From CEO to Startups: Masters in Business with Former Vanguard CEO Bill McNabb

**Bill McNabb** (0:02)
Bloomberg Audio Studios, Podcasts, Radio, News. This is Masters in Business with Barry Ritholtz on Bloomberg Radio.

**Barry Ritholtz** (0:16)
This week on the podcast, another extra, extra special guest, Bill McNabb was CEO and Chairman at the Vanguard Group. He had been with the firm for 30 years, helping to take them up to trillions of dollars. We've spoken to him a couple of times. In the past, he discusses his post Vanguard career, the boards he's sitting on, all the fintech startups and venture capital he's working with. I thought this conversation was fascinating, and I think you will also, with no further ado, my sit down with William McNabb.
Bill McNabb, welcome back to Bloomberg.

**Bill McNabb** (0:55)
Oh, thanks Barry. It's great to be here.

**Barry Ritholtz** (0:58)
So the last time, the last two times you were here, you were running Vanguard Group. I'm curious, how does a guy who rode at Dartmouth, taught Latin and coached at the Haverford School, end up running the world's largest mutual fund company?

**Bill McNabb** (1:16)
So there's an old saying that it's better to be lucky than smart.

**Barry Ritholtz** (1:20)
And my mom used to say that to me all the time.

**Bill McNabb** (1:22)
And that really did apply. I got very lucky, Barry, in terms of just opportunities that happened to come across, come my way.
And I had incredible mentors who sort of helped take those opportunities and make more of them than maybe they would have been otherwise. And one thing led to another.

**Barry Ritholtz** (1:43)
Huh, really interesting. So teaching Latin and coaching, what does that teach somebody like you about leadership that you were able to apply across three decades at Vanguard?

**Bill McNabb** (1:56)
Yeah, you know, I think that the two big things, and I was very fortunate to work for somebody at Vanguard who really lived this, and I'll come back to that in a second, but the power of we versus I, I was coaching a rowing team, and no matter how good the individual athletes were, if they didn't really exist in order to make the boat go faster, you weren't going to win. And we had to really get that across to people, and that collective drive for success actually is incredibly applicable in the business world. I think the other thing, maybe a little more subtle, is you lead by example.
And some of the people who talk about it and they theorize and all these fancy sayings, I'd rather just watch somebody do what they do really well, and if they're building good teams, just that example of how they do it is really worth emulating. I work for Jack Brennan, as you know, and you've had Jack on here before as well. And Jack really lived that. For me, when I got to Vanguard, the we versus I was very apparent where he was driving the firm.
And then no one led by example better than Jack. And, you know, when you've grown up in that world as a coach and an athlete, and then you get it reinforced professionally, you know, early in your career, it becomes a way of thinking.

**Barry Ritholtz** (3:24)
Yeah, big fan of Jack Brennan, loved what he did. When you join Vanguard in 86, it was obviously a fraction of where it was today. It was far less than a trillion dollars. And even in the mid 80s, I mean, that was the beginning of the bull market that started in 82
You had Peter Lynch and the Fidelity Magellan Fund. Berkshire Hathaway was on the rise. Stock picking was on the rise.
I guess I could say indexing was a fringe idea. What did the firm look like back in the mid 80s? Did you have any idea what was coming your way over the next couple of decades?

**Bill McNabb** (4:05)
This is why I said it's really better to be lucky and smart. I did not see this incredible explosion coming. What attracted me to Vanguard was I was working here for what's now JP Morgan Chase in New York, and was getting a little frustrated with a lot of things and decided it was probably time to go. And one of my mentors said to me, go find a place where the values match your own. And when I went in and interviewed with Jack Brennan and then Jack Bogle, you know, I found it was like, wow, this is so different. And it was, there was tremendous appeal. And so I did it really based on gut and intuition.
At the time, so when I interviewed with Jack Bogle, the funny story was he, he had data pulled out a bunch of stuff. And he's like, you know, we just crossed $15 billion under management. And I have no idea how we're going to get to 20 So I don't know why you would come here. You know, you're doing big things on Wall Street.