A Billion to One

Book excerpt: Legendary Nasdaq market-maker John E. Herzog shares the story of his business in this unabashed tribute to his partners, family, and friends.Inspired by his father, Herzog's route to building a securities trading behemoth starts modestly, when his grandfather, walking the teeming streets of Manhattan's Lower East Side, begins trading currencies. His father, Robert, joins these walks and learns how to earn a modest "spread" changing notes and handling remittances for newly-arrived emigres. The Herzogs' stock in trade is fair dealing, and as the decades roll by, we see that never changes.Robert apprentices at a bank where his aptitude for figures and entrepreneurial yearnings lead him to abandon a dependable $50 monthly wage for his first partnership. Rapid changes make him a sole proprietor very quickly, beginning a struggle just to stay in business. The family firm has survived more than prospered in 1959, when John accepts his father's invitation to join the four others that comprise the staff of Herzog & Co. Opportunity is elusive as he struggles to find business and develop a specialty. On a typical day, the firm makes only four or five trades!John's most significant deal is convincing two similarly principled brothers to put their doughnut business on hold while developing their trading careers at Herzog & Co. The very talented Irwin and Buzzy Geduld work with John to build a company with the ability and culture ideally suited to an expanding national trading opportunity. With a long list of company shareholders, the exquisitely timed sale of Herzog, Heine, Geduld to Merrill Lynch provides the ultimate reward.This intimate memoir would be more believable had it not happened on Wall Street. It's an unconventional story for that place: it's about integrity, not greed, where wrongs are quickly righted and fairness is never mistaken for generosity. For Herzog, the reward is sharing success with all who made it possible, and his story tells us how that happened.