IPO parade? 3 pressing questions on global markets with the NYSE

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Today, he's helping advise CEOs and investors as they navigate global volatility, market highs and lows, and of course, advances in AI. Are we in an AI bubble? He's here now for our special new segment, three pressing questions where we get into three hot topics in each space. So what's really driving stock markets around the world today? Could this be a banner year for the US IPO market? With a growing pipeline of what some are referring to as a trio of potential mega IPOs, including SpaceX, OpenAI, and Anthropic, what are you expecting for the US market this year? Those are very big, privately held companies. The question is whether the longer tail of companies that want to come to the market can IPO. What are the most common mistakes that companies make in the years leading up to an IPO? Really listening ready is a couple of these. Chris, thanks so much for joining us. Shell, pleasure to be here. So just to start off, I would love to hear about your path here to the New York Stock Exchange. Before this role, I understand you already had spent years working in investor relations and advising public companies and markets. What did these experiences kind of teach you and what guiding principles really stayed with you? Yeah, so I am coming up on a decade at the New York Stock Exchange. Thank you very much. Time certainly flies. I came to New York right out of college in 1990, always had a goal to come to New York City, and really started in a niche kind of industry called proxies solicitation. And that was working with companies who at the time were quite often being threatened by very aggressive investors, kind of the precursor to today's activist investors. And that experience really got me interested in the public markets and working directly with public companies. I won't retrace all 30-something years of my career, but leading up to the exchange, I ended up at the exchange, I ran a partnership with the exchange at another company. And that company also worked with public companies. And so when the exchange called me to become global head of listings, it was an opportunity to work for an amazing institution and really for me to essentially gain access to some of the greatest companies in the world. And I thought it was a great opportunity for me to use all the experience and expertise I had gained over 30 years and bring it to an amazing platform. Was that an easy decision for you to make just to make that leap? Because I did see that you were also at some of your previous companies for quite a long time as well. Because yeah, I'm not someone who's always thinking the grass is greener on the other side. And it was an opportunity for me to leave a company that I really loved. We had a very close-knit company, but it allowed me to go to a partner. And so I kept the relationship with my former company. So that made the decision relatively easy. And just being able to work for the New York Stock Exchange, if you talk to the people that work here, there's a sense of pride in representing this institution that is hard to explain unless you kind of get inside the walls here and start working or so. You know, it's very funny because obviously I was just telling you off-cam that I spent most of my career at CNN. I always say that I grew up in that newsroom. And I think I very much relate to that, right? We all felt like that allegiance to the three letters that were not on the back of our Jersey, but may as well have been. Yeah. I would love to just, you know, for our three pressing questions today, start off with getting your take on obviously the current state of markets. That's the biggest ongoing question for everyone is what's actually driving stock markets right now, not just in the US, but around the world. And where do you think consensus might be wrong? Hmm. Well, you know, at the New York Stock Exchange, you have to look back at history and the history of the markets. And when you look over time, the market generally go from the lower left to the upper right in terms of graphs, but there is volatility in between. And I will say, when you ask what's leading the market, certainly the US is leading the market. You know, the US is about, you ever take 25% of global GDP, but when you look at our markets and the market capitalization of the whole US market, we're knocking on the door or really at 50% of global market cap being represented in the US. And so when you look to markets globally, you really need to look at US market leadership. And you know, it's pretty obvious that the technology boom has been leading the marketplace. And obviously, this is the first time we're going to say it, but AI is a very important part of that technology boom. Now, I think what's kind of missed in the AI boom are some of the companies that are really developing the infrastructure of AI that are doing very well. Some kind of companies that may be quote unquote traditional industries from industrials that are really the picks and shovels of the AI boom and are doing amazingly well. Companies like Wednesday of this week was Earth Day. We had G. E. Vernova in, which was created a little over a year ago, and they produced gas turbines that are helping power data centers around the world. There's a great company that we have here at the New York Stock Exchange called Amphenol. I would say many people may not have heard the company, but they are providing a lot of the components that go into the AI boom. Companies like E. Inverted, all these companies on the industrial side that are really playing a big part. So the leadership of AI is not only the technology companies that everybody knows the names of like Nvidia, but it's all these other companies that are really developing the infrastructure. Right. Realizing that there's an entire ecosystem there. I think like that's such a good point because, you know, they frankly don't come across as the most sexy companies to know, right? People might glaze over when you talk about them, but they truly are winners of the AI boom. Yes. And I'll probably underrated here. When you look at their, their income statements and their cash flow generation, they are sexy for a lot of different ways. Yeah. Not at all. Not at all. That is so funny. So much of your job, Chris, is about working closely, obviously with the nearly 2500 companies listed here on the New York Stock Exchange. What are you hearing from CEOs and investors as they consider the overall landscape this year in terms of not just, you know, AI, which you just alluded to, but, you know, overall outlook. Yeah. And what we've completed are CEO agenda, which is our third annual CEO survey that we conduct with the Oliver Wyman forum. And CEOs are generally positive about the outlook. They are certainly leaning into into growth. That is their key category and they see a lot of opportunity for growth. They also see a lot of opportunity through disruption. So whether it's geopolitical disruption that is impacting their business, they actually see opportunity to take advantage of that cost savings, which is always a component of what companies do, while important, are less important than growth right now. And there's a separation in companies in terms of AI leadership and kind of AI laggards, if you will. Companies are still trying to figure out how to deploy AI and what it means. A growth perspective. I think most companies look at AI right now as a productivity tool. But I think for AI to truly flourish, it needs to become a tool for growth for companies. And companies are still trying to figure out that latter part. So much to unpack there. Firstly, I guess I just want to follow up on something you mentioned that was so interesting. You're saying that some companies actually see the geopolitical volatility as an opportunity. What do you mean by that? I mean, there are disruption to industries, whether it's supply chain or otherwise, that could give a company that is more nimble and faster to move an opportunity to pick up market share. And I think a lot of companies are better suited to handle some of the geopolitical disruption because of what they had to deal with six years ago during COVID when all their companies were disrupted. And they've become much more resilient, whether it's supply chain or they're staffing. And so they're just better suited now to take advantage of serious disruption. And on the subject of AI, obviously, I mean, I'm sure you can ask about this multiple times a day. But I mean, we've been seeing some really interesting headlines, right? I think you must have seen that all birds recently, the sneakers company said they're going to try to go all in on AI. We saw a huge stock rally there. And obviously there's all these questions all the time of, are we in an AI bubble? What do you say to that? It's healthy that people ask if we're in a bubble, usually bubbles are looked back upon in retrospect and people don't realize they're in it. So the fact that we're aware enough to be questioning whether an AI bubble, I think it's healthy for the market. And we've seen various periods of disruption in the AI space itself in terms of valuation. and then for it to buy. downs back. I think it's a question to that is difficult to answer currently. Valuations certainly are relatively high, but they're not at levels that I think cause a lot of concern across the marketplace. I think ultimately this question will be answered by the actual providers of AI if they find a path to profitability. It's not there yet, and a lot of the people in the ecosystem, folks that I mentioned earlier, other ones that are really making the profit, but for AI to survive long-term as a viable business, the companies that are actually providing the AI tools need to be profitable. They're in huge investment modes now. Are they going to get the return from that investment two years on the line, five years on the line, ten years on the line? That really is the question. That makes a lot of sense. Between the current conflict in the Middle East, broader geopolitical and trade tensions, and then worries about private credit, it's no secret that volatility is top of mind for a lot of folks right now. How is the environment shaping the actual IPO timing right now? Are you seeing any kind of hesitation from companies? Because I know that shifts. The pipeline is very strong for IPOs. It's been like that for a while though. At the end of 25, in the fourth quarter of 25, we're very excited for what looked like a very strong IPO market to end the year. The government shutdown happened. That delayed the timing of many IPOs. We get into this year, a lot of the geopolitical concerns have pushed IPO timing back. The pipeline remains strong. The IPO market itself is a bit up and down, but I think generally speaking, we're in a healthy period for IPOs, notwithstanding everything that is happening in the world. Yes, there's market volatility, but the VIX, which is a very popular volatility measurement, is pretty stable right now. We're seeing companies that are really strong businesses, profitable businesses have very successful IPOs. Last week, we had a company called Madison Air. For lack of a better description, it's an HVAC company, but they work on air filtration. Really important. There is a story along the line of data center buildout. That's happening, but it was our largest industrial IPO in like 30 years. Really, really big IPO, very successful business, very profitable growing. There are stories for businesses that can come out and do very well with an IPO right now. Yes, don't sleep on the industrial ones. No, exactly right, exactly right. Meet new groupie setting mist from Mavily New York. Gel to mist technology locks in your look for up to 24 hours, with flexible all day comfy grip. No tightness, no stickiness, no residue, just plump, dewy hydrated skin that still feels like your skin. Try new groupie setting mist from Mavily New York. Maybe it's Mavilyane. Okay, some analysts are calling this a potential blockbuster year for IPOs, which I'm sure is music to your ears. Yes. With a growing pipeline of what some are referring to as a trio of potential mega IPOs, including as I'm sure you are asked about SpaceX, OpenAI, and Anthropic. What are you expecting for the US market this year? I mean, you kind of talked about the fact that it's still very healthy and robust. But do you think we should be expecting that IPO parade as some people are hoping? Well, we'll see. Those are three very big privately held companies that would be IPO size like we've never seen before, which is really, really exciting. I think the bigger question is, those three companies kind of stand on their own. And I'm not sure whether it's one of those companies you mentioned. If that's going to open the floodgates for others, I'm hopeful that the other companies that really want to come that are more normal size have the ability to access capital so they can grow. There's about a thousand unicorns in the US. I think it's about 1500 globally. Companies that are worth more than a billion dollars or more that are privately held. We need those companies to come to the IPO market to really make it a lasting IPO market. So everybody's excited about those three companies. How could you not be? But for real to be a sustainable IPO market, we need companies earlier in their life cycle at slightly lower valuations from a market cap perspective to access the public market. Yeah, just a shoddy billion dollars. No big deal. No, it's an amazing figure to start a company that's worth a billion dollars. No, exactly. And it's so funny to say that because I've been taping with other folks here in the city as I told you, we just taped with away CEO, just now coming here, Peloton CEO, Canva co-founder. And it's something I definitely press them on, but of course, they're only going to tell me so much right now. So I think definitely want to watch the unicorn space. I'd love to turn to Roadmap in the near and midterm. What do you see as the New York Stock Exchange's next phase of growth? What are the top strategic priorities for the exchange over the next, let's say, one to three years? So a couple of things. One is, I'm going to stick to our core business. And that is listing companies. I just mentioned about the number of billion dollar companies that are still private. So I really feel like there's a secular reversal coming on. If you look at the last 30 years, the number of listed companies in the US has declined dramatically. It's basically been cut in half. That's shocking. So given the number of companies in the private market, I'm hopeful that they're ready to come public sooner. And right now, we have an SEC that is really looking to write size disclosure regulation that we think is going to make the public markets a little bit easier to navigate for smaller companies. And that's really, really important. Our biggest companies, they may not like some of disclosure regulations, but they can handle it. They have the resources. They have the scale. It's smaller companies that are coming to market that may need some relief. So things like executive compensation disclosure, a regulation called SK that is really dictates the qualitative narrative around financials. And importantly, we expect that the SEC will have regulatory proposals around the option to have semi-annual financial disclosure versus quarterly. And that may open up the eyes of some private companies. They say, hey, that's not too bad. I could deal with semi-annual. I don't need to do it every three months. So we'll see. I was going to ask what you thought of that, because obviously one of the biggest things we consistently hear from public company leaders is balancing that pressure to deliver on short-term expectations with the freedom to carry out a longer-term vision. Yeah. It sounds like also you're talking a little bit as well about the more practical implications of literally just getting your act together every three months and having the staff to do that, right? So it sounds like you're on board and very much in support of that. Well, I'm in board of the option for companies to do that. I don't think every company will make that choice. There are certain industries take biotechnology. You're a biotechnology company. You have a drug in development. A quarterly call is not really going to provide a lot of information to investors. And so allowing companies like that to have the option to report semi-annual financials, they may be pre-revenue. They don't have a lot of financials. And then provide just updates on the progress of their drug development. We'll free those companies up with more time to do the R&D that they need to do to bring drugs to market. So there are certain sectors that I think this will be very beneficial to other companies. They're pretty ambivalent about it. They are worried about investor reaction. They may have bond covenants that don't allow them to report financials semi-annual. They need to report quarterly. So there are a lot of different factors, but providing companies of different sizes and different sectors, the option to do that I think is really great and really important for the markets. Such a good point. Some companies have different horizons that they can look at. What are some of the biggest operational challenges that exchanges face today that most people don't see? What's a hard part of your job? I will say, I'm on the business side. My job is really to work with our listed companies, which I love doing. And it's a great job. The hard part of R&D exchange is actually running the market and the technology behind the marketplace. And really over the last six years, really since COVID, the markets, both the equity markets and the equity options markets have hit record volumes year after year. And so our markets, we have our trading system is called killer based on the six pillars of our building. And then goodness, we have invested a lot of money into that technology because we haven't seen volumes like this in our history of the exchange. The ability for our trading systems, not only handle the volumes, but the amount of what we call messaging, the indications for orders that come over our systems, they never in the trillions per day. And so the US markets writ large, I give credit to all of the exchanges, has really handled the increased volume of trading really, really well. And so we keep our fingers crossed that we continue to make the right decisions and our technology continues to hold up. We do more than keeping our fingers crossed. We actually work at it. But then there's of course other threats to the business that come with an electronic business that we have along with the trading floor. So that's the really hard part of the business. And we do a great job. And so Those are a challenge. I will say originally your question is kind of what's next. We're looking to a couple things. One is trading 23.5. So a lot of people don't realize that our electronic markets actually open up at 4 a.m. now. They close at 8 p.m. But the core market hours are 9.30 to 4. We'll be expanding them along with the industry from 9 p.m. start all the way up until 9.30 a.m. So there will be a hour break from 8 p.m. to 9 p.m. to take care of all of the different things that we need to take care of. And investors overseas now will have more access to the US markets off hours, which is pretty exciting. - Yeah, I think my mom will be happy to hear that one. I'm actually from Hong Kong. So my mom's always talking about US stocks. - It is incredible the amount of interest in US equities from the likes of Hong Kong from Korea. It really is very interesting. And if you look at after hours trading, it's now about 10% of overall volume. And a lot of that comes. Most of that after our trading is pre-market hours leading up to 9.30 with orders coming from Asia. So there's so much interested in the global companies that are in the US. - What do you think is like feeding that baratia's appetite and the higher volume that you're seeing? 'Cause I can imagine it's quite different from over the years that you've been here. - It is. You know, it's, I really do think it's about the notoriety of the companies in the US, how big they've gone. I noted that the US is almost 50% of global market cap. And the performance of the market over time has led people to look at the US as just a place to invest. As information and technology makes it easier to access our markets, the interest is grown. And so, and you know, we have a lot of CEOs of the US that are very big personalities, experts in their field, very charismatic people, and that attracts investment from us. - Imagine setting your makeup, then forgetting it's even theirs. Meet new grippy setting mist from Mabelie, New York. Gel to mist technology locks in your look for up to 24 hours with flexible all day comfy grip. Try new grippy setting mist from Mabelie, New York. - Maybe it's Mabelie. - All over the world. - Looking ahead, the debut of SpaceX's summer could mark the largest IPO in history. We kind of spoke about this already, but without getting into specifics, which I know you can't do anyway. What determines whether a high profile listing candidate would choose the New York Stock Exchange versus another venue in your view? - Yeah, well, what's interesting is the US from an exchange perspective is highly competitive. New York Stock Exchange, Nasdaq, and several other exchanges. And then there are some regional exchanges that are starting up. And I always kind of take a step back. I said, what makes our business so attractive? You know, it's a very, it's a good business. Don't get me wrong. But my statistic before talked about the decline in US public companies. So I'm like, okay, we're not in a secular growth mode yet. We hope to be with IPOs. And then even trading in the US is hyper competitive. And yet there are a lot of people that want to be in the exchange for this. - Everybody's got that dream of coming to real treat. - It really is true, it really is true. So the competitive structure of the markets in the US is really interesting. And so we compete very hard for every single IPO. It is a zero sum game. So one exchange wins, one exchange loses, what makes it very, very high stakes. The exchange has an amazing history, but we don't want to rely only on our history to win companies. Our technology is first in class. And really our market model, the way we trade stocks is not only different than any exchange in the US. It's different than any other exchange in the world. We are the last trading floor in existence of any stock market around the world. We're humans and technology meet at the point of sale. It's really important. But we have a special market maker status called designated market maker. Market makers that we incent to make better markets in the stocks of all of our clients. For us, that is the true differentiator for the New York stock exchange versus other markets. But we also have to talk about how we are going to elevate our clients beyond the stock market. And that's one of the things that we could beat on as well. Yeah, I think I just got a glimpse of the picture of the conversations that you might have with some of these leaders, right? As they seek to go public. I was going to ask about international competition, obviously London Stock Exchange, Hong Kong Stock Exchange. Many different forces are actively working to retain their homegrown companies. They also have introduced reforms. What's your view on that? I know that you've outlined several different ways that you would approach that conversation now. Has it shifted in response to some of the updates you've seen from competitors? The way it's shifted is that we have a lot more inbound calls from companies outside the US looking to access the US markets. Whether that's a primary listing in the US or a dual listing in the US. And you know, it's what I mentioned before in terms of the market cap of the US. What that means is we have the most liquidity and the most capital to invest in the US. And that's very attractive for companies. And when you're a company in a different market and you look at a peer company in the US and you see a valuation that is higher and sometimes significantly higher than yours, one of the ways you try to bridge that valuation gap is a US listing. I feel like we are the beneficiaries of, is the really strong marketplace in the US and are really liquid marketplace in the US. For instance, this morning we had a Canadian silver and gold mining company on the New York Stock Exchange. They are dualistic in Toronto. Toronto is a great market for miners as well. We have about 125 companies that we have dualistic in Toronto in the US. So it's quite normal for companies to look to two markets to find liquidity and find valuation. We've had so many success stories of European companies coming to the New York Stock Exchange. For, you know, just to broaden the investors that would be attracted to their stock. - I've heard that a lot over the years. It's just a sheer liquidity and then just to your point, you know, the fact that you can do the dual doesn't have to be a choice at all times. You know, I covered grab and D.D., I think when they came to Wall Street and they said the same thing. We all know that probably the regulators and the exchanges back home were probably really trying to convince them to start at home. But, you know, there's that allure. I guess, you know, just speaking of introspection just now, looking back on nearly a decade here at the exchange, what have been, you know, some of the most defining milestones for you along the way? - Yeah, you never know when you come to work at 11 Wall Street, who you're going to meet. And we've had the honor and privilege of hosting heads of states from numerous countries we're on the world. We host the biggest companies in the world every single day. I really love our companies. I love meeting the leaders of our company. I love hearing what's driving their business decisions, what concerns they have, and how the NYC can provide information to help them. But my personal favorite, of course, is my alma mater, University of Connecticut. The basketball teams, both the men and women's coming in to ring the bell to celebrate national championships. So, I'll treat all of our listed companies as equal, I'll treat all the heads of states as equal, but it's really my alma mater. We all have a, you know, love for universities. So, that's always a fun time. - That was going to be my question in the rapid fire. So, you're ready to answer that? - Oh, I answered that, oh my gosh. - Yes, okay. Well, I want to ask, before we get into that, what are the most common mistakes that companies make in the years leading up to an IPO? You know, what makes a company truly listing ready? - You know, truly listing ready is a couple things. One, you have to have just your financial structure in place and the financial infrastructure in place. Really kind of just blocking and tackling stuff. Really, really critical to have that place. And the key part is good communication, investor relations. You could have a great business, which is also key, of course, but the way you communicate that business is absolutely critical. - And you would know 'cause you spent most of your decade in IR before this. - Yes, it's sometimes underappreciated part of an organization. - What separates companies that have a great IPO from those that, you know, might struggle a little bit after listing? - I would say the companies that have a great IPO have a great business right off the Gecko. So they've got revenue and profitability to back valuation. Some of the companies that may struggle from a valuation perspective are kind of proven stories where they get out. They are business that may need development or they're in an industry that is very nascent and has future potential. But over time, investor interests could lag if you don't have that performance on a financial perspective to keep it going. So the ones that are back like some of the industrials that I mentioned are the strongest in terms of consistency right out of the gate. - That's a good point. Lastly, do you think the traditional IPO model will remain the primary path for companies going public over the next decade? - I do. I've seen nothing in my career that looks like it's gonna change. There have been tries. You know, you go back to the Google IPO and the Dutch auction that they put it to place. It didn't really catch on. We've certainly had direct listings that come to the market without raising capital. We actually have a rule for direct listings that will wanna raise capital. So from time to time, you see people kind of take a look at trying to disrupt the current IPO model. But I haven't seen anything that's gonna, going to be sustainable. And if, you know, Google was a very successful IPO, obviously a very, very successful company. If that model didn't sustain, I'm not sure what model would. Right. Chris, thank you so much for breaking this down. Now we're going to wrap with a quick rapid fire around. Don't overthink it. Just say what I said. All right. All right. If you could pick anyone dead or alive to ring the bell today, who would it be? Proust Freakstein. Oh, that's a fun one. How do you like to unwind after a long day? Go for a run. What would you be doing if you weren't doing this now? If I wasn't doing this now, I'd be at my desk working now. You mean, you mean doing this job now, this life. Oh my gosh, I've been doing it for almost 40 years. I don't know. I would be a barista at Starbucks. Huh. What do you like to ask when you're hiring? I like to have conversations with people when they're hiring. I like to see that their multi-dimensional can have a conversation that can go various ways from personal to professional. Lastly, what is one piece of advice you come back to often? It's not philosophical. In any way, it's very practical. My first boss in early 1990, told me to read the Wall Street Journal every day. And when I was taking the subway into Manhattan from Queens, I used to fold the paper like we all used to fold the paper. And it's a habit that has lasted along with Bloomberg and the New York Times ever since. And it is the really the only way to build up a depth of knowledge that you really need to interact. We have over 2,000 companies. We talk to CEOs from around the world from 48 different countries across 11 sectors. I'll never know their business as well as CEOs in other business, but we need to be able to have conversations and have knowledge about that. The only way to do that is to read. And so pay attention to the world and try to learn every morning. Listen to the journalists. Yes, exactly right. Yes. Chris, thank you so much. I've enjoyed this. Absolutely pleasure. Thank you. Thanks for joining us on Behind the Business. For more stories on business and leadership, follow us on Apple Podcasts, Spotify, YouTube, or wherever you get your podcasts. See you next week. Imagine setting your makeup. Then forgetting it's even theirs. Meet new groupy setting missed from Mavily New York. Jell to Miss technology locks in your look for up to 24 hours, with flexible, all-day comfy grip. Try new groupy setting missed from Mavily New York. Maybe it's Mavily.