This is one heck of a book. Ia enjoyed it so why did you decide now to write this now was his restless joe syndrome or something more you wanted to say . But why now . Thank you for this interview. But now it was written to let young entrepreneurs know how hard it can be and how rewarding it can be so that it offers encouragement for people to think if i want to start my own business i also wanted to do it before i got too old and didnt remember from when the sec dictated to the New York Stock Exchange to get rid of commissions and go through all the technology that was the Inflection Point of the Financial Service industry subpoena with the human aspect to it. The harder you work the luckier you get is it tongueincheek or do you believe that quick. I really do believe that. That happened to me so many times. Somebody else put the phrase together but as i was talk to people of Simon Schuster here is a problem we work so hard the harder you work the luckier you get it sounded like it should be a good title. There was an amazing amount of hard work and somebody that has written about financial industry working on wall street close to 20 years myself, the stories you tell about building ameritrade and how hard it was is truly gripping. And i dont think that you could do that. How did you do it . I had 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 the customers one called and said i thought i would tell you that you left three zeros off of your net worth. [laughter] i said those are the real figures. So we could only grow by the capital that we left in the business. We had to be careful about running the business and stay within the regulations it was a constant struggle to balance the income to make sure we have that and then make sure that we balance that in three areas how much money and advertising . How much money for employees and how much money to grow. But it took us almost 20 years but i saw the opportunity for the internet and for advertising i said we dont have enough cash. We dont have enough 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 will have to have similar capital and that prompted us to go public. That is a momentous decision in any company you spoke about the momentum of the big bang and what that meant for your business. In my own writing and research with wall street one of the most important moments is when firms when it public going from private to public because they needed access to capital that made it easier but it sounds like you had some regrets but you had to do it also the same thing with Goldman Sachs was something off when you went public . How important do you think this idea on wall street going public is in the way it has change the culture . For us, for me it was a very difficult decision because i always wanted to leave a business for my family to operate after i retired in a new if we went public that would be difficult to maintain the atmosphere of a Family Business. But at the same time i knew we needed the axis of that capital to take advantage of the opportunities ahead of us and that was right. I figured we needed 100 million for a technology and 100 billion for advertising both of those below. We went public just at the right time to get the right amount of capital to get us into the Upper Echelon of the people we would be able to stay in business. At one time we had over 400 competitors that most were weaned out before the late 19 nineties a similar story to the automobile industry. I was aware of that. I knew if we wanted to stay small we could not survive if and i would nve to my children. I got all the blessings of capital and could compete i knew we would not have the same intimate atmosphere we had in the past. People really felt close about working at ameritrade. It was a very fun environment even though people had to work hard when you go public for lack of a better term you lose that personal touch when you are in a private company. I have a different attitude toward the Investment Bankers. I dont think they ever shouldve gone public i think there is better control and management as Investment Bankers and with retail buying and selling and two different businesses and i always thought the Investment Bankers should be kept private but those on the public side when you deal with customers is okay it was us personally that last of the family. Host i agree that Investment Bankers and getting into so many other businesses the family had a big brokerage there were so many different businesses but the Capital Requirements were not that much different from the weekend brokerage business do you feel the underwriters did a good job with that . Does that leave something to be desired . I was amazed we were in business 20 years we couldnt get anybodys interest until we got to first boston then they did not understand so they were not enthusiastic about taking is public but they did it because they made money but there was no special enthusiasm for our stock after be republic for a little while and demonstrated the growth we could have then first boston said why didnt you tell us . I said i tried that you wouldnt buy into it. It was amazing for 20 years we kept that going 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 not in new york or San Francisco . I think even if we were in one of the money centers. I met nebraska. Im sorry. We are close. We are neighbors. If located one of the Major Centers i think we would have been looked at the same way because the securities industry did not want to think we were competitors or doing as well as we were so subconsciously they ignored us. But of course omaha has 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. Both in the securities industry but completely different. I dont know if the Warren Buffett phenomenon word would wear off on this us. Host have you met him . Yes we live in the same neighborhood ive had a couple of business meetings with him over 30 years. Maybe a see him once a year at a fundraiser or something of that sort. But he is in a completely different world than im. He didnt seek your counsel . [laughter] that is correct. So your child is so interesting growing up you say in the book how you had a very different outlook different than your family and your parents and different interests, was that hard for you growing up someone not interested in the House Building business your father was in or the typical things kids growing up . It was not hard. In fact i had and ideal growing up. Being in Nebraska City in the forties and fifties and sixties was a young one wonderful place for people to grow up we look back and say we had the most wonderful way it we did not realize it. Now my father was in business with his father and then when my grandfather died he bought the assets from the estate my father would have liked me to be in business with him he encourage me to go to Engineering School but i had no intention to go into that business. I tried as a young person but you have to have talent with your hands and i dont. I couldnt conceive of the mechanics necessary you have to understand where to cut and nail and i just didnt have that. I couldnt wait to get out of Nebraska City even though its a wonderful place to get on grow up but i was ready for new adventures. My father would have enjoyed me coming into business with him, he knew i would never do that. He even counseled me when he fired me and said you just will not make it as a carpenter. Youre not good at working with your hands even though you think that would be stressful he was comfortable asking me to leave and i was happy you are asking me. I dont want to disappoint you im pleased you are not disappointed. With the other aspects . I never did feel any shortcoming i tried to play sports but it just didnt work if i tried to catch the ball it would hit me in the face. And i felt like a grownup. I was a little boy i had a paper route i would take my dollars into the bank and go up to the teller and hand my passbook savings and that teller would take the information provided in the passbook it would make me feel grownup that was a feeling that nothing would replace so working to make a few dollars into the bank account was probably the 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. And the first my parents were raised in the depression so there is a different attitude we should do with your work. You talk about you had freedom but also responsibility. That seems like such an american concept to me. Thank you. I felt responsible to my mother and her especially i didnt want to do something that would make her feel embarrassed we all understood that we had a certain place in the community and we needed to work to maintain that place although i had no idea what was happening at the time as a look back, i always knew i should be responsible but i also do i could go anywhere and do anything. Host told the viewers of the story of the family able how many generations back but that seems to be a seminal moment. For that generation it was at a great lesson for me to learn what my mother told me that story i was a young man. My grandfather was a successful farmer in manly nebraska being a successful person in that community meant the rows that you plowed were straighter the hogs got fatter and then the other thing is that the Catholic Church in the small town offered the first pew to the family that gave the most in the second and that sort 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 took your risk and put the Interest Rate that you thought would be something relative to the risk taken 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 but then the market grew as the economy grew and had a demand for Agricultural Products so during the twenties times were good so my grandfather had a farm on which they had a mortgage and as soon as they had equity they borrowed against that for the next farm for the next kid if they had equity again they built that inverse pyramid of debt but of course it did and we went into the depression. That he did raise cattle in his dream was to leave the cattle operation to him and his sons so that you have on the side of the barn but before they ever got old he bought this bull. The ball had a disease of the mouth or tuberculosis. But it was a prized bowl and when he brought it home it was a party in the farmyard and they brought them in tables were taken from the house and everybody brought some food and people would play games one of them that the man word bet how many eggs they can put on their back before they would roll off so my grandfather was in his heyday because he could show off the ball bull to have the herd get bigger and better. When he got the decision from the state his animal had this disease, he lost all control than the state took control it was before current science new. So the whole herd had to be destroyed and then of course he didnt have the money to make the payment on the loan that was like pulling the fulcrum out of the interest pyramid and everybody lost their farm also before any kind of social welfare. So when he lost the farm he moved to Nebraska City to work in the packing house but he had a nervous breakdown so he never worked 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 so the whole family went to work to support the family. But here is a man who had a very Strong Social position and a good farmer and had to move into a house with the dirt floors they went to the least expensive thing they could find they had floors like a log cabin. It was very much of a come down and hard times for the family. He never did recover. It had a big influence on my mother and she told me that story many times. Did you take a lesson from that story with ameritrade . I did i always had to say to myself be ready to fail. Be ready to lose all your dreams and start over entrepreneurs great jobs. Com and one of them that i interviewed says entrepreneurs fail and then we get back on the horse so as an entrepreneur you have to understand eight out of ten new businesses fail and your risk is quite high but if that happens and you really the entrepreneur you get back up and try again. Another important moment with the buzz saw in your fathers business and the importance of innovation and technology. It is an important part of the story and then i point out because after we were successful with technology around the turnofthecentury , everybody thought i understood technology and with that understanding allowed me to be successful but the reality was i didnt understand it i just understood what it could do like the buzz saw and thats where my mind went and i got the idea. They dont know i dont know about technologies so how do i take advantage of that . So went back to the afternoon when my father used the buzz saw and how much more construction they could get done. Is this the idea you dont have to know how a car works just to know what it can do for years. Correct. Same thing. Host it seems again from reading the book that technology was always a hurdle you were trying to get over and you thought you had a solution that it would be obsolete by the time you implemented it and a lot of money was spent and then cycling through to figure out the technology and it was as simple as the innovation for people to dial a phone number to make a trade and it seems like every time you thought you had the edge on technology you were behind the eight ball all over again. It is correct but its amazing to think where we started with a touchtone telephone the latest technology in 1975. And a piece of paper. If a trade was made we recorded it in the book and then it went on the ledger sheet. And as we said in the book everything is done by hand. It didnt take long to learn we could continue in the first we all want the business to go so we had to have the automation to help us out. The First Company with Computer Research and that was a teletype machine. And that had a tickertape and then to set the telephone in a folder and then it would give the beats and then get the information to the computer in philadelphia. Now if there was static on the line the information was incorrect. So the company in philadelphia would receive the information so all ledgers the shes and confirmations are good enough in chicago . That was supposed to happen overnight. Very seldom did it there was a snowstorm or something we normally god it today later and then we have to go through to pick up all the mistakes and get it corrected. So it was much more efficient way but also to have mistakes and in some ways it was very inefficient because we were ready to do the business that day to answer the phone and write the tickets and not spending the time to do the business of two days ago to correct the errors. So it wasnt too long im very happy we had it. It was a good steppingstone but we realized we needed our own system. But i never heard of the word software. So then back in 75 its hard to realize it wasnt that long ago these things the world is completely different than it is today. In the book i talked about dave kellogg who was 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. I would have taken a huge risk to even get that done was amazing. Right there online andt works and people feel good about it. To have that be an object if nobody had the concept that you could do that. The day gave them to the clerk to call in and get a callback. Years later when we could report that execution within six seconds its truly remarkable. To be aware of the information that was something that was remarkable, absolutely wonderful but we didnt dream it or have any concept of 1975. Guest . It was prosperous and as thats what did it for you . Guest thats part of it. The other part was i wasnt too happy with my job. I wasnt excited about where my career was going and since i had been a reporter i knew i wanted my own business but i didnt have any capital or way to get any capital so being a commissioned salesman was the next best thing and at the time i went through covering the magazine and they were making a lot of money so thinking that i could have the opportunity to put in my pocket the compensation relative to the Commission Job and do it in a way that is related to the Securities Investment market was the most attractive i could get. So when i understood what happened, i had to go there so i went to omaha to apply for jobs i didnt have a College Degree and all the manager said is we dont even look at somebody without a bachelors degree up to take care of a family and where and how i could go back to school and then i went back to college to get my bachelors degree. The idea that i would make a lot of money as a stockbroker was incredibly attractive but it just so happened i got registered at the top of the market in the late 1960s he is the one thats really sad somebody is going to break ranks and headed to offer price is at a lower price because he was experienced in the business and competition. Bob perlman is the one t