The a16z Show - a16z Podcast: Market Shifts

Episode Date: December 10, 2017

NASDAQ CEO Adena Friedman runs one of the world's largest financial services companies, including the NASDAQ stock exchange that's home to more than 3,500 listed companies. They were also the creator of the world's first electronic stock market. Yet how does the company adapt to technology trends today, such as the blockchain? How does it deal with other headwinds in its business, from fewer listed companies to trends in passive vs. active investing? Based on a conversation that was recorded at our annual a16z Summit in November 2017, this podcast features general partner Jeff Jordan interviewing Friedman about these changes... as well as broader themes in the way markets work. They also discuss the IPO process (which Jordan has also shared his experiences and advice on) -- from what companies should be thinking about to where technology could help. Stay Updated:Find a16z on YouTube: YouTubeFind a16z on XFind a16z on LinkedInListen to the a16z Show on SpotifyListen to the a16z Show on Apple PodcastsFollow our host: https://twitter.com/eriktorenberg Please note that the content here is for informational purposes only; should NOT be taken as legal, business, tax, or investment advice or be used to evaluate any investment or security; and is not directed at any investors or potential investors in any a16z fund. a16z and its affiliates may maintain investments in the companies discussed. For more details please see a16z.com/disclosures. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Hi and welcome to the A16Z podcast. In this episode, General Partner Jeff Jordan, who has written and shared his experiences with IPOs, managing growth and more, interviews Adina Friedman, CEO of NASDAQ, the financial services company that also owns and operates the NASDAQ stock exchange. The conversation took place at our most recent annual summit event in November 2017, and the discussion covers everything from IPOs and trends in passive versus active investing to NASDAQ the company and tech innovation. including the blockchain. A lot of people hear NASDAQ and they think about a company that runs an equity exchange in the United States, but I believe this vision is fairly dated. Can you give us

a little elaboration on what is NASDAQ today? You're right. Our brand is very associated with our equities markets. It's the foundation of who we are and what we do, but we've been able to use that to grow a lot. NASDAQ is a global technology company that serves the capital markets. We also provide

that technology to 90 other exchanges around the world. Broker dealer clients use our trade surveillance technology, corporate clients, use us for their IR intelligence and their board and leadership tools. And then we have a whole plethora of data that we provide out to millions of people to help them interact with the capital markets. It certainly appears to be a very dynamic time in markets in the United States with a lot of interesting macro trends. The number of listed companies in the U.S. has about halved it, I think, the past 20 years. Yes, that's right. Even in the last 10 years, the number of public companies,

has dropped by 1,000. And what's driving it? On the one hand, there's obviously a lot more access to private capital. So the private route is more abundant. It's more competitive. Therefore, companies have other choices. The second thing is the Jobs Act did change some of the rules that made it easier to stay private longer

because they allow you to have 2,000 non-employee shareholders. And then the third thing is that the public markets have become more and more challenging in terms of the obligations that are placed on companies and the way the disclosure obligations, the proxy access, and the sense that there's a real short-term orientation, I think that coupled with, obviously, litigation issues too. There are a lot of reasons why the public markets just aren't as attractive as they used to be.

And our job is to make sure that we change that because it's a more competitive game today. So talk about what you're trying to do to change that. Well, we've launched something called Project Revitalize, and basically we wrote out a thought piece on what we believe is wrong and what we need to do to fix it. Where we focused is on disclosure obligations. So not only how often do you have to submit your filings, and our view is quarterly is probably too often,

but also what you need to say as a disclosure company. We are disclosure economy, so we believe in providing disclosures to your investors. There's so many things that are in the cues in the case today that have absolutely nothing to do with whether or not an investor understands your company. It's politically motivated disclosures that shouldn't exist. Then also the proxy access and proxy firm reform is critical. It's a terrible fact, but it's a fact, is that six small investors generated 33% of all proxy proposals in the United States last year.

Oh, geez. And, you know, so their obligation is they have to have $2,000 worth of stock and hold it for one year. And if they meet those criteria, they could put a proposal on your proxy. And that to us just makes no sense whatsoever. It's a huge waste of time and money. and it really should be that the skin in the game is raised substantially. So we have some proposals around that. Litigation reform, the idea of arbitration instead of class action lawsuits is, I think, very important,

in addition to a lot of other proposals. Let's go to a related topic. The number of IPOs has not been robust. I mean, five of the most valuable companies in the United States IPOed within the last four decades were they're all technology companies, but the numbers are just falling off the cliff. Again, what's driving? Well, this year's a better year than last year.

year was a real low for us. That's obviously, I think, caused a lot of concern. It kind of was a wake-up call. And people were saying, well, gosh, what's the deal? And I think that part of it is the fact that private companies have the option to stay private longer. But the fact of the matter is the public markets just, first of all, were challenging in terms of the receptivity, investors being willing to take the risks on certain companies and business models. That's changed this year. So we have definitely seen certain industries come back into the markets. Last year, energy was a really challenged sector. We're seeing a lot more energy IPOs this year. Biotech was huge the last two years. It started off slow this year, but it's picked up. And then, of course, tech. And everyone's

focused on the tech IPOs. And that's where the private capital alternative has really created more of a challenge for companies to go public. Yeah, I mean, to that end, there is now a trunch of capital increasingly available for later stage companies. And it's coming from very non-traditional sources. It's mutual funds and hedge funds and sovereign wealth funds and oligarch to now soft bank you know, injecting hundreds of billions of dollars into the ecosystem, that has to be delaying IPOs, right? Personally, I think, yes, the answer is yes, that is definitely having an impact. I also think, though, that there are times when investors,

particularly mutual funds, hedge funds, who are getting into late-stage companies, they're not in them for 10 years. I mean, they want to have, you know, liquidity. And I know that, you know, the venture firms look at it and say, okay, when the time is right, it's time for companies to grow up and migrate, and be ready for the public markets. So I do ultimately believe that there are, there's a balance that we can strike

between having access to private capital to grow and expand, particularly when your earnings are not as predictable, and then moving into the public markets when you have the opportunity to have a little bit more predictability, but still have growth. I mean, at the end of the day,

there are so many great examples of success stories like in Amazon, came public at $300 million, you know, it was worth, what, $400 billion today? So there are so many, many great examples where the public markets can be the right source of capital, but we do need to make it a more inviting environment. One of the memes on why not to take your company public is short-term thinking versus

long-termism. I think there was a survey done about 10 years ago that said something like 80% of CFOs said to make their quarter, they would do something that might not be in the long-term interest of the company. How do you address that with people who are thinking about the public market? Yeah, so I look at it. And first, I think you have to have conviction on your long-term story. you have to be to articulate that vision really well

and provide the shareholders' milestones that they can understand and allow them to track you towards that vision. But those challenges, when you go public, there's a real temptation to stray from that vision in order to get those short term. If the vision isn't working, then you have to pivot. But I think that if you can demonstrate

that you can do that and communicate it well and communicate it actively, I mean, I would say I actually enjoy going out and talking to investors. I really do. I enjoy it because, number one, they look at your company through a different lens, and it's important for you to understand that lens. Number two, they ask interesting and insightful questions most of the time. It depends on who they are.

And then number three, I think it forces me to have a very discreet and tight story as to what I'm trying to do here at the company. And if you can do that and articulate it well and be consistent, I do actually think that the public markets can be a great environment. A friend of mine who was in equities once said you get the investors you deserve at OpenTable, we ended up with a bunch of long-term buy-and-hold guys, what we allocated them, and then marketed to them. And, you know, the stock was very narrowly held by a bunch of people who held it and managed it.

They wanted us to manage it for the long term. Right. I do watch my stock price. But you can't get so obsessed with it that it makes you lose focus. You also have to be able to tell investors where you're going. They want the story. They want to believe in the story. And they want to believe in you.

And so it's a matter of being able to do that in a way, but also give you. but also giving them tangible evidence that you're progressing against the story. And it's not always easy. One thing I would say, and I've learned this by watching a lot of IPOs, that first quarter after your IPO is an incredibly critical quarter. So I know I'm sitting there saying have the long term and everything else. But when you are preparing for your IPO, you're giving analysts essentially a forecast of your business for the next two or three years,

most likely three. And you're giving them a quarterly view as to how you're going to achieve against that. And if you miss on that first quarter out of the gate, it's really, it's a confidence crusher, right? So you've basically sold your story on the back of being able to achieve your forecast. And it doesn't mean that you're going to make every single quarter perfectly. But if you miss that first quarter, that's a tough one. I did a blog post the things you need to do to go public.

And, you know, if you don't, for a perspective, if you don't have the next four quarters in the bag, you know, don't even think about it because it's so interesting, the long-term performance, of the company in terms of value is so predicted by the first quarter performance. And not every business model allows you to have the next four quarters in the bag. It depends on the industry. It depends on the business. If you're in biotech, the investors who are investing in you know that you're not going to have every quarter downright, they're looking at it as a long-term play.

They're looking at his portfolio play. They're all making their revenue estimates. Yeah, that's right. Right, exactly. Exactly. So, you know, investors are smart enough to be able to pivot and understand that. I agree with that. Okay.

What's NASDAQ trying to do to bring back the ideas? We make it so that your path into the public markets is as smooth as possible. Our marketing organization kind of becomes your marketing organization. To make it so you get the visibility that you need. And then on an ongoing basis, we help you navigate those public markets. Most notably, you get a lot of shareholder turnover in those first two years. It just is the nature of the game. And so we have this whole IR intelligence suite to manage that turnover and get you with the right shareholders.

What we're also doing is trying to give the companies better tools to be able to have more constructive relationships with their investors, most notably short sale disclosure. I'm on a mission to get so that companies can have a disclosure around who is shorting their stock. You have, at the end of every quarter, you get a report called a 13F that tells you all the longholders in your stock. Why can't you also get the same report for who's shorting your stock? Because if you're sitting across the table from an investor, don't you have the right to know if they're long or short your stock? And what's so frustrating is the short sellers say, well, but then they might not want to meet with me.

And I'm thinking, well, don't I have the right to make that decision? I should have the ability to know. Ignorance is not bliss here, you know, and it's really just that information disparity to me is just totally wrong. I mean, it would be great because you get people talking negative about your business and they never have to disclose the fact that they're short. One of the fascinating things have been, you know, NASDAQ was the first technology exchange. The process of going public is amazingly manual.

So my experience of the process in 2009 was, We had 46 meetings in rapid succession where we had a flipboard presentation, and you had to give the presentation the same way every time. So it became one of the most nerve-wracking things was also one of the most mind-numbing. So can technology enter this process to change it? I do think that technology can do a lot to help the process. I think that there are, to be honest, a lot of vested interests in the people who control the process. to make it so that they manage the relationships with the investors,

and they put you in front of those investors, and that the investors do have a chance to look at the whites of your eyes, right? So there could be a lot of things you could do in terms of using video conference. Certainly having it so that you can, we do pre-record now. You're allowed to pre-record your road show presentation and put that up. That's an improvement. But that doesn't make it so you don't have the meetings, because at the meetings you want to be able to answer the questions.

But it does create it so that you're doing your presentation once, everyone watches it, and then when you're in the meeting, you're really just answering questions. That would be huge. That's better. But it's still, it still is a very manual process. That's what college curriculums are doing now. You watch the lecture outside and you come in and do hands-on experiential type thing. So possibly due to high frequency trading, there's an explosion of venues where you can trade in the U.S., you know, dark pools, all kinds of things. And it seems to have resulted in an amazing fragmentation of share. Is that good or bad, for the U.S. economy? The foundation of the U.S. capital market system today for equities is that the SEC has promoted an environment where there's rampant competition among trading venues like

exchanges and broker-dealer systems. They want that. So they basically created the rules to create that competition. And that has resulted in 40 venues. What kind of rules led to that? So there's something called Reg. NMS, the national market system. So Reg NMS is the way we say it. And it was enacted in 2005. And it basically defines that number one, best price rules over all else. So price, time is the priority for all executions. All exchanges have to be linked to each other. And if some other exchange has a better price than NASDAQ has, we must route to the other exchange. We are obligated to route. Also, all exchanges can trade all stocks. So we trade in the range of 20% of the trading in New York listed securities. They trade some percentage of NASAC listed securities. And then they also allowed single dealer. broker-dealer systems that are not lit venues, they don't have to disclose any of their quotes, they allowed them to basically operate on a level playing field, which is a challenge. So you've ended up with 40 venues that can trade any listed security. And I would argue for, you know, stocks that are more than a billion dollars and have active

liquidity all day, probably it's okay. I mean, the liquidity is there, the depth is ultimately there, the systems are incredibly interconnected, trading happens in microseconds. It's pretty efficient. But for stocks that are less late. where it's a little bit more, not trade by appointment, but certainly not an active market all day long and you're trading maybe 100,000 shares a day or less, that is not a good environment.

So one of the things that we are preparing, and we've wrote in our blueprint, is to give an issue or a choice. They should be allowed to choose which market structure they want to embrace. So they can choose to be in the national market system or they could choose to be in a single venue. And we want to allow for Massac or other exchanges to create single venues. that have different market rules that allow issuers to have a choice. That is a fundamental change to the market structure of the United States,

and so it will be a petition process. How does NASDAQ decision itself relative to the other 39 venues? I mean, what is your positioning to investors? I started off by saying NASDAQ is a technology company, and it is, in fact, true. So for every dollar we spend to improve our own markets, we have the ability to commercialize that and offer it out to 90 other markets around the world. So we have a much more natural incentive to invest in our systems and to spend money in R&D than any of our other exchange peers.

And as a result of that, we have every opportunity and incentive to bring the future into our technology and to make it so that we can drive to the most efficient capital markets on the planet. That is one of our key competitive advantages. New topic, passive trading. So some enormous amount of stock now trades through ETFs, indexes. funds, things like that, and full disclosure, I'm an early investor in wealth front, which is one of the robo advisors. How has this changed your job, or the task of NASDAQ? Is it a profound change or a minimal change? It's a good question. So, well, the first thing is that we actually

are, for our own disclosure, we're a significant indexer ourselves. So we provide indexes that now have $150 billion of assets tied to them. So about 60% of that AUM assets under management is tied to our benchmark indexes like the NASDAQ 100, the biotech, the semiconductor, but another 40% is tied actually to smart beta indices that we've created. I call them outcome oriented indexes. So they're very different and they're more strategic in the way that they're constructed. So we are very active in the passive games, so we've been benefiting from that. But I would say holistically in the system, I think that I'm a big believer in two things. there are $77 trillion in assets under management today that are investable.

It's probably going to grow to $100 trillion in the next five to seven to ten years. It's a big growing pile of money. So all the boats are lifting, but in a long bull market where it's been just a very long bull market, it's very hard to beat the benchmark. It's very hard to beat the beta. And so indexing has become more and more popular, and you're seeing more and more money piling into it because the beta is so good that is it worth paying an extra? amount of money to beat beta. And I think therefore the active managers have been under some pressure.

However, I personally believe that all cycles have their cycle. And active managers will prove, they'll demonstrate why they matter as the cycles kind of change. And I also believe that we will always have a balance between active and passive. If it moves more towards passive, the herd mentality and the arbitrage opportunities will become greater. And then that'll give the active managers more opportunity, right? So I think there'll always be a balance, but right now that cyclical trend is driving a huge amount of demand for passive. A friend of mine when I was talking to about this made the observation, you can't have passive without active because someone has to set the price that sets the index that kind of comes. So there is a logical limit to where it can go.

Now, the impact on the markets is that passive investors have much lower turnover than active investors. So the more passive that comes to the market, you could argue that there could be less turnover. I think that that is somewhat true, but I also think that there are other reasons as to, you know, the volume has been very flat in the last few years. I think that also has to do with the beta in the market and the fact that it's a one-way story

right now. All right, let's turn the other 75% of your business. When did NASDA get serious about diversification? I mean, when did you leave being a U.S. exchange company? Back in 2003, when Bob Greifeld, our former CEO came in, NASIC was actually not in great shape. You know, we'd had a regulatory change,

that had created a lot of competition for trading, and we had not fared well in that, so we really had to learn a lot of lessons. And we basically, we shored up our U.S. markets. We bought a company called INET. We integrated their technology. We still use it today. And so as soon as we were able to shore up our U.S. capital markets

and feel really confident that we had the best equity markets available, we immediately started diversifying. I was this head of corporate strategy and the head of the data business at the time for that period, and we bought our way into U.S. our way into Europe with the OMX acquisition. They also had this global technology business. We really were buying it for the access to Europe. But this little tech business was in Asia, was in the Middle East, was in Africa. It was like this is a SaaS business. And it's become this

great business. Then we went on to buy Phyllex, which is an options exchange. And then we went on to buy the corporate solutions business, which really provides his IR and a board portal. So we diversified through acquisition. We now have enough piece. of the puzzle, we have a lot of opportunity to grow organically, and that's what I'm really trying to spur and promote, but we also can bolt on acquisitions that help us catalyze growth in certain areas. So with all these acquisitions, was the strategy to retain management and have them, give them autonomy, have them grow, or was it kind of, we have a NASDAQ machine kind of thing? I would say we're more the latter until recently. So the acquisitions

tended to be highly integrated. So buying other exchanges, it's a huge synergy play. So there's huge amount of benefit to scale. And so that ultimately results in a lot of integration. We've definitely been able to retain the former CEOs of these companies in different roles throughout NASDAQ, but it's been a real integration game. Our latest acquisition is a company called Investment, and it basically allows us to get very involved in the asset management space with data. And the management team is spectacular. So we want to keep that team. It's a revenue synergy play, not a cost play. So then it's a different strategy altogether. So the former strategy puts a huge premium, particularly with geographic expansion, on building out management talent. How did you start,

you know, getting that level of talent to disseminate globally? You have to create the right environment that allow them to continue to have a level of autonomy that gives them that sense of empowerment. But at the same time, they have the power of our brand. So with all these acquisitions, what is the current business? Have you talked to the street about where you plan to go in the Continued direction, new direction. Our data and index business will continue to expand to grow into the asset management space. And then the global technology business is the other area beyond just the capital markets. We have clients now that use our market infrastructure technology to trade ad futures,

to trade reinsurance credits, to trade loyalty points. So we can look at that marketplace. Yeah, so basically we can take that marketplace economy concept. Any business now that wants two-sided price formation, and allowing consumers or clients to have a say in pricing of any product. I mean, one of the ironies here is when we're at eBay, we used to talk about it as an exchange business. Yes. And we used to compare the volume of trades relative to the public stock markets because it was incredibly similar.

By the way, we did the same thing. Yeah. So we were always looking at eBay and saying, wow, they're really an exchange business. Yeah, selling mini babies. Yeah, it's a slightly different product, but that's there. So NASDAQ was the first electronic exchange. So technology is in your DNA. There's some pretty interesting things on the technology scene out there now.

You know, one is how do you attract and retain talent, you know, which in a lot of legacy businesses is hard to do? I would say that the mission of NASDAQ, which is to create the opportunity for economies to grow by creating efficient and effective capital markets, that is a mission that people can kind of get around because what we do actually really matters for the economy. and it's not just our own economy. What's really cool is when you go into Indonesia and you bring our market infrastructure technology into an evolving and developing market. They have very advanced integrations

with the ability to attract international investors to trade extremely efficiently and to grow their economies through their capital markets. People can really get their head around that and their hearts around that and they get excited about being able to do that. Okay, so a couple specific topics, blockchain. Will distributed ledgers based on blockchain technology

permit instantaneous settlement and clearing? It definitely has the potential to do that. It's just a matter of how you actually implement it. So the technology is the easy part. The ecosystem is the really hard part, right? The last two years, everyone's been experimenting with it, including NASDAQ. We've integrated the blockchain now

into our next generation market infrastructure technology. So we can basically support any market from pre-trade risk management through to settlement on the blockchain and any market, so including non-financial markets. Our technology now allows us to deliver a market in the cloud and allows us to be able to scale a market in the cloud. But we've been doing a lot of experimentation.

Now we actually have signed contracts with clients who really are in that use case mode. Let me prove out this use case. So I'm going to settle out my OTC securities in Switzerland using the blockchain. Let's see if we can prove that out. And we'll work with you, NASDAQ, to do that. We have a JV kind of a partnership with a bank in Sweden

to prove out the blockchain. blockchain for mutual fund formation and mutual fund management. And then we have actually a specific use case in South Africa to implement the blockchain for proxy voting in South Africa. So these are great because now we're going from experimentation to real-life use cases that prove out the technology. But all of those are pretty unregulated, right? You're not talking about a lot of regulation and layers in a huge ecosystem. These are pretty defined ecosystems. The next step would then be, okay, this works. We have it in the NASDAC private market too, by the way. way where we can settle out. But let's then say, okay, let's apply to a regulated market.

You got the regulator. And you've got a lot of legacy systems. And a very large ecosystem of embedded workflow. So the benefit has to be huge. And I would argue the benefit is extremely large. The firms can understand that if they can settle faster, they have to commit less capital to the trade. They'll commit less capital. It saves them a ton of money and they can trade more. It's just that the technology is so old and the workflows are so embedded that it just takes time. So I believe that it's going to be more of an evolution, not a revolution, but it's pretty exciting. In the Clay Christensen view of the world, the threat to NASDAQ is you're the incumbent who's investing to optimize your current systems and the scrappy little innovators come from behind. So it sounds like you're trying to embrace the innovation as best you can in the market's where it's addressable, non-regulated.

Yeah, I'm personally a big believer that you can't stop technology. So if you think you can, then you're delusional. So therefore, you better embrace it and figure out how to make it work within your business and make sure that you learn it, understand it, use it, and then define your future with it. I'm not a believer that it totally eliminates the need to have an organized ecosystem around the trading of securities. I actually think that that will always be a part of the ecosystem. First of all, there's disparity and temporal disparity between you as a buyer and me as a seller most of the time. So having intermediaries matters.

Having a place to bring it all together matters. Having regulation around that to make sure it's fair matters. Having really good technologies aboard it matters. That's who we are. So I feel very good about that even in the context of an instantaneous settlement. Clearing and settlement to us is not a big part of our business. I also think the clearing houses would benefit from having that efficiency as well. It does make sense that there's a set of value-added services.

you're building on top of the settlement mechanism, which is great. Okay, machine learning and artificial intelligence. What's the future of these two in the markets? We call it machine intelligence. It's kind of a combination of the two. People ask me, what's the one technology that's going to drive the most change in the industry? And I have to say, I think, machine intelligence. Now, if you then couple that with the promise or the potential of quantum computing

to put it on steroids and then have all this data available that's organized and available to you in the cloud, and then you can basically apply all that technology together, that's a real game changer for the way that people interact with the capital markets. So you can be a lot smarter and the use of that data to drive outcomes. You can scenario analysis,

thousands of scenarios simultaneously to figure out what the optimal scenario outcome is and then interact with the markets in an instantaneous machine-driven way. That has a potential to you could argue to drive perfectly efficient markets, which is kind of something that doesn't exist.

So I think that that's pretty game-changing. So what we also have to look at, though, is from a protection perspective. So how could we use all of those same technologies to put more and more advanced protections on the markets? We are the number one surveillance, trade surveillance system in the world, and so we better be really good at it. Because if the investors have all those tools available to them, we need to have all those tools available to us, too, to surveil and oversee the markets as well.

Tools the investors could use to make better decisions. Is there applications at NASDAQ of machine intelligence? We have a team of data scientists that are working on machine intelligence in two areas. One is in compliance and surveillance. Big opportunity. Big problems. Big opportunity. We're introducing machine intelligence into our alerting capabilities and into an e-coms compliance solution.

On the investor side, this idea of getting more engaged with the asset management community, giving them better tools to be able to make decisions and using machine intelligence as a way to find signals and to drive, to uncover opportunities with them. And using our data, using third-party content, bringing it all together into community, and then applying machine intelligence on top of that, allows us to offer those out to the investing community, and that's the other side of it.

One asset you do appear to have in spades is data, and you have a business monetizing data. How do you think about monetizing data versus the broad dissemination of data? So monetizing often involves proprietary access to, whereas broad is broad and it's hard to monetize if you're giving it away. Why would I pay you for it? So where do you look to strike that balance? So the way that we look at it is, well, you make it affordable.

Okay. So a lot of people get to. Yeah. So we basically have 20 different data products that we sell today. But I'll just start with the core data that comes off of our trading engines in the U.S. is a good example. And there are lots of different flavors. So we have something that is a utility, that all of the exchanges have to come together

and commit their data into a central system called the Securities Information Processor. That data generates the national best-bidden offer and last sale for every stock in the country. And it's available real-time. And it's available through a regularly mandated committee and a technology, and it's a utility. So there's utility-based pricing.

And then you basically have all the rules, of how you distribute that, how people can access it, you sign contracts. Anytime you sign for a new brokerage account, you sign a data agreement. Okay. And so we can count you. And then we go in and audit our firms to make sure that they're complying with the contractual obligations. Then there's the NASDAQ proprietary products.

As I said, there's 40 different venues that trade stocks. So, you know, the main venues get a chance to then sell the proprietary data. We sell much deeper information, and we also make our best bid and last sale available cheaper than the SIP. And so we basically compete for getting people to buy our data, but we have a very discrete process around that. We also have to get all of those fees approved by the SEC. And then we have to make them available on a fair and equal basis, no special deals. And so everyone in the world gets equal access, and we make it very affordable. And that's the best way to do it. Well, we started the process of going public at Open Table in late summer 2008. And between the

time when we had our bake-off and awarded the business and the org meeting between Thursday and Monday, Lehman went bankrupt, Merrill, our lead bank traded. And our business dropped 15% over the weekend. The number of diners making reservations dropped 15% because it was mass panic. And me being the incredibly intelligent guy I am, had complete knowledge that the spending pattern of the U.S. consumer had changed dramatically. And I did not trade out of an equity over the four months and got killed when it's all game obvious. Right, right. So that's a perfect example of a signal. The power of the data was enormous. And then you're like, do you give it to one person for a lot of money? Do you give it to a ton of people

for a little bit of money? We are a believer in, and that's what I mean about this data community. So I want to make that data available to a lot of people so that they can all get the benefit of understanding that signal, but that you get to monetize it because you created it. I mean, you're the formation of it, right? Companies have a lot of data. They bring their data into our system that's now a cloud-based data tool. We have a revenue share agreement with them. So either the firms can just buy it through us and they get a rev share, or they can buy it through our package where we've actually matched it up against the NASIC data,

found a signal in it, predictable signal. We can give you backtesting on it and show you that it's actually useful. It gives you a true predictive signal and then provide that signal to you or the signal and the underlying data. So the whole idea is to allow these really innovative companies to have a chance to offer that out in an affordable way to everyone equally so that we're not making it so that there are halves and have-nots. You're syndicating. Yeah, you're syndicating on behalf. So that's great. So you're almost a lifer at a company, except for taking Carlisle public, you know, for the other thing. And so you've gone to the experience of being part of the team under someone else's leadership to being the leadership. How do you do you do that transition and both in your own psyche as well as with the organization? Well, there were definitely certain specific pivotal moments that allowed me to kind of get to the next level.

And first of all, sponsorship is really critical. I've had really good sponsors throughout my career. And they would, number one, took a risk on me. And number two, supported me very clearly so that when I was in that position, everyone understood that they have. had to listen, right? You have great people who can work for you, and they really are partners more than employees. So if you treat them with mutual respect, that's obviously the best way to make sure that you have success and they have success. The second thing is just making sure that you have that open dialogue, communication. Don't let it just sit as this elephant in the middle

of the room, talk about it, figure out how you make it work. That was really, really important as well. So it's funny. One of the, it sounds tripe, but it was really important to me. But developing as a manager is the phrase, be the boss you want to work for. You know, just saying, what did I value as an employee? Someone who communicated with me, told me, where we were, pushed me, tried to make me better. The one thing that I really always craved was information and open communication. Treat me like I'm an adult.

Don't treat me like a child and make it so I don't know everything. Like if things are going well, I want to hear why they're going well. If things aren't going well, I want to hear why they're not going. well. I want to be a part of that and recognize we're all part of this team and we all have to push the organization forward together. So I do really believe in that sense of communication, but open communication. Be very open with people so they understand where we stand. What we're doing well, what we're not doing well. I'm a truth teller. Like if things aren't going well, I'm going to tell you. But that doesn't mean I'm blaming you. I'm just saying, okay, this isn't going well.

What are we going to do together to make it work better? Right. That's awesome. Please join me in thanking you, Dana Friedman for the conference. Thank you. Thanks.