Book Review: Bloomberg By Bloomberg
This book is the autobiography of Michael Bloomberg.
He is the founder of Bloomberg LP
According to Forbes magazine his net worth is 40.9 billion USD (2015)
Purpose: I read this book to understand what it takes to build a technology and media company that is both private and profitable.
Michael Bloomberg started out on Wall Street at Salomon Brothers selling stocks sold by large institutions.
He rises up the ranks to partner but is later demoted to the information technology department where he was up until Salomon Brothers merged with Phibro; the commodity trading firm.
Bloomberg was fired when the merger took place and according to him, he had no plans of ever leaving Salomon brothers because he was embarrassed and hurt. He ended up with a severance check of about $10 million dollars because he was a partner.
Even after being told he was going to be fired, he still worked up to 12 hours a day until his final day. What I got from this was to keep doing what is right and not allow circumstances to ruffle you.
At the time he was fired, he had gotten a deep understanding and unique insight into two things that would help him start his own business.
He had a deep knowledge of the securities, investing and of how technology could be used to make the financial world efficient.
Many people work at places for years and do not learn enough to be exponentially more valuable and productive than before they got hired. This is a mistake.
Years ago, when I was employed by someone else, I made sure I was a sponge and studied every piece of knowledge I found valuable. Within 6 months after leaving, I had a freelance business that paid me over 4 times what I was receiving as salary from my previous employer.
He created a business to solve a problem he had noticed while working at Salomon brothers. He had the financial capital but most importantly he had the mental capital to create a great product.
Since he wasn’t technical, he decided to work with people who were and focused on sales.
Even though he did not have a fully operational product, he pitched Merrill Lynch and used the risk reversal strategy.
He offered to built them a product and deliver in 6 months. His offer was that they did not have to pay him if they were not satisfied with the final product.
Even on the final day of his presentation, the product was still not working properly but at least the minimum viable features were enough to get him a deal for the delivery of 22 terminals. This step of faith led to global clients including the Vatican, World Bank and every Federal Bank.
Build a product that works as fast as possible and launch. It may not be perfect but it should be useful and productive enough for your client to get value from it.
The Bloomberg Terminal as it is now known, is an interactive real-time system that is user friendly enough for nonspecialists. It is able to take information about different investment types — stocks, bonds, currencies — and reveal a firm’s position and show what is moving where so traders could see investment opportunities previously unseen because of too much (and too inaccessible) data.
Products that help people who are not specialists to achieve the same or similar results are usually welcomed.
Marketing, growth and sales
Bloomberg built the company in the initial stages by doing sales calls and building a brand.
He changed the name from Innovative Market Systems to Bloomberg LP to leverage on his name as a brand.
Instead of growing by acquisitions, he grew the business on profits by innovating in areas such as media, news and television.
It’s interesting to note that their strategy has been so sound that for over 3 decades they hardly have any competition that has their results and reach.
Quote from Page 200:
It also encourages me to delegate and let others run parts of our organization so we can go into new areas and products. I don’t want any manager here to do the same thing for too long, and I shouldn’t either. If everything works, I get paid; if it doesn’t, I shouldn’t, and with our structure, I won’t.
Most companies, most of the time, grow and contract with the market they’re in. Management often makes the difference only at the margin. Changing executives periodically almost always improves results. No matter how entrenched the CEO is. Mythology to the contrary, no one’s irreplaceable and there are few revelations in business. The corporate change that works is evolutionary change, not revolutionary change:The quick fix, like buying a competitor or growth through acquisition, usually boosts earnings only for a short while. Corporate fixes through public relations and industry analyst “stroking” aren’t worth much either. Stock P/E ratios go with the group, which is why they call it the herd instinct.
Lessons from school:
Bloomberg mentions that at Harvard, most of the people he admired for their noble birth or admirable backgrounds never ended up doing anything remarkable with their lives.
He also mentions that Harvard brought him before classmates who were ambitious and would challenge you if you spoke without getting your facts straight. He counts this as preparing him to work on Wall Street.
I like that observation because I have been in a lot of conversations where people feel compelled to speak when they have no facts. This reminds me of Proverbs 18:13
He that gives an answer before he hears is a fool, and is brought to shame.
What I didn’t expect to find, but did.
In Chapter 5, Bloomberg explains the fundamentals of how content is created an distributed. Even though he is a technology entrepreneur, he is not jaded in thinking that technology solves all problems in media distribution. Media companies still need to have great content that their audience wants to consume.
Corporate governance and management
This book is filled with gems on corporate governance and there’s even an entire chapter on Management which I found very useful in many respects.
At the time of writing, Bloomberg wasn’t the mayor of New York yet but his opinions on important topics such as education are pretty solid.
The parts I didn’t agree with:
I don’t think he gives good marriage advice and maybe one or two of the management tips may not be applicable to every industry.
For example, he frowns on employees starting a side business and even says…
“why is the second idea they come up with not the property of the firm paying them to work full time? Or they invest personally outside their companies. “
This is funny to me because I don’t expect to own the ideas of my employees.
It is my observation that most men are good at a few things when they give advice on things outside of business, it’s invariably wrong.
My impression about part of what he believes made him successful is hard-work. This as we know isn’t enough since there are many people working 14 to 16 hour days who are not as productive as others who work less than they do but have wisdom that produces exponential results.
Diligence in work counts but diligence without wisdom is just activity without productivity.
Interesting quote from Page 180:
The primary function of those at the top is the care and feeding of the company’s most valuable asset, its employees, including designing and administering a compensation system that encourages cooperation, rewards risk taking, and gives inducements to work — Job One for the CEO
Conclusion and closing notes
In my opinion, from what I can infer from the book, Bloomberg’s success was due to his mindset regards to how to deal with people and his boldness to do the things he believed were right.
What I found most impressive about Michael Bloomberg is how quickly he implemented ideas. Secondly, that he built a private billion dollar(by revenue) business is definitely a good reason to read this book.
Rating in relation to my reason for reading this book(see beginning of the post)
4 out of 5
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If you have any books that you would like me to share my review on, please email me at email@example.com. I rarely review fiction and I usually read business books or auto/biographies that have lessons on marketing, sales, leadership and success.