#433 How Michael Bloomberg Works

What I learned from reading Bloomberg by Michael Bloomberg. Made possible by: Ramp: ⁠⁠⁠https://ramp.com⁠⁠⁠ AppLovin: ⁠⁠⁠https://www.applovin.com⁠ Vanta: ⁠⁠⁠https://vanta.com/founders⁠ Sage: ⁠https://founderspodcast.com/sage

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00David Senra?

  So there I was, 39 years old and essentially hearing, "Here's $10 million and you're history." John Guthrie, managing partner of Wall Street's hottest firm, told me that my life at Solomon Brothers was finished. "It's time for you to leave," he said. "I was terminated from the only full-time job I'd ever known and from the high-pressure life that I loved." This, after 15 years of 12-hour days and six-day weeks. Out. Fired. Most of the 63 partners were asked to stay on as employees of the new company. Not me, though, and a half a dozen other guys were pushed out at that time as well. Was I sad on the drive home? You bet. But as usual, I was much too macho to show it. And I did have $10 million as compensation for my hurt feelings.

• 0:45David Senra?

  If they had said, "We had another job for you," I'd have done it in a second. Just as I did at an earlier career turning point in 1979, when Billy and John told me to give up my sales and trading responsibilities and supervise the computer systems area. I was willing to do anything that they wanted. It was a great organization and I would have been happy to stay. I would have never left voluntarily. Afterward, I didn't sit around wondering what was happening at the old firm. I didn't go back and visit. I never look over my shoulder. Once finished, gone. Life continues. So that is from the beginning of the book that I'm going to talk about today, which is the autobiography of Michael Bloomberg.

• 1:27David Senra?

  It is called Bloomberg by Bloomberg, and he's describing the fact that getting fired was one of the best things that ever happened to him. There's a great line by Steve Jobs that comes to mind, where he says that sometimes life is going to hit you in the head with a brick, but don't lose faith. And so Bloomberg said, "I didn't look back." He was going to take the $10 million that he got from sale of the company and jump right back into the arena, this time as an entrepreneur. And so Bloomberg grew up working class, his parents didn't have a lot of money. I'm going to skip over childhood. I want to go right into when he went to Harvard Business School, and this is right at the end of Harvard, really not sure what to do after college. Says, "My two years at Harvard were well-spent. Harvard's case method teaching honed my analytical skills and sharpened my communication abilities.

• 2:10David Senra?

  The academic standards there were superior, but not what I would call outstanding. There were some very bright students in my class, some classmates I thought not exactly intellectually gifted, and a few that I considered total frauds who could only talk a good game. Those who I thought were smart generally did well later in life. Those who I considered dummies did less well. The bullshitters faded away. Street smarts and common sense, it turned out, were better predictors of career achievements." By this point, I hadn't really pondered where my life and work would take me. What should I do with my life? I talked to my good friend Steve. Steve told me to call the firms of Solomon Brothers and Goldman Sachs to say that I was desperate to be an institutional salesperson or an equity trader.

• 2:56David Senra?

  Who were they? Meaning who is Goldman Sachs and who is Solomon Brothers? And what would I be doing? "Don't worry about it," Steve told me. "Just do it." Not having any better ideas of my own, I made the calls. And then he makes the point that these jobs at the time were considered very, like, low-status. He says, "Security, trading, and sales were considered second-class occupations in those days. Both involved getting your hands dirty by actually picking up the telephone and talking to customers." So essentially what he's describing at this point in his life and this point in this book. Essentially, he's learning the meta-skill of sales. Uh, I did this episode on Ken Griffin, I think last year or maybe the year before. And when, uh, one of Ken Griffin's mentors retired, he said, "Hey, come to my office. You can grab anything that you want."

• 3:36David Senra?

  And what I thought was interesting is Ken wanted this, like, $10 sign, uh, this plaque that was in his mentor's office that said, "If we're going to eat, someone's got to sell." And then, in that episode, Ken was giving advice to college students. And he says, "You're always selling, and if you don't like to sell, here's my advice. Get over it." I think Michael Bloomberg would agree with what Ken Griffin was saying. Talks a lot about the importance of selling and that this point in his life was hugely beneficial in the, the future decades of him building his own company. One of the most valuable private, uh, privately-held companies in the world, by the way. Uh, "Both involved getting your hands dirty by actually picking up the telephone and talking to customers. Forget the fact that almost all occupations have a big selling component. You have to sell your firm, your ideas, and yourself.

• 4:18David Senra?

  Overlook the fact that a good trading mentality is synonymous with the ability and discipline to compartmentalize, focus, and compete for success. In those days, no self-respecting research analyst or banker ever thought of working the phones, of actually bringing in business. They thought soliciting was undignified." And this is the first few years of his company. He was probably the best salesperson of Bloomberg when he starts it. Uh, "For me, with college loans to pay off, a good job was a good job. And as I would learn later in life, it's the doers, the lean and hungry ones, those with ambition in their eyes and fire in their bellies, who go the furthest and achieve the most." And so I absolutely love this part because he winds up getting an offer from both Goldman

• 5:03David Senra?

  Sachs and Solomon Brothers. Goldman offers him $14,000 a year. Solomon offers him $9,000. So he wanted to take the job at Solomon and be like, "I literally would starve. I cannot live on $9,000. I have no money. I have student debt. I'm in New York City." And so essentially, this is his financial situation at the beginning of his career. "Look, I cannot afford to work at Solomon." Uh, so he's, he's talking, uh, to Guthrie. This is the same guy that's going to fire him, uh, many years later. "I want to. I love it, but I don't own another suit of clothes. I don't have an apartment to live in. I have no cash in the bank. All I've got are outstanding student loans, uh, that I took for tuition when the part-time campus job as a school parking lot attendant didn't pay enough." And so he asks, "How much do you need?" He says, "I need $11,500."

• 5:47David Senra?

  So remember, they offered him $9,000 a year? He says, "Fine. That's a $9,000 salary, and I'll give you a $2,500 loan." And so he talks about the culture at Solomon Brothers. He says, "To say that I fit into Solomon and loved the industry is an understatement. I reveled in it every minute of the day." The year is 1966 and Michael Bloomberg is 24 years old. And then he talks about the difference in leadership between the two different people that are going to run the firm. He absolutely loved Billy Solomon. He says, "The boss when I joined was Billy Solomon. Billy made the culture special. He was decisive and consistent as a leader. If he ever harbored doubts after making a decision, I never saw it. He was easily approachable and willing to listen to everyone's views. When he said we were going left, we went left.

• 6:32David Senra?

  When he said right, right it was. We didn't have to prepare for both directions. He set the rules. There was no different set of rules for him. He led by example. What he said, he did, and the rest of us did as well. John was a great leader too, but I always thought that he listened to too many people. It made running the firm much more difficult for him. Smart people prepared for both left and right when John succeeded Billy. This event split resources and made it harder to lead when the going got tough. Unlike Billy, John consulted all interested parties before making a decision. No matter how noble the motive, that resulted in indecisiveness. Comparing John to Billy on leadership, I always thought John was more egalitarian,

• 7:17David Senra?

  but less effective." And so he starts out at the very bottom. In fact, he has to work in his underwear in an unconditioned bank vault. This is hilarious. Remember, it's 1966. "I worked my first summer there in the cage. Yeah, we were physically counting securities by hand. It was a pretty lowly start. We slaved in our underwear in an un-air-conditioned bank vault with an occasional six-pack of beer to make it more bearable." And then he reinforces the low-status nature of the job that he chose, the one that he had. He had no other way to feed himself. And he's really too embarrassed to tell his friends, who had, you know, at the time were much more successful than he was. "My friends asked what I was doing for work. To save face, I told them I was studying methods and procedures to simplify workflows.

• 7:58David Senra?

  My friends were research analysts and investment bankers with lush, private offices, and I was what can only be called a clerk. Why didn't I quit? I was too embarrassed." And then again, this was great preparation for his future career. He talks a lot about sales in the book. He's going to give us basically this, this, this definition of what he considers a good sales technique. "We did what all great salespeople do. We presented everything we had and then highlighted whatever facts enabled customers to convince themselves that they were getting a good deal." And so he's selling securities over the phone. Both of his bosses are wa, are watching him. Says, "Billy and John would stand over me, watching silently while I was on the phone with a customer, head down, totally focused on making the sale, talking, explaining, cajoling, pleading.

• 8:42David Senra?

  I felt a great thrill when I closed the deal. After I closed the deal, they would walk away without a word. There weren't any congratulations. They weren't needed. I was expected to make big trades." Before we get back into this, I want to tell you about the presenting sponsor of this podcast, Ramp. I have been reading a lot about SpaceX lately. SpaceX is one of the most valuable businesses in the world, and one of the main themes in the history of SpaceX is constantly attacking and questioning your cost. Ramp helps many of the most innovative businesses in the world do exactly that, and they do this by using first principles thinking. The median company running on Ramp cuts their expenses by 5%. And one thing that SpaceX has demonstrated is that a religious dedication to controlling your costs helps

• 9:26David Senra?

  increase revenue because you can pursue opportunities you couldn't otherwise, and we see that in the Ramp data, too. The median company running on Ramp also grows their revenue by 16%. So when you're running your business on Ramp and your competitors are not, you have a massive competitive advantage that compounds over time. Ramp is the only platform designed to make your finance team faster and happier. Many of the top founders and CEOs that I know run their business on Ramp. I run my business on Ramp, and you should, too. Go to ramp.com today to learn how they can help your business save time, save money, and grow revenue. That is ramp.com. And so even though he's going to make his first small fortune in finance, he never

• 10:08David Senra?

  thought if he was going to be an entrepreneur that he would be an entrepreneur in finance. He wanted to actually have a real business that had a real service that made real people's lives better. And then he has this, I skipped over this part in his childhood and then also in high school and college, he has this love of history. So he's constantly consulting history when he has to make decisions. And when he's going to start his own company, he's like, well, okay, like, do I want to just be in finance? Like, well, how were all the great fortunes made? And so he says, "Wall Street promised vast riches, although a few of the great fortunes had been made there. From John D. Rockefeller to Sam Walton to Bill Gates, great financial success comes from starting businesses with concrete products in the real world, building jobs, creating value, and helping people." We are not yet

• 10:52David Senra?

  in the story, though, where he starts Bloomberg. He's still telling us essentially lessons that he learned at Solomon Brothers that he would use when he built his own company. So now, this is in 1967. This is a year after he starts working at Solomon Brothers. And again, didn't grow up with money. Now, he's exposed to people that have a lot of money, and it's just kind of like humorous and funny stories about, you know, him peeking into this world that he didn't even know existed. Now, fast forward to this day, you know, he's rumored to be, you know, one of, if not the wealthiest person in America. I've heard a bunch of different stories about this, that he's essentially been pulling out billions and billions in dividends out of his company for, you know, more than two decades. But back, back at this point in the story, he's in his early twenties, mid

• 11:32David Senra?

  twenties, and he's going to a fancy dinner at a very nice New York restaurant. And he says, "I couldn't stop gawking. It was my first time in such opulent surroundings." So he's talking about the person that's sitting next to him. And he says, "Her topics of conversation were equally incomprehensible. She asked, 'Where did my family have vacation houses in Europe? And what country was our yacht registered? Where did we keep our plane? My late father, who never earned more than $6,000 per year, would have chuckled. In front of me was more silverware per place setting than my family owned in total. I thought I'd gone through the looking glass into another world.'" And so early in his career, he has a really great idea where he's like, "Okay, Billy's the boss. I'm

• 12:14David Senra?

  going to make myself indispensable to the boss." Now, keep in mind, this is his first, second year that he's working there. Let's say 14, 15 years in the future, he's going to wind up getting $10 million and then fired from this job. But this, he would have never got the $10 million and then therefore the seed capital he needed to start Bloomberg, this, you know, this very valuable business that he still owns today, if it wasn't for the things that he's doing at this point in his career. And he's like, the really thing about this book is, one, it's very simple language. Bloomberg is unapologetically extreme, and he's also very, very direct. And so he'll tell you a story, and he's like, "I don't know, this just seems like obvious. Everybody should just do this." And the moral of the story he's about to tell is like, you should just, if you have a job and you have a boss, like, why aren't you automatically making yourself indispensable? It's the fastest

• 12:59David Senra?

  way to move up. "I came in every morning at 7:00 AM, getting there before everyone else except Billy. When he needed to borrow a match or talk sports, I was the only other person in the trading room, so he talked to me. At age 26, I became a buddy of the managing partner. I would stay later than anyone else. When he needs someone to make an after all hours call to a big client, or someone to listen to his complaints about those who had already gone home, I was that someone. Making myself omnipresent wasn't exactly burdensome. I loved what I was doing. And developing a close working relationship with those who ran the show probably didn't hurt my career either. I never understood why everybody else doesn't do the same thing. Make himself indispensable on the job. That was exactly what I did." And then this is one of my favorite parts in the book. This part is absolutely amazing.

• 13:44David Senra?

  I'm just going to read huge chunks of the book to you from here. It's really on the importance of showing up, working hard, staying flexible, and then loving what you do. There's a handful of ideas that Bloomberg repeats throughout this entire book. "It is said that 80% of life is just showing up. I believe that. You can never have complete mastery over your existence. You can't choose the advantages you start out with, and you certainly can't pick your genetic intelligence level. But you can control how hard you work. I'm sure someone, someplace, is smart enough to succeed while keeping it all in perspective and not working too hard, but I've never met him or her. The more you work, the better you do. It's that simple. I've always outworked the other person, and if I hadn't, he or she would be writing this book. Still, I had a life. I don't remember being so driven

• 14:27David Senra?

  or focused that my job got in the way of playing in the evenings and on weekends. I dated a lot. I skied, and I jogged, and I hit the town more than most other people. The more you try to do, the more life you'll have. Although I was serious about my career, I never had a budget for my future. Unlike so many of my classmates, I didn't set out to be a partner or a vice president at age 30, or a trillionaire at 35. Make a comprehensive scheme for the rest of my life? I had trouble filling out the part of the college application where you're asked to write 1,500 meaningless words about what you're going to do for the next 10 years. Both at business and at home, I've never let planning get in the way of doing. Life, I've found, works in the following way. Daily, you're presented with many small

• 15:12David Senra?

  and surprising opportunities. Sometimes you seize one that takes you to the top. Most, though, if valuable at all, take you only a little way. To succeed, you must string together many small incremental advances, rather than count on hitting the lottery jackpot once. Trusting to great luck is a strategy not likely to work for most people. As a practical matter, constantly enhance your skills, put in as many hours as possible, and make tactical plans for the next few steps. Then, based on what actually occurs, look one more move ahead and adjust the plan. Take lots of chances and make lots of individual spur of the moment decisions. Don't," this is such a great line, "don't devise a five

• 15:54David Senra?

  year plan or a great leap forward. Central planning didn't work for Stalin or Mao, and it won't work for an entrepreneur either. Every significant advance I or my companies ever made has been evolutionary rather than revolutionary. Small earned steps, not big lucky hits. I stay flexible. A reporter asked me what we at Bloomberg had failed at. My answer, after some thought, was, nothing. But what we accomplished wasn't always what we set out to do. Often, in the process, things worked that we hadn't planned on. Unforeseen uses arose for our products, customers appeared whom we hadn't known existed, and exactly the reverse occurred for those I had been dead sure of. Planning has its place.

• 16:39David Senra?

  The actual thought process sometimes leads to great new ideas, but you can only accomplish what's possible when you get there. Then, whatever your idea is, you've got to do more of it than anyone else. A task that's easier if you structure things so that you like doing them. Since doing more almost always leads to greater accomplishments, in turn, you'll have more fun, and then you'll want to do even more because of the rewards, and so on. I've always loved my work and put in a lot of time, which has helped make me successful. I truly pity people who don't like their jobs. They struggle at work so unhappily for ultimately so much less success, and thus develop even more reason to hate their occupations. There's too much delightful stuff to do in this short lifetime not to love getting up on a weekday morning."

• 17:25David Senra?

  And then he brings the story to after he got fired and starting Bloomberg. And again, I've said this a few times, I think, Bloomberg is unapologetically extreme, and you see that right here in this paragraph. He says, "Did I want to risk an embarrassing and costly failure? Absolutely. Happiness for me has always been the thrill of the unknown. Trying something that everyone says can't be done. Feeling that gnawing put in my stomach that says danger ahead. I want action. I want challenge. Work was, is, and always will be a very big part of my life. I love it. Even today, after toiling for 50 years, I wake up looking forward to getting in early, practicing my profession, creating something, and competing against the best. It is a real high to be a participant rather than a spectator."

• 18:11David Senra?

  Think about the percentage of your life spent working. If you're not content doing it, you're probably pretty miserable with the situation. Change it. And then he invites the gifts to start a company is think about what you do better than anyone else. I would start a company that would help financial organizations. There were better traders and salespeople. There were better managers and computer experts, but nobody had more knowledge of the securities and investment industries and of how technology could help them. I wanted to create something that would make smart investors out of mediocre ones and would create a competitive advantage over anyone lacking these capabilities. And then he goes back to this thing that he repeats. He's like, stop over analyzing, stop planning too much, just start. If you're going to succeed, you need a vision, one that's affordable, practical and fills a customer need.

• 18:56David Senra?

  Then go for it. Don't worry too much about the details. Do not second guess your creativity. Avoid over analyzing your new project's potential. And he talks about the people stay away from. He talks a lot of shit about bankers and venture capitalists in the book. So it says, banks and venture capitalists can be the worst enemies of entrepreneurs. They create doubt in entrepreneurs minds. And worst of all, they think that an originator will be helped by their oh, this is funny. And worst of all, they think that the originator, meaning him in this situation, will be helped by their oh, so insightful views on how he or she should run the new business. Often they kill off what's different, special and full of potential. And so he gives an example of this happening early in his career, early in the days of Bloomberg, I should say.

• 19:41David Senra?

  In our early years, one venture capitalist came to see us. This guy was one of those self entitled men who had been born on third base and thought he hit it triple. After telling us everything that we were doing was wrong and that we were too unstructured to survive and we were stupid because we were unable to predict future growth with specificity. He left to advise his partners not to buy from Bloomberg. The reason? We didn't show much interest in his views on how to run our company. He was sure right about that account. At Bloomberg, and then he's talking about work on product and sales first and work on them in parallel. And then you can work on everything else after that. At Bloomberg, we'd always built the product first. We think about accounting and shipping much later in the process.

• 20:23David Senra?

  Selling is the only process we run simultaneously with development from the start. And then he talks about the very humble first days of what becomes one of the most valuable private companies ever created. I rented a one room temporary office. It was about a hundred square feet of space with a view of an alley. I deposited $300,000 of my Solomon Brothers windfall into a corporate checking account. And 15 years later, I had a billion dollar business. And before we get back into this, I want to tell you about AppLovin. One of my all time favorite quotes is from the book Zero to One. In that book, Peter Thiel writes, he says, the single most powerful pattern I have noticed is that successful people find value in unexpected places. And they do this by thinking about business from first principles instead of formulas.

• 21:08David Senra?

  And that is exactly what AppLovin has done with their advertising platform. AppLovin connects you with over a billion potential new customers in mobile games. AppLovin allows you to capture undivided attention. AppLovin ads are full screen videos that are watched for an average of 35 seconds. That is retention that blows other ad platforms out of the water. And you can launch on AppLovin in minutes. You set the goal and AppLovin achieves it. No complex setup, no expertise needed and AppLovin scales quickly. They can put your ads in front of over a billion potential customers. Other businesses have seen immediate results, scaled to hundreds of thousands of dollars of spend per day and increased their revenue by millions. So you want to get started quickly before all of your competitors are on AppLovin.

• 21:52David Senra?

  And you can do that by going to applovin.com. That's applovin.com. And then I want to tell you about Vanta. Vanta, Vanta, Vanta. Vanta helps your company prove you're secure so more customers will use your product or service. Vanta is an AI powered security expert that scales with you. The more your business grows, the more complex your security needs get. And that complexity turns into chaos. Vanta tames that chaos for you. Vanta automates compliance, continuously monitors your controls and gives you a single source of truth for compliance and risk. So whether you're a fast growing startup or an enterprise company, Vanta fits easily into your existing workflows. Many companies won't sign contracts unless you're certified and this is causing you to lose out on sales.

• 22:33David Senra?

  That is why the average Vanta customer reports a 526% return on investment after becoming a Vanta customer. Automate your compliance, security and trust with Vanta. Vanta will help you win trust, close deals and stay secure faster and with less effort. Go to vanta.com/founders and you'll get a thousand dollars off. That is vanta.com/ founders. And so it's going to take him some time to figure out what product to build and then to build that product. And so in the meantime, he needs to bring in money. And so he has this idea, it was like, okay, try to do some kind of service related business. Let's see if we can do some consulting. This brings in, you know, a couple hundred thousand dollars. And so he writes, right after forming our company, we did some consulting. It brought in cash, gave us exposure and helped provide us with some legitimacy that would later lead to work for more clients.

• 23:17David Senra?

  And it bought us our first sale to Merrill Lynch. And then I love that he sold to Merrill Lynch before he had a product. When I came back from the meeting, my colleagues were elated until the reality of a six month delivery for something that didn't exist began to sink in. So it's like, okay, we sell this product doesn't exist. And we say, don't worry, it doesn't exist. You're going to have it six months from now. He just made up the day. As developers, we're magicians, not miracle workers. Month after month, as we worked, our mood alternated between elation and the feeling of an impending disaster. We weren't just putting out fires. We were adjusting to major earthquakes when some new software bug forced us to start over. But every day we got closer to building the machine that we promised. At the time, he's also building hardware, which he'll talk about. He's got a lot of great ideas about that, by the way.

• 24:02David Senra?

  Essentially, he looks at his business as just content like data and analytics. And he built hardware when he needed to build hardware. But once somebody came along that could build a better hardware than him, he just focused on what his actual business was. And he never confused what his business was with the device that delivered it. He has some great lines on that, which we'll get to in a minute. Our style then was pretty much the same as today. We took the problem and broke it down into little manageable, digestible pieces. Then each of us took responsibility for the one we were best suited to do. And then he goes back to this idea, get action. We acted from day one, others planned to plan for months. I must admit, I was worried. Remember, he started the company with 300,000 of his own money. Now he's four million into this thing. He only has 10 million to his name.

• 24:47David Senra?

  We were spending what would grow to be a $4 million investment of my $10 million. Simultaneously, I was becoming responsible for families of almost two dozen company employees. I convinced these people to follow me. And if the venture had not succeeded, I would have failed them, their spouses and their children, as well as our prospective customers. Yet we plowed ahead. From the beginning, I was convinced we were doing something that nobody else could do, nor was anyone even trying. Our product would be the first in the investment business where normal people, without specialized training, could sit down, hit a key and get an answer to financial questions, some of which they didn't even know they should ask. Over time, the Bloomberg terminal evolved to allow users to run an ever wider array of functions

• 25:31David Senra?

  developed by our more than 5,000 programmers and engineers. But it all began with a simple premise, putting more information at people's fingertips more quickly and more accurately than they could otherwise get it. That is still the heart of our business. And then I absolutely love this part because this describes again, the beginning of his business. Finally, the day arrived, almost. The six month promise ran out on a Saturday. So we could postpone delivery until Monday. So now we're at six months and two days. And Monday didn't necessarily mean Monday morning. It could be Monday afternoon. We were constantly having to fix the software, rewriting it again and again to deliver the consistency needed for reliable, real time analysis. We're out of control, I would shout as each software bug surfaced.

• 26:16David Senra?

  We're going to be out of business if this continues. I still say the same things today. It was June 1983 and we had delivered something on time, close to, something that worked, sort of, and a machine that would be useful somewhat. So then we get to the very important role that Merrill Lynch plays in Bloomberg's story. It's not only their first customer, they're their first major investor. So in 1982, this is going to blow your mind. 1982, they buy 30% of the company for $30 million. Okay, that's in 1982. And around 1996, Michael Bloomberg buys back 10% of the 30%. Okay. 10% for 200 million.

• 27:01David Senra?

  So then about 10 years later, in 2008, Michael Bloomberg buys the remaining 20% that Merrill Lynch still owned from this investment they made in 1982 for 4.4 billion. So a way to think about that is for 30 million invested in 1982, Merrill Lynch makes what about 4.6 billion dollars. Not only that, they helped him understand the product he was building. And so he has two traders working at Merrill Lynch that are essentially telling him everything about the product that needs to be fixed so it's useful to them. And therefore it's useful to them. It could be useful to the, you know, future tens of thousands, maybe hundreds of thousands of people just like them. When we first installed it, Merrill assigned two traders to work with us. I thought they'd be real pains and second guessed us every step of the way. Was I wrong?

• 27:46David Senra?

  It turned out both of them were as responsible for success as anyone. They were nit pickers, but not in a nasty way. They wanted us to succeed. When they said something didn't work, they could show us it didn't work. So we knew for sure it didn't work. And more important, to help fix the problem under what specific circumstances it didn't work. Every day, our system got better as we fixed each problem they pointed out. I'd always rather have a smart, fair, honest, demanding client than a nasty dummy or an I don't care user. And then more about the early days, which I think were his favorite part of the company, the fact that you should be doing everything yourselves at the beginning. For our first three or four years in business, I did all of these functions. I worked full time selling our services, negotiating all of our supplier

• 28:31David Senra?

  and customer contracts and running the company. Never before or since did I have as much fun and as challenging a time in business. Back when we started, the original half dozen of us, after finishing our regular jobs, would go into clients' offices on the weekends. We would crawl under the new customers' desks and we'd lay our own cables. We would drag wires, stuffing the cables through holes that we drilled in other people's furnitures, all without permission, without giving any thought to any fire law or building code. It's amazing we didn't burn down some office or electrocute ourselves. At the end of the day, 10 or 11 o'clock at night, we'd turn it on and watch what we created come alive. It was so satisfying.

• 29:15David Senra?

  We improvised everything as we went along. I gotta stop there. He's used the word improvise, steering the boat, you know, a little bit every day, just to use the words of Henry Singleton. He uses that over and over again. We improvised every day. We just came and we iterated and got better every day. The difference is, he iterated, got better every day and didn't stop for 50 years. I used to write all the checks myself. I signed every contract. I paid every bill. I did the hiring and firing. I bought the coffee, soda, cookies and chips. I emptied the wastepaper baskets. I dusted the window sills. I wrote and handed out the paychecks personally. Those were the best days, the first few years in the early 1980s. We were involved in every aspect of our company. As we grew and turned these functions over to newly hired specialists,

• 30:00David Senra?

  I felt like I was losing a child to adolescence. Good for the kid, but painful for the parent. So then we get to one of my favorite parts of the book, and this is where he starts building out the media part of his company. Starts with this guy named Matt Winkler, who's a reporter at the Wall Street Journal. Keeps hearing about Bloomberg and this Bloomberg Terminal and trying to figure out, okay, what's going on? Like he's hearing about it throughout the finance industry. And he's like, okay, I'm going to go and like interview Michael Bloomberg. And so in this part of the book, this is where Bloomberg is describing this first meeting they have. He says, when they arrived in my office, I offered them the same speech that I used to convince people to take jobs with us. We've got the best people in the world working here. All of them think they walk on water. All of them are workaholics.

• 30:43David Senra?

  Once they come, they stay for the rest of their lives because they love it. They've built the better mousetrap. They're doing something important. They're giving the little guy information he needs to fight. And he's saying, you know, one thing for him to say that he's got the, you know, the best product, the best people. But he said, you don't have to believe me. Here, he does something really smart. And he actually, it's a good idea whether you're talking to, I guess, a reporter or even trying to recruit somebody to join your company. And he comes into, leaves the room, comes back with this big, thick printout. And he goes, here's every customer we have by name, by firm and by phone number. Call them yourself and essentially verify everything I just told you is true. And so as Michael Bloomberg builds a relationship with Matt Winkler, he starts seeking Matt's advice.

• 31:26David Senra?

  And really the main point of this section, I think, is really important. It's like, hey, your company likely has information that no one else has. Start thinking about how you can repurpose it to benefit other people and then achieve your objective. So he's on the phone with Matt and he goes, hey, I want to make our terminal indispensable to stock as well as bond traders. Should we get into the text news business? His answer wasn't what I expected, although it encouraged me to keep the conversation going. Mike, he said, you and the people who work with you have created a terminal that explains more about why bonds fluctuate each minute, each day and each week than any collection of reporters ever could. You already provide charts and graphs that influence the major debt trading decisions worldwide. Add text to that information and you'll have something that doesn't exist anywhere else.

• 32:09David Senra?

  No one in debt or equity will be able to live without it. And then we see he goes back to this habit that he has. He consults history when trying to decide if he should enter the news business, right? So he says, history shows that any gutsy entrepreneur, Joseph Pulitzer, William Randolph Hearst, Henry Louis, B.C. Forbes, Ted Turner, Rupert Murdoch and Oprah Rinfeldt can enter the news business anytime. And then he compares his advantage that he has that these other historical figures did not. Best of all, we had revenue from terminal rentals, which meant we didn't have to worry about a news service paying for itself as a standalone product. One hack of it advantage. Fundamentally at Bloomberg, we're builders, not buyers. So it has never occurred to me to acquire a news organization as a starting point.

• 32:53David Senra?

  It's always more fun to create from scratch and a lot less risky. And so this is the initial idea of this media business that he begins to build. I handed him a three page list of what Bloomberg News should be doing. Our purpose was to do more than just collect and relay news. It should also advertise the analytical and computational powers of the Bloomberg Terminal by highlighting its capabilities in each news story. With our terminal functions included, each of our news stories would be more informative than the competitors and more people would want to access them. This meant more revenue, which in turn meant we could afford more reporters and have more news and so on. So think about it. Each news story is a product demo. More demos lead to more revenue. More revenue leads to more stories and even more revenue.

• 33:38David Senra?

  And so this is the part I mentioned earlier about really understanding what the actual business that you're in. When we first began, we manufactured computers and keyboards because we had to. Personal computers didn't really exist in order to deliver our product. But we never made the mistake of believing that we were in the hardware business. We are in the business of producing and distributing the world's most accurate, reliable, comprehensive, up to the second information and analysis. This has been our mission from day one and it has never changed. Technology will continuously revolutionize distribution, but our product is content. It remains consistent. Much of that content sits behind the media world's most expensive paywall. A subscription to Bloomberg costs about $22,000 a year. This book, I think it's almost 20 years old.

• 34:23David Senra?

  I think the price is over $30,000 a year, if I'm not mistaken. That works out to be about $88 per workday. When customers complain that it's expensive, we tell them, if you can't make $88 a day using Bloomberg, you have a bigger problem than our bill. And then he's got some great advice on how to make your product or your company stand out. I should say, at this point in the story, his company's not called Bloomberg. It's called Innovative Market Systems, and he's about to change that. So he says entrepreneurs in the booming 1980s were commonplace. My company was small and virtually anonymous. Our product, the market data terminal that we were selling, was called Market Master. And it could have been confused with a kitchen appliance. No one knew us. No one cared about me. But by 1984, this was about to change.

• 35:06David Senra?

  Those were the days when Ronald Reagan proved how marketable ideas could be when they were peddled with charisma. You needed a spokesperson for mass appeal. Consumers and the media identified products and policies with the people who pitched them. That's actually a very old idea. You and I have talked about David Ogilvie, Albert Lasker, Claude Hopkins. In any case, they tried to get away from the company and basically have like a spokesperson, even if it wasn't the founder. But they wanted, they said, people identify with people, not products and not companies. And essentially were what?

• 35:38David Senra?

  Sixty years later, then Albert Lasker and Claude Hopkins were applying that same exact idea to all kinds of different products. He just happens to apply it to his own product. So you need a spokesperson for mass appeal. Consumers and the media identify products and policies with people who pitch them. Nike didn't just make sneakers. It pushed them with the mistake that it could only come from Michael Jordan. To have the best mousetrap wasn't enough. Success was delivered by people promotion. If we were going to build our business, we too needed a personality. The obvious choice, me. Our competitors' founders were all dead. I, on the other hand, were alive and out making speeches and sales calls every day in city after city around the world, turning my name and work into a great weapon that others in the

• 36:20David Senra?

  financial news and market data businesses could not match. And since I'd spent so much time demonstrating our product, people had begun to mentally interchange me with the terminal. So they would already, they were already, before they were called Bloomberg terminals. They'd say, hey, give me, instead of saying, what was his name, Market Master? Terrible name, by the way. Or even they're using the word terminal. They're just like, hey, give me some of these Bloombergs. I acquiesced to a decision that the marketplace already had made. Henceforth, the product and the company itself would be Bloomberg. And then he has a hilarious line here. I would become the Colonel Sanders of Financial Information Services. As the owner, by definition, I spoke with authority. And to make good copy, I gave the press a colorful personality to focus on. You kind of see, obviously, I think

• 37:05David Senra?

  if you're listening to this, you probably know, you've heard his name, you know, about his business. But you can see, he's, you know, he likes to, he has a colorful personality. He's unapologetically extreme. He talks a lot of shit throughout this book. He has a perspective, a point of view. And he used that perspective, that personality, that point of view, to build his company. And so then he talks about this very important extension for his media business where he expands into television and radio. And the interesting part about this, and it goes against his idea that he doesn't want to buy things, he wants to build them. So, one, he didn't want to do television or radio. I think the person had to ask him three times. And then, two, he realizes, oh, it's actually smarter in this case, I can buy something that I kind of jumpstart this process. And again, it goes back to this flexibility that, you know, he has this goal, this end goal, he has a basic idea of where he's going to go, but he doesn't know how he's going to

• 37:50David Senra?

  get there. And he's willing to be flexible every day. This is a guy named John Fram calls him. John was an employee at the FNN. The FNN was the Financial News Network. It was a television channel whose parent was in bankruptcy. He told me I should buy FNN. Mike, what you really need to do is get into television. It will create synergies with everything else you're doing. What a dumb idea, I said, cutting him off. My operating principle has always been build, don't buy. Besides, what did I have to do with television? And I think the price of this, this television network at the time was $200 million. She's like, listen, we're not going to buy, I'm not spending $200 million on this, no matter what you say. You're crazy. Guy calls him back the next day, starts talking to him as if we're old friends. He suggested, now, instead of, he goes, so you should buy this,

• 38:33David Senra?

  but then you also need somebody in-house to develop audio and video programming at Bloomberg, and you should hire me and two other guys to do this. Once again, I said television and radio makes no sense for Bloomberg, and I hung up the phone. A few days passed, and then I got another call from him. And as I listened to a longer version of the pitch he made a few days earlier, it occurred to me, one of us is stupid, and it isn't him. So I hired the three of them that day. And so the first thing they do is they start going out and buying radio stations. And then from radio, they start pushing and extending into television. And he talks about this. And again, this is, I think, one of the most important parts of the book. He's got like, a lot of these like roundabout ways to get in front of potential customers. I think this is maybe one of the

• 39:15David Senra?

  most genius things he's ever done, is obviously the media component of his business. He says, people often ask me why Bloomberg ventured into radio and TV. Was there some hidden motive? And the motive wasn't hidden. The motive was to sell more subscriptions. That it was, that's the, what his entire business runs on. And he talks about why he has an advantage in doing this. He says, we have the necessary information and the technical know-how. So broadcasting is an easy extension of what we're doing elsewhere. Radio and television provide our company with instant visibility. The media like nothing better than writing about themselves. The more exposure Bloomberg has to the fourth estate, the more they'll promote us to the general public. To reach potential customers who don't yet subscribe to our print products, radio and TV help us get our message out.

• 39:58David Senra?

  The people who lease our terminals are part of radio and television's masses. They need news while jogging, showering, driving, or sitting at home. And we've got to give them what they need where they are. Radio and television simply became another delivery mechanism for the same content. And every piece of content he produces is a ad for the Bloomberg subscription. And he talks about the same idea a few pages later. Again, everything they do increases the likelihood of selling Bloomberg subscriptions. TV stories relate to magazine articles that relate to the computer data. Then he's got a great idea on how to pick the person that should lead the project, any new project inside your organization. As a true capitalist, I've always believed in the market's ability

• 40:41David Senra?

  to make efficient selections. In many of our new ventures, we do not appoint a manager at the beginning. We simply throw everyone interested into the deep end of the pool, as it were, and stand back. It becomes obvious very quickly who the best swimmers are. We just watch who people go to for help and advice. And later, when we formalize a management appointment, no one's ever surprised. The leverage we gain from employing creative people and letting them do their own thing is incredible. A few pages later, goes back again to that idea. Everything we're doing is just increasing the likelihood of selling more Bloomberg subscriptions. Our business is information, not the medium that the information is delivered into. You see, he's already been flexible about this multiple times. Why use all forms of media rather than focus on just one? What business are we in? Some

• 41:26David Senra?

  companies declare themselves to be in radio, or in television, or in newspapers, and so on. We have a greater vision. Bloomberg is in the business of giving its customers the information they need, in whatever form is most appropriate. With all methods at our disposal, we do better. We create or adopt a new medium. We do not ask our customers to accept less. And then I think this paragraph is interesting, because he talks about the necessity for having a lot of self-confidence, having a big ego, but not, making sure your ego's not too big. And so he talked about, you know, the fact is, he likes, he was a micromanager. He had a really hard time delegating. And so he says, I was there in the beginning, and I too think I could do everything better than anyone else. I believe in my design instincts, in my sales savvy, and my management skills are the best around. Still, my ego

• 42:11David Senra?

  does allow for the remote possibility that someone might be as good at one or two little things. I've admitted, there's a slim chance that ideas coming from others could be valuable as well. In other words, I'm the same as every other entrepreneur, but at least I know what I don't know. And then it goes back to this aggressive personality that he has, the fact that he's unapologetically extreme. He considers his competitors as if they're trying to starve his children. Every day at Bloomberg, we face challenges that jeopardize our comfortable life. We constantly have to fight established competitors trying to take food out of our children's mouths. And then there are the startups that want to destroy everything that we've built. Another thing that he repeats he has in common with Edmund Lannan and Peter Thiel, this idea that you should not be making Me Too products.

• 42:55David Senra?

  Edmund Lannan says, don't waste your talents on Me Too products. Peter Thiel says, don't build an undifferentiated commodity business. Michael Bloomberg says, what can we do that our competitors can't? There's no reason to do a copycat product. Consumers can just as easily buy from others. And then he goes back to what he was saying at the beginning of the book, that he prefers a lot of these small bets with limited downside and uncapped upside. Our modest operandi remains building from within, which avoids the bet-the-store, high-risk gambles that often characterize large takeovers, such as the disastrous Time Warner AOL deal. Maybe I'm just not that smart. When I'm looking to expand, I prefer starting with a little capital that we can afford to lose and a few people we can always reassign to other projects. This way, we never feel we've committed to stay with our mistakes.

• 43:37David Senra?

  Nor are we so overextended, we can't handle other additional experimental ventures simultaneously. And so then there's some hints in the book of just this unreal financial performance. Again, I think it was like 98, or he might own 100% of the business now, or like, something like 98%. Even, and he was like wildly successful almost from the beginning. So, a few years after founding Bloomberg, I think it was in the 90s, he was making so much money in cash, he was giving away $200 million a year at charity. I think in the early 2000s, he was donating like 700 million a year. I think he's given something like over $10 billion a year to like philanthropic, different like, like charities and philanthropic endeavors

• 44:18David Senra?

  that he was interested in. At the same time, scattered throughout the book, he's got these just like very, again, unapologetically extreme perspectives. This is one of my favorite. He says, since Bloomberg was always up against companies many times our size, we had to enter each commercial fight with an advantage. I don't believe that business battles should ever be even. At Bloomberg, we do not want fair fights. We want to go into contests with an advantage. And so this made me think of, when I got to this section, Jeff Bezos said something that was very similar. So I asked Sage about this. And I asked, like, what did Jeff Bezos say about not wanting to fight a competitor as strong as you are? And it pulled a quote from one of his past episodes. And it says, when it comes to competition, this is Jeff Bezos now, when it comes to competition, being one of the best is not

• 45:01David Senra?

  good enough. Do you really want to plan for a future in which you might have to fight with somebody who is just as good as you are? I wouldn't. Bloomberg is saying the exact same thing. We want to go into all these contests with an unfair advantage. I do not believe that business battles should be even. And then he talks about the importance of persistence, of resourcefulness. He says, most fortunes are built by entrepreneurs who started with nothing, and generally got fired once or twice in their careers. And throughout history, the vast majority of great writers, artists, musicians, dancers, and athletes have come from the less financially secure families. The CEOs of many Fortune 500 companies went to a state university rather than an Ivy League school. The rewards

• 45:42David Senra?

  almost always go to those who outwork the others. The time you put in is the single most important controllable variable determining your future. Communists tried to eliminate any form of meritocracy for 70 years. And in addition to wrecking their economies, they starved millions of people to death in the process. And then finally, he has some great advice for the future generations of entrepreneurs. Periodically, while surrounded by the fruits of our success, the profits, the power, the notoriety, I get frustrated and dream of starting again. But something stops me. Perhaps I'm too old. Perhaps I'm afraid it was all luck. Or maybe, deep down inside, I really do like the trappings that I've accumulated.

• 46:24David Senra?

  Nevertheless, when I find we have to clear it with legal, or had a meeting just to keep others in the loop, or a justifying staff versus producers, I want to scream. We used to have the Nike motto attitude. We just did it. Now there's a why we can't lurking in the background. Keeping it from coming out while we grow is our number one management focus today. What started simple with time has become complex. A single straightforward policy has picked up exception after exception over time. Products have grown to overlap. No one's got an excuse, but everyone's got a reason. This is maddening. Why not just quit then? Chuck it all. Sell the business. Take the money and run. Why not cash in?

• 47:09David Senra?

  Play it conservative. Relax. Real entrepreneurs never do. And I haven't either. Real builders are so focused and dedicated, they'd have a nervous breakdown after two weeks of sitting around. Their challenge, even their reason for living, would be gone. Why swap fun, influence, challenge, and more money than you could ever spend for only a multiple of more money than you can ever spend? I can't think of anything better than my current situation. And why would I take the company public? Why would I have to answer to more partners, stockholders, and security and analysts? I know why the investment bankers want me to issue stock, but why would we want to do it? We're going in the other

• 47:52David Senra?

  direction. We've already bought back Merrill's 30% investment in our company. The first 10% for 200 million in 1996, and the second 20% for 4.5 billion in 2008. Not a bad return on the original investment of about $30 million. So why not sell? No thanks. Answering to no one is the ultimate situation. So back on the treadmill. Ratchet up the risk. Enter a new medium. Start another project. Improve. Develop. Expand. Go. And that is where I'll leave it for the full story. I highly recommend reading the book. That is 433 books down, 1,000 to go. And I'll talk to you again soon.