Welcomeon you. Thank you for coming down to tonights terrific program with Charles Schwab, in conversation with adam. We are appreciative to have you here. How many are you are members . Thank you very much but if you e e not a member of this is a great time to join. There are all kinds of traffic programs coming up in a gray building with a great roof deck and programs like the one in d re and there is the gentleman named billy at the back of the room paid hello, thank you, billy. He will be happy to answer questions you may have about joining the club so please see him on your way out. Thank you, george. Youre welcome. Please take a moment and turn off your devices that make noise during the program and while you do that let me tell you about a couple upcoming programs at the Commonwealth Club. On october 31 halloween at noon, fox news anchor bret beyer will be with us. On november 12 is not a comment in that just so you know. On november 12 National Review editor rich lowry will be our guest. On november 12 in the evening in Silicon Valley legendary 40 niner jerry rice will be with us. And on november 15, friday november 15 at noon actress mary lou hunter who many of you may remember from the tv series taxi and we talk about why she is unique condition that allows her to member everything in her life. Gary interesting program. The Commonwealth Club has great travel programs and we encourage you to ask billy and our staff about those. D r example, the separate you can take expedition to new zealand with adventure, the son of mountaineer. Lots of good stuff coming up in there are question cards under seats for mr. Schwab and these will be elected during the program and brought to our distinct moderator. Please write your questions early and often and make sure they are questions. Try to make them as legible as you can we try to get to as many as we can. We also want to remind you sign copies of his books are on sale outside this room right after the program. Without further ado please give a warm commonwealth welcome to Charles Schwab and adamen lucian ski. [applause] boy, what a crowd. Im going to hit the gavel in a moment but before i do i will reiterate that there are dash i do discriminate in favor of legible questions. [laughter] youve been warned on that. Here we go. This is one of my favorite parts of doing a Commonwealth Club event. I can hear you. Welcome to tonights meeting of the Commonwealth Club im adam executive editor of a fortune and your moderator for tonights program. This program is part of the Commonwealth Clubs ethics ethics and countability series underwritten by the travers Family Foundation with Additional Support for the bernardup foundation for our god lid programs. Im now very pleased to introduce tonights guests, Charles Schwab, founder, former ceo and chairman of the Charles Schwab corporation and author of the new book, invested, changing forever the way americans invest. Charles schwab is one of the most influential financial executives with as of 2019 im not done, nearly 3. 6 trillion worth of assets managed by the autonomous Charles Schwab and company. He founded the Brokerage Firm i0 1971 with a 100,000dollar loan naand is since grown into a Financial Services juggernaut. Mr. Schwabs memoir invested lays out his passion to change the way we invest and the hard work, ingenuity and entrepreneurship that propelled his vision into one of the leading Financial Service firms in the world. From studying economics at Stanford University to guiding his company through decades of economic transformations and fluctuations he recounts the divining moments of his life while providing unique insight into the evolutionary dynamic of entrepreneurial companies. Today we are pleased to be able to have a conversation with mr. Schwab about the howtos of Financial Management and his advice on fulfilling career and life, please join me in welcoming Charles Schwab. [applause] a lot of my fans are out here. T a real pleasure. I think we stack the deck spirit i was again you might want to quit while you are ahead. Leaving right now. Lets start at the beginning, not at the beginning of your life but the beginning of your lifes work, if you will, it was in 1975 you hadl an entrepreneurial moment and would you tell everybody about that as you describe in the book. It was may 1, 1935 and the congress made the decision to make sure that commissions were all negotiable and before they were fixed for over 200 years at certain levels whether six rates all the way through the prior 200 years and on the day they liberated the whole thing and democratized in many respects the ability to invest anyway he wanted to and pay any price on which broker you use and we lowered our prices substantially and others raised their prices a little bit like Merrill Lynch and created a huge gap for us to enter into the business with low prices and hopefully Great Service and we started with four people, that was in 75 we started the company before because we knew thatt the chane would occur and so today we hae about 20000 employees that work with us and try to serve great customers. One of the, these of entrepreneurialism and youre right about being in entre nous or you identify as an entrepreneur is that the things you see and act on are what separate you from everyone else so for example, what congress did wasnt the secret but the opposite of a secret and everyone in these Security Industry new about it. Can you reflect a little bit ono why this what we now look back on as obvious and what enabled you to create your business why you were able to act on it and others do not. We were not the only firm that entered into that area of discounted commissions but there were a few others and most of which were in new york. We happen to be in San Francisco so the San Francisco story fromr stem to stern say the least so montgomery street i had four employees and i thought this was a great idea to go into this business and at the time so we started this a couple years before the 75 change but i had this idea that customers really wanted a better deal than being sold High Commission products and being sold stories along the way that some were true, most of them were hyper stories and it was aon way to create a commissn or compensation for the selling broker. And so, i wanted a place for people to invest and the reason i got into this because i was just out of Stanford Business school in 1961, i was, and it worked as a financial analyst for the next ten years or so. Portfolio manager and so many brokers came to our little firm and i was with a little teeny company near menlo park at the time and i just got to know this brokers this was a bad business. Its based upon the wrong kind of foundation and they werent based upon Customer Service work values and those kinds of things that you hope for so anyway we decided or i decided ten years later i was in 71, 72, 73 basically when we started to the company with this view in mind. First thing i did was i dont want any salesman in our company for no salesman. We compensated our employees by salary plus bonus based upon the success of the company. If we were successful everyone got a nice bonus and if he werent, and so everyone focused on Customer Service because they wanted to have them refer new customers to us and we wanted to grow and prosper and thats how we were different then and have been different and kept the same model for the last 40 years. You make this is a profound point you make early in the book that you come back to repeatedly. You decidedis your company is nt going to sell anywhere going to market and we will talk about marketing because you also identify yourself as a marketer you personally your book has a lot of really nice detail ilabout you and about your early life and your eight californian through and through and tell everybody a little bit about where you grew up and how it wan is part of your story . My maternal father, grandmother was born in saninrn francisco in the 1880s. My father was born in San Francisco in the 1950s. I was born in sacramento so basically ive grown up here and spend my whole life here in california. I went to school here et cetera so im really a local guy but that was serendipitous in many respects. I think the emphasis go ended up being, for me, i could do thins that he would not ever do in new york city. Many people do not realize i started the company here, built the company here in San Francisco and never had all the negative things that new york brokers hadfr and retained. That was t beneficial. The other part was the fact that technology and innovation was clearly happening in Silicon Valley and San Francisco and i had a lot of those great things in the introduction to our company to make us much more efficient then we were in all through those years even before the internet we were applying all the best technology so that was beneficial and lucky i was here in the third thing was we were able to market close 1 00 oclock so we had all afternoon to clean up that time because so much of the paperwork which was paperwork and it wasnt technology. We had extra time to make sure our back offices were clean all the way through and a couple times they words but for the most part we were able to have a clean back office. You describe and im going to touch on three things that were important early in your life to you and one is that when you got out of college you had a whole lot of jobs but you did a whole bunch of things. One of them was selling insurance and i dont know if its hard to say but you werent any good and you didnt like it and it did not work. Tell everybody. I had a number of jobs and i think its critical for you to encourage young people to get jobs, any kind of job and i had any kind of job but i switched on the railroad and speaking about i was between first and second year in Business School and i thought i better learn something about the Insurance Industry because i was focused on being in the Financial Services world so i wanted to work your bank and wanted to see about the insurance. I really found out the stuff was so overpriced in the sales commissions and they wanted a list of all my family and friends and i never sold a single policy. I started to analyze what this was about and i said this was not for me and finally after about six weeks i think they encourage me to quit. Id[laughter] you did not you said you were skeptical about most insurance products. Well, theyre all built upon a sales kind of content that is extraordinarily expensive. When you analyze how they are constructed and i learned that quickly and decided that i think it was a bad thing for most actually i would they had so many endowments, twentyyear endowments all my gosh, to anybody and i was the stupidest thing to ever doo because i was always interested in investing and i thought putting your money and something that might grow faster than an insurance product which sucks most of their charts out and goes to the Insurance Company so anyway that was an early learning. Another early passion of yours and current passion of yours is golf. I believe you got into it playing for the High School Team in santa barbara. You are right, adam. I love it. Other than enjoying it why is golf such a good deal . It turns out i loved basketball. L really loved fastball but turned out i was not tall enough. [laughter] nothing i could do about that. I played junior basketball in college or not in college but in high school and all of a sudden as a sophomore, junior i was these other guys were 62 and i was looking up to them paid i decided ab golf was an area i should focus on because even i thought that was my iconic man so i wanted to copy him and that was the reason i went for golf. Many people will know this but i suppose some wont know that chuck is dyslexic and i wanted to push you on something you wrote. Nt you said that for four years you wrote that for 40 years you thought that you are stupid. Slow somehow or other i cannot read as fast as some of my friends in the school. It upset me a whole lot. My comprehension was not as good as theirs. And so it was always i had to read things a couple of times to really understand what was going on. It was always to me it was a handicap but i never talked about it and it was the kind of thing never spoke to anyone about about how slow you might ybe in reading because theresa stigma attached to it. But you didnt know spirit i discovered when my youngest son had the same exact issues that i had in school, seven or eight, took him down to the review by psychologist and so forth to see what his issue was about reading and they came back and said your son has dyslexic issues and this that and the other things so it was a great revolution to find out that his problems were identical to mine as a kid and explained everything. Thee word dyslexia and that whoe science was undeveloped when i was young and its been relatively analyzed even for the brain functions slightly different where you deal with words and the words meaning in that sort of thing but for me and solved a lot of issues that i had earlier on. From that point forward my wife and i decided to develop a charity thing for service for other parents who have kids who have issues like that called the parents education resource centerer and we have many many families come, brilliant moms and dads who have kids who cant read fast and whats wrong with them and your normal and every other respect but you have a processing problem that you know, you have to identify and book on tape is a great way to read books. [laughter] one of the things i admired about a book is that it exposed the average reader but you go deep into the business events of your career for the scale of the business reader. Adam, its a story about a Company Started with four employees here in San Francisco and grew to 20000 over 40 years in time. All the ups and downs we were bought by the bank of america at one time and one time we were had very large hours of bank of america and issues they are so i had to we finally bought ourselves back after quite a struggle and that was in 1987 so the story about all that we go on thehe bank of america board s interesting and also you will love reading about that but fortunately we were able to free ourselves and to buy the company back in 1987 it was. Its a new growth pattern and its a fun story to 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. Will you go all the way back and explain the First Time Technology was important and why you were so persistent about spending big money on it even when you do not necessarily have big money, right . The first transaction i talk about inn the book is about entrepreneur. I bet the whole company is 1979 and the whole company on buying the Software System would solve our beginnings of a problem as we were getting more and more volume and more and more paperwork and all that stuff i had to solve this thing otherwise we would go deep into the sink or we would thrive. Thank god we worked hard through that whole time and we were able to come out at the other end and a system that worked well so we were very on and adopting an Online System and was not intimate but it came back to 1995 or 1996 so we had all those years of using an efficient system that i talk about a little bit and i will not bore you with that information butfo the Software Cost me 500 in 1979 the company was worth 500,000 so that was a big decision, let me tell you. You mentioned bank of america moments ago and you are growing quickly and why did you sell the bank of america in the first place . We thought originally they would lend us money and they sort of suggested that and i said g they studied our Business Model and i thought this is pretty Good Business and maybe we ought to buy that company and diversify and they flashed a couple big numbers on me and having come from zero money myself 55 million was a whole lot of money to the whole company and i think i own maybe 40 of the committee wishes a lot of money, let me tell you then in 1981. We finally decided to do that and to make the transaction because i was faced with as we grew and grew we needed more and more money to grow. You need that in capital and i was turned down by many venture capitalists along the way and men of wall street did not come to my aid because we were creating competition and we were lowering the prices and making Great Service for customers and thousands of customers were joining our company as clients and so they did not want to finance it any further so i had a tough time raising money. The bma thing was an attractive thing at that time and the involvement of the company but soon over the next three, 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. They ran into huge problems and lent money to shipping guys and it went down the tube and argentina they had all kinds of loans south america and it went on and on and they had to sell the big Tall Building in downtown San Francisco and there were a couple other subsidiaries and so i said sell us. [laughter] i convinced them to sell us and that was another interesting story about and i said we will sell you and so we sell you to the highest bidder. I said thats terrific. But no, you know very well im not for sale. You can sell the company and i will start a Similar Company right across the street and it was not an empty threat but a real threat because i would do it. I was upset with him because going back when we made the deal with our stock we had a stock for Stock Transaction and their stock was 24 a share and that was a top tech and i think the next four years went from 24 all the way down eventually to Something Like nine so i was not a happy guy for many reasons and that was my total net worth in my wife is over here in the corner and shes short of it shy. [laughter] is a nontrivial point but they could sell Charles Schwab but they cannot sell Charles Schwab. Name and likeness and they made this provision that i was not for sale. So serendipitous that i used my name and face by that time in advertising so i was getting people who identified the company with me and so i dont know who they will sell to and the name sake goes down the street about a block and opens up another similar competing company. Anyway, we came to terms and they were happy and they ended up with five, six times what they paid it before and compensation in five years time but it was a good return for them. I want toi come back to that moment in a moment but before that you mentioned that the company was identified with you and it was fewer in the advertising and your name was on the door and that was not one 100 your idea. No smack could you talk about that. That was an interesting moment in time. The guy who was our advertising executive at time his name was richard cruiser, wonderful guy, this is now 1977 and we had a great article about the company and the examiner and dear member of the San Francisco examiner . Big picture of me and big picture in the book and im leaning over this thing and its that [inaudible] machine and they had a nice article about what we were doing and growing et ceteraou and so he said to me why dont we use that picture of you in the ad because before we had ads that save 75 on your transaction costs and gray 1 inch, one column by 3 inches and then two columns and we just could barely afford advertising at that time but we grew and i think we could afford and add about that size siso i said lets put your picte in there and i said are you kidding me . My friends will say im an egomaniac and with my wife going to say, are you kidding me . But my name and face out there and only those guys down at the post office thats where they have their names and faces off mac. [laughter] i said well try it once. The results were ten times what they normally were and so we convinced everybody and it wasnt that much of an egomaniac. I was pretty bashful at the tme. We did it and worked and that was the way we were going to operate here after. Anyway, thats what happened. Questions are starting to come from the floor so i will abandon my script right now and go to their questions and i will read three that are similar to each other. What advice would you give to a 16 yearold starting and investments in figuring out his future path second question is 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 you give him as he gets started within investing . I guess you get questions like this from time to time. Even from my grand kids but i have 13 grandchildren. Even they ask how many how do do wellin the stock markets. First, i would say its about education bird read as much as you possiblyas can even at 16. About how the world functions in an economic sense. And the stocks along with it. What is a stock and what is ownership a company and we have thousands of companies in america andds thats our system and we call it the capitalist system and free enterprise, in other words and better than capitalist but i have to tell you this is for the kid to understand what capitalism comes from the world the latin word for computer meaning head which means creation, invasion and all those kinds of things but thats why we love capitalism because its a creation of my ipod to apples to whatever might be from comes from the creation of the human brain. But anyway, learning about economics and audit functions is an important way to start and unfortunately school today dont have much in terms of the economic education. Its a real problem. Financial literacy is at a low level frankly. The bull get into a lot of trouble with bad ideas about credit cards and borrowing and all those kinds of things. They have no clue what they need to learn about that in school. Its become education and they want to get successful in this business, read more about it. Get passionate about it. Understand why you are there and you will have a great investment of life for many years. We are all living a lot longer. Let me drill down to play devils advocate. O a young person would be by index funds and whatever you do, dont buy individual stocks because youre probably going to do it poorly because the Academic Research proves that most people do. Im a great believer in index funds. Having started one in 1991, called the schwab 1000 and its done incredibly well over the last 27 or eight years. It compounded about 9. 9 percent compounded and its like the s p 500 except we have 1000 stocks so im a longtime believer of it and ive recommended it to many people. Index funds is a great way to start, however its a little bit boring. In fact, its very boring and i think for a youngperson to step into an index fund , you dont get the real fabric of what inv how about facebook, all the things you see. So guess what, we are going to solve that issue. We have a thing coming up for people who want to buy one tenth of the share of something, one fraction. A thousand dollars of gifts from their grandparents and divided to 25 different stocks and that would be an easy way for them to get involved and i love index funds and its the greatest way for most of us to invest in all those kind of thing that i think they will make more mistakes early on and do it inexpensively. The next question from the room is what was the most painful lesson you learn about forming and growing a business . Lack of capital. But they do these days we are a great foraging system with a great capital of ideas you see what happened with facebook they were supported by venture capitalists and so forth. Back when i started it wasnt a beneficial thing to have got to read the book to see them all we never knew for sure where weth were going to end up because we had all these Technology Things to do. I was the only one. You dont want to give away every detail in the book so for people who know aboutpe the festival, there is a really funny story about his investment and that is all that i will say about it. Two more questions from the room how can investing help address the growing problem of income inequality in our country and that is assigned by a client and a second take how can we lower through economic empowerment. Hispanic education is the only way to really do it we have to get more young people interested in why they should invest. We develop our paycheck and after we retire for whoever we work for but thats education. The government is set up to incentivize people to save more and invest more. I would increase the earned crediting on taxes so that people would get a tax credit back it was increased a little bit this last time that i could double it to the low end. My understanding is people on the low end pay no taxes. But you do have to workrk to get the earned income tax cred credit. Its implied in the questions that income inequality is a worsening problem. Do you agree with that . Sometimes its overstated. We see Warren Buffett with these awful numbers but theres not enough to the contributions they have made getting back to Different Things along the way. You dont want to take awayy incentives. We benefit by the innovations. We dont all want to drive the same car, wear the same clothes we have a likeness about our creativity. If the massive accumulation of funds andnd index funds leadingo over valuations and compromising the price discovery process . Do you see this as a bubble in the making . All these people out there giving valuations and finding gaps they step in and buy thousands of hedge funds probably 10,000, theres all kinds of people individual portfolios are always looking for new values so yes maybe 45 of the Big Investments but i dont see that as a problem. You mentioned philanthropy a moment ago. Another question i understand you have a great passion for philanthropy. Can you tell me how to incorporate youincorporated thie incorporation for your clients . Youre talking about the Charitable Funds which have been successful over the years. We had our 20th anniversary of it yesterday and i went to a meeting with the director is talking about how 15 billion gives out about 3 billion a year to different charities. Me personally i felt 40 or 45 years of age we have a responsibility to give backe to society whether its education or helping people learning the kids with learning issues, lots of things, Charter Schools, Charter Schools have been instrumental. I like the way you describe yourself as a maverick. I thought wall street was based upon how much money they can make not whether or not the customer really likes it or not so that was a little bit of the secret sauce. I thought you sort of take great pride it happened to be wed reversed everything and they didnt like. We were thinking about our client first. Do you think its still the case . Yes i have ceos of Major Companies i would love to have a system based upon the success and happiness of the client they can make more money when they do their business and anyway he would like to come our way but he cant do it. I i want to come back to this because its interesting how you craft the business back but before you did, if i have the edge correctly, you are 46yearsold and commented that yohe was the youngest board member. By a long shot. Was the most premier bank. The on the board was a room probably about the size of this room. We had people that ran levi strauss or all the big corporationsns at the time they were all mostly men, and there was one lady. But there was 27 ofdy them and they had maybe 100 shares of the company said they didncompaniee a keen interest in this. I came in and of course my whole network i thought i had a reasonably good position to be able to speak out about the company which i was really quiet like a mouse for the first year or so and then i started to roar a little bit. [laughter] in many ways you had very good timing with buying your company back and not only doing that but quickly took the company public. I had to because i have too much borrowed money and i wanted to certainly the leverage and thank goodness i did. We call that the tsunami year of 87. A it was rough and ready att that time. You bought the company and within weeks i think within a month it was a safe six. Thosof those that bought fantass that bought at six. It would have gone in any way but you would have had a worse balance sheet. Absolutely theres no question about it. I talk about all the fears and details by hand. Another question from the audience, few founders are able to transition as Companies Grow in maturity and size. What did you find most challenging. I knew i had this thing with dyslexia i needed people and that have a common vision of the company and what we were about and i had the confidence thatwei could sort of leave them and they helped me in categories i was completely incompetent and as a team we were able to create e good things. It might have been that sort of handicap thing that worked in my mind that i needed help from other smart people and i think all the way through sort of a central thing i didnt think about at the time necessarily the think its certainly true. Around 2000 we had appointed a gentleman to be the ceo at the time and he lasted about nine months. The board came to me and said its just not working out. We dont have the competence and somconfidence insome of the decd they asked me what you come back. I was chairman, would you become ceo again. I was probably 66 or Something Like that thinking okay. It took me about four seconds. [laughter] i knew the company needed some different leadership and i knew they were right. In 2004 we came out of the decline of this boom and we were suffering. The company has been great in 1999, 2000 and then fell on rough times. So we needed a new direction. The fellow that was running it wasnt providing that so i came back in 2004 and was there for the next four years. Hi work still to this moment. Closely. One of the things thats interesting about that appear co. Some of the companys values have gotten out of whack. You had new sins or gotcha fees. Explain that but can you also, you are still chairman were stiu understand how thatai happened . You couldnt have been happyso about it. You have to let the reins go if you appoint someone. The bank used to charge a monthly fee. People had paid money for a balanced check and we took that out. We dont have any nuisance fees. Banks still do some of this stuff. You just eliminated the most famous which is a brokerage commission. It would be analogous to google in some ways but then you use other services along the way. We are not going to do what they do and use your information that we have mutual funds and a bank and people borrow from us so the commission we took to zero. It makes it convenient and weve seen an influx of this is coming in. A startup took out a Page Congress are leading them on having no fee brokerages and i wonder what you thought about that and if they remind you a little bityo of you. Certainly. Theres competition. They were doing successful growth they dont provide price improvement and things like that so theres probably a preferred way to do it with zero commissions even though you dont get a superior transaction so anyway you put 100,000 to give you free trade. The marketplace was happening to do you think how you treat your employees has a wrecked effect on revenue, like the bigger return on investment . Absolutely. That is the number one resource you have is your employees and our businesinour business and ie do really welll at that. We have a value system that i think everyone hangs onto. If you comeo in and you have other values outside of that, youst dont last very long. Its all about Customer Service, not about sales. So, anyway,us its been invaluae and has grown and i think our employees have really benefited by what we do. Can you talk about given that last question on employees, talk about how as an entrepreneur and a leader, you process when you have to tell employees to go, when you have layoffs. Which youve hadla throughout te history in the company. One example a talk about in the book was very painful for us. It was after the 2000 crash that i mentioned in the boom and allo that kind of stuff and we had to lay off a large number of people. It was a very painful thing we decided to put up a big fund to help people and go back and recharge themselves if they want to go back to law school or medical school with a funding to help. So, we felt pretty good about that. And sure enough the 10 million grant away in a hurry. [laughter] how do you decide on your make it or break it choices . In other words how do you feel about choice . We thought we were pretty interesting and clients told us either they were no good or dont function properly in the trash it so we listen to our clients. We want to listen to what they say and try to do the things they suggest. To use a sports analogy, some people but he tells them what to do and other people there that tells them what to do. Over your career do you identify with one or the other as a leader . Many things that we have done along . The way that people say that its such a Great Service, they didnt know, people dont come necessarily up with these great ideas. You sort of got to go into the marketplace and be creative enough to put the idea out there and hopefully most ofrk them stick. If they dont, then you obviously trash them. But i think youve got to be like some of the great innovations that you see they are obvious innovations that have come up alon along the waye netflix, so easy to get a nice movie on a sunday evening or something. You dont have to go to apple tv and all that stuff. Its fantastic. Whether itss your iphone and all these great creations. I think one of the greatest things that happened for many years as the internet and its just beginning whats happened and what you are able to do because of that capability is unbelievable really and it will get faster as five g. Comes along and all these other things come along and well give you more privacy than you probably have today because a lot of firms have used your private information for their advertising at such so we were talking about tha about that bae about the block chain and stuff like that. Someday you will be in control completely at your privacy, not today, but someday. You are not a technologist, you are not traine were not traa technologistte. How do you make these decisions because on the one hand with the internet, you were clearer that this was a big technological change and Charles Schwab corp. Was going to address it aggressively. Right now in your field Everyone Wants to talk about crypto currencies, and schwab isnt jumping ond that bandwagon. It did on the internet. Crypto currencies is sort of not something im in favor of right now because its really yes they have security but they dont have anything backing up the currency. You want to have full faith and credit of somebody behind it but the u. S. Government. Its pretty important to have, or a bank or something. So this is sort of a something you can a dream about. I own one big client of three years ago i got it. Half from my youngest son and one from my soninlaw making onean claim. [laughter] it was worth 16,000 that christmas and i think within six months it was worth 4,000 so i lost 75 of my socalled gift. [laughter] not a good place to be and i kept telling him this isnt a great place so i sat through it and i think my son sold everything he had in terms of crypto currencies. So, anyway, he is a sharp investor. I still own the coin. You will be okay. [laughter] i cant remember if its the ninth or tenth year of an economic expansion in the United States and the market logic or history then common sense would suggest its not a great place to be as an investor. What are your thoughts on that . You have to be an optimist when you are somewhat like myself. I think that the undercurrent of the economy is really strong. And i happe happened to be a ber that tax bill that went | corporations in america become internationally competitive is a fantastic thing. The cash flo flows the companies have hired even right now reporting most firms are reporting improved earnings. Its a comedy underpinning of consumers seems tthatconsumers y great position of confidence and it can go on but nonetheless economies, markets always go up and down. That is fundamental whether its currency, stocks, bonds, interest rates, you name it. Markets always go up and down so if you are a smart investor, understand that and make sure you just hang on for the long term and when you look at any charter longterm you can find yourself three years, five years, ten years. It always ends up your into that eventually ends up over here. Im talking about things that grow, stocks not necessarily gold or silver, commodities like that, those things dont really grow necessarily. They go up and down by the shortness of supplyro or demand and those kinds of things, but stocks and things like that are the things that can really grow. You will get an look at any of t companies talk about, to make my point after the company that ive ever been on the board of ive been o four of the 500 d no management has ever come into the board room and said we cant grow next year. They always have a plan, some dont achieve it, but all i plan to grow and thats what companies, thats what we do. Can you talk about the role of mentor ship . Is there someone that played that role in your life with important lessons did you learn . I didnt have any Single Person that was my coach or such. My father was a lawyer and he had really not much background in what i was up to in economics and finance staff. So, that was i think the biggest motivation i had as a kid. Our family, your dad cam our dad how important the saving was, so that was a fundamental learning i got from my family make sure you do well. Who are the people that really did well in these businesses most of which i sort of drifted towards those that did finance asserted his jpmorgan or Something Like that. I want to get wealthy. They dont want to sit around and say i cant say that thats what you do when you are 12 yearsat of age. We went out and bought a used bike. Can you share some words of wisdom about navigating the exchanges and making them work in your favor . Making sure you have every avenue figured out and then take the risk to make a decision to go one way and it doesnt work then changeo your mind and come out with a different way. I promised you and everybody that we would talk about marketing. You write a lot about why marketing was important to you and not Just Marketing and Public Relations and public speaking. Can you talk about that . Goes on all learnable things. I learned about marketing for instance and pr but i never learned about how to be a great salesman particularly if there is a bad product. Something i could be really enthusiastic about. What we do and what weli stand r and all the values our company has. We would go around as an Early Company we couldnt afford more advertising. They could certainly afford today but i went around to radio stations all around the country to introduc introduce to the woe benefits of discount brokers and it seemed to work. I go got appointments with different radio stations and a few articles in the newspaper like the one i talked about early on and it continues to be out there in front and groups like this talking to groups about the programs and why its important in any interview and see something to that effect communicating with journalists this is my personal favorite passage that im going to read, and im going to share this with other ceos in 2004, 20 of five and y so when you were just beginning to turn around who i believe had done an article about Corporate Leaders with dyslexia. The executives advised you that that was a bad idea to send you havent proven anything yet and you write here there are any number of reasons to say no, but i knew that a good story requires attention and we had enough progress i thought we should take the chance to. It focused more than we had hoped the underlining theme was clear we were fixing schwab. Its me and a 13yearold, Fortune Magazine so there was this article about executives that have dyslexia and their backgroundnd and so there was a picture of me on the front page of a magazine going of my god. Of course nobody recognized me which was good. [laughter] photo researchers. Theyve got to find some of the best because that makes it believable when they tell. Not all ceos are like that. Your story about working with it having a photo of the view and working with other parents and children reminds me its not just about numbers on a spreadsheet for you. If you do want to make money youve said that very clearly thabut its about more than tha. So, could we end with just explain to people how youve managed to not only build a business but have a good time doing it and why that matters . You think about the purpose of life and what you try to do, you maximize the best of your ability, whatever it might be. Music company musicians, doctor, lawyer, whatever that might be just pursuedus their passions a. Of the best deal they can get into its one of the conversations we have about really pursuing your best, whatever it might be making more like myself and being successful and there was a huge obligation to give back to what we do in terms of being successful. And we are happy to do that for sure, but i think that its every kid needs to find a direction in life to pass up to contribute in a significant way the best they can. How was your golf game today . It is ass good as i can remember. [laughter] [applause] before we close, there would be for a moment. Our thanks to Charles Schwab founder of the ceo Charles Schwab corp. Whose new book changing forever the way americans invest. This program has been part of the Commonwealth Clubs ethics and accountability series underwritten by th Family Foundation with additional rdsupport from bob bernard foundationou for our good litery programs. We would also like to remind everybody here in the room that signed copies of the book will be available outside of the room d llowing the program. Now this meeting of the Commonwealth Club is adjourned. [applause] you are watching a special airing of book tv this week featuring top nonfiction authors, the programs and fairs and festivals which air every weekend along with our signature programs in depth and after words. Enjoy the tv now and every weekend on cspan2. Tonight i am pleased to introduce tyler to politics and prose. He holds the terrace chair in economics at george mason university. He is the Bloomberg Opinion columnist, has written regularly for the New York Times and contributes to a wide number of newspapers and periodicals. His previous books include the class and create stagnation. In his new book the business, he examines the tension between American Trust in big businesses and the importance of the
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