Transcript: Joe Moglia

 

 

The transcript from this week’s, MiB: Joe Moglia, TD Ameritrade, is below.

You can stream and download our full conversation, including the podcast extras on iTunes, Spotify, Stitcher, Google, Bloomberg, and Acast. All of our earlier podcasts on your favorite pod hosts can be found here.

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VOICEOVER: This is Masters in Business with Barry Ritholtz on Bloomberg Radio.

BARRY RITHOLTZ, HOST, MASTERS IN BUSINESS: This week on the podcast, I have an extra special guest. And strap yourself in for this one, it’s absolutely fascinating. Joe Moglia could have the most unique career I’m familiar with. Not only is he a Wall Street veteran, 17 years at Merrill Lynch, eventually rising to the role of CEO and Chairman at TD Ameritrade which is just a giant custodian and trading shop, but he also has been the head football coach and defensive coordinator at a number of esteemed college teams. Such as a fascinating and unusual career and he went back and forth between the two of the career several times, it’s really an intriguing career path he took. When life basically threw him a lemon, he really made lemonade and created one of the most interesting careers in sports and finance.

There’s a ton to learn about him, he’s been unusually successful in both careers, and I just found this to be absolutely fascinating.

So with no further ado my conversation with Joe Moglia.

VOICEOVER: This is Masters in Business with Barry Ritholtz on Bloomberg Radio.

RITHOLTZ: My extra special guest this week is Joe Moglia, he has one of the most fascinating careers in finance, he was the head coach of a football team, Coastal Carolina U from 2012 through 2018, he was also a 17-year veteran at Merrill Lynch before becoming chairman and CEO of TD Ameritrade which was the largest online brokerage firm if you measure it by daily retail online trades.

He is also the author of two books “The Perimeter Attack Offense” and “Coach Yourself to Success, Winning the Investment Game”. Joe Moglia, welcome to Bloomberg.

JOE MOGLIA, AUTHOR, THE PERIMETER ATTACK OFFENSE AND COACH YOURSELF TO SUCCESS, WINNING THE INVESTMENT GAME: Barry, thank you very much. I’m excited to be on.

RITHOLTZ: I’m excited to have you, and II have to start out with your career which is which is so fascinating. You began in athletics, you were a college football coach for 16 seasons, what made you say let me pick up a side hustle in finance?

MOGLIA: There is a little bit of a story behind this, of course, but I will jump to the transition time.

So I coached for 16 years and my – it was 1981, it was my first year as defensive coordinator at Dartmouth, and we had four children and we were in the middle of a staff meeting and the sheriff from Hanover New Hampshire comes in and the need to see me and I was – I thought there was a death in the family and he says “Coach, I’m sorry.” And he hands me the divorce papers.

So I couldn’t afford to live independently and support my wife and four children, so I got permission to move into a storeroom above the football offices. I didn’t mind that it was small, but it had no heat, and this is New Hampshire. So I could see my breath in the wintertime, i lived there for two years.

Now my goal as a coach, Barry, was one that one day, I want to be a head coach of a major, major school, you know, a Michigan, Notre Dame, Nebraska whatever that’s was my goal will that year, January 1984, in the Orange Bowl, Miami upset Nebraska to the national championship and their secondary coach, Mike Archer, took a head job at LSU, and the following year, the defense coordinator was going to the Cleveland Browns.

And they offered me the opportunity to go down as a secondary coach and then later on, succeed Olivadotti, the current events coordinator as defense coordinator. So I’m going from defense coordinator in the ivy league to defensive coordinator in the national championship team, I cannot have a more perfect next step in my career, could not have been more perfect.

You know, a football coach works seven days a week, about 80 hours a week, 5 months, you don’t get a day off, that is literal, there’s no days off. And especially back then, coaches didn’t make that much, and I’m going to be living in Coral Gables Florida, while my children will live with their mom in New Hampshire. And I couldn’t afford to fly back and forth.

So the most difficult decision I ever made was I turned down that job think I could do that job as a coach if I couldn’t live up to my responsibilities as a father.

RITHOLTZ: Right.

MOGLIA: But that also told me very clearly that means I can’t stay in football. So I majored in economics always had an interest in Wall Street, so I thought that I really wanted to pursue a career in the institutional side of Wall Street, not easy to figure out but ultimately Merrill Lynch gave me an opportunity in their Institutional MBA Training Program, there were 26 of us, 25 MBAs and one football coach.

RITHOLTZ: (LAUGHTER)

MOGLIA: And pretty much everybody said this football guys is not going to make it here but ultimately, the majority of those MBAs were working for me and wound up turning out okay. That is the transition from football to Wall Street the first time.

RITHOLTZ: So you are at Merrill Lynch in the early 1980s at the start of an 18-year bull market, what was it like in those days? That was a very different world than the world of today or even the world of the late 90s.

MOGLIA: I would agree now, after I went through my training program, I became an institutional bond salesman. So it was also an interesting time in the bond world because I didn’t realize it up until then, but you take a lot more risk on your trade investing in fixed income than what you would have in the equity world, and rates were high, but they did — the bull market wasn’t just inequities, the bull market was also fixed income because rates were coming down.

And there was a tremendous amount of things that I needed to be able to learn but frankly I already knew how to handle myself under stress. I knew how to listen, I knew how to have an impact on people and I think I was without question a much better bond salesman because of my experience as a coach. So to me, frankly and became a pretty prolific bond salesman, and then from there, I wound up moving into executive manager.

In the late 80s, Merrill Lynch had a horrible $377 million mortgage-backed security loss and that was very significant, plus the time back then, 377 was very real money. But I think Wall Street was learning also that you needed your leaders, your real leaders to be at executive management positions and they just weren’t producers that wound up getting promoted.

But my ability to learn what’s going on the markets, how critical fixed income is, the role of the Fed all of those things would have a significant impact on the equity markets, were all those things that I learned during that period.

RITHOLTZ: And we will talk more about the bond market later where we’re arguably still in the 40-year bond bull market that began back in the early 80s when Fulcher broke the back of inflation. But let’s stay with Merrill Lynch for now, you were at Mother Merrill for 17 years, what was your last role before you departed?

MOGLIA: I had – I was in the first person in the firm go from the executive management — executive management team on institutional side to the private client side, and before I left, I was responsible for all investment products, the 401(k) business, the insurance business and the middle-market business.

RITHOLTZ: So that’s a pretty serious role and it obviously prepped you to become CEO of TD Ameritrade, I think that was 2001, tell us about the transition from Merrill to TD, what was that like?

MOGLIA: Well, I think that I was leaving you know, one of the greatest brands in the history of finance. We were — I think it’s the time we were an $80 billion company, and we had I think 60,000 to 70,000 employees from 47 different countries, we were double A rated bond, and I was going from a company that had incredible stability to a company that was blowing up as the dotcom bubble burst.

And Ameritrade was losing a lot of money, the market cap had gone down about 700 million and I had done my homework before taking this job, and I thought it was probably a 10 percent chance we might go out of business, a 10 percent chance we might hit a real home run, but 80 percent chance no matter what, I was going to make you better.

And after I got there, I realized that there was a 25 percent chance we would go out of business.

RITHOLTZ: Wow.

MOGLIA: And one of the things I learned pretty much early one, I’m not an expert, that we were really a technology firm and a financial service wrapper.

RITHOLTZ: Right.

MOGLIA: And we needed to focus on what our core competencies were so we could leverage those into competitive advantage. So we could be leaders in the market niches that we chose to participate in. And by doing that, I would take half of — I got we were in different countries, I got out of virtually all of them, we were doing different businesses and different products, I got out of all of them, and I took that money, half of it to offset the losses that we were having and the other half I poured back into our core competencies.

And our core competency was transaction processing. Well, in the financial world, that is buying and selling stocks, and that was when we became very, very, very significant in that arena and once we kind of got ourselves straightened out, the recession after the dotcom bubble burst of March 2000 to March 2003, and it is around the middle of that and consolidation had not begun in the industry, and that’s when I thought that was a significant opportunity for us.

RITHOLTZ: So let’s talk about that period, that bear market. Market peaked March 2000 around 5,100, did not bottom until October ‘02 and then again a second bottom in March ‘03 at about thousand down over 80 percent.

MOGLIA: Yes.

RITHOLTZ: You have to imagine that you’re running the hottest online training company at the time, trading volume had to really — dropped off a cliff during that period. What was that like?

MOGLIA: You know, Barry, you can always make a parallel to what’s going on today back in the 90s when everything was going incredibly well for everybody, the day trader, because of the Internet became alive and one of the things that Ameritrade did, they really did everything they could, they got to do a lot of other things, but they try to focus on the day trader. Strategically, that was not a great decision because the day trade is once the market blew up per your reference, the day traders wound up going out of business.

RITHOLTZ: Right.

MOGLIA: So we needed to restructure our entire business, but it was not to do something that we couldn’t do, it was to focus on the ability to be able trade. Not the day trade, just an active trader platform. And social — at the time, the industry, it was tremendous and to consolidate the industry is far greater supply than there is in terms of demand, but trades had surely significantly dropped off. But by 2003, doing — leading the industry consolidation and focusing on the emphasis that we focused on, we start — we started to do more trades than anybody else.

RITHOLTZ: Let’s talk a little bit about how did coaching prepare you for running a giant financial organization?

MOGLIA: I think in terms of I’ve often said that I was a much better bond salesman, I think, and a Wall Street executive because of my experience as a coach. And then when I went back to coaching, as a head coach, I think I was a much better head football coach because my experience as a business leader.

And when you think about football, you need to be able to make decisions very quickly, your entire career is dependent upon what you do on Saturday, you have an incredible stressful 80 hour work week, there are no days off in a span of a five-month season or so, you need to be – you need to be able to understand people, you need to be able to motivate and inspire, you need to be able to discipline, you need to be able to incent.

You also need to have a very, very well thought out strategy that would handle contingencies in terms of your opponents, but you have to be able to simplify that strategy in order to execute.

So football is about 11 people functioning at once with zero error, well, in the business world, there a lot of firms I think that don’t maximize their potential because it sounds like a grandiose strategy, but it’s not simplified enough to really truly be able to execute. So if you take all those things together and whether I was talking about football or whether I was talking about the business world, they would really be the same principles, it would be the exact same principles.

The only thing that is different, Barry, is the product. The product of football is very different from the product of finance but the principles behind running a good business, a successful business being a good leader and each are really the same.

RITHOLTZ: Makes a lot of sense to me. I recall that merger between Datek Online and TD Waterhouse. I was on a trading desk early in my career and I have a vivid recollection of my former trading buddies when I had been, by that time, I was already off the desk, kind of freaking out about the merger. Tell us a little bit about who Datek was while you were running TD Waterhouse and what that experience was like going through a major merger?

MOGLIA: That was about 2002 so I have been there almost a year and we have gotten our at straight and the first deal we did actually was National Discount Broker and they were owned by Deutsche Bank and we paid 154 million for them but we had no cash so we had to do it in stock when we were worth about 700 million.

And if we had not gotten that deal done right, we would have gotten out of business.

RITHOLTZ: Right.

MOGLIA: And the Datek deal, we were losing money, they were making money they were by far the biggest competitor, they were taking market share from us and frankly when they wanted to do something strategic and it put together that — the memo of details associated with trying to do something like that, we didn’t even get that.

And they weren’t interested in doing something with us so I figured out who the leaders were, they were owned by private equity, the three dominant ones were TA and Bane and Silver Lake, and I actually flew to Boston and I met in a private room with Steve Pagliuca, the guy at Bane. And we kind of worked things out a little bit on the back of the napkin the next day I met with their board and then shortly thereafter, I met with our guys, and then eventually, we figured it out.

But again, once again, we didn’t have any cash, so we had to do it for stock. So this was a 50/50 deal so we paid 1.150 billion for them when we were worth 1.150 billion, and again, we screw that deal up, we are gone, we are out of business. But we had a home run with NDB, and we had a home run with Datek. And we delivered above and beyoond what anybody thought we would.

RITHOLTZ: Right, so after the merger, you are now the biggest online trading firm at least if we are going by daily volume, what are the challenges of running a big technology company essentially in that space?

MOGLIA: While, when I got to Ameritrade, while we were really struggling from a financial perspective, the one thing that I thought Ameritrade did very well in the 90s was when they went public, they took a lot of that money they poured into marketing, and they poured it to technology.

So I was aware of that before I took the job.

So for me, I don’t, frankly, I didn’t know much about how online brokerage, I didn’t know much about technology, but there’s nothing new in that but I knew how to run the business and I had people around me that all knew all of those things.

So I think with regard to technology, I think you got to be aware that you’ve got to be religious with you fervor in terms of making sure that you’re staying on top of how can we break out, what is the strategic plan? What’s going to happen. There is a lot going on, how are we going to be able to do that? And you know, we needed the right people in leadership roles and we needed to make sure that we knew it was a real commitment on management’s part.

As I said, we really weren’t a financial service firm, we are really a technology firm in a financial service wrapper, and as long as you got your priorities straight, that certainly helped us out significantly over time.

RITHOLTZ: So given that, you weren’t an asset management shop, you weren’t charging fees based on AUMs, what did the revenue breakdown look like you know in between the dotcom collapse and the financial crisis? That’s about modern era of online trading that’s separate from today’s year as I can imagine, what were the revenue sources? Was it strictly execution and trading, were and some margin loan lending or was – were there other lines of revenue?

MOGLIA: Well, there are basically three ways that I think of brokerage firm can make money with regards to at least with regards to its trading, the first are the commissions you are charging, and the second one would be the way you manage your assets which are the client assets on the balance sheet, you know, what do you do with those assets, do you invest them, how do you handle that?

That became a big issue in 2008, of course.

RITHOLTZ: Right.

MOGLIA: And third, will you be paying for order flow, so they would be the three ways in effect that you can make money, back then, back then though, the dominant, the dominant, our dominant revenue stream was for trading and commissions.

RITHOLTZ: Now, in your minds, when you are running this company and trading is 60, I remember before the Schwab TD merger and will talk about that later, I remember reading that something Iike 57 percent of revenue at TD was trading was a much smaller percentage at Schwab, so it became easier for them to drop the cost structure, but in your wildest imagination, did you ever suppose there would be a time when trading would become free?

MOGLIA: Well, you know, I think in Chuck Schwab’s book, he actually, I think predicted, you know, back in the early 90s or at some point in time that you might and might be free, but I think from a business perspective, I talked early about you have to have a thoughtful strategy that handles contingencies down the road – problems, issues that pop up.

Well, there was no question, you should look at the history that the fees and commissions were being squeezed and squeezed and squeezed and they were just going to continue to go down. So we always believe that there was a shock that one day they may be zero commissions and we better be prepared for that, but we didn’t want to waste all of our time on that because we really had businesses we got to run.

But probably, I would say pretty much every board meeting, there was some discussion, almost every board meeting, there is some discussion about what is going to happen if we wound up — commission wound up going to zero.

And then eventually, of course, we got to zero and I think we got there faster than anybody anticipated.

When Schwab decided that they had to cut commissions to zero, but there was always that – we always thought that that was that possibility. In my head, if I had to guess, I would guess probably that would happen around 2025.

RITHOLTZ: So I’m trying to think back to what it was like then and I’m only imagining these board meetings, at what point do you look at margin pressures and say we have to continue to get bigger, we have to continue to get more efficient, and we have to be the best user of technology of anyone, otherwise our business is at risk?

MOGLIA: I think from the very beginning, that was the principle. And I think that’s also the reason — part of the reason why I thought it was so important to lead the consolidation of the industry was because you wanted scale.

But I think the best answer to zero commissions is a real quality asset base. So the focus on being able to gather assets also became very, very important to us, so the consolidation helped us– help us with synergies, helped us with scale, only helped up profit margins, it allowed us to grow market share. When we purchase Ameritrade, what TD Waterhouse from TD Group, and that’s when it became TD Ameritrade.

But they also were big in the RIA business and that was a business I really want to begin as well because I thought that allowed us to go after the more serious longer-term investor. And so you are spreading your risk out over the different types of investors that actually out there, not just the trader or the active trader, but also the long-term investor.

And you are gathering assets while we go. So when we did, you know, when we announced the Schwab deal, I think we had about 1.5 trillion in assets. You know, when I began, we had 24 billion in assets, so making sure your technology was top notch, always testing it, making sure you continue to prioritize where you are going to invest capital and the consolidation, growing assets, which as all part of the plan and it was very, very effective.

RITHOLTZ: Quite fascinating. So let’s talk a little bit about this business of free trading and I have to start with the obvious question, “Hey, I learned in economics there is no such thing as a free lunch. Is free trading really free or are there costs that we’re just not aware of as traders?”

MOGLIA: I think you got to look at that from two perspectives, first do it from the perspective of the trader, so everything is pretty simple, you go to your website, boom, boom, boom, you are putting a trade against – executed almost always instantaneously, and you get — you get you have to get the best execution of that moment in time in the marketplace, and all the time you actually get — you get price improvement.

All right, that is what you see upfront. And that costs you zero. Now I look at the backend, behind that, you got gazillion dollars’ worth of infrastructure, technology, regulatory, many, many, many things that need to take place.

So when you do the trade, you go through the broker, right? Through the market maker, the market maker in effect has the spread they have to give the client the best execution at that time, you decide as the broker how much price improvement you want to give them and then you keep the rest in terms of payment for order flow.

RITHOLTZ: Right.

MOGLIA: So the way you pay for this is to the payment for order flow, so on the front end, the client really does get excellent execution, and he or she is getting it for free, but at the back end, there is tremendous expense involved as well as complexity and that is taking care of my payment for order flow.

RITHOLTZ: So to simplify that, back in the days, when it was eight-dollar trades or $10 or $15, I think the last we saw was about seven bucks a trade, there wasn’t that necessarily the payment for order flow, were traders getting better execution, less spread going to the market maker, back when trades had a fee attached to them?

MOGLIA: From the time I showed up at Ameritrade, you know the number one priority is make sure we were taking care of our clients. So it was always a commitment to make sure they got the best execution.

Now when you were making money back then, I’m sorry, when you were charging fees back then, you got both, you got the commission as well as the spread and payment for order flow, but the client was still getting best execution, but they were paying $8,000 $5,000 or $7,000 ir whatever that was. Now, keep in mind, too, Barry, back then, technology was not as good as it is 20 years later when commissions went to zero, but it was good but not the way it is today, I mean obviously technology improved significantly from one year to the next, certainly from every two or three years to the next two or three years.

So since you have that going on but with regard to that, the individual investor still will get price improvement so when I stepped down, by the time we closed our deal on the — payment for order flow piece that we were able to control, we gave price improvement on a ratio of three and a half to one, so the client benefited 3-1/2 to 1 times what we would have benefitted from it.

RITHOLTZ: So this raises the question, are custodians able to make up the lost revenue, are they getting it from somewhere or is this just becoming an increasingly low margin business? When we look at the shop like Schwab, I think the number I saw when they announced the TD deal was that 57% of their revenue came from the float, from the money they made on cash sitting around overnight.

MOGLIA: Right, so the way you make money, you make money by your commissions. Now they go away, then you had to pay more for order flow, but then you have your asset base. And the ability of any brokerage firm or bank to be — to take those assets and reinvest those is another way for it to generate incremental revenue for that particular firm or bank.

Now I think, I think when you when you look at that situation specifically you also start to recognize then now as interest rates — with higher interest rates, you can take advantage of your program where you might be paying one percent to the client and going a few years back now, but you might be able make three percent or four percent or five percent in the case of a bank maybe doing a mortgage, in the case of investing in fixed income type securities.

But you would — you got to marriage that, is your balance sheet and you still of course, have the liability to each of your client base, but there are the different ways you can make money.

I would like to add one more point, that is off trading. So keep in mind that you want to be able to diversify from trading as much as you reasonably can’t so therefore the growing of the assets, the use of the IRA — the RIA the use of robo-type portfolios and different asset allocation tools and risk management tools help you do that, help you be able to diversify, maybe getting involved more fixed income is another way to be able to diversify.

So you want to be able to diversify your revenue stream away from trading, but with regard to the trading, you still make money with the payment for order flow as well as what you do with the assets. When you have very low interest rates as we do today and have for a while, that’s more difficult to do.

RITHOLTZ: So what do you think of apps like Robin Hood that have gamified the concept of trading especially for young, inexperienced people who are bored, stuck at home, and Robin Hood makes this kind of fun?

MOGLIA: Well, I think, number one, I think it’s great that we’ve got younger people coming in to marketplace even if they come initially as day traders. I think because those people are so wired and so connected and have played game themselves but are certainly incredibly efficient with regard to what they have about the technology, I think the idea of gamifying that was, I think, probably a pretty good marketing tool.

And with the leadership that the retail investor has the day trader read or has seen from the Reddits and the Ask Kevins of the world, et cetera, they’ve been able to put on some pretty significant — pretty significant trades.

The concern that I have is that — so I get — the retail investment, I give Robin Hood some credit for that, but the concern I have is that think back to the ’90s, when the dot-com bubble burst, there was significant day traders in the ’90s, they went out of business. At some point, we’ve got a pretty significant bull running here in equities for the last five years, the last two, three years, we’ve had some really good day trading going on but at some point, the market’s going to turn and I think it’s behooves the Robin Hoods of the world .

Ameritrade does this, Schwab does this. Now, it’s Schwab. Schwab does this. Other firms that have been around a while do this. But you’ve got to do, you’ve got to educate your client.

So, for example, let’s say you have a GameStop trade on, you bought it at 10 and it goes to 20, 30, 40, 50, well, should you take of something off the table? No, I’m going to wait to 200. I think it’s 200. I take something off the table? I think you need to help people understand how to manage their risk when on those situations because if the market’s really turn around and go the other way for a prolonged period of time, I would think that the fate of the day trader would be similar to what it was in the ’90s.

RITHOLTZ: That makes a lot of sense. The other question I wanted to ask you about online trading, I don’t remember which CEO said this, it could’ve been Tim Buckley at Vanguard, but one of the questions that have come up has been about cybersecurity. How much should this be keeping the people running current trading shops up at night these days?

How dangerous is the risk from hackers and others accessing accounts and how much more work needs to be done to make sure that there is an increased level of cyber security for financial firms?

MOGLIA: Whatever the most is a firm can do, they probably have to increase that. So, it’s got to be the number one priority. I know when I was asked a lot trying to — using the term that you just used, what would really keep me up at night? I knew we were doing a really job with executing our business plan. I knew we’re doing a great job with our numbers, with our people, et cetera, et cetera.

But at the end of the day, we’re doing everything we can to make sure our technologies fail proof but we know — we know that nothing’s perfect and what happens if we get blindsided? What happens if we get a hacker?

Now, we’ve got people to do nothing to try to hack into our system so we can prevent hackers from hacking into our system. So this is not going away. And to me, Barry, the single greatest risk in the world today is terrorism. And terrorism can come at you in a number of different ways, not just by flying into a building, but they can have a buyout — you’d have a biological attack, you could have a chemical attack, you could have, obviously, a nuclear attack, but you could have also have a cyberattack.

And the cyberattack is the one that probably scares me the most. So, from the United States perspective in terms of just national defense, we have to — we have to make this our number one priority and every business in our country and probably around the world that has a serious technology, a part of what they and I think that’s probably everybody, you’ve got to be able to protect that and do everything you can and stay ahead of the game. And if you don’t do that, you’re going to fall behind, you can’t afford to fall behind.

RITHOLTZ: Let’s talk a little bit about your return to coaching. What made you decide to go back into football?

MOGLIA: When I stepped down in 2008 as CEO and that’s when the firm asked me to be chairman, we have had a 500 percent return for our shareholders. And we outperformed every financial firm in the globe bank.

And in 2008, when the world was blowing up and that includes the financial crisis, but when the world is blowing up, we got it right. We didn’t do any of the things that everybody else did and as a part of that is, as I mentioned, I grew up in the fixed income world and I pushed the envelope. I’m always pushing it, I’m very, very aggressive.

But never to the where you crossed a line and never to the point where you crossed the lines too aggressively, i.e. with leverage where you potentially put your institution at risk. So we got it right.

So, I stepped down in 2008 and I have been working in my father’s fruit store since I was 10 years old and I was ready, I was ready to kind of take a break. And but because we have done so well, frankly, I’ve never been more demand in my career and there could have been some very, very significant opportunities but I didn’t step down to take other opportunities.

And then I got a call from a group of alumni at Yale telling me that the football job maybe opening and I would be interested. And I remember literally, I was in a hotel, in Vermont, and I remember looking at my telephone and putting it back to my ear and I said, guys, I said you know I haven’t coached for over 20 years?

They said we know that, but we spent a lot of time looking at the skillset that require of a head coach, we think you not only have a skillset but you have better advantage that other people don’t have. And I said there’s only one problem. What’s that? Well, in 135 years of college football nothing like this has ever happened.

And somebody like you is not going to be hired unless there’s sign off from the president and a typical president in academia may be very, very smart but they’re not risk takers, they’re not risk-reward people. But think about it, think about it. And I really did. And I really did.

And I spent the next six to seven months truly, truly examining my conscience. Is this something that I wanted to do and looking at the pros and the cons. And it hit me that number one, at this point in my life, while there were a lot of the things I could do, what I not did greater — would I not get greater satisfaction by going back to football and really having an impact on helping six — 18- to 22-year-old boy really kind of growing up and becoming a man. And I didn’t think I’d be doing it, so it gave me greater satisfaction then.

Number two, when I think this was subconscious, I didn’t acknowledge it out loud but I do think it was subconscious in hindsight that when I left football to go to Wall Street when my career path was on a great path, when my career was on a great path and I think without question that it got on my head, I think — and I’m not going to Wall Street, I think I would have been a major colleague coach at the biggest schools in the country and I think I would have been very successful doing that.

And maybe there was a piece of my that wanted to take a shot at that.

RITHOLTZ: Really interesting. So, before I asked you how being a football coach prepared you for a career in finance, let me flip that question. How did running a big technology and finance compo prepare you for your reentry into coaching?

MOGLIA: I think with regard to — I think in the business world, we were always so aggressive and we’re trying to — this is true also in the division that we’re responsible for more or less. So aggressive and just trying to do as much as we can.

To me, it wasn’t so much the bottom line. It was maximizing your potential so you can earn a dollar and — or the Street expects you to earn a dollar and you come in at a $1.10, everybody’s patting you on the back. But I would want my executive team to know was the $1.10 the most we could do or should we have done a $1.20?

And so, maximize your potential with football or in business, what — was always a priority in mind. I strongly — felt that strongly in the business world.

The second piece of it that in order to do that, in order to have thousands of people and multiple things going on, you had to absolutely make sure you had the right people around, period. You have to make sure you have the right people around you that brought in to what you believe in and people you count on and trust.

And you had — you want to make tough decisions if that wasn’t the case. I think you also then needed to be able to definitely have to delegate to those people. And again, I said before, you need to have a sophisticated enough strategy to handle divisions down the road but simplify it so you can execute.

Every one of those things, Barry, were things that help me become a better football coach. So, my number one priority was to hire the best possible people I can. They got to apply it to my leadership philosophy, got to buy it to what I’m doing, if they don’t, they’re not going to be part of the program going forward and I am a world-class delegator.

And if you are running my offense or you’re running a defense or whatever your particular job may be, I’m expecting you to do that. I’ll do what I can to help you. And of course, during the game, certain decisions a head coach got to make. But I am counting on you to be able to do that.

Very, very similarly to what I did when I was on Wall Street. So, you have — you can’t micromanage, and you’ve got to have the right people in the place, right, that you delegate to and then the fact that you monitor progress.

RITHOLTZ: So here’s a question that, I guess, is obvious but I’m just thinking of it now. There’s a 20-year gap between two coaching stints. How has the game changed? How have the student athletes change, how has the technology and the officiating change, how different is college football today from back when you’re a coach in the late ’70s and ’80s?

MOGLIA: So first of all, so first of all, simple thing, they took the hash marks. They brought it to the middle a little bit, so you had, in effect, a wider field, number one.

Number two, the game has strongly sped up. Very few people even huddle up today. Now, we did that too, but that was a — that was a two-minute drill ph and we needed to handle that both offensively and defensively, but the only time people really did that was when they were in two-minute drill. Now, pretty much everybody does that.

I think that when you look at sets that existed then, by that I mean formations, typical offense, I think, is very much spread out across the field. That wasn’t always the case back then so the game’s faster, there’s more — there was more combination, I think, of passing and running, probably more passing and the speed of the game.

Now, I think today, there’s also more of an emphasis placed on schemes whereas when I coached first time, it was probably more of an emphasis placed on fundamentals. So, I think doing both today, schemes and fundamentals is one of the things that I think would give us a better advantage.

Now, let’s look at the player. So you got — your 18-year-old kid who’s constantly connected because of technology. So, there’s more information coming at him or her than it’s ever been the case in the past and I think because of that, it tends to be a little bit more pressure, perhaps, to produce or how you interact with your peers, wherever it might be.

But so while the world has changed and everything is faster and everybody’s connected and everybody’s got a little bit — playing, looking at their phones all the time, the basic thing that makes up the human being, a young boy, a young girl, as you go through the beginning of adulthood, that hasn’t changed at all.

It hasn’t changed at all. So, I think about what it was like when I was growing up, what it was like when my children was growing up, I think what my plays were like the first time and what plays are like this time and a concern about peer pressure, the concern about the issues associated with drugs or sex or alcohol, the pressure potentially that might come from a parent or with the respect of coach you would respect to be a teacher, or with your girlfriend or boyfriend or whomever it might be.

That hasn’t changed. So, I think, number one, you got to recognize that. And while the world’s changed around it, the basic human being, what makes us tick, what makes us tick inside, I think that was true 50 years ago as the way it is today, I think that’s got to be true 50 years from now.

RITHOLTZ: So, there are two aspects to student athletics that I think have changed that I want to get your opinion on. The first is the athleticism of the players. It certainly feels like players today are faster, bigger, stronger. Is that my imagination or are student athletes really in a level of competitive shape that’s noticeably different than 25 years ago?

MOGLIA: You’re a 100 percent right. You see that exactly right and I think part of that is tremendous emphasis and of course, in terms of strength training and workouts and things like that that frankly, take place over the span of the entire year. So, if you look at football but this is true in other sports, our guys, at least twice a week — and the off season now becomes three or four times a week, perhaps five times a week depending on what we have going on.

So, in effect, you’re working out year-round. That’s number one. And the number two piece is after 25 years, look at mortality rates. Seventy-five years ago, mortality rate may have been 50. Today it’s 85. So, there’s also — also, the element of evolution that is taking place, the typical — a little bit fast, a little bit stronger, a little bit larger, a little bit — maybe a little bit smarter, all of those things, I think have taken place all the time.

RITHOLTZ: And then second issue that came up over the past couple years is the concept of the NCAA and student athletes demanding control over their image, control over how licensing is done with their names, and even student athletes getting paid. What are your thoughts on this area?

MOGLIA: Well, being a business guy, Barry, I certainly — I think you got to follow the money and you got to pay close attention to that. And so, I think if you really understand money flow and how it works, a lot of times, the fact that you can — even that, say, you’re a soothsayer or a fortune teller but you can tell what’s going to openly happen.

And with regards to this, to preface it for a moment, when I went to college, I was married, I had a daughter, I had paid every dime of my education. And we have about 125 guys still on the team, well only 85 of them has scholarships. That means we got 40 guys in the team that are — that do not get paid, and they’re treated exactly like the other guys and they got to work just as hard as the other guys and they’re not getting money.

So, you would think then to be able to provide a student athlete with room, board, books, tuition, it’s a pretty significant thing. But the TV contracts are so significant, are so significant today that the amount of money a Power Five school makes from their league, from their conference, just in football alone, is astronomical, far greater than, let say, what the entire athletic budget would be at Coastal Carolina.

So, with that amount of money and look at coaches at the Power Five level getting paid, four, five, six, seven, eight, $9, million and schools being able to get rid of a coach and not have a problem with a $10 million payout and hire another guy for $6mil or $7million a year.

There’s a lot of money there and I would suggest that a lot of that money is actually being wasted. So for the student athlete to raise the hand and say, hey, I’m tied up with some here and I think the NCAA could have been — could have taken a far greater leaps of growing this but they didn’t.

And so, at the end of the day, I think — I think this is part of evolution that we’re moving in this direction as student athletes. Now, I think majority of the states, I think have already voted that student athletes can get paid for the use of their image.

And I don’t necessarily disagree with any of that. So I think that’s the way of the world, I think that’s the way the balance are going. There are enough balance ph to go around, so I could appreciate that’s happened. So, it’s going to happen. I think that really should roll in ph.

The issue, the concern that I have is that this becomes easier to cheat. We go back in the ’70s, — the ’60s and the ’70s wasn’t that common to give a player money. It wasn’t common but you’re doing that and there have to be a recruiter. I’m sure it happens in all sports, but probably specially basketball when you really only need one guy to really make a difference and be the ultimate team.

So but then, you saw what happened to SMU, you saw what happened to a couple of other programs when they got the death penalty. So the entrants ph of late in college football has really been very, very strict with that all the time. Well, now, with individual players, they can get paid on their own because they’re using their image or there’s enough money to go around and the student athlete was getting some of that.

I worry about how that gets controlled. I worry about — I worry about whether or not teams and there’s so much money involved, as I pointed out a minute ago, so much money involved, there’s even more of a propensity potentially to take advantage of that and by that, I mean, crossing a line and cheating.

So, I see an uptick in that which is a negative. But moving this direction, I think, is the way of the world and I’d rather deal with it and have a control on it than follow it along.

RITHOLTZ: Since we’re talking about getting paid for playing, let’s talk about getting paid for coaching. I read something fascinating in USA Today as part of the Coastal Carolina cutbacks, you agreed to forgo your salary and accept a dollar just as a formality, making you arguably the best bargain in college athletics. How do you respond to that?

MOGLIA: I think even with my salary, I was a pretty good bargain for college athletics, but I think at a dollar, at a dollar …

RITHOLTZ: That’s a deal.

MOGLIA: With a dollar, I think especially with my background and why — I take a credible, credible pride in being a football coach, I’m not just a football coach. And with the university that I’m associated with, whenever I could do to kind of participate in that or help, I want to be able to do.

So we were in the middle of a global pandemic, of course, a lot of people had to sacrifice. I thought it was only fair that I give up my salary.

RITHOLTZ: And that also, given your background in finance and management, it really raises the question, what you do for the college over and above just — and I know it’s a full-time job, but just being a coach, I kind of picture you as being able to pick up just about any sort of role and run — again, not to mix metaphors, but run with the ball on just about anything you could possibly do for the school?

MOGLIA: Well, I think one of the things that I strongly had a close was Dave DeCenzo, our previous president, who just stepped down recently that he was the guy that, frankly, put his credibility on the line by hiring me. So, we always had a good relationship and he and I would be relatively frequently talking about different things going on. I was always happy to give him my opinion.

I was somewhat instrumental and the current president that we had that just officially began in January, Michael Benson, and the guy has an incredible academic resume. Frankly, that best of anybody we have on campus. He’s a true scholar. He speaks multiple language. He plays multiple instruments but he’s also an athlete himself. His children were athlete and he very much understand and believes and appreciates the significant that athletics can take in a university life.

So my titles today, having stepped down in 2018, my titles today are I am Executive Adviser to the President and he and I probably — try to have dinner every couple of weeks and talk about what we’ve got going on. And again, he’s new, so he’s making a lot of changes and he though (ph) his decisions, but we’ll talk about a lot of that. And then on the other side, I’m chair of athletics.

But the only thing — only responsibility I have in athletics is football. So football does report directly to me. And so, they’re my two roles.

But I think President Benson especially, would not hesitate to use me in a different role. For example, maybe visit the board, talk about different things, et cetera. So, I’m happy for them to leverage whatever my experiences may be.

RITHOLTZ: Before we get to our favorite questions that we ask all of our guest, I have a curveball I want to throw at you and it’s this quote from Staubach which is, “it’s unlikely that any other candidate has ever been as remarkably successful in two unrelated fields of endeavor, football and finance as Joe has been.”

So, tell us about your relationship with Roger Staubach who, by the way, for listeners who may not be familiar with his history, not only was a spectacular football player but he also built an amazing commercial real estate business that was sold for, I think, half a billion dollars. Like a giant-winning transaction.

Tell us a little bit about your relationship with Roger Staubach.

MOGLIA: To add tone point to that, I think it’s worth adding as well, Barry, that he also played at the Naval Academy where he was the Heisman Trophy winner.

RITHOLTZ: Yes.

MOGLIA: Then he went on to serve our country as a graduate of the Naval Academy. So, he missed about four seasons or so as a pro-football player and still had the career he had.

So, when I decided that I want go back to football, I recognized that I wanted to be able to reach out to as many people as that were practical that I thought maybe could give me some insight and one of those people was Roger.

Now, one of my friends from Omaha, Former Admiral Bob Bell, he went to the Naval Academy around the same time that Roger did and they friends. So he made that introduction, and I went down to Dallas to meet with him we became friends. It wasn’t uncommon for us to have dinner or breakfast if I were in town that I — he never hesitated to talk to me if I reached out for something.

And so that ability to meet him, just to have access to him, by itself, was I think really, really terrific. And as you pointed out, he’s the one guy, too, that had — but not as a coach, he was a player. There was a difference there. But strongly understand the world of football whether it’s collegiate or pro and then certainly understand the world of business because he’s incredibly successful there as well.

So, he was a very, very bright guy, as you would expect. So, he was a wonderful resource for me to — for me to be able to reach out to him.

RITHOLTZ: Really quite interesting. All right, so, lets jump to our favorite questions that we ask all our guest starting with, given the fact that you no longer coaching and have a little more free time these days, tell us what you’re streaming? What are you — what were you watching to keep yourself busy during the pandemic and the work-from-home year?

MOGLIA: Well, I think a lot of people think just because I’m a football coach, I’m crazy football fan, but I’m not. And I look — I used to look at 35 hours of tape when I go home. I do not want to watch football.

And so, I would enjoy — I would enjoy a movie. I would enjoy some of the episodes that they had on Netflix. I mean, whether it’s “Billions,” “Ray Donovan,” “House of Cards,” the — there are a handful of those that I think — that really, really, really well done that I enjoy and because their episodes, I’m not stuck at two and a half hours having to watch. That’s number one.

The other thing, though, in terms of podcast, the one that actually I do really enjoy is Compound. And that’s the one with the Josh Brown ones and I think I follow that. I think they’ve done a good job and I think if I’m not — if I’m not mistaken, they’re going to add “The Compound & Friends” thing which I don’t think has started yet. But I’ve gotten a lot of value out of — an enjoyment out of all those.

RITHOLTZ: So by the of this broadcast, that will have started and if you’d like to be a guest on Compound & Friends, I would be happy to twist Josh’s arm and have you show up on that podcast.

MOGLIA: I would enjoy that, Barry. I would enjoy that. I have a lot of respect for him as well.

RITHOLTZ: So now, let’s talk a little bit about some mentors. Who were the people who helped shape your career?

MOGLIA: I think you could talk about there are, as a coach for example, I read everything there was read about Vince Lombardi and John Wooden. Both are successful but both are very, very opposite. In the business world, we got Warren Buffet, we got Lee Iacocca, you got — there are so many people there.

But the people that really changed — shaped my career, especially as a leader and as a person but in the — in football and business were my parents. And my dad was an Italian immigrant. He came here when he was 11. He never finished eighth grade, sold bananas and apples in the Bronx his entire life.

But dad — my mom, he met my mom after World War II, she — in Ireland. She came over here to marry him. She never finished 10th grade. I was the oldest of five. Seven of us grew up in — at the time, Dayton ph Street section in New York City was very much a gang area, I was part of that and we lived — seven of us live in a two-bedroom, one-bath apartment.

And from my mom, she was — she had such an incredible attitude. Always with a smile in her face. Unconditionally loved us. Always had a thought that the glass is always half full. Enjoyed laughing but truly, truly loved us. And I think very much -I get my sense of humor and a lot of my personality, I think, from my mom.

My dad side, dad was committed to make sure he took care of his family. He worked very hard in that fruit store 14 hours a day, six days a week and I learned, I learned the — how important a real work ethic was. And again, make sure you take care of your family.

The difference with my dad, he had maybe three people working for him. Dad never had a hobby and most of the time he’s burnt out and later on in life, he become an alcoholic. And but — I could tell just the way he treated his guys, treated me, it was always- I thought a kind of a better way to do something, like he was always in a bad, it was never his fault. The glass is always half empty.

And I think he could have been done a better job like that would be — and have the other guys do work. And in terms of being a leader, and I mentioned before my ability to delegate and how I run things and I how I lead, a lot of that that I learned was from my father in terms of what not to do. So, I think the two greatest influencers on my life were literally my mom and my dad.

RITHOLTZ: Really, really quite interesting. Let’s talk a little about books. What are some of your favorites and what are you reading currently?

MOGLIA: Probably my best and most favorite book is the “The Gold Coast.” Probably written about 30 years ago by Nelson DeMille.

RITHOLTZ: Yes.

MOGLIA: About the Gold Coast meaning Long Island and it’s about a guy, I think he was Speedy Bellarosa who was a Mafia guy that I think came in to buy one of these states in Long Island — I’m making up the numbers now — $16 million and he brings a bag of cash to that and I thought it was a fun book. It was actually — and I actually read it twice because I enjoyed it that much.

Then the other — the book that I just finished, I just thought of another one, it was “Walking with Ghosts” by Gabriel Byrne. And it’s his memoirs and he’s really a very, very, very — I’ve always respected him as an actor, but he’s really a very, very clever writer and I’ve gotten a lot of joy out of that.

And then what I’m reading right now is Barack, the one by Obama and this is an old one and I’m only about 130 pages into it but some of it is really enjoyable, some of it gets a little bit too much detail, I skip over a little bit. But that’s what I’m reading now. That’s what I just finished and the other one’s my favorite book.

RITHOLTZ: So, all — there are a variety of different Barack Obama books. This is, I’m assuming, is whatever the most recent one is?

MOGLIA: No, It’s either Barack or it’s Obama. It’s just a one-word title and it’s his name.

RITHOLTZ: So, our final two questions. What sort of advice would you give to a recent college grad who is interested in a career in either college athletics or finance?

MOGLIA: No, I think one of my principles of leadership is I call it spiritual soundness. It doesn’t have to be religious, but it can be. But it’s — I think most people don’t really know who they are and I think — you become a composite of, like, who I am relative to my mother, my father, my girlfriend my wife, my job, what kind of executive am I, what kind of coach am I? what kind of friend am I, et cetera, et cetera.

And if you sit down and you write that down, just to keep writing and writing and writing about yourself and you step away from it, come back to it later, you’re probably going to change 25 of the things you wrote down. But you’ll be one guy like you can never show it to anybody because the second you saw it to somebody, you subconsciously, actually look for their approval.

So, in order to be happy, I think you need to know who you are because you’re going to have to make decisions under stress and the better you know who you are, the greater the probability you’ll make the right decisions.

Now, one of those, and the most — one of the most important, by far, is your career path. So, if you know who you are, what kind of skill sets do you really have? What are the skill sets required, whether it’s coaching or athletics or business or whatever the field might be, what are the — what are the skillsets required for success in that field? Do you have those skillset? If you don’t, do not go down that path.

If you do, you still have to ask yourself one other thing and that is was this something you’d really love? If the answer there is yes, then chances are, you’ve done a good job of picking a right career path.

So, it’s kind of irrelevant whether or not it’s finance or trading or investing or football, it’s kind of like what works for you not because this is something you thought about, not because this is what your dad did or it’s somebody you admire does. It’s kind of what really works for you and I think we would have a happier society if more people spent more time thinking that through?

RITHOLTZ: To say the very least. And our final question? What do you know about the world of investing and trading and football today that you wish you know 20, 25, 30 years ago?

MOGLIA: I think — I think 30 years ago from a football perspective, I think it would have been great to have this scheme, knowledge that exist today, the ability to really kind of go out, just spread out the field, take advantage, not just the triple option that Oklahoma and Nebraska used to run, but true option if that run past and do different things, in effect, from an offensive perspective.

I think, that would have been great, I think, for me to have back then. And from — with regard — with regard to the business world, I think — I think, really, the principles that I build on today, what are your core competencies? You got to make sure you’re taking care of your people. What really matters to your clients, your shareholders, and your associates because it’s your employees that give value to each of those constituents.

For me, while the world’s changed, I’ve just grown with the world. I was adapting it. I do a good job of adapting adjustment and I’ve adapted just with the world. But the principles I believe in so much today, that I’m really good at is — would be experience that I have been able through life, that’s kind of how I started out. They were the same principles I believed, 30 years ago.

I wish I were more experienced because with that experience comes knowledge and with that knowledge comes wisdom so you can make better decisions for yourself or for your people, for your family. So, it’d be the same — so, that would be what — I wish I had 30 years ago.

RITHOLTZ: Really quite fascinating. Joe, thank you for being so generous with your time.

We have been speaking with Joe Moglia who is not only formally a head coach at several esteemed college football team, but is also the former chairman and CEO at trading giant TD Ameritrade.

If you enjoy this conversation, well, checkout any of the other nearly 400 such interviews we’ve had on Masters in Business. You can find that at all the usual places, iTunes, Spotify, wherever you get your podcasts.

We love your comments, feedback, and suggestions. Write to us at mibpodcast@bloomberg.net. Sign up for my daily reads at rithotlz.com. Check out my weekly column on Bloomberg, at Bloomberg.com/opinion. Follow me on Twitter @ritholtz.

I would be remiss if I do not the crack staff that helps put these conversations together each week. Tim Harrow is my audio engineer, Michael Batnick is my head of research, Atika Valbrun is our project manager, and my producers are Michael Boyle and Harris Walt ph.

I’m Barry Ritholtz. You’ve been listening to Masters in Business on Bloomberg Radio.

 

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