After ten years as the chairman of Bloomberg, Peter Grauer has seen his share of ups and downs. And in spite of an uncertain economy, he has managed to lead the $7 billion company into a period of exceptional growth and success
photograph by william taufic
One day last October at Bloomberg’s headquarters in midtown Manhattan, its chairman, Peter Grauer recalled the unusual circumstances that led to his meeting Michael Bloomberg and ending up at the helm of a world-famous business and financial news company. The story begins in the summer of 1986, he says, when his almost-six-year-old daughter Victoria, known as Tory, told her parents she wanted to take riding lessons after they returned home to Manhattan from a family vacation on a Wyoming dude ranch. “We found a barn in North Salem, New York, so we drove out one October afternoon,” Grauer says. “In one of the rings, there were two young girls on two small ponies, jumping over very small jumps. They turned out to be Mike’s two daughters, Emma and Georgina. Georgina and Tory are a week apart in age and started riding together, had the same lesson times, started competing in the same shows. And this guy, Michael Bloomberg, would show up. And I would show up.”
Grauer, who at the time worked for Donaldson, Lufkin & Jenrette, an investment bank, says he wasn’t on the capital market side of the bank so wasn’t familiar with the Bloomberg Terminal, the computer system that’s known as the gold standard for financial information. “And I certainly didn’t know who Michael Bloomberg was, nor did he know who I was. But we were thrown together because of our children. We would be at a horse show, and I’d get coffee and he would bring the newspapers. And he’d get the soft drinks and I’d get the sandwiches. And we’d have dinner together.” Grauer and his wife, Laurie, who moved to Greenwich in 1991, started taking ski vacations and European trips with Michael Bloomberg, who was divorced but had a “significant other,” Grauer says, adding, “Mike and I became very, very good personal friends.” In the fall of 1996 while they were at a horse show in Harrisburg, Pennsylvania, Bloomberg invited Grauer to serve on his board of directors. “Mike said, ‘I’ve decided that if something were to happen to me, you’re someone who I would like to play an important role in worrying about my assets and my company and so forth, going forward.’ “I said, ‘Who’s on your board?’ He said, ‘Me and my lawyer.’ I said, ‘What does your board do?’ He said, ‘Kind of the normal stuff. Not all that much.’ ”
After getting approval from his partners at DLJ, Grauer told Bloomberg he would join the board but had four caveats: They had to build a real board, practice good corporate governance, meet at least four times a year, and he had to have access to whatever information or people he needed to see. Bloomberg told him he had carte blanche. “We did all that and built a real board,” Grauer says. In 2001 when Bloomberg decided to run for mayor of New York City, he asked Grauer to serve as nonexecutive chairman of the board, and after he won the election, asked him to run the company as chairman, president and chief executive officer.
“I had no idea of what I was going to get paid or where I was going to sit or anything else,” Grauer remembers. “But he was off to do great things for the City of New York, and I felt that if I could help him steward his resources and his assets over this period of time, that would be a good thing. When he asked me to do this, he said, ‘The only way you can get on my bad side is if you screw up the company,’ and so far, almost ten years later, we haven’t.” Grauer comes across as someone totally engaged with the company and its people. He emphasizes the importance of personal contacts, and in a conversation, directs all his attention to the person he’s talking with. Informal in manner, his look is casual but elegantly tailored and athletic. He says he is a “fitness nut” who works out five to six days a week and likes to play squash, golf and ride a bike.
Grauer grew up on Philadelphia’s Main Line where he attended a private boys school and then went to Hotchkiss. After graduating from the University of North Carolina in 1968, he spent the first ten years of his career at CitiBank, which sent him to Harvard Business School in 1975. In 1980 he moved to Donaldson, Lufkin & Jenrette (acquired by Credit Suisse in 2000), where he became a managing director and remained there until joining Bloomberg, except for a three-year venture starting a private equity firm that failed. He and Laurie, who recently celebrated their thirtieth wedding anniversary, have three daughters and three grandchildren, with a fourth due in the spring.
Beginning in a Broom Closet
The company Peter Grauer runs in 2012 is far different from the one Michael Bloomberg founded in 1981 after he was fired from Salomon Brothers because of conflicts with a member of the firm’s executive committee. Using part of his ten-million-dollar severance check, Bloomberg rented what he calls “a broom closet of an office” on Madison Avenue. He recruited three Salomon colleagues and began building a unique financial information database for a computer terminal that would allow traders and investors to make rapid, informed decisions about the relative value and trends of securities. Within ten years, the company had made over 10,000 installations of The Bloomberg, as the terminal became universally known. Today, it leases terminals to over 310,000 subscribers in 170 countries around the world. “We are basically the desktop vendor of choice for news, data and analytics in the financial services community, whether it’s the private sector, big banks, brokerage firms or asset management and hedge fund firms on the buy side, or whether it’s government agencies, central banks, finance ministries,” Grauer says.
In 1990 Michael Bloomberg added a news service on his terminals to give context to the data and analytics they already provided. He hired a talented young Wall Street Journal journalist, Matthew Winkler, as editor and some reporters. Bloomberg News now employs 2,300 journalists in 72 countries and includes a global TV network, a U.S. radio station, the former weekly magazine Business Week that’s been redesigned and expanded as Bloomberg Businessweek and a monthly magazine Bloomberg Markets, five Web sites, a wire service and a syndicate that provides news to 420 publications. The American Journalism Review describes Bloomberg News as a “juggernaut” that is “spending, hiring, opening new outposts, launching fresh enterprises and raising the stakes” at a time when most news organizations are losing money and reducing staff and coverage.
Over the years, Bloomberg has expanded in many new directions. It added Bloomberg Tradebook, an electronic brokerage business, to its terminal business, called Bloomberg Professional, in 1996. Recently the company has developed two new businesses in addition to Bloomberg Professional and Bloomberg News. One, called Enterprise, works with customers on broader technology solutions for their investment in computer software and hardware. It includes a Trading Solutions, a Technology Solutions and a Data Solutions service, where “we create data sets from the terminal that we collect and sell outside of the terminal,” Grauer says. “It’s a very good business for us.” The other new business, called Industries, includes Bloomberg Govern-ment, which provides information about government, politics and policy that subscribers can access on their personal computers, and New Energy Finance, which Grauer describes as “our initiative in the renewable energy and the carbon market space.” Bloomberg Law offers legal research and last summer agreed to buy the Bureau of National Affairs, a major publisher of legal, tax and regulatory information, expanding its role in the field. Grauer says that Bloomberg has sustained an annual revenue growth rate of between 9 and 12 percent almost since the company began, except for the recession of 2009, when it finished up 2.5 percent. The company was expected to earn over $7 billion in 2011, of which 83percent comes from its core terminal business. Its biggest competitor in that business is Thomson Reuters, whose slightly larger market share has slipped in recent years. “We have competitors all over the world in all sorts of different asset classes,” Grauer observes.
The fact that Bloomberg is a private company gives it a significant competitive advantage, he says. “We can take a very long-term view about the world and not be persuaded that we need to make short-term decisions to bolster our earnings. We can make longer-term decisions that may have short-term negative consequences, whereas in the long term it’s going to benefit us. We have a contrarian view about the world,” he adds. “When things are kind of their weakest, we become very aggressive about investing in our business.” Four years ago, Grauer hired Daniel Doctoroff, Mayor Bloomberg’s deputy for economic development, as president of Bloomberg to help run some of the businesses he had developed. In July Doctoroff was named chief executive of the company, with day-to-day responsibility for the company’s products.
Growth? In this Economy?
When Grauer was interviewed last fall, the U.S. economy’s growth was sluggish, unemployment was stuck around 9 percent and stock markets had been on a roller coaster for months. Bloomberg, however, was having a banner year. Grauer reported that the company would hire 1,000 new employees and install an additional 15,000 terminals in 2011. And while some companies have reacted to the downturn by cutting prices, Bloomberg has maintained its strict pricing policy for the terminals where every other year it raises the cost of leasing them, currently set at around $1,700 a month, according to a recent article in Wall Street Technology.The non-terminal business, which the company has been building aggressively, has also been growing. Although Bloomberg Businessweek has yet to make money, Grauer says that it’s “wildly exceeded our expectations” in terms of editorial content and reader receptivity.
From the very beginning, superior customer service—what Grauer calls “a very tight customer service envelope”—has been a vital component of the company’s success and helped it survive the financial crisis that followed the collapse of Lehman Brothers in September 2008 relatively unscathed. “The amount of contact we have with customers around the world is very intense,” he observes, “and as a consequence when things get tough, we tend to be in front of them more frequently rather than when things are a little bit more buoyant.” Because Bloomberg operates all over the world, the company has benefited from the growth in emerging markets. “We have been very aggressive in building out what we categorize as passive classes that we weren’t penetrating in as deeply,” Grauer adds, saying that Bloomberg is now an important player in the foreign exchange market and active in commodities and derivatives markets. Grauer characterizes his personal style of management as one of “intimacy” and says that he tries to meet with Bloomberg personnel around the world at least once a year to give them an opportunity to talk and ask questions. “I love being a cheerleader, an inspirational force in the company,” he explains. “I thrive on relationships.”
He has also formed close ties with some of the leaders of financial firms that are good customers, such as Steve Cohen, a fellow Greenwich resident and CEO of SAC Capital Advisors. “I have known Peter for many years and have tremendous respect for him and the global business he has helped to build,” Cohen says. “Bloomberg has created and continues to enhance an excellent product.” Asked what role Michael Bloomberg plays in the company today, Grauer says he gets involved in some specific areas such as acquisitions, long-term strategy and financings when his advice is needed. Although his term as mayor ends in 2013, Grauer doesn’t expect Bloomberg to return to the company. “Mike is someone who tends to look forward, not look backward,” he observes. While optimistic about his company’s future, Grauer’s outlook for the United States economy is less positive. “I think the developed world is in the midst of a period of slow and sluggish growth,” he cautioned when asked for his views. “My personal view is that we are in for a protracted period of slow growth, and the U.S. economy needs to get back on stronger footing; the confidence of the U.S. consumer has to come back so they start to consume again,” he says. “I think there are some fundamental long-term structural issues that the federal government has to address in entitlements to help take away some of the long-term drag on growth. And you can make the same case for Western Europe and certainly for Japan.”
A Building Like No Other
Bloomberg’s futuristic headquarters on Lexington Avenue at 58th Street occupy twenty-nine floors of a sleek, fifty-five-story building designed by Cesar Pelli. Visitors entering the lobby pass by an eighty-eight-foot-long muscular cedar sculpture by Ursula von Rydingsvard that seems to undulate along one wall, one of nine striking contemporary works of art commissioned by the company for the site. After checking in at a bank of security personnel who ask for photo identification and deliver an I.D. tag in return, visitors are sent to the sixth floor where a dazzling sight greets them. A glass-enclosed, two-story atrium, the Link, overlooks a ground-floor courtyard; a large, four-band LED display known as the Zipper flashes instant headlines; freestanding stairs and a rare curved escalator emphasize the openness of the space; a huge titanium sculpture by Spanish artist Indigo Manglano-Ovalle, titled Cloud and based on an actual thundercloud, hovers next to the escalator; tanks with exotic tropical fish lend tranquility to the fast-paced environment, and Bloomberg terminals appear everywhere. A cavernous newsroom with endless rows of desks resembles a trading room and television studios, including one for the Charlie Rose show, that along with studios in London and Asia broadcast financial news across the globe twenty-four hours a day. Food courts offer the nearly 6,000 employees in the building free food, from banana chips and cookies to soup and oatmeal to tea and coffee.
Widely known as the Bloomberg Tower, the office has been cited as one of the most creative spaces in the business world. When Grauer wasinterviewed in a small, glass-enclosed sitting area behind his desk—there are no private offices at the company—he wore a photo ID around his neck like all other employees and was visible to everyone who passed by. “The style of our offices, we hope, is very much conducive to transparency and accessibility,” he says. “All of our offices are always open plan. But it was not by chance that I designed our space here so that people coming in and out, which they do from the lifts to the food court, could see if I was at my desk. If they wanted to, they could stop by.”
Asked about the lack of privacy, he says it’s something one gets used to but allows that it can get noisy. “Because women wear the kind of shoes they do, when they come down the steps [next to his desk], there’s a lot of clopping on the floor. But the benefits far outweigh the disadvantages. Not only do people come by, but we have guests and clients that come in. Sometimes a sales rep will stop by and say, ‘I’d like you to meet Joe Blow.’ It’s actually quite efficient because the level of collaboration and openness and the willingness of people to exchange ideas is much greater because we are all in together.” Another aspect of the company’s culture is supporting the communities where it’s located, mainly in areas of education, the arts and health care. Grauer says the company gives a priority to innovative programs, and Bloomberg employees are encouraged to be involved in local nonprofit activities. Grauer’s personal philanthropy primarily focuses on education and health care. He is president of the board of trustees of the Inner City Scholarship Fund and of the Pomfret School, where two of his daughters went, and is a board member of Rockefeller University and the National Collegiate Advisory Corps, which is affiliated with the University of North Carolina. He also serves on the board of the Prostate Cancer Foundation, and he and his wife have funded basic research into prostate cancer cures. Both he and Laurie support a number of nonprofits in Greenwich, and Laurie Grauer is vice chairman of the Family Centers.
In his 1997 book Bloomberg by Bloomberg, Michael Bloomberg describes himself as pig-headed, among other labels. “I’m the opposite,” Peter Grauer says. “When Mike and I really talked in depth about my coming to Bloomberg on a full-time basis, one of the things I said to him was, ‘You’re kind of irreverent, contrarian. I’m not that way. I’m very much a conventional thinker and very orthodox in my approach to business.’ This may be why we have such a unique relationship. I’m different, I’m lower key, I’m more balanced, which means I’m not nearly as successful as he is. “The reason I’m here is because of my personal relationship with Mike. I didn’t earn it in a conventional fashion,” Peter Grauer comments. “And as my twenty-eight-year-old daughter is prompt to point out, I owe her everything since I wouldn’t have gotten my job at Bloomberg were it not for her wanting to ride horses.”