Welcome to the Boardroom Governance Podcast. I’m your host, Evan Epstein. In this episode, I talk with Louis Lehot, a partner and business lawyer with Foley & Lardner, based in the firm’s Silicon Valley, San Francisco and Los Angeles offices. Louis focuses his practice on advising entrepreneurs and their management teams, investors and financial advisors at all stages of growth, from garage to global. In this podcast, we talk about "compromised independent directors", boardroom decision making --particularly on M&A and downrounds-- dual-class share structures and other venture terms. We also address ESG, the current state of VC in Silicon Valley, and the challenges and opportunities of the crypto industry. 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.
1:28 -- Start of interview.
2:04 -- Louis's "origin story".
4:14 -- His current role at Foley & Lardner.
5:48 -- On the question of "compromised independent directors." Reference to the Delaware case Goldstein v. Denner.
10:25 -- The higher scrutiny over independent directors in this downturn (particularly on M&A, downrounds and recaps).
14:22 -- How venture terms have changed in this environment. From "founder-friendly" to "investor-friendly." Supervoting shares, liquidation preferences and participation rights.
20:39 -- How should (independent) directors handle "empowered" founders or CEOs. "It all happens outside of the boardroom and its absolutely about relationships."
24:44 -- On the rise of ESG. "[Almost every VC termsheet] will now include a requirement to adopt a ESG policy." "It is indisputable and undeniable that this movement is very strong."
29:28 -- The increasing political pressure on management and boards. "Irrespective of politics, the single largest pressure that exists for CEOs and investors is the financial performance of the company."
31:53 -- What should directors be considering in this environment. "How to adjust in the face of different multipliers applied to revenues" and "increased risk of failing to meet the financial targets that were set out."
37:23 -- On the crypto regulatory landscape. "The meltdown of crypto prices was triggered by three big drivers: 1) interest rates (macro environment pushed capital away from riskier assets), 2) the crash of Terra/Luna stablecoin, and 3) enforcement actions from the SEC (whether tokens are securities is still not a settled question). On the plus side, Ethereum's Merge and Surge (next year). "The digital markets are here to stay."
42:34 -- What are the books that have greatly influenced your life:
44:43 -- Who were your mentors, and what did you learn from them?
45:50 -- Are there any quotes you think of often or live your life by?
"Think for yourself to decide 1) what you want, 2) what is true, and 3) what you should do to achieve #1 in light of #2." Ray Dalio.
47:10 -- An unusual habit or an absurd thing that you love: to garden.
47:58 -- The person he most admires: his mother.
Louis Lehot is a partner and business lawyer with Foley & Lardner, based in the firm’s Silicon Valley, San Francisco and Los Angeles offices. He focuses his practice on advising entrepreneurs and their management teams, investors and financial advisors at all stages of growth, from garage to global.
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You can follow Louis on social media at:
Twitter: @lehotlouis
LinkedIn: https://www.linkedin.com/in/louislehot/
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You can follow Evan on social media at:
Twitter: @evanepstein
LinkedIn: https://www.linkedin.com/in/epsteinevan/
Substack: https://evanepstein.substack.com/
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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