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Joe Cecala, Founder & CEO of the Dream Exchange, joined Yahoo Finance’s Kristin Myers, Sibile Marcellus, and Jen Rogers to discuss the creation of the first ever minority owned stock exchange and how it’s looking to make equity markets more inclusive.
– Welcome back to 2020– a Time for Change. The New York Stock Exchange was founded in 1817, and it didn’t have its first Black member until 1970. It took until 1991, with the IPO of BET, for a company controlled by African Americans to be listed on the big board. The picture isn’t that much better today, in terms of diversity and public exchanges, whether you’re talking about the NYSE or the NASDAQ.
Our next guest is hoping to offer an alternative– the first ever minority-owned stock exchange. Joe Cecala is the founder and CEO of Dream Exchange. So, Joe, let’s just start big here at 20,000 feet. What is Dream Exchange? How is it going to be different than the exchanges that we talk about on a daily basis here?
JOE CECALA: So Dream Exchange is a full-blown national market stock exchange in formation. We’re not licensed yet, but we’re going through that process. And we’ve been working on this for years. This isn’t something new. It’s fortuitous and interesting and ironic that this is something that’s coming out now, and that the private equity group of Cadiz Capital Holdings is really going to be the majority owner, and they’re a Black-owned firm. But I’ve been working on creating diversity and economic empowerment in minority communities for 20 years.
And so this is just a natural outgrowth of all the work we’ve been doing. We’re different. The Dream Exchange is a very different model. And the model is designed to reach into the small cap marketplace, and especially into the Black community. And what we’re doing is more about all the people I haven’t helped for the last 20 years because there’s a tremendous difficulty in getting capital into the minority communities. So that’s really at 40,000 feet where we’re at.
And, I mean, you didn’t ask this question, but the economics are really simple. 10 years ago, the Department of Treasury conducted an IPO Task Force because, at one time, we had 10,000 public companies. We have about 3,500 today. And they looked into this problem, and one of the findings was that 92% of all jobs are created after a company has its IPO. If that were cancer, it would be a tumor the size of– a tumor the size of a beach ball. So 92% percent of jobs are created after an IPO– after public market access to money comes. And we’ve had one Black-owned company in 230 years. So you do the math.
And you can see now why the empowerment into certain communities hasn’t provided the economics and job growth that’s needed. So we’re targeting $50 million dollar and under companies. You’re not even eligible for the New York Stock Exchange at that level. So we’ve designed our programs– all of our outreach is really designed specifically at the entrepreneur and especially the minority entrepreneur. We’re going to make a difference in that marketplace. I think we’re going to make a big impact in it.
– And we talk about this a lot in our show, when it comes to the statistics of how many Black Americans actually own companies or how many Black Fortune 500 CEOs there are– just four. So how do you think your majority-owned Black stock exchange is going to achieve more than the New York Stock Exchange has been able to up until this point?
JOE CECALA: So every day– every single day, I’m meeting with my partners. And we aren’t doing something as a side project. We’re not a diversity program within a large company. We are the diversity program. Every conversation is geared towards empowering minority entrepreneurship. So the difference will be when we’re targeting where the listings will come from and how we can deliver equity into small businesses. We’re designing everything we’re doing to reach into that community, whereas, you know– and I’m a fan of regulation and investor protection. I like consumer protection. So we’re complying with all of those regulations.
But we’re targeting, and there are literally thousands of outstanding companies that we already are aware of that will provide the expansion of living wage jobs because they can expand their company with public capital funds. That’s really– it’s an everyday activity. It’s not something that’s sort of a collateral bonus for someone on my staff. It’s our whole partnership. That’s the basis of what we’re doing.
– Joe, I want to ask you about the flip side. Obviously, this is to help minority-owned businesses access capital, but I’m wondering if there’s also a piece of this that will help investors– specifically, minority investors– invest in companies. Because as we know, overwhelmingly investors on the exchanges are white. And we don’t see a lot of minorities getting involved in investing, buying stocks, buying bonds. So is there a piece of this at all that would make it easier for minority investors to get involved?
JOE CECALA: We have an entire division that will be dedicated to just educational programs to get the minority investor to open brokerage accounts. And train so that the investing is not– it’s not just– we have minority-based, as well as the general public. Because this goes across the board, that the early stage investing is done by a cadre of people that most of us are– even I am unfamiliar with. It’s a Rolodex relationship-driven environment.
So when we bring the educational process down to the retail-investing public, and we give them a solid basis on which to make investment and open up brokerage accounts, because that’s the vehicle through which they’ll make these investments, you’ll see a broader audience– especially a broader minority audience.
And here’s the important part. Early stage companies, as they grow, provide the opportunity to build and harvest wealth. So we don’t have wealth creation and equity creation in the retail market if you’re not introduced to it, if you don’t understand it, if you’re not able to use an app to get into an account and find companies that you’re familiar with and you understand and you understand what they’re doing. So there’s an entire devotion just to educational programs.
And I don’t mean educational programs in terms of, how we would just be putting into the public concepts. These are training programs that we’ve designed that will actually get the person to open accounts and begin the process of taking proportional money, being able to make sure that they make good retail investments, and harvest the wealth. Building personal wealth in the markets is something that just isn’t being done at the retail level today, in general and especially in the minority community. So that’s what we’re– that’s what we’ve designed to do.
The name of the job for the person who’s going to be doing that is a Dream Catcher. He’s going to go out. Our focus will be, catch those dreams. What is that person really looking for in their own wealth creation? And help them accomplish it.
– Joe Cecala. Joe Cecala is Dream Exchange Founder and CEO. Much more to come from you as this gets launched. Thanks so much for joining us.