How The Mighty Have Fallen: Gary Cohn Joins Blockchain Startup 7 Months After Leaving White House
Oh how the mighty have fallen...
Seven months after he angrily quit the Trump Administration in protest over President Trump's tariff plans, former Goldman Sachs President Gary Cohn has broken his silence to announce his first big career move since leaving the West Wing. As the Financial Times reports, Cohn has joined the advisory board of a...blockchain startup?
Somebody should tell Cohn that he's about a year late: In 2017, joining a blockchain startup was the trend du jour for bankers looking for an entry point into the burgeoning fintech space who - despite the reality that many of them didn't understand the underlying technology beyond the notion that it would someday "revolutionize" banking/commerce/logistics/supply chains). To be sure, Cohn is merely a member of the advisory board of Spring Labs. And we concede that the company has a tantalizing pitch: Its founder, Adam Jiwan, plans to leverage blockchain technology to build a secure "peer to peer" system that would allow banks to share customers' credit data in a way that could render credit reporting agencies like Equifax and Experian obsolete. If last year's Equifax data breach taught us anything, it was that the credit reporting bureaus have grossly represented their ability to protect our most sensitive personal data.
Under the current credit system, banks hand over customer data to credit reporting agencies such as Equifax and Experian, before buying back aggregated reports from those companies. Last year, Equifax disclosed that it had suffered a massive data hack in the US, affecting 143 million clients and raising concerns about the safety of customer information.
Adam Jiwan, Spring Labs’ chairman and chief executive, said his company was building blockchain-based applications that would allow such data to be shared directly between parties in a "highly secure" and "anonymous" way that complies with data privacy regulations.
He added this could “ultimately . . . replace the credit bureaus you see today”.
That sounds like a viable business strategy, but the one obstacle is the technology itself. Nobody - including Spring Labs' engineers - has figured out how to scale blockchain technology to accomplish these tasks on the scale necessary to make this model viable. Even Cohn - who is also an investor - admits that "building the technology" is the company's biggest obstacle.