a large brown paper bag. I was afraid to carry the new leather briefcase my parents had given me for college graduation. And I made sure I was in the office before my mentor and the partners, and I left after they did.
When I started at Goldman, I was handed a two-hundred-page, green-covered directory with every employee’s and partner’s home address and work and home phone numbers (cell phones were not widespread, and e-mail was years away from being used at Goldman) as well as summer or weekend contact information. Obviously, having readily available contact information increased efficiency, but the other message was that you were expected to be reachable at all times—no matter who you were. The directory seemed like a club book, and it reinforced the feeling of being in a family, adding to the flatness of the organization.
One implication of the value of keeping a low profile was that there were to be no superstars.35 The implicit proscription of displays of ego extended beyond office walls. Unlike other investment banks, which allowed their bankers to be quoted by the media, Goldman preferred its M&A bankers to be “anonymous executers of transactions.” The unspoken message was clear to all: “No one is more important than the firm.”36
Goldman also invested serious time and effort in training. Most analysts and associates joining Goldman from school are trained over weeks to learn the firm’s history, expectations, processes and procedures, and organizational structure. The primary intent is the socialization of new members. During my training, various Goldman executives came and spoke about the Goldman history and their departments. Junior people gave talks about their jobs and explained how to be successful at Goldman. There were group dinners and cocktail parties. We learned specifics that would help us in our day-to-day jobs, such as Excel spreadsheet-modeling skills, but it was also a way for new people to gain exposure to various people and departments that would help trainees think about problems or provide information to help clients. The people we were in training with were our “class,” and we developed a strong identity as members of our class. You would also be evaluated by comparison to those in your class. Even with the implicit competition, we felt a great camaraderie. My twenty-year class reunion party in 2012, sponsored by Goldman, drew people from all over the world. Retired senior partners also attended.
After the initial sessions, Goldman provided constant formal training: tools to do the job better, updates on product innovations or trends, information about how to be a better interviewer or mentor, training on how to better provide clients with full solutions and not only a product solution, and updates on compliance and legal issues as well as best practices. Not a month went by without some sort of formal training. We also had outside guest speakers to talk about specific topics. As we progressed in our careers, we received specialized training for any promotions—usually followed by a cocktail party in which partners congratulated us, perhaps followed by handwritten notes of congratulations from various partners. In addition to training, we attended many department functions, including holiday parties, strategy sessions, outdoor bonding exercises, and picnics—even group trips to the beach or skiing (often, spouses were invited).
Goldman also strongly encouraged participation in community and public service. Most people looked up to and admired Goldman employees who went on to public service, and those who were hired from government. You were expected to participate in Goldman’s Community Teamworks program, an initiative that allows employees to take a day out of the office and spend it volunteering with local nonprofit organizations. The firm also matched the charitable contributions of employees, and partners generously gave to their alma maters and other nonprofit organizations. In some interviews, partners explained that citizenship had multiple purposes: to do good, to make people feel good about where they worked, and, admittedly, to extend Goldman’s network.
Long-Term Greedy
Goldman’s foremost principle—of “clients’ interests first”—entails doing what is best for the client, regardless of the size of the fee (whether it will be received now or later) and never suggesting deals to clients specifically to generate fees. Putting clients first requires a commitment to the honesty and diplomatic candor that enable clients to trust Goldman to honor confidentiality of information, provide reliable advice, and not pull any punches. This honesty was a hallmark of Goldman’s earlier days, and the firm’s reputation for ethical behavior distinguished it among Wall Street firms.37
When I was a financial analyst, we were asked to review the strategic alternatives for a division of an industrial company. Internally, we informally gathered about a dozen M&A bankers and debated the best courses of action for the client. During the discussion, a young associate revealed something the CFO had said: that the client CEO thought the division in question should be sold, and pointed to the data and analysis that would substantiate this point of view. Goldman would collect a fee if the division sold.
The vice president who was assigned to advise the company patiently listened and then snapped, “The CEO hired us for our unbiased advice, and not to justify what he thinks.”
We incorporated the group’s suggestions and then spent days going from one partner’s office to another, discussing the merits of various courses of action. I was impressed that all these partners would take the time to listen to discussions about a situation in which they were not involved—to help us get to the best advice and teach us how to think about the issues.
In the meeting with the client CEO, the Goldman vice president presented the various alternatives. He concluded by recommending that the CEO not sell the division at that time, because there was a good probability it would be worth more in the future. Then there was an awkward silence. The client CEO complimented the team for the quality of its work and then said Goldman was the only bank that did not recommend a sale. Unexpectedly, he called a few days later. He decided to wait and continue executing the business plan.
A few years later, that same division had doubled its profits, and Goldman was hired to sell the entire company.
The Goldman approach in this case was consistent with Steve Friedman’s description of Jimmy Weinberg: “He just had a great demeanor, and people would develop confidence in him because he wasn’t pandering to them, he would tell them what he thought.”38 I interviewed several Goldman clients from the 1980s, and there was a general consensus that typically Goldman did emphasize unbiased advice.
Devotion to Client Service
The values of integrity and honesty are codified in the last of Goldman’s business principles as being “at the heart” of the business. In the eyes of the partners during the Weinberg and Whitehead days, the firm’s reputation for ethical behavior was a competitive asset and crucial to the firm’s success. It was the right thing to do, and it made good long-term business sense. They recognized the value of their reputational capital.39
Integrity was the favorite word of longtime Goldman head Sidney Weinberg, and he defined it as a combination of being honest and putting the interests of clients first. As one partner observed, “Mistakes were quite forgivable, but dishonesty was unpardonable.”40 John Whitehead explains: “Our industry is one in which the services of the leading investment bankers are all pretty much the same. So, I’ve always believed that one’s reputation is extremely important and that decisions are often made according to the general reputation a firm has, not so much by the fact that they will perform a service a little cheaper and a little faster. Reputation is what matters.”41
When describing Jimmy Weinberg, Tom Murphy, former chairman and CEO of Capital Cities/ABC, said, “His clients were his friends … His whole reputation in the business world was as a person of honesty and integrity.”42
Whitehead expressed the strategy behind the philosophy this way: “We thought that if our clients did well, we would do well.”43 Together with the emphasis on maintaining a “steadfast”
