“I would like to invite you to join the partnership,” is for most, the reward for a decade of grinding hard work at Goldman Sachs (GS).
What does it take to get into ‘the zone’ (the inside term for those in contention of a partnership)? What gives Sachs its global presence, golden reputation, and golden list of clients? How did Sachs transform into a titanic professional organization from a family business? What are the secrets to Sachs still shining?
‘Goldman Sachs – The Culture of Success’ by Lisa Endlich, former VP and trader in the foreign exchange department of GS, is the mother lode that offers a rare bird’s-eye view of 130 plus years’ history of Goldman Sachs.
Divided into eight chapters, the book blitzes straight into 1986, when the firm faced its contemplation of going public just as it reached the top tier of investment banks. The subsequent seven chapters are in chronology, starting from 1869 in Chapter II (when it was a family firm) to 1998 in the penultimate chapter which covers its IPO. The final chapter is a fast-forward into the 21st Century.
The writer, in her captivating style, shares the ‘trimurti’ of Sachs still shining. That GS maintains exceedingly close client relations which enables the firm to respond quickly to changing client needs and stay abreast of the deluge of innovations generated in the financial industry is the first of the three. These client relations have been nurtured by generations of bankers and have been handed down almost like family heirlooms. Devotion to the firm’s clients, new and old, is considered inviolate and forms the bedrock on which the firm’s investment banking division sits. Secondly, “Greedy, but long-term greedy” is the firm’s watchword. According to Steve Friedman (ex-chairman, GS), if one is willing to turn down money and keep their ego under control, it can save a lot of heartache in this business. Ultimately, the firm’s high level of performance has been due to the singular dedication of its employees, most of whom believe that one day they might become partners. Friedman has summed up the value of ownership by saying, “No one ever washes a rental car.” The dream of partnership has served as an unmatched source of inspiration and a great lure for attracting the best people – those with brains, humour, motivation, a sort of restrained audacity, confidence, and maturity.
Simple as it sounds, the firm’s success can be traced to its iron grip on the above ‘trimurti’.
The nail that sticks out is usually the first to get hammered down. A Chinese idiom emphasizes hiding your capacities and biding your time. One of the most visible manifestations of Sachs shining is actually Sachs not shining. Indeed, Sachs has an emphasis on understatement. From partners carrying battered briefcases and riding the subways to Sachs’ main office, a few blocks south of Wall Street – these are monuments of an understatement. Even the austere logo of the firm – a box around the words ‘Goldman Sachs’- seems to celebrate the golden rule of not shining when shining bright.
Lisa Endlich’s book makes it clear that the emphasis at Goldman Sachs is on creating wealth rather than displaying it; that money is for bank accounts, not for flashing about. The book also gives a glimpse of the ‘We for Victory’ culture at Sachs. The partners always say, ‘We’, they never say ‘I’. It isn’t about individual stars shining. One cannot count the many moons that shine on GS’ roof or a thousand splendid suns that hide behind its walls.
What does the book lack? Endlich spent her career at GS in one of the firm’s trading businesses. While she has endeavoured to write about the banking side of the business, that her knowledge of this is less substantial is evident. Also, the book does not attempt to place a value on the role investment banking plays in our society. There has been a debate since the 2008 recession about the part speculators and bankers have played in the world economy, particularly concerning the many emerging economies that have recently faltered. While this is an important issue, it is outside the scope of this book. The writer can be arguably blamed for minutiae and repetition in some parts of the book. As a result, the book could have been many pages shorter.
Most importantly, certain parts of the book are apparently, though understandably, biased. They are equivalent to mere statements lacking evidence. The writer has to be trusted at face value.
Examining both the history and mystique of this great financial institution, ‘Goldman Sachs – The Culture of Success’ is an essential read for anyone interested in finance.
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