Michael Bloomberg And The CIO Hall of Fame
The success of this former Salomon trader and computer chief is a testament to why IT leaders should be rotated into other business roles
New York City Mayor Mike Bloomberg was in town the other day, and I had a short conversation with him (Howard, you shameless namedropper). Bloomberg grew up near Boston and was a less-than-stellar high school scholar before he shipped off to Johns Hopkins University in Baltimore. Years later, when he was so successful, Bloomberg was named the university's chairman of the board and has been "more than generous" with his riches (read: a $100 million-plus donation). The joke at Hopkins: There are three statues on the campus: Johns Hopkins, Michael Bloomberg -- and the admissions officer who let him in.
Bloomberg's business and political accomplishments got me to thinking: Is he the most successful ex-CIO in American industry? Jim Barksdale went from FedEx CIO to become CEO of McCaw Cellular and then Netscape. Bob Crandall was CIO at American Airlines before rising to CEO. But, no, Bloomberg and his $20 billion fortune still stand above them all.
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I use Bloomberg's story in my MIT classes. Bloomberg went to work at Salomon Brothers right after getting his MBA from Harvard and worked as a trader. Then he got caught in a power squeeze and was "relegated" to running the computer department. Then he got fired -- and left with $10 million when Salomon got sold.
Instead of starting another boutique investment banking firm, he started what became Bloomberg LP. His insight was that he knew more about computers than the traders and more about trading than the IT folks. Bloomberg's first real client for his Market Master terminals was Merrill Lynch, where his proposal was pooh-poohed by the internal IT staffers, who said they could build the application that he was proposing cheaper than Bloomberg's upstart firm.
That is the same argument we often hear. The internal IT guys don't want to lose face or power and insist on keeping application development in-house. The CIO at Merrill at the time was DuWayne Peterson, who cut a terrific deal which I'll get to later. Mike Bloomberg asked when Merrill Lynch's development team could start this project and was told it would be a year.