Ex-Trump aide joins blockchain start-up

Gary Cohn, who re­signed over tar­iff pol­icy, will help ad­vise Spring Labs.

Los Angeles Times - - BUSINESS - david.pier­son@la­times.com Twit­ter: @dh­pier­son

Spring Labs, a Los An­ge­les start-up that wants to over­haul the con­sumer credit in­dus­try us­ing blockchain tech­nol­ogy, has added Gary Cohn, a for­mer top Gold­man Sachs ex­ec­u­tive and eco­nomic aide to Pres­i­dent Trump, to its board of ad­vi­sors.

The an­nounce­ment marks Cohn’s big­gest move since end­ing his some­times ac­ri­mo­nious ten­ure with the Trump ad­min­is­tra­tion. The for­mer of­fi­cial was a key fig­ure in the White House’s tax­cut plan, but re­signed in March as di­rec­tor of the Na­tional Eco­nomic Coun­cil in op­po­si­tion to Trump’s tar­iffs on alu­minum and steel.

Cohn joins a board of ad­vi­sors that al­ready boasts a num­ber of high-pro­file names, in­clud­ing Sheila Bair, for­mer chair­woman of the Fed­eral De­posit In­sur­ance Corp.; Nigel Mor­ris, co­founder and for­mer pres­i­dent of Cap­i­tal One bank; and Bobby Me­hta, the for­mer chief ex­ec­u­tive of credit bureau Tran­sUnion.

Their as­so­ci­a­tion gives the start-up some im­me­di­ate cred­i­bil­ity in an emerg­ing field of tech­nol­ogy that has wide­spread po­ten­tial ap­pli­ca­tions but has been tar­nished by its as­so­ci­a­tion with fraud­u­lent cryp­tocur­rency of­fer­ings. Last year, JP Mor­gan Chief Ex­ec­u­tive Jamie Di­mon called bit­coin a fraud and “worse than tulip bulbs.”

Oth­ers re­main bullish on the tech­nol­ogy. Wal­mart re­cently an­nounced that its sup­pli­ers of let­tuce will have to use blockchain so any out­breaks of food-borne ill­nesses can be traced more rapidly.

Blockchain is es­sen­tially a dig­i­tal ledger that’s kept on mil­lions of com­put­ers at the same time. That de­cen­tral­ized net­work pre­vents any one per­son from tak­ing own­er­ship of the ledger and cor­rupt­ing it. When changes are made, any­one with ac­cess to the ledger can see the changes.

Spring Labs, which raised $14.8 mil­lion in seed fund­ing in March, be­lieves that ap­ply­ing blockchain to con­sumer credit could help thwart hack­ers and stream­line the way fi­nan­cial in­sti­tu­tions ac­cess per­sonal credit rat­ings. By shar­ing those data us­ing blockchain, banks can po­ten­tially cir­cum­vent credit re­port­ing com­pa­nies such as Equifax and Ex­pe­rian, which ag­gre­gate con­sumer credit in­for­ma­tion and sell it back to the banks. Tougher se­cu­rity may also help pre­vent breaches such as the one that af­fected 148 mil­lion Equifax cus­tomers in 2017.

“I have been very in­ter­ested in blockchain tech­nol­ogy for a num­ber of years, and Spring Labs is de­vel­op­ing a net­work that could have pro­found im­pli­ca­tions for the fi­nan­cial ser­vices sec-

tor, among oth­ers,” Cohn said in a com­pany news re­lease. “I am ex­cited to ac­tively sup­port the Spring Labs team in the devel­op­ment of this im­por­tant busi­ness and net­work.”

Cohn re­ceived an undis­closed amount of eq­uity in Spring Labs. Adam Ji­wan, Spring Labs’ chief ex­ec­u­tive, said Cohn and the 11 other mem­bers of the com­pany’s board of ad­vi­sors have an equal stake in the Marina del Rey firm.

“Gary brings an im­pri­matur of cred­i­bil­ity and val­i­da­tion,” Ji­wan said. “It doesn’t mean we can’t fail, but we’ve tried to max­i­mize the prob­a­bil­ity of suc­cess by hir­ing the brightest and sur­round­ing our­selves with the best peo­ple we can.”

Spring Labs was founded in 2017 by Ji­wan, Anna Frid­man and John Sun, who are also founders of Avant, an on­line lender that has orig­i­nated nearly $5 bil­lion in loans and counts ven­ture cap­i­tal­ist Pe­ter Thiel as an in­vestor. Spring Labs also has an of­fice in Chicago.

Ji­wan said he was in­tro­duced to Cohn by a mu­tual friend at in­vest­ment bank Gold­man Sachs.

Ji­wan made his pitch to the for­mer ad­min­is­tra­tion of­fi­cial over break­fast, ar­gu­ing that a de­cen­tral­ized net­work could have warned about ris­ing risk in the U.S. hous­ing mar­ket be­fore the 2008 fi­nan­cial cri­sis. Ji­wan told Cohn he wanted his help nav­i­gat­ing the fi­nan­cial in­dus­try with all its reg­u­la­tions.

“We thought Gary, com­ing out of the ad­min­is­tra­tion and be­ing the for­mer pres­i­dent of Gold­man Sachs, was some­one with un­par­al­leled net­works and un­par­al­leled knowl­edge of reg­u­la­tions,” Ji­wan said. “He’s some­one who deeply un­der­stands the types of prob­lems we’re try­ing to solve with this net­work.”

Cohn could not be reached for com­ment.

Ji­wan said Spring Labs, which has 20 em­ploy­ees, has enough cap­i­tal to de­lay an­other round of fundrais­ing for more than a year. The com­pany will an­nounce cus­tomers in the com­ing months, he said.

Cohn is not the first Wall Street ex­ec­u­tive to ven­ture into the new tech­nol­ogy.

For­mer Gold­man Sachs in­vest­ment man­ager Matthew Goetz launched a cryp­tocur­rency hedge fund in 2017 called Block­Tower Cap­i­tal. And Blythe Masters, a for­mer JP Mor­gan ex­ec­u­tive who helped cre­ate credit-de­fault swaps, is now the chief ex­ec­u­tive of fi­nan­cial blockchain firm Dig­i­tal As­set Hold­ings.

‘He’s some­one who deeply un­der­stands the types of prob­lems we’re try­ing to solve with this net­work.’

— Adam Ji­wan, Spring Labs chief ex­ec­u­tive, re­fer­ring to Gary Cohn

Bren­dan Smi­alowski AFP/Getty Im­ages By David Pier­son

GARY COHN, for­merly of Gold­man Sachs, joins the board of ad­vi­sors of Spring Labs, which aims to ap­ply blockchain tech­nol­ogy to the con­sumer credit in­dus­try.

Don Bartletti Los An­ge­les Times

RE­TAIL GIANT Wal­mart, which runs gro­cery stores like this one in Hunt­ing­ton Beach, re­cently an­nounced that its sup­pli­ers of let­tuce will have to use blockchain so out­breaks of food-borne ill­nesses can be traced faster.

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.