Bloomberg Profile
nytimes.com
In an oft-told tale, Mr. Bloomberg, a former bond trader, started his company with a $10 million severance check he snared when he was fired as manager of information technology at Salomon Brothers, a big bond house that later merged into what is now Citigroup. He and Mr. Secunda soon formed a small group that packaged bond data inside little terminals later known as Bloombergs, at a time when there was a dearth of easily accessible market information. As years passed, Mr. Bloomberg and his team layered more and more proprietary information into the Bloombergs, until the machines became vast encyclopedias of the financial world.
The terminals also had messaging functions in the days before e-mail became widespread, and the Bloomberg network became a popular lifeline connecting Wall Street's inhabitants. While Bloomberg devices now offer thousands of functions, messaging remains the most popular.
Early Bloomberg users needed to pick their way around the terminals using arcane commands and interfaces, many of which persist today. Mr. Bloomberg believed that once people were trained in how to use a Bloomberg terminal, no matter how confusing, it would make them less inclined to switch to other systems. He also insisted that every new service or data point be bundled inside the Bloomberg and never sold separately, increasing the value of the machine and allowing the company to charge a premium to use one.
When the mayor started his venture, all of the company's data resided on a disc he could slip out of a washing machine-sized computer each night and pack safely in his briefcase for the trip home. Today, the company has warehouse-sized server farms that store Bloomberg data; to avert disruptions in service, back-up systems reside at three undisclosed locations, two in the United States and one in Europe.
As the company's data universe expanded, Mr. Bloomberg and those he hired crafted a sales culture built on two concepts: nonstop, guerrilla efforts to circumvent the purchasing departments at big companies and establish a direct relationship with end users, and an unflagging emphasis on meeting users' needs and providing top-drawer service to cement that relationship. Having Bloomberg terminals on their desks became a sign of prestige for traders as much as it was a tool for helping them make buckets of money. Many users stipulated in their employment contracts that a Bloomberg would be a perk.
"The company does have a unique culture and it's a sales culture," said Arthur Levitt, a member of Bloomberg's board and a former head of the Securities and Exchange Commission. "Bells ring when terminals are sold. Parties are held. And the service provided to customers is just extraordinary."
As financial markets zoomed in the 1990's, so did installations of Bloomberg machines. Annual terminal sales soared 28 percent in 1997, 22 percent in 1998 and 17 percent the next year, before cooling down to single-digit growth rates thereafter. But even during the stock market downturn in 2000, and a widespread belief that the Internet boom foretold the demise of proprietary information providers like Bloomberg, the company's crack sales force managed to post sales gains. There are now more than 200,000 Bloomberg terminals flashing atop desks worldwide.
The data business is dominated by Bloomberg and Reuters P.L.C. They control about 83 percent of the $7 billion industry, with Bloomberg edging out Reuters with a 43 percent share, according to Inside Market Data. Analysts said that Reuters had been at a disadvantage recently. "They're not seeing any sharp growth, it's just slow and steady," said Ms. Zwanger of Inside Market Data. "What has helped Bloomberg historically is their ability to go directly to the end user and bypass market data managers who might otherwise say it's too expensive."
A Reuters spokeswoman said the company had a more diverse revenue mix than Bloomberg and that her firm was "excited by long-term growth prospects."
Bloomberg employs about 8,000 people, 1,600 of whom work on the news side. About 97 percent of the company's revenues come from terminal sales, meaning that the media division's contribution to Bloomberg's bottom line is negligible. But the company's management argues that the media unit's overall impact on the company is hard to quantify because the firm gains intangible marketing benefits from having a substantial news operation.
Nonetheless, Bloomberg's future is not dependent on its media unit, which are mostly an appendage to the company's core business of selling data. In that capacity, Mr. Secunda, who leads data gathering and has a long history with Mr. Bloomberg, is a pivotal figure at the firm.
"The most important guy in the company is Tom Secunda because he's in charge of protecting our proprietary economics," said Thomas R. Keene, an editor at large for Bloomberg's news unit.
And Mr. Secunda said overall morale at Bloomberg, despite newsroom discontent, was just fine. "We have a dynamic group of people and we strive to have a meritocracy," he said. "That means you're going to have some people who are unhappy, some who are sort of happy, and some who are really happy. I would hope and think that the vast majority are really happy."
BUT Mr. Secunda, a relatively subdued, self-effacing member of the Bloomberg cult, was not the person tapped to run the company when the mayor left four years ago. Instead, Mr. Fenwick was anointed as chief executive.
At the time, Mr. Fenwick had chalked up extraordinary sales gains while managing the company's European sales force, and Mr. Bloomberg brought the British manager to New York to work the same magic here. Mr. Fenwick, tall, lithe and bald, is Mr. Secunda's antithesis. Mr. Fenwick is a kinetic, sharply tailored quipster and a font of colorful profanities who employees say can direct his passions abusively or inspirationally.
To keep tabs on Mr. Fenwick and to streamline the company's financial management, Mr. Bloomberg gave Mr. Grauer control of the firm's purse strings. Critics say the appointments did not allow for clear leadership and led to inevitable clashes; management says that glowing sales figures speak for themselves.
If effectively managing all aspects of the company eluded a sales wizard like Mr. Fenwick, there is no guarantee that Mr. Grauer, who has invested in many companies but had never run one, is the right person either. Both men say they look forward to working together and are devoted to expanding Bloomberg globally, though neither is seen as a visionary of Mr. Bloomberg's caliber.
But Mr. Grauer is well regarded within the company's senior ranks, where a nostalgia persists for the days when Mr. Bloomberg strolled around swearing, cracking off-color jokes and goading people forward.
BLOOMBERG L.P. must remain vigilant about threats from existing and new competitors, and the company constantly has to increase the value of what it offers to justify the $17,000 to $20,000 a year it charges current users for each terminal. That price tag has drawn the attention of cost-cutters at securities firms and other companies struggling with tighter budgets.
Most Bloomberg users take advantage of only a small portion of the thousands of functions available on a terminal. Several firms have tried installing keystroke software to monitor employee usage and determine which Bloomberg functions are the most popular and which ones can be done away with - information that would be helpful when trying to negotiate price discounts.
Bloomberg has resisted steep discounts or offering terminals without a complete package of products, according to customers, competitors and the company's own staff. It is a one-size-fits-all strategy that may run the risk of alienating clients who feel that Bloomberg is force-feeding them an exorbitant goodie.
Some information technology mavens also say that the software architecture underlying the Bloomberg terminal is outmoded and that newer users find the Bloomberg screen too intimidating. But the company has offered enhancements to address these concerns and says that it does not feel that its technology is dangerously outmoded. Like everything at Bloomberg, they said, it can adapt.
"When we started Bloomberg we weren't sure what we were doing, we just knew there was a void to be filled," said Mr. Secunda. "We live in a world in which the better you get the more you have to do and we're constantly trying to figure out how to keep running on that treadmill." |
