Scott Cutler spent nine years at the NYSE transforming it from a physical marketplace into a technology hub, attracting companies like Alibaba and LinkedIn. He says roughly half of companies miss expectations in their first two quarters after going public. Cutler emphasizes that courage is what separates entrepreneurs who build billion-dollar businesses from those who don't.
Chapters
I know that when you were at the New York Stock Exchange, you started some boot camps for people who were looking, entrepreneurs who were looking at IPO?
Yeah, I worked, I was in charge of the many different jobs that I had at the New York Stock Exchange. One of them was responsible for all of the capital raising that would happen globally. And so I worked with companies from all around the world, you know, 60 different countries where we supported listed companies and worked with entrepreneurs that had ideas and wanted to be able to eventually have access to the global capital markets. And so while I typically would see them at, you know, the start of their journey as public companies, you know, all of them at some point in time made a leap forward and started a business, whether that Whether that was somebody who started something in their garage to something they inherited. I met teachers, doctors, mechanics, people that came up with ideas that became big, massive, multi-billion-dollar companies because at some point they had the courage to execute on an idea they had. That's, quite frankly, the formation of the capitalist society that we operate in today.
While you were doing that, did you see any or notice any defining characteristics of those type of people that maybe had an idea and executed on it well?
Courage. Courage. A lot of courage. I mean, it's probably the most difficult thing to do because starting a business, there's not a path that you're following. It's not footsteps that you're just, put your head down and march forward. You've got to blaze your own path. I think courage is probably the one word that I would describe almost every entrepreneur. It takes a tremendous amount of courage to be able to step out and do something on your own and make the investment in yourself.
Let's say that some of the entrepreneurs in the audience here have a really, really good next couple of years and down the line they decide to IPO themselves. Is there any advice that you can give them on going that—
Of going public?
Yeah. Maybe to ease the pain a little bit.
Yeah, I mean, if any of you are lucky to have that type of success, I don't think that's the— I used to— in the New York Stock Exchange, there's this huge boardroom with gilded gold walls, and it's sort of the pinnacle of achievement of the public markets to be able to have one of these breakfasts to celebrate an IPO. And I hosted literally hundreds of these things. What I would always say was my advice to that entrepreneur who is actually now going to the public markets, going to go out in front of the world and say, hey, I've just raised hundreds of millions of dollars. I would essentially just say, welcome to the starting line. It was true because all that work, all that effort didn't matter. You were just getting to a new starting line. Buckle up. You're in for a new ride. So, you know, as much as you'd say, oh, the tremendous success at that point, for all of them it was exactly the same. They were all standing in front of that line looking into the future saying, what is it gonna take for us to ultimately be successful?
Yeah.
And the race started for all of them right there. And it's an important thing to know that within the first or second quarter after almost all of those people started, Half of them failed to meet their expectations.
From the IPO?
From the IPO, the first and/or the second quarter after making it to that point. I mean, it's an incredible process to go through that and then an incredible process to succeed even beyond that point.
Yeah. Wow. Now that we're at the New York Stock Exchange and we're kind of on the topic, What, I guess, happened in your 9 years there?
Yeah, it's one of the oldest and largest marketplaces in the world. Now, I guess I have a theme in my career of running marketplaces. New York Stock Exchange is a marketplace. It was started by brokers underneath a Buttonwood tree in New York trading war bonds. You know, and so it's a place— marketplaces are platforms that bring a buyer and a seller together at scale. And, you know, the New York Stock Exchange had been around for about 200 years when I joined. And I joined part of a team that said, we've got to blow up everything about how this place operates. And it was a place that operated in a very physical, analog world where trading happened You know, on the floor of the New York Stock Exchange with people. And in 6 years' time, that moved to a world that was largely autonomous, largely machine-driven, and went from execution in, you know, several seconds to microseconds.
Right.
I mean, just the amount of technological transformation over that 6-year time period. And by the way, That was through the worst financial crisis globally and coming back out of that. So it's just, I saw an incredible amount of change while there.
Yeah, and I know that you worked a lot while there to kind of bring in technology companies onto the New York Stock Exchange, correct?
Yeah, yeah, it's a great story about that. So I, I was a— I was here in San Francisco technology investment banker and was recruited to go back to New York. I didn't even own a suit. I just had been in the tech world. I remember after I had taken the job, I went to pitch a company to work with the New York Stock Exchange. This guy, who is a well-known person around here in the Valley, he just says, F you and F the New York Stock Exchange. You were too cool for all of the startups around here. The New York Stock Exchange standards are way too high, and so it's a country club that none of us want to belong to.
It wasn't Tim, right?
No, it wasn't. It wasn't. But the point that he was making was the right point, is that at the time, the New York Stock Exchange was reserved for what they viewed and defined as blue-chip companies. And with that as a definition, missed Intel, Cisco, Microsoft, Google, all of these companies that became the next great companies because there was this definition of, of, of this is the type of company that had to be profitable, had to be big. And so we changed all that.
Did you go around to Google and Apple and Microsoft and all of them and pitch them to come on?
I spent most of my time focused on Yelp, LinkedIn, Alibaba, Workday, NetSuite, Salesforce. I mean—
What was the pitch to get them to come on?
You know, it was, you know, we were going through a transformation as a company, and it's just one of the best brands in the world. So how do you take one of these great brands and be a partner and be a part of this exclusive network? but in a different way. We became sort of the underdog in every situation, and we went from not having any technology companies list with us to 95% market share in that 9-year time period.
That's amazing.
We literally just swept over the market, but we ended up using this position of a global brand and a global network, and the median exposure at the New York Stock Exchange in a way to attract small companies, and built our entire brand around entrepreneurship. As much as it was still very blue chip and still very much from that world, we focused on—
Blue chip meaning like industrial kind of stuff?
Yeah, blue chip, the big large companies that you would define as the GEs of the world. We're just— the world was changing and it had to change and we supported entrepreneurship and by so doing transformed our brand as well. It was a tremendous halo effect to be associated with the companies that were defining what the future of industry was going to look like.
Since you were actually in these meeting rooms pitching these people and they have to do a pitch here later in the semester, do you have any Any kind of tips or tricks that you used to get through it all or get them on board or form your pitch?
I think every great meeting has 3 points. Here's what I'm going to tell you. A, B, and C. Then you tell them A, B, and C. Then you tell them at the end that you want their business. I mean, I've either delivered or listened to pitches or hiring people, but the people that say, This is what I'm gonna tell you, and then you tell 'em, and then you ask for the business, stand out like you can't believe. There's so few people that have the courage to ask for it.
