WEBVTT - Masters in Business: Altegris Group CIO Jack Rivkin (Audio) 0:00:03.240 --> 0:00:07.560 This is Master's in Business with Barry Ridholts on Bloomberg Radio. 0:00:08.880 --> 0:00:11.880 Welcome to the podcast. This is Barry Ridholts, and today 0:00:11.920 --> 0:00:16.040 I have a very special guest, really somebody who is 0:00:16.200 --> 0:00:22.880 a legend on Wall Street. Jack Rivkin, best known as 0:00:22.920 --> 0:00:27.120 a managing director at Lehman Brothers, c I O at 0:00:27.200 --> 0:00:31.560 new Berger and Berman, a partner at Ideal Labs, and 0:00:31.560 --> 0:00:35.720 and now managing director at Altegri's. Jack is really a 0:00:35.840 --> 0:00:40.640 legend and and the way his legend um forms is 0:00:40.720 --> 0:00:46.000 he was hired to take Lehman Brothers research department, which 0:00:46.159 --> 0:00:50.959 was literally dead last in the i I rankings, just 0:00:51.040 --> 0:00:54.720 the worst research department on Wall Street. And he was 0:00:54.840 --> 0:00:57.600 hired to improve that. And he did a lot of 0:00:57.640 --> 0:01:02.000 things that actually turn out to be quite common today, 0:01:02.040 --> 0:01:04.679 but back in the day when he was doing this, 0:01:04.880 --> 0:01:08.920 it was relatively unheard of. He hired lots of women 0:01:09.080 --> 0:01:12.839 and minorities. People just didn't do that way back when. 0:01:12.920 --> 0:01:20.000 He also started tracking how people's research report was used 0:01:20.040 --> 0:01:24.280 by the Street, how often people requested a specific analysts report, 0:01:24.680 --> 0:01:28.280 how much revenue it generated, how much commission dollars had generated, 0:01:28.800 --> 0:01:34.600 simple basic quantitative metrics to evaluate um the research product, 0:01:34.760 --> 0:01:38.280 and we take all those things for granted today. He 0:01:38.600 --> 0:01:42.080 was the first guy who did this. So not only 0:01:42.120 --> 0:01:45.080 did he do a lot of for then, out of 0:01:45.080 --> 0:01:47.800 the box hiring and outside of the box thinking, he 0:01:47.920 --> 0:01:51.720 engaged in a lot of off campus retreats and lots 0:01:51.720 --> 0:01:55.200 of stuff that were considered touchy feely back then and 0:01:55.280 --> 0:01:59.320 again fairly common fair today. And over the course of 0:01:59.520 --> 0:02:03.480 three years, he took Lehman Brothers Research from the worst 0:02:03.720 --> 0:02:05.960 to the best on Wall Street, who was the number 0:02:06.000 --> 0:02:10.720 one ranked research department. For his troubles, he was subsequently 0:02:10.800 --> 0:02:15.160 fired by Dick Folds and his inner circles of yes men, 0:02:15.320 --> 0:02:17.640 as I like to call it um, But he was 0:02:17.680 --> 0:02:22.520 so successful. Jack was so successful in this that the process, 0:02:22.600 --> 0:02:26.560 the methodologies, what he did became the basis of a 0:02:26.639 --> 0:02:29.600 Harvard Business School case study. For those of you not 0:02:29.680 --> 0:02:33.120 familiar with Harvard Business School, they teach through a series 0:02:33.160 --> 0:02:36.560 of case studies. Here's how a manager, Here's how a CEO, 0:02:36.800 --> 0:02:41.200 Here's how a company addressed a specific problem and solved it. 0:02:41.280 --> 0:02:45.320 And so I actually met Jack through a mutual friend. 0:02:45.400 --> 0:02:48.200 It was at a dinner with the famous art cassion 0:02:48.280 --> 0:02:51.400 of Ubs and John Moulden where I met Jack, and 0:02:51.440 --> 0:02:53.440 it turned out we had a lot of things in common, 0:02:53.480 --> 0:02:56.040 even though he's got a few um years and a 0:02:56.040 --> 0:02:59.600 few gray hairs on me. We're both fishermen. I ended 0:02:59.680 --> 0:03:03.760 up in reducing Jack to to David ko Talk because 0:03:03.800 --> 0:03:08.440 they're just same age, same you know, same sort of background, 0:03:08.520 --> 0:03:11.600 same era. They hit it off swimmingly. Jack is now 0:03:11.639 --> 0:03:15.560 a regular fixture at the Ko Talk Shadow Fed event, 0:03:15.600 --> 0:03:18.440 which is every August up in Maine where a bunch 0:03:18.480 --> 0:03:23.520 of fund managers and economists go fishing. Um Jack really 0:03:23.520 --> 0:03:26.360 fit in very well. But he's a fascinating guy because 0:03:26.400 --> 0:03:30.280 he then leaves, then leaves Lehman Brothers and ends up 0:03:30.320 --> 0:03:33.440 at New Burger and Berman, where he's c I O 0:03:33.840 --> 0:03:37.280 and does a phenomenal job there, to the point where 0:03:37.320 --> 0:03:40.480 Lehman Brothers ultimately ends up buying New Burger and Berman. 0:03:41.000 --> 0:03:45.480 And here's Jack, a guy who was fired um after 0:03:45.560 --> 0:03:47.839 doing a great job, ends up working for the same 0:03:47.880 --> 0:03:52.840 guys who fired him, and gently egresses himself out of 0:03:52.920 --> 0:03:57.400 Lehman a second time. This this version is voluntary, and 0:03:57.440 --> 0:03:59.720 it turns out to be quite fortuitous timing because he 0:03:59.840 --> 0:04:03.720 le eaves just before Lehman collapses. I want to say 0:04:03.760 --> 0:04:07.400 two years before everything hit the fan, and so uh, 0:04:08.160 --> 0:04:12.760 he ended up really being one of those situations where 0:04:12.800 --> 0:04:15.920 it was a fantastic firing and and did really well 0:04:15.960 --> 0:04:18.880 for him. But Jack is one of these guys who's 0:04:19.000 --> 0:04:24.680 just really savvy and down to earth again, another no 0:04:24.880 --> 0:04:27.640 nonsense sort of guy who just tells it like it is. 0:04:28.240 --> 0:04:31.080 And Amen, she's a delight to speak with. He's really 0:04:31.120 --> 0:04:35.040 a charming fellow. I love the fact that he's seventy 0:04:35.200 --> 0:04:38.800 or seventy one and has zero interest in retiring. He 0:04:38.839 --> 0:04:41.760 loves what he does. When he was a partner at 0:04:41.800 --> 0:04:43.880 Ideal l Abs, he's still a partner at Ideal Labs. 0:04:44.360 --> 0:04:49.360 Really fascinated by finance, technology and software as well as biotech, 0:04:49.440 --> 0:04:53.279 and we briefly talked about you know, printable organs and 0:04:53.400 --> 0:04:56.520 principal bones and and things along those lines. It's it's 0:04:56.920 --> 0:04:59.760 the areas that interest him I find quite fast and 0:04:59.839 --> 0:05:04.120 and so I thought this conversation was really really interesting. 0:05:04.640 --> 0:05:07.800 It's not as much inside baseball as I've threatened. For 0:05:07.839 --> 0:05:10.960 a guy that the average investor may not know who 0:05:11.000 --> 0:05:14.279 he is, he's been all over the street. He's got 0:05:14.360 --> 0:05:17.640 just a phenomenal career, a great track record, and just 0:05:17.760 --> 0:05:20.039 a deep, deep well of knowledge. So it was a 0:05:20.080 --> 0:05:22.359 pleasure to sit with him and have him share some 0:05:22.440 --> 0:05:26.440 of that. So I think I've babbled more than enough. Uh, 0:05:26.480 --> 0:05:30.800 probably a minute longer than my usual babbling. Without further ado, 0:05:31.000 --> 0:05:38.200 here's my conversation with Jack Rivkin. This is Masters in 0:05:38.240 --> 0:05:42.560 Business with Barry Ridholts on Bloomberg Radio today. On the show, 0:05:42.600 --> 0:05:46.160 I'm thrilled to have my friend Jack Rivkin, a person 0:05:46.320 --> 0:05:50.440 you may not know who he is, again, another inside 0:05:50.440 --> 0:05:54.159 baseball sort of person who people on the street certainly 0:05:54.240 --> 0:05:56.719 know who he is. His his Let me just give 0:05:56.760 --> 0:06:01.400 you a little flavor of his resume, because it's quite outstanding. 0:06:01.520 --> 0:06:04.920 You began your career as research as a research analyst 0:06:05.360 --> 0:06:11.520 back in ninety eight at a small firm called Mitchell Hushins. 0:06:11.560 --> 0:06:16.440 Eventually become head of research there they get bought by 0:06:16.440 --> 0:06:19.039 pain Webber and you work your way up the ladder 0:06:19.040 --> 0:06:23.520 of Pain Weber, where you become research director, CFO, CEO 0:06:23.640 --> 0:06:27.080 of the equity trading side, and eventually president of Pain 0:06:27.120 --> 0:06:32.280 Webber Capital. Then you move over to Lehman Brothers in seven. 0:06:32.320 --> 0:06:34.240 There are some other things in the middle, but I'm 0:06:34.279 --> 0:06:38.279 just doing the highlights At Lehman Brothers. You famously took 0:06:38.400 --> 0:06:44.440 them from first from worst to first famous right, and 0:06:44.600 --> 0:06:48.640 eventually your tenure there was the subject of a Harvard 0:06:48.680 --> 0:06:53.800 Business School case study describing exactly what goes in taking 0:06:53.800 --> 0:06:57.440 a last place research firm turning it to a first 0:06:57.440 --> 0:07:01.279 place firm. You were c I O, Chief Investment Officer 0:07:02.120 --> 0:07:05.120 at New Burger Berman, and before that you were Director 0:07:05.160 --> 0:07:09.479 of Global Research at Smith Barney. And currently you're a 0:07:09.520 --> 0:07:13.880 director at Dale Carnegie Associates and on the Economic Club 0:07:13.960 --> 0:07:15.840 of New York. Did did I miss any of the 0:07:15.840 --> 0:07:19.120 big The only thing you missed were I have My 0:07:19.200 --> 0:07:22.720 most fun is I'm a director of Ideal Lab. You 0:07:22.800 --> 0:07:27.440 do very early stage investment pre venture capital. We start 0:07:27.480 --> 0:07:30.000 with an idea and turn it into a company. There 0:07:30.040 --> 0:07:32.320 you go. That's that's about as early stage as it gets. 0:07:33.000 --> 0:07:36.760 So you've obviously had a very storied career on Wall Street. 0:07:36.800 --> 0:07:40.360 You've worked in a lot of major firms. Um, what 0:07:40.400 --> 0:07:45.200 were your early influences, what actually affected your early approach 0:07:45.240 --> 0:07:50.040 to investing. Well, I had some very good mentors at 0:07:50.080 --> 0:07:53.600 Mitchell Hutchens. There were three people that I worked with 0:07:53.680 --> 0:07:55.600 for a long time and they made a difference in 0:07:55.640 --> 0:08:00.760 my life. Don Mirren, who became CEO at Paint Webber 0:08:00.840 --> 0:08:03.760 and then when they sold to UBS, he took over 0:08:03.840 --> 0:08:08.400 a private equity operation there. Dave Williams, who, when he 0:08:08.600 --> 0:08:14.920 left Mitchell Hutchins went to Alliance Capital and built Alliance 0:08:14.960 --> 0:08:19.280 Capital up was not owner the Alliance Bernstein acquisition. And 0:08:19.320 --> 0:08:22.760 Mike Johnston, who went to Capital Research and had a 0:08:22.760 --> 0:08:26.480 long career there as well. They were very strong influences 0:08:26.640 --> 0:08:31.280 on my care I left out earlier. You're from originally 0:08:31.320 --> 0:08:34.560 from Oklahoma. That's right. How does a guy like you? 0:08:34.559 --> 0:08:38.320 You went to college at Colorado, Colorado School of Mines 0:08:38.480 --> 0:08:43.479 engineering degree. I went there to actually become a petroleum engineer, 0:08:43.480 --> 0:08:47.480 but I really didn't like identifying rocks, so I switched 0:08:47.520 --> 0:08:51.679 to metallurgy and got my engineering degree. Realized that I 0:08:51.720 --> 0:08:54.080 didn't really want to be an engineer. I actually went 0:08:54.120 --> 0:08:56.720 to work for Procter and Gamble out of out of 0:08:56.760 --> 0:09:00.319 engineering school and then went back to business school. So 0:09:00.720 --> 0:09:03.160 you end up at Harvard Business School. I ended up 0:09:03.200 --> 0:09:06.200 at Harvard and from there, well, I went to Harvard 0:09:06.240 --> 0:09:09.079 to become the world's expert in manufacturing. I was going 0:09:09.120 --> 0:09:12.559 to go back and make better soap, and I realized 0:09:12.600 --> 0:09:14.480 that there were other things going on in the world, 0:09:14.800 --> 0:09:18.800 and one of them was Wall stre Did we really 0:09:18.840 --> 0:09:21.720 need better soap? Soap has been pretty good for a while. Well, 0:09:21.760 --> 0:09:23.840 but you could always make it better, at least that's 0:09:23.840 --> 0:09:29.120 what they told. You can always sell more units of all, right, 0:09:29.160 --> 0:09:32.520 So you end up. I end up on Wall Street. 0:09:32.559 --> 0:09:35.960 And I gotta tell you, you know, growing up in Tulsa, 0:09:36.520 --> 0:09:39.559 if anyone had told me I had go to New York, 0:09:39.880 --> 0:09:42.600 I would have told them they were crazy anyone go 0:09:42.679 --> 0:09:45.439 to that kind of a city. And then if they said, 0:09:45.920 --> 0:09:48.600 and you're going to work on Wall Street, I would 0:09:48.600 --> 0:09:50.920 have had to ask what that was. I had no 0:09:52.160 --> 0:09:56.160 interest in finance, never, I had no clue. And Tulsa 0:09:56.320 --> 0:09:59.040 was at that point the oil capital of the world. 0:09:59.040 --> 0:10:03.560 Suddenly moved to Houston, so everyone was kind of focused 0:10:03.600 --> 0:10:07.640 on that industry and taking those weird tests that you 0:10:07.720 --> 0:10:09.920 do in high school, it said, well, maybe you ought 0:10:09.960 --> 0:10:13.520 to think about being an engineer. So that's what I did. 0:10:14.280 --> 0:10:18.320 But when I didn't like finding rocks and identifying them, 0:10:18.360 --> 0:10:20.800 and when I found that there was more to life 0:10:21.000 --> 0:10:24.840 than it was a great educational background, but there was 0:10:24.960 --> 0:10:28.640 more going on out there, I moved on that's quite 0:10:28.760 --> 0:10:32.079 quite fascinating. So you work your way through a number 0:10:32.320 --> 0:10:36.400 of um a number of big firms. You've you've certainly 0:10:36.520 --> 0:10:40.360 seen changes since. So you started in the late sixties, 0:10:40.400 --> 0:10:45.040 which was pretty much the end of the post war rally. Yes, 0:10:45.120 --> 0:10:47.200 so you had a twenty year run from forty six 0:10:47.280 --> 0:10:50.520 to sixty six. The Dow I think started at someone 0:10:50.559 --> 0:10:54.319 in the two hundreds, just about kissed a thousand in 0:10:54.679 --> 0:10:57.920 nineteen six air under it and then for the next 0:10:57.960 --> 0:11:01.240 sixteen years that's whoever got back over that level. No, 0:11:01.640 --> 0:11:04.480 it never did. It was an interesting period of time. 0:11:04.559 --> 0:11:07.840 It was a time we're actually doing analytical work and 0:11:07.920 --> 0:11:11.840 coming up with specific investment decisions. Actually made a difference 0:11:11.920 --> 0:11:14.600 because the market wasn't helping you at that time. No, 0:11:14.720 --> 0:11:17.800 whin did you're back. You've had five major rallies, five 0:11:17.880 --> 0:11:20.480 major selloffs, and by the time you were done back 0:11:20.440 --> 0:11:23.520 in two you were essentially where you started. That's right. 0:11:23.640 --> 0:11:26.760 So high inflation rates, so you could get ten year 0:11:26.920 --> 0:11:32.760 treasury yielding twelve fourteen and and and free Fed funds rate. 0:11:32.880 --> 0:11:36.400 The high the peak was twenty two point three percent 0:11:36.960 --> 0:11:41.360 and twenty two point three percent as the Fed funds rate, 0:11:41.520 --> 0:11:44.079 and we had one, and we had a whole lot 0:11:44.080 --> 0:11:46.800 of inflation over that same pioge we did we did 0:11:46.840 --> 0:11:48.600 that was that was a period where you paid a 0:11:48.600 --> 0:11:52.880 lot of attention to the to the classic deep cyclicals 0:11:52.960 --> 0:11:56.959 who were involved in commodities, and some of them made 0:11:57.000 --> 0:11:59.960 a lot of money. Coming up, we continue our conversation 0:12:00.240 --> 0:12:03.400 with Jack Rifkin and we discussed how he took the 0:12:03.520 --> 0:12:07.280 last place research department of Lehman Brothers and made it 0:12:07.480 --> 0:12:10.640 the best on Wall Street. You're listening to Masters in 0:12:10.720 --> 0:12:19.240 Business with Barry rid Holts on Bloomberg Radio. I'm Barry 0:12:19.320 --> 0:12:22.680 rid Holts. You're listening to Masters in Business on Bloomberg Radio. 0:12:23.040 --> 0:12:27.040 My guest today is Jack Rivkin. He's chief investment officer 0:12:27.200 --> 0:12:31.920 at Altegri's Associates and has a very storied career on 0:12:31.960 --> 0:12:35.640 Wall Street. Worked at UH in very senior positions, head 0:12:35.640 --> 0:12:39.240 of research, CFO, et cetera, at and a number of 0:12:39.320 --> 0:12:43.320 large firms. But what you're really is it fair to 0:12:43.360 --> 0:12:46.080 say what you're best known for is the work you 0:12:46.120 --> 0:12:48.600 did at Lehman Brothers in its heyday? Is that a 0:12:48.640 --> 0:12:51.840 fair statement? I I think that's close to a fair statement, 0:12:51.920 --> 0:12:56.240 and it was definitely something unusual that happened there, and 0:12:56.320 --> 0:12:58.760 we touched a lot of people and it made a difference. 0:12:58.840 --> 0:13:01.360 So so let's stay back and talk about this. U. 0:13:02.280 --> 0:13:05.280 By the way, you and I first met some years 0:13:05.320 --> 0:13:08.600 ago and after I we had met, and you're just 0:13:08.640 --> 0:13:13.120 a very ordinary guy, very humble. Like when one meets 0:13:13.200 --> 0:13:17.000 Jack Rifken, one is not does not come away with wow, 0:13:17.040 --> 0:13:20.120 that guy has an unbelievable resume. So so what a 0:13:20.200 --> 0:13:23.080 nice guy. And I just happened to mention it to somebody. 0:13:23.280 --> 0:13:25.280 By the way, I met a guy named Jack Rifken, 0:13:25.400 --> 0:13:28.360 Jack Rivken. Do you know who Jack Rifken is? Yeah, 0:13:28.400 --> 0:13:30.840 he's this guy. No, no, no, you should go google 0:13:30.920 --> 0:13:34.559 Jack Rifken. So I google you, and upcomes the Harvard 0:13:34.600 --> 0:13:38.120 Business School case study on what you did at Lehman 0:13:38.200 --> 0:13:41.960 Brothers from I want to say seven to the early 0:13:42.600 --> 0:13:46.880 that's right. So so essentially at the time, Lehman Brothers 0:13:47.520 --> 0:13:52.000 was a fifth or sixth um largest investment bank, maybe 0:13:52.040 --> 0:13:55.479 even a little smaller than that, with the research department 0:13:55.720 --> 0:14:00.280 that someone called the laughing stock of Wall Street. Not well, 0:14:00.320 --> 0:14:05.120 it was not highly regarded, essentially last place in every ranking. 0:14:05.280 --> 0:14:08.959 And so who recruited you to run their research upon 0:14:09.080 --> 0:14:12.679 actually a guy named Jeff Laine who had an influence 0:14:12.720 --> 0:14:15.960 on several things later in my life. He was CEO 0:14:16.040 --> 0:14:18.720 at New Burger when I went there as CEO at 0:14:18.800 --> 0:14:22.080 his request, and this was kind of an offer that 0:14:22.280 --> 0:14:24.640 was hard to refuse. First, it was sort of a 0:14:24.640 --> 0:14:27.920 blank slate. I could I could do. I could apply 0:14:28.320 --> 0:14:33.200 everything that I had learned to a something that really 0:14:33.280 --> 0:14:37.080 needed to be reformed, and it truly needed to be reformed, 0:14:37.480 --> 0:14:40.480 and there were incentives put in place to take it 0:14:40.600 --> 0:14:43.120 up to somewhere in the top five. And that was 0:14:43.160 --> 0:14:46.280 our that was really our goal. And really that five 0:14:46.360 --> 0:14:49.080 year plan took you about three years to put into 0:14:49.080 --> 0:14:51.720 a That was the surprise. I was surprised at that 0:14:51.920 --> 0:14:55.040 as well, that we managed to do that in three years. 0:14:55.160 --> 0:14:57.280 And so let's talk a little bit about the how 0:14:57.320 --> 0:14:59.760 did you end up? What did you do to change 0:15:00.480 --> 0:15:03.840 the staffing, the culture, and the quality of the work there. Well, 0:15:03.840 --> 0:15:07.800 it was it was fairly easy in the sense that 0:15:08.120 --> 0:15:12.280 I could make changes to everything. There was nothing that 0:15:12.360 --> 0:15:15.360 was sacred. And in fact, in the case they talked 0:15:15.360 --> 0:15:18.840 about the possibility that we could have actually brought in 0:15:18.920 --> 0:15:22.520 a Wigia board and fired everybody, and nobody would have known. 0:15:24.760 --> 0:15:27.640 Sometimes people wonder if that's actually what goes on in 0:15:27.800 --> 0:15:31.720 research departments anyway. Well, the very famous monkey throwing darts 0:15:31.760 --> 0:15:34.880 at a stop pages on the wall. That's absolutely right, 0:15:34.920 --> 0:15:38.800 not that far off. So so what what changes aside 0:15:38.800 --> 0:15:41.960 from the wholesale changes from what wasn't working? What did 0:15:41.960 --> 0:15:47.920 you actually do? It was two things. Primarily, one was measuring. 0:15:48.200 --> 0:15:52.240 We measured everything, and we measured it very openly. Whether 0:15:52.240 --> 0:15:54.880 it was a number of calls and analysts made, what 0:15:55.040 --> 0:15:58.000 their track records were on their stocks, the quality of 0:15:58.040 --> 0:16:01.320 their written work, all of the contact they had with 0:16:01.360 --> 0:16:04.600 the salesforce, the contact with the clients, all of anything 0:16:04.640 --> 0:16:07.640 we could measure, we did, and we posted it. We 0:16:07.760 --> 0:16:10.760 posted it so everybody could see it. Now, analysts aren't 0:16:10.960 --> 0:16:14.360 tend to be competitive, so you're posting who makes the 0:16:14.400 --> 0:16:17.480 most calls, who writes the best report, who writes the 0:16:17.480 --> 0:16:21.760 most reports, who has the most feedback coming from the salesforce, 0:16:22.240 --> 0:16:26.080 how are they getting rated by the clients? All of 0:16:26.120 --> 0:16:28.320 those things people saw. No one wanted to be at 0:16:28.320 --> 0:16:30.800 the bottom of the list. So you created a somewhat 0:16:30.800 --> 0:16:36.040 competitive environment. But against the background of it was spelled 0:16:36.080 --> 0:16:40.200 out and we tried to make it as collegial as possible. 0:16:40.240 --> 0:16:42.880 I instituted a rule that's at any time you were 0:16:42.920 --> 0:16:45.840 out with a client and you talked about what you 0:16:45.880 --> 0:16:49.120 were doing, and even in your reports, you had to 0:16:49.120 --> 0:16:53.640 mention two other analysts in the department. Now, that started 0:16:53.640 --> 0:16:55.680 out with people saying, well why do I do this? 0:16:55.760 --> 0:16:58.720 I said, Number one, someone's going to mention you. You're 0:16:58.720 --> 0:17:01.520 gonna get better known. Number two. Ultimately, you're going to 0:17:01.640 --> 0:17:04.360 have to find out a reason why you're mentioning an analyst. 0:17:04.400 --> 0:17:06.920 So it's gonna make you a better analyst as well. 0:17:07.080 --> 0:17:11.200 So so all of these quantitative metrics and this transparency, 0:17:12.080 --> 0:17:15.000 this is pretty common stuff these days. It wasn't then. 0:17:15.119 --> 0:17:17.520 So so that was you guys were really operating a 0:17:17.560 --> 0:17:19.920 little outside of the box and shaking things up well. 0:17:19.960 --> 0:17:22.760 And we operated even more outside the box. We used 0:17:22.760 --> 0:17:26.479 to have off sites that were bizarre. We did strange things, 0:17:26.640 --> 0:17:30.000 face painting, uh. We We had people coming in talking 0:17:30.040 --> 0:17:33.199 about left brain, right brain. We had people coming in 0:17:33.760 --> 0:17:38.480 providing sports analogies to how you run a successful organization. 0:17:38.600 --> 0:17:41.240 We did a lot with these folks. We put them 0:17:41.240 --> 0:17:45.040 through a lot of training as well. Even the older analysts, 0:17:45.720 --> 0:17:48.600 we would we would put them in a group and 0:17:48.720 --> 0:17:51.760 have someone who was let's say we had an analyst 0:17:51.760 --> 0:17:55.159 who was making the most calls that analysts would talk about, 0:17:55.280 --> 0:17:57.040 Here's what I do, Here's how I do it, Here's 0:17:57.040 --> 0:17:59.359 how I get off the phone to make the next call, 0:17:59.800 --> 0:18:02.720 here is what I concentrate on, etcetera. We had one 0:18:02.720 --> 0:18:05.919 of our analysts, who was a very good balance sheet person, 0:18:06.240 --> 0:18:08.840 go through with all the other analysts. First, that meant 0:18:08.880 --> 0:18:13.440 they were recognized internally, and secondly they were conveying information 0:18:14.040 --> 0:18:17.600 and other people said, Hey, I'm surrounded by some good 0:18:17.640 --> 0:18:20.360 folks here. And this did not really happen at other 0:18:20.359 --> 0:18:23.360 Wall Street Research. It was not happening as much. There 0:18:23.440 --> 0:18:27.000 was another element that worked for us that was different. 0:18:27.080 --> 0:18:30.600 We had a fair amount of gender arbitrage. I guess 0:18:30.640 --> 0:18:32.600 that's the way I'd put it, meaning that you brought 0:18:32.600 --> 0:18:34.560 in a lot of women, brought in a lot of women, 0:18:36.520 --> 0:18:40.560 well they were mail and and the women. In terms 0:18:40.560 --> 0:18:44.000 of market share of ranked analysts, we had the highest 0:18:44.080 --> 0:18:47.200 market share by a lot. Now why did they come 0:18:47.240 --> 0:18:50.880 there to work? Because we created an environment where one 0:18:50.960 --> 0:18:53.919 they felt that they were recognized to that it was 0:18:54.040 --> 0:18:56.639 totally based on merit. There was no nothing in the 0:18:56.640 --> 0:19:00.160 way of compensation difference, and we supported, We created an 0:19:00.240 --> 0:19:03.520 environment was supported if they had kids, let's deal with that, 0:19:03.840 --> 0:19:08.040 if if they need to take a break, time off, office, 0:19:08.080 --> 0:19:11.320 at home, whatever you wanted to do. And because we're 0:19:11.359 --> 0:19:15.439 measuring everything, we knew people were working or they weren't. 0:19:16.040 --> 0:19:20.960 It also became a very collegial environment. And that work. 0:19:21.280 --> 0:19:24.239 Now the reason Harvard wrote a case on it is 0:19:24.359 --> 0:19:29.680 because it applied outside of just a research effort. It 0:19:29.760 --> 0:19:34.440 was taught in the Management of Service Organizations course as 0:19:34.480 --> 0:19:37.520 they kind of standard for right. And I still go 0:19:37.640 --> 0:19:39.400 up there, you know here it is. You know, it's 0:19:39.680 --> 0:19:43.480 twenty years later and they're still teaching the course. That 0:19:43.480 --> 0:19:47.560 that's quite fascinating. When we continue our conversation, we'll discuss 0:19:48.000 --> 0:19:52.119 how Jack actually got fired from Lehman Brothers despite taking 0:19:52.160 --> 0:19:56.440 them to the top of the institutional rankings. I'm Barry Rihults. 0:19:56.480 --> 0:20:01.800 You're listening to Masters in Business on Bloomberg Radio. You're 0:20:01.880 --> 0:20:05.159 listening to Masters in Business with Barry rid Holts on 0:20:05.280 --> 0:20:14.639 Bloomberg Radio. This is Masters in Business on Bloomberg Radio. 0:20:14.840 --> 0:20:18.199 I'm Barry rid Holtz. Today we're speaking with Jack Rivkin, 0:20:18.680 --> 0:20:22.919 who is currently Chief Investment officer of Altegri's associates. But 0:20:22.960 --> 0:20:25.840 he has a very storied background and career. He worked 0:20:25.880 --> 0:20:29.400 as the head of research at Lehman Brothers, the chief 0:20:29.480 --> 0:20:32.960 investment officer for new Burger and Berman. You were at 0:20:33.000 --> 0:20:35.639 Smith Barney, you are at a number of places, a 0:20:35.920 --> 0:20:42.040 very storied um background and incredibly knowledgeable about how things 0:20:42.119 --> 0:20:45.320 work in the world of finance. Earlier, we were talking 0:20:45.320 --> 0:20:48.000 about how you had taken Lehman Brothers back in the 0:20:48.160 --> 0:20:52.800 nineteen eighties from the worst research department, a laughing stock 0:20:52.800 --> 0:20:58.000 on Wall Street, to the number one ranked institutional research department, 0:20:58.400 --> 0:21:02.879 and for your troubles you were rewarded. How you listed 0:21:02.920 --> 0:21:05.200 every place I had worked. Some people could say, well, 0:21:05.200 --> 0:21:08.000 he couldn't hold a job, Well, this was an instance 0:21:08.040 --> 0:21:11.080 where I clearly couldn't hold it. All those other jobs 0:21:11.080 --> 0:21:15.120 you had been recruited away and hired away this one, 0:21:15.400 --> 0:21:18.879 it was not quite the case there. Three years into it, 0:21:19.000 --> 0:21:22.120 we were number one in research. I then moved from 0:21:22.160 --> 0:21:26.360 being head of research to running the whole equity division, 0:21:26.840 --> 0:21:30.280 and we were actually doing extremely well. But it happened 0:21:30.280 --> 0:21:33.520 to be a time when the fixed income markets weren't 0:21:33.560 --> 0:21:35.959 doing well. If you go back that was a period 0:21:36.080 --> 0:21:40.159 of crisis SNLS. There were all these kinds of problems 0:21:40.520 --> 0:21:43.600 and fixed income, which was the core of Lehman, was 0:21:43.640 --> 0:21:47.159 not doing quite as well. And we were really kicking it. 0:21:47.440 --> 0:21:50.760 We were doing extremely well, and I don't think that 0:21:50.800 --> 0:21:53.320 went over well. And I had a different management style. 0:21:53.560 --> 0:21:56.840 Lehman was a pretty buttoned up management style, and I 0:21:56.920 --> 0:22:01.600 had casual fridays and all these offside, very loosey goosey 0:22:01.640 --> 0:22:03.560 with But by the way, a lot of the stuff 0:22:03.560 --> 0:22:08.359 you talked about, it's pretty standard operating procedure today today 0:22:08.480 --> 0:22:12.119 in in a number of management courses and a number 0:22:12.160 --> 0:22:16.119 of service oriented industries. But back then it was not. 0:22:16.359 --> 0:22:18.399 People looked at you a little, hey, what is this crazy? 0:22:18.520 --> 0:22:21.840 It was this crazy guy and what is he doing here? Well, 0:22:22.080 --> 0:22:25.760 what what we were doing was producing results, but it 0:22:25.840 --> 0:22:28.639 was not being done. And what I'd call the button down, 0:22:29.119 --> 0:22:31.040 this is the way we're going to operate. And the 0:22:31.040 --> 0:22:34.399 guy running the fixed income operation at that time was 0:22:34.960 --> 0:22:37.639 a West Point grad. He had a certain way of 0:22:37.680 --> 0:22:41.080 doing business. He was totally opposed to casual fridays and 0:22:41.119 --> 0:22:43.639 he said, you know, I, I I just don't believe in 0:22:43.680 --> 0:22:48.320 wearing doctors into work. And I said, well, what's important 0:22:48.320 --> 0:22:52.560 are the results, not the numbers. That's it. And the 0:22:52.640 --> 0:22:57.200 numbers were pretty good, but I didn't fit. So who 0:22:57.280 --> 0:22:59.399 ultimately fired you? Was it Dick Fold or was it 0:23:00.160 --> 0:23:03.479 Dick was in the office, Dick was in in the meeting. 0:23:03.680 --> 0:23:06.160 It was Dick and Chris Pettitt, who was the guy 0:23:06.280 --> 0:23:09.240 running the fixed income operation at that Hey, you're making 0:23:09.280 --> 0:23:11.440 too much money on the equity side, and we don't 0:23:11.480 --> 0:23:14.000 like what you're doing. You gotta go. Well you could 0:23:14.040 --> 0:23:18.119 see how that ultimately were strange because I I you know, 0:23:18.160 --> 0:23:19.679 they said, well, we're going to have to make a 0:23:19.760 --> 0:23:23.240 change here and I I said, well, let's talk a 0:23:23.320 --> 0:23:26.199 little bit about why. And they said, well, we just 0:23:26.280 --> 0:23:29.399 feel it's necessary. It just as important. They wouldn't go 0:23:29.480 --> 0:23:34.160 into it. There was no argument on that, and and okay, 0:23:34.200 --> 0:23:37.560 so it was going to happen. That's fine. So it 0:23:37.640 --> 0:23:43.119 then became let me negotiate the best exit I possibly could, 0:23:43.560 --> 0:23:46.720 and I get maybe because they felt guilty or whatever. 0:23:46.960 --> 0:23:49.280 It was a pretty good exit. It gave me a 0:23:49.320 --> 0:23:53.159 lot of flexibility of things to do, and uh, I 0:23:53.280 --> 0:23:55.920 still have lots of friends at Lehman, And of course 0:23:55.960 --> 0:23:59.199 I came back involved with Lehman because new Burger. So 0:23:59.280 --> 0:24:02.199 you ended up as chief investment officer at new berglan Berman. 0:24:02.840 --> 0:24:06.399 So this is you leave Lean Well, No. Nine two 0:24:06.480 --> 0:24:09.960 is when I Yes, ninety two is when I left Lehman. 0:24:10.280 --> 0:24:13.560 And I was trying to actually with a guy named 0:24:13.640 --> 0:24:16.879 Jim Freeman. We were going to actually raise a merchant 0:24:16.920 --> 0:24:20.800 banking front. And I went to Sandy Wild to raise 0:24:20.880 --> 0:24:22.680 some money and he said, why don't you come over 0:24:22.720 --> 0:24:25.480 here and help us on the research. And then at 0:24:25.520 --> 0:24:28.800 that point they had Smith Barney. Yes, they had Smith Barney. 0:24:28.880 --> 0:24:31.080 And I said, no, I'm raising this fun And I 0:24:31.160 --> 0:24:32.960