May 2020

30 Things I Have Learned During My First 30 Years At Jefferies

Rich Handler, CEO, JefferiesThirty years ago today at the age of 28, I officially began working at Jefferies in Los Angeles.  Technically, I agreed to join Jefferies in February of 1990 to help build a high yield bond department, but for the first three months I had a dual role as I was also helping to liquidate the bond portfolio of my previous employer that just filed for bankruptcy, Drexel Burnham Lambert.  I sold our leftover bonds from inventory during the day and at night I made photocopies of the thousands of holders’ list of bonds (with creditor approval) and recruited people to join me at Jefferies.  The holders’ lists were our version of Bloomberg and served as our blueprint and roadmap to begin our high yield trading operation.  You had to know where the bonds were if you wanted to trade them.  The sales pitch to join Jefferies was very simple and it got my attention:  

A.  The firm was entrepreneurially cultured small boutique (a few million dollars in total earnings) with one business: the riskless crossing of cash common stock between institutional investors.

B.  The firm would give our team the entire $30 million of risk capital at Jefferies to begin a high yield trading operation from the ashes of the 1990 crisis and allow us to participate in our success and get paid partially in equity.  I could not believe anyone would trust us with that staggering amount of capital.

C.  If successful, we would have the opportunity to help build Jefferies in ways we thought were smart.

That was all I needed to hear.  I was sold and I joined on the spot.

In celebration of my 30 year anniversary, it’s my party and to celebrate I would like to share with you…………..

30 Things I Have Learned During My First 30 Years At Jefferies:

  1. When you join an entrepreneurial company, you can actually make a difference and move the dial.  The satisfaction from being smack in the action every day with nowhere to hide and seeing the direct results of your contribution is incredibly motivating and meaningful.  I feel the same energy today at Jefferies.
  1. It is much harder to be in a relatively smaller organization than a larger one in many ways.  Successful brands make everyone’s job easier and it takes forever to build one and a minute to destroy it.  I spent what feels like the first 7 years of my career saying the following, “No, it’s Jefferies, ‘J..E..F..F..E..R..I..E..S.’  Please tell him I called again.”  That doesn’t happen as much anymore and it feels great.
  1. When you start out in your career, you focus very inwardly on what you think you need to do to be a success in life.  Often that has to do with money and titles.  As you get older, you understand that what makes you happiest is when everyone in the organization thrives.  The sooner you can make that transition in your life, the happier you will be.  It’s quite ironic that this is also when financial rewards and increased responsibility miraculously start coming your way.  
  1. If you deal with your clients honestly, competently and transparently, they will be with you for your entire career and they will multiply from every direction.  In fact, some of my clients' offspring are now clients.  Short term greedy behavior can result in a nice monetarily short run win, but never a career.  It’s actually not even that nice as you will have many sleepless nights before you eventually wash out of your industry.  Relationships are the most important part of building a company and I believe the trust our entire firm has built over decades with our clients is allowing us to flourish in today’s current virtual reality. 
  1. If you hire really great people all around you, they will tell you when you are wrong and occasionally your ego will get bruised.  Thank god because a bruised ego heals and a broken company dies.
  1. When you hire people who have been at only a very few firms (and have excellent reasons for leaving), ninety-nine times out of one hundred they are better long-term partners than people whose resumes resemble those of mercenaries.
  1. You cannot begin to diversify your company until you have a business or two that has relatively predictable, stable and recurring revenues.  Once you have the cash flow stream(s), you can begin to invest in new and related businesses.  Diversification allows for much greater chances of survival in tough times.
  1. Relatively predictable, stable and recurring revenue businesses usually don’t stay that way without continual investment, innovation and adaptation.  What worked yesterday rarely works tomorrow due to competition and technological changes.   
  1. Having a pure outright commission structure motivates people in the short term, but it is impossible to build a truly sustainable long term business exclusively with that model.
  1. Doing the first piece of business with a new client is incredibly difficult.  Once you achieve that goal, the next 30 years is pretty easy.  Don’t screw it up.
  1. Just about every lesson I have learned or improvement in myself I have made has been during or immediately after a period of extreme crisis, dislocation and/or pain.
  1. It always seems to work best if you worry about your people and your clients rather than spending any time focused on your competition.
  1. Naysayers, bad mouthers, and second guessers have no idea what they are talking about and it is a joy continually proving them wrong.  Rise above the noise and keep moving forward.
  1. Helping to build a company requires the balancing of multiple constituencies.  Shareholders, bondholders, clients, employees, board of directors, rating agencies, regulators, vendors and the media all have legitimate needs, desires, requirements, pressures and motivations.  Many times these interests conflict and it is impossible to serve everyone’s short term needs at the same time.  Fortunately there are many consistent value principles that benefit all players and the challenge is to maintain them while you navigate the right times to prioritize each group’s unique needs.   
  1. Bad behavior by just one person at a firm tarnishes every single person at a firm.  
  1. It is not easy being an underdog fighting goliaths, but it is incredibly rewarding when you continually gain ground.  As you get larger and more successful, it is important to always maintain the humble characteristics that allowed you to thrive back in the days when you probably had no legitimate right to even be in the fight.
  1. Never underestimate the abundance and strength of the forces in the universe that will be instantly unleashed whenever you try to carve out even a small niche in a supposedly irrelevant area for your company.
  1. You can’t build anything by yourself.  If you are lucky, you will find that one business partner who shares your vision, priorities, perspective, values and intensity.  If you are even more fortunate, that person will also have skills and abilities that complement and supplement all the things that you don’t do particularly well.  I am very fortunate to have had that person in my career and alone this would not have worked.
  1. Helping to build a company isn’t about one or even two people.  You need an inner circle of A+ players who are truly partners in every success and help you through each failure.  These partners will arrive at different times and from random places, but you will know when you meet one and the goal is to never let them get away.  Success becomes exponential as each partner will feed off the other and then this group attracts all the other special people you need to build a company.  Quality begets quality.
  1. You never know how much you care and what a privilege and responsibility it is to help lead an organization until events unfold that put the health of the company at risk.  It doesn’t matter if the event was random or not your fault.  Understanding the fragility of something you have worked so hard to help build and how much you care about the people that make up your company becomes crystal clear when all the chips are down and you have a legitimate fear that something bad could be imminent.  The feeling of watching everyone in the organization rally for the collective good during these scary times makes all the personal sacrifices you make along the way worthwhile. 
  1. If you are lucky enough to be a leader of an organization, all that means is that you work for everyone within the organization.  You serve at the pleasure of everyone and you are in charge of no one.  The phone rings and it’s never to say great job.  Usually the person on the other end wants to tell you their problems or let you know what our company did wrong.  Never complain or lament about these calls because receiving these messages regularly is a good thing.  It’s your job to help fix or solve the problem.  If the phone stops ringing when there are problems, that means people think you can no longer help them fix things.  Then it is time for you to leave.
  1. When helping to run and build a company, it is very easy to give the impression that you are always swamped and so busy that it is a massive inconvenience for anyone to meet or talk with you.   When you give the appearance of being too busy, too important, or too “anything” that keeps people afraid of approaching you, it is BS.  Everyone has the time.  The title or level of perceived importance of the person wanting to talk with you is not relevant.   Prompt or better yet, real time responses set the tone, show you welcome everyone’s opinion, and you learn exactly what you need to keep building. 
  1. If you can get a sense of urgency throughout your company and maintain it for the duration, it’s amazing what you can accomplish.  That also means that while you are running your heart out, you also must pace yourself because this sprint is also a marathon.
  1. Companies must stand for something besides the products, goods and services they provide. 
  1. I don’t know of anyone who successfully started or helped build a company whose primary objective was to become wealthy.
  1. There is always more to do and while you can be proud, you can never be satisfied. 
  1. You are never as smart as you think you are when things are going well, nor as dumb as you feel when everything sucks. 
  1. Owning a piece of something and believing in it means you never have to work a day in your life.
  1. Never judge other people as they try to build their companies.  If you put yourself on the line every day, are willing to take the risks and potential ridicule for failure, then I respect you.  It’s almost impossible to imagine the challenges, pressures and fears involved with trying to create and build.  Respect even those who fail, just try not to invest with them.
  1. No matter what success, accolades, wealth or publicity you may get from your career as a CEO, builder and/or entrepreneur, at the end of the day your happiness and satisfaction will be derived exclusively from the people you love and the lives you have helped make better.

Thank you for listening to me.  My 30 years at Jefferies have flown by in what feels like 30 minutes.  This note is dedicated to all the wonderful people who have devoted their time and careers to build our company.  I am here today because of each of you and please know that I am forever grateful for having the chance to be a part of Jefferies for these past 30 years.  I am more motivated today than ever before to keep going strong.  Your dedication and commitment during this crisis brings me incredible pride and I know that together, we will bring Jefferies to yet another level.

30 years is a charm,

Rich

 

RICH HANDLER
CEO, Jefferies Financial Group
1.212.284.2555

rhandler@jefferies.com
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