in the unforgiving world of Wall Street the man poised to reshape the financial landscape of America was not a product of a privilege he's a Visionary who through Relentless determination revolutionized the way people invested in 1905 Charles Schwab's grandfather moved from New York to California seeking a fresh start and soon he established himself as a respected lawyer Charles father Lloyd Schwab follows suit and also becomes a lawyer and eventually is elected as the district attorney for Yolo County as a Young Man Chuck feels the immense pressure to succeed but what Chuck does not know is that he was born with dyslexia a learning disability not officially recognized until the 1970s Chuck was a very strong-wailed person he was spent a lot of time after school re-reading the books trying to translate the words on the paper to something that his unique mind can understand he compelled himself to read a lot of stories about successful people like Rockefeller and JP Morgan which further motivated him to become a really hard worker despite his immense effort at school Chuck Schwab struggles with grades knowing his own academic limitations his Force to find an alternative path to enter a prestigious College and soon he discovers the perfect solution applying the same level of intensity and effort Chuck Schwab quickly becomes one of the most accomplished young golfers in the city his golf scale ultimately secures him a spot at a prominent University on the West Coast it's a school considered to be a life changer for almost any student at the time Stanford University [Music] Chuck Schwab's golf skill may have gotten him through the door as Stanford but he quickly realizes that it will not keeping there unless he finds a way to overcome his reading disability during the first two years his grades were so poor that he was on a verge of getting expelled English I was really slow in so I had a terrible time in reading things I was particularly good at math I was sort of advanced and all that stuff there's so many different ways that you can solve a math problem so that's where it's sort of a gift to someone who is dyslexic because they can have their own way validated and it can be the right way to get there one subject that allows him to Showcase his unique strength is economics with Incredible effort Chuck eventually graduates from Stanford's MBA program at the top of his class but after graduation Chuck finds himself stuck in a dead end job it was a stock market analyst and finance looking at companies and trying to analyze them so I learned from some people that were in that area and that was my that's how I thought you could create wealth in order to reach that level of success like as Heroes JP Morgan and Rockefeller he become fixated on starting his own company after spending only two years at Foster investment service Schwab teams out with the two colleagues and a client to establish their own company first Commander Corporation so this was the 1960s so the market was booming so Chuck saw there was a need for investors to have high quality well-researched newsletters very analogous to financial media companies like Bloomberg today the company becomes an instant success within a year they gained 3 000 subscribers each paying 72 dollars annually for a subscription they generate 216 000 from subscriptions which is equivalent of two million dollars in Revenue in 2023 foreign continues to grow a conflict among the partners arises Chuck wants to reinvest the earnings to expand the young business while his partner's desire to withdraw the money and live a better life I think one of the top three reasons businesses fail is making bad partner choices you really need to know your partner and your deal before you begin which will increase your chances of success Chuck Schwab was very growth oriented from the very beginning and he was not going to settle at being a boutique investment research firm Chuck knows there's only one way to resolve the conflict he must buy out his partners he decides to obtain a hundred thousand dollar loan to purchase the shares for his Partners until he gains total control of the company without control over decision making Chuck intends to focus his attention squarely on growing his company at the age of 34 Charles Schwab is poised to become a financial Titan [Music] but his timing to buy out his Partners couldn't be worse following the bearer Market round of the 1960s the stock market is about to enter its most volatile decade the stock market toppled to new lows for the year again yesterday the loss of 2. 73 points in the composite index for the week was the largest since 1939. the oldest year for which it has been computed and may have been the largest ever as investors were unscared the last thing they want to do is pay for newsletter subscriptions in a blink of an eye Charles Schwab's company is decimated [Music] even as a company of one chug refuses to give up he knows there are always opportunities regardless of the economic environment he just need to find his own and soon he realizes the opportunity may have been staring right at him this entire time so during a bear Market the public tends to Harbor a lot of animosity towards the finance industry so the image of a stockbroker tends to be more negative Chuck notices a growing number of independent investors who don't require any investment advice from their stock brokers they simply need someone to buy and sell stocks without asking any questions now after a prolonged struggle Chuck Schwab discovers a game-changing opportunity he decides to launch a revolutionary type of a brokerage firm called discount stock brokers the problem is it's broke and no bank is willing to extend him any more credit so he pitches his idea to friends and family in a desperate attempt to secure the necessary funding to bring his vision to life would have to go to friends for a little bit of money I had some people and YPO who thought my business was great through sheer persistence he ultimately succeeds in raising the money allowing Toro swaps Incorporated to officially reopen its doors this time as a groundbreaking stop brokerage yet despite his brilliant concept his new business is slow to take off after one year of operating a discount brokerage Charles Schwab has only managed to attract 300 clients as investors remain skeptical about this novel type of a stockbroker the number of roadblocks that most entrepreneurs have had to deal with would blow people's minds because they just see the success not the grit that allowed them to keep going foreign just less than five years since it started the discount brokerage business the market begins to see the value of this new approach this business explodes gaining over 45 000 clients and managing approximately 70 million dollars in assets [Music] as the business skyrockets Charles Schwab now has a different kind of problem the company was growing so fast or too fast that it wasn't enough just to reinvest earnings in these more outside capital truck determines that a best option is to go public through an IPO but they'll plan filters before he gains any traction Charles Schwab's attempt to secure funding by going public might have stumbled but Fate has other plans in store a prominent U.
S bank has been closely observing the potential in Charles Schwab and is about to become the solution to Schwab's problems Bank of America in the mid-1970s Bank of America stands as the largest bank in the United States with over 4 000 branches and 100 billion dollars in assets but economic uncertainty mounting inflation and escalating interest rates led to stagnation within a bank during this kind of environment only a handful of finance companies are thriving companies like Charles Schwab to profit for an untapped Market Charles Schwab becomes an alluring acquisition Target for Bank of America [Music] now working as a subsidiary of boa Charles Schwab has virtually unlimited Capital to meet their needs for growth in the first two years following the merger Charles Schwab appears to reap significant benefits but all of that come to an abrupt end in 1985. as of September 9 1984 55 banks have actually collapsed this year more than during all of 1983 and the most since the last year of the Great Depression Chuck eventually realizes that selling tar swap to boa has been a miscalculated move was a growth company while Bank of America was a big conglomerate that is very slow and risk-averse so Chuck wanted to spend more money on new technologies but boa was very hesitant about giving them any money when the goals of the organization and the goals of the people who work there are in sync that's when the magic happens that's when a company is just firing in all cylinders and if they're not you're going to be upset you're going to be pissed off Chuck's influence over a significant investment decisions is limited leaving him unable to pursue his vision for his company he makes a faithful decision one that now appears inevitable he's going to reclaim ownership of Charles Schwab from Boa so he led a group of investors in a leveraged buyout of Charles Schwab Corporation and the deal was valued at 280 million dollars and most of it was debt so once again Charles Schwab was betting his own fortune just so that his company could be independent so you had a lot of your net worth tied up there you also had a lot of debt ahead of you and all my net worth and then some [Music] Chuck Schwab knows his firm may have gained the necessary Independence but the leverage to buyout deal places a firm at a significant financial risk he needs to reduce the firm's debt by increasing his Equity the only viable option to achieve this is by taking the company public the problem is he has already tried it once and he failed he's uncertain if people will show interest this time around [Applause] raises over 134 million dollars by selling 16 stake to the public the company finally has a healthy Equity to debt ratio and the future finally looks bright [Music] foreign [Music] just days after Charles Schwab's successful IPO the financial Market ground to a halt resulting in what come to be known as Black Monday dark markets were in free fall around the world today the Fallen Wall Street was worse than the crash of 1929. Chuck who's watching his world begin to crumble once again right before his eyes due to the crash Charles Schwab is forced to cut costs for the first time laying out 15 Workforce and reducing payroll by 9.
1 million dollars shortly after going public we had the crash of 87. our stock dropped from 15 was the IPO price right on down to six But Chuck knows the only way to survive for any business is by finding a new way to grow he just needs to find their path forward thank you Chuck Schwab managed to reduce the risk by going public because he understands economic Cycles Finance Legends like Chuck Schwab know that good times like that of the 1980s won't last forever as La newspapers retroactively called 1987 the best and the worst year for IPOs these micro Cycles in our economy continue today with IPO proceeds plummeting 94 in 2022 but this time investors like Chuck are prepared for shocks with unexpected investment one has put tens of millions into throughout his career many people don't realize that Chuck is actually one of the top 200 art collectors in the world in his mind Contemporary Art is part of its portfolio as an asset it makes sense because Contemporary Art prices have outperformed the S P 500 from 1995 to 2022. animate 2022's record volatility ultra wealthy collectors like Chuck doubled their median spending on Art but billionaires haven't bought it all up the global value of art is expected to grow at a whopping one trillion dollars by 2026 almost doubling the current Global value in fact many subscribers of this Channel and myself have been investing in arts for years thanks to Masterworks art investment platform masterwork's fractional approach means you don't need millions of dollars to allocate to Blue Chip pieces and they have a track record of 45 million dollars and are sold so far every single Masterworks exit so far has returned a profit to investors I'm a proud investor in a basket painting on mass works and through the link in the description you can skip the waitlist to invest alongside me and a few clicks after Consulting with a Boston Consulting Group Chuck determines that the optimal strategy to revive his firm is to venture into the world of mutual funds back in the 1990s the mutual fund industry really took off the industry assets went through the roof going from one trillion dollars to 6.
9 trillion dollars in total assets growing at a 20 rate per year leveraging their substantial customer base Charles Schwab finds itself in an ideal position to capitalize on the burgeoning growth of mutual funds by establishing its own [Music] in a year following its Inception Charles Schwab experiences remarkable growth in their mutual fund but capitalizing on online trading the firm's profits soar at an astounding pace at the height of his success Chuck believes he has fulfilled his dream of constructing a financial Empire a king to those of JP Morgan and Rockefeller and the time has come for him to retire David potruck previously serving as the company's president steps up as Chuck Schwab's successor with the high standards set by Chuck putt truck is determined to elevate Charles Schwab even further while preserving the success that Schwab already has but during a bullet market like that of the 1990s it was easy to perform well so potruck started a lot of initiatives that seem to have some success for the time being pot truck excels as CEO with a company continuing to accumulate substantial profits amid the internet boom field but an unparalleled influx of retail investors but no Prosperity can last indefinitely for pot truck the true test of his leadership is just around the corner they are already calling Black Friday it was the worst single day point loss ever for both exchanges after the burst of tech driven bubble Charles Schwab's fortunes waned with revenues and profits plummeting and a stock price spiraling from 50 per share to below ten dollars per share the. com bust like pop truck to recognize the necessity of safeguarding the company's Core Business he believes the only way to do that is by diversification within just a few years the company expands into various new sectors including launching a bank and an Institutional trading Department but as a result of his over diversification the profitability and growth of the company have declined severely by the early 2000s Charles Schwab became the sort of big conglomerate mess of enterprise a lot of Divisions were barely profitable recognizing the need for a change in Direction the board turns to the one man they believe could turn the tide the company's founder Chuck Schwab [Music] Charles Schwab Corp the famed San Francisco discount broker that has struggled since the. com bust abruptly dumped chief executive officer David potrock this week replacing him with the 66 year old founder who shares the company name Chuck Knowles the key to Reviving Tor Schwab lies not in diversification but in focusing on growth and improving client service his story is very analogous to Steve Jobs returning to Apple so he cut a lot of departments and product lines and make the company really focused on user experience upon Chuck's return the company experiences a dramatic transformation revenues begin to climb and by 2005 profitability is restored after years of losses the market rallies around Schwab driving the stock price from a modest seven dollar per share in 2002 to over 20 per share by 2006.
[Music] having rescued the firm Chuck Schwab retires One Last Time passing the CEO title to Walter bettinger for bettinger the future appears bright confident in his ability to avoid pop truck's pitfalls he prepares his steer Char swab to a new era [Music] mere weeks after Walter bettinger assumed the CEO of Charles Schwab the company finds itself plunged into the depth of the most devastating financial crisis in racing memory as the crisis deepens Charles Schwab's becomes one of the most vulnerable firms on Wall Street its yield plus fund that was heavily invested in Mortgage Debt collapses within a matter of days but to make matters even worse the class of the yield plus fund draws the attention of the SEC making Charles Schwab a target of regulatory punishment [Music] as a new CEO of Charles Schwab water bettinger is in trouble the company's revenues plummet experiencing a staggering 20 decline from 2007 to 2008. but bettinger is determined to revive the firm and to avoid suffering the same fate as pot truck he will spend the next five years trying to rebuild Charles Schwab but to truly regain its past Glory he need to do something groundbreaking he knows the only way to save tar swap is by focusing on growth and rebuilding the client's Trust you realize that Charles Schwab made a grave miscalculation with mortgage-backed Securities and he needed to make sure to avoid that type of risk again in 2015 Charles dropped launches intelligent portfolios becoming one of the earliest pioneers of Robo advisors bettinger hopes by utilizing algorithms the risks associated with the portfolio could be better understood and managed ultimately providing Superior Service to clients foreign guy for 2015 Charles wrought Witnesses is staggering Ascent with SS owner management Skyrock cutting for 2. 4 trillion dollars to impressive 6.
7 trillion dollars in 2020. meanwhile the active brokerage accounts tripled surpassing 30 million as Innovations like intelligent portfolios Captivate a new era of investors as is the case with a lot of big companies the growth is not necessarily organic anymore for Schwab it came from Acquisitions like USAA and Street Smart thanks partly to Walter bettinger Charles Schwab becomes the Undisputed king of stock brokerages his sheer scale and power have effectively kept his competitors at Bay what none of them realizes is that the biggest challenge will emerge from the most unexpected places imaginable [Music] [Applause] [Music] looks like when you're looking at it I think it's Robin Hood it's the privately held operator that launches commission free brokerage platform in 2015. this company has been growing like a week 10 times since we saw them last in 2016.
Robin Hood rapidly amasses a growing user base seemingly appearing out of thin air baiju and valad embody a new era on Wall Street where young Visionaries achieved The Impossible through Innovation and resourcefulness using Robinhood is less like using a traditional Financial product where you have paperwork you have to wait it's more similar to using a technology product like an Uber or an Instagram this rise was fueled by surge of novice investors and heightened demand for online trading amidst the global kova 19 pandemic by the year of 2020 Robin Hood has gained over 13 million account holders for bettinger every client that Robin Hood gangs is a potential loss for Charles Schwab sensing the urgency he realizes that a Time Has Come for his company to strike back while the investing world rocked last week when Charles Schwab announced the firm would go to zero commissions on equities and ETFs removing the trading commission will cause a temporary Revenue setback for Charles Schwab investors don't see it as good news for the industry shares of Schwab fell sharply today so did Rivals like TD Ameritrade E-Trade and interactive brokers bettinger is betting that Charles Schwab's quality service and better infrastructure will convince people to choose it over Robin Hood but by sheer coincidence Robin Hood is about to make a grave mistake and playing directly into bettinger's hands [Music] power of the internet to destroy the kings of American Finance we have seen a massive surge in the stock price on the company called GameStop in early 2022 a short squeeze on the struggling retailer GameStop stock unfolds as amateur Traders from reddit's Wall Street beds defy Wall Street hedge funds the share prices soared platforms like Robin Hood halt trading citing volatility and regulation concerns critics accuse them of favoring hedge funds over retail investors by limiting participation in the market surge interactive brokers about restricting trading in light of recent volatility we are restricting transactions for certain Securities to position closing only foreign ER Robin Hood stumble is a golden opportunity to assert Charles Schwab's dominance at Charles Schwab so there you go there's gme the price right now 390. although firms like Charles Schwab eventually began to limit trades on GameStop the most of the blame for the public falls on Robin Hood driven in part by The Surge in retail trading during the pandemic Charles Schwab added 5 million brokerage accounts in 2020.
