Imagine being on top of the business world, transforming a small brokerage in San Francisco into an online trading behemoth, to then being shown the door after the dot com bubble popped. Well, that happened to David Pottruck, former CEO of Charles Schwab (SCHW), but he rebounded in a big way.
An accomplished athlete at Penn, Pottruck began his career nearby on Wall Street. But when Charles Schwab came calling, it was tough to resist. “Chuck is a visionary,” Pottruck notes in the attached video. “Chuck understood that that was all about building a team, and he had recruited a terrific team of people over the years and I was lucky enough to get brought from New York out to San Francisco. It was the first inning of something really terrific.”
Pottruck was at Schwab for nearly 20 years, and became CEO at the end of his tenure, but ultimately was let go when times got tough. “We were experiencing so much growth it was hard to keep up,” he says. “And then when the dot com thing happened in 2000 and the market went seriously down and … our volume in trading dropped by two thirds.”
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Despite Pottruck’s best efforts, ultimately it was not good enough for the board and Pottruck was replaced. It was a devastating blow to him. “I was sort of this growth guy. I needed to change myself into a contraction guy, and I didn't do that very well.” Pottruck was given first-hand experience in discovering that flexibility in business was key.
It was this flexibility that allowed him to rebound in a big way, by tapping into the network he knew and the business he understood - brokerage and advisory services. Pottruck is now chairman of Hightower Advisors, an advisor-owned, wealth management firm serving high-net-worth individuals and institutional clients. “We think there's an opportunity in the market, we think a lot of the financial advisors that are sitting at the really big firms are frustrated, they're not as happy as they might be,” he says. “[Financial advisors] want more in the way of products to to offer to the clients. They want more in the way of research. They want more in the way of technology compliance.”
In addition to providing these services to his advisor clients and teaching at Wharton, Pottruck also sits on the board of Intel, where he has served since 1998. The company has faced many challenges over the years, and one of the biggest issues now is dealing with a huge growth market - China. “It's a never ending challenge, and [Intel CEO Brian M. Krzanich) has been very aggressive in trying to form partnerships with Chinese companies,” he says. While Intel is in a position where it does not want to give away its IP and technology, they need to partner with China in order to sell their goods there, adds Pottruck. “China wants, among many things, is they want to not only sell products but they want to develop their own internal capability to build things.”
Of course this must be balanced with the concerns of sharing too much proprietary information, as well as the threat of cybersecurity. “They need to see you as an ally,” he says, but at the same time “all the risks of cyber security are real, very real, and I think in a less public way you need to be having conversations with the government to understand that they need to address those issues if they want to make us comfortable doing business there.”
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