Joe thank you for being with us today. Its one heck of a book i really enjoyed it. Its a gripping story so the first question is why do you decide to write this now . Is there something more you wanted to say at this point . So to let young entrepreneurs know how hard it can be and how rewarding it can be. Really offers and encouragement and the other thing i wanted to do before i got to hold and didnt remember everything is looking at this change that the sec dictated to get rid of fixed commissions wires and Inflection Point and i wanted to tell the story to see the human aspect. So the harder that you work is that tongueincheek . I really did believe it i believe sam goal and put that phrase together but of course its in the book time and time again the harder you work the luckier luckier you get just came out. There was an amazing amount of hard work he went through and somebody who has written a lot about the financial industry and the story that you tell about building ameritrade of how hard it was was truly gripping and i have written books about the history of Goldman Sachs and i never got the impression of course i did not live through it but as you had experience in building ameritrade. How did you do it . It 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 customer called me and said i thought i had to tell you you left three zeros off of the net worth. [laughter] so we could only grow by the capital we left in the business from our profits. So we had to be careful about running the business to be within the regulations so it was is a constant struggle first of all to make sure they had an income how much money to put in advertising or to make sure the increase does not increase exceed net capital how much can i put into new employees and equipment for them to use . That was a difficult for many years. But thats what allowed us to grow as well as we did. But even being in business almost 20 years i saw the opportunity for the internet i said we dont have enough cash or money and we will not make it internally generated funds so we will have to go public. So that is the time i regrettably said if we stay in this industry to be a winner we have to have more capital that promoted us to go public. That is a momentous decision in any flight span talk about the big bang and what that meant for your business with the Rising Research and wall street one of the most important moments is when the firm started to go public and made access to capital a lot easier but it sounds like you had regrets but you had to do it the same was about Goldman Sachs so how important do you think this is the way it change the culture of wall street . For me it was a very difficult decision because i had always wanted to leave the business for my family to operate but if we went public it would be difficult to maintain the atmosphere of a Family Business. But at the same time i also knew that we needed access to that capital to take advantage of those opportunities ahead of us and that turned out to be right we need 100 million for technology 100 million for advertising both of those figures turned out to be low. We went public just at the right time into the Upper Echelon and to stay in business at one time we had over 400 competitors. But most of the people were weaned out before the late 19 nineties and a very similar story to the Automobile Industry that if we wanted to stay small we cannot survive but the time we went public i got all the blessings and could compete i knew we would not have the same atmosphere as the past. People really felt close working at ameritrade and it was a fun environment all the very stressful and people had to work hard everybody seemed to enjoy it. When you go public you become a Different Company you become more professional for when you are in a private company. May have a different attitude toward the Investment Bankers i dont think they ever shouldve gone public. I think they had better control of what they were doing as Investment Bankers when they stayed private so dealing with the public in retail buying and selling his two different businesses when we saw they shouldve kept it in a partnership keeping it private but when you deal with customers its okay we did it well by going public. I certainly agree about the balance and getting into so many other businesses Morgan Stanley had a big brokerage from dean witter. Maybe it was inevitable and the Capital Requirements are not that much different. Do you think those underwriters . We have been in business 20 years. We couldnt get anybodys interest to have a small offering until we got to first boston and then they were not enthusiastic but there wasnt any special enthusiasm. And to demonstrate the type of growth we can have to say i tried to. And we have been growing at a phenomenal rate and nobody in the securities industry that we were anything other than a startup business. Is that because you are in oklahoma . And one of the many centers probably would not have thought of that. One of the major metropolitan areas in the securities industry didnt want to think we were competitors intend to ignore us. But omaha actually has Warren Buffett so its not like they werent aware of what was going on in omaha. [laughter] that is true. And both in the securities industry and i dont know if the Warren Buffett do you know Warren Buffett . Yes we live in the same neighborhood we had a couple business meetings with each other. So wed meet at a fundraiser. But he is in a completely different world than i am. That is correct. So growing up in nebraska is so interesting to have a very different outlook with your family and parents and different interest was that hard for you with the House Building business your father was in or for that kid growing up . It was not hard. I had the ideal growing up. In the forties and fifties was a young one is a great place for people to garrotte. The most wonderful way we did not know it now with respect when my father was in business with his father when my grandfather died my father got the assets of the estate and then encourage me to go to Engineering School but i had no intention of going into business i tried as a young person but i dont have that talent with my hand. And the mechanics that are necessary to understand and i just didnt have that. The second part i couldnt wait to get out of Nebraska City although a wonderful place to grow up but i was ready for new adventures. My father would have enjoyed me coming into business with him he knew i was never going to do that. And then when he fired me he said he will not make it. And i got it working with your hands. Normally you think it would be a stressful time it was comfortable asking me to leave and i was comfortable im happier asking me to leave. And the other aspects we never did feel any shortcoming. I tried sports it did not work and to have a paper route i would go up to the teller and hand in my passbook savings account and that teller would take that information and right in the passbook that was feeling that nothing else would replace so looking to make a few dollars to put into your bank account was the most important my parents always encouraged me to work they never encourage me to play sports. Of course my parents were raised in the depression with a different attitude of what you should do. Growing up you talk about the american concept that is in my rebel that is in my rebel i feel responsible to my mother especially didnt want to disappoint her to do something that would make her feel embarrassed we always did understand from my mother we had a certain place in the community and we needed to work to maintain that place so although i had no idea what was happening to me at the time i can see i always knew that i should be responsible and i had the freedom to go anywhere and do anything. Tell the story of the family bowl. That was a seminal moment. It was for that generation and a great lesson to learn i was told that story as a young boy. My grandfather was a successful farmer in manly nebraska a small farming town a successful person the roads plowed were straighter the hogs were fatter and of course the other thing and the second most in my grandfathers family and brought a new car every couple of years. My grandfathers mother is like owning a hardware store. And with adequate reward. My grandmother wanted to leave each of her grandchildren. Right after the war with extra supply them with those Agricultural ProductsUnited States produced times were good so my grandfather had a farm which they had a mortgage as soon as they had equity they borrowed against that for the next kid when they had equity again they built for the next kid they built the enormous pyramid of debt if it sustained it wouldve been wonderful but then we went to the depression. One of the things my grandfather did do is that his dream was to leave the cattle operation to his son that before they got very old now the bull had a disease whether tuberculosis or less and mouth but apprised bull when he brought it home he had a party in the farmyard to see the new bowl and then everybody brought some food and people would play games they could make up one of the games my aunt told me they would bet how many eggs they could lay on the back of the bull before they would fall off. My grandfather was in his heyday of his career because he could usher off the bull and to get bigger and better but when he got the decision from the stat states animal had this disease then the state took control it was before current science new how to handle it. So this whole herd had to be destroyed then he didnt have the money to make a payment on the loan that is like pulling the fulcrum out of the universe pyramid and everybody lost their farm also before any social welfare. And then to go to Nebraska City in the packing house but he had a nervous breakdown and never could work after he lost the farm my memories of him or in a rocking chair looking out the window. Her his sons were old enough to go work in the packing house and you have a Strong Social position and then to move into a house in Nebraska City. So it was hard times for the family and he never did recover. It was a big influence on my mother and she told me that many times. I always had to say to myself be ready to fail be ready to lose all of your dreams and start over i have a website in one of the entrepreneurs on that website says entrepreneurs are different. We fail. So you have got to understand eight out of ten new businesses fail and your risk is quite high but if that happens then you get back up and try again. Another important moment is the buzz saw in the use of that and the importance of innovation and technology. It is an important part of the story i will point that out because when we were successful at the turnofthecentury everybody thought i understood technology and with that understanding allowed me to be successful the reality is i didnt i just understood what it could do like buzz saw and that image is where my mind went right after i got the idea these people dont know. So how did i take advantage of it . My mind went right back to that afternoon in the yard when my dad first used the buzz saw that how much more instruction could be given out. See dont have to know how a car engine works but just what it can do for you. Correct. The same thing. It seems again from reading the book that technology was always a hurdle you are trying to get over and you thought you had a solution but it would be obsolete by the time you implemented it and a lot of time was spent in people try to figure out the technology and it was as simple as having people die a love phone number and do it automatically. It seems like every time you thought you had the edge of the technology it would let you down crack. That is correct whats amazing to think where we started we made this technology 1975 so when we got a trade made then we put it on ledger sheet so as i said in the book everything was done by hand we learned we could not read on could not expect the business to grow and we saw that opportunity so we have to have automation the company was by the name of Computer Research and it was a teletype machine where the clerk would type in all the the money for the day the checks going out and that sort of thing. That machine had a tape like a ticket tape and then set the telephone in the holder it word is hooked up with that information to philadelphia. All of this goes to philadelphia. If there was static on the line the information was incorrect. So the company in philadelphia would receive the information and printed out in chicago all of our statements would be printed up in chicago. In chicago they would put them in a box and send them to omaha. All of that would happen overnight very seldom did it. Something happen like a snowstorm so we usually got it a day after that we had to pick up the mistakes and get it corrected. It was a much more efficient way but a lot of opportunities to make mistakes and in some ways it was very inefficient because we were ready to write the tickets and not spend our time to go back through business we did two days ago to correct to the errors. It wasnt too long after we had that business im very happy we had it. It was a good steppingstone but we needed our own system. But id never heard the word software. People said you have to have a computer and software what is software . In 1975 its hard for people to realize it wasnt that long ago that these things came into being and the world was completely different than it is today. In the book i talked about dave kellogg that is the genius that put our software together but if anybody thought you would build the brokerage system from scratch they would say you are crazy if i would have never known dave kellogg i would take a huge risk so that was amazing oh my goodness we did that i forget how much risk we took so without him we could not do it but did it really out of a challenge to himself to do the impossible in ways that demonstrated he could do things that other people couldnt. To you ever have imagined we could be with the technology where we are now with the website interface and do your own trading right there on mine to make people feel good about it. When we started in 1975 to be an objective note even had the concept to do that that was beyond our imagination we took him by telephone and gave them to a clerk to call in and call back. Years later to report that execution back to the customer within six seconds was truly remarkable almost like a miracle from our point of view. Everybody had to build their systems so the order would flow through from the customers keyboard to the exchange of back and have us be aware of all the information. That we had no concept of that in 1975. Why get into this brokerage business was that it . The mckesson i wasnt too happy with my job and where my career was going so i really knew i wanted my own business so i had no way to get any capital so being a commissioned salesman was the next best thing to having your own business. And double market so thinking that we could have the opportunity to put compensation and do it in a way that is related to the Securities Investment market was the most attractive i could get. When i understood what happened i had to go there. So i went to omaha to apply for a job i did not have a College Degree they said we dont even look at somebody without a bachelors so my wife and i sat down how much money we would need to take care of the family and how i could go back to school. Then went back to college to get my bachelors. So the idea one of the people that flourish to make a lot of money as a stockbroker was incredibly attractive. But it just so happens i got registered at the top of the market in the late sixties and then there was five years of a bear market. So how do you go from being a broker to thinking you could start your own lowcost brokerage and make it work . As i talked about my mentor and associate and partner really said somebody will break ranks and try to offer prices at a lower price. He was experienced with competition and the grocery business. The Brokerage Community did not want to change. They didnt think it would change so they thought even though the government had instructed the negotiated commissions that people would not reduce their prices and bob said to me somebody will. So i believe that and i understand it so if we think we have to compete for our business on the commission then lets be one of the people they want to do business with and not defend ourselves from the high commissions. So thats how i got started. We had no idea we just had a lot of help and it sounded great but as a story unfolded it was piecemeal but i dont know if we were naive or stupid just to follow the dream we just kept following along. When you think there is a market for somebody that just wants to make the trade heres what i want to buy. Heres what i want to sell i dont need any research or service to find out the market is bigger than you think is wonderful the other thing thats important right after the Second World War the government had the g. I. Bill people came back from the conflict to go to college on the g. I. Bill to become engineers and accountants and doctors and architects. And with that education they felt comfortable making their own decisions about what companies they want to buy stoc stock. So two things were going on at the same time that made the market deeper and broader than we ever thought it would be. The harder you work the luckier you get we didnt know about that market until we got starte started. It is an incredible story of perseverance. And i was poor. [laughter] but am i going to do . Several times my back was against the wall i thought i might lose it all here but i can go get a job i will be happy i took the risk i feel on a failed and i just have to recover. Having your back against the wall does help you dont have any choice but to keep