Facing a sudden career exit can lead to mental frustration and whatnot. However, the story was completely different for businessman and politician Michael Bloomberg. In 1981, he faced a low point in his life that became a turning point in his career. As per the Harvard Business School founder’s profile, he got fired from the firm called Salomon Brothers at the mere age of 39. It was Bloomberg’s only employer throughout his professional life. The reason behind this event is vital because he was not trying out other career options nor planning to establish a company of his own at that moment. He was very much settled in Wall Street. The sudden exit meant, he had to decide whether to look for employment opportunities in his area of expertise or create his own company. Harvard Business School has regarded this event as an inflexion point. In contrast, Bloomberg did not consider it as an ending but as a starting point. This outlook contributed to shaping his decisions in the future.Bloomberg’s severance became his startup capitalThe most crucial aspect of this event was its financial nature. Bloomberg did not leave his job empty-handed. Rather, he had received a partnership buyout from Salomon Brothers.Harvard Business School asserts that this payout was used to finance the establishment of a firm known as Innovative Market Systems, the precursor to Bloomberg L.P.This is not the typical story in entrepreneurship. Typically, entrepreneurs depend on investments from outsiders, savings or financing from banks. Bloomberg benefited from an ex gratia payment upon leaving his firm. This provided him with the initial capital to start his business immediately.Access to early funding is one of the critical considerations in studies of entrepreneurs, according to business scholars. Research carried out by various industry experts shows that the source of funding affects the success of startups. Bloomberg’s experience was no different.Bloomberg started Innovative Market SystemsThe company founded by Bloomberg did not have a name at the time of its establishment. It went under the name Innovative Market Systems at its inception. It was a very straightforward but effective idea. Bloomberg had intended to facilitate access to more information regarding the stock exchange. Back then, market information would come slowly and in fragments.With time, the company underwent many changes. Its products were perfected, it expanded its offerings, and it underwent a rebranding process. It finally reached its current state of being a market leader as Bloomberg LP.This process can be seen clearly through the company profile at Harvard Business School. The organisation did not spring up overnight, but it progressed to what it is now through stages.
Michael Bloomberg launched Bloomberg L.P. with the severance check he received from his last job. Image credit – Wikimedia
Why Bloomberg LP’s case is so memorable todayThe dismissal that took place back in 1981 has remained quite memorable due to the straightforward link between cause and effect. Bloomberg was fired, got some compensation for it, and started a business on the basis of that money.However, there was much more to that incident than mere happenstance. Bloomberg was knowledgeable about financial markets, and he could identify where the weaknesses of the systems used at the time lay.Entrepreneurial literature backs up this trend. As mentioned in a research report by the National Bureau of Economic Research, several successful entrepreneurs develop their businesses based on their industry expertise from earlier jobs. Bloomberg enjoyed this benefit from his earlier occupation.Timing also plays an important role. At age 39, Bloomberg was far from a young entrepreneur. In entrepreneurship literature, the typical ages for starting businesses range between 24 and 50 years. Therefore, this incident occurred outside the normal startup age bracket.Adversity transformed into strengthFrom a business perspective, Bloomberg’s termination from the company represented leverage. Losing his job alone would not create opportunities. The severance package made the difference. It transformed adversity into strength.This point is highlighted in the Harvard Business School case study. The termination, buyout, and establishment of the business all correlate. Each one led directly to the next.This is why the narrative withstands closer examination. It does not depend on exaggeration. It rests on verifiable facts. Bloomberg was terminated. He was provided a severance package. He invested it in launching a company called Bloomberg L.P.The event that took place in 1981 was a disruptive period in Bloomberg’s career and became the cornerstone of the future business entity.
