This changing face of the industry demanded a new kind of leadership. Remarkably, the Nasdaq Board exhibited great foresight in recognizing the moment. It would have been too easy for them to look toward Wall Street’s past rather than its future in choosing a new CEO. The top job at Nasdaq, as with NYSE, conveyed a certain ceremonial power, and it was often bestowed on a respected elder in the financial industry as a kind of sinecure. But Hellman, Rock, and their fellow Directors were clearly not attached to tradition when it came to writing Nasdaq’s next chapter.
The first interview went very well; it was clear the Board and I saw eye to eye on the technological and cultural challenges facing the organization. Soon, any lingering questions about why they’d tapped me for the role dissipated. I might not have come from an investment bank or a brokerage firm, but my entrepreneurial background and my technological orientation were part of my appeal. Nasdaq needed that kind of energy.
I began to feel like the job might be mine if I wanted it. However, I’d soon learn that I had serious competition. At some point in our discussions, the headhunter let slip that the other person being considered was Bob McCann, then head of global equity trading at Merrill Lynch. I knew that McCann was articulate, charming, and formidable, and would be hard to best in a traditional interview format. If we both simply answered questions, I feared that the job would be his.
It was only when I considered that I might lose the role to someone else that I realized how much I really wanted it. Who are you kidding? I asked myself. You’re not going to walk away from an opportunity like this. My entrepreneurial mind had already started to mull over the types of transformations that might help Nasdaq execute a turnaround. The more I thought about it, the more determined I became to do whatever I could to show the Board that I was the right person to lead Nasdaq into a new era. I would take a more proactive approach in my second interview. After all, the struggling exchange didn’t need conversational skills; it needed decisiveness and action.
When the day came, I sat down in front of the video screen and before anyone from the Nasdaq Board uttered a word I said, “Here are the five things I’m going to do in the first hundred days.”
My plan was simple:
1. Get the right people on board.
2. Reduce bureaucracy.
3. Embrace fiscal discipline.
4. Overhaul technology.
5. Stop being satisfied with No. 2.
I spent about fifteen minutes going through this five-step plan, describing how I would implement each step. No posturing. No sugarcoating. No charm. Just a straightforward, hit-the-ground-running blueprint for change. As I finished, I looked around at the faces on the video monitors (and a couple in the room with me). I could tell I had won them over. Two weeks later, it was official.
Day One
I had a firm point of view on what it would take for Nasdaq to be successful. It was going to involve a significant change of culture. Inevitably there would be ruffled feathers and disgruntlement, and I would need to part ways with some of Nasdaq’s existing management team. There was no avoiding it, and only so much I could do to prepare. On the final day before assuming my new role, I decided to do the best thing I knew to keep my mind focused and blow off some tension—I ran a marathon.
As a young man, track had been my preferred sport, and in my adult years I had taken to running longer distances. The only race I could find that particular weekend was in Ottawa, Canada. I brought Bobby and Greg, my two teenage sons, along with me. It was a surprisingly chilly day in late May; in fact, it was so unseasonably cold that our flight home was almost cancelled because the deicing equipment was in storage. Am I going to miss my first day as CEO of Nasdaq? I thought as we sat on the tarmac. Thankfully, we made it out. As I watched the skyline of Ottawa fall away, I wondered when I would have the time and opportunity to do something like this again. As it turned out, that would be my last marathon.
The next day, I was sitting in the kitchen of my New Jersey home when my wife, Julia, called from the front room. “Bob, there’s a great big black Cadillac parked out front. I’m guessing that’s for you!”
As the driver opened the door to the plush private limousine, I reflected on how far I had come. I wasn’t bred to be a captain of industry. Growing up working-class, I had worked hard to get an education. I’d not attended private schools or Ivy League colleges. I was lucky enough to have genuine opportunities to advance, but I’d had to earn every one of them. As a hungry young executive, I put myself in a good position to succeed. I got my MBA at NYU Stern, taking classes at night. I helped build and sell a successful company, gained important experience in leadership, and created a good life for my family. But this situation was different. I was stepping onto a bigger stage. Nasdaq was more than an organization or a business; it was an American institution and a global symbol of capitalism—a signature brand that spoke to the aspirations of millions. In my own mind, I was still just a kid from Queens, but I knew that somewhere along the way, I had crossed an invisible line. Private cars and Wall Street Journal mentions were only the first indications of that change. There would be more to come.
The car pulled up to One Liberty Plaza, Nasdaq’s home office. This imposing skyscraper had originally been commissioned in 1973 by U.S. Steel—a once iconic, top ten American company that today doesn’t even crack the top five hundred. If I needed a reminder that there are no guarantees in business, the large steel girders of this architectural giant sent a pointed message.
I could never have imagined then that this massive structure would be my workplace for the next fourteen years—a lifetime in terms of global markets. In the days, months, and years ahead, I would oversee the near death and rebirth of Nasdaq and build it into one of the world’s premier stock exchanges, a globally dominant company active on six continents and in twenty-five markets around the globe. I would help Congress and the Securities and Exchange Commission (SEC) overhaul and modernize financial regulations, and shepherd Nasdaq’s antiquated technology through a massive restructuring and upgrade. During my tenure, I would have a front-row seat for the Lehman Brothers bankruptcy and the ensuing financial panic. I would be center stage during the frightening Flash Crash, in the spotlight for the infamous Facebook IPO, and caught up in the controversy around high frequency traders. Like everyone else, I would be shocked by the fall of Bernie Madoff, and encouraged by the resiliency and recovery of global markets in the wake of the greatest recession of my lifetime.
Through it all, I would participate in hundreds of successful IPOs, as America’s next generation of great companies—in biotech, technology, energy, renewables, medicine, and more—found funding and empowerment in the public markets. It would be a period of tremendous upheaval, and even the nature of my own job, as CEO, would be hardly recognizable by the end.
But that was all to come. On that cool spring morning in May 2003, I only knew that Nasdaq was in a fight for its survival, and there was not a minute to waste. Perhaps I was already too late. I walked in the door, headed up to my new office on the fiftieth floor, and parted ways with three of my executive team before 8 a.m.
Chapter Two
People First
Two Executives Leave Nasdaq As Greifeld Assumes the Reins
Wall Street Journal, May 13, 2003
Get the right people on board.
That was number one on the list of priorities I had presented to the Nasdaq Board in my interview. The right people leverage everything else in a business—even more so when you are undergoing a turnaround and cultural shift. Business, like life, is unpredictable. No matter how good your strategies, you can be sure you will face unexpected challenges, new opportunities will arise, and shifting market conditions will take you by surprise. You can’t control circumstances, but what you can do is to ensure that you have the best people in place so that when the world changes around them, they can adapt, respond, and step up. That’s why my motto has always been people first.
In m
anagement circles, we talk a lot about engagement. If you have workers who show up every day merely because they’re getting a salary, your company is unlikely to thrive in the long term. Engaged employees come to work for more than a paycheck. They show up with purpose and even passion. They want to work hard and are connected to the mission of the organization. That’s the type of workforce a thriving business needs. In the early days of any culture change, the critical first step is to find the people who want to work in that new culture—and to part ways with the people who don’t.
When corporate leaders say, “People come first” or “People are our most important assets,” the message may seem warm and fuzzy. But it’s not always a line that a CEO can deliver with a hug and a smile. There is another side to the “people first” principle. Just as the right people are extremely important to the success of any given business, the wrong people—individuals who do not fit, for whatever reason—need to be let go. And letting people go is never easy.
The first firings during my tenure happened immediately. I had done my homework, evaluated the executive team, and already knew several changes in senior management that needed to be made. It was still early morning when the first person came in. This was an individual with a long history at the company. I considered him part of the old Nasdaq and knew that he was not a good fit for a company embarking on the changes I had planned. I needed someone who could get out ahead of our issues; he seemed only able to analyze what went wrong after the fact. It was the right step to take; there was no benefit in dragging it out. “We’re taking Nasdaq in a different direction,” I explained, “and we don’t think your skill sets are aligned with where we want to go. We might as well part ways now and give you time to go look for something else.”
He was surprised, of course. Perhaps he’d had an inkling that this might happen, but I could see he wasn’t expecting it before 8 a.m. on my first day. Nor were the other two people I let go in that first hour. Around the office, as staff arrived, there was a palpable sense of shock at the events of the day and how quickly they were unfolding. As word got out that personnel changes were already underway, not surprisingly, people were reluctant to come into my office.
Personnel changes can be painful—there’s no way around it. The people I said good-bye to on that first day, along with the nearly three hundred I let go in my first year, weren’t faceless cogs in a machine; they were colleagues and teammates. Change had come to them uninvited. In these situations, I was glad Nasdaq had the resources to be generous with severance packages. After all, many of these employees weren’t leaving because of underperformance in relation to the original expectations of their job. Rather, the expectations had suddenly and dramatically shifted.
I knew that these changes would temporarily impact morale. But I kept in mind a great piece of advice I’d received from a friend and business associate, Vinnie Viola: “Good morale in a bad organization isn’t worth much.” He is absolutely right. What use is a contented workforce if the business is failing? I was willing to temporarily sacrifice morale if that’s what it took to achieve the goal—good morale and a great organization.
I also saved myself a lot of time and struggle by acting clearly and decisively from the moment I arrived. The message was immediately and effectively communicated: We’re in a new world, and there’s nothing to be gained by digging in and defending the old one. It saved us all countless hours of meetings and long, drawn-out culture wars. I didn’t want to constantly hear the phrase “This is how we’ve always done it.”
Transparency builds trust and minimizes drama. If you tell people what you are about, right from day one, then when they see you follow through on your intentions and act accordingly—even if that involves making difficult decisions—on some level they’ll appreciate that you were up front and honest with them. That will create confidence in your leadership and encourage clarity and transparency in return. If you’re not transparent, you set the stage for all kinds of negative drama. There will be gossip, innuendo, and distrust, none of which helps anyone get their job done.
The bottom line was, those changes had to happen if Nasdaq was to survive. Yes, this was an emotionally difficult part of the job, but as I told my team at the time, “We can’t operate like a charity. If we don’t do the right thing—and make the necessary changes to adjust to financial realities—somebody will acquire Nasdaq and do the right thing for us.” As a public company, you’re always for sale. The sale price is published every day on the ticker. And if you’re running a 20 percent margin business when you really should be running a 35 percent margin business, someone is going to take notice and make a change.
Who’s on the Bus?
Most business leaders understand the impact of a bad hire. Zappos CEO Tony Hsieh has said that bad hires have cost his company over $100 million since he opened for business.1 A study by the Society for Human Resources Management suggested that the cost of a bad hire can reach as high as five times that person’s annual salary.2 A bad hire disrupts productivity, saps morale, and can negatively impact the performance of others as well. Plus, the opportunity costs of not having the right person in the role are incalculable. Unfortunately, having the wrong person already occupying a position is similar to making a bad hire. That’s why I believe that the same concern and attention that is often brought to the hiring process should always be applied to existing personnel at the start of a turnaround. Indeed, it’s helpful to imagine that you are hiring for a new company, one that will exist only when the change process is complete. That will lead you to look at your existing staff freshly, with eyes on the future of the organization.
“I felt like I was interviewing for my job,” Adena Friedman told me later, describing our first meeting. “Then, at a certain point, I realized that was exactly what I was doing!” You might recognize her name—she would become CEO of Nasdaq after I decided to move on in 2016, and that role still rests in her capable hands as of this writing. In 2017, Forbes would rank her as one of the most powerful women in the world. In 2003, she was a smart young executive with tons of potential. She’d been with Nasdaq for a decade, and exuded dedication, passion, and competency. I quickly recognized that she had no cause to fear for her job in the reorganization. Adena soon became a critical member of my inner circle. A highly effective manager and tough financial negotiator, she would go on to lead a number of strategic acquisitions.
In addition to Adena, there was another executive who would become a central figure in Nasdaq’s turnaround: Chris Concannon, my new EVP of Strategy. Industry insiders may know him as the current President and COO of MarketAxess, a large electronic bond-trading platform. In 2003, Chris was an outsider like myself, one of the two people I brought with me to Nasdaq. He had previously worked at an ECN called Island, and then as an executive at its parent company, Instinet, so he was deeply familiar with the ways in which technology was changing the trading landscape. As upstart executives and leaders of ECNs, both Chris and I were disruptors when it came to the Nasdaq marketplace.
Chris was smart, creative, and independent. He had an irreverent, wise-guy personality that brought some welcome levity to our executive team. He didn’t just follow directions. He liked to second-guess things. His thoughts on Nasdaq’s various projects and business strategies were already proving invaluable in the organizational overhaul, and his skills nicely complemented mine. Indeed, I believe that any good team should supplement each other’s skills, abilities, and expertise, not replicate them. I think of this as “checkerboarding your skill sets.” Chris would go on to become a thought leader in the organization, who deeply understood how markets and exchanges work, and he helped us shepherd the Nasdaq marketplace into its next phase. I take pride in having helped Adena, Chris, and many others develop from talented young executives with great potential into seasoned leaders who are shaping the future of the financial industry even today.
During my initial days and weeks on the job I would continue to evaluate my man
agement team. Some clearly brought a lot of value to the table, like EVP of the Global Index Group John Jacobs, or General Counsel Ed Knight. I was fortunate to have them on board. However, I ended up parting ways with several others. And instead of immediately searching outside the company for their replacements, my preferred strategy was to look more closely at the people already around me. I was rewarded by the discovery of real talent at Nasdaq that had been unrecognized, undeveloped, or underutilized before I arrived.
Sometimes it’s necessary to go outside the company to find the right person for a role. But don’t make that a default move. Promoting from within builds morale, incentivizes higher performance, and avoids many of the risks associated with outside hires. The hiring process is unscientific, and interviews last hours at best. People can sound good in an interview, but it’s hard to know for sure. I’ve found that eloquence is often overrewarded in corporate contexts. Internal candidates, by contrast, have essentially been interviewing for years. They are also familiar with company culture, which accelerates the onboarding process. Wherever possible, promote before you recruit.
If you find that you can’t follow this rule, you may need to do some honest self-examination. If you’ve been doing your job as a leader in an established company, you should be developing the talent you need. When I couldn’t find an internal candidate for a key role, I’d ask myself, What am I doing wrong? We invested a lot in developing talent over time for this reason. Of course, sometimes new blood is a good thing, and you don’t want to become entirely insular, but as a general guidepost, I like to keep the ratio of promotion to outside recruitment at around 80:20.
Over and over again, I sought out hidden gems at Nasdaq and elevated in-house talent. When I let go of the head of our listings business, a prominent position that required a unique mix of relationship-management skills, marketing talents, and public relations expertise, I didn’t just call an executive search agency. Soon enough, on a trip to our office in San Francisco, I met Bruce Aust, a young, charismatic executive with that exact skill set, along with an impressive roster of relationships with key figures in Silicon Valley. There was just one problem: Bruce was a Vice President, two rungs down the ladder of the Nasdaq hierarchy. In order to lead the Corporate Client Group, he’d need to leap over the Senior Vice President and into Executive Vice President territory. Such leapfrogging was virtually unheard-of at the company. In the old Nasdaq culture, you ascended to VP, you put in your two to four years, then you might be considered for SVP positions. Put in another several years, and perhaps an EVP role would be in reach for the lucky few. It was more about time and experience, less about merit and performance. There is value in seniority, of course, but I wanted meritocracy to become a fundamental value at Nasdaq as well. And as I surveyed the existing EVPs, I saw no one with the qualities that I found in this young VP.
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