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 MightyAtom Korea (South). March 15 2012 15:19. Posts 1570 | Profile Blog # |
http://www.nytimes.com/2012/03/14/opinion/why-i-am-leaving-goldman-sachs.html?pagewanted=1&_r=1
The following is a pretty heavy piece, and if you know anything about fiance, Goldman Sachs is pretty much the best of the best of the investment banks. It is an interesting read. ***This is not me, it is an opinion piece in the NY Times***
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TODAY is my last day at Goldman Sachs. After almost 12 years at the firm — first as a summer intern while at Stanford, then in New York for 10 years, and now in London — I believe I have worked here long enough to understand the trajectory of its culture, its people and its identity. And I can honestly say that the environment now is as toxic and destructive as I have ever seen it.
To put the problem in the simplest terms, the interests of the client continue to be sidelined in the way the firm operates and thinks about making money. Goldman Sachs is one of the world’s largest and most important investment banks and it is too integral to global finance to continue to act this way. The firm has veered so far from the place I joined right out of college that I can no longer in good conscience say that I identify with what it stands for.
It might sound surprising to a skeptical public, but culture was always a vital part of Goldman Sachs’s success. It revolved around teamwork, integrity, a spirit of humility, and always doing right by our clients. The culture was the secret sauce that made this place great and allowed us to earn our clients’ trust for 143 years. It wasn’t just about making money; this alone will not sustain a firm for so long. It had something to do with pride and belief in the organization. I am sad to say that I look around today and see virtually no trace of the culture that made me love working for this firm for many years. I no longer have the pride, or the belief.
But this was not always the case. For more than a decade I recruited and mentored candidates through our grueling interview process. I was selected as one of 10 people (out of a firm of more than 30,000) to appear on our recruiting video, which is played on every college campus we visit around the world. In 2006 I managed the summer intern program in sales and trading in New York for the 80 college students who made the cut, out of the thousands who applied.
I knew it was time to leave when I realized I could no longer look students in the eye and tell them what a great place this was to work.
When the history books are written about Goldman Sachs, they may reflect that the current chief executive officer, Lloyd C. Blankfein, and the president, Gary D. Cohn, lost hold of the firm’s culture on their watch. I truly believe that this decline in the firm’s moral fiber represents the single most serious threat to its long-run survival.
Over the course of my career I have had the privilege of advising two of the largest hedge funds on the planet, five of the largest asset managers in the United States, and three of the most prominent sovereign wealth funds in the Middle East and Asia. My clients have a total asset base of more than a trillion dollars. I have always taken a lot of pride in advising my clients to do what I believe is right for them, even if it means less money for the firm. This view is becoming increasingly unpopular at Goldman Sachs. Another sign that it was time to leave.
How did we get here? The firm changed the way it thought about leadership. Leadership used to be about ideas, setting an example and doing the right thing. Today, if you make enough money for the firm (and are not currently an ax murderer) you will be promoted into a position of influence.
What are three quick ways to become a leader? a) Execute on the firm’s “axes,” which is Goldman-speak for persuading your clients to invest in the stocks or other products that we are trying to get rid of because they are not seen as having a lot of potential profit. b) “Hunt Elephants.” In English: get your clients — some of whom are sophisticated, and some of whom aren’t — to trade whatever will bring the biggest profit to Goldman. Call me old-fashioned, but I don’t like selling my clients a product that is wrong for them. c) Find yourself sitting in a seat where your job is to trade any illiquid, opaque product with a three-letter acronym.
Today, many of these leaders display a Goldman Sachs culture quotient of exactly zero percent. I attend derivatives sales meetings where not one single minute is spent asking questions about how we can help clients. It’s purely about how we can make the most possible money off of them. If you were an alien from Mars and sat in on one of these meetings, you would believe that a client’s success or progress was not part of the thought process at all.
It makes me ill how callously people talk about ripping their clients off. Over the last 12 months I have seen five different managing directors refer to their own clients as “muppets,” sometimes over internal e-mail. Even after the S.E.C., Fabulous Fab, Abacus, God’s work, Carl Levin, Vampire Squids? No humility? I mean, come on. Integrity? It is eroding. I don’t know of any illegal behavior, but will people push the envelope and pitch lucrative and complicated products to clients even if they are not the simplest investments or the ones most directly aligned with the client’s goals? Absolutely. Every day, in fact.
It astounds me how little senior management gets a basic truth: If clients don’t trust you they will eventually stop doing business with you. It doesn’t matter how smart you are.
These days, the most common question I get from junior analysts about derivatives is, “How much money did we make off the client?” It bothers me every time I hear it, because it is a clear reflection of what they are observing from their leaders about the way they should behave. Now project 10 years into the future: You don’t have to be a rocket scientist to figure out that the junior analyst sitting quietly in the corner of the room hearing about “muppets,” “ripping eyeballs out” and “getting paid” doesn’t exactly turn into a model citizen.
When I was a first-year analyst I didn’t know where the bathroom was, or how to tie my shoelaces. I was taught to be concerned with learning the ropes, finding out what a derivative was, understanding finance, getting to know our clients and what motivated them, learning how they defined success and what we could do to help them get there.
My proudest moments in life — getting a full scholarship to go from South Africa to Stanford University, being selected as a Rhodes Scholar national finalist, winning a bronze medal for table tennis at the Maccabiah Games in Israel, known as the Jewish Olympics — have all come through hard work, with no shortcuts. Goldman Sachs today has become too much about shortcuts and not enough about achievement. It just doesn’t feel right to me anymore.
I hope this can be a wake-up call to the board of directors. Make the client the focal point of your business again. Without clients you will not make money. In fact, you will not exist. Weed out the morally bankrupt people, no matter how much money they make for the firm. And get the culture right again, so people want to work here for the right reasons. People who care only about making money will not sustain this firm — or the trust of its clients — for very much longer.
Greg Smith is resigning today as a Goldman Sachs executive director and head of the firm’s United States equity derivatives business in Europe, the Middle East and Africa.Last edit: 2012-03-16 05:19:04 |
| | -I am the universe- Morihei Ueshiba |
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| Flamingo777 United States. March 15 2012 15:33. Posts 1140 | Profile # |
| Good to see some white-collar activism and whistle blowing. Corporate crime and dishonesty plagues our (US, and I'd expect many other countries as well) country far more heavily than one would expect. Look up the Ford Pinto, and Flint Michigan, Enron's illegal creation of demand through forced power outages in Western power grids (Very similar to America's current definition of terrorism imo). Last edit: 2012-03-15 15:34:25 |
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| Alventenie United States. March 15 2012 15:33. Posts 1164 | Profile # |
Not surprisingly shocking, but none the less I hope the public sees more of this.
I see it a lot in even retail business where higher ups only care about pushing numbers rather than whats right for the customer. All i hear about 95%+ of the time is you need to sell anything you can get them to buy rather than selling them what they need. They try to make that sound like, well they need all of this stuff even if they don't. I hope a lot of people take the time to understand this as I think companies that grow and do well are ones that have those values of serving their customers properly, and not just selling them whatever makes the most money for the company. |
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| JayDee_ March 15 2012 15:33. Posts 548 | Profile # |
| No specifics, just the generalized ramblings of a disgruntled employee. The unnecessary paragraph about his scholorship/accomplishments was funny. Last edit: 2012-03-15 15:35:12 |
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| Gardel Mexico. March 15 2012 15:36. Posts 215 | Profile # |
I don´t think this was rambling at all, this is very serious, and sadly this is becoming a normal thing in a lot of businesses along the world. Life has become too much about making money without caring if you have to affect third persons in the process as long as you benefit.
We need to start making a change right now, tomorrow will be too late. |
| | "And in the end, it's not the years in your life that count. It's the life in your years." Abraham Lincoln. |
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| slytown United States. March 15 2012 15:37. Posts 1189 | Profile Blog # |
On March 15 2012 15:33 JayDee_ wrote:
No specifics, just the generalized ramblings of a disgruntled employee. The unnecessary paragraph about his scholorship/accomplishments was funny.
Any window into the complex and corrupt world of large-scale private financing is not arbitrary, espeically after the economic collapse. |
| | I'm a NukeKnight. Are you? http://www.youtube.com/user/NukeTheStars; The best Flash meme ever: http://imgur.com/zquoK |
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| darkscream Canada. March 15 2012 15:42. Posts 2114 | Profile Blog # |
https://twitter.com/#!/gselevator
Relevant. Basically someone inside goldman sachs eavesdrops and posts little snippets of conversations he's heard in the office. If you want a window into exactly how "morally bankrupt" these people are even when shooting the shit with their co-workers. |
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| endy China. March 15 2012 15:42. Posts 6114 | Profile Blog # |
When you watch films like "Inside Job", you realize that banks are ripping off everyone, and with the complicity of the government.
I hope this guy will show the way, integrity has totally disappeared unfortunately. |
| | ★ SK Telecom T1 ★ MSL Forever ★ SonicBJ is my hero ★ Kim Taek Yong ♥ I took a photo with Bisu before it was mainstream | |
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| Ckalvin Australia. March 15 2012 15:44. Posts 149 | Profile # |
The wealth of knowledge and diversity of people using TeamLiquid never ceases to amaze me. It takes a lot to realise that the place you've been working for over a decade and have invested so much of your life and career into has become morally bankrupt.
I'll be pm-ing you for help sometime soon as a business student by the way.
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| | Stay calm and split drones. I'M NESTEAAAAAAAAAAAAAA! I'M NESTEAAAAAAAAAAAA |
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| OsoVega Canada. March 15 2012 15:44. Posts 926 | Profile # |
| You don't need to offer your client a good product when you can just get bailed out when your short sightedness comes back to bite you. |
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| cydial United States. March 15 2012 15:46. Posts 746 | Profile Blog # | |
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| hiyo_bye United States. March 15 2012 15:57. Posts 733 | Profile Blog # |
| I don't understand why this article is such a big deal; have seen it mentioned many times today already. I don't think anyone really believes banks are perfectly moral: their goal is to make money, after all. Seems this guy was either just too naive or got really fed up with something. It doesn't make sense to me that someone would work somewhere for so long and then just all of the sudden decide to quit because the of the company's culture. |
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| HULKAMANIA United States. March 15 2012 16:00. Posts 1186 | Profile Blog # |
On March 15 2012 15:44 Ckalvin wrote:
The wealth of knowledge and diversity of people using TeamLiquid never ceases to amaze me. It takes a lot to realise that the place you've been working for over a decade and have invested so much of your life and career into has become morally bankrupt.
I'll be pm-ing you for help sometime soon as a business student by the way.
Do you realize that MightyAtom just posted that article here? He's not the original author.
(Word on the street is that's he's business savvy, though.) |
| | If it were not so, I would have told you. |
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| feanor1 United States. March 15 2012 16:05. Posts 1820 | Profile # |
| I read this earlier today, but it really isn't shocking considering all the greed that caused the 2008 crash. I feel like this guy is going to have a lot of job offers. Although he is probably set for life if he wants to be done. Last edit: 2012-03-15 16:05:54 |
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| Ckalvin Australia. March 15 2012 16:07. Posts 149 | Profile # |
| Yeah but he's still done consulting work and has had a stint at PwC so he obviously is in the know. |
| | Stay calm and split drones. I'M NESTEAAAAAAAAAAAAAA! I'M NESTEAAAAAAAAAAAA |
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| HULKAMANIA United States. March 15 2012 16:07. Posts 1186 | Profile Blog # |
On March 15 2012 15:57 hiyo_bye wrote:
I don't understand why this article is such a big deal; have seen it mentioned many times today already. I don't think anyone really believes banks are perfectly moral: their goal is to make money, after all. Seems this guy was either just too naive or got really fed up with something. It doesn't make sense to me that someone would work somewhere for so long and then just all of the sudden decide to quit because the of the company's culture.
According to the article, the author did not just "all of the sudden" quit because of a culture that had been there all along. According to the article, the culture at Goldman Sachs had degenerated dramatically over the course of his career there. I suppose you could argue that he's misguided or naive or, I dunno, irrational, but then again he might simply be correct. He did, after all, work there successfully for twelve years.
And the idea that banks should only exist to make money seems to be what he's blaming the culture decline on in the first place. I don't think he (or anyone else for that matter) thinks that banks should avoid making money on moral principle, but acting in a client's best interest should not be an alien concept to a banker, nor should it be trumped by the overriding directive to maximize profits. |
| | If it were not so, I would have told you. |
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 zatic Germany. March 15 2012 16:08. Posts 11714 | Profile Blog # |
| A friend of mine was at GS NYC a couple of years back. At age 23 that's basically a dream career (for a German even more so I'd say) and a job thousands of finance majors would kill for. She quit after one year, and I am pretty sure "toxic" was the word she used as well for the environment there. |
| | I know Teamliquid is known as a massive building |
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| HULKAMANIA United States. March 15 2012 16:08. Posts 1186 | Profile Blog # |
On March 15 2012 16:07 Ckalvin wrote:
Yeah but he's still done consulting work and has had a stint at PwC so he obviously is in the know.
Yes, sir. MightyAtom's a baller! No disagreement there. I just couldn't tell from your post whether or not you knew he wasn't the article's author. Sorry! |
| | If it were not so, I would have told you. |
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| Voltaire March 15 2012 16:10. Posts 1482 | Profile # |
| People know how sly these corporate finance guys are these days. Corporate America is a jungle where the smartest and strongest survive. |
| | As long as people believe in absurdities they will continue to commit atrocities. |
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