Separation

The Real Deal: My Life in Business and Philanthropy
by Sandy Weill, Judah S. Kraushaar

The Sandy Weill story is truly one for the ages. Starting with $30,000 in borrowed cash in 1960, and relying on uncanny entrepreneurial instincts, Sandy created one of the leading securities firms in the U.S. and became one of the best known businessmen in the world. After selling his company to American Express and becoming its president, he experienced a professional setback. Undaunted, he cannily parlayed it into a second career, starting over with a sleepy consumer loan company called Commercial Credit, which over the next seventeen years he transformed into the leading global bank, Citigroup. During this span, Weill as chairman and CEO delivered an astounding 2,600 percent return to investors-better than legendary CEO Jack Welch or investor Warren Buffett during that same period.

Yet success is never an easy path, and Weill divulges the highs and lows. His ascent to power has been documented by the media over the years, but never before has Weill revealed the brutally honest and unvarnished side of an astonishing life and career.

And Weill goes further, sharing his love of philanthropy, a journey that took him "from a mediocre bass drummer in my high-school marching band to the chairmanship of Carnegie Hall." He brings readers into his personal life, introducing them to his wife, Joan, his daily inspiration, and discussing his relationships with competitors and colleagues alike, including protégés like Peter Cohen and Jamie Dimon. Along the way, he shares the most important lessons he learned in business and in life. From a middle-class Brooklyn childhood to corporate legend, philanthropist, financier, and chairman emeritus of Citigroup Inc., THE REAL DEAL tells a remarkable story-that of a financial superstar who always loved the game more than the gold.

Chapter 1

Somehow, I entered into many of my biggest deals over the years in May. The cycle seemed as regular as the seasons: another year, another deal. My colleagues insisted I'd purposely announce an acquisition by Memorial Day simply to wreck their summer vacation plans and demand that we roll up our sleeves with yet another big merger. Looking back on my very first deal, though, I barely could have imagined possessing that sort of sway over other people's lives.

For four years, my friend Arthur Carter and I dreamed of starting our own company. Arthur was a fledgling investment banker at Lehman Brothers while I had made my way from Bear Stearns to Burnham & Company as a young stockbroker. Commuting into Manhattan each morning to our respective jobs, we talked incessantly of pooling our resources and opening our own business. It was the late 1950s; I was in my mid-twenties; and the Space Age was upon us. American industry was benefiting from an explosion of new technologies, and prosperity was in the air. The promise of a new decade was at hand, and the stock market was surging. We had a limited perspective on the securities business, but we were young, optimistic, and infused with self-confidence.

As we imagined our new business, we looked to Allen & Company, the prestigious merchant bank. Charles Allen had made a fortune investing in start-up companies and profiting as the companies in which his firm had ownership stakes sold out to the public. We were drawn to that sort of enterprise but knew we didn't want to stop there. I had experience selling securities to individuals and figured a brokerage business alongside a merchant bank would cover our day-to-day operating costs.

How to produce sufficient cash flow to have enough left over to feed our families soon became our major challenge. Before long, we effectively solved that problem by bringing in two additional partners, Roger Berlind and Peter Potoma. Like me, Roger and Peter were brokers who could be relied upon to generate a steady stream of business while we'd hunt for the episodic and lucrative investment banking deal.

Opening day for Carter, Berlind, Potoma & Weill was thrilling. It was May 2, 1960. We had found a small no-frills office with an address that oozed respectability within sight of the New York Stock Exchange: 37 Wall Street. Along with a newly hired secretary, the four of us spent our first day in cramped quarters opening boxes, getting our phone lines working, and calling as many clients as we could to announce our new venture. Conscious of our young age-we were all in our twenties- Peter Potoma had suggested that we buy hats and black umbrellas so that we might appear older. After all, with our own money on the line, credibility and bringing in new accounts would be more important than ever.

Shortly after we set up shop, the four of us and our wives convened at Arthur's home on Long Island to celebrate. It was a festive occasion, and we all openly shared our aspirations. To this day, I remember the others stressing over and over their desire to become wealthy. Given that Joanie and I were raising two toddlers and lived nearly hand to mouth, the talk was certainly seductive. Still, what I remember most from that dinner was my declaration that the money should be secondary-what mattered more to me was to build a great firm: one that would lead the industry, employ lots of people, endure over many years, and importantly, command respect.

Over the next forty-three years, I never altered my priorities. I don't recall how my partners reacted to my idealism that evening. It was probably a good thing that none had known me in my younger years. Had they been more familiar with my up-and-down experiences growing up and my family background, I'm sure they would have snickered at my outburst and accused me of hubris. In truth, setting off with my new partners amounted to a genuine coming of- age. Being my own boss was empowering and nerve-wracking all at the same time. It allowed me to dream, but it also instilled discipline, self-confidence, and a work ethic the likes of which I had never consistently mustered before.

I'm still amazed I was able to summon the confidence to start my own business. I was shy as a child and through all my years of schooling was at best an uneven student. My parents never enjoyed a close relationship, and neither represented a particularly good role model. And I lacked the family connections that gave many of my college classmates and early colleagues that certain swagger as they approached their first jobs.

I was born on March 16, 1933, and lived in a modest three-story home in the Bensonhurst section of Brooklyn until I was ten. My mother's parents owned the home and lived on the first floor with my Aunt Rose, while my family lived in two bedrooms on the second level. The third floor was reserved for tenants. Since I was meek and introverted, I depended heavily on an Irish nanny, Miss Heally, with whom I shared a room and who doted on me so much that I almost looked to her as my real mother. Our neighborhood was filled with Italian, Jewish, and Irish kids, but I never went out of my way to make friends. Between my shyness and reliance on my nanny, I must have been sort of a sissy. It was always easier to talk to Miss Heally or play with my younger sister, Helen.

Summers were special, as we spent them in Peekskill, New York, then a largely agricultural community on the Hudson River. My mother's father originally had owned a hotel there; by the time I was born, he had sold it and bought a farm. It was a terrific escape from the noise and hubbub of Brooklyn. The farm was a gathering point for my extended family, which included my mother's four siblings and their spouses and children. While my mother would move up for the full summer, dad commuted from his city job on weekends. Helen and I had a great time at that farm swimming in the pond, learning to milk cows, fishing, and racing down a sweeping hill in our matching red wagons.

By the time I knew them, my maternal grandparents were already well on in years. In his prime, though, my grandfather, Philip Kalika, must have been a risk taker with good business sense. He had grown up in what is now Poland but then was part of Russia. Though he had been engaged to someone from his hometown, he met my grandmother, Riwe Schwartz, while serving in the Russian army. Falling in love, my grandfather never returned home and instead married my grandmother and settled in a village northwest of Warsaw. Before long, with three of their five children born, including my three-year-old mother, they emigrated to the United States, entering through Ellis Island in 1908.

I don't know the story of how my grandfather went from being a penniless newcomer to his later prosperity; by 1919, he had bought his first home in Brooklyn (the house in which I grew up) and by 1926 opened his own business mass-producing black mourning dresses. Somehow, the company thrived through the Depression years to the point where my grandfather was investing in hotels and farmland and giving his children trips abroad for high school graduation presents.

Copyright © 2006 by Sanford I. Weill

About the Author

Sanford I. Weill is Chairman Emeritus of Citigroup Inc., the diversified global financial services company formed in 1998 through the merger of Citicorp and Travelers Group. Mr. Weill retired as CEO of Citigroup on October 1, 2003, and served as Chairman until April 18, 2006.

Judah S. Kraushaar, the former director of the Global Financial Services Equity Research team at Merrill Lynch, has been consistently ranked as the banking industry's top securities analyst by investor surveys from The Wall Street Journal, Institutional Investor, and Fortune. He and his wife, Michele, and their three children live in Westchester County, New York.