'The world is a much poorer place now'
November 13, 2009
Last fortnight, the opening bell of the Bombay Stock Exchange (BSE) on Dalal Street was rung by a surprise guest — Peter T. Grauer, Chairman, Bloomberg L.P.
The opening bell is usually rung by a promoter on the first day of the listing of his company on the BSE. But the exchange top brass made an exception with Grauer, as Bloomberg along with India partner UTV is putting up a television studio at the BSE.
On the Bloomberg board since 1996, and Chairman since 2001, the 62-year-old Grauer was in India to meet with the UTV team to discuss the road ahead for the Bloomberg-UTV business television network.
In an exclusive interview, Grauer also threw light on the $6.5-billion New York-based financial media major’s plans for the news and information business, as well as its plans for the recently-acquired BusinessWeek. Excerpts:
India is one of the five emerging markets—apart from Brazil, the Middle East, Russia and Mainland China—that Bloomberg has identified for growth. What are your plans for India across all your businesses?
We have for the first time in Bloomberg’s history put together an India-specific five-year business plan. This business plan has five main elements: One is news, in which we intend to improve and expand upon the depth and breadth of our news coverage across all asset classes that Indian and global investors care about; two, equity markets where we are already the preferred weapon of choice. So, we want to maintain our market leadership position in the cash and the derivatives equity market in India; the third objective is to capture and grow our presence in the Indian fixed income markets; four, we are aggressively entering the forex market in India which till now we never really tapped; and, finally, we want to focus sharply on providing systems for the Indian domestic asset management community. The overall message we are sending across is that Bloomberg is a local product with a local service, which is why we are growing our staff. In 2009, we started with about 12 sales people in India. We have now increased that to 25 with three offices. Our overall staff strength in India is 95 people.
How does your growth in India compare with that in other major markets?
In India, between 2003 and 2007, our average growth rate was 40 per cent year-on-year in terms of net installations. In 2008, this growth dropped to 30 per cent. In 2009, we are expecting single-digit net installation growth. The reasons for the slowdown is that: the world is a much poorer place now; we bill our customers in US dollars and recently the Indian rupee has devalued significantly against the US dollar; and thirdly, approximately 30 per cent of our customer base in India is the outsourcing industry, which has been dramatically impacted by the demise of some of the global investment banks.
How is Bloomberg withstanding the downturn? The company has seen a fall in the number of terminals because of the slump in financial services…
I am very pleased with how we are coming through this downturn. After many years of solid growth, this year our growth will be slower but modestly positive in revenue terms. The installed base of our terminals business (Bloomberg Professional Service) will be down a little bit this year, but in revenue terms we will be up slightly because of our one-price policy for every one. So during a weak period we tend to pick up market share.
Being a private company we cannot reveal numbers. In 2008, Bloomberg’s revenue were $6.5 billion with 350,000 users across 120 countries in the world. Despite a 3.4 per cent drop in terminal numbers, the company is hiring people. We have chosen to add 1,000 more employees this year. So we entered 2009 with just less than10,000 people and we shall end 2009 with a little over 11,000 people. People have been selectively hired to build and design products; we have also added journalists and sales & customer support people around the world. We have the financial wherewithal to do these things that when things are most demanding and difficult in the markets those are periods when we invest more aggressively.
How does Bloomberg compare with competitors like Reuters and Dow Jones?
I will not talk about our competitors. According to me, Bloomberg is a company that has been built on innovation. Bloomberg Professional Service, which sits on the desktop of financial professionals around the world, has about 30,000 separate functions. We will produce this year 2,000 new functions that will provide better capabilities to our customers, along with more sophisticated tools. We have what’s called the ‘Open Tap Theory of Innovation” which creates several functions for Bloomberg annually. There are very few companies that have this kind of approach to innovation. We are a company that is heavily focussed on customer service. We take about 10,000 electronic enquiries a day about our products... We do things differently and unconventionally.
How does BusinessWeek fit into your existing portfolio of businesses?
BusinessWeek (BW) covers a market which we essentially do not cover so well. (Bloomberg has a monthly magazine for finance professionals called Bloomberg Markets.) BW as a weekly publication has a circulation of just under a million copies. It is read by more than 4.8 million people a week in 140 countries. It goes well beyond the financial services market which is our bread and butter every single day. Our overriding aspiration is to be the most influential news organisation in the world for the financial markets and the business community; the BW acquisition is a logical extension for us to be able to achieve that.
We believe the BW acquisition will yield huge benefits for users of the Bloomberg Professional Service, for Bloomberg News, and for our television, Internet and other multimedia properties. While Bloomberg customers are primarily financial professionals, BW is read by CEOs, CFOs, deal lawyers, investment banks, product managers, and high government officials. So, BW will expand our audience.
Bloomberg is known to have made some famous faux pas— announcing the death of Steve Jobs of Apple (who is very much alive) is one of them... how does the company react in such circumstances?
I would like to put this in context. We write 5,000 stories a day seven days a week, which totals 35,000 stories a week, 140,000 stories a month, or 1.68 million stories a year. And we screwed up once. It was a technical fault and once something like this happens we put out a correction immediately and make the appropriate apologies to the extent we need to. But if you think about it in the context of what we do everyday and the frequency with which it happens it defies the law.
Bloomberg is also known to be unafraid to take on the powers that be. Recently, it sued US Federal Reserve to force the latter to reveal which companies it loaned its trillion-dollar bailout cash to...
We have won the case. Bloomberg is all about transparency, and we did not feel that the Federal Reserve Bank was being transparent in disclosing those (financial) institutions that they had been funding as part of the government programmes, and we sued under the Freedom of Information Act for that information. Clearly, one of the contributing factors to the breakdown of the financial markets was a lack of transparency. (We believe) that better transparency will improve the flow of capital and credit in the markets, and contribute to helping the global economy get back on its feet.