Nasdaq CEO Adena Friedman on AI Transformation, Reforms

Well, so I do think that one of the things that everyone here has converged on is the fact that it is a transformational technology. I've heard it from policymakers, I've heard it from politicians, I've heard it from the private sector and from those that serve the private sector and the public sector, so that there's no doubt that this is a technology that's going to redefine every industry. So therefore, it needs to be financed. It needs to be built out. And as we've seen in other transformational moments in our history with technology, the amount of investment that's required can range from 2 to 5% of GDP in terms of what's been put into the ground and literally into the ground so far. Four is about 1% of GDP. And so we still have an opportunity to continue to accelerate and escalate the investment in order to really accelerate the potential of this technology. So that's really the foundational capabilities that we need to be able to start to take advantage of what this technology really will have to offer. Now, it's a matter of how do you diffuse that technology into the economy and that goes to enterprise use cases, enterprise integration of the technology. And that's where I think people are wondering why it's taking as long as it's taking now, it's only been three years. And yes, there are a lot of incredible startups that have been born, that have found problems and may resolve them very quickly and to scale their businesses very quickly. But as you bring that technology into the enterprise, all enterprises, there's a different level of obligation that you have security, resiliency, scalability. And within the organization, the level of change management that's going to be required in order to really transform your organization, to be able to take the technology in and make the most of it. That's what's taking the time. But what we're seeing is those that have been using it, a lot of companies are starting to they're showing proof cases. 2.8 times return on their money in a very short period of time. That obviously gives a lot of people confidence to say, okay, top down, we've got to manage the change. We've got to make sure that we're finding the right partners and we've got to scale this up. I think the J curve is going to be very steep very quickly now that the proof is there.

I mean, I think as we talked about with that level of financing and the fact that a lot of it's happened in the private markets, but also the hyperscalers and the large semiconductor players who are public companies are also financing this technology. But as we've been thinking about what is necessary, a whole new power structure, a whole new set of data centers, a whole new level of connectivity, all of those things, that means you need to bring more expertise in. You need to bring more pockets of capital in. So you see very large scale firms like Blackstone and Brookfield and others coming in with their capital. But then also the industry players themselves, most of whom are public, are going to be starting to really bring the capital to bear as well. And then those companies, those innovators, we would love to see these amazing innovators come to the public markets and broaden out their capital base. And I think that's what is really exciting about what could come.

So I would say that it's still at the very beginning. I mean, if you think about what's had to happen in the first year of the administration, he had to build a team. He had to make sure that he had the right people in the right seats to be able to start to work on that agenda. He had to then we have been engaging with the regulators to understand what are the priorities within that agenda. And the whole notion of making markets great again, I think has got an enormous amount of support within the regulatory agencies. And now it's a matter of putting that into action. I think this year is going to be all about the rule making and rule changes, and we're very, very excited about that. We're very aligned with our primary regulator, the SEC, on ways to reform proxy, ways to reform disclosures, and even ways to consider changes in litigation for the public company model that will make the public company model more attractive. So we're excited to continue that engagement.

So I think the first thing I would say is flows are always going to be really dominated by returns. I mean, the flows are just about returns. So if you see flows in and out of an economy, it's really the investment firms are obligated to find the best returns. And so if you actually look over the last year, there is a $3 trillion increase in equity flows into the United States from foreign investors. So that's been a really interesting phenomenon. But I also would say that we just have to continue to drive those outsized returns in our economy to continue these flows coming in. In terms of companies looking to go public, the U.S. markets are the deepest and most liquid markets. They have the deepest investor base. Those people understand these, especially for innovative tech companies. I think that they understand that by coming to the United States, they're going to get access to the best analysts and the best investors to help maximize their valuation. So we have not seen a fundamental shift in that, but we also support great innovative markets here in the Nordics, in Europe. And they also have seen a real growth in IPOs over the last year. We had the largest IPO since 2020 to occur in Sweden with the virtual IPO. And so we actually are seeing a lot of vibrancy in the Nordic markets as well.

All right. Look, you know, well, you know, we were getting closer to that part of the world. Opening up an exchange does not cause any trouble.