Where this was said
The ETF Debate & Jack's Second Firing (1999)
At 2:14:14 · chapter starts 2:00:06
The ETF battle is the episode's most revealing management case study. In 1992, Nathan Most, VP of New Products at the American Stock Exchange, brought Bogle the concept of exchange-traded funds — mutual funds that would trade on stock exchanges like individual stocks. Bogle hated the idea. He worried that intraday tradability would encourage speculation, that brokerages would profit from trading commissions, and that short-selling index funds would be catastrophic for financial stability. He sent Most away empty-handed. Most went to State Street, which launched the SPDR (the world's first ETF) in 1993 and built a massive lead that persisted for decades. By 1999, Brennan's management team had concluded that Vanguard had to enter ETFs — they were losing clients and market share in what was clearly going to be the dominant product vehicle. Bogle was immovably opposed. In August 1999, the board enforced its mandatory retirement age of 70 — selectively; at least one older board member was not similarly removed — and announced Bogle would step down at year end. The public outcry was enormous: Bogle had become 'Saint Jack' to millions of Bogleheads. The compromise established the Bogle Financial Markets Research Center, where Bogle spent the next 20 years writing, speaking, and evangelizing — the best marketing money can't buy. Ben Gilbert notes that 99% of Vanguard's total AUM came after Bogle's departure, illustrating the classic founder-vs-scaler dynamic.
