What Happened to Goldman Sachs. Steven G. Mandis
discipline, and a sense of community and obligation to society. Teamwork is codified in Goldman’s principle 8 (“We stress teamwork in everything we do”), and discipline is implicit in principle 9 (regarding the “dedication of our people to the firm and the intense effort they give their jobs”). Interestingly, a sense of community and obligation to society is not written as a business principle, but it is so ingrained that almost every internal and external communication about the firm prominently describes and displays its “citizenship.” (For examples, see appendix E.)
At the close of the interview, the partner asked me whether I had any questions as he filled out a form for human resources. “If I work until two or three o’clock in the morning, how will I get home?” I asked. “Are the subways open at that hour?”
He chuckled. “There are always Lincoln Town Cars lined up outside the building. You can take one of them home.”
Coming from a middle-class Midwestern background, I had never heard of such a thing (I couldn’t contemplate someone else driving a car with me in the backseat), so I asked what I thought was a practical question: “So do I drive the car back when I come back in the morning?”
He burst out laughing. While having trouble to stop laughing, he then explained that I would be “chauffeured” and dropped off at home. There he sat, with his sleeves rolled up on his white shirt, top button undone and back of his shirt slightly untucked, Brooks Brothers striped tie loosened a little. It was the standard look in M&A. You looked as if you were working hard. He leaned over and said, “Let me read what I wrote on your review form: ‘Lunch pail kind of guy—knows nothing but will kill himself for us—and smart enough so we can teach him.’” That was me in a nutshell—and just the kind of person Goldman wanted.
I was surprised that other candidates and I were interviewed by the people they would work with, not human resources people.
After completing ten or fifteen interviews, I got an offer the next day.
Soon after I was hired, I was asked to review résumés from Midwestern schools for candidates to interview. When I was given hundreds of them bound in three-ring folders, I asked the vice president who had given me the assignment, “How should I go about choosing?”
He shrugged and told me to take anyone who didn’t have a certain grade point average and SAT score and throw them out, and then get back to him.
I did that, but I was still left with what still seemed like hundreds of résumés. So I asked, “Now what do I do?”
“Take out anyone who doesn’t play a varsity sport or do something really exceptional or substantive in public service,” he told me, waving me out of his office.
Once again I culled the folders, but still I had too many. So I went back again.
“Now throw out any that don’t have both sports and public service, and raise your grade and SAT requirements.”
After this round, I came up with the thirty people we would interview to select the one or two who would get an offer.
It seemed to me that a large percentage of people hired by Goldman in the United States had roots in the Midwest or in Judaism, and when I discussed this with Whitehead and others, they said that there was no conscious effort to hire to a certain ethnic or regional profile; it was most likely only that people are attracted to people who have similar values and backgrounds. The similarities in backgrounds can be seen in this list of the past five CEOs or senior partners:
Lloyd Blankfein: Jewish; raised in New York public housing in the Bronx
Hank Paulson: Christian Scientist; raised in Barrington Hills, Illinois, on a farm; played football in college; Eagle Scout; worked in the government before joining Goldman
Jon Corzine: Church of Christ; raised on a farm in Central Illinois; football quarterback and basketball captain in high school
Stephen Friedman: Jewish; on his college wrestling team
Robert Rubin: Jewish; Eagle Scout
Partners modeled and reinforced the desired behaviors and delivered “sermonettes of perceived wisdom” as deemed appropriate.31 French sociologist Pierre Bourdieu argued that in analyzing any society, as well as a firm’s culture, what matters “is not merely what is publicly discussed, but what is not mentioned in public … Areas of social silence, in other words, are crucial to supporting a story that a society is telling itself.”32 The written principles were important, but it is how they were interpreted and put into action—brought alive each day—that really mattered. The Goldman partners reinforced the importance of the values by their actions; they didn’t need to be specifically mentioned because they were understood by watching. The way these CEOs and partners acted, dressed, and behaved reinforced unwritten norms or uncodified principles. The men at the top wore Timex watches and not Rolexes (and this is before Ironman watches were fashionable). Partners did not wear expensive suits or drive fancy cars (most drove Fords because it was such a good client and many partners got a special discount). They lived relatively modestly, considering their wealth. It was simply not in the ethos to be flashy but rather to be understated, with Midwestern restraint.
The archetype for proper behavior was John L. Weinberg: “Revered by his partners and trusted by the firm’s blue-chip corporate clients, he was entirely without pretension, he spoke blunt common sense, [and] wore off-the-peg suits.”33
The unwritten commandment to keep a low profile was not, until rather recently, violated casually. In the early 1990s, an analyst was riding in a taxi past the famous and pricey Le Cirque restaurant in New York when he spotted a low-key Goldman vice president standing outside. To tease the VP in a funny, friendly way, the analyst rolled down the cab window and yelled out several times, “VP at Goldman Sachs!” Clearly, the subtext was, “VP at Goldman Sachs dining extravagantly at an elite restaurant!” The VP took it so seriously that the next morning he called the analyst into his office, along with a few of the analyst’s friends (including me), who, he correctly assumed, had already heard the funny story. The VP explained that he had been invited to Le Cirque by his girlfriend’s parents and that he would never have gone there on his own. Then he asked us to please not tell anyone or discuss (or joke about) the matter further.
The low-key imperative extended even to the modest Goldman offices. Goldman did not want clients to view an ostentatious display of corporate wealth, fearing it would be seen as an indication that the fees for the firm’s services were too high or that the firm had the wrong priorities.34
When I started at the firm, there was no sign bearing the name Goldman Sachs when one entered 85 Broad Street; behind the reception desk there just was a list of the partners’ names and floor numbers. There was even a floor for retired partners, but their names were not listed individually, the label for that floor just said, “Limited Partners” and a floor number. Even the twenty-second-floor offices of the senior partners were relatively modest, with the elevator doors opening to a gallery of senior partners’ portraits. It all served to reinforce the message: keep a low profile, respect the history, and remember whose money is at risk here. Such organizational humility, combined with the business principles and a drive for excellence, helped Goldman develop strong client relationships and allowed the firm’s culture to hold materialism at bay for a long time.
There was also an ethic that talking about compensation was taboo, although no one ever actually said so. Almost all of us had our sights set on partnership, and we were certainly curious about how our compensation stacked up against that of others, but no one ever directly asked.
One class of vice presidents had an interesting approach. Each year, all the members of that class got together and anonymously wrote their compensation figures on a slip of paper and dropped the paper into a bowl. The slips were then extracted randomly and read aloud to the group. In that way, no one knew exactly how much each person was making, but they knew the range and could figure out where they fell within it. I learned the range was less than 5 percent to 10 percent from the highest to the lowest (a remarkably narrow range by today’s standards), and