Ep 54: Charles Schwab: The big entrepreneur looking out for the small investor

Charles Schwab is the founder and chairman of The Charles Schwab Corporation. What began as a small discount brokerage company in the 70’s has evolved to become the nation’s largest publicly traded investment services firm, with close to $4 trillion in client assets. He is also the chairman of The Charles and Helen Schwab Foundation, a private foundation focused on education, poverty prevention, human services, and health.  He is the author of several bestselling books with his latest memoir titled Invested.

 

Some interesting insights from this episode:

  • He had to work extra hard to build his self-confidence to overcome his dyslexia and to keep up in class.
  • People with dyslexia are conceptual thinkers who tend to not get lost in the weeds. Some people are very literal in learning and need to go from step 1 to 2 to 3 while dyslexics can go from step 1 to step 10.
  • Seeing an inherent conflict of interest between commissioned stock brokers and the customers, he invented a new contrarian business model by paying salaries to people placing trades with a bonus tied to the overall success of the company.
  • After the tech meldtown of the early 2000’s, Charles had to come out of retirement to run the company again. He had to lay off thousands of employees and get the company turned around.  Sometimes founders are the only ones who can make the tough calls and drive huge fundamental changes to the business.
  • He was a consummate innovator who continually pivoted, redefined the business, and opened up new markets. He knew it was important to disrupt yourself before someone else did it for you.
  • When hiring, beyond skills and experience, he looks at their character and ethics and their responsibility to the customer.
  • “Excellence is an ongoing pursuit. You are always striving for it but you never achieve it.”

Ep 50: Steve Schwarzman: Co-founder and CEO of Blackstone

Steve Schwarzman is the co-founder and CEO of Blackstone, one of the world’s largest and most successful investment funds with over a half trillion dollars under management. Steve is an active philanthropist with a history of supporting education, culture, and the arts.  He holds a BA from Yale and an MBA from Harvard Business School.  His new book is called What It Takes: Lessons in the Pursuit of Excellence.

 

Some interesting insights from this episode:

  • He has always been very competitive. When he graduated from Yale, he insisted upon an extra $500 a year in his offer from a prestigious investment bank so he could be the highest paid graduate from his class.
  • “What I lacked in basic economics, I made up for with my ability to see patterns and develop new solutions and paradigms, and with the sheer will to turn my ideas into reality.”
  • He single-handedly advised Tropicana on getting acquired, which was the second largest transaction in the world that year, even though he had absolutely no M&A experience up until that point.
  • “To be successful you have to put yourself in situations and places you have no right being in. You shake your head and learn from your own stupidity. But through sheer will, you wear the world down, and it gives you what you want.”
  • They closed on their first fund of $1 billion the morning of October 19th, 1987, aka Black Monday, the largest one day drop in stock market history. Just one day later and Blackstone might not have ever gotten off the ground.
  • After losing some money on a deal, he re-architected the entire investment decision making process to be much more rigorous with the goal of engineering out the risk so as to never lose money again
  • He has a philosophy to only hire “10’s”. Those people tend to be intelligent, articulate, calm, energetic, curious, and can envision the future.
  • “Excellence is being the best that you can be at whatever you choose to do.”