Books: The Ascent of Jamie Dimon | Last Man Standing

by | Jan 8, 2017 | Books

Last Man Standing is presented as the biography of Jamie Dimon but it covers more than Jamie. It dedicates over a third of the book to the financial crisis. The diversion is perhaps because Dimon is still too young to have a definite biography published. All in all, an easy read with a few nuggets of wisdom and ideas to experiment with.

Narrative summary (continues at the end of this post)

Business start and deal making to Citigroup

After graduation from Harvard, turns down investment banking offers and joins American Express as Weill’s assistant. The idea was that i-banking was too narrow focused and one can get lost in selling specific products for a long time, whereas at American Express he would learn how to run a company.

But soon both Weill and Dimon find themselves jobless… [continues at the end of this post.]

How did the book make me feel?

It made me feel, of course, like an underachiever. All joking aside, since this is a biography that reads like a sequence of events and doesn’t go too deep into the man himself, my emotional reaction was rather dim. However, I extracted some themes or nuggets of wisdom from my reading:

  1. It may not always be a good idea to fire the CEO’s daughter.
  2. Find a good mentor to expedite learning and advancement. Choosing to work with Sandy Weill (and sticking with him) over prestigious and more lucrative jobs in investment banking may be the most important career choice Dimon ever made. It also makes for a good story, in a Hero’s Journey context.
  3. Stand at the center of the crossroads and your value will grow exponentially. Dimon is frequently praised for knowing what is going on and what’s important in all lines of business of the company. This is prevalent in the book from the early days at Commercial Credit. Nothing of significance (strategic or operational) would take place without Jamie’s knowledge, advice, or direction.
  4. Break down issues into their smallest components to better understand drivers. This one has to be essential if we want to apply the “stand at the center of the crossroads” technique. Otherwise, standing at the crossroads without knowing what’s going is a recipe for bureaucracy, micromanagement and, ultimately, failure and mediocrity.
  5. Maintain a strong balance sheet and wait for market downturns to acquire assets a fire sale prices. Could be applied at the personal finance level too: do not take on too much debt, do not compete with the Joneses on meaningless spending, be patient and disciplined before deploying capital.
  6. Dismiss office politics. Dimon has the following rule: “if you can’t say it in the room, don’t say it at all”. Those are the folks who wait until a meeting is adjourned to approach the leader and try to push their own agendas.
  7. Discipline in M&A is paramount and requires three yeses: 1) does the deal have business logic? 2) is the price attractive? 3) do we have the ability to execute?
  8. Notes on personal philosophy:
    • do not boast of achievements but instead talk about the work that remains unfinished,
    • no perquisites,
    • don’t fire people simply to signal that you’re placing the blame on someone else,
    • don’t retreat behindlegal corporate speak, be clear and straightforward

Could the book be improved or challenged in a fundamental way?

The only though I have is that Duff McDonald could have put more emphasis on character development to make the readers feel that they have a view of Dimon’s personality and mental software (values, virtues, glitches, etc.). I guess that he didn’t have sufficient access to the man himself or his close friends and partners to present the psyche of Dimon without falling in the pool of speculation.

But not a problem… this will be covered in another book, a definite biography a few decades down the line.

Narrative summary (full)

Last Man Standing is presented as the biography of Jamie Dimon but it covers more than Jamie. It dedicates over a third of the book to the financial crisis. Of course, Dimon plays an extremely important role as the CEO of one of the few well-managed banks, but the limelight is diverted from the life and career of Dimon to the unfolding of the credit crisis and the collapse of several institutions (Bear Stearns, Lehman Brothers, Merrill Lynch, among many).

Early life and studies

Nothing that interesting here. Bachelor’s degree in psychology and economics from Tufts, MBA from Harvard. Both his father and grandfather worked in the financial sector at Shearson. His parents become friends of Sandy Weill, at the time a high level executive at American Express.

Business start and deal making to Citigroup

After graduation from Harvard, turns down investment banking offers and joins American Express as Weill’s assistant. The idea was that i-banking was too narrow focused and one can get lost in selling specific products for a long time, whereas at American Express he would learn how to run a company.

But Weill is pushed out of Amex and Jamie chooses to follow his now unemployed boss. The two of them, along with Alison Falls McElvery (Weill’s assistant), rent an office in Manhattan and spend about a year looking and waiting for deals to make.

Finally, the opportunity arrives. They acquire a small lender in Baltimore, Commercial Credit, clean up its balance sheet by selling assets and cutting costs and, with it, begins a decade-long of deal making.

Weill and Dimon’s strategy is to build a solid balance sheet and use it as an advantage by acquiring companies and assets at low valuations during economic downturns. The strategy requires discipline and patience, but it pays off in the long run.

From Commercial Credit, they move on to buy Primerica, Drexel Burnham, Shearson, Smith Barney, Salomon Brothers, Travelers, and finally Citicorp, which they rename Citigroup.

They are at the top of the finance world. And then… Weill fires Dimon in 1998.

They had been butting heads the last couple of years. The author views the situation as resentment and insecurity from Weill toward Dimon as the latter began to receive more recognition in the press.

Bank One and JP Morgan

After leaving Citi, Jamie spends about a year looking for the right opportunity. He sees it in Bank One, a large regional bank based in Chicago. He joins Bank One as CEO in 2000. As a trained and tested efficiency seeker, he cuts cost across the board and improves financial discipline at the bank.

In 2004, he orchestrates the merger of Bank One with JP Morgan Chase and moves back to New York. A year later, he was named CEO.

Enter the financial crisis. In the subprime mortgage business and overall mortgage derivative world, JP Morgan was not as aggressive (and was better at managing risk) as the rest of large Wall Street firms and, therefore, it was in a position to “provide help” (provide help = buy companies) when the undoing began.

JP Morgan became the institution of choice for the Fed and Treasury to direct their calls to.

JP Morgan was asked by the government to purchase Bear Stearns. Over a weekend, Dimon’s team had to come up with an offer price. They set it at $2 per share. It was later increased to $10 due to a massive mess up by JP Morgan’s legal counsel. The government also asked JP Morgan to buy Morgan Stanley, but Dimon declined due to lack of business logic.

There are further acquisitions down the road, such as Washington Mutual, and also the accepting of TARP funds. Money that they didn’t need but had to take to instill confidence in the financial sector.

The financial crisis took down prestigious institutions such as Lehman and Merrill, and it solidified JP Morgan Chase as the best managed bank and Jamie Dimon as the most talented and powerful banker in the world.

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