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 performed, 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.
Don’t get me wrong; I wasn’t going to stop working. I was just finished being a CEO, with all the demands that come with the job. I still wanted to try new things and take on new challenges, some far outside of my current domains of expertise. I was founder and Chairman of the USATF Foundation and was proud of what we’d achieved over more than a decade, supporting our country’s most promising young track and field athletes, but I knew we could do more. Plus, I wanted to get back to my entrepreneurial roots, help create new companies or build up young ones. I was itching to play upstart disruptor again and to mentor young innovators. And as I finally began to allow myself to reflect more directly on the past, I was considering writing a book.
We made the announcement on November 14, 2016. Adena was officially named as my replacement effective January 1, 2017. The weekend before the announcement I sat down in my home office to write a few words to Nasdaq staff. I poured myself a nice glass of wine, and as I took the first sip I thought better of my timing, and decided I’d write it in the morning, when my mind was fresh and less likely to drift into nostalgia. As the sun rose, I put pen to paper, and I thought about all of the various intersecting reasons that made this the right moment to step down. But one truth stood out above the others and seemed to encapsulate my thoughts in leaving. It was about the knowledge that time is a precious, limited resource, and as we get older, we feel it more deeply.
“What I have come to realize,” I wrote, “is that the opportunity cost of how you choose to spend your time increases not on a linear but rather a logarithmic scale as your assumption about your number of tomorrows decreases… After careful consideration and discussion, in full recognition that the CEO position will always have infinite and all-encompassing responsibility, Julia and I decided that now is the proper time to plan for a more balanced number of tomorrows.”
I was fit, healthy, and mentally sharp, but as I neared sixty, and my number of tomorrows decreased, I knew I wanted to spend them doing other things. I had truly loved being CEO of Nasdaq. But time moves on relentlessly, and Adena had met every test, exceeded every bar, and done everything that I had asked of her. The Board had taken my recommendation and chosen her. It was time for her to put her unique stamp on the future of a great organization.
On the fiftieth floor of One Liberty Plaza, we gathered for a champagne toast as the announcement went out to staff. It was a beautiful and bittersweet moment of celebration, of moving on, moving forward, and moving out. I had cut my leadership teeth on the steel girders of One Liberty Plaza and come away a changed man, a wiser man. Nasdaq, likewise, had found its way, gone from desperately surviving to truly thriving, and I was proud to have been central to that remarkable transformation. I had given the best years of my life to the organization and it had responded in kind.
In a little over a month, Adena would be CEO. I would briefly stay on as Executive Chairman of the Nasdaq Board to oversee the transition. In the words of one of my favorite poets, Bob Dylan, it was time to “strike another match [and] start anew.”
A Final Toast
After the resignation letter was released, I found myself in my office, at a loose end. Everyone wanted to talk to me, but I didn’t quite know what more to say. And then my phone rang with the best idea I’d heard all day.
“Bob, it’s Vinnie. How would you like to meet me for a drink later this afternoon?”
I had known Vinnie Viola, founder of Virtu Financial, since my days at SunGard. A West Point graduate and former army Major, he had become wealthy in the years since we first met, the founder of a successful financial firm, as well as a personal friend. When Chris Concannon left Nasdaq in 2009, he had gone to work with Vinnie at Virtu (before moving on to CBOE). In fact, Vinnie had several times tried to convince me to step away from Nasdaq to come work with him. But it had never felt like the right time.
It was nice to hear from an old friend, and the idea of getting out of the office early was a relief. I quietly slipped into the elevator and headed over to the east side of Manhattan to an old-school Italian restaurant where Vinnie was camped out with a couple of friends.
“Two Dewar’s, please,” Vinnie said to the waiter as I sat down. Over the years it had become a tradition—Dewar’s for both of us, the workingman’s Scotch. For two leaders of the financial industry, it was a nod to the time when neither of us could afford anything more expensive. We had both grown up working-class—he was from Brooklyn; I was from Queens and Long Island. The best thing about new money is that you remember what it’s like to have none.
“A toast to your success.” Vinnie raised his glass, and I joined him.
“And I have news,” he continued. “Our President-elect has asked me to be Secretary of the Army.”
“Congratulations. That’s a real honor,” I replied, and we toasted again.
As it would turn out, Vinnie would eventually withdraw his name from consideration, due to business ties that were too difficult to untangle. But for the moment, he was moved and excited by the proposition, which was due to be announced the following month. And he was already making plans for his firm—which was where I came in.
“Bob, come work for Virtu. I’d like you to replace me as Chairman of the Board. I promise it won’t be too demanding, and we’ll compensate you well. No doubt Doug would appreciate your counsel and expertise.” Doug Cifu is cofounder and CEO of Virtu, and he’s a great business leader and friend.
With Nasdaq about to be in the rearview mirror, it felt like a day for reflecting on my life and career, both past and future. As I considered his proposal, I imagined how I would have responded to such a proposition at a younger age—incredibly well-paid work, and not exactly backbreaking. Somewhere in the back of my mind, my inner twenty-five-year-old was yelling, Are you crazy? What’s to consider? Take it!
“Thanks, Vinnie,” I said, “but I’m not going to do that.”
Vinnie and I had always looked forward to the day we could spend more time together. And I knew that in the next period of my life, I could easily trade on my name for a few plum Board seats, take a great salary, sit back, and enjoy the perks. That wasn’t for me; I was never going to be that guy. I didn’t need another job; I’d already had the best one in the world. If I took a Board seat, it was going to be because I had real equity in the company and relished the entrepreneurial challenge of helping the company grow. Still, I knew Doug and the team at Virtu, how smart and capable they were. It would be a thrill to work with them, help build a great company. Maybe something was possible.
“I would love to partner with you on something. Let’s do a deal together. What could we do? What could we create? What could we build?”
Vinnie and I explored possibilities. At some point, the name Knight Capital came up. Virtu and Nasdaq had tried to buy the company a few years before but lost out to Getco. Now it was KCG, and ripe for a takeover. Vinnie got excited and called Doug, who was similarly enthusiastic.
I called my friend Glenn Hutchins, a current Board member at Nasdaq. Glenn was looking for new ventures, and we’d already discussed the possibility of partnering. He brought to the table a kaleidoscopic knowledge of the private equity industry. What about it? Maybe we could obtain the financing to help Virtu make a bid? As the idea swirled around in my head and we moved on to a finer Scotch, I could already imagine the synergies.
My phone rang. I looked down at it and smiled. Family trumped business now. Bobby was calling to say congratulations. We spoke for a few minutes before our conversation was interrupted by a call from Greg. Later came a text from Katie, who just happened to live nearby. I invited her to join us; the business discussions could wait. She sat and talked with us as a brisk afternoon melted away into the cold November evening.
Friends. Family. Business. New plans. By the time I stepped out into the night and headed home to spend more time with Julia, the love of my life, I was a happy man. While nothing could ever replace the magic of the Nasdaq years, the future was going to be wonderful.