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.Even as late as 1961, a yearafter Weill started his own firm, the young economist HenryKaufman declined to pursue a coveted position at Smith Barneybecause he was warned by a mentor that he would never be ableto climb to senior management because of his religious affilia-tion.In his memoirs, nearly 40 years later, Kaufman would ob-serve that now, the religious barrier to advancement in WallStreet has nearly disappeared. To illustrate this, he noted thatSmith Barney is now owned by Citigroup, which is headed by aJew, Sandy Weill.4Weill s rejections by the dominant Wall Street firms explainhis loyalty to people who gave him a chance, such as I.W. Tubby Burnham, who mentored Weill when he was a youngbroker.Weill would return the favor years later in part by bring-ing Burnham s firm in on underwriting deals in the early- andmid-1960s.In later interviews, Weill referred to Burnham as one of my heroes. 5A Start at Bear Stearns and an Education withTubby Burnhamne can t blame everything on the exclusionary policies of theOOur Crowd and Anglo-Saxon brokerages and banks.Perhapswith a finance degree or at least a rudimentary knowledge ofWall Street, Weill might have fared better on the job market. ston_c02.qxd 4/16/02 8:47 AM Page 4444KING OF CAPITALWeill admits to a total ignorance of banking and finance whenhe launched his career.For example, after his marriage, he de-posited wedding gifts in a savings bank and tried to get checksfor the account. I didn t know that savings banks didn t allowyou to write checks, Weill later told Business Week. That s howmuch I knew. 6The Weills were living off wedding gifts and cash Weill hadsaved from his Bar Mitzvah when he was finally hired as a runnerby Bear Stearns for what was, even then, the paltry wage of $150a month.A typical entry-level position on Wall Street, the job en-tailed literally running, order slip in hand, from the broker whotook the order to buy or sell stock, to the trader, who executedthe trade.Weill thrived on the energy of the trading floor andwas eventually promoted to broker.Weill later told a reporter, Iremember thinking that if I had $10,000, I could buy all thestocks that I d ever want to buy. 7In 1958, Weill was hired at Burnham & Company by TubbyBurnham, the firm s founder and a Wall Street legend.Burnham& Company, located at 60 Broad Street, later acquired DrexelFirestone, a Philadelphia investment bank, and became Drexel,Burnham, Lambert, today most often remembered for launchingMichael Milken and his band of junk bond kings.In the late 1950s, Burnham & Company was a prestigious, ifnot huge, brokerage house.Weill, at Burnham s urging, spentmuch of his time in the back office, where he learned how totrack and clear orders.Weill also worked as a board marker for Burnham, writing out the latest stock prices on a big bul-letin board so the brokers could quickly glance up and see thelatest prices.Years later, after he started his own firm, Weill issaid to have spent hours each day studying the stock ticker, per-haps just happy he didn t have to write all the prices down.Weill may not have realized it at the time, but these low-leveljobs gave him a better fundamental education of how the business ston_c02.qxd 4/16/02 8:47 AM Page 4545The Best and Brightestof issuing and trading securities really worked than he wouldhave gotten as a broker-trainee at a bigger firm.It was this decid-edly nonglamorous administrative experience that taught Weillto take behind-the-scenes operations seriously.Back-office effi-ciency was the key to much of his firm s early success, includingthe Hayden Stone acquisition in 1970.It s clear that Weill developed his core philosophy of runninga business partly from Tubby Burnham keep costs low, avoidunnecessary risks, and keep an eye on the details.He learned tospot the tiny red flags that could turn into big problems for abrokerage firm, such as clients buying too much stock on margin(they then might not be able to pay back the firm if the bor-rowed shares fell sharply), or traders placing big bets that stockswould go up, exposing a firm to significant potential losses.These lessons would serve Weill well throughout his long career,as he would make sure employees of his firm didn t take the kindof risks that caused other firms to blow up, such as when the bro-kerage firm Bache backed the Hunt brothers in their 1980 at-tempt to corner the silver market.Bache ended up so damagedthat the owners sold the firm to Prudential.It was also the late 1950s when Weill, still in his mid-20s, hadgrowing responsibilities at home.His son, Marc, was born in1957 and two years later came Jessica.Weill, encouraged by Joan,would soon step out from under Burnham s shadow and, with afew associates as partners, go into business on his own.Four Young Entrepreneurshe Sandy Weill who would eventually create Citigroup beganTto emerge when he started his own brokerage firm in 1960.The initial drive to start something new came from ArthurCarter, a charismatic young broker from Woodmere on Long ston_c02.qxd 4/16/02 8:47 AM Page 4646KING OF CAPITALIsland Joan Weill s hometown who lived across the hall fromWeill and his family on Atlantic Avenue in East Rockaway.Weillhad, up to this point, shown little stomach for entrepreneurship,and Carter had a much more adventuresome spirit.Weill s con-servative nature held him back for some time before making theleap with Carter.He was ambitious, but his aspirations weremodest.He felt he and Joan would be living like kings if they hadenough money to buy a deep fryer and a slide projector.8Weill was 27 and Carter was 28.Though Weill agreed to joinin the new firm, he insisted that a third person share the risk.Carter did one better; he arranged for two more brokers to jointhem: Roger Berlind, 29, an old friend of Carter s from Wood-mere, and Peter Potoma, 32.Those two had already discussedbreaking away from their current firm, Eastman Dillon, andstarting their own firm.When Berlind signed up, Potoma was in-vited to join the firm as well.On May 3, 1960, the partners went to the County Clerk s officein downtown Manhattan and registered the name of Carter,Berlind, Potoma & Weill.From that point on, Weill would neversend out another resume.The four partners managed to scrapetogether $215,000 from various sources as their seed capital.Weillturned to his mother, for example, for at least some of his $30,000stake.The four partners bought a seat on the New York Stock Ex-change with $160,000 and with the rest, they hired a secretary andrented a fifth-floor office at 15 Broad Street from Burnham.Itwas also decided that they would clear their trades through Burn-ham s back-office operations.Each partner received a base salaryof $12,000, which was a major pay cut from the $25,000 Weill hadearned the previous year as a broker working for Tubby Burnham.Each of Weill s new partners came to the firm after working atone of the Big Board brokerage houses.All were well-educatedand seemed to have more outside interests than Weill, particu-larly in the arts.Carter had majored in French literature at ston_c02.qxd 4/16/02 8:47 AM Page 4747The Best and BrightestBrown University and was a talented enough pianist to considerturning professional.Berlind, who served in the Army aftergraduating from Princeton, had tried professional song writingin New York after leaving the service.But he had little success [ Pobierz całość w formacie PDF ]
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.Even as late as 1961, a yearafter Weill started his own firm, the young economist HenryKaufman declined to pursue a coveted position at Smith Barneybecause he was warned by a mentor that he would never be ableto climb to senior management because of his religious affilia-tion.In his memoirs, nearly 40 years later, Kaufman would ob-serve that now, the religious barrier to advancement in WallStreet has nearly disappeared. To illustrate this, he noted thatSmith Barney is now owned by Citigroup, which is headed by aJew, Sandy Weill.4Weill s rejections by the dominant Wall Street firms explainhis loyalty to people who gave him a chance, such as I.W. Tubby Burnham, who mentored Weill when he was a youngbroker.Weill would return the favor years later in part by bring-ing Burnham s firm in on underwriting deals in the early- andmid-1960s.In later interviews, Weill referred to Burnham as one of my heroes. 5A Start at Bear Stearns and an Education withTubby Burnhamne can t blame everything on the exclusionary policies of theOOur Crowd and Anglo-Saxon brokerages and banks.Perhapswith a finance degree or at least a rudimentary knowledge ofWall Street, Weill might have fared better on the job market. ston_c02.qxd 4/16/02 8:47 AM Page 4444KING OF CAPITALWeill admits to a total ignorance of banking and finance whenhe launched his career.For example, after his marriage, he de-posited wedding gifts in a savings bank and tried to get checksfor the account. I didn t know that savings banks didn t allowyou to write checks, Weill later told Business Week. That s howmuch I knew. 6The Weills were living off wedding gifts and cash Weill hadsaved from his Bar Mitzvah when he was finally hired as a runnerby Bear Stearns for what was, even then, the paltry wage of $150a month.A typical entry-level position on Wall Street, the job en-tailed literally running, order slip in hand, from the broker whotook the order to buy or sell stock, to the trader, who executedthe trade.Weill thrived on the energy of the trading floor andwas eventually promoted to broker.Weill later told a reporter, Iremember thinking that if I had $10,000, I could buy all thestocks that I d ever want to buy. 7In 1958, Weill was hired at Burnham & Company by TubbyBurnham, the firm s founder and a Wall Street legend.Burnham& Company, located at 60 Broad Street, later acquired DrexelFirestone, a Philadelphia investment bank, and became Drexel,Burnham, Lambert, today most often remembered for launchingMichael Milken and his band of junk bond kings.In the late 1950s, Burnham & Company was a prestigious, ifnot huge, brokerage house.Weill, at Burnham s urging, spentmuch of his time in the back office, where he learned how totrack and clear orders.Weill also worked as a board marker for Burnham, writing out the latest stock prices on a big bul-letin board so the brokers could quickly glance up and see thelatest prices.Years later, after he started his own firm, Weill issaid to have spent hours each day studying the stock ticker, per-haps just happy he didn t have to write all the prices down.Weill may not have realized it at the time, but these low-leveljobs gave him a better fundamental education of how the business ston_c02.qxd 4/16/02 8:47 AM Page 4545The Best and Brightestof issuing and trading securities really worked than he wouldhave gotten as a broker-trainee at a bigger firm.It was this decid-edly nonglamorous administrative experience that taught Weillto take behind-the-scenes operations seriously.Back-office effi-ciency was the key to much of his firm s early success, includingthe Hayden Stone acquisition in 1970.It s clear that Weill developed his core philosophy of runninga business partly from Tubby Burnham keep costs low, avoidunnecessary risks, and keep an eye on the details.He learned tospot the tiny red flags that could turn into big problems for abrokerage firm, such as clients buying too much stock on margin(they then might not be able to pay back the firm if the bor-rowed shares fell sharply), or traders placing big bets that stockswould go up, exposing a firm to significant potential losses.These lessons would serve Weill well throughout his long career,as he would make sure employees of his firm didn t take the kindof risks that caused other firms to blow up, such as when the bro-kerage firm Bache backed the Hunt brothers in their 1980 at-tempt to corner the silver market.Bache ended up so damagedthat the owners sold the firm to Prudential.It was also the late 1950s when Weill, still in his mid-20s, hadgrowing responsibilities at home.His son, Marc, was born in1957 and two years later came Jessica.Weill, encouraged by Joan,would soon step out from under Burnham s shadow and, with afew associates as partners, go into business on his own.Four Young Entrepreneurshe Sandy Weill who would eventually create Citigroup beganTto emerge when he started his own brokerage firm in 1960.The initial drive to start something new came from ArthurCarter, a charismatic young broker from Woodmere on Long ston_c02.qxd 4/16/02 8:47 AM Page 4646KING OF CAPITALIsland Joan Weill s hometown who lived across the hall fromWeill and his family on Atlantic Avenue in East Rockaway.Weillhad, up to this point, shown little stomach for entrepreneurship,and Carter had a much more adventuresome spirit.Weill s con-servative nature held him back for some time before making theleap with Carter.He was ambitious, but his aspirations weremodest.He felt he and Joan would be living like kings if they hadenough money to buy a deep fryer and a slide projector.8Weill was 27 and Carter was 28.Though Weill agreed to joinin the new firm, he insisted that a third person share the risk.Carter did one better; he arranged for two more brokers to jointhem: Roger Berlind, 29, an old friend of Carter s from Wood-mere, and Peter Potoma, 32.Those two had already discussedbreaking away from their current firm, Eastman Dillon, andstarting their own firm.When Berlind signed up, Potoma was in-vited to join the firm as well.On May 3, 1960, the partners went to the County Clerk s officein downtown Manhattan and registered the name of Carter,Berlind, Potoma & Weill.From that point on, Weill would neversend out another resume.The four partners managed to scrapetogether $215,000 from various sources as their seed capital.Weillturned to his mother, for example, for at least some of his $30,000stake.The four partners bought a seat on the New York Stock Ex-change with $160,000 and with the rest, they hired a secretary andrented a fifth-floor office at 15 Broad Street from Burnham.Itwas also decided that they would clear their trades through Burn-ham s back-office operations.Each partner received a base salaryof $12,000, which was a major pay cut from the $25,000 Weill hadearned the previous year as a broker working for Tubby Burnham.Each of Weill s new partners came to the firm after working atone of the Big Board brokerage houses.All were well-educatedand seemed to have more outside interests than Weill, particu-larly in the arts.Carter had majored in French literature at ston_c02.qxd 4/16/02 8:47 AM Page 4747The Best and BrightestBrown University and was a talented enough pianist to considerturning professional.Berlind, who served in the Army aftergraduating from Princeton, had tried professional song writingin New York after leaving the service.But he had little success [ Pobierz całość w formacie PDF ]