Market Mover

by Robert Greifeld

  To their credit, the protagonists of Flash Boys did try to come up with an alternative approach, building an exchange with features designed to curtail HFT behavior. The “speed bump” they developed to foil the industry was innovative, but it is already being replicated and improved upon by others. To paraphrase the words of Oracle CEO Larry Ellison during the dot-com era, I suspect they have created a feature, not a business. Regardless, the market will decide, according to the rules set down by the SEC—as it should be. And a new generation of idealistic young entrepreneurs will seek once again to innovate, improve markets, and overthrow the existing elite to install a better solution. Such is the evolution of business, of markets, and of life.

  The Known and the Unknown

  In my early days at Nasdaq, I used to have dreams that I was jumping off a cliff, or in some cases falling off a cliff, and tumbling through the air not knowing how or if I was going to land. Sometimes that image would spontaneously come to mind even in daylight. It was a perfect metaphor for how I actually felt during that period. Being CEO of Nasdaq was an experiential leap in all kind of ways. Massive reorganizations, new technologies, global acquisitions, dealing with Washington—all of it was a thrilling adventure, a leap forward into the unknown.

  But as a decade passed, that sensation was fading. The job was engaging and consuming. I was deeply gratified by Nasdaq’s growth and success. I found satisfaction in working on and solving big problems and watching the ongoing maturation of the business. But that fundamental excitement, that sense of adventure, had diminished. When you can’t see the ground beneath you, the thrill of the unknown is real. But now I could see, in some fundamental way, how the future would play out. I was familiar with the terrain. I thought I knew how we were all going to land.

  To some extent, I dealt with my own need for new challenges by focusing on the future, digging into the technologies and ideas that would inform the next decade of Nasdaq’s growth—blockchain, NPM, Nasdaq Futures Market, and so on. The relative stability of the business also allowed me to make upgrades in otherwise neglected areas of the organization that might not be experiencing noticeable problems but weren’t performing to my satisfaction. One of my stock phrases during those years became: If something is not right, it’s wrong. A good leader should always be looking to upgrade people, processes, and technology.

  All of these activities required my full engagement and expertise, but as the novelty and drama of the early days faded, I began to consider my post-Nasdaq life. Watching Nasdaq flourish was its own reward, but the more Nasdaq became a consistent machine, firing on all cylinders, the more I began to recognize that my time at the company was finite. At the very least, it was time to start thinking seriously about who would fill my chair when I was gone.

  LEADERSHIP LESSONS

  • Once You Achieve Competency, You Must Battle Complacency. When the business is under threat from market forces, the motivation to improve comes naturally. When the threats are vanquished, you need to find new ways to encourage change and innovation.

  • Don’t Worry About the Slope; Worry About the Trend Line. Significant change takes time. As long as you’re headed in the right direction, it’s less important how fast you are going.

  • Carve Out a Safe Space for Innovation. In a cost-conscious culture, it’s hard for innovation to take root. Make sure there’s a dedicated space in the culture, the budget, and the institutional structure for new ideas to germinate and grow.

  Chapter Thirteen

  Don’t Look Back

  Nasdaq Names Adena Friedman CEO

  Reuters, November 14, 2016

  “What do you see as the top accomplishments of your career?”

  This question was posed to me by Rich Repetto, lead analyst for Sandler O’Neill in the financial sector, onstage at a Securities Trader Association conference in Washington, DC, in 2014. It was the same question that had been asked of Tom Farley, the President of NYSE, who had been onstage right before me. Farley and I were friends and colleagues, having a common background at SunGard. He had spent a few minutes reflecting thoughtfully on his career and I was impressed by what he’d accomplished. But when I was asked the question, I took a different approach.

  “The moment I start to think about the past in that way, it’s time for the Board to look for a new CEO,” I declared to the surprised interviewer as several hundred people looked on. I really meant it. Any moment reflecting on the past is a moment you’re not focused on the future. Just because you were successful yesterday does not mean you will be successful tomorrow. No doubt there would come a time to reflect more on the past, but not while I was CEO.

  At Nasdaq, I spent more time thinking about how not to become complacent as a leader and how not to lose our edge as a competitive, innovative company than I spent thinking about any of our accomplishments. I pushed our team not to become self-satisfied, and I pushed myself as well. If you’re not careful, personally and organizationally, past success will be a weight on future success, and the greater the success, the heavier the weight.

  That’s not to say I didn’t take pride in having helped rescue Nasdaq from its doldrums in 2003. But this was more than a decade later. Nasdaq was a different company. I was older. The financial industry had changed. There were no guarantees that Robert Greifeld of 2003 was up to the unique challenges of 2014. Yes, I had gained a great deal of experience, and that was incredibly beneficial, without question. I was more efficient in my day-to-day running of the business. I had seen the ups and downs of the markets. I knew the company inside and out. I knew the players in the industry. My wisdom and skill level had shot up over the years. But in order to truly belong as CEO of a public company, you have to continue to be the right person for the present and the future—again and again, year after year. After all, there are a lot of competent people who are hungry for the opportunity. Every year, I wanted to be at the top of my game, ready for current and future challenges.

  I also never wanted to fall into the trap of thinking that Nasdaq’s success was inevitable. There was nothing preordained about it. It had to be re-earned every day. Just because we were riding the momentum of past execution didn’t mean that our momentum couldn’t stall. It was impossible to tell how close we might be as a company to falling behind. I always felt that success and failure were two sides of a thin dime. Indeed, maybe the line between success and failure was thinner than we imagined; maybe we were succeeding by the slimmest of margins. At least, that was how I thought about our performance. I didn’t want to start feeling like we had some special privilege—as if the past were always prologue to a successful future. Success doesn’t drop out of the sky. We had worked hard to earn it. And each day, we had to do it again. I knew that if I lost that edge, I should seriously consider whether it was time to move on.

  Succession

  While I didn’t spend much time thinking about the past, I did spend a fair amount of time thinking about the future, especially the part that would not include me. Good succession planning is an integral part of being a responsible CEO. It’s something every Board should be on top of, even though many shirk that responsibility. I knew I needed a more robust plan for replacing myself at Nasdaq’s helm. The most qualified person for the job, in my mind, was Adena Friedman. Since I had first promoted her in 2003, I had watched Adena evolve from a talented young executive to an accomplished, experienced industry leader. Ever since she left for Carlyle, I had kept alive the idea, in the back of my mind, that one day she might make an ideal future CEO for Nasdaq. So in early 2014, I called her up. We met at a restaurant one rainy night in Manhattan. I had a personal rule that I don’t do business dinners unless I’m the one doing the selling. Knowing me, she must have suspected that I had something important to say.

  I explained to her that I was planning to be at Nasdaq for a couple more years, but after that, she would be a natural choice to replace me. I asked her to consider returning to the company, and told her that if she did so, and pe
rformed, I would help her win the support of the Board. I gave no guarantees, no definitive private or public commitments, but I assured her I would do my best, within my power, to give her every opportunity to prove herself to the Board as the logical choice to be my successor.

  She was intrigued, and I was hopeful. However, I wanted her to gain more operational experience in terms of running a large, complicated business. Carlyle was a bunch of operational fiefdoms, and while she oversaw the financial side of things, that wasn’t the same as mastering the ins and outs of running revenue-producing businesses. She had been CFO and EVP of Strategy at Nasdaq and had done a great job running the data and indexing business. So I had complete confidence that she could do it, but she would still need a period of proving herself. I assured her that if she did so, I would be her strongest advocate to the Board.

  We talked and strategized. By the time our dinner was over, I felt confident that it was an offer she couldn’t refuse, and over the next weeks and months, we worked out the details and she completed her work at Carlyle and officially resigned. I personally called David Rubenstein, CEO of Carlyle, to explain to him why Adena was returning to Nasdaq. Carlyle was a Nasdaq-listed company, and I wanted to show them the proper respect. I told him her reasons, as I understood them, for returning to One Liberty Plaza.

  He wasn’t thrilled but was gracious, and he seemed resigned to the inevitability of losing her. “She did a great job at Carlyle, and I’m sorry to see her go. I guess we just rented her talents for a couple of years,” he conceded.

  On May 12, 2014, it became official. Adena was returning to Nasdaq and it was obvious to anyone watching closely that she would be the natural person in line to be the next CEO. “Adena Friedman to Rejoin the Nasdaq and Likely Be in Line to Lead”1 read one headline describing the move. Her official new title was President of Global Corporate and Information Technology Solutions. I hadn’t used the “President” title since Magnus Böcker (former CEO of OMX) had left the company, but this seemed an appropriate moment to dust it off. At the same time, I also made Hans-Ole Jochumsen, the current EVP of Transactions, a co-President. He might have had aspirations for the CEO role as well, and he would have certainly been a plausible choice, and a good one. But I explained to him when we made the move that Adena was the clear front-runner.

  In early 2015, Adena moved into the COO position, essentially running all of Nasdaq’s business lines. I had never had a COO before; I had always considered overseeing the revenue-producing businesses to be part of my job. But giving Adena that responsibility was part of the succession plan. I intended to orchestrate the transition in such a way that the Board never felt the need to do an external search, and letting Adena prove her operational competency was critical. At this point, every single revenue-producing piece of Nasdaq worked for her. If there had been any doubt that she was next in line, it was removed at that point. Three or four highly qualified individuals from other large firms on Wall Street had expressed a desire to run Nasdaq. My intention was for such conversations to seem unnecessary.

  One Too Many Mornings

  By late 2016, I was finally ready to step down as Nasdaq’s CEO. A still-small voice was whispering in my ear, “It’s time to move on.” Why? In truth, there wasn’t one reason. There were many elements that came together to make 2016 the right moment. I had been there for almost fourteen years, a lifetime in terms of global markets. CEOs rarely make it that far. I had the backing of the Board, the support of my team, and a track record like few others. I know that it can be hard for leaders in any field to let go. I’ve seen too many CEOs struggle to leave behind the job and surrender the trappings of the position—the power, the status, the affirmation, the perks, the limelight, the support structure, the feeling of being at the center of the universe. I didn’t want to fall into that trap. When it’s time, it’s time. No one gains by pretending otherwise. I’d always prided myself on being able to look ahead, see around the next corner. So while I was good at the job, and I was accustomed to the job, it didn’t mean I was actually still the best person for the job. In my heart, I knew that it was time to say good-bye.

  As Nasdaq got bigger and more successful, it also became a different company. I knew my talents, and while I was skilled at being CEO of Nasdaq, as the company grew and our management team became more experienced and effective, I began to feel that the very qualities that made me so indispensable at one point in the life of Nasdaq were no longer so front and center. There was a moment when my skill set seemed to uniquely fit what Nasdaq desperately needed. I was able to shepherd the exchange through the critical period when new trading technology was dramatically disrupting all exchanges. In a sense, we were the first big one to go through that tunnel of disruption and thrive on the other side. Please don’t misunderstand me. I’m not so arrogant as to imagine that no one else could have successfully done the job in 2003. But I think it’s also true that I was the right person at the right time.

  As Nasdaq grew into a new maturity, however, I felt less essential. My management team had grown up and become a powerful group, highly capable and filled with experience. Every week in our management meetings, I was struck by their independence, foresight, and ability. The reality was that they needed me less and less.

  One evaluative method I used to think about my own performance was a conversation in my head between Bob the Nasdaq shareholder and Bob the CEO. How would the former judge the latter? Somewhere along the line, that internal conversation shifted. Bob the shareholder was no longer 100 percent confident that Bob the CEO was still ideal for the job. In my mind, I could imagine the shareholder saying, “You’ve had a great run. But all good things come to an end. Let Adena have her chance to lead the organization into the future.”

  There were also family concerns. When I first started at Nasdaq, every night I would come home to Julia and the three kids, and the time with them was always a welcome respite from the intensity of work. Despite the demands of being a CEO, family was central to my life, and Julia and I had shared the many delights, trials, and joys of raising Bobby, Greg, and Katie. That’s not to say it wasn’t tough. While I had always tried to make time for my family, the reality is that as a CEO of a public company, you’re never entirely free of work, and rarely able to be fully present even when you’re at home. Mentally, it’s a 24/7 occupation. I used to tell my executives that there was no real work-life balance in our particular choice of career. Rather, the better approach was to seek a work-life integration: a healthy and functional relationship between life at home and life at the office. To have a family that was supportive was critical, and I was grateful for the forbearance of mine when those urgent calls came in the middle of dinner or when my mind was otherwise occupied during a family gathering. Inevitably, Julia shouldered an outsized portion of the daily responsibilities in our family’s life. That was an unavoidable trade-off of the choice we’d made and my own career commitments. Today, when I look at my children’s successes with pride and admiration, I appreciate all over again the large role that she played in guiding their development.

  As the three children grew up, headed off to college, and moved on to new horizons in their twenties, the dynamics of my relationship with them naturally changed. Suddenly, they weren’t always there when I had a break. In fact, if I wanted to spend time with them, I had to conform to their busy schedules! The tables had turned. And that’s not so easy when you’re running a $12 billion company and traveling around the world. As I approached my sixtieth birthday, it became ever more clear to me that time was marching on and no one could say for certain how many years were left. I wanted to spend at least some of that time continuing to be part of my children’s lives and the lives of our future grandchildren.

  I was also aware that with the kids out of the house, Julia was left alone while I traveled and worked long hours. She’d sacrificed a lot for my career over the years, and it was time to be there for her. There had been one too many mornings when I left the house
before she was even awake. Moreover, my own parents were getting older. They’d done so much for me; I felt it was my turn to be available for them as they took their final trips around the sun.

  I wanted time to give back, too. After four decades of building a very successful career, I had made more money than I would spend in my lifetime, and it was time to use some of it for helping others and supporting the causes that mattered to me. I decided to focus my giving in a particular area that I’m passionate about: education and opportunity. I’m determined that the upwardly mobile spirit of the American dream should not become unavailable to those from humble circumstances. I wanted to use some of my wealth to provide opportunities for others like myself—who grew up in modest households but are talented and hungry for advancement. As an NYU alumnus, I initially chose the NYU Stern School of Business as an effective vehicle for this: 30 percent of the students in their programs were Pell Grant recipients, with families in low-income brackets. I was able to direct my giving specifically to those students, who have the talent and motivation to qualify for a great education but lack the critical resources needed to make that dream come true. Today, our family foundation is further expanding our investment in programs serving talented, underprivileged children, who have so much promise but lack so many advantages. We’re trying to make the rungs on the ladder of opportunity just a little bit easier to reach.

  Finally, I wanted to enjoy the fruits of success in a way that is impossible when you’re working so hard. I’ve seen the insides of conference rooms in every corner of the world but rarely had the opportunity to immerse myself in the cultures and landscapes that surround them. I looked forward to enjoying more time with my wife and family, riding my road bike and improving my golf game, traveling around the world, and spending quality time with the many friends and colleagues I had gained over the years.