What’s a “Bloomberg”?
Most people have never seen one. They may have heard about Bloomberg News, or read about Michael Bloomberg, the former mayor of New York. But there aren’t many computing platforms launched in the early ‘80s that are still around. There’s the Windows PC, which comes from the IBM PC, introduced in 1981. There’s Apple’s Mac—famously announced in 1984. And there’s the Bloomberg Terminal, which came out in late 1982.
In 1981 Michael Bloomberg was forced out of equity trading at Salomon Brothers, where he was a general partner, and into systems development. When Philbro Corporation bought the partnership Bloomberg was fired and given a generous severance bonus. He used the money to start a new venture that would provide current market data to professionals in as many forms as possible.
They started with just 22 terminals and were limited to their financial partner, Merrill Lynch. But Bloomberg quickly realized the tremendous growth potential, and Merrill lifted that restriction. The service began to grow 20% to 30% per year, supplanting Quotron, Telerate, and other market information products. They were a scrappy, nimble start-up with no legacy issues.
Bloomberg Terminal keyboard circa 1990. Source: Fastcompany
They now enjoy the network effects of 325,000 subscribers worldwide in tens of thousands of varied financial firms, from hedge funds to mega-banks. It’s hard to buy or sell a bond without exchanging Bloomberg-generated screens, and risk-managers and regulators rely on their reports. In hindsight, 1982 was the perfect time to start the new service. Global stock exchanges had just gone electronic, the recession had put many talented engineers out of work, and financial markets were booming.
In retrospect, getting fired from Salomon was the best thing that ever happened to Michael Bloomberg. The former investment banker is now a media mogul and is worth over $30 billion. Bloomberg’s success reminds us of the line by Walt Whitman: “Keep your face toward the sunshine, and shadows will fall behind you.”
Douglas R. Tengdin, CFA
Chief Investment Officer