In our fifth episode, we would like to welcome David Weild- a man that holds so many titles that we don’t even know where to start, “Father of the Jobs Act”, “Former Vice Chairman of NASDAQ” and “CEO & Founder of Weild & Co.” Being in the business industry for over 30 years, David has the expertise and great vision and expresses his view on the current landscape for finance and technology. In this episode, hear about his experience in NASDAQ as well as the reasons behind his creation of the JOBS Act. Find out what triggered David to enter the investment banking industry, why he encourages small businesses to borrow capital and his opinion on owning an Ivy League Degree!
Angela: In episode 5, we have David Weild. Hi, David, how are you?
David: Terrific Angela, how are you?
Angela: Good, good. So David here, a capital market expert, best known for his position as Vice Chairman of Nasdaq, and is the father of the “JOBS Act”. He is currently the founder chairman and CEO of Weild & Co, one of the fastest-growing investment banks here in New York.
David: In the country!
Angela: (Laughing) In the country, in the country!
David: We’re in 17 states now, including the District of Columbia.
Angela: So I don’t even know where to start with you. Everything is just so impressive – so let’s talk more about the Job Act. I think it was designed to make it easier for companies to go public, and for more people to invest.
David: I had a concern which is when I was vice-chairman of NASDAQ, they changed some of the regulations and I saw a collapse going on in smaller companies, in finance and public markets. It wasn’t picked up by people. When you live in these markets and you understand these markets. You see things and sense things that other people don’t right, so we decided that we had to get people broadly to understand that there’s been a real negative change in the market, in terms of access to capital for entrepreneurs. And so we had to pull the data together and put it into slides that took a lot of work to make it really easy for people to see the dramatic shift that it occurred. So you know while many people will tell you that Sarbanes-Oxley and the increase in regulation that occurred in 2002 is that as a reason why our IPOs went from 800 a year down to 120 (Well, think of the change). But what really happened was before that we went during the dot-com bubble, when lots of deals were getting done if you looked under the covers- you would find that the smaller deals were not getting done. Smaller companies we’re having problems because they went to a telephone quoted market where market makers could really provide liquidity to an electronic auto-execution market and it collapsed these markets. So now all of a sudden, they raised the bar dramatically for companies to go public and access capital, it’s harder to access capital and get public which means there’s less of a supply of capital – for start-ups and entrepreneurs. We also documented the stock exchanges were reporting their listings numbers and bragging about how they were growing, growing, and growing! And what we did was we went through the detailed listing numbers and pulled out all of the funds: the exchange-traded funds. And when you did that, what you would see is the company, the operating companies, actually employed people. That number had gone from 9,000 down to 5,000. Okay? And that’s just jobs, jobs, jobs; that’s
economic development; that’s innovation; out the window. Thank you for messing up what was the greatest industry creation mechanism that the world had ever seen which was I thought the Nasdaq stock market at that time in particular so.
Angela: And how was your experience in NASDAQ?
David: And that’s that. Well I felt like I was doing you know important work right because I’m a believer that anywhere and (well, you know)It’s entrepreneurs, innovators and scientists that are going to solve the great challenges of our time, (like) global warming. I think it will be solved because people create technology that pulls carbon out of the atmosphere. You know, I’m not a big believer obviously, we have to do some things – leaders, and converting people over to less polluting forms of energy. But at the end of the day we are going to have to clean up our mess right and so we need technology and innovation to do that. We need to find cures for cancer and a lot of what the markets do is they provide capital, so research scientists can come up with cancer immunotherapy is to cure cancer.
Angela: In your interviews you mentioned, you are very supportive of small businesses and we were just mentioning that and you feel like they’re very important to the American economy. So how does that tie in into the JOBS Act and do you think that enough small businesses are aware of it and benefit from it?
David: Well, I think first of all the work that we did what it did was it changed the discussion down in Washington right? There is a Jobs Act one point now, Jumpstart Our Business Startups Act gave birth to crowdfunding and securities which is another tool to invest in entrepreneurs to raise capital regulation A+ which is like IPO right. I would characterize that testing the waters that I can go out and free market or at least find out if there’s an appetite for my dealing delisted so it’s a lot of good that came from the JOBS Act. And then they passed the Fast Act which was called Jobs Act 2.0 but we got a lot more work to do. We had a massive (you know) on the bus package, that included a new form of the stock exchange to get better support in the smaller companies because the magic here is going to be if we can get more companies public easier. And if we can, that frees up capital for people that naturally invest in private companies to create more startup capital, so I would say that we’re scratching the surface, Angela, of what we need to do but the reason why it’s so important is that if you create really tight employment- you pull people that are less well-educated and poorer many times off the bench and into the employment market, where they start to develop skills. So there’s a real piece of this, which is important to upward mobility, particularly if you get into poor communities and singles. You know whether or where there’s a disproportionate number of saying “single parent, “single mom”, you know we need to do some things for (“minorities, for women.” – Angela) Absolutely, you know as I said, I think what I say is that people of color are my people. It’s that you know if we get into a war, the African American kid in that is going to be in the foxhole with my Caucasian kid, and so I think we really have to start, and this is one of the things that I would love to see in Washington. Starting to figure out how to make it work better for everybody and stop some of the rancors and the partisan bickering, to start understanding you know that everybody is our people. You know, we’re Americans, and we’re all the same. But one of the beautiful things about this country, which no other country has to the extent that the Americans do, is that you can be Latino and American; you can be Chinese and American; you can be Japanese in the American, but you can’t be American and go out the other way and be like, Colombian, you can’t be so easily. You can’t go to a Chinese, you can’t be Japanese, so that’s actually an incredible advantage. So we need to be attracting the best and the brightest in the world, because the world is going to lead on the faces of countries, that are actually maintained superpower status, are going to do it, because of technology, because of innovation in minds. And the population growth frankly helps us, in terms of our long term economic outlook, because if you look at one of the problems demographically in places, like Japan, and in China, there are not enough people at the bottom of the pyramid. Young people support people that are going into retirement and so on and so forth so we need to think about immigration strategically, also morally. But you know, we got a lot of work to do, where we can be so much better than we are, and so we hope to get back doing some of thought leadership papers to provide recommendations that are ultimately going to be bipartisan them, in whether this last Jobs Act we point out that went through the house. It passed 460 and I’m a big believer that you can do things that are incredibly bipartisan, but you have to be able to work with the Democrats and the Republicans, to be able to show what’s in there for their constant in those bills for their constituencies. And creating a win-win situation and if you can create a win-win situation you’re going to be very successful. I think the country will be very successful in the long term.
Angela: Let’s say someone wants to start a small business and I think a lot of people are afraid of taking that risk. What is the best advice you can give them, especially since you’re in the investment banking business or have been in it for such a long time?
David: You could just call me old (Laughing)
Angela: (Laughing) No I didn’t. You are young. What’s the number one advice you have?
David: Well, I think that there are a time and a place that to take that kind of risk, and it tends to be when people are really young. Unfortunately, they don’t have a great knowledge base and everything. But it’s not fatal, you learn from that experience and you can get a job with a bigger corporation and if it doesn’t work out, you’re much more trying other things. Your employability is incredibly broad because your cost to be an employee is not high. But when you’ve got many years developing your craft and you go up and you’re making more money. You have greater obligations because you have kids and everything so it becomes financially very difficult for most people to take that risk. So what you see is it’s either done early or it’s done late, meaning between 45 and 55. You still got enough vigor to kind of taking that risk since you’ve got financial security, hopefully at that point. And you can try and do something but you should always have a Plan B. If you’re young, plan B is to know how to go back to school if it doesn’t work, where to go. You know, into a bigger corporation or something else.
Angela: Speaking of school, do you think that an Ivy League degree matters?
David: Yeah, it’s a Good Housekeeping Seal of Approval, it helps. But I also think that (you know) with many kids- It can be a hindrance and the reason is that there’s nothing like being the underdog and having to prove yourself. Talking to some of my African American women friends who are very productive and they will tell me that they have to be twice as good as somebody else. And so you know, as I like to say, I will always learn much more for my failures than I’ve learned from my successes. And the challenge is not a bad thing and coming up from the bottom is not a bad thing. If you look at some of the greatest entrepreneurs that this country has ever seen, like Andy Grove, he was an immigrant and came from I believe of a socialist country. You know people have that sort of internal drive and that desire to kind of overcome. You walk out of an Ivy League institution and it’s a loving education and you could be extremely bright and gifted. But if you’re complacent you know that you may not be as successful with somebody that comes out of, like CUNY. Some of these kids out of CUNY have done great things because (some of ) they’re immigrant families, they haven’t had a silver spoon. (“They could not afford an Ivy League education, or did not get any scholarships” – said by Angela) A variety of reasons as I said. You know there’s the paraphrase something that Martin Luther King Jr. said “judge people by the content of their character” and character comes in all sizes, shapes, ethnicity, religions, colors, and geographies, from all of all sections of society.
Angela: You talked about the businesses you’ve been involved with- they all have taken out business loans, correct?
David: Yeah, they have taken out business loans from the government and some they took out from corporate debt facilities. It’s a wide range of things I mean- there’s you know – it’s an incredible diversity of types of fixed-income financing debt financing.
Angela: Do you recommend the small business to take business loans?
David: Absolutely, but you know you have to be able to repay it. And you have to any of your use of proceeds with that loan should be something that actually drives growth and generates greater cash flow. Greater ability to pay down the loan so you know a loan is a form of finance, just like equity is a form of finance. And what you’re trying to do with the proceeds from that loan is to build greater value. But if you’re living hand-to-mouth, sometimes you ultimately forestall the inevitable. Maybe the thing that you should be focusing on near-term is how to get your expenses in line with your revenues. So your long-term ability to sustain that business is to improve.
Angela: I’d like to know what intrigued you to go into investment banking business?
David: So I fulfilled all my undergraduate biology requirements with courses in mostly molecular genetics. I was a geneticist and I wrote for genetic engineering news. My father, who is an intellectual property lawyer specialized in international law. And we used to have these debates about the compatibility of things coming out of life sciences. And so I was really intrigued by the commercial potential before any of the life sciences companies went public a long time ago. I saw Genentech go public at $30 a share and the stock traded on the first day all the way up over $80. What it said to me is there’s amazing promise and this emerging technology, an amazing promise to solve you know real problems for people’s health and mankind. I really developed a strong interest from that observation in the importance of capital and capital markets to solve problems. And I’ve been sort of doing it ever since.
Angela: Would you say that’s a problem now in this generation and what kind of financial challenges you think we’re facing? Not just Millennials.
David: There’s too much debt. I mean if you look at the demographics of this country right now and the aging of the population. The baby boomers are retiring, and you need a supply of people coming into the United States- and the right people. If you will sort of immigration formula probably requires two immigration strategies. One is about bringing the best and brightest into the U.S. and all of that scientific and engineering capital, that we’re going to need to compete in the future; but also that moral piece, which is to say that when we look at the southern border. A lot of it is an economic refugee crisis. It’s not like Ecuador, Guatemala, places like that people don’t walk a thousand miles because they’re not under a lot of stress. I think it says something about who we are as people, we have to do a better job of managing both ends. Back to your original question. I mean there’s a high level of student debt there’s why we have more people retiring coming out of the economy that was put under stress. Because you’ve got Alzheimer’s that’s projected by 2050 that if we don’t find the cost curve of Alzheimer’s. It’s going to cost the US economy (I think) 1.3 trillion dollars a year. And you know and what it does is it takes a lot of women out of the workforce because they tend to be the caregiver and it puts a real burden and that’s coming down the pike. So we really need to do a better job, we’re working with a thin tech company right now that that would take spare change investing allocate coins and put that money into finding cures for Alzheimer’s and sort of unleashing the power of a market of 70 million American it’s actually touched directly through their family members by Alzheimer’s
Angela: Wow thank you so much! David, it was a pleasure having you.
David: It is a pleasure to be with you Angela, thank you!