If you can’t beat ’em, buy ’em.
“Nasdaq Agrees to Buy Brut ECN,” Wall Street Journal, May 26, 2004
“Young man, you don’t get it. This is not an admission of failure.”
The gentleman addressing me in this fatherly tone was Jim Mann, longtime CEO of SunGard. It was 1999, and he had just told me he was planning to acquire another company that had developed some technology we needed. I’d questioned his move—couldn’t we just build in-house the technology he was proposing to buy?
“Give me a fraction of what you’re planning to pay for that company and I can come up with our own version,” I said.
Mann shook his head, smiling indulgently at my entrepreneurial pride. “It’s smart,” he told me. “We buy the winners.” A successful company, he explained, has already beaten out its competition and proven itself in the marketplace while a dozen others failed. Yes, you pay a premium when you buy. But you save yourself all the time and resources it takes to develop your own product, build a customer base, and outperform your competitors. And you dramatically reduce your risk of failure by betting on a proven business.
I took his words to heart. At forty-five, with many years in business under my belt, I was at an age where I could appreciate being called “young man.” And more important, I learned a lesson that day that I would employ for years to come: Buy the winners.
Mann’s wise words came back to me as I assessed the state of Nasdaq’s technology in 2003 and 2004. Could we develop what we needed in-house, or should I be seriously looking for someone to buy?
Turning Nasdaq into a market leader was going to require more than new tires and a paint job—we needed to overhaul the entire engine of our trading technology. I knew this before I was hired—that was why overhaul technology was one of the five points on the plan I presented to the Board. Even so, getting a look under the hood was an eye-opener. Nasdaq was operating on an older mainframe system, while the competition was using faster, more flexible, less expensive UNIX systems or, in some cases, Intel and Microsoft platforms. We had our own way of doing business that was native and proprietary, but the industry around us had become more open-source, fostering a degree of iteration foreign to our internal culture. If an ECN had a problem in executing orders, they’d just tweak it and reboot it, and their system would come back up—no harm, no foul. Like modern software, ECNs were constantly updating and upgrading, in some cases as often as once a day. Nasdaq had no such flexibility. If we went down, even momentarily, it would be on the front page of the Wall Street Journal. Our engineers upgraded the system closer to once a year. Yes, our platform was reliable—much more so than our new competitors’. The uptime in our trading systems in 2003 was more than 99.99 percent. In a different time and place, that reliability might have given us a significant advantage. But in this circumstance, it began to look like an albatross. It left us without the critical adaptability that allows innovation to thrive. As a result, we weren’t evolving fast enough. It was time for Nasdaq’s technology to enter a new era.
I knew the technology behind electronic trading, and I had firsthand experience of building an ECN from the ground up. As I made my appraisal of the state of our technology in 2003, I took a good look at SuperMontage, knowing that the organization had invested enormous time and resources in developing this system. Could we turn it into a platform on which to build Nasdaq’s future? Try as I might, I just couldn’t see it.
By 2004, we had begun to upgrade the existing transaction system to work with new regulations and keep competitive with existing ECN functionality. We were shifting to a more flexible, dynamic architecture and had even increased our average update speed from once a year to once a month or more if needed. Steve Randich, our CIO, was transforming our IT department into an outfit that valued dynamism and responsiveness, not just stability and reliability. BRUT had helped stabilize our market share. But I knew that none of those changes was sufficient to deal with our fundamental issues. With a technological engine designed to fit a different era, we couldn’t just put our foot on the accelerator.
Realistically, that left two pathways open to us. Option one involved some promising but unproven new technology we had developed with Nasdaq Europe, built on a Microsoft platform. It could potentially be the architecture for Nasdaq’s next-generation system. But I was hesitant. It was not designed at enterprise scale, and I wasn’t convinced it would be easy to get it there. Speed to market was critical. The prospect of integrating a system, however promising, that wasn’t yet tested at scale and was bound to encounter growing pains along the way made me slightly queasy. We simply didn’t have a lot of margin for error. Spending too much time in development limbo or going to market with a less than bulletproof system was a fate to be avoided at all costs. Furthermore, I had done my previous system-building work on UNIX platforms, and knew the reliability of that computing ecosystem. I was willing to pursue the new technology, but our second option was my preferred path.
What was option two? Simple: Buy someone. And not just anyone, but the best. Buy the winners. The winner, in my mind, of the ECN wars was very clear. It was INET (formerly Island ECN). Especially from a technological point of view, INET was the one I coveted. It was robust, sophisticated, and proven at scale. Its real genius was in the simplicity of its construction, often the hallmark of the best software architecture. It was elegant, efficient, and, with its off-the-shelf hardware and open-source software, had a light footprint that made it less expensive to operate than many of its competitors. Plus, it had the largest market share.
To understand how INET technology had earned such a good reputation and why I singled it out, it helps to know something about its unlikely origin story—a remarkable tale starring a few highly motivated outsiders who were determined to disrupt the established Wall Street trading landscape with the new tools of the information revolution (and make a lot of money in the process). By chance, I’d made a brief appearance in one chapter of this narrative, more than a decade before I started the job at Nasdaq, in an unlikely setting—a basement office in Staten Island.
An Island of Bandit Traders
It was the early 1990s, long before the days of GPS navigation systems or ubiquitous mobile phones, and I was lost on Staten Island. I wasn’t familiar with the borough; like most New Yorkers, I’d only ever driven through. While Staten Island is just a short ferry ride from Wall Street’s soaring skyline, culturally it may as well be a thousand miles away. It is home to lots of working-class Irish and Italians, contains the highest number of gun owners in New York, and, in more recent years, boasted a majority of Trump voters. Some readers may remember it as the home of Melanie Griffith’s scrappy character in Working Girl. I thought about that movie as I anxiously cruised past blocks and blocks of identical row houses looking for the right address. As a blue-collar kid from Queens, I would have expected to feel at home. But the inimitable character of Staten Island resisted such superficial comparisons.
The founder of ASC, Carl LaGrassa, had asked me to go in search of a trading outfit based somewhere out there. ASC had a back-office software business clearing trades. Most of the customers were small, doing a handful of trades every day. But suddenly, one customer’s trading volume spiked dramatically. “Find out what’s happening in Staten Island,” Carl had said.
I was about to give up any hope of finding the place, when I turned a corner and saw a shiny Porsche, a Mercedes, and a BMW, all parked next to each other on the street. It was an incongruous sight, to say the least. At that time, in that neighborhood, it was like seeing a unicorn tethered on the side of the road. I had arrived.
In the basement of that modest Staten Island home was the operation of Shelly Maschler. This was my first encounter with Maschler; it wouldn’t be my last. He was a fascinating character—a big, boisterous bear of a man, full of brains and braggadocio in equal parts. Think Rodney Dangerfield, only with a larger personality and more F bombs. Maschler would become something of a Wall Street legend in the years ahead, making millions by pioneering various trading schemes, many of which riled financial authorities, skirted the edges of regulations, and even ignored them altogether. In a few years, Maschler’s small Staten Island operation, Datek Securities, would morph into Datek Online, one of the original day-trading operations, which would eventually be sold to TD Ameritrade in 2002 for more than $1 billion.
Maschler’s influence on Wall Street was significant, if controversial. Playing the role of the upstart, little-guy outsider fighting the elites, he used aggressive strategies to help usher in a new age of speed and automation in Wall Street trading practices. But perhaps his greatest impact was helping to recognize the talent and launch the career of Josh Levine, whom I met in his office that day.
Levine was an idealistic, brilliant computer programmer who was just a few years out of high school and had landed a consulting gig working with Maschler and his small team of traders. Levine started out as a technical gofer—an enthusiastic kid still learning the finer details of trading and experimenting with technological enhancements that would help give Maschler’s team an edge. However, as the whole industry would discover in the years ahead, Levine had bigger goals. He believed in the promise of computers to change the world and, more important, to level the playing field on Wall Street.
At the time we met, Levine was helping Datek capitalize on rule changes in the Small Order Execution System (SOES), an early computer ordering system that automatically processed the orders of small investors. SOES had been devised as a response to the infamous Black Monday crash of 1987, when smaller investors were furious that Nasdaq dealers didn’t answer their calls as stocks plummeted. From the dealers’ perspective, the unprecedented volume of trading that day meant that their phone lines were overwhelmed, and they simply couldn’t get to every call. Telephone, after all, is a nonscalable technology. Whatever the reason, the result spelled disaster for the small investor. So new rules were proposed to help protect them. The SOES system would automatically fill stock orders for small investors at a market maker’s current, posted quote (up to a thousand shares).
As with many seemingly innocuous rule changes, the SOES rule spawned a new class of opportunities for savvy traders willing to exploit this automated system to their advantage (and ignore the spirit of the rule). Maschler was the most prominent of these “SOES bandits,” as the dealers called them. Given that any dealer or market maker worked in many Nasdaq stocks at once, and entered their posted stock quotes manually in their computer terminals, it was often hard to keep fully updated with small changes in each stock. At any given moment, two market makers might have different posted quotes, especially for stocks that were on the move. These were small differences, to be sure, but that was all a smart trader needed. For example, one dealer might have a posted quote of Microsoft at 25¾; another might have it at 26. Sitting in his basement in Staten Island, Maschler, or one of his traders, could buy from the first dealer and sell to the other in a split second, making money on the difference in price. One might make only tens or perhaps hundreds of dollars at most on any given trade, but repeat that many, many times a day, and pretty soon you are making real money.
By any contemporary standard, it wasn’t technologically sophisticated. But when the other guy is unarmed, even the simplest weapon wins the day. And it wasn’t long until Levine devised a way to automate the process—a computer trading system that would carefully seek out the best trading opportunities on its own (it was appropriately called “the Watcher”). Other algorithms followed, and Levine’s reputation spread, helped along by another young trader in Maschler’s orbit, Jeff Citron. They showed me the system that day as I toured their Staten Island office. Watching their algorithm track “risers” and “fallers” among Nasdaq stocks, I suddenly wondered where they were getting this up-to-date information. There was no hard line attached to this house, as you might find on Manhattan trading desks. This was long before the days of mobile phones, high-bandwidth cable, or even dial-up internet. As I contemplated this seeming miracle, Maschler walked me outside and pointed up to the roof, where a satellite dish hung precariously.
“Check out our data feed.” It was another anomaly in this sleepy neighborhood.
“The neighbors must think you’re communicating with aliens,” I remarked, only half joking.
With this innovative setup, Levine, Citron, and Maschler brought attention to the advantages that the smart use of new technologies could give the savvy (and sometimes unscrupulous) trader, increasing their trading speed and access to information. Soon, copycat strategies would be ubiquitous on Wall Street, even as they became increasingly sophisticated.
Not surprisingly, the establishment was not happy about these developments. The SOES system was designed to help brokers act on behalf of small, retail investors—mom-and-pop investors around the country calling in their orders—not to enrich a fleet of high-energy, super-motivated day traders pushing the boundaries of speed and arbitrage. (The extent to which the SOES bandits were legitimately representing investors was often a point of contention.) Market makers did everything they could to have them censored. A technological and regulatory arms race proceeded between the SOES traders seeking new advantages and market makers looking to defend their turf. Datek Securities was repeatedly fined. Maschler and his young crew saw themselves as scrappy Davids taking on the old boy network of fat and happy Goliaths who didn’t want the world to change. They didn’t seem to care too much if they needed to bend or even break a few rules in the process. Needless to say, Nasdaq market makers saw it differently.
Regulations eventually did evolve in response to these trading strategies, but the technology genie was out of the bottle on Wall Street. Trading was becoming faster, more automated, more democratized, and more accessible, and information more transparent. Perhaps it was inevitable. After all, information wants to be free—to borrow a phrase from the emerging world of computer hacker culture that Levine represented (a saying that, incidentally, goes back to one of the fathers of the personal computing movement, Stewart Brand, who had been on that bus with Ken Kesey).
Maschler would eventually cash out of Datek Securities and walk away with millions, but he would also incur one of the largest fines in history and be personally banned from the securities industry for life by the SEC. Jeff Citron would go on to work with Levine on his new ventures before leaving Wall Street altogether (he was banned along with Maschler) to help found the telecommunications company Vonage. But the part of this story that was destined to intersect again with mine and with Nasdaq’s was Levine’s.
In the years following our first meeting, this young savant would parlay his initial efforts at automated trading into a new ambition—building a virtual marketplace where buyers and sellers could come together without the need for a middleman. He envisioned an electronic exchange that would match Nasdaq trades efficiently, immediately, and transparently. It was the culmination of his dream to build a platform where every trader in the market was on equal footing, whether they were in Milwaukee or Manhattan—a sort of protected, virtual “Island.” He built Island ECN using Linux OS, the open-source UNIX operating system, running on Dell boxes, in another basement, this time at his company headquarters on Broad Street in Manhattan. The servers were set atop wooden pallets to protect them from flooding (another reason for Island’s name).
Many of the world’s great technical breakthroughs seem simple and even inevitable—in retrospect. That’s part of the illusion created by innovation. Our backward-looking narratives so easily fill in the blanks. All the pieces were already present, we might think to ourselves. It was a natural evolution of the market. Yes, that may be true, but only with the benefit of hindsight. It takes genius to put all the pieces together in a new way. Take Steve Jobs and the iPod. Or Tim Berners-Lee and the World Wide Web. Maybe someone was going to create such breakthroughs, sooner or later. But no one had, until them.
In his book Where Good Ideas Come From, author Steven Johnson posits that creative genius is less about dramatic, singular leaps of invention and more a creative fusion of many smaller ideas put together in novel ways. Levine’s Island ECN was like that. Trading automation, distributed computing power, near-universal online access, a decade-long bull market, cheaper Intel-based hardware that could compete with mainframes, a version of UNIX (Linux) that was open-source—all of it came together in the right creative fusion. Levine devised an ECN that was built around the Linux kernel, so it was reliable. It could also run on distributed Intel servers, so it was cheap and scalable. Its coding was lean, so it ran fast. Levine understood the market structure down to its fundamentals, so his programming was elegant. And he understood trading, so Island’s feature set was built for the new wave of traders entering the market. Was it an inevitable evolution of trading technology? Maybe. But no one else did it quite so brilliantly.
Island ECN grew quickly. It became the preferred platform of the wave of electronic traders entering the market in the midnineties. By the end of the decade, Island had established itself as a major player, and Levine’s reputation had grown along with it. Digital luminaries of the era, like Jerry Yang of Yahoo! fame, made the pilgrimage to his New York office to check out the system, and a highly talented technology team formed around Levine and his creation, including my future partner Chris Concannon. In 1999, a glowing article about him in Wired began: “Forget Nasdaq. Island ECN is tearing down Wall Street.”1
A few years later, in a strange and simple twist of fate, it was Levine’s carefully crafted and brilliantly simple ECN—now known as INET—that would help rescue Nasdaq from its doldrums. I could never have predicted such a turn of events at that original meeting, where Maschler, with his brawny intensity, was chewing on his cigar and barking orders at his youthful acolyte. Who knew then what market-changing genius was germinating in that basement office?
Perhaps, however, it’s not so surprising. Business leaders should always cultivate an attentive disposition toward outsiders, especially in industries impacted by technology. Always be on the lookout for new ideas, products, and technologies happening on the edges of your business ecosystem, where outsiders are developing a different picture of your future in apocryphal (and sometimes actual) garages and basements. Of course, you have to distinguish the mad from the madly creative, but it’s always wise to give some attention to what today’s outsiders are planning for tomorrow’s establishment—one day they might be right.
Today, Levine’s fingerprints can be found all over Wall Street’s trading systems. In 2017, when I took over as Chairman of Virtu Financial, a company whose computers are deeply embedded in Wall Street’s operations, I quizzed them about their IT systems. In a frank moment, one of the engineers told me, “Well, you know, it basically runs a lot like Nasdaq’s INET.” Moreover, Nasdaq still sells trading technology based on INET IP to more than one hundred exchanges all over the world. In other words, Levine’s handiwork is now ubiquitous in the world’s electronic markets—a quarter century after I first met him.
A Necessary Risk
In April 2005, Nasdaq bought Instinet, the company that owned INET. Of the forty-five acquisitions we made during my time as CEO, all were by choice, except this one—it was by necessity. This was the one we had to do. I felt we were at institutional risk otherwise. After all, if Nasdaq couldn’t call itself a worldwide leader in trading equities, what exactly was it? If we couldn’t command a premium share of the market for transactions in our own listed stocks, what were we doing in the listings business? If we weren’t leading the market in technology, how long would we continue to be the stock market of choice for the tech industry?
The acquisition wasn’t cheap. We had to take on $955 million in new debt, leaving Nasdaq highly leveraged. Our debt was actually junk-rated at the time. It was a calculated risk, but a risk nonetheless. If we’d hit the great recession in the months after the INET deal we could have been dead in the water. Luckily, we had time to get the company back on a sound financial footing.
The private equity firm Hellman and Friedman provided much of the funding for the deal, along with Silver Lake Partners. The deal wasn’t simple—Instinet included several subsidiaries, including an institutional brokerage business that we didn’t want and agreed to sell to Silver Lake, meaning that in effect we had to work through multiple deals at the same time. The marathon series of negotiations was led by Adena Friedman on the Nasdaq side. Adena worked incredibly hard on the deal and established her reputation as a persistent and smart negotiator, a role she would reprise again and again in future Nasdaq acquisitions.
Mike Bingle, the representative from Silver Lake, proved a tough counterpart. As he and Adena sparred over the various issues at stake in the deal, progress slowed to a crawl. Perhaps it was just that they were both smart, intense negotiators, but I began to worry that we weren’t moving fast enough. During negotiations like this, long hours and sleep deprivation don’t do any favors to clear thinking. People become less rational, more irritable. As I watched the time tick by and the energy of our team wane, I grew concerned that it was all going to fall apart.
Sometimes in dealmaking you need to stage a reboot. In a bid to get progress restarted, I called Glenn Hutchins, cofounder of Silver Lake Partners, and told him, “Glenn, you have to come in here or this isn’t getting done.” Hutchins showed up, well rested and ready to get things moving. He and I negotiated directly. Facing a second all-night session, I was exhausted but determined to get the deal across the finish line. As we went back and forth, trying to wrangle this complicated multistakeholder deal into submission, Hutchins and I got to know each other well. In fact, out of the chemistry we developed in the heat of the negotiating battle, a real friendship was formed. Hutchins would later serve on the Board of Nasdaq and we would eventually go into business together. In the last act of the drama, we sketched out the final series of agreements on a conference room napkin. After two days and two nights of nonstop dealmaking, everyone was happy (and exhausted), and Nasdaq had its prize.
A Balancing Act
Over the next year, we consolidated the SuperMontage matching engine, the BRUT matching engine, and the INET matching engine into an integrated system: one platform to rule them all. It was a herculean undertaking and involved significant new functionality. For example, we had to write new code to handle opening and closing auctions for the markets—technologically tricky processes to get right. This was not something that BRUT or Island had had to worry about in their pre-Nasdaq incarnations.
The team, who had come over from INET, had a distinct culture—rebellious and idealistic. After all, they had built Island ECN as a revolt against the Wall Street empire—to democratize access and let Main Street trade on equal footing. Now they had become part of that empire, but they had retained all of those anti-authority, antihierarchical, nonconformist leanings in their group culture. It was all jeans and sandals, not coats and ties. It was half corporate culture, half hacker culture. The team had real talent, without question, and the attitude to match it. They had the exuberance of youth, focused on what they could create, not on what could go wrong. They didn’t want to submit to any traditional, buttoned-up corporate oversight. Under normal circumstances, I believe in creating cultural consistency throughout the organization. But I decided the time wasn’t right to overly enforce this, so I made a calculated compromise. Sometimes you have to break your own rules.
It wasn’t long before that decision cost me my CIO. He clashed with the incoming group, and he probably knew that this culture was not right for him. I respected his decision, and he found a great opportunity elsewhere. I was reminded that the right person for one moment is not always the right person for another moment. So I promoted Anna Ewing to CIO and put one of our newly acquired engineers, Jonathan Ross, in charge of the development of the new exchange platform.
Jonathan was talented, had a remarkable understanding of the inner workings of the equities market, and, like many highly capable engineers, loved building things and writing great code. He had a bit of a cowboy attitude, but without question, he was the right person for the job. Anna used her considerable skills to negotiate all of the culture and personality clashes and became a trusted colleague who served Nasdaq as CIO for the next decade.
In the end, the culture clash wasn’t too problematic. After all, the INET people were doing great work. If they wanted to wear casual clothes to the office and resist certain operational structures, what the heck did I care? Were they producing? The answer was a resounding yes.
The team ran almost like a startup, meaning that we gave the engineers unusually free rein to remake our trading systems. They controlled most aspects of the process—functioning as their own quality assurance department, and deciding when code went into production. We ran without a lot of the checks and balances you would have in a more conventional production environment. My remaking of Nasdaq IT from an old-style, mainframe-oriented, slow-adapting, reliable, nonprofit work culture into a fast-iterating, technology-first, trust-the-engineers, startup-like work culture was never as fully realized as it was during this period. In any IT organization, there is a trade-off between radical efficiency and careful oversight, between engineering and operations, between speed to market and quality control. In this production process, we erred to one side of those dichotomies. We calculated that the existential challenge Nasdaq was facing necessitated that kind of approach. We were trying to survive and play catch-up in the new universe of automated trading functionality. Every release cycle seemed like it could make or break us, and speed to market was critical.
Today, we hear a lot about the “fail fast” ethos of startup culture. Move fast and break things was Facebook’s unofficial motto in its early days. The idea is to not get bogged down in analysis paralysis, to get to market fast so you can get feedback, and then to iterate and change things on the fly as needed. For a startup, it makes sense. In that kind of environment, engineers rule. Operational oversight is minimal. Speed is everything. But for an established company with highly regulated legacy systems like Nasdaq, whose computers are central to the entire equities market, it’s not so simple. We had other responsibilities. We had to be reliable. Uptime had to be close to perfect. So while I was trying to remake our culture to be more nimble, innovate more quickly, and get to market faster, I also had to ensure we kept one foot in each world. We couldn’t abandon our conservative roots. It was like riding two horses at the same time without a harness to keep them going in the same direction. As time passed, we would rein our startup side back in, and reestablish a more conservative operational oversight. But for the moment, it was an unbalanced situation.
Looking back on it today, I’m still amazed by what the team accomplished. Their productivity was through the roof. In any normal production environment, integrating two independent matching engines would have taken at least two years. We did three in one year. The advancement they made on the IT front was unprecedented and might have rescued the company. By 2007, not only had we saved a great deal of money on synergies from the Instinet acquisition; we had built a trading platform that was industry leading. Frankly, it still is today. My conviction that INET had been the right technology to acquire was vindicated and then some. The buy-the-winners strategy had worked. Even the high cost of the acquisition and the leverage Nasdaq took on ended up being a small price to pay for the long-term boost to the business. After years of technological missteps, Nasdaq had finally got it right. We had a transactions platform that was best of breed and a technical team to match it.
The price of riding those two horses would be paid much later. In business, as in life, every decision comes with inevitable trade-offs. Context and timing is everything when it comes to strategy. We were in a desperate situation, and my hands-off approach to my touchy but talented engineering team was necessary for their success. And I don’t just mean the dress code. I let them keep the black box of their technological universe partially opaque and resistant to traditional forms of operational management. No doubt, that’s partly why they were superproductive. It also meant, however, that we didn’t have sufficient visibility on all the ramifications of the technology. We didn’t have fail-safe procedures to vet all of it in real-world situations. Their extraordinary work would deliver us great returns and power Nasdaq’s transactions platform for years to come. In 2007 it was all upside. The downside would come later. Unfortunately, it would reveal itself during one of the most publicized IPOs in history, that of another company famous for its unorthodox “hacker” culture—Facebook.
From the Basement to the Boardroom
Disruptive innovation often comes dressed in countercultural garb. The electronic trading revolution, like many rebellions, had started on the fringes—cultivated by outsiders, built by computer engineers, and indirectly financed by hordes of investors across the country who wanted a more direct pathway to sharing in the riches of the economic boom. The upstarts were ignored, resisted, feared, banished, and eventually embraced as allies. ECNs traveled from Wall Street’s basements to its most illustrious boardrooms in just a few years. Along the way, they dealt a mortal blow to the cloistered, insider clubs of Wall Street, where cigar-smoking men gathered in wood-paneled rooms filled with leather chairs to count their money over cognac and discuss the winners and losers of the day (at least in Hollywood legend). It was the end of an era.
I reflected on this unlikely journey when I sat down to lunch with Josh Levine at Nasdaq’s headquarters, shortly after our purchase of his creation. INET had come a long way in its short life. The once antiestablishment ECN was now integral to our establishment exchange, and we were beginning to assimilate our trading platform into its technology. Chris Concannon had invited Levine to connect and celebrate the acquisition. As young entrepreneurs and executives at Island, they had dreamed of the day when their ECN might actually vanquish Nasdaq, wresting control from the old-style market makers and remaking Wall Street trading in the image of their creation. In a sense, that day had arrived, though perhaps not in precisely the way they had envisioned.
Levine himself, dressed down in his usual T-shirt and jeans, was a pleasant dining companion. A private, unassuming person who always shunned the limelight, he had moved on to new horizons in alternative energy and lost interest in the markets. Perhaps he felt his contribution to the Wall Street technological revolution was complete.
A new elite was rising—the quants, coders, and engineers who were more likely to be found in chat rooms and data centers than in high-ceilinged men’s clubs. Wall Street was slowly being remade in the image of ones and zeros. As someone who watched the revolution unfold from its earliest days and helped coax the old guard into the new world, I was convinced the changes were mostly for the better, but like any innovation, they came with plenty of disruption and involved significant new dangers and regulatory challenges—as the years ahead would make clear.
LEADERSHIP LESSONS
• Buy the Winners. There’s no shame in using smart acquisitions to gain much-needed market share or technology, even if you pay a premium in the short term.
• Sometimes You Have to Break Your Own Rules. A good leader can be flexible as circumstances demand—even knowing there will be trade-offs involved, and what’s right today won’t be right tomorrow.
• Today’s Outsiders Are Tomorrow’s Establishment. Don’t ignore those on the fringes of your business ecosystem—they just might be creating your future.