Acquired
00:29:03 · Ben Gilbert, David Rosenthal
[00:29:03] S0: This is what? Mid fifties? [00:29:04] S1: Early fifties. 1951. K. So, again, we talked about the economics for the management company. Like, I think Morgan and everybody at Wellington and Jack absolutely did have their customers and the fund holders in mind and wanted to do a great job for them, but they are making a lot of money. [00:29:23] S0: It's market. It's industry standard. [00:29:25] S1: Yeah. Based on the fees and that fund size, call it, like, two to three million dollars a year flowing into a reasonably low headcount, high margin business here in, you know, 1951. Yeah. Everybody's doing great. So Jack takes to Wellington and to mister Morgan like a pig in mud. He loves it. He rises through the ranks from Morgan's assistant to basically doing, like, every job in the company. And after a pretty short number of years, he emerges as the clear heir apparent to take over Wellington when Morgan retires. Morgan was thirty years older than Jack. And then, ultimately, in 1965, Morgan retires, steps back, and names Jack president of the firm at 35 years old. He's made it. Yeah. Here's Jack. He's come up in the world. He's gone from family ruin, essentially an orphan, to president of a highly profitable and respected enterprise at age 35. He's got it made. [00:30:29] S0: And importantly, a successful and pretty conservative mutual fund organization here with Wellington at this point in time.
00:30:29 · Ben Gilbert, David Rosenthal
[00:30:29] S0: And importantly, a successful and pretty conservative mutual fund organization here with Wellington at this point in time. [00:30:36] S1: Yep. Yep. Absolutely. But, unfortunately, that conservative, mindset and pedigree was exactly the wrong thing for this moment here in the mid nineteen sixties for Wellington and its young hotshot new president because Wall Street and the investing world is undergoing a sea change from the hyper conservative mode that emerged after the depression to what would come to be known as the go go years, pioneered by a small investment firm in Boston called Fidelity. Yes. But before we tell that story, now is a great time to thank our presenting partner, JP Morgan. [00:31:21] S0: Yes. And today, listeners, we are gonna talk about something that we mentioned last season on the Trader Joe's episode, supply chain finance. [00:31:29] S1: Yes. Think about when a buyer gets an invoice from their supplier. They're expected to pay quickly, but often can't or don't wanna tie up that cash. Wouldn't it be great if you could have a financing partner come in and fund that gap so the supplier isn't waiting up to thirty, sixty, or even ninety days to get paid? Well, that's exactly what a bank can do to bridge that time gap. The buyer gets to hold on to their cash longer, and suppliers get paid faster. True win win.
00:31:29 · David Rosenthal, Ben Gilbert
[00:31:29] S1: Yes. Think about when a buyer gets an invoice from their supplier. They're expected to pay quickly, but often can't or don't wanna tie up that cash. Wouldn't it be great if you could have a financing partner come in and fund that gap so the supplier isn't waiting up to thirty, sixty, or even ninety days to get paid? Well, that's exactly what a bank can do to bridge that time gap. The buyer gets to hold on to their cash longer, and suppliers get paid faster. True win win. [00:31:55] S0: Yep. And JPMorgan specifically has been doing this kind of work for decades at the world's largest companies. So supply chain finance, receivables financing, dynamic discounting, All of this is built on top of the trillions in daily payment processing moving through the system. [00:32:11] S1: But the tooling and the teams around it have historically been fragmented. You've got treasury teams trying to maximize liquidity. You've got procurement wanting everything in one place, and IT stuck integrating all of it. Not to mention the different portals, static reports, and all the manual setup. [00:32:27] S0: So this is where JPMorgan payments working capital accelerator platform comes in. You've got one login and one unified view across payables and receivables financing near real time data, and it plugs into the ERPs that your team is already running.
00:32:27 · Ben Gilbert, David Rosenthal
[00:32:27] S0: So this is where JPMorgan payments working capital accelerator platform comes in. You've got one login and one unified view across payables and receivables financing near real time data, and it plugs into the ERPs that your team is already running. [00:32:42] S1: And when teams can see their full working capital position in real time, working capital stops being a cash management headache and starts becoming a lever that you can pull as a business. The best business is treated as part of their operating system, and this is the kind of platform that makes it easy. [00:32:56] S0: So listeners, if you wanna learn more about this new working capital accelerator platform, go to jpmorgan.com/acquired or contact your JP Morgan rep and tell them that Ben and David sent you. And if you wanna join us for some live interviews, we will be on the main stage with JP Morgan at the We Are Developers World Congress in San Jose this September. Click the link in the show notes to learn more. Alright. So, David, the entrance of Fidelity into our story.
00:32:56 · Ben Gilbert, David Rosenthal
[00:32:56] S0: So listeners, if you wanna learn more about this new working capital accelerator platform, go to jpmorgan.com/acquired or contact your JP Morgan rep and tell them that Ben and David sent you. And if you wanna join us for some live interviews, we will be on the main stage with JP Morgan at the We Are Developers World Congress in San Jose this September. Click the link in the show notes to learn more. Alright. So, David, the entrance of Fidelity into our story. [00:33:24] S1: Yes. And the go go years, which really were this, like, violent reaction to all the pent up conservatism and prudence and austerity that had dominated Wall Street and finance for America and the world through the depression and through World War two. The journalist John Brooks would write about it later in the New Yorker that the go go era was, quote, a method of operating in the stock market, a method that was, to be sure, free, fast, and lively. And certainly in some cases attended by the joy, merriment, and hubbub implied by the go go term. The method was characterized by a rapid in and out trading of huge blocks of stock with an eye to large profits taken very quickly. So in other words, the exact opposite of Wellington management and Walter Morgan's approach. [00:34:23] S0: Which is tough because if you grew up as a leader in that previous era and you believed in that philosophy, but this is what all of your customers, the the investors want, what do you do?
00:34:23 · Ben Gilbert, David Rosenthal
[00:34:23] S0: Which is tough because if you grew up as a leader in that previous era and you believed in that philosophy, but this is what all of your customers, the the investors want, what do you do? [00:34:34] S1: Yep. And Fidelity was the one that pioneered all of this. So Fidelity goes all the way back to the early Boston mutual fund scene, kinda like same era as the Massachusetts fund. They were always though like a kinda small bit player until the legendary Edward Johnson, known as mister Johnson, who had previously been Fidelity's legal counsel, takes over the firm right before the end of World War two. At the time, Fidelity is managing just $3,000,000, and the previous owners, who I think are, you know, retiring, they literally give Fidelity, the firm, to Edward Johnson for free. Wow. [00:35:14] S0: Because they just don't think it has much value? [00:35:16] S1: No. I mean, it it was part of that, like, we're here to serve the clients, that sort of ethos. But, also, it was a $3,000,000 fund even with the high economics of how this fund industry works. You know, if the base that you're pulling a percentage fee off of is $3,000,000 Right. You're just kinda limited in how much money you're gonna make here. Yep. But, yeah, this is what like, spoiler alert. Obviously, Fidelity is one of the largest fund complexes and financial companies in the world today. It's still owned by the Johnson family. It's estimated that their net worth is 40 or $50,000,000,000. Thanks to this. Incredible. [00:35:53] S0: On a basis of zero because they got it for free.