4th and Goal

by Monte Burke

  The human resources folks, however, did not. They resented the move from the get-go. And they let Joe know it.

  Joe started in the Merrill Lynch MBA training program in the late spring of 1984. There were twenty-six people in the program at the time, most of them in their midtwenties. Twenty-five of those people had MBAs. Joe’s classmates, for the most part, embraced him, impressed by his story and his dogged work ethic. They called him “Coach Joe.”

  But none of that seemed to matter much to the head of the program, a woman from HR. She had recruited and chosen the other twenty-five members of the class and seemed to resent the fact that Joe had been shoehorned into her class and that upon graduation, he would be in direct competition with her handpicked trainees for the best jobs.

  During the first week of the program, she announced that there was to be a cocktail reception for the trainees with Jerome Kenney, who ran all of Merrill’s institutional businesses. These get-togethers with big shots were a regular part of the training program, meant to inspire the trainees and give them a little schmoozing time.

  As she stood in front of the entire program and announced the party, she added: “Only the regular class is invited.” Joe, of course, was the only trainee who was not considered part of the “regular class.” He went to the reception anyway. But the program head never strayed from her message. From that point on, any time there was a trainee gathering, she made a distinction between the regular class and Joe.

  Joe took it all in stride (and continued to go to the parties). “I got a kick out of it. I was a man by then. I’d gone through a lot of stuff and learned how to handle stress and read people.”

  Still, Joe had to cram twelve to fourteen hours a day in an attempt to catch up to his better-educated peers. Everything he was being taught—from the math to the terminology—was entirely new to him. “I was so far behind the learning curve,” he says.

  But Quinn’s assessment of Joe’s appetite had been spot on. “I knew I had to make this work,” says Joe. “I had so much on the line, I couldn’t fail.” Failure, he believed, meant going back to the fruit store.

  In the fall of 1984 Joe went back to Dartmouth for a football game. The Big Green were playing the Quakers of the University of Pennsylvania. Joe wanted to check in on his old players, whom he’d coached and recruited. It was a perfect fall day in New Hampshire, sunny and brisk, the trees ablaze in a patchwork of yellows and reds. After saying hello to his former players on the field before the game, Joe took a seat in the stands by himself, soaking in the familiar sights and sounds. Shortly after the singing of the national anthem, the emotion hit him. “I just started weeping,” Joe says. He tried to hide his face in his hands.

  That year—his first away from coaching in sixteen years—Joe had somehow made the transition from football to finance by talking his way into one of the most competitive industries on the planet. He was succeeding there already. And though he wasn’t yet making much money, it wasn’t hard to envision a time—maybe soon—when he would be making more money in a year than his father had made in his entire career.

  But none of that mattered on that beautiful fall day as Joe sat in the stands and self-consciously wiped the tears from his cheeks with his sleeves. As he watched the nose tackle that he’d coached skip over a chop block and smother a running back; as he watched his old linebacker screw up his gap responsibility on a draw play; as he watched his slow cornerback take a perfect angle to knock down a pass; as the crowd rose in throaty roars after a good play and hunched over in disappointed moans after a bad one…

  At that moment, none of that success at Merrill, none of the promising future mattered.

  “I was put on this earth to be a football coach.”

  When Joe got back to New York City, he decided he wouldn’t go to any more football games. He didn’t want to put himself through the torture.

  In 1985 Joe became a junior fixed-income salesman. His job was basically to analyze the portfolios of large insurance companies and pension funds, figure out what their investment needs were, then cold-call them and try to interest them in doing business through Merrill. Graduates of the trainee program were always given the toughest accounts. “The new guys got the absolute crap—the companies that said they didn’t want to do business with Merrill or the ones who hadn’t returned a phone call in years,” says Quinn. “But you had to earn your stripes.”

  And Joe still faced some prejudice. Despite the fact that he had successfully graduated from the training program, there was still a feeling among some senior salesmen that this football guy couldn’t hack it. They made jokes about his background. “Some senior guys would say things like ‘We should give that guy the pensions from the steamfitters and welders unions,’” says Jake Albright, a fellow trainee who became very close to Joe during their years together at Merrill. “I used to tell Joe, ‘They won’t be saying that when they report to you.’”

  Joe kept up the fourteen-hour days, studying the portfolios of both his clients and potential clients, trying to figure out how he could help them—and thereby himself—make money. He honed a one-minute pitch for phone calls. He always believed—as he did during his job search—that if he could meet someone face-to-face, he could close the deal. “Sales back then was a people business,” says Quinn. “Joe used his charm.” Cathleen Ellsworth was a marketer for what was then known as Chemical Bank, which was one of Joe’s clients. “He always laid out his reasoning for a trade in such detail. He was earnest. It was like you could actually see him walking himself though it as well.”

  Joe took nothing for granted. “Basically, the guy outworked everybody else,” says Seth Waugh, who was head of Merrill’s global debt market back then. “He wasn’t the most intellectual guy, but he was always so prepared. Other guys would be going out and having ten beers, then showing up late in the morning. Joe would work at night, then show up early.”

  Joe spent hours rehearsing what he was going to say to his clients, partially because of his stutter, but more so because he wanted to deliver his pitch perfectly. “I remember going to the floor one Sunday because I had forgotten something,” says Thomas Hughes, another of Joe’s fellow trainees. “No one was around, just a few guards. I walk up to my desk and I hear someone talking. I look out and it’s Moags. He’s practicing his presentation.”

  Joe thrived on the floor. With its constant thrum of activity and its vast physical dimensions—the ceilings were thirty feet up—it even felt a bit like a sporting arena. The traders sat in the center of the room, surrounded by salesmen. Adrenaline crackled through the floor. Big decisions were made in seconds under intense pressure. Back in those days before the Internet, the floor was a very loud place. “The only way to communicate was verbally, on the phone or through hoot-n-hollers or just by yelling,” says Walter Donovan, a trader who sat back-to-back with Joe. “People were crammed in together. You couldn’t hear yourself think. I just remember that Joe was always leaning forward in his chair, always ready.”

  In sports parlance, Joe was back on the field, on this mental gridiron. He was no longer a coach. He was a player, a producer. Though he still believed his skills were best suited for management, for motivating and directing other people, he knew he would have to prove himself on the field first.

  He got off to a helluva start. In his first year, Joe cracked some of those seemingly impossible accounts, raking in money for the firm. He became the most successful rookie salesman in Merrill Lynch’s history.

  The next year, 1986, Joe got even better. In just his second year on the floor, Joe was inducted into Merrill’s “Circle of 30,” an intrafirm club composed of its top producers. “He got there because he was an animal,” says Albright. Members of the club received extra company stock, a trip to a sunny locale, and a significant boost to their stature within Merrill.

  But that same year Joe suffered the biggest loss of his life. His mother had been diagnosed with colon cancer the year before. Though her smile never left her
face, by 1986, she started to go downhill, fast. In June of that year, Frances McLarnon Moglia died. She was sixty-two.

  Joe delivered the eulogy. He talked about the Rye Beach school trip, and the harsh disappointment his mother felt in her oldest child after he was caught with the bottles of liquor. He had vowed then never to let her down again, to make her proud one day.

  Establishing and maintaining that pride was perhaps the single most motivating factor in Joe’s very driven life. It remains so to this day. Joe may have learned his work ethic from his father, but from his mother he learned something much more valuable: that life is about people, about respect, about love. Joe’s mother had sacrificed everything for her family. She had been his cornerstone, the shelter from his father’s frequent storms, the warm, gentle heart in a neighborhood and family life that was often cold, harsh, and hard.

  “I think Jim [Joe] was heartbroken that our mother never got to see him as a really big financial success,” says Johnny. “But she was very proud of what he had done with his life. Very proud.”

  The long working hours, the lack of exercise, and the stress of his mother’s death eventually took a physical toll on Joe. By the summer of 1986, two years into what was looking like a surefire starry career at Merrill, he’d fallen out of shape. “I saw him on the beach and said, ‘Joe, you’re gonna die, man,’” says Albright, a sinewy marathoner. “He got really mad and said, ‘Damn it, I’m going to do something about it.’”

  Joe told Albright that he’d run the New York City Marathon if Albright would train him. Albright agreed. The two started to run every day after work. “I beat the living hell out of him,” says Albright. “But he never complained.”

  The running was good for Joe. He lost weight. His colleagues at work all noticed that change. Still, they had no faith in his ability to run a 26.2-mile marathon. The over/under at the office on his predicted finish time was four hours. Everybody but Joe and Albright put their money on the over.

  The two ran the marathon in early November. Joe was doing great for the first twenty miles. Then he hit a wall. For the last six miles, “he was friggin’ finished,” says Albright. “But he just kept going and never said a word.” They beat the four-hour mark by a few minutes. “We made a ton of money that day,” says Albright. Joe has a picture at home in Omaha of the two of them at the finish line that year. Their hands are raised together, a victory gesture. Albright looks like he’s holding up a dead man.

  Joe later joined an over-forty baseball league. One day while fielding pregame grounders hit by Albright, a bad-hop ball popped over his glove and caught him in the mouth, knocking the top row of his teeth back into his gums. “Blood was everywhere,” says Albright. Joe wiped off the blood and proceeded to play the game before finally going to a dentist.

  “Nothing is recreation for Joe,” says Albright.

  In 1988 Joe became the number one producer in all of Merrill Lynch. In just four years on the floor he had fulfilled the promise he’d made to Quinn during their first meeting.

  That year, Joe also helped change Wall Street.

  Bob Bertoni, then a senior institutional salesman at Merrill, remembers the first time he heard about Joe, in 1985. Quinn called Bertoni into his office and told him that a trainee would be joining his sales team as the junior member. “He’s kind of a goofy guy,” Quinn told Bertoni. “He doesn’t make the best first impression, and he doesn’t know much. But if we let him hang around for a bit, he’s going to be running the place.”

  Joe joined Bertoni and another senior salesman named Ed Sheridan on a fixed-income sales team. The two senior members of the team had both played football back in their school days. They took a shine to the coach immediately. And together, the trio came up with a radical new way to sell debt on Wall Street.

  The sales teams on Wall Street were “teams” in name only. The Street at the time worked on a commission model, rewarding individuals for sales. That model was particularly ingrained at Merrill Lynch, which in the mid-1980s was still heavily influenced by its past as a brokerage firm, where individual commissions on sales made sense.

  But there were a few big problems with the commission model on the institutional side. One was that it promoted individual glory and not teamwork. It was also an imperfect way of measuring the productivity and capability of a salesman. “We would have, say, the twelfth-best account on the Street with Prudential,” says Bertoni. “That would bring in some decent cash because Prudential was so big, and the salesman with that account would make a pretty good commission. The problem was that Merrill was still number twelve at Prudential, which was horrible. Commissions were a terrible way of judging how an individual was doing his job.”

  But perhaps the biggest problem with commissions was that by the mid- to late 1980s, institutional products were becoming so numerous and so complicated that they were very hard to understand and sell. New derivatives of existing products were popping up overnight. A company like Prudential had billions of dollars in assets, and those assets were spread over many dozens of products, far too complex and too great in number for any one salesman to understand. The solution, Joe, Bertoni, and Sheridan believed, was to create a true team that would divvy up responsibility for mastering the key information they needed to know. The team concept fit the coach’s worldview perfectly.

  The trio decided to tackle the market together and split their pooled commissions. They broke the market down into three distinct sections: mortgages, corporate bonds, and government bonds. They produced exhaustive reports on all three and shared them with each other. Then they went out and sold.

  By the end of 1988 they were producing huge money for Merrill. “On the institutional side, if you started putting up big numbers, you started getting attention and earned some leverage within the firm and the industry,” says Bertoni. “Suddenly companies were actually coming to us.”

  Senior management within Merrill began to take notice, too. In early 1990 the firm hosted a three-day conference in Chicago. All of the institutional traders and salesmen were required to attend. Joe’s team was asked to do a presentation on their new concept.

  “You have to understand what we were walking into there,” says Bertoni. “This idea of individual commissions was firmly entrenched at Merrill, and on the Street for that matter. There were hundreds of salesmen at Merrill who had only known the commission model and, by damn, that’s the way they liked it. We were these punks who were threatening their entire way of life.”

  They knew they’d face pushback. So Joe took the lead in getting them prepared for their moment in the spotlight. (The team now included Albright and a man named Dave McCarthy; Sheridan had been promoted.) In the month leading up to the conference, they enrolled in public-speaking classes and hired a speech coach. The men practiced their talks for hours after work.

  When the big day came, four hundred restless traders and salesmen sat in the audience in a convention hall in Chicago. Bertoni, Albright, and McCarthy did the first presentations. “We did okay,” says Bertoni. “But we were nothing like what was coming next.”

  When Joe took the stage, he had no notes and no slides. “He basically delivered a halftime speech,” says Bertoni. “His face was red, he was yelling, spit was flying all over the place.”

  Joe told his four hundred colleagues in that room that the way they did business was going extinct, and that if they wanted to survive, they had to adapt and adjust to a new way. The traders and salesmen did not like what they were hearing. They felt threatened. They crossed their arms over their chests and shook their heads. Condescending smiles spread across their faces. “They were sitting there thinking, Who the fuck is this guy?” says Bertoni.

  Some of them openly laughed at him. Others snickered behind his back. “Joe didn’t care at all,” says Bertoni. “The number one thing about Joe is that he is never afraid.”

  Seth Waugh was in the audience that night. “Joe really put himself out there to be ridiculed. But you couldn’t wa
lk away from that and not think, Wow, this guy is gutsy as hell.”

  Joe was also right. Within a few years, Wall Street moved away from the commission model. Salesmen and traders began being paid a salary and a bonus that was based on how well their teams did. That model is still in place today.

  By 1990, Merrill, basically starting from scratch, had surpassed Salomon Brothers and caught up to Goldman Sachs on the institutional side. No retail firm in history had ever so successfully transformed itself. “I give all the credit to the group we had there on the institutional side,” says Roger Vasey, who was head of the division. “And Joe was a huge part of that.”

  In 1991 Vasey promoted Joe to the head of New York fixed-income sales, a position that Brian Barefoot—who by then had become friends with Joe—had once held, and that Mike Quinn was in when he hired Joe. The only thing Vasey asked of Joe was whether or not he had a plan in mind for taking over. Joe handed him a book of detailed documents three inches thick. His game plan. “I’d never seen anything like it,” says Vasey.

  Yet there was still some skepticism about the move. “Everyone thought Joe was a great salesman, but no one thought he could be a manager,” says Thomas Hughes. But the doubters overlooked one crucial element: In becoming a manager of people, Joe was moving back into the role in which he was most comfortable. He was now in charge of hundreds of people. In essence he had been taken off the field of play, given the headset, and moved to the sidelines. He was a coach again.

  Within a year, Joe was promoted to the head of global fixed-​income sales.

  Joe managed to keep the promise he’d made to himself on that fall day in 1984, after attending that Dartmouth game. Joe never went to a college football game during his tenure at Merrill. (It would be 2001 before he went back to one, and his attendance at that game would be more or less forced on him.) Plenty of his colleagues at Merrill had season tickets and box seats for New York Giants and Jets games. Super Bowl ticket offers made the rounds in the office every year. But Joe never went to a pro game, either. He didn’t even watch football on television during the weekends. “I just blocked it out,” says Joe. He was completely focused on his Merrill job. Thinking about football was looking backward and only produced heartache. And Joe is not one for wallowing in misery, or nostalgia.