How Michael Bloomberg Sold His First Terminal

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Welcome to success story, the most useful podcast in the world. I'm your host, Scott Declary, and today I'm going to break down the story of Michael Bloomberg and how he sold his first Bloomberg terminal. We're going to speak about his entrepreneurial ventures and his sales exploits and some of the things that he did when he was trying to build the business that got him to where he is today that maybe we didn't realize were classic examples of great sales and startup strategy. So, without further ADO, this is the story of how Michael Bloomberg sold his first terminal. Now I'm going to tell you the story of how Michael Bloomberg sold his first terminal. But first, if you're listening to this, you may be asking what is the Bloomberg Terminal? Well, the Bloomberg terminal is one of the most sought after pieces of technology in financial markets. I'm going to read you the definition of what the Bloomberg terminal is,...

...obviously built by Michael Bloomberg, so that you have a good idea of what it is and what it's used for and why it was one of the things that made Michael Bloomberg, a billionaire. So this is the definition straight from wikipedia. It's going to do a much better and more succinct job of describing the Bloomberg terminal than I can. The Bloomberg terminal is a computer software system provided by the financial data vendor Bloomberg LP that enables professionals in the financial services a sector and other industries to access Bloomberg professional services, through which users can monitor and analyze real time financial market data and place trades on the electronic trading platform. It was developed by businessman Michael Bloomberg. System also provides news, price quotes and messaging across its priortary secure network. It is well known amongst financial community. Four black interface just become recognizable trait of the service. The first version of the terminal was released in December one thousand nine hundred and eighty two. Most large financial firms have subscriptions to Bloomberg Professional Services. Many exchanges...

...charge their own additional fees for access to real time price feeds across the terminal. All Bloomberg Terminals are leased on two year cycles, with leases originally based on how many displays were connected to each terminal. Most Bloomberg setups have between two and six displays. It is available for an annual fee of Twentyzero dollars per user, or twenty five twenty four thousand dollars per year for the small number of firms that use only one terminal and as of October, two thousand and sixteen. Slightly dated data, but this will give you a good idea of how popular it is. There are three hundred and twenty five thousand Bloomberg Terminal Subscribers World Wide. So that is the Bloomberg terminal and that is the first entrepreneurial venture that Michael Bloomberg took on. So let's go back to Michael Bloomberg story, and there is a sales and entrepreneur lesson in here, so bear with me. A quick history of Michael Bloomberg. He was at Harvard Mba. He started working at the Investment Bank Solomon Brothers. When Solomon Brothers...

...was acquired by five row, Michael Bloomberg was pushed out with a ten million dollar paycheck as a nice little paid a nice little severance package. The first career milestone gave him the capital to develop the Bloomberg terminal. So he spent four million dollars of that ten million dollar paycheck developing the terminal with only the money he had a time from his exit from Solomon Brothers. Who else this remind you of? Taking the money from their first success? I'll be it not as great as the example I'm thinking of, and putting that into their future company? So Elon Musk took the money from paypal and he put it into SPACEX, Tesla and solar city. So, as you can see, there's a trend here. People that are successful and achieve a level of success. It's not like they just take their foot off the pedal. They do more, and ten million dollars a nice paycheck. Keep in mind, if you are in finance in New York and you're doing well, there's a good chance that you're living a pretty good lifestyle. So ten million can you know, has a has a little bit of a runaway on it, but it's not in New York. If you are living a lavish lifestyle, it's not going to last at the rest of your life, that's for sure. So he spent four million of that on his first terminal and he didn't have any...

...customer. So his MVP, is minimum viable product, was four million. Dollars, and this is where our sales story starts. So Michael Bloomberg, unlike many entrepreneurs, actually did not rush to get his first customer. He spent four million dollars and three years of his life building out the initial literation the MVP of the Bloomberg terminal and then also thinking about how to sell this to a customer. So what Michael Bloomberg was running into was the fact that he was not replacing an ingrained, entrenched system. It was a blue ocean. He was creating something. There was a need for it and he knew it, coming from a financial background. But that being said, it wasn't like he was replacing some other piece of equipment that was globally known. So he had to decide, how am I going to sell this to a customer when they may not have anything like this already? So these are the steps that he took to land his first customer. Remember, three years to land the first customer. So in year one, from a sales perspective, what...

...he did was he folk, and this is high level sales advice, he built relationships, he focused on landing small deals with customers in hopes of eventually landing larger deals with customers. So this is how he did that, and this is a classic sale strategy, building relationships, landing a small deal and then opening up and getting more share of wallet or expanding the amount of spend with a customer. After you land a small deal and parlay that into a larger deal. So Michael Bloomberg was doing odd consulting jobs in his time off and one of his clients was Mary Lynch. In that, in terms of being the ideal customer, the person that he would want to sell his Bloomberg Terminal to, Mary Lynch checked all the boxes. So Bloomberg was doing consulting work, but his goal was not to be a consultant. The goal the consulting work was entirely to establish a relationship with the company and start to form relationships with the champions and decision makers within the organization. So he was doing what's called in sales multi threading, where he lands with Mary Lynch, he...

...starts to talk to people, he starts to build relationships. Yeah, they're paying him a small consulting feet, but he knows that he has this piece of tech in his mind that he's building out, sending a lot of money building it out and he wants to eventually sell that to all those people that he's working with. So hope, of course. The next year consulting at Merrill Lynch paid Michael Bloomberg roughly one hundred thousand dollars, which is really not a lot compared to, all things considered, what he is made before from his exit Solomon Brothers, in the fact that he's invested four million dollars. So we still net negative three point nine million dollars at this point. But you know, he has an in. He's built relationships, he's going to continue his sales process and year too. So again, first year was entirely building relationships. Your to, your to, he identified the decision maker. This is the sales steps that he took. He built rapport with the decision maker to increase the wall at chair. Remember, that's what was his goal. He wanted to get the consulting job and then eventually sell them a terminal.

So he had to figure out, okay, I have the consulting relationship and now I have to figure out who would actually I I know all these people in Mary Lynch. Who's going to be the person who's actually going to purchase this terminal if I put it in front of them. And he so. He didn't have all the relationships with all the key decision makers in Mary Lynch, but he did know that he had access, yet access, and he had a foot in the door. So what he decided to do was double down on building on the relationships that he had already built with the people within Mary Lynch. And his strategy was it was quite it was quite an ingenious so he had access to all the Mary Lynch offices because he was consulting there. So every morning at six Ami woke up, he drove to a Delhi across the street from Mary Lynch, his headquarters, and bought coffee with and without Melk, and then he bought tea with and without Melk. He put a few sugars on the side, I guess, of his tray and he roamed the halls of Mary Lynch looking for anybody who was in the office early in the morning and he literally would walk into their office and say hi,...

I'm Mike Bloomberg, I brought you a cup of coffee. I just like to bend your ear. Is what he said. This is a yeah, this is actually a quote. I saw it in I think a business insider piece high Mike Bloomberg, about your coffee. I like to bend your ear. His rationale. Nobody was going to tell him to go away. It was before work started. He was offering them free coffee or tea, and there was also a psychological effect that he implemented here, whether or not he knew it. But the law of reciprocity is a very, very powerful law in sales. When you offer somebody something for free, they want to give you something back. And if that thing back is just time and it's a minor inconvenience and it's really what's the difference? You know, if somebody comes in offers you a free coffee, ass a chat with you and all you're doing is killing time reading the paper before work, well, you'll take the coffee, you'll probably say yes to the conversation. So anyways, he did this. He did this all through his all through year two, and he finally got a meeting with Ed Moriarty. I'm managing director at Mary Lynch.

This was the person who could make the decision to purchase the Bloomberg terminal. But he had to convince he had to convince Ed. He couldn't just sell it to me. Had to convince him that this was something that Ed actually needed. So now we're on to year three. So year three he pitched Ed. He got some he got some peep, he got some push back on the concept of the terminal, but then he mitigated the risk that was in ED's mind of purchasing a new terminal. What was the risk involved? He mitigated that. I'm going to explain why and how he did it. And then, after he mitigated the risk, he proposed something to add that was above and beyond what Ed could say no to. Let me explain. So He, Michael Bloomberg, finally had a chance to pitch the terminal to Ed. It went horrible. So the Mary Lynch team saw the terminal was a great idea, but Mary Lynch is a huge, huge, huge entity and they realized they could just build it themselves. They had the money and they had the brains to figure it out. They forecasted that in six months they could build an alternative internally and that they're alternative would be even better...

...than what Bloomberg could pitch them. So Bloomberg said, you know Shit, okay, I got to figure this out now. How do I get them to take a chance on the product that I already have right now? So they don't even try an attempt to build something because it's very, very possible they could have built something much better or slightly better than what then what he had built, because they have way more than four million available. So he knew that he had to move fast and this is what he did. He had to mitigate the risk. Remember, we have to mitigate the risk. So Bloomberg said, okay, if I install it and it doesn't work, you don't pay. If I install it and you don't love it for six months, you don't pay if I install it and there's any issues with it at all while you're building your new machine. You said it's going to take you six months. So he said, just just try mine for six months while you're building your new machine. anyways, what's the harm? Right? So if anything goes wrong in six months, I take it out, no...

...questions asked, no bill, no invoice. You have your own machine. But what happens if mine works? Okay, so if it works, then you'll know that my machine works. So the lesson here is, if you want to sell more, eliminate the risk. Involved in the sale and the risk is usually technical or financial, and Bloomberg eliminated both of those risks. He said, if doesn't work, I'm going to I'm going to I'm going to install it myself. You don't do anything. It doesn't work, you don't pay. If you don't love it, you don't pay, which is such an objective measurement, right, if you don't love it, if you don't love it, what does that even mean? Well, it means that and and Mary Lynch exacts new this. They fully could, for whatever reasons, they forget about it and say we don't want it. But because he mitigated the risk, it was an easty it was an easy decision for Mary Lynch. They signed off on the project and gave six months to Bloomberg's terminal to prove itself. When the six months was up, Michael Bloomberg tested the first iteration of the Bloomberg terminal at Merrill Lynch. There were some software bugs...

...but it worked very well. It was already installed. The MARYLYNCH team love that that he had fulfilled in the time frame they had allotted and saved in the trouble of having to produce a compliant complicated product from scratch. They proceeded to order twenty units from their initial order and then added two more after the six months period was up. So, with Bloomberg selling this terminal to one of the top five banks in the world, the product was made, the story was made. This was the beginning of the Bloomberg terminal and it all just picked up steam and snowball from there. And this is truly the story of how Michael Bloomberg sold his first terminal with four million dollars. Three years, three steps and, regardless of whether or not it was done purposefully, a very insightful and strategic sales process executed quite flawlessly, to be honest. Anyways, I hope you enjoyed if you did hit that like button, please subscribe and leave some comments. Let me know what other stories, what other...

...case studies you'd like me to break down, and we can learn some great insights from companies that have built businesses and from people that have built businesses. To the fingers crossed, we don't have to make the same mistakes twice. Have a great day. We'll talk to by.

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