YouSaid · the spoken record

Stephen McKeon

lines on the record: 106
first: 2018-09-17
most recent: 2018-09-17
sittings or episodes: 1
sources: podcast

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“I'll get to in just a moment. I think the more important pieces of the thesis are really liquidity, automated compliance, interoperability, and what I call design space. So kind of walk through those things. So liquidity is this idea that when you raise a VC fund, you're investing typically in illiquid assets. And so your investors are locked up for seven, eight, nine, ten years.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“So let's see. Next point, if I remember correctly, was probably fractional ownership. Fractional ownership is just the idea that you have high unit value assets, whether it's like a skyscraper here in New York or a company. Like, you know, obviously we've been doing fractional ownership for a long time. This is not something that's unique to blockchain. But this was kind of the idea behind this BCAP token or this blockchain capital. It's like one of the reasons we don't fractionalize ownership as much as we could is because it's sort of a headache from just like a logistical paperwork standpoint. And so by infusing a lot of that stuff into a token, it just makes managing a cap table with a lot more participants, a lot easier for the issuer. And you already see this to some degree with real estate. Like we got all these sites, like Cadre and realty shares and realty mogul and Crowd Street, and there's probably a dozen others where you can go and fractionalize real estate right now, but they don't work quite the same way as tokens.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“Bitcoin clears in ten minutes, stock should clear in ten minutes. But I do think the prospect for really shortening that settlement time is there, but it's going to take some work.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“That's the first point of the thesis. And then I go through things like people talk about immediate settlement, right? So Bitcoin settles in 10 minutes, many of these other crypto assets settle in minutes or seconds even. And this idea that when I buy a share of stock, like it's not actually in my account for a day or two seems like this thing out of sort of antiquity relative to the way the digital age works today. And so one of the points I make in the paper is that I think there is a lot of promise in terms of really reducing settlement time, but these are more complicated transactions than just the way cryptocurrency works, right? Like you've got custodians involved, you've got regulators involved, you've got sort of a lot of other people that are going to exert some influence or that you've got shorting, you've got buying on margin, you've got sort of all these extra pieces. And I think a lot of that will be able to be automated, but it's not as simple as saying,”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“You know, I don't know that it is a good thing for all assets. And I actually, I'm not sure all assets are going to trade 24-7, right? Because it's a liquidity issue. You don't really want to spread the liquidity out over all of those hours. And even if you look at the extended hours right on the New York Stock Exchange, you get lower liquidity. Like, I remember when I first traded on extended hours, like I had to sign a little disclaimer that said, hey, you might not be getting the best price, but trading in this lower liquidity environment. So I think what you're going to see is a spectrum. So some assets are going to trade 24-7. I mean, many assets already do. Bitcoin has traded 24-7. Ethereum has traded 24-7. For traditional assets, maybe the larger issues will trade 24-7, but you'll find others that'll trade on restricted hours. Maybe you'll find others that only trade on certain days of the week. That's something that we're going to discover as we go through this.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, I kind of just laid out, it was like a bullet point list. You know, there's maybe eight items, and some of them were not that revolutionary, like the idea that markets might be open longer than the traditional hours we see today.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“Exactly. So there certainly are network assets, so so-called utility tokens, that are going to try and make the case eventually that they should not be deemed securities, right? Because they're sufficiently decentralized and they don't pass the Howie test and so on and so forth. And so not all blockchain, like Bitcoin is very clearly not a security. They've said as much, right? I think it's going to be regulated by the CFTC. And so not all of these assets are securities, but most of the network assets at least start their life as securities before the network is active. And of course, all the traditional assets, real estate, equity bonds that we might represent on chain, are going to be deemed securities for their entire life cycle.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“I don't think there is any agreed upon definition. The one I used in the article was any representation of value on chain, so on a blockchain that is subject to security laws. So that would include all subject to.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“And so it was like everywhere I was going, like all these dinners and everything, I was always asking people, what do you think the benefits of security tokens are and sort of collecting their thoughts and then synthesizing them? And so I guess the way I came to security tokens was that I spent my whole career studying securities. That's what I've studied as a professor, whether it's debt, equity, all the different sorts of facets of securities. And so, of course, when it comes to blockchain, that's naturally where my mind is going to go. It's like, what if we could represent these types of ownership claims on chain?”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“Excited about and the different use cases and you know, real estate and private funds and various other things. And I went to consensus this last year, so consensus is one of the largest crypto conferences actually held right here in New York. It was like 6,000 people, I think, or 8,000 people this last year. And everyone had all these ideas about security tokens and what the benefits were. I just realized at that conference, I was like, I need to write something that kind of puts all of this in one place, right? Like sort of format the entire thesis. It's actually not my thesis. It's sort of the thesis of all the people that we're thinking about this stuff.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“Like, I can't get access to the best deals, right? Like, I can't, I have no opportunity to invest in Coinbase. Like, I have no opportunity to invest in Bitmain or, you know, all the big names that we're kind of raising back then. You know, and VC funds, like they don't want to take money from a bunch of individual investors through the traditional LP stance because it's just going to be a massive headache, right? It's going to be a massive paper headache. And they don't want to deal with redemptions. But this was sort of a new form of an ownership claim that allowed the investors some liquidity when they started trading and allowed access to a much wider pool of market participants. And so it was just really eye-opening to me. I said, I think a lot of things are going to move this way. And so I wrote a paper called Traditional Asset Tokenization, and that was sort of maybe a year or year and a half ago. Then people started talking about security tokens and people.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“The epiphany was really blockchain capital. So blockchain capital in, I want to say April of 2017. So they're a VC fund. They had had prior funds raised in the normal way. And they said we're going to take a portion of our fund and we're going to tokenize it. So instead of just LP interests, I think they did $10 million. So we're going to issue 10 million tokens. We're going to sell them for a buck each. You've got to be a credit investor. The regulations require that it be ninety nine investors max. And so I applied for an allocation, I got it. And so I invest in this BCAP token. And everyone knew like it's”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“Mechanisms like the saft that were invented. And so I'd say that was the other big theme is that everyone started trying to, or the legitimate projects, I guess, started trying to comply with regulations in some way.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, I don't know if there's consensus on anything in terms of academia and this market, right? Because it obviously was just sort of crazy in 2017. I mean, one of the things that we found was there definitely was sort of updating by the project. So in the early part of the rush, they were leaving a lot of money on the table, right? And so, and we saw this with IPOs as well, like in the tech boom, right? Like they'd issue at $10 and it closed at like $127 or whatever. One of the things we saw is that as we moved through 2017, the projects got better at capturing more of that value. So we weren't seen as large of sort of the pop on day one of trading. The other big theme was that regulations became much more important, right? So initially everybody was ignoring securities laws entirely. And then there was this idea of like, oh, maybe we need to comply with these things. And so then there were all these other.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“That project, it turned out that that was sort of the obvious paper to write, and so it turned out that actually lots of people started working on that topic.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so initially we were really interested in how price volatility impacted consumers. How does the volatility of Bitcoin impact its use in commercial transactions? So we're really interested in sort of on-chain volume. And it turned out that's actually pretty difficult to parse out, like which transactions are commercial and which are sort of exchange in nature. I mean, you can separate off exchange volume, but when you look at the on-chain volume, you've kind of got a mishmash of a lot of different stuff. So then we moved on and really started looking at ICOs. So, of course, I've been studying securities my whole career, have thought a lot about IPOs and equity issuance. And so we said, oh, ICOs are sort of this equivalent for the crypto industry. And so really just started going through IPOs and thinking about all the different attributes, right? So like, is there a vesting period? What's the background of the founders? Like, what sorts of things?”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“Really, call this guy Chris Bernisky. So Chris Bernisky was an analyst and an ETF here in New York called Arc, and Adam said, you know, he's the only guy I know that's thinking about this the way you are in terms of really trying to think through why do these things have value, how does value accrue, how are these networks going to develop sort of like a lot of the economic fundamentals behind these assets? And so I called Chris or Adam connected us, and that was really a pivotal moment for me because really we just started doing a series of calls. And Chris, I have to credit him with really educating me on the space. So, of course, he wrote a book called Crypto Assets. He's gone on to found a firm called Placeholder Ventures with Joel Manegro from USV. And it was really that series of calls with Chris that I sort of ramped up. That plus, of course, a lot of self study.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“Know as soon as I had time, I started reading everything I could. And then, of course, I'm an empirical researcher. So I said, I need data, right? Like I need data. There's not many academics looking at the space. And so I'm going to just cold email everyone I can think of. So I cold emailed like Brian Armstrong, the CEO of Coinbase, and I cold emailed Patrick Byrne of Overstock and a bunch of others. Anyone who was kind of using Bitcoin and commerce in some way. And what was amazing is back then the industry was still so small that they actually got back to me, right? Like today it's hard to even get a response from customer service for a lot of these companies. And back then it was like high ranking people were getting back to me saying really the pivotal one I guess was Adam White from Coinbase. He got back and he said, look, so he was like the number two guy there. And he said, we can't give you data. We're just not in a position to release data to you, but you should.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“Part 107, I want to say it was like 20 sixteen. It was definitely not early on in our history. There was sort of a precursor that opened it up a little bit, but part 107 is what sort of opened the floodgates.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“Like, this is a friction. This is making it harder to do what we want to do. In the case of Part 107, I think it was actually an enabler of innovation because as soon as everyone knew what the rules were, you had all these large companies that wanted to invest in this space, but they had held out, right? And so Verizon never would have bought Skyward pre part one hundred seven. It was only after part 107 was laid down that they said, all right, now here are the rules. We're going to know how to comply with them. We're going to start investing in this space.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“Fascinating actually informed a lot of the way I think about crypto because initially it was illegal so everyone was sort of scared off right and everyone said all we need to know are the rules like we're happy to comply or at least there was a contingent of people that were happy to comply but there was just so much uncertainty about what they were going to look like and I really think the FA did it the right way because what they did is they convened a lot of industry leaders they did a lot of listening both to people that were on the side of managing airspace as well as the people that wanted to put machines into this airspace and they eventually came out with something called part 107 part 107 was sort of a pivotal moment in the drone industry because it really set down the law for how you could operate commercially legally and it's interesting because a lot of people look as regulation look at regulation as constraining innovation to some degree right”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“So we got our funding. We built out a prototype, eventually got some venture funding from Voyager and several others. Voyager's out of Seattle, moved the company up to Portland at that point. So everyone moved up to Portland, of course, except for me because I was a professor down to Eugene. So I'd kind of do the train ride once a week or something and go up there. Went through some more venture funding. And then eventually Verizon actually started participating, I believe, starting our second round. And at one point, Verizon decided, you know, we're going to need a drone division. And this company already has all these relationships. And so Verizon acquired us in February of last year.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“hundreds of thousands of these things in the air someday, he said these are going to have to fit into national airspace. There's other participants up there, right? And so he said, I don't think anybody's thinking about that piece of it. And so we decided to form the company around that idea around regulations and the idea that these large corporations that have fleets are going to need to know who's flying, where they're flying, potentially get FA approval, the insurance company, of course, is going to be involved in some of this information flow. And so we wanted to build that platform. And so it was really hard to get funding initially because of all this regulatory risk. But we found a guy out of Utah who had already exited a drone company, so use a domain angel. And then we actually found one of the co-founders of Skype. So we did, you know, of course, a Skype call with this guy who was in Estonia. And those two are kind of original angels as well as a local.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“Of this British company and kind of hang out until the regulations come around, but then it was like, well, I don't know, we're really interested in the software aspect of this, and there's a lot of uncertainty, like it could be years before these regulations. And are they really going to sit and just incubate us for years while we're waiting? And so in the end, we decided, what is it that we're better at or that we have a unique competency in that no one else is thinking about? And so Jonathan, we go into a lot of these conferences. And he said, you know, there's a lot of people in computer science that are attacking this from very technical angle, how to write the software, like how the drone moves, right? And all the sort of flying software. And then he said, there's a lot of engineers that are attacking all the mechanical stuff around the machines themselves. He said, I don't really see anybody paying attention to the regulations. He said that, you know, the end, if you envision that there's going to be thousands.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“The Gulf of Mexico. So that's where you've got thousands of these oil rigs. Everyone knew that eventually the US would open this up and there would be sort of like this land grab to do these inspections. And of course, that's just one use case within drones. But it was a big one. It was one that was proven out as being really profitable. So initially we thought will be the US subsidiary.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“So when we first started, we actually thought we would be more of an operator. And so there was a company out of the UK who was inspecting oil rigs. And it was an enormously profitable business because normally to shut down an oil rig, it cost something like a million dollars an hour or a million dollars to do one of these inspections because you've got to shut the whole thing down. You've got to cool it down. You've got to send a person up there to kind of look inside the stack and determine whether everything's okay or not. And they have to do this by regulation and not continual basis. And so with the drone, with the right sensors, infrared sensors and so on and so forth, you don't have to shut the thing down, right? Like you can fly it up there, fly it around, and so you can charge huge margins, which is still a massive savings to the drillers. And so they were doing this in the UK where it was legal to fly commercial drones, but of course the giant market was.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“And so it wasn't something that made sense for what we were building. So that was early, I mean, like 2013 is when we first came across it. And it was like, I remember as soon as I saw it, I was like, this is fascinating. This is fascinating to me because this is like the perfect merger of all of my expertise, right? So all of this sort of history and tech and emerging technologies and then the sort of formal training and finance, I was like, this is the intersection of these two pieces. I'm very uniquely suited to kind of look at this. And so I remember as soon as I saw it, I thought I am going to dive into this at some point. But we were so busy with the drone company. Any startup, you're kind of running 100 miles an hour. Plus, I was a professor, which was my main job. And so just had no time to dive into it. And so it wasn't until 2015 when I left the board of Skyward as we went through our second venture round that I was sort of”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“I guess it was just being close to emerging technologies. Yeah. Right. So I'd started my career in tech, but I'd really moved away from tech through the Hawaiian experience. And then, of course, at the PhD program, wasn't sort of intimately involved in tech, this is what brought me back close to the bleeding edge of the space. And I think when you're there regardless of what piece you're currently occupying, you're seeing a lot of other stuff that's going on, right? Whether it's AI or machine learning or cryptocurrencies, drone technology that's kind of all pushing the edge in different directions.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“And so I said, I want to help these guys. Like, I think they genuinely have something here. So we ended up co-founding a company called Skyward, which was essentially made drone software. So for commercial drones operated by ideally large corporations. So when we started the company, there was no commercial drone market. It actually was illegal to fly drones commercially in the US. And so every conversation we had was about regulatory risk, like when we were pitching VCs and so on. Eventually, the company got funded. It started to grow. So it's on the board there. And that was the experience through which I actually bumped into Bitcoin and blockchain.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“And we just started talking about it. And I was like, I think they might have something here, but they understand the technical aspects much better than I ever will, but I'm not sure they understand the building a business part, right? Because they were first-year MBA students.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“And he came in and I remember him saying very early, like maybe week one or week two, he said, I'm going to start a drone company. And, you know, as a professor, you get pitched a lot of stuff. Like we have a reputation for entrepreneurship at Oregon. And so we get, you know, a lot of people with entrepreneurial aspirations. And I thought, okay, we'll see. and didn't really think much of it. And he linked up with another student in class who was an engineer like a mechanical engineer who had actually worked on helicopters. And so now they had the pilot who knew airspace and they had the guy who kind of understood the machines themselves.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“Essentially, I went through the program studying corporate finance, one of the promises I had made my wife was that we would try to get back to the West after school. And a job opened up at Oregon, so took the job at Oregon, so started there in 2011. So I basically wrote out the entire financial crisis in the PhD program, which again was a really interesting place to be while that was going on, right? Because just all of these people had spent their lives thinking about economics and finance were kind of trying to make sense of what happened. And it was fascinating. So started at Oregon, continued on this sort of path of research, and in 2012, so the first time I taught an MBA class, I had a student named Jonathan Evans. And Jonathan was a commercial pilot, so he had flown Blackhawks in the military, he had flown air ambulance, he was, you know, like as accomplished as you could get.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“To test all these things. And so we're along the way you had this great experience in corporate finance. And presumably you could have taken that and gone to a different industry and you go back to school and it sounds like you're walking down this academic path. So what was the spark that sort of led the direction of where you'd head?”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“Those were all public companies. So that was our database of CEOs was from public companies because we needed their financials to be able to test all these things.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so essentially the CEOs that had higher levels of risk-taking in their private lives, we saw the same attributes in the firm. So everything from higher leverage, higher prevalence of M&A activity, higher equity return volatility. It was almost like everything we looked at it came through.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“That's the idea, right? Is that it actually goes back to this psychological trait called sensation seeking, which is not synonymous with risk-taking, but they're definitely highly correlated. It was a risky project because it took us forever to collect all this data. We had to kind of like teach ourselves Python and write this script to scrape this database. And in the end, it was like, man, I hope something comes through. And when we finally got this data, it came through everywhere.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“You know, we were hung up on driving records for a long time, so somebody had done a similar study around not CEOs, but investors. And in Sweden, in Scandinavia, it's like they have data on everything. And so they were able to get driving records and look at speeding tickets and this type of thing. And so that was kind of where our minds went initially. But of course, you can't just go pull driving records. There's privacy laws in the US and so on. And then one day it struck us that pilots' records are openly available on the internet. So you can't download the database, but you can query the database. And so we took this huge database of CEOs, and then we had to go out and find birth dates to kind of triangulate because you'd find Brian Smith in one place and the other, and you can't really be sure it's the same guy. We eventually triangulate about almost 200 public companies CEOs that were also private pilots. And so we use that as our self-selecting that those...”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“Because it was just a large production facility. We did services for other wineries. One of the things I noticed was that the personality of the CEO really imprinted on the company. So when I got to school, I thought, well, was that just sort of like a weird phenomenon in the wine industry that's happening because these are relatively small companies, or is this sort of a larger effect? And so we went out and we said, well, we want to find CEOs that have sort of a risk-taking personality. Not necessarily in a financial sense, right? Like, we don't want to take some variable from the firm. We want to try and find an external variable that indicates that they're risk-taking and then study the impacts on the firm. And so we just had to do that.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“The thing that was interesting is that the common path to PhD is to go straight out of undergrad, or maybe a very brief experience. So in that sense, it was a really non-traditional path to have worked and risen up to sort of a C-level position and then gone back. And so what I did is I took those experiences and they actually formed the basis of most of my early research. So my first paper that I wrote with my advisor, David Dennis, was basically let's look at companies that take on large debt issuances, right? Because I've been thinking about large debt issuances through the wine industry. And then the second paper was what happens when a CEO is sort of innately risk taking, right? Or innately not as risk averse because the wine industry attracts a lot of characters. And one of the things I noticed was that when we came across our winery was sort of an incubator. There's about 30 different brands that were started out of our facility.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“So corporate finance, so all the things that CFOs think about, right? Like how much debt should we have? What happens if we take on large debt issuances? How should we pay our employees cash holdings, all of those types of things? All the things I'd seen in practice, some of which didn't make sense to me, I just wanted to dive in deeper to really try and understand them in a more fundamental level.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“I was thinking, am I just going to do this sort of 30 more times and call it a career? And I said, probably not. And so I started thinking about like, what's the next move and eventually decided I would try going back to school. And so went to do my PhD at Purdue University. They had a really strong group that was focused on the stuff I was interested in, which was”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“Capital needs. And so I remember the owner was suggesting that I go get some glasses. So I got some glasses as a prop to look a little bit older. And that was great living great life, you know, homin, downtown Napa, and so on and so forth. But I remember around maybe my fourth harvest,”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“There was a bunch of turnover that happened over my first about a year to two years at the winery, and it happened in such a way where it was always the person right in front of me that left. And again, just sort of being in the right place at the right time, I'd always go to the CEO and I'd say, I think I can do that job. And they'd give me the job on an interim basis, right? And then pretty soon I was hiring someone into the job behind me. And that happened four times all the way up to CFO. And so I was the CFO of this relatively large winery in Napa at the age of 24, largely just because I was there and sort of negotiated my way into each step along the way. Obviously, huge, steep learning curve. I remember when I first started, they were very concerned that the bank would accept somebody as young as I because we had a huge line of credit. So the wine industry is largely debt financed because huge amounts of inventory, you know, lots of working.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“I could have never planned the way it worked out, in the sense that I started at the lowest rung sort of cost account I was not excited about being a cost account. I actually told them that in the interview, which was not in retrospect, not a good strategic move. But I did end up getting the job eventually. And what happened is the winery was moving from one end of the valley to the other. So Napa's kind of a north-south valley. So you've got kind of Calestoga up at the top. And the winery was located up there when we started, but it was moving from sort of a beautiful, picturesque but very small winery down to a giant warehouse sort of production facility because they'd way outgrown the facility therein. And so it was about forty-five minutes south of the original location, which was perfect for me because as they're making that move, I located down in Napa, which is at the south end of the valley, but many of their employees were living up in Calestoga or even further north. And so what happened is”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“No, so I moved up to Napa, just sort of dove in. I had this idea that I would go back to school. That was sort of always a long-run plan. I wasn't sure whether it would be MBA or PhD, but I felt like I would go back to school. Of course, you know, I'd only spent about six months working down on the peninsula. And so I knew I had to do something else for like at least another year. And I thought, oh, the wine industry's fun. You know, I wasn't hugely into wine, but I enjoyed wine and I thought it would be fun to learn more about it. So I started up there.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“I would say I'm going to walk west today or I'm going to walk north. I'm going to walk miles and miles and miles. Obviously that doesn't pay well. So eventually I said I've got to start looking outside this little geographic region. So I really wanted to stay in the Bay Area. I like the bay a lot. So I just sort of widened my scope. Then I came across a winery up in Napa Valley that was hiring for a cost accountant. And so that was the move I made. So it's about two hours north of Palo Alto.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“Like it prior or since, in many ways. So were you a techie going in, or how did you end up getting in that community? I was not a software engineer. I was always studied economics and finance, but always had sort of an interest in tech. And so I knew that I wasn't going to be coding software, but I wanted to be around that space just because I thought, you know, the economics and the finance implications were so vast as we've seen play out over the last 20 years. Okay, so the bubble bursts. Everyone you know is unemployed hanging out, having fun for a short period of time. Then what? Right. It feels like a vacation for about a week, right? And you play a bunch of video games or whatever. And then after a week, you're like, this is kind of boring. Like, I got to find something to do. So every morning I wake up, I'd go on Craigslist. I'd look for whatever opportunities that were apply. Then it was 8.15 and say, what am I going to do today? So I just started walking. So I actually got to see a huge swath of the peninsula.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“And, like, I think all these ships are sinking to some degree. And at that point, it was kind of like, do I move on or do I just sort of ride this out and watch it? It seemed like I wanted to carry on, do the best I could, but also really learn from the experience. And so I stayed there not quite to the bitter end, but through several rounds of layoffs. And so I guess it felt educational in some ways and also scary just because, you know, this whole, when you look at a lot of financial crises, they are wider spread geographically, right? They affect an entire nation, they affect the whole globe. This one was so acute in such a small, to some degree it affected everything, but it really affected the peninsula, like everything between San Francisco and San Jose was just in complete meltdown. Almost everybody I knew who was my age lost their job like within a six month span. And so it was actually just sort of surreal. I mean, certainly had never experienced any.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“Steven, thanks so much for coming. Joining me absolutely. Thanks for having me. How'd you get into academia? It was a very sort of nonlinear route. I started my career in Silicon Valley. I was always interested in tech and moved down to Palo Alto, worked at a startup in San Carlos. This was sort of the height of the tech boom, like spring of 2000, like literally the peak. Of course, we all know what happened, right? So it all melted down over the next six to nine months, which actually was an extremely educational experience to be sort of inside one of these venture-backed firms and kind of watching everything implode from the inside. How'd that feel? I had nothing to lose, right? I mean, I was in my early 20s and no dependence, and I had to make rent. So that was sort of my biggest concern. There was a moment where when you first started, I was really amped up and excited and, you know, Go team and everything. And then there was this moment I remember about probably about the summer of 2000 where it was like, I think the ship is sinking.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“Now that the noise from storing cryptocurrency prices has died down, we can learn a lot from Steve about what blockchain technology may bring to investing in the years ahead. I hope you enjoy the show, and if you do, this week, if you happen to be in a married or committed relationship, and one night you turned to your partner and say, hey, babe, what do you think? And they turn back and say, sorry, hun, not tonight. I have a headache. Why not turn a lemon into lemonade by responding, I have a better idea. Let's listen to the capital allocators podcast together. You can snuggle up and share a night of stimulating intellectual bonding. Thanks so much for spreading the word to your partner. Please enjoy my conversation with Professor Stephen McKeon.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source