Roger McNamee post from July 28th, 2011
I knew I liked Roger McNamee. Here he is holding a Martin guitar!
Yesterday while trading equities for our clients, and trying to out-maneuver the predatory HFT “liquidity-providing” front-running 2% of the Stock Exchange customer base who make up 80% of their revenues, we were treated to one of the finest CNBC interviews we have ever been privy to.
Roger McNamee, Elevation Partners co-founder, Integral founder, Silver Lake co-founder, Rocker-dude extraordinaire, and Market Structure Genius was being interviewed by CNBC’s David Faber and Gary Kaminsky. He offered his perspective on CSCO, Big Tech, Social Media, and yes, even the for-profit public stock exchange model. Kudos to Kaminsky and Faber for conducting a Grade-A interview that allowed us all to witness one of the sharpest, most progressive minds our equity markets have ever seen. In this interview (Watch CNBC Video Here) at the 8:00 mark in, we were treated to this comment:
NASDAQ, once it went to flash trading, it said we’re not in capital formation anymore. We’re just in the business of letting our market makers front run their customers… you’re crazy to go public on NASDAQ… We have now gone back 40 years, to what NASDAQ used to be, where we have negotiated markets for informed investors… the venture capital market has been reinvigorated.
Facebook… being private hasn’t hurt them at all; they are able to keep people focused (long term). I’m a long term holder; for the first time in fifteen years I see this massive change that I can invest in for ten years at a time.
So, Roger, it would seem to us, has been following how the Stock Exchanges are not really about Trading Stock anymore. They are not about Exchanging Capital. They are about selling services like collocation, data services, and other Adnan Kashogi-esque menu items so that their largest customers can flip stock in microseconds. I think Bloomberg published a recent article where they called the NYSE a server farm. Perhaps Roger might agree with that sizing-up.
How did Bob Griefeld respond to Roger McNamee’s comments, just minutes later, on the same program on CNBC? In a moment of purely priceless television, Bob Greifeld, CEO of NASDAQ, who doesn’t know what gross margin is (See Horrific Video Here), when asked about McNamee’s comments on public exchanges, stated that McNamee “with all due respect doesn’t follow market structure as closely as somebody like myself.” (See here: CNBC Video : fast forward to about 3:15 mark).
We wish to note here that NASDAQ sold Instinet to Silver Lake Partners, a firm McNamee co-founded, for $200 million, who in turn then turned around and flipped it, quicker than a Greenwich Connecticut starter home, for five times that amount, $1 billion.
Ummm we think perhaps Mr. McNamee understands our market structure a tad better than NASDAQ’s CEO does. Perhaps NASDAQ stockholders might do well to have someone like McNamee be the CEO, someone focused on long term value as opposed to short term micro trends. Perhaps then NASDAQ can know what it feels like to buy something and sell if for a five-bagger, instead of the other way around.
You can’t make this stuff up.