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hackNY Speaker Series – Barry Silbert

August 12, 2011

On Wednesday, July 27, 2011, the SecondMarket office played host to the hackNY fellows. Barry Silbert, the founder and CEO of SecondMarket, spoke to us.

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SecondMarket is “an online marketplace for buying and selling illiquid assets” – it is, quite literally, a secondary market for trading different illiquid assets – for example, employee-to-employee/investor share-sales before a company has actually gone public. And Barry Silbert doesn’t need an introduction in the startup world – and for that matter, in the finance world – today.

The markets are broken
According to Barry, modern public markets like the NYSE and the NASDAQ are broken. Using a number of different graphs and examples as evidence – including the decreasing rate of IPOs over the past decade, the flash crash from May 2010 (on which I have written a paper), the impact of high-frequency traders, tightening spreads in the public markets, and the eye-popping stat that the average holding period for a stock today is 2.8 months – Silbert claimed that the public markets are broken, probably even beyond repair, and that the future lies in private markets.

Regulation – a necessary hassle?
When I asked him about regulation and whether it ever seemed too daunting to him, Silbert replied that regulation is something they just have to deal with. They have to spend millions of dollars every year in legal compliance but the bright side is that it’s worth it – since that earns them the valuable trust of companies and investors.

Don’t ever outsource development. Ever.
Silbert talked about a few blunders his team made when they were trying to get off the ground in the beginning. He strongly recommended against outsourcing development just for the sake of saving some money.

“Don’t fear the establishment.”
Silbert said that we shouldn’t fear the establishment, as “big companies are very slow to move.” (Chris Dixon spoke about attacking the incumbents too) He advised that we should “launch with just an MVP.” He added, “We tried to build something for everybody which was a mistake.”

We are lucky.
In Silbert’s words,

“We are the luckiest generation in the world. It’s very easy for us today to build something world-changing.”

Silicon Alley or Wall Street?
Having been a banker himself, Silbert called entrepreneurs “well-rounded” compared to Wall Street-ers, and warned us that if we did want to do investment banking, we should just remember to eventually get out and not stay in for the long haul.

After Silbert’s talk ended, we spoke to some other employees. I spoke to Dominic Preuss, ex-Googler and Chief Product Officer at SecondMarket about employment opportunities at startups and how they compared with bigger tech companies.

Micro-who?
Preuss emphasized that the big, stable startups in New York – like SecondMarket, Knewton and Foursquare are ready to pay engineers market or above-market salaries, equivalent in cases to even Microsoft. This was fairly eye-opening, at least for me. Money is an important factor when considering a job right after college and such a statement helps lessen that factor of uncertainty about pay (or apprehension about being under-paid). On top of that, “Working at a startup will be great because you’ll get to learn so much.”

“We also kinda have to pay people more here just because the cost of living in New York is higher and we understand that. You can survive on $50,000 a year on the West Coast, but that amount won’t sustain you in New York.”

It was an interesting session for all of us (if slightly strange for those un-initiated to the world of finance) and we came away with some valuable insights – and a photo with the Wall Street bull right outside.

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