My journey from the world of traditional finance to cutting edge technology.

BlackRock

In October 2007, months before the dramatic breakdown of our global financial system and the beginning of the “Great Recession,” I joined the BlackRock Financial Markets Advisory Group. The team, just newly formed, was tasked with advising institutional clients — mostly banks — on their balance sheet exposures. On a daily basis, I split my time between working on deals, talking to clients, understanding their needs, and trying to determine what else they didn’t know but needed to know.

I joined BlackRock because of the team. We were small, nimble, and charged with unique tasks and clients across the globe. The team was highly organized, structured, and adept at problem-solving. The high stress of the job was tempered by the support of the team’s leadership and the brilliance of my colleagues.

The Financial Markets Advisory Group was a world class organization, and I was proud to be in the thick of it. At the time, I did not think much of the timing of the group’s formation. Our leadership understood the market well; that’s why we were there. I don’t believe we were fully conscious of what might be on the horizon, but something brought all of us together on that team. We found ourselves in the unique and oddly prescient role of preparing to wind down big banks and institutions. And while we never vocalized it, I do believe we all sensed — without even fully realizing it — that something was going to happen.

The 2008 Crisis

We’re all familiar with the story and the devastation of the 2008 financial crisis. For me, I felt like I was on the frontlines. We began with the task of winding down the portfolios of Bear Stearns, AIG (Maiden Lane portfolio), and other bailout qualifiers. Our goal was to analyze hard-to-price assets and liquidate the risky ones. We quickly grew to realize, however, how interconnected these global asset classes were. As we and others around the world moved to wind down risky portfolios, we collectively watched in horror as a chain reaction occurred globally. We were unprepared to respond to how tightly intertwined the global economy was, and we recognized our efforts to minimize impact would likely end in vain as the globe sank into a recession.

Why didn’t we know? Why didn’t our governments know? Why did so many major institutions and regulatory bodies in the world not know? The answer is frustratingly simple: data. We didn’t have high-quality data and we couldn’t see the data we did have, which meant we didn’t have a clear picture of the ecosystem. We were unprepared to respond.

Even more frustrating, all the data we could possibly have needed did exist. It just existed across dozens of institutions, hundreds of proprietary systems, thousands of email inboxes, and many more thousands of documents. We were all operating in silos while falsely believing we were operating together. The results were devastating.

Why I Left — A Crack in the Veneer

I left BlackRock in 2017 with ten years under my belt. At the end of the day, I left BlackRock not because of BlackRock, but because of Wall Street. I recognized that the challenges facing traditional finance were still, in many ways, the same as they were. Nearly ten years after the crisis, we still had no effective way to understand the many interconnections within the financial ecosystem, or how they might affect one another.

I had a growing sense that this problem wasn’t going away; in fact, it seemed to be worsening as the tide of data consistently grew. The problems leading to 2008 were huge, complex, and global. I am convinced, however, that the crisis could have been reduced dramatically had we — as a community of banks, advisors, and institutions — had better visibility into and access to data. Moreover, our ability to respond to the crisis would have been vastly improved had we been able to access real-time information.

My experience at BlackRock reinforced that people, systems, and companies today are not effectively communicating because of proprietary standards and systems. On my team, we would often fantasize about a “master database” where all our client data would live and automatically be categorized while at the same time maintain its security. As it would turn out, I would land on just that technology.

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Why I Left for Blockchain

One of the main things I learned at BlackRock was that tech solutions are often better than human solutions. To be more specific, tech solutions are better than manual solutions prone to prototypically human emotional and intellectual error. When I first came across blockchain technology, I was struck by how fundamental this idea was to the technology itself. Blockchain, at its core, seeks to hedge against human error and malice. Instead of operating in a world where we are forced to trust people and institutions we have no good reason to trust, we are able to trust in the technology itself.

In particular, I was struck by the ability of blockchain technology to better aid “wind downs” — the transactions I helped advise during 2008 and its aftermath. Winding down a portfolio — especially the portfolio of a large bank in the midst of a precarious financial ecosystem — requires radical data transparency. That data transparency, simply put, does not exist today. Only with transparent data can we fully understand the relationship between asset classes, and thus more appropriately wind down portfolios to ensure a destructive chain reaction does not occur.

Blockchain technology also open the doors to decentralization in the financial industry. It promises a lot: radical confidence in KYC standards, efficiency in international trade reconciliation, stronger adherence to regulation, and much more. Decentralization sounds like a magic potion to many in the legacy financial industry: mysterious origins, grand promises, and dubious benefits. At its core, however, blockchain technology is simply a shared database that allows parties to access and distribute their data in real time with full trust and instantly. Is that really beyond imagining? Should it be? I would argue it is a fundamental necessity for businesses to serve their consumers, adhere to regulations, and protect themselves against another future disaster.

What I Found at ConsenSys

ConsenSys and BlackRock have different objectives, customers, and histories. It is hard to compare them, but I cannot help but recognize a few stark differences between the two. The comparisons are not indicative of a “better” or “worse” way to do business, but simply a variation in theory and approach. At ConsenSys, however, I found an approach to the future more aligned with what I had sought after a decade at BlackRock, specifically in organizational structure, autonomy, and risk appetite.

“Building a Better World with Blockchain Technology” — Leading a discussion at the World Economic Forum in San Francisco, October 2017

Company Organization

Compared to BlackRock’s top-down, centralized, legacy-driven company organization, ConsenSys aims to be as flat, decentralized, and transparent as possible. No one has official managers and any sort of formal title is, at best, a bedrudging nod towards legacy enterprise culture. The result is a community-driven company, guided forward by the collective intelligence and consensus of the company rather than by a single person’s judgment of what’s best. ConsenSys’ devotion to remaining as forward-thinking as possible means our organization will continue to evolve to better fit the needs of the company. We don’t know how it will change, and the possibilities are endlessly exciting.

Freedom & Autonomy

Hand in hand with a flat and decentralized company comes autonomy. At BlackRock, the Financial Markets Advisory Group was uniquely independent. We were essentially a start-up couched in a legacy institution. We were young, scrappy, and eager. ConsenSys encourages employees to chase blue skies. The mission statement of the parent company aligns with that of our internal teams, departments, and incubating companies, which means we support each other’s individual attempts to bring about blockchain-based solutions to the problems in our world.

Risk Appetite

By design, BlackRock has a low appetite for risk. This isn’t a bad business model. BlackRock’s business is to generate returns and to mitigate risk — which they are experts at. They are in the business of lowering their risk exposure. ConsenSys, on the other hand, is in the business of supporting ideas and giving people the runway to pursue them. We inspire technologists with the knowledge that many projects will fail, but that a few will usher a radically new way of interacting with one another.

Lessons from My Journey

From BlackRock to blockchain, the lessons I’ve learned along the way have stayed consistent:

Whatever you say you’ll do, commit. Do not overpromise.

Always be the trusted advisor. Never hide the truth from the client. In order to build a strong team, support is key.

Always over-communicate. Never micromanage. Despite everything, imagine and fight for a better future.

Always invest in potential improvements. Never settle for the status quo.

After a decade of measuring and mitigating risk, I was ready for a company that saw a future not inevitably full of crises and portfolio wind-downs, but one that could help build stronger financial, economic, and technological systems. While blockchain technology still has a long way to go to realize its full potential, it can bring a more transparent, more secure, and more equitable operating system for the world.

Disclaimer: The views expressed by the author above do not necessarily represent the views of Consensys AG. ConsenSys is a decentralized community with ConsenSys Media being a platform for members to freely express their diverse ideas and perspectives. To learn more about ConsenSys and Ethereum, please visit our website.