Fiscal 2020 – Our Goal and Our Plan for By Far Our Best Year Ever and the Beginning of the Road to 2030
Thirty years ago, just after one of us arrived at our firm, Jefferies was a pure boutique with one real business, cash equities, which drove net earnings of $7 million on galactic-wide total revenues of $144 million.
Twenty years ago, as the other of us was heading toward our firm, Jefferies was still headquartered in Los Angeles and had grown mightily to 885 employees. We were no longer a boutique, but striving to become a legitimate niche player by diversifying to better serve our clients. Our net revenues were $543 million, with equities representing over 80%, or $445 million, while investment banking and fixed income contributed $81 million and $45 million, respectively. We had $400 million in shareholders’ equity and an equity market capitalization of what we thought then to be an astounding $477 million.
Ten years ago, Jefferies emerged from the financial crisis with over $2 billion of net revenues, with almost half represented by investment banking and the balance split roughly evenly between our equity and fixed income businesses.
We all know who and what Jefferies is today, an incredibly stronger and much broader global firm, and incredibly differentiated from a one-product boutique, a narrow niche player, or a post-crises re-creation. Today we have more than ample capital, an increasingly enviable market position in a broad array of the most important Wall Street businesses, and we can honestly say that without arrogance, we are now one of a handful of global leaders in Investment Banking and Capital Markets.
Before we put this history in further perspective, let’s also look at the state of the markets and the world compared to one year ago today. We entered fiscal 2019 with the markets seizing up and the value of almost everything plunging downward. Starting exactly one year ago, the stock market had its worst December since the Great Depression of 1929. When the U.S. government promptly shut down in January 2019, the perfect storm was upon us. While the final three quarters of 2019 were better, the trade war, Brexit and other macro issues kept us on our toes and investors somewhat “ill-at-ease” for much of 2019. It was not an easy year. Today, sentiment and momentum are better. The past ten days have witnessed a resurgence of merger and acquisition activity and, with accommodative monetary support, a generally greater openness to risk. The fact that 2020 is also a U.S. presidential election year generally bodes well for the economy and activity. We thus enter fiscal 2020 looking forward and upward, a welcome change from one year ago today (but we will, of course, remain on guard for any shifting of the winds).
Decades show true evolution, while shorter periods of time provide only an erratic glimpse. If one looked back at each one of the individual years that make up each of the past three decades, one would get a limited picture of our momentum and opportunity. Some years we click on all cylinders, sometimes most of them and occasionally just a couple, but we find a way to always persevere, move forward and ultimately thrive.
Jefferies is unique in that we enjoy several advantages that very few financial services firms have been able to master. First, we have had a commitment to a long-term vision and mindset. Second, we have been able to constantly evolve and adapt in an ever-changing and volatile world. Third, we have maintained a strong and humble culture that consistently values our clients, our team and every one of our other important constituencies. We know who we are and we understand what we need to do to get to where we want to be. Simply put, we are a firm with a plan, the people, the drive and the persistence to achieve our goal. We never give quarterly or even annual earnings forecasts because the future is never clear and we don’t make promises we cannot keep. The promises we do make are to always be there for our clients, protect our firm, value our people, improve our culture and have a deep rooted sense of urgency and responsibility to do our very best every day.
That said, at the beginning of this new decade we think it would be a fruitful exercise to ponder what Jefferies could look like as we enter 2030, a mere ten years from today:
1. The Jefferies brand universally is recognized as a world class firm that is one of a small handful of global leaders in Investment Banking, Capital Markets, Research and Alternative Asset Management. Every one of our clients knows that we are their true partner and they can always count on us, in good times and bad. We are fully integrated as an organization and operate always as “one firm.”
2. Our Investment Banking effort is widely appreciated as the “go to” partner for the very best companies in the world because of our vast industry knowledge, undeniable long term solid relationships with management teams and corporate boards, and ability to deliver by providing the very best insight and execution in every relevant product, service and region.
3. Our trading businesses remain critically important to our clients as “must have” partners due to our unparalleled level of trust with our clients, our innovation and commitment to technology, and our significant capital foundation that we devote to assisting clients.
4. Our research is recognized as amongst the most innovative, technologically sophisticated, and value added in our industry.
5. Our integrity as an organization is the envy of our industry, the pride of our people and highly valued by our clients.
Jefferies entering 2030 can be highly respected by all, incredibly important to our vast array of clients, and hugely valuable for our shareholders. It will also be a remarkable place to start a career, continue to build a career or complete a career.
Well, to get where we want to be by 2030, we have to grind it out once again starting today in fiscal 2020, one day, one quarter and one year at a time. Since this is the first day of the first fiscal year of our next decade, let’s all start executing our plan that will set us on our way:
1. Market and Re-Market Jefferies. We want to market all of Jefferies today consistently to our clients, making them aware of the ever-increasing breadth and depth of our capabilities. Too many of our clients and prospective clients have an image of Jefferies in their minds based on our historic relationship or experiences that reflect Jefferies 1990, 2000 or 2010. It is time for every client to understand and best leverage Jefferies 2020. We want to take the time to update and educate our clients on Jefferies’ capabilities today and the myriad ways in which we can help them achieve their goals. We ask every individual at Jefferies with client responsibility to take inventory of your client relationships and determine who and how we are going to elevate each and every client’s understanding of our firm. Please ask one or more of your direct leaders and us to accompany you to each client and let’s assure that they understand our capabilities and desire to open our entire firm to help them achieve optimal success.
2. Listen to Our Clients and Determine Their Needs. Let’s assure that we are focused on our clients’ needs and problems by beginning every encounter with open minds and keen ears. Our first order of business in each meeting should be to ask our client an open ended, non-judgmental question that allows our clients to share with us what is on his or her mind. Our job is to listen to every word carefully, as most clients will provide a pretty clear roadmap of what should be our priorities in serving them. Let’s avoid pre-dispositions and mis-conceptions, in favor of understanding what will serve our clients best. If we have the right relationship and ask the questions correctly, the roadmap of how we best serve our clients will be right in front of us and, given our resources, providing the solution will be straightforward. Let’s please listen to our clients carefully and consistently. Listening is very different from hearing. It’s also not about us or what we can do, it’s about what they need us to do for them.
3. Deliver Jefferies. Further to serving our clients with the best of Jefferies, we must assure that we always have the right people serving our clients. None of us should attempt to play the hero or seek to limit access to a relationship. The resources needed may be at the next desk, the next city, the next continent or in the undersigned’s offices. Whoever is needed to assure we do the best job possible for our client will be available and supportive. Our obligation to each other and to our clients is to deliver the best of Jefferies every time. There is strength in broadening relationships and weakness in protecting them.
4. Provide Our Clients Valuable Insight and Best Execution. With a clear understanding of our clients’ priorities and needs, and with the right Jefferies people on the case, we should be well positioned to deliver true insight to our clients in response to their needs. Insight and execution is our value proposition, and our capabilities position us to deliver as well and usually better than most who try to compete with us. When we lead with true empathy and put ourselves directly in our client’s shoes and actively, creatively, and persistently solve their problems, our clients will be delighted they chose Jefferies.
We stop there with a clear goal and straightforward plan built on four priorities we must execute starting today. If we execute each of these objectives in 2020, nobody will be surprised that when we ultimately get to and reflect back on 2030, we will be thrilled with the company we have become, yet again. We need to start with numbers 1 and 2 ASAP. This week (and all month) every one of us who has responsibility for client relationships should start to develop a personal plan for 2020 so we can achieve our best year ever at Jefferies. This goes for prospective clients as well. For those of you who don’t have direct client relationships, realize that you too are instrumental in helping the rest of us execute our plan by providing all of the key support and initiative required for success. We are here to help any way that makes sense. You have our phone numbers and emails.
Looking forward to by far our best year ever,
Rich and Brian