Chairman of LawLogix Group – a global software technology company. In 2012 he sold a majority stake of the company to PNC Riverarch Capital, continued as Executive Chairman, and led the sale of the company to Hyland Software/Thoma Bravo in 2015. In this podcast, we talk about his personal and professional background, current market trends and his new fintech venture involving equity compensation for private venture-backed company employees. We also discuss regulation of private markets, venture capital in down cycles, and his relocation from California to Nevada. Finally, we talk about director evaluations and director education. If you like this show, please consider subscribing, leaving a review or sharing this podcast on social media. You can find all the show notes on the website boardroom-governance.com and please feel free to subscribe to the Boardroom Governance Newsletter at evanepstein.substack.com
0:00 Intro.
2:08 Start of interview.
2:42 Dan's "origin story". He was born and grew up in Arizona, with a stint in Atlanta, GA. He later attended the University of Arizona on a Flinn Foundation scholarship. He then went off to graduate school to Stanford (Econ), later transitioning to Stanford Law School. He practiced law in Arizona for a year and came back to the Bay Area "almost on any excuse", and ran a cookie company.
8:01 His time at Stanford Law School, first to help launch the LLM Program in corporate governance, and later as Faculty Director of the Rock Center, Associate Dean of Executive Education and Professor of the Practice of Law.
9:19 The story of his company LawLogix, which he sold to Hyland Software/Thoma Bravo in 2015.
14:02 How the board of LawLogix evolved from startup to having PE investors to final sale. Three huge lessons:
23:00 His thoughts on the current market and down cycle (recession). "It is important to distinguish between a financial crisis from a business cycle recession." "It feels like we're in a business cycle recession with a lot of hype. Relatively speaking capital is still cheap."
29:31 On his role as an independent director on the board of the Federal Home Loan Bank of San Francisco. *Congress established the Federal Home Loan Bank System in 1932, in the midst of the Great Depression, to improve the nation’s housing finance system by facilitating the flow of credit for mortgages throughout the country.
34:44 Dan's new fintech startup "Nikkel". Focused on equity comp for employees of late-stage private venture-backed companies. "Many investors would like to be invested in unicorns, but if you look at the distribution of who's invested in unicorns it's a very short list [~20 global investors have material investments, and 10 of them account for 80% of it.] If you want to get access to unicorn returns, you really can't and that's unfortunate.
44:28 Reaction to SEC Commissioner Allison Herren Lee's speech on "Going dark: the growth of private markets and the impact on investors and the economy." "I think that within 3 or 4 years [my startup Nikkel] will be directly or indirectly one of the largest beneficiaries of unicorn upside, because 11% of the global cap table of unicorns right now is the hands of employees in the form of vested options [and nobody pays it any attention to this segment]. Imagine if you can constructively engage around that part of the cap table and have everyone do better [just like billionaires do in managing their wealth, maximizing upside, minimizing taxes, etc.]" Example: Airbnb's 10 year statutory expiration for option grants (before it went public). "Nikkel will advance money to employees on a prepaid variable forward contract." "Employees are at the heart of the success of modern unicorns, more so than ever before." "On average, employees should not sell their shares in a successful high growth venture-funded unicorn."
54:17 What Nikkel will offer tech employees with vested stock options.
57:47 On why he moved from Los Altos, California to Las Vegas, Nevada.
01:02:42 On director evaluations: "The importance of director evaluation has only increased." "The third rail/holy grail of director evaluation is identifying, coaching and assisting under-performing board members and/or helping them ease off the board (i.e. to improve or step-off the board)."
01:07:02 On director education: "Cybersecurity is an area that we pay a lot of attention to it but we don't do it constructively enough." "The best director education is a format that has great content but that allows directors to interact with each other."
01:10:40 The 3 books that have greatly influenced his life:
01:14:00- Who were your mentors, and what did you learn from them?
01:16:38 - Are there any quotes you think of often or live your life by? "Trust, by Verify." "Qui tacet consentire videtur." (he who is silent is understood to consent)
01:17:43- An unusual habit or an absurd thing that he loves: Movies. Waking up absurdly early.
01:19:45 - The living person he most admires.
Dan Siciliano is an Independent Director of the Federal Home Loan Bank of San Francisco and Chair of the American Immigration Council. He is the former faculty director of the Rock Center for Corporate Governance at Stanford University and former Professor of the Practice and Associate Dean at Stanford Law School. Dan was also co-founder, CEO and ultimately Executive Chairman of LawLogix Group, Inc. – a global software technology company.
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Twitter: @evanepstein
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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