The harder you work, the luckier you get!

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Today marks the drop of Joe Ricketts’ memoir, The Harder You Work, The Luckier You Get, a book to which I contributed and within which I am portrayed.

Joe Ricketts is the founder of Ameritrade, and he was my boss. I was initially hired to run marketing but was quickly moved to the more historically interesting job of leading the company to the Internet (with a capital I, because back then it was spelled that way). During the creation of this book, I was interviewed several times and it’s hard to remember everything I said, but I do think the following story will be new.

In the fall of 1995, we launched the world’s first internet trading site under the brand, Aufhauser. Aufhauser was a scrappy New York based brokerage which we had recently purchased – I think largely to provide us some NY street cred which as Omaha “bumpkins”, we were in desperate need. Aufhauser had been uniquely using the internet as a platform for messaging between clients and brokers.

Understand that at this time, no one had ever traded stocks on the internet. In fact, No one had ever paid a bill on the internet, transferred money on the internet, or even viewed a statement on the internet. We were the absolute first financial services company to have a functioning website! We may have been the first to have any website, but I am not certain of that.

From a technical perspective, it wasn’t that difficult. We already had a call-and-response system (an API) created for our touch-tone phone application so we could get the information to the client’s web page. The real challenge was navigating the unexpected objections of just about everyone!

One of my favorite brouhahas from the period involved the exchanges (The New York Stock Exchange and NASDAQ), the regulators, and our compliance team. They all hated me, and I like to think Arthur Levitt, Chairman of the SEC at the time, may have even known my name (but he probably did not). The issue, which has been thoroughly eliminated since, was real-time verses delayed stock quotes.

Randolph and Mortimer Duke. Old-timey Brokers.

You see, the exchanges did not want regular-guy investors to have access to real-time stock quotes. Old-timey stockbrokers (think: Randolph and Mortimer Duke, left) were big clients of the exchanges and access to real-time quotes was one of the reasons people had brokers. Every time that phone rang, the broker had a chance to push another transaction and trade commissions were hundreds or even thousands of dollars per trade. As a result, financial service companies who wanted to share stock prices electronically did so by delaying the quotes by 20 minutes.

But the regulators – the people from the executive branch of the government who enforce laws – required that every trade be preceded by the presentation of a real-time quote. Even if an investor wanted to buy a stock and hold it for 20 years, he had to see the actual price at the time of purchase.

Previous electronic systems such as Ameritrade’s touch-tone trading and clunky Accutrade for Windows had located a compromise wherein real-time prices would be delivered at trade-time and delayed prices would be used everywhere else. This was the model we were following when we launched. Business was slow at first, but within a few months people started to take notice, and I got a call from compliance.

Um, yeah…

I don’t remember who worked in compliance or who called me, but over the years I have inserted Bill Lumbergh into my recounting of the story. “Um, yeah”, drawing out that second word as long as possible, “we are going to need you to stop using real-time quotes on the internet.”

Compliance was the organization in our company – any company – that ensures that laws are being followed down to the letter but also that contracts are being adhered to. They watched our every move and scrutinized every application we built. The internet was untested territory and, although I am speculating, our recent success had been noted by brokers who were pressuring the exchanges to keep professional tools out of the hands of retail investors. The exchanges were very clear that this violation put our service with them in jeopardy. In no uncertain terms: to continue would risk our access to real-time quotes altogether and threatened our ability to stay in business.

Adhering to their request required choosing between two untenable options. We could provide delayed quotes at trade time – and be in violation of the law, or we could stop allowing trades over the internet all together. I thought hard about this before going to Joe Ricketts with my thoughts. Joe and I had a great relationship at the time. I had shown him I was capable, I had made a positive impact, and he gave me more than enough rope to hang myself and the whole company.

I returned to my team with the news. “Fuck it, we are moving forward as is.” I expect that, at the same time, Joe was on the phone warning compliance to buckle up because the next week was a bull ride worthy of a rodeo. Compliance was fighting with exchanges, exchanges were fighting with regulators, and regulators were trying to figure out how they had gotten stuck in the middle of this. I took calls from all sides, received an earful, and was called an upstart (maybe more than once). But at my core I knew that efficiency always prevails over the objections of those profiting from that efficiency. Our business depended on exactly one outcome, and I was confident it would come.

And it did. The law won out, and the exchanges agreed to allow real-time quotes in certain situations and in return for a hefty sum every time one was presented.

I remember a year following this event, Amazon announced that for the first time, they had surpassed $1 million dollars in a single day. No one called us for that story, but we had been doing 100 times that for months. According to a recent story on NBC, TD Ameritrade now processes nearly 1 million trades (and an estimated total value of $1 billion) per day.

This story started off as a classical example of the exchanges’ channel conflict – one company profiting from two clients who had competing business models. In retrospect, the resolution was the moment when the new disrupted the old, the tipping point was reached, and the paradigm shifted. When that happened, every obstacle to internet trading had been eliminated, the industry was allowed to rush forward, and it did. I am proud to have been there.

Yup, I’m entitled.

I am a white male who was raised in a middle-class subdivision and a nice house. We had a sledding hill in our front yard with a wide oak tree at the bottom that – as legend has it – was standing there when Ulysses S. Grant traveled the Stagecoach Trail on his way to Galena in the 1860s. The town was Rockford Illinois, a place where no one visits, and no one leaves. We had a train station there once, but it closed. Then we lost our bus station too. Rockford in the seventies was a town where residents grew up thinking that the big city – even one as close as Chicago – wasn’t for us. Where people thought airplanes were for fancier types, and international travel was, well, not even invited into our imagination.

I was entitled to be raised by a single mother. My father had never been one long for employment, and so when he left, my mother was left with no prospects, no alimony, and no child support. Still, she was entitled to the “American Dream” and she vowed to keep that house. It was the foundation of what was left of our small family. Towards that goal she worked multiple jobs while going to school in pursuit of a teaching certificate.

My mother and I. The early days.

I was entitled to have a mother who turned out to be a great public-school teacher. She was loved by her students and her parents. Yet, every fall she suffered through strikes or pink slips. Once at the end of a RPS strike, she inadvertently crossed a picket line to get her classroom ready for her returning students. That afternoon she found her tires slashed in the school parking-lot. The cruelties and challenges she suffered on my behalf are almost too much to consider.

In junior high school I was entitled to receive free lunches from taxpayers. Free-lunch kids had a special line that snaked through the lunchroom at the busiest time of the day. Those better off heckled from their seats and threw uneaten food at us – alms that not even the poor wanted. Cheers went up for face shots and extra points were given for making one of us cry. I stopped eating lunches and was entitled to have a school library where I could pass that 45 minutes for the next two years.

When I was in high school, I was entitled to become a hoodlum like my peers or get a job. My mother helped me with that decision. Now, this was Rockford Illinois, the most depressed city in the country. Minimum wage was $3.35 but with unemployment over 20%, minimum wage was a king’s salary. I took a job washing dishes for $2 an hour working weekend nights from 8:00pm until 4:00am. I was 14. I would go home at the end of the shift with $16-cash in my pocket. On school nights I could go home at midnight.

I am grateful to have been entitled to leave Rockford – alive. My first friend to die was my childhood best friend, Paul Ogilvy, who died of cancer at age 21. Jim Roberts who lived across the street from him followed soon after with a shotgun in his mouth.  My dear friend Debby Warden was a drunk driving casualty as was Renee Ring and Glen Nichols.  There were a couple others too. Oh, and we should not forget poor Tammy Tracy, sister to my first-grade bestie, Darren. Her teenage body was found in a cornfield. All this before I was 21.

I was accepted to the University of Chicago where I was entitled to get my ass kicked and make the best friends a fella can make. My mother couldn’t pay for it, so I got through by “beg, borrow, or steal” – which really means borrowing and working hard. School was difficult, and I joked, I was fired from more restaurants than my classmates had eaten in. It took me an extra year, but I made it through.

After college. I was entitled to find a job, quit, and find a better one. Then I was fired from that job and found a better one anyways. But then, I quit that one and finally found an opportunity in which I believed. I was offered the opportunity to invest, and I was entitled to risk everything I had (and everything I could borrow). I took a speculator leap knowing that if it failed, that burden was no one’s but mine.

But it didn’t fail. And with financial success came a generous life with my wife, my family, and my community. I was entitled to enter semi-retirement, get involved with charities, help in a meaningful way, and make gifts larger than I ever would have thought possible. I take great pride in knowing that I have made a positive difference in the people’s lives.

As my children aged and needed me less, I found myself desiring to return to the corporate world. I missed the camaraderie and shared goals of working as part of a team. But finding a job did not come easily, and I readily saw how dispassionate hiring managers can be. As a male in my late 40s who had not worked in more than a decade, I suffered intentional bias, unintentional bias, ageism, and sexism – all the while reminding myself that every obstacle was surmountable. After many years of learning how to get around those people, I finally landed a great job where I am using all my entitlement to make a positive impact on culture, efficiency, and revenue. It is from there that I write this post today.

Like many who succeed, I have been entitled my whole life. I have been entitled keep a positive attitude. I have been entitled to show compassion learned from hardship. And most importantly I have been entitled to believe we are entitled to something better than the lot we were given.

So yup, I’m entitled. And even if I’m not, that’s my story and I’m sticking to it.