The Many Lives of Michael Bloomberg

by Eleanor Randolph

  Salomon Brothers thought they were shedding a young troublemaker. Instead, as he has said repeatedly over the years, they made it possible for Michael Bloomberg to change Wall Street and become one of the world’s most powerful billionaires.

  4

  THE MAKING OF A BLOOMBERG

  “He pushed me and other people out of our comfort zones into places where he saw opportunity, and he was willing to take the risk.”

  —Thomas Secunda, co-founder, Bloomberg Terminal

  Walking through Bloomberg’s New York headquarters in 2019 with its sleek starship look, its aquariums filled with exotic fish, its vast beehive humming with any hiccup of news in the world economy, it was hard to imagine the hunt-and-peck beginnings of Mike Bloomberg’s terminal.

  Newly fired by Salomon Brothers, Mike Bloomberg has always said he worked his normal twelve hours on his final day at Salomon, and then started his own company the next morning.1 He took $300,0002 from his $10 million payout and rented two small rooms in a high-rise full of low-rent offices on upper Madison Avenue. He wanted four other Salomon employees to come with him. One decided it was a gamble he couldn’t take, but three young geeks signed on for the adventure. Bloomberg took the office with a window and a classic New York view of the back alley.3 The three other Salomon alumni shared another room, and the makeshift sign on the door said “Innovative Market Systems.” The project that would make them all members of the “three comma club,” billionaires whose net worth would someday require three commas, all started very slowly.

  Their first year, 1982, would not be a particularly good time to start a business. The financial world around them was in retreat. President Ronald Reagan was overseeing what was then the worst recession since the Great Depression, and the lines of people looking for jobs lengthened as the unemployment rate hit nearly 11 percent.4,5 The Dow hovered around 1,0006 and the prime interest rates, which had soared to a meteoric 21.5 percent in December 1980, had begun to come down slowly to the still-astronomical mid-teens.7 As for Bloomberg’s new company, there was a far more important benchmark: Time magazine’s “man” of the year was The Computer.8

  Computers were not alien to Wall Street. David Leinweber, a computer scientist and historian, likes to begin his story in 1823 when the “eccentric and obnoxious” Charles Babbage invented (but did not build) his “calculating machine.”9 Then came the telegraph and the ticker tape (which Thomas Edison improved by repeatedly dropping it and then fixing what was broken).10 Then there were the big computer machines—the first one in 1946 “weighed 30,000 pounds and blew a tube every 45 minutes.”11 Bell Labs invented the modem (telephones required). The machines steadily improved and grew smaller each year.12

  By the time Bloomberg and his colleagues left Salomon Brothers, there were already the cumbersome mainframe IBM computers and Quotrons or Telerates, boxy contraptions that were little more than computerized ticker-tape machines. Personal computers were edging onto desks by then. They were better than the paper logs of the past, but the Bloomberg team knew these machines could not offer the broker an idea of the “what-ifs” (what if the Fed rate changes or what if OPEC raises the price of oil). The financial computers of the day did not compare one product with the rest of the market. They did not help a trader recognize a good deal from a clunker. As they had packed up their family photos at Salomon Brothers, this foursome would begin their adventure years before most people would even hear the word “Internet.”13

  * * *

  At Innovative Market Systems, the young Salomon refugees began by figuring out what exactly they wanted their machine to do. Bloomberg was the visionary and the banker. Duncan MacMillan would eventually help figure out who would buy their product. Chuck Zegar worked on the software, and Tom Secunda was the whiz kid who helped write the formulas and analytics to make the Bloomberg Terminal unique.14

  All four brought key advantages to their new venture. They had been traders, and they knew firsthand what the guy on the phone, the broker desperate to make a sale or buy the lot, really needed. Also, they knew more about computers than most of those on Wall Street. How to knit those two advantages into one great package would be no easy business.

  Bloomberg’s official version of this period generously spreads the credit around to those who took a chance with him. But the real spark behind the Bloomberg machine came from Thomas Secunda, who was twenty-seven years old when Bloomberg, then thirty-nine, recruited him.

  “He’s like a Steve Wozniak [who co-founded Apple with Steve Jobs],” recalled Morgan Downey, a long-term Bloomberg employee who left to create a lower-cost competitor called Money.net. “Mike was the money; Tom was the coding brains, if you will.”15

  Bloomberg and Secunda met in the 1970s when Secunda was a young bond expert and Bloomberg was one of the hotshot equities traders in the business. When Bloomberg asked Secunda to dinner one day, it was like being tapped for an insiders club, the younger man remembered. Since Mike was quite the dashing Wall Street superstar, they went where stars gathered—the Quilted Giraffe on Madison and Fifty-fifth. It was a restaurant of choice in Manhattan in the 1970s and ’80s, and regulars included Jackie Onassis, Woody Allen, Henry Kissinger, and, that evening, Mike and Susan Bloomberg. Bloomberg, the Medford kid, had once marveled at such glamour, the extra forks at the place settings, the masterpiece paintings on loan from the Met. Now it was Tom Secunda’s turn to gawk. “My girlfriend got so flustered that she called me Bob most of the time.”16

  In what might have seemed like a fairly routine question that night, Bloomberg asked Secunda what he could do to help him. The youth gave the right answer. He wanted a computer on his desk so that he could get more work done quickly. “In those days, you didn’t have a keyboard,” Secunda recalled. Instead, traders would take their requests to a central computer room to get data from the big computer. Traders used this time waiting for the big computer as a break from the phones, he said. “People spent most of their time just shooting the shit and hanging out” while they waited, but Secunda wanted to skip that step and the leisure that went with it. So the next day he came in and one of the few available terminals was on his desk, “which made me dramatically more effective and pretty soon everybody had one, and I happened to be one of the most hated guys for a while because I took away your excuse for not working.”17 Mike Bloomberg saw real promise in someone who knew about these confounding new computers, someone like him who wanted to work smarter and faster and who refused to slow down with the four o’clock bell.

  Secunda tended to be soft-spoken, a gentler contrast to Bloomberg’s sharp edges. Even years later, he would have the look of a sixties folk singer, short beard, easy smile (all of which betrayed an inner toughness, some of his colleagues suggested).

  “The thing I’m really proud of is that we changed the way Wall Street works,” he said. “The emphasis shifted from who you knew to what you knew. The trend would have happened whether there was a Bloomberg or not. I think we sped it up. We made it affordable. We made it possible.”

  Before the Bloomberg, you went to a trader and he sold you the bonds he had or thought he could get. It was a little like going to a used-car lot and saying, I want a blue Malibu. And the salesman would say, we only have a nice, red Impala. The Bloomberg let its user get a better idea of what was really under the Impala’s hood and whether somebody else at the lot across the street might actually have an affordable blue Malibu. This was nothing short of a revolutionary system that let the air out of a lot of inflated deals and the egos that went with them.

  Other data and information providers, like Reuters, were eyeing the market, and it was obvious to many of the younger, computer-savvy traders that this confetti of a system based on paper was as arcane as the old days when some of the first traders sent offers and prices by stagecoach or semaphore.18

  “Nobody knew for sure where computers were going, and later where the Internet was going,” remembered John Holman, who helped create what would be an unsuccessful Bl
oomberg competitor with a system called Shark. The Shark was produced by Walsh Greenwood Information Systems, but didn’t survive on its own. Like Bloomberg’s terminal, Shark arrived before Al Gore’s bill to create the “Information Superhighway” in 1991 or the revolution created by the World Wide Web two years later.19 For those who couldn’t understand why anybody would spend so much energy and money on computers, this looked like a risky gamble, a fantasy tethered to that airy thing called the Internet. No paper; no reality.

  “Now it seems obvious,” Holman said. “Then it was a huge risk.”20

  * * *

  Risk, of course, had been the drug of choice at Salomon Brothers. The big risk takers were known in the trade as the Big Swinging Dicks, and they acted like high-wire artists, buying and selling sweat-free and without a net. Bloomberg had learned to savor risk, to court it personally and financially. He skied on the double black diamond slopes. He flew airplanes and helicopters, relishing Wall Street’s code about the need for adventure. “Happiness for me has always been the thrill of the unknown, trying something that everyone says can’t be done, feeling that gnawing pit in my stomach that says, ‘Danger ahead.’ ”21 Clearly, even with all that hard work and careful planning, this love of risk also came with a surprising allotment of good luck.

  By the end of the first year at Innovative Market Systems, Bloomberg’s bank account began to dwindle, and friends described a tense and anxious man with little of the bravado from his Salomon days.22 Help came just in time. Bloomberg had been doing a little consulting for Merrill Lynch & Co., and Edmond Moriarty, who was Merrill’s executive vice president for capital markets, offered to give him a hearing about his dream project.

  In Bloomberg’s telling, one daunting scene made all the difference, and the hero, as is often the case in these renderings, was Bloomberg himself. It was a small Mike from Medford versus a whole squad of well-tailored corporate giants at Merrill Lynch. To a roomful of skeptics, Bloomberg pitched and pitched, making this glorious machine (which did not yet exist) sound like the answer to every bond trader’s dream. Some in that group remembered being transfixed by Bloomberg’s dazzling spiel but also troubled that Merrill was already working on a similar project with IBM. And the man who had been running software development for Merrill scoffed at the very idea of going outside the company. He told the group that he could do the same thing—internally. It would take six months, he estimated, as long as there were no interruptions.

  Six months? Bloomberg huffed. He could get a machine prototype in six months—and, here was the clincher, there would be no charge if Merrill didn’t like the thing.23

  Six months? His colleagues back at the little office gasped. Who even began creating a new computer system in six months? For the next very intense nine months—Merrill allowed extra time for contract negotiations—the four men worked six days a week, dawn to midnight some days. On Sunday, they would often come into the little office “just to talk,” Secunda remembered.

  “We were all family,” he said. “We sort of lived what we were doing, and we were on a mission . . . we really thought we could change the way Wall Street worked.”24

  Bloomberg often remembered those days as the best in his business life. “Never before or since did I have as much fun and as challenging a time,” he would say later in his many speeches to young entrepreneurs. “I’m not sure the company wasn’t better off then either.”25

  What they created would look like a kid’s toy. Named the Market Master by the Bloomberg team, it was basically a cathode-ray tube (think 1950s television set) with everything tucked inside. The innards were based on Intel,26 the microprocessor company that later became the world’s top producer of this computer necessity. Having Intel from the beginning made it easier to switch from their self-made machines to the commercial ones when they became available. One early witness thought their machine looked a little like a contraption cobbled together for a high school science project that had more promise than reality. Others quickly saw the future.

  Secunda described how they designed and assembled their own keyboards—focusing on how to simplify their offerings enough for the bond trader who was coping with an increasingly bewildering marketplace. They called their first keyboard in 1983 the Chiclet because the keyboard buttons looked vaguely like the little squares of gum popular at the time. Instead of “Enter” on the keyboard, you pushed “Go.” Different markets had different keys—munis, government, mortgages, et cetera. The dreaded QWERTY system of letters that had tortured typists since the 1870s remained, however, even though Bloomberg and his people knew that the world’s bullheaded old brokers of the 1980s would not deign to “type.” Typing was for women and flunkies, “peckers,” as they were known on Wall Street. So Bloomberg and his crowd would argue that this was not typing; this was punching keys. One early ad for the machines even shows a trader aiming only one index finger at the keyboard—to punch, not peck, at the terminal.

  Over the years, learning how to use the terminal allowed one to enter a kind of insider’s universe—one user compared it to the Star Trek language of Klingonese—but once you learned, you were so easily hooked that another extremely satisfied user would compare it to drugs. For traders, it was like a company “selling heroin.”27

  In early 1983, it became a joke at Merrill that if Bloomberg made the deadline of nine months, he would deliver the first on-time software project in history.28 When Bloomberg brought the prototype of his machine back to Merrill Lynch, he presented it in the afternoon of the day it was due.29 But even the outwardly self-assured Bloomberg was not sure if his makeshift machine would work. There had been weeks of computerized nightmares—crashes, failures, bugs of all varieties. There had been plenty of yelling—Bloomberg himself admitted to a lot of it—and hours of despair. At the demonstration to Merrill’s executives, Bloomberg focused on promoting the wonders of his creation while desperately waiting for it to actually turn on. Finally, out of the corner of his eye, he saw the little flashing message “Loading software.” It meant that his team had dispatched the latest glitch,30 and the machine worked enough to show promise. A few at Merrill opened a bottle of champagne, but there were doubters who worried about whether IBM would match this one-man dervish of a Mike Bloomberg and his homemade terminal.31

  Bloomberg had already softened the ground at Merrill’s executive suite when he began consulting for the financial behemoth. In his version, he would start out in the early mornings when most workers were still wrestling with their alarm clocks. He would buy several cups of coffee and tea—black or with milk, sugar, stirrers at hand. He would roam the corporate halls of Merrill holding his coffee tray as a way to introduce himself to the bosses. Oh, you don’t like coffee, you like tea? I’ve got tea. You want sugar with that coffee? I’ve got sugar. Let’s talk. (Those were the days before security, he said, and you could walk right in with a smile and the sheepish look of a lackey who was forced to get the boss coffee.)32

  The Starbucks method apparently worked.

  Merrill eventually invested $30 million in the fledgling Market Master, and almost equally important at that point, the company supplied Bloomberg with its own data for pricing bonds. Unlike the stock market, the bond market was built on contacts with different traders who could offer different prices for bonds at different banks or brokerages.33 Any real information about some bonds could be extremely slippery because the price was affected by all sorts of shifts—in repayment rates or early redemptions or other arcane matters.34 A trader could use this complexity to make a ton of money at the buyer’s expense. The Bloomberg team wanted to eliminate that confusion for any financial pro who need only peer into their machine and ask it whether a particular bond offering was really a good deal. The Bloomberg would not only give out numbers, it would help the trader make sense of it all by answering a trader’s questions immediately.

  Graphs helped, of course. The machines of the day took far too long to create a graph at the same time the broker wa
s working a sale. So Bloomberg hired an engineering company to make what was a “two-plane board”—a way to have the needed information about a bond and a graph about it at the same time. By later standards, it was the horse-and-buggy stage of computing. But for the day, it was as futuristic as the George Lucas Jedi. The clunky Market Master would give you the numbers and the graph almost at the same time—a delicious new combo for a trader who wanted some context while still negotiating on the phone.

  The Bloomberg team would install new machines at night when most offices were empty. City building codes? What codes? “A half dozen of us dragged wires from our computers to the keyboards and screens we were putting in place, stuffing the cables through holes we drilled in other people’s furniture—all without permission, violating every fire law and building code and union regulation in the books. It’s amazing we did not burn down some office or electrocute ourselves.” The reward, of course, was when they turned on the machine and, magically, it worked.35

  Bloomberg watched over every person and every detail at his new company, and each challenge became a mission, especially for the boss. He came in early, started the coffee, fed the goldfish (he would always have fish tanks, perhaps as a touch of serenity in the midst of chaos, and these were the only fish he could afford in those days). He hired the newcomers, looked them in the eye. He wrote the checks and handed them out to employees. He bought the snacks. Ever the neatnik, he swept the floors and dusted the windowsills. (Even later, as a very rich man, Bloomberg would confess to being outraged when he saw anybody drop a paper towel in the bathroom or a scrap of paper and leave it on the floor. “I want to scream,” he said. “Perhaps I’m compulsive, but I stop and pick it up, even at someone else’s place.”36)