The alarm went off at 5 a.m. as usual on Monday, July 19, 2004, even though David Pottruck had stayed up until 2 a.m. preparing for that morning's board of directors' meeting. Also as usual, Pottruck, the CEO of Charles Schwab, hit the snooze button more than once, waking his wife, Emily. Annoyed and overtired, she let him have it. "If you do that to me again, we're sleeping in separate rooms," she yelled.
It was a lousy start to what would be a lousy day. Pottruck trudged off to work, preoccupied with the board meeting, which was sure to be grueling. Schwab's troubles had only deepened in the 14 months since Pottruck, now 57, had become the sole CEO after five years as co-CEO with Charles Schwab, the company's founder. The stock price remained stuck far below its split-adjusted 1999 high of $50.17. The market and dotcom crashes had put an abrupt halt to much of the active trading that had made Schwab a dynamic profit center. The vaunted corporate culture, which Pottruck had taken great pride in helping to build in his two decades at the company, was dissolving in a sea of layoffs. And his aggressive acquisition strategy wasn't bearing fruit. The board knew all of this, of course, but Pottruck wasn't looking forward to rehashing it.
He wouldn't have to. The board suddenly called an executive session, something usually done only at the end of a meeting. "I actually didn't think that was a big deal," says Pottruck, a wan smile playing across his broad face. "It shows how unaware I was." About 30 minutes later, a strained-looking Charles Schwab came into Pottruck's spacious office on the 30th floor of the company's headquarters and asked him to join him in Schwab's office.
The words that followed ended a 20-year corporate career in less than 20 seconds. "I'm sorry," Pottruck remembers Schwab saying, "but the board has met and decided that they have lost confidence in the direction of the company and in your leadership. We've decided to make a change and have me come back to the office." Effective immediately, Pottruck was to step down, and Schwab would become CEO again.
Immobilized, Pottruck felt the words wash over him. I've been fired, he thought. He was stunned, not because it had happened — he was well aware that the poor performance of the company put his job at risk — but because of how it had happened. As Schwab's protege and then partner, he'd been sure there would be a warning, a probationary period, a hint of some kind. Pottruck pulled himself together, then asked to speak to the board, intent on handling the news with some grace. "I told them I was sorry things had worked out the way they had and that I would leave with enormous gratitude."
In a heartbeat, David Pottruck's life — and identity — was forever changed. He was no longer the CEO of a financial-services giant. He was no longer the gregarious public face of a company that had revolutionized the way stocks are bought and sold. He would no longer sit atop the company he had helped build as president, co-CEO, and finally chief executive. Instead, the self-made son of a factory worker at Grumman Aircraft suddenly had a new, much less appealing, identity; he was just the latest CEO to hit the skids, just another well-paid dotcom acolyte who couldn't hack it when things got tough.
It's easy, pleasurable even, to regard the toppling from power of a chief executive as worthy of little more than scorn. Why have empathy for a man who was paid obscenely well to run a company that ultimately faltered, we say, chops dripping with schadenfreude? What could any of us possibly have in common with a man whose net worth is around half a billion dollars, who lived in a rarefied world of meetings with senators and trips by private jet?
The answer, it turns out, is plenty. Pottruck's yearlong journey through the stages of corporate grief has relevance and resonance for every person, no matter what his or her station. In today's unforgiving corporate environment, dramatic professional takedowns like the one Pottruck suffered have become commonplace. They may not be writ quite as large as they are for a CEO, whose defeat is splashed across every paper in lurid detail. But the feelings and emotions are just as raw, the insecurities just as naked, the challenge of moving on just as great. The story of how David Pottruck dealt with the death of one career and the birth of a new one holds important lessons for anyone facing a sudden bump in the corporate road.
Stage I: Shock and Disbelief
The initial reaction to a loss is a stunned, numb feeling and refusal by the individual to acknowledge the reality of the loss. (From Dr. George Engel, as interpreted in Psychiatric Mental Health Nursing: Concepts of Care, 4th Edition)
Pottruck slowly headed back to his office, his head spinning, unsure of what to say or how to act. He felt embarrassed, ashamed, humiliated. "I felt badly that I had let people down," he says. "I was very concerned about what would happen to the company. I worried about my reputation." It wouldn't be a stretch to imagine Pottruck, a bulky man who fills out every inch of a suit and whose broad face is best described as a mug, smashing every elegant object in his well-appointed office. He'd never been asked to leave any job — not at Shearson/American Express, where he helped run consumer marketing and advertising, or at Citibank, or anywhere else for that matter. Instead, Pottruck felt eerily calm. He wouldn't flee the office. He'd always been proud of his reputation for dealing with problems head on. It was time to deal with his own downfall the same way.
He picked up the phone and began to make calls, aware that his firing would ripple far beyond his desk. Pottruck's assistant of 15 years, Colleen Bagan-McGill, was driving through San Francisco with her husband and kids at the start of a long-awaited vacation when her cell phone rang. "How are you doing, honey?" she heard Pottruck say, a forced chipper note in his voice. "I need to tell you something. I got fired this morning."
"I really thought he was kidding," says Bagan-McGill. "He told me three times. I said 'Oh my God' three times. It was very emotional." Bagan-McGill turned the car around and went to the office in her flip-flops and sundress. She never took that vacation.
Pottruck reached his wife, Emily, and told her the news in a monotone. "It sounds ridiculous," she remembers, but the first thing she said was, "My God, I would never have yelled at you this morning."
Still acting with the authority of a boss — it was what he knew best, after all — Pottruck held a meeting for his administrative staff to explain what had happened. Although the company suggested putting out a press release explaining that Pottruck was stepping down for personal reasons, he rejected the idea. He knew everyone knew he'd been canned. Why sugarcoat it with some crap about "spending more time with his family"?
At about 8:30 that night, Pottruck headed home. Part of him felt, somehow, relieved. As much as he loved being CEO, as much as he loved being responsible and making decisions and BlackBerrying furiously from bed or beach, it had been a terribly stressful time. Although he'd helped build the company from client assets of $25 billion to more than $1 trillion since he became president in 1992, he'd more recently had to lay off more than 8,000 workers, many of whom he'd recruited. He'd clashed with Charles Schwab over the right direction for the company for years. Maybe this really was the best thing.
"I had a bottle of wine opened up," Emily says. "He said 'Really, I'm fine. Things have been hard. I really wanted to turn things around. Maybe someone can do a better job.' " Emily figured he was in denial. "This is going to be a process, David," she told him. "You're in shock."
Everyone told Pottruck to take some time off. But what he knew best was to go to work. So when the press release went out at 5 a.m. the next morning, July 20, he and Bagan-McGill were at their desks, ready to face the coming storm of press calls. Pottruck patiently explained to reporter after reporter that yes, he had been fired, and that yes, as the chief executive he should be held accountable. The release read, in part, "I accept the Board's decision that it's time for me to step aside. It's been a great journey."
Stage II: Developing Awareness
Awareness of the loss creates feelings of emptiness, frustration, anguish, and despair.
For most people who have been abruptly fired, the first reaction is terror that you will no longer be able to provide for your family. This was hardly the case for Pottruck, who accumulated vast wealth as part of the team that bought Schwab back from Bank of America in 1987, and who took home a $10 million-plus severance package, not including stock sales and option exercises. So while he felt some bitterness at how the last chapter was written, he also felt grateful. "We're not crying in our china," says Emily. "Dave has been financially successful in ways he never dreamed possible." He signed his good-bye letter to the staff "David S. Pottruck: private investor, Schwab client, U.S. Trust client."
But although his checkbook was healthy, his ego was ailing. For someone who had long aspired to run a company, who had enjoyed being at the top of the heap, and who loved to lecture on leadership, this public beheading was a great humiliation. On July 21, the day after the news became public, Pottruck had a board meeting at Intel, where he was a director. He had been famous for asking people to do the impossible by saying, "How hard can it be?" And that's in part how he convinced himself to attend the meeting. "Absolutely, when you're in a room full of senior businesspeople," he says, "it is much more comfortable to know you have as many stripes on your sleeve as they do."
What would they say, he wondered? Would they acknowledge what had happened? Ignore it? Ask him to step down from this position, too? Would he become a corporate untouchable? "I felt terrible," he remembers. "I was very concerned about my reputation. How would this look and what would people think? It was kind of the ultimate rejection. I was having a very hard time staying focused."
"Do you think the fact that you're no longer CEO of Schwab means you're not a better man?' Intel's Andy Grove asked. 'You're as good a man as you were last week. Hold your head high.'
Just before the meeting got started, Andy Grove, the gruff chairman of Intel's board at the time, pulled Pottruck aside. " 'When you got promoted to CEO,' " Pottruck remembers him saying, " 'did that make you a better man?' I said no. He said, 'Well then, do you think the fact that you're no longer CEO of Schwab means you're not a better man?' I said, 'No, I don't think so.' He said, 'You're as good a man as you were last week. Hold your head high.' It helped me a lot."
Pottruck came to an important decision. Rather than succumb to the urge to blame everyone else, he'd try to act like a leader, even in defeat. He'd take responsibility for the things he did wrong and acquit himself better than he had during other dark periods of his life. He thought about how he'd handled his two divorces, which he calls failures that made this one pale in comparison. And he remembered one searing memory from his college years.
When he was a junior and captain of the wrestling team at the University of Pennsylvania, Pottruck unexpectedly lost in the 190-pound class in the Eastern Championship Finals. He was devastated, but he still qualified for the National Championships in Utah. "Instead of saying, Okay, next time I'll beat that guy, and rededicating myself, I thought, Oh, what a loser I am," he says, still pained at the memory. Pottruck showed up physically for his match but not mentally: He brought his skis along, figuring he'd have time to hit the slopes after he lost — and lose he did. This time around, though, losing wouldn't be a defeat; it would be a temporary setback.
Stage III: Restitution
In this stage, the various rituals associated with loss within a culture are performed.
The death of a career is difficult, sometimes made more so by the lack of true closure. There is no funeral, no wearing of black clothes, no eulogy. Except in David Pottruck's case. From the moment the news crossed the wire, the letters and emails began to pour in by the dozens. "This is a gift," Emily told him. "Because usually the family only gets to see this stuff because you're in the coffin."
A few messages were vitriolic, but the vast majority were heartfelt outpourings of thanks for his leadership and friendship. "Thank you for leading by example," wrote one manager. "You impressed me beyond words when you stood up in front of the entire retail management team and took responsibility for some fee change that no one liked. This was a defining moment in my career and instilled an intense sense of loyalty in me to you and to Schwab."
In another, an acquaintance shared his own story of being fired. "Take your time," he wrote. "Close the door firmly behind you and don't look back. You had a good run and better than most. Life is good for David Pottruck and about to get better."
The messages helped snap Pottruck out of his funk. Purging helped, too: Pottruck's dad called to tell him that he was throwing out most of his Schwab clothing. Emily did the same, collecting the golf shirts and other detritus of a corporate life and donating them to charity.
Still, there were plenty of awkward moments as the reality that Pottruck no longer ran a multibillion-dollar company sunk in. On a trip to New York, Pottruck flew commercial for the first time since before September 11. As he walked through the metal detector, it went bonkers. Nail file? Scissors? Lighter? Check. He wasn't a terrorist — just a clueless former CEO. Then there was the suddenly complex problem of getting to a meeting when there was no longer a trusty Town Car at his beck and call. Suddenly, Bagan-McGill, who had quit Schwab when Pottruck was fired, had to pick him up for meetings in her minivan. Cookie crumbs and kiddie toys replaced leather seats and The Wall Street Journal.
Many executives, particularly those of Pottruck's age and tax bracket, would simply have retired, using that competitive fire to improve their handicaps. But for Pottruck, the best coping strategy was simply to charge ahead, to believe that what came next was just as important as what had come before. By September, he had settled into luxurious new offices (paid for by Schwab as part of his severance agreement) that overlooked San Francisco's Embarcadero, just 10 blocks from Schwab's offices. "There is going to be mourning," says Howard Morgan, a leadership consultant who has worked with Pottruck and other fired executives, "but successful people let go of the past as quickly as they can. You can't mourn at the same time you have a new beginning because it drags the new beginning down."
He named his company the Pottruck Group, (now called Red Eagle Ventures), although he wasn't quite sure what it would do. "We had an agreement that we would have a nice fall and have long lunches and see friends and regroup," says Bagan-McGill. Instead, Pottruck threw himself into meetings with private-equity folks and headhunters in search of the next new thing.
But what was this thing? At first, it seemed to be the same old thing. Pottruck thought he needed to be CEO again, maybe even in financial services. "For the first six months, I was in a sort of post-Schwab stress syndrome," he says. "The first tendency is to re-create your old life, because that's what you know." He missed, in his words, the "stress and the adrenaline that comes when I look myself in the mirror and say, 'I hope I'm good enough in my heart of hearts to do what every day requires.' "
But as the weeks went by, Pottruck began to confront the reality that there were many things about his job that he hadn't liked at all. He had been the guy who skied past the mountains of Vail while talking through the cell phone attached to his helmet. He had little time for his children or his spouse. And despite his high rank at Schwab, he was also something of a micromanager. "The adrenaline rush you have every day, the excitement and joy that is part of that job, I know what that feels like," he says. "That's the comfortable place. But it's sort of like when I look back on my days as a college football player. When I really search my soul, I remember puking in the summer two-a-day practices we had, and my various surgeries, and it all wasn't so great."
He relived the mind-numbing administrative meetings, the power struggles, the strategic decisions that went awry, and of course, the layoffs. "It was horrible," he says. As he had more time to reflect, he realized that he'd been happiest at Schwab when the company was smaller and more able to take risks. Perhaps that was the right fit now.
Pottruck began to look at opportunities in smaller businesses in everything from for-profit education to sports to transportation. He wondered if there might be a role for him if his friend John McCain decided to run for president. He realized that he just might be able to enjoy himself as an active investor or the chairman of a company without being CEO. It was a big step.
Stage IV: Resolution of the Loss
The concept of the loss is idealized. Preoccupation with the loss gradually decreases over a year or more.
In November of 2004, Pottruck accepted an offer to guest lecture at his alma mater, the University of Pennsylvania's Wharton School. Pottruck was on the university's board of trustees and had donated a spanking new gym in 1999. He'd even given the Wharton commencement speech in 2002. Penn had always been his safe haven.
"My leaving Schwab was on less than elegant terms," Pottruck says. "What is really humbling is to have time to reflect on what you've done and what you could have done better."
Was it still? As he strode into the room, he projected confidence, his 6-foot-1, 234-pound frame encased in a white shirt and pink tie. But his face projected something different: uncertainty. Vulnerability oozed through the armor of his monogrammed shirt. And he made the decision not to hide it. "It's new to me to be an ex-CEO," he said, a bit haltingly, his Long Island accent asserting itself. "My leaving Schwab was on less than elegant terms. It was a pretty humbling experience for me. It wasn't humbling because I was replaced. . . . What is really humbling is to have time to reflect on what you've done and what you could have done better." Pottruck's frankness seemed to surprise and delight the students, who gave him a standing ovation.
But as in any grieving process, there have also been setbacks. Pottruck, always a good sleeper, had recurring nightmares. There were snubs from people he'd mentored and speaking engagements that went away. And although he had pledged to spend more time with his children, he still slipped easily into old habits. A few months after leaving Schwab, Pottruck canceled a trip to Los Angeles to visit his son because a meeting came up.
His son, crushed, called him on it. "My whole life, I've been number two to your career," he said. "I really thought now your business stuff would take a back seat." Pottruck felt like he'd been punched. "I had so let him down," he says. "It was a major wake-up call: I'm not a CEO anymore. And that means I no longer have the right to make those excuses."
In May of this year, some of the feelings Pottruck felt he had so successfully conquered came tumbling out when Fortune magazine ran a story titled "Charles Schwab's Big Challenge." The article quoted Chuck Schwab, who seemed to place the blame for the company's troubles squarely on Pottruck's shoulders, even though as co-CEO and then chairman for so long, Schwab had been involved in virtually all of the company's key decisions. Schwab wouldn't comment.
"Was I in a funk for about a week about that story? Absolutely," Pottruck says. "I was angry and embarrassed and saddened. It sucked me back into what happened when I had been working so hard to move on." Eventually, Pottruck just rationalized the whole thing. If he wanted to move on, there was no other choice. "The best thing for the company after the CEO goes is to try to blame everything on the old guy," he says.
By this time, though, Pottruck had managed to put his own decisions under the microscope. He regretted never doing any contingency planning for Schwab that would have served it better as the bubble burst. He felt the sheer number of projects he launched hurt the company by keeping it from focusing its energies on the best ones. He should have developed a better relationship with his board. And he realized that his heavy focus on the details made it too hard for his subordinates to grow and slowed decision making at the top of the organization.
Stage V: Recovery
Obsession with the loss has ended, and the individual is able to go on with his or her life.
They say the grieving process takes a year. So perhaps it's no coincidence that on August 1, 2005, Pottruck was to venture back into public life — not as CEO, but rather chairman of a new $200 million airline startup called Eos Airlines, which will provide first-class-only service between New York and London at business-class prices. While Pottruck is no airline expert, he knows plenty about taking on incumbents from his Schwab days.
Pottruck's role is to be a coach and mentor to CEO and founder David Spurlock. He is thrilled, but also a bit nervous, perhaps because of his own experience with a very involved chairman and his own natural impulse to run the show. Can Pottruck learn to exert influence without any real control? "It's very hard," he says. "Very hard. I'm amazed that I can do it at all." Spurlock says he welcomes the help. "I pick up my phone whenever my instincts tell me to do so," he says. "It's especially fruitful for me to hear a different perspective. I've rarely met a man as open as Dave."
Pottruck will also take on the chairman role at another company equally far afield from financial services, one that does all the furniture buying for large hotel chains. Pottruck hopes to help the company create a channel for consumers to buy the furniture directly.
It's a less powerful but more diverse new life, and Pottruck seems thrilled to realize how much he enjoys it. "He's absolutely back. Even better. Schwab was our whole focus," says Bagan-McGill. "Now he sees a world out there with all kinds of business opportunities. And we both agree it's going to be fun."
But while Pottruck has moved on in life, it's clear that the idea of the corner office has not quite gone to its final resting place. "I love 90% of my new life," he says, a tiny bit wistfully. "But I miss the business challenge and the big leadership. Every morning when my feet hit the floor, I had a compelling purpose. Other people were counting on me to fulfill an extraordinarily challenging leadership role that demanded nothing less than the best of me every day." Any takers?
Jennifer Reingold (firstname.lastname@example.org) is a Fast Company senior writer.
A version of this article appeared in the September 2005 issue of Fast Company magazine.