i would not be surprised of the final two are women, warren, harris or harris, warren. >> afterwords airs sunday at 9:00 pm eastern and pacific. to hear the rest of the interview visit our website booktv.org and search for her name or the title of her book, the man who sold america using the search box at the top of the page. >> good evening, everybody. we've got to try one more time. you have great energy. this looks like an excited and high-energy group. good evening! that is the energy we know you have. my name is george, i am program director, i want to welcome you, thank you for coming to

this terrific program with charles schwab, we are appreciative to have you here. how many are members of the club? thank you very much. if you are not a member this is a great time to join. there are terrific programs coming up, great programs like the one here and a gentleman named billy at the back of the room, happy to answer any questions about joining the club. see him on your way out. please take a moment, turn off your cell phones, any devices that might make noise, let me tell you about some upcoming programs. october 31st, halloween at noon, bret baer will be with us. on november 12th, there is not a comment on that. on november 12th, "national review" editor rich lowry will be our guest. november 12th in the evening

silicon valley, jerry rice will be with us. november 15th, friday, november 15th, mary lou henner who you may remember from the tv series taxi will talk about why she has the unique condition that allows her to remember everything in her life. also great travel programs. we encourage you to ask our staff about those. this february you can take an expedition to new zealand's with peter hillary with the redmond hillary. there are question cards for mister schwab that will be collected during the program and brought to animation ski which please write your questions early and often and make sure they are questions, we will get to as many of them as we can. signed copies of mister schwab's book are available outside the room. charles schwab and adam lotions key.

[applause] >> what a crowd. i will hit the gavel in a moment but i will reiterate i had to discriminate in favor of legible questions. you have been warned on that. >> i can hear you. >> welcome to tonight's meeting of the commonwealth club. i'm the executive editor of fortune and your moderator for tonight's program. it is part of the commonwealth club's ethics and accountability series underwritten by the travers

family foundation with additional support for the bernardo sure foundation for good lit programs. i'm pleased to introduce tonight's guest charles schwab, founder, former ceo and chairman of the charles schwab corporations author of the new book invested:changing forever the way americans invest. charles schwab is one of the most influential executives as of 2019, i am not done, nearly $3.6 trillion worth of assets managed by charles schwab and company, he founded the brokerage firm in 1971 with a $100,000 loan and has grown into a financial service juggernaut. the passion to change the way we invest and the hard work, ingenuity and entrepreneurship that propelled his vision into

one of the leading financial service firms in the world. and economic transformations and fluctuations, he recounts the defining moments of his life and providing insight into entrepreneurial companies. we are pleased to converse with mister schwab about the how tos of financial management and his advice on obtaining a fulfilling career and life. please join me in welcoming charles schwab. >> got a lot of my fans out here. i stacked the deck a little bit. >> i was thinking you might want to quit while you are

ahead. >> let's start at the beginning, not the beginning of your life which we can come back to but the beginning of your life's work in 1975, you had an entrepreneurial moment, would you tell everybody about it as you described in the book? >> may 1, 1975, congress made a decision to make sure commissions were all negotiable. at certain levels, fixed rates prior to 200 years and on that day they liberated the whole thing and democratized the ability to invest any way you want to and pay any price, we lower our prices substantially and others raise prices a little bit like merrill lynch did creating a huge gap for us to enter into the business with low prices and hopefully great service and start with four

people, so we have 20,000 employees serving customers. >> one of the common themes of entrepreneurialism and you write about being an entrepreneur, you identify as an entrepreneur, the things you see and act on are what separate you from everyone else so what congress did wasn't a secret. it was an opposite of a secret. everyone in the securities industry knew about it. can you reflect a little bit on why what we looked on as obvious and what enabled you to create a business why you were able to act on it and others didn't? >> entered into that area of discounted commissions most of which were in new york. we were in san francisco, from

stem to stern, montgomery street i had four employees and i thought it was a great idea to go into this business at the time so this was a couple years before the 75 change but i decided customers wanted a better deal than being sold high commission products being sold stories along the way that some are true, most were hyperstories and there is a way to create compensation for the broker and i wanted a place for people to invest and had a sanford business school and of financial analysts and portfolio manager.

this is a bad business based on the wrong foundation, not based on customer service and all kinds of things you want to hope for so we decided, 71, 72, 73, so first thing i did was i don't want any salesman in our company, no salesman will ever call you. we compensated our employees with bonus based on the sentencing of the total company and if we were successful everyone got a nice bonus so everyone is focused on customer service because they want to have them refer customers to us and grow and prosper and we have been different, kept the

same model the last 40 years. >> this is a profound deck is that you come back to repeatedly where you decided your company was not going to sell, you were going to market. ..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 grown up here,e, spent my whole life here in california and went to school here, so i'm

really a local guy. but that was serendipitous in many respects. san francisco ended up being for me, i could do things that you would never do in new york city. many people didn't realize i started the company or compel the company here in san francisco and never had all the negative things that new york brokers had and retained, , so that was very beneficial. the other part was the fact that technology and innovation was clearly happening in silicon valley and san francisco, et, et cetera. i adopted a lot of t those great things in the introduction to our company, make us much more efficient, even before the internet we were applying all the best technology. that was really beneficial. lucky i was here. the third thing was we were able to market close at 1:00 new time. the sole focus in york so with all afternoon to clean up the

time because so much paperwork was just paperwork wasn't technology. we had the extra time to make sure our back office was clean all the way through. a couple times they work but for the most part we were able to have a clean back office. >> you describe, i'm going to touch on three things that were important early in your life to 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 you were not, , at another try to say you were not any good at it. you didn't like it. it didn't work. >> well, i had a number of jobs and i think it's really critical for you to encourage young people to get jobs, any kind of job, and i had any kind of chuck, switchman on the railroad. but speakingn about, between first and second year in business school, and so i

thought i better learn something about the insurance industry because i was focused on being in the financial service world s saw wanted to work in the bank the year before and that i wanted to see about insurance. i was a complete failure at that. i really found out this stuff was so overpriced in terms of the sales commissions involved, they wanted a list of all my family and all my friends and so forth. i never sold a single policy. [laughing] i started, this is not from me and i finally after about six weeks i think theyd encouragede to quit. [laughing] >> you said in the book you're skeptical but most insurance products, period. >> they were all built upon a sales can content that was extraordinarily expensive when you analyze how they are constructed, and i learned that very quickly and decided i think it was a bad thing for most,

actually they had me sell endowments, 20 endowments, oh, my gosh, to anybody. that was the stupidest thing to ever do because i was always interested in investing. i thought putting your money in something micro a little bit faster than insurance product which sucks most of the returns outcome goes to the insurance company took so anyway, that was an early learning. >> another early passion of yours and current passion of yours is golf. w got into it playing for the high school team in santa barbara. >> you're right, adam. i loved it. >> y why is, other than enjoying it, why is golf such a big deal? >> it turned out -- not i love basketball. it turned out i wasn't old enough. nothing i could do about that one. i played junior basketball in college, not in college but in high school, and all of a sudden as a sophomore, junior i was just, these of the guys were 62

and i was looking up to them. i decided maybe golf was an area i should probably focus on because even -- i thought, that was my iconic man i wanted to copy him and that was the reason why i went for golf. >> many people will know this but i suppose some will not know that chuck is dyslexic and want to push yous on something you wrote. you said that for four years he wrote that for 40 years you thought you were stupid, slow or something. >> somehow or another i could not read as fast as some of my friends in school. it really upset me a whole lot. my comprehension wasn't as good as the't bears, and so it was always, i had to rethink a couple of times to really understand what was going on. it was just, it was always come to me it was sort of a handicap

but i never talked about it. it's the kind of thing would never speak to anybody about hol slow you might be in reading because there's a lot of stigma attached to it. >> but you didn't know what -- >> i discovered when my youngest son had the same exact issues that i had in school, 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, at 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, that explained everything but the word dyslexia and a whole sites was really undeveloped when i was young and it's been relatively analyzed even mris of the brain, , how the brain functions slightly different in that area where you do with

words and conversion of words and meaning and that kind of thing. any rate, turns out it solves e about issues i had earlier on, a big aha moment for me. so from that point forward my wife and i decided to develop a charity thing, or service for other parents who have kids with learning issues like that. parentsled the education resource center down in san mateo. we had many, many families come, brilliant moms and dads, got this kidre who can't read very fast can what's, wrong with hi? you are normal in every other respect. you just have a processing problem that you have to identify and so books and tapes is a great way to read books. [laughing] >> one of the things 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 don't get the real fabric of what investing is. how about microsoft, how aboutfacebook , how about all the things you see and so guess what? we're going to solve that issue. we got a thing coming up next year for young people who want to buy one 10th of a share in something. one fraction of a thing you

can take $1000 from their gift from their grandparents and divide it into 25 different stocks. and that will be an easy way for them to get engaged and involved and that's what you want to supplement to what they are really about so they get this annual report, they get interested and curious about what's happening next in the company so i love index funds. it's the greatest way for most of us to invest, low cost, all those kinds of things. i think for young kids, they get to make more mistakes early on and do it inexpensively. >> wonderful segue to the next question from the room is what was the most painful lesson you learned about forming and growing abusiness . >> lack of capital. we had so many, that's what venture capitalists do these days is they are, we have a great system there with it.

equity capital available for great ideas and you can see what's happened with facebook, they were supported by one great idea and supported by venture capitalists and so forth so back when i started, that wasn't really a flourishing area to speak of. so that's really a beneficial thing to have and i think great ideas , they have even now many ways you can do an advertising about. i'm looking for capital, it's now possible toeven put an ad in the paper and say i'm looking for capital, i want to pay for that ad . >> you have a favorite mistake you made that was just a plain failure? >> there are many. too many.you've got to read the book to see them all. >> good entrepreneurs do have failures. >> all the way along. there's a whole series. and we never knew for sure where we were going to end up

because we had all these technology things to do . personnel, very early on i couldn't hire the best people. i knew i was lacking in different capabilities. i couldn't afford the competing salaries so i'd have to convince a person to come on, we've got a great company. how about some stock options and that didn't cost me anything and he said okay, that sounds good . but we didn't get the harvard mba's for sure our the stanford mbas. i was the only one, actually. >> well, i appreciate and respect you don't want to give away every detail so for the young people who know all about the fire festival, that debacle of a music festival there's a funny story in spoke about his investment in a music festival and that's all i'll say about it. >> that was before thecompany got started . >> to questions of similar from the room, how can investing address the growing

problem of income inequality in our country and that is signed by a schwab client and the second take on that topic is how can we lower income inequality globally through economic empowerment? >> that's a big issue for all of us that we're facing now . frankly i think education is probably the only way to really do it . we've got to get more young people interested in and why they should invest, why every person living until they're 65 and 30 years ago, now it's 85 or hopefully higher and so there's a huge time. where we all take care of ourselves and develop our own paycheck and that 20 to 30 years of retiring from a company orwhoever it might work for . but that's education. it's truly critically important though kids know when they get engaged and

they do something for their iras, everything that government has set up to incentivize people to save more and to invest more. i think just in the current base, if i were president of the united states i would increase the earned income credit things on taxes so people at the low-end would get a tax credit back. it would increase a little bit this past time when the tax bill was changed but i would have probably double at least back. thatwould help certainly at the low-end . >> my understanding is most people at the low-end pay no taxes. >> doesn't make any difference, they still get the check back but you have to work in order to get that back. it's called an earned tax credit . >> is implied in those two questions that i just read that income inequality is not

only a problem but a worsening problem and do you agree with that western mark. >> i think sometimes it's overstated . we see warren buffett who is amazon founder having these enormous god-awful numbers, but i think what happens to, there's not enough attributes to the contributions that they do make in terms of innovation and what they've done to society and yes, it looks like a heck of a lot most of them are very philanthropic. you get back tons of money to different things along the way and then guess what, they die two and goes away for the most part . so i don't think you want to take away incentives. we have a system that really incentivizes people to work hard because we all benefit by innovations of some of these will be people have

done but it's not up for everything so don't take away then send it . that would be obviously socialism and wedon't all want to drive the same car, we don't want to wear the same clothes . life is about our intellectual capacities and creativity and all those things. it makes life much more interesting and socialism. >> i'm going to read another question from the room. is a massive population of funds in index funds leading to overvaluation and compromising the price discovery process, do you see this as a bubble in the making? >> i don't see that at all. ice discovery and matters, all these people are out there doing valuations of companies and finding gaps when they're undervalued, they stepped in and by the thousands of hedge funds, probably 10,000 hedge funds, there's all kinds of people with individual portfolios always looking for new values so yes, maybe 45 percent of

investing is in exxon's but i don't see those as a problem. >> you mentioned philanthropy a moment ago. i 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're talking about our charitable funds which has been very successful. we had our 20th anniversary yesterday and i talked to the directors about how we have $15 billion and it gives out about 3 billion a year 250 thousand different charities. and we do it for our clients and it's an easy way to go about giving and so forth. we do all the paperwork and that sort of stuff though that's important but for me personally, we've always felt that we were successful in

life which it wasn't obvious to anybody until we were 40 or 45 years of age that we had responsibility to give back to society where we got benefits, whether it's education or helping people, kids with learning issues or whether in our case we helped build a museum in town. he did that thing and lots of things, charter school. we had our own foundation meeting today talking about things that we particularly like. education, charter schools were very instrumental in helping improve that part of the thing so it goes on and onand on . >> i really like the way you describe yourself as a maverick. you made your career sort of poking wall street's i just a little bit so not intentionally.

i really through the lens of what would a customer like and i always thought wall street was based upon how much money could they make up of whatever it might be, not whether or not the customer likes it or not though i've reversed the whole thing around. that was a little bit of our secret sauce . >> i thought my read was that you take great pride in -- >> it just happened to be, we reversed everything and they didn't like that. we were thinking about our client first and they don't . >> you think it's still the case? >> i have ceos of major companies and say chuck, i'd love to have a system like you where my employees have bonuses based upon the success and happiness oftheir clients . they love the commission got

these guys can make a whole lot more money the way they do. the way they do their business and anyway, he would like to come our way but he can't do it. all his employees would say we quit and did come work for us. that would be okay. that would be okay to. >> i want to come back to this because it was interesting how you grabbed your business back before you did, if i have the age correctly you were 46 years old and you commented that you were the youngest or number. >> by a longshot. you can imagine this christine institution. it was probably the most premier bank in the country at the time. just now in the mid-80s before there was really interstate competitionand such .

so be of a in california hada branch on every corner of every town . so on their board it was sort of a first day i walked into the board there was a room probably about the size of this room and it had a big long table and every position had a leather book there right in front of you with your name printed out, charles schwab so i was pretty impressed with that thing and i looked around the room and we had people that ran levi strauss or transamerica or all the big corporations at the time were on the board . somebody was on the board and they were all mostly men, i think there was one lady but anyway, it was 27 of them and i think i'll maybe owned 100 shares of the company so they didn't have a keen interest in this thing and icome in , of course my whole network had been one of the largest shareholders of b of a so

then i started or a littlebit . >> so in many ways you have very good timing with buying your company back and not only doing that but very quickly you took the company public. >> i had to because i had too much borrowed money. and i wanted to certainly deleverage as they say and thank goodness i did. we call that the tsunami year of 87. it was really a fast read and it was rough and ready at that time. >> because you bought the company, took it public. >> and then the crash happened. >> within weeks. >> we went public and i was 14 or $15 a share and i think within a month it was at six.

that was not a very favorable thing and many of our clients that want to start in the hopes that it was going to be a great thing but fortunately those who bought at six, it's probably 1000 times in value so anyway it worked out okay if you hang on. >> the stock might have gone to six anyway or your value would have gone down anyway but you would have had a worse balance sheet. >> absolutely. no question about it. it was a leveraged buyout and it was talked about, i talk about all the details and the fears andtribulations that i had . >> another question from the audience, a 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 leave through that

evolution ? >> 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 sort of handicap thing was dyslexia. i needed to surround my people with smart people who had shared acommon vision that we had about the company and what we were about . and i had the confidence that i could leave them and they'll help me in categories that i was completely incompetent in and so as 18 we were able to create some pretty good things and it might've been a handicapped thing that has always lurked in my mind that i needed help from other smart people and i think all the way through, it's an essential thing that i didn't think about at the time necessarily but i think it's certainly true.

>> the board famously fired one of the ceos, maybe the onlyceo . >> i had to fire him. 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 don't have the confidence in some of his decisions, etc. etc. and they asked me would you come back? i was chairman. would youbecome ceo again ? i was probably 66 orsomething like that . and thinking well, okay. took me about four seconds to say i would do it . i knew the company needed some different leadership and i knew they were right. there was no question about it so in 2004 we had just come out of this client of

this.com boom and we were suffering. the company had been great in 1999, in 2000 and then fell on rough times in the ensuing couple ofyears so we needed a new direction . and the company wasn't providing that so i came back 2004 and did it for the next four years and i appointed walt bettinger and he's done a fantastic job and we were still from this moment working very closely. >> one of the things you callout up those. was the companies valued had gotten, you had gotten new since these are what walter calls gotcha fees. explain that but also you were stillchairman . can you understand how that happened? it must've been a source of, i don't want to put words in your mouth.

you couldn't have been happy about it. >> i wasn't happy about a lot of those things but you appoint someone ceo, youkeep your mouth shut as such.my mouth is not always shot, let me tell you . so you could probably say i went along with it but anyway, the gotcha fees, you all know them. the bank used the charge you every monthly statement paid three dollars for the service and so forth and those were kind of things that were nuisance fees and the one thing i really even to this moment, people have paid $30 or $35 for it bounced check. we took thatout at schwab, we don't have any bounced checks, no nuisance fees, all that stuff is gone away . thanks willdo some of that stuff , actually but everyone ispretty familiar with gotcha fees . >> it in the auto industry is the format.

or the nuisance fees of buying a car. >> you just eliminated probably the most famous in the history of the brokerage industry which is the brokerage commission. >> we were on that dissent from the earliest days so my hope was that we would eventually get there where we had enough other business area and it's sort of in many respects it would be analogous to google in some ways. that search is free. but then you use other services along the way. you buy some of the products and do some of the things and don't worry about it, we're not going to do what they do advertising your information to sort of set you up for these differentpurchases and so forth . but we have mutual funds and we have a bank and people borrow from us and we have a lot of different ways that people use us and so commissions we took tozero . so it makes it really very convenient and i think people

, we've already seen an influx of new business coming in. people seeking out three commissions. they're leaving some of the old traditional firms and coming to us and we're happy about . >> when you do that, a venture startup called robin hood took out a full-page ad in the newspaper congratulate you for following them on having no fee brokerage and i wonder what you thought about that and if they remind you a little bit of you? >> certainly there was competition. it was a wonderful thing about american business. so much competition so we have to keep on our toes all the time. so they were doing accessible growth themselves, most of which were raped in accounts and i have to say their transactions are somewhat impaired because they don't provide price improvement and thingslike that to clients . but for obtaining transaction

isprobably preferred way to do it with zero commissions even though you don't get a superior transaction . with price improvement going to you, so anyway, we have the other firms and some banks who are providing, if you put $100,000 and it would give you free trade so it was in the marketplace that was happening so we thought let's do it now. >> so we went to zero. >> is a good value. >> you think how a company treats its employees as a direct impact on revenue for example, the better the company treats its employees a bigger return on investment. >> absolutely. that's probably the number one resource you have is your employees in our business and i think we do really well at that. i think we have a value system at schwab that i think everyone hangs onto and if you come into schwab and you have some other values outside that, you don't last

very long at schwab. it's all about customer service, not about sales . so anyway, it's been invaluable and we've grownand i think our employees have benefited by what we do . >> can you talk about as given that last question on employees , talk about how as an entrepreneur and as a leader you processed when you have to tell employees to go, when you have layoffs which you had at various stages throughout the history of the company. >> one example i talk about in the book was verypainful for us and it was after the 2000 as i mentioned , the.com boom and all that stuff and we had to lay off a large number of people and it was a very painful thing for myself and my wife at the time. so we decided to put up a big fun to help people that we had to let go to go back and recharge themselves if they wanted to become a nurse or

whatever they want to go back to law school or medical school or whatever. upon to help them repot . so 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? in other words, how do you think about ritz? >> i think about it all the time. also, without taking risks , you're not making any progress so we have many products along the way that we thought were pretty interesting and the clients told us eventually when we came out that they were no good at what they don't want toproperly , we trash them. sowe listen all the time to our clients . we're always probably annoying to them, surveying them about this particular thing with that kind of service area so we want to listen to what they say and try to do the things that they suggest.

>> what do you, to use a sports analogy, some people are the data tells them what to do. other people there.tells them what to do over your career do you identify with one or the other as a leader ? >> there are many things we have done along the way that people say that's such agreat service . why didn't you start that last year -mark they didn't know, people don't come necessarily with great ideas. you've got to go into the marketplace and you've got to be creative enough to put the idea out there and hopefully most of them. if they don't, then obviously you trash them. but i think you've got to be, but some of the great innovations you see, there are obvious innovations that are coming up along like netflix. it's so easy for you to get a nice movie on a sunday evening orsomething . right in the convenience of your television.

you go to apple tv and all that stuff, it's fantastic or whether it's pull out your iphone and do that kind of thing. it'salways these great creations . of the greatest things that happened in many years is the internet and it's just beginning, what happened and what you're able to dobecause of that capability is unbelievable . and it will get faster and as we know 5g comes along and hopefully other things will come along and will give you more privacy and you probably have today because a lot of firms that use your private information or their advertising and such but so we're talking about that backstage about block janeand things like that. someday you'll be in control of your privacy , not today but monday. >> as someone who's, you're not a technologist. you were trained as a technologist . you, how do you make these

decisions because on the one hand with the internet, you were clear this was a big technological change and charles schwab corporation was going to invest aggressively. right now in your field everyone wants to talk about crypto currencies and schwab is not jumping on that bandwagon . >> crypto currencies is sort of not something that i'm in favor of right now because it really, yes, they have security butthey don't have anything backing up the currency itself . you want to have full faith and credit of somebody behind it like the us government would be pretty important to have or a bank or something so this is sort of something that you can dream about and i own one bit coin. i got it about three years ago, i guess i got the coin from my youngest and half a coin from myson-in-law making one coin .

it was worth $16,000 that christmas and i think within six months it was worth 4000 so i lost 75 percent of my so-called gift. not a good place to be. and i kept telling them, this is not a great place to be so i've suffered right through it and i think my son sold everything he had in terms of crypto currencies so anyway, is a sharp investor. i'm a stupid investor. i still on the coin. >> you'll be okay. >> chuck, i can't remember if it's the ninth or 10th year of an economic expansion and able market. logic or history, even common sense would suggest that's not a great place to be as an investor. what areyour thoughts on that ? >> i happen to be, you have

to be an optimist when you're like myself so i think the undercurrents of the economy is really strong and i happen to be a believer that the tax bill that went through to help our corporations in america become internationally competitive is a fantastic thing. the cash flows of companies are high and even right now, reporting the most firms are reporting improved earnings. underpinning of the consumers seems to be in really great position of confidence. and it can go on but nonetheless, economies always markets always go up and down. that's a fundamental with its currencies, stocks, bonds, interest rates, you name it. markets will always go up and down so if you're a smart investor, understand that end ensure that you just hang on for the long term and you

look at any chart over a long-term, i don't know if you can find yourself, it can be three years, five years, 10years . it always ends up here and eventually, ends up over here. i'm talking about things that grow. i'm talking about stocks. i'm not necessarily talking about bold or silver, commodities of that but those things don't grow necessarily, they go up and down by a short distance of supply or demand, those kind of things but docs and things like that are the function of a thing that can grow. and we're seeing it. you look at any of the great companies. i talk about, to make my point, every company i've ever been on the board of, i've been on for s&p 500 companies and no management as ever come into the boardroom and said we can't grow next year. they always have a plan of backup . somedon't achieve it but all

have a plan to grow . and that's what companies, that's what we do. >> can you talk about the role of mentor ship? is there someone at play that role in your life, what important lessons did you learn -mark. >> i didn't have any single person was my coach as such. my father was a lawyer so he had really not much background in what i was up to in economics and then on finance. so that was i think the biggest motivation i had as a kid was our family came up, they came up through the depression years and how important my end saving was so that was a fundamental learning i gotfrom my family . make sure you do well enough and pack something away or tomorrow. so i read a lot of biographies when i was a kid about who were the people that really did well, success

in business whether it's most of which i sort of drifted towards those that did finance and whether j.p. morgan or somebody like that. i said that's what i want to do, i want to get wealthy,i don't want to be sitting around and say i can't buy that . that's what you dowhen you're 12 years of age .you want to buy the bike, well, in my case we went out and found a used bike and i had a used bike. i was happy with a used bike. it worked well with a new swing, i didn't have a new schwinn but i had a used bike that i greased that baby up every day and it function. >> can you share some words of wisdom about navigating external changes and making them work in yourfavor ? >> i think for sure you just education, it's understanding what you're talking about.

making sure you have every avenue to figure out and then take the rest to make a decision to go one way and if it doesn't work, change your mind and come out with a different way. flexible. lexical, flexibility and understandinxtra time to make sure our back office was clean all the way through and a couple times they work but for the most part would talk ab and you write 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? >> those were all learnable things. they really are learnable things. and i learned about marketing for instance, i learned about pr. i learned about, i would never learn how to be a great salesman, that's one thing i

could never doparticularly if it was abrett babcock . like insurance . >> so i always wanted to surround myself where it's something i could be enthusiastic about. a great product that i was deeply involved in an act confidence in you so we created schwab i've always been, i like to talk about the company because what we do and what we stand for and all those values that our company has and i was not, in the bri would go around in the early days of the company. we couldn't afford much advertising area very expensive. they're expensivetoday but we can afford today . but i went around, radio stations all over the country to try to introduce the world to the benefits of discount brokerage and it seemed to work and i got introduced, appointments with different radio stations and got a few tv stations and a few articles in the newspaper. like we talked properly on

and we got us continuously out there, out in front and then talk to groups like this about the benefits. early on, right before 40 years ago, talking to groups about the benefits of discount brokerage, why it was important and how you could just save money but be able to make decisions free of commission sales guys. that was what we did. >> i remember saying in any interview you ever dayyou ended by saying something, either giving the800-number or saying come seeus , something to that effect . >> that's what a good marketer does . >> you also about communicating with journalists, you have some wisdom in their that this is my personal favorite passage that i'm going to read and i'm going to share this with

other ceos. in 2004, five or so when you were into just beginning the turnaround of the company, my former colleague betsy morris and fortune i believe you'd work on an article with about corporate leaders with the sex leah said i want to write aboutthe turnaround charles schwab and the executives advise you that was a bad idea. it's too soon . they haven't proven everything yet and you right here there were any number of reasons to say no but i knew that a good story requires some tension and we had enough progressunder our belt that i thought we should take the chance . in retrospect the piece focused more on david's departure then we hope. it made it a more dramatic story i suppose but the underlying theme was clear. we were fixing schwab.

>> we were and i cheated. there's a picture of me in fortune, the real hard cover out there which i love, it's oneof the best . it's me as a 13-year-old i think, 13 years of age. once in magazine, betsy has dyslexia should so she started this article about executives that had dyslexia in their background and so she came and interviewed me, interviewed a bunch of other characters . and unbeknownst to me she got a picture of me 13 so it was a front-page of the fortune magazine 13-year-old. all my god. of course, nobody recognized me then, it was good. >> we used to have a big staffof photo researchers would go find that sort of thing . >> you part of that fixed up. >> i know you're joking about that because you had the

presence of mind to save your people yes, they got to find some of the comedy 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 thewhole story. not all ceos are like that . >>. >> openly it's one. >> thank you. >> let's end with what your story about working with having a photo of the 13-year-old, you and 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, you said that very clearly but it's about more than that so good we end with, just explain to people how you managed to not only build a business but have a good time doing it and why that matters ?

>> you think about purpose life and what you try to do, you try to maximize the best of your ability whatever it might be and i'm always in great admiration for those that are musicians. or are great at being a doctor or a lawyer or whatever it might be just pursue your passions and that's what i found i had a i just had a young boy and today who is applying to college. i like to help these kids get into the best school they can get into but that's one of the conversation we had about realln pursuing your best, whatever they might be in making business like myself and being successful financially. you also have a huge obligation to get back a large part of what we do in terms of being successful. we are happy to do that for sure, but i think every kid needs to find the direction in life, the passion they have and how they can contribute in a significant way, the best they can to society.

i think that's sort of the way it should work. >> i would be remiss if>> i dont ask you, how is your golf game today? [laughing] >> i had to say it's as good as i can remember. >> really? [laughing] [applause] >> before we close please bear with me for a moment. our thanks to charles schwab, founder and former ceo and chairman of the charles schwab corporation whose new book is "invested: changing forever the way americansor invest." this program has been part of the commonwealth club ethics and accountability series underwritten by the traverse family foundation with additional support from the bernard gaucher foundation for our good literature programs. we would like to remind everyone in the room that sign copies of the book will be available outside this room following the program. i am adam and now this meeting

of the commonwealth club is adjourned. [applause] [inaudible conversations] >> watch an extended weekend of booktv this holiday weekend. today at 3:20 p.m. eastern pulitzer prize-winning investigative journalist details the efforts made to stifle his reporting. >> this was not a journalistic decision that was happening. we were told to cancel interviews with rape victims. we were told to stand out and not take a single call on subject. i was threatened that is going to be exposed as having been terminated and let go from the company if i ever disclosed that nbc had anything to do with the story.

>> sam houston likes to talk about church, he felt he was impervious. he got shot three times and he should have died. courage has mechanically. when it's time to get a commission because washington, close to hear according to the map, burned to the groundwork what does he learn? this country is fragile and encourage have to be calculated. .. i think he was twice elected, that is the voting rights act. >> at nine eastern on "after words", university of virginia professor sarah exposed the political history of tobacco in america, the cigarette, she's

interviewed by david kessler. >> looking at the turn of the 20th century and the early 1900s was considered un-american it was the vice of the foreign-born. the movement of the first two decades of the 20th century road a wave of nativism and thinking about what behavior is appropriate for native born healthy americans. >> watch an extended version this holiday weekend and every weekend on c-span2. i wouldn't impar