David Warren, Nasdaq

Stock market's new CFO says change a good thing for finance chiefs. He should know. StaffOctober 19, 2001

If there’s one thing that separates managers at technology companies from their counterparts at more-traditional businesses, it is this: They go their own way.

Therefore, it comes as no great surprise that the chief financial officer at the Nasdaq Stock Market Inc. — which, after all, is home to so many high-tech companies — is a bit of a maverick. In fact, David Warren, the new CFO at Nasdaq, has made a career out of going his own way.

Warren has been an investment banker. He was also deputy treasurer at the State of Connecticut. In addition, he was CFO at the Long Island Power Authority, where he helped transform the organization from a state agency into one of the largest public power authorities in the United States. Warren joined Nasdaq in January and was named acting CFO at the exchange in July. He got the job on a permanent basis in late September.

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Warren says he relishes a new challenge. He’s come to the right place, then. Nasdaq is in the midst of being spun off from its parent, the National Association of Securities Dealers. Officials at the OTC specialist are also seeking to take the company public. Before that happens, however, the Securities and Exchange Commission must okay Nasdaq’s request to become a full-fledged exchange. Last week, the SEC postponed its review of that request.

In addition, Nasdaq has witnessed a drop in revenues, as a number of the tech companies on its roster have been de-listed because of shrinking market capitalization. If owners of privately held technology companies continue to avoid the IPO market, things could get even tougher for Nasdaq and its new CFO. recently spoke to Warren about career choices, M.B.A.s, and serial CFOs.

As you know, there’s quite a debate about what makes the best career path for CFOs. Many recruitment specialists say finance managers should stick to one industry. But you’ve had jobs in the private arena, in government, and even in the not-for-profit sector at the Nature Conservancy. Do you think working in various sectors has helped prepare you for your job at Nasdaq?

My theory is that skills and experiences are transferable. Lessons that you learn in any sector or industry are lessons you can take with you, regardless of where you go. I think the one thing for me that remains constant is that an organization is only as good as its people. You’ve got to be able to bring in good people and create an environment that lets people thrive.

For a finance manager, what are the differences in working at a public company versus working at a not-for-profit?

In a publicly owned company, the emphasis is on building shareholder value, and that’s what a CFO spends a lot of time doing. In that sense, the job is probably more defined in the for-profit world. But those challenges are still very much there in the not-for-profit sector. The problem is that it’s a little bit more diffused in terms of what the objectives really are. There are wide definitions of what would be the equivalent of “shareholder value.” In government, I found that the challenge is serving multiple constituencies that all have different ideas of what the government should do for them.

But in the end, it’s still about defining what your products or services are, making a very clear statement about what you’re about, and working hard to make sure you’re delivering on those objectives. And there is competition for resources wherever you are. If you’re a nonprofit, you’re competing for philanthropic resources. How do you get those dollars? You need to demonstrate that your organization has the right idea, has the right vision, and can take the money and use it effectively. People who invest in companies are motivated by a lot of the same reasons people invest in charities — they’re looking for a return. They want to see the money put to good use.

Many CFOs are serial CFOs — they go from one CFO post to the next. But you joined Nasdaq earlier this year as chief administrative officer, after being CFO at the Long Island Power Authority. Why the move out of finance?

I was attracted to Nasdaq for a few reasons. I knew some of the senior people here, and as I said earlier, I think what makes an organization is the people that work there. I was very impressed with the people of Nasdaq. I was also attracted to the opportunity at Nasdaq — as it spins off from the NASD and transforms itself from a company with a 30-year history into a for- profit, publicly owned company. It was an opportunity to be part of tremendous change, where history is being made, instead of reading about it later. I was attracted to the idea of building something new. And the fact that I could be a part of building the human resources of Nasdaq was another thing I found attractive.

So you were more interested in the experience than the title?

Absolutely. It wasn’t so much that I needed to find a CFO job. And that’s been the pattern throughout my career. I’ve always looked for the opportunities where something had never been tried before, or where we were looking to change the way a particular business was done.

One of the side effects of the dot-com bust and the recession has been postponed or cancelled IPOs. Do these events worry you as Nasdaq embarks on its own path toward the public markets?

Nasdaq is not that different from all companies in this environment. We’re definitely seeing decreased activity in all three of our business lines than we have in the past three years. We’re also seeing these economic conditions continuing through 2002, and depending on what forecast you read, probably through 2003. That means were using this as an opportunity to take a look at what we’re doing, to cut costs wherever we can. Like other companies, we had to go through some layoffs this year. They’re painful, but they’re an important part of what we need to do to get costs in line with where we see the business going.

You have an M.B.A. from one of the country’s most prestigious business schools, the Yale University School of Management. How important is it to you that your finance staffers have M.B.A.s?

If you’re just starting out, I don’t think an M.B.A. is necessarily all that critical. But I would encourage everyone to think very seriously about an M.B.A. at some point in their career. If you’re looking to get into senior management positions, I think it’s a very important asset to have.

What advice do you give recent grads most often?

People think they should focus on one direction, say, finance or marketing, and I think that’s right. But I really think you should look for as many opportunities in that general direction as you can. I think one of the hardest lessons is to trust your instincts. It seems so obvious, but I find people are always worrying about where they might be living, what company they’ll be working for, how much money they’re going to make — and all those are important. But I think in the end you should really be looking for the opportunity. Look to be as expansive as you can.