Tax reform is very much in the air these days.  Proposals to fund President Biden’s ambitious infrastructure plan and related reconciliation bill for “soft” projects include the adoption of a first-time wealth tax on billionaires, elimination of the step-up in basis upon death,  and a proposed minimum corporate tax levy.

 

I believe there is a far simpler and more equitable personal income tax alternative. In short, all individuals would pay the higher of 30% of their Adjusted Gross Income but no less than 20% of their Gross Income (with no tax due below a Gross Income of $50,000 and rates graduating from 10% at $50,000 to 20% at $200,000 and above). There would be no differentiating between Ordinary Income and Capital Gains rates and absolutely no deductions allowed against Gross Income. The 30% levy against Adjusted Gross Income would only apply to individuals with Gross Incomes greater than $500,000. The Alternative Minimum Tax would be eliminated.

 

Since Congress cannot be expected to resist the urge to fiddle with tax policy to benefit its chosen lobbies such as real estate and energy, and since I believe it is important to encourage charitable giving, tax planners (of whom I would hope there would be fewer) would be free to ply their skills in reducing their clients Adjusted Gross Income with all flavors of deductions and credits, but ultimately subject to the rule that no one pays an amount of  tax less than their applicable percentage of Gross Income.

 

Since I claim this proposed tax policy is simple and fair a couple of examples might be helpful.  Imagine Mary, a successful lawyer who makes $2,000,000 per year, has itemized deductions of $100,000 and donates $400,000 to charity.  Mary’s Gross Income is $2,000,000 and her Adjusted Gross Income is $1,500,000.  She would owe $400,000 in income tax at the top 20% rate applicable to Gross Income, but $450,000 at 30% of Adjusted Gross Income (since she exceeds the $500,000 Gross Income threshold).  Mary would pay the higher amount unless she could be encouraged to contribute another $166,667 to her favorite charity, thereby reducing her Adjusted Gross Income to $1,333,333, and her tax payable to $400,000  under either prong of my proposed tax system.

 

Now lets imagine Robert, a successful teacher with a Gross Income of $80,000 per year and  $2000 in charitable deductions. At a graduated tax rate of 12% (the rate applicable to Robert based on where his Gross Income lies from the $50,000 minimum to the $200,000 maximum rate), his income tax payable would be $9,600.  The 30% tax on Adjusted Gross Income would not apply.

 

In practice even my simplified tax proposal would need some bells and whistles. So, for example, I have only described rates and thresholds applicable to individuals, and some adjustments would need to be made to cover couples filing jointly and family-size credits; however, these are well established tax concepts and would not overly complicate the system.  Nor would this personal income tax proposal need to be adopted in isolation.  Reforms to the estate tax regime and efforts to establish a minimum corporate tax could also be adopted.

 

Ever since I studied US Federal Tax in law school I have been shocked by the complexity, volume and questionable policy choices of the Tax Code. While my proposed system is far from perfect and I would welcome comments on how it could be improved, it is progressive, more fair, far simpler to administer, and should enable the average taxpayer to actually prepare his or her own taxes — an ordeal for which even the best law school education and many years practice at a top law firm could not prepare me.

 

 

 

I sat down recently with The Record, the excellent publication of threat intelligence provider Recorded Future, to share the story of how I became interested and involved in cybersecurity and why I co-founded Bluevoyant LLC with Jim Rosenthal. The full interview can be found at The Record

 

When Tom Glocer was serving as a top executive at Reuters, the business news and information provider, cybersecurity was rarely the main story.

But in the roughly ten years since he’s left the firm, the finance sector has been rocked by cyberattacks and internet-enabled bank fraud, including multimillion-dollar nation-state heists and data breaches that have cost CEOs their jobs. Glocer, who has served on the board of directors at Morgan Stanley since 2013, decided to get into the business of cybersecurity in 2017 by launching BlueVoyant with former Morgan Stanley COO Jim Rosenthal. The startup has since added executives and advisors to its ranks including former GCHQ director Robert Hannigan and former Joint Chiefs of Staff chairman Admiral Michael Mullen.

One of the firm’s focuses is on small and mid-sized companies that often lack the budget and expertise for state-of-the-art security tools. These businesses, to which BlueVoyant acts as something akin to a for-hire security operations center, might have data, customers, or technology that makes them an attractive target. The Record caught up with Glocer recently to talk about the company’s long-term plans, how boards are dealing with cybersecurity, and how the finance industry is handling new threats. The conversation below has been lightly edited for clarity.

The Record: I want to start by going back in time to your experience at Reuters—when did you first realize that cybersecurity was going to be such an important issue both in your life and in day-to-day business operations?

Tom Glocer: I had always been enamored of technology and computing in particular since college. But other than writing some early code, which I had the better sense of stopping, I wasn’t in the weeds on it and nor was I Reuters. But we were operating through the ’90s and into the first decade of the 21st century this really large electronic foreign currency dealing system. There were really only two platforms at the time if you were trading foreign currency, which was the first asset class to really go predominantly electronic. Later we also had Instinet, an equities trading platform, and much later Tradeweb, a fixed income trading platform. But we had already noticed things around 2000—my CTO came to me and said we’re getting probed. At the time we had better control of our internet access, because most people on staff could run their job without it and everyone didn’t require ubiquitous immediate access. So we only had openings to the public internet at like three points, and we could see weird stuff being hurled against our proxy servers there.

And that was interesting to me—it was interesting on a technological level, how do you do this? And it was interesting geopolitically as well, who’s doing this? A 400-pound teenager, a nation state, or some shadow in between the two? That was really how it got started, and then to pick up the story at a certain point… towards the end of my Reuters time—I stayed until 2012, but let’s say 2008, when I moved back to U.S. from London to run the combined Thomson Reuters—somebody who worked at the company came to me and said there are a bunch of NSA, CIA types—Mike McConnell, Michael Hayden, Michael Chertoff—who are concerned that Wall Street is not paying enough attention to the threat. Would you be willing to host a series of lunches and dinners in New York or in a couple of cases take a traveling troop down to Fort Meade and we’ll just scare them a bit?

They didn’t share anything that you couldn’t find in The New York Times, but they did it in a way that made you feel like you’re an insider—they’re sharing these incredible secrets, isn’t this cool? It was pretty targeted, it was pre-JPMorgan, pre-Equifax, it was before CEOs had come to learn that you could lose your job if you didn’t pay attention to this.

TR: Looking at the financial sector 10+ years later, the general reputation is that they at least spend more on cybersecurity than other sectors, and are probably more secure. Do you think the intelligence folks who came to you with concerns in 2008 still have the same fears?

TG: I think that’s accurate… I obviously do see what gets done at Morgan Stanley, which is how I came to form BlueVoyant with Jim Rosenthal because he was the COO at Morgan Stanley with operational responsibility for technology, and therefore of cyber. To me, the great question that every director wants to know—whether they’re more technical or less—is am I spending enough money? And then number two is, am I getting bang for the buck?

The first one is hard enough to answer. You can sort of begin to benchmark that. But whether you’re actually spending on the right things and getting value for money and how defended are you… that’s all over the map.

TR: Metrics have become a big discussion among cybersecurity leaders—as a board member, where do you think the industry needs to mature?

TG: I think part of it is a generational thing. I have not sat in on a Facebook security board review, but I would think that an audience like Mark Zuckerberg would be more interested, more receptive, and care a lot about this issue. I’m 61, and my era of CEOs—and this is a terrible generalization—if you mention tech or cyber or even we’re thinking of swapping out PeopleSoft for Workday… the answer you should get is, “That’s incredibly important. These are platform decisions. They’re core to agility and strategy and cost.” But what you often get is, “Oh, you want to talk about plumbing? Let me take you over to this little room with no windows where we’ve got the geeky CIO, because I’m a big swinging CEO and I only deal with strategy and important issues.”

Fortunately, I think that’s changing naturally as this generation of managers has grown up in and around computing. And there’s been enough bad stuff that’s happened—people who’ve really lost their jobs—that even if you’re inclined to do that, you at least have to pay lip service and say that this is a super important issue. Therefore, yes, I think CEOs and boards are paying more attention to metrics, things like the NIST standards that helped at least create a framework.

To me, there are a whole bunch of really interesting governance questions around things like do you need a cyber expert on your board? Well, it doesn’t hurt to have somebody who’s well-versed, but the rest of the directors certainly shouldn’t say, “Great, we’ll let Mikey try the cereal and now we don’t have to care about it.” There is no concept under at least U.S. corporate law that you can expertize one director and therefore the others are off of some liability hook—and nor should there be. But I think in general, people are getting more educated and asking better questions.

I do speak a lot to boards with BlueVoyant and I’m also chairman of this thing called Istari, which is the holding company for Temasek of Singapore’s various cyber investments, including BlueVoyant. And what I tell people is that the questions don’t have to be about API injection scripts or other deep minutia. You can ask the CISO out of the earshot of the CFO: “What was the total budget you put in a request for? What did you end up getting? Are you comfortable where that line was drawn? What are the next three topics that fell out of the budget that actually you must have felt important enough to include in the first place? What do you think about that? What’s your strategy? Do you do it in-house or are you outsourcing it?” A lot of that stuff is not technical and doesn’t need to be.

TR: To follow up on what you were saying earlier about people losing their jobs over cybersecurity failures, are you referring to a specific incident?

TG: I was thinking of Equifax, and I think the CEO of Target also essentially lost his job. Others haven’t, and when I get asked by CEOs what’s the difference, the answer usually ends up being an ex-post review by the board with a whole bunch of experts that they’ve pulled in. And the question is, did our CEO at least take all the reasonable steps? Did we spend roughly as much money? Did they have a process to review this, etc.? And it’s like every other aspect—you get the benefit of the business judgment rule. But the question is, viewed in hindsight, were the efforts you made reasonable under the circumstances of the threats that you were aware of or should be aware of?

TR: It’s interesting how it took until CEOs started losing their jobs for the conversation to shift.

TG: And I think context matters a lot. In the case of Equifax, there’s obviously a huge amount of private consumer data, as there is in, let’s say, the Morgan Stanley private wealth business. You would expect us to take more care to keep that financial information private than say Zoetis, the animal health company that produces flea and tick collars. I’d like to keep that pet health information confidential too, but on a relative basis… If data about the temperature of a cow population ends up in a pastebin site, that doesn’t worry me as much.

Glocer serves on the board of Morgan Stanley. “To me, the great question that every director wants to know—whether they’re more technical or less—is am I spending enough money?”

TR: What is the latest with BlueVoyant? The company raised $83 million in 2019—how big is the company now?

TG: The latest raise was actually in the 2nd quarter of 2020, and I’m pretty sure we haven’t said publicly what it is, but let’s say we’re closer to unicorn status [a $1 billion valuation] than farther away. That was our B round led by Temasek of Singapore, which as an investor is very focused on the security of Singapore Inc.—they’re making a significant financial and energy commitment to the space.

TR: What’s the grand plan for the company?

TG: It’s still early years and we have a lot of growing to do. The history of the company was Jim was retiring from Morgan Stanley, where, as I mentioned, he was the COO. I at the time was chairing a committee of the board called the Operations and Technology Committee, which now we’re seeing more companies follow the idea of a dedicated committee not just to cover cyber—although obviously that as a defensive matter is a large part of the mandate—but also what I think of as the offensive uses of technology. Not cyber offensive techniques as much as are we using everything we should be in machine learning, cloud, etc.

So anyway, Jim was getting ready to retire, I guess in 2017. And I had been babysitting a set of cyber assets and relationships at a friend’s company, K2 Integrity. So we had a dark web capability out of Tel Aviv and we had what’s grown into the BlueVoyant Incident Response Group, which was sort of the former New York FBI cyber unit. Jim wanted to do one more entrepreneurial thing after Morgan Stanley and McKinsey and Lehman, and I said why don’t you take a look at these assets and figure out what part is underserved or where is the opportunity? And what came back was two ideas: One is the third party risk supply chain focus, which is really the most differentiated part of the business. The idea that, take Morgan Stanley as an example, I would never say we’re 100% guaranteed from first party attackers, but you have to be a pretty sophisticated nation state to get in, move laterally and and do damage. Nobody would say impossible. But Morgan Stanley has over 10,000 suppliers and one is vulnerable via the supply chain and the potential there to introduce malware and ransomware. Even if it’s just one key supplier and they’re out of business… If you’re a pharma company and your supplier of active pharmaceutical ingredients is taken out… Everyone’s got these just-in-time supply chains, and that’s also a significant risk of your business.

The other part was, since we believe the right way to do that was not to send out another hundred thousand signals from the supply chain, we thought we should do it on a managed basis to actually help with that load and improve the signal-to-noise ratio— which ultimately I think is the holy grail across cyber.

And so we thought, OK, while it’s a little crazy to start two business lines as a startup, there would be a natural synergy in doing a modern managed service. If we were going to do a managed third party risk for large institutions, why not also do managed service for smaller and mid size businesses who frankly could never spend enough money to protect themselves. I always use the example of the Dime Savings Bank in New York—Morgan Stanley spends hundreds of millions of dollars just on cyber defense and hires fabulous people like Jen Easterly, who’s now leaving to go into government to lead the Cybersecurity and Infrastructure Security Agency. You’re not going to be able to do that if you’re a small or medium sized bank, but nonetheless, you’ve got SWIFT codes, you’ve got electronic payments, etc. I think you’d be an attractive target. What do you do? Do you roll your own, or maybe it makes sense to rely on a third party like us where we can invest once and spread that cost of that sophistication?

So that was the genesis of the company, and more or less the two business lines.

TR: When you talk about supply chain risks, I assume that the SolarWinds attack has been a wake-up call for all sorts of companies. Have you seen a lot of interest there?

TG: It’s interesting, NotPetya had just happened when we were forming the company and I certainly didn’t think it was that esoteric—it was certainly well publicized even in the more general business press. So I was going around basically saying, look, this was contamination via a small Ukrainian tax provider where they managed to weaponize an automatic update of the tax software, it’s a supply chain attack. People recognized it, but somehow it didn’t feel that the penny had dropped, or at least not to us. But now with SolarWinds, it’s unfortunately for society a very good thing for BlueVoyant, because now the penny has dropped.

Maybe the difference in the four or five years is that people were still playing catch up to their own perimeter defense and their own endpoints… They’re not 100% done there either, but now you raise your head above the parapet and start worrying about your periphery.

After the Equifax breach, “CEOs had come to learn that you could lose your job if you didn’t pay attention to [cybersecurity],” Glocer said.

TR: How would you characterize the companies that have come to you in the wake of SolarWinds? Are they both big and small, or are they in certain sectors? Have you gotten a lot of interest from government-related organizations?

TG: It’s definitely the largest ones, in part because it takes a fair amount of work to do it properly. You need to identify all of the suppliers—that’s not too difficult, most well-organized companies can pull that out of their billing systems or procurement. But then to get that signal-to-noise ratio right, you need to accurately footprint the attack surface of the supply chain, and you’re looking a lot from the outside. We’ve invested a lot in the tools to take an outside-in view of the supply chain and then work with those companies and say, “Look, your rating is an 83, let us help you get up to a 90 because that’s what your purchaser expects you to be.”

And then, yes, government especially now with the change of administrations and the really terrible revelations of just how broad the penetration is—not just SolarWinds, but the Microsoft Exchange situation as well—they’re for the first time realizing we can’t do this all out of the NSA. It’s very nice that we’ve secured the .mil infrastructure, hopefully. But the government is very reliant on .com for everything from logistics to projection of force. And we’ve got really good ongoing discussions about rolling out the capability for government.

TR: SolarWinds also showed that hackers are looking at attacking their targets through the side door, which makes managed service providers especially vulnerable. I’m curious how your company, which falls into this category, deals with this risk and stays protected?

TG: It’s a very good question. We certainly live by the adage that people who live in glass houses shouldn’t throw stones. We use our own technology and data on ourselves. We have a first-class CISO. And we do that famous trade-off between security and convenience. It’s a royal pain in the ass trying to log into BlueVoyant… we do all the things we tell our customers to do. We don’t have the arrogance to believe that we can’t be penetrated, but if we were it would require a high level of sophistication.

TR: When you’re thinking about new technologies or practices down the road, what is catching your interest?

TG: I’m thinking a lot about the increasing dependence in all of our businesses and our personal lives on technology. I hear stories about people who have old-fashioned mechanical typewriters because they don’t want to create a digital record. I think a lot about central bank digital currencies, including crypto, because there seems to be a whole lot of momentum—appropriately—to moving the world’s cash systems to a digital currency. And just based on the experience of the last 10 years, if the Bank of Bangladesh had a digital currency rather than just moving some money via SWIFT out of their Fed account, how much worse would it be? And what happens if the ledgers are somehow able to be tampered with? You don’t have to necessarily steal actual currency, it would be enough that if everyone’s ledgers or enough ledgers were off by a penny and you couldn’t balance the amounts of assets and liabilities, I think the world would run into an instant bank run panic. And those are things that folks at the Fed and the Bank of England worry about, and rightly so. In the U.S. right now, there’s this whole popular theme of the Chinese outpacing us to go to a digital Yuan. Nonetheless, this is an area where you want to be really, really careful. And our experience with places like the OPM and other parts of the federal government don’t give a lot of confidence that we’d be able to protect it at the moment.

TR: Cryptocurrency has gotten a lot of blame for the rise in ransomware attacks over the last few years—it will be interesting to see how governments deal with that as they try to role out digital currencies.

TG: In many respects, the current regimes on things like know your customer and anti-money laundering are diametrically opposed to the foundational principles of blockchain and bitcoin, right? If it’s supposed to be a decentralized end node authentication system and you actually don’t know the identity of the endpoints, you therefore have to reintroduce as an aftermarket retrofit the machinery of know your customer on a framework and an architecture that was built precisely not to allow you to do that.

When I look at the deeper future, I think we will live in a world where it will be too important not to know identity on what we call the internet. The Chinese already do. Their digital currency—they’re not running on a free ledger system there. They will know exactly who’s transferring to whom. So one is the end of anonymity. The other is that the internet that we built on the back of 13 or so trusted institutions, where Harvard trusted MIT, which trusted Stanford… that’s got to be replaced by something that’s secure down to the chip level. But I think the cost will be too high to continue to run this pretend Wild West, which actually is vulnerable.

Unfortunately for all of us as world citizens, cybersecurity is an amazing growing market. Maybe there will come a day when all of this ends up being concentrated in only three firms. But I think more likely than not, there are probably 500 firms around the world that can each make a major contribution to keeping us safer and grow really substantial billion-dollar businesses. And it’s nice to be in that phase of industry.

 

This week I had the pleasure of giving a talk to The Reuters Society — an alumni club of sorts for my favorite news organization.  As I explain in these remarks my loud opposition to  Donald Trump in my post Reuters years would have been inconsistent with the values of  Reuters Editorial that I adopted and proudly defended during my years as CEO.

 

I made many friends in my 19 years in Reuters Group PLC (and its successor company Thomson Reuters Corp.); learned a great deal and greatly enjoyed the company culture which, to me, mixed principled journalism and a global outlook with an affinity for technology and a commercial edge.

 

One aspect I very much took to heart during my time as chief executive was never to publicly express my own political views.  While this might not have been strictly necessary given the separation of church and state at Reuters, nonetheless I felt it was important as people might not make the fine distinction that the CEO was speaking in his personal capacity and not as a representative of Reuters Editorial.

 

This was trying at times such as during the aftermath of 9/11 when I had to explain to the then head of Reuters America why he needed to take down the American flag then  displayed on the large electronic billboard atop the building because statelessness was important to our independence and there should be other ways in which we could express our support for the people of NY.  As one wiser head counseled me: “How would we like it if Saddam ordered the Baghdad bureau to fly the Iraqi flag.”

 

So, given this history and my own actual disinclination to politics, I largely stayed out of the political debate until riled and offended into action by one Donald J. Trump.  Can there be a more execrable human being on the face of this earth?  For me, Trump was the antithesis of every admirable quality I seek in fellow men – intelligence, tolerance, worldliness, respect for history, science, the truth and hard work.  I need not go on to list all his miserable traits.

 

This was not a new aversion for me.  I had grown up in New York and seen his racism, misogyny and buffoonery up close.  What I truly resented was the way in which he routinely stiffed hundreds of contractors, carpenters and artisans on their bills and then counter-sued them if they dared try to collect.  Bankrupting five companies only represented his economic violence writ large.

 

This perhaps explains why I not only publicly and financially supported Hilary five years ago (although she was far from the ideal candidate), but why I kept it up on my blog, on Twitter and elsewhere for five years

 

So, this finally brings me to my topic today, how American business has found its political voice in these last few weeks.  Talk about burying the lede!

 

While there have been some notable exceptions, American business largely either welcomed or at least tolerated the first three Trump years.  Yes, there were some noble voices like Ken Frazier, the brilliant African American CEO of Merck, who resigned from one of the presidents councils in the wake of his racist both-sides-ism concerning the Charlottesville mob; however, in general CEOs stayed mum and welcomed the corporate tax breaks and deregulatory agenda.

 

That began to change in the lead up to the election and changed for good once Trump told the Big Lie: That he had actually won the presidential election, and won it in a landslide, for that matter. Trump and his loyal henchmen like Rudy Giuliani and the Fox So-Called News anchors roused the Republican base to “Stop the Steal” and launched over 60 frivolous lawsuits to challenge perceived fraud and irregularities in elections in the key swing states of Arizona, Georgia, Michigan, Pennsylvania and Wisconsin.  Not a single one of these courts, including those recently stuffed with conservative Trump-appointed judges, found there was any cause to overturn the results.  After multiple recounts and audits, Trump’s own consigliere, William Barr, declared there was no fraud and Chris Krebs, the well-respected Director of the government’s Cybersecurity and Infrastructure Security Agency (or CISA),  declared it the “most secure” election ever.

 

None of this, however, would deter President Pinocchio.  As the days ticked down toward Congressional certification of the election results, Trump and team grew more desperate and CEOs, timidly at first, and then more bravely began to add their voices to the journalists, academics and former government officials warning about a threat to American democracy.

 

One such effort was led by Professor Jeffrey Sonnenfeld of Yale School of Management, who enlisted me to help rally the troops.  In a series of Zoom meetings straddling the January 6 insurrection at the Capitol, 40 to 50 prominent current and retired CEOs found their voices.  There were parallel efforts by the Business Roundtable and National Association of Manufactures, among others.

 

As any of the journalists on this video will know, CEOs are notoriously shy to get dragged into what they perceive to be partisan politics.  This is not crazy.  We don’t want to offend employees with different politics, we don’t want to piss off customers and we are afraid of government retribution.  Others like me might have an editorial justification for keeping quiet; still others just feel that they should stick to business issues and not grandstand on the political stage.

 

My argument to the reticent executives was that Trump’s threat to the rule of law and outright incitement to violence went way beyond the confines of normal politics and had, in fact, become a core business issue.  To wit: Respect for the rule of law was not some abstract civics notion — it was the very foundation of a market economy.  Businesses rely on the enforcement of contract and property rights, the predictability and stability of judicial review and enforcement, and the peaceful transition of power.  The United States benefits greatly from the reserve currency status of the dollar, but this is not some aspect of so-called American Exceptionalism destined to be maintained for all time.  Rather, it rests on the strength of the American economy and the pillars of a constitutional democracy. There is a reason so many businesses are organized and listed on US and UK stock exchanges – even Russian oligarchs know this is where you set up shop if you want to avoid the kleptocrats.

 

Thus, I argued it was incumbent on all of us to raise our voices, but public virtue-signaling was not enough. Davos-like speeches and proclamations have their place, but we needed to hit the political opportunists who were enabling Trump in the only place they cared about — their campaign wallets.  So, many of us committed personally and pledged to encourage our companies to no longer contribute to the political campaigns of any of the 140-plus Congressmen who opposed certifying the clear election results.  Cynical opportunists such as Ted Cruz and Josh Hawley were singled out.  These elite products of Harvard Yale and Oxford, were not just Tea Party yahoos — they knew better, but reasoned they had a free option to pick up the Trump base for their presidential bid aspirations at no cost to them.  They knew that the challenge to certification of the election results would fail to pass the Democratic-controlled House, and likely the Senate as well, so there would be no cost to these opportunists.  We swore to impose such a cost.

 

So if this is beginning to sound like some adoring elegy to the CEO class —apologies. I believe we did the absolute bare minimum that responsible leadership requires and that many of us waited far too long to reach this decision.  However, with trust in media and government at all time historical lows according to the influential Edelman Trust Barometer, all members of civil society need to raise their voices.

 

As Ben Franklin is rumored to have replied to an attendee of the Constitutional Convention who asked what form of government was contemplated, a monarchy or a republic. Dr. Franklin famously replied: “A republic – if you can keep it.”

 

There is some doubt as to whether Franklin actually spoke these words, but there is no doubt after the failed Trump experiment that Americans, even the CEOs among us, have learned this lesson.

 

I was recently interviewed by Bluevoyant LLC, the cyber defense company I co-founded and chair, on my predictions for the post-COVID business world.  While it remains premature to proclaim the end of COVID, with novel vaccines now well on their way to market, I hazard the following.

 

This year, COVID-19 has disrupted businesses and global economies in extraordinary ways. Add to this a highly controversial US Election and Brexit, whereby the UK could leave the EU without a deal, and you can start to see how organizations have been forced to consider a different type of future. Here, former CEO of Thomson Reuters and BlueVoyant Executive Chairman, Tom Glocer, provides his view on the business outlook and trends challenging boards in 2021.

 

Prediction/trend 1 – Lack of resilience in supply chains

There are a conjoined set of issues around the vulnerabilities of our supply chain that COVID-19 has unmasked. The primary one is around the active ingredients in vaccines and pharmaceutical drugs; many of whcih have been single-sourced from China or India. But the issues extend beyond the pharmaceutical industry and are far larger, for example, in the tech world, the Apple supply chain has also been affected — many components are manufactured in China.  Likewise, components for batteries and rare earth minerals are being sourced from both friendly and unfriendly places.

 

Going forward, there will be multiple years of effort to either repatriate supply chains or at the very least, a requirement to make them more durable. This is a move towards anti-globalization. The current model works from a cost efficiency standpoint. However, this may not be the case moving forward, whereby we will likely see a deterioration in the level of just-in-time integration of supply chains.

 

Prediction/trend 2 – Real estate and travel will change indefinitely

Real estate and travel have arguably been the two sectors most impacted by COVID-19. When we have some return to normality, will we go back to flying again with the regularity that we did before the pandemic? Likewise, will we go back to offices operating in the same way and what sort of offices will these be? With remote/home working resulting in a distributed employee base, this presents a subsequently larger cyber attack surface. Employees using their own devices on home networks will continue to be a challenge for organizations. In certain sectors, such as financial services, organizations have home devices completely locked down but the average commercial/industrial enterprise doesn’t have such a disciplined remote set up and therefore we will continue to see adversaries using ‘Bring Your Own Device’ (BYOD) as an attack vector.

But how many offices will close down? And if we reduce travel what impact will this have on airlines and the travel industry as a whole? The nature of the work we perform in offices and at home will change. People will go to work to collaborate. Therefore, solo work in an individual office is likely to reduce significantly. In fact, solo working will only be undertaken in the office if the employee cannot work from home.

The sight of an office-based employee wearing headphones to aid concentration will therefore become more rare — if you need to isolate to work effectively and have the space at home you will work at home.  As a result, we will see an evolution in the type of spaces required with more conference and meeting rooms, and open collaborative work areas. This will force employees to be more deliberate about scheduling their activities.

 

Prediction/trend 3 – A recession was inevitable

In terms of spending and investment, even if organizations cut back in 2021, enterprises will still see the depreciation flow-through some of the big investments that they committed to in 2018-20.  However, at the start of 2020 organizations were getting nervous that we were coming to the end of the ‘bull market’ and they had started to trim. But you can’t bring CAPEX to a screaming halt; instead organizations will delay their spend as long as possible.

That said, we will continue to see investment and movement to the cloud, with organizations making their infrastructure as agile and marginal cost oriented as possible. Organizations will try to be very nimble in their spend as they deploy.

 

Predictions/trend 4 – A focus on rightsizing the business for the future

I sit on three public and five private boards so as you can imagine the challenges being discussed around the boardroom table do vary quite a bit depending on industry and size. One of the companies I work with is an  advertising agency holding company. Firstly, the digital shift has impacted their business and secondly, the COVID-19 pandemic has been a huge shock with their clients’ marketing budgets being cut back. This has led to fluctuations in spend, with clients cutting back and then re-investing again.

Therefore, how do you right-size your business and infrastructure in that environment of uncertainty? Certainly, here in the US, the banks have been doing incredibly well, especially the investment banks. Another company whose board I sit on is a large pharmaceutical. The big question they are facing is how fast can we get COVID-19 therapeutics and vaccines out while still meeting the demand for all the other drugs? And if you abstract this challenge and layer it onto other industries, boards will be thinking about how they keep driving forward to meet existing demand, without knowing what that demand will be and not having a fully-secure supply chain.

Prediction/trend 5 – Growth in the gig economy

Whether there will be a consumer recession and an onset of credit problems or not will depend, in part, on government action and stimulus packages. How many people will end up being out of work?

With so many people potentially out of work, will we see an explosion in the gig economy and platforms like Fiverr, SpareHire and Gigster.  I’m not just talking about Uber or food delivery and so on, but more business-oriented platforms. Many people who either can’t find work or prefer to work for themselves will be driving demand for these solutions. This will lead to an evolution of business models with employers sourcing from the gig economy. But how do you build a set of services like banking, insurance, and healthcare for this industry? This brings into focus a number of issues around trust and payments. For example, how do you deliver services for a client in Turkey if they want to pay you in Turkish Lira?

 

Prediction/Trend 6 – Acceleration of digital transformation business plans

Owing to the pandemic, we’ve seen three to five-year digital transformation plans being squeezed into three to five-months. Many businesses are scrambling to get their heads around what has happened whereby five years of technological transformation has happened in mere months. And, while there is certainly a perception that we have seen enormous transformation, I believe this is because the penny has only just dropped with the older generation that we can do things differently – and that may even mean ‘better’. When I was CEO at Thomson Reuters, I always felt there was a real divide between the digital natives and digital immigrants. So, I think digital transformation initiatives have been held back by a bunch of 50 and 60-year olds who weren’t convinced, who didn’t even know how to schedule their own Zoom meetings. Now suddenly, through adversity, they realize they can do this and it is actually a better way of working – they are digital immigtrants!

 

Prediction/Trend 7 – Diversity, ethics, ESG and sustainability

In the US, the Black Lives Matter movement has reset responsibilities and priorities. However, one of the challenges for public boards is how do you take these issues, and those such as environmental, social and governance (ESG) issues beyond virtue signaling to reality? Do you write letters to your whole business ecosystem saying, ‘we expect everyone to adhere to this policy’? How do you police your whole supply chain and ensure they are procuring ethically and responsibly? It is significantly harder to make the substantive change, than to sign off the press release or marketing campaign.

 

Movements and initiatives such as ESG will only resonate when boards start to financially account for climate change. For example, this will occur when board executives can monetize the true cost of climate change. Up to now it has really only been insurers who have recognized these costs as a result of payment on claims such as those resulting from the Californian and Australian wildfires.

 

Under the auspices of the former Governor of the Bank of England, Mark Carney, the Sustainability Accounting Standards Board (SASB) championed a great initiative around sustainability accounting for companies. However, in a couple of years’ time all reporting companies will squeal and the PWCs and Deloittes of this world will have a field day as they implement all the accounting and control mechanisms to allow this to happen.

 

Prediction/Trend 8 – US Election and Biden – A steady period of normalization

In January 2021, we will see a new administration in the White House, leading to a normalization of the US Government. There will be three likely Biden effects: 1.) a divided government with a Republican-controlled Senate, 2.) a short-term stimulus plan; and  3.) a focus on rebuilding government institutions and relationships with traditional allies. With a Senate still likely controlled by the Republicans, true radical change in healthcare or tax policy is unlikely to go through under the Biden administration.

 

Therefore, we will enter a period of ‘steady as she goes’, which can be good for the markets for a while. We don’t need to do anything radical but stabilize and unite. However, in the long-term – on big issues such as climate change, inequalities in society – the Biden administration won’t be able to make sizable changes, as the government institutions are in gridlock.

 

Prediction/Trend 9 – Brexit is good for some Nation-states

Brexit is such a gift to the Russians. It takes the UK out of the bloc, as one of its strongest members, and weakens Germany; it makes the EU tip more towards the southern countries. I believe there is a golden thread that links Trumpism in the US, and Brexit. It has been remarkable how much damage has been done.

 

Prediction/Trend 10 – A shift from vendors to trusted advisors

Here at BlueVoyant, we are in the cyber defense business which will (unfortunately for society) remain a growth industry for a long time.

 

There is currently a real trend of boardrooms becoming much more involved in cyber, treating it as an existential  risk. But boards are now asking core questions – “How much spend is enough? For years my CISO has been telling me I need firewalls, endpoint, agents, etc.” but now most CEO and CFOs want to know “How much am I spending relative to my peers, and how do I benchmark?”

Whether you lose your job after a cyber attack stems largely from whether you did everything reasonable to prevent such an attack or were you delinquent in your duties. This is why boards want to benchmark against their peers. They want to know whether they are spending enough, and in the right areas, enabling them to get a good “bang for the buck”. Those are the key questions in every boardroom.

As many businesses have shifted to the cloud and continue on their migration journey, this has put the spotlight on managed services. As boards and senior executives think through that spend question, they will also be asking whether it makes sense to do it in-house, or whether there is a better way to share and defray the cost of proper defense? If I am one of the main clearinghouse banks i.e. Barclays or Lloyds, I will have a sophisticated set of infrastructures and I can afford the best talent as advisors and heads in my security division. But if I am a tier 2 bank or a building society I can’t spend £100 million on cyber, I can’t afford to pay top money for senior security staff, but I still have SWIFT codes, payment services, and customer data which, if breached, could  destroy the business’ reputation. Therefore, how do I get Lloyds-quality defense but at a price and in a manner I can afford? Here is where BlueVoyant can really help.

Ultimately, this will shift power away from vendors in favor of trusted experts and advisors. That trend is real, and the future is already here. But everyone won’t come to that conclusion at once. It will take time.

 

Almost four years ago I wrote a hopeful but quixotic post addressed to the president-elect calling on him to listen to his better angels (if any exist) and pivot from his divisive campaign rhetoric to a more mature, inclusive approach to governing.  Needless to say my words fell on not just deaf ears but a completely closed and uneducated mind.  Readers can draw their own conclusions but I would not give my persuasive powers high marks.

 

 

Dear Donald,

I am writing you this letter because I love our country and, despite your hateful rhetoric, I suspect that you do as well. Since I doubt you do much reading other than fanzines about yourself, I don’t expect you to read this or the many other unflattering (but true) posts I’ve written about you in this blog over the past four years. Nonetheless, I hope that others closer to you will convey the recommendations (really, the hopes) I set forth below.

Listen to your better angels.

Set yourself the goal of competing with the Obamas in dignity, grace and inclusion.

Disavow the racists who celebrate your victory with hate speech and waving Confederate flags.

Surprise us all with kindness, compassion and inclusiveness.

Eschew the has-been loyalists and fanners of the flames of prejudice who campaigned with you by appointing the best and the brightest to advise you. Listen to them patiently and seek out those who will speak truth to power now that your office confers it upon you and you need not bully others to obtain it.

Appoint a Muslim and a Mexican-American to high office. Better yet, make sure they are feminists.  Appoint the best qualified jurist to the vacant Scalia seat on the Supreme Court.  Since you tend to pack your teams with family members you might even consider choosing your elder (and better behaved) sister, Judge Maryanne Trump Barry.

Focus your boundless energies on attacking the entrenched bureaucracy of Washington – the kudzu of rules and agencies that strangle good governance. You can start by merging the SEC, CFTC and CFPB into a single agency that balances investor protection with vibrant and fair capital markets.

Don’t tamper with the independence of the Federal Reserve, but follow through on your proposals to use the fiscal policy of infrastructure investment (as I’ve been arguing for years in this blog) to relieve the burden that the Fed and other central banks around the world have had to carry with monetary policy alone.

Revamp the tax code to make it simpler, shorter and more fair: reduce the corporate tax rate to be more in line with the economies around the world with which we compete; move to a territorial system of corporate taxation and encourage the repatriation of foreign source income; increase the earned income credit for poorer families to provide a basic income to those who work less skilled/lower paying jobs; abolish the preferential treatment of carried interest; abolish the AMT but make all individuals (yourself included) pay at least 20% of their income and gains.

Protect the environment. If you really don’t believe the science of global warming, ask your son Baron – most 5^th Graders who attend Columbia Grammar in NYC know more than their parents about climate change.

On healthcare, rebrand Obamacare Trumpcare if you prefer and fix the insurance/payment provisions that don’t work,  but leave in place the protections that actually benefit the folks who elected you such as coverage for those who had no health insurance and the prohibition on denying coverage based on prior conditions. 

Don’t underestimate the value the US receives from the “Pax Americana.” Yes, the United States bears a disproportionate share of the cost of defending freedom and democracy around the world, but we benefit greatly from free trade, open shipping lanes and the reserve currency status of the US Dollar. Respect international treaties and don’t encourage further nuclear proliferation.

Keep a cool head; don’t let others bait you; keep off Twitter, you now have a very big megaphone.

Oh, and don’t build that silly wall.

During a crisis such as the one in which we are experiencing with Covid-19, we learn (or perhaps rediscover) how much of our world functions on the basis of trust.  Individuals also reveal their best and worse selves, but I promise not to make this another blog post about President Pinocchio.

 

In his widely read Sapiens: A Brief History of Humankind, Yuval Noah Harari explores how belief in ideas such as the nation state, religion and money have permitted humans to develop at a far faster pace than would have otherwise been possible through natural selection working its magic via pure biochemistry. Harari refers to these cultural artifacts as “myths” — they are really just shared beliefs.

 

This got me thinking in my coronavirus-driven isolation of the institutions and services upon which we rely that may be equally intangible.  Examples unfortunately abound in today’s news flow: the availability of hospital beds and ventilators for the very sick in the medical world and liquidity (ultimately cash) in the financial world.  Banks and other financial institutions exist to intermediate cash flows and desired maturities between borrowers and lenders, and companies and investors.  Bank panics occur (and they used to occur frequently) when, typically, depositors lose faith that their bank has enough cash to satisfy all withdrawal requests and begin frantic withdrawal attempts.

 

The financial system and the world’s economies could not function if banks held 100% of their deposits in cash-on-hand.  When we borrow, we rely on banks to lend us money on a longer-term basis — how many of us would take out a 30-day revolving mortgage?  However, when we deposit money in our checking or short-term savings or money market accounts, we expect to be able to spend or withdraw those funds on short notice.  The US Federal Reserve, in close coordination with central banks around the world, is doing an excellent job in this health crisis to ensure adequate liquidity in the system and prevent a public health crisis metastasizing into a financial crisis.

 

Until Covid-19 I had not focused on how much of our public health system also functions like a bank.  It would be prohibitively expensive for any nation to maintain sufficient hospital capacity to meet a “run on the bank” type demand for medical services.  Obviously, the US could not and should not maintain 320 million ICU beds and ventilators or the trained professionals to staff them.  However, what is the right number?  Financial regulators and the boards of responsible banks spend a lot of time and thought (and stress test their conclusions) to establish what is a safe amount of capital and liquidity to maintain.  Good hospitals do the same for the communities in which they operate; however, I believe that the US, Italy, Spain and other nations have discovered this month that they have not done a good enough job mandating sufficient resources at the national level.

 

Continuing this analogy of the pandemic virus qua bank run, health authorities need to introduce sufficient liquidity into the system by blunting demand (through social distancing and additional hygiene measures) while rapidly increasing supply (through providing additional hospital beds, ventilators, personal protective equipment and testing capacity).  These measures are now, belatedly, underway but precious time has been wasted.

 

Trust is a vital social good when it comes to our health and our finances.  When the immediate crisis abates, health authorities and governments around the world need to learn the lessons bank regulators did post-2008 to restore confidence in a system that can only function on a basis of trust.

 

I delivered the following remarks at Yale Law School on the occasion of my 35th class reunion.  I found the school to be in robust health under the leadership of a great new(ish) dean, Heather Gerken.  I wish I could say the same about the state of our republic. 

 

Good morning.  This may be the earliest hour I have ever been in this classroom during my three years at Yale Law School.  Harkening back to my law school form, I have also chosen to ignore the instruction I was given to focus my talk on a topic relevant to my area of expertise.

 

You see I did not go to Harvard Law School – and therefore I have no area of expertise.

 

Instead I plan to talk today about a mystery that has confounded me since my arrival on campus an incredible 35 years ago:

 

Namely, why do people despise lawyers in general, but often admire their own counsel?  And while one can hate lawyers but still respect the rule of law, I will go on to offer some thoughts on why it has never been more urgent that we act as a nation of laws, not of men.

 

At best, lawyers are ridiculed for being small-minded, risk-averse and pedantic scriveners.  At worst, we are deceitful ambulance chasers seeking high fees, who prey upon our fellow citizens during their weakest moments.

 

This is not at all how I see my Yale classmates or even lawyers in general.  Of course, I see the occasional moral failure (Rudy Giuliani comes easily to mind these days), but I mostly see  decent human beings who were once inspired by a sense of fairness and justice, who believe in high-minded concepts like the rule of law, the dignity of hard work and the belief that we are better off solving our differences via fact-based debate following an agreed set of rules, rather than through physical violence.

 

There are many obvious reasons why society does not often recognize these finer qualites.  Some stem directly from our representation of unpopular defendants and the vigor of such defense that can sometimes verge on the abuse of process; others are driven by a focus on minutiae and a tendency to follow form over substance; and, finally there is the fee system that rewards hours worked rather than, sometimes, value added.

 

A classic example is divorce proceedings.  It is not at all uncommon for an aggrieved spouse to declare that he hates the other’s lawyer for stoking the flames of marital discord, but ignore or even praise the similar action by his own counsel.  How to explain this inconsistency?

 

One reason I believe is that lawyers are truly able to argue either side of a case and are adept at making their opponent look not only incorrect but also morally wrong.

 

However, I believe there is another deeper or more subtle reason why Americans don’t like lawyers:  We ask the question best left unsaid — What could go wrong?  What could possibly go wrong ? — And thereby we lay bare fuzzy thinking, half-baked business plans and conduct one might prefer not to appear on the front page of the New York Times.

 

 Let me give you an example.  Two big-picture, public company CEOs are meeting to agree upon an important merger.  They agree on a price per share at which Company A will purchase all the shares of Company B.  Delighted, the CEO of Company A returns to headquarters to brief his sycophantic senior team, when the General Counsel pipes up:  “What happens if Company B’s stock falls by 20%, shouldn’t we have a formula price adjustment or at least a collar below which we can walk away?”  When Company A and Company B lawyers meet to flesh out the details of the merger, unsurprisingly, the deal craters.  The big picture CEOs are furious and tell all their golf buddies that everything was going swimmingly until those damn lawyers got involved.

 

Now this is clearly an intentionally exaggerated example, and there are many shrewd and detail-oriented CEOs; however, this perception of the lawyer-as-naysayer or asker of uncomfortable questions is common and not limited to corporate law.

 

This in turn reminds me of an episode from my Yale years. Many years ago I sat in a classroom down the hall listening attentively to Guido Calabresi teach his then current book, Tragic Choices.  I recently re-read the book (yes, I did read it the first time as well), and I can say that it remains highly relevant and readable.  Most of the book is dedicated to the economics of social choice – for example, why we as a society opt to spend tens of thousands of dollars and  scramble coast guard helicopters to save a lone offshore canoer in trouble, but we do not allocate the same dollars to build railroad grade crossings that we know (at least statistically) could save more lives per dollar spent.  Guido’s answer is, in part, that there are choices that we avoid making simply to reaffrim our own humanity and avoid laying bare the implicit decisions that we would prefer not to confront.

 

As practicing lawyers, whether in litigation, doing deals or counseling clients, we do not have the luxury to avoid asking tough questions and I believe lawyers should be more explicit in acknowledging and celebrating this function.

 

This is not to say that lawyers should abandon the many roles we undertake for the public good, such as judging, teaching, representing pro bono clients and the like, but we should not be embarrassed about our role of asking the tough questions and testing propositions in detail.

 

These last three trying years of the Trump presidency have caused me to ask many tough questions concerning the fundamental soundness of our constituional democracy, and, in particular, the actual effectiveness of our system of checks and balances and separation of powers.  Many features I believed (even after a pretty decent legal education!) were elements of positive law, have turned out just to be behavioral norms or ineffective levers of social suasion.

 

For example, that a presidential canditdate should release his or her tax returns and divest of conflicting business interests. The ongoing daily assault on truly American values from this defective President has only strengthened my belief in the fundamental decency of those who believe in and champion the rule of law; those who believe in telling the truth and arguing on the basis of facts and not deceptions and lies.

 

And again there are Yale Law School ties to these noble sentiments.

During my student years here, the Federalist Society was created, and it will come as no surprise to those of you who know me that their politics were and remain substantially to the right of mine.  However, it gives me great pleasure to see a Federalist and fellow Yalie, George Conway, attack this criminal president and defective human being on nearly a real-time basis on Twitter.

 

I have never before been such an overtly political person.  I was proud to be counted among the millions of Americans who elected the intellectually-gifted and morally-upright Barack Obama to two terms, but I was not embarrassed to call George Herbert Walker Bush my president.  I am socially liberal and economically conservative, and would vote for the seemingly unelectable Mike Bloomberg over most of those in the current polarized field if I could.

 

But what we are living through now goes well beyond personal politics.  Our great nation of laws has been taken over by a corrupt and criminal con man who leads a daily assault on our institutions of government, the free press and the very truth itself.

 

George Conway is hardly a flaming socialist seeking to ban all hunting rifles and abolish Christmas.  There is probably not much we would agree on other than impeaching this President and the other’s right to advocate his position freely.

 

This month another arch conservative graduate of this august law school, John Bolton, has also joined the Dump Trump bandwagon.  And when Bolton, Conway and I see things the same way, there must be a national interest above politics.

 

And herein also must lie our road back to a well-functioning democracy in which we can have heated policy debates within the framework of a respect for the institutions of government, respect  for the rule of law and a respect for the truth.

 

These are principles of good government and good citizenship that I found 35 years ago in my professors and classmates here at Yale, and they remain ever so relevant today.

 

Americans have long enjoyed (or suffered from, depending on one’s perspective) a belief in our own exceptionalism.  Many nations and cultures believe in their own superiority despite empirical data suggesting that citizens of the Nordic countries are the most fulfilled[1].  However, the United States is, perhaps, unique in believing that the history of the US is inherently different from that of other nations and that the US has some special mission to transform the world.

 

While the assertion of American Exceptionalism never rang true to me despite my pride in the many  achievements of the United States over the past  240+ years, my travels to and knowledge of other countries, coupled with a decent grasp of world history, suggests (i) the United States is hardly the only country to excel and (ii) if we would like this long period of American dominance to continue we had best not take this role and status for granted.

 

The world has known multiple flowerings of great civilizations, each of which has believed itself to be unique: Ancient Egypt enjoyed preeminence in the Mediterranean world for 30 centuries, commencing around  3100 B.C.; Ancient China flourished from the Shang Dynasty (c. 1700 B.C. ) with some long interruptions to 1901 (and it could be argued that a new period of Chinese dominance has already begun); Ancient Greece enjoyed its centuries in the sun from the 8th century B.C. until it was eclipsed by the great Roman Republic and then Empire which survived until the fall of Rome in the 5th century A.D.; and, finally, but by no means exhaustively, the Mayan Civilization endured for some 95 centuries closer to home.  By comparison, the “American Century” has lasted just that.

 

American Exceptionalism not only largely ignores world history — what I think of as vertical blindness — it also myopically focuses on what occurs in the admittedly large, but by no means global, US landmass — what I label as horizontal blindness.  During the last century we have seen Britain lose and hand over one of the great empires in the modern world, and in this hemisphere, Argentina fall from one of the wealthiest countries in the world at the turn of the last century to the 24th by per capita GDP today.  None of Modern Egypt, Greece, Italy or Argentina should give us confidence in our own immortality.

 

The point I am trying to make beyond this litany of declining statistics is that if we wish to maintain this self-proclaimed exceptional experiment in democracy, Americans need to look backwards across history and outwards across other nations (which each seek their own form of greatness) to preserve what makes us special.  I would argue that this goes well beyond the economic and military might of the country, although these are intertwined to preserve global relevance, to the idea of America.  It is the “shining city upon the hill” in the often-borrowed words of John Winthrop. It is the land of freedom and opportunity; of religious belief but also religious tolerance; it is a country that opens its doors to immigrants and the oppressed; and it is a country that embodies the rule of law, aspires to equality among peoples; and looks hopefully to a better future.

 

It is the anthesis of all that is Donald J. Trump.

[1] See, e.g.World Economic Forum Report, Finland is the World’s Happiest Country – again, 21 March 2019

 

My mother Ursula died two weeks ago at age 97.  What follows is an adaptation of the remarks I delivered at her memorial service.

Ursula often said that she outlived all of her friends other than Helga. This not unreasonably troubled my mom, but as I often reminded her it  beat the most likely alternative.

The approach of death tends to bring out faith among closet believers, but my mom did not have much time for organized religion.  She was not in the least anti-religious; she was just anti-zealot of any stripe.  This was one of her finer points as a human being – she was very tolerant and welcomed difference before it was woke to do so.  She was delighted that my  best friend in elementary school, Matthew,  was black but she had a true German embrace of decorum and custom.

Ursula was born in September 1921 in Hamburg to a sturdy family who could have walked out of Thomas Mann’s Buddenbrooks.  She could until last week tell you the name of the local butcher they frequented and the course she rowed on the inner Alster.  She had an amazing memory and a remarkable gift for languages as I will describe later .

Had Herr Hitler not broken-up this decorous childhood, Ursula would no doubt still be living in Germany and I would not be at all.  Rather tragically for her but fortunately for me, the family escaped to Cleveland in late ’37.  While grateful to be safe, my mother, rather like the Queen whom she resembled in later years, was not amused by the Ohioan intelligentsia. Undoubtedly this forced migration at an early age contributed as much as her German heritage to her desire for custom and routine.  More about this too later.

As soon as she could, Ursula split Cleveland and moved to a West Village apartment she was ultimately to share with her life-long friend Helga.  My mother LOVED New York.  Not just as one among many great cities, but above all others.  She loved the pace, the glamour, the architecture, and the museums, theatres and opera halls.  Years later, when I told her that Cleveland had greatly improved she would have none of it.

After a couple of other jobs, Ursula eventually became my father’s secretary in the textile machinery import business my father Walter started from scratch after the War.  When Walter, Sr. had the good business sense to expand to Brazil which was rapidly industrializing in the mid-1950s he asked my mother to move with him to Sao Paulo  As the family story goes, Ursula replied that she would only move as his wife, and my father, recognizing the value of a smart, multilingual secretary, said “I do.”

I showed up in 1959 as somewhat of a mistake – a status that I have successfully strived to maintain all these years. While I was still young, 14, when my father died, I recall that our Manhattan apartment was sort of a cross between the UN and Katz’s Deli.  My mother used to complain about the Eastern European emigrants and hangers-on who had a tendency to show up at 11:00 AM Sundays expecting to be well fed; however, she was surrounded by a whirl of company and languages that I know she enjoyed.

Later, after my father died, Ursula’s social life contracted to bridge, international cinema and a handful of friends, of whom only Helga survives.  She did not complain but reassembled a borrowed posse of staff at her beloved beach in Cannes and an assortment of favored doormen, supers, waiters and concierges around the world.

My mother was a creature of habit.  Not like “I enjoy going regularly to my favorite restaurant,” but more “I want to eat there every single night.”  As Steve likes to observe, I have certainly inherited some of this DNA, but not like Ursula!  Every year from when my father died in 1973 until her broken hip in 2015, my mother stayed for two months every summer in the same French resort town, in the same hotel and in the very same room!

A word about Ursula’s remarkable gift for language. She spoke her native German, and English and French and Spanish and Portuguese FLUENTLY, and could hold her own in Russian, Polish and Hebrew – which she set about learning “for fun” in her 80s.  I used to, rather uncharitably, tell her than she had nothing to say in 10 languages, but this was, of course, very unfair, as she had a lot to say, often repeatedly.  It frustrated Ursula greatly that she could not understand Finnish since other languages came to her so easily.  Whereas,  I am happy to take a relaxing mental snooze while my Finnish wife Maarit speaks her inscrutable language to her parents, it frustrated my mother no end.

This brings me to Maarit.  My wife routinely asks me to mention her in my talks or blog posts which, like my appearance at the 2019 Consensus Blockchain conference, involves major oratory gymnastics.  Not so here.  I can confidently tell you that the single best thing I ever did for my mother in my life was to marry Maarit.  She was not only incredible at the end of Ursula’s life; she was incredible day-to-day over their 33 years together.

I will end this remembrance of my mother with a relatively recent episode that captured both her playful spirit and her secret for a long healthy life.  Four summers ago, Ursula broke her hip in a fall in the street in France and thereafter her cherished independence but also her loneliness ended.  After excellent orthopedic surgery my mother was admitted to a rehab facility behind the town of Antibes to regain mobility.  I, of course, was only too happy to volunteer to stay for the month of September to perfect my tennis, skiing and cycling, not to mention rosé drinking.  My friend Joe, being the mate he is, spent a week with me.  On one of my daily, but admittedly brief, visits to Ursula at the Maison de Re-education, Joe and I smuggled a bottle of good vodka and three shot glasses into the otherwise dry rehab facility.  This permitted my mother to maintain her nightly custom of a full shot of vodka before dinner — a potion to which she ascribed miraculous medicinal powers. This episode may have been the second nicest thing I ever did for my mom, as even in her last days on earth  she was telling this story to the nursing staff in the hospital.

A life well-lived.

With civility and civil discourse under such assault these days – from none less than the President of the Unites States – I’ve been thinking a lot about how to be a better listener and how to hear other, even disagreeable points of view.

 

When I was a practicing lawyer and I would read a trial complaint or an appellate brief, I often marveled at how clear cut the case appeared – until at least I read the responding submission.  This perhaps obvious realization continues to influence my approach to business today.  Whether listening to an investment case or simply one manager’s complaint about another, I try to reserve judgment until I have heard the other side. I also try (with admittedly less success) to employ the same strategy in my use of Twitter, although I often think that the platform is perfectly designed to hear only the like-minded users one follows.

 

A related challenge is remaining open-minded when a banker is defending the ethics of modern financial markets, or a pharma executive is proclaiming the societal benefits of the drugs her company markets.  Here the challenge is more subtle than simply hearing the other side; the problem verges on the mysticism of quantum mechanics.  Let me explain: The Heisenberg Uncertainty Principle teaches us in, simple form, that you can measure the position of an object or its velocity, but not both at the same time.  The parallel I see in debating the ethics of banking or pharma is that these are complex subjects that few of us take the time to study in depth and those who do tend to be industry insiders.  When these insiders seek to respond to criticism of their industry or just participate in the debate, they are often met with cries of “Well, they would, wouldn’t they?”  Thus, the individuals with the most knowledge are disqualified from the debate, while those free of inside knowledge carry the day. This seems sub-optimal to me.

 

Fortunately, there are exceptions to this “scientific” rule.  Academics, think tank scholars, and long-form journalists sometimes dedicate the effort to become quasi-insiders and join the debate from a knowledgeable but industry-independent position.  These efforts should be supported with our attention and dollars.  We should also seek out opposing viewpoints and listen to individuals who may very well be captive to their vantage points but who nonetheless have important knowledge to contribute to the debate.  Returning to law and science one final time, I cite Albert Einstein, a greater fan of freedom of speech than of quantum mechanics: “Laws alone cannot secure freedom of expression; in order that every man may present his views without penalty, there must be a spirit of tolerance in the entire population.”