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DAVID SKORTON: Welcome, everyone. Good afternoon. It's a great pleasure to have all of you here during Trustee-Council weekend in brand-new, beautiful Bailey Hall.
[APPLAUSE]
You're in for a great treat this afternoon. And I'm delighted that, building on the excitement of this morning and the noontime activities, I can promise you an equally engaging start to your afternoon by bringing you The Real Deal. That's the name of Sandy Weill's new book released earlier this month. And Sandy and his co-author collaborator and fellow Cornellian, Judah Kraushaar, have both returned to campus today to tell us about the project and its result.
I want to start, though, by recognizing Joan Weill, Sandy's wife of 51 years and his partner in life and philanthropy, who has her own chapter in the book. Where's Joan? Joan, would you please stand so we can recognize you? Welcome, welcome, welcome.
[APPLAUSE]
It's wonderful to have you here. Sandy Weill's rise from an $150-a-week runner on Wall Street to the head of Citigroup, where he delivered a 2,600% return to investors, is almost an urban legend by now, except that it's true. Deal by deal, merger by acquisition, Sandy utilized his management style and his instincts for finding the opportunities that others missed and making them pay off.
His strategy was to acquire companies in trouble and use them to move to the next level. But it was hardly a straight line trajectory to the top. There was an especially difficult period after his rise to the presidency of American Express, when he resigned in frustration over differences in management and essentially found himself out of a job.
Someone with less resiliency and courage and less passion might have opted for early retirement and faded gracefully into the sunset. Instead, Sandy Weill essentially started again, buying Commercial Credit, a Baltimore company, and through a series of brilliant management initiatives and mergers put together the pieces that eventually became Citigroup.
But Sandy's long road to Citigroup, from which he stepped down as CEO in 2003 and as chair this last April, is only part of what makes the book and Sandy, himself, so compelling. Equally intriguing are the ways that Sandy and John have committed themselves to making a difference in the world, targeting their philanthropy to a limited number of enterprises and supporting them generously and over the long run.
Now, they are making their philanthropic work the central focus of their lives, setting an example for their children and grandchildren and, I must say, for all of us. Joan and Sandy were profiled in the Chronicle of Philanthropy, earlier this month, as two of a kind, who talk through potential philanthropic endeavors over home-cooked chicken dinners.
And when they decide to take on a project, they support it not only financially but with their time, energy, expertise, and passion. As we've seen so often here at Cornell, both in Ithaca and, of course, at the Weill Cornell Medical College, where Sandy chairs the board of overseers, Sandy and Joan put their heart and soul into the causes they support.
In addition to all they have done for the medical college, financially, through Sandy's leadership, with the board of overseers, they've traveled to Qatar, to help guide the development of Cornell's efforts there, to Tanzania, where Weill Cornell is partnering in the development of a new and much needed medical school.
Their personal involvement magnifies the impact of their philanthropy and inspires others to join on. And that story of personal engagement has been repeated in their philanthropic endeavors, often, from the Alvin Ailey Dance Theater, one of Joan's special interests, to Carnegie Hall, to the National Academy of Finance program for high school students, which Sandy has nurtured into a nationwide program to encourage high school students to attend college and then to pursue financial services careers.
When Sandy decided to share some of the wisdom of his five decades in the financial services world, he turned to Judah Kraushaar, fellow Cornellian and one of the top security analysts on Wall Street, to help with the project. Judah earned an undergraduate degree in economics at Cornell in 1979 and went on for an MBA from the Johnson School. So it's great to have him back.
During his 20-year career as a sell-side analyst on Wall Street, Judah was consistently ranked among the banking industry's top securities analysts. He retired a few years ago as a first vice president and director of the global financial services equity research team at Merrill Lynch.
Judah is a member of the advisory board for the Parker Center for Investment Research in the Johnson School and also member of the Cornell University Council. And I'm pleased to note that his daughter, Liana, is currently a student in Arts College here at Cornell.
For today's keynote, Sandy and Judah are going to give us a taste of the way they worked together on the book, and then we'll have some time for your questions and thoughts, which you can ask, later, using the microphones that are in the aisles.
Please now join me in welcoming Sandy and Judah back to Cornell.
[APPLAUSE]
JUDAH KRAUSHAAR: Well, that was quite an introduction, Sandy, wasn't it?
SANDY WEILL: It was.
JUDAH KRAUSHAAR: Thank you, all.
SANDY WEILL: I like it.
JUDAH KRAUSHAAR: I did, too. Thank you all for coming out and allowing us to present to you today. The format today, just to make it clear, is I'm going to ask Sandy a few questions to kind of set the stage here, and then we really look forward to questions from the audience.
We've had such a fun time working on this book together, so you're going to kind of see a little bit of a window of what we went through for two years while we worked on the book together. I also wanted to just thank David for working my daughter into the introduction. I just want to say one other thing.
This is a real thrill to be here, for both of us, since we're both obviously Cornellians. We've been on the book tour for a couple of weeks now. But to come back to a homecoming for Cornell is really great. And I just want to let you know, my wife, Michele, is in the crowd, too. We met here at Cornell. And it just makes this very special for me.
SANDY WEILL: Great.
[APPLAUSE]
JUDAH KRAUSHAAR: Before we start the questions, I just want to set the stage a little bit. This was a very exciting project for both of us to work at. I think we both came at it at different times in our careers, Sandy retiring from Citigroup, myself wanting a little bit of a change of pace in the mid-phase of my career.
And what we really agreed on, from the start, was we wanted to write something that would be different from a typical business autobiography. We approached this really thinking that it would be great if the narrative could really put the reader on the shoulder of Sandy and say, what was going through Sandy's mind at different points in time, what was it like, emotionally, factually, all through this period.
And I hope when you read the book, you'll find that this is really a very different book. It's very introspective. I hope you'll feel it's very honest, because I think we really both feel that we worked hard to really bring out what Sandy was thinking at different points in time. It's anything but a pat on the back, which neither of us really wanted to do.
It's also a phenomenal history book, I think. You know, Sandy being in business for 51 years, a tumultuous period both for business generally and for the financial services business. We've seen the advent of globalization, the empowerment of the consumer, technology changes, regulatory changes. And Sandy is--
SANDY WEILL: Don't we hope that Cornell will use this in a lot of their classes as a text?
JUDAH KRAUSHAAR: You stole my punchline. We're hoping it's required reading. And lastly, through all of this, it's just a tremendous book of business lessons. Sandy, as you'll see, if you don't know him, really believes in a common sense approach to management. And so as he tells his story in the book, and as you'll hear today, I think there's just an enormous number of lessons, both in business and philanthropy and how to support a great institution, like Cornell, specifically, that we both hope you'll really enjoy.
So with that, let me start off, Sandy. Let's start when you were first here at Cornell or as you were wrapping up. The thing that was amazing to me, when you graduated Cornell, in 1955, you really didn't--
SANDY WEILL: You think so?
JUDAH KRAUSHAAR: Well, you almost graduated. You didn't really seem to know what you were going to do with your life. You certainly didn't seem to have a focus on business. And what's amazing to me, in looking at your career, 5 years later, 1960, you're already out in the world starting your own partnership with three other partners.
Your life is all about passion and business. But this passion for business seemed to come on the scene, explosively, in the late '50s. Tell us how you went from kind of a directionless alumnus to a very successful businessman in a five-year period of time or less than five years.
SANDY WEILL: Well, alumnus was slow in coming. Unfortunately, at my graduation, there was nothing inside the thing that I was supposed to get. And that didn't happen until September, which ended up changing my life in a lot of very good ways.
But I think, seriously, the event that really helped me the most and really shaped my life was my marrying my wife one week after my supposed graduation, with the blessing-- ha, ha, ha-- of her parents.
And Joan really taught me about how to believe in myself. She was much more outgoing. I was more shy. And it really gave me confidence. And we had children, right away, so we had expenses. We had to pay for the milk man in those days. They didn't have disposable diapers, so we pay for the diaper man. Because there was only certain things that she signed up for and doing diapers was not one of them.
And so she encouraged me to call people and to be a risk taker, really. The time to take risks is really when we're young. And so she encouraged me to pursue a career in the financial business, which I seemed to like, to become a salesman and that, which took a long time.
At the beginning, my accounts were all waiters and maitre d's, with the theory that they know a lot of rich people. And if I do well for them, who knows what will happen.
And she also was incredibly supportive, 5 years after school, of our starting a small little brokerage company, with 3 other people, where we had built up a net worth over those five years, including our wedding presents, of $31,000.
And we put $30,000 into that business. Kept out $1,000 in case the kids got sick. We had two at that time and no house. All our friends had houses. But Joan believed in me. And that's how it started.
JUDAH KRAUSHAAR: So the message for the students that may be in the crowd that aren't quite sure what they're going to do with their future is, what, just marry right?
SANDY WEILL: Right. Right. For the first part of our life, she encouraged me. And the more recent part of my life, she says, down boy, get real.
JUDAH KRAUSHAAR: Be that as it may, you started working in this small partnership in 1960. And you worked there, together, with your partners, for more than 10 years before you really stepped out in front. I think it would be interesting, maybe, to talk, briefly, about the condition of the securities business in the early '70s. It was a very trying period.
And you went from being comfortable with being sort of the house second-guesser to sort of really stepping out. And I'm curious, what was it that gave you that confidence? And maybe the second part of the question would be, you really sort of, in the '70s, established your persona, in many ways, your emphasis on partnership, your ability to do smart acquisitions. What were the real lessons that you learned through this difficult period in the '70s?
SANDY WEILL: Well, I think that the '70s was a period where the industry was beginning to grow, the public was beginning to come into the market. I think Merrill Lynch coined the phrase, "own your share of America," in reaching out to the average person that was walking in the streets.
And yet, the securities industry was mainly partnerships at the end of the '60s. A lot of the companies didn't have good capital bases. A lot of the companies were built on borrowing securities from clients and paying their clients some extra money. And some of those securities didn't work out.
And the people around the companies didn't really know much about how to build a company. The Stock Exchange used to have a surprise exam every year. It used to be at different times. So it was hard to do GAAP accounting. And the Stock Exchange accounting was not GAAP.
We started in 1965 having an outside auditor come every year and do a GAAP report so that we were able to look at our company like a normal business would. And people didn't spend the energy or the money or have the understanding about operations and back offices.
And the revenues grew, but a lot of the money went out the back door in very sloppy accounting, lost securities, And that created an opportunity for us. In 1969, in the first nine years, we cleared our business through Burnham and Company. That meant that they handled all of our back office operations.
And by the end of the decade of the '60s, we were doing nearly as much money as Burnham, and they didn't want to be spending all this money to expand their business for somebody else's business. So they told us that maybe we should think about going someplace else.
And we thought about starting our own back office, which we started working on, in the beginning of '69, and pushed the button to have our own self-clearing run by a person, by name of Frank Zarb, in 1970. And then problems developed in the industry, and we ended up having an opportunity to buy a company that had a very good business, but no balance sheet and terrible operations, called Hayden Stone.
And we went and took a chance and tripled our-- I'm sorry, increased our business 30-fold. We had one branch. We bought 30 of theirs. And all of a sudden, we had a national organization. But yet, we ran this thing as a partnership.
And the way we looked at our business, the person that did the most business the previous week was the person that had the strongest voice the following week. And that was OK if we were in just one office. But it really didn't work when you are around the country. And it really was exacerbated in '73, when we bought H. Hentz and doubled the size of our business, again. And we really couldn't run it that way.
And my partners thought I should be the person to run it. And Joan and I really worked on convincing myself that being a second-guesser is terrific, but if you really want to be a leader, you have to be willing to take responsibility for making a mistake.
And because no leader is going to be right all the time, and no person is going to be right all the time, but if you make a mistake, correct that mistake, surface so other people can help you. Don't hide the mistake and try and pray it gets better, because usually that doesn't happen. It gets worse.
And Sandy, be a person that's willing to put your head out there and see how you can do. But I still kept my brokerage license in case I didn't do well. And that's when I became the CEO of the company in 1973.
I think our stock was-- we had gone public in '71 at 12 1/2. We were selling at 1 3/8, which was about $0.20 on the $1 of our net worth. So obviously, people thought a lot of our company in that period.
But that was the beginning of what-- through that whole decade, '73 to '75 was the time of Watergate and a lot of problems and how people felt the United States a real bear market. And our company ended up coming out of that four times the size of how we went into it. And we never lost money, really, through that period.
We bought Hentz, in '73, and then Shearson Hammill which doubled the size of the whole thing, again, in '74, and knew how to put the organizations together, knew how to get them to work together to keep the best people from all the organizations.
And by the end of the decade, in '79, buying Loeb, Rhoades, Hornblower, which included one of the old heads of the Cornell Board of Trustees, Jan Noyes, who had sold his company to that organization.
And I'll never forget, we were talking about buying Loeb, Rhoades, Hornblower, and we had a meeting, in our house, in Greenwich. These people, they merged Loeb Rhoades, and Hornblower, but they never liked each other and never talked.
So John Loeb was in one room, with his lawyers. And Jan Noyes was in another room, with his lawyers. And Clark was in another room, with his lawyers. And we had to deal with all of them. But we served them good enough food and hospitality.
And we ended the decade of the '80s as the second largest securities firm, in terms of customers and revenues and brokers, and then looked to what was going to happen next.
JUDAH KRAUSHAAR: Which is selling your company for $1 billion, in round numbers, to American Express. And you went in and thought that you would really, effectively be a chief operating officer for American Express. And over the next--
SANDY WEILL: No, the beginning. At the beginning, I just wanted a job. I wanted to be able to do something. I'd been in the brokerage industry all my life. I'd run a company for nine years. I'd been chairman of the company since '65. And I wanted to see if I could cut it in another kind of environment.
And when we were talking, Robinson would say to me, you know, we really should get together, and I'll let you run your own company. I said, I don't want to run my own company. I run my own company now. I don't need you to do that. I mean, I want to see if we can make something really happen that gives us a leg up, the company of American Express a leg up, because we all got together.
JUDAH KRAUSHAAR: But as David indicated in his introduction, by 1985, you were frustrated. It wasn't what you expected. And you resigned. And this part of your story, I think, is interesting, because it reveals a lot about your character in terms of how you deal with disappointment.
And I wonder if you would talk about-- this was your first real personal setback, is the way I look at it. And I'm curious, there are lots of things in your life that didn't go the way you planned, and, yet, you have a philosophy for dealing with that, which I think is inspirational. Tell us a little bit about how you deal with adversity.
SANDY WEILL: Thank you, Judah. This is how we got along for two years, I'm easy when you say nice things.
JUDAH KRAUSHAAR: I got the zingers. The zingers are in reserve for later.
SANDY WEILL: But you know, I didn't look at it as a setback. I looked at the experience, at American Express, as this was something that I thought really made sense. I learned a lot in the time that I was at American Express.
I learned the importance of independent boards. I learned the importance of developing a relationship, with those independent members of the board, which I didn't do very well in my time at American Express, but served me, I think, very well in the time of our consolidation with Citicorp to form Citigroup and basically till I retired.
I also learned about philanthropy and the benefits of getting people, in the company, involved in their working, in local philanthropies, to make the communities that you operate in better, engaging customers with a project, like cause-related marketing, and bringing your customers into what you're doing and how they think about the philanthropy and getting involved, myself.
I got involved, in that period, with three major organizations, the three of which I'm chairman to this day. One is the National Academy Foundation, which I started. And Hunter is on the board. And Hunter, we're going to do great things now. We've got the Gates Foundation supporting us.
And it's a phenomenal program that really works to train young people, in our high schools, for a career in whatever business, whether it's financial services, travel and tourism, and information technology. And I think next year, we're going to start a program in engineering, which is something that is really wanting in this country.
Engineering is very important. It's important to Cornell. But yet, when you look at the engineers in the United States, about 15% of them are women. And a very small percentage of them really come from diverse parts of the population. And we do our teaching all in the inner cities. And we can, I think, be getting a much more diverse class for Cornell, come six or seven years from now, from that program.
So I learned those things. And I went on the board of Carnegie Hall in that period. I went on the board of the Medical College at that period in time. So what I've done in philanthropy has really been long-term involvements.
JUDAH KRAUSHAAR: Well, we're going to come to that in a second. I just want to pursue this a little bit further. Because here are the couple tough ones for you, Sandy. We're going to fast forward to 1998. And you came up with the idea of merging your company, Travelers, with Citicorp to create Citigroup.
And you had a lot of advice before that deal was announced.
SANDY WEILL: I saw in the paper, today, or someplace, that Jamie did that.
JUDAH KRAUSHAAR: It was you. It was all you. But the hard part--
SANDY WEILL: Read the book.
JUDAH KRAUSHAAR: But the question I would have for you is, you got some advice, both from your board of directors, from Joan, among others, saying, Sandy, if you're going to go into a merger of equals and share running this very big company with John Reed, you're not the best sharer, personality-wise.
And I want to ask you, and I think it's important to understand, how did you con yourself that you could work with John Reed and run this? And when you went through this, and it did become more difficult, a lot of people might have felt hurt in that process, that it wasn't sort of run seamlessly at the very beginning. What do you take away? And what would you advise others if they were ever to try something similar in terms of a merger of equals?
SANDY WEILL: Well, if it was anything like the one that I did, they should do it, because the thing was fantastic. But basically, we were looking at two really proud companies in 1998. Travelers had grown enormously, through the decade of the '90s, and had been maybe the fastest growing financial company in the United States and one of the best in the United States but, really, no position on a global basis.
And if you wanted to think to the future, if you were going to be in the financial business, the products were all becoming global, especially the investment banking and investment type products. And if you weren't global, you were going to eventually lose your position.
Citicorp was a company that was 180 years old. It had been the leading company, in the emerging markets and really around the world, at that point in time. Now, over 100 years in Japan, 100 years from opening the first office in Shanghai, which was 1903, over 100 years in India, England, 80, 90 years in Latin America and all different places.
And we had good management. We had the products. They had the diversity of the delivery system around the world. We had the ability to create a company that would have the strongest balance sheet of any company in the financial business, would have the best earnings, at that point in time, $7 billion after tax of combined earnings and a return of around 20% on equity. And putting this together, there would be some savings and there would be a tremendous opportunity for growth.
But I knew that American Express had talked with Citi about merging, about four months before we talked, and that fell through. And my sources told me it fell through because of how fast the CEO of American Express wanted to be the CEO of the combined company and how fast he thought the other guy should retire. Well, he said he wanted to retire.
So I knew we wouldn't get any place if we talked like that. And so I decided to call John Reed. And I made an appointment with him, three months in advance, for us to get together, after a dinner, a business council dinner in Washington.
John Reed comes to my room. Hi, John. And I know him for 25 years. Some of you would remember this, that John and I were on the board of a real estate company, where I learned a lot about what not to do in real estate. It was a company called Arlen Realty and Development. Right, some of you do know.
And John and I were both on that board. It was a big client of Citibank. And we worked together to try and come to the best conclusion that could develop from that. And we had a lot of respect for each other.
So he came up to my room. I offered him a glass of wine. He said, no. I offered him a Coke, he said, no. I said, how about a glass of water? He said, no. So I said, well, listen, let me tell you why I wanted you to come. And I'll start at the end, and, if it doesn't make any sense, we can all go to bed earlier.
I think companies should merge is what I said to him. He looks at me, and he said, jeez, that's not what I thought you were going to say. I agreed to come here, because I thought that you were going to ask me to buy a table at a charity dinner.
[LAUGHTER]
And I had convinced myself that I would take a $25,000 table. And we're talking about a $100 billion deal. Well, the rest is history. He obviously did like the idea. We were able to put the whole thing together in one month. We did it without any leaks from either side and more people got involved. And when you don't have leaks, it means that the people from both organizations think it's going to work.
I convinced myself that-- and in the early part of the process, John says to me, Sandy, I respect you a lot. I have no problem working for you. There's no reason why we have to be co-CEOs. And I knew if I took them up on that, that also would have been the last conversation we had.
And so I convinced myself that we were mature enough, we both have done well enough, we shouldn't let our egos get in the way. Why can't we get along? And that's what the people in both of these companies would want. And I really believed that.
And so we did get together. And I think John and I could have gone as partners somewhat longer. But we were driving, slowly in the beginning and then much faster, everybody that reported to us absolutely crazy. We have very different management styles. And they were getting different directions from John and from me.
And people began to leave. And we couldn't. We tried. We brought in a corporate shrink, who is phenomenal, by the name of Ram Charan, who has written books. And he's really highly regarded in the area of getting managements and companies to work.
And as a matter of fact, he doesn't have an office. This guy lives on an airplane. And he goes all over the world meeting with people. And one day, he pops up in our hotel in the south of France, where my wife and I are on vacation. And I had to spend the morning with him in our cabana talking about how management structures.
Two weeks later, he's at our home in the Adirondacks. And we came up with something that I thought made sense and John agreed with, where all the operations of the business would report to me, that finance would report to both of us. He would have the staff functions and the internet. And he agreed to do that.
But things still didn't work. And he said we should have a board meeting and let the board decide what to do, which ended up happening. I was scared to death of what might happen. And I offered all kinds of compromises. But John didn't want to compromise at that point in time. And some people said, don't worry. It's obvious, you should be the CEO.
And we each made our presentation to the board about what should happen. I thought that I could be a good leader. I said all the people in the company that are running every different part of this company work for me. And a lot of the people that worked for John are no longer there. And a lot of them shouldn't have been there.
And John thought that his presentation was that the company should get rid of both of us and bring in somebody from the outside. And it took the board about eight hours to realize that might be a little dangerous.
And it was scary. Can you imagine waiting in a room for people deciding, are you retired or not retired, after putting this thing together? It was very scary. John and I watched golf all afternoon. And Bob Rubin, who also was kicked out of the room, was watching a basketball game.
JUDAH KRAUSHAAR: If there was one thing, looking back, that you think you could have done differently better, what would it have been in that whole story?
SANDY WEILL: I don't know. I don't think that we would have been able to put the companies together if we didn't think about a merger of equals. And when you look 8 years after it was put together, the $40 billion of equity has grown to $110 billion of equity. The $7 billion of earnings have grown to a rate of $22 billion of earnings after taxes. The returns through the whole period have been somewhere between 18% and 22%, which is terrific. The dividends have gone way up. So I don't know.
JUDAH KRAUSHAAR: You're still rationalizing.
SANDY WEILL: Ask my wife.
JUDAH KRAUSHAAR: You had couple of years later, a few years later, the whole industry faced sort of the payback, if you will, for the bull market of the '90s. And there was a whole regulatory sort of onslaught, not just for your own company but for Wall Street, in general.
And you had some interesting things to say in the book, I think, about recognizing when the game changes and how to not stick your head in the sand and fight change. Talk a little bit about that as a lesson. Because I think, obviously, any large institution, like Cornell, you can be on one track and then, all of a sudden, you can see certain changes. How should we deal with change like that?
SANDY WEILL: Good question. At the end of the bull market, where, for the previous 18 years, people made a lot of money in the stock market, smart people, dumb people, all people, and now it was beginning to go the other way. Some incredible frauds surfaced, the two biggest being Enron and WorldCom. But there were others.
It became obvious that the so-called Chinese wall between research and investment banking had gotten very porous. And lots of people thought, when the regulators started looking at how business was done, or who participated in financing or funding Enron and WorldCom, which was just about every major company in the business-- it was every major company in the business-- a lot of people in our company thought that we didn't do anything wrong.
We should stand pat. We should fight them. And that should be our position. I think what we were seeing was a lot of our customers lost a lot of money. You can't tell somebody, who watched the stock go from 60 to broke, that nothing was wrong. When people lose money, there's no way that nothing was wrong. And a lot of people were losing money on the internet and technology and in some of these telecom stocks.
And so we decided that we're going to change our model, and that our company should not say that we didn't do anything wrong. We should be supportive of the changes. We should lead a lot of the changes in governance. And we separated research from investment bank more than anybody has done it to this day.
We brought in that person by name is Sally Krawcheck, who had an incredible reputation in the research area, with Sanford Bernstein and was president of that company, to run that and gave her the opportunity to run, also, the securities business, which became part of the research operation and away from investment banking.
We did a lot of things. Unfortunately, after Merrill Lynch, which was the first one under the gun, when the needle hit us, it became a very inviting target. And it was not a very pleasant experience to watch email leaks, from different offices, one day, two, the next day, one, and something else, without any background of what these things related to.
And eventually, thank god, the person that wrote all the emails basically testified under oath, even though he was pressured with a lot of threats that he would go to jail or whatever. But he testified that these were done to some woman to show her how important he was rather than having any basis in fact. But that one was interesting to the newspapers as the original stuff. But that's basically what happened.
JUDAH KRAUSHAAR: Let's switch gears. I want to ask a couple questions on your philanthropy. I mean it's your other great passion in your life beyond your business interests. And tell us how you define your brand of philanthropy.
It's obviously way more than just giving money. And if you could weave into your answer the fact that you ran a global enterprise, with Citigroup, what lessons that you've learned from your business career, in terms of managing globalization, and how you're applying it to helping contribute to Cornell and your other philanthropic efforts?
SANDY WEILL: Well, I've always believed in business, in partnership and having open communications. Because that's how the best things happen. And I think I have that same relationship in the philanthropies that I am involved in.
I've had 10-year, real partnership with Tony Gotto, where we are really joined at the hips. And he knows a lot of stuff, about a lot of things beyond just medicine, that I know nothing about. I know a wine that I like, but he knows all the grapes that go into it.
But it's important to have a relationship of trust. And I think I'm blessed to have that in the work that I do with the Medical College and its connectivity to Cornell University, which I think is very, very important.
An important part of our stakeholders are the people that are going to finance the campaigns and finance a lot of the stuff that we're doing, like with this new $4 billion campaign. And I think that our stakeholders will get a lot more bang for the buck by being able to tie together the brilliance of basic research, that's done here, with the brilliance of the clinical research that's done in New York, that's like translational research.
And I think we will be able to do a lot of things. And were we are now in research, I think is nowhere compared to what we're going to be. I have the same relationship with the person who now runs Carnegie Hall, Clive Gillinson. And unfortunately, I had two people, that I also had that same relationship over the past 15 years, die. So we've tried to change the water and the air around the offices at Carnegie Hall.
And I have the same relationship in the National Academy as my wife does in what she does now in Alvin Ailey and all the people. What was your question?
JUDAH KRAUSHAAR: Let me ask a follow-on. As far as Weill Cornell goes, we have this exciting, new capital campaign, university-wide, and the specifics for Weill Cornell. In your recent years, the university has opened a medical college in Qatar. You're doing things in Tanzania. You're doing all kinds of outreach, globally.
SANDY WEILL: And we also have gone national. This is how a business would operate. You want to be national and global. We have this affiliation with Methodist Hospital in Houston. They decided to divorce Baylor, which is a very good medical school. Or Baylor decided to divorce them. And we are now the teaching part of that institution, which is, again, an outreach for us to Latin America.
JUDAH KRAUSHAAR: I want to ask you, though, Sandy, if you looked ahead 10 years and had to boil the answer to this question down to one answer, what's the single most important thing you'd like to see Weill Cornell achieve over the next 10 years?
SANDY WEILL: Tony?
[LAUGHTER]
This is why we have a partnership.
JUDAH KRAUSHAAR: You're supposed to be joined at the hip. Do you want to come up here?
SANDY WEILL: We are.
JUDAH KRAUSHAAR: I mean, does it go national?
SANDY WEILL: I think, well, it's everything. Let me tell you what the pleasure to me has been. I have been able to introduce friends, acquaintances, whatever to some of the greatest doctors in the world, from New York or from around the country, that come here and really are helped a lot. And to have somebody come and say, your doctor saved my life, that's a pretty good feeling-- a pretty good feeling.
I also am really driven to see if we can get people in this world to relate better to each other. And when you think about the great religious teachings of the Old Testament, the New Testament, the Koran, have people begin to concentrate on the similarities of these teachings and not the small parts of them that create real issues.
And I think that we have to learn, in this world of ours, how we become brothers with the people that are from different cultures. And I think we are accomplishing that in Qatar, with the work that we did there, which was started before 9/11 and lasted though that, lasted through the Iraqi war. They like us. They like Americans better because of what we're doing.
And this is how you bridge that cultural divide. It's through education. It's through health care. It's through music, which is a universal language. And I'm really driven on that. My politics on the Middle East is a little different than yours.
JUDAH KRAUSHAAR: Let me wrap up with two, hopefully, quickie questions, and then we want to make sure we get plenty of time for audience participation. But Joan is a remarkable person. It was, for me, an unexpected pleasure working together with you. And Joan, you're terrific. And you really do keep his feet on the ground.
But I want to ask you, Sandy, I mean you've been married for 51 years.
SANDY WEILL: Yeah.
JUDAH KRAUSHAAR: 51, right. And you have a wonderful marriage. And I want you to tell this crowd the single most important or valuable piece of advice Joan ever gave you. And she's got a wonderful chapter in the back of this book.
SANDY WEILL: Down, boy.
[LAUGHTER]
Stay real. Yeah, I think that our relationship is one that has evolved. We started with nothing. And we've gone the whole way together. And I think we're on a new road now. The both of us are incredibly excited about what can happen in the future and how we think about trying to make the world a better place.
And I think that we're both crazy enough to think that maybe we can make a little bit of a difference. And even if we can't, we're going to try.
JUDAH KRAUSHAAR: Finally, I asked you this the other day, in another setting, but I think it's a great question. On the audio book, Chuck Prince, your successor as chairman and CEO of Citigroup, interviewed you as the introduction to that audio book.
And he said, Sandy, if you could invent a time machine, travel back to 1960, and come across a 27-year-old Sandy Weill, what advice would you give him?
SANDY WEILL: Stick with it. I think what I said to you, when you asked me that question before-- and I didn't know you were going to ask it again, because I thought my answer was lousy the first time.
JUDAH KRAUSHAAR: No, it wasn't.
SANDY WEILL: But I think I'd say-- what I said, I think, was that I had been so lucky in what has happened to our lives so far, that I wouldn't want to go back 27 years and think about changing anything. There have been some good parts. There are bad parts. There's that in everybody's life. But we've had a fantastic life and meeting lots of people.
We've been lucky to have loved work. I'm an optimist by nature. And every morning, I get up as an optimist. I don't always go to bed as an optimist. But the next morning, I'm an optimist again. And I think it's a good way to think about things. It's a lousy answer, again.
JUDAH KRAUSHAAR: Well, I'm going to help you answer, because I spent three years with you, very closely, in being your alter ego. I think it's all about passion, your optimism, tenacity, and partnering with people. I'm going on in my life starting a new business.
And I think anybody that's in the business world, the philanthropic world, institutional world, there's a lot of inspiration in this book along those lines among many other areas.
SANDY WEILL: And I'm really happy, what you are going to do. And he's going to create a hedge fund. And he's open for a few more accounts. But I'm glad to do it. I'm glad that you are doing it in the way that I think you should be doing it. And it sort of relates to part of what happened in parts of this book.
JUDAH KRAUSHAAR: Absolutely.
SANDY WEILL: I'm thrilled.
[APPLAUSE]
DAVID SKORTON: I wanted to say, Sandy, again, thanks so much. Now we do have some time. We started a tiny bit late. Let's take a few minutes. This is an incredible, incredible opportunity to ask some questions of either Sandy or Judah.
There are microphones here. If you don't mind actually just coming to the microphone. And we'll take a few minutes for questions. Please, sir.
AUDIENCE: Sandy, not only do I remember Arlen Real Estate, I remember working as a summer associate in a law firm in 1961. Our client was General Electronic Distributors. And it was one of your first deals if not your first deal.
SANDY WEILL: It was.
AUDIENCE: And I was asked--
SANDY WEILL: You're dangerous.
AUDIENCE: --to [? refer ?] a red herring over to your firm. I think it was on Beaver Street.
SANDY WEILL: Right.
AUDIENCE: And there were three guys in the room looking at a black and white screen with some numbers on it. What was on your horizon then? And if it was limited, what event changed it?
SANDY WEILL: Well, you know, I think, when you came into my office, what was on our horizon was very simple. We wanted to get this deal through the SEC and sell it. And then hopefully, the company would do well.
But seriously, our company was a year old. We were just beginning to build the business. We were trying to create an investment banking part of a business to balance our retail brokerage part of the business.
And we just wanted to create something that would do better. We were paying ourselves a very small amount of money, like $12,000 a year and, over and above what our salaries were, we put all that money back into the business, so that it would have capital to grow.
We didn't know how far it would grow. But we kept on throwing out the bar, further and further, as we would approach an objective. We never would leave the objective the same. And so it was something that evolved. Thanks for buying two books.
[LAUGHTER]
AUDIENCE: Sandy, I hope you eventually graduated from Cornell.
SANDY WEILL: I did. And I recently got my diploma.
[LAUGHTER]
AUDIENCE: I don't think--
SANDY WEILL: The first one was lost in the mail.
AUDIENCE: I don't think from your history that you went to business school. Did you get an MBA?
SANDY WEILL: I didn't get an MBA. But I doubled registered in my senior year in the business school, here, which was part of the problem.
AUDIENCE: So two questions, did you learn-- you seem to be an expert in organizational behavior and financial interests. Did you learn that at business school? And do you think that you'd advise people now to get an MBA degree before doing the kind of things that were you doing? Or can you just learn it as you do it?
SANDY WEILL: Basically, I would say to you that I think one of the big advantages that I got out of college was meeting a lot of very interesting people from all over the world and getting to understand different cultures. And that was very important to me.
I never learned how to use a calculator. I don't know how to use a computer. I don't have a BlackBerry. And I don't do email, so I wouldn't qualify for any way that anybody does anything.
I learned how to run a business by basically walking around the halls and speaking to people, being accessible to the people in the company that I worked in, whether it was 4 people or 270,000 people. And people didn't take advantage of it.
And it's amazing the things that I was able to find out, about how we were running our business, by speaking to a heck of a lot of people all the time. And I loved the people in the business. We included families in the business. We included spouses in the business, so that a family can understand what's happening as the working partner goes through the highs and lows. And that partner can be much more helpful.
Would I advise somebody to go to business school? If you can afford it.
AUDIENCE: Thank you.
AUDIENCE: So Sandy, I want to ask you two big questions. First, what is the most important thing you have learned from your Cornell experience? And what is your biggest achievement here besides getting your wife here? And do you have any regrets at Cornell? If you go back to become a Cornell student, again, what is the thing you would want to do, which you have not accomplished at Cornell?
SANDY WEILL: On the first part of the question, I think the thing that I learned the most from my experience is the importance of partnership and the importance of teamwork. And if you take anything, whether it's a sports team or a company or a group of researchers, and you get them to work together as a team, which is what our new campaign at Cornell is all about, the teamwork of putting together the best and the brightest people from all of the campuses of this institution--
So in answer to your third question, I think I can do more for Cornell and for myself working from my position as chairman of the Weill Cornell Medical College than going back to school.
[LAUGHTER]
AUDIENCE: Thank you.
SANDY WEILL: Thank you
DAVID SKORTON: We'll take one last question because of the time.
AUDIENCE: Sandy, I'm John Bailey. And I'm a Travelers Insurance representative.
SANDY WEILL: Great.
AUDIENCE: I sell Travelers products.
SANDY WEILL: Great. Do yo own any of the stock?
AUDIENCE: A little bit.
SANDY WEILL: Right.
AUDIENCE: But you've seen a lot of businesses-- you've brought a lot of businesses together in your career. And each of those businesses has a culture. And I was wondering how you dealt with these different cultures and bringing them together and especially on such a massive scale. Because as a small businessman, I see, when we try and merge together, there's a lot of difficulties--
SANDY WEILL: There is.
AUDIENCE: --on the small end. So I was wondering how you dealt with it across these massive mergers that you brought together.
SANDY WEILL: I think three main points-- number one, have a company that really is a meritocracy, where the best people survive, especially when you're doing a merger of companies in the same business. Pick the ones, no matter where they come from, that can do the best job. Because the people that work for them are going to know who those people are anyway. And when you can't make up your mind, you're not being a good leader.
Second, create, again, a feeling, in the organization, of partnership and teamwork, and have a vision that you can espouse, that people buy into that believe in, and they have a passion for executing on that vision.
And third, I would say, is make everybody an owner, an owner financially, so that they all own shares, everybody own shares in this thing, whether it's the receptionist or it's the person that's creating the new products. Have people feel that they are going to benefit besides just being paid something. And that they're a partner, a real partner, I think is a very important thing to do. So I would think about those three things.
AUDIENCE: Very good. I wish I owned as much stock as you do.
SANDY WEILL: Well, you're younger.
DAVID SKORTON: I think that's a wonderful note to end on. I want to thank everybody for participating, mostly Judah and Sandy. I want to thank you for all you've done. And I want to remind you, in case you didn't know about this, that we are selling The Real Deal at the Cornell store all weekend long. Thanks everyone.
SANDY WEILL: Thank you.
[APPLAUSE]
Corporate legend Sandy Weill’s autobiography, The Real Deal (October 2006) is discussed. With co-author and long-time Wall Street analyst Judah Kraushaar, Sandy shares highlights of his extraordinary business pursuits and successes over five decades, culminating in his creation and leadership of one of the world’s leading financial powerhouses, Citigroup. He talks about his philosophy toward philanthropy and the special role that Cornell has played in shaping his life and his choices.
Speakers:
Sanford I. Weill AB '55, Chairman Emeritus of Citigroup Inc.; Honorary Chairman of the Committee to Encourage Corporate Philanthropy Judah S. Kraushaar AB '79, MBA '80, Private Investor; former First Vice President of Merrill Lynch
