20VC: The Memo: The $23BN Company You Might Not Have Heard Of: Tradeweb, The Story of 27 Years of Compounding Growth Leading to the Market Leader with $1.4BN in Revenue and 50% EBITDA Margins

0:00It's not about pedigree, it's not about polishness, it's not about what school you came from and who you know, it's about old -fashioned grit and resiliency and streets mart. I have an ego, you have to have an ego. I'm a person that was, you know, president of my company, the number two person in my company, you know, for a long time. You know, when people show you who they are, like believe them. This is 20BC The Memo with me, Harry Stebings. Now 20BC The Memo is our monthly show where we highlight an incredible company that you might not have heard of. Today, we highlight the story of a $23 billion juggernaut, trade web, the electronic interface that connects the lights of Citadel to Goldman.

0:39Now, joining us in the hot seat today is their CEO, Billy Holt. This is an incredible discussion on CEO ship, parenting, relationships to money, ego, and so much more. But before we dive into the show's day, Merge is the leading product integration platform, offering a suite of unified APIs across key software categories from HRIRS to CRM. That allows organisations to offer hundreds of customer facing integrations. Merge also handles the full integration lifecycle from an easy initial build to hand -held end user onboarding to maintenance support and management tooling for all your integrations, thousands of customers like RAM, GONG, SEMGRAB and Sendozo use Merge to power their integrations.

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2:50It's so important that you make the right decision for one of the most important elements of your company. Equity and equity management. Choose Angelist at angellist .com. You have now arrived at your destination. Billy, I am so excited for this. I heard so many good things from Rhana when I was walking with her in the park. I was like, I want to have Billy on the show. Please make the intro so grateful to her for doing so. And thank you for joining me today. Well, thank you for having me. Rhana is amazing. I want to tell you Harry, I think this is maybe like a bucket list thing for me to do with you because I've been watching You know, you're growing kind of you two presence and I was hoping to get the invite and sometimes you get lucky and actually get it I remember when we started I could actually get away with not doing video and now I actually have to look presentable Billy I mean this is tiring life more than presentable.

3:34I think you're ready for the biggest platform available Well, you're very kind Charm will get you a long way But I want to go back way way back, which is I think we shaped actually a lot in our childhood And so if we go back to your early years, how would your parents and teachers have described the young Billy? I do agree with your premise that like it's amazing how much of you get formed from like the age of like zero to six or zero to eight So I think it was like a much more quiet kid and I think I've become of a fairly, you know, boisterous I'm not a young adult anymore. I think I'm like middle aged now, we're not very but it was a quiet kid I tended to do very well in school at things that I was interested in and very poorly in things that I was not interested in.

4:17So I was like almost like that prototypical kid that flourished when I was engaged on something and then really struggled. Like capital S struggled when it was not interesting to me. There's like a story about, you know, the kid that took French from like 0 to 11th grade and couldn't learn to speak like three sentences in French. and then he moves to Paris meets a girl who only speaks French and learns the language in like two months I was kind of like that as soon as I was emotionally kind of engaged on a topic Then I would do okay, but I struggled with everything that was sort of like not straightforward to me I was not like by any stretch.

4:53I was no runner. Did you have a hard first job? Someone said to me the other day. It's very transformative to have a really hard first job Be it like doing lawn mowing when you're seven all day or like I did. I grew up in Manhattan, you know, so there were no lawns to mow. But I'm going to make you laugh with this. It's a good question. Sometimes like the most true stories are entertaining. My first job and it was like either end of high school or Early college kind of one of those summer jobs was working Harry at a place they called like OTBs It was an off track bedding The place where people would go in back in the 80s and 90s in Manhattan and place bets on horses And I was a bedding clerk in the South Bronx.

5:35It was a tough neighborhood, and it was a tough job. And you had to learn very quickly to think on your feet. You met all different types of people. It wasn't like an internship at Brown Brothers or Morgan Stanley. A little bit of the school of hard knocks. You said about... I didn't. You're kind of really leaned into things that you were good at or passionate about and discarded or didn't like the things that you did. You think people should lean into their strengths and discard their weaknesses? I think that there's a way maybe to like overdo all of that and maybe there was a time when I was a kid where I was definitely overdoing it There's something about like the 3c minuses and the 2 a's that doesn't always please the parents plus it can cause some alarm bells in the school So I wouldn't necessarily pattern all of that that being said I think especially as you get older I think there are some inherent strengths that you want to kind of lean into There are things that like you're good at, the things that you gravitate to, but most importantly, I think there is an aspect of what are you really ultimately emotionally engaged in, like what do you really truly care about, and then my instinct is you tend to do the best with things that you really care about.

6:42Someone said to me, oh, they, everyone says like, do what you love. I say that's bullshit. Do what you're good at, because what you're good at, you'll generally like, and if you don't suck it up. I think that's true. It's a little bit of you can be misleading when it's sort of Just follow your passion Harry, just do what you love. You know, life can be a little more kind of exacting and sometimes decisions you make early in your career or your life have like longer term consequences. So you can be sometimes a little naive if you just go down that path, what's the sort of hemming way? Like isn't it pretty to think so?

7:14Like wouldn't it be nice if we could all just do like things that we love? You're a PM way back, why not? I had a couple of jobs in the old kind of traditional world. I was a bond broker and then a sort of cell -side bond trader learning along the way I was never like never good at it. I think maybe that's because I didn't like it. Did you find being CEO very natural? It is a very different role. Every CEO ship is different. There are aspects of the job that I have found to be natural and there are aspects of the job that I think I gravitate towards and I enjoy And then there are kind of things about it that I think maybe aren't like in my perfect sweet spot and are harder.

7:50What do you think makes a good CEO? Like what are the core checklists of my job as CEO is this? I'm not gonna make you laugh with this, but I do think there's something which is interesting which is like you're the CEO of a company and what is a company? It's like people. I do constantly remind myself that I'm dealing with people and people have egos, they have opinions, they have personalities, there are ways to motivate people the right way and then you can demotivate people. So I do think there's a concept of like reminds yourself what a company is. I think high level you have to be the external face of the company.

8:23And you have to really be the person that at the end of the day represents the company at the highest level. I think you have to set strategy. And I say that like in a very straightforward way. I think it's a CEO's responsibility to set the strategic direction of a company. And then the company executes behind that. I think in a good way I try to get my kind of sleeves rolled up and my hands around execution, that's where companies ultimately make their bones around like how good are you at really ultimately executing on a game plan. And if you get yourself like too removed from the actual kind of like the execution piece of it, I sometimes think that there can be a little bit of a passivity.

9:00But my question to you is, like you said there about you don't want to be too far removed. We often hear the statement, hire great people and get out the way. How do you think about that? And then, my career management and the balance between the two. It goes back a little bit to sort of like, how do you lean into what you do really well? And so I think that there are aspects of a sort of ecosystem or a complicated company where you hire great people. And it's not that you get out of their way, but maybe you support them in a way where they feel empowered to do their job really well. And then there's the concept I think of, what is my responsibility, Harry, to like make a difference?

9:37You know, how do I become a difference maker player for my team? And so how I try to do it is high level like engage with, you know, the biggest most important investors and engage with the biggest most important clients. I think I'm really good at that. And so I try to make a difference for my company by putting myself in those situations. Early on when I became CEO, I was invited nicely. I don't think they regret it now, but it was a very nice invite from them to be a part of the sort of JP Morgan, in like CEO conference in Napa. Quite a nice conference and it was a nice invite. These CEOs from all over the world were there and this won't surprise you at all.

10:15I got to watch like Jamie in action as the CEO of JP Morgan. He's there but like JP's hosting this event for their clients. He's amazing with clients. You talk about a guy that can flip the switch from he's the most well regarded esteemed person in a lot of ways at that event. He makes it all about his engagement, you know, with JP Morgan's clients. His ego goes away and every single one of his interactions is about like, how are you doing? What's going on in your business? How can we help you better? That was kind of like an interesting visual that I got. Like, I'm like, if he can be still that good at that, then we all have to up our games a little bit because, like, goodness, like, talk about like a difference maker.

10:59You know, that's like a big deal. You know, how many people like walked away from that conference, like, yeah, the wine was great, but I got like 30 minutes with Jamie and he like really like understands my business now. Like that's cool. Well I think it goes back to my angelu quote, it's not what you say, it's not what you do, it's how you make someone feel. I think that is true. You know the other thing she says which I love we're gonna get into like a quote contest is like you know when people show you who they are like believe them and so I've always thought of that which is like you know good and bad when people reveal themselves to you it's happening for a reason.

11:31Okay help me understand that to people not change so I look at myself I'm not old but I've grown up quite a lot in the last 10 years. I did stupid shit I used to lie when I was nervous I would be too arrogant because I believe that bullshit and now I realize that I'm just another person figuring life out and so I don't know if that's fair. Well people grow for sure and I think that's a very kind of intuitive comment that you're making and I think as you grow you show people your evolution and so you don't just believe them once I think maybe there's this concept of you believing them all the time but you're seeing who they are and so maybe there was a moment where you showed someone one thing about yourself a long time ago and now you have the ability to show someone something else about yourself and if they're evolved the right way they're seeing your growth along the way.

12:19As this kind of recurring theme in my management which is that I very much dictate there is no voice but mine and people are scared of me. It's not great actually. I mean my response is you should be. What would you advise me? I don't want to have a culture of fear. How do I not, but also be very direct? Sat the direction and lead. You don't seem unbelievably scary, but I hear you. So since we're like sharing notes a little bit, I do think the most important thing is like being direct. I think that's really important. Do you sugarcoat? You know, we all have things to work on. Either I sugar coat or I have a little bit of this like what's the thing like truth with Novakine?

13:00Yeah, I try to make it feel good sometimes and that's not always like the most effective way So we all have things to work on and I got to think through that But it sounds to me like that directness that you're describing is really good and really important as you get older Do you sometimes like become a little bit maybe more mellow? No, I've become less patient But you're not as older. Maybe there's some sort of like moment where it flips a little bit. I'm gonna make you laugh with this I'm you know 54. Oh, you're not belly. You know I'm 54 going on 65. I'm probably more intense in Certain ways at 54 than I was at 34.

13:39I guess I'm nicer now at 54 than I was at 34 I'm a little more like Understanding of people probably try to be the kids make you nice. Is that it? Do they make you more patient more understanding? Maybe like being around love when you leave the office in that kind of way. Maybe mellows are kind of softens you. I think you can be pretty nice, but also like pretty exacting and pretty rigorous. And I think you can have very high expectations of people. So I can be nice. I can be a little bit sometimes not quite as direct as I need to be. Everyone that works for me understands when I'm angry. It's probably a bummer when I'm angry because it maybe takes a little bit to get me angry or get me disappointed, do you care about being light?

14:20Yeah, I can understand how people would perceive it as a weakness. My overall instinct, Harry, is if you're authentic and you're yourself, then that's a lot of it all. Not to say that no weaknesses can emerge, but you lead with who you are. So I've always probably wanted to be light. I feel like getting along with people is like, let's start there. I'm not easily pushed around. I mean, I'm going to make you laugh with this one. I don't always get what I want, but I tend to get what I want a fair amount. So I'm not a pushover, but if someone doesn't like me, does it bother me? Yeah. A little bit.

14:59When do you dictate versus when do you welcome opinion? This is another challenging one, which is like, no, no, I'm this year we're going this way. Versus open for thoughts, let's discuss the right plan together. If I feel like it's a decision that ultimately there's a tremendous amount at stake around and there's going to be a fall guy on the decision. If it doesn't wind up working out, I will make sure to make an obvious point that it's mine because I don't think you can pass the buck on big decisions. That being said, dude, I have a lot of smart people that work with me and I have a lot of really smart by the way clients in my world.

15:37So I do like to get people's opinions and I do like to hear from the people around me and my general view is if you can get a consensus, that's better. I get you. Inventure consensus often needs to be a bit of a challenge. That's when it comes to decisions. And on decisions before you've said about the importance of CEOs making kind of big bets, so to speak. Can you talk to me? Why is it so important that CEOs make big bets? And how do you... So let me describe a few this way for a second. So my company, TradeWeb, has largely gotten to where we are today through a lot of like, really good organic investments and organic growth, right?

16:17So we are not some company that's arrived here through lots of like M &A. But as you know, well, and you talked about like for yourself, like the sort of like the personal kind of evolution, the personal growth things, sometimes like companies need to grow through, I think, change. And so one of the things I've been doing a little bit is like using the language of change, right? Which is like we've gotten here and we've arrived through all of this organic kind of investment and growth and continuing to kind of move ourselves forward in this very one specific way. Let's start talking about putting more bets on the table.

16:53Let's start talking about doing more deals. And since we're going to talk about that and we're going to look in that direction, let's talk about it in big ways, let's talk about it in transformative ways. Let's not be afraid to start using the language of real ambition. Why not? I sometimes like, click off like too often and for sure like not well enough. When you take a golf lesson, they'll make a change and that change will feel so awkward because they're trying to get you to feel something. So sometimes you, or I do this a lot, I will enunciate a point pretty loudly to sort of push us in the direction of change.

17:31It totally makes sense. I think the biggest thing also with leaders is and an anciating change. I always hit people say, I'm so bored of saying the vision and the mission. And it's like, yeah, but for someone, it's the first time that they're hearing it. And it's true. Always after remember that. You mentioned there, like, how do you take bigger bets? How do you be more courageous, more bold? Yeah. Super direct, Billy. I think about talent brands a lot. Where do the best software engineers want to go to work? Yeah. And with Stripe, with Shopify, with the Silicon Valley names. do you the best software engineers want to go to trade web?

18:05And how do you think about that? I think the goal is for the answer to be yes. The history of the company is interesting because you don't always have companies that have been private for so long and then go public kind of later in the company's history or evolution. So like the roots of the company is really around being a little bit private. There are advantages to being sleepy. So I'll describe for you an advantage or maybe we can talk about this. Trade Web Harry has a lot of clients. Goldman Sachs, Morgan Stanley, Pymco, WAMCO, the Central Banks, Norgeous, like all these big, like, you know, hedge funds, right?

18:42We travel along back and forth between like giant egos. At the end of the day, it's really simple. We're the electronic interface that connects like Citadel and Goldman. We've been pretty smart around understanding like, there's a totem pole, there's always been a totem pole, understand where you sort of live in that totem pole and we don't always have to be the sort of like biggest ego in the room We don't always have to have the biggest brand. We can you know flourish And amplify a little bit Sometimes behind the scenes and let our clients Ultimately at the end of the day have the biggest most important presence out there I don't know if we've like always like thought that through like perfectly exactly I think that's how we evolved in a certain way I think it's fascinating in terms of the strategic position of kind of knowing where one sits and also being the Enne Blob means that you don't always have to be front of house.

19:38Dude, one time I was out with a guy, this is like a long time ago. He was a nice guy, he was a little bit of like, out of central casting, hard -nosed like, bond guy. And this is like probably like 10 years ago, he was working at Credit Swiss at the time. And we were talking and I kept referring to BlackRock as my client. And he just reminded me in a really nice way. He's like, oh yeah, like they're actually like my client and I didn't want to get into a debate with him about like who actually was providing more value to BlackRock or who BlackRock was more of the client to but he was letting me just Understand like hey look, I'm gonna say this in a nice way.

20:12There's no way that relationship with BlackRock is more important to you than it is to me. Human beings are very like interesting, right? Because there's like so quickly almost like I don't want to say like a competitive dynamic but people have like egos dude like big egos do you have an ega? Definitely yeah, I have an ego you have to have an ego I'm a person that was you know president of my company the number two person in my company You know for a long time and I had a great working relationship and a friendship and a partnership with the CEO And we would talk about it where I would say to him like this can't be cold play where like everyone knows like Chris Martin and like no one else.

20:51Like this has to be a band where at least there's two of us. Why? Because my ego, I guess my ego was bruised. I was like, oh wait, I don't want to be Mike Pence standing in the back. What did he say? He said, I got you. I hear you. And that's why we will co -brand. We'll work on making sure that it's always understood that this is a two -man partnership at the time. That being said, he was the CEO. You know, so there were certain things he would do by definition that I would be the person standing on the sides. And I felt my ego then, like, oh, what would it be like to do that myself, right? And so of course.

21:25How was it when you became Freddie Mercury? Oh, Chris Mossend. It was comfortable and normal. It felt like a process that had worked. And for me, it felt like a moment in time, maybe in my life and career, where I was for sure like ready to do it, which is like a big part of, I think, like when succession works the right way. It did not feel honestly, and I think you know very well that I would tell you if it was true, it did not feel like laden with like anxiety. It felt like let's go, let's go do this. I've done a lot in my career and I'm ready for like this next chapter. Was there ever a time when you had to check yourself on your e -gay?

22:00I remember when I was like 21. I made a thousand amount of money and I was like, I am fucking cool. And I believe the bullshit too much. Professionally, it has not felt challenging for me to do that because I think there's like a little bit of like like an easy goingness that I bring to the equation that feels less ego driven. So what I think about is like, how do you make sure that your casualness does not allow a scenario where someone thinks the results are casual? I'm aware of all of that stuff. Do you worry about that? You aren't informal and human and it's wonderful for me. I do because like I'm more driven now than I was when I was building my career, but I don't always show it.

22:43I wouldn't say it's like a technique because it's like it's my personality and it's who I am I'm comfortable in my own skin and I come across that way I'm also again, let's throw this other thing back in the mix I think like firmly aware of like this totem pole thing right when someone takes themselves like so seriously It's like come on guys like let's remember there are bigger problems in the world There are bigger problems and the financial service industry like when I make you laugh when um the famous line when you know of the financial crisis was kind of roaring. And the story was that Lloyd was in a town car headed down to see the Fed and kind of one of the bankers in the car said to him, like, I don't know how much more I can take of this, because they were stressed.

23:25They were working really hard. Everyone was going like 100 miles an hour. And I think the guy was like, I don't know how much more I can take all this. It's like the pressure is like building. And Lloyd said, like, come on, like we're not like storming the beach at Normandy, right? Like let's keep this all in perspective. We're all pretty lucky here. Do you feel a pressure? I feel the pressure and maybe this is a little bit of a concept of what you're saying in terms of ego I sometimes feel the pressure when I go home and I find myself like slightly having a harder time to Relax and unwind and be present with my family and I feel like distracted and so I'm thinking to myself like Why am I carrying all this stuff home?

24:01Maybe because of like how I'm dealing with pressure Maybe how pressure is kind of running through my system Someone asked me like do I feel nervous and I don't feel nervous Well, you make everyone feel very comfortable, so I wouldn't feel nervous in this situation. Sometimes when I'm doing a part of a board meeting that isn't necessarily out of my central casting sort of comfort zone, I'll feel a little nerves. Like, oh, I'm in 10th grade, I'm going into take a biology test. You know, have I studied hard enough? I do have to ask, on the like, you feel the pressure when you go home. I don't, I feel the guilt because I'm like, relatively uninterested by the conversation and that sounds awful and if anyone from my family listens I'm sorry it's true but my point being like you spend all day stimulating.

24:45You're brain -stired? Yeah but then they want to talk about the weather. I feel that too it's like it's a challenge it's like something's not quite right if at the end of the day I haven't figured out a way to keep that engagement thing running and maybe it's like run out of gas a little but I feel that way too or it's sort of like how can I be unbelievably aware of the details of these five business issues, but struggle with my, you know, my 12th graders, the name of her history teacher. Do you feel like you've been that few kids like you would like to have been? It's pretty hot when you see you have a public company.

25:18The broad answer is definitely yes. The truthful and the more recent answer is no. I have three kids and my younger daughter. She's a senior in high school and she's got like all these like big basketball games. You know, it's her last basketball games and I missed a bunch of them, you know, I was working and I felt like the work was really important and I relied on my relationship with her that she would be understanding of it and of course she was, but I feel the loss of missing those moments the most I think. Did you really need to be there? I often we can over amplify the importance of it and it's like no one will remember those any yet.

25:55Good question. I think it's impossible to know the answer of like was it worth it. If you're asking me today, my answer is like probably not, but at the time I must have thought yes. Has your style of parenting changed over the years, Benny? No. I think I was always probably a little bit of like the yes dad. I struggled saying no, so it was easy to kind of surround them with love and to try to be the person that did a lot of fun things with them. And I find myself doing different obviously versions of that, but being similar along those things 15 years later, that sort of dynamic is kind of still How do you inspire children to have the same hunger, ambition, tenacity when they're brought up in a wealthy family bluntly?