“SPACs democratize investment in these companies and it distinguishes correctly among companies. Not every company is the same and has the same needs.”
After serving as law clerk to the honorable Chief John Biggs, senior judge on the US Court of Appeals for the Third Circuit, Betsy Z. Cohen became the second female law professor on the east coast teaching anti-trust law and government regulation of business at Rutgers University Law School. Cohen went on to build many international financial companies and is now active in the SPACS space.
A special-purpose acquisition company (SPAC) is not new, but has seen its utilization rise sharply in the last year. Where IPOs focus on the past financial records of a company, SPACs take a more forward-looking approach in its evaluation, especially useful for fast-growing companies. Launching a SPAC requires a wide range of knowledge and skills typically acquired from experience and exposure to all levels of business. “A SPAC looks easy, but it’s very difficult to execute. It has many components from capital markets to understanding the business to assessing the management.”
As a pioneering woman entrepreneur, with a long storied career in law and business, Cohen understands the resilience it takes for women to succeed in male-dominated industries. A key driver of success involves, particularly for women, identifying what one’s self tick and centering a career around that. As more women hold executive level positions at major companies, more women will ultimately lead the launch of SPACs.
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SPEAKER
Betsy Cohen
Chairman
FinTech Group
MODERATOR
Anthony Scaramucci
Founder & Managing Partner
SkyBridge
EPISODE TRANSCRIPT
John Darcie: (00:07)
Hello everyone. And welcome back to salt talks. My name is John Darcie. I'm the managing director of salt, which is a global thought leadership forum and networking platform at the intersection of finance technology and public policy. Salt talks are a digital interview series with leading investors, creators and thinkers. Our goal on these salt talks is the same as our goal at our salt conferences, which is to provide a window into the mind of subject matter experts, as well as provide a platform for what we think are big ideas that are shaping the future. And we're very excited today to welcome Betsy Z Cohen to salt talks, uh, Betsy, uh, in short, she builds financial businesses after serving as law clerk to the honorable John Biggs, chief judge of the U S court of appeals for the third circuit. She became the second female law professor on the east coast, teaching antitrust law and government regulation of business at Rutgers university law school.
John Darcie: (01:02)
Using that knowledge capital before age 30 Betsy had founded a shipping business in Hong Kong, a leasing company in Brazil, and a joint venture with a bank in Spain. And co-founded a Philadelphia law firm that specialized in representing financial institutions and industry clients in complex real estate and financial matters. Uh, Betsy has been very active in the SPAC space of late, which we'll talk about a lot here on this salt talk, but hosting today's talk is Anthony Scaramucci, the founder and managing partner of SkyBridge capital, which is a global alternative investment firm. Anthony is also the chairman of salt, uh, and with no further ado, I'll turn it over to Anthony for the interview.
Anthony Scaramucci: (01:41)
John, thank you, Betsy. Welcome to Saul talks. You've had this legendary career, so congratulations on all that. Um, I want to start with the brief overview, if you can, for what is known as SPACs, uh, which is an acronym for special purpose acquisition corporations, um, in a squawk on the street interview on February 3rd, you said SPACs give investors better knowledge of forward potential for companies that are growing very quickly. So it's almost like a, it's a portal. If you will, into the potentiality of growth and investment opportunity. Uh, again, my opinion I'm on new dispatched. So I confess that's why I'm starting at this cursory level, but it does seem like SPACs were born from excess regulation, frankly, because uh, many private companies decided not to go public. The speck goes public for them, does all the work, and then they make a decision to sleeve into the spec or not. If I'm wrong about that, please correct me, but give us your view of SPACs for viewers that may not be familiar with the spec as a structure and or investment vehicle.
Betsy Cohen: (02:54)
Well, I agree with many of the things that you just said, Anthony, but not all of them. I don't, the driver was really the excess regulation, although it may have been the pain that was inflicted and the time line that it created, which is much longer than a spec. And you're right, that the spec sponsor by taking the company public, uh, is able to provide to the seller or the private company that is transitioning to the public markets, a method of reaching those markets. That's both faster and in some ways easier. Um, the spec is really in its basic structure, just a merger, it's the merger of a private company into a public company. Uh, and then, uh, the resulting company, uh, takes on the characteristics of the private company. Uh, it allows companies that are growing quickly to reach investors in a way that's very differentiated from, uh, initial public offerings in those offerings.
Betsy Cohen: (04:17)
Uh, accompany will look backward and provide audited financials for what they did, uh, in a spec, a quickly growing company. And we have many areas in which that kind of growth is really, uh, possible, uh, whether it be technology or, uh, bio-science or some or various other, a very quickly growing, uh, areas for companies to grow really has an opportunity and a requirement from the sec to reflect the merged entities, the public company with its cash and the private company with its business on a forward-looking basis. And since we are in a moment of time, when a couple of vectors are coming together, when companies are growing quickly, uh, when, uh, the opportunity for financing of additional growth is really important when institutions in the capital markets are full, uh, all of these things are coming together to proliferate, uh, the number of specs and that's, I think what we're seeing today,
Anthony Scaramucci: (05:41)
You're, you know, it, let's, it's a brilliant exposition. You are a pioneer in so many different things. And so I want to, I want to go back a second. Tell us a little bit about your career arc. Uh, obviously John read some of the things that were, uh, in your bio, but tell us some things that are perhaps not in your bio or that we couldn't find on a Wikipedia page. How did you get to be this, a polymath entrepreneur and judicial genius at the same time at it? How did you manage all of that in one lifetime? Well, I
Betsy Cohen: (06:11)
Love those, uh, characteristics. I'm going to take them with me. Um, I hadn't really would very early in my career. Uh, what was for me, uh, sort of seminal experience. Um, I was a very good student at law school served on the law review was recruited during a summertime to remove from as is traditional, uh, to be, uh, an intern. And to generally at the end of the summer, uh, a law firm would offer its chosen interns, um, a job for the following year, but the person who hired me said to me, um, my senior partner is not ready to have a woman in the law firm.
Betsy Cohen: (07:05)
And with that, I looked at this person, I don't know where I got the nerve, but I looked at the person and said, you know, I think this is your loss. Um, he was a little surprise, but it made it quite clear to me that I was never going to work for anybody else again. And so out of that came probably what was already there, a desire to start things on my own to move them forward, to grow them and to, uh, to be an innovator in, uh, certainly not in 1966 in, in technology, but in, uh, a variety of different ways.
Anthony Scaramucci: (07:52)
You know, it's, it's a fact, it's a fascinating story. I'm gonna regale you with a quick story. I think, uh, uh, Darcy will appreciate this, uh, Mario Gabelli, the legendary investor. I went to see him when I was 30. I was at Goldman Sachs, had a pretty good career going. He told me, leave Goldman Sachs. And I was like, shocked. I was like, why? He said, well, someday you're going to turn 50. And Goldman Sachs will put you on the dustbin of history. There are, you know, there's very few people that make it past 50, you'll feel young. And if you have your own business, you'll be able to run it. And I took his advice to heart that see, and so I left at the age of 32 and started my first business and never looked back. And so it was an interesting story about being an entrepreneur. So tell us about those tribulations though for you getting started. Um, for me, uh, I'm always reminded of, would Fred Smith, the founder of FedEx said about starting FedEx. He said, if he knew how hard it was to start FedEx, Betsy, he never would have started FedEx. And I'm sure you've had that feeling as an entrepreneur as a, as I have. And so tell us a little bit about that early life as an entrepreneur, the early
Betsy Cohen: (09:04)
Life of an entrepreneur is that you turn out the lights, just reap the floors and do everything in between. And to the extent that it's hard, um, that's one of the consequences, but the, I think for me, at least, um, the adrenaline flow, which comes with starting something new offsets, all of those hardships and maybe it's because I've been through it so often there are eight companies that I started from scratch that I took to the public markets and became not became was the CEO. Uh, so I really had both the, uh, pain and the pleasure.
Anthony Scaramucci: (09:53)
Yeah. And I, I have experienced that as well. I want to shift gears to your newest venture or one of the newest ventures. Payoneer hopefully I'm pronouncing it right. It's a pay payment startup. It's agreed to merge with Ft, a C Olympus acquisition Corp. Now Payoneer is going to receive $300 million from your SPAC investors in a deal that valued the FinTech company that about 3.3 billion. And so, uh, tell us about a little bit about that deal, why that deal and where do you think things are going
Betsy Cohen: (10:28)
Payoneer uh, when you refer to it as a startup, uh, it's a little bit misleading Payoneer as a 15 year old company that has been building out its technology, uh, for that period of time, it is facilitating and democratizing, uh, the access of people, small business people all over the world, uh, who are on e-commerce, uh, with a, the opportunity to operate as if they were a very large company. So they facilitate payments and, uh, tax payments and services. Even beyond that, that a small business, uh, operator really needs, but can't afford to buy on a one by one basis. And so they've created a network it's, uh, headed by a remarkable leader, Scott galette, who has combined both the mission of, uh, democratization of, of, um, small businesses, uh, with the financial savvy of being able to bring this company to profitability. So it is a great of a 15 year old company that has layered service upon service, upon service, listening to, uh, the needs and understanding the needs of a small business people on a global basis, we were really delighted to take what was a $750 million, um, spec Corpus $750 million in cash and raise another $300 million above that, to both satisfy the capital needs of the company so that it could, at this time when all the tailwinds of, for that kind of company are in place, it could go forward vigorously and continue to grow together with looking at the needs of the existing shareholders who, uh, many of whom had been shareholders for 10 or 12 or 13 years for some liquidity, uh, with, for their stuck.
Betsy Cohen: (13:04)
So it was a, a win-win for sellers for the marketplace. And for the company
Anthony Scaramucci: (13:15)
You you've been described by many people as precious, you see things, uh, you know, for some reason you've been able to, uh, look around the corner. You've found a Jefferson bank in 1974, you've encountered, uh, roadblocks in your career. Uh, but you have a touch for these things. Betsy, why, uh, what, what is it about your personality? What is it that you're reading? Who are you meeting with? How, how did you, uh, develop this skillset?
Betsy Cohen: (13:46)
I wish I knew, uh, but I, I can only reflect, uh, what members of my family who know me best say, which is that I just don't think like other people. Uh, and I think that perhaps are you left-handed, I am
Anthony Scaramucci: (14:05)
My husband
Betsy Cohen: (14:06)
And children. So we think we brought something to the world, uh, uh, and maybe it's the left-handedness, but certainly it is green, uh, continuing curiosity. Uh, and what I think of in, um, in, in Eastern terms as a negative space, looking for negative space that have really propelled me through, uh, the identification of opportunities,
Anthony Scaramucci: (14:45)
Your, your story is also one of resilience, you know, you're, you're, uh, you know, I'm reminded of what Alan Greenspan said in his memoir, uh, the former federal reserve chairman, he said in the 1950s, he hired women economists and, and he was once asked, well, why are there so many women on staff? He said, well, they couldn't get jobs elsewhere because there were these patronizing male chauvinist that prevented them from getting jobs. And so it was, uh, it was an opportunity for them and an opportunity for me because I realized how brilliant they were. Uh, but, uh, these obstacles for women, particularly women of your era, um, how did you overcome them? We had a lot of young people that are listening to our Saul talks, and one of the things we want to teach our young people, particularly as a parent, I have five children, how to be resilient, how to overcome naysayers and doubters and doubters on your businesses, doubters on your personhood, if you will, how did you do that, Betsy? And what are some of the tips you could recommend to others?
Betsy Cohen: (15:49)
Um, I think that I found my own voice if I could put it that way in, early in my life. Um, I was not always confident, but I had a sense that I could accomplish things. Um, and I, I was very focused in whatever I did, uh, on being professional, um, being firm, uh, sometimes to my own detriment, um, but always had a very strong sense of what was right and wrong. Um, and finding not everybody is the same and we wouldn't want them to be, but I would say women in particular, finding out what it is that makes you tick and communicating that and pursuing that as a goal, uh, is I think, uh, what is, is very important. Not everyone wants to be an entrepreneur, not everyone can be an entrepreneur. So I often say to young women who are, uh, in looking for jobs in corporations, that you must look for a job in a company where the CEO has only girls not has girls, not a has daughters, but has only daughters because the, the transition from really the emotional transition of empathy to, uh, women succeeding that can't takes place in a, in a corporate setting is really, the tone is really set by the CEO.
Betsy Cohen: (17:47)
And if that CEO success, uh, in an absolute sense, uh, being possible with women, much like Alan Greenspan, who I think has many, many wonderful qualities, including trumpet playing, uh, is, uh, you know, is clear. Uh, the commitment, uh, by a CEO, uh, is really critical. I often think of, uh, Harold Shapiro, who one time was the president of Princeton university, and he made it his business to, uh, promote to provost or a Dean or one of the important posts within the, uh, administration, uh, a number of very talented women. And those women went on to fill the positions of president of many of the Ivy league universities. So it's a process, it takes commitment. You have to find the right spot and you have to continually analyze it and, um, uh, identify what is working for you. And what's not.
Anthony Scaramucci: (19:15)
Yeah. You know, it's a good segue into culture. You're describing a lot of elements of what makes for a successful culture and a business and entrepreneurial startup you in a large scale corporation. Um, before I turn it over to our resident millennial, who will try to outshine me Betsy. So I've got to try to come up with a really good clue. I have to come up with a really clever question here before I turn it over to him, but it it's one about culture. You know, one of my mentors said to me a long time ago, a Goldman that we have the same desks. We have the same telephones, the same ink, the same printer toner. Uh, so what's gonna make our business more competitive or more successful. And my mentor once said to me that it was culture, it was the putting the values in place and the commitment you clearly had that in spades. So I'm wondering how do you identify that in others? And then if you had to describe the recipe for a good corporate culture entrepreneurial or otherwise, what would it be?
Betsy Cohen: (20:16)
Um, I think it's communicating, uh, to everyone that there are, uh, opportunities, uh, within the corporate structure, uh, that they have as much responsibility to identify as to be identified, uh, and that, um, the supportiveness of allowing people to make of, uh, learning together, all of those things are important in terms of, uh, creating a culture in which people are going to, uh, feel that they're supported in reaching for participation. Decision-making all the rest of the things cause that's where your next group of leaders comes from.
Anthony Scaramucci: (21:16)
So, John, I know you have some questions from our audience and I know you have your own questions. I'm going to I'll, I'll turn it over to you. Uh, but it is, uh, it's wonderful to have you with us and I love the story. Uh, and I love the fact that you're just getting started. I love that about you. And I hope, I hope, I hope that people realize that that the, the best is yet to come. But go ahead, John.
John Darcie: (21:43)
Yeah. I want to start with, uh, a lighthearted question sort of, you know, you have the FinTech spec line, uh, but you also have the FTAC Olympus, uh, which debuted in August of last year. And you have a whole nother family of SPACs with Greek names. You have, uh, Thena you have Hara, is there anything behind the naming convention of these specs?
Betsy Cohen: (22:05)
Oh, indeed. There is. My husband is an internationally known scholar in the field of Greek history. And so we've all been embedded with it, uh, imbued with it. Uh, so I think we're very prone to, to, uh, the Greek Pantheon, uh, but we thought everybody was doing numbers. We really ought to be doing something else. So, uh, I am Athena. There'll be, uh, uh, I'm sure Zeus will not be far behind. Yeah.
John Darcie: (22:40)
So I'm going to talk about specs, uh, even more in depth than unsa Anthony, we're already talking about them. So, uh, when investors are looking at potential specs, uh, what, what should they be looking for in the team that's put together this back, uh, you know, even prior to identifying the target company,
Betsy Cohen: (23:00)
I think they really have to look to the, uh, depth of expertise of the sponsors. And in fact, their past history, not that their history will predict success necessarily, but at least, uh, they have done it before a spec looks easy, but it's very difficult to execute. It has many, many components to it from capital markets to understanding the business, to assessing the management, uh, and so on and so on. Um, so really you're looking for someone with whom you can partner because as you go forward a transaction, uh, the market's changed, the company's changed. The, uh, many things can, can be altered and you really have to be able to work with that partner, uh, through the entire transaction. So it's that whole range of things, but expertise, knowledge, experience are all part of it.
John Darcie: (24:12)
Yeah. My, my Uber driver, uh, that I had this morning launched a spec. So you're saying I shouldn't, I shouldn't necessarily go into that one.
Betsy Cohen: (24:19)
Well, um, you'll have to, uh, tell me more about your Uber driver.
John Darcie: (24:27)
All right. Yeah. I shouldn't judge a book by its cover, I guess. Um, but going to the next stage of the process for a spec, what do you as management look for in companies that you're taking public? So obviously there's this preponderance of specs. I think obviously there's some spec targets that maybe aren't quite as ready for public life as others, but what do you look for in terms of characteristics for the targets?
Betsy Cohen: (24:49)
We're really looking for a company that is what we call public ready. And that's a combination of characteristics. It's having a, a good corporate infrastructure, a well-developed management team, a business that is, uh, has recurring income and has predictability, uh, a growth profile that is perhaps beyond that, uh, which one generally sees in the marketplace, all of these things combined some in greater amounts in some, in lesser, depending upon the situation. And I think, uh, uh, a company that has differentiated itself from others in the field.
John Darcie: (25:37)
Yeah. That that's very interesting in September of 2020 Bloomberg called you the lone Wolf of specs, a reference to you being one of the only few women that are in this space, leading these blank check companies. Uh, and then in December, again, writing for Bloomberg crystal se, uh, noted that your FinTech acquisition Corp could be the only SPAC with an all female board, uh, in aggregate specks of race. I think now more than 20 billion over the last couple of years, why do you think women are so underrepresented in the SPAC world and how could, you know, SPACs and markets in general benefit from greater female representation? I,
Betsy Cohen: (26:14)
I think, uh, where you will see more and more women in this back field, remember that, um, uh, the knowledge that is required of a spec sponsor is really a multifold. It's really knowing the capital markets, knowing trading, knowing the companies, knowing the field, uh, all of those things are important. And it may be that there are not as many women who have reached that level of multiple skills. Uh, I benefit from my age, uh, you know, uh, as maybe there are men, a lot of the specs that are now being, uh, offered, are being offered by retired CEOs of large companies.
Anthony Scaramucci: (27:15)
Uh, if
Betsy Cohen: (27:16)
You take a look at the profile gender profile of, uh, large of CEOs of large companies, you know, if it's probably going to be a lot like the spec market, yeah. It's a,
John Darcie: (27:30)
It's a chicken and egg, you know, you have fewer female executives. So you have fewer that are in the marketplace looking to, you know, race back, but
Betsy Cohen: (27:38)
There is a female. Um, or so it's rumored a female CEO. Who's now retired, who is going to launch a speck. There are lots of women in technology who are readying themselves to a launch specs. So I think over the next six to nine months, uh, you'll see many, many more women coming to the fore, but I have to tell you that my grandchildren call me grandma lone Wolf.
John Darcie: (28:11)
All right, well, you're going to be a Wolf pack here for a few other, uh, former female CEO step up to the plate. So you'll still be the leader of the pack, Betsy. Absolutely. So, you know, like I mentioned earlier, you were one of the pioneers in this space. We saw SPACs coming online last year. Obviously it's not a brand new phenomenon, but the market has now become so flooded with specs. I was joking about my Uber driver, but you're seeing former NFL players, athletes, entertainers, a part of sponsorship groups for specs. How has the spec market change, whether it's for better or for worse as a result of this preponderance of, of new specs?
Betsy Cohen: (28:50)
I, I mean, it, we talk about it as if the spec market has changed, but it's really the underlying businesses that have changed. So you have a, whether it's e-sports or on the field sports, if we ever get back to that, uh, you know, that had, that are growing significantly. So it would be a natural thing for someone with a real knowledge of the sports area to be doing, uh, leading a business venture that required that kind of information. Uh, there are specs that are growing and excuse me, there are businesses that are growing in, uh, financial technology, which is my own area, but also in electric vehicles, in other areas. And as Anthony said at the very beginning, uh, I feel that, that the SPAG is an opportunity for a company to talk about its future instead of its past. And so if there are many more companies that meet that profile, there'll be many more specs because there are many more opportunities. So
John Darcie: (30:09)
There's obviously, uh, the traditional IPO route, but there's now, you know, this, the SPAC market has grown more robust. You're seeing Coinbase, uh, the leading exchange for digital assets going public via direct listing. And that, uh, according to sources is already trading at about a $100 billion valuation, uh, which puts it on par with Goldman Sachs in terms of market cap. What do you think in general, this sort of, uh, diversification of paths to public life and just the blurring of public life and private companies, is that a healthy phenomenon for markets providing greater access to investors at an earlier stage for companies? Or is it somewhat dangerous, uh, given the lack maybe of, of information and, and proof of concept for some of these companies, for them to be available to public investors? I
Betsy Cohen: (31:00)
Think it is both. Uh, I think that it it's helped me in the sense that it allows, um, particularly retail investors and, you know, retail investing has, uh, increased from about 12% to about 22% over the last couple of years. So it, it, it democratizes investment in these companies and it distinguishes correctly among companies, not every company is the same, not every company has the same needs, often an IPO, whether direct or in a investment bank supported, uh, is, uh, a branding exercise, as I would think it would be for Coinbase, or it was for Airbnb, not every company meets those criteria or has those criteria and needs that kind of branding exercise. Uh, so it allows companies to take a look at themselves, uh, say, what are my needs? How can I best achieve them? And which of these paths suits me best?
John Darcie: (32:21)
So last question, I'm curious about your views on the digital asset space. You know, not necessarily whether you're a Bitcoin bull or, or a Bitcoin skeptic, but about the general growth of that sector of the market, you know, it can be characterized as FinTech of, for sort of a disintermediation and decentralization of finance. Do you think digital assets defy Bitcoin? Do you think that is something that maybe is a little bit frothy or do you think that's just, we're, we're at the beginning of a brand new era of how finances run?
Betsy Cohen: (32:52)
I think both. I mean, I think that, that we are at, at, uh, remember that that adoption there there's another adoption curve and it's really of people having facility and knowledge and use of the internet and digital sources. So as more individuals gain that, uh, knowledge, the access to digital assets is actually much easier. And so the audience for digital assets grows and whether, uh, I'm not advocating that digital assets should be your whole portfolio, but, um, it might be worthwhile to, for, uh, some people in certainly for younger people to have in their portfolios. Some bet that digital assets will in fact, uh, become more and more important.
John Darcie: (34:00)
Well, fantastic. Betsy, it's been such a pleasure to have you on Anthony. You have any final words for Betsy before we let her go?
Anthony Scaramucci: (34:07)
No, I just, I'm trying to figure out how to get hired by her. Okay. I, you know, I'm, I'm sitting here and figuring out if I'm doing well in this job interview, John. I mean, that, that's what I'm doing, you know, doing just fine. Okay. Well, thank you. We really appreciate the time
John Darcie: (34:23)
For her Anthony. She's looking for, you know, young FinTech type
Anthony Scaramucci: (34:27)
Spike when you're dealing with millennials, Ms. Cohen, do you see what it's like when you deal with these people all day long is the next person in the room. I have to put my battle armor on every day, Betsy, but in all seriousness, I think your story, your life story, your a Odyssey of entrepreneurship, all of these things, uh, make you a true role model for so many people. So we're very grateful to you for coming on, uh, to salt talks and sharing that with us. And I hope we can get you at one of our live events, uh, once we're able to do that again, uh, John and I are working on something in New York city, uh, which will help, you know, we hope in a small way to revitalize the city and so forth. So, uh, we'll be in touch with you. Hopefully we can convince you to come. Uh, we do some pretty fun things when there's no pandemics around you bet. Thank you. Be safe.
John Darcie: (35:26)
Great to have you, uh, thanks again to Betsy Zico and for joining us today on salt talks. And thank you everybody who tuned in to today's salt talk, talking about this exploding SPAC market of which Betsy has been at the forefront of that. Just a reminder, if you missed any part of today's talk or any of our previous talks, you can access them on our website. It's salt.org backslash talks or on our YouTube channel, which is titled salt tube. Uh, we're also on social media on Twitter is where we're most, most active at salt conference, but we're also on LinkedIn, Facebook and Instagram as well. So please follow us there and please spread the word about these assaults talks. We love educating an even wider audience, but on behalf of the entire salt team, this is John Dorsey signing off for today. We hope to see you back here soon.