I have the pleasure to be joined today by Geoff Miller, CEO of Afaafa and former CEO of GLI Finance which he built from having no presence in AltFi to having over two dozen share stakes and loan agreements.
If existing FS has gone far to far in the direction of endless PC box-ticking – the porridge is too hot, then for sure in Fintech the porridge is too cold. Fintech is a long way behind grown-up FS is on corporate governance – the average Fintech board being comprised of founders & VCs/angels – little independence there.
How can Fintech get the porridge “just right”?
What are the advantages for a Fintech of a well-composed board?
A quick count on LinkedIn shows that Geoff may have been on getting on for two dozen boards. So who better to talk about the importance of corporate governance then Geoff. As Professor John Kay said in LFP055 corporate governance may sound like a dull box-ticking exercise but it is a vital function of FS. Just look at what has happened to senior executive pay in the UK when the FS industry (now the largest holder as most of our investments are indirect) hasn’t much to vote much at board meetings. If the cat is off busy making whoopee its hardly surprising if the mice steal most of the cheese.
If you are anywhere near the Fintech scene in London (or in some other countries) you will have heard of Geoff. Geoff has always been a rare soul in terms of brutal honesty. At AltFi Europe 2015, the general tone of which was “ra-ra aren’t we wonderful” Geoff spoke of “woeful underwriting standards and hopelessly naïve CEOs”.
Geoff is an ideal guest on the London Fintech Podcast as he doesn’t just have “views and opinions” which are so prevalent amongst the so-called “thought-leader” classes Rather he has been at many coal faces with many miners. And as with coal mining its often painful work. In LFP037 John Regan gave an excellent account of managing ones way out of business model crisis at Platform Black. GLI Finance had its own internal shuffle before Xmas bringing in new management. More recently Funding Knight went into administration and there was plenty of work for the board there.
Topics discussed on the show include:
– why West Ham and Aston Villa both have claret&blue kit 🙂
– Geoff’s career to date – from decades in FS, including working in Russia and Singapore, to producing a ten-fold return for shareholders of GLI
– how Russia and Singapore relate to corporate governance
– a brief history of FS Corporate Governance over the past 30yrs in FS and through into Fintech
– “why corporate governance isn’t some boring crap”:
- Independent oversight
- Dealing with issues
- How structured the board should be
– different models of Boards around the world but the commonality is “to hold the company accountable and look after it’s interests as a whole”; “the Board is responsible for the company as a whole”; “holding management accountable for the day to day running of the company”; “setting the overall strategy for the company”
– diversity in the real sense (not PC-sense) to create a diversity of opinion
– “challenging management” vs “a Board being difficult”
– what attitudes to going to a Board meeting tell you about how it is run
– the dividing line between the Board and the executive management – which topics are reserved for the Board and which are not
– with early stage companies there can be too many matters reserved for the Board rather than delegated to executive management
– what does “independent” actually mean? Can this be set by codes of practice or (as per Geoff’s suggestion) should this be left to the Chairman to ensure?
– can investors be independent?
– “experience” – how this works in practice
– the vital requirement for Fintech to grow being having greater experience and Corporate Governance in the good sense
– identifying crises earlier than the management; dealing with crises and how the Board can add value
– the value of “contacts” in practice
– contacts should not be the only reason someone is on a Board
– “dealing with issues” – the Chairman having to step-in and manage the company in extremis, and Boards that have run away from this responsibility
– looking after the company vs looking after ones own interests
– the problem over there being no “dissenting opinion” on a Board which is collegiately responsible for all decisions; there being little short of resigning in important disputes – but this often leaves a viewpoint un-represented
– the idea that the regulator should conduct exit interviews of standing-down directors
– Directors can’t individually talk to investors as Board matters are confidential
– “How structured Boards should be”; how this needs to evolve over time
– Fintechs by and large don’t have an independent non-executive risk director on the Board
– how will good Corporate Governance in Fintech come about?
– Geoff’s current business Afaafa
And much much more 🙂
Share and enjoy!