Aug. 11, 2020

How to solve capitalism? Public market access, education, & the economy

The fate of the U.S. economy comes down to one thing: access.

If every individual who wants it and every company that needs it can’t access capital markets, both wealth and job creation skid to a stop—and with them, so too does the power behind the U.S. economy.

By and large, we’re pretty okay and handing access to those looking for it—any old fool could download an app and begin trading stocks. 

But like a first attempt at homemade croissants, things could always be better. We’re facing a gaping wealth disparity problem and a pressing inequality of basic education. The first step in increasing access to public capital markets is solving for those...not an easy feat.

Adena Friedman—president and CEO of Nasdaq, the first woman to lead a global stock exchange, and today’s Business Casual guest—hasn’t let it deter her.

  • Adena’s been helming Nasdaq since January 2017, and during her tenure, she’s focused intently on issues of access—access for companies, access for investors, and access in general to capital markets.

In this episode, Adena will explain how we increase access in the right and healthiest ways. To her, allowing more companies and people to tap into public capital markets will necessarily level the playing field for individual and institutional investors.

But whose responsibility is it to ensure that increase in access happens? Listen to find out.


Business Casual - Adena Friedman.mp3

Kinsey Grant, Morning Brew business editor and podcast host [00:00:06] Hey, everybody, and welcome to Business Casual, the podcast from Morning Brew, answering your biggest questions in business. I'm your host and Brew business editor, Kinsey Grant. And now, let's get into it. [sound of a ding]

Kinsey [00:00:18] This podcast is free to listen to, but that doesn't mean everyone has an iPhone and 40 minutes to listen to it. Similarly, these days, it's virtually free to invest in the stock market with no-fee trading. But that doesn't mean everybody has the requisite apps or capacity to do it. It all comes down to access. What's the point of making something—be that something a podcast or a dividend-paying multinational corporation or even an entire economic system—without ensuring that everybody who wants to can access it? That's what we're talking about today. 

Kinsey [00:00:49] One of the core tenets of our American concept of capitalism is the notion of increasing access for more people and businesses and groups. But that doesn't happen overnight. So how do we overcome emerging challenges to make our version of capitalism equitable? To make it work for everyone who wants access? It's part of a larger conversation that a lot of us, myself included, have been having about the utility of institutions, especially as COVID-19 and long overdue conversations about equality lay bare a myriad of institutional shortcomings. To me, capitalism isn't exactly working for everyone right now. But I also don't think it's beyond repair. 

Kinsey [00:01:26] These last few months, we've been taking a more critical look at the roles institutions play in our lives. And what better way to understand our economic system and access and where the two meet than by talking to the woman who heads up one of the greatest exercises in capitalism around, the president and CEO of Nasdaq, Adena Friedman. Welcome to Business Casual. 

Adena Friedman, President and CEO of Nasdaq [00:01:46] It's great to be here. Thanks for having me. 

Kinsey [00:01:48] So I said just a second ago, CEO and president of Nasdaq, and the first woman to lead a global stock exchange. You've been at the helm of Nasdaq since January 2017. And during that time, the last couple of years, you've taken over and focused a lot on issues of access. It's been a real priority for you. 

Kinsey [00:02:05] So that's what I want to talk about today—access in general to capital markets, access for different people in different groups, and how we should understand it in the context of the broader economy. 

Adena [00:02:16] Great. I look forward to it. Let's get into it. 

Kinsey [00:02:18] I love it. Let's get into it. [laughter] Our little tag line. So I guess, just to start here, Adena, I want to kind of establish from the start why access is important. So what does access, quote unquote, access mean to you? Why is it important to you? 

Adena [00:02:33] Well, when you think of the capital markets, what you really want to have is as much participation in the ability for people to have wealth creation, for them to create jobs, to be able to access that capital, to be able to grow their businesses, and ultimately to grow the economy. So access is the critical word, really, frankly, that really defines the capital markets. If it's a democratized access, and every individual has the opportunity, at least, to be able to raise capital, grow their businesses, create jobs, and be innovative, creative, as well as to power the economy forward, then you have a very successful capitalist system. 

Adena [00:03:11] And so our job at Nasdaq is to maximize access and minimize friction to that capital, either as an investor or as a company itself. And that is kind of the core of what we are and what we serve in terms of the economy. 

Kinsey [00:03:25] Right. So without access, we can't have broad stroke wealth creation, which in turn means we can't power the economy forward. So it really is a building block that's absolutely necessary to ensure that we have an economy that's growing in the right ways. Do you think, though, that access right now is distributed as it should be? Is access equal for all people who want it? 

Adena [00:03:46] I think that that is certainly the issue of our time, which is, no, I don't think that access is equal to everyone. I think that we have certain elements of what we do that really does maximize the opportunity for people to access the markets. But we do have a lot of structural issues inside our country and frankly, around the world, that does not make that an equal opportunity for everyone. Whether that's an equal opportunity for individuals or those equal opportunity for companies or small businesses, I think we have to recognize that we have a lot of work to do to be able to achieve that vision and that goal. 

Kinsey [00:04:18] So when we think about the structural issues, these big-picture roadblocks to access for all, what are some examples of that that you've encountered? 

Adena [00:04:26] Well, if we kind of take a step back and look at the overall economy, not just Nasdaq and the capital markets, but the overall economy, I think that we have to recognize that there is a critical role that government and businesses, so the public sector and the private sector, play together to create equal opportunity. Now, opportunity doesn't necessarily mean everyone will go forward and find their [indistinct], use it to gain access, but they will have the opportunity to gain access. 

Adena [00:04:53] And if you look at those building blocks of any society or community, it starts with overall structures to make it so that people have proper access to education, that people have proper access to healthcare so that they can be healthy, they can be educated, they can be ready to seek out those opportunities and grab onto them. The third thing, of course, then, is access to capital, making it so that they can, in fact, raise money if they have a great idea. How do they make sure that they are able to execute on that idea? They have great advisers that can help them find the path forward, and ultimately, they find their way into having access to investors, public investors. You know, the broad swath of investors around this country that are going to put their capital and their money behind those great ideas. 

Adena [00:05:35] So it's really that combination of the public sector really focusing in on those core services that provide for the starting point of gaining equal access and equal opportunity, and then the private sector putting together a whole range of services and capabilities to make it so that that person can exercise that opportunity once they have it. 

Kinsey [00:05:56] And I definitely want to talk more about the intersection of the public and private sectors. I think that this is a huge part of the conversation. But before we get into that, just in terms of the ways that we should approach access based on who we're talking about or what kind of entity we're talking about, I think is important to highlight. To your point, access to education leads to the kinds of people who would then be able to access capital later down the line. There are these building blocks you have to build up to. But how do you see access differing from where you sit at Nasdaq for people versus companies? 

Adena [00:06:29] OK. So then you're talking about it more as an investor, someone who really wants to take their savings and have an opportunity to grow their savings and be able to buy that next house or, again, have access to higher education or to do something new and different with their lives. And I think that is on the investor side. So to us, that's where we think that the U.S. equities markets today are the broadest and most available in the world to anyone who wants to be a part of them. They do, of course, have to have those dollars to be to put to work. 

Adena [00:06:59] But if they do, today, it is, in fact, free to be able to go into a retail broker and to be able to open a trading account and to be able to start that investing exercise or activity. Or, if they realize thatthey don't have the time to educate themselves on how to do that the right way or to make sure that they really understand all of the different instruments available to them, there are a whole range of advisers and professionals out there who can work with them. And the fee structure today is as low as it's ever been. 

Adena [00:07:28] So then our job is to make it so that once they want to put their dollars to work, we give them a frictionless experience, very low spreads, very fast executions, and we make it so that what they see is what they get in terms of they see the price of a stock and they want to execute on it. They press a button, they get access to it, and therefore they can then put that stock into their savings account and start to see how they can help it grow. But I do think that that part of the system is working quite well today. I think it's really the core part, the fundamental part of the economy, that we have to continue to work on so that more people have those savings to put to work. And so that people who have great ideas can raise capital and turn them into businesses. 

Kinsey [00:08:11] So on behalf of this individual investor who has access to the market, they are, like you said, the lowest fee structure, in like, ever. [laughs] There's been this race to the bottom for zero fee trading. To be fully transparent here, I was going to ask, is it ever possible for this individual investor to ever compete at the same level as these institutional investors. But I think maybe the better question is, is that even a question? Is that a question that needs to be asked? Or are they just on two different playing fields right now? 

Adena [00:08:39] No, I actually think that that is a relevant question. So, if you think about the level of information that investors have, the whole foundation of the U.S. equities markets, particularly once a company goes into the public markets and makes themselves available to public investors, is that every investor gains access to the information about that company on an equal basis in equal time. So when we have a lot of rules around what management can say to whom, making sure they're giving equal access to any sort of market-moving information, we then also have a whole lot of technology that supports issuing press releases and making those available out through the various channels that investors use. 

Adena [00:09:18] We have a whole set of rules around making sure that there's equal access into the market. We have to treat all members equally and we have to make sure that they have the same pricing and they have the same ability to be able to interact with the markets the right way. And then, of course, there's the market data. So today, essentially, billions of people literally have free access to real-time market data. That's been a real evolution of our markets over the last 20 years—to make sure that over time, that access really did become as distributed as possible. 

Adena [00:09:47] And so, therefore, I would say that investors have all of the information on an equal basis and they have access to real-time data on an equal basis. Then they have to choose how are they going to access the market. Are they going to work with an adviser who sits in a professional firm who submits that order in through their own systems, or are they going to go online and submit that order through the online systems? And in both cases, the technology that supports that decision is very advanced today. 

Adena [00:10:14] So if you're sitting and working with an adviser, let's say, at Morgan Stanley or Merrill Lynch, those systems today are extremely sophisticated to be able to place that order into the market. If you're working and putting your order into Schwab or TD Ameritrade, they're very, very sophisticated as well in terms of being able to access the market. So it's really kind of that whole ecosystem today, I would say, is built to make it so that there's equal access. Now, at the same time, I also would say, but professionals spend an enormous amount of time educating themselves on how to make smart decisions. 

Adena [00:10:44] They spend their entire lives as professionals, understanding the markets, understanding investments, understanding balance sheets and income statements. They read a ton about all of the companies that they're thinking of investing in or strategies they want to execute. And so if an individual investor really wants to be on equal footing, they have to take that very seriously. That education is available actually, very much available, through the retail brokers, through FINRA and other means. But it's really a matter of really taking advantage of that so that they can educate them on how to participate in a market successfully. 

Kinsey [00:11:16] Yeah, and I mean, I think about my own personal experience. I didn't know how to read any forms that you had to submit to the SEC until college. And at that point, there were definitely people that I was friends with who were just playing, basically, like gambling, with the stock market because it was fun and they could and they had these apps on their phone. So I think, really, [laughs] we should drive home that point that just because you can doesn't always mean that you should. That these institutional investors are obviously operating on a much larger scale in a lot of cases, but also are spending their entire careers focused on making sure that the decisions that they're making are smart decisions. 

Adena [00:11:50] Yeah, informed decisions. [laughter]

Kinsey [00:11:54] There we go. 

Adena [00:11:55] I think that the other thing I would say, you know, I have two sons who are early in the workforce, and as they were going through high school, they started to become interested in understanding investments and understanding the stock market. And so I actually had set up—essentially, it's an Investopedia account for them—so that they had to work with fake money for a while. And they had to work through—Investopedia actually has great educational materials on what is an income statement, what's a balance sheet, what does a P/E ratio mean. All the basics of just understanding the basics of a company, so that they then had to put fake money into an account and decide which stocks to buy. 

Adena [00:12:34] And then I would sit down and say, well, why do you want to buy that stock? What is it about that company that you think is interesting? What information are you using to base [laughs] that decision on? It's not because you just bought a really cool pair of sneakers, and so you want to buy socks in the sneaker company. It's OK, what about the fact that, you know, how expensive is that company relative to other sneaker companies? Things like that. 

Adena [00:12:53] So, of course, I'm in the market. So I kind of understand that there's a lot to do to make it so that you're ready for that kind of decision. But at the end of the day, they have that account. And then once they really did demonstrate that they understood enough to be able to make informed decisions, informed enough—I mean, you don't have to be like a guru, but informed enough—then they took a little bit of their own savings that they had saved up and opened a very small brokerage account and they started to put their own money to work. It was not [laughs] anyone else's. 

Adena [00:13:22] So essentially, they had to decide the risk they wanted to take. And I would say that I do think it helped prepare them. So I would ask that, you know, think about all of those educational opportunities that you have to get ready before you go in and just think that you're going to swim in the big league. 

Kinsey [00:13:39] Right. Yeah, there's a reason that Warren Buffett is the only Warren Buffett out there. [laughs] It's not easy, and it takes time, and also a pretty large dose of luck. So from the corporate perspective, we've seen about a decade or so of lots of companies staying private for longer. There's just a lot of cash to go around in private markets when it comes to VC or private equity or what have you. 

Kinsey [00:14:00] So with that, there's been a case to not go public. Why would you answer to the SEC or any other of these regulatory bodies when you don't have to—there's plenty of money to be made without that. So it's a matter of choice, I think, for some of these companies. How should we be thinking about that in terms of increasing access for corporations to the capital markets? Is it just increasing access to exchanges like Nasdaq or what exactly is the situation? 

Adena [00:14:25] Yeah, I think we want to look at it from two different perspectives. So the first perspective is, what is keeping them from deciding to tap the public markets? And what are the benefits of the public market? So what are the impediments and what are the benefits? And we'll go through that in one second. But the second thing is the fact that individual investors, as we've talked about, unless you have a certain amount of wealth, you don't actually gain access to the private markets. You don't have it. The SEC says that you are not allowed to access those private markets unless you have a certain amount of wealth. 

Adena [00:14:55] And so I think that we have to look at from two sides of that coin. I think that there should be a better ability to gain access to the private markets as an individual. But I also think there should be an easier road to the public markets for companies. So if we could take on both sides, that would be great. 

Kinsey [00:15:10] Yeah, let's do it. 

Adena [00:15:10] So from the perspective of the company, right now in the United States, are about 4,000 public companies and there are about 8,000 private companies, I would say either owned by VCs or private equity. So there are 12,000 companies that have external investors that are professional investors coming in and helping to own that company and helping to drive that company's success. And what we would like to see is more of those companies being available to retail investors, to those average savers out there, those people who work really hard to save up their money and make it so that they can therefore then access these types of investments to grow their wealth. 

Adena [00:15:46] You can do that in two ways: making the private markets more accessible, making the public markets more attractive for public companies. So we strive for both. On the public markets side for companies, there is a high bar that companies need to reach in order to be able to go from being a private company to a public company. And there are really good reasons for those. So the first is, as we talked about before, disclosure. How much information is available about that company? How well known are the risks associated with that company? How complete the financial statements of that company? Have the financial statements been audited by an auditor? Are they ready to come in and be a part of the public markets that requires those disclosure obligations? 

Adena [00:16:25] And then there's also the governance. Do they have independent board members or at least do they have enough independent board members, I should say. Do they have an audit committee? Do they have the ways to make sure that the financial statements are accurate and fully reflect the risks and opportunities of the company? Those are all things that I think are foundational and fundamental to making it so that those companies gain access to the hundreds of millions of investors here in this country, and the billions of investors around the world that are putting their hard earned savings to work. 

Adena [00:16:54] The other side of that, though, is once you have access to public investors, what are the benefits? Well, you have permanent access to capital. And we have seen that as being a really, really important resource right now during this pandemic. Companies that have had to raise money to manage through the crisis have had ready access to the markets, have found investors, and have been able to raise money very quickly. And that is the huge benefit of the public markets. Is that what we call permanent access to capital in good times and bad times? There will be investors because it's such a plethora, such a range of investors out there. There will be investors who can help fund your company. So for all of those reasons, we think that there are a lot of benefits being a public company. 

Adena [00:17:36] But you can't make the bar too high. And so we have been undertaking with the SEC to make sure that we balance that bar. So now we turn to the private markets. Do I think that individual investors, the person who's been really working really hard to put some savings to work, should be able to buy into private companies directly? Actually, no, I don't. I think because those private companies do not have those disclosure obligations, you can have differential access to information. You can have very incomplete information. And so, therefore, investors will be disadvantaged. Individual investors will be disadvantaged versus professional investors. 

Adena [00:18:13] But do I think that individual investors should be able to invest in private equity funds and potentially VC funds? Yes, I do. Because then you're putting your money into the hands of professionals who do have access to that information. And there, that still is not available. Private equity funds are not generally available to our friends, essentially. [laughs] 

Kinsey [00:18:33] Right. 

Adena [00:18:33] You have to really have a certain amount of wealth in order to gain access. And I think that's where I do believe the SEC is considering, do we make it more accessible? And I believe we should, because I think that otherwise, you're choking off access to growth and wealth creation to a broad level of the population that I think that other people get to enjoy and some people don't. So I would like to see that evening out a bit. 

Kinsey [00:18:57] Right. And it's a huge task that we have asked of the government here, that you mentioned before, to walk this fine line between setting a high bar, but also not setting the bar too high. 

Adena [00:19:07] Right. 

Kinsey [00:19:07] And taking into account so many different, very, very different circumstances in terms of who they need to be protecting the most. What do you think the biggest threat to capitalism as it exists today in the U.S. is? 

Adena [00:19:20] Well, I do think that it is, at the end of the day, the fact that there is such a wealth disparity in the country. And the fact that not everyone has been given the opportunity to have, you know, not everyone is given equal opportunity. And I think at the end of the day, that is going to be the critical element that both the government, the public sector, and the private sector need to work together to try to solve, because if we have a growing wealth disparity in this country, then you have a growing distrust of each other, a growing distrust of institutions. And you are basically leaving people without opportunity in their lives. 

Adena [00:19:57] And I think that's really a travesty, frankly. So we have to make sure that we look together, both the public sector and the private sector working together—we call that cooperative capitalism—to find ways to make sure that we are, of course, generating returns for investors, allowing their savings to grow, just like we talked about. But at the same time, how we do it and who we serve along the way is an increasingly important part of the private sector's job. And I think that there is a recognition of that today that may not have existed even 10 or 20 years ago in some sectors. 

Adena [00:20:31] And the fact that the BRT, the Business Roundtable, recently came out with a new purpose of a corporation, I think is a testament to the fact that the private sector is recognizing their broader role in society in a way that may not have been as emphasized in the past. And now it's a matter of how do we execute on that opportunity, how we execute on that role, and then how do we then work with government to make it so that the broader societal programs are also working in a way that does give everyone equal opportunity. It's a wonderful, frankly, mission, some wonderful NorthStar. It's very difficult to achieve and it will take a long time. 

Adena [00:21:08] But we have to start at some point, and this is a great time to do it. I think that we recognize the critical role that frontline workers, that healthcare workers, that all of these people who are going to work every single day to serve the community—they play such a critical role in making our economy work. And we owe it to everyone to make it so that those individuals are as valued as every other individual in terms of their access to opportunity and how they leverage that access is up to them. But we have to give it to them. 

Kinsey [00:21:38] OK. I'm going to ask you more about this NorthStar and how we actually get to the NorthStar, even though it's a huge ask, in just a second. [Adena laughs] But quickly, we're going to take a short break to hear from our sponsor. —

Kinsey [00:21:51] And now back to the conversation with Adena Friedman. Adena, this idea of co-operative capitalism sounds really, really good. Like you said, this is a great NorthStar mission. It's a great something to work toward. But I wonder in practice how it actually pans out. What can a specific company do, or even what do you view as Nasdaq's responsibility, in furthering the ball down the field toward this end goal of co-operative capitalism? 

Adena [00:22:18] Well, the sphere of influence that a company—that many companies have, and there are certain companies that have an even bigger sphere of influence—but the immediate sphere of influence that we have is, of course, on our employees. So our team members and all the people who choose to work here, on our clients and making sure that we're serving them properly and appropriately with all the services we offer, and we do it in a fair way, as well as in the communities that we operate in. So we have a role to play here in the cities in which we operate to serve the communities as well, as well as also looking at the suppliers. 

Adena [00:22:50] And we Nasdaq are not really a supplier-driven company in the same way that a lot of other manufacturing companies and product traders are. But that is also a key element as how you manage your supply chain. How do you make sure that you're mindful of how those companies, in fact, are treating their employees, etc.? So that's the sphere of influence, the immediate sphere of influences, that companies have. So if we break that down, the first thing is, are you providing a fair wage to your employees? Are you providing them fair services? And are you making it so that they have a way for them to care for their families and have their own role in the community around them? 

Adena [00:23:29] I think we take that very seriously here at Nasdaq and I think at many, many, many companies, that's a primary part of their mission. I think that the next thing is, is also making sure that the diversity of our employees reflects the diversity of our community. And I think that is something that a lot of companies have really woken up to—the fact that we have a lot of work to do to improve the diversity within our companies so that our company can reflect the communities in which we operate. So Nasdaq, in particular, that's something that we've actually spent an enormous amount of time focused on. We will be publishing our diversity stats share, which are not terrific. 

Adena [00:24:09] They're a pretty good reflection of the industries we operate in. But the fact is that we, as an industry, have a lot of work to do to continue to make sure that we give more opportunity to more diverse individuals so that our company can reflect our country. And we are a global company, so we also will be looking at that across the world in terms of all the cities where we operate, making sure that we at least have diversity, inclusion, and belonging programs, goals and aspirations that allow us to move the needle. 

Adena [00:24:40] So I'd say that's number one. The second thing is on the customer side. I think that's more a matter of making sure that you think about the services you're offering, the price at which you're offering them, making sure that they're getting a complete service, that they are satisfied and that they know you're obviously giving them access to a fair service. So I think that there are things like that that companies can do that are immediately within their sphere. And I think that's a great starting point. 

Kinsey [00:25:07] It's almost a virtuous circle—or a cycle. When you think of enabling your employees and empowering your employees to create their own wealth and to feel like they are safe and represented in the workplace, that then breeds exactly what we were talking about before, that it breeds access and it breeds involvement in capital markets in a much more meaningful way, I think. 

Adena [00:25:28] Yeah. And one of the things that we actually are focused on right now is, is this issue of equity ownership among employees. So that's been a big part of our culture for a long time—is making our employees owners. And therefore, one of our key values is acting as an owner within Nasdaq. That has a lot of different connotations, but one of them is, in fact, thinking about yourself as an owner of the company and therefore, what should we do and how should we do it to make sure we're doing it the right way. 

Adena [00:25:52] But one of the things that the government can do is figure out—there are certain accounting rules that were put in place that actually discourage companies from issuing equity to their employees. It's very specific, very esoteric accounting [chuckles] rules around how equity compensation is calculated and how it's reflected in the income statements as well as options, and how those options are reflected as costs on the income statement. And in many respects, it's kind of double-counted. 

Adena [00:26:19] So the fact of the matter is the government can also play a role in their policies and making it so that companies are more motivated to make their employees equity owners and to give access to capital to their employees. I think that those are the types of things [indistinct] cooperative capitalism comes in, where the government and the public sector and the private sector need to work together to say, what are the things we want to solve for here and let's make this so that we lower those impediments. 

Kinsey [00:26:45] Do you see the government actually doing that, you know, say, for example, changing that accounting rule you were just referencing? 

Adena [00:26:50] I think that is something that we should certainly start to have a dialog around. When they put the rule in place, I don't think they thought, well, we want to make it so that it's really not very, very interesting for companies to issue equity. Instead, they just wanted to have that equity compensation, what they thought was properly reflected. But it did create a disincentive that at best, that's the type of unintended consequence that government action can sometimes take. 

Adena [00:27:12] The key for government is to say, well, maybe that's not the right way to go. Let's be nimble. Let's change it. And that happens on a frequent basis. It's a matter of you can't be perfect, but if you admit that you did something that had an unintended consequence, what do we do next to make sure that we solve for that? And that's the type of thing that would be a good dialog to have. 

Kinsey [00:27:31] I do have doubts whether or not the government, as we know it today, would actually be nimble. [laughs] It's not exactly a word that people [Adena laughs] use to describe lawmakers. 

Adena [00:27:40] Well, OK. I agree that, in fact, the structure of our government is designed to be slow. To be able to have a new law come in and have to pass through two houses and the Oval Office, that is designed to be slow. And there's good reason for that. And the reason for it is to make sure that you think through those unintended consequences, that you have enough dialog and debate to make it so those unintended consequences are considered before the law goes into effect. 

Adena [00:28:07] But at the same time, some of these things, like this equity options accounting rule, isn't a law. It's a policy within a regulator. So they actually have a much easier and faster time to be able to be more nimble. And I think that's the part of the system that I think people, behind the scenes, that there are ways for the government to be nimble in the way that they regulate. 

Kinsey [00:28:30] Right. And also, the way that our government was designed was a very long time ago, obviously. [laughs] But the world around us is very different. Things happen a lot faster. Change occurs in a much more accelerated fashion than it did when a lot of these processes were put into place. 

Kinsey [00:28:46] And I think it's worth taking a second to pause and think about that, that there are always going to be unintended consequences for decisions that are made. But when we live in a world in which things change like that [finger snap], even just the high-frequency trading conversation [laughs] could be a huge portion of this too—that we have to have a little patience, practice a little patience, but also expect change to come on the other side as well, that the government should try to learn to be a little bit more nimble to reflect the changes that are happening in the world around them. 

Adena [00:29:14] Well, I have to say, I'm a huge believer in the system that we have as a core principle. I think that the three branches of government, plus the judiciary, is a wonderful foundation. I think our founding fathers were incredibly forward-thinking [laughs] in the way that they created the country. So I'm a huge believer in the system we have. It's just a matter of how we go about executing it, how we get to consensus, how we create those debates, how we facilitate decision-making, and making sure that we are, in fact, coming together as a country to solve big problems. 

Adena [00:29:46] And we recognize that there's a lot of compromise and debate that needs to happen, but we do continue to see those goals as solving these big problems. Let's go to it and figure it out and get it done. But I do actually believe that the overall system we operate in is designed wonderfully. It's just a matter of how we execute inside of it. [laughs]

Kinsey [00:30:04] Yeah. I love how meta this is. This is a fun thinking conversation. [Adena laughs] So I'm going to give everybody a couple seconds here just to think on what we've just talked about, the entire foundation of the American government system in which we operate right now. And while you guys think about that, we're going to take a short break to hear from our partner. — And now back to the conversation with Adena Friedman.  

Kinsey [00:30:27] Adena, we were just talking about change and adapting, adaptability, and the ways that government can adapt and that corporations can adapt and that people can as well. Obviously, the last five or six months of [laughs] not only in the business world, but just the world in general, have really highlighted the importance of being adaptable and being willing to change and to understand that we are unable to predict the future, try as we might. What do you think greases the wheels for this cooperation that we've been talking about? 

Adena [00:30:55] My mantra is always, if there's a will, there's a way. And I think that it's really a matter of, first of all, the private sector coming together, like we do and think in organizations like the Business Roundtable or the Chamber of Commerce or, you know, there are a lot of private sector organizations that look at this and say, how can we as a group, as a community, make a difference? And increasingly, I would say that the role, particularly—I'm a part of the Business Roundtable—has really been, how can we make a positive change to society in our role as corporate citizens? 

Adena [00:31:30] Then you take that into and have active dialog with the government to say, OK, here are the things you want to try to get done. Here's what we can do to help you get those done. Or here are the things you're trying to get done. Here's what we need from you in order for us to be able to get that done. So that dialog and those types of organizations, I think, are important conduits to that conversation of cooperative capitalism. And I think that in this particular time, where we've had such a incredible amount of change being brought into the economy, that dialog is happening, and there is an active discussion between the private sector and the public sector on how we can make sure that we are making a positive difference to society right now. 

Kinsey [00:32:09] Yeah, absolutely. Well, I love ending on that note. Thank you so much, Adena, for coming on Business Casual. It has been interesting, to say the least, to have [Adena laughs] this conversation and to learn from you and your experience. I love having these differing points of view about capitalism on this podcast. You have a different idea of what it should be than Chamath Palihapitiya or Mark Cuban or even Ray Dalio that I mentioned before. And I love that that is the world that we live in, and we're all functioning in some capacity under this system. And it's really, really awesome to hear from you and better understand it. So thank you so much for coming by and taking the time. 

Adena [00:32:46] Great. Thank you so much. 

Kinsey [00:32:54] Thank you so much for listening to this episode of Business Casual. Did you enjoy this conversation about capitalism with Adena Friedman? If you did, go check out our episode with Chamath Palihapitiya. Chamath and Adena have got pretty different ideas about the future of our economy. But just like Adena, Chamath brings the heat. Let me know what you think, and I'll see you next time. [sound of a ding]