A chance encounter on London’s Westminster Bridge in 2017 opened up the fascinating world of blockchain for Paul Melchiorre. It led to a new role as an independent non-executive director on the Board of enterprise blockchain software company R3 – and gave Paul insight into the global financial services industry. He talks to Ben Erskine-Hill, Partner at Erevena about his experiences.
Why did you join the Board at R3?
I had no plans to take on something like this, but the world is a small place. I was enjoying a sunny day in London with a walk across the Thames on my way to a meeting when I bumped into Erevena CEO Dan Hyde. We’d met before when I was in another role and we got chatting as we walked over Westminster Bridge. I was curious when Dan said that I ought to talk to David Rutter, the head of a company called R3.
I hadn’t heard of them, nor did I know much about blockchain – it was still an emerging technology at the time. R3 had engaged Dan and Ben Erskine-Hill at Erevena to hire an independent non-executive director with an enterprise SaaS background. That was me. But I wasn’t sure if this role was the right fit. It took four months to set up a meeting with David at R3 because we were both so busy, but when we discovered we lived just a few blocks apart in New Jersey, USA, I cycled round to his house for a very informal interview – I describe it as a meeting of destiny.
I was intrigued by R3’s unique situation. At one level it was a start-up – a new blockchain venture set up to solve business issues in complex and highly regulated markets. Then, at another level, it was funded by some of the world’s largest financial services organizations, with its many Board members drawn from the industry. A start-up with the backing of a global consortia was something different.
What gaps were you brought in to fill as a non-executive director?
The Board had extensive experience in financial services but lacked the enterprise software platform know-how needed to scale the blockchain technology. I was brought in to offer insight into how this enterprise software would impact the financial services industry and to add an independent dimension to the Board. It wasn’t my first non-executive director experience, but it has proven to be the biggest challenge due to the composition of the stakeholders.
Did you have a steep learning curve on joining the Board?
There was no steep learning curve from an enterprise software perspective, but the financial services industry was new to me. It had its own nomenclature that I had to learn. Blockchain too was a new departure – as it was to everyone at the time, so we were all learning about its potential.
I also learned very quickly that this role would be far more time consuming that I initially anticipated. Some people might think sitting on a board as a non-exec director simply requires attendance at quarterly meetings and little else. But that’s not been the case. I have been heavily involved in a range of different areas, from re-vamping pricing and hiring new people on the go-to-market side, to sitting on the compensation and governance committees. Banking and enterprise software companies typically have very different compensation models, so we needed to work on this and get the right balance. Defining the governance model was also highly complex, with so many different partners and stakeholders involved. It all took time.
As a Board member, how do you choose what to get involved with?
I liken it to raising teenage children. By which I mean you pick your battles. You need to decide when to step in and when to step away from an argument. Arguing every point can easily mean you lose impact, so my approach is not to fight over small things. That might sound easy, but it’s really hard to hold back sometimes. It’s a bit like pausing before you hit ‘send’ on an email you’ve written in anger! This is a challenge all directors face at times.
What impact have you had?
As the first independent introduced into an environment that was heavily financial services oriented, I recognised that I could make my biggest impact on the blockchain product itself – Corda. I felt it would be better to build a platform on which we could scale Corda and take on the big players, like IBM. This would demand a completely different product strategy and I had to balance the different needs of the stakeholders. R3 had a long-term ambition to build the business over the next 3 to 5 years, whereas the Board had a shorter-term perspective. I made everyone look at the product and the market in a new way, recommending that we build an ecosystem of communities and developers that used our blockchain platform – it is now the world’s largest blockchain application and project ecosystem. Companies pivot all the time and this was a big change that I had to convince the Board would work.
I have also made an impact on R3’s go-to-market approach. The business needed more enterprise software in its DNA, with operational people and developers on the ground. When I joined, I was surrounded by venture capital and finance people, all non-operational. They had not built a company, but that’s what we needed to do. We have started to hire in people with this enterprise software DNA and this is changing R3’s culture.
Who has helped you make an impact?
One of my early recommendations was to bring Eileen Voynick onto the Board as an independent non-exec director. Having another like-minded person on the Board has been really helpful. I’ve also built some good alliances with several of the financial services Board members. These alliances have enabled us to move ahead with new thinking when we needed to operate like a small start-up yet didn’t have the mechanism in place to do so. Understanding what they feel (and why) has helped me to navigate the changes needed.
How have you grown both professionally and personally?
I always say that if I’m not learning and getting better at my craft, then I need to move on. Before taking on this role, I didn’t know who R3 was or what blockchain did beyond what my son had told me. I’ve had to learn this and become knowledgeable about the competitive landscape as blockchain emerges as a potential impactful and disruptive technology.
I went into a situation as an independent Board member feeling like an island in a sea of investors, banks and other financial institutions. They all had a lot of vested interest in R3’s product and were some of the world’s biggest financial services brands. I thought I knew everything about global companies, but I didn’t. I’ve had to learn. Professionally, this has been very different to other start-ups, which don’t usually have this immediate global presence and financial clout.
What advice would you give to someone considering a non-executive director role?
- It is naïve to think that being a non-exec director is just about turning up for a few meetings. You need to ask yourself if you can really afford to invest the time needed, both personally and professionally. Do your research and ask lots of questions about the level of commitment you’ll need to make.
- Have a passion for what you are doing. If you’re joining a Board, make sure it’s with a company or cause you’re interested in, or that involves a product you really want to learn about, such as blockchain in my case.
- You’ve got to like who you’re working with. Do due diligence on the other Board members and find out about their ethics. It’s important to look forward to the Board meetings and feel that you are truly part of the team.
“Paul has made a significant contribution to the R3 Board given his enterprise software experience and operational background. He is very dedicated to the company and its mission and consistently brings amazing energy and valuable insights to the board and committee meetings. I look forward to continuing to build my relationship with Paul as R3 expands.”
David Rutter, CEO R3