Spend any time following Wall Street and you realize that most of the focus is on short-term gains, whether it’s a company working feverishly to beat quarterly earnings estimates or a day trader making snap decisions on when to buy and sell a stock. But that’s not necessarily how it’s supposed to work.
Most financial gurus advise investors to focus on the long term – putting your money into a stock and then waiting patiently through the inevitable ups and downs for it to rise in value. As legendary investor Warren Buffett famously put it, “If you’re not willing to own a stock for 10 years, don’t even think about owning it for 10 minutes.”
That’s the idea behind the Long-Term Stock Exchange (LTSE), a Silicon Valley exchange that operates on the other side of the continent from Wall Street and encourages long-term thinking over short-term gains.
- Make long-term commitments to follow the exchange’s principles-based listing standards
- Plan to keep creating and innovating for generations
- Define success around long-term growth, not day-to-day stock price
- Attract investors who hold equity for longer and decrease volatility
This focus on long-term and sustainable investing helped LTSE recently land two high-profile tech firms: Twilio, a $67 billion software company; and Asana, a $10 billion cloud software firm run by Facebook co-founder Dustin Moskovitz.
In June, Twilio and Asana became the first two companies to agree to dual list their shares on the LTSE. The CEOs of both companies – which also trade on the New York Stock Exchange – were early investors in LTSE with financial stakes of less than 1.5 percent, according to The Wall Street Journal.
“Both Asana and Twilio demonstrate the kind of governance and growth that will help build a better future for everyone,” Eric Ries, founder, and CEO of LTSE Group said in a press release. “We’re honored that companies of this caliber are committing to the Long-Term Stock Exchange.”
By listing on the LTSE, Twilio and Asana also made commitments to adhere to the exchange’s principles, which prioritize long-term actions and promote transparency.
These principles include considering a broad group of stakeholders (e.g. customers and employees) when making decisions, including how those decisions impact the environment and diversity; measuring success in years and decades, and prioritizing long-term decision-making; aligning executive and board compensation with long-term performance; ensuring that boards of directors have explicit oversight of long-term strategy, and actively engaging with long-term shareholders.
Landing Twilio and Asana was a major step in validating LTSE’s business model. But the fact that LTSE exists in the first place is a testament to the founder’s resolve and vision.
Before starting the exchange, Ries was probably best known as an entrepreneur and author of the 2011 bestseller, The Lean Startup. As Forbes reported last September, it was while writing that book that Ries got the idea to launch a long-term exchange. He spent the next four years researching how to start a stock exchange from scratch.
In November of 2015 Ries formed a company and then started raising money behind it. He attracted about $90 million in three rounds of financing from investors such as Founders Fund, Andreessen Horowitz, and Obvious Ventures. The LTSE got SEC approval in May 2019 to become the nation’s 14th listed exchange.
More than two years later, with Twilio and Asana becoming the first companies to list on the LTSE, one hope is that they can lure the hundreds of billions of dollars stashed in funds that are devoted to environmental, social, and governance investing. Another hope, and maybe a bigger one, is that other companies will recognize the value of long-term investing in the overall financial ecosystem.
“Our focus has always been on creating sustainable value for all of our stakeholders,” Twilio CEO Jeff Lawson said. “We’re just scratching the surface of a generational opportunity, and we look forward to joining a community of stakeholders that share our commitment to long-term growth.”