"I have known no wise people who didn't read all the time — none, zero." – Charlie Munger

Bloomberg by Bloomberg

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BLOOMBERG BY BLOOMBERG: table of contents

Bloomberg by Bloomberg is an excellent story of how Mike Bloomberg founded and built Bloomberg and provides very specific details on the company’s early strategy and culture.  Bloomberg worked extremely hard, but was also uniquely equipped to shape the financial services information and technology industry due to his experience at Solomon.  The book includes valuable lessons for entrepreneurs and executives on how to treat your customers, outsmart your competitors and build an enduring culture.

BLOOMBERG BY BLOOMBERG: notes

Notable Quotes

  • “Life, I’ve found, works the following way: Daily, you’re presented with many small 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”
  • “Both at business and at home, I never let planning get in the way of doing”
  • “If you can compete based on smarts, flexibility, and willingness to give more for less, then small companies like Bloomberg clearly have an advantage”
  • “Two things haven’t changed in twenty years or twenty centuries: the need for information; and the users of data, with their bravery, jealously, adventurousness, and fear of the new. No matter what systems we create in the next decades, these two statements will be the same”
  • “The great system advances are pushed on users, not demanded by them”
  • “Any supplier who offers today what it sold yesterday will be out of business tomorrow”
  • “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”
  • “As a citizen of the world (and a lucky one at that), I have a responsibility to improve other lives.  I do it with my money, experience and time (wealth, wisdom and work – the three contributions one can make).”

Key Takeaways

  • Bloomberg had been at Solomon for 15 years and lead the developed of the firm’s IT systems, so had an in-depth understanding of how a Wall Street firm could benefit from technology. He also had $10 million from the sale of Solomon, $4 million of which he used to fund Bloomberg
  • Bloomberg does not believe in very long-term planning and the company’s flexibility allowed them to overcome their slower competitors and capitalize on opportunities (expand into journalism and broadcasting)
  • They prefer MVPs and emphasize product development over operational planning
  • Bloomberg has an enduring culture of meritocracy (employees start a 7:30 and titles are not important) and dedication (low turnover and they do not hire employees back)
  • Bloomberg has two very different characteristics than an Outsider CEO – his typical day is rushed with meetings and client dinners and the company’s headquarters are luxurious

DETAILED Notes

  • Early Beginnings
    • Eagle Scout as a kid, which he attributes to his philanthropic interests later in life
    • Grew up in Medford outside of Boston
    • He had very supporting parents – his father was an accountant for a dairy company.
    • He attended John’s Hopkins and then Harvard Business School
  • Career and Founding of Bloomberg
    • His friend in business school recommended that he interview at Wall Street banks
    • He started in an operational finance role at Solomon Brothers and then moved into equity trading when Solomon was becoming a leader in block trading for institutions and then was asked to build out their IT system
    • At Solomon (and all of his jobs) he would get in before 7:00AM and stay later than everyone else – this allowed him to get to know Billy Salomon and John Gutfreund
    • He was not a big life planner (no five year plan) – “Constantly enhance your skills, put in as many hours as possible and make tactical plans for the next few steps”
    • Solomon was acquired by Philbro and he was asked to leave the partnership – largely due to him bolding voicing his opinions on how the firm should be run.
    • He started Bloomberg (originally called Innovative Marketing Systems”) because he was uniquely equipped with his contacts on Wall Street and understanding of how technology could benefit Wall Street firms and he thought the financial services industry would benefit from the momentum in the American economy
    • He started Bloomberg with $300K from his Solomon payout and eventually ended up spending $4mm. He hired four people from Solomon with product and technology skills in 1981 and then more sales people in 1985.  They did consulting work for Merrill Lynch to understand their technology needs, which eventually lead to their first sales opportunity with the terminal
    • A few people in Merrill Lynch wanted to build it internally and said they could start in six months, which gave Bloomberg his open – he promised delivery in 6 months and a full refund if they did not like it
  • Business Strategy
    • Does not believe in acquisitions – any company that is worth them buying is likely not for sale
    • Bloomberg always builds the product first and would push things to market quickly (without a lot of testing) – the first Bloomberg terminal had a bug that was fixed minutes before the demo to Merrill and didn’t even work well, but Merrill was so thrilled to have a product actually delivered on time for a change
    • Their speed to market was a huge competitive advantage (Reuters and Dow Jones did not even know how good the Bloomberg terminal was until it was too late)
    • Different approach to the cost management to their competitors – they focus on depreciation of equipment and always conservatively estimate capital expenses (40% a year of capital expenditures for ongoing maintenance)
    • For CIO/CTO positions, he looks for executives that have a holistic view of the business in addition to technical skills
    • Bloomberg had an early break by automating a process for the Fed to become the benchmark for yield information – by 1987 they had 150 employees
    • In the late 1980’s, they decided to go into the text news business – they were currently offering Dow Jones news through the Bloomberg terminals, they did not want to be vulnerable to Dow Jones and they wanted to become more meaningful to their customers
    • He hired Matt Winkler from WSJ and took a different approach to journalism by combining text and analytics (most of which was automated) and demanded higher standards from their journalists
    • Bloomberg then entered the broadcasting business (news and radio) after John Fram (executive of Financial News Network, whos parent was bankrupt) convinced Bloomberg to. In broadcasting they used technology more than their competitors and catered to local markets
    • Bloomberg tends to insource most critical functions – they realized this was a better approach when they had installation issues with the early systems
    • They are very transparent with their customers – they have a published price list and generally stick to it – they also reduce prices for existing customers if they do so for new customers (not a standard practice)
  • Company Culture
    • Bloomberg does not hire back any employees that have left the firm (other than family reasons) and he does not attend going away parties
    • The Bloomberg offices are very luxurious (fish tanks, art work, etc.) to show that their people matter (this differs from other successful companies, e.g. Outsiders) and they also have the waiting room next to the employee snack room for transparency
    • Culture is a meritocracy – when they start a new venture, they naturally see who develop as leaders (who people go to for questions)
    • Believes in growth and expansion is critical to employee retention
    • Does not put a lot of weight into titles – they separate, create class distinction and inhibit communications rather than foster cooperation
    • Tries to rid the company of excess process and procedures – does not believe in keeping everyone informed at all times and does stand up meetings
    • His salary is equal to the lowest-paid full-time employee at the firm ($19K at the time)
  • Philanthropy and Personal
    • He is a runner and believes he does most of his creative thinking while running
    • He calls his mother every morning when he gets to work
    • Keeps a very busy schedule – his ideal day is rushed meetings starting at 7, an early dinner with clients and then a second one with friends
    • Believes people should not try to creatively avoid taxes – country gave you the opportunity
    • Bloomberg the company gives heavily to charities, including those of its clients/customers

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"I have known no wise people who didn't read all the time — none, zero." – Charlie Munger

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