E*Trade's Stop-Loss Order

CEO Mitchell Caplan is guiding E*Trade Group Inc. through its turbulent adolescence.

Who Mitchell Caplan
Title Chief executive officer, E*Trade Group Inc.
Where Arlington, Virginia
Challenge Rescue E*Trade's image from high-profile founder Christos Cotsakos; guide the online investment company through its turbulent adolescence

It's a tough act to follow — and for all the wrong reasons. In January, Mitchell Caplan took over as chief executive officer of E*Trade Group Inc. from Christos Cotsakos, the company's charismatic founder. In the go-go 1990s, E*Trade and Cotsakos were the very essence of the dotcom boom. The company's outrageous ads — including its Super Bowl spots — got lots of attention. And E*Trade racked up big numbers: In 1996, the company had 91,000 customers. A year later, it had 400,000 customers and $10 billion in assets. In 1999, the stock hit a split-adjusted high of $72.25. But as the market collapsed, so did E*Trade: In 2001, Cotsakos's reputation suffered when he raked in a huge compensation package while the company's stock and revenue nose-dived. He eventually gave back much of the compensation — but the company's image took a hit. Caplan came to E*Trade in 2000 through its acquisition of Telebank and became CEO in January 2003 when Cotsakos resigned. Caplan needs to rebuild investor and customer confidence in a company whose stock now trades at around $5.

One of your first jobs seems to be to repair E*Trade's reputation. How will you do that?

Our company is moving from its infancy to its adolescence. As with any business, the distinction between the company and the executive gets muddy when you have a charismatic CEO — especially in the early years. But E*Trade has become much more than any one individual. The brand identity has to stand on its own. We are moving into adolescence with a leadership team that will take the company through its next stage of evolution.

Last year, E*Trade launched a $9.99-a-trade campaign targeted at active traders. Why that market?

There's an opportunity with people who view trading as a business, people who are betting on its volatility. But we needed to do more for those customers than offer inexpensive trades. The trades were $9.99, but we also promised that they'd be executed in nine seconds. We had to move fast to capture those customers. It took us just one quarter to come up with that idea, do focus groups, work on the technology, and launch it. You'll see more ideas like that. We have to ask, "What is important to people today?"

What other niche opportunities do you see?

A lot of companies have abandoned the people with $5,000 to $500,000 to invest because those companies' high cost structure means they can't serve those people profitably. But it's the fastest-growing customer segment. It's the sweet spot. It's where people are building wealth. We need to empower them, get them a better deal.

Cotsakos once described his approach to solving problems as "swarming all over a challenge until it gets addressed." What's your approach?

The swarming has evolved. Now I assign responsibility to a problem. We have bench strength. The only way to succeed as a team is to hold all of the members accountable for their expertise. If you don't have accountability, you won't succeed.

What's your leadership philosophy?

I need to build consensus. I have 10 strong, passionate people on the leadership team who all have opinions. We have a long-term strategy, but we see it only as the outline of a puzzle. Every day, we have to react quickly to what is happening in the marketplace. I depend on the team to help me move the pieces of the puzzle every day.

Add New Comment

0 Comments