In this episode of our series, “Crypto leadership & talent: Evolution of the control functions,” part of The Heidrick & Struggles Leadership Podcast, Heidrick & Struggles’ David Richardson and Julian Ha speak to Matthew Homer, a venture investor and advisor to crypto founders and managing member of venture capital firm The Department of XYZ. Homer is also the former executive director, superintendent of research and innovation at the New York State Department of Financial Services, and the former head of policy and research at Quovo. Homer shares what it was like moving from his government job into the venture world and his perspective on how to work with and build teams in this evolving industry, particularly regarding what skills and capabilities he thinks are most needed in leaders. He also shares the key piece of advice he offers leaders on their development goals and objectives. In turn, Ha and Richardson discuss what they are seeing organizations and leaders do to help onboard talent from outside the industry.

Below is a full transcript of the episode, which has been edited for clarity.

Welcome to the Heidrick & Struggles Leadership Podcast. Heidrick is the premier global provider of senior-level executive search and leadership consulting services. Diversity and inclusion, leading through tumultuous times, and building thriving teams and organizations are among the core issues we talk with leaders about every day, including in our podcasts. Thank you for joining the conversation.

David Richardson: Welcome to the Heidrick & Struggles Leadership Podcast. I’m David Richardson, a partner in Heidrick & Struggles New York office and a member of the Financial Services Practice. I co-lead our global Payments & Lending and Market Infrastructure & Data Services sectors and also serve as a leader in our Crypto & Digital Assets Sector across the Americas.

In today’s podcast, I’m delighted to speak with Matthew Homer and my colleague Julian Ha.

Matt is a former fintech crypto regulator and operator and is currently a venture investor and advisor to crypto founders. Matt was the executive deputy superintendent of research and innovation at the New York State Department of Financial Services (NYDFS). He was also the head of policy and research at Quovo, which was acquired by Plaid. Most recently, he has served as a venture capital (VC) investor and advisor across the crypto space. 

Julian is a partner in Heidrick & Struggles’ Washington, DC, office and a leader of the global Legal, Risk, Compliance & Government Affairs Practice and Associations Sector. 

Matt, to kick off this conversation, could you walk us through your first exposure to the crypto sector and talk about what drew you into the space?

Matthew Homer: Let me talk about my first two exposures, which were separated by eight years or so. Both of these exposures happened when I was serving as a regulator. The first one was earlier in my career, when I was at the FDIC on the policy team. I was a junior person at the FDIC at the time, and I took it upon myself to sign up for every new fintech product that emerged. This was a very different time, when you could do that sort of thing, and so I did it with basically all of the fintech products of the time, including crypto. 

So I signed up for a Coinbase account just to get some experience in the space. And at that time, one of the ways that you could use the crypto in your account was through a partnership with Overstock.com. I bought just enough crypto to have Bitcoin to buy a pencil sharpener on Overstock.com. So I used my Bitcoin to buy the pencil sharpener, and then Overstock.com told me they had no record of my transaction. But meanwhile, Coinbase had in fact deducted the amount from my account. So it was actually not a great experience. I thought, “This feels really nascent, so I’m going to put this to the side for a while.”

I came back to crypto again when I was a regulator for the second time. In the meantime, I had had other roles in the fintech space at the New York State Department of Financial Services. And the thing that got me interested in crypto again was the opportunity I saw, as a regulator, to regulate or supervise the sector in a much more data-driven digital way than other parts of financial services had been regulated in the past. And that was very exciting for me, and we organized a whole tech sprint around it. So those are a couple of ways in which I was first exposed to the space. 

David Richardson: Matt, since leaving the NYDFS and moving into the VC space with Nyca Partners, what have been your key learnings and lessons? 

Matthew Homer: It wasn’t that long ago that being a regulator in a VC capacity was sort of unusual, a head-scratcher. But I think VC has become much more diverse in a lot of ways, particularly around crypto, where regulation is critical. It is part of the strategy. It has to be part of the strategy. I have found that my regulatory background has served me well within the VC space.

There are three different capabilities that I’ve tapped into from my experience as a regulator and that I’ve been able to use now as a venture capitalist. The first is the ability to take complicated matters—in this case, regulation—and distill them and explain them to founders and other investors and to use those insights to identify opportunities in the market.

The second skill I gained as a regulator was an ability to identify patterns, trends, and gaps across the market. As a regulator, you see a lot. It’s a unique bird’s-eye perspective that is very helpful when investing in the space as well.

The third one is having a really good BS detector. As a regulator, you’re trained to be skeptical of everything, and that’s important and that’s part of your job. In VC and in the crypto space, where there are, let’s be honest, a lot of charlatans, unfortunately, having a strong BS detector can make a big difference.

David Richardson: Julian, to continue with this theme, based on your conversations with policy and regulatory executives, what is their openness and thoughts on the space, and do they have any hesitancy in moving into the sector? 

Julian Ha: Truth be told, there were probably many folks who jumped onto the crypto policy bandwagon and weren’t truly ready for the ups and downs, not that any of us may have been. And so some of those folks have been reaching out and asking to be considered for non-crypto-type roles.

That said, ironically, the need right now for great policy and regulatory executives and advocates in crypto companies is more acute than ever. That’s because we’re going to see a lot of potential regulatory and legislative actions this year, and serious crypto companies need to have their own in-house leaders providing that in-house advice and guidance and navigation. 

There’s some very good talent now on the sidelines, through no fault of their own, perhaps because their company was caught up as collateral damage in some of the recent failures. And given that we make it our business to track talent in this space very closely, we’re in touch with a lot of talented individuals who do see the longer game and the longer-term potential and are keen on the right opportunities, although they’re probably being more selective and kicking the tires a little bit harder.

So again, not for the faint of heart, but for many great policy advocates, this moment is built for them, because where else can you make such a mark on a space that’s still in formation and make meaningful and real impact? 

David Richardson: Speaking to that kind of maturing, and also to your point, Matt, around some of the challenges in the space and the charlatans, I saw you talking on PBS NewsHour post-FTX about the evolution and the maturity of this space and how much further there is to go. From a talent and a leadership perspective, how do you go about working with and building teams in this industry, and what are the skills and capabilities that you are looking for in leaders, especially given that this is still an evolving space and requires perhaps different skills than those for more mature industries?

Matthew Homer: It’s a great question. First, I agree with a lot of what Julian said, that now is the time to enter the space. If you’re a policy or regulatory person and you have any interest or conviction in the space, if you think it’s part of the future, there’s no better time or way to have an impact.

Thinking about the leaders in this space and what attributes they require, character matters a lot. In some ways, it might be the most important thing, having leaders who have integrity and can be trusted. And so I think the most important thing as a leader in this space is that you have a core set of principles that you abide by. Crypto is a stormy space, and you can be tossed to and fro if you don’t have a core set of convictions and if you don’t hold yourself accountable.

Another attribute that is really valuable, in the sometimes chaotic nature of the space, is the ability to see the forest for the trees. The leaders who are successful are those who can see the big picture but who can also drill that down to tangible progress that can be made over a finite period of time. And that vision really matters because the space is constantly changing. 

There are two other things to mention. One is agility and the ability to pivot and adapt. This space has gone through so many different adaptations that it can really take a toll on you, and you have to have the ability to roll as things change.

And, finally, you need a high degree of tolerance for ambiguity and stress. One of the things that’s so exciting about this space is that, in some ways, we’re building a new economic system from scratch. So there’s a lot of ambiguity associated with that, and it really requires a special type of leader who is comfortable with that ambiguity and can execute against a strong vision. 

David Richardson: Matt, when you are advising leaders in this space, be they founders or executives or board members who are relatively new to the industry, what is the key piece of advice or development objectives and goals that you might give them to ensure that they successfully adapt?

Matthew Homer: If you’re coming from the outside, you probably have a lot of value to add, and I would think very intentionally about how you can utilize or leverage your prior experiences to make this space stronger.

In terms of adapting to or becoming part of the space, it’s something that just requires time. It’s a space that’s being written as we go along, so there’s only so much you can read, for example, to really understand it. You’ve got to really enmesh yourself in this space and use the different tools and products that are being developed here to get a good sense from them.

And people sometimes miss this, but there’s a really strong cultural component to this whole industry. It’s not just a technology transformation; it’s a cultural transformation. So that’s also very important for people to understand. And you can do that by attending all sorts of events that are hosted on the topic.

Julian Ha: David, what do you see organizations and leaders doing to help onboard talent from outside the industry? 

David Richardson: It’s certainly changed a lot in the years that we’ve worked in the space. When we work with clients, we break it down into three main buckets: assessment, engagement, and development.

For the assessment, where we get involved at the earliest parts of a search process, I completely echo what Matt was flagging around conviction, culture, and adaptability. When we’re running a search process, we and our clients are looking for an individual’s personal conviction. And where that personal conviction is nascent, we look for a willingness and an intent from them to educate themselves. Most education in this industry is open source, so they don’t have to enroll in a school program. They can do quite a bit of research on their own, but it takes time and conviction.

And then the cultural alignment is huge because we tend to group crypto and digital assets together. It’s a relatively small industry compared to others, but there are significant subcultures that vary dramatically. For many, if not all, people moving into the space, being comfortable with that ambiguity is absolutely critical, as is having agility, because of how fast moving the space is. And those are some of the skills people are lacking when they are not successful in landing the role that they’re seeking.

On the engagement side, when clients identify talent they want to onboard into their business, we advise that, relatively early in the process, they go above and beyond to build that relationship—whether it’s in short term, such as bringing them in for a particular need, or to build and maintain that relationship over time.

They also need to put a lot of thought into hiring and onboarding. In this industry, like many others that have grown a lot during the pandemic, it’s very typical now to have a remote-first culture. While that can be a big benefit for some people, those who are coming out of traditional technology, financial, and other industries may be used to a more standardized onboarding plan: face-to-face meetings, going out for coffee or lunch. Putting the same level of thought as before into how you engage and onboard people coming into your firm is critical and a key differentiator.

And then on the development side, retention, education, development, and partnering with your hires really do make a difference in people being successful over the longer term. 

This space moves incredibly fast. Those people who are successful hires, who integrate well within the environment and the culture, and who build a strong rapport with the executive teams, will take on more and more responsibility over a short period of time compared to those in other industries.

Matt, as a follow-on to that, I’d be interested in the dialogue that you have with stakeholders in this industry and how that has changed in relation to regulation over the last few years, specifically the last six months or so. 

Matthew Homer: As I mentioned earlier, my first exposure to the space was as a regulator, about a decade or so ago. On the regulatory side, we’ve seen an evolution. First, it was regulators becoming aware of the space. Then regulators started more actively monitoring the space. And then the third phase was positioning, with regulators developing talking points and positions on the topic.

Now we’re in what I’d call the actioning phase. And if we had had this conversation a year ago, I would have said that the actioning phase was taking existing rules and enmeshing crypto within the regulatory system. Unfortunately, as a result of FTX, the actioning has shifted more toward resisting, and I think it’s a natural implication of everything that’s happened. We are in a moment right now where there’s very strong resistance from regulators in general toward the space.

When I talk to or advise founders, I tell them that regulation has to be part of their strategy from day one. And, in fact, a general counsel or a chief compliance officer needs to be one of their first five to ten hires. This has to be something that you’re thinking about from day one and that you are building as if you were regulated, with an expectation that at some point either you’ll be regulated or you’ll have regulated counterparties. 

But the onus today is on founders in this space to know the regulatory implications for their companies and to prove to regulators that they can be trusted. I think that the founders that are successful will be those that are able to do that over the next few years. 

David Richardson: Matt, as we head into this actioning phase, with regulation as part of the strategy, what would you say are some of the newer concerns that founders in the industry are raising, and what are the talent implications as a result of those concerns?

Matthew Homer: I think that the concerns today are kind of the same as they were before, but they’re just more acute. Whereas before FTX and the other events we’ve seen in the industry, you might have wondered how a regulator would think about a specific product you might offer and you might have thought you had some period of time to test the waters, today you have to be much more intentional in thinking about what your risk appetite is, knowing that, unfortunately, you’re not going to get much clarity beforehand.

You have to build in this space with an expectation that regulators are always watching. And, unfortunately, it’s not really possible today to just go in and meet with a regulator in good faith before launching a product. You have to have done your homework and know that you’re on very strong footing. 

The talent implications are interesting. There’s no doubt that you need strong legal compliance and risk professionals from the get-go. One thing that makes this space unique is that it’s still being defined and there are no black and white lines, so you need people with seasoned judgment to help you weigh the trade-offs and make the best decisions. While you can, to some extent, work with outside support, at the end of the day, the CEO or another executive within the company has to own this area. 

David Richardson: Matt, looking back to when you first got your exposure to this space, trying to make a transaction using Bitcoin, and, subsequently, as a regulator in this space, and with all the change that’s happened, with the benefit of hindsight, what advice would you give yourself if you could go back in time?

Matthew Homer: Taking a step back, there are many different ways of thinking about crypto and digital assets and the blockchain ecosystem. I think about it as a new economic infrastructure. If you think about the evolution of fintech, the first phase we might have called the “lipstick on a pig” phase, where people were building really nice interfaces for consumers, but they were built on top of fundamentally broken infrastructure. So building a new economic infrastructure is what makes this space so exciting. 

So my advice to others thinking about entering this space is that you’ve got to have a perspective on how you think the world is going to evolve and the impact of this technology. And you’ve got to have conviction. You’ve got to be willing to accept that, at some point in a system’s evolution, maybe you’re going to show up at a holiday meal with your cousins and they’re going to look at you with side eyes when they find out you work in crypto. But it’s such an interesting ecosystem that I think it requires you to be, in some ways, all in or all out. And I don’t mean that in the sense that you have to think the same way as everyone else within the ecosystem. What I mean is that it is so all-encompassing that if you’re going into the space, you’ve just got to dive in. 

And, as I mentioned earlier, the winds change directions a lot in this space. So you’ve got to be ready for the good times and the bad. But if you’ve got the core conviction and you have your North Star, whatever that North Star is, you’ve got to remember what that is and stay focused on that. And if you do that, I think it’s a very exciting space to be involved in. It’s building a new set of infrastructure from scratch, and, to me, that’s very exciting and that’s what drew me into the space. 

David Richardson: Julian, as you speak to leaders in the space, particularly those in policy and regulatory areas, is there a common theme that you’ve been hearing in terms of things that they wish they’d known before entering the space or that they’ve learned upon joining?

Julian Ha: Like everyone else, they wish their crystal balls had been working a little bit better. But, from the outset, the majority of policy professionals in fintech and financial services and crypto assets have wished that the US Congress and regulators, whether that be the SEC (Securities and Exchange Commission), CFTC (Commodity Futures Trading Commission), OCC (Office of the Comptroller of the Currency), or US Treasury—and that’s its own debate, of who’s going to own this—would have been able to provide clearer direction and guidance and a regulatory framework. I’m not saying that companies crave regulation, but they do crave clarity.

It’s interesting that we’re now seeing Europe potentially pulling ahead of the US in this regard, with some proposed legislation called MiCA (Markets in Crypto Assets Regulation) that’s going to establish a harmonized set of rules for crypto assets and related activities. So that’s something we hear from a lot of folks in this space—that they wish that the US would get its act together and at least coalesce around who’s going to regulate this and what that’s going to look like. I do think that a lot of that action will take place this year. 

Some leaders have also wished that some more thought and energy could have been applied to develop some clear use cases for crypto, which are starting to emerge. That’s going to enable broader and wider adoption, and that will in and of itself demonstrate to regulators and legislators that crypto is a force for good in social inclusion, by lowering transaction costs and by allowing for greater access to financial services for underserved groups around the world. 

David Richardson: As we bring this conversation to a close, I’m going to ask you both to get out your crystal balls. Julian, looking ahead at this year and heading into next, what are the specific leadership skill sets and capabilities that you think will be most important for leaders in this space to help organizations meet strategic goals?

Julian Ha: In the policy space, and Matt referenced this earlier and I completely agree, reputation and character for being an honest broker is critical. That old saying of “my word is my bond” is still very much applicable in the policy world.

Another skill would be adaptability. The crypto space is constantly evolving and changing, so leaders need to be agile and address their strategies accordingly. 

Leaders also need good communication skills. Policy leaders need to be able to communicate effectively with many different stakeholders, such as regulators, investors, customers, employees, and partners. They’ve got to be able to explain and break down these complex concepts into simple terms and to bring people along and build trust around that. 

Another is risk management skills. Leaders in this space need to be able to identify, assess, and mitigate the risks associated with crypto assets and activities. And they’ll be able to do that if they have a clear understanding of the regulatory and legal risks that are involved.

And, finally, vision. Like all good leaders, they need to work with their CEO and board and stakeholders to ensure that they have a clear vision of the positions they want to take and stake in terms of legislative and regulatory directions. They need to be able to articulate those goals and values. 

These are some of the things that I think will be critical. 

Matthew Homer: I had mentioned three things. One is a strong perspective and point of view on what the world is going to look like in a few years, combined with the pragmatic ability to navigate the company through these turbulent waters and make difficult decisions when those arise.

The second is an ability to motivate and hire a strong team. That perhaps never mattered more in this space than now, but it potentially might even be harder now than before.

And then, finally, humility and integrity and an ability to connect with others. And if we’re now thinking again about regulation and policy, an ability to forge meaningful relationships and earn the trust of not only regulators and policymakers but also the public more broadly.

David Richardson: That was an excellent summary. Thank you both for taking the time to speak to us today.

Thanks for listening to the Heidrick & Struggles Leadership Podcast. To make sure you don’t miss more future-shaping ideas and conversations, please subscribe to our channel on the podcast app. And if you’re listening via LinkedIn, Twitter, or YouTube, why not share this with your connections? Until next time.

About the interviewers

Julian Ha (jha@heidrick.com) is the global managing partner of the Legal, Risk, Compliance & Government Affairs Practice and a member of the Diversity, Equity & Inclusion and CEO & Board of Directors practices; he is based in Heidrick & Struggles’ Washington, D.C., office.

David Richardson (drichardson@heidrick.com) is a partner in the New York office and a member of the Financial Services Practice. He leads the global Market Infrastructure & Data Services sector and co-leads the Crypto & Data Assets sector in the Americas.