Bloomberg's Three Year Journey To Land Their First Customer! (4-minute read)
To the 200+ new subscribers since last week....welcome 👋. This is First 1000, a newsletter about how companies got started and how they landed their first customers.
How did Bloomberg get started?
Michael Bloomberg, a Harvard MBA graduate, started his career at Salomon Brothers, an investment bank that pioneered what we came to know today as block trading. During Salomon's brothers' acquisition by Phibro, Michael Bloomberg was pushed out despite being a firm’s partner. Don’t bring up the tissues just yet; this deal netted him $10m, which were critical in his endeavor to create the Bloomberg Terminal. Bloomberg would spend in access of $4m to fund the creation of his Software + Hardware Bloomberg terminal before landing a single customer.
Year 1 of the journey: Side Hustling
If we are to OKR Bloomberg's journey, the first year's OKRs were:
Bring in some Cashflow to fund the operation
Build "Street Cred" on Wall Street
To hit #1, Bloomberg and the team started doing some consulting work on the side. One of his consulting customers were Merrill Lynch & co. This was an exciting project, not because of its nature but because Merrill would have been the perfect first customer to Bloomberg.
Big investment bank - ✅
Wildly respected in the industry - ✅
Did not have their in-house solution - ✅✅✅
Bloomberg spent six months working closely with Merrill's team and netted $100k from his consulting work (plus expenses). Still, this $100k is nothing close to what came after year 2: an intro to Ed Moriarty, the person that runs the Capital Markets division at Merrill Lynch.
Year 2 of the journey: 10m errand boy
Okai so Bloomberg somehow still had access to the Merrill Lynch offices, and after building some credibility there because of his consulting work, he was determined to land them as his first client! Go big or go home!
Bloomberg would wake up and buy two coffees and 2teas (one with milk and one without) every day. He would roam around the Merrill Offices to find anyone reading the newspaper at 7:00 am
Hi, I am Mike Bloomberg. I brought you a cup of coffee. Can I talk to you?
The effort paid off, and he finally got that meeting with Ed Moriarty, the person in the company that would have the ability to pull the trigger on something like Bloomberg terminal.
Year 3 of the journey: Selling a product that doesn't exist
I implied with perhaps some minimal embellishment that everything but the packaging was completed, I made my pitch.
If there is anything to be learned from Bloomberg's pitch to Merrill lynch its this:
Going All-in on risk*
Going All-in on Guarantees*
*Especially if you are selling a B2B product
After Bloomberg made his pitch, the team at Merrill Lynch were unimpressed.
We can do this internally
So Bloomberg asked them how long it would take, and the response he got was,
If we don't have anything new to develop, we can probably get started in 6 months.
So Bloomberg did a business school 101, he eliminated the downside risk for Merril Lynch.
I'll get it done in six months, and if you don't like it, you don't have to pay for it.
That was a non-brainer for Merril Lynch, and it was perhaps the fastest decision ever made at the firm.
After it was all said and done, Bloomberg bought himself some time; it wasn't until 2-3 months later that the final contract would be signed, and on a technicality, his six months promise would only start then.
What happened after was shocking; when the 6 months were up, Bloomberg went to present his new terminal machines, and after running the first function, the whole thing crashed…you would expect this to be the rock bottom of which he emerges victories but it wasn’t at all!
Instead the team at Merrill Lynch popped some champagne’s open to celebrate this moment (🤨🤨). It was the principle that they delivered something (almost at least) on time that would be (kind of) useful for the team. Any doubt, the Merrill executives had up to this point completely disappeared. They even went on two commit to buying two additional units (the original contract was 20). With some critical feedback, and time Bloomberg finally hammered down all the software bugs one at a time, and with the wind at his back from landing one of the top 5 banks as his client...the sky was the limit for the then 42-year-old Michael Bloomberg.
This is the story of how Bloomberg got their first customer, I really hope you enjoyed reading this!
See you next week,