“Time for you to leave,” Salomon Brothers’ cigar-chomping chief executive John Gutfreund told Michael Bloomberg. With the $10mn he got as compensation for being fired, Bloomberg started a company, Innovative Market Systems, the next day. It was 1981, and computers were finally starting to take over Wall Street. Bloomberg, then 39, thought the time was ripe for a product that gave people access to all conceivable financial information and for software enabling anyone, even traders, to crunch it. He was right.
To many people outside finance, Bloomberg is a media company. That is a little like describing Disney as a theme-park operator or Google as an email provider. Out of Bloomberg’s more than $12bn of annual revenue, only about $500mn comes from media, according to people familiar with the matter. The vast majority of its profits come from banks and investment companies renting “the terminal”, its clunky-but-powerful data and analytics portal. From this beachhead, Bloomberg has expanded into trading infrastructure, legal analytics, regulatory technology, public policy and more. It has claimed one-third of the roughly $37bn global financial data and analytics market for more than a decade.
Bloomberg, the company, has made Bloomberg, the man, vastly wealthy. His $94bn fortune — as estimated by Forbes since Bloomberg News’ billionaires index doesn’t track its owner — means that only Warren Buffett has ever made more money out of the business of money. If data really is the oil of the 21st century, then Michael Bloomberg is today’s John D Rockefeller.
And yet, it’s remarkable how little scrutiny the core business of one of the world’s most valuable private companies receives. Bloomberg LP is a data behemoth so enmeshed with the financial industry that it may be of greater importance than any single investment group. This article is based on interviews with more than a dozen current and former executives, rivals and major clients. They reveal a company increasingly consumed with the question of Bloomberg after Bloomberg.
In February, Michael Bloomberg turned 81. People with knowledge of the company’s internal dynamics and its founder suggest he is likely to transfer ownership of his empire to a trust that will finance Bloomberg Philanthropies for perpetuity, similar to the move recently made by Patagonia’s founder Yvon Chouinard. That would be one of the largest charitable donations in history. “He has committed to giving the company away to Bloomberg Philanthropies when he dies, if not sooner,” company spokesman Ty Trippet told the FT.
According to most insiders, Bloomberg’s likely successor is CEO Jean-Paul Zammitt, a company veteran. Yet some note that a new internal contender has recently emerged and that the mercurial Bloomberg might also look outside the company when he finally steps back, as he did when he left to be New York mayor in 2008. “Mike asks his senior leaders every time they meet if they have more than one successor, and while he has succession plans for himself, he has not discussed them with anyone,” Trippet said. But as the finance industry continues to be transformed by changes to technology and new ways of working, a question even more urgent is coming to the fore: what comes after the terminal?
S&P Global’s senior executives had already begun drafting the triumphant press release. It was 2014, and they were acquiring Barclays’ bond index business for more than $1bn. Financial benchmarks aren’t exactly sexy, but as the reference point for trillions of dollars worth of investment funds, derivatives and structured products, they are profoundly influential and incredibly lucrative. S&P had managed to beat numerous giants to win one of the industry’s crown jewels.
Then Bloomberg showed up. While Barclays owned the indices, Bloomberg supplied much of the underlying historical data. S&P executives tried to negotiate a licensing deal but never seemed to get anywhere. Without an agreement, they’d be buying a house without most of the land on which it was built. “Every night it was one step forward, and every day it was two steps back, until it all fell apart,” says one person involved in the talks. “It was dirty.”
It was also classic Bloomberg: private, patient and cut-throat. A year and a half later, the company announced it was buying the Barclays indexing business for a discount price of $781mn. Bloomberg declined to comment on the deal, or to make executives available for interviews for this article, underscoring how the company prizes privacy as a competitive advantage.
The Barclays deal was the company’s most aggressive gambit to date, as it branched out from its dominant business of renting out terminals. Today, there are about 365,000 Bloombergs on the desks of investment bankers, bond traders, equity analysts, pension fund managers, sovereign wealth funds and central bank officials. Every day, the terminal processes an average of more than 300 billion bits of financial information and sends about 1.4 billion messages and 30 million “Instant Bloomberg” chat messages that ricochet around the world.
The investment bank Merrill Lynch was the first to take a gamble on Bloomberg’s promise that he could build a one-stop shop for all financial data and analytics. Back in 1982, Merrill promised to pony up $600,000 in development costs for what was then dubbed “Market Master”, but only if the start-up succeeded in delivering on time. When Bloomberg came through, Merrill agreed to pay $1,000 a month for each of the first 22 terminals it would take.
Ever since, the terminal has been the sun around which the company has revolved. Everything Bloomberg LP has done centres on how to make the terminal more valuable, whether it is building out a chat function, starting a news organisation, setting up bond-trading protocols, adding funky alternative data like geolocation for tanker ships, scooping up social media chatter from Twitter or even setting up a high-end classifieds site. Over the years, its design has changed from a blocky desktop PC, accompanied by a complex, colour-coded keyboard, to a lithe multiscreen set-up, accompanied by a complex, colour-coded keyboard.
It may not be as glamorous as many other corners of the technology world, but Bloomberg terminals have become an essential part of any self-respecting bank or investment group’s toolkit. Some executives insist on having their own as a condition for accepting a job offer. “I’ve been married to the Bloomberg terminal for longer than I have my wife,” says Steve Sosnick, chief strategist at Interactive Brokers, who has had one since he started his career at Salomon Brothers in the late 1980s.
The company’s ability to charge for the privilege of renting a terminal is the envy of the data industry. Last year, Bloomberg raised the price for just one of its terminals by about 9 per cent to $30,000 ($2,500 a month) and the cost of multiple ones to $26,580 per unit, as reported by the FT. Because the company refuses to cut deals, even for its biggest clients, and because of how rare it is to get rid of one once they’re installed, that means the annual revenues thrown off by the terminals over the next two years are easy to calculate: at least $9.7bn.
Bloomberg LP is a private company almost wholly owned by its founder and not required to make any public financial disclosures. But insiders and industry analysts say its profit margins are enviable. It has many rivals in each segment it operates, including the London Stock Exchange’s Refinitiv, financial data provider FactSet, bond-trading platform MarketAxess and the Symphony messaging system. But customers say, even if they are cheaper, none of them can touch Bloomberg’s overall integrated offering. “If it’s already on your desk, you can’t get rid of it. There is no really good alternative,” complains the CEO of one major Bloomberg client, with more than 100 terminals installed. “I have respect for their non-negotiable terms. I don’t like it, especially when I have to write them a big cheque every month, but I respect it.”
Even a global financial crisis couldn’t put a major dent in the terminal business. After the wipeout of many investment banks and money managers, the number of terminals being rented globally shrank from 285,000 in 2008 to 279,000 in 2009, according to people familiar with the matter. But Bloomberg’s overall revenue grew slightly, thanks to those steady price increases and other revenue streams. By the end of 2010, the terminal count had risen above 300,000 for the first time.
How thoroughly the Bloomberg terminal has wormed its way into the fabric of the financial system was clear in 2015, when a brief outage forced the UK debt management office to postpone a bond sale. Finance Twitter was predictably mocking. But any long-lasting outage could have serious consequences. “It’s a critical aspect of Bloomberg’s business,” says Richard Berner, a finance professor at NYU Stern and former director of the US Treasury’s Office of Financial Research. “It’s not just important that the system functions 24/7, but also that it’s secure.”
Bloomberg LP’s quirky corporate culture — a mix of aggressive drive and gnawing insecurity — reflects Bloomberg’s idiosyncrasies. Company lore has it that the founder loves aquariums because watching the fish sedately swim through the water is like someone massaging your eyes at times of stress. Whether that’s true or not, many of Bloomberg’s 176 offices have at least one large saltwater aquarium. Almost every one of them is open plan and equipped with a canteen, the idea being that everyone should see everyone else work and no one should ever have to leave.
Employees’ comings and goings are monitored, and everyone must wear a lanyard with their work badges, after Bloomberg sent a memo insisting the policy be observed when he returned from serving as New York mayor in 2014. “Mike is pretty hands-on,” says one former executive. “He wanted to see everyone’s names. It was important to him. He has a desk like everyone else, walks around like everyone else and grabs coffee like everyone else.” Even at 81, he appears to remain the same hands-on CEO who once said Sunday night was his favourite time of the week because he knew he would soon have “five full days of fun in the office”. People at the company say he is still in most days from about 7am, and still routinely gets involved even in minutiae like desk configuration and the canteen food selection.
There are other big personalities. Peter Grauer, a former Donaldson, Lufkin & Jenrette banker, is the statesmanlike chair and especially active in courting and maintaining big clients. Grauer met Bloomberg through their daughters’ equestrian events and has been schmoozing clients ever since he was first appointed to the board in 1996. Michelle Seitz, the former chief executive of Russell Investments, says that Grauer called immediately when she announced that she was leaving the asset manager last year. He wanted to offer his congratulations — and ensure she had uninterrupted access to her terminal as she launched her new firm. (This is a common Bloomberg tactic.) “Their customer service is world class,” she says.
Co-founder Tom Secunda, who worked with Bloomberg at Salomon Brothers, has long overseen engineering and technology. Although the terminal might not have his name, he is widely considered its spiritual father. “Tom is the heart of the product,” according to one senior former executive. “Tom is the [Steve] Wozniak to Mike’s Steve Jobs. He even looks a little like Wozniak. Anything major built into the terminal still gets signed off by him.”
Alongside this trio, there are a handful of other top executives on Bloomberg’s management committee and an assortment of other senior executives jostling for a seat at the top table. Over the years, many Bloombergers have described Bloomberg’s management approach as “cats in a bag”. There is a constant struggle to see who emerges, scarred but alive. Ultimately, there is just one person who really matters. “Mike is kind of like God at the company,” Dan Doctoroff, whom Bloomberg installed to run the company while he was mayor, once told an interviewer.
Some say for better and worse. One issue that has dogged Bloomberg and its founder for decades are repeated claims that its culture is hostile to women. In 1990, the company’s former marketing chief Elisabeth DeMarse presented Bloomberg with a book of his “wit and wisdom”, including quotes like “make the customer think he’s getting laid when he’s getting fucked”, calling a competitor a homophobic slur and making sexually explicit jokes, according to a report in The Washington Post. When Bloomberg entered the presidential race in 2019, Business Insider counted nearly 40 employment lawsuits from 65 plaintiffs that had been lodged against Bloomberg LP and Bloomberg personally in state and federal courts since 1996, mostly over discrimination based on gender, race and disability. Bloomberg declined to comment on the lawsuits. In the past, a company spokesperson denied the founder “said the things somebody wrote in this gag gift”.
Kat Tatochenko, a former Bloomberg executive, notes that there is still a paucity of women at the top — at least when it comes to the core financial data business. But she stresses that she never saw or experienced any discrimination and argues that “Mike gets an unfair rap” about hostility to women. “They’ve gotten really good,” she argues. “There are a bunch of very strong women coming up the senior management ranks; they’re just not at the top top levels yet.”
Bloomberg LP is now having to contemplate a world without its sun king. His closest lieutenants are also past the age when most people retire: Grauer is 77 and Secunda is 68.
Last year, the company offered a glimpse of what that future might look like, with a reorganisation that elevated the two people whom insiders say are most likely to lead the company once Bloomberg exits for good. Jean-Paul Zammitt, a taciturn British-Italian Bloomberg veteran who has overseen the terminal sales business for years, was made chief commercial officer and picked up some of Grauer’s customer-facing responsibilities. Vlad Kliatchko, a computer engineer originally from Russia, was named chief product officer, in charge of all of Bloomberg’s technology, engineering and data operations.
Bloomberg also elevated Patti Roskill, then chief financial officer, to be the company’s new chief enterprise officer and put her in charge of co-ordinating the management committee that runs the company. Roskill is a former accountant at Geller, which had worked for Bloomberg LP since its founding until Bloomberg simply bought its entire 300-strong outsourced CFO business in 2021. That makes Roskill one of the most senior women in the Bloomberg empire, alongside Patti Harris, who runs Bloomberg Philanthropies. John Micklethwait, the former Economist editor who runs Bloomberg News, is not considered a contender and does not sit on the management board.
According to people with knowledge of the company’s management dynamics, the person currently most likely to follow in Bloomberg’s footsteps is Zammitt. Kliatchko is often seen as playing the Secunda role. Yet several insiders note that important Bloomberg LP divisions have lately been moved under Kliatchko’s aegis, positioning him as a viable contender. And some think Bloomberg could easily shake things up by going outside the company for a CEO. “There are only two people that really run the company after the reorganisation, JP and Vlad . . . [But] he has no need to go internally,” says one former senior executive. “Mike believes in stability, and then change.”
Bloomberg himself nodded to this in his memo announcing the reorganisation last year. “The world is changing, and the second derivative of change is positive. We have lots to be proud of but the biggest threat to our livelihoods is complacency caused by our success,” he wrote. “I know change is hard for us all, but better we drive the process than let competitors do it.”
Many analysts and people inside Bloomberg LP are unconcerned by the prospects of a founderless future. They point out the company’s cultish culture, experienced management and the fact that Bloomberg was gone for more than 12 years during his stint in politics, with little meaningful disruption. “Mike could die tomorrow and the company would run like clockwork for another 20 years,” says one former executive. “People would freak out, but the guardrails have been set down.” Robert Iati, managing director at Burton-Taylor, an industry consultancy, concurs. “There’s always a risk when the founder goes away, but I think it is less of a risk at Bloomberg than at many other companies,” he says. “I can’t believe I’m saying this, but Mike Bloomberg is probably not a ‘keyman’ risk.”
Not everyone is so certain. Some former Bloomberg executives point out that former CEO Doctoroff made a lot of changes that were quickly aborted when Bloomberg returned from City Hall. For example, in 2009 it launched a sports analytics division only to sell it when the Mike 2.0 era began. Whoever ends up taking the reins when Bloomberg exits permanently is probably going to be an aggressive, confident executive with aspirations to do more than just maintain the status quo after surviving years of “cats in the bag” management testing.
To use Doctoroff’s metaphor, what happens to Bloomberg LP when its God is no longer around? “At the end of the day, every business is a people business, even in technology. When the people at the top change, organisations change,” points out Kevin McPartland, a top industry analyst at Coalition Greenwich. “Someone has to be behind the wheel, and at Bloomberg that has always been Bloomberg himself. When he is no longer around something surely will change, even if his successor isn’t going to rip up the playbook.”
Then there is the future for the Bloomberg terminal, the bedrock of the company’s strategy and corporate culture since day one. If Bloomberg LP was sentient, the terminal would be its id. “All we ever talked about was the terminal,” observes one former executive. “The terminal is front and centre. It’s all about the terminal. Everything is built for the terminal and is on the terminal. At one point, Mike didn’t even see the need for a website. It’s all part of the mystique of the terminal.”
Right now, even rivals seem resigned. No one talks of “Bloomberg killers” any more, unless it is sardonically. Many companies still compete with Bloomberg in every arena where it is active, but the reality is that few rivals are gung-ho about dislodging Bloomberg from the bedrock of the financial data world. “They have all the desktop space you could ever dream of. They have the data. They have the analytics. They have the electronic trading, and now they have the indices,” says the CEO of one Bloomberg competitor, sighing. “People have expected them to lose market share my entire career. I’m now late in my career, so I’m going to say it’s not going to happen.”
In an embryonic way, the transition away from the physical terminal is already under way, something reflected by its slower growth over the past decade. Many clients use their own hardware and only rent the terminal’s idiosyncratic keyboard, designed specially for Bloomberg software. In 2004 the company launched “Bloomberg Anywhere,” which allows clients to log on from any computer they please with a biometric identity card called “B-Unit”. (It costs the same, naturally.) Since last year, they’ve been able to use a phone app. Usage has exploded since Covid-19 lockdowns.
There are also other corners of the Bloomberg empire that are becoming more meaningful, supplementing terminal sales. For example, the media business has gone from only supplying the terminal’s clients with terse news on recondite subjects to a swish subscription offering whose breadth competes with publications ranging from The Wall Street Journal and the FT to USA Today. Last year its overall number of news and magazine subscribers grew about 20 per cent to 450,000. The “Industry” group — Bloomberg Law, Bloomberg Tax and Bloomberg Government — has almost doubled revenues over the past decade to $450mn in 2022, according to people familiar with the matter.
Perhaps most importantly, the company has also been building a separate data sales business, which pipes raw data directly to clients that neither need nor want a terminal subscription, called B-PIPE. One former insider estimates this business now probably makes about $2bn a year. As a result, non-terminal business generates about one-third of Bloomberg’s overall $12bn of revenues, up from 20 per cent when Bloomberg returned in 2014.
The company is also looking to lessen its dependence on finance. In January, Zammitt set up a new division dedicated to selling Bloomberg products to companies in other fields. It has long leased terminals to corporate America’s chief financial officers, treasurers and investor relations staff. Now it wants to reach much deeper, targeting corporate strategy departments and anyone else who might need data and analytics. “It is prudent to be more deliberate in developing revenue streams that are differentiated from our financial services business,” Zammitt wrote in another memo obtained by the FT. “I believe there are far more avenues of opportunity and new services we can develop to extend our reach and revenues even further.”
A broader unbundling is anathema to Bloomberg’s corporate culture. But that may become increasingly problematic. “People now want to buy data by the bite, they don’t want bundles any more,” says Iati. If the shift towards more pick-and-choose data marketplaces keeps growing, it will be hard for Bloomberg LP to adjust.
One former executive observes that most of Bloomberg’s top lieutenants have been there for a long time and are very process-oriented. When it comes to running a huge organisation where stability is a matter of global financial importance, that is important. But it can make them “a bit robotic and discourage creativity”, the executive observes. “Bloomberg says it wants you to take risks [but] in reality it’s pretty hesitant to do so. So how do you transition this behemoth into the new world we are entering, where people just want access to data and do their own analysis? That’s something that is difficult for Bloomberg to get comfortable with.”
For years, people inside and outside Bloomberg have played “fantasy M&A”, imagining potential Bloomberg acquisitions, primarily media targets such as The New York Times, the FT and, more recently, The Washington Post or Dow Jones. At times, speculation has even linked deep-pocketed companies such as the exchange behemoth ICE, Amazon and Google to buying Bloomberg.
It remains a popular parlour game, even if Bloomberg is now too big for any one other company to digest. However, some analysts think a change at the top could trigger a more unsentimental look at what the company wants to keep doing. “I think Bloomberg would actually be more valuable in parts than as a whole,” says Iati. “If Mike is no longer in the picture — but no one can swallow a $80bn business — you might see his successor peel some parts of it off or that Big Tech tries to buy parts of the core.”
While Bloomberg might throw a curve ball at the end of his career, most observers say he is likely to transfer his ownership of the company to something like a “Perpetual Purpose Trust”. This would be overseen by friends and family, such as his daughters Emma and Georgina, and its profits would go to Bloomberg Philanthropies. This is what Patagonia’s founder Chouinard did last year, albeit on a much smaller scale. Patagonia estimates that it will give $100mn annually to its trust; in 2021 Bloomberg Philanthropies doled out $1.66bn.
Bloomberg is fond of pointing out that his mother lived to 102 — a record he hopes to beat. If so, Bloombergers might still have to face another two decades of lanyards, no offices and fish staring at them at work, and executives contemplating carving up the behemoth will be further frustrated. The multibillionaire loves to revel in how many competitors he has bested over the years, from Telerate and Quotron in the early days to more recent rivals, including Thomson Reuters. But he has also noted that “we went against giants, and giants are usually easy to beat”. Today, his company is the biggest giant of all.
Robin Wigglesworth is the editor of FT Alphaville
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