Quinn, who spent twenty-six years at Salomon and was there during Bloomberg’s time, described the room as “an adult kindergarten and, frankly, it was wonderful. The language was not appropriate for adult men,” he acknowledged, “but we were all in the pit together yelling and fussing. It was spontaneous and fast, like an intellectually athletic experience. You had to be quick-witted and think on your feet and express yourself very quickly.”14
Bloomberg would thrive in that thunder dome, at least for a while. He fed on the electricity, the daily scrum for trades. He also learned quickly that the “easy to talk to, nice” Billy Salomon, or WRS as his staff called him, was not always that easy to talk to or nice. Billy could be gentlemanly, but he also ran a tough school for fast-talking, street-smart ruffians. Still, he would insist that they refuse to exchange expensive gifts with clients—no booze, no tickets, no Thanksgiving turkeys. WRS could listen to dissent, but he was the head man, not the head negotiator. Even for Bloomberg, who believed he was a favorite, Salomon could be tough. One day Billy asked him to go buy a birthday card, and when Bloomberg came back with it, after some careful shopping around, Salomon threw it at him and said, “Not this shit.”15
Morris Offit, who was Salomon’s sales director in Bloomberg’s day and later went on to found a bank and an investment house, once described Billy as “the most underrated Wall Street leader” of his day. “Billy had little compassion, and he did little stroking . . . He had what I used to call the Pit Theory of personnel management—put all these guys into a pit and whoever walks out is the survivor.”16 It would be a rough model for Bloomberg’s own system as he later ran a business, a city, and a high-powered philanthropy.
Yet for all the noise and the raw locker-room talk in those days, Billy Salomon demanded a kind of financial propriety that would soon become passé. He would require that traders give up part of their profits to the needy. And Henry Kaufman, once the chief economist at Salomon Brothers, best known as “Dr. Doom” for predicting troubles in the markets, remembered Salomon’s code in detail. One day Billy told a trader he had made too much from a deal and had to give some of the profit back.17 Give the profit back? How quaint, traders would scoff in later years, but Billy Salomon believed that you had to be fair to the customers, not simply suck out every dime on every deal. And when one of the biggest trading stars in the firm cheated on his expense account, Salomon fired him. No appeal, no questions. He was just gone.18
Billy Salomon’s system worked well in the time that Bloomberg was there. The firm grew from a modest bond house to a legendary investment center on Wall Street. Bloomberg rode that growth into the good times, and he quickly got a reputation as a particularly ballsy salesman who told everybody, including the boss, how to run things.
Bloomberg worked with Jay Perry, an occasionally unhinged block trader (once described as “frenetic and untrustworthy but not vicious”)19 who honed Bloomberg’s skills as a salesman to the point the duo “could sell anything to anybody.”20 Bloomberg apparently enjoyed the full Perry madness, and soon he had ridden that high-risk tension executing big trades and earning his chops as an up-and-coming Salomon superstar. It did not hurt that he came in early and often stayed late enough to get a ride home with Gutfreund.
Still, Bloomberg’s trajectory was not a straight line upward. In August 1972, when he expected to be named partner, he was not on the list. Everyone else at his level got the nod, not Mike Bloomberg. With tears of fury, Bloomberg recalled muttering, “I’ll kill ’em.” And “I’ll shoot myself.”21 Instead, he went for a run to relieve the tension and arrived back at work the next morning, full of his usual brash confidence and enthusiasm. In December that year, without explanation, he was finally made partner.
* * *
Bloomberg’s years at Salomon were a little like a raucous childhood he didn’t have, the sybaritic frat world that he barely tasted. Wall Street was turning into the famous go-go Gomorrah of Hollywood fame, and even though Salomon was a small firm, it was growing and becoming a part of the fast, mean, ugly, risky, obscene, and seductive world. Temptations were everywhere. The hot breathing over a risky sale, the successful peddling of a new product, a client who bought the line—it was simply another form of Wall Street sex. At day’s end, they needed smokes, expensive cigars, good food, and whiskey. The girls were there, if that was what you wanted. The drugs were there—and they brought more than a few of them down. But the money would be the greatest seduction of all and it was everywhere. Piles of it, literally.
At first Mike Bloomberg had gawked at the silverware laid out at fancy dinners and marveled at the genuine artwork in upscale offices. In 1967, for his first trip to the La Côte Basque, a luxurious restaurant on Manhattan’s West Fifty-fifth Street that was once anointed “society’s temple” by the Times, he couldn’t stop admiring the excess.22 His friend Harvey Eisen described those early days as two lower-middle-class guys who didn’t have a nickel, and Bloomberg was living in a studio apartment where he put up a curtain and called it a one bedroom.23 Soon, however, Bloomberg would learn to use the expense accounts like his colleagues. And he would quickly adopt the argot of Wall Street so that even years later, he could all too easily slip back into the mean crudities that traders came to expect from one another.
Richard Levy, a trader who worked for Bloomberg on the equities desk, recalled the day when his grandfather died and he told Bloomberg that he planned to go to the funeral. That was not convenient, Bloomberg told him. It would be a big trading day, and “Would you mind having them change the funeral?” Bloomberg asked. He later apologized, but his instant reaction was to focus on the sale, not on the humans around him.24 It would be another example of how Mike Bloomberg would often blurt out exactly what was on his mind, then apologize later—a habit or tic that would cause him more trouble after he escaped the Wall Street of his day.
As Bloomberg was moving up at Salomon, his boss and champion, Jay Perry, was turning into a strange, tortured creature—at one point emptying all the contents of Bloomberg’s desk on the floor.25 Perry screamed at colleagues and even threatened clients. As he wrestled with an ugly divorce, Perry’s tasks fell to young Bloomberg, who was considered meek and stable compared to the combustible Perry.26 Perry’s bitter enemy was another complicated man, Richard Rosenthal, and battles between the two had turned into fisticuffs on the trading room floor.
In 1975, the everyday flare-ups between Perry and Rosenthal became so intense that the managing partners decided to bypass both and give the less erratic Bloomberg control over the block trading in stocks. He was thirty-three and his work ethic was legendary. “It’s a game for people who thrive on pressure and excitement,” he told the New York Times. “I love the business. I live and breathe the business.”27
Bloomberg’s life after hours also changed. He moved from his old dating patterns—would you like to take a beer and pizza and join me on the Staten Island Ferry?—to the fast lane. On weekends, he and his friends would party with incredible energy and efficiency. When they rented a place, Bloomberg was, as always, in charge. “He cooked, he did all the food. He wouldn’t let anybody do anything,” said Harvey Eisen, a friend from the Salomon days who remained a friend. He even bought groceries—two full carts always empty by Sunday evening. Empty? Eisen was asked. He laughed. “You never heard of the munchies?”28
Bloomberg would boast, or maybe admit, that he had “a girlfriend in every city.” Maybe, for a while, but one British secretary at Salomon Brothers in London turned out to be special. In December 1976, he married Susan Elizabeth Barbara Meyer, née Brown, a twenty-eight-year-old British divorcée. Friends remember his wife as quiet and strong, the family anchor when daughter Emma was born in 1979 and Georgina in 1983. If the new Mrs. Bloomberg had read that interview about how Bloomberg lived and breathed the business, she would have been prepared for the husband who worked hellish hours, who loved dinners and galas, who was seldom at rest, a man who would later say that he loved devoting “twelve
hours to work and twelve hours to fun—every day.”29 It was a joke, yes, but what it really revealed was that Michael Bloomberg had begun to agonize over an empty hour. He was a doer, a constant doer. An evening home with a book, more Mrs. Bloomberg’s style, was not Mike Bloomberg’s idea of a productive night. Soon, they were beginning to enjoy separate lives, a sliding toward what would be a fairly amicable divorce after seventeen years of marriage. Susan Bloomberg told the London Daily Mail years later that she had asked for the divorce because her husband was working night and day, and “I was in a country that wasn’t my own and very lonely.”30 Bloomberg often said that he had suffered only two bad days in his life—the day his father died and the day his mother died. One longtime associate added a third heartbreak—when his wife, Susan, left him.31
More and more, what Bloomberg loved was being out there, meeting people, connecting, networking. It was all part of building the Bloomberg name and the Bloomberg man. He later wrote that “I’m sure someone, someplace is smart enough to succeed while ‘keeping it 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 always outworked the other person.”32
Yet even the Bloomberg work ethic wasn’t a simple route to success at Salomon. The late seventies were not good for block traders like him, and Richard Rosenthal, who seemed to have a special need to disparage the boy from Harvard. Rosenthal, who did not have a college degree, told colleagues that Bloomberg was a failure, a waste of the firm’s money, a burr in the hide of the august Salomon firm.33
Suddenly, in 1979, Rosenthal made his play. He convinced the board to allow him to take over equities, Bloomberg’s patch. The news sent Bloomberg into a rage, and he stormed across the room to see the bosses, in particular the one he had cultivated for so long, John Gutfreund, and announced that there was no way he was working for Richard Rosenthal. They knew that. Bloomberg would not be working with Rosenthal or Perry, who had by then been transferred to the edge of the known world—Dallas. No more equities for the Bloomberg irritant. Instead, he was going “upstairs” to run the company computer system and the technical side of things. It was, by anybody’s lights, a demotion.
For his bosses at Salomon, however, it was obviously a reasonable solution. Bloomberg had been nagging them for years about updating the paper trail needed to sell stocks and bonds. When he pushed in the early 1970s to set up a system that would provide quick and understandable data to traders (who often had to look through piles of ragged Wall Street Journals to find yesterday’s index or price or whatever), the bosses told him he could create such a computerized package—but only on his own time. Bloomberg did exactly that, and he and a few others created something he called the “B-page.” The B meant “back-up or background,” not “Bloomberg,” although he admitted he enjoyed having people think it was his creation. Never the shy one, Bloomberg’s first message to colleagues on his B-page was the announcement in December 1972 that he had just made partner.34 If he deserved praise and credit for dragging Salomon out of the paper era, Dick Rosenthal made certain he didn’t get it.35
Rosenthal also conspired to make Bloomberg’s last two years at Salomon miserable. Computers, administration, data—to any self-respecting trader this was girls’ stuff. He went from being the quarterback to the water boy overnight. Barely a step up from his early days as clerk. Friends remember him at a lonely desk on an upper floor, away from the action, away from the trading thrum that he so loved. But if the big boys were trying to get him to quit, Mike Bloomberg wasn’t leaving. Instead, he turned the full force of his energy and his knowledge—the engineering, the Harvard business expertise, the understanding of Wall Street—toward the computers that were supposed to humiliate him.
In his exile, Bloomberg soon became the master of charts and data and the complex logarithms of modern finance. He kept going to Gutfreund to talk about how other, newer computers would make Salomon run better and faster. But Gutfreund and others were not listening. They mostly sided with Richard Rosenthal, who kept making fun of Bloomberg and his “peckers,” belittling the Perry acolyte as a misfit in Salomon’s high-powered fraternity.
At the same time, Rosenthal was helping craft the sale of Salomon to the Phibro company. The Philipp brothers, who ran Phibro and traded in nearly one hundred major commodities including oil or silver,36 offered to buy Salomon Brothers for $550 million. In the official histories of this era, the merger happened because Phibro had cash and Salomon had debts.37 But there were other more personal reasons that some at Salomon wanted this sale. When he was in charge of the company before retiring in 1978, Billy Salomon had made it hard for his employees to draw out their share of the company’s profits unless the money went to a charity.38 Some, like Rosenthal, were anxious to check out with the full share (and he would leave the company with his payout a year after the sale).39
Gutfreund and his colleagues also decided the sale would allow them to shed people, paying them handsomely to leave. On August 1, 1981, Gutfreund and others told Michael Bloomberg he had until the end of the year to find another job. They gave him his share—a payout of $10 million.
Almost any telling of Michael Bloomberg’s business career, any imparting of advice from one of the nation’s most successful billionaires, begins on that August day when he learned that his beloved Salomon Brothers did not love him in return. His autobiography starts there. Once, in a television interview that lasted seven and a half minutes, he mentioned it five times.40 He would later thank the man who fired him, John Gutfreund, and often mention in speeches that “it turned out okay,” which, coming from a famous billionaire, mayor, and philanthropist, always got a good laugh.
For all the talk about that day he was told to leave, Bloomberg has never really explained in much detail how he felt or what he did to make it happen. He has said, “Was I sad . . . you bet. But, as usual, I was much too macho to show it.”41 Sure, he was a rich man, his father would have told him to put it in the bank, but his first purchase was a new sable coat for his wife—just to show her that he was fine.
Actually the young Mike was “devastated,” said Kenneth Lipper, who was at Salomon and who watched Bloomberg through his last rocky years. “He loved Salomon Brothers. He loved the tough-guy swagger, the whole trading atmosphere. It was like having your parents stop the car, open the door, and leave you at the side of the road.”42
Bloomberg’s own explanation is that Richard Rosenthal was out to get him and finally did. Others from that wild era see it slightly differently. “He was one of the good guys, working their butts off,” said his friend Eisen. He was fired, Eisen believed, “because he has a big mouth, and he doesn’t have a governor on it. So, they sent him to Siberia [running the computer system] . . . Then the worst place turned out to be the best.”43 Bloomberg—who bragged about coming in early and staying late to have time with the boss—kept telling those same bosses how to run the place, never a smart policy for an underling.
* * *
In his fifteen years at the company, Bloomberg had learned a great deal about bonds, equities, the full panorama of the increasingly complex financial marketplace. But when he was fired, the young Michael Bloomberg took in other important lessons about how to run a company.
Bloomberg’s friends who have been fired (or find themselves in trouble) have said that one of the first condolence calls comes from Mike Bloomberg. He would learn to use the corporate ax (unstintingly if someone cheated or failed to do the job—like the city official who was instantly dismissed after the mayor caught him playing solitaire on his computer).44 But he would also keep connections with many of those he had ousted—a seat on the board, a grant, a golfing date, a part-time aerie somewhere in the company. Howard Wolfson, who worked for Bloomberg as a deputy mayor in city hall and a political adviser, said that he took Mayor Bloomberg aside one day and complained that one top member of their team was a dud. He wanted the authority to fire that person as soon as possible. Ins
tead, the mayor lowered his voice and explained that firing people is dangerous. It hurts the person who gets fired, of course, and he or she can then go off and bitch about the Bloomberg operation, even to the press. It also hurts the others who stay and fear that their loyalty to him is misplaced. Loyalty deserves loyalty, he said often, and that loyalty pact became early dogma at Bloomberg LP.45
* * *
The mighty Salomon Brothers made one particularly important mistake when they gave Michael Rubens Bloomberg his golden boot: they also released him, in every sense of the word. Besides the money, Salomon handed Bloomberg, and later three colleagues, the keys—the expertise they needed—to build one of the most successful financial enterprises in the world. Bloomberg would insist that he and his associates had made sure they did not take anything that belonged to Salomon, no papers, no computer data. But what was in their heads was enough. As Gutfreund acknowledged later, “In the eighties, Bloomberg built his business and sold the services he had developed at Salomon back to Salomon. We paid for it twice. I congratulate him.”46
Bloomberg tried to make certain another Mike Bloomberg couldn’t happen to him. People who work in Bloomberg’s many enterprises sign a confidentiality agreement before the first paycheck. They vow not to use their wisdom about the Bloomberg operation or even gossip about life in the Bloomberg capsule or badmouth the boss. In 1981, when Salomon Brothers fired Mike Bloomberg, they failed to do that.
The Many Lives of Michael Bloomberg Page 5
