Talking To Chuck

Charles Schwab Picks Up the Pieces for the Company That Bears His Name

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BUSINESS 2.0 - Charles Schwab, founder of, yes, Charles Schwab Corp., returned to head the financial-services firm as CEO after its board, dismayed by the performance of Mr. Schwab's successor, David Pottruck, asked him to come out of a golf-filled sabbatical and turn the company around. He's done just that, writes John Battelle, who interviewed Mr. Schwab shortly after the company reported it had surpassed $1.2 trillion in client assets. One key problem that needed fixing: marred customer relationships and an ineffective marketing strategy. In the interview, Mr. Schwab expanded on this discovery:

"What did you learn, once you started digging into the business, that surprised you?"

"I saw a variety of things. We lost the emotional connection with our client. We did a long series of things that antagonized our client relationship-raising fees and rates in a bunch of areas, impersonal marketing. We lost one of the great sources of our growth in the past, our happy customers referring new customers to us. And as our pricing got disconnected from the marketplace, we lost all momentum with new customers who came from marketing and advertising. So the franchise was being seriously weakened. The morale in the company was about as low as I could have imagined. And our cost structure was totally bloated. We were sort of immobilized. Not a good place to be."

-"1.2 Trillion Buck Chuck," by John Battelle, Business 2.0, March 2006
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