Inside the Mind That Rebuilt the New York Stock Exchange | With Jeff Sprecher

I'm thrilled to be here and always enjoy being with you.

That's exactly right. I mean, you've distilled it. It's messier in real life than that, but when I was a kid, I was the kid that my parents would buy me something and rather than play with it, I would take it apart and then see how it worked.

Yes, in Madison, Wisconsin. And so, my leadership style is to look for things that feel messy. They feel broken. I also have acquired a lot of things. I'm not Elon Musk trying to figure out how to take us to Mars. I'm glad there are Elon Musks in the world that are really driving goodness and innovation. I'm much more about here's a great brand or here's something that is iconic. It seems a little messed up and maybe we can go in and reorient it. So I tend to do well with things that other smart people have invented and maybe they've just lost their way or they've kind of scratch and dent merchandise. New York Stock Exchange was an unloved company for example when we bought it. People ask me all the time, how the heck did you buy the New York Stock Exchange?

It was not for-profit. It was owned by the members and you had to buy a membership. So it was a club.

And at one point before I arrived here, they decided to monetize it basically and turn those memberships into public shares and take the company public. And once it became a public company, it was loved and then became unloved. And I remember when we bought this company, investors were saying, 'Why would you want to own that?' And I just said, 'It's the New York Stock Exchange.' The answer is in the name. This company was started in 1792.

Yes. You know the invention of everything and its life has been threatened many times by changes in technology or world events or what have you. Like surely it's just a little scratched and dented and we can come in here and figure out how to do it. And so I tend to look for those opportunities. And it's interesting in life they're often iconic businesses and opportunities that fall out of favor. And those are always kind of interesting to me to say, could it be fixed and saved?

The New York Stock Exchange was actually a merger of a number of exchanges. They bought the American Stock Exchange and the Pacific Stock Exchange and a few others and each of those had their own technology, their own infrastructure. And rather than pick the best one and move everybody to the best one, they sort of put a wrapper around all the technology so that to the outside world it looked like it was a unified whole. But under the covers it was a whole bunch of hamsters on little wheels. And so we said to ourselves, well certainly we'll just go in there and pick the best technologies and we'll move everything on to that and we'll get rid of all the rest. And when we got in there and finally bought the company and then looked at the technology hard, we said, 'They're all terrible.' And so, unfortunately, we're going to have to start over. And we didn't exactly know how to start over. So, I found a little company that had some really smart entrepreneurs that were building technology for trading of stocks and bonds. And we went to these entrepreneurs and we said, 'Look, you can build your company or we can buy your company and you can build the New York Stock Exchange.' And so we bought this company and we basically shut down what they were doing. Brought all the people in here and said, 'Have at it. We trust you.'

It's never done. It took honestly about 10 years. But it was one of those cases where we were building a bridge and the cars were driving on it. And also every major financial institution is worked into the New York Stock Exchange and we couldn't ask all of Wall Street and broader international finance to rewrite their connectivity. So we had to build something that the puzzle piece plugged into them and their legacy systems while we were modern. So a really interesting challenge. So we did it in bits and bobs behind the scenes, insulated our customers and today I mean we do billions of transactions a day on the stock exchange. I don't think people realize it's probably bigger than Google search in terms of technology and because it's so highly regulated we have to save every transaction for seven years. What we've really become is massive database and networking specialists of dealing gobs of data, organizing it and storing it and making it searchable so that you can go back and doing that in a way that has 100% knock on wood reliability.

It was cool. You know, it's above my knowledge base and we just put these smart young people in there and said, 'We trust you. Do your best. We're here, let us know.' And they did a great job.

Yes.

You know, I got my master's degree at Pepperdine University, which is in Malibu, California.

That's why I went there, honestly. I wanted to meet girls on roller skates that skated up and down the boardwalk in Venice, California. That was one of the allures as a young person. And the weather's a little different than Madison. Beautiful campus. There was everything about it. The last thing I cared about was its rating in the world. And so, anyway, I met a guy in college that had this idea to start a company to do alternative energy. And at that time, Jerry Brown was the governor. He was governor multiple times, but this is his first time. He wanted to pioneer alternative energy. And there was a company, an investment bank known as Drexel Burnham Lambert that was based in California, and a guy named Michael Milken who invented the junk bond. And it turns out that what we were doing, which was trying to build alternative energy, the world was saying, 'We're going to take California tax credits, strip them off, and sell them to people on Wall Street.' So, we were able to raise a lot of capital as young people using these sophisticated techniques. And so I started to learn the ways of finance and Wall Street. I started to actually realize over time while our altruistic goal was to do alternative energy the world was looking at us as if we were creating financial products. And I think that helped me to acquire... I've probably done at least 50 acquisitions in my life and I understand that process very well.

I had one of those meetings where I was the number two. It was my friend had the idea, so I was his number two. And we were invited to meet Michael at his home in Beverly Hills at 4:30 in the morning.

And we got up at like three. And dressed as best we could. And we got in a car and we pulled up to this mansion that had a big wall around it and a gate and the whole neighborhood was dark and there was a call box there and we sat in the car and said, 'Are we sure we have the right address? I don't want to wake somebody else up.' And we debated who's going to go push the button, me because I'm number two and I'm in the passenger seat or should my colleague who was driving and number one push the button. And we pushed the button and an answer came back yes and we said is this the Milken residence we're here to see Mr. Milken and they said pull in. And I'll never forget that and it was symbolic in that there were no business hours. These were serious people that were working around the clock and that 4:30 experience sort of elevated this idea that what is work if we're going to be here working with these people.

Exactly. So, it was good. It was a good early lesson. So, yes, I met him one time, in his house at 4:30 in the morning.

Yes. Well, it's interesting. You know, he has a second phase in life where he has really become more influential than a guy with money.

Yeah. He started out when he was diagnosed with prostate cancer and changed how... he just came from a hospital board meeting and his influence is present all the time when you're looking at research and coordination. He's trying to do the same thing in philanthropy now. So much is wasted in philanthropy and it makes him nuts.

It's harder than I thought it would be.

But I'm more confident that we have the right vision if that makes sense. You know, buying a house is so complicated. It's the largest transaction most families ever make. During COVID, we were all at home on our computers and if we were buying stuff, we were buying on Amazon or some web-based or 1-800-Flowers. And I noticed that there were all these opportunities when you checked out to say, 'Do you want to buy now and pay later?' Like you could literally buy a box of chocolates and it would ask you, 'Do you want to buy now and pay later?' And it would immediately underwrite you and figure out your creditworthiness or whatever, however they did it. And I thought, 'Okay, well, when those chocolates arrive, you're going to eat them and there's no collateral.' But it was like when you buy a house that has a foundation, it's attached to the earth. You can see it on Google Earth. It's going to be there. It's part of Maslow's hierarchy of needs. Like it's your safety and security. It's one of the last things you'll give up. Why does it take 60 days to lend people in a house? That was the simple question I had that came about because of my home shopping. And the answer when you scratch the surface of it was well it's a complicated transaction. There's lots of documents. There's a lot of paper. There's a lot of things that have to come together at the end of that process. And it was mostly paper-based. And prior to COVID most states which regulate mortgages required that you have a wet signature on a piece of paper. And COVID got some states, but not all states to say, 'Well, maybe you can sign with a click on an iPad or with your mouse or from the comfort of your kitchen.' And so we started to say, why can't we put together a network since we run networks and since we're attached to most major financial institutions because of the exchanges we owned, why can't we put together a network where we get everybody using a common language and data set so that we can ship this data around and build an infrastructure that a young couple buying their first house can do that quickly and easily and click a button and close on the mortgage. And so I bought seven leading software companies that range from very current cloud-based state-of-the-art technology to COBOL-based mainframes buried in some anonymous data center.

Yes. So, I bought a CRM company. I bought a loan underwriting company. I bought a closing company. I bought a network that sends the completed documents to the county recorder. And we bought a...

Correct. And if you were a lender, you would have strung a bunch of this stuff together all cobbled and tried to make it all talk within your ecosystem. And I thought this is all... Do you remember when word processing came around? A lot of your audience is probably younger than me. But when word processing came around, we all had a different word processor and we would type a document and you would email it to somebody and the word processor had an import export button and you would import somebody else's document and when you looked at it the pagination was wrong, the spacing was screwy, things weren't centered but you could read it. And then somehow over time we all ended up on Microsoft Word.

I mean, those don't even really exist today.

But why is that? We all kind of migrated. We all said, I know if I attach this Excel spreadsheet or this word document to my email, somebody becomes a standard. And it was organic. And I also realized like every time I buy a new computer I buy those software packages and they're... I just bought a new laptop not too long ago and I think it was $299 or something for the home and student package or so it was relative to the cost of the computer was pretty minor. I was happy to buy it. It's kind of a utility. And I said to myself, why isn't this software to underwrite a mortgage that everybody's going through, you know, 70 to 80% of mortgages go through Fannie or Freddie conforming loans? It's like why? I also had this view with technology, which is as you're the young couple filling out the application and you type in the address of the house, why can't the computer go out and learn everything that it can about the house? And when you type in your employer's name, why can't it go pull information that exists about who you are and what you're doing? And so that by the time you finished filling out the application that the lender would have a high... It's a little bit like the buy now pay later concept. So anyway, that was...

Yeah. And it seems like all these hyperscalers know everything about us. You know, I'm sure you, in selling flowers and candy and celebrations and balloons and everything you do, there's all kind of data that you know about your consumers that exist. So, why can't we pull that together around a mortgage platform? Now there are laws and rules that we have to conform to but the reality is this up until... but we're used to dealing in very very regulated environments.

No. In fact, I kind of embrace your core competency. I kind of embrace it in the sense that it's one more thing that makes it hard to do what we do. But if you can crack that nut, it cements your standing with your customers. It's just if you can insulate your customers from that. So, we go, for example, because mortgage is highly regulated and we have 3,500 banks and lenders now that are on this network, instead of saying to the regulators, 'Hey, you could go audit 3,500 individuals,' why don't you just come to us and audit us once? And we'll show you everything that everybody does. And in a way, we volunteered to be regulated. You know, banks are regulated. Software generally is not. But we said to the regulators, let's just cut out the middleman and get to the root of the matter. Well, now we go to our customers and we say, if you use this software, the regulator is already here. They know it. They've seen it. If there's an issue, if there's a new law, a new rule, we'll conform to it. You don't have to worry about it. Like, we've got so many people that are doing so many things.

Yeah.

Oh, yeah. And that's why your initial question was how's it going? We see the same thing with AI.

We have and didn't call it that.

Machine learning. We had in fact after the financial crisis of 2009-2010 if you recall there was a period that everybody said there are toxic assets on the books of the banks and it could bring down the banking system and there are all these things called credit default swaps that are tying up the financial system.

Correct. I never even heard of a credit default swap. I didn't even know what it was. I went to the then Treasury Secretary Geithner and said, 'I think we could build something to help you.' And he was lovely. He said to me, 'Jeff, I'm with government. I can't tell banks and financial institutions what to do, but if you build a barn and open those doors, I'll run those damn horses right in front of you.' And so we did. Anyway, it was another one of those things in life where I don't know, you've seen this as an entrepreneur. Nobody rings a bell when opportunity knocks. You just kind of have to say, 'Well, maybe I'll stick my nose in it and see if it's something.' So anyway, we went and we took I think 16 trillion dollars worth of credit default swaps off the books of the banks, stuck them in a subsidiary that we created, cut deals with all the major lenders, got the government involved early on as a... early on. Yeah. To free up the financial system. I went and I literally bought a company, a brokerage firm that specialized in credit default swaps just to buy domain knowledge because we didn't know exactly what they were and we said these guys know what they are and would you be willing to help us build something.

Whether it was the team who built the technology that runs all the exchanges now. So anyway, that business, the bill that's called Dodd-Frank which is a financial services bill that passed a couple years later was basically designed to regulate credit default swaps and to prevent this from happening again.

Yes. And so I give you that anecdote just because you want to talk about regulation. I mean no regulator wants the world to be impacted the way that happened in 2009 and '10. That is very highly regulated, highly scrutinized. But the business opportunity was to take that burden off your customers. And centralize it and then bring experts around it and make government comfortable and regulators comfortable. And in a way you're regulated but there's a bit of a partnership there which is nobody wants the world to blow up. We don't. The regulators don't. We just need to convince each other every day that we're heading the right direction.

Fannie and Freddie.

Yes.

Yes.

No. Look, and we have a lot of risk that we oversee too. And risk management is about predicting the future. And partly the way you predict the future is to study the past. But then you have to understand that history never fully repeats twice in the exact same way. It resembles. It's a cousin to. And so, if it was always perfect, we would all write contracts where there would never need to be a court. We'd solve every problem and write it down. And so, there is risk in the systems that are trying to derisk the systems and this is where you just need humans that can adapt and rule. One of the things I argue all the time to regulators is don't write the rules so strict that there isn't a little wiggle at the height of the crisis because you think you're going to write a rule that's going to prevent what happened in the past. But what happened in the past isn't going to happen the same way. You need a little bit of wiggle that gives you the regulatory leeway to look at what's actually going on on the ground and allow things to be tweaked in a way that didn't happen in the past but that will prevent calamity in the future.

It's a great question. I think I think about it the way you do, which is I think there's short-term risk and long-term opportunity. In other words, I've read articles that say when the Mercury spacecraft went up for the first time and went into the atmosphere, the technology on that was less than what we have on our phones in the pocket, right? The amount of compute that we have in the world since we went to the moon, I mean it's asymptotically grown and the number of people in the workforce have also asymptotically grown. In other words, technology, we all figured out how to adapt and embrace the technology incorporated. I talked about word processing and how efficient it is right now and spreadsheet making compared to just 10 or 20 years ago. So I'm long-term optimistic. I do feel like that the compact that I think we made in society that if you go to high school and get good grades and go to college and get good grades and come out the other end for that cohort, it's difficult. Because a lot of the kinds of jobs that you would take a young professional, people that wanted to go work in offices that yes came through colleges are quickly being automated away.

Now, oddly, my wife, you mentioned my wife, Kelly Loeffler, who is in the administration. She's...

I call her honey. My wife is in the cabinet in the current cabinet and runs the Small Business Administration and she's traveling tremendously and with the current state of affairs that she tells me about with the tariffs that we have that are pushing a lot of small parts and manufacturing back to the US. There are dozens and dozens and dozens in every state of small companies. They're usually companies of 20 to 50 people that have CNC machines and other interesting technologies that can make small parts that make their way into all kinds of things that we used to send overseas that are now coming back. But the factory, those factories of today are not like the factories we think of of the immigrants.

Way up. You're talking about 3D printers and CNC machines that don't necessarily need a college education to run, but they're not hands-on, you know, steel making. And so you need a certain aptitude and a pipeline of how to take people and say here's a career that can pay really high salaries that you can build a career and get into the workforce in a different way.

Correct. And that's where I think the dislocation is in the short term. I feel it in my own company. I'll give you an example. My company is called Intercontinental Exchange. So, most of your viewers have probably never heard

They have. Yeah. And that's why I use the long form. Our ticker symbol on the New York Stock Exchange is ICE. So, everybody calls us ICE. And Secretary Bessent, our Treasury Secretary, now calls me capitalist ICE in order to define which...

They are. Yeah, he is. Yeah, I got to know him fortunately before he went into government. So, became impressed with him and had an opportunity on a number of occasions to talk to the president about him and his thinking on bringing them in.

In my own company, on our website under our job opening page, we decided for the first time to put internships. We had never really done internships. We tried it and it got abused. Everybody has a niece or a nephew or a neighbor. We had this family that's looking for something to do in the summer and they'll park them there. And I was like, 'Come on, we're not—that's not who we are. We want to be high-profile, elite, best of the best.' And so anyway, we decided in this environment, let's do 50 interns. And in order to qualify for an intern, we said to each manager, you have to have an open position in the company that you haven't been able to hire for. And if that's the case, bring in an intern. We'll train them in whatever it is you need them to do. We'll pay them and do it during a summer season and if the person works out well, then give them the full-time job. In other words, we're going to take some risk on some young people in ways they wouldn't otherwise be qualified for that job. And so we had 50 of them. We got 50,000 applications. And this job was listed on our website. Okay. It went viral. Somehow the way networks work today, it got into the viral network. And the quality of the people that were applying. I mean, it was crazy. And moms and dads were calling the switchboard and people were sending letters and people were trying to figure out who works at this company that I know that I can get in. It got so crazy that we finally had to publish, don't call us, don't contact us, if you do, we're going to disqualify this person if you bug us too much because we're buried with this. And now, of course, we're using AI to sort through all of this. Anyway, the point that we—and by the way, we're replicating that program. We're expanding it. It worked out great. We got great people. We decided let's just—we have an obligation to society to train some of these people. I can't complain that this is a government issue. We the private sector is going to move much faster. And so let's take a chance on some of these people.

I'll tell you if you got a minute I got a story that I'm very proud of. One of the things during COVID that really bothered me was trying to run a company virtually and you mentioned that I'm based in Georgia and Georgia was one of the first states to reopen and I said to people get back to the office if you're willing to take the risk. The governor has opened the state like we really need—so much of what we do is random bumping into each other, ideas bubble up, things we didn't plan on, it's so hard to do over video. So anyway, I go back to the office and our headquarters has got 14 stories and we have these kind of coffee machines that were the higher-end ones that were there—beans, raw beans in the top and when you make a cup of coffee, it grinds them. Anyway, it never really dawned on me that somebody's got to clean the grounds out of that machine every day. So I have all these highfalutin people that we're paying a fortune to that are worried about coming back to the office and are working from home. And I'm going in every day and here's this young woman. She's going floor by floor opening each of the coffee machines to see if anybody made a cup of coffee to take the coffee grounds out. And so anyway, one day I said to her, and she was one of those young people that walk around with the headphones on, which kind of sends a signal like, 'Leave me alone.' So I said to her, I said, 'How's the coffee business?' And she looked at me and said, 'Mister, I'm not in the coffee business.' And I said, 'Oh.' I said, 'What business are you in?' And she said, 'I don't know yet, but this isn't my business.' And so anyway, I admired this—you know, I'm roaming around this office. It's kind of empty and yet she's there every day cleaning the coffee machines with barely any grounds in them. So I became kind of fascinated with her and I said to her one time, you know, you seem to be doing a really good job. I'm really glad that you're here. And she said, I don't have a choice. I have a car payment. And she said, 'I need this job.' And I said, 'Well, you said that you weren't in—it wasn't your career and you're calling it a job. What do you want to do?' And she said, 'I really want to go become a hair stylist. I want to work in a salon.' And she said, 'I'm saving my money and I'm going to go—I've been looking. There's a number of schools that I can go to and learn that trade. And I've been looking at job openings and my cousin lives in a different city and I figure if I can get through this, then I'll go live with my cousin, but my mom and dad don't really want me to leave home.' And so we're having a little bit of a fight internally. And so anyway, I went to my HR department. So I said to her, 'Well, when are you going to go to school?' And she says, 'Well, I'm going at night.' And she said, 'You know, I live 2 hours away from here.' I said, 'Two hours? I see you here every morning.' She said, 'Yes, I get up at 4 in the morning and I leave the house at 5. I have to beat traffic in this big city that we're in, Atlanta and then I've got my route and then I go home and then I go to my classes.' And so anyway, I went to my HR department and I said, 'We've got people that we're paying a fortune to that are not coming in here. This young girl is getting up at 4 in the morning.' I said, 'What entry-level jobs do we have?' And so they gave me three jobs. And I grabbed her one morning and I said, 'Would you be interested in working for me, working here?' And she said, 'I don't know why. What would you have me do?' And I said, 'Come into my office if you don't mind.' So, she sat down and I had printed out these three job descriptions and I set them down in front of her and I said, 'This is Tall, Venti, and Grande.'

Tall is we need in our legal department somebody to do filing. And I said you would work with the lawyers. They have lots of documents and things that need to be filed. And you would over time learn about the legal profession and you might want to become a lawyer or you might want to—by the way this woman had just graduated high school. So and I said or you might become a paralegal and we would teach you how to do it and how the system works and that pays X. And then I said we have a second job which is actually we run markets and at the end of the day every day we have to publish the prices and oftentimes there are instruments that we list that don't trade and so we have to figure out if it did trade where would it trade and so we use math to do implications. We look at other related markets and I said that's a—there's quantitative people there that are working on relationships between things and if you went into that you'd learn about markets there's a number of places you could go but it's very sort of detailed math oriented and that pays 30% more than the first job. And I said and then there's a job here that you are completely unqualified for but I'm going to describe it to you. And that is that we have an opening in our cyber security department. And this job requires according to our specifications a college degree in engineering or computer science plus two years of work experience and that pays huge. And I said, you're not qualified for that job, but one thing I know about cyber security is that whatever you knew yesterday is already worthless. And so once somebody gets into that position, you're going to be in a constant learning. You just need to start. And so anyway, she said, 'Okay, well, let me think about it.' And she came back a week later and she said, 'I've decided which one I want. I want to go into cyber security.' And I said, 'Did you talk to your parents about it?' And she said, 'Yes, I did.' And I said, 'What did your parents say?' And they said, 'They want me to go to hairdressing school. They want me to pursue my passion.' And I said, 'So well then why do you want this job?' And she said, 'I like what it pays.' And my parents don't—they feel like if I take a job that pays well and I'm doing it simply for the pay that I'm going to become unhappy. And I said well let me tell you my view of this which is you're completely unqualified for this job. You're going to go in there and everybody around you is going to say how did this person get in here? And your answer is going to be, I was cleaning coffee machines and I impressed the CEO and he thinks that I'm a hard worker and that I can do this job. You're going to have to go in there and be a hard worker and learn this. You're going to be behind everybody else. They may or may not be helpful. You're going to have to show them that you deserve to be there. And by the way, if you're not happy, if you don't like it, if it isn't interesting, you'll never catch up because your own limitations will prevent you and I'm going to fire you. And so go tell your parents that we're all aligned. You're either going to love this job and you're going to excel at it or you're going to hate it and go to hairdresser school. So anyway, we hire this woman. My deal with her is I want you to still get up at four in the morning. I want you to be the first one in the office. And she's done that and she is a rock star.

And she loves it. And so anyway, her journey and this kind of random quality that she had of hard work—not random but random in the way that I discovered it—it was light in terms of her colleagues. Exactly. Caused us to say that, well, there's probably a lot of people out there that maybe we should stick in jobs that on paper they may not be qualified for, but they have that something special. And that's hard to hire. It's hard to know passion on a resume. It's hard to know ethics and that little something special that wants to succeed, that little spark that wants to be a part of a winning team. And if you have that, you can train people almost anything.

Yes. As I look around our company, the people who are eight years out of that intern program that are still around—they all still have that something special, that work ethic, that ability to get other people to follow them. And you just can't see that on a resume.

That's not true. That I met you sitting next to you.

Right.

Yeah. You know, we started this conversation about the job displacement of AI, but we drifted into where I—and I'm optimistic because I think regardless of how jobs change, there are—and clearly they're going to change—they are going to change, but there are people that will adapt to the opportunities that will be created by those jobs. And you know, we've just given evidence of a number of people that stepped into the breach.

I think the biggest impact is not going to be on you owning a little fraction of a piece of art. I think the biggest impact is on the banking system and the way money moves. And right now, money moves on a series of wires between banks. And you and I have credit cards and debit cards and online shopping and buy now pay later. Exactly. Which you run an infrastructure that your companies have been built on where you can click a button and money moves. But it's running through this legacy set of wires and pipes that credit cards and banks have long established. And what tokenization promises is to move money on the internet. And the internet is everywhere. Elon's got us surrounded by satellites and it's everywhere. It's in the middle of the ocean. It's in the jungles. You know, it's at 50,000 feet. It's around the world. And those pipes exist that go right to a device you have in your pocket and a device you have sitting on your desk. And so I think what we're going to tokenize first is money. And the cost of moving money is going to be substantially less than those legacy pipes.

Mhm.

Right. That's a good question. I mean, right now, a bill that was passed at the end of last year called the Genius Act says that you can have a stable coin, and a stable coin has to be backed by US treasuries. And look, partly why government did that, it's like buy our stuff, you know, buy treasuries. But as you pointed out, you can tokenize anything and we've been working with a number of the big banks to tokenize your savings account in the bank. The allure when you and I grew up, we dealt with paper money. You go to a store and you would have paper money and they would give you change and you had paper money in your wallet and if you dropped your wallet on the sidewalk, some nice person might actually give you your wallet back, but the money would be gone. And we live in a world now where there's a generation that they buy stuff and they say, 'Ah, I don't really want that or I lost my credit cards and somebody went to Rome on it, but I've called somebody and they've reversed all those charges.' Well, we may go back to this tokenization where your money is a token and it's on your phone and if you lose your phone, you may lose your money. Now, there are people building technologies to try to have that be more recoverable. But the idea here is that if you can store your money on your phone, then are you going to have a bank account? What is the reason that you're going to have a bank account? And partly why lenders are—you and I borrowed money to build our businesses from banks and so one of the big debates is what does it mean to take money out of the banking system so that it can't be lent? What does it really mean for you and I to tokenize everything and keep custody ourselves? Where—you and I used to go to banks that had safe deposit boxes and we had a key. There was stuff in it. There were banks that had vaults. Yes. Here in the New York Stock Exchange, I can show you a full wall of those little boxes. Like a young person would be like, 'What? Why would somebody want that?' So anyway, part of the debate about tokenization and the regulation of tokenization has to do with tokenizing money and who holds it and how does it regulate and how does it affect the banking system and how do you prevent money laundering? How do you prevent behavior with money that government doesn't like?

Yeah.

Correct. And so anyway, it's coming fast.

It's another one of those things like AI where I don't know that we know exactly what it disrupts. It's going to probably have some bumps in the road for sure as we get there. And by the way, a token is an encrypted bunch of digits. And there are people building quantum computers where people are already saying, well, we're going to build a computer that can unencrypt those digits and take your money. And there are others that are saying, 'Well, we're going to build better encrypted money that the computers—you're going to use the computers to make.' But so it may drive us all back to using paper money. I don't know. You know, it's a bit like how AI can create these deep fakes where you can watch a video and you may not be able to believe what you see. And they're amazing. And it may be that you and I, we go back to a society where we only believe the people that we know and sitting in front of them. And maybe we only accept money that is in the form of paper or maybe gold. I don't know. I just know it's coming quickly and the internet is a different kind of network that is much broader than anything we've ever seen. Touches everybody. You know, Tether, which is a cryptocurrency, has 500 million clients. 500 million. Okay. Think of a bank and it has the world's largest distribution. There are certain economies, there are certain countries or parts of countries in Africa and parts of Asia where the street vendors, the tuk-tuk driver, the taxi man only accepts digital currency. They don't like the currency of their indigenous country. They don't have a bank account. They're never going to walk in a bank. They don't have a trading account. They're never going to meet a stock broker. And they are just all digital and they're going to live on their telephones. And that's the world that has come quickly that at least in the US the Trump administration is trying to figure out how to at least bring it into some kind of a regulatory system where it can evolve in a way that at least government wants.

Yes, that's what government does. There's proponents of—some governments, a recent administration really didn't want crypto to come along.

And there are people in crypto that don't want any regulation, you know. I mean, there's two sides of the coin. It's going to happen. So, be there and be at the table with a David Sacks who's advising the president, the administration. One thing I tell a lot of—because we've been heavily involved in this and one thing I tell a lot of the maximalists that don't want any oversight is that I'm a Christian and in my religion Moses came down a mountain with two tablets and on there it says you can't steal somebody else's money. And there have been so many laws passed in this society that are about fiduciary responsibility to one another and how we deal with money. Probably no more laws than—more than murder—is how we deal with money. And to disrupt the lawmaking that is just the piles and piles and piles of laws that have been written since Moses was on that mountain to say we're going to throw all that out. It's for a guy in my generation is hard to believe.

There you go. And it'll probably come back and say thou shalt not steal.

Well, the president has asked my wife to look at it. So, I'm very familiar with it and I'm not going to speak for her or the administration. But let me just frame the problem which is fact-based. When I did go to college and I did borrow money and I subsequently paid it back through work. When I did that, I went to a bank and borrowed the money. And there were some government guarantees to incent the bank. There were other government policies that incented the bank to take a risk for me as a young person to borrow the money. And that changed when we passed Obamacare, which most people don't realize it was—the government was trying to figure out how to pay for Obamacare. And one of the things they decided to do was have all student loans be put out directly by the government. Off the government balance sheet, take the banks out. So, they pushed the banks out of the market and then calculate how much interest the government would earn and use that profit to offset health care costs.

It sounds good on paper, but there are no government agents that are going to meet with individual borrowers. And so, how did the government go about deploying this money? Well, they went to all the schools and universities and they said, 'Well, you have a finance department. You figure out who should get the money and we'll give it to the university.' Well, what happened in that period? The cost of a university—you know, used to be that for $50,000 you could go to Harvard or Yale or what were considered the best universities in the country. Well, my little university—I went to a state school. Suddenly, state schools are $50,000. Everything's $50,000. Universities that you barely ever heard of for $50,000. And there's a finance department in there that is lending out government money and what's their incentive? Exactly. And so the incentives were not there to graduate the student and put them into an employable profession. You could go and learn how to play the harp and have a bunch of debt. So today something like 40% of all outstanding student loans are in arrears. It's a huge cohort of people and it's not clear that—and most Americans think, well, look, you borrowed the money and you should pay it back. But then there's the reality of well they went and learned to play a harp.

And is it—it doesn't pay that well. You know, and so how—for there's a few harp—I shouldn't—I don't want to throw harp players under the bus. Really well paid at the philanthropic harmonica. So anyway, the dilemma is what is fair, but how do you reshape the incentives in this country? How do you stop the pool from growing?

And how do we make education incentives to educate people in a way that can get them into the job market? And you don't want to disadvantage the fellow who didn't go to college, didn't borrow the money, and say, 'Wait a minute. You're going to forgive their debt? That's coming out of my pocket.'

It sure isn't. But I figured you'd be working on it. Better to know that Kelly is supporting my wife as she—and there's other people looking at, you know, some of it is how do we deal with the fairness of the past?

And how do we more importantly realign the incentives going forward.

Yes.

Look, look how lucky I am. I get to meet with nice, smart, good people and learn from them. And how lucky am I?