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.It s easy to see why Citicorp executives had to do some re-search on Travelers.Citicorp, while linked to many other com-panies, had very few business ties to Travelers.This was true evenat the board level, where many deals get done.Citicorp waslinked to 29 different companies through various board mem-bers, including the three boards Reed served on: Monsanto,Philip Morris, and The Spencer Foundation.But there was nooverlap with Travelers on any of them.This lack of familiarity and mutual acquaintances didn t stopReed and Weill from acting with amazing speed on the deal. ston_c08.qxd 4/16/02 8:54 AM Page 225225Deal of the CenturyReed sent Weill a long fax from Singapore outlining some roughterms for the deal.He returned from his trip and, after just twodays of conversations with Weill, wrapped his arm around Weill sshoulder and said, Let s do it, partner. Weill was stunned thedeal had moved so fast.4 So were a lot of other people.When itbecame apparent how fast the merger talks advanced, especiallyafter a first few months fraught with problems and managementturmoil, it was thought by many that Weill and Reed acted inhaste and thought through very few details.One detail Weill and Reed failed to really think through washow they would manage the company together, and how a suc-cessor to the two of them eventually would be named.While itwas decided that they would run the company together as co-CEOs, the merger picked up so much velocity so quickly thatWeill and Reed never stopped to fully examine just how the dy-namics between them would work.It seems they both simplyplanned on retaining the right to approve or veto all importantdecisions and didn t think enough about what kind of frustra-tions the co-CEO system would create for their top managers.Just as Weill and Robinson presented very different stylesyears before at American Express, Weill and Reed were also cutfrom very different cloth.Reed, 59, was known for his tremen-dous intellect.But he could be distant and aloof, theoretical inoutlook and a loner in practice.Weill, 65, was not considereda particularly deep thinker, but was gregarious, surrounded by anetwork of friends and admirers at Travelers.In contrast to Weill whose relentless drive to succeed waslegendary Reed had the mark of a man who didn t need his jobthat badly.He loved to cook, read, and noodle around withtechnology.But in his own way, Reed was just as intense as Weilland also shared a reputation for being ruthless.He couldquickly lose confidence in protégés he thought weren t measur-ing up, such as Chia.Conversely, he would cling for dear life ston_c08.qxd 4/16/02 8:54 AM Page 226226KING OF CAPITALto projects he had dreamed up but were clearly failures, like theacquisition of the technology company Quotron, which lost hun-dreds of millions of dollars before Reed finally gave up on it. He believed himself to be a great intellect, he was enormouslyself-confident, but he couldn t stand to have bright peoplearound him, says analyst Richard Bove. In my view, he was al-ways afraid the guy he was grooming might take his position andmove him out. The fact is, Reed was just as prominent a figure in the businessworld as Weill, and on top of that, had emerged from severalscrapes that would have mortally wounded other CEOs.Reed,presumably, would not be easily pushed aside like some of theCEOs in other companies that Weill had acquired.Another clear difference between the two men at the start ofthe merger: They had very different visions for how their co-CEOroles would end.Reed entered into the merger thinking that heand Weill would handle the transition, run the company jointlyfor some time, and then leave together.He had been CEO fornearly 14 years.Various heirs apparent had come and gone, andnow Reed had few potential successors anywhere within Citi-corp.Many observers believe Reed was drawn to the mergerpartly because it provided an exit strategy for him.Jamie Dimonwas never specifically mentioned as the successor Reed had inmind, but clearly he was a candidate.Weill, it would become clear, had no intention of retiring any-time soon.Perhaps early in the talks he thought he and Reedcould run the company together for a long time.But many Weillobservers think he always planned to eventually take over thereins himself. I think he went in there with a concept that hewould bide his time, says one senior Citigroup executive. I haveno doubt in my mind that from day one he wasn t planning to sitaround being co-chief executive officer forever. Going into the merger, Weill and Reed were both guilty oftreating their relationship and its impact on the performance of ston_c08.qxd 4/16/02 8:54 AM Page 227227Deal of the Centurythe new company lightly.Perhaps each knew there would be amessy end to the proposed arrangement, and simply felt the dealwas worth it.They were truly forging something new: the long-predicted but never realized financial services supermarket ofthe kind CBWL s Edward Netter had theorized about over 30years before.The company would be a major player in consumerbanking, investment banking, mutual funds, credit cards, andinsurance.The deal would also produce a legitimate competitor with theworld s top banks, which in Asia and Europe weren t restrictedfrom offering banking and insurance products under a singleumbrella.They had been combining for years, putting U.S.firmsat a competitive disadvantage.Both Reed and Weill wanted totake their best shots at being players on the global stage, and thiscombination would instantly put them on the map.They also sawthe advantage of diversifying their lines of business, making bothcompanies less dependent on earnings from volatile sources, likeSalomon s trading operations or Citicorp s Asian emerging mar-kets business.Then, of course, there was cross-selling.Weill, in particular, stillfervently believed that one huge sales force could sell a broad arrayof financial services to consumers.He wanted bank accounts,mortgages, variable annuities, mutual funds, stocks, and insuranceall to be sold by the combined Travelers and Citicorp salesforces.He believed if Travelers and Citicorp were to merge, the peopleand products would be in place for cross-selling to succeed.Historically, the lack of cross-selling success for banks wasblamed on the federal legislation separating commercial banksfrom the securities business.Weill, of course, was openly bettingthat Glass-Steagall would fall in the wake of the Citicorp-Travelersmerger.With those regulations gone, he could fully execute hiscross-selling strategy for consumer financial products.Weill also thought that cross-selling could work on the cor-porate side.Citicorp s corporate bank had relationships with ston_c08.qxd 4/16/02 8:54 AM Page 228228KING OF CAPITALapproximately 1,700 institutions.Why couldn t these corporatebanking clients be turned into Salomon Smith Barney investmentbanking clients? Weill also believed cross-selling to date hadn tworked because of poor execution.Just weeks before the mergerwas announced, he said, What I had hoped to happen at Ameri-can Express didn t happen at that particular location, but it didn tmean that my concept was wrong.It was just that the people to-gether weren t able to make it happen
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