Inside Wall Street | Tim Sanchez

 

About Tim Sanchez

Tim Sanchez grew up in Oakland, CA. He attended the University of San Francisco where he completed his undergraduate degree in Information Systems Management and dual MBA’s from the Haas School of Business at the University of California at Berkeley and the Columbia University Graduate School of Business. Tim has worked as a Silicon Valley entrepreneur, oversaw the Twitter’s IPO and has spent over twenty years working on Wall Street for Lehman Brothers, Citi Smith Barney and the New York Stock Exchange. Tim proudly serves as a Lieutenant Commander with the US Navy Reserves.

 

Interview Transcript:

Alan
Welcome back. I’m here today with Tim Sanchez. Tim is a director of the New York Stock Exchange. And you’re you’re employed here in the San Francisco Bay Area. Is that correct? That’s correct. So Tim, welcome to today’s show.

Tim
Thank you. Good to be here.

Alan
So Tim, give me some background, how you got to where you are today?

Tim
I’ll try to keep it short and sweet. So I, I’ve been with the New York Stock Exchange about five years in our Silicon Valley office. And a lot of people ask, Well, why do you have an office here when the exchange is based in New York and, and the reason is that we, we have a capital markets listing office here on the West Coast in which I’m a part of, and what that means is we compete with NASDAQ for the listings of Silicon Valley IPOs. It’s a very lucrative market, companies like Twitter, LinkedIn, so on and so forth are listed with the NYSC. And those relationships are developed out of our office. Once West Coast companies are listed on the exchange or if they’re currently trading, then those relationships are managed out of our office as well. So I work closely with about 275 West Coast publicly traded companies who shares trade on the New York Stock Exchange. Now you listen, we love it, the Twitter, I was That’s my my account my relationship. And in fact, I was down on the trading floor. The morning that they rang the bell on their stock begin to trade. So it was an exciting time for us down on the floor of the exchange, and certainly an important IPO that we were able to capture for the big board.

Alan
Now you have two MBA degrees, Columbia and Berkeley School is the Haas School of the Haas School of Business. Tell me about that program.

Tim
Sure, was a partnership that was entered into between these two fine schools. And the idea behind it was that both schools are have strengths and are known for focusing on certain areas of business in which they’re really strong. In so the idea was to come together jointly create a program a bicoastal program that could take the best of both programs. The case of Colombia, it’s known as a factory for producing finance, MBA specialists, Berkeley has an amazing real estate program entrepreneurship program being close to Silicon Valley. So that was the idea behind the program took a little longer than a normal MBA program. But it was great. We got to travel back and forth between these two great campuses.

Alan
How did you get to where you are today? Sure.

Tim
So I grew up in the Bay Area, product of the streets of East Oakland, a rough area, but had two great parents father was a minister. So he kept me kept me in line on the straight and narrow, so to speak. But I just wanted to be the first in my family to pursue an education and to do something a little differently than what’s been done in the past. Historically, by tradition within our family and people that grew up in my certain neighborhood. I just had a dream of wanting to pursue a career on Wall Street. And I think it all started with a visit back in 1983 that we made in the New York Stock Exchange. It was an impressionable moment for me at the time as a young teenager. And so I just pursued my education. I started my career back in the early 90s, with Lehman Brothers when it was around, spent five years with Lehman moved on to what was then called Salomon Smith, Barney spent five years in equity sales there. And then took my shot at Silicon Valley dream, a Silicon Valley dream by being a co founder of an internet company back at the height of the internet.com. Boom. And of course, things didn’t work out like a lot of other companies. We crashed and burned. But it was a great entrepreneurial experience, went on to co found another company, and then decided to pursue a graduate education and then eventually made my way back to finance by joining the New York Stock Exchange. So it’s been quite a quite a journey.

Alan
So your your education for the MBAs have happened after a period of time of.

Tim
Absolutely, absolutely. And then mixed into all of that I’m a naval officer in the reserves. So 911 impacted my life in a big way. Like a lot of Americans, I felt the need to do something. And so I pursued a commission in the reserves. And a week after I received my MBAs, I was on a plane headed towards Iraq and Kuwait and volunteered for my first deployment. And last week, well in 2012, volunteered for another deployment returned last May. I was in Afghanistan for a period of time. So that’s it for deployments. I feel like I’ve done my part, but it’s sort of a second Where I’ve had as well along finance, which is to serve our country and to contribute in some way.

Alan
Now, I just said, You’re Lieutenant Commander, that’s great US Naval reserves. And you know is that as fun as it really sounds?

Tim
It’s a lot of fun. It’s a lot of fun. I, I do my one weekend a month duty, I play Navy one weekend, a month and commit three weeks a year to annual training, which is active duty. And, of course, I’ve had two deployments in the last six and a half years, which, which has been a challenge. It’s been exciting, dangerous at times, certainly a strain on my family life. But my kids are all better for it, as well as my wife.

Alan
Tim, we need to take a quick break. We’ll be right back after these messages.

Alan
Welcome back. I’m visiting here today with Tim Sanchez. He’s a director at the New York Stock Exchange. And you know, Tim, as we’re going through your, your your career history, you mentioned that you’ve worked at both Lehman Brothers. And Smith, Barney, in what way? Were those jobs? Similar? What was it like in the banking industry?

Tim
Sure. Well, I cut my teeth for Lehman Brothers. And, you know, it’s pretty sad to know that Lehman no longer exist. But I was there back in the, in the fun, the fun days, early 90s, which, in which the firm was actually spun off from American Express at the time. So I got to experience those early days of leaving becoming a standalone company once again. And I worked in San Francisco, in our institutional sales office in our private client office. So we managed assets for high net worth families, as well as small to mid size institutional accounts. And back in those days, in order to earn a desk, so to speak, which was just a phrase for, for landing a real job. You had to prove yourself as a salesman, you had to prove yourself that you were capable of managing money following the markets. And I worked under some incredible institutional salesmen learn how to sell, learn how to develop confidence and present myself to to wealthy clients who were far wealthier than I could ever imagine. And it was just an incredible time to be a young professional working at such a great firm, working with some experienced salesmen and money managers who manage money for some of the wealthiest families in the country. And it was just an eye opener, and I spent five years there, working under the tutelage of of some of the senior members of the West Coast office.

Alan
So in working with differences between the two between Smith, Barney and Lehman Brothers, are there they’re in what ways were they really different from each other.

Unknown Speaker
People who are on the outside don’t really understand that there is such a thing as a culture of a firm. And that was never more evident than, you know, back in the 1990s. When you looked at Smith, Barney, which historically had sort of been a white shoe investment bank, extremely conservative by nature. Partners ran the firm and they had been there for years and it was just a very traditional very conservative organization before Sandy Weill bought the firm under the old traveler’s umbrella in Lehman was very different. Lehman was an aggressive culture very fast, aggressive, cutthroat in many ways, but had more of an entrepreneurial bent to it. And so it was quite a contrast to leave Lehman Brothers at the end of 1994. Enjoying Smith Barney, I felt like I was a fish out of water eventually became accustomed to Smith Barneys culture and spent five years there working with one of my partners in the San Francisco office and had a great time.

Alan
How was it with the moving out of the private industry with the caravan and best match? How did your experience at the investment banking firms help or prepare you for being out in the private sector?

Tim
Well, it was quite a challenge because I was used to working for two well known investment banks. I had a pretty good career on track. Certainly was is making more money working for those firms than as a struggling entrepreneur. But this was back in late 1999, at the height of the internet bubble, and I was dealing with lots of clients who overnight, develop or acquire huge fortunes in the in the.com bubble. And I thought, Well, these guys can do it. So can I. So I hung up the suit and tie hung up the wood paneled office and decided to get together with a couple of friends. We raised money with some angel investors, and a small VC and gave it our best shot. And it was, it was great, because I think what Wall Street did is it toughened me up over those 10 or 11 years, allowed me to develop thick skin, and in have a sense of focus, discipline. And that certainly carried over to the entrepreneurial space where there aren’t any rules, you really need to be discipline, you got to have thick skin because it’s quite a roller coaster ride in for every Google or Twitter that people hear of there are 1000s of failures out there. And it’s a very difficult life, the life of an entrepreneur in Silicon Valley.

Alan
At Tim, we need to take a quick break. And after we come back, I want to talk about the New York Stock Exchange your position here in Silicon Valley, and what are some things that you deal with day to day, we’ll be right back after these messages.

Alan
Welcome back and visiting here today with Tim Sanchez. He’s a director at the New York Stock Exchange. And, Tim, we’ve been visiting about your history, the, you know, through your career paths. And also you dabbled a little bit in moving from the investment banking industry with Lehman Brothers, Smith, Barney to private industry, starting up your own companies. And then you you roll back to the New York Stock Exchange, which, you know, we always see this in the news, the New York Stock Exchange this and that, but, but for the sake of the viewers, what exactly does the New York Stock Exchange do?

Tim
That’s the question I get almost every day. Well, you know, a lot of your viewers and most Americans who follow the markets see that grand building that iconic structure located on the corner of wall and broad in New York. And I think most Americans have a sense of what goes on down there on the trading floor. But they don’t truly understand that the New York Stock Exchange is an organization institution, it’s been around since 1792. And it was formed under what was called the Buttonwood agreement. And so it was an agreement that allowed brokers to earn a commission by trading shares. And that’s sort of our founding. And what we do as we create, we’ve created a trading platform that allows companies to tap into the capital markets, trade shares, and we maintain a fair and orderly market and over 2300 listed companies who have chosen to list their shares at the New York Stock Exchange. So down on the trading floor, what you see every day, when that bell rings in the early morning hours, what happens is that we’ve created a marketplace, which allows these companies to exchange their shares, allows investors to buy and sell. And so we’ve created the infrastructure, if you will, the New York Stock Exchange is the infrastructure that allows these companies and all of the firms that have a presence on the floor to trade during those hours in so that’s what we do. And we’ve been doing it well for a number of years. We’re the largest global exchange. And if you look at the market cap, or the value of the companies that are listed on the New York Stock Exchange, it’s larger than five, the five next largest global global exchanges around the world. So it truly is the largest marketplace and the face of American Finance and capitalism.

Alan
How does a company get to be listed on the New York Stock Exchange?

Tim
Well, there are a couple of different ways a company can transfer from NASDAQ, which is the other exchange in the United States or if a company goes public via an IPO. They get to choose their listing venue and it’s either going to be NASDAQ or the New York Stock Exchange. We have listing standards. So there are requirements that a company has to meet. And there are a number of requirements based on shares value. Equity tax As assets liabilities, once we review the application, we will then approve a company’s listing. And then when they go public, the stock begins to trade on the floor of the New York Stock Exchange.

Alan
in a company choose both. And is it possible to do that

Tim
There are a few dual listing left. That was an experiment that NASDAQ came up with a few years back. And they did it in a way to or they did it the purpose was to create some competition and still listings away from the New York Stock Exchange. The reality is that nobody takes advantage of that anymore. There’s really no reason to have your shares listed on two exchanges.

Alan
What’s the difference? If if you’re trying to get the pitch of New York Stock Exchange versus NASDAQ? And for the layperson, it’s like, well, I’m, I’m using my Schwab account, or Yeah, I don’t know where they come through it. But what’s the difference? So what’s the pitch of why they should choose one versus the other.

Tim
Two reasons why I tell a company they should list with the New York Stock Exchange. One is the visibility that we bring to the table. So our companies are able to leverage the spotlight that exist every day on the floor of the exchange, there are 39 global news networks that broadcast over 200 times a day from the trading floor. If there truly is a platform that allows for global visibility. We allow our companies to take advantage of that the interviews, events on the floor or ringing the opening or closing bell may not seem like much, but when you have an opportunity to have that kind of spotlight. It’s priceless advertising that a company is able to take advantage of the most important reason is the way in which our stocks trade. So we they used to be called specialists, they’re now called designated market makers. We have firms on the floor that create this human element that doesn’t exist on let NASDAQ, which is an all electronic exchange, technology is great. But as we all know, technology breaks from time to time. And as a result, it can be catastrophic for a lot of companies when that technology breaks on the floor of the New York Stock Exchange, these designated market makers, they’re humans, they’re real people. They use technology as well, but they have the ability to step in and to intercede when necessary and take over trading. They also have to commit their own capital, which is a huge difference. They’re buying when others are looking to sell and they’re providing liquidity when others are looking to buy. That’s a feature that you don’t find on NASDAQ. And that’s why NASDAQ listed companies tend to be a little more volatile than New York Stock Exchange listed companies.

Alan
What does this seat on the New York Stock Exchange cost now?

Tim
Well, it costs zero because there are no more seats on the New York Stock Exchange. A number of years back, the members on the floor who own those seats exchange their seats for shares in NYSC urine excellent when we went public ourselves. So we used to be a quasi public institution up until our IPO a few years back, and now we are a publicly traded company. And recently, we were acquired by ice, the Intercontinental exchange. And so now we’re part of a 20 plus billion dollar conglomerate, which owns a number of exchanges around the world.

Alan
I’m visiting here today with Tim Sanchez. He’s a director on the New York Stock Exchange. And, Tim, what can you share with our listeners about today’s economy?

Tim
Well, it’s it’s an interesting economy that we’re that we’re in the middle of it’s one in which the stock market and the valuations that we’ve seen, the returns that we’ve seen, don’t accurately reflect what’s going on day to day in the economy. Without getting too deep in terms of true valuations. Because I’m not a predictor, I would just say that this economy is struggling, continues to struggle. I know that there are a lot of positive headlines out there. I just don’t think the stock market reflects the reality of what we’re facing in terms of high unemployment, which I would argue is become normal now. I think the country has sort of accepted the fact that the new norm will be unemployment in the seven to 8% range, which 10 years ago, was, it would be twice what we saw 10 years ago. And so I think we’re struggling, I think we’re still trying to figure out a way to have to develop a footing in this economy. And I think it’s going to continue for quite some time. We’ve got some major structural issues we’ve got to deal with.

Alan
Tim, thank you for being on today’s show. Great. Thanks for having me visiting here today. Tim Sanchez, director on the New York Stock Exchange. We’ll be right back after these messages.

 

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This transcript was generated by software and may not accurately reflect exactly what was said.

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