You . First of all thank you for this interview. But now it was written to appeal to entrepreneurs to let them know how hard it can be and how rewarding it can be. It offers encouragement if i want to start my own business i can do it. The other thing i wanted to do it before i got to walden didnt remember everything because looking at the sec that dictated the New York Stock Exchange they got rid of fixed commissions and going through all the technology was the Inflection Point in our Financial Service industry. I wanted to tell the story from the other side so people could see a human aspect. Host so the title of the harder you work the luckier you get, is that tongueincheek or do you believe that . I really did believe it because it has happened to me so many times the first one sam gould put that together but as i was talking to the people at Simon Schuster and of course its in the book time and time again the harder you work the luckier you get , it sounded like it should be a good title. That there was an amazing amount of hard work for somebody who has written a lot about the financial industry , worked on wall street close to 20 years myself, the story that you tell about building ameritrade and how hard it was was truly gripping. I have written books about the history of bear stearns and Goldman Sachs and i never got the impression that writing those histories of course i didnt live through them but it was ever as tough as what you experience to build ameritrade. How did you do it . What made it tough was lack of capital. We started with almost nothing. In fact back in the seventies we had to send out a Financial Statement every six months to our customers and one called and said you left three zeros off and i had to say those are the real figures. We could only grow by that capital that we left in the business from our profit. So we also had to be careful about learning the business to be within regulating that capital and stay within the regulations. It was a constant struggle of balancing the income interest of all making sure we had an income and then balancing in three areas. How much in advertising . How much that the increase will not exceed net capital . How much to hire new employees and buy equipment for them to use. That was a difficult balance for many years. Thats what allowed us to grow as well as we did. But even after business almost 20 years, when i saw the opportunity for the internet and for advertising i said we dont have enough cash or money and we will not make it we have to go public. At the time when i regrettably said if we stay in this industry and be a winner we have to have more capital and then we went public. Obviously that is a momentous decision in any company you spoke about the big bang when commissions went away what that meant for your business. In my own writing and researching wall street one of the most important moments in history of wall street was when firms started to go public going from private partnerships to a Public Company obviously impacted capital it sounds like you have some regrets about going public but you had to do it in the same thing with Goldman Sachs how important do you think this idea on wall street going public is . It was a very difficult decision because i have always wanted to leave the business for my family to operate when i was gone and a new that if we went public it would be difficult to maintain the atmosphere of the Family Business. But at the same time i also knew we needed access to that capital to take advantage of the opportunities ahead of us i figured we need 100 million for technology 100 million for advertising in both of those were low. s we went and got the right amount of capital so the Upper Echelon we had over 400 competitors most of the people were weaned out before the late 19 nineties in a very similar story to the Automobile Industry and i was aware of that that if we wanted to stay small we could not survive and then i would not have anything to leave to my children. I got all the blessings with capital and could compete that i knew we would not have the same atmosphere we had in the past. People felt close about working at ameritrade it was a fun environment even though very stressful everybody seemed to enjoy it. When you go public he become a Different Company and to lose that personal touch and to have to the investment. One investment banker to better control and management of what they were doing as Investment Bankers so i see dealing with the public and retail buying and selling is two different businesses and need to be thought of separately i was out they should have been kept them public but when you deal with customers we did that well that personally as a family we lost. Host i am on balance that Investment Bankers however getting into so many other businesses in the family had a big brokerage so maybe it was inevitable it wasnt that much different than the weekend brokerage business. So does that leave something to be desired . It left something to be desired. Weve been in business 20 years. We couldnt get anybodys interest until we got to first boston they didnt understand the business or enthusiastic. But there was no enthusiasm for our stock and then to demonstrate the type of growth they said why didnt you tell u us . I said i tried to but you wouldnt listen or buy into it. Was amazing 20 years we were growing at a phenomenal rate and nobody in the securities industry thought we were anything other than a startup business. That was always a surprise and a shock to me. Because you are in oklahoma and not new york . I think even if we were in one of the many centers. We are close but if we were located one of the major metropolitan areas we would have been looked at the same way because the securities industry didnt want to think we were competitors are doing as well as we were so they subconsciously ignored us. Host but omaha also has Warren Buffett so its not like they were not aware of what was going on in omaha. That is true. But what Warren Buffett does is so much different that we were in the securities industry but i dont know if the Warren Buffett phenomenon would have worn off on us. Host have you met him . Yes. We live in the same neighborhood ive had a couple of business meetings with him over a period of 30 years. Maybe i will see him once a year at a fundraiser or something of that sort. That he is in a completely different world than im. He didnt seek your counsel . [laughter] that is correct. Host so go back. Your childhood is so interesting growing up. And you say you had a very different outlook for your family and your parents was that hard for you growing up to be not interested in the House Building business or sports or the typical things kids do growing up that were interested . It was not hard. In fact i had an ideal growing up. In the forties and fifties and sixties was an absolutely people one wonderful place for people to grow up we still get together with my friends and look back and say we had it in the most wonderful way and we didnt realize it and didnt know it. And with respect to my father, he was in business with his father and then when my grandfather died my father bought the assets from the estate he would have liked me to have been in business with him and he encouraged me to go to engineering school. But i had no intention of going into the business. I tried as a young person but you have to have talent with your hands i dont have that talent with my hands. I could not conceive of the mechanics necessary to be a carpenter you have to understand how you should cut and nail things and i just didnt have that. I couldnt wait to get out of Nebraska City even though wonderful place to grow up i was ready to go off for new adventures. Although my father would have enjoyed me coming into the business he knew i would never do that and in fact even counseled me when he fired me and said youre just not going to make it as a good carpenter working with your hands. Even though you normally think that would be a stressful time i was comfortable to say im happy you are asking me to leave i dont want to disappoint you. Im pleased youre not disappointed. Some of the other aspects . I never felt any shortcoming. I tried to play sports but i was all thumbs. I tried to catch the ball that would hit me in the face. And as i indicated in the book i felt like a grownup. A little boy i had a paper route i would take me a few dollars into the bank and go up to the teller to hand in my account and the few dollars they would take that and write it so that made me feel grownup. That was a feeling that i got that nothing else would replace. So working to make a few dollars to put into the bank account was probably the most important thing in my life as a young man. My parents encourage me to work and save but not to play sports. Of course my parents were raised in the depression so sometimes you have a different attitude of what you should do with your dollars. But you talk about great freedoms but also responsibilities. That feels like such an american concept to me. Which is admirable. I went to disappoint my mother that was considered to be embarrassed we always did understand we had a certain places in the community and we needed to work we had no idea what was happening at the time but i can see now that i always knew i should be responsible and that i had the freedom to go anywhere and do anything. Can you tell the viewers. That seem like a seminal moment. And for that generation it was most importantly to learn when my mother told me that story is a young man. My grandfather was a successful farmer in nebraska a small farming town being a successful person in that community the roads that you plowed were straighter the hogs were fatter and things of that sort so the other thing is the church in the small town offered the first pew to those that gave the most and then the second most and that sort. My grandfathers family always had the front pew they bought a new car every couple of years. My grandfathers mother married a banker and this was before regulation or anything of the sort you take your money and your risks of what you thought would be relative to the risk you are taking. But then had access to capital so my grandmother what each leave a child a farm priming was a very successful business after the war but then the market grew has the economies around the world had a demand for Agricultural Products during the 19 twenties times were good so my grandfather had a farm as soon as they had equity in the farm they borrowed against that equity and then for the next kid. As soon as they had equity again so they built the inverse pyramid of debt if it would have continued the same it would have been wonderful so then they went to the depression so my grandfather did feed cattle so history was to have cattle operation so his dream was to have a big sign that said clarence and son but before they got very old now this bull had a disease of the mouth or tuberculosis but it was a very prized bowl ball when they brought it home there was a party like a fair in the farmyard invited all the people to see the bull. And then everybody brought some food the tables were full of people would play games and one of them is that the men would bet on how many eggs they could lay on the back of the bull one bull before it would roll off. So my grandfather was in his heyday and then to think about the benefits he could have to use that to make his her to bigger and better but then he got a letter from the state that it had a disease then the state to control the for current science knew how to handle it. And then with the inverse pyramid and everybody lost the farm. Also before the days of any type of social welfare so when he lost the farm he moved to Nebraska City to go to work in the packing house but he had a nervous breakdown so he never did work after he lost the farm. My memories of him are sitting in a rocking chair looking out the window. His sons were old enough to work and then his daughters went to work the whole family did to support the family but here is a man that has a very Strong Social position as a farmer to go into a house with dirt floor floors. They rented the least expensive they could find. Floors like a log cabin. It was a come down and hard times for the family. And he never did recover. Something with a big influence on my mother and she told me many times. Host did you take a lesson from that with ameritrade . I did. I always had to say be ready to fail. Be ready to lose all of your dreams and start over. I have a website entrepreneurs great jobs. Com one of those that i interview say they are different. We fail and then we get back on the horse. So as an entrepreneur you have got to understand eight out of ten new businesses fail and your risk is quite high. If that happens in your really an entrepreneur you get back up and try again. So the buzz saw and what that taught you about the importance of innovation and technology. I figured out how important it was because after we were successful with technology at the turn of the century i understood and with that understanding is what allowed me to be successful. So the reality was i didnt understand technology but just what it could do you like the buzz saw. That image is where my mind went when i got the idea these people dont know i dont know about technology. So my mind went right back to the afternoon in the yard when my father use the bus stop. And how much more instruction. You dont have to know how a car engine works but just know what it can do for you. Correct. The same thing. Host it seemed again from reading the book that technology was always a hurdle that you are always trying to get over and when you have a solution then it would be obsolete by the time you implemented it and allied of money was spent and then they cycle through to figure out the technology and it was as simple as the innovation to have people dial a phone number and it seems like every time you have the technology you were behind the eight ball. That is correct it is amazing to think where we started. With a touchtone telephone in 1975 with a pencil and a piece of paper but then we put it on a ledger sheet and then we put in the system. Right out of Charles Dickens days everything was done by han hand. And then we can do everything by hand and expect the business to grow. We saw that opportunity and then to have some sort of automation to help us out. As i describe in the book the First Company was by Computer Research they gave us a teletype machine like a great big typewriter where the clerk would type in the activity for the day monies received and checks going out. It put out a tape like a tickertape and then set the telephone enough folder and it was hooked up to give the computer into philadelphia. If they had some static on the line that they would receive the information all of the ledger see sheets would be printed up in chicago. And those that would put them in a box and send them to us in omaha and happen overnight. Something always happened. There was a snowstorm so we would get one day after and then we have to go through to pick up all the mistakes and get it corrected. A much more efficient way to operate and to have mistakes and very inefficient. And then to go back to the business. It wasnt too long after we had that business im very happy that we had it. It was a good steppingstone but we needed to have her own system. And then the first question wa was, back in 1975 its hard for people to realize it wasnt that long ago these things came into being and the world was completely different at that time. So i do talk about in the book the genius that put all the software together but if anybody thought you word build a system from scratch they would say you are crazy. If i never knew dave kelly had never have taken a huge risk so then i was amazed i forgot how much risk we took. But without dave we would not have been able to do it. And out of a challenge to himself and then impossible with ways and to do things other people couldnt. Host could you ever have imagined with that technology we are now from the internet or website interface to do your own training right there online . And then feel good about it. We started in 1975. To have that be an objective was beyond our imagination. We didnt even have that concept. And then to report that execution and it is truly remarkable. And then we had to build it so the order would flow through from the keyboard to the exchange and make us have all the information or be aware of it. So we do that concept in 1975. And then to be a magazine cover. And then to be prosperous. It is part of it i wasnt too happy with my job. And to be a reporter with Dun Bradstreet i knew i wanted my own business and then to be the next best thing to having your own business. At the time going through the story to see the cover of the magazine brokers were making a lot of money thinking we wouldnt have the other opportunity to put my own compensation and then to do it in a way related to the securities and investment market was the most attractive i could get. One anderson what happened i had to go there. I went to omaha to apply for jobs without a degree. They said we dont even look at somebody without a bachelors degree. Thats when my wife and i sat down to map out how much money we would need to take care of the family and where i could work and go back to school. And then i went back to college to get my bachelors degree. So the idea i would be one of these people that flourished to make a lot of money as a stockbroker was incredibly attractive. But it just so happened but in the late sex on in the late sixties of the bear market. Host had to go from being a broker at dean witter to thank you could just start your own low cost brokerage . And make it work . As i talk about my associate and partner and mentor, bob is the one that somebody will break ranks. To offer prices at a lower pric price. He was experience with competition in the grocery business. So even though the government had instructed the negotiated commissions and bob is the one that said to me that it is clear i understand it so they think we have to compete for our business on a commission , why dont we be one that customers want to do business with . Thats how it all got started. Actually we had no idea how to do it. And that sounds great. The story unfolded as we tell in the book. That we were so naive or stupid enough that we just kept plowing along. And it turned out when you think there is a market for somebody who just wants to make a trade here is what i want to buy and heres what i want to sell to find out the market is bigger than you think it is wonderful. Also right after the Second World War the government had the g. I. Bill and people came back from the conflict to go to college to become engineers and architects and accountants and doctors. With that education they felt comfortable making their own decisions about what companies to buy stock. There are two things going on at the same time that made the market deeper and broader than we thought it would be. So the harder you work the luckier you get. We didnt know the market was there until we got started. Host it is an incredible story of perseverance. Also i was poor. [laughter] otherwise what what i do . Several times my back was against the wall and i thought it might lose it all here but i could go get a job but will i be happy . Know. I took a risk and i failed i just have to recover some way. With your back against the wall does help because we have no choice but to keep going. Host there is a bittersweet quality with those relationships that you formed mentioning bob perlman and to make tough decisions as people come into the business and left the business and to make tough decisions and to make it a Family Business and your wife worked there and you said hopefully you have your brother working there and your children but it sounds like often you had to make tough decisions and part ways with these people and never spoke to them again in some cases. What was that like . It was terrible but what you have to face to go through sometimes. Tim was right out of law school with her first difficulties with the Securities Exchange commission. Because he had a lot of confidence in himself and a unique way to solve this problem he saved us from going out of business. This is an attorney only business as an attorney for a couple months and had the ability to save us and keep us running. Two years later he change the whole industry by thinking differently how the rules and regulations. So even then the sec to ask them if we could form an association with a commercial bank and just share commissions the sec said it had no action letter do it this way we will take no action. He was only in business as an attorney for a couple years and change the whole securities industry later he saved me in a fight with my partners to allow me to stay a partner in the Brokerage Firm that i started because i was doing of noxious things with my judgments and partner stocks they wanted me to leave. Tim was very important in very near and dear to me my closest friend as i could have. When he really helped us with the legal work in 1975 and 76 we had a bill to him for 75000. More money than i could comprehend. They said we cant afford to pay you because you dont have the money so i would give you have in stock and the other half as we can. He had no choice but to agree so now he has stock and knows it is increasing in value because he keep all of the earnings back into the business. But every once in a while something to grab his attention and need cash to sell the stock then i had to reduce advertising every time i bought his stock thats a go hold in the heart. He did that a couple times and said i cant do this anymore. I will buy all of your stock right now and get it done and over with and send you a check. We parted ways. We werent mad but we lost that friendship him and i always friends later on in life at arms length. Those were hard things but then bob perlman my mentor i just have to say to myself, dont let your emotions get in the way of good judgment. And follow the ideas that come out of that and dont let your emotions become involved. Both of these men i loved. At the armslength for the relationship. Have you found that is a standard occurrence in the business of successful businesses that people coming go . Have you shared this with other entrepreneurs like yourself to discover they are similar experiences . Yes. Generally there were associations that were difficult to keep the has two people want to go different directions. And that camaraderie when you start the business five or ten years later. Its not something that is abnormal to us may be normal for new business. Is something you have to handle successfully for you will not survive. You are clearly driven to succeed beyond your wildest dreams. Could you have imagining it happening this way . And he didnt want to merge with the bank but it did happen so youve accomplished many goal goals, but not all of the goals and are obviously very wealthy beyond your wildest dreams. The story of america the 20th and early 21st century how you feel your experience and narrative. And then i accumulated more money than ever dreamed or thought i would have. I was old enough when that happened my wife and i still have the same values when we didnt have any money. It allows us to do things he would not have been able to do. Children wanted to buy the Baseball Team chicago cubs we could not do that without that type of success. Made a wonderful business for my children to run, the Baseball Team. Host you only put two paragraphs in your book but that is a momentous thing. That my kids did it. Why would i want to buy a ball team . We dont want you to have interest we wanted for ourselves. My wife got the kids interested in baseball. We got the television station wgn in the omaha area. So my kids were home in the afternoon and watch and i did not know that. My kids went to chicago loving the chicago cubs. It was serendipitous. I have no interest but the kids did and in a very earnest way in one the World Championship like the first time in 100 years they were very successful Baseball Team with the remodeling of the ballpark its been a wonderful thing and we could not have done that if we didnt be successful at the brokerage business. Rickets family heroes in chicago . And then to get a championship. First of all they were the ones that was suggested by my son tom that had the most interest. And those four kids put time in charge. He was the one to make the important decisions. So we are in chicago when we win the world series. I think tom could have been elected to anything if they said president or mayor or anything. And how wellregarded. Host you had a brother that was gay and died of aids and dad daughter who is gay coming from a catholic background going up in the midwest obviously you are very forthright about it so what has that experience been like growing up the way you did . Going up in a town of 6000 and the agricultural community. And the reality of a homosexual it just doesnt come into your wellbeing. I never had an idea my brother was gay until he called me and told me he had aids. But he was only one year younger than i was. I loved him. It didnt make a difference to me if he was a homosexual or had aids. We took care of him until he passed away. My daughter was in her early twenties, a young woman when she came to us to tell us that she was gay. She said i did not choose this nobody would wish among themselves to be gay i was born this way. Through my tears i was able to tell her never take second place in be as good as you can do whatever you want to be. That comes out of love. And then in a persons life and then to other people the basic unit of society my wife and i both came from a to different type of families and that is automatic. And that is part of why i talked about in the book i talked about that and i could have left it out but i think its important to let people know theres a good percentage of the population that are gay and that should not have any influence on any other aspect of their business. They give or discussing that. That is such a big part of the business putting money into it and the benefits of driving customer volumes with the tv ameritrade on tv ameritrade today . Im still a large shareholder. And they still have good management. I would say this today that the ad you have running is too old. They must have a reason to continue it but i dont like it. I liked it two years ago but not now. Host it seems a little long in the tooth. [laughter] it is memorable i dont know why i remember it. And what about the schwab market cap of 70 billion and e trade is still around 70 billion. Its well beyond anything could have imagined. Chuck schwab was a friend but at the time at the turn of the century was a competitor and i just mentioned that several times in the book but he was fortunate enough to start in california. I think at that time had the ninth largest economy in the world if it was its own country. In nebraska we have one one. 5 Million People most do not buy or sell stocks and bonds. And then the market to go searching for haystacks to started in 1975 i never heard of the discount brokerage in San Francisco until about 1977. And those published within the same month. If you read the book you see that we have the opportunity that is larger than the market then i was in to go as fast as he could so i think chuck schwab has done a wonderful job all through the years but what we had to deal with as a new company and to grow. And just because of the population that he has. And he bought private Wealth Management . Online. Yes. Every entrepreneur makes mistakes. Anybody can look at chuck schwab or joe rickets and say that was a bad thing. You have to give a lot of credit to chuck schwab for doing the things that did not work and then to say i deserve credit for being brave. And the markets these days at alltime highs people would like to know your views for you think the market is going. I did retire from ameritrade as ceo 20 years ago. I figured i deserve to take use of the money i accumulated to do what i want and that lasted six months then i was no longer happy for you have to be in business and a part of that creative process. Went back to work and i am very happy that i have never worked in such a Strong Economy that exist today. It is quite wonderful for the country im not in the brokerage business there is a lot of money floating around so you have to pass so the government gives the country the attitude to lead the charge on reducing taxes and if i could i would get on my soapbox to say on part of the federal state and local levels at this stops people from starting their own business and thats what makes the economy grow. On the other hand you say before regulation of the securities industry like a seatbelt in a car. That would go too far. I feel like i shouldnt be told what to do. The other argument is if i am in a car wreck without a seatbelt and i end up on the charity list to get me well then that is reckless. But my feelings are leave me alone. That is my emotions. Realistically you know there has to be some regulation. I like the word Free Enterprise more than capitalism but that gives the image that is raw and cutthroat which is what you should be but it could give the same image but that temperance regulation so we do need regulation and the overseer of the securities industry. And then to offer their products and services. So how far do you go . My personal feelings and then to go too far into the point we start people from starting their own businesses and once they start their own business and then create the jobs to make the economy get along well. So on that very optimistic note, thank you to joe rickets for being a part of the program today to tell everybody this is an amazing story of entrepreneurship and truly the American Dream and a very readable way. Congratulations. It is a great read. I appreciate that. Thank you kindly. Of the past 20 years, he has appeared on book tv cause to 20 times first out, in 2007 on a monthly call in program, in depth. P. J. Orourke discusses politics and why he uses humor to address political and social issues. Host is the real picture of you not awake. Oh yeah, not awake. I would guess that was in 71