Source Code: Your daily look at what matters in tech.

fintechfintechauthorBenjamin PimentelNoneGet access to the Protocol | Fintech newsletter, research, news alerts and events.f6ea366a38
×

Get access to Protocol

Your information will be used in accordance with our Privacy Policy

I’m already a subscriber
Protocol | Fintech

Alfred Chuang was the ‘CEO’s CEO’ of Silicon Valley. Now he wants to make his name as a VC.

The BEA founder leads a fund focused on tech for the post-COVID world, including crypto and blockchain.

Alfred Chuang was the ‘CEO’s CEO’ of Silicon Valley. Now he wants to make his name as a VC.

Race Capital's Alfred Chuang.

Photo: Race Capital

Alfred Chuang became a Silicon Valley star in the '90s as co-founder and CEO of BEA Systems, one of the most successful infrastructure-software companies of the dot-com era.

That ended in 2008 when Oracle launched an unsolicited takeover bid. Oracle prevailed in that fight, eventually acquiring BEA for $8.5 billion.

Chuang stayed in tech afterwards, starting Magnet Systems, an ecommerce chat startup backed by Andreessen Horowitz. Ben Horowitz invested, describing Chuang as "the CEO's CEO."

Now Chuang is trying to be the VC's VC. He co-founded Race Capital last year in the face of the pandemic with an eye to invest in new technologies expected to emerge or grow more rapidly in the post-COVID world. One area Race Capital is focused on is fintech, including blockchain and crypto.

In an interview with Protocol, Chuang shared the firm's views on fintech and blockchain, including his reaction to the Coinbase direct listing and the confirmation of Gary Gensler as the new head of the Securities and Exchange Commission.

Chuang also reflected on the offbeat strategy he embraced to become a more effective tech executive. To develop his communications skills as a young Silicon Valley manager, Chuang took stand-up comedy classes in Sunnyvale. That taught him a fearlessness that helped him rise through the ranks at Sun Microsystems and launch BEA. And now, he says, it's helping him seal deals with entrepreneurs.

This interview has been edited for brevity and clarity.

Why turn to venture capital now?

My DNA is to build companies. That's really what I was trained for. I really like early-stage stuff because there's nothing like when you open the door for the first time and you see either one single founder or a small group of founders, and you can actually make that kind of contribution to that. It is a very daunting journey. I didn't have anybody to help me when I did it at BEA.

The best time to invest literally is right after a crisis. Now, our crisis is not over yet. But generally, that brief 18- to 20-month period is the best time to reinvent many aspects of tech.

Why did you decide to include fintech as one of the areas to focus on?

A big part of our focus is data infrastructure. My background is transaction processing. So, that applies to obviously everything about fintech, everything about crypto.

BEA became a major infrastructure software company when the web was just getting started. How do you reflect on that experience as an investor, given that infrastructure is a critical area for fintech?

The exciting deals are infrastructure deals in fintech. It is very interesting. When I first started going deeply into this, I said, "Oh my God, this insurance thing is so boring. I can't imagine I'll get really excited about somebody doing some kind of insurance company." But as we peel the onion, I said, it's the same old stuff that's what I do for a living. We now have really great, incredible technology now from a hardware and a systems level to accelerate each transaction to a point where I never imagined it could be done that fast. I'm really excited about where this stuff is going.

The new SEC chief is an expert in cryptocurrency and blockchain, and he's expected to push more regulation of fintech. What's your reaction to the confirmation of Gary Gensler?

In the past few years [I went] from believing cryptocurrency to be just kind of a fluke to thinking that that's an inevitable trend that we must move into. Our large IT organizations are kind of like a classic American garage. We keep packing stuff in. We can't throw anything away. So we still are using old mainframes. We're going to need a major reboot. This major fintech trend moving into crypto will give us the opportunity for that reset. I think the really smart regulators, they all know that. There's a race going on. It's a tech race among countries on which one will get there first.

You took stand-up comedy classes to become a more effective tech executive when you were just starting out in the '80s and '90s. Is that still helping you today?

I made a comment yesterday to my other partner [when] we were [working on] a very significant deal that we want to invest in. She asked me: "Alfred, were you nervous when you presented because we really wanted to buy this company, or was the entrepreneur actually more nervous?" [I said,] "I'm nervous about nothing." It's just tactics. I think the stand-up comedy part allowed me, as a very introverted person, to separate the strategy part, which is you have to come up with the term sheet, and the tactical part, which is how do you sell the term sheet to a founder. The selling never ends.

After an entrepreneur [presents to us], the partners [would] say, "Wow that was impressive." What is impressive? Because they were able to clearly articulate and project the level of competence that we should back them. Communication is where the other [people] enjoy talking to you, the kind of communication where you sit there, they just talk for an hour, and you walk out [and say] "My god, that was so much fun." It's a stand-up comedian gig. I would recommend it to everybody, especially the people who think, "I'm an engineer. I'm never going to break out." Look at [Coinbase CEO] Brian Armstrong. He is king for the day. Or king for the week. He's a very introverted guy. But now he got put on the bandstand. If he had asked me [for advice, I'd say], "Sunnyvale Comedy Club. Go take a class."

Protocol | Workplace

The pay gap persists for Black women

"The pay gap is a multifaceted problem and any time you have a complex problem, there's not a single solution that's going to solve it."

For every dollar paid to white, non-Hispanic men, Black women are paid just 63 cents, according to the American Community Survey Census data.

Photo: Christine/Unsplash

Last year's racial reckoning following the murder of George Floyd led many tech companies to commit to promoting equity within their organizations, including working toward pay equity. But despite efforts, the wage gap for Black women still persists. For every dollar paid to white, non-Hispanic men, Black women are paid just 63 cents, according to the American Community Survey Census data.

Black Women's Equal Pay Day on Tuesday represents the estimated number of days into the year it would take for Black women to make what their white, non-Hispanic male counterparts made at the end of the previous year, according to the organization Equal Pay Today. And while the responsibility to fix the pay gap falls mostly on companies to rectify, some female employees have taken matters into their own hands and held companies to their asserted values by negotiating higher pay.

Keep Reading Show less
Amber Burton

Amber Burton (@amberbburton) is a reporter at Protocol. Previously, she covered personal finance and diversity in business at The Wall Street Journal. She earned an M.S. in Strategic Communications from Columbia University and B.A. in English and Journalism from Wake Forest University. She lives in North Carolina.

pay

What comes to mind when you think of AI? In the past, it might have been the Turing test, a sci-fi character or IBM's Deep Blue-defeating chess champion Garry Kasparov. Today, instead of copying human intelligence, we're seeing immense progress made in using AI to unobtrusively simplify and enrich our own intelligence and experiences. Natural language processing, modern encrypted security solutions, advanced perception and imaging capabilities, next-generation data management and logistics, and automotive assistance are some of the many ways AI is quietly yet unmistakably driving some of the latest advancements inside our phones, PCs, cars and other crucial 21st century devices. And the combination of 5G and AI is enabling a world with distributed intelligence where AI processing is happening on devices and in the cloud.

Keep Reading Show less
Alex Katouzian
Alex Katouzian currently serves as senior vice president and general manager of the Mobile, Compute and Infrastructure (MCI) Business Unit at Qualcomm Technologies, Inc. In this role, Katouzian is responsible for the profit, loss and strategy of the MCI BU, which includes business lines for Mobile Handset Products and Application Processor Technologies, 4G and 5G Mobile Broadband for embedded applications, Small and Macro Cells, Modem Technologies, Compute products across multiple OS’, eXtended Reality and AI Edge Cloud products.
Protocol | Workplace

Tech company hybrid work policies are becoming more flexible, not less

Twitter, LinkedIn and Asana are already changing their hybrid policies to allow for more flexibility.

Photo: FG Trade/Getty Images

Twitter, LinkedIn and Asana are all loosening up their strategies around hybrid work, allowing for more flexibility before even fully reopening their offices.

In the last week and a half, Twitter announced it's adopting an asynchronous-first approach, and both Asana and LinkedIn said they would increase the amount of time their employees can work remotely.

Keep Reading Show less
Allison Levitsky
Allison Levitsky is a reporter at Protocol covering workplace issues in tech. She previously covered big tech companies and the tech workforce for the Silicon Valley Business Journal. Allison grew up in the Bay Area and graduated from UC Berkeley.
Power

Activision Blizzard scrambles to repair its toxic image

Blizzard President J. Allen Brack is the first executive to depart amid the sexual harassment crisis.

Activision Blizzard doesn't seem committed to lasting change.

Photo: Allen J. Schaben/Getty Images

As Activision Blizzard's workplace crisis rages on into its third week, the company is taking measures to try to calm the storm — to little avail. On Tuesday, Blizzard President J. Allen Brack, who took the reins at the developer responsible for World of Warcraft back in 2018, resigned. He's to be replaced by executives Jen Oneal and Mike Ybarra, who will co-lead the studio in a power-sharing agreement some believe further solidifies CEO Bobby Kotick's control over the subsidiary.

Nowhere in Blizzard's statement about Brack's departure does it mention California's explosive sexual harassment and discrimination lawsuit at the heart of the saga. The lawsuit, filed last month, resulted last week in a 500-person walkout at Blizzard's headquarters in Irvine. (Among the attendees was none other than Ybarra, the new studio co-head.)

Keep Reading Show less
Nick Statt
Nick Statt is Protocol's video game reporter. Prior to joining Protocol, he was news editor at The Verge covering the gaming industry, mobile apps and antitrust out of San Francisco, in addition to managing coverage of Silicon Valley tech giants and startups. He now resides in Rochester, New York, home of the garbage plate and, completely coincidentally, the World Video Game Hall of Fame. He can be reached at nstatt@protocol.com.
Protocol | Workplace

Alabama Amazon workers will likely get a second union vote

An NLRB judge said that Amazon "usurped" the NLRB by pushing for a mailbox to be installed in front of its facility, and also that the company violated laws that protect workers from monitoring of their behavior during union elections.

An NLRB judge ruled that Amazon has violated union election rules

Image: Amazon

Bessemer, Alabama warehouse workers will likely get a second union vote because of Amazon's efforts to have a USPS ballot box installed just outside of the Bessemer warehouse facility during the mail-in vote, as well as other violations of union vote rules, according to an NLRB ruling published Tuesday morning.

While union organizers, represented by the Retail, Wholesale, and Department Store Union, lost the first vote by more than a 2:1 margin, a second election will be scheduled and held unless Amazon successfully appeals the ruling. Though Amazon is the country's second-largest private employer, no unionization effort at the company has ever been successful.

Keep Reading Show less
Anna Kramer

Anna Kramer is a reporter at Protocol (Twitter: @ anna_c_kramer, email: akramer@protocol.com), where she writes about labor and workplace issues. Prior to joining the team, she covered tech and small business for the San Francisco Chronicle and privacy for Bloomberg Law. She is a recent graduate of Brown University, where she studied International Relations and Arabic and wrote her senior thesis about surveillance tools and technological development in the Middle East.

Latest Stories