Last Man Standing

by Duff McDonald

  Another long held Weill principle: know when to be capital rich. Both the economy and Wall Street have cycles, and he who is capital rich when the competition stumbles will see opportunities abound. Weill used this strategy to great effect in both stages of his career, and it allowed him to take over much larger companies with his smaller but more financially secure organizations. Too many discussions of both Weill and Dimon paint the two as risk averse. Neither is anything of the sort; rather, they have eschewed financial risks so that they might embrace strategic ones.

  It’s reductive, but the secret to Sandy Weill’s success was no secret. As Dick Bove, at that time an analyst with the securities firm Laden-burg Thalmann, put it, “Buy businesses with significant cash flow, preferably at a discount, prune their expenses without sacrificing revenues, and then use that additional cash flow from those cuts to buy more companies until you end up owning Citigroup.”

  Dimon later said that he “learned a lot from Sandy Weill—including what not to do.” Among the things not to do: hogging the spotlight so much that your senior team feels underappreciated. Heidi Miller told Business Week in 2005, “The Sandy mythology is so large that it often obscures the contributions that other people made.”

  “Sandy wasn’t a mentor in the traditional sense,” Dimon recalls. “In the sense of people giving you advice and sitting you down. That’s what most people mean. I got none of that. Sandy was much more sink or swim and he just shed people left and right who didn’t meet his standards, but it wasn’t really a mentoring thing. He had a tremendous work ethic, and he was always thinking about how the world was going to change. He was brave and bold. I learned a tremendous amount from him.”

  “Jamie is the smartest man I ever worked with,” recalls Dimon’s former colleague Mary McDermott. “But Sandy had the best instincts. I guess that’s why they worked so well together.” Brian Posner echoed that sentiment. “Jamie is really about precision and knowing everything about everything,” he says. “Sandy is much more conceptual, about the big picture.”

  Even if your business is your life, it’s important to keep some distance between your work life and your home life. For Sandy Weill, there was no distinction, and that lack of clarity clouded important issues in the office, particularly when it came to his children. Although Dimon is both friends and friendly with his subordinates, he does maintain more distance than Weill ever did. And therein lies a profound difference between the two men. Sandy Weill needs to be liked. Jamie Dimon doesn’t really care if you like him or not. Dimon will ask one or two employees to join him for drinks. Weill asks 300 people to his farm to pick apples.

  “Throughout his career, Sandy could engage people in a way that was unique and made them feel good about themselves and what they were doing,” recalls Jay Mandelbaum. “But Jamie has a different leadership approach, which is based more on his abilities, fairness, and directness. Sandy’s a smart guy, but his success was often based more on how he related to people.” Weill, was, and remains, a bit of a goofball. At a birthday party planned for him at The Four Seasons, the crowd listened to “I Heard It through the Grapevine” sung by a bunch of people dressed as grapes. That is not Dimon’s style.

  Asked in late 2008 what other rules of thumb he practiced in his career, Weill responded succinctly: “Don’t fuck up.” But that’s precisely what he did in the fall of 1998.

  • • •

  Dimon wasn’t exactly forced into penury when he was fired. He eventually reached a $30 million severance agreement, which included a three-year, three-phase noncompete that went far above and beyond the norm. (Black received $20 million.) Dimon was rich enough never to work another day in his life, but at 42, he was certainly not contemplating retirement. This was a man who, over the course of his 16 years following business school, had spent about 75 hours a week at work.

  He was, however, completely demoralized by the turn of events. The weekend after his firing, Dimon and Judy attended a party at the home of their college pals Peter and Laurie Maglathlin in Darien, Connecticut. “He was devastated,” recalls Laurie Maglathlin. “And totally blindsided. I really do believe that when he walked into that office he had no idea he was going to walk out without a job. And it wasn’t about being humiliated, even though he had been. It was more about him being hurt and betrayed and saddened by it all.” Jamie Dimon, friends say, is a man who engages in the project at hand, with all the focus he can muster. Tear anything away from him, and you’ll throw him for a loop. Tear his life’s work away, and you have done much more.

  In a bizarre move, his former employer agreed to give Dimon temporary space in the Citigroup building itself. (He used a separate entrance from the Citigroup executive team.) For the next several weeks, all he and Theresa Sweeney did was respond to well-wishers—all manner of people called, up to and including Senator Charles Schumer—before transitioning into preparing and sending out the Dimon family’s annual Christmas card and responding to hundreds of the same. “We were drowning in a sea of paper,” recalls Sweeney, who estimates that they spent about eight weeks thanking people for wishing Dimon well.

  Commuting to the building that Sandy Weill worked in did not sit well with Dimon. It didn’t sit well with Sandy Weill, either. On a weekday in mid-January 1999, Theresa Sweeney picked up the office phone to hear Dimon on the other end. He told her to stand up and walk to the Park Avenue window. “You see that green patch between the lanes on Park?” he asked. “That’s where we’re going to be on Friday if we don’t find a place to go.” After just two months, he was being tossed out of the Citigroup building once and for all.

  They didn’t move far, only across the street. Dimon was going to set up shop in the Seagram Building, just as Weill had done after being tossed from American Express in 1985. (Dimon’s wife noticed the irony in the move, but she kept the thought to herself.) He decorated his office with a white board, a boxing dummy, and a pillow that said, “My Next Boss Will Be Normal.” He also had a pillow that said, “The Best Is Yet to Come.” (A tough man with a lot of pillows.) Shortly thereafter, he and Weill found themselves in The Four Seasons at the same time. The two did not speak.

  The firing sobered Dimon, taking him off the frenetic, overachiever’s treadmill he’d been on since college. It was a position very similar to Weill’s after his own ouster. “It was a strange time for him,” Dimon had told Jon Friedman of Business Week in 1989, regarding Weill’s time in the Seagram Building. “He had been running nonstop his whole working life.” Dimon might have been speaking of himself in 1999.

  The break gave Dimon more time to spend with his children, as well as time to talk with Judy about his firing. If Dimon was hurt at being cast aside, Judy was furious. “Even though Jamie was at peace with himself, I was a raging maniac because of the way he’d been treated,” she recalls. Dimon constantly reminded his wife that it was his net worth, not his self-worth, that had been tied to the company. The latter, he said, was something Sandy Weill could never take from him. (Nor, for that matter, could Weill take his net worth, which by that point was quite substantial.)

  Dimon leaned on Judy during his time off, and by all accounts, she was the right person at a tough time. Considered by friends the glue that holds the family together—a Harvard MBA herself, she willingly took over the role of head of household so Dimon could pursue glory with Weill and beyond—Judy Dimon was as important to Jamie Dimon as Joan Weill was to Sandy over the years.

  Another rift opened between Dimon’s mother, Themis, and Joan Weill. They’d been friends for 25 years, but following Jamie’s departure from Citi, Themis did not speak to Joan for more than a year. Affection eventually returned to their relationship, but they would never again be as close as they had been.

  Dimon cast himself as the victim in a Shakespearean tragedy, the prince who died because the king did not understand his own destiny. He told friends that he was stunned by his firing, that although he was certainly aware of the problems between him and Sandy, it had never
occurred to him that they could outweigh his value to the company. “I never saw it coming,” he later told the reporter Roger Lowenstein. “I thought one day we’d have a drink and work it out.”

  In February, Dimon filed with the Securities and Exchange Commission to sell 800,000 shares of Citigroup worth some $42.5 million—his participation in the blood oath had come to an end, and the separation was complete. Dimon also severed ties with most people he considered Weill partisans.

  A board member of both the Mount Sinai–New York University Medical Center and the Center of Addiction and Substance Abuse (CASA), he spent some months during his forced sabbatical negotiating a bond sale for CASA when it was looking to purchase permanent headquarters in midtown Manhattan. The former Primerica board member Joseph Califano, head of CASA, watched with admiration as Dimon played two banks—Chase Manhattan and J.P. Morgan—off each other in the debt negotiations. Dimon extracted an all-in financing cost of just 3 percent annually over 20 years for CASA.

  In his career, Jamie Dimon has been on the board of only one public company for which he did not work at the time. In 1999, when Andrall “Andy” Pearson, the chairman of Yum! Brands, asked him to join its board, Dimon accepted. “Andy is one of the truly exceptional businessmen I ever met,” recalls Dimon. “He’s in a category with Jack Welch and Warren Buffett. Andy was talking about some of the stuff Jack did at General Electric way before Jack did it. Stuff like training people, about discipline, about honesty.”

  (Dimon also puts Merrill Lynch’s former CEO Daniel Tully in that group. When he and Tully traveled back and forth to Washington in 1996 during the settlement negotiations in the Nasdaq price-fixing scandal, Tully offered Dimon some words to live by that he’s repeated on many occasions. “Son,” Tully told the 40-year-old CEO of Smith Barney. “It’s not just whether you tell the truth. It’s whether you even shave the truth.”)

  Ever the disciplined goal-setter, Dimon made a list of things he wanted to do during his time off. One thing he did was read what he wanted to—not what he had to read for work—something he’d had little time for in the past decade. He began to do so voraciously, knocking down about two books a week, primarily history. “History is humbling and inspiring,” he later told a reporter. “It puts you in your place.” He read biographies of Caesar, Alexander, Napoléon, Nelson Mandela, and ten U.S. presidents, including George Washington and Abraham Lincoln.

  (Dimon’s reading taste runs to both business and history, but he’ll read just about anything, from the memoirs of Ulysses S. Grant to Bill Bryson’s 2003 best seller A Short History of Nearly Everything. He admires Grant particularly, he says, for the lucidity of the man’s thinking. “They say his success on the battlefield boiled down to the sheer clarity of his orders,” Dimon says admiringly. If he were making a list of books for the aspiring CEO, he would start with Shakespeare, adding Built to Last by Jim Collins and Jerry Porras, Only the Paranoid Survive by Intel’s Andy Grove, Warren Buffett’s annual letters, and Graham and Dodd’s Security Analysis.)

  Next on the list: boxing. Dimon had been a longtime runner and tennis player, but to work out some of his frustration, he began taking boxing lessons. More generally, he wanted to get back into shape. When asked if he was successful, Judy smiles and says yes. He also traveled. He took a trip to Denmark to visit his brother Peter, who spent eight years there. He took his daughters on an expensive, luxurious trip across major cities of Europe, including Paris, London, Rome, Florence, and Venice.

  (Despite his hectic career, Dimon had made a point of going on vacations with the family on a regular basis. Over the years, he took three RV vacations with the girls to the Shenandoah Valley; up the east coast; and from Yellowstone to Yosemite through Sequoia National Forest, ending in Los Angeles. “People in the office seemed shocked that I knew how to drive an RV,” he recalls. “I asked them, ‘What do you think? That I bring my driver with me?’” As a family, they took weeklong vacations to Vail every year, as well as the Grand Canyon, the Green River, South Africa, and Greece’s Turquoise coast.)

  Under the list item “do things with Judy” he also agreed to try out a week at a Canyon Ranch spa in the Berkshires. He lasted three days. “I’d get up at 6:00 A.M., read the papers, go for a 10-mile run, come back, have a massage, and it would only be 10:30 in the morning,” he recalls. “I lost like three pounds while I was there, but there was nothing else to do.” Judy Dimon stayed the whole week.

  James Long, Dimon’s Harvard classmate—the two men were in each other’s weddings—talked to him and heard about the list. When Dimon told him that one of the items on it was driving the Lewis and Clark trail, Long jumped at the opportunity to join him. Dimon flew to Billings, Montana, alone and drove to Portland, where he met up with Long. The two men then drove down the coast to San Francisco. In the end, Dimon accomplished everything on his list but climbing Mount Kilimanjaro.

  He also made new friends. On a trip to Israel with a few U.S. executives, Dimon met Greg Brenneman, the young president and CEO of Continental Airlines. The men spent some time in the Knesset—the legislative branch of the Israeli government—with the president and prime minister, and also visited the king of Jordan. Dimon and Brenneman became fast friends, and have been available to each other as sounding boards over the years.

  Dimon surprised not a few friends during this time with the thoughtfulness of his deliberations. Here he was, a lifelong workaholic, taking more time than anyone expected to plot out how best to spend the next decade or so of his career. Judy Dimon insists that her husband is not a workaholic. “He’s just one of the most efficient men alive,” she says. He might be one of the most thorough as well. He would not take a job until he had reviewed all his options.

  • • •

  The day after Dimon left Citigroup, Weill addressed Salomon Smith Barney’s staff over the “squawk box,” the intercom used on Wall Street trading floors. During the address, he opined that though he himself had been unable to find a job for 10 months after his ouster from American Express, he was sure that Dimon would be overwhelmed with job offers and would quickly find a new gig. Weill was right about the offers. By the time Dimon left Citigroup, he was one of the most celebrated executives in the country, and interest in hiring him was palpable. But Weill was wrong about the new job. It would be 16 months before Dimon made a decision about what to do next.

  The list of companies that took a shot at luring Dimon is a lengthy one. For starters, there were the financial services companies—AIG, American Express, Deutsche Bank, Goldman Sachs, J.P. Morgan, and Barclays Bank in London. He turned down the last one, he said, because he didn’t want to move his family to London. (He also told the Maglathlins that he preferred to work for an American company. Dimon was and remains a patriot.) The legendary hedge fund manager George Soros called.

  Jon Corzine, who had recently been ousted from Goldman Sachs by Hank Paulson, called and asked if Dimon had any interest in perhaps buying the core of LTCM and using it as a platform to build a company in the spirit of the Blackstone Group, a financial services firm for the new millennium. “I’m either going to do this with you, Jamie, or run for a Senate seat in New Jersey. I haven’t made up my mind yet.”

  “You’re kidding me!” Dimon replied. He was intrigued, but it wasn’t quite the right thing for him, either. “I always thought that was funny, though,” Dimon recalls. “Because he did run, and he won.”

  The interest did not stop there. Starwood Hotels & Resorts was interested. Jeff Bezos tried to lure Dimon to Amazon.com, a tempting opportunity in early 1999, with the Internet frenzy still ongoing. “For a minute there, I had this fantasy of moving the family to Seattle. I was dreaming of being Tom Hanks on a big houseboat and I would never wear a suit again,” he recalls. “But it just wasn’t me. I like Jeff Bezos, but I’m a finance guy. It’s like taking someone who has played tennis their whole life and telling them from then on they had to play golf. You have to relearn all these new skills. Plus, I wasn’t su
re I wanted to do that to my family, to move out to Seattle on a bit of a gamble.” Priceline.com also came calling. So did Webvan. During his time off, Dimon looked at no fewer than 100 Internet companies, and concluded that only about 10 would survive. He decided the space wasn’t for him.

  Arthur Blank, the cofounder of Home Depot, also inquired. Despite not knowing his way around a toolbox, Dimon took the idea very seriously. (Over dinner with Dimon, his Harvard classmate Stephen Burke teased him about even considering the idea. “Have you ever even been in a Home Depot?” he asked the lifelong New Yorker. Judy Dimon felt the same way. “He felt like a foreigner in there,” she recalls about a visit to a store.) He was offered the position of national finance chairman for Al Gore’s 2000 presidential campaign, but turned it down.

  Dimon made another list during his time off: potential occupations. It included teaching, politics, investing, sitting on boards, and retiring. And banking. (Speaking of banking, every day that he and Sweeney sat in their office in the Seagram Building, they looked out the window at Citigroup, the company he had helped build. They amused themselves by throwing rubber darts at the window.)

  In April, four months after Dimon left Citigroup, Bill Campbell followed him out the door, frustrated by the same issue—too many chiefs—and rented his own office in the Seagram Building, a few floors beneath Dimon. Campbell often joined Dimon, Brian Posner, and Peter Freund (who had formerly been a derivatives expert at Bankers Trust) in Dimon’s office to spitball about new ideas.

  Dimon also kept in touch with a number of colleagues at Citigroup, but to a man they were actually afraid of provoking Sandy Weill by being seen with Dimon. The result was a lot of skulking around when it came time to see old colleagues like Jay Mandelbaum, Heidi Miller, and Charlie Scharf.

  Dimon also thought a lot about a vision he had for melding discount and full-service brokerage. Although he came from a full-service background, he could not deny the success of Charles Schwab’s discount operation, and he had his eye on earning the same kind of valuation from the stock market for a new kind of firm. After long bull sessions, the group at the Seagram Building opened a bottle of wine and stared at Dimon’s whiteboard, envisioning the future. Over long dinners at the Della Femina restaurant in the Helmsley Building at 230 Park Avenue (now Bobby Van’s), they did more of the same.