Bob Greifeld, Nasdaq’s chief executive, may live in a world of bulls and bears, he told a class from New York University Stern School of Business at their recent graduation, but his passion is for turtles. He collects them.
“They are steady, consistent creatures, with a hard shell. They’ve been around since the time of the dinosaurs. They know how to survive and thrive,” he said, nearly 30 years after his own graduation from the same school.
It is an odd image for a man who is a runner and works in an industry where speed is king. Even as many others would think about winding down at 57, Mr Greifeld has taken up Muay Thai, a high-energy martial art, and talks enthusiastically about attacking rival exchanges and going into new markets.
In other ways, during his 12-year stint at one of the world’s most high-profile exchanges, Mr Greifeld had to develop a hard shell and thick skin to see him through the tough times. And he keeps plodding along as the rival New York Stock Exchange, which suffered a technical glitch last Wednesday, turns over bosses: five during Mr Greifeld’s tenure at Nasdaq.
Mr Greifeld says he was drawn to Nasdaq as a disrupter: a market that never had a trading floor and which went straight into the electronic age. But when he took the reins Nasdaq was the one being disrupted, in the ugly aftermath of the dotcom bust. IPOs had dried up and regulatory change opened the door for competition from alternative trading venues and “dark pools”, eroding margins.
His solution was to diversify. Mr Greifeld is credited with transforming Nasdaq from a single equity exchange to a multi-faceted technology and services company.
The expanded group now comprises 26 exchanges and three clearing houses. It also has an arm that offers services to listed companies and another that sells technology to fellow exchanges and broker dealers.
Businesses other than trading represent nearly three quarters of revenue, which has risen from less than $600m in 2003 to an expected $2bn this year. “My job today is entirely different than it was 12 years ago,” Mr Greifeld says.
Born in Queens, New York to what he calls a lower middle-class background, Mr Greifeld had “limited aspirations” until a weekend job opened his eyes to other possibilities. In 1981, fresh out of college, he was selling computers for Burroughs Corp, the precursor to Unisys. He took a job on Saturdays delivering packages for FedEx.
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“Saturday delivery, because what was I going to do, sit around on a Saturday? So I figured, let me make some money doing that,” he says.
His deliveries took him to Greenwich and other affluent areas of Fairfield County, Connecticut. That was his first view of a seductively different world from the one in which he grew up, prompting him to think: “OK, what do you do to be successful like that?” His answer to that question was to go to business school, where he wrote a thesis on Nasdaq.
Mr Greifeld speaks like he runs his company, stripped down and sparse. He still uses the same chair as when he became chief executive. The arm is worn down with the stuffing falling out of it. The one thing the industry is unanimous on is his ability as a cost cutter.
“He is an extraordinarily good operator. Every promise that he has made to the public market about getting synergies he has outperformed,” says Glenn Hutchins, co-founder of Silver Lake, and a Nasdaq board member.
Nasdaq stock is trading at about the $50 mark, up from $6 in 2004, its rise powered as much by tight control of costs as top line revenue growth.
But running a US exchange with an office on Times Square has its drawbacks. Everyone knows the screw-ups. Was Facebook’s 2012 IPO the worst?
“I should say yes so I don’t have to bring up all the low points,” he says.
Investors could continue to put in buy or sell orders through the opening of trading for an IPO. On listing day for Facebook, a flood of cancellations of buy orders for shares overwhelmed Nasdaq’s system, delaying the opening and resulting in a$10m regulatory fine.
“The Facebook problems didn’t come from incompetence, they came from arrogance in terms of how the software was designed,” he says. Nasdaq has since added a so-called gate to address the issue.
The Facebook situation was followed the next year by a problem with the exchange’s data feed for prices that left the market shut for hours. This year, its shareholder services unit accidentally released disappointing earnings from Twitter early. Shares tanked.
Of Twitter, Mr Greifeld says such snafus come with the technology and are an opportunity to learn: “We recognise that there will be an error rate with technology.”
< > As a manager, he is exacting – routinely giving pop quizzes to make sure employees know their stuff.
“We don’t quite call it that but yes a hallway visit is always an opportunity for a question,” he says.
A key part of Nasdaq’s growth under Mr Greifeld has been acquisitions. During a time of consolidation among exchanges, he has not had luck hunting elephants. An attempted takeover of NYSE was thwarted by regulators. Critics say Nasdaq has little dry powder left, or leverage leeway, for a big deal. Mr Greifeld disagrees, pointing to politics as more of a deterrent.
“Let’s say you have a set of 10 possible deals that should happen based on pure economics,” he says. “There’ll be one or two that could probably get through the political or the regulatory side.”
The 2013 acquisition of eSpeed, a Treasury bond trading platform, has been a challenge, losing market share since Nasdaq bought it at what some say was a full price. Mr Greifeld says it is a matter of getting the technology up to snuff and rolling out new products.
So, what are the disrupters now? “Certainly we say there’s going to be a big change in vertical monopolies. Monopolies don’t make it over time, they’re not natural orders of things and it’s our job to aid and abet the movement from a monopoly to a competitive situation, primarily obviously in the futures business,” he says.
Nasdaq is launching a low-cost futures exchange challenging the dominance of CME and Intercontinental Exchange.
Aiming to stay on technology’s cutting edge, the company is also experimenting with blockchain, the ledger that records transactions in bitcoin.
Another thing ripe for change is the very concept of going public. The kind of hot tech companies that would have listed on Nasdaq in the 1990s, such as Uber, Pinterest and Spotify, have instead been able to raise billions of dollars privately at attractive valuations. Nasdaq also has a market for non-listed companies
“Right now it’s a little binary; you’re private or you’re not, or you’re public and you’ve got to take everybody in whether you want to or not so I think you’ll see more gradients there in terms of companies choosing what level of public, private, what level of liquidity they want or need for their stock so that would be a big change that you’d see.”
Mr Greifeld’s contract at Nasdaq is up in 2017 and he remains defensive about how long he will remain. What about his legacy, whether his job ends in two or 10 years? “After you’re out of the seat, then you can start thinking about it. Before it, we have enough things to keep us busy all day every day,” he says.
By Nicole Bullock
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