A longtime finance expert is leading a new Web3 fintech charge in Pittsburgh.
It took him a few moves to get there, though. After earning an undergraduate degree in financial mathematics from Carnegie Mellon University, Conor Platt moved to New York so he could work as an analyst at Morgan Stanley before returning to Pittsburgh to get his MBA in finance from CMU. Then, following another stint in New York to work as an associate for the oldest private investment bank in the United States, Brown Brothers Harriman, he and his family ended up settling in Pittsburgh’s Lawrenceville.
He’s since founded his own private investment partnership, Confluence Capital, and sustainability-minded investment management company Etho Capital. Now, he’s taking both of those efforts even further with Confluence Analytics, a fintech firm he launched in 2018 that uses decentralized finance to create sustainable investment solutions based on ESG equities, digital assets and new carbon emissions markets. (ESG stands for environmental, social and governance, and is relevant to how the climate crisis is transforming the meaning of “sustainability” in business.)
Across three products in analytics and indices related to digital carbon — that is, CO2 emissions related to production and use of digital infrastructure — Confluence Analytics leverages the success of the Etho Climate Leadership US ETF, which it says outperformed the S&P 500 on total index return and carbon footprint. That may sound like a bunch of financial jargon (and it is) but what it boils down to is this: using a combination of machine learning, blockchain technology and performance-relevant ESG factors to provide customers with new and profitable investment insights.
Technical.ly chatted with Platt about his background, his interest in the blockchain and more, as shared in excerpts from the conversation below. This conversation has been edited for length and clarity.
Technical.ly: How did you leverage your finance experience to launch a fintech company that relies on the blockchain?
Conor Platt: Around 2014, I cofounded a company called Etho Capital and it independently launched the best performing ESG ETF. The way that we built Etho is actually the interesting part. We used climate footprinting data as a proxy for supply chain efficiency. About seven years ago, people thought that was ridiculous and now a lot of people think that that’s kind of useful. [After that] I built an investment fund for a UN group, and I went to Davos [in 2018] and I met a bunch of people. That year, crypto took over Davos, so it was actually kind of a wild time to be there. After that, I started Confluence Analytics, and really what Confluence Analytics is about is taking that same ESG data, but now making it actionable.
What made you want to apply these fintech tools to ESG investing?
The carbon offset market has existed for around 20 years. It’s kind of slow moving. It’s really not very prevalent in the United States. And it basically trades in a closed auction market. What we’re doing now is essentially building an investment vehicle to help shape the digital carbon space and make it institutional and bring it to corporations. So the way we’re going to do that is all digital and through the blockchain.
This is digital infrastructure around a real asset that actually needs that kind of technology to make this market much bigger. As I have very much been professionally involved in financial carbon markets, it’s beyond clear that that sort of combination of this digital infrastructure and a real commodity, with both big corporations [and people of a range of age and experience levels interested in blockchain] wanting it — it’s a wild intersection, and that’s kind of where we’re staking our claim.
Our plan is to create a better vehicle so the corporations can participate better and then also, over time, bring their offsets to market because that’s the way to help lower their costs over time.
Why use blockchain for this as opposed to traditional finance tools?
We’re using blockchain because it’s more efficient. And because in the US, there is a market but it exists only for gigantic banks and big power companies because it is very much an industrial market.
"Where we're at is as simple as this: We are going to take some money from some institutions and hopefully some corporations and we're just going to go buy some digital carbon in a particular way."
What we’re seeing, though, is that corporations are starting to need to buy a lot more credits to meet these [ESG] pledges. We are trying to represent a more efficient way but also truly a different way to do this. And we think that we can shape a market because it a.) represents that efficiency, and then b.) it it’s just an interesting moment in time. One of the biggest reasons that almost all of these trends are unlikely to change is that [it involves] these weird two groups meeting each other — gigantic corporations and younger people between 18 and 25 outside the US. And our version of Web3 is making that intersection of the digital and these assets get better. And it really is a game of how can we make this market to expand by 100x to see what happens.
But the first step is just having a regular fund that actually attempts to buy these things. Where we’re at is as simple as this: We are going to take some money from some institutions and hopefully some corporations and we’re just going to go buy some digital carbon in a particular way.
Why launch a company involving Web3 technology in Pittsburgh of all places?
Up until up until maybe a year ago, I was not very involved with the Pittsburgh community. It was because with Etho, we were so focused on the coasts, and that’s where we had to go all the time. And then same with the beginning of Confluence Analytics. [We thought,] we’ll build it here because all the people [involved] basically live in Pittsburgh or around Pittsburgh, or they’re from Pittsburgh. So we’ve all worked together for a long time now.
The way it’s worked is that as we focused in on this project, it was super clear that we really needed some corporate buy in where we absolutely needed to go talk to them. We needed their feedback. So it turns out really that between COVID, reality, and then the fact that in Pittsburgh, we luckily have an absolutely fantastic, broad, 20 to 30 public companies, it makes a lot of sense to really focus locally. We can kind of shape this carbon market. We really only need one or two of [those companies] at first and then we’ll build some structures that are compliant. That will absolutely lead to a compliant fund that will be digital.
So the reason it’s really become Pittsburgh is because both necessity and reality — we’re not leaving Pittsburgh, and corporate-wise, this kind of lines up well.
Sophie Burkholder is a 2021-2022 corps member for Report for America, an initiative of The Groundtruth Project that pairs young journalists with local newsrooms. This position is supported by the Heinz Endowments. -30-