I know you have great energy we saw you coming in. Group. A highenergy good evening. [applause] and the Program Director here at the commonwealth. Thank you for coming tonight with the program with Charles Schwab in conversation with adam lish and ski. How many of you are members . Thank you very much if not this is a great time to join there are terrific programs coming up when there is a gentle man named billy we will bel happy to answer any questions please take a moment to turn offta your devices that could make noise and i will tell you about upcoming programs. On halloween fox news anchor brett baer will be with us. On november 12th rich lowry. Jerry rice will be with us and november 15 at noon Mary Lou Henner will talk about why she has a unique condition that allows her to remember everything in her life. Also great travel programs ask our staff about those this february take an expedition to new zealand. A lot of good stuff coming up there are question cards in your seats please write your questions early and often make them questions and as legible as you can also signed copies of his book are on sale outside this room outside after the program please give our guests a warm welcome. [applause] i will hit the gavel that first i will reiterate i do discriminate in favor of legible questions. [laughter] you have been warned. This is one my favorite parts of doing the Commonwealth Club event welcome to tonights meeting of the Commonwealth Club i am at lish and ski in your moderator for tonights program it is part of the Commonwealth Club ethics and accountability series underwritten by the traverse familyly with the Bernard Osher foundation for the good that programs. Very pleased to introduce Charles Schwab found her former ceo and chairman of the Charles Schwab corporation and author of the new book invested. One of the worlds most influential financial executives as of 2019 nearly three. 6 trillion worth t of assets managed by Charles Schwab and Company Founding in 1971 with a 100,000dollar loan and has since grown into a Financial Services juggernaut. His memoir invested lays out the passion to invest change the way wee invest hard work and ingenuity that propels his vision into the leading Financial Service firms from stanford to guiding his company through decades of Economic Transformation and fluctuations he recounts the defining moments of his life while providing a unique insight into the evolutionary dynamics of Entrepreneurial Companies we are pleased to have a conversation with mister schwab about the heights how to use of Financial Management and having a fulfilling career and life please join me to welcome Charles Schwab. [applause] a lot of my fans are out here. I think maybe you stack the deck. I was thinking quit while you are w ahead. Start ate the beginning of your lifes work in 1975 you had an entrepreneurial moment so tell everybody about it. May first of 1975 and congress made a decision to make sure that commissions were all negotiable before they were fixed for over 200 years at certain levels fixed rates for the prior 200 years and on that day they democratized in many respects the ability to invest any way you wanted at any price depending on which broker you used be lower substantially others raise them like merrill lynchli it created a huge gap for us to enter into the business with full prices and hopefully Great Service so then we started the company because we knew change would occur. So today we have 20000 employees that we serve as customers. One of the common themes ofhi entrepreneurial that you identify that the things that you see and act on is what you separate you from everyone did so what congress wasnt a secret it was the opposite everybody knew about it. So can you reflect on what we now look back is obvious and what enabled you to create your business and why you could act on it. We were not the only firm that entered into that area that most were insc new york. We happen to be in San Francisco on montgomery street we had four employees i thought its a great idea to go into thiss business at the time so we did this before the change i had the idea customers wanted a better deal than being sold High Commission products some are true and most were hyper stories in their way to create a compensation for the broker wanted to have a place for people to invest. I got into itt because i was just out of Business School in 1961 and they worked as a financial analyst for the next ten years as a portfolio manager. Many brokers came to our firm and they said this is a bad business if you have the wrong foundation was based on Customer Service or values or the things you would hope for. So we decided ten years later and 73 we would start a company with this view in mind. So the first thing i did i dont want any salesmen in our company we compensated employees salary plus bonus and if we were really successful everybody got a nice bonus and if we werent so everybody was focused on Customer Service because what they wanted them to refer customers to us to grow and prosper and we were different then and have kept the same model the last 40 years. This is a profound point you make you decided your company would not sell but you were going to market and we will talk about w marketing because you identify yourself as a marketer. Your book has a lot of really nice detail about you, your early life, a californian through and through just to tell everybody a little bit where you grew up and how it was why thats part of your story. My paternal grandmother born in San Francisco in the 18 eighties my father born in San Francisco in the fifties forgot i was born in sacramento so basically ive grown up here and spent my whole life here in california for car went to school here so im a local guy. That was serendipitous in many respects for me it would never do in new york city many people didnt realize i started here in delta here in San Francisco and never had the environment the new york brokers had that was very beneficial also the fact that technology and innovation was clearly happening in Silicon Valley and San Francisco so i knew about those great things in the introduction to our company to made us much more efficient even before the internet we were applying the best technology. So it was really beneficial im lucky i was here and third we could it was so focused on new yorks we had all afternoon to clean up because there was so much paperwork it wasnt technology so we had the extra time to make sure the back office was clean a couple times they werent but for thefo p most part. [laughter] we did. You describe three things that were important early in your life to you. One is when you got out of college you had a lot of jobs. One of them was selling insurance i dont know if its right to say you were not good at it. I had a number of jobs and its really critical to encourage young people to get jobs i was a switchman on the railroad and i was between a first and second year in Business School so i said i better learn about the Insurance Industry because i was focused and i went to work at a bank the year before and i was a complete failure i really found out the stuff was so overpriced in terms of sales commissions and the list of all my family and friends and i never sold a single policy. [laughter] that i said this is not for me after six weeks and they encourage me toede quit. [laughter] you said you were skeptical about most insurance products. They are all built upon a sales content that is extraordinarily expensive if you analyze how they are constructe constructed. With those twentyyear endowments it was the stupidest thing to ever do because i was always interested in investing something that could grow faster than insurance yet it turns out mostly goes to the Insurance Company so that was early learning. Another early in current passion is golf played for the High School Team in santa barbara. I loved it. Other than enjoying it why is that such a bigt, deal quick. I really loved basketball but i wasnt tall enough. [laughter] nothing i could do about that i play junior basketball in college or high school and the other guys weree 6foot two and i was looking up to them. I decided maybe i should focus on golf because even then i was 57 i thought was my iconic man and i wanted to copy him. Many people notice that he ise dyslexic you said for four years you wrote you thought youu were stupid. Somehow or another i could not read as fast as my friends at school and it upset me a lot. My comprehension was not as good as theres. I had to read things a couple times to really understand what was goingt on. So to me it was a handicap is nothing you would speak about. But you didnt know. I discovered when my youngest son had the same exact issues i had in school at seven or eight and took him down to be reviewed to see his issue about reading and they came back and says he has issues and it was a great revelation to me his problems were identical to mine and explained everything but that whole science was undeveloped when i was young and its been analyzed for the brain how it functions slightly different in thats area where we deal with words and conversion of words. So it turns out for me a lot of issues i had early it was the big ahame moment four oh one so that point forward we decided to develop a Charity Service for other parents who had kids with learning issues calling the parents Education Resource Center we have many families come of moms and dads with a kid who cant read very fast. They are normal they just have a processing problem you have to identify. So books on tape is a great way to read books. [laughter] one thing i admired about your book it is very accessible to the average reader but you go deep into the major businesses. Its really a San Francisco story about a Company Started with four employees and it grew to 20000 over about 40 years time. All the ups and downs we were bought by bank of america one time and shareholders and there were issues there so we bought ourselvesel back after a struggle. That was 1987 so the story of that me going onto the bank of america board was really interesting. [laughter] and unfortunately we could free ourselves in by the company back in 1987 and then start new with a growth pattern so thats a fun story to review. A lot of your stories are fun and interesting. You mentioned how and why technology has always been important to schwab. Go all the way back to explain the First Time Technology was important and why you were so persistent about spendingen big money even though you didnt have big money. The first transaction i talk about in the book as an entrepreneur thats the whole company in 1979 to buy a Software System that would solve the beginning Software Problem we were getting more volume and more paperwork i had to solve this or we would go into the sink we would thrive thank god we worked ughard and we came out on the other end with a system that worked well. We were very honored to adopt this online system. It was not internet that did not come about until about 1995 so we had all these years of using a very efficient system i dont bore you with the information but the Software Cost 10000 at the time in the company was worth 500,000. [laughter] that was a big decision. You mention bfa as a Young Company growing quickly why did you do that in the first place quick. We thought they would lend us the money they suggested that and with our Business Model they thought its a Good Business maybe we ought to buy that company and diversify they flash some big numbers on me and having come from zero money 55 million was a lot of money and i own 40 percent which was a lot of money in 1981. So we finally decide to do that and make the transaction because as wewa grew we needed more and more money to grow we needed the capital and i was turned down by many venture capitalists and wall street did not come to my aid because we were creating competition by lowering the prices and thousands of customers were joining our company. So they did not want to finance it further so i had trouble raising money so it was very attractive at that time at my age. But soon over three or four clear we weree under the wrong umbrella and had to work her wayut out. But they also manageat a huge problems. Shipping went down the tubes and argentina and south america and on and on. Theres a big building in downtown San Francisco so i said cell aspect i convince them to sell us thats an interesting story. They said okay we will sell bidder. He highest but im not for sale. You can sell the company and i will start a similar one right street. He it was a real threat because i was going to doo it. I was upset with them because and then the next four years and went from 24 down to Something Like nine so i was unhappy for many reasons. So they could sell Charles Schwab but they cannot sell the person. Then name the rights there was a provision that was not for sale. It was serendipitous that my name and face with advertising g that time so then the namesake goes down with a similar competing company. So it was good for them. To but before that you mentioned the company was identified you were in the advertising in your name was on the door that wasnt 100 percent your idea. Can you talk about that quick. Its an interesting moment in time. The executive its not 1977 we had a great article about the company in the examiner. The San Franciscohe examiner. And how we are doing a growing soso he said lets use that picture of you in the ad. Meant to save 75 percent on transaction cost. We could barely afford advertising so we could afford and at about that size. Is that is that an egomaniac what will my wife say quicks . So we say we will try it once. The results were up ten times so we convinced everybody that it was bashful. And that was the way we would operate. So now i will abandon my script and go to their questions. I will read three that are similar to each other. What advice would you give to a 16 yearold justei starting investments to figure out his future path . What three pieces of advice can i take back to my High School Students and then my son graduates from college this year what advice would youu give as they get started with investing . I guess you get questions like this from time to time. Even from my 13 grandchildren. Its all about education. And how the world functions in the economic sense. It is called capitalist and free enterprise. Means creation and invasion thats all we love capitalism. And it comes from the creation of the human brain but with economics and how that functions it is an important way to start they dont have much in terms of the Economic Education so thats a real problem and Financial Literacy and frankly people get in a lot of trouble about credit cards and borrowing in those kinds of things. They have no clue they dont learn about that in school so it is education if you want to be successful get passionate and understand why you are there and read about it. You will have a great investmentan life let me drill down and play devils advocate. Advice to young person to buy index funds dont buy individual stocks because you will probably do it poorly the Academic Research proves most people do. Im a great believer in index funds having started one in 1991. And then the index funds however its a little bit boring. Is very boring. [laughter] and all the things that you see we have to solve that issue and one tenth of the share or one fraction of things. Or to take the gift and divided into 25 different stocks. Thats an easy way to get engaged and get involved. So i love index funds thats the way for most of us to do this at low cost. And the kids will make more mistakes early on to do thatan inexpensively. Spirit thats why venture capitalists do these days its a great system. Everything available for great ideas so that was not a flourishing area to speak of so im looking for capital. Do you have a f favorite mistake that was a plain failur failure. Too many read the book to see them all. We never knew for sure where we might end up the personnel and very early i knew i was lacking those capabilities you really got a great we didnt get the harvard mbasfo for sur. I respect you dont want to give everything away look at the fire festival theres a really funny story about his investments thats all i will say about it. And to address the growing problem of income inequality that is assigned by a schwab client. And education is the only way to get more people interested in why they should invest. And 30 years ago so there is a huge time. To developop a paycheck after we retired for a company that that is education which is critically important so all the things that government set up to incentivize people to say more and invest more. If i was president right now i would increase the taxes so people at the low end poverty levels it was increased a little bit this last time but was doubled at least that. Its my understanding that most people. It doesnt matter they still get a check back you would get that back the earned taxle credit. It is implied in those two questions it is a worsening problem amazon founder having these enormous godawful numbers, but i think what happens to, theres not enough attributes to the contributions that they do make in terms of innovation and what theyve done to society and yes, it looks like a heck of a lot most of them are very philanthropic. You get back tons of money to Different Things along the way and then guess what, they die two and goes away for the most part. So i dont think you want to take away incentives. We have a system that really incentivizes people to work hard because we all benefit by innovations of some of these will be people have done but its not up for everything so dont take away then send it. That would be obviously socialism and wedont all want to drive the same car, we dont want to wear the same clothes. Life is about our intellectual capacities and creativity and all those things. It makes life much more interesting and socialism. Im going to read another question from the room. Is a massive population of funds in index funds leading to overvaluation and compromising the price discovery process, do you see this as a bubble in the making . I dont see that at all. Ice discovery and matters, all these people are out there doing valuations of companies and finding gaps when theyre undervalued, they stepped in and by the thousands of hedge funds, probably 10,000 hedge funds, theres all kinds of people with individual portfolios always looking for new values so yes, maybe 45 percent of investing is in exxons but i dont see those as a problem. You mentioned philanthropy a moment ago. I understand you have a great passion for philanthropy. Can you tell me how you incorporated this into your corporation and the opportunities for your clients through the corporation . Youre talking about our Charitable Funds which has been very successful. We had our 20th anniversary yesterday and i talked to the directors about how we have 15 billion and it gives out about 3 billion a year 250 thousand different charities. And we do it for our clients and its an easy way to go about giving and so forth. We do all the paperwork and that sort of stuff though thats important but for me personally, weve always felt that we were successful in life which it wasnt obvious to anybody until we were 40 or 45 years of age that we had responsibility to give back to society where we got benefits, whether its education or helping people, kids with learning issues or whether in our case we helped build a museum in town. He did that thing and lots of things, charter school. We had our own Foundation Meeting today talking about things that we particularly like. Education, Charter Schools were very instrumental in helping improve that part of the thing so it goes on and onand on. I really like the way you describe yourself as a maverick. You made your career sort of poking wall streets i just a little bit so not intentionally. I really through the lens of what would a customer like and i always thought wall street was based upon how much money could they make up of whatever it might be, not whether or not the customer likes it or not though ive reversed the whole thing around. That was a little bit of our secret sauce. I thought my read was that you take great pride in it just happened to be, we reversed everything and they didnt like that. We were thinking about our client first and they dont. You think its still the case . I have ceos of Major Companies and say chuck, id love to have a system like you where my employees have bonuses based upon the success and happiness oftheir clients. They love the commission got these guys can make a whole lot more money the way they do. The way they do their business and anyway, he would like to come our way but he cant do it. All his employees would say we quit and did come work for us. That would be okay. That would be okay to. I want to come back to this because it was interesting how you grabbed your business back before you did, if i have the age correctly you were 46 years old and you commented that you were the youngest or number. By a longshot. You can imagine this christine institution. It was probably the most premier bank in the country at the time. Just now in the mid80s before there was really interstate competitionand such. So be of a in california hada branch on every corner of every town. So on their board it was sort of a first day i walked into the board there was a room probably about the size of this room and it had a big long table and every position had a leather book there right in front of you with your name printed out, Charles Schwab so i was pretty impressed with that thing and i looked around the room and we had people that ran levi strauss or transamerica or all the big corporations at the time were on the board. Somebody was on the board and they were all mostly men, i think there was one lady but anyway, it was 27 of them and i think ill maybe owned 100 shares of the company so they didnt have a keen interest in this thing and icome in , of course my whole network had been one of the largest shareholders of b of a so then i started or a littlebit. So in many ways you have very good timing with buying your company back and not only doing that but very quickly you took the company public. I had to because i had too much borrowed money. And i wanted to certainly deleverage as they say and thank goodness i did. We call that the tsunami year of 87. It was really a fast read and it was rough and ready at that time. Because you bought the company, took it public. And then the crash happened. Within weeks. We went public and i was 14 or 15 a share and i think within a month it was at six. That was not a very favorable thing and many of our clients that want to start in the hopes that it was going to be a great thing but fortunately those who bought at six, its probably 1000 times in value so anyway it worked out okay if you hang on. The stock might have gone to six anyway or your value would have gone down anyway but you would have had a worse balance sheet. Absolutely. No question about it. It was a leveraged buyout and it was talked about, i talk about all the details and the fears andtribulations that i had. Another question from the audience, a few founders are able to transition as Companies Grow in maturity and size. What did you find most challenging about that transition . What qualities does someone need to leave through that evolution . I think there was a part of me that as i look back i didnt think about it at the time, but i knew i had this sort of handicap thing was dyslexia. I needed to surround my people with smart people who had shared acommon vision that we had about the company and what we were about. And i had the confidence that i could leave them and theyll help me in categories that i was completely incompetent in and so as 18 we were able to create some pretty good things and it mightve been a handicapped thing that has always lurked in my mind that i needed help from other smart people and i think all the way through, its an essential thing that i didnt think about at the time necessarily but i think its certainly true. The board famously fired one of the ceos, maybe the onlyceo. I had to fire him. That was 2004. 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 confidence in some of his decisions, etc. Etc. And they asked me would you come back . I was chairman. Would youbecome ceo again . I was probably 66 orSomething Like that. And thinking well, okay. Took me about four seconds to say i would do it. I knew the company needed some different leadership and i knew they were right. There was no question about it so in 2004 we had just come out of this client of this. Com boom and we were suffering. The company had been great in 1999, in 2000 and then fell on rough times in the ensuing couple ofyears so we needed a new direction. And the company wasnt providing that so i came back 2004 and did it for the next four years and i appointed Walt Bettinger and hes done a fantastic job and we were still from this moment working very closely. One of the things you callout up those. Was the companies valued had gotten, you had gotten new since these are what walter calls gotcha fees. Explain that but also you were stillchairman. Can you understand how that happened . It mustve been a source of, i dont want to put words in your mouth. You couldnt have been happy about it. I wasnt happy about a lot of those things but you appoint someone ceo, youkeep your mouth shut as such. My mouth is not always shot, let me tell you. So you could probably say i went along with it but anyway, the gotcha fees, you all know them. The bank used the charge you every monthly statement paid three dollars for the service and so forth and those were kind of things that were nuisance fees and the one thing i really even to this moment, people have paid 30 or 35 for it bounced check. We took thatout at schwab, we dont have any bounced checks, no nuisance fees, all that stuff is gone away. Thanks willdo some of that stuff , actually but everyone ispretty familiar with gotcha fees. It in the Auto Industry is the format. Or the nuisance fees of buying a car. You just eliminated probably the most famous in the history of the brokerage industry which is the brokerage commission. We were on that dissent from the earliest days so my hope was that we would eventually get there where we had enough other business area and its sort of in many respects it would be analogous to google in some ways. That search is free. But then you use other services along the way. You buy some of the products and do some of the things and dont worry about it, were not going to do what they do advertising your information to sort of set you up for these differentpurchases and so forth. But we have mutual funds and we have a bank and people borrow from us and we have a lot of different ways that people use us and so commissions we took tozero. So it makes it really very convenient and i think people , weve already seen an influx of new business coming in. People seeking out three commissions. Theyre leaving some of the old traditional firms and coming to us and were happy about. When you do that, a venture startup called robin hood took out a fullpage ad in the newspaper congratulate you for following them on having no fee brokerage and i wonder what you thought about that and if they remind you a little bit of you . Certainly there was competition. It was a wonderful thing about american business. So much competition so we have to keep on our toes all the time. So they were doing accessible growth themselves, most of which were raped in accounts and i have to say their transactions are somewhat impaired because they dont provide price improvement and thingslike that to clients. But for obtaining transaction isprobably preferred way to do it with zero commissions even though you dont get a superior transaction. With price improvement going to you, so anyway, we have the other firms and some banks who are providing, if you put 100,000 and it would give you free trade so it was in the marketplace that was happening so we thought lets do it now. So we went to zero. Is a good value. You think how a company treats its employees as a direct impact on revenue for example, the better the company treats its employees a bigger return on investment. Absolutely. Thats probably the number one resource you have is your employees in our business and i think we do really well at that. I think we have a value system at schwab that i think everyone hangs onto and if you come into schwab and you have some other values outside that, you dont last very long at schwab. Its all about Customer Service, not about sales. So anyway, its been invaluable and weve grownand i think our employees have benefited by what we do. Can you talk about as given that last question on employees , talk about how as an entrepreneur and as a leader you processed when you have to tell employees to go, when you have layoffs which you had at various stages throughout the history of the company. One example i talk about in the book was verypainful for us and it was after the 2000 as i mentioned , the. Com boom and all that stuff and we had to lay off a large number of people and it was a very painful thing for myself and my wife at the time. So we decided to put up a big fun to help people that we had to let go to go back and recharge themselves if they wanted to become a nurse or whatever they want to go back to law school or medical school or whatever. Upon to help them repot. So we felt pretty good about that and sure enough the 10 million went away in a hurry. How do you decide on your make it or break it choices . In other words, how do you think about ritz . I think about it all the time. Also, without taking risks , youre not making any progress so we have many products along the way that we thought were pretty interesting and the clients told us eventually when we came out that they were no good at what they dont want toproperly , we trash them. Sowe listen all the time to our clients. Were always probably annoying to them, surveying them about this particular thing with that kind of service area so we want to listen to what they say and try to do the things that they suggest. What do you, to use a sports analogy, some people are the data tells them what to do. Other people there. Tells them what to do over your career do you identify with one or the other as a leader . There are many things we have done along the way that people say thats such aGreat Service. Why didnt you start that last year mark they didnt know, people dont come necessarily with great ideas. Youve got to go into the marketplace and youve got to be creative enough to put the idea out there and hopefully most of them. If they dont, then obviously you trash them. But i think youve got to be, but some of the great innovations you see, there are obvious innovations that are coming up along like netflix. Its so easy for you to get a nice movie on a sunday evening orsomething. Right in the convenience of your television. You go to apple tv and all that stuff, its fantastic or whether its pull out your iphone and do that kind of thing. Itsalways these great creations. Of the greatest things that happened in many years is the internet and its just beginning, what happened and what youre able to dobecause of that capability is unbelievable. And it will get faster and as we know 5g comes along and hopefully other things will come along and will give you more privacy and you probably have today because a lot of firms that use your private information or their advertising and such but so were talking about that backstage about block janeand things like that. Someday youll be in control of your privacy , not today but monday. As someone whos, youre not a technologist. You were trained as a technologist. You, 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 invest aggressively. Right now in your field Everyone Wants to talk about crypto currencies and schwab is not jumping on that bandwagon. Crypto currencies is sort of not something that im in favor of right now because it really, yes, they have security butthey dont have anything backing up the currency itself. You want to have full faith and credit of somebody behind it like the Us Government would be pretty important to have or a bank or something so this is sort of something that you can dream about and i own one bit coin. I got it about three years ago, i guess i got the coin from my youngest and half a coin from mysoninlaw making one coin. It was worth 16,000 that christmas and i think within six months it was worth 4000 so i lost 75 percent of my socalled gift. Not a good place to be. And i kept telling them, this is not a great place to be so ive suffered right through it and i think my son sold everything he had in terms of crypto currencies so anyway, is a sharp investor. Im a stupid investor. I still on the coin. Youll be okay. Chuck, i cant remember if its the ninth or 10th year of an economic expansion and able market. Logic or history, even common sense would suggest thats not a great place to be as an investor. What areyour thoughts on that . I happen to be, you have to be an optimist when youre like myself so i think the undercurrents of the economy is really strong and i happen to be a believer that the tax bill that went through to help our corporations in america become internationally competitive is a fantastic thing. The cash flows of companies are high and even right now, reporting the most firms are reporting improved earnings. Underpinning of the consumers seems to be in really great position of confidence. And it can go on but nonetheless, economies always markets always go up and down. Thats a fundamental with its currencies, stocks, bonds, interest rates, you name it. Markets will always go up and down so if youre a smart investor, understand that end ensure that you just hang on for the long term and you look at any chart over a longterm, i dont know if you can find yourself, it can be three years, five years, 10years. It always ends up here and eventually, ends up over here. Im talking about things that grow. Im talking about stocks. Im not necessarily talking about bold or silver, commodities of that but those things dont grow necessarily, they go up and down by a short distance of supply or demand, those kind of things but docs and things like that are the function of a thing that can grow. And were seeing it. You look at any of the great companies. I talk about, to make my point, every company ive ever been on the board of, ive been on for s p 500 companies and no management as ever come into the boardroom and said we cant grow next year. They always have a plan of backup. Somedont achieve it but all have a plan to grow. And thats what companies, thats what we do. Can you talk about the role of mentor ship . Is there someone at play that role in your life, what important lessons did you learn mark. I didnt have any Single Person was my coach as such. My father was a lawyer so he had really not much background in what i was up to in economics and then on finance. So that was i think the biggest motivation i had as a kid was our family came up, they came up through the depression years and how important my end saving was so that was a fundamental learning i gotfrom my family. Make sure you do well enough and pack something away or tomorrow. So i read a lot of biographies when i was a kid about who were the people that really did well, success in business whether its most of which i sort of drifted towards those that did finance and whether j. P. Morgan or somebody like that. I said thats what i want to do, i want to get wealthy,i dont want to be sitting around and say i cant buy that. Thats what you dowhen youre 12 years of age. You want to buy the bike, well, in my case we went out and found a used bike and i had a used bike. I was happy with a used bike. It worked well with a new swing, i didnt have a new schwinn but i had a used bike that i greased that baby up every day and it function. Can you share some words of wisdom about navigating external changes and making them work in yourfavor . I think for sure you just education, its understanding what youre talking about. Making sure you have every avenue to figure out and then take the rest to make a decision to go one way and if it doesnt work, change your mind and come out with a different way. Flexible. Lexical, flexibility and understandinxtra time to make sure our back office was clean all the way through and a couple times they work but for the most part would talk ab and you write a lot about why marketing was important to you and not Just Marketing but also Public Relations and public speaking. Could you talk about that as a Business Leader . Those were all learnable things. They really are learnable things. And i learned about marketing for instance, i learned about pr. I learned about, i would never learn how to be a great salesman, thats one thing i could never doparticularly if it was abrett babcock. Like insurance. So i always wanted to surround myself where its something i could be enthusiastic about. A great product that i was deeply involved in an act confidence in you so we created schwab ive always been, i like to talk about the company because what we do and what we stand for and all those values that our company has and i was not, in the bri would go around in the early days of the company. We couldnt afford much advertising area very expensive. Theyre expensivetoday but we can afford today. But i went around, radio stations all over the country to try to introduce the world to the benefits of discount brokerage and it seemed to work and i got introduced, appointments with different radio stations and got a few tv stations and a few articles in the newspaper. Like we talked properly on and we got us continuously out there, out in front and then talk to groups like this about the benefits. Early on, right before 40 years ago, talking to groups about the benefits of discount brokerage, why it was important and how you could just save money but be able to make decisions free of Commission Sales guys. That was what we did. I remember saying in any interview you ever dayyou ended by saying something, either giving the800number or saying come seeus , something to that effect. Thats what a good marketer does. You also about communicating with journalists, you have some wisdom in their that this is my personal favorite passage that im going to read and im going to share this with other ceos. In 2004, five or so when you were into just beginning the turnaround of the company, my former colleague betsy morris and fortune i believe youd work on an article with about Corporate Leaders with the sex leah said i want to write aboutthe turnaround Charles Schwab and the executives advise you that was a bad idea. Its too soon. They havent proven everything yet and you right here there were any number of reasons to say no but i knew that a good story requires some tension and we had enough progressunder our belt that i thought we should take the chance. In retrospect the piece focused more on davids departure then we hope. It made it a more dramatic story i suppose but the underlying theme was clear. We were fixing schwab. We were and i cheated. Theres a picture of me in fortune, the real hard cover out there which i love, its oneof the best. Its me as a 13yearold i think, 13 years of age. Once in magazine, betsy has dyslexia should so she started this article about executives that had dyslexia in their background and so she came and interviewed me, interviewed a bunch of other characters. And unbeknownst to me she got a picture of me 13 so it was a frontpage of the Fortune Magazine 13yearold. All my god. Of course, nobody recognized me then, it was good. We used to have a big staffof photo researchers would go find that sort of thing. You part of that fixed up. I know youre joking about that because you had the presence of mind to save your people yes, they got to find some of the comedy to find some of the bad stuff. Thats their job and thats okay because that makes it believable and authentic when they tell thewhole story. Not all ceos are like that. Openly its one. Thank you. Lets end with what your story about working with having a photo of the 13yearold, you and working with other parents and children reminds me that its not just about numbers on a spreadsheet for you. You do want to make money, you said that very clearly but its about more than that so good we end with, just explain to people how you managed to not only build a business but have a good time doing it and why that matters . You think about purpose life and what you try to do, you try to maximize the best of your ability whatever it might be and im always in great admiration for those that are musicians. Or are great at being a doctor or a lawyer or whatever it might be just pursue your passions and thats what i found i had a young boy in today whos applying to college and say i like to help these kids get into the best school they can get into but thats one of the conversations we have is about pursuing your passion, whatever it might be and making business like myself and being successful financially. You also have a huge obligation to give back large parts of what we do interms of being successful. And were happy to do that for sure but i think its every kid needs to find the direction in life, the passion that i have and how they can contribute in a way that they can society and i think thats sort of a way that youwork. I feel as if i dont ask you how is your golf game today . I have to say its as good asi can remember. [applause] for we closed, please bear with me for a moment. Our thanks to Charles Schwab, founder, former ceo of the corporation whose Book New Book is invested. Changing forever the way americans invest. This program has been part of the Commonwealth Clubs ethics and accountability series underwritten by the traverse Family Foundation Additional Support from the Bernard Osher foundation or our good list program. We would also like to remind everyone here in the room signed copies of mister schwabs book will be available outside his room calling the program. Im at a and now this meeting of the Commonwealth Club is adjourned. Tonight im pleased to contribute tyler, hes a Bloomberg Opinion columnist, has written regularly per the New York Times and contributes to a
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