How Michael Bloomberg Sold His First Terminal #scottsthoughts

Welcome to success story the most useful podcast in the world. I'm your host Scotty Clary and today I'm going to break down the story of Michael Bloomberg and how he sold his first Bloomberg terminal we're going to speak about his entrepreneurial ventures and his sales exploits and some of the things that he did when he was trying to build the business that got him to where he is today that maybe we didn't realize were classic examples of great sales and start-up strategy so without further ado this is the story of how Michael Bloomberg sold his first terminal. Now I'm going to tell you the story of how Michael Bloomberg sold his first terminal but first if you're listening to this you may be asking what is the Bloomberg terminal. Well the Bloomberg terminal is one of the most sought after pieces of technology in financial markets. I'm going to read you the definition of what the Bloomberg terminal is obviously built by Michael Bloomberg so that you have a good idea of what it is and what it's used for and why it was one of the things that made Michael Bloomberg a billionaire. So this is the definition straight from Wikipedia it's going to do much better and more succinct job of describing the Bloomberg terminal than I can. The Bloomberg terminal is a computer software system provided by the financial data vendor Bloomberg LP that enables professionals in the financial services sector and other industries to access Bloomberg professional services through which users can monitor and analyze real-time financial market data and place trades on the electronic trading platform. It was developed by businessman Michael Bloomberg the system also provides news price quotes and messaging across its proprietary secure network it is well known amongst financial community for black interface just become recognizable trait of the service the first version of the terminal was released in December 1982. Most large financial firms have subscriptions to Bloomberg professional services many exchanges charge their own additional fees for access to real-time price feeds across the terminal. All Bloomberg terminals are leased on two-year cycles with leases originally based on how many displays were connected to each terminal. Most Bloomberg setups have between two and six displays it is available for an annual fee of $20,000 per user or $24,000 per year for the small number of firms that use only one terminal. And as of October 2016 slightly dated data but this will give you a good idea of how popular it is there are 325,000 Bloomberg terminal subscribers worldwide. So that is the Bloomberg terminal and that is the first entrepreneurial venture that Michael Bloomberg took on. So let's go back to Michael Bloomberg story and there is a sales and entrepreneurial lesson in here so bear with me. A quick history of Michael Bloomberg he was a Harvard MBA he started working at the investment bank Solomon brothers when Solomon brothers was acquired by five row Michael Bloomberg was pushed out with a $10 million paycheck. So he spent $4 million of that $10 million paycheck developing the terminal with only the money he had at the time from his exit from Solomon brothers. Who else to this remind you of taking the money from their first success albeit not as great as the example I'm thinking of and putting that into their future company. So Elon Musk took the money from PayPal and he put it into SpaceX Tesla and Solar City. So as you can see there's a trend here people that are successful and achieve a level of success. It's not like they just take their foot off the pedal they do more and $10 million dollars a nice paycheck. Keep in mind if you are in finance in New York and you're doing well there's a good chance that you're living a pretty good lifestyle. So $10 million has a little bit of a runway on it but it's not in New York if you are living a lavish lifestyle it's not going to last you the rest of your life that's for sure. So he spent $4 million of that on his first terminal and he didn't have any customer. So his MVP his minimum viable product was $4 million dollars and this is where our sales story starts. So Michael Bloomberg unlike many entrepreneurs actually did not rush to get his first customer he spent $4 million and three years of his life building out the initial the initial iteration the MVP of the Bloomberg terminal and then also thinking about how to sell this to a customer. So what Michael Bloomberg was running into was the fact that he was not replacing an ingrained entrenched system. It was a blue ocean he was creating something there was a need for it and he knew it coming from a financial background. But that being said it wasn't like he was replacing some other piece of equipment that was globally known. So he had to decide how am I going to sell this to a customer when they may not have anything like this already. So these are the steps that he took to land his first customer remember three years to land the first customer so in year one from a sales perspective what he did was he focused on landing small deals with customers in hopes of eventually lot landing larger deals with customers. So this is how he did that and this is a classic sale strategy building relationships landing a small deal and then opening up and getting more share of wallet or expanding the amount of spend with the customer after you land a small deal and parlay that into a larger deal. So Michael Bloomberg was doing odd consulting jobs in his time off and one of his clients was Merrill Lynch. In terms of being the ideal customer the person that he would want to sell his Bloomberg terminal to Merrill Lynch checked all the boxes. So Bloomberg was doing consulting work but his goal was not to be a consultant. The goal of the consulting work was entirely to establish a relationship with the company and start to form relationships with the champions and decision makers within the organization. So he was doing what's called in sales multi threading where he lands with Merrill Lynch he starts to talk to people he starts to build relationships. Yeah they're paying him a small consulting fee but he knows that he has this piece of tech in his mind that he's building out spending a lot of money building it out and he wants to eventually sell that to all those people that he's working with. So for the course of the next year consulting at Merrill Lynch paid Michael Bloomberg roughly $100,000 which is really not a lot compared to all things considered what he has made before from his exit. Solomon brothers and the fact that he's invested $4 million so we still net negative $3.9 million at this point. But you know he hasn't in he's built relationships he's going to continue his sales process in year two. So again first year was entirely building relationships year two year two he identified the decision maker this is the sales steps that he took. He built rapport with the decision maker to increase the wallet share remember that was his goal he wanted to get the consulting job and then eventually sell the maternal. So he had to figure out okay I have the consulting relationship now I have to figure out who would actually I know all these people in Merrill Lynch who's going to be the person who's actually going to purchase this terminal if I put it in front of them. And he so he didn't have all the relationships with all the key decision makers in Merrill Lynch but he did know that he had access yet access and he had a foot in the door. So what he decided to do was double down on building on the relationships that he had already built with the people within Merrill Lynch and his strategy was it was quite it was quite ingenious. So he had access to all the Merrill Lynch offices because he was consulting there so every morning at 6 a.m. you woke up he drove to a deli across the street from Merrill Lynch's headquarters and bought coffee with and without milk and then he bought tea with and without milk. He had a few sugars on the side I guess of his tray and he roamed the halls of Merrill Lynch looking for anybody who was in the office early in the morning and he literally would walk into their office and say hi I'm Mike Bloomberg I brought you a cup of coffee. I just like to bend your ear is what he said this is actually a quote I saw it in I think a business insider piece hi I'm Mike Bloomberg about your coffee I like to bend your ear his rationale. Nobody was going to tell him to go away it was before work started he was offering them free coffee or tea and there was also a psychological effect that he implemented here whether or not he knew it but the law of reciprocity is a very very powerful law in sales when you offer somebody something for free they want to give you something back and if that thing back is just time and it's a minor inconvenience and it's really what's what's the difference you know if somebody comes in offered you free coffee ask a chat with you and all you're doing is killing time reading the paper before work well you'll take the coffee and you'll probably say yes to the conversation. So anyways he did this he did this all through his all through year two and he finally got a meeting with Ed Moriarty a managing director at Merrill Lynch this was the person who could make the decision to purchase the Bloomberg terminal but he had to convince he had to convince Ed he couldn't just sell it to me I had to convince him that this was something that Ed actually needed so now we're on to year three so year three he pitched Ed he got some he got some pushback on the concept of the terminal but then he mitigated the risk that was in Ed's mind of purchasing a new terminal what was the risk involved while he mitigated that I'm going to explain why and how he did it and then after he mitigated the risk he proposed something to Ed that was above and beyond what Ed could say no to let me explain. So Michael Bloomberg finally had a chance to pitch the terminal to Ed it went horrible so the Merrill Lynch team saw the terminal was a great idea but Merrill Lynch is a huge huge huge entity and they realized they could just build it themselves they had the money and they had the brains to fill it up and they had the brains to figure it out they forecasted that in six months they could build an alternative internally and that their alternative would be even better than what Bloomberg had pitched them so Bloomberg said you know shit okay I gotta figure this out now how do I get them to take a chance on the product that I already have right now so they don't even try and attempt to build something because it's very very possible they could have built something much better or slightly better than what he had built because they have way more than four million available so he knew that he had to move fast and this is what he did he had to mitigate the risk remember we have to mitigate the risk so Bloomberg said okay if I install it and it doesn't work you don't pay if I install it and you don't love it for six months you don't pay if I install it and there's any issues with it at all while you're building your new machine you said it's gonna take you six months so he said just just try mine for six months while you're building your new machine anyways what's the harm right so if anything goes wrong in six months I take it out no questions asked no bill no invoice you have your own machine but what happens if mine works okay so if it works then you'll know that my machine works so the lesson here is if you want to sell more eliminate the risk involved in the sale and the risk is usually technical or financial and Bloomberg eliminated both of those risks he said if it doesn't work I'm gonna I'm gonna I'm gonna install it myself you don't do anything it doesn't work you don't pay if you don't love it you don't pay which is such an objective measurement right if you don't love it if you don't love it what does that even mean well it means that and and Merrill Lynch exacts knew this they for they could for whatever reason say forget about it and say we don't want it but because he mitigated the risk it was an easy it was an easy decision for Merrill Lynch they signed off on the project and gave six months to Bloomberg's terminal to prove itself when six months was up Michael Bloomberg tested the first iteration of the Bloomberg terminal at Merrill Lynch there were some software bugs but it worked very well it was already installed the Merrill Lynch team love that that he had fulfilled in a time frame they had allotted and save in the trouble of having to produce a compliant complicated product from scratch they proceeded to order 20 units from their initial order and then added two more after the six months period was up so with Bloomberg selling this terminal to one of the top five banks in the world the product was made the story was made this was the beginning of the Bloomberg terminal and it all just picked up steam and snowballing all from there and this is truly the story of how Michael Bloomberg sold his first terminal with four million dollars three years three steps and regardless of whether or not it was done purposefully a very insightful and strategic sales process executed quite flawlessly to be honest anyways I hope you enjoyed if you did hit that like button please subscribe and leave some comments let me know what other stories what other case studies just like me to break down and we can learn some great insights from companies that have built businesses and from people that have built businesses the fingers crossed we don't have to make the same mistakes twice have a great day we'll talk soon bye