Transcripts For CSPAN2 Charles Schwab Invested 20240713

Have. My name is george and im the programmer at the commonwealth and we want to welcome you and thanks so much for coming down. We will have Charles Schwab in conversation with adam bleszinski. We appreciate you all being members of the Commonwealth Club. If youre not a member itse oun a great time to join. Traffic programs coming up in programs like the one here. And there is ae jonbenet billyt the back of the room who will be happy to answer any questions about joining. See him on your way out. Youre welcome. Take a moment to turn off all your cell phones. While youre doing that let me tell you about a couple of things about the program at the Commonwealth Club. On october 31, halloween at noon brett will bewe with us, novem r november 12 National Review editor rich lowry on november 12 in the evening legendary jerry rice will be with us. And onh november 15 actress may lou henner who many may remember the tv series taxi, why she has a unique addition that allows her to remember everything in her life. We have great trouble programs and encourage you to ask billy and her staff about those for example this february you could take a trip to new zealand. Lots of good stuff coming up. There question cards on your seat for mr. Schwab and these will be collected during the program and be brought to adam, right early and often and make sure they are questions and make them as legible as you can. We will get to as many of them as we can. Signed copy of mr. Schwabs book right after the program. Without any further ado give a welcome to Charles Schwab andnd atoandadam. [applause] what a crowd. Am going to tip the gavel in moment but before i do to reiterate i do discriminate in favor to question. [laughter] so you been warned onte that. Thats one of my favorite parts of doing commonwealth. I hear you. Welcome to the commonwealth and your moderator for tonights program. The program is part of thet commonwealthat club of ethics ad accountability series with Additional Support from the Bernard Osher foundation for good listening programs. I am now very pleased to introduce tonights guest Charles Schwab, founder and former ceo and chairman of Charles Schwab and an offer of the new book investment changing forever in the way americans investor he is most influential executive as a 2019, im not done. Nearly 2. 6 trillion worth of assets managed by economist Charles Schwab company, he was founded in 1971 with a 100,000 loan. Mr. Schwabs memoir invested laid out to change the way that we invent in the hard work and nudity in entrepreneurship that held his vision into one Financial Service firms in the world. From studying economics and the university to guiding his company through decades of economic transformations and fluctuations, he recounts the defining moments of his life while providing unique insight into the evolutionary dynamics of entrepreneurial companies. Today were pleased to have a conversation withh mr. Schwab about the how tos of Financial Management and his advice on obtaining a fulfilling career and life, please join me in welcoming Charles Schwab. [applause] i got a lot of fans are here. Thank you very much adam. Its a real pleasure to stack the deck. You might want to quit while youre ahead. [laughter] im leaving while my head. Lets start at, not the beginning of your life which will come down to, but your work if you will in 1975 you had an r entrepreneurial moment, can yu tell everybody about it. It was may 1 of 1975 in the congress made a decision to make sure that commissions were all negotiable before they were fixed for over 200 years at certain levels whether fixed rates, on that day, they liberated the whole thing and democratized in many respects the ability to invest anyway you wanted to pay any price depending on which broker you use, we lower our prices and others raise theres a little bit like merrillll lynch. It created a huge gap for us to enter into the business with low prices and hopefully Great Service and we start with four people, and 75 we started company that was before because we knew changes going to occur. So today we have about 20000 employees. I think one of the common theme of entrepreneurialism that you write about being an about an entrepreneur and being identified as an entrepreneur is the things that you see and act on are what separate you from everyone else. For example, what congress did was not a secret, it was the opposite of a secret, everybody knew about it. So can you reflect a little bit on what we look back on is obvious and what enabled you to create your business, why you were able to act on it and others did not. We were not the only from th entered into that area of discounted commissions paid there were a few others. Most of which were in new york. We happened to be in sanin francisco. This is really a San Francisco story. So i had four employees, and i thought this is a great idea to go into this business at the time it was a couple years before the 75 change but i had an idea that customers wanted a better deal than being sold High Commission products, being sold stories along the way the summer true, most juston hyper stories and there was a way to create a commission or compensation for the ensuing broker. So i wanted to have a place for people to invest in the reason i got into this because theres just out of school in 1961 and worked as a financial analyst for the next ten years or so and many brokers came to our little firm, i was with a little teeny company in menlo park at the time and i just got to tell him broker this is a bad business based upon the wrong foundation, they were not based on Customer Service or values or those things that you hope for so anyway, we decided or i decided ten years later and 71 and 72, 73 basically when we really startedd the company with this view in mind. So the first thing i said i dont want any salesman in our company, no salesman will ever our you, we compensated employees by salary plus bonus based upon the success of the total company. And if we were really successful everyone got a nice bonus, if we werent everyone was focused on Customer Service because they wanted them to refer new customers and wanted to grow and prosper and thats how we were differents then and we kept the same motto for the last 40 yea years. This is a profound point you make early in the book that you come back to repeatedly, where you decided your company was not going to sell, you werent going to market. And well talk about marketing because you also identify yourself as a marketer, your book has a lot of really nice detail about you and your early life, or your californian through and through. Tell everybody a little bit of where youup grew up and how beig a californian is part of your story. Its interesting, my paternal father, grandmothers morning San Francisco 1980s. My father was born in San Francisco inr the 1915th, i was grown up in San Francisco is from a holy fear. I went to schooly here. Im really a local guy. That was serendipitous in many respects i think San Francisco for me i could do things that you would never do in new york city and many people didnt realize i started to hear bill to here in San Francisco and never had all the negative things that new york brokers had and retained so that was very beneficial. The other part was technology and innovation was clearly happening in Silicon Valley and San Francisco so i adopted a lot of those great things and an introduction to our company which made us much more efficient even before the internet we weree applauding all the best of technology. That was really beneficial and lucky i was here in the third thing we were able to market closed at 1 00 oclock, ever been so focused on new york but we had all afternoon to clean up aton the time because there waso much paperwork, it was paperwork not technology. So we had time to make sure our back office was cleaned all thet way through and a couple times it wasnt but for the mosta pa. [laughter] we had a clean back office. You described, ill touch on three things that were important early to you and one, when you got out of college you hadg a whole lot of jobs, you did a whole bunch of things, one was selling insurance and i dont know if its right to say, you werent any good at it, you didnt like it, tell everybody. I had a number of jobs and i take is really critical to encouraging people to get jobs, any kind of job. I was between first and second year in Business School and so i thought i better learn about the Insurance Industry because theres focused on being on the Financial Service world. So i worked at a bank agh year before and i wanted to see about insurance. Ra and i was a complete failure at that. I really found out that this stuff was so overpriced in terms of the sales commissions and they wanted a list of all my family and friends and so forth. And i never sold a single policy. [laughter] so analyzed with dish insurance off was and i thought this is not for me and after six weeks they encourage me toora quit. [laughter] you are even clear in the book he said youre skeptical about most insurancee products. Are all built upon a sales content that was extraordinarily expensive when you analyze how they constructed an island that very quickly and decided i think it was a bad thing they had me so and it that 20 or indictment, to anybody, that was the stupidestst thing to overdo because i was always interested in investing and i thought putting your money and something would be faster than insurance product which sucks most of the returns out and goes to the insurance company, so anyway, that was earlyly learning. Another early passion of years in current passion of yours is golf, i believe you pay for the High School Team in santa barbara. Youre right, adam. Other than enjoying it, why is golf a big deal . It turned out not that ive loved basketball, i love basketball but i was not tall enough. [laughter] so there is nothing i can do about that when i played junior basketball in college noncollege but in high school but as a sophomore junior these other guys are 6foot two and six with three so i decided maybe golf, maybe an area i should focus on. Even ben is 5foot 6 inches and so i thought that was my iconic man so i wanted to copy him so thats why play golf. Many people will notice that chuck is dyslexics. In 40 years you thought you were stupid or slow. Somehow or other i could not read as fast as some of my friends in school and it really upset me holland. In my conscience wasnt as good as members. So i had to be things a couple times to really understand what was going on. To me there was a lot of segment attached to it. [laughter] but you did not know. I discovered when my youngest son had the thing exact issues that i had in school being seven or eight and i took him down to be reviewed by psychologists and so forth to see what his issue wass about reading and they came back and said your son has dyslexic issues in this that and everything in it was a great revelation to me too find out his problems were identical to mine as a kid and it explained everything but thehe word dyslea in the whole science was undeveloped when i was young and its been relatively memorized how the brain is different in that area and how you deal with words in a conversion of words and i can anything. So anyway it turns out a lot of issues that i had early on was a big aha moment for me. From that point forward my wifeo and i decided to develop a maturity thing for other parents who had kids with learning issues like that its called the Parent Education Resource Center and we had many families come, brilliant moms and dads and they have a kid who cannot read very fast which is whats wrong with him. Your normal and every other respect you just have thoughts and problems you have to identify. So books on tape is a great wayu to read books. [laughter] one of the things i admired about your book it was very sensible to thehe average reader you go deep into all the major businesses intoyo your career aa business reader. It is really a San Francisco story about a company that started with four employees in San Francisco on montgomery street and grew to 20000 over 40 years of time. All of the ups and downs, we were bought by bank of america one time and one time we were very large shareholders of bank of america and there is issues are and we finally bought herself back after quite a struggle, that was in 1987, so the story about all of that and me going on the bank of america board was really interesting also. I loved reading about that importantly we were able to for yourselves and by the company back in 1987 and start a new, in terms of growth pattern, in sort of a fun story to look back andt review. A lot of your stories are very fun and interesting. You mentioned a few minutes ago about how and why technology has always been important to schwab. We you go all the way back and expand the First Time Technology was important and why you were so persistent about spending big money even when you do not necessarily have big money. The first transaction i talk about in the book about an entrepreneur, thats the whole company, 1979, the whole company on buying a Software System i thought would solve the beginning software problem, we were getting more and more volume, more paperwork and i had to solved this thing otherwisee were going to go deep in the sink or thrive. Thank god we worked hard through the whole time. And we were able to come out at the other end with the system that worked well. We were very early on in adopting an online system, it was not internet, internet didnt come about until 1985 1996. So we had all the years of using a very efficient system that i talk about a little bit i wont bore you with information but anyway the Software Cost me 500,000 hollers in 1979, and the company was worth 500,000. [laughter] so that was a big decision. You mentioned be of a a moment ago, a young company, you are growing quickly, why did you sell to bank of america inhe the first place . We thought originally they would lend us money, theyus suggested that and then they studied our Business Model and they thought it was a prettyne Good Business so maybe we ought a bite and diversify. So they flashed a couple big numbers on me and having come from 0ze money myself, 55 millin was a whole lot of money as a whole as a company and i think i own 40 of the company which is a lot of money. Let me tell youlo especially 19. So we finally decide to do that, to make the transaction because i was faced, as we grew and grew we did more and more money to grow, you need that capital and i was turned down by many venture capitalists along the way and wall street did not come to my aid because recruiting competition. We were lowering the prices and making Great Service for customers and thousands of customers were joining our company as clients. Want to finance any further so i had a tough time raising money. So the b of a thing was very attractive at the time in my age. In the development of the company. But soon over the next three or four years it became clear that we were under the wrong umbrella and had to work our way out of their. Not only that but they ran into huge problems. Thats what i mean they ran into huge problems with the greek shipping guys and went down the tubes in argentina that all kinds of loans to south america, and went on and on. So we had to sell the bigig Tall Building in downtown San Francisco and they sold a couple other subsidiaries and i said sell to us. So i convinced them to sell us and that was another interesting story and they said okay will sell you will sell you to the highest bidder and i said thats terrific. But you know very well im not for sell. You could tell company, it was a real threat. Because i was going to do it. I was a little bit upset with them because going back when we made the deal we went stock for Stock Transaction and their stock was like 20 per dollars a share. And that was the top to an the next four years and went from 24 all the way down to Something Like nine. So i was not a happy guy forgu many reasons, that was her total net worth, my wife in the corner. [laughter] is a nontrivial point, they could sell Charles Schwab but they cannot sell Charles Schwabs [laughter] so the name and likeness and provision that i was not for sell. And i had a serendipitous that i use my name and face by that time in advertising so i was getting people who identify the companyti with me and so i dont know who theyre going to solitude and the namesake goes down the street about a block and opens up another competing company and so anyway became to terms, they were really happy they ended up with five or six times what they paid me for an compensation. So it was a good return for them. I want to come back to leaving b of a and a moment, but before that you mention that the company was identified that you were in the advertising and your name was in the door, i remember correctly that was not 100 your idea. That was not my idea. It was an interesting moment ink time. The guy who is our advertising executive at the time name richard cruiser, wonderful guy, this is now 1977, we had a great article about a company in the examiner, remember the San Francisco examiner. [laughter] a big picture of me in the picture is in the book im leaning over a machine and they had a nice article about what we were doing and going and et cetera. So he said to me why dont we use that pictureha of you in the ad because before we had ads that saved 75 undersa transactn cost likee a one column by 3 inches and then we had two columns and we can barely afford advertising at the time but we grew and grew in at 77 i think we could afford and add about the side. He still is put your picture in their and i said are you kidding, what do you think my friends will say, you egomaniac. [laughter] with my wife going to say, put your name and face upp there. And to all the guys at the post office thats where they have the names and faces. [laughter] so i said how about this, well try it once. So the results were up about ten times what they normally were in terms of advertising. So we convince everybody, i wasnt in egomaniac, and factors pretty bashful at the time. And we did it, it worked and we decided that was the way we would operate hereafter so. Questions are coming in from the floor so im going to abandon my script and go to the questions. I will read three that are similar. What advice wouldat you give toa 16yearold just starting an investment in figuring out his future path, the second, what three pieces of advice can i take back to my High School Students and lastly, my son is graduating from college this year, what advice would yougr ge him as he gets started with investment. I guess you get questions like this from time to time. Even for my grandkids, i have 13 grandchildren. So they ask how do you do well in the stock market. First, i would say its all about education. You gotta read as much as you possibly can even at 16 about how the world functions and economic sent in stocks our a weather. What is a stock, ownership in a company and we have thousands of companies in america, thats the first system, the capital system, Free Enterprise is about or worsen capitalist but i have to tell you this is for the kid to understand, capitalism comes from the latin word meaning head means creation, innovations, all those things thats why we love capitalism because of the creation, the ipod apples, whatever it might be comes fromo the creation of the human brain. Anyway, learning about economics and how that functions is really an important way to start, and fortunately schools dont have much in terms of Economic Education and its a real problem, Financial Literacy iss at a very low level and people get into a lot of trouble with bad ideas about credit cards and borrowing and all those kinds of things and have no clue and they need to learn about that in school. School. It becomes education if you want to get successful in this business, read more about it get passionate about it, understand why you are there and they will have a great investment life for many years to come. Were all living a lot longer. Let me drill down and play devils advocate on that question and your whatever you do, dont buy individual stocks because you are probably going to do it partly because the academic inresearch proves the most peope pdo. Charles i am a great believer in index inds and having started one 1991, is called the schwab 1000. Some incredibly well for the last 27 or eight years. Compounded about 9. 9 percent and the s p 500 except we have a thousand socks. Screaming longtime believer and supporter of it. Recognize people with index funds is the great way to start. However, its a little bit boring. [laughter]is. In fact its very boring. For young person to step into an index fund, the real fabric of what investing is. How about microsoft netflix, facebook, all the things you see and so, guess what, going to solve that issue. Anything coming up next year for young people who want to buy one tenth of a share or something. One fraction. Seeking a thousand dollars gift from their grandparents or something, and divided into maybe, 25 different socks. It would be an easy way for them to get engaged and involved in this what you want to suck them into. What they are really about. So they get the annual reports and interested in curious about what is happening next in the company. Some of index funds. The greatest way for most of us in this room to fit in us. A low cost, all those kinds of things. For the young kids, they need to make more mistakes early on and do it in inexpensively. Wonderful segue to the next question from the room is what was the most painful lesson you learned about forming and growing aou business. Charles lack of capital. [laughter] yeah, thats with venture capitalists do these days, we have a great flourishing system there with the capital available for great ideas and you can see what is happening with facebook so they were supported by and it was a great idea there were supported by venture countless and so forth. So back when i started, was it really of formation. To speak of. So thats really beneficial thing to have. Thank great ideas havent even now, monday ways you can do an advertising about and im looking for capital. Is now possible to even put an end of in the paper and see im looking for capital. I want to pay for that ad. [laughter]. Host dm a favor mistake that was just a pain out failure. Charles there are monday. There are is it too monday. You better read the book see them all. Ny [laughter]. Host good entrepreneurse ut for nero his do the right failures all along. Charles we never knew for sure where we are going to end up because we had all of these Technology Things to do. The personnel, very early on, i could hire the desk people and i knew it was lacking different capabilities. But i couldnt afford the salary so i had to convince a person to come on and we have a really great option, i can give them Stock Options and that didnt cost me anything. And they see this goes good. But we didnt get the harvard mbas brochure or the stanford mbas. I was the only one actually. Host [laughter] i appreciated the respect that you dont want to give every detail away the book. First suffer the young people in the room, the debacle music festival, theres a really fun story textbook about his investment in the music possible and thats all i will see about it. Charles as before the company got started. Host to questions of similar from the room. How canhe investing help address the growing problem of income inequality in our country and that is signed by a schwab client. That, is howke on can we lower income inequality globally through economic empowerment. Charles is the big issue for all of us that we ares facing now. How that all occurred. Frankly, i say education is probably the only way to really do it. Weve got to get more young people interested in why they should invest. Why every person left 265, years ago, now see 85 and hopefully hired o ruth so there is a huge time. When we all need to take care of ourselves and have 20 or 30 years of after we retire from a company or whoever they might work for. But that education is truly, really critically important so kids know when they get engaged in the do something in their four o one kays and iras all of the things the government has set up to incentivize people to see and mark doing this more. I say part of the part president of the United States right now i would increase the earned credit and the taxes of the people of the very low end and count, poverty levels, would get stacked feathered back. It was increased a little bit this last time when the stacked, probably double neatly set, that would help certainly the low end. Host most people at the low end of my understanding, how that help. Charles it doesnt make any difference on this to get a check back. It doesnt present, you have to work in order to get the back. Its hard to stacked credit. Host to be clear, it is implied in this two questions that i just read that the income inequality has brought only a problem but a worsening problem. Do you agreeee with that. Charles i say sometimes it is overstated. See Warren Buffett use amazon founder and enormous members. But i say what happens, there has brought enough attribute to the contributions that they make in terms of innovation. What is the dunce in society. Looks like a heck of a lot. In fact tons of her name Different Things along this way. And guess what, they die is it too. And goes away. Part. St i dont say you want to take away incentives. We have a system really incentivize people to work hard because we all benefit from by all of the innovations that these wealthy people have done. But its not enough for everything. So dont take away the incentive. It would obviously be socialism. We do want to drive the same c car, with the same clothes, life is about our intellectual capacities and creativity and interesting ch more interesting. And socialism. Host are another question from theno room. Is the massive accumulation of funds and index funds, leading to rfa evaluations and compromising the price discovery process. Using this as a bubble in the making. Charles i dont see that out at all. As a bubble. All of these people out there, that are doing evaluations of Companies Finding gaps in their undervalued, they step in and by the thousands of hedge funds. This probably 10000 hedge funds all kinds of people with individual portfolios always looking for new values. Yes maybe 45 percent of the investing, the big investing is through index funds now see that as ag problem. Host you mentioned philanthropy. Another question from the room. You have a great tradition for philanthropy. Can you tell me how you incorporated this into your corporation and the opportunities for your clients. Through the corporation. Charles charitable funds. Very successful over the years. Actually had her 20th anniversary of it yesterday. Going to the meetings with the directors and some for the talking about help now we have 15 billion, gives out about 3 billion a year 250 thousand different charities. We do it for our clients and its a very easy way to go about giving and so forth. We do all of the paperwork itself. Thats really important to me personally, my voice felt that to be successful in life, the obvious to anybody until we were probably 40 or 45 years of edge, that we had the responsibility to get back to society we got benefits weather its education are helpingor people learning in kids with learning issues or weather in our case, he helped build a museum here in town. We did that thing and lots of things, charter schools, weather on Foundation Meeting today is matter of fact, talking about Different Things that we particularly liked education and charter schools, really have been very instrumental in helping of that part of the thing. It goes on and on and on. Host i really like the way you describe yourself as a maverick. Career sort of poking all streetside, just a little bit. Not intentionally. See what i really didnt through the lens of what were the testimonies like. I always felt that wall street was based upon how much her name they make off of whatever it might be aff service, want not weather not the customer really liked it orr not. Reversed the whole thing around. There was a little bit of our secret sauce. Host i thought that you take great t pride. Charles inches having to be, we reversed everything and they didnt like that. [laughter] we are thinking about our client first and they dont. It is true. Host his say it is still true. His. Charles yes. Like you were my employees, salary plus bonus based funds. Success and happiness of the clients. No, they love the commission, they can become a lot more her name when they do. When they do the business. Anyway, seems like he come our way but he cant do it. All his employees, they would see they would quit and they would come work for us. [laughter] that would be okay to. Host on a come back to be of a because it was interesting how you wrap your business back. But before he did, by the edge correctly, your 46 years old and you commented they read the youngest board member. Charles by a long shot. You can imagine, this pristine institution, the talk of the most premier bank in the country right now. That was in the 80s before the really sort of interstate competition and such. So bma of california, and brent on every corner of every town. On the board, was sort of i walked into the board, probably about the size of this room here. And big long table and reposition and Little Leather book writing from with your name printed out there. Charles schwab. I was pretty impressed with that. And i around the room and we had people ran levi strauss or transamerica and all of the big corporations at the time. They were on the board somebody was on the board. Mostly men. There was one lady. Anyway, 27 of them. I say they all may be owned a hundred shares of the comedy. So they didnt really have a really keen interest in this thing. I came in, first my whole network then, started one of the larger shareholders of b of a and had a reasonably good position to be able to speak out about the company. I was really part of why its like a mouse. For the first year or so. And then i started to roar a little bit. [laughter]. Host in monday ways you had very good timing with buying your company back in not doing that but very quickly, you took the company okay public. See what i had to be said is it too much borrowed her name i wanted to certainly deleverage as they see, thank good news i did. We call that sonoma year and 87. It was really a task we did. It was rough at the time. See for each of then the crash happened. Screaming we went public and is 14 or 15 a share and within a e month, was it six. There was not a very favorable thing. In fact monday of our science by the stock hunt hopes that it would be a great thing. Fortunately those who bought it six, except probably a thousand times in value. Anyway, norco okay if you hung on. Host would be of value gone down anyway but you wouldve had the worst Balance Sheet if he had it done that. Charles no question about it. Innocent leverage that we talked about all of the details and the fears and tribulations that i had. Host another question from the audience, you founders are able to transition as Companies Grow in maturity in size, could you find most challenging about the transition. What qualities does someone need to lead through that evolution. Charles is the part of me that as i look back, i didnt say about it at the time. But i knew i had this handicap thing with this lexi a. I need to surround myself with really smart people. But share the common vision we had about the company in what way are about. I the confidence that i can sort of lead them in the helping categories that i was completely incompetent in and so is 18, we were able to create some pretty good p things vitamin sort of handicap thing. Sort of always looked int my mid that i need it help from brother smart people and i say all the ayway through, is an essential thing that really didnt say about at the time necessarily but i say its certainly true. Host your famous with the board fired one of the ceos, bowling is the only ceo. Charles i had to fire him. I was 2004, we appointed a gentleman to be ceo at the time he lasted about nine months. The board candidate said shes not working out we dont have thee confidence in some of the decisions etc. They asked me would you come back. I was chairman and would you become ceo again. I was probably 66 or Something Like that. And i was thinking, okay. It took me about four seconds to see i would do it. I knew the company need it some different leadership and i knew who they were. Theres no question about it. So in 2004, we just came out of the client on the. Com boom and we were suffering and the company had been great in 1999, and in 2000 and then fill in some rough times and ensuing couple of years. We need it new direction. If all that was running it wasnt providing that so i came back in 2004. A dinner for the next four years. An appointed vault venture into thousand foreignad and hes dona fantastic job. I would work still to this moment, very closely. Ca host is interesting that you call about that. Is that some of the companies values had gotten out of whack. So youd call the nuisance pr what because i got to feed. Explain that but also, can you sort of, you are still chairman can you understand how that happened. It mustve been a source of, to put words in your mouth. You could have been happy about it. Charles i was not happy about a lot of those things. But you have to listen things go if you avoid someone to a ceo. Yet russia. My mouth has brought always shut. [laughter] so you could probably see that i went along with it. Anyway, apostrophes are, you know them. The bank is to charge you every little monthly statement, you pay 3 for the service and so forth. Those were kind of things that were in his and see. And the one thing i really, even to this moment, people pay 30. 35 for Balance Check and we took that out of schwab, we dont have any bounce checks notices fees, all that stuff is going away. Make still do some of that stuff actually. Everyone is pretty much familiar with the gotcha fees. Host in the audio industry auto industry, some formats. You just eliminated the most probably famously with a history of the brokerage industry which is the brokerage commission. Charles on the dissent in the earliest days. My hope was limited eventually get there we had enough brother habusiness, in monday respects,o google it in some ways, searches rate, but then you use of their services along like a by some of the products knew some of the things. Dont worry about were not going to do what they are going to do, use advertising and use your information. To sort of set you up for these different purchases and so forth. But we have mutual funds in a bank he will borrow from us in a lot of different way, people use us so commissions we take to zero. Makes it very convenient and i say people, we very seen, new business coming in. People seeking out freepe commissions. Using some of the old traditional firms and their coming to us and im very happy about that. Host when he did that, obin hood took out a fullpage ad in the newspaper for following them. Let me know feed brokerages. I wonder you thought about that and did they remind you a little bit of you. Charles certainly there is competition and wonderful thing about marketing business, so much competition so it cannot enclose all of the time in sunday were doing successful growth and most of which are 18 accounts, their transactions, or someone impaired because they dont provide pricing for and things like that. The transaction, preferred way to do it with zero commissions even though you dont get a superior transaction with price. We better firms, banks who have provided new put a hundred thousand dollars and we give you free trades. The marketplace was happening. With that, the stew mundel. So we went to zero. To say how a company treats its employees has a direct revenue. For example the better a company chooses employees, the bigger investment retirement. Charles the number run resource you have is your employees. And i say we do really well at that. With a value system as schwab and everybody hangs onto if you come to schwab and t have values outside of that, you dont last very long as schwab. It is all about that super service. Not all sales. Anyway, its been invaluable and we have grown and are employees of really benefited. I will review. Host given that last question on employees, talk about housing entrepreneur and is the leader you process we have to tell employees to go. We do have layoffs. Which you have had it through various stages throughout the company. Charles one example i talk about the book was very painful for us. After the 2000 press the limited the. Com boom and all of that stuff we had layoff a large number of people. Was a very painful thing for myself and my wife at the time so we decided to put up a big fund to help people we had lego to go back and recharge themselves they want to become a nurse or whatever maybe they want to go back to law school or medical school. Ach fund to help them sort of r lot so i felt pretty good about that. And sure enough, the 10 million went away in a hurry. [laughter]. Host how you decide on your naked or break it choices make it or break it choices. He say about risk. We want to say about all of the time. Also, that went out taking any risk, you are not going to make any progress. We have monday products along this way that we thought were pretty interesting place almost eventually when it came out there were no good adult function properly. We trust them. And so we listen all of the time to our clients. Probably annoying them, surveying them by the services, and so want to listen to what they see and troy to do the things that they suggest. Host do you, to use a sports analogy, some people are, the data tells them what to do eod brother people there weve god tells them what to do. Of your career, you identify with one of the brother as a leader. Charles there are monday things that we done along this way the people said she, it was such a Great Service, wanted to start last year. They didntt know you dont come necessarily with the great ideas. He sort of market place and be creative enough to put the idea out there and hopefully of them sick. They dont, then you obviously crush them trust them. I say youve got a b, like some of the great innovations you see, there are obvious innovations that have come along this way, netflix, so easy for you, nice movie on a sunday evening or something. Find the convenience of your television area. Go to booktv all the stuff. It is fantastic oru weather what your iphone and that kind of thing. All of these great creations. Make one of the greatest things that have happened is the internet. Im just beginning. Enter able to do because of that capability is unbelievable really. Le i will get faster on an five g comes along and hopefully brother things will come along and will give you more privacy than you have today because the firms have used your private information for advertising in such so we are talking about the backstage about jane and seven day you will be in control. Completely of your privacy. Not today but sunday. Host promoted technologists, trained as a technologist. Speed. Charles no. Host how do you make these decisions because on the one hand, with the internet, you were clear, this was a big technological change and Charles Schwab corporation was going to regress aggressively. Write down your fields Everyone Wants to talk my crypto currencies and schwab has brought jumping on that bandwagon. Did on the internet. Charles crypto currency has brought something, larry now. As security but they dont have anything backing up the currency. One helpful faith and credit of somebody behind like newest government. I would be pretty important to him or make or something so this is sort of something you can bring about in fact i own one point i own one bit coin. At about three years ago. He got half a coin from a younger son on the half going for my soninlaw. Making one coin. [laughter] is worth 16000 times that christmas. 16000. I say within six months, it was worth 4000 so i lost 75 percent in my socalled gift. [laughter] not a good place to be. I kept staying this has brought a good place to be. Si say my son sold everything e had in terms of crypto currencies. So anyway, he is the sharp investor. [laughter]. Charles ipi am they stupid investor because i still on the coin. Host youll be okay. [laughter] rhr rhoda i cant remember if its in the 9010th year of an economic expansion in United States edible market. Logic or history of common sense would suggest has brought a great place to be as an investor. What are your thoughts and that. Charles i happen to be, abitibi an optimist or Something Like myself. I say the undercurrent of the economy is really strong. I happen to be a believer the text of the women that helped our in america become internationally competitive. It was a fantastic thing. The cash flows of companies are high. Even right now, reporting the most firms are report improved earnings. So consumers are in a really great position of confidence and it can go on but nonetheless the economy always markets go up and down. As a fundamental, with theirs currency or stocks or bonds, interest rates, you name it. Markets will always go up and down. So if you are smart investor, understand that. In making sure you hang on the longterm and you look at any chart of longterm, you can find yourself in maybe three years of five to ten years, it always ends up here. And then eventually, it ends up over here. Im talking about things and grow. Stocks. Not necessarily talking about gold or silver. Commodities. Those things of this early group 11 down by shortness of supplier demand. This kind of things. The socks, things like that, are the function of thing that cany really go. And we see, look at any of the great companies, talk about, to make my. , every company ive ever been on the board of, for s p 500 companies, no management has ever come into the boardroom as a we cant go. They always have a plan to achieve it. All have a plan to grow. Asthma companies and what we do. Host can you talk about role of mentorship. Is there someone that played the role in yourn life. What important lessons did you learn. Charles i didnt have a Single Person that was my coach. My father was a lawyer so not much background and what i was up to in economics. Confided stuff. I say the biggest motivation that i had as a kid our family came up through the depression years and how important my knee and saving was. So those really fundamental learning of weve god for my f family. Make sure you do well enough and asked me something way for tomorrow. So i read a lot about it when i was a kid. That lower the people who really did well who are successful in business weather, i started drifted towards those who define us. J. P. Morgan or Something Like that. And i said thats what i want to do. Only the wealthy. I do want to be sitting around staying i cant buy that. So you do when you are 12 years of edge. [laughter] walk by like, in my case we went out and found a used bike and used bike. And i was f really happy with i. It worksav well brother than a w schwinn, no i didnt have that but i have used bike. I agrees that they be up every day. [laughter] generally functions. Host can you share some words of wisdom by navigating external changes in making them work in your favor. Charles will, i say for sure, education and understanding what you are talking about. Making sure you have every avenue sort of figured out and then take the rest to make a decision. One way, if it doesnt work, ginger might come out with a different way. Be flexible. Flexibility and understanding on how to be flexible is really critical. Steve. Host promised you to everyone we would talk about marketing. You write a lot about why marketing was important to you. Not Just Marketing but also Public Relations and publicc speaking. If you talk about as a business leader. Charles his world learnable things. They really are learnable. I learned about marketing for instance, i learned about pr. I never learned to be a great salesman. This the one thing i could never do. Particularly if it was a bad product. [laughter] like insurance. [laughter] i always wanted to surround myself with something i can be really enthusiastic about. A great product that i was deeply involved in. And really had confidence in. So it created swell. Ive always been and i like to talk about the company because what we do and what we stay on for and all of this values that a company has, and it was not, and the pr would go around, in the early days weys couldnt afford much advertising. It very expensive. But we can certainly afford it today. But i went around to radio stations all of the countries to troy to introduce to the world, the benefits of this brokerage. And seem to work. And weve god in introduce, and appointments with different radio stations and i got a few tv stations and a few articles in newspapers like the one i talked about early on. Images got this continuous to be out there out in front and then talk to groups like this about the benefits, very early on. Were talking about the groups discount brokerages. Why is really important to you and how to save her name. Will be able to make decisions free of Commission Sales guys. So thats what we did. Host i say you said in any interview you said you ended by staying something either giving it hundred number four staying siesta something to that effect. Charles was thats what a good marketer does. [laughter] c4 also about communicating with journalists. You have some wisdom in here, that this is my personal favorite passage going to read and going to share this with brother ceos. In 2004 or five or so we do were a bit into our beginning that return around of the company. My former colleague betsy morris, said person, i believe you had worked on with Corporate Leaders with deluxe dyslexia. Steve units and i want to write about the turnaround at Charles Schwab schwab and that your executive advise you that that was a bad idea. Its is it too soon, they havent proven anything yet. And you write, there were any number of reasons to see no. But i knew that a good story requires some tension. And when enough progress on about that i thought we should take the chance. Ouakin retrospect, the piece fod more on davids departure, david pressure then we helped and it made it more dramatic story i suppose. But the underlying theme was clear. We were fixing schwab. Charles we work. She actually wrote, theres a pitcher of mee and fortune,. [inaudible conversation] charles is one of the best, it is me as a 13 yearold with a, Fortune Magazine she did the best idea. She has childhood dyslexia, so she did the article about ceos who had dyslexia innd her background so she came and interviewed me and a bunch of brother characters. Andy knows to me, she had a pitcher of me at 13. So the front page of the Fortune Magazine at 13 yearold, oh my weve god. Nobody recognized me. That was good. [laughter] c4 we used to have a big step of photo researchers to go find that sort of thing. Charles a nastyty guy. He found that fake stuff on there. Host i know you are talking about that right now because you had the presence of mind to save your people, theyre gonna find some of that. Some of the bad stuff. That is their job and thats okay because it makes it believable and authentic and they tell the whole story. [laughter] not all ceos are like that. Charles hopefully there is one. [laughter] thank you. Host lets and with, will your story about working with them a photo of the 13 yearold, and working with brother peers and children, reminds me of, its not just about numbers on a spreadsheet for you, you do want to make her name, you said that very clearly when its about more than that. So check could be end with, to see splendid people how youve managed not only to build a business and have a good time doing it and why that matters to you. Charles you say about the purpose of life and what you troy to do, you troy to maximize the severey ability whatever it might be. Im always in great admiration and people start musicians. Theyre unbelievable. Ourmu greed of being a dr. Or lawyer one of them iv. Just pursue your passions. I had a young boy in today is applying to college. Like to have these kids get into the school they could get into but thats one of the conversation we have is about really pursuing your passions. There might be. In the making, businesslike i myself, and be successful financially. We alson have a huge obligation to give back of a large part of what we do in terms of being successful. And were happy to do that for sure. But its every kid needsve to fd the direction in life and the tradition they have now they can contribute in a significant way the best they can to society. Host is your golf game today. [laughter]. Charles i have tobe see its as good asi can remember. [laughter] [applause]. Host our thanks to Charles Schwab his new book is invested, changing the way america invest. This program has been out of the ethics and accountability series underwritten by the travers Family Foundation with Additional Support from the Bernard Osher foundation for a good lead programs. We would also like to remind everyone here in the room and signed copies of mr. Schwab his book will be available outside of this b room following the program. Im at initiate ski in this meeting of the Commonwealth Club is adjourned. [applause] later tonight book to me, join us as a report and allegations of Sexual Misconduct against resident trump. He recounts his time as the secretary of Veterans Affairs when the trump administration. At Princeton University professor elana perry talks about her book on africanamerican history and racial inequality. A p. M. Eastern. Check your Program Guide for more information. Next booktv, law professor, argues that marriage contributes to inequality in america. Men atlas society, ceo Jennifer Grossman on land, and later Washington Examiner his senior political analyst michael barone, Political Parties in america. You can find more information in your Program Guide by visiting booktv. Org. Tonight we are challenging some assumptions. Challenging assumptions is one of the activities we really love doing here at the historical society. You are very likely been reading about our guests. Danielle markowitz. This seems to me, is being written about. In his new book, which New York Times calls an ambitious and disturbing survey of american upperclass. Markowitz makes an important and distressing argument and we have the honor of hearing from here tonight. There