IAMA David Weild, former Vice Chairman of NASDAQ. I'm the father of the JOBS Act, brought email to iPhone with Steve Jobs, and currently co-chair the world’s first digital asset network, 55 - AMA!

I just did my BBA and am confused about whether I should do a masters or stick with my job (currency derivatives broker) and study for the CFA. I want to work in a risk Analyst position for a major bank. Any advice?

Longterm you may want to do both! The CFA is a terrific credential. I have an MBA. I wish I'd also done the CFA because I think it provides a rigorous discipline on how to analyze and value companies and other assets, but the MBA taught more broadly how to run businesses. They both have merit and are terrific credentials.

I really think you can never have too much education. Whether you have it in formal degrees and certifications or just through a lifelong learning process. If you don't have a thirst for knowledge you are not going to be successful. The world is changing quicker and quicker, you either have to embrace change or change is going to relegate you to the dustbin of history.

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Edit: Thanks for the gold! I'll be investing it into my diversified portfolio

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Edit2: My portfolio is expanding!

is it worth exchanging for an already good paying job?

I think this really depends on your career path and the institution's track record in placing graduates.

Is it possible to do both (work and do your masters) at the same time? Sounds like you're earning great with your current job

I think you want to do them in series (not at the same time), especially if you've got a current job. If you're in business school full-time, I think it's feasible, but that's still going to be a lot of work. There is what people's see in terms of credentials and what people have amassed in terms of knowledge by throwing themselves in front of rigorous intellectual pursuits. I audited a number of graduate courses in molecular genetics while I was in business school because it was something that interested me. Obviously, that doesn't show up on my resume.

What did you have for breakfast?

Japanese pickles.

Do you believe that investing in the stock market is becoming more important to the average American then it used to?

Actually, I think it's going in the opposite direction.

One of the interesting developments is that there are a variety of different regulatory bodies, but a token is a token. So, you could conceivably trade a security token, a currency token, and a futures token all on the same platform, but each of these reports into a different regulatory body. So, the design of exchanges is largely going to require different corporate entities to house each of these businesses despite the fact that the tokens are largely homogenous from a trading perspective.

Yes... I'm a nerd.

What is the ideal way to allow non-accredited investors access to private companies, which tend to have higher returns?

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Also, is the Volcker rule good?

The Volcker rule is good - separating out risk from major lending institutions but I would have preferred that they break up the big banks. If you are too big to fail, you are simply too big. The US also needs to grow a set of b-lls on the antitrust front. We broke up AT&T and it spawned a revolution in telephony/mobile communications. Big business has gotten too big.

Why are VCs so quick to fund startups in the most expensive zip codes in the country (Silicon Valley, NYC, Boston) ? I get that the talent pool is richer, but it makes burn rates much higher than in, say, the Raleigh-Durham area.

A lot of this is that some VCs have rules that they're not going to travel more than 10/20/50 miles from their office. If you have a high concentration of talent and a high concentration of capital it's much more efficient to stay local. Many attractive areas, including Raleigh-Durham and Austin, TX, don't have the massive capital pools to take companies to the next level. So, even when companies are successfully financed at the seed or A-round stage, they get forced to move to Silicon Valley in the search of greater capital at a later date.

You've hit on an incredibly important point because this phenomenon is exacerbating the "Have versus Have-not" problem in this country. The fly-over states are really being left out.

Mr. Weild, this is probably a tasteless question but where would you recommend someone to begin making a lot of money? Which direction would you point them and why?

The trend is your friend.

Hey David,

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What does it mean to be the Vice Chairman of NASDAQ. Like how would you describe that job? Also on a more personal note, who's the strangest of the "big" people that you've met and why?

Steve Jobs was by far the strangest. I talked to him with great frequency. At the time he was involved with both Apple and Pixar. I never called him, he always called me... always to complain about something. He told me one time, "I need you to get rid of the annual meeting." You have to have annual meetings for a public company. I told him, "I can't do that for you, Steve, but I can call the SEC and see if they'll consider it."

Regarding my position as Vice Chair of the NASDAQ stock market, it was an honor and a privilege. I oversaw all of the NASDAQ listed companies. I met CEOs, heads of state, congressman, senators. I got to host the NASDAQ market open mornings with people like Bill Gates, Steve Ballmer, Tom Stemberg (Staples). I had offices that oversaw places like Shanghai, San Paolo, Silicon Valley, London, and Bangalore, India. As a result, I got to meet politicians and dignitaries in foreign countries and at the same time I got to use my innovation skills by creating the NASDAQ market intelligence desk (MID), which is used when CEOs call in and ask "What's going on with my stock?" It instantly lights up all systems of information for use, making NASDAQ more appealing as a whole.

Where can I apply?

My team tells me you can apply here

What is different about today's bohemoths' (Walmart, Amazon, Apple, Uber, Facebook, Google) business models and the sharecropping model?

Walmart is different because it was an actual big-box retailer, but if you look at Amazon, Uber, FB, and Google... they are all platforms that depend on others to create the value. Amazon is the largest retailer without having stores, Uber is the largest ride-share company without employing drivers (they are independent contractors) or owning cars (drivers have their own cars), Facebook does not create 99% of its own content, just as Google depends on others content.

Are they different from the sharecropping model? It's an interesting analogy. I would say that you have to own the farm to bring the sharecroppers to farm it and that is a much more capital intensive model. I think the analogy makes some sense so I don't think that sharecropping is as attractive a business model.

Did you believe the tick pilot would entice more companies to list their stocks? Do you think the pilot was a success?

Great question! I think the Tick size pilot was a waste of time, money, and effort because it was terribly designed. The concept was a great idea but the SEC turned it over to the stock exchanges to design and what matters is not stock exchange profitability if you want to ensure support for public companies. What you need is to improve the profitability to the investment banks who are the ones who actually provide the support. If they can't make money in the aftermarket, then they won't provide the necessary equity research, sales, and distribution support. So, if I was cynical I would say that the SEC and the stock exchanges intentionally sabotaged the tick-sized pilot, but since I'm not cynical I have to believe that they really didn't understand it.

Do you have ADHD, if so has it helped you?

Doesn't everybody?

In all seriousness, I think ADHD people outperform in high-stress environments. That's when they laser focus. So, yes, I love the action. I've never performed better than I did during the Crash of '87, during the bubble rubble of the dot-com era, and in the aftermath of 9/11 and the Credit Crisis. I get eerily calm and clear-thinking and things run in slow motion. Some people get panicked in those environments so, yes, I think ADHD people have advantages and disadvantages depending on the job.

Thank you for the response :)

My pleasure.

Is the NASDAQ really run by the Illuminati reptilians?

Parthenogenic shapeshifters.

And,

What is the current regulatory stage on blockchain tokens compared to the securities market instruments?

First, it depends on which jurisdiction you are in the world. Places like Switzerland, Malta, and Gibraltar and some of the Asian countries have been more aggressive. This is in part because they don't enjoy the world's largest, most liquid, and transparent markets that we enjoy in the United States. So, the SEC is being very diligent in their approach so that they don't unwittingly allow harm to be caused to the investors. One of the great challenges right now is, "How do you custody crypto-assets for institutional investors?" Interestingly, the vast majority of institutional investors will not invest in these markets until the custody issue is solved. It's different in private markets where the SEC plays much less of a role, but in public markets, we need a bonafide '34 Act' custody solution that is capable of doing everything that a custody solution would do for traditional securities.

From where I sit, the proper approach is to take all of the protections and corporate governance that has been developed over many years in the securities markets and then figure out how you can afford that same standard in the crypto markets. Anything less is unacceptable. importantly, that standard can be met through innovation.

How could we shape stock markets to reduce the importance of short-term profits and focus more on the long-term financial and social health of a company? It seems like our entire economy now hinges on companies running on Swiss-cheese infrastructure and manpower, with no investments in R&D, no investments in their people, and cutting every corner possible on important things like safety, environmental protection, and data security.

A little friction is a good thing.

What I mean by this is that higher transaction cost cut down short-term trading and allow salesmen and research analysts to earn a living based on identifying fundamental long-term value. This obviously cuts down on short-term speculative trading, which helps management teams to focus on the long-term.

Hi, David. Thanks for being here.

Can you tell us any stories about the eccentric business leaders whom you've met, other than Steve Jobs?

Sure, Craig Barrett, who was the CEO and later Chairman that replaced the legendary Andy Grove at Intel. Craig has a PhD from Stanford, is brilliant, charismatic, and looks a bit like the Marlboro man. We were at the NASDAQ MarketSite for a market open and he had handlers keeping media away from him so that he could engage in normal conversations. Our CTO, Steve Randich, introduced himself as NASDAQ's CTO (now the CTO of FINRA) and Craig exclaimed, "Oh my God, a client!" Whereupon he got down on one knee and said, with a big smile on his face, "Thank you for coming!"

Just to give everyone faith about how important perseverance and hard work is to long term success, while Steve Jobs completely missed the fact that people were using email on Blackberries, Craig Barrett, when I was out at Intel HQ and before the launch of iTunes, described Steve Jobs to me as "being really good at figuring out what that 3% of the population that doesn't want to be like anybody else wants to do." No matter how smart you are, you're going to miss some things, but if you work hard and persevere good things tend to happen.

How do you feel about people like Jordan Belfort?

I have associates who worked with Jordan Belfort and from what they've told me, The Wolf of Wall Street toned it way down, to say the least.

Obviously, people who scam the public need to go to jail. You can't have confidence in markets when you have rampant scams and fraud.

That.. didn’t answer my question? I’ve seen the movie, which was nothing compared to the book, which no doubt left out some of his shadiest antics.

I’m curious how a former high ranking member of NASDAQ feels about people like him. The financial pirate, a term I’m coining right now, who treats the stock system like a video game to be cheated and abused. Obviously he did horrible things and fucked a lot of people over, but how does the financial world feel about him?

The reputable financial world hates people like this because they undermine our ability to do the God's work of investment banking, which is to raise capital for legitimate entrepreneurs who are trying to raise capital to find cures for cancer, solve global warming, and leave the next generation with the world in better shape than we received it. It's our moral obligation. Financial markets matter.

I have to ask: is this a reference to Lloyd Blankfein’s comment in the NYT about 10 years ago?

Lloyd made the mistake of calling what Goldman Sachs did "The God's Work of Investment Banking" - In fact, the God's Work is much earlier in the life cycle of a company - getting operating companies the capital they need to save lives, create renewable energy sources, cut pollutants, attack global warming. This is the stuff that really matters.

Appreciate your response. Have a nice day.

You as well!

Hello David.

I've heard you for a long time. What do you think about the idea of blockchain fundraising (e.g. ICO IEO) compared with stock issuing (such as IPO).

I'll tell you what I've been saying to people at conferences all across the country, it may not be what people in the industry want to hear: Maybe 10% of investors can own a token right now, the vast majority of capital is still in securities. So, I think we have to give investors exposure to the assets the way the investor wants to be exposed. As a consequence, the solution which I'm not sure I've seen yet is "How do you provide investors the opportunity to purchase the same asset as a token, as a security, and to be able to exchange between one for the other if you change your mind. That would be an investor-centric solution.
If you go back through the history of the securities industry, people had the choice of taking physical delivery of their securities or holding their securities in Street name (electronically-held). In everybody's sort-of--mania to do the new new thing, we lose sight of the fact that there is an adoption curve. Just remember the book, "Crossing the Chasm", we are still in the early adopter phase of tokenization.

How do you feel about “boiler room” type companies making money out of people who invest in binary options, foreign exchange or derivatives with very high leverage?

They are parasites.

What are your thoughts on tokenized tradeable synthetic stocks similar to what Abra is doing? Is this something the SEC might have a problem with? The SEC seems to have issues with certain "fantasy stock" concepts but Abra seems to be moving ahead with their new synthetic product regardless. It seems like a huge untapped area worldwide, especially in China where it's virtually impossible for a normal person to invest in international stocks

Synthetic stocks can mean a whole range of things and sometimes they start to look like single stock futures and ADR (American Depository Receipts). A lot of what is going to be important here is the safety of the investor and that the promise to pay is fulfilled. Conceptually, I don't have an issue with it but it is important that it be regulated and vetted. 55 is actively innovating in this arena. Stay Tuned.

Is there one thing you come across when working with CEOs and world leaders that seem unique to that group that the average person doesn’t have, or doesn’t exploit?

It's work ethic and perseverance.

What position do you see the Chinese Government taking long term on digital assets including cryptocurrencies?

China is passionate about technology and crypto/blockchain/general ledger technology represents an important shift in how transacting businesses and supply chain will be conducted. At the same time, the Chinese government has been concerned about currency controls and flight capital, so I think that the government is out to embrace innovation while it continues to try and control capital outflows.

Have we learnt anything from the GFC that will help everyman in the future?

What I learned from the Global Financial Crisis is that legislation matters. People don't realize that the seeds of our near demise were sewn during the Clinton Administration with three major pieces of legislation:

• the repeal of Glass-Steagall gave us "too big to fail"
• the Commodities and Futures Modernization Act of 2000 gave us the counter-party risk that helped collapse AIG and Lehmann Brothers
• liberalizations in mortgage-credit standards led by Barney Frank and the Community Reinvestment Act created terrible credit quality in mortgage-backed securities that led to the housing crisis

What do you look for in a presidential runner?

Someone who inspires.  A fiscal conservative (we need to tackle the budget deficit, the social security shortage, the cost of healthcare, the cost of education) but a social liberal (creative solutions for working parents, single parent households, the poor – that lift up and support and improve productivity and tax receipts rather than drain them).   Highly articulated policy ideas (which most politicians avoid).  I want to see a thinker.  A bridge maker.  Not a shameless partisan.  An American for all Americans.

Tokenization sounds a lot like electronic bartering? Is the basic idea?

Not quite. Another term might be fractionalization. For example, if you wanted to invest in the future earnings of a professional baseball player, I could sell you a token that represents some portion of that person's future earnings and when those earnings are received, your portion of the earnings could be paid directly into your digital wallet. The baseball player receives a lump sum of current income, which de-risks his career in exchange of trading off some of the upside. So, it creates an interesting investment opportunity at the same time that it creates value for the baseball player. That's an example of how someone might tokenize a nontraditional "asset". Again, this transformation into asset networks is something we're working on fervently at 55.

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I actually think that we're in a very tender stage of market development because I think that the safeguards that have been implemented by the regulators are likely not anywhere as sophisticated as they need to be. Market complexity is extreme. In equities markets alone there are 60 active trading venues (exchanges and ATSs) that are interconnected. There are said to be over 2000 different order types. So, the safeguards that are in place are fairly rudimentary and in high economic stress environments may not work. What really concerns me is that we've taken so much of the human element out of markets that there may not be enough people to be able to determine value and to take a stand. And if markets suddenly nosedive, it can so undermine investor confidence that we go into a death spiral where investors continue to take money out of markets and markets continue to dip, investors take more money out, and we find ourselves in the midst of another great recession... or worse.

What is your biggest regret in your career?

How has your responsibilities hurt/enhanced your personal life?

Thanks!

That I haven't done enough. As they say, you want to leave it all out on the field of life.

How do you feel about the dual class share structure of high profile IPOs like SNAP and their implications for corporate governance? Is this a fair use of a company’s discretion or a dangerous path to go down?

I have mixed feeling about it. It seems like a single-minded board has worked wonders for some companies and gotten some out of a tight spot when they did not have the luxury of waiting for consensus to settle... at the same time without voting power you’re less a part owner and more a bystander.

Thanks for your time

It works for some companies and doesn't work for others.

The beauty of public markets is that people are responsible for 'voting' with their dollar. If you don't like the governance, sell the stock.

Also, there are many short term interest groups including corporate activists that are not interested in building long term value. One could argue that in some instances, having concentrated control allows management the luxury of planning for the long term.

Where do you think you would've wound up in life without the socioeconomic advantages you had (e.g. Hotchkiss)?

You raise a heck of a good point which is why much of my advocacy and thought leadership is focused on the structural problems that hold kids back in society. We need to support single mothers by keeping schools open from 7 in the morning to 7 in the evening so kids can be engaged and moms can work. We are founding The JUMMP Coalition - Jobs, Upward Mobility and Making Markets Perform to drive improvements in entrepreneurship and the "human capital" which is essential. There is no question that Black Lives Do Matter - Of course all lives matter, but if you look at how different groups have assimilated - Its the African American community that has lagged behind. We need to fix that in the interests of fairness. How we do with the African American community, is in my view, a litmus test for creating a "More perfect union." As I would say to people on the Republican side of the aisle - kids don't choose their circumstances - so we need to make the investment required to turn them into "assets" to society and head off them becoming "liabilities." We need all Americans to contribute to the best of their God-given talents because let's face it, we are one nation and one team and there are people with larger populations against whom we compete. It is a National Security issue that we right these injustices.

How many hours are in your average work week?

I'm flabbergasted at how she people manage to achieve so much in one lifetime.

I average 70 hours a week.  I don’t take much vacation.  But, I love what I do and the people I’ve interacted with.  I was out last night with Iran Barkley, former middleweight champion of the world.  If you like what you do and get real “psychic income” from what you do because you think it matters, it isn’t hard to throw yourself into your work, and it will take you interesting places.

What do you think of the Trump administration's effect on the US stock market and the economy?

Presidents tend to get credit (good or bad) for groundwork that was laid in prior administrations.  The Bubble Rubble (Bush) was set up during the Dot Com Bubble (Clinton).  The Credit Crisis was triggered by legislation in the Clinton Administration that came home to roost in the Bush Administration.  Bush’s Secretary of Treasury, Hank Paulson, wrapped the full faith and credit of the US Government around the banking system and saved the US from going into a Second Great Depression.  Obama’s hands were somewhat tied on economic policy because he had to stay the course.  Meanwhile, our National Debt continues to spiral up and Trump has exacerbated it.  Meanwhile, the rich got a windfall profit when interests, taken to 0% to save the economy, caused their securities portfolios to skyrocket.  The poor have been left behind.  I think both parties need to do better.  

Interestingly, we have not heard anything about Social Security in a while:  How hard is it to bite the bullet and take the retirement age out to 75 and force employers to employ older folk?

Interesting, we pay 2x GDP for healthcare when our life expectancy has declined.  Time to wake up and take an axe to a healthcare system that cheats the people.

So bitcoin and other digital currencies are the future?

Stablecoins are a natural evolution from credit cards to make transactions much more efficient. That said, I believe that tokenized assets are much more interesting than cryptocurrencies. We are in the process of setting the stage for a complete transformation in how capital is raised and investable assets are traded.

Mr. Weild,

I have two separate questions:

I) In your professional opinion: Do you believe outstanding student loans could be a major player in a market crash akin to the one that happened over 10 years ago?

II) In your personal opinion: What do you think about the FI/RE movement? (It technically isn't a movement, it's closer to a lifestyle). For anyone that doesn't know: Financially Independent/Retired Early is an idea where people pursue financial independence primarily through 1) Living beneath your means, 2) Avoiding/Eliminating debt, and 3) Investing (typically through index funds, real estate, and other passive means of income). The end game is to have enough money to last through retirement until death. Essentially, it's just budgeting and spending less money than you make.

More info can be found here on the respective subreddit's FAQ. It's a pretty sizable community. Another term I heard for being financially independent is having "fuck you money", if that helps paint a better picture.

The student loan problem is really a problem with the cost of education and it's leaving many young adults with a crushing debt burden. this is clearly not going to be helpful to the economy and it's something that my friend, Ken Londoner, who is the CEO of BioSig (I am on their Board of Directors) is very passionate about. But, I don't think it's going to trigger a market crash. But, it is likely to curtail consumer spending in a consumer-led economy, which obviously is recessive.

What’s your take on the strength or weakness of the Dollar over the next 5 years compared to the rest of major foreign currencies?

I get very concerned about budget deficits. Typically, what people look at in currencies over the long run is "purchase power parity". I have to think that it is getting harder and harder for people in this country to maintain their standard of living and that a large part of this is likely due to great debt balances. So, the only way we have to sustain and improve our quality of life is by getting better at creating economic value. I think that reinvigorating the entrepreneurial growth sector of the economy should be a national imperative.

What is your opinion on lowering the accredited investor capital/income requirements? I know Jay Clayton has made noises about doing this. Is it a good idea to lower the threshold, and if so, how much?

I think what's more important is to fix the IPO markets so that companies can go public earlier and be supported in the aftermarket. US stock market structure is a disaster for small public companies. So, lowering the accredited investor standard if you don't improve the probability can get public so that those investors can earn a return... I'm not sure you're doing anyone any favors.

any feeling of investing crypto assets? how to build a asset network in your mind?

We need to build a network of exchanges that are properly licensed in each of their respective jurisdictions and link them together. At the same time, we need to work on the capital raising/ distribution element. Tokenization first, distribution second, trading on an exchange third, and finally integrating with foreign exchanges to create global liquidity.

"...make or break the future.". David, you're secondarily giving yourself way too much credit here. Insofar that many economies are consumption-driven, what we're really talking about is, how quickly can we incubate technology to take advantage of time value of money? Entrepreneurs have no moral obligations, and without them, the future won't be broken. I'm a capitalist, though you've got to stop patting yourself on the back and taking credit for spurring innovation that people were already going to accomplish.

No capital, little innovation. QED.

How should people starting businesses educate themselves on taxes?

When you find the answer let me know.

The issue most of the time when you start a business is that you've got losses so taxes aren't a near-term issue, but you need to find a tax specialist for small businesses. It's probably worth spending a few hours with them to better understand the taxes, incentives, and any tax opportunities for you to take advantage of.

What do you think of Uber going IPO?

I think it’s a clear sign of why we need to fix IPO markets.  Uber should have IPO’d back in 2012.

Who were the 3 other David Weild?

For better or worse, it isn't a Highlander-type situation, if that's what you're asking.

My great grandfather came from Scotland and settled in Brooklyn.  His father joined him but went back to Scotland when he could not get his wife to join him.  They built many of the English Row Houses in Brooklyn and you can still see advertisements in the long gone “Brooklyn Eagle” for houses built by Weild & Son.  I’m told that they were subcontractors on the building of the Brooklyn Bridge.

My grandfather, David Weild Jr., studied medicine at Columbia University.  He served in World War I (as did my grandmother, his wife, Elizabeth McPherson Weild who was a front line nurse in the War and hailed from Canada).   The war was pre-penicillin and the mortality rate of the wounded was 50% due to infection.  It was so gruesome that my grandmother would never speak of it and my grandfather changed professions and apprenticed to become and intellectual property attorney.  He was the head of the international division of Pennie and Edmonds for many years – the largest IP law firm in the country.

My dad, David Weild III, went to Brooklyn Tech, Yale University (undergrad) and Yale Law School.  He one the best international law thesis prize at Yale Law School and, after serving in counterintelligence in the US military, followed my grandfather into the practice of law.

David Weild V, is headed to Tulane University in the Fall and he has a sister Kelly Christine (after my wife) Weild and brother Michael McPherson Weild. The younger two are twins.

On my mother’s side, my family had the only license to produce wines during Prohibition for the Catholic Church and Jewish Synagogues.  The property was expropriated by the US Government to build Quonset Naval Airbase.  My grandfather Michael Romano was the only Republican in the State Senate of Rhode Island and he was followed by my Uncle John Romano who was in the Naval Air Corps and was a test pilot with Chuck Yeager.

Wait is https://www.weildco.com/ open to public investments?

We've raised capital from accredited investors.

What ammo does the Fed have during the next crash, assuming they don't go right to 100 year bonds and/or helicopter money (via the UST)?

The same tools:   Lower interest rates (even go below zero) and spend money (e.g. Infrastructure projects) to prime the economic pump.

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I am happy to discuss, I'll pm you directly.  I need to know more.  Are you holding real estate assets?  Or, is this a real estate services business?  Or, a real estate systems/software business?  Or, a real estate brokerage business. What are the gross margins? Growth?  Free cash flow? My instincts are its too early for you to IPO but I can’t tell without understanding your business and financial model.

How do you interpret the general animosity that much of the younger generation seems to hold against ‘Wall Street’?

And can I add you on LinkedIn?

Wall Street deserves much of the animosity but so does Congress.  Wall Street lobbies Congress and Congress needs Wall Street’s money to run for office.  Congress passes poorly thought out legislation (e.g. The Commodities and Futures Modernization Act of 2000 and the Graham Leach Bliley).  Wall Street harms the economy instead of contributing to the economy.

In the end, it's up to both Wall Street and Congress to channel market forces by putting the carrots in the right place and to create proper checks and balances.  Maybe the younger generation can help get Wall Street back to funding job-creating enterprises that work to solve the major challenges facing society.

And can I add you on LinkedIn?  Sure.  I'll pm you.

Why didn't the JOBS Act go further in reforming the public offering SEC registration rules? Are you concerned about the long-term decline of IPOs/public equity markets compared to private funding?

Yes, I’m terrified about the long-term decline of IPOs and I wish the SEC, which has broad exemptive authority, would have an epiphany.  The SEC has broad exemptive authority and it is in their power, to create a market structure that will support asymmetrical-order-book stocks” (where there is a big seller but no buyer).   Currently, our one-size-fits-all stock markets are designed for innately-liquid, large-cap, symmetrical-order-book stocks like Intel, Microsoft and Exxon Mobil.   It’s a crime what we’ve done to our investment landscape.

There continues to be a robust discussion on these issues on Capitol Hill.  We had a Bill that would have gone further.  It was referred to as JOBS Act 3.0 and it was crafted by Chairman Hensarling and Ranking Member Waters.  It passed the House 412-4 and was expected to be tacked onto the Senate Appropriations Bill in the last Congress but of course, the President held up the budget and closed the Government over the Wall.   Unfortunately, the Bill then got pushed to the next Congress which cancelled it and it is up to Chairman Waters (now that the Democrats control the House) to pick it back up.  Chairman Waters is a deal maker but, with all the distractions in the wake of the Mueller Report, I fear that the People’s business may take a back seat.  

Keep the faith.  I’m not going away and I promise that at some point, the lights will go on and the SEC will realize that the IPO crisis is caused by the lack of a viable aftermarket economic model to broadly market, remarket and cover small cap stocks.   What we demand is ultimately in the best interests of the country and especially the poor (who have no money in stock markets but desperately need higher paying jobs).

Not sure if it's been asked already or not but do you have any concerns about the growing trend of corporate stock buybacks artificially boosting stocks? Particularly considering the recent, albeit brief, yield curve inversion?

I’d rather see the cash be invested in the economy: 

1. Building businesses,
2. Investing in capital goods,
3. Investing in R&D.

I’m not sure of the implication of the yield curve inversion other than that it foreshadows a recession and a likely decrease in share prices.   China has an interesting policy on the Shanghai Stock Exchange where they require companies to payout, I believe, 30% of earnings to shareholders or explain why they won’t.   I’m not sure that this wouldn’t force a more efficient allocation of capital since investors would have to make more decisions about what to do with that cash.

Hi David.

Thanks for doing an AMA.

I’m very interested in the free trade of assets that you mentioned, this sounds very difficult to implicate however.

Would it remain company policy on how to depreciate there own assets, or would you guys take the lead on that & manage the depreciation as you see best fits?

Would you then have any labour input on transaction from companies buying/selling assets?

How companies depreciate their own assets is determined by accounting rules and it generally has very little to do with how they are bought and sold. I think the answer is that nothing should change with regard to how companies account for assets. What we're proposing is that we will create one interlinked global marketplace to trade tokenized assets and that inevitably, if there are deviations in private versus public market valuations or token versus security valuations, there will be opportunities for traders to engage in arbitrage so those value discrepancies will ultimately be closed.

What do you think about machine readable data initiatives such as the XBRL mandate for public companies? Do you think they will have the intended consequence of helping level the playing field for small investors who cant afford to pay for curated data sets? Are there other better ways?

Wow.  Interesting question given that Al Berkeley and I drove the initial pilot in XBRL when I was Vice Chairman of NASDAQ.   Originally, I thought it would help drive down the cost of equity research by automating the ability to pull financial data from SEC Edgar filings and drop it into a spreadsheet.  I was hopeful that we would see more fundamental equity research but instead, I think it played into the hands of high-frequency traders who can instantly pull information into models to trade ahead of others in the market (or computer-based traders and investment managers).   And, it adds cost to corporate issuers who are already burdened by too much cost and too little benefit (no real support) for being public.

My point is that we need more human analysis and participation in markets.  More fundamental research.  More sales people getting on phones.  More human market makers taking positions.

However, we had venture exchange legislation that passed the last Congress (The “Main Street Growth Act”) and I believe that if XBRL was paired with a new stock exchange structure that was optimized to support small cap stocks (higher spreads and commissions and maybe no electronic trading), that XBRL might become a boon to research analysts covering microcap stocks.

Right now there is no economic model to remunerate firms for covering microcap stocks.  XBRL will only be helpful with there are sufficient carrots to lure equity analysts back into coverage.

I might be too late?

How do you feel about the expansion of reg A+ to public reporting companies?

I've heard concerns that some of the penny stock pump and dump operators are intending on using this new pathway for new fraud schemes.

Vigilant enforcement is always preferable to prevention policies that tend to inhibit capital formation, innovation and undermine US competitiveness.   It should be obvious that if we want to prevent all fraud, that we can simply stop all business.   But, we all know that that is not the right answer.   So, I am very supportive of extending Reg. A+ to the rest of the market (and applaud the SEC’s recent expansion of “Testing the Waters” – another JOBS Act provision – to the entire market) as long as the SEC prosecutes the “pump and dump” operators.

fighting to improve capital access for entrepreneurs

So, making it easier for rich people to borrow more money?

No. We're talking about equity capital access, which is the mother's milk fueling entrepreneurship. At Weild & Co., we are trying to bring "Wall Street to Main Street" by creating a platform that will support investment bankers that want to work directly in the community. This way we should be able to provide major firms support to independent investment bankers who are operating locally. Currently, we have investment bankers in 15 states & the District of Columbia. This is a radically different model. For example, Goldman Sachs probably has investment bankers in only 5 states and we are in the early part of our growth curve. At some point we'll be in all 50 states and global.

Entrepreneurship in this country has fallen off a cliff. We are at a 40-year low in the number of start-ups that we do. Entrepreneurship is the source of almost all quality job creation and innovation and so we MUST figure out how to get more capital into the hands of more entrepreneurs.

What’s your thoughts on precious metals?

Well, I'm seeing people working on stablecoins backed by gold, for instance. Venezuela was kicking around the idea of issuing coins backed by oil-futures. I think you can tokenize commodities, commodity futures, just as you can any other asset. These are things we're working on at 55. I'm sure our team would be happy to give you more information if you're interested. [More info](mailto:[email protected])

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This was at the time that iTunes had been launched and well before the iPhone had been launched, about 2002 I would guess. Steve Jobs called me when he discovered that NASDAQ was standardized on Dell laptops and started the conversation by saying, "If you don't convert everybody over to the Mac immediately, I'm moving my listing over to the NYSE." This obviously would've been a big loss for NASDAQ, so I needed to come up with a compelling response. I told him how much we liked the Mac, we used it in the graphics department, but the Mac didn't integrate with Blackberry and everybody was using remote email communication to communicate with clients, friends, and significant others. It was largely displacing phones. Steve said, "That's really interesting. Tell me more." This set off this whole series of conversations over the next 12 months where he was picking my brain on what people were using these devices for. In hindsight, it was clear that he was in the planning stages for the iPhone.

Needlessly to say, he stayed on NASDAQ and we stayed standardized on Dell because of the integration issue.

What are some for a 16 year old to make money?

Start a business. Any business. Build a business that demonstrates that you possess the skills to take a project from start to finish with a profitable end. This will give you a strong differentiator from your peers in your college applications.