IF YOU'RE AMONG the few million men and women who traipse through Manhattan on any given weekday, you can't escape Michael Bloomberg (Eng '64). As the escalator up from the tracks at Penn Station crests, the first thing you see in the main concourse is the enormous arc of a billboard touting Bloomberg News Radio. The electronic bulletins that march across one side of the Morgan Stanley building in Times Square include business headlines from Bloomberg. Climb into a taxi, and the bus in front of you has a placard on the back that reads, "More. Better. Bloomberg!" Bloomberg is on the radio, Bloomberg is on the television, and Bloomberg is all over the business sections of most of America's major daily papers.
Bloomberg the man started Bloomberg the company (now known as Bloomberg Limited Partners, to be precise) in 1981, and has built an operation that, by his estimate, has 10 to 15 percent of the worldwide business information market (at least one industry estimate gives him more) and generates revenue at a clip of $850 million per annum. He owns a New York radio station and, by his estimate, syndicates radio programming to 80 percent of the American market. He has four television operations. His business news service employs 410 editors and reporters in 66 news bureaus that are found, among other places, in Cleveland, Santiago, and Jakarta. His eponymous data terminals, which remain the heart of his business, sit on 62,000 desks. He publishes magazines and books.
If you accept Forbes magazine's estimate--Bloomberg does when it suits him--he's personally worth $1 billion. To Hopkins, of course, he's the new chairman of the Board of Trustees and the $55 million man--donor, in 1995, of a gift so big one faculty member quipped that the university might soon rechristen itself if Bloomberg agrees to add an "s" to his first name.
Thirty years ago he was making $9,000 a year as a clerk at Salomon Brothers. Now Bloomberg is one of the country's richest men.
Never underestimate the power of a simple idea.
MICHAEL BLOOMBERG'S simple idea was to take all the data that financial traders had to look up by hand 15 years ago, computerize it, and make it accessible from a desktop terminal. That was the beginning of the global operation now headquartered in midtown Manhattan. Tell the guard in the lobby of 499 Park Avenue where you're headed, and he directs you to a special elevator. Bloomberg L.P. not only has its own elevator, it has its own elevator button--there on the wall is Up, Down, and Bloomberg.
The company occupies several stories of the building, but every employee must pass through the 15th-floor reception area. Access to the other floors is via a spiral staircase that constantly bustles with traffic, like the stairway of a school that's always changing classes. Just past a large aquarium (aquariums full of intensely colored salt-water fish are all over the Bloomberg offices) is a large snack bar well stocked with free food. The boss believes in the salubrity of mingling. He wants employees from all parts of his company to keep running into each other in these common areas, to share tips, ideas, news, and energy.
On this Tuesday morning the place is indeed humming with Bloombergians, all wearing company IDs hanging from neck chains or clipped to their clothes. They look to be in their 20s and 30s and every last one of them is in rapid motion. To enter commands on a Bloomberg terminal, you hit a green key marked [GO]; everyone scurrying to and fro this morning seems to have his or her personal [GO] button permanently depressed.
So does the company founder. The two words that first come to mind upon meeting Bloomberg are compact and alert. He is a trim man in his mid-50s, not very tall, with sharp features that, one imagines, easily shape themselves into pugnacity. To a conversation he brings a disarming directness, considerable self-confidence, and an array of practiced answers that, like a politician's stump speech, tend to show up in more than one publication. For the last five years or so, the business press has been intrigued by Michael Bloomberg. He does not seem to mind the publicity.
Instead of an office, he simply has a desk in one corner of the Bloomberg broadcast newsroom. For private conversations, he steps back into a small, glassed-in alcove decorated with mounted articles about himself and models of aircraft he has flown. As it's noon, he orders lunch: servings of hot-and-sour soup delivered by a young man wearing a necktie and a ponytail. After he leaves, Bloomberg says, "Why does my receptionist have a ponytail?" Shrug. "I dunno."
Bloomberg--who pronounces his name closer to Blumberg-- has a reputation for impatience and profanity, but today he's relaxed and mostly clean spoken. He must enjoy talking to reporters about guy stuff like rollerblading, pretty women, and flying airplanes, because few stories about him are without a paragraph or two of that sort of thing. Today he begins by describing what it was like to go up in a jet fighter with a pilot from the Navy's precision team, the Blue Angels. Bloomberg is an avid flyer who often pilots his own helicopter to Baltimore for trustees meetings, landing on the athletic field next to Garland Hall. After describing a brief urge during that Blue Angel flight to fire his ejection seat, just to find out what that ride would be like, he settles on a sofa to talk about his company, pausing frequently to jot down on a card lists of all the things he has to do later.
Bloomberg launched his company after leaving Salomon Brothers in 1981. He'd had a successful run at the venerable investment house, rising from clerk (1966) to partner (1972) to head of equities trading (1974). But during his tenure he watched Salomon change. The company known on Wall Street as Solly transformed itself from the scrappy, close-knit, remarkably agile partnership it had been during the 1960s and '70s to a bloated, arrogant, and ultimately scandalous circus that was scathingly portrayed in Michael Lewis's book Liar's Poker. As Bloomberg tells it, he was not shy about voicing his disdain for the changes he witnessed as the company entered the go-go 1980s. When the commodities trading firm Philbro acquired Salomon's assets in 1981, management pointedly did not invite him to stick around.
As a Salomon partner, his personal take from the Philbro acquisition was $10-20 million in cash and convertible bonds. The true value depends on when Bloomberg converted the securities; he says he's not sure what the final figure was, but he uses the higher estimate. Whatever the tally, he had full pockets and time on his hands. So he decided to start a company.
"Nobody offered me a job," he says, "though it's also true that I didn't look for one. The thought of doing something on my own was attractive. I had the resources, and I'd done the big-company thing. As the kids say, ‘Been there, done that.'"
He pauses to make another note, then continues: "I rented a one-room office from a temporary office service. I went out and got newspapers and coffee, and at 10 o'clock, when the stores opened, I bought a little refrigerator and a coffee machine--you gotta have the basics. I remember spending the first day reading the newspaper a lot, but by the second or third day I had talked to three or four other people who had worked with me at Salomon, and they joined."
Bloomberg's intent was to pursue something he'd first experimented with at Salomon Brothers. In those days, if a bond trader--any sort of trader, for that matter--needed market information more complicated than prices, he or she had to look it up in bound volumes of charts and statistics. To do any sort of analysis, the trader had to do the calculations by hand. Bloomberg looked at this setup and thought, Why not computerize all this stuff? Computerize the bond data and make it rapidly accessible from the trader's desk by way of a computer terminal. While you're at it, build in analytic formulas, so the computer, not the trader, does the analysis. Create your own proprietary hardware, software, and database, and lease the whole deal as a turnkey operation--ring up Bloomberg, and the company would deliver and hook up a system ready to spit out data as soon as you hit [GO].
"I had some knowledge of this kind of system," Bloomberg says. "I knew enough about technology to know that I can't program, but I can tell whether you can program. I don't care about the code--I know enough to ask the right questions. For the first few months we bought or rented a few terminals. Remember, PCs weren't really around then. One guy started to write a few analytics, and another guy started to look at mini-computer manufacturers. We didn't talk about grand schemes of 50,000 terminals, but how to do 10 terminals."
Bloomberg was far from the first player in the computerized financial data game. Stock brokers already used terminals call Quotrons to get stock quotes. Dow Jones, publisher of The Wall Street Journal, had a competing product called Telerate. "Quotron had 80,000-odd terminals around the country," Bloomberg says. "Telerate had some large number, probably 40,000. They owned the business. It was inconceivable that those two companies would be displaced by somebody new."
Yet that's what Bloomberg set out to do. He scored a major break when Merrill Lynch, the giant brokerage company, ordered 20 of his terminals, and was so taken with what it saw that it staked him $30 million for 30 percent of the new venture (a holding that one recent estimate pegged at a current value of $600 million). About a year later, Merrill Lynch put in an order for 1,000 terminals, to this day Bloomberg's largest single order.
From the beginning, Bloomberg's terminals supplied information not found on the screens of his competitors. "Quotron had opening stock prices, closing prices, high, low, volume, and last sale for U.S.-listed stocks. And they had Dow Jones business news. Telerate had mainly government bond prices, and almost nothing else. What we did was collect data in a database, which lets you put it into a formula. Then we provided the formulas so that users could do something with the data." They could tap a few keys, hit [GO], and calculate the future value of bonds, project the worth of an investment portfolio under various interest rates, or analyze a security using several different variables. They could create charts and graphs, and track price histories. Bloomberg also contracted with Dow Jones to carry its business news. Suddenly, on a spiffy Bloomberg color monitor, traders could access data that formerly took hours to look up, sort, and analyze. And they could do it seconds.
His first sale outside of Merrill Lynch was in September 1984. In the beginning, Bloomberg concentrated on bond market data, leasing terminals to smaller investment companies; later he would add equity market information. Brokerage house analysts and global monitors at the World Bank also were early customers. He says, "Our strategy at first was to sell to the small buy-side money manager. Those were a few guys in one office and they made quick decisions. We went out and convinced these people to take one or two."
By targeting the buyers of securities, Bloomberg was correcting an information mismatch, and in doing so weighing in against big traders like his former employer. Salomon made money by brokering securities transactions and taking a small bite out of each one. It would convince Pension Fund A, for example, to buy $30 million worth of corporate bonds just issued by IBM, and it would take for itself a small fraction of that $30 million, say a fourth of a percent. It would then turn right around and convince Pension Fund B that those same bonds were worth more than what Pension Fund A had paid for them. If Salomon succeeded, Fund B would buy them from Fund A (which enjoyed a quick if modest profit), and Salomon would take another small slice of the pie. It worked to Salomon's considerable advantage if the buyers had no convenient way to estimate what the bonds might really be worth. With his new company, Bloomberg began to eat away at this information monopoly by giving buyers rapid access to the same data that the sellers had.
"What we've done is level the playing field," he says. "The fundamental change in the securities industry between 1966 when I went to Wall Street and today is that the relative power between the sell-side and the buy-side is dramatically different. It used to be that the buy-side would call the sell-side and say, ‘Hey, I've got money, what do I do with it?' Now, they call up and say, 'I want the following bids and offerings, and I want them firm, and I may not get back to you.'"
At this point in the conversation, Bloomberg looks up as a young woman approaches. "I'm sorry," she says. "Englebert Humperdink is here."
Sure enough, waiting a few feet away in the Bloomberg newsroom, is Englebert, in the flesh.
"He's the singer!" Bloomberg exclaims, then bounds out to shake Humperdink's hand. "Hi, Mike Bloomberg. You're a famous guy!"
Celebrities are not that rare in the Bloomberg news room--PBS talk show host Charlie Rose tapes his program from Bloomberg's studio. But Bloomberg seems to enjoy this little encounter, and doesn't at all mind that it happens in front of a visiting reporter. He chats with the singer for a few minutes in the newsroom, then returns. He has a small smile as he jots another note.
BACK TO THE MID-1980S: Bloomberg put a special button on the keyboard that provided his customers with a quick way to request new features, and he put up anything they asked for at the rate of 20 to 25 new services a month. Hit [GO] and your Bloomberg terminal lit up with every sort of arcane financial analytic, things with names like histograms, moving averages, candle charts, oscillators, stochastics, volatilities, sinking funds, option-adjusted spreads, butterflies, and betas. Customers asked for sports scores, and Bloomberg gave 'em sports scores and horoscopes and weather reports and even--for his Japanese customers--sumo wrestling results complete with images of nearly naked behemoths. His business began to grow as word of his terminals spread.
In theory, his competitors could have looked at what he was doing, copied it, then used their considerable resources to swat him out of the way. But they didn't.
"Big companies never respond very well," Bloomberg says. "There's a natural inclination for top management to not realize what's happening. Their staffs always tell them that things are good. What's more, if you're very big, dominant, and growing--which all these guys were as the securities business expanded in the '80s-- so what if a little guy comes along? You know, every month business is better. If somebody says, 'Hey, you know, this guy Bloomberg's a threat,' somebody else says, 'What are you talking about? Our sales were double this month from a year ago!' Had we gone up against small scrappy companies, I think we would have had a much tougher time than we did competing against giants."
BY 1988, BLOOMBERG HAD INSTALLED 5,000 terminals. The business information market was growing 20 percent per year. As he became an ever-bigger competitor in that market, Bloomberg figured it was only a matter of time before Dow Jones, owner of the competing Telerate service, would stop selling him the business news feed he carried on his terminals--something that Dow Jones still hasn't done but seemed likely to do at the time. Near the end of 1989, he decided the best way to provide his customers with a steady stream of news was to produce it himself.
Says Bloomberg, "I called Matt Winkler, who had written a front-page story about us in The Wall Street Journal about a year earlier. I said, 'What would it take to get in the news business?' He said, 'What are you smoking?' Or something to that effect."
As Winkler recalls their subsequent lunch meeting, he tried to give Bloomberg a taste of what might be in store for a data provider who simultaneously was a publisher: "I said, 'Okay. One day one of your reporters finds out that the CEO of Bloomberg's biggest customer for terminals has embezzled $10 million from his company. He's now in Rio with his secretary. Oh, and the secretary's wife is suing for divorce. Now...do you run the story?' Mike just smiled and said, 'Boy, are our lawyers going to love you.'"
The next day, Winkler agreed to join Bloomberg and create from scratch the business news service he now oversees. They began recruiting reporters and setting up news bureaus. In June of 1990, the first Bloomberg News Service story hit the screens of Bloomberg terminals.
"The news business is a simple business," Bloomberg says. "It's hard to make something complex out of it. It is judgment, it is hard work, it is writing skills, it is a publisher who has the guts to go with difficult stories. It's not rocket-scientist stuff." As for the conflict of his news reporters writing unflattering stories about his customers, Bloomberg adds, "You grit your teeth and you go with the news side. The editorial independence of a news organization is sacrosanct. The fact of the matter is, the customers are going to deal with you regardless. If they pull away, they'll go to our competitors, who are also in the news business, and the same thing will happen there, and they'll come back to us."
To boost the credibility of his news operation and thus open doors for his reporters, he decided to provide Bloomberg terminals and news stories at no charge to the nation's biggest newspapers. Today, more than 150 papers have Bloomberg terminals. Pick up a New York Times on any given day and you'll see the result. On August 20, for example, in the business section there were 23 stories taken from news services; 10 of them came from Bloomberg, with Associated Press, Reuters, and Dow Jones supplying the rest. The next day, the score was Bloomberg 12, Competitors 14.
"Most days it's half Bloomberg," says the boss. "That's impressive. When we want you to give us an interview, you jump. We're a credible force, boy." Though the company gives its news away instead of selling it, Bloomberg says, "in terms of impact on our company, it's phenomenally profitable. Lots of our business is done because people know who we are." Every Bloomberg byline is another little advertisement for the Bloomberg terminal.
Doug Feaver, business editor of the Washington Post, uses Bloomberg news, as well as feeds from Associated Press, Dow Jones, and Reuters. He wasn't that impressed with Bloomberg Business News at first. "You just knew each story was a press release being regurgitated," he says. "But they've gotten a lot better." Stories from Reuters, says Feaver, tend to be more polished and insightful, but less timely. "Bloomberg covers everything, and they get it up on the wire very quickly. They're more of a tip service. We use a lot of their copy." The graphics-intensive Post also uses a lot of Bloomberg-generated charts and graphs. "We could live without Bloomberg's words," says Feaver. "We'd have a hard time without its data."
TWO YEARS AFTER his news service produced its first piece, Bloomberg purchased a New York radio station, WNEW-AM. In January 1993, Bloomberg Business Radio began broadcasting business news 24 hours a day from what was now called WBBR-AM. Bloomberg terminals began carrying the station through an audio feed.
Why go into radio? At the time, professional observers of the industry expressed doubts that Bloomberg would do anything but lose money on WBBR. Bloomberg, who doesn't think much of this sort of analysis, professes little concern: "One, our clients need information while they're driving a car, showering, or jogging. The only practical way is over the air. Two, the more distribution that our news gets, by whatever means, the more people are willing to talk to us. Even the entertainers come in. Englebert Humperdink walks in to see us--we don't go to him. We haven't built big ratings in New York, but we have syndication now through 80 percent of the country. It's not quite making money yet, but it's getting there. And radio was the genesis of our television business. TV's just radio with pictures."
His television business, launched in 1994, now includes Bloomberg Information TV, available through the DIRECTV satellite service, Bloomberg Business News on public television, and two programs broadcast on the USA Network, Bloomberg Personal and Bloomberg Small Business. Anyone with a Bloomberg terminal can receive Bloomberg Information TV. The programming comes across one quadrant of the monitor. On a regular television tuned to Bloomberg, there's a lot going on at once. Headlines scroll on the left side of the screen, while a talking head performs on the right. From bands across the bottom, you learn that it's going to be hot today in Dallas and that hog prices are holding steady in Ohio.
To feed this insatiable media beast, Bloomberg has created what might be the world's first corps of multimedia news reporters. Mary Thompson, one of those reporters, produces several two-minute radio updates each day without leaving her desk. Her beat is the bond market. When it's time to do a report, she gathers the latest information from the Bloomberg terminal sitting to her left. She writes the report on her computer, reaches overhead for a microphone, and records her radio spot. The report is recorded digitally, so she can edit it herself on the same computer she used to write it. When she's done, she slots the report in the computerized rotation that feeds stories to Bloomberg Business Radio. All without moving from her chair.
Thompson also does a few four-minute television reports each day. For these she must actually get up and walk to a corner of the newsroom, where she stands before a pair of cameras, reads her script from a teleprompter, and cues her own graphics from a console at her fingertips. The report goes out as a live feed, just like in the early days of network television. Thompson also does conventional business reporting, calling sources and conducting interviews. These stories go out on the wire service and appear in print. Her reports also show up on Bloomberg terminals and, sometimes, on the Bloomberg Web site on the Internet. She's a one-woman multimedia production company, and the Bloomberg Radio newsroom has 35 more just like her. It's a streamlined operation, functioning without the usual staff of broadcast producers, directors, and technicians.
Performing what at other companies would be separate jobs is typical for the members of Bloomberg's operation. No one has a title, not even the boss. There are lines of responsibility, of course: reporters have editors, staff members have supervisors. But Bloomberg encourages his people to move around the various parts of the company, learning different jobs, exchanging ideas.
He says, "I want to run this company as a family, the way we ran it when it was small, the way Salomon Brothers used to be. If we succeed because of a technological advantage, we're not going to succeed for very long. No technological advantage lasts in this day and age, it's too easy to replicate. The thing that is hard to replicate is our culture. The most important part of it is our openness. We don't have a well-defined management structure. We let lots of people do lots of different things. We move people around from one job to another, from one branch to another. All of our policies encourage cooperation and openness. You take good people, you let information flow freely, you let them be exposed to each other all the time...it's quite amazing. People come up with great ideas and do great things. My job is to bring in that culture, get it going, and then stand back and let everybody do his or her own thing. The profits will take care of themselves."
The culture Bloomberg speaks of is one of urgency, initiative, long hours, and complete loyalty to the company. Take ownership of a project and do it now. Tank up on the caffeine and sugar dispensed by the snack bar and [GO] [GO] [GO]. On a tour of the office, the company guide may reveal more than she means to when she leads her guest into the newsroom and says, "This is where our reporters live and work." Bloomberg has been quoted to the effect that one purpose of all the free food is to keep people from leaving the office for lunch; he wants them at their desks, working. He freely admits that he seeks workaholics. If you're a young, ambitious, urgent, caffeine-fueled hotshot, you probably thrive on the Bloomberg corporate culture.
If you're not, you burn out and seek opportunities elsewhere. In 1995, the Columbia Journalism Review found some former Bloomberg reporters who were less than enamored of the company's workplace ambience. Said one, Hal Davis, "They're grinding people into the ground. I've always been a workaholic, but Bloomberg turned me into a recovering workaholic." In the same CJR story, Barbara Garson, author of The Electronic Sweatshop, said bluntly, "Bloomberg is hell."
It seems to come down to what sort of person you are. Radio reporter Mary Thompson says, "The three most exciting companies in America are Microsoft, Fidelity, and Bloomberg. I came here from Fidelity, so I've worked at two of them."
BLOOMBERG L.P. CONTINUES TO GROW. Each month, it installs 1,100 more terminals at $1,150 per month. Its competitors periodically make noise about devising a new product that will be the "Bloomberg killer." Their target responds by adding more services to his terminals. The August issue of Bloomberg magazine, which is mailed to everyone who has a terminal, lists nine new features, including a search function for convertible securities, a quick yield analysis for collateralized mortgage obligations (don't ask, it's complicated), and worldwide airline information.
Though it's still smaller than Dow Jones/Telerate and especially Reuters, which dominates outside North America, Bloomberg L.P. is gaining ground.
MDI: The Market Data Industry, published by Waters Information Services, estimates the global financial information market to be worth $5.2 billion. Reuters is still very much the leader, with about 52 percent of the pie. Second, says Waters, is Dow Jones/Telerate, at 21 percent, with Bloomberg next at 17 percent. In North America, Bloomberg is second only to Reuters. Says David Longobardi, Waters's editorial director for North America, "Worldwide, Bloomberg is right on the tail of Dow Jones/Telerate. And the story is he's closing fast."
Analyst Brian Stansky, of the investment firm T. Rowe Price in Baltimore, says, "Reuters is one of the best-operated companies that I follow. It's not like Bloomberg's competing against low-grade people. But he's got a product that people want. He built a better mousetrap, and some of these other companies were asleep."
They haven't all stayed asleep. Reuters failed with its first try at a Bloomberg killer, but some analysts believe its newest competing product, Reuters 3000, may finally give the Bloomberg terminal a run for its money. They say he may need to adjust his pricing structure, and gear more of his company's efforts to feeding the Bloomberg data stream to his customers' desktop PCs instead of to his proprietary hardware. But at the end of a conversation concerning Bloomberg's prospects, one industry analyst concludes, "It's hard to find a weakness."
Since he founded the company, Bloomberg has done nothing that, at this juncture, looks like a major blunder. By the end of the year, he hopes to have bought back one-third of Merrill Lynch's share of the company. He scoffs at speculation that he'll take the company public one day. He says he doesn't need the hassle and doesn't need the money. "I was able to give Hopkins $55 million from what I've made from the company," he says. "How much money do I need?" ("I don't know," counters an info market analyst. "That's a lot of money [from a public offering] to turn down.")
What worries him is not how to compete with the big guys. He's convinced that he knows how to do that. What worries him is that somewhere, somebody is sitting in a temporary office with a coffee machine, a newspaper, and the next big idea. That is, what worries him is the next Michael Bloomberg.
He knows he must keep his burgeoning operation light on its ever-growing feet, but how to do that? "That is a good question," he concedes. "I hope that management style will do it. It's a constant battle to keep the bureaucracy from growing. There will always be some reason why we need to add one more form. There will always be some reason why we have to have one more written policy."
Now that he is chairman of Hopkins's Board of Trustees, he has said he will be devoting a significant portion of his time--up to one day a week--to Hopkins. That can get complicated given his hectic schedule. Lately, it's meant three-hour conference calls from Paris in the wee hours of the morning and flying in from Brazil to host a dinner for new president William Brody. "There are new challenges all the time," he says. "The whole change in East Baltimore at the medical institutions will present enormous opportunity as well as great challenges. It's very hard to deal in this world when everybody in health care is out to reduce prices and there's so much competition. We're going to have our hands full."
Where does he go from here with his company? "I wish I knew. I don't have a 10-year plan, or even a five-year plan. I have a one-year plan that I'm skeptical about." He describes a newspaper of the future as an electronic medium, a large sheet of flexible material that will still look and fold up like a newspaper, but will receive, via satellite like a flexible data terminal, whatever the reader orders--maybe sports from a local paper, national news from The New York Times, and political coverage from the Washington Post. He describes this vision with the implicit suggestion that if it comes to pass, Bloomberg will have a piece of it.
"We are going to improve every one of our products," he says. "We are going to enhance the skills of all of our people. And we're going to fight the bureaucracy so people here can create. They'll figure out where we go."
Make that [GO].
Dale Keiger is the magazine's senior writer.
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