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Ep 65: Why GCs Need to Understand Geopolitics with Sean West
64 Plays1 month ago
Do general counsels need to care about geopolitics? Is now the right time to start a legal tech company? And should you consider growing your team in a place other than Silicon Valley, like Rwanda?
Join Sean West, Co-Founder at Hence Technologies and writer at Geolegal.substack.com, as he explains how he became a geopolitical forecaster for corporations and hedge funds at Eurasia Group, then chose to co-found a tech company that brings geopolitical insights to general counsels and executives at a time of rising international volatility.
Listen as Sean explains why CEOs are becoming chief geopolitical officers, why government affairs teams are increasingly falling under the purview of the general counsel, how he develops his predictions in a constantly changing world, and more.
Read detailed summary: https://www.spotdraft.com/podcast/episode-65
Topics:
Introduction: 0:00
Tyler asks about the Eurasia Group: 3:51
Tyler asks how Sean learned to trust his gut: 8:18
Tyler asks why general counsels should care about geopolitics: 10:49
Tyler asks how general counsels can get better at handling political risks: 15:59
Tyler asks whether CEOs have to be politicians: 22:10
Tyler asks about building Hence Technologies in Rwanda: 31:46
Tyler asks about starting your own business: 35:03
Tyler asks about the future of Hence Technologies: 41:41
Tyler asks rapid-fire questions: 43:23
Book recommendations: 45:19
Tyler asks what Sean wishes he’d known as a young researcher: 47:25
Connect with us:
Sean West - https://www.linkedin.com/in/seanpwest1/
Tyler Finn - https://www.linkedin.com/in/tylerhfinn
SpotDraft - https://www.linkedin.com/company/spotdraft
SpotDraft is a leading contract lifecycle management platform that solves your end-to-end contract management issues.
Visit https://www.spotdraft.com to learn more.
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Transcript
AI in Legal Systems
00:00:00
Speaker
In China, they already have legal robots. I can walk into the court in China and punch in the details of my case and it'll say, you have a 90% chance of losing. If you would like to file this complaint, click here and it'll file the complaint for me anyway. Now China has like societal reasons why they want that, right? They basically want you to settle. So the machine's like there to tell you like you'll destroy a harmonious society if you have this lawsuit. But in reality, like it's not the technology that's been limited, right? The technology is here today to allow us to do it. I have used an AI-powered personal injury lawyer to fight an insurance company that claimed I didn't have a concussion when? i have two doctors letters that say i had a concussion i turned to ai to do that gcs need to care about geopolitic is now the right time to start a legal tech company And should you consider building out your team in a place other than Silicon Valley, like
Introduction to Sean West and Career Journey
00:00:58
Speaker
Rwanda? Welcome to season five of the Abstract Podcast. I am joined by my friend, Sean West, co-founder at Hence Technologies. He also has a great sub stack. It's called geolegal dot.substack. We'll put it in the show notes. I recommend that you subscribe to that. He's a lecturer at UC Berkeley School of Law, and he was formerly the deputy CEO at Eurasia Group, which is Ian Bremmer's all things geopolitics consultancy. And he started his career at Deloitte in DC and the Federal Reserve in San Francisco. Sean, thanks so much for joining me here in l LA for a live taping of The Abstract. Yeah. Well, look, it's a pleasure to be here. If I'd known this was full body, I would have wore some long pants. But you know here we are in full form, ready to get vulnerable. It's LA. Yeah, you know yeah you yeah you can you can wear shorts all the time here. i feel I feel like that Curb Your Enthusiasm episode where Larry David looks at the guy next to him and says, did you think how I would feel if I had to stare at your legs for six hours? Did you not think about wearing long pants? But here we are for all your viewers. That's great. Okay, let's go back sort of to to the start. We like to talk about careers on this podcast, and I've got a ton of questions for you about your time at Eurasia.
Political Forecasting and Eurasia Group
00:02:10
Speaker
But what got you interested in a career in international relations, geopolitics, international affairs? Yeah. Yeah, so I got bit by the politics bug really early. I did all sorts of like mock government, ah like elected mock government stuff in high school, went to college. I sort of realized I needed to learn about the world. I had spent, you know, I'm a New Yorker, but I spent a lot of time in California and I didn't know enough about the world. So I went to a school focused on foreign affairs, learned a whole lot about the world that was interesting, went and studied in London for a year, kind of like got my eyes opened up. And then when I, you know, I did a master's degree in domestic public policy. And then when I was starting to look for jobs, I sort of thought like, I want to do something related to politics, but I also want to get paid. How yeah how do you do that? Right. Because, you know, in reality, though there are, you know, in politics, you get paid with power, right? That wasn't necessarily the initial goal for me. Or you have to go be a lobbyist in which you can make a bunch of money by like perpetuating other people's interests. I thought I don't like either of those. So started off at Deloitte actually in their federal government consulting. So we were working with government agencies, but we were private sector consultants. So that was kind of cool. And then landed at Eurasia Group not long after that with the promise of being the connection between what's going on in the world of politics to really at the time what mattered for asset managers. Increasingly, we we started working with with large corporations, but you know most of my day in that role was fielding calls from hedge funds saying, what the heck is going on in Washington? And then two minutes later, having them call me back and go, how about now? yeah you know Because there's just like frenetic movement of money on the basis of any news. Uh-huh. So it's not lobbying. It's basically like predictions or analysis or, ah yeah, tell tell us like what what all does Eurasia or did Eurasia do while you were there? Yeah. So not lobbying at all. And actually that was what was attractive for me. I really enjoyed the sort of sport of forecasting and the analysis of it. Right. So, you know, we had a team, dozens and dozens of analysts covering the entire world. And our job was to make sense of that world, often through having a call, a quote unquote call, a forecast. So you were only as good as your forecast because in reality, your clients who are trading the markets, they've got calls all day. They're calling stocks up and down. They're calling currencies up and down. You're going to call them and talk about politics, they don't they don't want color. Tell me what's going to happen. Tell me when it's going to happen. Tell me how it's going to be announced. And so you end up developing this muscle for reading the news, digesting it, and figuring out like what are the one or two likely outcomes here, which is most likely, and giving a forecast. And so you know I used to tell our new analysts, right if you right seven out of 10 times, you make your clients a ton of money. yeah The three out of 10 times you're wrong, they call you, they're furious, right? It's super uncomfortable. You you like want to crawl on a rock, but you realize even when you've gotten it wrong, they still need you, right? And so they're like, okay, you got this big thing wrong, but what happens next? And so you get very comfortable with taking bold predictions. I had quite a few of those in my days as an analyst. And you know over time, I went from being an analyst to being deputy CEO. So a lot more like, how do you actually how do you actually build the business and whatnot? But the analytical craft of waking up, digesting a thousand headlines and figuring out what's going on, like that that never leaves you.
Fiscal Cliff Prediction and Challenges
00:05:20
Speaker
And it's part of what I've tried to bring back into what we're doing at HENCE nowadays. So when you're making those calls, is that super data driven? Or is it like, you know, looking at what people are saying on Twitter? Are you making phone calls to people in government? Or is it also like your gut? Right? I mean, that's interesting. You talk about being deputy CEO, you're having to train all these other analysts and how to make the right calls to Like, how do you get to a position to make the right calls seven out of 10 times? Well, so you listed off all these data sources and the answer is just yes, because like you're pretty much using every data source. Right. My favorite trick was I would go talk to people. So I was our U.S. expert for a long time during the basically the entire Obama administration. So for those who you know lived and breathed it, right, like the U.S. almost defaulted the government shut down, Obama passed big healthcare, big stimulus, there was a financial crisis, a lot of stuff going on, right? And so trying to predict the twists and turns, you have to come up with different techniques. And one of the things I realized was you can have a great network in Congress or in the White House, but as you get closer and closer to an event, people stop talking to you or they're just so partisan, they don't see the other side. So my big trick was I would go and speak to all these stakeholders about things I knew were on the agenda six months later. And i'd I'd say to them, if this happens, how would you react? If this happens, how would you react? And you almost are building a controlled experiment where you're kind of like, okay, the reaction function over here is X, Y, and Z. And the reaction function over here is P, Q, and R. And so as we get closer to the event, I can actually visualize who's going to get rolled, who's going to roll, right? Like what's going to happen, what the ultimate outcome is, because as you get closer and closer to the event, people, they just don't know or they won't talk to you. So I'll give you an example. um There was this this moment that probably is irrelevant in history, but for a while was a big deal called the fiscal cliff where um there were going to be, you know, basically like 5% of GDP ah increase in taxes like at midnight on New Year's Eve. uhu I think it was 2010, something like that, 2012 maybe. And um we knew this was going to happen. So in March, April, May, I'm literally spending time trying to figure out how everyone's going to react. So we get to like 11, 15 p.m. and there's still not a deal. And I'm still, you know, I put out research saying, I still believe, I think I have like a 90% chance there's going to be a deal um in time before the markets opened on, you know, whatever January 2nd. And I'm putting out this research. I'm the only one, I'm like the lone voice. There was like coverage of it. It was, it was pretty cool to be the only person saying it if you were right. right. And the people I was talking to in Congress and the White House were basically saying, like those other sides, such jerks, they're not going to do the deal. They're going to drive the economy into a hole. right So you can have access to people they don't see yet. And then suddenly the deal came. came yeah you know The deal started coming together. You saw the headlines that was coming together. I remember it was 1145. We're living in New York City. And I said to my now wife, I was like, cool, deals come together. We got 15 minutes to go get to dinner. And you celebrate celebrate. Yeah. So we got there. and you know We made it. And then by 2 a.m., I was back writing research about the deal that had come together. Wow. I mean, that's that sort of experience has got to teach you to like really trust your research and trust your gut. And I can't imagine that it's easy to be out there telling all these clients who have a lot of money, and maybe their big bets that they've made in the markets riding on this, right? Like, how do you handle that sort of thing personally? Like, did you train in some way? Or it's just like, you do this over and over and over again, and then it's not such a big deal to think about
Impact of Geopolitics on Legal Strategy
00:08:44
Speaker
getting it wrong? Well, you you start to realize what good looks like, right? yeah So like, I remember my first week covering the US, we'd put out research and then we'd have to hit the phones. If you've ever watched, you know, any of these TV shows, like industry or any of these shows about what banking is like, right? The research folks in a bank will call their clients and tell them this is the trade for the day. So we did the same thing. So I'll call up all these hedge funds, um often like the partner whose name on the door, right? Call them up and tell them. So I remember the first one I called, I said, okay, this is the research I put out today. Here's my view. And he laughed and he goes, you just read the Wall Street Journal to me. Thanks a lot. Go hang out with this analyst who also works in New York on your team. And once you figure out what he does, then you can call me back. And I was like, okay, cool. Like, you know, that that hurt. yeah But you know what? The reality was, okay, like let's, it's like an apprenticeship. And you see the way people figure it out and you you gain the muscle over time. I think the biggest thing is not being afraid to be scared and also realize that your clients are making 10 moderations of their view a day. So, you know, we're we're recording today, the day after the Federal Reserve announced a huge interest rate hike. A lot of people, or sorry, interest rate cut. yeah A lot of people got the call right, but what they didn't get was the commentary the Fed had with it. right So there's like a perception that this may be the only hike they do, right where everybody thought this was the beginning of a hiking cycle. So clients who made a call that like the, they yeah sorry, a cut. Yeah, I'm sorry. No, no, no. Yeah. So, you know, clients who made the coin yeah who made the call that it was going to be cut might not have gotten the atmospherics about it right. And they have to suddenly modify their view. And so they're used to that. But as analysts, you like you don't want to be, you don't want to have to call someone up and say, I thought this was going to happen last week. Now I think this other thing's going to happen. You're afraid of it. But you develop a rhythm for when do you actually move? What's noise? What's signal? Et cetera. And that type of stuff is really, really important. And I think it's it's important in business. it It's like an important skill set in general because most people are stuck in the day to day. Yeah. And when you can step back and actually look out at the future and go, okay, like that's cool. That was a headline today. What does six months from now look like? you have ah You have a very different view on the business environment. We're talking about hedge funds or investors. I mean, a lot of the listeners of this podcast are general counsels of a variety of companies, tech companies, all sorts of legacy businesses. Why do you think GCs should also care a lot or people, executives in a business should also care a lot about geopolitics and what's happening in the political sphere. Yeah, for sure. So look, when i I mentioned when I started off, we were very investor focused. That was 2008. By like 2012, 2013, 2014, corporations started to realize that there was political risk everywhere they were operating. So I think, you know, for a long time, corporations sort of got comfortable with political risk in emerging and in frontier markets, yeah but sort of felt like the US, Europe, Japan, like, don't need to worry about it. Everything's going to be okay. Like, we just run a lobbying strategy to get some minor tax break for us. We don't need to forecast. Well, based on what everybody's lived through in the last decade, they know that that's not true anymore. yeah So companies have gotten better at doing it. But increasingly, it's the legal department where this matters the most. And I'll give you a couple of reasons for that. One is you can have a lot of fun all day long talking about politics. You and I could talk about, yeah we could talk about elections around the world all day long. It'd be a lot of fun, but none of it really matters until it becomes law, right? So politicians making promises about what they're going to do, it doesn't matter until it hits the administrative state and actually becomes a law or regulation. So increasingly, in a world of so much noise, whether it's social media, TV or whatnot, what we're really zooming in on what matters, it's what's going to actually move the needle about what my company has to do. And increasingly, those types of risks are risks that involve not just your government affairs officials making sense of it, but also the legal team. So um think about any amount of news that's come out of the Middle East over the last 12 months, right? Whether it was the terrorist attack on Israel and the response from Israel, whether it's missiles flying between Israel and Iran, the first kind of direct contact they've had, whether it was pagers blowing up and walkie-talkies blowing up in Lebanon, yeah right? It's easy to say, well, there's first order effects. My security team will handle that. Okay. Are people safe? Right. Or we might need to lobby for the US government is to push harder for a ceasefire because we want less volatility in the region. But in reality, all the second order effects are legal effects, right? Is there going to be a supply chain shock? yeah Am I going to have to break contracts with employees because ah the security team says we can't be in region anymore? Can my people travel to different countries and not be concerned that they're going to be arrested, right? All of this stuff actually is legal risk that the company's covering. And traditionally, this sat separate from legal, but increasingly it's not the case. So according to the ACC, almost a quarter of GCs now have government affairs reporting to them. yeah Additionally, they have compliance, ethics, yeah ESG, risk reporting to them as well. So GCs are kind of becoming the older of risk for the company. And they're also a connector because increasingly, you know, the ACC research shows they're reporting to the CEO. They're in board meetings, right? So they're the ones that are being asked in the board, this event happened last week. What does it mean for our business? And it's not, you know, it's no longer just sitting with strategy or the CEO or government affairs on this narrow sense. but So I think general counsels have woken up to it, but you have different types of general counsels and those who are listening to this podcast will understand the typology, right? You have political general counsels who they you know they used to be in the US administration, presidential administration, yeah and they've literally been hired because the company was getting a rough ride from regulators and their job is to smooth it out. So that's like one type. They're pretty politically astute, right? Then you have others who are, you know, they were career litigators and they they did great work for the company. They were brought into the organization to continue to do that, right? They may not have that political muscle yeah or they were in-house in some role and they've been elevated to the GC role because they're great managers of the department and the company is going to go through a technology transformation and they've elevated someone who can actually lead them, you know, through an AI strategy or whatnot. They're not necessarily political creatures either. And so I think you have this evolution um where the stuff you learn in law school is not the stuff you necessarily need today.
Intersection of Law, Technology, and Geopolitics
00:15:01
Speaker
And GCs realize that. So for me, right, like I did a little bit of experimentation on this. And so in late 2023, I announced I'm going to do a couple of private conference calls for gc
00:15:12
Speaker
on geopolitics let's see if anyone signs up i mean the the post went viral had like two hundred and fifty gcs dial into the first phone call. not wow Not all GCs, but GCs were partners at law firms. yeah First phone call. And it grew it grew from there. And so I said, OK, well, you know this validates that something shifted. Because for the many Yeah. years I was a political expert going into companies, the legal department didn't show up even when the CEO was sponsoring. right It just was like the CFO's team would show up, strategy would show up. Legal, not necessarily because people weren't connecting it to legal risk either. And I think that's part of what's shifted is you need to be able to actually connect the dots. Because if I if i sit down with a GC and say, let's talk about missiles flying in the Middle East, we're not that exposed, et cetera. but If I sit down and say, these are 12 legal choices your company's going to make because of missiles flying in the Middle East, now suddenly they care. Right. I mean, you're seeing it even in titles. You see a lot of GCs taking on, I'm in charge of corporate affairs or I'm in charge of global affairs right today. You've got a sub stack. I'd love to hear a little bit about your sub stack and what you write about. And you know then the audience can know too. And I'd also sort of in that question, be interested in your thoughts on how you're seeing some of the best GCs train themselves up or learn to be good at this sort of these sort of political questions or political risk questions? Yeah, it's ah it's a great question. So the substta is geo illegalgal dot Substack.com. It's free to follow. I subscribe. And we really pour our like analytical heart into this. This is the type of analysis we charge hundreds of thousands of dollars for. We're now just doing it as on some level as a service to the legal sector because nobody else is covering it from this angle. Obviously, it can be self-serving in a number of ways as well to have a sub stack. So, you know, not pretending I'm a saint here. But the reality is the, you know, the research that we do in that really takes whatever event is going on in the world and starts to think about it from from the perspective of what I think of as the geo-legal triangle, which is geopolitics, law, and technology. And if you imagine as a triangle, each of the legs of that, whether it's geopolitics and technology, geopolitics and law, law and technology, they're constantly in flux. And so I think a big mistake people make in analyzing political risk is they sort of do it as a one-off assessment, right? or Or they look at it in buckets. In MBA programs, you'll learn pastel analysis, like political, economic, social, technological, ecological, and environmental, and law. But they're like treated as separate things. This stuff is all in flux, right? So you know there there's an election going on in the US right now, probably by the time people listen to this, we'll know who's won and who hasn't. But there's an election going on right now that has literally been mediated by the courts. Like every step of the way, it's been the intersection of politics and law. There are Russian, Chinese, Iranian propaganda outfits that are using technology to influence the politics of this election, right? This is all in flux. And you know frankly, technology and law are colliding in a way that's generating robot lawyers and robot lobbyists and the promise of all of this, ah if only regulation permits it. We could talk more about that. So you have a world where these factors are in flux. And what I try and do is pick one topic every week to really dive dive into. I feel like for general counsels, they don't have all day to read all the news. They need to know what really matters. So I'll pick either news of the day or a big idea and I'll dive into it. And it's all kind of building towards a book on the same topic that's coming out early 2025 as well. Tell us about the book. That's super exciting. It's your first book, right? First book, yep. And so the book really is about how geopolitics and technology are undermining law as we know it, right? And so if you think about it, we live in a world where the law is retreating. So international law is not restraining countries from walking across each other's borders, from having collateral damage when when they make attacks, right? Whether that's Ukraine and Russia flying drones into apartment buildings or, you know, allegedly Israel exploding pagers and walkie-talkies in supermarkets and whatnot. Like international law is not really a concern. Vladimir Putin visits Mongolia. Mongolia doesn't arrest him, even though their party to the ICC, which has indicted him. Right, at an international level, the law is eroding. At a national level, we're seeing it too, whether that's nationwide injunctions that wipe away entire laws, whether that's ah presidential immunity that's sweeping, whether that's impeachment being yeah you know a legal tool being used as a political weapon. And we see it at a local level too. I mean, Tyler, you lived in LA, you live in New York. you know wouldn't it be Wouldn't it be amazing if you could walk into a pharmacy and not push a button to get your toothpaste out of a glass case? I order my deodorant on Amazon now exclusively because I don't want to do that. Right, which is actually a function of the erosion of law. yeah Shoplifting is effectively permitted below certain thresholds. yeah right So we have this erosion of law, which is the backdrop against which we all live. At the same time, that technology is fundamentally going to change what it means to be a lawyer. I mean, in China, they already have legal robots. I can walk into the court in China and punch in the details of my case. And it'll say, you have a 90% chance of losing. If you would like to file this complaint, click here. And it'll file the complaint for me anyway. Now, China has like societal reasons why they want that, right? They basically want you to settle, right? So the machine's like there to tell you, like, you'll destroy a harmonious society if you have this lawsuit. But in reality, like it's not the technology that's been limiting. Right. The technology ah is here today to allow us to do it. yeah I have used an AI powered personal injury lawyer to fight an insurance company that claimed I didn't have a concussion when I have two doctor's letters that say I had a concussion. I turned to AI to do that. Right. So, you know, the book is really saying a lot of people understand what's happening politically. There's a whole universe of people who understand what's happening politically. There's a separate universe of people who understand what's happening to the law via technology. But very few people understand that these two things are intersecting to shift what the law is going to look like in the future.
Corporations as Political Entities
00:21:00
Speaker
And that's what the book is going to outline. So it'll be out, you know, likely March 2025, published by Wiley. ah There's a work working title right now, which is Geo Legal Meltdown. But I suspect by the time it's published, we'll have a different title there. But yeah you know, you can find it by my name. And it's it's already up on on Amazon under the working title. Awesome. Pre-order. The Abstract is brought to you by Spot Draft, an end-to-end contract lifecycle management system that helps high-performing legal teams become 10 times more efficient. If you spend hours every week drafting and reviewing contracts, worrying about being blindsided by renewals, or if you just want to streamline your contracting processes, SpotDraft is the right solution for you. From creating and managing templates and workflows, to tracking approvals, e-signing, and reporting via an AI-powered repository, SpotDraft helps you in every stage of your contracting. And because it should work where you work, it integrates with all the tools your business already uses. SpotDraft is the key that unlocks the potential of your legal team.
00:22:03
Speaker
make your contracting easier today at spottraft dot com um so you're talking about this sort of void that's being created as laws being eroded around the world. And of course, maybe individuals or lone wolves at times fill that void. Non-state actors are empowered. I also think one of the one of the entities that if institutions are also sort of eroding along with you know respect for the rule of law or the rule of law itself, corporations are one of the entities that's filling that void. I mean, you see declining trust in government, but at least for a period of time, you saw more trust in corporations or some corporations. You see CEOs expected to speak out on a lot of social issues or political issues. Sometimes those are very directly related to what their business is doing. Sometimes not so much, right? I guess the broad question is like, do you agree with that thesis that like CEOs have to be politicians and corporations are acting kind of like states in a lot of places. And maybe at times or they're forced to be the ones who are upholding the rule of law or they're stepping in where there's a void. And then is that a good thing? Or should we be moving back towards maybe more traditional institutions or states or governments? Yeah. So there's no doubt that the CEO is often the geopolitical, you know, chief geopolitical officer, right? Sure. Article about this with KPMG years ago. You used to be able to go on TV if you're the CEO and talk about your earnings. And if the anchor said to you, you know, this crazy news story happened yesterday, politically, what do you think? You could laugh and go, that's above my pay grade. You you can't do that anymore. They'll be like, okay, great. Like, that's funny. But like, what do you think? Right? Business leaders can't avoid commenting on politics when it's directed at them. And so they need to be able to connect what's going on in the world to the values of their company. But I do think companies score a lot of own goals in trying to talk about politics to align with social media momentum or from a marketing perspective. So, you know, simple example, a lot of companies on October 7th, 2023, when Israel was attacked, came out and said, we stand with Israel, right? How do you not stand with a country that's been, you know, that's just had a terrorist attack where a thousand people have been killed and hundreds of people have been taken hostage, right? sure The challenge is on October 8th and 9th and 10th, when Israel responded into Gaza and killed a whole lot of people that were not all combatants, do you still stand with israel
00:24:31
Speaker
well you as a company don't don't want to you don't want to qualify your opinion you were like no we still we stood stand with them when there's a terrorist attack we're not here to narrate the news but people are expecting your views to be updated right Right. And so, you know, it was the same thing with, you know, we stand with Ukraine and then suddenly companies realized, oh my gosh, we're going to have to leave Russia in Right. like an hour. Right. Right. It's not, this is not a joke, right? yeah The marketing and PR team have created a legal challenge for me. Now I have to sell my assets in a fire sale. Right. And so um my view is and companies like to take a line out of Hamilton should talk less and smile more. Right. Like if if an issue is fundamental to who you are. Yes. Then stand for it. But if it isn't, your job is not to narrate the news and it is a problem for you. So I'll give an example. Right. Unilever is super outspoken on um on environmental issues. So if like ah someone in product developed a new product at Unilever that would make everyone's life better, but destroy the environment, right? Like managers don't, it's it's not hard for them to figure out whether that's a product they should quash a squash or not, right? They're going to squash it, yeah right? They're going to say no. But for other companies where values aren't central to who they are, right? They're a business. The value is creating shareholder profit. And by the way, like I did an analysis of the top 100 law firms in America, like almost 95 of them don't mention anything values laden, right? Their mission statements are, we solve the toughest problems for the most discerning clients. Serve of our clients. Yeah, we serve our clients, right? It's all about creating, you know, Deloitte, when people ask what our job is, we'd we'd say our job is to deliver exceptional value to our clients. Like, what does that mean? Right? You just do what the client needs and it's valuable. It's not guided by morals. And so what we've seen, particularly law firms, but companies as well, is we've seen a backlash to ESG. And so companies would sort of come out and say, we've got views on ESG issues. Let us talk about it. ah then and there And it was a freebie, right? So they could say like, I used to say, don't print this email at the bottom of my email. That was my commitment to the environment. But now I'm going to say more than that. Or you know we were we moved into amazing like energy efficient offices. Let me show you a tour. But now we're actually going to say like, we support diversity. We support the environment. We support all this kind of stuff. But they started getting backlash from it. And suddenly they all went quiet. And so now they've angered both sides. They took a position on the issue, which angered the side that didn't want them to. And then they've gone silent, which angers everyone who cares about it. In reality, like if you are a company, you should realize you're a political actor. You should have a a corporate diplomacy team if you're a global company whose job it is to change perceptions about your company the same way that diplomats do for countries. But that doesn't mean narrating the news. That means understanding what's core to you and what message you want to be received and delivering that constantly and consistently, not chasing the news. If you're a law firm, I think it's a very different proposition, right? Law firms aren't actually corporations. They're partnerships of yeah individual practitioners. So for a law firm to come out and say, we stand with Ukraine when they're also representing Russian oligarchs, like that's pretty inconsistent. But that's the world today. but I know law firms are scared to death to say anything politically about China because they still have big Chinese business or they want to be able to advise American clients in China. But increasingly, they're going to be, you know, they're going to get questions about the technology divide between the US and China and things like this in public forums. And they're going to have to figure out what's authentic to their values, who do they want to be. And I think as the the world is kind of splintering, right, we're splintering into different spheres, one led by China, one led by the US, and everybody else is stuck in the middle, that becomes a lot harder to navigate. And increasingly, companies are going to be called on by their governments to be patriotic, which is going to create like an even and even tougher ah set of challenges for companies to figure out where they stand. You've already seen that with like Microsoft and Google. And do they provide clouds right i mean cloud services to DoD and others? I mean, oh yeah really interesting questions there. Look, and i think you know, it's very hard for a company to say, we're not going to carry water for our headquarters government. Now, sure you know, and in reality, just because your company, you know, is taking advantage of a Dutch sandwich or whatever the tax methods you use between, you know, Ireland and Dutch and corporations, so you don't pay taxes. Like if you're an American company, you're an American company. If you don't, if you, if you are unwilling to acknowledge that, then it's gonna become harder for you. Right. And so I actually think a lot of, a it requires deep thought, but a lot of these issues can actually be turned into strengths. So you've got antitrust, people sniffing, ah you know, breathing down your neck. If you make the argument that we have to maintain scale in order to you know keep US prominence in the AI race, Congress is going to back off. So a lot of this is about connecting the dots between the problems you have and what you actually offer your country. If you don't offer your country something, then you know you should think in terms of what you can do. right it's that I'm not saying this strictly from an American perspective. right A lot of your listeners will be in the UK or in Europe. Maybe they're in Latin America. They might be in Asia. They're anywhere. If you can align with the geo strategy of your country, you will get benefits politically for that on the domestic level
00:29:43
Speaker
and part of that i think is thinking about things from the perspective of the policymaker right and and what's going to but's the soundbite that's going to come out of their mouth if they support you right it's probably not going to be we increased earnings by this quarter or it's so great that we have y number of cars on the road. It's going to be we're preserving American dominance in this sector against potentially geopolitical frenemies or that on the enemies, right? Or it's thinking about it from their perspective and what their incentives are. Yeah, it really is about figuring out who you are. Why does it matter to the politicians yeah that have power over you? And then telling that story and no other story. yeah Because it's very easy to get caught in commenting about it all. I mean, it was interesting. The you know the Teamsters Union yes came out yesterday and said they're not going to support either political party. And I think if you think about it from a corporate point of view, corporates don't have to come out and announce they're not supporting either political party. um But often corporates would do like 75% of their donation one way and 25% just as a hedge another way to sort of be like, we're not throwing our weight behind you, but like, love us anyway. If you win, like here's some resources. I think increasingly corporations are feeling comfortable staying on the sidelines. They're just not going out and saying that, right? And to be honest, five years ago, values laden expectations from consumers were on the rise. I think it's sad because I'm very values driven. I mean, you you talked about building a company outside of um outside of traditional tech hubs, which we can get into. Right. A lot of that comes from um a manifestation of values we have as a company. But like if you don't share the value, you know, if you don't have these core values as a company, please don't pretend. here Right. Yeah. It's just going to cause you a problem. It's not because I don't want to hear it. Right. it's just like you're goingnna you're going to get caught in it you're goingnna be a hypocrite it's going to be obvious and it's clear that the messaging isn't coming from a genuine place it's just sort of corporate speech exactly well and it's just going to get you in trouble because Nobody, you know, there's now, there are now movements to keep quiet, the corporate speakers. Yeah.
Founding and Vision of Hence Technologies
00:31:46
Speaker
Let's get into what you're building at Hents. Well, first tell us about what Hents does and and what you're building. And then I've got a bunch of questions for you, including why and how have you been able to hire so many engineers in Rwanda? That's super cool. Yeah. Yeah, cool. So um started Hents in 2020. My co-founder is from, came came out of Palantantir Technologies. I'm not the tech side of the business. I'm i'm the the the mascot. yeah But in reality, we so we set off initially with a kind of a big question that we feel is still unaddressed in society, which is how come every time I buy knowledge, I get ripped off, right? I never am confident that I get value out of the people that I'm spending that I'm getting commensurate value with what I'm spending when I buy knowledge. And that's because the people who deliver the knowledge also determine the price. So like, ah you know, often I will have a you know, I'll have a lawyer or consultant that I agree to spend a certain amount of money to to to do something for me. And the results they deliver are OK. But how do I measure okay with the price they charge? They would have been great if they charged me less. And they would have been terrible if they charged me more. It becomes challenging where you know if I buy a bunch of microphones and they show up broken, like they were a bad deal. I won't buy from that microphone person again. right So we started off with with that conception, got pulled into legal very quickly because legal has this problem. And so we we built out outside counsel management, which evolved into litigation management and matter management suites, like core productivity suites. And those suites are used by some extremely large companies that that love them. They're great products. um We won Zurich Insurance's Global Innovation Championship with um a tool that selects lawyers for every insurance claim that comes in, recommends who's most likely to win um and reduce the cost that they will have to pay out, which is, you know, pretty fascinating application of AI. We do a lot of stuff in the kind of pure legal tech space, but we're bringing to market now. And by the time this airs, it'll be in the market, a geo-legal product that digests political events and translates them into legal risks. And the amount of interest around this like is like unbelievable, right? Companies that have said, I'll buy this the day this is released um has really been motivational for us in in deciding to devote really considerable resources to to bring it to market because, you know, geopolitics is pretty hard to build technology around, right? We started off discussing the analytical process I went through um to forecast. Now, if you're trying to build software to forecast the future, right? Like that's very difficult youtube can even forecast
00:34:12
Speaker
after i watch ten cat videos do i want to watch another cat video or dog video right like like and preferences are so dynamic and inf flux politically it becomes very hard to forecast but the big insight for us was that forecasting is kind of the fool's errand right for legal departments they need they care about implications Right.
00:34:31
Speaker
and within one minute you know what you need to worry about that is gold dust for for a corporation so and for law firm that wants to be in front of them so you know our our software is currently um being refined as part of a and o sherman's fuse program so we're inside fuse which is there It's very right because if we can help law firms become more relevant for their clients that's valuable if we can help clients understand what's going on in the world that's valuable too and so that's product to build. I can't wait to get it out on the market. What's your experience been like? I mean, you're a first time founder. I know you helped run Eurasia Group, but what's your experience been starting your own business? What's been surprising to you about that process and experience? How's it been starting a company? Yeah, look, I mean, don't do it unless you can't not do it, right? Like it is, it's like mathematically not a good bet, right? Like if you, right. Like if there's a 90% failure rate and you multiply that by your likely payout by the time your company gets acquired or sells, and then you distribute that over the number of years it took you to do it. Like you may just want to keep a real job for most people. But for me, I had to do it. I wanted to know how good I was. Right. I like you, when you sit on someone else's platform, you don't actually know if it's you or if it's the platform that's driving it. And you find out very quickly the platform was super helpful. The first couple of years, you're on your own. You're in the wilderness, right? And you're trying to get people to pay attention. A buddy of mine told me, he said, there's only one math equation for starting a company. Twice as much time, twice as much money, half as many friends. And it's totally true, right? Like it's, you know, a little sad, but that makes sense. Like we're at year five where we would have believed we'd be at year three. And yeah, we've raised and spent more money than we would have hoped. And half the people who told me they backed me when I started my own company didn't return the phone call or weren't helpful as trial clients or whatever. But the people who did, man, like they were amazing. Yeah. Right. Because they, you know, they were, they're the reason this business has been successful. I have a group of people that have been unwavering in their support. I mean, we incorporated the day the UK, we were a UK company. I was living in the UK. We incorporated the day the UK went into lockdown for COVID. Whoa. Right. And so all the money we had had lined up in January and February, come March, we said, send the money. A handful of people were like, no, right? The ones who did, for me, I'll do anything for them. And so to me, look, the experience is one of being able to really experiment and try and do the things that you think need to exist in society. And if you can connect the resources, raise the resources to the idea and bring it to market, you win. And for me, that's been a great process. You mentioned the base we set up in Rwanda. That's been one of the most gratifying and interesting elements of the Hentz journey. So my co-founder, Steve, moved down to Rwanda as we were setting up the business. His wife got a job opportunity there. And he said, give me a couple weeks. And either we just won't work together or this will be amazing. Like, I'll call you and let you know. Yeah. They called me a few weeks later. I was like, this is going to be amazing. Carnegie Mellon has our Africa campus there. So you've got tons of engineers graduating from across the African continent. You have no corruption, right? Nobody asks you for a dollar. We've never been asked for a dollar there where like literally you can go to other places in the world, including like places people tell you to do technology in Eastern Europe and you will be asked for money the minute you show up, right? Like Rwanda, you don't have that problem. And they're the fastest internet in Africa. And so we said, okay, let's start hiring the team. So, you know, we brought on board a third co-founder who was teaching at African Leadership University in Rwanda. With him came the, you know, he hired the initial team from students that he knew and people he knew in the ecosystem. We built out a team of about 20 folks, many of whom have been with us really from the beginning in Rwanda. And we are literally delivering software to, you know, Fortune 10, Fortune 20 companies with engineers, engineers building it in Rwanda. And for me, like, this is amazing, right? This is not, we've not outsourced to Rwanda. I am the offshore team. I live in Los Angeles and I am the offshore team. Yeah. Right. The team is the team, right? We have a campus there. It's like a Silicon Valley startup there. And I think realizing that the world has millions and millions, hundreds of millions of smart people that don't get connected to opportunities. And that if you can actually visualize how you can do that, not only do you do it out of the goodness of your heart, right? You can have a whole story about how you do it because it's a wonderful thing to do. But in reality, you do it because you get the best talent. Yeah. Right. In Rwanda, if I set a goal of getting the top 1% of talent in Rwanda, that might be possible. Right. If we're able to bring the coolest opportunities, the best benefits, global pay packages, we could potentially get the top 1% of talent. No matter how much money I raise, no matter if every VC in the world backs me right now. I'm not getting the top 1% of talent in Los Angeles. It's just not happening. It doesn't matter. Infinite money, you cannot do it. And so I think the reality is, if you can dream a little bit about having a bigger footprint, sure, there are hiccups along the way, things you don't know. The stuff you got comply with that you, you know, you did. I wasn't, I was a political risk analyst, but I wasn't born knowing about Rwandan tax policy. Right. Sure. But you figure it out and it actually is. And it's been great. And so, you know, our team has actually moved with us. You know, a number of our engineers have moved to London as their life has taken them there. A number of engineers have gone, you know, often on full merit-based scholarships to Ivy League universities in the US for master's degrees and have come back and said, can I work with you again? Right. So we've had like, we've just had such a cool run finding amazing people and connecting them to this opportunity. And it's very different from the way people think about development and emerging in frontier markets because they either think about number one, I'm going to there because it's cheap right so i'm going to outsource it and sweat the resource and go there because it's cheap right that often builds very terrible technology and also like it's not a nice thing to do to not pay people for the value that they that they of course um create right like of course there's a cost of living differential between somewhere like rwanda and somewhere like los angeles but if somebody is somebody talent talent exists in a global economy. And if you don't pay people like they exist in a global economy, they're not gonna work for you. So I think there's that like kind of almost like predatory outsourcing thing. Right. And then there's also the sense of like, I'm going to go there. I'm going to go to a different place to test stuff, but I'll go do the real stuff somewhere else. Right. And I actually think a lot of emerging markets trying to attract companies with the test kitchen thing. And even Rwanda did it. Right. So they said to Zipline, the drone company, we will change our entire drone legal infrastructure to allow you to deliver blood anywhere in Rwanda. So that, you know, basically so someday you can deliver pizzas in San Francisco with your drones. And it worked really well for them. I think, you know, I think that model is valuable to some extent. But I also think countries that have, you know, resources like great universities and great talent should do more than just say come and test. They should say build from here. Sure. Right. Build from here. This can be your launchpad. Where do you hope to see hence? And if you had a crystal ball, where do you hope to see Hentz in three years, five years, a few years down the road? Well, I hope to see Hentz installed on the computers of everybody listening. That would be a big win, right? No, look, I think as an entrepreneur, you're kind of always looking at what your strategic options are. And so there are even odds that I am at hence until I die, right? You know, I get the tattoo and I'm just, that's just, this is it for me, right? We grow this thing as big as possible. We still have as much fun as we're having today and we never leave, right? And, you know, but the journey becomes so interesting because instead of just doing geopolitics for lawyers, we're doing geopolitics for CFOs and for technology divisions or whatever. Or instead of just doing geopolitics for lawyers, we're embedding geopolitics into our matter management systems. Maybe it just is that exciting. Maybe someone comes along and says, hey, your products would be great on our platform and we can help you scale into the entire world at a level you never could. And we look at that sort of thing, right? Really don't know. Maybe one day we IPO and all of you can own a small share of the Hens vision. But the reality is what I really hope fundamentally is at the end of the day, we've built a product that made a real difference to the users in the way they think about the world. And that we fundamentally changed the lives of everybody who's been on the journey with us, whether that's customers or staff. And if we do that and that's a smaller outcome or larger outcome, I'm going to feel like the time I spent in my life was well spent on this project, for sure. Fantastic. I've got a few fun questions. I think they're fun for us to close it out. I was having fun already. The first one is if you have a favorite part of your day to day, although I'm sure it's pretty variable. Yeah. Well, look, I have two small kids and no matter how little sleep I get, that moment where they run in my room and pull me out of bed and demand that they need my time. Like as much as I, they, they probably can't perceive that that's my favorite moment. Cause I'm like, why are you waking me up? No, I can't like play chess and build a fort
Personal Insights and Recommendations
00:43:57
Speaker
right now. We gotta, you know, we gotta get ready for the day, et cetera. Like that's my favorite day. Cause that's my favorite part of the day. Cause you, you wake up and you realize that there are people who are just so thrilled to see you. And for the rest of my day, as excited as you were to see me, I bet you weren't that thrilled. I love that moment. I needed one cup of coffee first. Do you have a professional pet peeve? Professional pet peeve. Okay. So I don't drink caffeine, right? I gave up caffeine a long time ago. Literally, I'm drinking decaf cold brew here. You've never seen that before, but I'm drinking decaf cold brew. That's kind of an oxymoron. What I hate when I go into an office for a meeting, someone asks me if I want coffee and I say, like, can I have decaf? And they say, no. They don't have it. We don't have it, right? It's like, you know, okay. so So literally, literally like I've i've come come here here for for business. business for decaf come on i've come here for a business meeting and you're trying to like get me hooked on drugs like i know what if i don't want to be drugged during your meeting what if i just want to be me like come on keep some decaf in your office for for the record i did not offer sean coffee before i brought it i got you packing now i I know know. Go in my backpack. I'm never caught out. But it was a pet peeve of mine because it's like, you know, why do you assume everyone wants to share in this addiction? That's funny. Good professional pet peeve. Not one that I think I'm going to hear again on this podcast. Do you have a book recommendation for our audience? Something that you've read recently that you've enjoyed or an oldtime favorite? So The Coming Wave by Mustafa Saliman, who's now head of AI at Microsoft, was one of the founders of DeepMind. It's just a phenomenal book, right? If you want to very quickly get spun up on the societal ramifications of everything that everyone in the AI and tech world is talking about, that book is inspirational. It's very good. I mean, you and I, we see each other at like millions of legal tech conferences a year. I think what people need more of is just that kind of societal window into like, what does this all mean? Because we're all furiously trying to increase our productivity using amazing tools like Hentz or Spot Draft or whatever. But like all of tools actually are existing in a bigger ecosystem of rules and laws, and they're affecting rules and laws. And I think that book was part of the inspiration for me to write mine because I read it and I thought, we need to go much deeper on the politics of this and really think about it and connect it into the legal sector and understand the implications of law. It's a really interesting book. And I think it educates you on how these Gen.AI use cases that you're seeing today are like, that's just the tip of the iceberg, right? Like that is not the scary thing that might happen. And it's not really even like autonomous robot. There's all sorts of other use cases out there that I think pretty much everybody, policymakers, business leaders, but just lay people need to understand. He's got examples in there of using AI to engineer bioweapons. Correct. That's exactly what I'm thinking of. You probably haven't thought about it yet because the Netflix movie hasn't been made and you don't want nightmares, but it gets very scary very quickly because if you look at today's world, you realize the intent to cause harm from many actors is present. And the only thing that can save us from it is either they can't get there technologically or they can't get there because there are guardrails in society that are holding them back and those guardrails are falling away. So it's a scary dynamic. Pick up that book. Okay, my last question for you and my traditional closing question. If you could look back on, a lot of times as lawyers, but in this case being sort of like a young researcher at the Fed or at Deloitte, something that you know now that you wish that you'd known back then. Yeah, I think, I wish I knew how much more effective you can be when you're comfortable in your own skin and not feeling like you need to put on a show for people. Right. I mean, I remember when I showed up at Deloitte, I had just finished a policy masters at Berkeley. Right. I probably was dressed like this. And I showed up in, you know, I showed up in, you know, what I thought was like professional looking clothes. Yeah. And it was a total, it was a total mishmash. Right. And I didn't, I didn't have a clue what the corporate world wanted me to look like, but I was trying to emulate it. I wish, I wish someone had said, find your own version of this. Don't try and conform. Find your own version, be yourself. Cause I would have felt a lot more comfortable. And I think, you know a Eurasia group, we were able to find that space. Certainly, certainly like running your own business, you do that. But it's not just about fashion. It's about having a sense of humor. It's about not not being like a faceless consultant with, you know, that is interchangeable with anybody else. It's about really not being afraid of your personality and not being afraid to let people know who you really are and also to get comfortable with the conflict that creates. Like half the people you meet, maybe more, maybe less, maybe, but maybe more are not going to like it. Right. But that's cool because you find your universe of people that will roll with you the way that you roll. And I like, I wish someone had told me that earlier because I do, I do feel like just generationally, like I arrived into the job market at kind of at a time when paying your dues and conforming was still like, was still present. And so in my head, I know it probably took me like an extra 15 years to shed that. Right. For sure. What a great message. I'm glad you wore shorts today. Here we are. Sean, thanks so much for joining me for this episode of The Abstract recorded here in LA. It's a pleasure. Thanks for coming back to LA. And to all of our listeners, thanks so much for tuning in. And we hope to see you next time.