harrowing. that winds up making many black americans when we take about all our debt, all our debt, all are departed, all are denigrated, we are back where they cspan2's book tv, moretelevision for serious readers . >> good evening everybody. we've got to try it one more time. i know you have greatenergy, we saw you coming in . this looks like a high-energy group so let's try it one more time. good evening, that the energy

we know you have. my name is george, i'm program director at the commonwealth club , on behalf of all of us i want towelcome you , thank you for coming down to tonight's terrific program with charles schwab in conversation with adam listen ski. how many of you are members of the commonwealth club. if you're not a member, this is a great time to join. there are all kinds of terrific programs, there is buildings like with a great roof deck and a gentleman named billyat the back of the room . he will be happy to answer any questions you have about joining the club so see himon your way out . these take a moment and turn off all your cell phones. any devices that might make noise and while you're doing that tell you about upcoming problems of the commonwealth club . on october 31 halloween, fair will be with us. on november 12, there's not a comment in that area just so you all know.

november 12 rich lowery will be our guest. november 12 in the eveningin silicon valley legendary 49er jerry rice will be with us . and on november 15, actress mary lou henner who many of you may remember from taxi talk about why she has a unique condition thatallows her to remember everything in her life . very interesting program. the commonwealth club asbury travel programs and we encourage you to ask billyand our staff about those . his february you can take an expedition to new zealand with adventurer peter hillary, the son of edmund hillary lots of good stuff coming up .?'s on your seat for mister schwab that will be brought to our moderator, write your questions early and often and make sure they are questions,try to make them as legible as you can and we will try to get to as

many as we can . signed copies of his book are on sale after the program. without any further review you get a warm welcome to charles schwab and adam listen see. [applause] >> what a crowd. i'm going to hit the gavel in a moment but before i do i'm going to reiterate that i do discriminate in favor of legible questions. so you been worn on that. this is one of my favorite parts ofdoing the commonwealth club event . i can hear you. welcome to tonight's meeting of the commonwealth club. i'm adam listen see, executive editor of fortune and your moderator for tonight's program. this program is part of the

commonwealth club epic and accountability series, underwritten by the travelers family foundation with additional support from the bernard osher foundation for our good list programs. i'm now very pleased to introduce that ice yes, charles schwab, elder, former ceo and chairman of the charles schwab corporation and author of the new book invested, changing forever the way americans invest. charles schwab is one of the world's most influential mental executives with as of 2019, i'm not done. nearly 3.6 trillion worth of assets managed by the anonymous charles schwab and company. he founded the brokerage firm in 1971 with a $100,000 loan and has since grown into a financial services or not. mister schwab's memoir

invested lays out his passion to change the way we invest in the hard work ingenuity and entrepreneurship that propelled his vision into one of the leading financial service firms in the world. from studying economics at stanford university guiding his company through decades of economic transformation andfluctuations , he recounts the defining moments of his life while providing unique insights into the evolutionary dynamics of entrepreneurial companies. today we are pleased to be able to have a conversation with mister schwab about the how to's financial management and his advice on obtaining a fulfilling career and life. please join me inwelcoming charles schwab . [applause] >> that a lot of my hands out here, thank you. it's a real pleasure, i stacked the deck here. i was thinking you might want

to quit while you're ahead. >> let's start at the beginning, not the beginning of your life which we can come back to the beginning of your life's work if you will and it was in 1975 you had an entrepreneurial moments. tell everybody about it as you describe in the book. >> may 1, 1975 and the congress made a decision to make sure that commissions were all negotiable before they were fixed for over 200 years at certain levels but it was fixed rates all the way through from the prior 200 years and on that day they liberated the whole thing and democratized in many respects the ability to invest anyway you wanted to and pay any price depending on which broker you use. we lowered our prices substantially and others raised their prices a little bit like merrill lynch and created a huge gap for us to enter into the business with low prices and hopefully

great service and we started with four people, not in 75, we started a couple years before because we knew this was going to occur and so today we have about 20,000 employees that work with us and try to serve our customers. >> i think one of the themes of entrepreneurialism and you write about being an entrepreneur. you identify as an entrepreneur is that the things you see and act on are what separate you from everyone else so for example what congress did wasn't a secret. it was the opposite of the secret, everyone in the securities industry you about it so can you reflect a little bit on why, what we now look at as obvious and what enables you to create your business, why you were able to act onit and others in . >>. >> we were the only firm that

entered into that area of this discounted commissions, there were a few others most ofwhich were in new york . we happened to be in san francisco so this really is a san francisco story from stem to stern to say the least so on montgomery street i had four employees and i thought this is a great idea to go into this business . and at the time, so we, this is a couple years before the 75 change but i have this idea that customers really wanted a better deal and being sold high commission products, being sold stories along the way that some were true, most of them were just hyper stories and there was a way to create a commission or compensation for the discerning broker so i wanted to have a place for people to invest and the reason i got into this because i was just out of stanford business school in 1961 and i worked as a financial analyst for

the next 10 years or so and as a portfolio manager only brokers came to our firm. i was just with a tiny company near menlo park at the time and i just got to know these brokers and said this is a bad business. there based upon the wrong kind of foundation, they were based upon customer service or customer value for all those kinds of things that you all want to hope for, so anyway we decided or i decided 10 years later, it was 71, 72 that when we started the company with this view in mind so the first thing i did is i don't want any salesman in our company. no salesman will ever call you. we compensated our employees by salary plus bonus based upon success of the total company and if we were really successful, everyone got a nice bonus . so everyone is focused on customer service they want to

have them refer new customers to us and wanted to grow and prosper and that's how we were different then and we've been different, the same model for the last 40 years. >> and this is a profound point you make earlier in the book that you come back repeatedly. you decided your company was not going to sell . you were going to market. and we will talk about marketing cause you also identify yourself as a marketer. you personally. your book has a lot of nice detail about you, about your early life, you are a californian through and through. just tell everybody a little bit about where you grew up and how it was, why being a californian is part of your. >> it's interesting, my paternalfather , grandmother was born in san francisco in

1880. my father born in san francisco in 1915. i was born in sacramento so basically growing up here and i spent my whole life here in california so i went to school here etc.so i'm really a local guy . that was erin deputies in many respects and i think san francisco ended up being for me, i could do things that you wouldn't ever do in new york city so many people didn't realize i started the company here, built the company in san francisco and never had all the negative things that a new york brokers add and retain so that was very beneficial. the other part was the fact that technology and innovation was clearly happening in the silicon valley in san francisco so i adopted a lot of those great things in the introduction to our company made us much more efficient and we ever were all those years, even before the internet we were applying all the best technology so that wasbeneficial .

lucky i was here and the third thing was we were able to market close at 1:00 new york time so i should focus in new york so we had all afternoon to clean up at the time because there was so much paperwork was just paperwork was technology so we had extra time to make sure our back office was clean all the way through and a couple times they work but for the most part we had a clean back office. >> you describe, i'm going to touch on three things that were important early in your life you and one is that when you got out of college you had a whole lot of jobs. you did a whole bunch of things. one of them was selling insurance and i don't know if it's right to say you weren't anygood at it, you didn't like it, it didn't work . tell everybody. >> i had a number of jobs and i think it's critical for you to encourage young people to

get any kind of job and i have any kind of job. i've been a switchman on the railroad but speaking about, i was between the first and second year in business school and so i thought i'd better learn something about the insurance industry because i was focused on being in the financial terraces world so i worked at a bank the year before and then wanted to see about insurance. and i was a complete failure at that. i really found out that this stuff was so overpriced in terms of the sales commissions involved and they wanted to have a list of all my family and friends and so forth and i never sold a single policy. i started analyzing with the insurance stuff and i said that's not for me and after six weeks i think they encouraged me to quit . >> you made it clear in the book you said you were skeptical about mostinsurance products . >> they're all built upon a failed content that was,

extraordinarily expensive, when you analyze how their constructed. and very quickly i decided i think it was a bad thing for most, they had me selling endowments, twenty-year endowments to anybody. that was the stupidest thing to ever do because i was always interested in investing and i thought putting your money in something that might grow faster than an insurance product which sucks most of the returns out and goes to the insurance company so that was an early learning. another early passion of yours and current passion of yours is golf. i believe you got into it playing for the high school team in santa barbara . >> i loved it. >> other than enjoying it, what is golf such a big deal ? >> not i love basketball, i really loved basketball but it turned out i wasn't tall enough .

there's nothing i could do about that one and i played junior basketball in college, not in college but in high school and all of a sudden as a sophomore or junior these other guys are six foot two and three and so forth and i was looking up to them so i decided maybe golf is an area i should probably focus on because even then ogilvy was 56457 so i thought that was my iconic man so i wanted to copy him and that was the reason i went for golf. >> many people will know this but i suppose some want know that chuck is dyslexic and i want to push you onsomething you wrote . you said for four years, you wrote for 40 years youthought that you were stupid . >> slow or something. somehow or other i could not read as fast as my friends in school and it upset me a whole lot and my comprehension wasn't as good as they are so i had to read

things a couple of times to understand what was goingon . to me it was sort of a handicap but i never talked about it. it was the kind of thing you would never any about about how slow you might be because i took my test. >> but you didn't know what it was? >> i discovered when my youngest son had the same exact issues that i had in school, and he was seven or eight, took him down to be reviewed by a psychologist and so forth to see what his issue was about reading. and they came back and said your son has dyslexic issues and this that and the other thing. it was a great revelation to me to find out his problems were identical to mine as a kid and explained everything but the word dyslexia, that whole science was undeveloped when i was young and it's

been relatively analyzed even mris of the brain, how the brain functions lightly different in that area where you deal with words and conversion of words to meeting and that kind of thing so anyway, turns out it sold for me a lot of issues that i had earlier. a big moment for me. >> so from that point forward my wife and i decided to develop a charity thing for service for other parents who hadkids with learning issues like that . it was called a parent education resource enter and we did it in san mateo and we had many many families, , brilliant moms and dads and this kid can't read very fast, what's wrong with him quest mark your normal in every other respect, you just have a processing problem that you have to identify so books on tape is a great way

to read books . >> one of the things i admired about your book is that it's very acceptable to the average reader but you go into all the major business events of your career. >> it's really a san francisco story about a company with four employees in san francisco on montgomery street and grew to 20,000 over four years of time and all the ups and downs. we were bought by the bank of america one time and one time we were very large shareholders of bank of america and our issues there so we finally bought ourselves back after quite a struggle. that was in 1987 so the story about all that and me going on the bank of america board was interesting also. you'll love reading about that and fortunately we were able to free ourselves and by the company back.

in 1987 it was. and then start a new basically in terms of our growth pattern and so it's sort of a fun story to think about and review. >> a lot of your stories are very fun and interesting. you mentioned a few minutes ago about how and why technology has always been important to schwab. will you explain the first time technology was important and why you were so persistent about spending big money on it even when you didn't necessarily have big-money. >> the first transaction i talked about in the book about an entrepreneurial, that's the whole company. since 1979, the whole company on buying a software system i thought would solve our beginning software problem. we were getting more and more

volume, more and more paperwork and i had to solve this thing, otherwise we were going to godeep in the sink or thrive . thank god we worked hard through that whole time and were able to come out at the other end, have a system that would work well though we were very early on at adopting an online system and the internet wasn't really coming about until 1995, 96 so we had all those years of using a very efficient system that we talk a lot about a little bit, i won't bore you with that information but anyway, the software cost me $500,000 that time in 1979 and the company wasworth $500,000 . so that was a big decision, let me tell you. >> you mentioned a moment ago there was a young company, you were growing quickly. why did you sell the bankof america in the first place ? >> we thought originally there were going to lend us money. they suggested that and i

said to study our business model and they thought this is a good business, maybe we better buy that company and diversified and they flashed a couple big numbers and having come from zero money myself, 55 million was a whole lot of money for the whole of the company and i think i owned the percent which was a lot of money, let me tell you in 1981 so we finally decide to do that, to make the transaction happen because i was faced with as we grew and grew, we needed more and more money to grow. you need that in capital and i was turned down by many venture capitalists along the way and certainly wall street didn't come to my aid because we were creating competition for them and just lowering the prices, making big service for customers and thousands were joining our company as clients.

so they didn't want to finance it any further so i had a tough time raising money so it was an attractive thing at that time, my age and thedevelopment of the company. but soon , over the next three or four years it became clear that we were under the wrong umbrella and had to work our way out of their. >> not only that but they ran into problems. >> a rented huge problems, lend money to the greek shipping guys that went down the tubes and the argentina had all kinds of loans to south america. it went on and on so they had to sell the big building, big tall building in downtown san francisco. they sold a couple other subsidiaries, italian subsidiaries so i said hey, i convinced him to sell us and that was another interesting story about us and they said okay, will sell you so will sell you to the highest bidder and i said terrific but you know very well that

i'm not for sale area you can sell a company, i'm going to start a similar company right across the street and it was a real threat because i was going to do it. but i was a little bit upset with them because going back when we made the deal with them, our stock , we went in a stock for stock transaction and their stock was $24 a share and that was a top check in the next four years it went from 24 all the way down eventually something like nine so i was an unhappy guy for many reasons. that was my total worth, my wife is here in the corner, she's shy. >> it's a nontrivial point, they could sell charles schwab they couldn't sell charles schwab. >> so the name and likeness provision in therethat they couldn't, that wasn't for sale . and it was serendipitous that

i used my name and face by that time in advertising, so i was getting people who identify the company withme . though i don't know who they were going to sell it to. the namesake goes down into the streets about a block and opens up another similar competing company though we came to terms. they were really happy. they ended up with five, six times what they had paid me for an compensation in five years time so it was a good return for them. >> i want to come back to this in a moment but before that, you mentioned that the company was identified with you. you were in the advertising, your name was on the door. i remember correctly wasn't 100 percent your idea. could you talk about that? >> that was an interesting

moment in time. the guy who was our advertising executive at the time, richard cruiser, wonderful guy who , this is now 1977. we had a great article about the company in the examiner. remember the examiner? there was a big picture of me and the picture is in thebook . i'm leaning over this thing they call on reno machine. and they had a nice article about how well we were doing and growing and etc. so dick said to me why don't we use that teacher of you in the ad because before we had ads that said save 75 percent on your transaction cost like a one inch, one column by three inches and then we go with two columns and we could really afford advertising at that time that we grew and grew and i think we could afford and add about that size. so they said let's put your picture in there. are you kidding me? what do you think my friends

are going to say, you egomaniac . was my wife going to say what the mark put your face out there, onlythose guys out of the post office, that's where they have their names . so anyway, i said how about this, will just try it once so the results were up about 10 times what they normally were in terms of the advertising thing so we convinced everybody. itwasn't that much of an egomaniac, i was pretty bashful at the time . and we did it and it worked so we decided that was the way we were going to operate hereafter. so that's what happened. >> questions starting to come in from the floor so i'm going to abandon my script and go to their questions. i'm going to read three that are similar to each other. what advice would you give to a 16-year-old starting in investment and figuring out his future path? the second question is what three pieces of advice can i

take back to my high school students and lastly, my son is graduating from college this year, what advice you give him as he gets started with investing? i guess you get questions like this from time to time. >> even from my grandkids, i have 13 grandchildren so they asked how do you do well in thestock market . first i would say it's all about education. you've got to read as much as you can, even how the world functions in an economic sense and start along with it . what is a stock? ownership in a company and we have thousands of companies in america, that's our system. we call it the capitalist system of free enterprise, a better word but i have to tell you, is for the kid to understand, capitalism comes from the word couplet, the latin word meaning head that means creation, innovation. that's why we love capitalism

because it's the creation of ipods, apples to whatever it might be but it comes from the creation of the human brain. anyway, learning about economics and how that all functions is really the important way to start and unfortunately school today don't have much in terms of economic education and it's a real problem i think financial literacy is a very low level and people get in a lot of trouble with bad ideas about credit cards and borrowing and all those kinds of things area they have no clue. you need to learn about that in school so anyway it becomes education. if you want to get successful and read more about it, get passionate about it, understand why you're there and you'll have a great investment life for many years to come, we're all living a lot longer. >> let me drill down and play devils advocate on that question and your answer and i would save my advice to a young person would be by index funds and whatever you

do, don't buy individual stocks because you're probably going to do it poorly because the academic research proves that most people do. >> i'm a great believer in index funds . having started one in 1991, called the schwab 1000 and it's done incredibly well over the last 27 or eight years . it compounded about 9.9 percent compounded and it's like the s&p 500 except we have 1000 stocks so i'm a longtime believer of it and i've recommended it to many people. index funds is a great way to start, however it's a little bit boring. in fact, it's very boring and i think for a youngperson to step into an index fund , you how about microsoft? how about facebook? how about all the things you see so guess what we are going to

solve the issue. we have got that thing coming up next year for young people who want to buy one tenth of a share of something, one fraction of $1000 from the gifts from their grandparents or something and maybe 25 different stocks. and there will be an easy way for them to get engaged and involved and that's what you want to set them into what they are all about so they get in your reports they s get interesd and curious about what's happening next in that company. i love index funds. the greatest way for most of us in this room to invest a low-cost and all those kinds of things. i think the young kids can make more mistakes early on and do it inexpensively.y om a wonderful segue to the next question from the room is what was the most painful lesson you learned about forming and growing ass business? >> lack of capitol.

that's what venture capitalists do these days. we have ae great flourishing system with it with equity capitol available for greatwh ideas and you can see what happened with facebook. supported by a great idea and they were supported at venture capitalists and so forth. back when i started that wasn't really a flourishing area to speak of so that's a beneficial thing to have prayed i think great ideas even now in many ways you can do advertising. i'm looking for capitol. it's possibly can put an ad in the paper and say i'm looking for capitol. i want to pay for that from. >> do you have a favorite mistake that you made those just a plane failure? >> there are many, too many. you have to read the book and see.

>> good entrepreneurs do have failures. >> all the way along. and we never knew for sure so it had all n these technology thins tond do and personnel. i couldn't hire the best people and i knew i was lacking in differing capabilities. they couldn't afford the competing salaries i'd have to convince a person we have a great company and how about some stock options and that didn't cost me anything but a said yeah okay that sounds good. we didn't get the harvard mbas for sure. i was the only one actually. >> i appreciate and respect you don't want to give every detail in the book so for the young people in the room who know all about the fire festival at the baklava music festival there's a really funny story about his investments in the festival and

that's all i i will say about a. >> that was before the company got started. >> to questions of a similar ilk from the room. how can investing help address the growingow problem of income inequality in our country and that is signed by schwab client and the second take on that topic is how can we lower income inequality globally through economic empowerment? >> is a big issue all of us are facing now. frankly i think education is probably the only way to do it. we have got to give more young people interested in why they should invest in why every person lives till they are 65 years ago and now they are 85 are hopefully higher. and so there's a huge time period for real take care of ourselves and develop her own

paycheck and 20 or 30 years after we retire for company who we might work for. but that is education that is critically important so kids know they have engaged and they do something and invest in irs's and 401(k)s to incentivize people to save more and to invest more. just in the current base if i were president of the united states i would increase the credit thing on taxes so people at the low end at the poverty level get a tax credit back and increased a little bit this last time. the tax bill was changed and would double the least that. it's certainly a blow in. >> my understanding is most people pay no taxes so how about help? >> they will still get a check back. but you have to work in order to

get that back. in the urn tax. >> to bebe clear it's implied in those two questions that i just read that income inequality is not only a problem but a worsening p problem and do you agree with that? >> i think sometimes it's overstated. we see warrenrr buffett and we e amazon founder and have an numbers.guile for i think what happens to, there's not enough attributed to their contributions that they do make in terms of innovation to society. it looks like a heck of a lot and they give back tons and tons of money to different things along the way. and then guess what? they die too and itgs goes away for the most part. i don't think you want to take away incentives. we have a system that really

incentivizes people to work harw because we benefit by all the innovations when these wealthy people have done it but it's not a a forever thing. don't take away that incentive. we all want to drive the same car and where the same clothing and their live is about our intellectual capacities and creative in all those things. it makes a much more interesting than. socialism. >> i'm going to read another question from the room. is the massive accumulation of funds and index funds leading to over valuations and compromising the price discovery process? do you see this as a bubble in the making? p i don't seeeeki that at all. there are always people out there that are doing evaluations of companies and finding gaps. been there and are valued they

step in by the thousands of hedge funds. there's probably 10,000 hedge funds. there are kinds of people with individual portfolios always looking for new values. maybe 45% of the big investment is inn index funds that i don't see that as a problem. >> you mentioned vlad tropea minute ago. there's another question from the room to understand you have a great passion for philanthropy. can you tell me how you incorporated this into your corporation and the opportunities for your clients through the corporation? >> you are talking about her terrible funds. we have been verynd successful. we had our 20th anniversary yesterday and there went to the meeting with the directors and so forth talking about how we have $15 billion we get about 3 billion a year to 10050 thousand different charities and we do it for compliance. it's a very easy way to go about

giving you. we do all the paperwork and that kind of stuff so that's really important to mee personally we have always felt we are successful in life and it isn't obvious to anybody until we were 40 or 45 years of age that be have responsibilities to give back to society whether it's education or whether it's helping people kids with learning issues or in our case we helped though the museum here in town. lots of things. charter schools we had her on foundation. as a matter fact talking about different things that we like. very instrumental in helping it. it goes on and on. i really like the way you

describe yourself as a maverick. you made your career started poking a little bit. not intentionally. >> i really did it through the lens and i'd always thought wall street was based upon how much money could theyy make off of whatever it might he has service to their offering. i reverse the whole thing around and so that was a little bit of our secret sauce. >> i thought my read was it you sort of take great pride. >> we reversed everything and they didn't like that. we were think about our client first and they don't. >> do you think it's still the case? >> oh yeah. i have ceos of major companies

say to me chuck of love to have a system like you for my employees with bonus based funds these guys could make a lot more money will where they do their business and anyway he would likely come our way but he can't do it. all of hisis employees would say we quit and they come and work for us. >> that would be okay too. >> i want to come back to b of a because it was interesting how you grabbed your business back as it were but before you did if i have the age correctly you were 46 years old and you commented that you were the youngest board member. >> by a long shot. you can imagine this pristine institution that was probably the most premium bank in the country at the time.

interstate competition as such so b of a had a branch on every corner of every town. on their board the first day i walked into the board there's a room probably about the size of the room here with a big long table and every position had the leather hook with their name. out their charles schwab. they were. impressed with that thing and we looked around the room and we had people that were wearing levi strauss or transamerica are all the big corporations of the time were on the board. somebody was on the board. they were all mostly men. i think there was one lady but anyway it was 27 of them and i think they all on 100 shares in the companies said they didn't

have a really keen interest in this thing. i come in with my whole net worth and one of the larger shareholders of b of a. i thought i had a recently good position to be up to speak out about the company which i was really quiet like a mouse for the first year or so and then started to roar a bit. >> you had in many ways you had very good timing with buying your company back and not only do we have that but very quickly took the company public. >> i had to because i had too much borrowed money and i wanted to certainly the leverages they say and thank goodness i did. we call that the tsunami year of 87. it was rough at that time. >> you bought the company took

it public and within weeks. >> we went public and 14 or $15 a share and within a month it was at six. that was not a very fair rebel thing and many of her clients at up theto stock in hopes it would give great thing. fortunately it's probably a thousand times in value. it worked out okay if you hung on. >> the stock may have gone to six anyway and the value would have gone down anyway but you would have had the worst balance sheet. >> no question about it. i talk about all the details and trials and tree relations that i had. >> another question from the audience, few founders are able to transition as companies grow in maturity and size.

what did you find most challenging about that transition? what qualities does someone need to lead through that evolution? >> i i think there was a part of me that as i look back i didn't think about it at the time but i knew i had this handicapped thing with dyslexia. i've really needed this around my people with really smart people who had shared the common vision we did about the company and what we were about. i had the confidence that i could lead them and they would help me in categories that i was completely incompetent in. the team we were able to create some pretty goodd things. i think it might have been a handicapped thing that always lurked in my mind that i needed tope help some very smart people and i a think all the way throuh

its a central theme and i really didn't think about it at the time necessarily but i think it's certainly true. >> the board famously fired one of the ceos. they guess the only ceo. >> that was 2004. we had appointed a gentleman to be the ceo at the time and he lasted about nine months. the board came to me and said it's just not working out. we just don't have the confidence in some of the decisions etc. etc. and they asked me would you come back? i was chairman and would you become ceo again and that was probably 66th or something like that. andth thinking well, okay. it took me about four seconds. [laughter]

>> then you the company needed some different leadership and they were right. there was no question about it. in 2004 we had just come out of the decline of the dot.com boom and we were suffering. the company hadff been great in 1999 and 2000 and fell on some representative times in the ensuing couple of years. we needed a new direction and it wasn't providing that so i came back20 in 2004 and their for the next four years and i appointed while pettinger is ceo and 2040s done a fantastic job. we were still to this moment working closely. it's interesting you callry out during that. maxim accompanies saudis had gotten out of whack. it was called nuisance fees or gotcha fees. explain that but also can you --

you were still chairman. can you understand how that happened? it must have been a source of i want to put words in your mouth. he couldn't have been happy about it. >> i wasn't happy about a lot of those things but you have to let the reins go of viewpoint is ceo to do certain things and keep your mouth shut as such. so you could probably say i went along with it but anyway the gotcha fees, you will know them. your bank used it charge you every monthly statement he paid $3 for the service and so forth and those were the kinds that things that were nuisance fees. the one thing at this moment people have paid $30 or $35 for a balance check. we took that up at schwab. we don't have any bounced checks are nuisance fees. all of that stuff is gone away.

bank still do some of that stuff actually but everyone has the gotcha fees. >> in the auto industry is the poor man's -- formats that are a nuisance fees and buying cars. probably does eliminate the most famous fee in the history of the brokerage industry which is the brokeragee commission. >> we were on that dissent for for days so my hope was we would eventually get there where we had enough other business and in many respects it would be analogous to the google in some ways. but then you use other services along the way and you buy some the products and do some things. in your case don't worry about it we are going to do what they do cometh advertising. to set you up for these different purchases and so forth. we have mutual funds and we have a bank and people borrow from us

and there a lot of different ways that people use us. the commission we took to zero so it makes it very convenient and i think people have always seen folks in new business coming in and people seeking out freepe commissions in summervile traditional firms coming to us and we are very happy about that >> when youou did that a startup called robin hood took out a full-page ad in the newspaper congratulating them for following them on having no feen brokerages. i wonder what you would thoughtt about that and if it may remind you a little bit if you. >> certainly there was competition. the wonderful thing about american business some of its competition. we have to stay on our toes all the time. they had successful growth themselves mostly which were raiding accounts and will have to say their transactions are somewhat impaired because they don't provide price improvement

in things like that to clients. it's probably the preferred way to do it with chiro commissions. the benefit goes to you. so anyway we have some banks who are providing if you put $100,000 theyy would give you free trade so the marketplace is happy. we thought let's do it now. so we went to zero. it's a good value. >> you think how a company treats its employees has a direct impact on revenue of? for example better treats itshe employees the bigger the return on investment. >> absolutely the number one resource you had for your employees in our business we do really well at that.

we have a value system at schwab that everyone hangs onto. if you come to schwab and you have similar values outside of that you don't last very long at schwab. it's all about customer service and it's not about sales. anyway it's been invaluable and we have grown and i think our employees have really benefited. >> can you talk about given that last question on employees talk about how as an entrepreneur and is a leader you process when you have to tell employees to go and you have layoffs which you have lahad area stages throughout the history of the company. >> one example that i've talked about in the book was very painful for us but it was after the 2000 crashes and mentioned the.com boom. we had to lay off the large number of people. it was a very pink of thing for

myself and my wife at the time. we decided to put up a big fund to helpp people that we had to let go to go back and recharge themselves if they wanted to become a nurse or go back to law school or medical school to help them sort of repot. we felt pretty good about that and sure enough the $10 million went away in a hurry. >> how do you decide on your make it or break it choices? a in other words how do you think about risk? >> i think about it all the time but also without taking risks it's never going to make any progress. we have many products along the way that we thought were. interesting and clients told us eventually they were no good or they don't function -- function properly the trash them. we are always probably annoying

to our clients serving this particular thing in this kind of service and in that kind of service that we want to listen to what they say and try to do the things that they suggest. >> to use a sports analogy some people the data tells them what to do another people their god tells them what to do. over your career did you identify as one or another is a leader? >> there were many things that way wheree along the people said gee that such a great service. why didn't you started last year? people don't come necessarily with a great idea. you have to go into the marketplace and be creative and put the idea out there and hopefully most of them stick. they don't then you obviously trash them. but i think you've got to be, like some of the great innovation ceci they are

obvious annotations that are going to come up like netflix. it's made so easy for you. you have a nice movie on a sunday evening or something. you can go to apple tv. it's fantastic. you comply your phone into that kind of thing. all these great creations and one of the greatest things that happened in many years as the internet. it's just beginning what is happening what you are able to do because of the capabilities are unbelievable really. you will get faster and as we know 5g comes along and hopefully it will give you more privacy than you probably have today because other firmsl have used your private informationil forever typing as such. we are talking about that backstage about lock chains and things like that. some day you'll be controlled completely their privacy. not today but someday.on

zemeckis someone, you are not colleges. you are trained as a technologist. how do you make these decisions because on the one hand with the internet you were clear. this was, a big technological change in charles schwab corp. was going to invest aggressively. right now in your field everyone wants to talk about cryptocurrencies and schwab is not jumping on that bandwagon. >> cryptocurrencies are not something favorable right now because it really has, yes they have security but they don't have anything backing up the currency itself. you want to have full faith and credit of someone like the u.s. government would be pretty important to have for a bank or something. something that you can dream about and i own

one bitcoin. i got it about three years ago. i got half a coin for my youngest son and a half of coin for my son-in-law making one coin. it was worth $16,000 that christmas and i think within six months it was 4000 so i lost 75% of the money of my so-called gifts. not a good place to be. i kept telling them this is not a good place to be. i think my son sold everything he had in terms of cryptocurrencies so anyway he's a sharp investor. i'm a stupid investor. i still on the coin. >> you will be okay. [laughter] spaeth chuck i can't remember for its the ninth or tenth year of economic expansion in the united states. logic or history even, common

sense would suggest it's not a great place to be as an investor. what are your thoughts on that? >> i happened to be, you have to be an optimist when you are someone like myself. i think the undercurrent of the economy is really strong and i happened to be a believer that the tax bill that went through the killer corporations in america have become internationally competitive. it's a fantastic thing to the cash flows off companies you see that right now reporting most firms are reporting improved earnings. the underpinnings of consumers seems to be a great position of confidence that i can go on but nonetheless the economies and markets always slow them down. whether its currencies, stocks, bonds, interest rates you name markets always go up and

down. if you are a smart investor understand that and make sure that you hang on for the long-term and you look at the any charter for the long-term and you can find yourself then it would be five years, 10 years , it always ends up here and eventually it ends up over here. i'm talking about is the grove. i'm not necessarily talking about old and i'm not talking about silver. those things don't grow necessarily. they grow up and down but supplier demand in those kinds of things but stocks and things like that are the thing that can really grow. if you look at any of the great companies, to make my point every company i've ever been on the board of,ev a them on for sp

500 companies and no management has ever come in and said "next year. some don't achieve it but all have a plan to grow. that's whatso companies, that's what we do. >> can you talk about the role of mentorship? is there someone that plays that role in your life and what important lessons did you learn? >> i didn't have any single person that was my coach as such. my father was a lawyer so he had not much background in economics and the financece stuff. so i think the biggest motivation i had as a kid or family came up through the depression years and held court and my savings was so that was the on the mental learning i got from my family. make sure you do well enough

that you pack something away for tomorrow. i read autobiographies when i was a kidbi about who are the people that really did well and had success in business. it drifted toward those who did finance and whether jpmorgan or somebodyet like that, that's what i want to do. ii want to get wealthy. i don't want to be sitting around and say i can't buy that. that's what you do when you were 12 years of age. if you want to buy a bike in my case, i have a used bike that i was really happy with the used bike. it works well. i didn't have the new schwinn. i have used bike but i greased that baby up everyday and it reallybu functions. >> can you share some words of wisdomom about navigating exterl changes and making them work in your favor?

>> well, i think for sure education and understanding what you are talking about making sure you have every avenue and sort of figure it out and then take the risk to make a decision to go one way and if it doesn't work change her mind and come out with a different way. be flexible. flexibility and understanding how to be flexible is really good. >> i promised you and everyone at some point this evening with a talk about marketing and you ride a lot about why marketing was important to you and not just marketing but also public relations and public speaking. could you talk about that as a business leader? >> well, those are all learnable things. they really are learnable things and i learned about marketing for instance.

they learned about pr. i learned about, the one thing i could never do particularly if it's a bad market like insurance [laughter] i always wanted to surround myself with something i could be really enthusiastic about. a great product but i was deeply involved in it really had great confidence in. i createdbe schwab and i like to talk about the company because we'll be doing that we stand for and all those values that her company has and the pr would go around in the early days as a company. we couldn't afford much advertising. very expensive and very expensive today but we can sort of afford it today. i went around to stations all over the country to try to world theto the benefits off discount appropriation and it seemed toee

work. i got appointments with different radio stations and different tv stations and articles in the newspaper like the one i talked about early on and continually being out in front and talking to groups like this very early on 40 years ago talking to groups. why was really important to you and how you could save money and be able to make decisions for a of commission saleses guys. so that was what we did. >> i think i remember you saying in any interview ever gave you ended by saying something either giving me 800 number coming to see us, something to that effect. >> that's what a good marketerer does.ef

you also talked about communicating with journalists. this is my personal favorite passages i'm going to read and i'm going to share this with other ceos. in 2004 or five or so when you were just beginning a return in, a turnaround of the company my former colleague betsy morris corporate leaders with dyslexia came to you and so they want to ride about the turnaround at charles schwab and your executives there were any number of reasons to say no but i knew that a good story required some tension and we had enough progress under her belt that i thought wewe should take a chan. richer spec the piece focused more and david's departure, this is david patrick and we hope it

made a more dramatic story i suppose but the underlying theme was clear. we were fixing schwab. >> we were. there is a picture of me. which i really love. it's's me and a 13-year-old, 13 years of age. "fortune" magazine, the betsy did this article about executives that have dyslexia and their background. she came and interviewed me and interviewed a bunch of other characters and unbeknownst to me she got a picture of me at their team. i went to the front page of "fortune" magazine as a gosh.r-old, oh my nobody recognize me andrs that s good. [laughter] >> do we used to have a big

staff of photo researchers that would go and find that sort of thing. >> those nastyth guys. [laughter] >> i know you are joking right now about that does you had the presence of mind to save your people yeah they have got to find some of the bad stuff. that's their job and that's okay because that makes it believable and authentic when they tell the whole story. not all ceos are like that. >> hopefully just the one. [laughter] >> thank you. let's end with you know your story about working with having a photo of the 13-year-old u.n. working with other parents and children reminds me that it's not just about numbers on a spreadsheet for you. you do want to make money and you said that very clearly but it's about more than that.

check could we end with just explain to people how you've managed to not only build the business but have a good time doing it and why that matters to you. >> if you think about the purpose of life and you try to maximize to the best of your ability whatever it might need. i'm icing great admiration for those who are great musicians or being a doctor or a lawyer or whatever it might be. just her shoes -- pursue your passions. i have a young boy in today who applied to college. i like to help these kids get into the school they can get into but that's one of the conversations we have about really pursuing your passion whatever it might the and businesslike myself being successful financially. you also have a huge obligation to get back as part of what we do in termsrm of being successf. we are happy toat do that for se

that every kid needs to find the direction in life and the passion they have too contributed in a significant way the best they can to society. that's the way it should work. >> i would be remiss if i didn't ask you how was your golf game today? >> correct to say it's as good as iit can remember. >> really? [applause] >> before we close please bearas with me for a moment there thanks to charles schwab founder and former ceo of the charles schwab corporation whose new book is "invested" changing forever the way americans invest this program is part of the common law court club ethics and accountability with additional support from the bernard osha foundation for good with

program. we'd also like to remind everyone here in theli room that signed copies of mr. schwab's book will be available outside this room following the program. i am adam lashinsky and this meeting of thehe commonwealth cb is adjourned. [applause] [applause] [inaudible conversations] >> welcome to the 24th annual texas book festival. my name is katy vine and an executive of texas monthly. we are here to talk to amaryllis fox with her new book "life underc"