Tyler Finn

What does it take to stay calm, cool, and collected during moments of crisis? Help your companies navigate through difficult times and deal with the sometimes personal fallout from these moments of crisis. I'm your host Tyler Finn and today we are going to be recapping some of the most interesting stories around crisis management from the past few seasons of the Abstract Podcast. Let's go. 

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Intro Music

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Tyler Finn

First up, we have Vanessa Wu, General Counsel at Rippling, on how her company navigated and survived the collapse of Silicon Valley Bank.

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Vanessa Wu

I'm taking a moment to recollect because I think all of us at Rippling who experienced it have tried to not relive the trauma. It was it ended up being an amazing moment for Rippling. But in the moment, it did feel like the world was possibly ending. So so that Wednesday night, SVB had made a disclosure that started spooking the markets. And over the course of Thursday, it happened quite quickly that things went from a feeling a little bit unsettled about SVB to SVB CEO, you know, getting on a call with all customers around noon to say everything is fine. You know, we are going to be able to cover all deposits so long as not everybody pulls out all of their money, which is not what anybody really wanted to hear, because then everyone's thinking about, like, well, I better not be the last person, because then what I'm hearing is there's money for most of us, but not if you're last last man or woman standing. And so so then I think sort of like that deep panic started setting in towards the afternoon of Thursday. But most folks thought, you know, like this wasn't meaning like there is going to be no SVB in by the next day. Folks thought there were like multiple people who were who were circling as buyers and other things.

We at Rippling sort of take very swift action. So we ourselves did have a board meeting that night to discuss transitioning over to our other banking partner, J.P. Morgan, by the following week. And we thought that was quite drastic and doing it in a week would be quite drastic. And we started getting folks spun up quite quickly. But we did not predict that by the following morning, that Friday morning, the world would have just completely changed. So that Friday, I woke up, there is an unknown phone number, someone had found my phone number, a woman in Tennessee to call and ask if I worked at Rippling and that her employees had not received their paychecks. And so I think it was probably five in the morning, got online and saw lots of people scurrying around because we were starting to get calls in from the East Coast that paychecks were not being received for Friday payroll. And a lot of hourly workers typically get paid on Fridays, their own weekly or biweekly schedules. So this tends to be worker, everyday American workers who are paid on average of like $50,000. So, you know, good wages, but not sort of tax salaries, if you if you will. 

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Tyler Finn

Sure

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And so folks who are more likely to live paycheck to paycheck. So we knew immediately that this was a huge problem. And I think we had, you know, 40, 50,000 American workers across the country who were expecting paychecks via rippling that day. So we sort of sprung into action at SVB. They had told us the payments went out. They were just delayed. And so they were somewhere in the ether between leaving SVB and landing in these bank accounts. And then we saw in the news at the same time everyone else saw in the news that SVB had been taken under receivership by the FDIC. And we were in active communications with folks at SVB. I recall they sent an email like we're about to step into a meeting and then one of them sent an email back that just said, no wires going out today. And I remember writing an email back immediately, what about ACH? And I got bounced back by like 30 different people at SVB who are on this thread. And that's sort of when I knew we were on our own. Just SVB these communication systems were fully cut. Moments prior, they were telling us this was all still going to go out. And that's when we really sprang into action. We knew we had tens of thousands of American workers expecting paychecks that Friday. We decided to hit like an emergency button at Rippling to actually fund out of our corporate bank account because we were fortunate to have quite a bit of cash at that time that would be able to cover I think it was a hundred and thirty million dollars of payroll at that time just to make sure those folks would be able to get paid. We were in conversation with JP Morgan team. They had like a few dozen folks working with us to move our entire payroll system over to JP Morgan. So that would be up and running on Monday and we would be able to facilitate paychecks. That next Wednesday was mid-month pay day as March 15th. So that was going to be a really big one. And and then Parker, our CEO, wanted to make sure that we were going to be able to pay folks that following week for March 15th, no matter what, because a lot of those funds for March 15th payroll were held up at SVB and we were not sure when they would be released. And so, you know, very quickly, we just, he started making phone calls. We could fundraise, we could take a loan, we could, you know, do a whole bunch of different options. And one of our great partners, Green Oaks, you know, big, big shout out to them. They were like, you know, we would love to do a financing with you. We will sort of provide $500 million to Ripling, they understood we would then possibly just loan that all straight out to our customers to ensure that they would be able to meet their payroll obligations the following week. And the critical thing was that it needed to be done over the weekend by Monday so that those funds would be in seat and we could tell customers that that's what we were going to do. So those were kind of the key conditions of the deal dictating the timing of it all.

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Tyler Finn

Next up, we have Joe Sullivan, founder at Joe Sullivan Security and former chief security officer of Facebook, Uber and Cloudflare, about how he navigated the personal fallout from handling a data breach at Uber. 

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Joe Sullivan

I never believed it was gonna come because I, I'm still fighting the case. It's still, it's pending on appeal and I still believe I'm gonna win and it's taken some turns that I think are gonna help it get there from a legal perspective. But yeah, I was talking about it with my attorney because I was terminated, like I said, I was like, Oh, in the fall of 2017 Thanksgiving week, and then a very sudden kind of rude way. And then I went to work at Cloudflare six, you know, I, I probably felt worse after I lost I was terminated from Uber than I felt when I got indicted, just because it blindsided me so much. And that the company was taking the view that it was on it. And so I knew for at least a year before the indictment, well, first it was a criminal complaint I was charged with, and then they did an indictment later. So I learned about the criminal complaint the same way I learned that I was getting fired from Uber in the news.

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Tyler Finn

Press release.

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Joe Sullivan

Yeah, the US Attorney's Office and the FBI did press conferences. They didn't tell me they were gonna charge me on that day. I was sitting at my desk working for Cloudflare, working from home because it was August of 2020. Yeah. So six months into the pandemic, I was sitting at my desk working. And my daughter, who was moving into college that week, she was with her mom and they called me because, like, I was I was texting with my ex-wife about how we were gonna tell her like literally on the day she's moving to college, I learned about it. And my daughter's calls because her friend heard on NPR that I'd been arrested. And so she so she started getting people reaching out to her like, Are you okay? Because the FBI put out a press release that was a lie.  They said that they'd arrested me when they actually hadn't. I've never been arrested. I don't know why they did that. After I asked them to retract it a few weeks later, and they did. But they put out that fake press release that everybody, so everybody thought I was in jail.

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Tyler Finn

Yeah.

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Joe Sullivan

And I had to call everybody and say, no, I'm not. I'm okay. 

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Tyler Finn

That was quite a typo.

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So it was, yeah, ss that was a pretty stressful thing. But at that point, I didn't believe it was gonna happen because I knew what it was like when I was a federal prosecutor. Like we had a million cases we could do. And I only did cases where it just felt like, honestly, it felt like it was a slam dunk each case because you could pick from so many different levels of guilt, so to speak. And I knew what really happened in this case. And so I just didn't believe it. So I was shocked. And then, you know, I didn't go to trial for another two years, so I went back to work and worked for the next two years and put my trust in my lawyers. I will say that like the other hard part was the first time I went into the federal courthouse in San Francisco a couple of months before the trial and it just hit me on a whole other physical level. Like here's an office in a courtroom that I've been into as a federal prosecutor and now sitting at the other table was pretty intense. And I always think of myself as a person who stays calm under pressure, because in security you have what could be the worst situation ever come up like once every two months. And then fortunately, it usually isn't. But you have to treat it like it could be the worst thing ever. And so I'm used to that. But when it's about you, it's a much harder, it felt like my brain couldn't think the way I normally can. Usually I can look at a situation and be like, oh, we need to do this, this, and this. And I was just like, lawyers, please just do what, like my brain just couldn't, like even sitting in trial, I just felt like I was a zombie version of myself and I wanted to be more active. It was, I think after I lost the trial, I think of it as winning this. We won the sentencing because that just knocked me out of my stupor. I was like, I need to own this and did much more for the sentencing.

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Tyler Finn

I think we all remember the Great Recession. Heath Tarbert, Chief legal officer and head of corporate affairs at Circle, had a conversation with me about how he helped the White House navigate the Great Recession and ultimately gained career momentum from the work that he did.

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Heath Tarbert

So I had started off, my undergraduate was in accounting and finance, and I had studied that. And even in law school, I aspired to be a corporate lawyer. And I wrote my dissertation for, I ended up getting the SJD because I thought I wanted to teach someday on the Basel Capital Accords, which at that time were completely unknown. Today they're still arcane, but in the aftermath of the financial crisis, you see them discussed on the pages of the Wall Street Journal and even to some extent on things like the New York Times and the Washington Post. But then my career took a turn and I had done these clerkships as we discussed, and I entered the White House Counsel's Office in late July, I believe, of 2008. I was brought in because my time both at the court, but also I did a stint at the Office of Legal Counsel, was focused on the law of executive privilege. They originally hired me to deal with constitutional issues involving the tensions between the presidency and Congress and the dispensing of information. When I walked in the door, they said, well, Heath, you've got this financial background and the person that had the financial markets portfolio for the White House Counsel's Office left several months ago we need someone to also just take that under their remit. But look, it's at the end of an administration. We're not expecting much work there. You can guess where we go, Tyler. Yes. So two weeks later, Fannie and Freddie fail. Before we know it, Lehman Brothers collapses. And I became effectively the White House Associate Counsel on the financial crisis full time. And so it's one of those great examples of, you know, you're not choosing a path in life, but that path in some way is choosing you serendipitously. And from that point in time, I said, well, this is fascinating. I'm gonna devote the next few decades of my life to thinking about that intersection of law, finance, and public policy. 

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Tyler Finn

Kristin Sverchek, former president of Lyft, had a conversation with me about how she was the face of the company and helped the company navigate crises, including Trump's first immigration ban and the Texas abortion law that may make it a crime for Lyft drivers to help facilitate an abortion or drive a patient to a clinic?

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Kristin Sverchek

Yeah. So for us, because we did start as an organization that always had to be pretty engaged in the political sphere, given the fact that we had to go out and make new laws really from day one, we had to quickly define our values as they related to the external policy landscape and how we thought about things. And so we had taken political stands, even before I stepped into that business affairs role. So, one example is in 2017, I think when we spoke out against the Muslim ban and donated, I think, a million dollars to the ACLU at that point in time. And the reason that we did that in that case was because many of our drivers are Muslim Americans and immigrants. And so a ban like that deeply affects one of our super important stakeholders. And similarly, in 2021, I think, yeah, 2021, when we took a stand on Texas's SB8, and I was very proud to be the face of that, it was because that law was so unique in that it provides for this private right of action for individuals to sue one another to the extent that the person they're suing has either gotten abortion care or aided someone else in getting abortion care. And so we were hearing from our drivers that they were really worried about being personally liable to the extent that they drove somebody to a planned parenthood. And this was like an untenable situation for our drivers. And certainly it's a horrible law. I'll go on record as saying that. But we felt that we really had to act because we did not feel okay with our drivers feeling that they were in personal financial jeopardy just by availing themselves of the flexible earnings opportunities that Lyft drivers are always able to avail themselves of. And so we took a really bold stand there too, but again, it was because of this nexus to our driver population. And so certainly like you can't as a company be taking a stand on every issue under the sun because there are so many and there are so many important ones. You have to decide, I think really what is core to you. And so you won't see us at Lyft taking a stand everywhere, but I think you will see us being really thoughtful when it relates to the populations that really matter it relates to the populations that really matter to our business and drivers being one of those.

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Tyler Finn

Next up, we have Dan Haley, my friend and general counsel and corporate secretary at GILD. Dan has managed two CEO transitions during times of crisis, something we talked about during our episode of the podcast. 

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Dan Haley

I think one of the things that lawyers in general and GCs specifically need to always keep in mind is there's a certain authority invested in the credential that is not necessarily present for all members of the executive team. We'll instinctively look to the lawyer in certain situations as a gauge of how worried should we be about this thing? How serious is this? Is this a big deal? Is this manageable? And even if you don't have any better insight into the answers to that question than anyone else around the proverbial table, people are going to look to you and take their cues from you. And so that is even when you feel internally, that inclination to like, jump to conclusions, rush to worst case scenarios, you have a responsibility not to do that. And one of the kind of tricks I use tricks tools I use for myself, and also I impose it on others is asking the question, what do we actually know to be true? And what are we assuming? And how do we test the assumptions? Yeah, conclusions do we draw from what we know to be true? It's almost always the case in a crisis, especially early on, that the things you know to be true, know to be true, not assume they're true. Know to be true, very small set of things. People tend to pile assumptions into that first category. Yeah, though this to be true. So I assume this is this is true. And I'm going to just act on them as though they're, you know, they have equal weight. I think…

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Tyler Finn

I've done this before, which you are saying is resonating. 

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Dan Haley

I mean, everyone does it. But and it's very hard. This is where the the kind of inherent authority of the GC can be very helpful because you can say to a CEO who wants to react. CEOs always want to react. No one wants to be caught flat footed. Nobody wants to be criticized by their board a week into a crisis for not taking immediate and deliberate action. So the action impulse is always present. And so the danger at the front end of a crisis of doing things that make it worse is very, very high. And I've found that tool. What do we know to be true? It's very useful. And then the second part of it is, how do we increase that pile of things as quickly as possible so that when we get to a point where we have to make a decision, where there's a binary, we have to do this or we have to do that, we have to ignore this, we have to address it. Left, right. You want that pile of known things, true things to be as big as possible. By the time you're making that decision. And it does tend to scratch the CEO's itch at the outset to say, here are the things we are doing to learn as much as possible, because that is action. That's not being passive. 

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Tyler Finn

The world today is incredibly uncertain, or in the words of his book unruly. Sean West, co-founder at Hens Technologies and former deputy CEO of the Eurasia Group, sat down with me to talk about how general counsels can get better at navigating political risk.

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Sean West

We really pour our analytical heart into this. This is the type of analysis we charge like 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 the perspective of what I think of as the geolegal triangle, which is geopolitics, law, and technology. If you imagine it 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. Or they look at it in buckets. In MBA programs, you'll learn pastel analysis, like political, economic, social, technological, ecological, environmental, and law. But they're 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 this will know who's won in New House it 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, 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 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. 

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Tyler Finn

And last but not least, Chelsea Grayson, managing partner focused on corporate restructurings at Pivot and former CEO of companies like American Apparel and True Religion, sat down with me to talk about the role of corporate boards during times of crisis. 

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Chelsea Grayson

The main difference is, you know, sort of twofold. So the difference in the situation between being the CEO or management of a company and turnaround and being a board member is, we are there and hopefully the company has also hired a restructuring firm, they're also called FAs, financial advisors. We're there to do that. You, CEO and management management are here to continue to operate the company. So there's some there there once we get finished, you know, so your focus should still be running the company. Yes, we're going to have things for you to do that are different because it's a turnaround. And we're going to ask you to cut costs, renegotiate indirect procurement costs. I mean, we're going to ask you to better cash management in place,  probably, you know, we're going to ask you to put together a 13-week, we're going to add, you know, a cash flow, we're going to, we're going to mind a lot of things, and you're going to have to maybe do some reductions in force, you know, but for the most part, we We don't want you to be distracted by what we're doing. So that's one of the main differences. So a board will really drop in, roll up their sleeves during a restructuring and turnaround and do that work so the rest of the people can run the company along with any advisors too. Now that's and then what you have to be as a board member during that time, and this is frequently why you'd refresh a board if you're about to do a turnaround or a restructuring, you really have to be steeped in that life. You have to understand what to do in that situation, because if you're just a big, healthy, you know, public company, like, la, la, la, I've always had a nice big budget, and I've always never seen crisis, you're gonna be terrified. 

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Tyler Finn

Right. 

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Chelsea Grayson

Lawsuits coming in, you're going to be hitting in the hit in the face, like people are gonna be punching you in the face every single day. There's lawsuits, there's investigations, we're having big, scary conversations about potentially making a chapter 11 filing. I mean, there's going to be you know, but even looking at a 13 week is terrifying, you know, just to see where the money is going and how quickly goes out the door. You know, this is not for everybody. So if you're not a restructuring turnaround person, you're probably going to be probably better for you to refresh off the board. So that's how you would drop in as a board member in that situation as a person who really does this, who really does this for right, has the right network and isn't going to scare under pressure. 

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Tyler Finn

Thanks so much for listening to this special episode of The Abstract, focused all around how companies and leaders can navigate crises. how companies and leaders can navigate crises. Hope you enjoyed this episode, and we hope to see you next time.

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