YouSaid · the spoken record

Joe Ricketts

lines on the record: 89
first: 2019-11-28
most recent: 2019-11-28
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“There was nothing you could buy. Nobody would tell you nobody would teach you. We had to learn everything the hard way, which meant we threw a lot. We threw away a lot of software because we built it. And the guys running the software building teams really didn't understand exactly what we wanted. We tried to tell them as best we could, so they did it and we found, well, that doesn't work. Here's what you have to change. So it was a trial and error method. But at the same time that it was awfully high in anxiety. It was exhilarating. Because you were conquering a new world. And so was a lot of fun from that point of view. But the anxiety came from you. You just really didn't know what your costs were going to be. So we finally got to the point where we knew what our costs were going to be and it was much more of an easier management job.”
2019-11-28 · Masters in Business · Joe Ricketts Discusses Trade and Deregulation · IDENTIFIED FROM THE TRANSCRIPT · source
“So once we understood what we had to do, Dave Kellogg was a genius that put it all together for us. We found out pretty soon that we outgrew that, although we spent a couple million dollars. Huge budget for us at the time. We had to do something new and different all the way along. We discovered there's really three pieces of technology that we had to have built in order to make the system work. When we got to the middle 1990s. The first was our account base and keeping records of all the trades in our customer accounts. The second was how the customer places their trade from their computer to our system, and then we had to have a piece of middleware, which would take that trade, send it to the market, come back and put it in our customer account. all that software had never been built before”
2019-11-28 · Masters in Business · Joe Ricketts Discusses Trade and Deregulation · IDENTIFIED FROM THE TRANSCRIPT · source
“That's correct. And we found out right quick if we were going to do very many trades, we couldn't do that anymore. So we had to really get into the computers. The first computer system that we got didn't work very well, and pretty soon our volume really didn't allow us to use it. So we had to think about getting our own computer. So I was one of those people that thought, well, we get our computer and we'll be okay. It'll last us forever. Somebody said, boy, you need software, and I'd say, What software?”
2019-11-28 · Masters in Business · Joe Ricketts Discusses Trade and Deregulation · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, one's our customer files, one's our company files, and then at the end of the month, we'd have to type up the confirmations and the month-end statements and send out to customers.”
2019-11-28 · Masters in Business · Joe Ricketts Discusses Trade and Deregulation · IDENTIFIED FROM THE TRANSCRIPT · source
“That is correct the whole time it took a long time for us really to come to the conclusion about what we had to do. But let me describe what it was like when we started. In 1975, we wrote an order on ticket. Our office lady called in the trade to the exchange. We got the report back written on the ticket. And then she would take that copy of the order ticket and write it down in a ledger, all the trades that we did that day, and then she would write it down on another piece of paper cardboard for that customer. And they were set in a bin. This was like Christmas Carol. It was like Charles Dickens.”
2019-11-28 · Masters in Business · Joe Ricketts Discusses Trade and Deregulation · IDENTIFIED FROM THE TRANSCRIPT · source
“So that was the dream that I had. But if we went public, that changes. You're no longer a private company, you're a public company, and the dynamics of who's going to run it and all that changes. But I realize that online trading was an inflection point in the history of not only the brokerage business, but in the history of investing. For all time. And if I was going to take advantage of it, I was going to have to move. And I wasn't, although we were making a large amount of profits, not enough for me to build the technology and advertise. So that's when I said I have to spend $100 million on advertising and a hundred million on technology. And those were guesses. Budberry, they turned out to be low”
2019-11-28 · Masters in Business · Joe Ricketts Discusses Trade and Deregulation · IDENTIFIED FROM THE TRANSCRIPT · source
“Anything else? Those were the two. We did a number of other commercials that had humor in them. off of certain things in a culture, but those were the two that were the biggest and the best.”
2019-11-28 · Masters in Business · Joe Ricketts Discusses Trade and Deregulation · IDENTIFIED FROM THE TRANSCRIPT · source
“Oh, yeah, it's iconic. And he took that ad took over the whole industry. And he made a comment in that ad, let's light this candle. That's right. Let's light this candle. That became a standard quotation in the security. But that got us a lot of attention. So using humor to get across the idea that we had a low cost with good executions was something that really permeated the market and really made us grow.”
2019-11-28 · Masters in Business · Joe Ricketts Discusses Trade and Deregulation · IDENTIFIED FROM THE TRANSCRIPT · source
“And then they giggled. They were so happy that they were able to buy a stock at such a low price. Those ads really set us off in a different direction But the ad that really made us was an ad with an office boy. His actor named is Michael Morona, if I remember back that frame. And he instructs his boss on how to place a trade online.”
2019-11-28 · Masters in Business · Joe Ricketts Discusses Trade and Deregulation · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, that's correct. And I think there were seven or nine of them. And I said, I've got to cut through the crowd, guys. We've got to do something new and different. And it seems to me humor is the way to go. And they said, no, that's wrong. People don't think of their money as funny. It's not light at all, and you're just not going to be successful. So they all gave me ads that were dull and boring, just like a bank. and accept Olgavi. Olgovi. Ogovi dared to come up with something new and different, and it was a person on the street that said they bought a particular stock, like General Motors, for 25 bucks. Well, General Motors selling for 50. So there was the play on the commission as well as on the price of the stock.”
2019-11-28 · Masters in Business · Joe Ricketts Discusses Trade and Deregulation · IDENTIFIED FROM THE TRANSCRIPT · source
“That's a big chunk of change. Was a big chunk of change. So we attracted advertising firms that were the top advertising firms in the country.”
2019-11-28 · Masters in Business · Joe Ricketts Discusses Trade and Deregulation · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, when we started, it was really kind of anxious. It was unsettling until we really did it. I was going to take our advertising budget, I think, from $25 million a year up to $100 million a year.”
2019-11-28 · Masters in Business · Joe Ricketts Discusses Trade and Deregulation · IDENTIFIED FROM THE TRANSCRIPT · source
“Full online trading and then the exchanges and the over the counter market developed systems of receiving those orders electronically, automatically executing them and reporting back. So it turned out over a period of time and huge investments on the part of everybody in the industry to bring this type of service to the customer, which is absolutely wonderful.”
2019-11-28 · Masters in Business · Joe Ricketts Discusses Trade and Deregulation · IDENTIFIED FROM THE TRANSCRIPT · source
“So we had to build all of that. Which is good because we learned the hard way. We made a lot of mistakes, a lot of software didn't work, throw it away, start all over, and do it again. But by the time we got all done, a customer could sit at home on their keypad of their own computer. Place a trait and get a report within seconds.”
2019-11-28 · Masters in Business · Joe Ricketts Discusses Trade and Deregulation · IDENTIFIED FROM THE TRANSCRIPT · source
“So we put the economies of scale in place to be able to increase our profits dramatically. Turned out to be a wonderful thing for us to do. We found out That the technology that Ofauser had really wasn't what I understood them to have, and it was more like smoke and mirrors. So the customer could use their computer at home to send the trade, but then it printed out at Offhauser and they had to have a clerk tear it off and put it back in to go the exchange. So they didn't have...”
2019-11-28 · Masters in Business · Joe Ricketts Discusses Trade and Deregulation · IDENTIFIED FROM THE TRANSCRIPT · source
“It turned out to be a Within two years Incredible. We really didn't have any understanding. But within a very short period of time, the Offhauser folks realized that they had put the price too low, and I had paid a bargain basement price. But the whole industry made fun of us on the day of the trade because they said we were stupid and that was way too high.”
2019-11-28 · Masters in Business · Joe Ricketts Discusses Trade and Deregulation · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, that's correct. It hadn't evolved to the point where we are today. So we talked to them about selling. And he gave us a price, which at the time I thought was incredibly high.”
2019-11-28 · Masters in Business · Joe Ricketts Discusses Trade and Deregulation · IDENTIFIED FROM THE TRANSCRIPT · source
“Lots of consolidation, and that was a lot of fun to go through that. In that that I really describe in a lot of detail in the book that was really attractive and they were advertising doing trades online. Now nobody had ever heard of online. Nobody knew the internet. Nobody knew what this was all about.”
2019-11-28 · Masters in Business · Joe Ricketts Discusses Trade and Deregulation · IDENTIFIED FROM THE TRANSCRIPT · source
“Everybody thought this was simple and easy. It's not, and of course everybody found out that it's not simple and easy. And so competition after a period of time allowed us and others to buy out our competitors. So today, you know, there's really only three or four brokerage firms in this area.”
2019-11-28 · Masters in Business · Joe Ricketts Discusses Trade and Deregulation · IDENTIFIED FROM THE TRANSCRIPT · source
“In Nebraska, we had about a million and a half people. I mean, a huge difference. So I had to go national, whereas he could really start local. I heard about, although we started in 1975, I first heard about this West Coast discount broker called Schwab in 1977. So he started after we got started, but I really didn't know he existed. The ones I did know existed advertised on the inside page of the Wall Street Journal, and they were from New York, and then one was from Chicago. So there was only a couple people in the business when we got started. Now, a couple years later, Barry, a few years later, we had 400 competitors.”
2019-11-28 · Masters in Business · Joe Ricketts Discusses Trade and Deregulation · IDENTIFIED FROM THE TRANSCRIPT · source
“Chuck Schwab is a friend of mine today, but at the time we were competitors, he had the advantage of having California as his customer base And I think at the time that was the night, California by itself was the ninth largest economy in the world.”
2019-11-28 · Masters in Business · Joe Ricketts Discusses Trade and Deregulation · IDENTIFIED FROM THE TRANSCRIPT · source
“They can print it out, and because it is on a PC, we can deliver more information. We can deliver our own tape, we can deliver research. And I said, this is going to be much more powerful than the Touchstone telephone ever was.”
2019-11-28 · Masters in Business · Joe Ricketts Discusses Trade and Deregulation · IDENTIFIED FROM THE TRANSCRIPT · source
“Have the touchdown. And I said, yeah, go ahead. We'll see what happens. So we executed that order and went back to the customer by email to report the trade. No voice communications. So it was very, very similar to the touchdown aspect of it. And I said, this is even better.”
2019-11-28 · Masters in Business · Joe Ricketts Discusses Trade and Deregulation · IDENTIFIED FROM THE TRANSCRIPT · source
“Because of the story that I just told you, I knew exactly the first time that we got an order. One of our clerks brought us a printed email message, which had buy 300 shares of a blue chip stock at the market. And they said, and of course we had the customers' account number and phone number. And the question to me was, should we go ahead and place this? Because we didn't talk to the customer.”
2019-11-28 · Masters in Business · Joe Ricketts Discusses Trade and Deregulation · IDENTIFIED FROM THE TRANSCRIPT · source
“Oh, that's unique. The people loved the power of taking care of themselves. They didn't want a broker. Once they used the system, They wanted the power of taking everything onto themselves and really they be the professionals that would call the shots.”
2019-11-28 · Masters in Business · Joe Ricketts Discusses Trade and Deregulation · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, they didn't want to use the surface, so I said I have to make it cheaper to attract their attention. And so I came out with a unique way of charging for a customer, three pennies a share. And so that was something that got through immediately. And so people would take the five minutes it took to learn how to use the system. Then what I found out was some people placed their trades so fast it would be impossible to move your finger that fast. So I called them up and I said, what are you doing? And he said, well, we are using a computer to program the touchstone system with the telephone number and with all the information of a trade. So we're sitting at home watching television and seeing the tape. And when the stock price gets close to what we want, we press one button and it'll go zip.”
2019-11-28 · Masters in Business · Joe Ricketts Discusses Trade and Deregulation · IDENTIFIED FROM THE TRANSCRIPT · source
“It was very innovative. And I went out to my customer base to form focus groups to ask them how they would enjoy this. And my answer was emphatically no.”
2019-11-28 · Masters in Business · Joe Ricketts Discusses Trade and Deregulation · IDENTIFIED FROM THE TRANSCRIPT · source
“That is correct. And the problem that we had to overcome was that people were not used to dealing with a broker that they couldn't see, touch and feel. So they're used to walking into an office and meeting the person. So they had to become comfortable with the systems that they were using in order for them to really do a lot of business with us. So they would generally start out slowly with small trades, and then they become to rely on us and that we got all their business.”
2019-11-28 · Masters in Business · Joe Ricketts Discusses Trade and Deregulation · IDENTIFIED FROM THE TRANSCRIPT · source
“And so our telephone rates for interstate calls long distance calls were anywhere from 10 to 20 percent lower than if we'd been in any other location in the country. And that was one of our major costs. So that gave us a cost benefit we didn't see when we started as First Omaha, but then we did see after we started advertising in the Midwest edition of the paper. That was so successful, we went to the national edition and we attracted customers from all over. So then we really kind of changed the name to First National.”
2019-11-28 · Masters in Business · Joe Ricketts Discusses Trade and Deregulation · IDENTIFIED FROM THE TRANSCRIPT · source
“It's really a long story, but we thought we would be... And we found out that we could not exist as a local business. So we advertised in the Midwest edition of the Wall Street Journal. There was a favorite spot on the inside of the back page in those times. Where all the discount brokers advertise. And so we advertised in that paper with an 800 number. Now something that was unique to us was that Omaha was the location of strategic air command? The federal government, the Air Force, paid Northwestern Telephone Company to put in a sophisticated communication system in case there was a hot war. Well, obviously there wasn't. So this communication system was not used. So the phone company dropped their rates on what was then a brand new idea, 800 telephone numbers where the caller did not pay for the telephone call.”
2019-11-28 · Masters in Business · Joe Ricketts Discusses Trade and Deregulation · IDENTIFIED FROM THE TRANSCRIPT · source
“Correct. So the market turned out to be quite huge. We just had to find a way to advertise into that market so that we could tell them succinctly what we were doing and make them want to respond to us.”
2019-11-28 · Masters in Business · Joe Ricketts Discusses Trade and Deregulation · IDENTIFIED FROM THE TRANSCRIPT · source
“The other idea that was important and there proved to be correct was that after the Second World War we had the GI Bill and a lot of men and women came back from the war, used the GI Bill to become engineers, pharmacists, and these people were educated well enough to be able to do their own financial planning and be able to make their own decisions.”
2019-11-28 · Masters in Business · Joe Ricketts Discusses Trade and Deregulation · IDENTIFIED FROM THE TRANSCRIPT · source
“There were two ideas that floated through our minds. Number one was we thought there was a large enough market of people that wanted to buy or sell a stock without any other conversation. They just wanted to place the order.”
2019-11-28 · Masters in Business · Joe Ricketts Discusses Trade and Deregulation · IDENTIFIED FROM THE TRANSCRIPT · source
“So I realized if I call my customer and talk to him about a good idea to invest in, the second conversation was how much are you going to charge? How little do they want to pay? So we were going to, so it appeared, though, as though we were going to have to have twice as much in the way of a client book and work twice as hard just to be able to make the same living. So my friend, the guy that became a partner with me, Bob Prohan and I talked about why don't we join him. I gotta tell you, Barry, we had no idea how to start a brokerage firm. Really? We didn't have any idea whatsoever except”
2019-11-28 · Masters in Business · Joe Ricketts Discusses Trade and Deregulation · IDENTIFIED FROM THE TRANSCRIPT · source
“A client book that would help us in the future, just about the time when we thought that client book was going to help us make the type of income that we wanted The idea of negotiated commissions came into the marketplace.”
2019-11-28 · Masters in Business · Joe Ricketts Discusses Trade and Deregulation · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, Dean Witter was a commission job. All the brokers really in the country worked on commissions, and I didn't have any capital to start my own business, so this was as close to having my own business as I could get. And we just happened to become registered. I say we, the other guys in the training class, at a time when a market was at the top and it went down for the next five years, which was a big surprise because it hadn't done that for a long, long time”
2019-11-28 · Masters in Business · Joe Ricketts Discusses Trade and Deregulation · IDENTIFIED FROM THE TRANSCRIPT · source
“And after I got out and into the business world, calling on these merchants, I understood the wealth of this country came out of the brains of these people. They took money out of their own pocket, ideas out of their own heads, and they started a business, a shoe store or a pharmacy or whatever. And they hired people and they had to satisfy their customers. And so working to satisfy your customer at the same time being able to create wealth was a wonderful idea for me. So I said, that's what I want to do. I want to have my own business.”
2019-11-28 · Masters in Business · Joe Ricketts Discusses Trade and Deregulation · IDENTIFIED FROM THE TRANSCRIPT · source
“That's right. And so I took this job with Dunner Bradstreet, where I went out to all the small towns in southeast Nebraska and southwest Iowa to call on the businesses. So I'd drive into town and I'd just go one business after another with the credit report that I had from the previous year and talk to them about updating it. And I got to meet a lot of interesting people and I got to meet a lot of people that were really making our country go. And the thing that stunned me, or really kind of light that went off when I was in college, I had a professor of social sciences tell us we were such a great country because of our natural resources.”
2019-11-28 · Masters in Business · Joe Ricketts Discusses Trade and Deregulation · IDENTIFIED FROM THE TRANSCRIPT · source
“While it was critically important to the decisions that governed my direction in life, I really didn't know what I wanted to do for a living, and I had already started a family, so I had to come up with some direction pretty quickly. Time was going by.”
2019-11-28 · Masters in Business · Joe Ricketts Discusses Trade and Deregulation · IDENTIFIED FROM THE TRANSCRIPT · source