Business According to Chuck: The Leadership of Charles Schwab
Apr 05, 2019
By Andrew Razeghi
I have given Charles Schwab a second nickname for his creativity and his courage. I refer to him as The Great Emancipator. (His other nickname, as you may know, is Chuck.) His success is predicated in his approach to belief management. When Schwab founded his investment firm, he challenged and shattered the prevailing beliefs that barred the average American from the world of Wall Street. Namely, he figured out how to lower fees for buying and selling stock. Take a step inside the heart and mind of the man named Chuck.
I began my conversation with Schwab with a question that I like to ask of all outrageously successful, and equally wealthy, entrepreneurs: Why are you here?
Schwab responded, “Fundamentally, to help a lot of people. People who use our services get a lot of benefits. Some are almost utilities. This investing thing is crucially important, particularly in America.”
Schwab then continued, “It goes to the essence of capitalism. After all, two-thirds of the word capitalism is capital.” At this point in our conversation, and leaning forward in his chair, Schwab said the following while softly tapping out each and every word with his finger on the table in a subconscious, subtle, yet physical expression of his passion, “The world believes today in this word called independence. Independence in our business means objectivity and looking out for my interest. And this is not only affecting financial services, it applies to everything from software to humanity. We live in an open-source world.”
As I would soon learn, words hold a lot of meaning for Schwab. He talks about, chooses, and uses words very deliberately. He’ll say things such as “that’s a great word, a powerful word, and a word I will have to remember to use more often in the future.”
In response to how he defines hope, Schwab responded, “Faith, hope and charity. Hope is certainly a word that has enormous meaning to me—on a number of levels. It is a great word. It is a powerful word. It is a word that I relied on a lot in my career.” In Schwab’s case, his beliefs helped him foster the courage to put his hope to work.
So how does he do it? How does he maintain his beliefs and use them to his advantage? Schwab continued, “The fact that I was out here and scrambling around as a little entrepreneur with no resources was fortuitous. I wasn’t encumbered by those old guys telling me what to do.” Unencumbered by conventional beliefs about how to succeed in the brokerage business, Schwab’s unconventional insight fueled his hope in the moment of uncertainty. In fact, his unconventional beliefs are precisely what he used to build his empire.
Speaking of beliefs, Schwab said, “I like to think in terms of giving people an understanding of why they should have the same passion as I do—why their life has purpose working here and why they should believe as much as I believe. I want them to seek a higher level of satisfaction above just making a salary. And so the better I can do that, the better I have been as a leader. The best way that I have found to do this is to help others understand why it is that we are here and how we fit in the financial services business; how it is that we got here and why it is so important.”
“When I started in this business, it was pretty crude to say the least,” Schwab conyinued. “I had little or no resources. I have one favorite example of a guy who came in to complain about something. He was from Chicago and had an accounting background. And I said, well, if you’re so damn smart, come out of accounting and start working here. So he came around and started helping me out. It was very difficult. We were mavericks at best. Some people would call us unethical because we were selling stocks at a substantially lower price at the time. In 1975, the ethical standard of a broker was that a broker was to be polite and sell it at 'this' price. It was a gentleman’s deal. On the other hand, we were sort of crass guys selling the stuff below somebody’s cost."
"Unemployment was high. We were in California—a nice place to live. We also sit in the middle of three or four major universities and so we were able to get smart kids.” At which point, looking outward as if he had an epiphany, he said, “All right, Andrew, actually, I took anybody.” He laughed and then continued, “They were a full collection of people. They took risks in their careers. Some were misfits at other places. I took a lot of misfits in. There were some strange people. Anybody who was a reasonable person and communicated well, I hired. I was one of the first businesses to hire women. Wall Street was 99 percent male, we were 40 percent female.”
“I feel good every day about helping people invest; helping them achieve financial independence.” Then, while pausing and looking out the window over the city of San Francisco, his eyes cast somewhere on the horizon, Schwab said, in a quiet yet deliberate tone, “It’s about the American dream.”
Excerpted with permission of the publisher John Wiley & Sons, Inc., from Hope: How Triumphant Leaders Create the Future. Copyright 2006 by Andrew Razeghi. This book is available at all bookstores, online booksellers and from the Wiley Website at www.wiley.com or call 1-800-225-5945.
About the Author(s)
Andrew Razeghi is an adjunct associate professor at Kellogg School of Management and author of Hope: How Triumphant Leaders Create the Future (Jossey-Bass). For more information, visit www.andrewrazeghi.com