Successful business people take advantage of change. Jeff Sprecher saw energy deregulation in California some 25 years ago as an opportunity to develop power plants there. He saw globalization as a catalyst to start IntercontinentalExchange, an Atlanta-based operator of electronic trading exchanges for investors around the world.
As co-founder and CEO, Sprecher, 57, built the company to $1.3 billion in revenue, partly through about a dozen acquisitions. But two that got away — failed attempts to buy the New York Stock Exchange and the Chicago Board of Trade — grabbed far more headlines than the successful purchases. Sprecher talks about how he deals with the wins and losses, his initial lack of expertise in the trading arena and how he finds business ideas.
Q: You run a business that performs an important but complex job in the financial system. What is your elevator speech?
A: We host the trading of commodities and derivatives that are based on commodities on an electronic platform, where we match buyers and sellers. It’s similar to what you would do on eBay.
We also provide “clearing,” similar to PayPal. In the case of clearing, however, we become the buyer to every seller and the seller to every buyer. So we guarantee the payment of every trade by sticking ourselves in the middle.
We get a commission for a sale on the trading platform. And we get a second commission by clearing.
Q: You do not have a Wall Street or computer background. How did you build the company?
A: I have never traded. I never wrote computer code. I did not have the requisite knowledge and experience. Yet I built an electronic trading company that’s involved in some of the most advanced trading anywhere. I was willing to work hard, learn and read and ask questions.
When I started this company 12 years ago, there was a change going on in the way people were trading. There was an interest in moving off of “open outcry” trading floors [where people scream buy and sell orders] and onto computers. It was coupled with a globalization trend where the demand for commodities was becoming 24 hours a day, all around the world. So I caught both trends in forming this company.
There are always opportunities in change. I think that right now — even in a very stressful economic environment — is a good time to be thinking about starting a business. There’s a lot of change going on. I’ve found that once people’s minds are open to change, you might be able to attract their attention as a start-up business.
Q: You created a company culture that has helped cushion the blow from two highly publicized acquisition attempts that failed. Would you please discuss your culture?
A: I don’t know that this is a good thing. But we’ve built a culture here that as soon as we’ve completed something successful, we immediately start thinking about the next challenge we need to tackle. There is a sense that our work is not done and we need to keep moving forward.
We make a lot of mistakes. But we don’t beat people up for making mistakes. We want people to take risks. We recognize that if you’re going to stick your neck out, every once in a while a hammer pounds a nail down. That’s OK. You can’t have success without defeats.
At the same time, we don’t celebrate every success. We’re all here to make this company successful. That’s what we’re being paid for.
People like to be patted on the back. But ours is more of a wink and a nod. If you’re going to have a big celebration for successes, then you should have a big funeral for failures. I don’t think it’s helpful to have that.
Q: You’ve been interested in business since childhood. Would you please discuss how that has helped you?
A: I grew up in an era in the midwest [rural Wisconsin] where you had to work to help the family. As a young kid in order to have my own income, I had a paper route and I used to wash cars for a local dealership. I put myself through college by being a surveyor’s assistant for the state highway department.
So, it was natural for me to want to make more money and learn more about business. As I became a young adult, I would read every major business publication, cover to cover. By reading and talking to people, you can pick up glimmers of information. If you string them together, you can find business opportunities.
About two years before the Lehman Brothers collapse in 2008, I started seeing references to credit default swaps [an investment blamed as a key cause of the financial crisis] in articles. I didn’t know anything about them. I started reading and learning. By the time Lehman collapsed, we were pretty much up to speed. That helped us work with the government to create a clearinghouse for credit default swaps to help deal with the aftermath of the financial crisis and prevent another one.
In life, it’s easy to say that Mark Zuckerberg or Bill Gates or Steve Jobs were at the right place at the right time. To a certain degree they were. But they understood the power of their ideas at that moment in time, and how it would impact people. And then they drove their ideas.
Q: Many students just graduated from college. What’s your best advice?
A: When I graduated from college, I thought I would get a job in the state where I lived. It was a big deal to look all over the United States for a job.
Today, if I was a young person, I would be looking all over the world for a job, because the opportunities are global. The United States has the greatest higher-education system in the world. Anybody coming through that has an unbelievable headstart. I know a number of young people who have gotten unbelievable opportunities by going abroad.
Each week, Sunday Business Editor Henry Unger has a candid conversation, called “5 Questions for the Boss,” with a top executive in Georgia. Some remarks are edited for length and style.