After trailblazing his way to success in mergers and acquisitions in the latter half of the 20th century, Eric Gleacher has written his memoir, Risk. Reward. Repeat.: How I Succeeded and How You Can Too.
Along the way, he’s collected advice from his years, not only on Wall Street but also in the Marines and growing up in a small town. On Author Hour today, Eric discusses his managerial style, the importance of giving back, and the power of teamwork.
Jane Borden: Hi Author Hour listeners, I’m Jane Borden and I’m here today with Eric Gleacher, author of Risk Reward Repeat: How I Succeeded and How You Can Too. Eric, thank you so much for being with us today.
Eric Gleacher: It’s my pleasure, thank you for having me on.
Jane Borden: Before we get into your story and inspiring advice, tell our listeners a bit about who you are and how this book came to be?
Eric Gleacher: Well, I grew up all over the country and eventually graduated from Northwestern University and the University of Chicago where I got my MBA. In between, I spent the better part of three and a half years in the US Marine Corps. When I finished at the University of Chicago, I got a job at Lehman Brothers, where I stayed for almost 16 years. Then I went to Morgan Stanley, where I ran global MNA and real estate for most of the 80s.
I left in 1990 and I set-up my own firm, one of the early MNA boutiques, which I ran for 23 years until I retired. In the course of doing that, I gave many speeches and taught many classes at the major business schools in the United States. In every case, at the end of the lecture period, people would ask, “What did you do to succeed and how can I succeed?” It was the same every time.
When I started writing this book, actually, the virus prompted me a year ago when everybody was locked down. I said, “Well if I am ever going to write a memoir, this is the time.” I started writing it and it immediately came to mind that I had seen a lot of people and talked to a lot of people and they always had this question. In the book, the story that I was going to tell was going to have all the reasons that I succeeded. What l learned along the way, how I used it, and what I did.
I just kept writing and when the book was finished, I thought I made my case, and called it Risk Reward Repeat, because I believe and, it comes up very clearly in the book, that the world belongs to the aggressive and if you don’t take risks, it’s going to be really hard to become a success, maybe I should say a significant success.
If you’re lucky enough to succeed, I’ve always felt that it was important to reward those who have helped you along the way. For example, in my case, I was very lucky to be able to go to the universities that I went to. I helped them out relatively significantly, for me, along the way. Repeat refers to philanthropy and helping others and hoping that they will repeat the process. You take the risk, you reward those that have helped you along the way, and you incent people to repeat the process. That’s how the book came about.
Be the Example
Jane Borden: Then, let’s back up and take us through some of your steps along the way. Well, this is a little bit out of order, but you open the book with some of your time in officer candidate school, with the US Marine Corps. You write, “Of all the lessons of leadership learned in the Marines, perhaps, the most impactful was not to ask anyone to do something you couldn’t do as well or better,” and I want to tell you, Eric, I felt like I just had this conversation with my five-year-old last night.
Tell us a little bit more about this piece of wisdom?
Eric Gleacher: Whether it’s in the Marine Corps or in business, you want to incentivize people to pursue excellence. In order to do that, you have to demonstrate that you are doing and you’ve done that yourself.
When I started with the section of officer candidate school and also, shortly thereafter, when I actually went to work in the Marine Corps and as an infantry platoon commander, that was the most impactful period of my life to that point. I was 22 when I showed up in officer candidate school, so I was in my early 20s when I was in the Marine Corps and it was a formative experience, which I carried on and adhered to all the way through my career, which lasted 45 years, so it was a long one.
I started with that section and talked about what it was like to try to be the leader of 45 men. Most of whom did not graduate from high school and turning them into an elite military operative entity. I felt asking someone to do something that you couldn’t do wasn’t the way to go and so, whatever it was we did, I wanted to be able to do it as well or better than anyone else.
Obviously, that’s not always possible. You get in situations where you just can’t, but I would tell you that because I was so motivated that most of the time, I could actually do that. For example, I talked about when we went to the rifle range, which is an important aspect of being a marine, you go every year, we usually go for a few weeks and you work on your marksmanship, you work on understanding the weapons with complete fluidity. You can be anywhere, daylight, darkness, winter, summer, spring, and you can deal with the weapons. Clean them and take them apart and put them back together in pitch black or blindfolded.
I wanted to shoot the high score in my platoon, and I did. I did the same thing with the .45 pistol and I had no background–my father was not a hunter. I never had a .22 rifle when I was a kid, but I was motivated.
So, the same thing applied to business. When we would work on MNA deals, quite often, the work would go well into the night. Sometimes there would be a week or 10 days where we’d work until 4:00 in the morning, and I was the last one to leave and the first one back in the office the next morning.
I found that if you do that and also if you’re successful at what you’re trying to do, people really respond to that.
Jane Borden: Well, let’s talk about Lehman–since you brought it up. You were there for 15 years I believe. Why did you think mergers and acquisitions would become as big as they eventually did and how did you help build that?
Eric Gleacher: When I was in my early years at Lehman, I got there in 1968 and I founded the merger and acquisition department in 1977, so I was there for a while. I got interested in selling businesses and the more I got interested in it, the more I dealt with CEOs and the more I came to believe that American CEOs were going to use acquisitions and mergers as a business tool. About that time, Lehman’s two biggest competitors, Goldman Sax and Morgan Stanley, started organizing merger and acquisition departments where they had professionals who did nothing other than advising CEOs on mergers and acquisitions.
Lehman had not done that. Leman was a place full of very talented people but was not able to create a culture based on teamwork. There was little organization and I decided that if Lehman didn’t create that department with professionals, and only did mergers and acquisitions that eventually, they wouldn’t be able to compete with Morgan Stanley and Goldman Sax because the clients are obviously smart and they would see the difference and they would want professionals who had the most experience.
I went to one of the prominent merger and acquisition lawyers, Marty Lipton, and I told him that, and I said, “Would you be willing to spend some time with me and educate me about mergers and acquisitions?” He did. We met on Saturday mornings, 9:00 in New York City in his office for weeks, and he taught me the ins and outs of mergers and acquisitions. I set-up the department and it went from there. I was right that American businessmen who are aggressive would want to use their ability to acquire other businesses to build their business or merge the companies to do the same thing.
It became and still is an enormous business with activities all over the world.
Not the Right Direction
Jane Borden: Talk to us then about the decision to leave Lehman for Morgan Stanley?
Eric Gleacher: Well, one of the older partners in Lehman, a guy named Lewis Glucksman, kind of became a mentor to me early on in my time at Lehman and he ran all the fixed income businesses. Over the years, there was a fellow named Pete Peterson who became the chairman at Lehman, and Peterson and Glucksman didn’t get along.
Finally, in 1983, in the summer, they had a showdown. Glucksman said that Peterson, “You’ve got to leave,” and even though Peterson was the chairman, he knew he didn’t have enough support in the firm to go head-to-head with Glucksman and he left. I was very encouraged because Glucksman and I always had a very productive relationship and a friendship. But the first time that he was in charge of allocating the bonus pool, which was a couple of months after he forced Peterson out, he allocated 40% of it to himself and three of his fixed income people, which was a very disproportionate division of the bonus pool.
I thought this is just not going in the right direction. I’ve been here a long time, I’ve earned some money, and every penny of it is in Lehman Capital. I just felt that if I was going to have any self-respect, I wanted to go someplace else and do what I did.
I knew the top people of Morgan Stanley. I liked them and I phoned Bob Greenhill, who ran their investment banking and we had done deals together on opposite sides, so we knew each other, and I told them what I just told you, and I said, “I like to talk to you about going to Morgan Stanley if you’re interested.” He said, “Come up to my office this afternoon,” and three weeks later, I was a partner in Morgan Stanley.
Jane Borden: How was life at Morgan Stanley different than life at Lehman Brothers?
Eric Gleacher: Well, the short answer is that Morgan Stanley was established and the culture was a teamwork culture, and Lehman was an “eat what you kill, everyman for himself” culture. Both types of cultures on Wall Street can actually work, but I learned after being in Morgan Stanley for a while that the teamwork culture was better and more powerful. That was the difference between the two.
The other difference was that Lehman had lots of really talented people and different types of people. Morgan Stanley was very homogenous. There is a likeness in the people and it wasn’t as diverse, but both were full of very bright people. The teamwork culture is a very good one and Morgan Stanley obviously is here today. It is one of the few remaining major firms and Lehman is gone. I think what I told you is a short way of saying what happened to both firms.
Jane Borden: Why do you think the teamwork model was more successful?
Eric Gleacher: Cooperation amongst the individuals, amongst the partners, so that all available information is used. There are situations where something might happen in a particular company–there might be some kind of a merger acquisition situation, and there’s a certain personality that might work better, and so there is a free discussion of that, and people figure out who it should be. Whereas in the Lehman model–well that wasn’t the case.
That never happened until we set up the merger and acquisition department, and even then, it was resisted for a long time. So, I just think you’ve got more people rowing the boat and everybody knows where it stands and the teamwork culture, all the people care about was winning, getting done what there is to do, and it’s very powerful.
Jane Borden: But you did eventually decide to go out on your own. I imagine that was, again, risky?
Eric Gleacher: Well, first of all, it had nothing to do with Morgan Stanley. I had a terrific time there. I was there for about eight years and they were very, very significant years in the merger and acquisition business in the late 80s, but going out on my own was something I thought I could do successfully. I wanted to do it and not many people had, and I told my wife that I wanted to do it, but then I’d make about 25% of the money that I was making in Morgan Stanley.
She said, “So what? Just go do it,” and I did. It worked out, I did not make 25% of the money that I was making, I made multiple of the money I was making, so that was good. But I wanted to take the challenge. I wanted to do it. One of the things the book does, there is a section on how I walked out the door and started the business, and then what developed and particularly over the first year it was a lot of things, none of which you could have anticipated.
I’ve always liked business books that talk about people who started companies. The ones I am going to name are certainly more significant than Gleacher Company is, but if you read Shoe Dog, which is the story of Phil Knight the story of Nike, or a book that’s recently come out, It’s How We Play the Game, it is about Ed Stack starting Dick’s Sporting Goods with two stores that his father had established and now has almost a thousand stores all over the United States.
It is really interesting to read about those books and the personality of the man. In every single case, all the things that went wrong, all of the things that happened that were unanticipated and then somehow, the whole thing was pulled together and became greatly successful. My book has got that part of what happened to me, and it’s the first book and so far the only book, I believe, that has been written by anybody who left a major Wall Street firm to set-up their own firm and compete with them for corporate clients.
People have gone out and started bond trading firms and things like that, but not people that are going out and competing for the advisory business of the same clients that the big firms also serviced.
The Pursuit of Excellence
Jane Borden: That must have been harrowing. You write about the importance of managerial skills and style in that endeavor and that advice I think applies to so many other endeavors. For any listeners out there who are managers or are budding managers, what advice do you have regarding that?
Eric Gleacher: The pursuit of excellence is where you begin. You should decide that whatever your course of action is, whatever your strategy is, whatever you’re trying to achieve you’re going to do it to a 100% of your capability, and you are going to incent your people to have the same attitude. I think you should always be very direct with people that work for you, and my experience is that people respond the best if they know where they stand.
Managers who have trouble being direct I think are less effective. There are people that just can’t seem to do it, and there are people that you talk to when you walk out of their office you really don’t know what they said or where they stand. Those people generally are not anywhere near as effective as people who are able to inform colleagues and their subordinates of how they think they’re doing, what they can do better, et cetera, et cetera. I think that is very important.
I think you have to have what I call flawless integrity. You never shade the truth. That was critically important in the military because you are talking about life and death. I always felt that you know, the 18-year-old Marines who looked up to you and never met anybody who went to college, and put their life in your hands and would do whatever you said instantly without question, yet they had to know. Whether they consciously knew it or not, that you had flawless integrity. You would tell them what you thought the situation was, where everything stood and what they had to do and so forth and so on, leading by example, which we’ve already talked about. All of those things are described in the book and all of those things I kept as my personal template to try to be successful at working with people and being successful in business.
Jane Borden: Thank you for that. Eric, it’s been such a pleasure speaking with you. Congratulations on the book. Again, listeners, the book is called Risk. Reward. Repeat.: How I Succeeded and How You Can Too. Eric, in addition to reading the book, where can people go to learn more about you and your work?
Eric Gleacher: There have been a lot of articles written. If you pull down articles that have been in the press over the last years, you’ll learn a lot about me but there’s a lot of stuff to read if you’re interested.
Jane Borden: Great. Thanks, Eric.
Eric Gleacher: Okay. Well, it’s been a pleasure, Jane. Thank you for having me.