Leadership And Building Institutional Exchanges

In this interview with Hiten Patel, David Mercer, CEO of LMAX Group, discusses the journey of the company, its differentiated offering and determination to shake-up the foreign exchange market. David shares how LMAX Group adapted and pivoted to meet the changing demands of the market and expanded into the digital assets space. He also emphasizes the importance of focus, discipline, and adaptability in business, and recognizes the value of empowering people in a company. David references Tim Cook, CEO of Apple, as an inspirational leader who has made significant contributions to Apple and the technology industry, creating a better ecosystem for all. The conversation provides insights into David's journey as LMAX Group's CEO, his views on the crypto market, and his leadership philosophy.

Key talking points:

• Disintermediation within the market and bringing transparency to foreign exchange.
• The challenges and opportunities within the digital assets space
• How the digitization of assets and the use of blockchain technology can bring greater ease of market access and more efficient record-keeping.
• Valuing people and the need to create a supportive and inclusive work environment.

This episode is part of our Innovators' Exchange series. Tune in to an inspiring interview, touching on the key themes, such as leadership, adaptability, and challenges in the business environment and more.

This episode was recorded in May 2023. 

Subscribe for more on: Apple Podcasts | Spotify | Youtube | Podscribe

Hiten Patel

Thank you for joining us today. It's Hiten Patel from Oliver Wyman, head of our financial infrastructure, technology and services platform. And I'm delighted to be joined today by David Mercer, CEO of the LMAX Group.

David Mercer

Hi Hiten, good to be with you today.

Hiten Patel

Thanks for making the time, David. It’d be great, just to start out by giving a brief intro for those who are not familiar with the LMAX group around what you guys do.

David Mercer

Okay, what we do? I guess what I what I do is ostensibly the same by virtue of title for the last 12 years. I'm CEO of LMAX Group. We operate five currency exchanges, globally trade $25 billion a day. The world's leading institutional cryptocurrency exchange and we've got 11 offices globally and 270 staff. But it wasn't always that way Hiten.

So I took over as an interim CEO of effectively a failed startup 12 years ago on March 31^st 2011, when the chairman knocked on my door and said want to take a look at something? I more or less said no. But then as it was just down the road from where I lived, so I went and had a look.

And what I discovered when I looked under the hood was that they made all the classic startup mistakes: hadn’t completed the product, focused on the wrong segment, had spent all their money. But under the hood there, there’s a fabulous world leading technology that I thought might be able to change a market they hadn't even thought about. So LMAX Group for London Multiasset Exchange was focused on disintermediating the retail equities market. And I tinned that immediately to focus on the world's largest institutional market, foreign exchange, which traded $7 trillion a day. So in the midst of that transition, when I'd gone from being interim to full time CEO, we did an NBO (next best offer) in 2013, that's when you kind of know you really have skin in the game.

And I don't know what possessed me. I'm not sure I'd do it again. But myself and nine others known as the garage crew here at LMAX wrote cheques of their own, with their own money and bought the company. Did this NBO at the time, to be clear, we were losing around £800,000 a month. And the first month I walked in, we lost £1.5 million.

The company that I bought had enough cash on the balance sheet to exist with that burn rate for another ten months. So as I say, if I had my time again, would I be brave enough? But we saw something, we thought we could revolutionize the FX market, we could bring greater transparency to the market. We followed a plan, and because we had skin in the game, we really had that effervescence, that discipline, that motivation, that rigor to make it work.

And we got to break even within three years. And then the rest is kind of history in that we proved the concept. I think I bumped into you the first time back in 2021 when we did the deal with J.C. Flowers. So we sold 30% of the business to Flowers at a valuation of $1 billion. That was a sort of a rollercoaster ride, if you look at that first ten years, very transformational for me in terms of the role, in terms of transformational CEO and sort of owner/ entrepreneur CEO.

And right now the challenges are very different. Everyone looks at this billion dollar company and says, "Oh, it must be easy now", but actually it might be the hardest time of all because now you have to transition a company that's had some success into a company that can create legacy and create a company that will withstand good markets and bad markets and still be in existence in 10-20 years time.

So in a nutshell, we still do the same thing. We still operate FX exchanges and crypto exchanges. But the job has changed a lot in the last 12 years.

Hiten Patel

That's awesome, it's quite the journey. And it's interesting that the number of people who tell me that these interesting journeys and always start with a no. And I have underlined the word garage crew as well, but I think you might need to upgrade the wardrobe if you want to carry that more externally as a garage crew. So let's stay historic.

You know, there was already a couple of platforms right in the FX space in where you where you decided to park up. Like what drew you to this idea that it could be done better?

David Mercer

I think, you know, probably the culmination of 30 years of learning. I’ve been in capital markets over 30 years. And throughout these 30 years, what you've seen is wider market access and if you like, democratization of the markets. You know, when I was a young fella sitting on the desk in an investment bank, they told me that every seat costs 250 - 300,000 dollars.

That in mind, that's 25 years ago and actually to have all the data required to trade, to put a trade on to trade fixed income, emerging markets at that time would cost about one and a half million dollars per head. And just for those specific traders, then you had the advent of the electrification of the market, you had direct dealer access, you had people being able to trade from a portal, as it was called back in the day.

And I just lived, if you like, through this democratization of the market. And when I looked at the foreign exchange market, the incumbents are big names, massive names in Chicago, a massive name in London. But you sort of go, well, does that mean they win forever? Is foreign exchange perfect? And it was far from perfect.

So I, if you like, took all the learnings I've had over 30 years and said there has to be a better way or there has to be an alternative. It also happens to be the world's largest capital market. So it can't be owned by a duopoly. So if you like, LMAX Group for me is just seeking to achieve everything I've been focused on for the last 30 years, and that's the democratization of financial markets.

Hiten Patel

Yeah, funny because I spent a lot of time around 2009-2015 as a consultant advising on all of this market structure reform, post financial crisis, and we'd always draw these charts around the level of electronification and FX is always at the top end and looked as like the golden child. And then there was equities and everyone was poking their finger at credit and rates.

And interesting hearing your approach of 'I'm going to go there and I'm going to do that better'. Talk to me a little bit about how FX has got you into the crypto digital asset space. For those out there who want to understand what's the relationship there, what's kind of got you to bring those asset classes together in your group?

David Mercer

Actually that conversation or that journey started six years ago. So in 2017, my largest clients outside of the banks, the proprietary trading firms, you know them well. The big guns at the top of every futures exchange, every asset class in the world, in Chicago, London, and New York, said, David, we're trading a lot of this new asset class, have you heard much about Bitcoin and crypto? What we need is some institutional framework, institutional style technology so that we can mitigate risk because ultimately, we're trading in this retail market all around the globe on pretty high latency. So slow and ponderous technology, we need somewhere we can exit with like-minded participants. We kind of thought that was interesting.

I’d first come across Bitcoin, we had a session in here in LMAX Group in 2013 and we said, look, it's too early for us, we don't know enough about it, it doesn't sit within our FX roadmap. So we left it alone for three or four years. Maybe that was the wrong decision, maybe it was fortuitous. So we took a deeper look in 2017.

And actually if you look at the most traded pairs today BTC USD would still be the biggest at 45%. Back in 2017, it was around 60% of the whole crypto market. And actually just by that mnemonic, BTC USD. This looks like a currency. This trades like a currency, this charts like a currency. The practitioners who want to trade in are currency dealers or they are market makers.

So we did a bit of research internally and discovered that actually everything we built in terms of exchange rate framework fitted Bitcoin, fitted Ethereum. One problem was there was no prime brokers and there was no great banking of this product. So we had to upskill ourselves and learn how to integrate with the blockchain and effectively become custodians, so become our own bank.

So that was the biggest challenge. But ultimately it took us six months really to go from field to fork or from that first request to launching LMAX Digital. And I mean, just if you roll forward five years, you know, we've had a lot of success with that obviously, at the tops and tails of the market 2021, we were clearly the number one institutional crypto exchange and only one retail venue traded more Bitcoin than us.

But when I looked at it overall from a group perspective, Bitcoin was actually our eighth most traded currency pair that year. It dropped a little bit last year, 2022 into 10th position. So for us it looked very much like a currency. It still does. Don't worry, don't poke me regulators. It's fine if it's a commodity.

By the way, I have no problem with Bitcoin and Ethereum being commodities and I have no problem with some others becoming securities. But for us, the price action, the price formation, the people who traded it, the way we traded the price discovery mimics a lot of what we did in currency markets.

Hiten Patel

So hearing you describe that sounds like a demand driven start to the journey. Sounds like there's a lot of overlap from the way that you build and run the platform on the FX side. The other thing that strikes me is again, another one of your, what seems like a contrarian view when it seemed at that time when we were looking at the market, everyone was running to the retail side of the digital asset space, you guys parked up, and focused on the institutional side.

I guess it's how would you feel about kind of positioning around that, given it was a lot more focus on the retail side? I guess it's been a lot more volatile. It would be great to kind of, you know, take a step back and reflect on what are the differences, the pros and cons of being on the institutional side of this versus the retail side of this one?

David Mercer

Well, first of all, institutional or the wholesale business is what we do. So we know that well, we build product for that market segment. Well, we build our technology product well for that. If you look at retail markets, both in foreign exchange and in crypto, the key to being good in that segment is all about online marketing, online onboarding and servicing millions of customers.

And that is not what happens in the institutional market. If you pick out the Bankers Almanac and you'll see a few hundred banks, that would be key to you, the propriety trading firms, as a few hundred of those that are key to you. But what we did at LMAX Global, which is our sort of retail facing or retail broker facing brokerage house, we decided to become the broker of brokers in foreign exchange.

So we have 200 brokers as customers so we can service them well, we can’t service 1 billion or 2 million customers as well. So my point being that if crypto was always going to be a retail product, it might be that LMAX Digital wasn't going to be a big part of the LMAX Group's portfolio. Our belief though is that this nascent asset class has something that can sort of promote it to the same value as commodities. If you look at gold, it typically trades in a range of 10 to $12 trillion. Crypto has a market cap today of around $1 trillion. So we thought look, institutions are going to enter this space led by the banks. And you've seen things recently with the likes of BlackRock and Invesco entering the space and we feel we can service that well.

And whilst there's only retail flow, then the retail brokers themselves, the market makers on those retail platforms will need somewhere to exit risk and somewhere to mitigate risk with institutional partners. So we decided that's our forte, that's our wheelhouse. We'll focus on that. And if you like it then we'll take a little bit of a bet that this asset class has more than just a retail flavor to it down the line.

That's what we thought in 2018 when we launched LMAX digital as it is today in 2023, that's still what I believe. You know, I believe that blockchain technology, crypto and tokenization will revolutionize a lot of traditional finance in the years ahead.

Hiten Patel

It'd be remiss of me not to ask, given your expertise in your position, I mean what's your take on the events that's played out over the last 12 months or so in the crypto digital asset space? I know tons of column inches have been written, lots of voices have been heard, but I welcome your perspective, David, on how you see things.

David Mercer

Well, it's been a real challenge, if I'm honest there's an awful lot of reputational contagion around that. And what you've seen is bad actors creating an implosion after implosion. It's been hard to know whether you build from what I see is an inevitable digital future, oblivious to the doom and gloom that those press inches cover.

But, you know, our viewpoint is that it's here to stay and we must persist and try and build fairer markets and a better ecosystem for all. What's clear though, is that the actions of those bad actors have forced some of the more significant institutions to hit the pause button. So certainly we haven't seen the institutional adoption I would have expected in 2022 and 23.

But this is key. You see, if you look hard, you see a lot of efforts from the biggest players, bulge bracket banks talking about digitization of assets, tokenization of assets. You see the biggest asset managers in the world launching or applying for ETFs. I think the last time I looked, bulge bracket banks themselves actually had something like $27 billion of assets in custody related to crypto, and that's tiny compared to all the assets they have in custody is about $200 trillion of assets in custody today. But under the radar, they're still working on it. And I think in the meantime, we're going to have to weather this storm. I hope there's no other bad actors out there, but I suspect there is. We need them to be flushed out and then we can get on with building an ecosystem that is fairer for all, that works for all.

But I think we're still not quite in the eye of the storm, but the storm is still brewing. And I expect it all to sort of clear and we can truly move ahead in 2024 and 25.

Hiten Patel

That's interesting. That's a helpful framing. I've picked up a distinction just hearing you talk, I guess there is digital assets and then there is the digitalization of assets, right? You know, you make that distinction, just drawing on that point. Talk to me a little bit around how you see the market structure playing out going forward. And is that an important distinction that you're making?

David Mercer

It's massive Hiten, and I wouldn't say we've cracked it but there's a lot of good things that come out of blockchain technology and just even for one, just the immutable nature of a record. So if you imagine I spoke to one large bank and they said, you know, we've got 20,000 people running around effectively chasing the same record.

They give up the efficiency in the back and middle offices if counterparts on both side of a trade are looking at one of the regional records, so I think inevitably there's going to be some big bang disruption. If you're not considering how innovative technologies like Defi and Blockchain will disrupt traditional financial services, then I think you'll be left behind.

Right? You want to be on the right side of this. Much the same is going to be the right side of the Internet or the electronification of the markets. But to answer your question directly, look, there's a bit of fear around. If you mention the word crypto right now, you're not going to get a lot of buy in from institutions as we sit here today in 2023, as soon as you mention using blockchain to tokenize assets or for record keeping or for credit, all of a sudden they're all ears.

So I think and I look at some of the biggest banks you can look at, it's pretty public. You go and look at JP morgan on the side of that digital asset group. We have a look at that, the permissioned blockchain and Onyx coin. They're thinking about what the market will look like ten and 20 years from now.

The traditional markets today are not perfect. Right? Very simple. They're a bit clunky and they're built for old technology. Simple thing Hiten, you know settlement is done on a t plus 2 basis, that would seem to be outdated. You know markets open for 8 to 10 hours a day if you’re looking at the equity markets and only five days a week that would seem outdated. If you and I rocked up on Mars and we jumped into one of Mr. Musk's spaceships and had to devise capital markets tomorrow, it's unlikely we're going to create the same plumbing we currently have.

And I think blockchain and the digitization of assets we currently trade is inevitable. Going back to one of my earlier points that will bring greater ease of market access and if you like, more frictionless access to those markets. And I think that’s going to be better for all, whether it be individuals, whether that be institutions. So, you know, we spend a lot of our time in the moment thinking about how the foreign exchange market will look in ten years time, and it won't happen in 23, 24, 25.  That it will happen within the next decade and how other markets will do the same.

So I think we all need to get on it. Certainly, you know, doing your job, I'm sure, every customer must be looking at that transition and what's going to happen in their life and in their businesses over the next decade.

Hiten Patel

Yeah, very well put. Very well put. One last question on this space. Let’s switch gears. I guess one thing that always bugs me is being an advisor, not a practitioner, is how sometimes things could be misunderstood when you're not on the front line. What point or couple of points do you think you would want the world to better understand all about the digital asset space? So you think they may have misunderstood from a practitioner's lens that you'd want to want to get out there?

David Mercer

Well, I think this goes back to the last point. I mean, is there a better way? You don't have to be a believer in Bitcoin. You don't have to be a believer in Ethereum, right. Let's face it. Bitcoin is quite old now, because of all of that. So my challenge to that industry and the Bitcoin evangelists is, well, you know, it's time to show up at this time to prove your point.

It's been around for 15 years. It hasn't transitioned. The market as we thought, it’s still relatively quite small. But you know, the basis of it was decentralized and anonymous, trustless. Look, regulated markets are going to struggle with anonymous and they're going to struggle with trustless. But they may not struggle with decentralized. So there might be room for, you know, permissioned blockchain at some stage.

You know, anybody, Wall Street, anything you want to have an account with you with Oliver Wyman, you want to open an account with your accountant, with your lawyer, with your banker, with your broker. You know, you have to fulfil normal KYC, but it's underlying it. What have we learned? I mean, the near instantaneous settlement that we've learned that we've been performing in LMAX Group, with LMAX Digital for six years.

David Mercer

You know, we settle dollars and we settle coin 24 hours a day, seven days a week. And that surely has to be a good thing for traditional markets. Why do you have to wait? Why do you have to rush for a Friday night? 5 p.m., right. To get your payments done or to hit your portfolio? Why can't you deal when you're time rich on a Saturday or Sunday?

So surely that's better for all. And look at the underlying blockchain technology and how you can transfer ownership of assets, how you can stop dealing with paper, how you can look at one record and be certain that that's what you've traded, not wait for some accounting error, some booking error, that's happened in the front office.

David Mercer

So I think look at the power of everything that's underneath. I'm not here today to convince someone that Bitcoin is better than an Argentinian peso or US dollar. There might be something else that comes out of the woodwork. But underlying all of that, the ease of transferrance of asset ownership and record keeping is the key learnings we should take away from the advent of crypto over the last ten years or so.

Hiten Patel

Yeah, the thing I take away from that hearing you talk is it's about the capability rather than the actual asset itself and what it brings. So I'm going to switch gears slightly and one of the things we like to do for the listeners is to kind of get a bit more insight into the life of CEO, life of founder.

What can they draw from it and learn themselves, so with more of your David Mercer hat on than your LMAX Group CEO hat, it would be great just to talk through and share big challenges you faced recently how you navigated that, what you take away from it and pass on to others.

David Mercer

Wow. The David Mercer hat and LMAX CEO hat, are sort of inextricably linked. So overall my advice to people is if you think you can leave work in the office and go home, then forget about it. You have to be passionate about your job and you have to love your job. I haven't worked a day in my life because I love what I do.

So number one, it is all encompassing and I still do have fun and I'm sure we'll get to that. But you've got to own it and you've got to constantly be thinking about how you can improve it. Look, I think you’ll have seen it from your standpoint and you look at a lot more customers than me, but the last three years have been hugely challenging for all businesses.

And if I look within capital markets and look within LMAX, it's like almost a triple whammy. So the business world just changed so much over the last three years. It's compounded all the change of competitors at great speed. I don't think anyone has dealt with a scenario like this before. But when you come out of this, you're going to see real changes that could be exciting for us.

So if I just put my finger on two or three of those challenges. First of all, people right? They are your assets, in any company that's the most valued, prime asset. The way they work, the way they behave has changed, so fully or partially remote is the question. That brings challenges and opportunity. You have a wider talent pool.

You have theoretically lower cost of hire but in reality, you have difficulties in knowledge transfer and training. Well, actually what I learned at the end of all of this is that one size doesn't fit all. So you could run your company with a people size problem that is different than it was three years ago.

Then of course, you have economic crises again with many of them coming at the same time. You've got rates in recession and then you've got some of them caused by COVID, some of them are coming anyway. And then you've got the events in Russia and in Ukraine, which are unique sets of people, supply chain crisis problems that we haven't experienced in the Western world, you know, for over 70 years. And then in the meantime, almost in the backdrop of that, you've got this rapid digitization.

You know, folks were working from the advent of COVID and before 2019, 2020, people were really analyzing how AI machine learning how blockchain technology, how decentralized finance, could change the markets. And all of a sudden, it's on us all at once. And those three things, it is like, wow, now is a good time to be alive.

Now is a good time to be in business. But it's not just traditional crises I've dealt with within capital markets. It's sort of you weather the storm and you come out better the other side and you have slight changes. I would say the last 2 to 3 years I've seen the extent of change that I probably would normally recognize in a decade or two decades.

Hiten Patel

That's interesting. Interesting. It's your people as an asset point is one that strikes me. It comes up in all of many of these conversations, which I always use the word irony in the wrong way, but I think it's interesting given we're talking to financial data, financial technology, financial infrastructure, businesses that people don't often always associate is people being at the heart of it, and it remains the case.

I think that's an interesting reflection that people does remain the key asset to what you guys are doing.

David Mercer

It is so different these days. It's, you know, it's like I think whenever I started my business career, you could look at a floor of investment banks and everyone had similar skillsets and perhaps similar backgrounds, but now in a company like LMAX Group and we’re relatively small company. I've got everything from rocket scientists to graphic designers as from 60 year olds to 18 year olds.

Their requirement, that idea of treating them like an asset, making sure they feel valued and enhancing their career, is not the same for all of them. And you've got to get it right. So I need all of those 16, 18 year olds, sixty year olds and the rocket scientist and the graphic designers to be coherent, to work together to make us a better company.

So, yeah, it's a fun challenge. I think you have to enjoy the people challenge if you want to run a company, if you want to build a business.

Hiten Patel

Well, it's great just hearing you put that so high up on your agenda. Right? When I start out as an intern, back in like 2005, it was. You're lucky to be here, you know, and you'll get what you get. I'm speaking to people around the industry now. It's great that companies like yours are putting people, employee propositions so high up on the agenda, and I think that's giving people who want to be in and around the capital market space a bit more of an option right around how it is they want to play it.

So I think that's been a big shift I've noticed over the past few decades. Last one in this space, I guess is there anything you'd like to share around what you do outside of the professional sphere? Any interests, any hobbies, and how has that played back into what you do as a day job?

David Mercer

Yeah, I just sometimes think most people have external pursuits to sort of clear your mind of business and get out of the weeds if you like. So I've done various things, various challenges. So, you know, I've trekked to the North Pole and we’re in the Guinness Book of World Records for the most northern game of rugby, I've climbed things like Kilimanjaro, I've just completed a marathon and am training for another one.

So when you do all that, most of those things, by the way, even the latest marathon was a team pursuit, you learn a lot and it's quite nice Hiten to not be the boss. I mean I did the Sydney Hobart yacht race as well so the Everest of yacht racing and there I’m the worst sailor of everyone on the boat and I was just part of the team so it was quite nice not to have to be a leader.

But what do you learn? And just three things you learn that you have to somehow transfer into business in that in all of those pursuits, focus and discipline were all key, very, very key in that you can't train to run a marathon and also optimize your sprint time at the same time. You've got to just focus on that and you can't rock up on race day and say, okay, I guess I can do just 26 miles.

Now you have to have the discipline to follow a training plan. So in fact, if you run a marathon or if you sail a yacht race, that's just the glory day. All the work you've done to achieve that was done previously. So I think that learning and focus and discipline and I'm telling guys at work that what you do now, laying the foundation is so key so you can enjoy the success that might be two or three years away.

And that's normally the case. I mean, we enjoyed fabulous success at LMAX Group and LMAX Digital, in 2021, but we didn't do anything different.  We've done all the hard work in the previous five years. I think getting into the previous point about the challenges in business today. Probably the biggest thing I learned was that you have to be able to adapt.

Having the ability to adapt and pivot is key, you know, and if I look at the North Pole. I mean, completely not in control of that. The weather is in control of you. So you have the best laid out itinerary. You say, that's when we're going to do it. That's when we’re going to hit the North Pole. All of a sudden the weather comes in and you're stuck at base camp for three days.

For four days. And in fact, it happened at both ends. And then once you’re at the North Pole played a game of rugby, had the world record, couldn’t get out. So you're stuck there, what is your coping mechanism? What's your plan for those three days sitting around in a tent? Another one is one of my friends on the expedition was convinced this was a skiing challenge.

So we all learned to cross-country ski. We did that. And then you get there and you work out that it's actually quite hilly. These skiis aren’t going to work and then you have bits of rock poking out at certain places. So ultimately we ended up trekking. Even worse than that, one guy turned up, size 13 feet, Absolutely did not fit the skis. So for him, it was always a trekking challenge.

So we had to adapt, we had to pivot. And I think that's the same going back to business today. There's absolutely no way as I sit here you could say in 2023 and say, David, did you map out LMAX Group perfectly when you walked through the doors in 2011?

Absolutely not. I've adapted and I've pivoted all the way. My sort of close on that bit is that everything you learn in life, everything to learn in business - the perfect plan just isn't possible. Perfection is impossible. Let's control what we can control and then adapt to the rest.

Hiten Patel

I don’t think there's enough self-help books out there. David. I think you need to write one. I've a few things I've called out there that resonate, and I think this your last point on adaptability, right? This whole being comfortable with what's outside of your control, I think over the last couple of decades we've ever been able to control so many elements and this kind of ongoing optimization, that becomes a big point.

And I like your concept of glory day. It's interesting. Often the big event and the big moment is actually the glory day. If you've done the practice and then the final bit that resonates is just enjoying not being a leader in those situations. I guess people probably have the lazy assumption that you enjoy leading and so therefore your pastimes should be that way as well.

So thank you for sharing. We probably could do a whole 30 minutes on that. But let me bring this to a close. The final thing that we ask our guests is to share the spotlight. You know, we're trying to raise this idea of community and bring visibility to interesting things that are out there.

So I'd love you to throw the spotlight, call out either an individual or a company that's not your own. That is doing impressive things or has impressed you that you think listeners should pay attention to or go out there and look up.

David Mercer

I think, you know, the person I want to mention doesn't need any shoutouts. He runs for the most valuable companies in the world, but I think he doesn't get enough credit. Tim Cook, CEO of Apple. I think the way he stepped into a massive pair of shoes, did it his own way and made significant changes to that company are admirable.

He would appear to be an amazingly humble character and what he's done is create new product, ship more product in a less extravagant way than Mr. Jobs, who I was also a big fan of and delivered phenomenal business results and, dare I say, delivered phenomenal business results with humanity at his core. You know, I think this gentleman could make a difference not just in business life, but in the world at large.

I mean, one of the things he said early on was that privacy is a basic human rights. He deserves privacy. He came out as the first openly gay CEO of any future 500 company. He didn't do that for himself, you know, because he guarded his privacy. And he has a right to that privacy. He did it for all the other up and coming young leaders to show them it was possible.

There's no way in the world this gentleman wanted to be a flag bearer or waver for that. But he stood up not just for the LGBT community, but for all minorities and everyone who has experienced discrimination, and he's done it quietly and humbly. If I can transform, you know, his point of differentiation a little bit to business. He's taken all that just the way he gets his company to work.

Going back to the things we discussed and with LMAX Group, I read recently, he says in the company expects innovation to happen throughout the company, not just from the innovation team, right? Not just from the product development team, but everyone must innovate. I also like the fact that he does it in a much quieter way than people like Mr. Musk, but they are constantly innovating his stock line is that anything is possible.

Go back to my analogy about building capital markets on Mars. Go back to first principles. Apple has always done that. Tim Cook has kept that going, and I think he spends most of his time, and believe it or not, I think most CEOs should spend most of the time thinking about the future of future products. So I know that Apple and Tim Cook don't need shout shoutouts from the likes of David Mercer but I certainly think he's an inspirational leader and the right leader at this time in history.

Hiten Patel

Thank you for sharing. It's a really interesting example and hearing you talk. One of the things that strikes me is for a lot of people out there who do exceptional things and deliver exceptional outcomes, what I think is a bit more unique is when the expectation is sky high, there is the delivering that when the expectations are sky high, that makes it particularly more challenging.

So thank you for sharing. Look, we're up against time. You're a busy man. Thank you very much, David, for joining us today and sharing your perspectives. It's been great hearing from you.  Thank you for coming on the show.

David Mercer

Thanks very much, Hiten. I've enjoyed it. Good luck.

In this interview with Hiten Patel, David Mercer, CEO of LMAX Group, discusses the journey of the company, its differentiated offering and determination to shake-up the foreign exchange market. David shares how LMAX Group adapted and pivoted to meet the changing demands of the market and expanded into the digital assets space. He also emphasizes the importance of focus, discipline, and adaptability in business, and recognizes the value of empowering people in a company. David references Tim Cook, CEO of Apple, as an inspirational leader who has made significant contributions to Apple and the technology industry, creating a better ecosystem for all. The conversation provides insights into David's journey as LMAX Group's CEO, his views on the crypto market, and his leadership philosophy.

Key talking points:

• Disintermediation within the market and bringing transparency to foreign exchange.
• The challenges and opportunities within the digital assets space
• How the digitization of assets and the use of blockchain technology can bring greater ease of market access and more efficient record-keeping.
• Valuing people and the need to create a supportive and inclusive work environment.

This episode is part of our Innovators' Exchange series. Tune in to an inspiring interview, touching on the key themes, such as leadership, adaptability, and challenges in the business environment and more.

This episode was recorded in May 2023. 

Subscribe for more on: Apple Podcasts | Spotify | Youtube | Podscribe

Hiten Patel

Thank you for joining us today. It's Hiten Patel from Oliver Wyman, head of our financial infrastructure, technology and services platform. And I'm delighted to be joined today by David Mercer, CEO of the LMAX Group.

David Mercer

Hi Hiten, good to be with you today.

Hiten Patel

Thanks for making the time, David. It’d be great, just to start out by giving a brief intro for those who are not familiar with the LMAX group around what you guys do.

David Mercer

Okay, what we do? I guess what I what I do is ostensibly the same by virtue of title for the last 12 years. I'm CEO of LMAX Group. We operate five currency exchanges, globally trade $25 billion a day. The world's leading institutional cryptocurrency exchange and we've got 11 offices globally and 270 staff. But it wasn't always that way Hiten.

So I took over as an interim CEO of effectively a failed startup 12 years ago on March 31^st 2011, when the chairman knocked on my door and said want to take a look at something? I more or less said no. But then as it was just down the road from where I lived, so I went and had a look.

And what I discovered when I looked under the hood was that they made all the classic startup mistakes: hadn’t completed the product, focused on the wrong segment, had spent all their money. But under the hood there, there’s a fabulous world leading technology that I thought might be able to change a market they hadn't even thought about. So LMAX Group for London Multiasset Exchange was focused on disintermediating the retail equities market. And I tinned that immediately to focus on the world's largest institutional market, foreign exchange, which traded $7 trillion a day. So in the midst of that transition, when I'd gone from being interim to full time CEO, we did an NBO (next best offer) in 2013, that's when you kind of know you really have skin in the game.

And I don't know what possessed me. I'm not sure I'd do it again. But myself and nine others known as the garage crew here at LMAX wrote cheques of their own, with their own money and bought the company. Did this NBO at the time, to be clear, we were losing around £800,000 a month. And the first month I walked in, we lost £1.5 million.

The company that I bought had enough cash on the balance sheet to exist with that burn rate for another ten months. So as I say, if I had my time again, would I be brave enough? But we saw something, we thought we could revolutionize the FX market, we could bring greater transparency to the market. We followed a plan, and because we had skin in the game, we really had that effervescence, that discipline, that motivation, that rigor to make it work.

And we got to break even within three years. And then the rest is kind of history in that we proved the concept. I think I bumped into you the first time back in 2021 when we did the deal with J.C. Flowers. So we sold 30% of the business to Flowers at a valuation of $1 billion. That was a sort of a rollercoaster ride, if you look at that first ten years, very transformational for me in terms of the role, in terms of transformational CEO and sort of owner/ entrepreneur CEO.

And right now the challenges are very different. Everyone looks at this billion dollar company and says, "Oh, it must be easy now", but actually it might be the hardest time of all because now you have to transition a company that's had some success into a company that can create legacy and create a company that will withstand good markets and bad markets and still be in existence in 10-20 years time.

So in a nutshell, we still do the same thing. We still operate FX exchanges and crypto exchanges. But the job has changed a lot in the last 12 years.

Hiten Patel

That's awesome, it's quite the journey. And it's interesting that the number of people who tell me that these interesting journeys and always start with a no. And I have underlined the word garage crew as well, but I think you might need to upgrade the wardrobe if you want to carry that more externally as a garage crew. So let's stay historic.

You know, there was already a couple of platforms right in the FX space in where you where you decided to park up. Like what drew you to this idea that it could be done better?

David Mercer

I think, you know, probably the culmination of 30 years of learning. I’ve been in capital markets over 30 years. And throughout these 30 years, what you've seen is wider market access and if you like, democratization of the markets. You know, when I was a young fella sitting on the desk in an investment bank, they told me that every seat costs 250 - 300,000 dollars.

That in mind, that's 25 years ago and actually to have all the data required to trade, to put a trade on to trade fixed income, emerging markets at that time would cost about one and a half million dollars per head. And just for those specific traders, then you had the advent of the electrification of the market, you had direct dealer access, you had people being able to trade from a portal, as it was called back in the day.

And I just lived, if you like, through this democratization of the market. And when I looked at the foreign exchange market, the incumbents are big names, massive names in Chicago, a massive name in London. But you sort of go, well, does that mean they win forever? Is foreign exchange perfect? And it was far from perfect.

So I, if you like, took all the learnings I've had over 30 years and said there has to be a better way or there has to be an alternative. It also happens to be the world's largest capital market. So it can't be owned by a duopoly. So if you like, LMAX Group for me is just seeking to achieve everything I've been focused on for the last 30 years, and that's the democratization of financial markets.

Hiten Patel

Yeah, funny because I spent a lot of time around 2009-2015 as a consultant advising on all of this market structure reform, post financial crisis, and we'd always draw these charts around the level of electronification and FX is always at the top end and looked as like the golden child. And then there was equities and everyone was poking their finger at credit and rates.

And interesting hearing your approach of 'I'm going to go there and I'm going to do that better'. Talk to me a little bit about how FX has got you into the crypto digital asset space. For those out there who want to understand what's the relationship there, what's kind of got you to bring those asset classes together in your group?

David Mercer

Actually that conversation or that journey started six years ago. So in 2017, my largest clients outside of the banks, the proprietary trading firms, you know them well. The big guns at the top of every futures exchange, every asset class in the world, in Chicago, London, and New York, said, David, we're trading a lot of this new asset class, have you heard much about Bitcoin and crypto? What we need is some institutional framework, institutional style technology so that we can mitigate risk because ultimately, we're trading in this retail market all around the globe on pretty high latency. So slow and ponderous technology, we need somewhere we can exit with like-minded participants. We kind of thought that was interesting.

I’d first come across Bitcoin, we had a session in here in LMAX Group in 2013 and we said, look, it's too early for us, we don't know enough about it, it doesn't sit within our FX roadmap. So we left it alone for three or four years. Maybe that was the wrong decision, maybe it was fortuitous. So we took a deeper look in 2017.

And actually if you look at the most traded pairs today BTC USD would still be the biggest at 45%. Back in 2017, it was around 60% of the whole crypto market. And actually just by that mnemonic, BTC USD. This looks like a currency. This trades like a currency, this charts like a currency. The practitioners who want to trade in are currency dealers or they are market makers.

So we did a bit of research internally and discovered that actually everything we built in terms of exchange rate framework fitted Bitcoin, fitted Ethereum. One problem was there was no prime brokers and there was no great banking of this product. So we had to upskill ourselves and learn how to integrate with the blockchain and effectively become custodians, so become our own bank.

So that was the biggest challenge. But ultimately it took us six months really to go from field to fork or from that first request to launching LMAX Digital. And I mean, just if you roll forward five years, you know, we've had a lot of success with that obviously, at the tops and tails of the market 2021, we were clearly the number one institutional crypto exchange and only one retail venue traded more Bitcoin than us.

But when I looked at it overall from a group perspective, Bitcoin was actually our eighth most traded currency pair that year. It dropped a little bit last year, 2022 into 10th position. So for us it looked very much like a currency. It still does. Don't worry, don't poke me regulators. It's fine if it's a commodity.

By the way, I have no problem with Bitcoin and Ethereum being commodities and I have no problem with some others becoming securities. But for us, the price action, the price formation, the people who traded it, the way we traded the price discovery mimics a lot of what we did in currency markets.

Hiten Patel

So hearing you describe that sounds like a demand driven start to the journey. Sounds like there's a lot of overlap from the way that you build and run the platform on the FX side. The other thing that strikes me is again, another one of your, what seems like a contrarian view when it seemed at that time when we were looking at the market, everyone was running to the retail side of the digital asset space, you guys parked up, and focused on the institutional side.

I guess it's how would you feel about kind of positioning around that, given it was a lot more focus on the retail side? I guess it's been a lot more volatile. It would be great to kind of, you know, take a step back and reflect on what are the differences, the pros and cons of being on the institutional side of this versus the retail side of this one?

David Mercer

Well, first of all, institutional or the wholesale business is what we do. So we know that well, we build product for that market segment. Well, we build our technology product well for that. If you look at retail markets, both in foreign exchange and in crypto, the key to being good in that segment is all about online marketing, online onboarding and servicing millions of customers.

And that is not what happens in the institutional market. If you pick out the Bankers Almanac and you'll see a few hundred banks, that would be key to you, the propriety trading firms, as a few hundred of those that are key to you. But what we did at LMAX Global, which is our sort of retail facing or retail broker facing brokerage house, we decided to become the broker of brokers in foreign exchange.

So we have 200 brokers as customers so we can service them well, we can’t service 1 billion or 2 million customers as well. So my point being that if crypto was always going to be a retail product, it might be that LMAX Digital wasn't going to be a big part of the LMAX Group's portfolio. Our belief though is that this nascent asset class has something that can sort of promote it to the same value as commodities. If you look at gold, it typically trades in a range of 10 to $12 trillion. Crypto has a market cap today of around $1 trillion. So we thought look, institutions are going to enter this space led by the banks. And you've seen things recently with the likes of BlackRock and Invesco entering the space and we feel we can service that well.

And whilst there's only retail flow, then the retail brokers themselves, the market makers on those retail platforms will need somewhere to exit risk and somewhere to mitigate risk with institutional partners. So we decided that's our forte, that's our wheelhouse. We'll focus on that. And if you like it then we'll take a little bit of a bet that this asset class has more than just a retail flavor to it down the line.

That's what we thought in 2018 when we launched LMAX digital as it is today in 2023, that's still what I believe. You know, I believe that blockchain technology, crypto and tokenization will revolutionize a lot of traditional finance in the years ahead.

Hiten Patel

It'd be remiss of me not to ask, given your expertise in your position, I mean what's your take on the events that's played out over the last 12 months or so in the crypto digital asset space? I know tons of column inches have been written, lots of voices have been heard, but I welcome your perspective, David, on how you see things.

David Mercer

Well, it's been a real challenge, if I'm honest there's an awful lot of reputational contagion around that. And what you've seen is bad actors creating an implosion after implosion. It's been hard to know whether you build from what I see is an inevitable digital future, oblivious to the doom and gloom that those press inches cover.

But, you know, our viewpoint is that it's here to stay and we must persist and try and build fairer markets and a better ecosystem for all. What's clear though, is that the actions of those bad actors have forced some of the more significant institutions to hit the pause button. So certainly we haven't seen the institutional adoption I would have expected in 2022 and 23.

But this is key. You see, if you look hard, you see a lot of efforts from the biggest players, bulge bracket banks talking about digitization of assets, tokenization of assets. You see the biggest asset managers in the world launching or applying for ETFs. I think the last time I looked, bulge bracket banks themselves actually had something like $27 billion of assets in custody related to crypto, and that's tiny compared to all the assets they have in custody is about $200 trillion of assets in custody today. But under the radar, they're still working on it. And I think in the meantime, we're going to have to weather this storm. I hope there's no other bad actors out there, but I suspect there is. We need them to be flushed out and then we can get on with building an ecosystem that is fairer for all, that works for all.

But I think we're still not quite in the eye of the storm, but the storm is still brewing. And I expect it all to sort of clear and we can truly move ahead in 2024 and 25.

Hiten Patel

That's interesting. That's a helpful framing. I've picked up a distinction just hearing you talk, I guess there is digital assets and then there is the digitalization of assets, right? You know, you make that distinction, just drawing on that point. Talk to me a little bit around how you see the market structure playing out going forward. And is that an important distinction that you're making?

David Mercer

It's massive Hiten, and I wouldn't say we've cracked it but there's a lot of good things that come out of blockchain technology and just even for one, just the immutable nature of a record. So if you imagine I spoke to one large bank and they said, you know, we've got 20,000 people running around effectively chasing the same record.

They give up the efficiency in the back and middle offices if counterparts on both side of a trade are looking at one of the regional records, so I think inevitably there's going to be some big bang disruption. If you're not considering how innovative technologies like Defi and Blockchain will disrupt traditional financial services, then I think you'll be left behind.

Right? You want to be on the right side of this. Much the same is going to be the right side of the Internet or the electronification of the markets. But to answer your question directly, look, there's a bit of fear around. If you mention the word crypto right now, you're not going to get a lot of buy in from institutions as we sit here today in 2023, as soon as you mention using blockchain to tokenize assets or for record keeping or for credit, all of a sudden they're all ears.

So I think and I look at some of the biggest banks you can look at, it's pretty public. You go and look at JP morgan on the side of that digital asset group. We have a look at that, the permissioned blockchain and Onyx coin. They're thinking about what the market will look like ten and 20 years from now.

The traditional markets today are not perfect. Right? Very simple. They're a bit clunky and they're built for old technology. Simple thing Hiten, you know settlement is done on a t plus 2 basis, that would seem to be outdated. You know markets open for 8 to 10 hours a day if you’re looking at the equity markets and only five days a week that would seem outdated. If you and I rocked up on Mars and we jumped into one of Mr. Musk's spaceships and had to devise capital markets tomorrow, it's unlikely we're going to create the same plumbing we currently have.

And I think blockchain and the digitization of assets we currently trade is inevitable. Going back to one of my earlier points that will bring greater ease of market access and if you like, more frictionless access to those markets. And I think that’s going to be better for all, whether it be individuals, whether that be institutions. So, you know, we spend a lot of our time in the moment thinking about how the foreign exchange market will look in ten years time, and it won't happen in 23, 24, 25.  That it will happen within the next decade and how other markets will do the same.

So I think we all need to get on it. Certainly, you know, doing your job, I'm sure, every customer must be looking at that transition and what's going to happen in their life and in their businesses over the next decade.

Hiten Patel

Yeah, very well put. Very well put. One last question on this space. Let’s switch gears. I guess one thing that always bugs me is being an advisor, not a practitioner, is how sometimes things could be misunderstood when you're not on the front line. What point or couple of points do you think you would want the world to better understand all about the digital asset space? So you think they may have misunderstood from a practitioner's lens that you'd want to want to get out there?

David Mercer

Well, I think this goes back to the last point. I mean, is there a better way? You don't have to be a believer in Bitcoin. You don't have to be a believer in Ethereum, right. Let's face it. Bitcoin is quite old now, because of all of that. So my challenge to that industry and the Bitcoin evangelists is, well, you know, it's time to show up at this time to prove your point.

It's been around for 15 years. It hasn't transitioned. The market as we thought, it’s still relatively quite small. But you know, the basis of it was decentralized and anonymous, trustless. Look, regulated markets are going to struggle with anonymous and they're going to struggle with trustless. But they may not struggle with decentralized. So there might be room for, you know, permissioned blockchain at some stage.

You know, anybody, Wall Street, anything you want to have an account with you with Oliver Wyman, you want to open an account with your accountant, with your lawyer, with your banker, with your broker. You know, you have to fulfil normal KYC, but it's underlying it. What have we learned? I mean, the near instantaneous settlement that we've learned that we've been performing in LMAX Group, with LMAX Digital for six years.

David Mercer

You know, we settle dollars and we settle coin 24 hours a day, seven days a week. And that surely has to be a good thing for traditional markets. Why do you have to wait? Why do you have to rush for a Friday night? 5 p.m., right. To get your payments done or to hit your portfolio? Why can't you deal when you're time rich on a Saturday or Sunday?

So surely that's better for all. And look at the underlying blockchain technology and how you can transfer ownership of assets, how you can stop dealing with paper, how you can look at one record and be certain that that's what you've traded, not wait for some accounting error, some booking error, that's happened in the front office.

David Mercer

So I think look at the power of everything that's underneath. I'm not here today to convince someone that Bitcoin is better than an Argentinian peso or US dollar. There might be something else that comes out of the woodwork. But underlying all of that, the ease of transferrance of asset ownership and record keeping is the key learnings we should take away from the advent of crypto over the last ten years or so.

Hiten Patel

Yeah, the thing I take away from that hearing you talk is it's about the capability rather than the actual asset itself and what it brings. So I'm going to switch gears slightly and one of the things we like to do for the listeners is to kind of get a bit more insight into the life of CEO, life of founder.

What can they draw from it and learn themselves, so with more of your David Mercer hat on than your LMAX Group CEO hat, it would be great just to talk through and share big challenges you faced recently how you navigated that, what you take away from it and pass on to others.

David Mercer

Wow. The David Mercer hat and LMAX CEO hat, are sort of inextricably linked. So overall my advice to people is if you think you can leave work in the office and go home, then forget about it. You have to be passionate about your job and you have to love your job. I haven't worked a day in my life because I love what I do.

So number one, it is all encompassing and I still do have fun and I'm sure we'll get to that. But you've got to own it and you've got to constantly be thinking about how you can improve it. Look, I think you’ll have seen it from your standpoint and you look at a lot more customers than me, but the last three years have been hugely challenging for all businesses.

And if I look within capital markets and look within LMAX, it's like almost a triple whammy. So the business world just changed so much over the last three years. It's compounded all the change of competitors at great speed. I don't think anyone has dealt with a scenario like this before. But when you come out of this, you're going to see real changes that could be exciting for us.

So if I just put my finger on two or three of those challenges. First of all, people right? They are your assets, in any company that's the most valued, prime asset. The way they work, the way they behave has changed, so fully or partially remote is the question. That brings challenges and opportunity. You have a wider talent pool.

You have theoretically lower cost of hire but in reality, you have difficulties in knowledge transfer and training. Well, actually what I learned at the end of all of this is that one size doesn't fit all. So you could run your company with a people size problem that is different than it was three years ago.

Then of course, you have economic crises again with many of them coming at the same time. You've got rates in recession and then you've got some of them caused by COVID, some of them are coming anyway. And then you've got the events in Russia and in Ukraine, which are unique sets of people, supply chain crisis problems that we haven't experienced in the Western world, you know, for over 70 years. And then in the meantime, almost in the backdrop of that, you've got this rapid digitization.

You know, folks were working from the advent of COVID and before 2019, 2020, people were really analyzing how AI machine learning how blockchain technology, how decentralized finance, could change the markets. And all of a sudden, it's on us all at once. And those three things, it is like, wow, now is a good time to be alive.

Now is a good time to be in business. But it's not just traditional crises I've dealt with within capital markets. It's sort of you weather the storm and you come out better the other side and you have slight changes. I would say the last 2 to 3 years I've seen the extent of change that I probably would normally recognize in a decade or two decades.

Hiten Patel

That's interesting. Interesting. It's your people as an asset point is one that strikes me. It comes up in all of many of these conversations, which I always use the word irony in the wrong way, but I think it's interesting given we're talking to financial data, financial technology, financial infrastructure, businesses that people don't often always associate is people being at the heart of it, and it remains the case.

I think that's an interesting reflection that people does remain the key asset to what you guys are doing.

David Mercer

It is so different these days. It's, you know, it's like I think whenever I started my business career, you could look at a floor of investment banks and everyone had similar skillsets and perhaps similar backgrounds, but now in a company like LMAX Group and we’re relatively small company. I've got everything from rocket scientists to graphic designers as from 60 year olds to 18 year olds.

Their requirement, that idea of treating them like an asset, making sure they feel valued and enhancing their career, is not the same for all of them. And you've got to get it right. So I need all of those 16, 18 year olds, sixty year olds and the rocket scientist and the graphic designers to be coherent, to work together to make us a better company.

So, yeah, it's a fun challenge. I think you have to enjoy the people challenge if you want to run a company, if you want to build a business.

Hiten Patel

Well, it's great just hearing you put that so high up on your agenda. Right? When I start out as an intern, back in like 2005, it was. You're lucky to be here, you know, and you'll get what you get. I'm speaking to people around the industry now. It's great that companies like yours are putting people, employee propositions so high up on the agenda, and I think that's giving people who want to be in and around the capital market space a bit more of an option right around how it is they want to play it.

So I think that's been a big shift I've noticed over the past few decades. Last one in this space, I guess is there anything you'd like to share around what you do outside of the professional sphere? Any interests, any hobbies, and how has that played back into what you do as a day job?

David Mercer

Yeah, I just sometimes think most people have external pursuits to sort of clear your mind of business and get out of the weeds if you like. So I've done various things, various challenges. So, you know, I've trekked to the North Pole and we’re in the Guinness Book of World Records for the most northern game of rugby, I've climbed things like Kilimanjaro, I've just completed a marathon and am training for another one.

So when you do all that, most of those things, by the way, even the latest marathon was a team pursuit, you learn a lot and it's quite nice Hiten to not be the boss. I mean I did the Sydney Hobart yacht race as well so the Everest of yacht racing and there I’m the worst sailor of everyone on the boat and I was just part of the team so it was quite nice not to have to be a leader.

But what do you learn? And just three things you learn that you have to somehow transfer into business in that in all of those pursuits, focus and discipline were all key, very, very key in that you can't train to run a marathon and also optimize your sprint time at the same time. You've got to just focus on that and you can't rock up on race day and say, okay, I guess I can do just 26 miles.

Now you have to have the discipline to follow a training plan. So in fact, if you run a marathon or if you sail a yacht race, that's just the glory day. All the work you've done to achieve that was done previously. So I think that learning and focus and discipline and I'm telling guys at work that what you do now, laying the foundation is so key so you can enjoy the success that might be two or three years away.

And that's normally the case. I mean, we enjoyed fabulous success at LMAX Group and LMAX Digital, in 2021, but we didn't do anything different.  We've done all the hard work in the previous five years. I think getting into the previous point about the challenges in business today. Probably the biggest thing I learned was that you have to be able to adapt.

Having the ability to adapt and pivot is key, you know, and if I look at the North Pole. I mean, completely not in control of that. The weather is in control of you. So you have the best laid out itinerary. You say, that's when we're going to do it. That's when we’re going to hit the North Pole. All of a sudden the weather comes in and you're stuck at base camp for three days.

For four days. And in fact, it happened at both ends. And then once you’re at the North Pole played a game of rugby, had the world record, couldn’t get out. So you're stuck there, what is your coping mechanism? What's your plan for those three days sitting around in a tent? Another one is one of my friends on the expedition was convinced this was a skiing challenge.

So we all learned to cross-country ski. We did that. And then you get there and you work out that it's actually quite hilly. These skiis aren’t going to work and then you have bits of rock poking out at certain places. So ultimately we ended up trekking. Even worse than that, one guy turned up, size 13 feet, Absolutely did not fit the skis. So for him, it was always a trekking challenge.

So we had to adapt, we had to pivot. And I think that's the same going back to business today. There's absolutely no way as I sit here you could say in 2023 and say, David, did you map out LMAX Group perfectly when you walked through the doors in 2011?

Absolutely not. I've adapted and I've pivoted all the way. My sort of close on that bit is that everything you learn in life, everything to learn in business - the perfect plan just isn't possible. Perfection is impossible. Let's control what we can control and then adapt to the rest.

Hiten Patel

I don’t think there's enough self-help books out there. David. I think you need to write one. I've a few things I've called out there that resonate, and I think this your last point on adaptability, right? This whole being comfortable with what's outside of your control, I think over the last couple of decades we've ever been able to control so many elements and this kind of ongoing optimization, that becomes a big point.

And I like your concept of glory day. It's interesting. Often the big event and the big moment is actually the glory day. If you've done the practice and then the final bit that resonates is just enjoying not being a leader in those situations. I guess people probably have the lazy assumption that you enjoy leading and so therefore your pastimes should be that way as well.

So thank you for sharing. We probably could do a whole 30 minutes on that. But let me bring this to a close. The final thing that we ask our guests is to share the spotlight. You know, we're trying to raise this idea of community and bring visibility to interesting things that are out there.

So I'd love you to throw the spotlight, call out either an individual or a company that's not your own. That is doing impressive things or has impressed you that you think listeners should pay attention to or go out there and look up.

David Mercer

I think, you know, the person I want to mention doesn't need any shoutouts. He runs for the most valuable companies in the world, but I think he doesn't get enough credit. Tim Cook, CEO of Apple. I think the way he stepped into a massive pair of shoes, did it his own way and made significant changes to that company are admirable.

He would appear to be an amazingly humble character and what he's done is create new product, ship more product in a less extravagant way than Mr. Jobs, who I was also a big fan of and delivered phenomenal business results and, dare I say, delivered phenomenal business results with humanity at his core. You know, I think this gentleman could make a difference not just in business life, but in the world at large.

I mean, one of the things he said early on was that privacy is a basic human rights. He deserves privacy. He came out as the first openly gay CEO of any future 500 company. He didn't do that for himself, you know, because he guarded his privacy. And he has a right to that privacy. He did it for all the other up and coming young leaders to show them it was possible.

There's no way in the world this gentleman wanted to be a flag bearer or waver for that. But he stood up not just for the LGBT community, but for all minorities and everyone who has experienced discrimination, and he's done it quietly and humbly. If I can transform, you know, his point of differentiation a little bit to business. He's taken all that just the way he gets his company to work.

Going back to the things we discussed and with LMAX Group, I read recently, he says in the company expects innovation to happen throughout the company, not just from the innovation team, right? Not just from the product development team, but everyone must innovate. I also like the fact that he does it in a much quieter way than people like Mr. Musk, but they are constantly innovating his stock line is that anything is possible.

Go back to my analogy about building capital markets on Mars. Go back to first principles. Apple has always done that. Tim Cook has kept that going, and I think he spends most of his time, and believe it or not, I think most CEOs should spend most of the time thinking about the future of future products. So I know that Apple and Tim Cook don't need shout shoutouts from the likes of David Mercer but I certainly think he's an inspirational leader and the right leader at this time in history.

Hiten Patel

Thank you for sharing. It's a really interesting example and hearing you talk. One of the things that strikes me is for a lot of people out there who do exceptional things and deliver exceptional outcomes, what I think is a bit more unique is when the expectation is sky high, there is the delivering that when the expectations are sky high, that makes it particularly more challenging.

So thank you for sharing. Look, we're up against time. You're a busy man. Thank you very much, David, for joining us today and sharing your perspectives. It's been great hearing from you.  Thank you for coming on the show.

David Mercer

Thanks very much, Hiten. I've enjoyed it. Good luck.