Joe 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. In this podcast, we review 2023 and talk about corporate governance trends for the coming year. Among other topics, we discuss: 1) The SVB and the banking crisis of 2023, 2) The current state and future of private markets and unicorns, 3) The growth of AI and the OpenAI boardroom crisis – including some geopolitical concerns, 4) The fate of Crypto and its regulation, and 5) The increasing politicization of ESG and DEI and how boards should address these concerns. We also talk about: 1) Biggest winner and looser in business of 2023; 2) Biggest business surprise from last year; 3) Best and worst corporate governance trends last year; and 4) Biggest corporate governance trend to watch out for in 2024. If you like this show, please consider subscribing, leaving a review or sharing this podcast on social media. You can also contribute as a Patron on the link patreon.com/BoardroomGovernancePod or you can subscribe to the Boardroom Governance Newsletter at evanepstein.substack.com This podcast is sponsored by the American College of Governance Counsel.
(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.