Last week I had the opportunity to moderate a great conversation with Brian Weisberg from Mux and Danny Prohaska from EPM Solutions on how the finance technology stack is evolving.

We covered everything from our old friend Excel to today's AI-native platforms, what has actually changed, what's still missing, and where finance teams are headed next.

It was a thoughtful discussion with strong perspectives from both the customer and implementation side.

If you missed it live, you can watch the recording here (scroll to the bottom and you'll see the link!)

If you’ve read this newsletter for more than a fortnight, then you know I’m obsessed with the process of going public.

I drop S1 breakdowns every time a notable company files (recents include SpaceX, Bending Spoons, Lime Scooters).

Which made it a full circle moment to record at the NYSE. I interviewed the CFOs of Vercel, Soundcloud, and CoLab in a studio above the trading floor.

And holy shit is that place made of a lot of marble. Imagine trying to build that today? In this economy?

Knowing that we had a field trip to the NYSE coming up, we took it upon ourselves (me, Creative Dictator Ben, and Stevey Stoves) to cook up our own mini doc on the history of stock exchanges.

Did you know that the Dutch East India company was the first business to ever go public? Neither did I, until I made this video.

Other highlights:

Watch it here.

And if you are a fan of the written word, I’ve provided the full story below.

Before there were stock markets, there were ship captains. Specifically, there were ship captains asking rich people for money in exchange for a cut of whatever they brought back, which worked fine and all, right until the ship didn't come back. Because that happened a lot in those days.

You either got a return, with some spices or gold, or you got a very sincere apology from the harbor master. These were very much all-or-nothing propositions. There was no secondary market for your ownership, and no way out once you were in. 

It was much more illiquid than venture capital.

The Venetians tried to get more organized about it around the 14th century, trading government debt on slates in the streets. Think Merchant of Venice. It may have been just chalk on a sheet rock, but Shylock would get his pound of flesh

Ben: Your high school English teacher left that part out.

Then the Bourse of Antwerp, which I learned today is a region in Belgium, built a family inn at the crossroads of Europe. This was in 1531, where merchants traded promissory notes and bonds as they passed through the Flemish town. Close. But, footnotes being my middle name, I have to tell you that no actual corporate stock changed hands, so we don't give them the trophy.

The trophy goes to Amsterdam. 1602. First IPO. Boom.

The Dutch East India Company, ticker VOC, held the first real IPO in history. Yes! That Dutch East India Company! Its charter did something new: it let "all residents of these lands" buy shares, not just shares in a single voyage, but shares in the ongoing company itself. You weren't betting on one ship coming back. That second word, tradable, is the part that really changed everything. You could sell your stake to someone else. You didn't have to hold until the ship docked or the captain drowned. That made this a two sided market.

Ben: The VOC itself was, by any reasonable description, the Palantir of the 17th century.

First company to ever issue public stock. Speculated on wildly. Heavily linked to the government. Somehow in everything. Nobody is totally sure what it does. So yea, Palantir or the Illumniati. You can decide.

And almost immediately, because humans are humans, the Amsterdam market developed futures, options, and short selling. Tools we still use today. Within a few decades of the first IPO, traders had invented most of the instruments that would eventually cause your favorite hedge fund to implode in a CNBC segment four hundred years later. The speed of financial innovation (and also destruction) when there's money on the line is something. 

London formalized its stock exchange in 1773, after decades of traders just kind of hanging out in coffee houses doing deals. Stimulants and trading have gone together like peanut butter and jelly for hundreds of years. This explains a lot about both asset classes.

Ben: Coffee houses to trading floors to guys in fleece vests staring at twelve monitors. The stimulants changed to Zyn and Celcius. The chaos and short selling remained.

America was watching. Not to be outdone by it’s big brother in London, The Philadelphia Stock Exchange opened in 1790, first of its kind in the new country. Then two years later, New York.

The NYSE was founded under a buttonwood tree by 24 brokers signing the Buttonwood Agreement, a two-sentence pact made outdoors near 68 Wall Street, committing to trade only with each other at fixed commissions of 0.25%. 

Leonard Bleecker, a prominent merchant whose family name still graces Bleecker Street in New York, was one of the 24. Alexander Hamilton's Bank of New York was one of the first companies listed. Serious people doing serious things, informally, outside, in the seriously bad North East weather.

Ben: So… basically it’s your typical Buffalo Bills tailgate.

Minus the folding tables. 

You see, the whole point was to move trading from the street into a private club. A club with fixed commissions, pre-approved stocks, and no outsiders. If you wanted to trade, you needed one of the approved brokers. An auctioneer would read off reputable stocks one by one. 

A small but big thing to call out: This moved trading from a side quest to a profession, which sounds obvious now and wasn't at all then.

Ben: By the way… Wall Street has spent 230 years making that original deal worse for everyone not in the club.

Stocks at this point were for two types of people: outright speculators and people trying to take control of a company. Not a lot of tertiary use cases (kind of like crypto?). The market was small, the participants were wealthy, and then William Duer showed up and reminded everyone why we can't have nice things.

Duer was the former Assistant Secretary of the Treasury, friend of Alexander Hamilton, and architect of America's first major financial crash. He used massive loans and insider knowledge in a failed attempt to corner the market on US debt securities and bank stocks. He spread rumors of bank mergers, and created a fake bank called the Million Bank to manipulate prices.

Ben: Which is not a totally shady name at all for a bank…

The market sold off 25%. Duer ended up in debtor's prison which I only thought existed in movies. And as Ron Burgundy would say in another movie, boy that escalated quickly. The country had been trading stocks for roughly three years.

The Buttonwood Agreement was a direct response. The 24 brokers moved behind closed doors to make sure all traders were reputable, unlike Duer. In 1817 they drafted a constitution, rented indoor space at the Tontine Coffee House, and presumably celebrated never having to trade stock in the rain again. It wasn't officially named the New York Stock Exchange until 1863, after going by various names for nearly 100 years. Most people just called it "the board." Because prices were written on a board. Cue the Pusha T.  Damn, I’ve been waiting three years to get a Pusha T reference in there. Mission accomplished.

The first fifty years of the NYSE were mostly government bonds and bank stocks. A nice start. Then came the railroads, and everything changed.

Building a transcontinental rail network is not a mom-and-pop operation. You need capital at a scale that local merchants and farmers simply cannot provide. Roughly 75% of railroad funding came from private loans and stock offerings rather than the government. The NYSE became the mechanism that let American railroads tap European investors, people who had never set foot in Ohio and were willing to fund a thousand miles of track through it. 

That required two things: a market liquid enough to make the investment feel reversible, and an accounting language sophisticated enough to explain what they were buying.

Ben: I think what you’re saying is the railroads basically invented modern accounting.

Yes. Depreciation existed because track and locomotives wore out over decades and someone had to account for that. Capex versus opex existed because building a rail line and running one are fundamentally different financial activities. Cost-per-ton-mile was invented as a metric, and I love metrics, because investors needed a way to compare efficiency across routes.

Necessity is the mother of all invention, including financial metrics. It was built by people who needed to explain a $50 million infrastructure project to nervous European money. So in many ways, your month-end close has a 19th century railroad to thank. This was the precursor to GAAP accounting.

By 1860, US companies had laid more than 30,000 miles of track. More than the rest of the world combined. Telegraph lines followed those tracks, letting news flash between financial hubs in real time. Which meant you no longer needed a stock exchange in every city. The exchanges in Albany and Buffalo became redundant overnight. Sorry, Buffalo.

Ben: At least they still have their tailgates!

Fun side story: Jay Gould, one of the most famous bears of the era, was called the Mephistopheles of Wall Street. A really gloomy name and an even harder word to spell. 

He'd publish vicious rumors about companies in a newspaper he owned to drive down prices, then buy. This was one of the early examples of sellers weaponizing media to move markets. Not completely unrecognizable behavior by today's standards.

OK, let’s talk about information again. Charles Dow, financial journalist and first editor of the Wall Street Journal, launched the Dow Jones Transportation Average in 1884. He took nine railroad companies, added up their stock prices, divided by nine, and presto. It was math a fifth grader could do. And the point wasn't precision. The point was that for the first time, you could look at one number and know whether the market was generally going up or down, which fundamentally changed how long people were willing to hold stocks and pulled a whole new class of investors into the conversation. It was an easier on ramp for people to talk about the stock market’s health in aggregate. 

In 1896 Dow expanded the index into the Dow Jones Industrial Average, twelve companies covering heavy industry: sugar, tobacco, and oil. General Electric was one of the originals. Same calculation. And Edward Jones lent his name to the whole thing despite reportedly playing no active role in creating it.

Ben: Sounds like a group project from seventh grade. 

Since I have the platform to say this: I want my group project teammates from Ms. Blessington's history class to be pallbearers at my funeral someday so they can let me down one last time.

The second industrial revolution brought about the rest of the giants we still recognize. Procter and Gamble. Pfizer. American Express, which started as an express mail business before anyone thought to put it on plastic (I always wondered where the express came from). The market was growing, the participants were multiplying, and the information the exchange was generating was becoming arguably just as valuable as the capital getting allocated. 

After World War I ended in victory, American families had disposable income and things just kept getting better. The economy was humming, the new NYSE building opened in 1920 with an enormous trading floor where each stock had its own designated post. You had steel companies at one, railroads at another, and specialists called auctioneers controlled the bidding. You would see clerks shuttling trades via pneumatic tubes to the ticker tape room.

Ben: Pneumatic tubes. The original API call. Latency was a little higher.

Around this time, the radio arrived in living rooms across the country, which meant ordinary families could now tune in and hear how the Dow was performing. The market was no longer a club for rich people in lower Manhattan. It was becoming a conversation everyone could follow.

What made this era different, though, was buying stock on credit. You could buy shares on 10% margin, meaning a $100 stock only required $10 out of pocket, with the stock itself pledged as collateral for the remaining $90. 

Dangerous as it sounds, this was not a niche strategy for sophisticated investors. It was how a huge swath of the American public participated in the longest bull market the country had seen, and it worked brilliantly right up until, well, the moment it didn't.

In 1928, a stockbroker named Charles Merrill, of Merrill Lynch, saw what was coming and urged his customers to get out of debt and sell at the highs. Nobody really wanted to hear that.

Ben: Nobody ever does. The guy calling the top is always the least popular person in the room… Like Michael Burry, he’s predicted 12 of the last 2 recessions.

Consumer spending on a few key categories started softening. Stocks began to fall. And then the margin calls went boom goes the dynamite.

For those keeping score at home - when a stock drops far enough, it is no longer valuable enough to serve as collateral for the loan you used to buy it. You either put up cash to cover the difference or your account gets liquidated. And on October 24th, 1929, a lot of accounts got liquidated. Then more the next day. Then more after that. The imbalance between sellers and buyers was so severe, so many shares changing hands so fast, that the ticker tape fell four hours behind real time. 

People were making sell decisions based on prices that no longer existed. Assumptions piled on top of assumptions, and the whole thing got worse.

Ben: What you’re saying is there was a communication breakdown, like the Led Zeppelin song. Nobody actually knew what anything was worth in real time.

Now, to be fair, stock market didn't cause the Depression on its own. The Depression ran deeper, fed by distressed industries and collapsing consumer spending. But everyone blamed Wall Street anyway, which, I mean, fair enough given the margin situation. So it brought Franklin Roosevelt to the table, and given the election cycle, he had something to prove. On his second day in office he ordered the NYSE to close for a week. 

Then he pushed through a sweeping set of reforms: banks could no longer gamble on stocks, brokers had to treat customer money with actual care, and any corporation wanting to offer stock to the public had to file formal reports with the government. People would now have far better information than they used to.

Roosevelt created the Securities and Exchange Commission to enforce the new rules. The SEC. Its first chairman was Joseph Kennedy, patriarch of the Kennedy family, which is either a brilliant choice or an extremely on-brand one depending on your read of the situation.

Ben: They appointed a guy who made his fortune doing exactly what the SEC was created to prevent. To run the SEC. And it kind of worked? America is something else.

A weary public stayed away from the market for most of the 1930s and 40s. And the government funded World War II largely without it. When needed, it printed it’s own money and raised war bonds. The stock market, the great engine of American capital formation, sat mostly idle while the country fought the biggest war in human history. It would come back. But it needed someone to bring it to the suburbs first.

Ben: Like a mini van

The market came back in the 1950s, but it needed a push. Charles Merrill was that man. The same guy who warned his clients to sell before the crash came back after the war with a different idea: what if the stock market wasn't just for rich people in Manhattan? He opened brokerages in the suburbs and targeted the returning GI with a wife, three kids, and a Chevy. He wanted those people to own their share of America. 

One of his signature moves was making research reports free, which sounds obvious now and was considered borderline insane at the time. 

Here's what our company thinks. No charge. 

He realized that by educating people, he gained a group of new investors, which his firm benefited from. This was either altruistic or the best customer acquisition strategy of the 20th century. Probably both.

Ben: Probably both. The best business moves always look like altruism until you check the revenue line. Free research reports. Free shipping. Free checking account. Someone is always making money on the free thing. 

It took until 1954 for the Dow to recover to its pre-crash high of 300. Twenty-five years to get back to even. 

So yea, Keep that in mind the next time someone tells you to just hold through the volatility. Also, Snowflake is still trading below its day one IPO price. 

Ben: I’m not bitter, your bitter.

Around the same time, a college professor named Harry Markowitz published a paper arguing that you should just buy multiple things and you’ll do better. He called it diversification. He won the Nobel Prize in Economics for it. 

Ben: The finance industry's ability to make simple ideas sound complicated, and then give out the highest possible award for un-complicating them, remains one of its most reliable features.

The rise of pension plans and mutual funds pushed daily trading volume to 11 million shares. Which sounds like a lot until you realize the entire back office was still running on paper. Like, a lot of paper. Actual physical stock certificates changing hands, clerks balancing books by hand each night, a system straining at the seams by the mid-1960s. 

By 1968 the paper crunch had become a full crisis. The NYSE had to close on Wednesdays so the clerks could catch up. The information backbone of American capitalism was drowning in its own paperwork.

Computers solved this. Through the 1970s and into the 1980s, computing infrastructure transformed the back office from a room full of exhausted clerks into something that could actually scale. Faster, cleaner, and much more reliable.

But then, the snake ate its own tail. Here's what happened.

Ben: I think your about to tell us about October 19th, 1987. 

The market had been declining for a few weeks heading into that Monday. The computers were pre-programmed to sell automatically when prices hit predetermined levels, which, like, is a perfectly sensible risk management strategy until everyone's computer does it simultaneously. One sell triggers the next threshold, which triggers the next sell, which triggers the next threshold. The Dow dropped 23% in a single day, still the largest single-day percentage decline in its history. 

A hard lesson was learned that day: we had to install circuit breakers; automatic pauses that interrupt the cascade before it becomes a catastrophe. We still use them to this day, and they were tripped multiple times at the start of COVID.

Ben: Shoutout to circuit breakers. Tip your local electrician, folks!

Up until this point, you’ll notice we’ve left out the other popular stock exchange in New York. The NASDAQ launched in 1971 as a super simple idea: what if you didn't need a physical floor to trade stocks? Instead of specialists congregating at posts and auctioneers reading off names, it was just a screen with two columns. People willing to buy. People willing to sell. They built a linked network of brokerage houses worldwide, with everyone seeing the same prices at the same time. 

It started with smaller, faster-growing tech companies that the NYSE wasn't particularly interested in.

Apple listed there in 1980. So did Microsoft. So did Intel. The companies that would eventually become the most valuable on earth started on the exchange that the establishment didn't take seriously.

Ben: One man’s trash is another man’s Apple.

The 1990s were something else entirely. Other than my birth, the internet arrived, and with it came the reasonable observation that it was going to change everything, followed by the slightly less reasonable conclusion that every company with a dot-com in its name was therefore worth billions of dollars regardless of whether it made any money. 

Between 1995 and 2000, the NASDAQ rose 400%.

Companies were going public with no revenue, burning cash at speeds that would make CFOs physically ill, and getting rewarded for it. Pets.com raised $82.5 million in an IPO in February 2000 and was out of business by November of the same year. 

Ben: Nine months from IPO to gone. That’s gotta be some kind of speed run record.

The sock puppet they used in their Super Bowl ad cost more to produce than some of their quarterly revenues. Do with that information what you will.

Webvan raised $375 million to deliver groceries and managed to lose money on every single order while simultaneously building out a billion-dollar warehouse infrastructure. The market was reflecting information about the world. But it was a mirror held up to a collective hallucination.

The NASDAQ peaked in March 2000 at 5,048. By October 2002 it had fallen 78%. It would not recover to that peak for fifteen years.

Then 2008. How we got there was different but the pattern was similar: an asset class got financialized beyond any connection to its underlying value, credit made it easy to participate with money people didn't have, and when the assumptions broke the cascade was catastrophic.

1928 was both crying and laughing.

As you saw in the Big Short, Housing prices were packaged into mortgage-backed securities, those securities had been rated AAA by agencies with catastrophic conflicts of interest, and the whole structure was built on the premise that American housing prices could not fall both nationally and simultaneously. 

Ben: Hell has a basement I guess. And that basement is part of a house with an adjustable mortgage rate.

Lehman Brothers filed for bankruptcy on September 15th, 2008, the largest bankruptcy filing in US history. The Dow lost more than 50% from peak to trough. The federal government intervened at a scale not seen since Roosevelt, backstopping banks, buying assets, and cutting rates to essentially zero, where they would remain for years.

Both crashes had the same underlying problem: the information the market was generating had become detached from reality. In 1999 the market was telling you Pets.com was a serious business. In 2007 it was telling you a mortgage-backed security full of subprime loans was as safe as a Treasury bond. 

We learned, once again, that the exchange is only as good as the information flowing through it, and when the incentives are structured to produce bad information, the market prices that in and calls it a day. 

Ben: The exchange doesn’t have an opinion, it’s just the scoreboard.

For most of the market's history, participating in it required friction. You needed a broker. You needed a phone call. You needed a minimum account balance that excluded roughly everyone who wasn't already doing fine financially. The commissions alone, $40, $50, sometimes more per trade, meant that casual investing wasn't really a thing. The market was open to the public in theory, but it was expensive and exclusionary in  practice

Ben: That’s a distinction that matters a lot when you are tracking who is able to build wealth over time.

I felt this firsthand. During my first ever internship in 2010, I tried to day trade shares of WebMD with $500 in my brokerage account. The good news was I was selling at higher prices than I was buying. The bad news was the commissions were more than $8 per trade. While I made a bit of money on the gross trades, I lost in aggregate on the net due to fees. Also, doing research on the stock convinced me I had cancer and a serious case of lupus.

Ben: I went in researching a sneeze and came out with a will.

Robinhood launched in 2013 with zero-commission trades and a smartphone interface that made buying a share of Apple feel like ordering a burrito on DoorDash, sans the Dasher fees. By 2021 it had 22 million funded accounts. The critics, and there were many, pointed out that gamifying investing for people with no investing experience during a period of zero interest rates and stmi checks was maybe not purely a public service. 

Looking back, both things were true. Democratizing access to markets is good. Wrapping that access in confetti animations and gifs every time you execute a trade is a different conversation.

The GameStop episode in January 2021 was the manifestation of that tension. A community of retail investors on Reddit coordinated to buy shares and options in a heavily shorted stock, forced a short squeeze that cost institutional hedge funds billions of dollars, and briefly made a company that sells physical video games in strip malls the most talked-about financial story in the world. Melvin Capital, a hedgefund, lost 53% in a single month. The little guys beat the big guys using the same information infrastructure the big guys built. 

Oh, then Robinhood halted trading in GameStop at the worst possible moment for retail investors and everyone remembered who actually owns the pipes.

Ben: If it weren’t for Vlad, I’d be a Game Stop millionaire.

Crypto arrived with a bigger promise: what if you didn't need the pipes at all? The blockchain is a distributed, immutable ledger, a record of transactions that nobody controls and everybody can verify, which in theory removes the need for the centralized exchange entirely.

No NYSE, no NASDAQ, no clearinghouse, no counterparty risk baked into every transaction by virtue of the fact that you're trusting an institution to be there tomorrow. Bitcoin launched in 2009, one year after Lehman's demise, which is either a coincidence or the most on-brand origin story in financial history.

Ben: Makes you wonder if Satoshi Nakamoto worked at Lehman and then found himself with extra time on his hands.

What crypto actually delivered was more complicated. While the technology worked, the ecosystem around it reproduced every pathology of traditional finance at roughly ten times the speed: insider trading, fraud, leverage, spectacular blowups, a class of early participants who got extraordinarily rich while retail investors bought in at the top, and also the Hawk Tuah girl had a coin. 

FTX collapsed in 2022 with $8 billion in customer funds missing and its founder tweeting from his underwear in the Bahamas. The Venetian lenders of the 14th century would have recognized the basic shape of it immediately, and Shylock would have gotten his pound of flesh rather than sending SBF to Rikers.

Today we have the clarity to see that there’s limited utility in many of these coins and they are even less a store of value. 

Ben: Also, mom, how did we get so rich? Oh, your dad was an early investor in Fartcoin.

Prediction markets are the newest iteration of the same underlying question the Amsterdam Stock Exchange was asking in 1602: can you build a mechanism that aggregates dispersed information and turns it into a price? Polymarket and Kalshi let you bet on the outcomes of elections, economic data releases, and world events. The prices they generate have, in several high-profile cases, been better predictors than polls, expert forecasts, or traditional media coverage. They've never gotten a Fed interest rate movement wrong. 

The stock market was never primarily a place to store value or speculate on companies. It was always, underneath everything else, an information machine. The capital flows are real. The wealth creation is real. The losses are very, very real, ask me about my Snowflake position any time. But the reason the stock market matters, the reason it became the central nervous system of the global economy, is that it creates and distributes information about the world that cannot be generated any other way.

When the NYSE auctioneer read off railroad stocks in 1850, he was generating a price that told nervous European investors whether to fund another thousand miles of track through Virginia. When Charles Dow added up twelve industrial companies and divided by twelve in 1896, he was creating a number that gave everyone, for the first time, a shared read on whether things were generally getting better or worse within the American economic machine. When the NASDAQ screen replaced the trading floor in 1971, it wasn't just cheaper and faster. Every broker saw the same price at the same moment, which meant the information was the market, not just a byproduct of it. 

When we look back, every technological upgrade in this story, the telegraph, the ticker tape, the radio, the computer, the smartphone, was really an upgrade to the information infrastructure first and a trading mechanism second.

Ben: It’s a story about information. How it’s created and how it's shared.

Markets don't fail when they go down. They fail when the information they're generating stops reflecting reality. The 1929 crash wasn't caused by stocks being overvalued in some abstract sense. It was caused by a margin system that let people make bets disconnected from any underlying assessment of value, which meant prices were reflecting the availability of credit rather than the health of businesses. 

The dot-com bubble wasn't caused by irrational people. It was caused by a market that had no good mechanism for pricing companies with no earnings history in a category that had never existed before, so it priced in pure narrative instead. 

And the the 2008 crisis was caused by rating agencies systematically producing wrong information about mortgage-backed securities, which the market then faithfully priced as if it were right. Garbage in, garbage out, every time.

Ben: Three crashes, trillions of dollars, millions of lives affected.

This is why the CFO's relationship to capital markets is more interesting than the job description implies. You are not just a person who accesses the market to raise money or manage a balance sheet. You are a participant in an information system. The numbers you report, the guidance you give, the narrative you construct around your business, all of it flows into a pricing mechanism that is constantly trying to make sense of the world. 

When you do that well, with specificity and honesty and an attempt to help investors understand what is actually happening inside your business, you make the market a little more accurate. When you do it poorly, or cynically, you contribute to the conditions that eventually produce the crashes.

Ben: No pressure though.

The nobles and merchants buying VOC shares in Amsterdam in 1602 couldn't access the same information as the ship captains and company directors. There may as well have been mermaids at sea that pulled your boat off the edge of the earth. That asymmetry defined who built wealth and who didn't for the next three hundred years. Some of those families own the real estate around the New York Stock Exchange today. The distance between then and now is the story of that gap slowly, unevenly, and still incompletely closing. Merrill taking his research to the suburbs. NASDAQ putting the same screen in front of every broker. Robinhood eliminating the $8 commission. Prediction markets letting anyone in the world put money behind their read of a Fed decision or a Venezuelan government takeover and see immediately whether they were right.

The market has always been, at its core, a bet on whether you have better information than the person on the other side of the trade. How you participate in creating that information is something to think about.

Wishing you trade at a high revenue and EBITDA multiple,

CJ