E-Trade

With revenues of nearly $11 million, TradePlus and E Trade operate as the fastest-growing private company in the United States. Cotsakos steps down; the company changes its name to E Trade Financial Corporation. E Trade Financial Corporation operates as a diversified financial services holding company. Considered a pioneer in the online trading world, E Trade was forced to expand its services when the dot-com bubble burst--an event that left many pure play online companies scrambling to shore up revenues and profits. As such, the firm not only offers online investing and trading to its four million customers but a host of other financial services related to wealth management and banking. E Trade touts its products and services to retail, corporate, and institutional customers. Its clients can access account information online and through E Trade Centers and automated teller machines located throughout the United States. Christos Cotsakos led the company through its stellar growth period in the late 1990s but stepped down in 2002. Mitchell H. Caplan was named his replacement and is leading the charge to transform E Trade into a multi-faceted financial services concern. In 2003, the company changed its name from E Trade Group Inc. to E Trade Financial Corporation. When William Porter formed TradePlus with $15,000 in startup capital in 1982, the online investment revolution was already underway. The first online service, called Tickerscreen, was initiated in May 1982 by Max Ule, as a division of Rosenkrantz, Ehrenkrants, Lyon & Ross, Inc. A bulletin-board system, Tickerscreen enabled customers to place orders after the markets were closed, which would then be transacted by the brokerage house when the markets opened again the next day. Porter, who had held management positions with General Electric and Textron, after earning an MA in physics at Kansas State College and an MBA in management from the Massachusetts Institute of Technology, saw an opportunity to take online investment services further--by automating the full transaction process. Porter's TradePlus "vision" combined two emerging trends. Already trading under his own account, Porter also looked at cutting the cost of trading. By then, a new breed of discount brokers, such as Charles Schwab, had arisen to challenge the full-service brokerage houses. By the mid-1980s, discount brokers amounted to 9 percent--up from 2 percent at the start of the decade and rising--of all stock transaction commissions. Porter, however, believed that he could cut the cost of trading even deeper than the discount brokers, who still charged as high as $100 per transaction. The second trend was the appearance of the first personal computers in the early 1980s. Porter immediately recognized the potential of this new electronic market, foreseeing that personal computers--equipped with their own modems--would soon become commonplace office and home equipment. Online trading continued to build momentum. By the summer of 1987, TradePlus reported that its servers were in use nearly every minute, often by several people at once, 24 hours per day, including a large number of international customers as well as domestic customers. By then, in addition to Quick & Reilly and C.D. Anderson, two banks began offering TradePlus as a brokerage gateway. Bank of America's Home Banking service gave customers access to Charles Schwab & Company using TradePlus's computers, while Chemical Bank's Pronto customers could place orders through TradePlus to Quick & Reilly. Electronic trading seemed on its way to becoming a competitive force in the investment community. Then, in October 1987, the market crashed. Trade volume contracted, and the online trading services, TradePlus included, withered. Trading picked up only slowly as the 1990s began, crippled by a national recession and then by the U.S. entry into the Gulf War. In 1991, however, Porter, still active with TradePlus, again showed his visionary side. With