Host joe, thank you for being with us today it is one heck of a book i really enjoyed it up or go its a gripping story and well told my first question is why did you decide now . Was there something you wanted to say . What motivated you to do this now . First of all thanks for this interview. I will tell you now it was written to appeal to young entrepreneurs to let them know how hard it can be and how rewarding it can be. So it offers encouragement for people to say if i can start my own business i should do it i didnt want to forget anything when the sec dictated the stock in chelan exchange to get rid of fixed commissions and going through technology was an Inflection Point in the Financial Service industry and i wanted to tell the stories of people would see the human aspect. The title the harder you work the luckier you get is that tongueincheek or do you really believe that . I really do believe it because it happened to me so many times. I think the first one that really put that phrase together but i was talking to the people at Simon Schuster telling them heres a problem the harder you work the luckier you get it just came out and it sounded like it should be a good title. There was an amazing amount of hard work somebody who has written and worked on wall street including myself in the story you tell about building ameritrade and how hard it was and i have written books about Goldman Sachs but i never got the impression in writing those histories that it was ever as tough what you experience to build ameritrade. How did you do it quex. What made it tough is we started with almost nothing and in fact back in the seventies we had to send out a Financial Statement every six months to our customers in a customer called and said i thought i had to tell you you left three zeros off of your net worth. [laughter] i said no those are the real figures that you see. So we could only grow by the capital that we left in the business from our profits and we also had to be careful about running the business so we were within the regulations calculating net capital and staying within those regulations. So it was a constant struggle of balancing first of all making sure we had account and then balancing in three hours how much i need an advertising or to make sure the increase will not exceed net capital and how much can i put into hiring new employees and buying equipment that was a difficult balance for many years. Host. But i was going to say thats what allowed us to grow as well as we did. But even after being in business almost 20 years when i saw the opportunity for the internet and for advertising i said we dont have enough cash and enough money and we will not make it with internally generated funds we have to go public so at the time i regrettably said if we are going to stay in this industry and be one of the winners we have to have similar capital and then forced us to go public. Host obviously that is the momentous decision in any country one companies lifespan you spoke about the momentous big bang when fixed commissions went away but in my own writing and research one of the most important moments is when firms started to go public when they went from private partnerships to Public Companies obviously they needed access to capital and it made it a lot easier but how do you feel . Feels like you have some regrets going public for the Capital Access was something lost when you went public in your mind . And how important is it to changing the culture of wall street quex. For me it was a very difficult decision because i had always wanted to be the business for my family to operate after i was gone and retired if i 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 the access to that capital to take advantages of the opportunities ahead of us and that turned out to be right. I figured we needed 100 million for technology and 100 million for advertising in both of those figures turned out to be low. So we went public at just the right time to get us into the Upper Echelon so to stay in business at one time we had over 400 competitors but most were weaned out before the late 19 nineties a very similar story to the Automobile Industry or any industry i was aware if we wanted to stay small we cannot survive than i would have nothing to leave to my children. The time that we went public and i got all the blessings of that capital i knew we wouldnt have that same atmosphere we had in the past. People really felt close about working at ameritrade it was a fun environment although very stressful and people had to work hard everybody seemed to enjoy it. When you go public you become a Different Company more professional and you lose that personal touch you feel in a private company. I have a different attitude toward the Investment Bankers. I dont think they ever should have gone public. I think they had better control and management of what they were doing as Investment Bankers when they stayed private so icd with the public and retail buying and selling as an investment banker is two different businesses and need to be thought of separately. And then it should have been kept private but on the public side i think it was okay we did well by going public it was us personally as a family that los lost. I certainly agree about the balance with the idea Investment Bankers stay private however getting into so many other businesses obviously Morgan Stanley had a big brokerage are so they were in so many difference businesses maybe it was inevitable. Did you feel the underwriters did a good job and did that leave something to be desired quex. I was amazed we had been in business 20 years we couldnt get anybodys interest we were going to have a small offering until we got to first boston then they didnt understand our business and they were not enthusiastic about taking us public they did it because they made money but there was no special enthusiasm for our stock after we were public for a little while demonstrating what type of growth we could have the stock went way up and they said why didnt you tell us i said you wouldnt listen or buy into it. It was amazing for 20 years we have been growing at a phenomenal rate and nobody in the securities industry that we were anything other than a startup business. That was always a surprise and a shock to me. Host because you were in oklahoma and not in new york quex. I think even if we were in a money center. Host i mean nebraska. Im sorry. Thats right. We are neighbors that located in the money center i think we would have been looked at the same way because the securities industry didnt want to think we were doing as well as we were so subconsciously they ignored us. Host but omaha had Warren Buffett so its not like they were not aware of what was going on in omaha. Thats true but what Warren Buffett does is so much different than what we do in the securities industry. And i dont know if that phenomenon would wear off on us. Host have you met him quex. Yes we live in the same neighborhood i had a couple business meetings over 30 years with him maybe i see him once a year at a fundraiser but he is in a completely different world than i am. Host he didnt seek your counsel . [laughter] that is certainly correct. Host lets go back your childhood is so interesting growing up and you say in the book you had a very different outlook with your family and parents was that hard for you growing up somebody not interested in the business your father was in . It was not hard. In fact i had an ideal growing up being in Nebraska City through this forties and fifties and sixties it was a wonderful place to grow up my friends and i still get together we really had it the most wonderful way and we didnt realize it and did not know it. With respect to my father he was in business with his father and when my grandfather died my dad bought the assets from the estate my father would have liked me to be in business with him and in fact he encouraged me to go to engineering school. But i had no intention of going into that business. I had tried as a young person but you have to have some talent with your hands and i dont have that talent. I could not conceive of the mechanics necessary to understand where you should nail things and i just do not have that. I couldnt wait to get out of Nebraska City although a great place to grow up i was ready for new adventures i would mom my father would have enjoyed becoming into business he knew i would never do that in fact he even counseled me when he fired me and said he wont make it as a good carpenter youre not good working with your hands. That you would normally think that would be a stressful time he was comfortable asking me to leave and i was comfortable saying im happy you are asking me to leave. Im pleased youre not so disappointed. Some of the other aspects of the sports i never did feel any shortcoming and myself. I tried to play sports but i was all thumbs. If i tried to catch the ball that hit me in the face. I felt like a grownup i would take my few dollars into the bank and go up to the teller and hand by passbook savings account and the teller would take the information and that made me feel grownup that was a feeling i got that nothing else will replace the working to make a few dollars putting into your bank account was most important thing in my life as a young man. My parents always encouraged me to work, and save they never encourage me to play sports. Of course my parents were raised in the depression so a lot of times you have a different attitude what you do with your work and dollars. Host but you talk about you have great freedom but also responsibility. That feels like such an american concept and an admirer of concept. I feel responsible to my mother especially i didnt want to disappoint her that she would consider to make her feel embarrassed. We needed to work to maintain that place. Although we had no idea whats happening at the time i could see that i always knew i should be responsible and i had the freedom to go anywhere and do anything. Host tell your viewers the story of the family bull. That seems to be a seminal moment. For that generation it wasnt a great lesson for me to learn when my mother told me that story as a young boy. My grandfather was a successful farmer in manly nebraska, a small farming town. To be successful meant the rows were straighter the hogs were fatter and then of course the Catholic Church in that small town offered the first pew to the family that gave the most and the second pew and my grandfathers family always had the front pew. They always bought a new car every couple of years. My grandfathers mother married a banker and this was before regulations so that was like owning a hardware store. You lend your money and you took your risk and put the Interest Rate you thought would be something to give you the etiquette reward. But then he had access to capital so my grandmother wanted to leave each of her children a farm. After the First World War farming was a very successful business there was a dip with the extra supply but then the market grew as economies around the world grew and a demand for the Agricultural Products the United States produced. During the twenties times were good. My grandfather had a farm they had a mortgage and as soon as they had equity in the farm they borrowed against that equity and bought the next farm for the next kid once they had equity again they borrowed against that for the next kid. If everything would have continued the same it wouldve been wonderful but it didnt and then going into the depression. One of the things my grandfather did do was cattle his dream was to leave a cattle operation to him and his son. His dream was a sign that before they got very old he bought a bull. And had a disease i dont remember tuberculosis or the mouth. But it was a prized bowl and when he brought it home he had a party and his farmyard to invite the neighbors the tables were full of food and people would play games. One of them the men would bet how many eggs they could lay on the back of the bull before they would fall off. My grandfather was in his heyda heyday. This was the peak of his career because he was able to show off the bull. Think of the benefits he could have to make his herd get bigger and better with the meat they would produce. When he got the decision from the states animal had this disease he lost all control and it was before science new how to handle it. So the whole herd had to be destroyed. When the herd was destroyed he didnt have the money to make the payment on the loan that was pulling the full chrome out of the pyramid and everybody lost their farm. Also before the days of any kind of social arrow welfare. When he lost the farm he moved to Nebraska City to work in a packing house. Buddy had a nervous breakdown so he never worked after he lost the farm. My memories of him or sitting in a rocking chair looking out the window. His sons were old enough to work in the packing house and the daughters worked the whole family went to work to support the family. But here is a man who had a very Strong Social position as a good farmer and then had to move into a house with dirt floors. The red to the least expensive thing they could find. It was very much of a come down and it was hard times for the family. And he never did recover. It had a big influence on my mother and she told me the story many times. Host did you take a lesson from that story for ameritrade . I did. I think i say be ready to fail. Be ready to lose all of your dreams and start over. I have a website and one of the entrepreneurs on the website that i interview say entrepreneurs are different we fail and then we get back on the horse. Eight out of ten new businesses fail and your risk is high but if that happens and then you get back up and try again. At another important moment with the buzz saw and that teaches you about the importance of innovation and technology. It is an important part of the story and i started out and pointed out how important it was because as we were successful with technology everybody thought i understood technology and with that understanding is what allowed me to be successful the reality is i didnt understand but just what it could do like the buzz saw and that images where my mind went that these people dont know i dont know about technology so how do i take advantage of it . But he was so pleased about what they could do and how much more construction they could get don done. So you just have to know what a car can do for you you dont have to know how it works. Correct. Same thing. Host it seems again from reading the book that technology was a hurdle you are trying to get over. And you thought you had a solution and its obsolete by the time you implemented it and a lot of people cycled through to figure out the technology and its as simple as the innovation to dial a phone number to make the trade and it seems like every time you thought you had the edge on technology you were behind the eight ball all over again. That is correct but it is amazing to me to think where we started with a touch tone telephone the latest technology in 1975 and a pencil and a piece of paper. The trade was maybe put in the book and then the ledger sheet that went into an alphabet system so as i said in the book right out of Charles Dickens days everything done by hand didnt take long to learn we could not continue to do everything by hand and expect the business to grow so we had to have some sort of automation come in to help us out. And as i described in the book the First Company we used was the name of Computer Research that gave us a teletype machine that was a big typewriter the clerk would type in all the activity for the day, trade made in checks going in and out in that machine gave a tickertape we would set the telephone in a holder and the tickertape was set up and give that information to the computer in philadelphia. So all of this transmission goes to philadelphia if you had static on the line the information was incorrect. The company in philadelphia would see the information we sent process it and print it out in chicago so all ledger sheets and confirmations are printed in chicago the person that ran those machines with the put them in a box and send them to omaha that would happen overnight but something always happened there is a snowstorm so we usually got it a day after we are supposed to get it and then had to pick up all the mistakes. Was a much more efficient way to operate and in some ways it was very inefficient because we are ready to do the business of that day to answer the telephone and write the ticket but not tracking like we did two days ago. So it wasnt too long after we had that business im very happy we had it it was a good steppingstone but we realized we needed our own system but i had never heard the word software. People said you have to have a computer and software the first question is what is software . Back in 1975 i said its not that long ago that coming into being the world was completely different at that time. How do they challenge to himself that he wanted to do the impossible in ways that demonstrated he could do things other people couldnt. You are going to ask a question. Host could you ever have imagined that we would be with the technology we are now where essentially the internet through a website interface to do your own trading right there online and people feel good about it and theres confidence in the system. Could you ever have imagined that . Guest we started tthat . Gueso have that as an objection nobody had the concept that you could do that. We took the trade by telephone, wrote them on a ticket and gave them to a clerk to call in and get a callback. Within six seconds it was truly remarkable, almost like america remarkable interview. Everybody had to build their systems so that it would flow through from from customers ked to tha customerskeyboard to thd back end must have all the information or be aware of the information. It was truly remarkable, absolutely but we didnt dream it or have any concept but that wo