Why Nasdaq’s Adena Friedman Says Sports Teams Should Go Public | The Deal

Intro (0s)

• Jason Kelly and Alex Rodriguez are in New York to discuss Nasdaq and its CEO, Adena Friedman, who will talk about her deals, particularly in the sports industry. (0s)
• Adena Friedman has a strong understanding of the intersection between sports, entertainment, and culture, which is a focus of her work. (13s)
• Franchise values in sports are increasing rapidly, and there is potential for more sports teams to become publicly traded on Nasdaq, similar to the Atlanta Braves, the only MLB team currently listed. (21s)
• The concept of a sports ecosystem extends beyond the teams themselves, with companies like DraftKings also being publicly traded on Nasdaq, highlighting the significant role of technology and access to capital in the sports industry. (38s)
• Adena Friedman is recognized as a dealmaker, with Nasdaq being heavily involved in public listings, which are crucial moments for companies. (1m5s)
• Adena Friedman has had a notable career, including a pivot from Nasdaq to CFO of Carlyle and back to CEO of Nasdaq, and she is also a black belt in TaeKwonDo and a fan of the Washington Commanders. (1m26s)

CEO of Nasdaq (1m57s)

• The role at NASDAQ involves overseeing a global technology company that serves the entire financial ecosystem, with exchanges as its foundation and a suite of data and software solutions for the industry. (1m57s)
• Daily responsibilities include focusing the team on driving strategy, executing plans, and meeting client needs, with an emphasis on teamwork. (2m11s)
• A successful day is characterized by making a significant impact, such as winning a big deal or launching a new service, while less productive days may leave one questioning their contributions. (2m31s)
• The mentality of making a difference every day was present from the beginning of the career at NASDAQ, starting as an intern in 1993 and becoming a permanent employee, driven by the need to earn one's paycheck. (3m11s)

Upbringing (3m36s)

• The individual's work ethic and attitude in life are influenced by their family background, particularly their father's hard work as an investment manager at T. Rowe Price and their mother's career progression from law school to becoming the first female partner in her law firm. (3m40s)
• The father grew up in Portugal with a missionary minister father and came to college on a scholarship, starting with very little. (3m50s)
• The mother went back to law school when the individual was nine and became a lawyer when they were eleven, demonstrating significant effort to enter the legal profession. (4m0s)
• The individual observed their parents' hard work and the benefits it brought over time, which contributed to their own work ethic. (4m23s)
• During childhood, the individual participated in various sports and activities, including gymnastics, ballet, karate, and tennis, before focusing on ballet for ten years and playing varsity tennis in high school. (4m50s)
• Engaging in ballet and tennis helped the individual develop focus, discipline, competitiveness, and a drive to strive for bigger achievements. (5m15s)

Taekwondo (5m27s)

• Adena Friedman is a black belt in Taekwondo, having achieved this rank after 10 years of training, which she believes has helped her in her career due to the discipline it requires (5m52s).
• Friedman found the skills-building aspect of Taekwondo to be enjoyable, but sparring was the most challenging part for her, as it required overcoming fear (6m2s).
• To overcome fear in sparring, Friedman learned to play offense and defense simultaneously, a skill she compares to playing chess, where every move has a counter-move (6m26s).
• This skill of playing offense and defense at the same time has been valuable for Friedman in her business career, allowing her to navigate complex situations effectively (6m47s).
• Friedman emphasizes the importance of getting past fear and learning to manage it, rather than conquering it, as fear has always been a driver for her (6m14s).

Fear Drives You (6m50s)

• The concept of "fear drives you" is discussed, where individuals are pushed out of their comfort zones to achieve growth and success (6m51s).
• A personal anecdote is shared about being sent to Portugal alone at the age of 10 to find grandparents, which was a moment of fear that ultimately led to a life-changing experience (7m6s).
• The experience of traveling alone at a young age taught the importance of conquering fear and developing self-confidence (7m28s).
• Parents played a significant role in encouraging the development of this mindset by putting their child in situations where they had to overcome fear (7m44s).
• Learning to fly in college was another experience that involved facing and overcoming fear, particularly the fear of mortality (7m49s).
• The process of learning to fly required perseverance and determination, as giving up was not an option (8m2s).
• This mindset of overcoming fear was applied to career opportunities, where the fear of failure drove success (8m19s).
• The fear of failure was a motivating factor in taking on new challenges and finding ways to succeed (8m22s).

Imposter Syndrome (8m27s)

• Adena Friedman experienced imposter syndrome at two key moments in her career, despite having a successful father and a professional mother. (8m27s)
• At age 30, she was given the opportunity to run one of the business divisions at Nasdaq, which initially shocked her and made her question her capabilities. She overcame this by identifying what she needed to learn and surrounding herself with knowledgeable people. (8m49s)
• The second instance occurred when she was asked to head corporate strategy while running the data division, despite having no experience in mergers and acquisitions. She sought advice from a trusted friend, which helped her manage her fear. (9m46s)
• By the time she became CEO, she felt fully prepared for the role, having used her previous experiences to build confidence and readiness. (10m14s)

Competitive (10m21s)

• There is an emphasis on the importance of competitiveness in life, suggesting that humans are naturally competitive and that healthy competition can drive positive outcomes. (10m22s)
• It is important to have a vision and strategy for achieving goals, focusing on client needs to develop capabilities, rather than solely concentrating on competitors. (11m0s)
• Competitors should be considered after establishing a vision, using their actions as a reference to improve or differentiate one's own approach, while maintaining a broader perspective on life and goals. (11m16s)
• Competitiveness should be balanced and not become excessive, ensuring it aligns with a larger vision and purpose. (11m35s)

Strategy (11m39s)

• As a CEO, it is crucial to have a clear vision for the business, which can be developed independently or with the help of the team. Once the vision is established, it is important to ensure that everyone in the organization is aligned and motivated to achieve it. (11m52s)
• Executing the vision requires active engagement and establishing a routine to drive the vision forward, ensuring that the team is moving together rather than being dragged along. (12m26s)
• Experience in running a business division within Nasdaq, where division leaders have significant autonomy, helps in developing problem-solving skills and setting a vision for new business areas, such as the data division. (12m46s)
• Running corporate strategy, which involved mergers and acquisitions, highlighted the importance of operational excellence and the belief that good execution is as important as having a great strategy. The ideal approach combines both a strong strategy and effective execution. (13m24s)

Bob Greifeld (13m50s)

• Bob Greifeld is described as a key mentor and sponsor, having a significant impact over a 20-year relationship, including 11 years of direct work. (13m51s)
• He provided valuable feedback, focusing on areas for improvement rather than just praise, which was appreciated for personal growth. (14m22s)
• During a negotiation for an acquisition, Greifeld advised shifting from a defensive to an offensive strategy to successfully close deals. (15m3s)
• As CFO, the advice was to empower the team and ensure necessary knowledge was acquired, acknowledging that not everything could be known. (15m17s)
• Greifeld was adept at identifying important issues and cutting through noise, making him a good partner in deal-making. (15m44s)
• He prepared his mentee for the CEO role by gradually stepping back, allowing for increased responsibility and readiness for leadership. (16m12s)

Carlyle (16m29s)

• After two years as CFO, a headhunter contacted the individual about a CFO position at Carlyle, a leading private equity firm in the Washington DC area, which was looking to go public. (16m30s)
• The opportunity was appealing because it allowed the individual to work and live in the same city, learn about the investment side of finance, and take a company public. (17m42s)
• Leaving the previous company was difficult, but the decision was seen as a long-term commitment, and the opportunity was considered too significant to pass up. (18m23s)
• The cultural differences between the previous company, Nasdaq, and Carlyle were notable. Nasdaq had a command and control culture, while Carlyle had a collaborative culture due to its partnership structure. (18m59s)
• The individual appreciated elements of both cultures, recognizing the need for fast decision-making at Nasdaq and the value of collaboration at Carlyle. (19m28s)
• Upon returning to Nasdaq, the individual aimed to integrate both fast decision-making and collaborative elements into the company's culture. (20m4s)

Deal Making (20m16s)

• Adena Friedman had experience in deal making prior to her role at Nasdaq, having worked in a business where deals were the primary focus (20m28s).
• When buying a company as a corporate entity, it's essential to have a long-term thesis on the company being acquired, as it will become part of the organization and influence its future direction (20m49s).
• In contrast, private equity firms focus on the exit when making a deal, with the goal of reshaping the company over a defined period and then exiting (20m58s).
• The investment committee process in private equity firms places significant emphasis on the exit strategy when making decisions to enter a deal (21m9s).
• Adena Friedman became familiar with private equity terminology, such as IRR (Internal Rate of Return) and MOIC (Multiple of Invested Capital), and was able to apply this knowledge when she returned to Nasdaq (21m23s).
• When translating private equity concepts to a corporate setting, the focus shifts from MOIC to ROIC (Return on Invested Capital), as well as the overall return delivered over time and the strategic value created (21m56s).
• The thesis in corporate M&A is different from private equity, with a greater emphasis on the strategic side and the value created through the deal (22m12s).

Return to Nasdaq (22m14s)

• Bob was considering succession and offered a position as president of Nasdaq, which was a compelling opportunity. (22m19s)
• The experience at Carlisle involved helping the company go public and mature as a public company, which was valuable. (22m33s)
• There was a realization of preferring being a business owner over a CFO, enjoying client interactions, and the challenges of profit and loss management. (22m41s)
• The role involved running all business units except for the trading division, which was seen as a smart decision due to its complexity. (23m26s)
• A year and a half later, the position of COO was offered, eventually leading to becoming the CEO. (23m56s)
• The decision to return to Nasdaq was driven by the desire to pursue an exciting opportunity rather than dissatisfaction with the current position at Carlisle. (24m6s)

How Nasdaq makes money (24m37s)

• NASDAQ makes money through three divisions: the markets division, the listings and corporate services business, and the FinTech division (24m45s).
• The markets division generates revenue as an exchange operator by taking a small portion of every share traded or every option contract traded, resulting in approximately $1 billion in revenue per year (24m57s).
• The listings and corporate services business offers services to help companies list on NASDAQ and maintain relationships with investors, including investor relations, governance, and transparency services, generating around $1.8 billion in revenue (25m32s).
• This business also provides services to investors, such as helping them make smarter asset allocation decisions and creating investible products through the index business (25m26s).
• The FinTech division provides software that powers the capital markets worldwide and offers risk management technology to broker-dealers and banks, resulting in approximately $1.5 billion in revenue (25m50s).
• The FinTech division primarily generates revenue through software sales (25m54s).

Growing Faster (25m57s)

• The CEO adopted a more aggressive approach to growth, focusing on building and expanding the business faster. (26m3s)
• Under previous leadership, there was significant activity in mergers and acquisitions, but a new strategy was implemented to enhance operational excellence and expand the foundational exchange business. (26m13s)
• The company aimed to understand client needs by engaging with them and identifying technology trends that would drive the industry forward over the next decade. (26m30s)
• The company positioned itself as a technology provider serving the global financial system, aspiring to be the trusted fabric of this system. (27m15s)
• The client base was categorized into corporates, investment managers, and financial market intermediaries, including banks and broker-dealers. (27m27s)
• A strategic initiative was undertaken to modernize technology by rewriting software, embracing cloud solutions, and adopting agile development practices. (27m50s)
• The company introduced technology-oriented key performance indicators, such as annualized recurring revenue, to measure success. (28m6s)
• The focus was initially on driving organic growth by understanding client needs and modernizing offerings, before considering expansion through mergers and acquisitions. (28m41s)

“Your Business Is Deals (29m5s)

• The Nasdaq plays a significant role in pivotal moments for companies, such as when they go public, which is often seen as a transformative and celebratory event in a company's history. (29m5s)
• Being part of these transformative moments is a constant aspect of Nasdaq's business, contributing to its brand identity as a hub for innovative companies. (30m40s)
• Nasdaq's association with leading innovative companies like AWS, Microsoft, Google, NVIDIA, and Intel enhances its reputation as an innovator and allows it to form deep partnerships with these organizations. (31m13s)

Atlanta Braves (31m33s)

• The Atlanta Braves, a well-managed sports team with a strong front office, have developed an impressive compound around their stadium, enhancing the franchise's value. (31m42s)
• The Braves went public and are listed on Nasdaq, which was an exciting development for Liberty Media and the franchise, allowing them to utilize facilities in Times Square for a celebratory moment. (31m55s)
• Going public enables the Braves to engage with fans in a new way, offering them the opportunity to become owners of the team, which is a unique aspect of having a sports team as a public entity. (32m15s)
• The organization includes a real estate arm that contributes to the franchise's value, and the team is recognized as one of the best-performing and most recognizable brands in sports. (32m30s)
• The decision to make the Braves' stock available to the public reflects a strategic move from a position of strength, altering the perception of sports teams as valuable and investible assets. (32m50s)

Sports Economy (33m11s)

• The sports economy is a significant business sector that encompasses not only sports teams but also merchandise, entertainment, sports betting, and media. (33m37s)
• The intersection of entertainment, culture, and sports has led to increased franchise values, driven by media exposure and social media, which humanize athletes and make sports more accessible. (33m41s)
• The rising franchise values make it increasingly difficult for individuals to own sports teams, leading to more professional investors, such as private and public equity, becoming involved in team ownership. (35m10s)
• The engagement of fans through various means, including sports betting and media rights, creates a cycle of increasing value for sports franchises. (35m58s)
• Women's sports have transitioned from a moment to a movement, with growing recognition of their value and viewer experience, leading to increased franchise values and new engagement opportunities. (36m43s)
• In the future, it is anticipated that multiple sports teams will become public entities, potentially leading to changes in league structures to unlock more value and involve different ownership bases. (37m10s)
• The global engagement in sports is seen as a unifying factor, with more people around the world becoming involved in the sports economy. (37m37s)

Sports Through A Business Lens (37m47s)

• The Washington Commanders is considered an undervalued asset that can create a lot of value if invested in, with potential for growth in areas such as merchandise sales, media licenses, and fan experience (38m57s).
• The business of sports involves a virtuous cycle where a successful team drives merchandise sales, licenses, and media interest, ultimately leading to a better fan experience and increased revenue (39m16s).
• The sports industry is evolving from private individual ownership to professional money with a return orientation, investment orientation, and real estate orientation, which is expected to bring significant changes (39m49s).
• Women's sports teams, such as those in the National Women's Soccer League (NWSL), are gaining value rapidly, with the Angel City team being sold for $250 million, a significant increase from its previous valuation of $2 million (40m49s).
• The NWSL and women's sports in general are considered a growing market with potential for investment and growth, with franchise values still relatively affordable for individual investors (41m8s).
• The idea of buying an expansion team, such as a women's sports team, is considered a great opportunity for investment and growth, with the potential to shape an entire league (40m28s).
• The Liberty is one of the highest-valued teams in the NWSL, but buying an expansion team, such as a Philadelphia team, could be a valuable investment opportunity (40m23s).
• The growth of women's sports is considered a movement, rather than just a moment, with increasing interest and investment in the industry (41m6s).

Women’s Sports (41m23s)

• The value of women's sports, particularly the WNBA, is experiencing an explosion due to increased media exposure and fan engagement, making it a fast-moving movement underpinned by a great product (41m23s).
• Women's basketball games are considered great games, with the NCAA women's tournament and Women's Olympic Basketball receiving significant viewership, sometimes even surpassing men's games (41m39s).
• The growth of women's sports can be attributed to the 50-year investment in women's sports since the creation of Title IX, resulting in better coaching, resources, and focus, ultimately leading to a flywheel effect of great athletes emerging from college and high school (42m2s).
• The machinery of women's sports has taken time to develop, but it is now gaining momentum, with the Women's World Cup being a prime example of global competition (42m31s).
• The women's sports industry is attracting interesting owners and media attention, contributing to a virtuous flywheel that is just getting started (42m41s).

The Listing Business (42m52s)

• The listings business is a relationship business that ultimately ends up in a transaction, but is underpinned by trust and relationships, with the goal of developing relationships with companies early in their life and industries as they emerge (43m8s).
• Nasdaq is engaging with every element of the sports economy, including women in sports, to elevate the product and accelerate the virtuous cycle, by connecting people and building relationships with women executives and men's sports (43m35s).
• The goal is to provide access to capital for sports businesses to grow and expand, as access to capital is the driver of every economy, and these companies are very entrepreneurial (44m23s).
• Nasdaq aims to help sports companies see themselves not just as leagues or teams, but as companies, and to engage and learn from each other, with the long-term goal of having them list on the exchange (44m38s).
• The approach is driven by enlightened self-interest, with the understanding that it's long-term lead generation, and the goal is to build relationships that can lead to a transaction someday (44m48s).

Rapid fire (44m59s)

• The deal-making style is described as persistent. (45m6s)
• Data is considered more important than instincts in deal-making. (45m8s)
• The hardest part of deal-making is the close. (45m14s)
• The best piece of advice received is to focus on how to get to the close, emphasizing the importance of the exit. (45m23s)
• The worst advice received was to not worry about the price, highlighting the need to balance price and strategy. (45m46s)
• A playlist called "girl's anthem" is used as a hype song before big meetings or negotiations, with Beyoncé being one of the artists featured. (46m0s)
• If only one sport could be watched for the rest of life, it would be football. (46m16s)
• The team most desired to win a championship is the Commanders. (46m24s)
• A surprising fun fact is that the individual learned how to fly in college and once aspired to be a fighter pilot, inspired by a love for flying and viewing the world from above. (46m33s)

Outro (46m57s)

• The outro section of the video includes expressions of gratitude for the time spent and the candid and thoughtful discussion. (46m57s)
• Multiple thank yous are exchanged, indicating a positive and appreciative conclusion to the conversation. (46m59s)