Combine the need to work harder with the Puritan work ethic instilled in him by his father, a Sacramento, California, district attorney, and you have the makings of a relentless, hard-driving entrepreneur. Schwab's father, having grown up during the Depression, constantly drove home the importance of prudent spending and of socking away money for a rainy day. "The Depression had a major impact on my parents and people my age," he says. "Those discussions about the difficulty of the Depression were burned in my mind. I was cautioned about not wasting money and the importance of stretching a dollar as far as it could go. There was a real incentive to work hard and earn money so I wouldn't wind up without any financial resources."
Pressure to contribute to the family funds fired up Schwab's entrepreneurial instincts. When he was 11, he made money selling the eggs of his father's chickens, as well as the droppings for use as fertilizer. When it was time for the hens to "retire," he negotiated a good price for them as fryers. As a teenager, he sold ice cream in the summer and sacked walnuts in the fall.
"I learned a lot when I was kid," says Schwab. "I didn't know what my potential was, but instinctively I knew there were lots of ways to make money. No matter how I earned it, my goal was always to make and save money. The next step in my life was learning how to invest it."
By his late teens, Schwab already knew he wanted to make his mark in the investment world. He insists his learning disability had something to do with his fascination with numbers. However, plunking down $100 of his hard-earned savings to buy 100 shares of a low-priced, speculative stock and then seeing a hefty return on his money might have played a part in his decision, too.
Entering Stanford University, Schwab set his sights on becoming a securities analyst. He managed to earn a bachelor's degree in economics and a master's degree in business administration, though not without difficulty. "My reading speed was about half that of the average Stanford student," he says. Once again, he found a second resource: Thanks to Cliff's Notes, Schwab passed with flying colors.
After graduation, in 1961, Schwab and two friends from Stanford cranked out a monthly newsletter called "Investment Indicators," selling one-year subscriptions for $84. Two years later, the under-funded newsletter almost went belly-up. "The newsletter needed a marketing push," says Schwab, "so I developed a direct-mail marketing program that boosted circulation."