But in the case of Dave Chappelle walking off the stage during his stand up show last week in Florida it was, in my view, 100% the fault of the audience member.
What was it that set Chappelle off? A cell phone. Not one ringing in the audience — which every comedian has had to deal with at some time or another — but a person using their phone to record Chappelle’s act, in violation of numerous explicit warnings not to.
Everyone who bought a ticket to Wednesday night’s show was warned online that recording devices are banned. The venue where the show was held, The Seminole Hard Rock Hotel & Casino in Hollywood, Florida posted similar warnings throughout the club.
The DJ who introduced Chappelle, DJ Trauma, specifically instructed the audience not to record any part of the show. In addition to myriad warnings, everyone attending the show was required to place their phones in a special bag that was locked before entering the venue.
Despite all that, an audience member sitting close enough in the 7,000-seat venue to allow Chappelle to see him from the stage was recording the show, via the camera on a cell phone that apparently wasn’t surrendered as requested.
During his set, Chappelle admonished the audience member and alerted security. But apparently he became so frustrated about the incident that he left the stage before finishing his act.
What anyone who thinks this was an overreaction doesn’t get, is that Chappelle and comedians at his level are not just concerned with getting laughs, but also with the business end of their craft. That’s why for years, comedians like Chappelle, Chris Rock, John Mulaney and others have been requiring audience members to lock their phones in a pouch to prevent the recording of the show.
These measures are partly to prevent people in the audience from recording new material a comedian is developing that isn’t ready for primetime. That was the very point Chris Rock made back in 2014, noting that comedians— even famous ones—need to “workshop” new jokes while they hone their material and weed out lines that simply are not funny.
Imagine seeing countless videos of famous comedians presenting material that wasn’t any good? Rock was so upset with people recording him working on new material in 2014, that like Chappelle last week, he reportedly walked off stage — after scolding a few audience members for recording him.
Beyond that, there’s also the concern that if people can watch a well-known comedian’s current tour for free on a bootlegged video, they might not be willing to pay for a ticket. Or people may attend, but then complain that they had seen all the jokes before.
In the case of Chappelle, there’s the added concern of his deal with Netflix that pays the comic reportedly $20 million per stand-up special. In fact, Chappelle’s new Netflix special, “The Dreamer” with a December 31 release date, is his 7th special for the streaming giant in 6 years. Obviously, if audience members were to record his tour and post videos of the material online ahead of the Netflix release, it could negatively impact how many people watch the show.
But something else is at play here as well. Some famous comedians don’t want to be recorded in case they say something offensive on stage that could hurt their career or even lead them to being “canceled.” In fact, Rock made that very point around the time he walked off stage in 2014, telling Vulture that knowing people are recording your every word — especially when workshopping new material — can cause comedians to self-censor. As Rock explained, in the past a comedian could “cross the line” trying to find funny material, but with cameras everywhere it leads comedians like Rock to believe “you don’t have room to make mistakes.”
In the case of Chappelle however, I doubt that was his rationale for being one of the first comedians to require audience members to lock their cell phones away during his shows. Chappelle’s history tells us he seems to love to court controversy, from his past Saturday Night Live monologues about Kanye West’s anti-Semitic remarks and on Donald Trump’s then-new presidency to jokes about the transgender community in his 2021 stand-up special that prompted a backlash.
Even if audience members aren’t recording his act, Chappelle knows his jokes and comments will get press, given his stature and his penchant for telling provocative jokes that sometimes upset people. And that includes his most recent standup show on Netflix.
But courting controversy hasn’t seemed to hurt Chapelle’s career. In fact, it may just have proved to be rocket fuel for it, as evidenced by the fact that in 2023, he was the top-grossing comedian of the year, earning $62 million for 31 ticketed shows in 2023. (And that doesn’t even include what he brought in co-headlining shows in 2023 with Chris Rock.)
People can like or hate his jokes, but a backlash won’t stop Chappelle, who said last year about these controversies: “The more you say I can’t say something, the more urgent it is for me to say it.”
Adena Friedman: Key Accomplishments
- As of December 2021, Nasdaq was the second-largest stock exchange in the world by market capitalization of listed companies.2
- Nasdaq’s tech-heavy portfolio of the biggest global brands—including Apple, Amazon, Microsoft, and Google—drove impressive performance over the 10-year time frame through March 2021: 444.12% for the Nasdaq Composite Index and 552.24%, for the Nasdaq 100 Index.34
- Nasdaq’s transformation into a leading global exchange and technology company with operations across six continents has been credited to Friedman’s strategic and operational expertise as well as her vision of the role that capital markets play in the 21st century.5
- In addition to pursuing growth opportunities—such as diversifying Nasdaq into data research services and software as a service (SaaS)—Friedman has leveraged Nasdaq as an "engine for capitalism" that makes investing more accessible by bringing companies back to the public market.6
- To advance corporate diversity, which she considers a key driver of equitable capitalism, she led Nasdaq’s successful proposal to the SEC to require companies listed on its exchange to publish board diversity data.78
- Among other awards, she has been named to Barron’s list of the 100 Most Influential Women in U.S. Finance.9
Active vs. Passive Investing
We began our conversation with Friedman’s perspective on the debate over active vs. passive investing, which has been going on since 1975, when Vanguard founder Jack Bogle created the first index fund as an alternative to active strategies that require high-priced portfolio management teams focused on beating stock market returns and taking advantage of short-term price fluctuations.
Since then, index investing, which seeks to replicate the performance of a financial market index (like the S&P 500), has been the most common form of passive investing, a term for any buy-and-hold investment strategy that avoids the cost of an active human team by trying to match—not beat—the performance of the market. (ETFs and robo-advisors are also examples of passive investing strategies.)
Now that the consensus in the investment community is that the steady growth of passive against active investment vehicles in the U.S. market will continue for the foreseeable future, we discussed how this trend will shape the future of the exchange.10“I believe that there will—there has to be—a balance between active and passive,” Friedman said. Although Nasdaq “likes the passive world” and has “about $200 billion of assets under management tied to index products that (they have) created,” she cautioned that “if every single dollar coming into the market is a passive seller and there's no individual thought going into making investment decisions,” that could lead to “a herd mentality” that would create “a huge opportunity” for arbitrage (the simultaneous purchase and sale of the same asset in different markets to profit from tiny price differences). This could make active investors come into the market, which could lead to “total (market) dislocation” (i.e., large, widespread asset mispricing that happens when financial markets operate under stressful conditions).11
However, with investment research firms reporting that few (if any) active mutual funds perform better than passive index funds (especially over the long term), Friedman said that the biggest passive vs. active issue “over the next 10 to 20 years” is that “active managers (will have to) rethink what value they provide and how much they can charge for that (value).”12Friedman touched on another important consideration in the active vs. passive debate (i.e., two different measurements of historical performance: alpha and beta). Alpha, which active investors try to keep high, is a measure of a portfolio manager's "edge” (i.e., their ability to outperform a market index). Beta, which passive investors try to keep low, is a measure of an asset’s risk against systematic market risk (i.e., a risk that is inherent in the market as a whole, not just a particular company or industry), including the impact of all economic, geopolitical, and financial factors.
“When the market is primarily going in one direction (toward passive investing),” Friedman said that “it becomes increasingly difficult for active investors (who are compelled to seek alpha) to differentiate themselves from the beta of the market.”
The Magnificent 7 has "the significant resources needed to build and benefit from complex AI models" and UBS "expect[s] the large players to grow larger still."
Microsoft
Shares of tech giant Microsoft, which gained nearly 60% this year, hit multiple record highs in 2023, in part due to interest surrounding AI.
While Microsoft does offer its own AI tools and hardware, its partnership with ChatGPT maker OpenAI drove significant investor interest as well. Through its “multiyear, multibillion-dollar investment to accelerate AI breakthroughs,” Microsoft has firmly established itself as a leader in the AI race.3
The company’s AI advancements and announcements are also unlikely to slow down in 2024, according to analysts, especially with the support of its OpenAI partnership.
Microsoft is “essentially the torch bearer of the global AI Revolution,” Wedbush analysts said, adding that the firm “believe[s] the stock has yet to price in what we view as the next wave of cloud and AI growth coming” to Microsoft in 2024. OpenAI’s “ChatGPT will be the next leg of the growth stool for MSFT” and “will ultimately spur growth and margins into” the 2024 fiscal year.4Shares of Google parent Alphabet have climbed almost 60% in 2023 amid enthusiasm for the company's AI-related advancements, which included the launch of Bard, a chatbot, and Gemini, a large language model (LLM).
Bard was unveiled in February, and though its launch was less than impressive when the chatbot made a factual error during the first public demonstration, Bard has undergone several updates since then that helped make the tool a viable alternative to ChatGPT. In early December, Google introduced Gemini, its own LLM AI model, which reportedly outperformed OpenAI’s GPT-4 model.
Google “may still be a step behind MSFT/OpenAI,” but “AI advancements are moving incredibly fast,” CFRA analyst Angelo Zino said, adding that the firm “think[s] future Gemini upgrades will allow GOOGL to keep up with the competition and be a major AI beneficiary.”
Google said it will launch Gemini Ultra, the “largest and most capable model for highly complex tasks, after further fine-tuning” which will power Bard Advanced in in 2024.5 J.P. Morgan analysts called Google a “new top pick” as Gemini tightens the GenAI gap. “AI is more of a 2024 story,” CFRA analysts said, noting that the firm “like[s] initiatives related to Bard, Gemini, and Search Generative Experience” when examining Google’s outlook in the new year.6Amazon
Amazon shares gained more than 80% in 2023, as the e-commerce giant advanced in the AI space.
Amazon notably began offering Bedrock through Amazon Web Services (AWS), the company’s cloud computing platform. Bedrock is “a fully managed service that makes leading foundation models from AI companies available through an API along with developer tooling to help build and scale generative AI applications,” Amazon said.7 Amazon also introduced Q, a GenAI assistant available through AWS, and its next-generation custom-designed AWS chips, optimized for GenAI, in November.8
Similar to Microsoft, Amazon bolstered its AI standing through a multi-billion dollar investment into a company already finding success in the tech. Amazon said the company would invest up to $4 billion in AI firm Anthropic, in a move that could allow the company to better compete with Microsoft-backed ChatGPT and Google’s Bard.
When asked about reports that Amazon is working on a large language model (LLM) called Olympus, Adam Selipsky, the CEO of AWS, told AP that they should “expect to see multiple iterations of Amazon’s first-party models.” Selipsky also noted that he believes that “very rapid evolution and change” is coming in 2024 as the tech evolves and businesses optimize its integration.9
J.P. Morgan analysts anticipate that “growing GenAI contribution” could support AWS growth in the new year. Beyond AI projects, Amazon is expected to have a positive 2024 with J.P. Morgan analysts naming it the firm’s “top large-cap pick” for the internet sector. JPM analysts projected revenue growth in the new year driven by a reacceleration in Amazon’s retail and AWS sectors and expanding margins.10Nvidia
Even among the Magnficent 7, Nvidia stands out as a major benefactor of the AI boom in 2023, with the largest share movement compared to others. On multiple occasions during the year, Nvidia shares saw double-digit growth in a single day. On May 25, after the company reported a “surging demand” for its products and a first-quarter earnings beat, share surged more than 24% from the previous day’s close.11As companies scramble to build AI models and integrate AI tools, Nvidia chips are used to power much of the technology, with Bank of America analysts writing that the chipmaker’s dominance in AI training likely represents more than 90% of the market share.12Nvidia announced its most powerful graphics processing unit (GPU), H200, designed to power AI models in November. The new chip is set to be used by Amazon, Google, and Microsoft, among other systems.13
Amid some concerns about the impact of U.S. restrictions on AI chip exports to China on Nvidia’s bottom line, analysts have been steadfast that the chipmaker’s gains in the AI boom will drive profitability. Nvidia could be the “best positioned” compared to competitors like Intel (INTC) and Advanced Micro Devices Inc. (AMD) according to Jefferies analysts, who named Nvidia the firm’s “franchise pick.”14
Despite other chipmakers like AMD and Intel making progress towards claiming a slice of the pie, Nvidia “should still end up a winner (if not the winner),” Wedbush analysts said.15
Meta
Meta shares nearly tripled in 2023 as the Facebook parent company joined the AI push.
The company introduced LLaMA, a LLM, in February. Since then Meta has used its AI tech to improve algorithms and advertising systems.
“AI is a foundational component of Meta’s apps and services, enhancing performance, measurement, and campaign setup,” the company said in a release. CEO Mark Zuckerberg reported that AI recommendation tools have driven an increase in the time that users spend on Meta platforms.16
Meta’s “efforts in AI thus far have been to improve its recommendations/rankings that power its entire ecosystem,” but “over time, META can monetize AI via its Llama 2, AI agents, and metaverse,” CFRA analysts said. The firm is “more optimistic about META’s initiatives toward a content-driven discovery platform.”17Tesla
Tesla shares nearly doubled in 2023, and while the electric vehicle pioneer didn’t introduce many major AI projects, the company is no stranger to the tech, as Tesla’s autonomous driving cars rely on AI technology.18CEO Elon Musk has also been vocal about his view that AI is "the most disruptive force in history," even saying “there will come a point where no job is needed… the AI will be able to do everything.”19Musk launched xAI, an AI-focused company, in July. While x.AI is its own separate company, it “will work closely” with X (formerly Twitter) and Tesla.20 The company introduced Grok, an AI chatbot, in November, though the product is not yet widely available.21
It could be a challenging new year for Tesla, with Bernstein analysts going as far as to say that shorting Tesla could be the “best idea” for 2024. The firm said it anticipates that the electric vehicle (EV) pioneer could “disappoint” investors in the new year due to low demand “stem[ming] from Tesla's narrow (and expensive) product family which is reaching saturation, and continued competition in the EV space,” the analysts said.22
Apple
Apple may not have released its own AI chatbot yet like some other members of the Magnificent 7, but the tech giant confirmed that it is working with AI tech, and its shares have gained nearly 50% in 2023.
CEO Tim Cook said Apple “[will] continue weaving it in our products on a very thoughtful basis” in a May earnings call. Apple is also reportedly working on a chatbot that could be released at a later date.23Despite Apple’s more muted involvement in the AI race, analysts say that the tech giant is poised for a profitable 2024, especially with the iPhone 15 propping up its holiday sales. The coming fiscal year is “the golden opportunity” for Apple investors, according to Wedbush analysts, who said that as “roughly 240 million iPhones in the window of an upgrade opportunity globally now at play for iPhone 15 and Services,” which the firm estimated is “worth $1.5 trillion to $1.6 trillion on a standalone basis” is “re-accelerating” into 2024.24
Frictionless Trading and Market Efficiency: Artificial Intelligence, Blockchain, Quantum Computing
As our conversation turned to how the rapid evolution of technology across capital markets will impact the way exchanges operate over the next 10 to 20 years, Friedman said that the essential role of exchanges as “central hub(s) where buyers and sellers come together will continue to be very much alive and well.”
Without exchanges acting as intermediaries, “a buyer of a company and a seller of a company” would not be able “to buy and sell at a price they are looking for at a time that they're looking for.”
On the other hand, Friedman said that technology will certainly have a significant—and positive—impact on the way exchanges operate in (at least) two core areas that are currently not optimal: frictionless trading and market efficiency.
“The (current) level of friction”—the total direct and indirect costs associated with the execution of financial transactions—has been “a very hard nut to crack“ for all stakeholders, including “the broker-dealers, all the intermediaries, and the investors, particularly institutional investors.” She anticipates that, within 10 to 20 years, the entire trade settlement process—from the date that an order is executed in the market to the date that the trade is finalized—will be “much more streamlined…across asset classes"—and that it will be driven by blockchain or a similar big-data analytics technology.
Friedman’s second example of a currently suboptimal area that will be expedited by technology is the slow progress from market inefficiency to perfect market efficiency: a hypothetical market condition in which share prices reflect all available, relevant information, so there are no undervalued or overvalued securities and no way to "beat" the market. Her predictions as the most likely technologies to solve market inefficiency are artificial intelligence and quantum computing.
As we look ahead over the next 10 to 20 years, AI is already being deployed, and prototypes of quantum computers, which use the properties of quantum physics to store data and perform computations, can already calculate “158 million times faster than the world’s fastest supercomputer.”16As the “march towards (even more) actionable…artificial intelligence” continues, Friedman said that the entire investment community will be able to “synthesize…mountains of data,” draw much better conclusions and make much better decisions. “If you (could) then pile on top of AI... the potential of quantum computing” to analyze “thousands of outcomes in seconds,” all investors would have all the necessary data to determine the right price to buy or sell every company and asset class—and capital markets across the globe could theoretically become perfectly efficient.
Regulatory Technology: Deep Learning AI
Another crucial area for Friedman as she charts Nasdaq’s future is RegTech (regulatory technology) to manage all monitoring, reporting, and compliance processes within the financial industry.
In fact, Friedman considers RegTech the most important artificial intelligence technology that Nasdaq has already deployed (i.e., the market monitoring products that “root out bad behavior, market manipulation, [and] insider trading—all the bad things that make markets unfair”). For example, in 2019, Nasdaq launched an artificial intelligence platform to boost their market surveillance functionality with new technologies to expand the range of malicious activity their systems can detect.
The platform includes: deep learning (to identify extremely complex patterns and hidden relationships in massive amounts of data); transfer learning (to create new models from old models (e.g., to detect new forms of financial crime in new markets); and human-in-the-loop learning (to allow analysts to share their expertise with the machine efficiently).17
Nasdaq’s AI technology is "such a critical part of (the) roadmap” to ensure that “all the right defenses (are) in place” to eliminate bad behavior that the company launched their market surveillance technology beyond their own market to other markets and the broker-dealer platform—a total of “50 other exchanges, 12 regulators, and about 160 broker-dealers.”
The Technology Underpinning Capital Markets
Under Friedman’s leadership, Nasdaq, the company that pioneered the digitization of the trading process, has remained committed to digital innovation that promotes transparency and drives access to the financial information that powers capital markets.
For example, now that “consuming and managing datasets in the cloud is…the norm,” Friedman led Nasdaq's 2021 launch of Nasdaq Data Link, a cloud-based platform that provides “all segments of the investing public with a comprehensive suite of core financial, fund, and alternative data…to generate alpha, manage risk, and gain transparency into public and private markets.”18
In the era of low-cost products and falling prices for trade execution, Friedman said that Nasdaq's most important function over the next two decades will be “to provide the technology underpinning the data and insights (that) allow… capital markets around the world to flourish.”
Frequently Asked Questions
What Does Adena Friedman Think About the Future of IPOs?
As Adena Friedman considered the future of IPOs and the significance of going public on the Nasdaq, she said that the real question is whether there will be “a convergence between the private markets and the public markets" within the next 20 years.
While she believes that a public-private market convergence is inevitable, “right now the private markets are really only available to the wealthy”—such as "accredited investors or qualified purchasers."
How Will Blockchain Impact the Stock Market, According to Adena Friedman?
When asked what Nasdaq was doing with blockchain, a distributed ledger technology (DLT) for maintaining secure, decentralized records of transactions that can be shared (distributed) but not edited, Adena Friedman replied that “the public equity market is not going to be the first place that blockchain disrupts the world.”
However, she added that Nasdaq is “using blockchain for proxy voting” and making investments in companies that are focused on “stable points” of the blockchain structure. Those areas are where blockchain will have “the most impact (on markets) over the next five years.”
How Does Adena Friedman See the Future of Digital Currency?
Although “the jury is still out” on whether digital currency will ever become “an actual fiat” that is widely used for goods and services, Adena Friedman said that a currency like Bitcoin “is (certainly) not used… for that purpose (right now).”
Of all the cryptocurrencies, Friedman sees one class as having the fastest track to adoption: stablecoin, which offers the price stability of fiat by pegging the market value to a reserve asset, such as the U.S. dollar or the price of a commodity, like gold. Unlike other cryptocurrencies, this price stability means that the minting of stablecoin is “just digitizing a currency in a way that takes friction out of the system and allow(s)…the transfer of money in a faster, more efficient way.”
The Bottom Line
For active investors seeking to differentiate themselves, Friedman advised investment tools that are not open to passive investors, including technologies that deliver an enormous competitive edge by leveraging alternative data and artificial intelligence.
Friedman anticipates that friction in the market will be greatly reduced when the entire trade settlement process is driven by blockchain or a similar big-data analytics technology.
Friedman also predicts that the massive storage, processing, and computational capacity of artificial intelligence and quantum computing will correct market inefficiency.
Rather than debating the future significance of going public on the Nasdaq, Friedman believes that the real issue is that a convergence between public and private markets is inevitable.
Friedman said that the essential role of exchanges as central hubs where buyers and sellers come together will continue—but that Nasdaq's most important future function will be provider of the technology that allows capital markets to flourish.