I was meandering around the internet looking for both a home and a job
as is my wont at the moment and in my need for a break I looked at my
Facebook page and found a link to the New York Times opinions page by
the Robin Hood Tax people. I will paste it here for you.
Why I Am Leaving Goldman
Sachs
By GREG SMITH
Published: March 14, 2012
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.
Victor Kerlow
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.
I
actually admire this man for his integrity in a business that has lost
its own, of course being an investment Banker is not exactly the toast
of the town but it has been an integral part of the worlds economy for a
good century and has lost its way before. We all know about the wall
street crash of 1929 this time though it was the investment banks that
had failed us this time not the stock exchanges.
I am not the sort of person to judge if I can help it but this time I
can't, over the past twenty to thirty years we have lost our way. The
societies we all live in are ruled by greed and that is wrong we have no
real moral compass in the west and the Abrahamic faiths have only been
used to justify the greed of big business rather than be the champions
of the poor and oppressed they have been in the past.
I am a pagan and I try my best to live by a simple creed, I don't always
succeed but at least I endeavor to better myself. the creed I try to
live by is not of viking origin but from the mid 20th Century, the
Wiccan Reade.
And it harm none, do what you will.
These eight words challenge you to do a number of things the most
important of which is to define harm, I could go on for pages to explain
this idea but I will let you do that for yourself. I would rather you
look at your own neighborhood and see what you can do to help those who
need it the most, that is what socialism is those who have helping those
who don't have. I agree with Thomas Payne on that, our society has to
bring the best out in all of us not the worst. We have failed both
ourselves and our children if we don't change now and show the integrity
we have inside us.
Brightest blessings
Steven