The big one obviously was the global financial crisis in which Lehman Brothers, Bear Stearns, and Merrill Lynch stopped existing. We were very unusual in not losing money. Partly because we've done so well and a lot because I've observed technology. I started in 1982 in the industry. I'll tell you what won't change. Well, thank you for having me. I'm very happy to be with you.
Your upbringing—you did mention it before that you came from a very humble background and about how you had to sell, what was it like, hot dogs at Yankee Stadium?
Oh, but you know, these things are also character building. You take the train, public transportation, two hours to get to a stadium to walk up and down and sell hot dogs as a young kid, but people should do that. It's, you know, you learn a lot from those experiences. One of the points I'd say is I grew up, my dad was a mail sorter in the post office. He was the guy at night that pushed the letters into little cubby holes so the mailman would carry them the next day. Today that's all done by machines and probably could have been done by machines even when my father was doing it by hand. But the post office, you know, when the technology came around, doesn't fire people and so let him do it for 10 more years even though they could have turned on a machine and done it, which is kind of sad to be doing a job that doesn't need to be done. But anyway, that was my background. And one of the things, my parents didn't go to college and I had an older sibling who didn't go to college but I wanted to go to college and for me that was the path out of, you know, a distressed neighborhood and I didn't know necessarily where it would take me but I was motivated to get out of where I was.
So looking back, what qualities do you think allowed you to rise to the role of CEO?
I was always a little bit of a stranger in places I went because my background wasn't the common background. So I was always very attentive to my own feelings, my own sense of not belonging. And I recognized that in others. It made me very, I think if I was really good at anything is I was very good at sizing other people up, figuring out what they needed and what would be keys to motivating them and generally being able to deliver because most of the time what people want from you doesn't really, it doesn't always come at your expense. You could give it to them without any, you know, without any cost to yourself as long as you think about them and their needs.
One of the things, again, I think successful in a firm like Goldman Sachs where there's a lot of people who think they're the smartest people in the world at what they do and many of them are actually right. They are the smartest people in the world at what they do. They're very good in their jobs. They make a lot of money. They're very prestigious in their, you know, the investment bankers help shape different industries and very successful but I think I was able to work with people in a way in a non-threatening way to them. And I'd say the reason why I was able to grow in the firm, I don't think I was the best investment banker in the firm, I don't think I was the best trader in the firm, I wasn't the best salesman in the firm but I was good enough at all those things but I think I was very good, very good at getting people who weren't naturally able to work together to work together and to contribute to kind of getting people to sacrifice for the benefit of the firm.
And if you sacrifice for the benefit of the firm. In other words, if you keep your own ego in check and you're willing to be gracious and let other people have opportunities and these things happen all the time and I could explain in a firm like Goldman, everyone's client wants to buy a particular asset. Which client should we work for? So, you're going to make one investment banker happy because you're going to work with his client and another investment banker sad that you won't work with his. And how do you get by by explaining things making people sacrifice at times make the platform bigger and if you make the platform bigger you can then use that in your own life to promote your own individual interests. So I was able to persuade people that if you forego opportunities, if you throw in, if you act in a collegial way, in an unselfish way, it makes the firm more influential, it makes the platform better and then you can use that platform in your life. It becomes more prestigious to be a partner of Goldman Sachs, but you can only.
So it's not just about the financial incentives.
No, no, it never is. And I'll tell you why. Look, I grew up in a family that was really pressed for money. And if you don't have enough money, then it is about financial incentives. But when you have enough and you have more than enough, it's not about it. It's very little. It's much less about financial incentives because that doesn't provide much more of an incentive. It's about other things. It's about the influence, about whether you enjoy your colleagues. It's about whether you enjoy teamwork. And by the way, people are wired differently. There are people who are wired to be loners and there are people who like being part of a team. Investment banking and working at Goldman Sachs is definitely a team sport.
I think this is a term that you use that you managed down, that you were good at managing down, incentivizing people, and you talk a bit about what it means to be in charge and to be around people who are in charge. Now these people are very ambitious. They are highly intellectual. They are accomplished and they are extremely influential and insanely wealthy. So being around these people, were there patterns of temperament or behavior that repeatedly appeared among these exceptionally successful people?
There are generalities to make and if you think about it, it's all sensible. People want to grow. You know, look, everybody wants to get paid 5% more than you're currently getting paid now, especially early in your careers. People aren't trying to max out, maybe some people are, but it's foolish to try to max out your compensation or your pay early in your career or your influence. What you want to do is you want to invest and grow so that you learn the skills, you get the experience, you make the relationships that will make you increasingly more important as you grow in your job and as you mature and as you age. And so the contract I always wanted to have with people is look I'm not there to persuade you by virtue of I'm going to pay you more than the next guy or that I'm going to entertain you or this is going to be so much more fun in the next week. My what I try to say is the contract that I try to have with people is that I really care about your growth and I will work hard to make you a better professional. And I used to say that depending on the interest that the firm has in you and the ability of the firm to develop you as a person, you could feel underpaid at X or underpaid at 10X because your expectations by the time you know at 10X are so much greater you deserve even more than that. In other words, I was there to make people's horizons better, to train them, to invest in them, to promote them, to let them carry as far as their talent and their work ethic would take them. That's the dream. I always used to say to people, I'm not here to be liked. I want to be appreciated.
In other words, I'm not here to entertain, to be funny, blah blah blah. And you can also make leaders out of, you know, again a lot of my career was about managing through crisis and I used to exhort people and say look you know you all, you people at that point I'm older than most of the people there and I'm talking to young people in their late 20s or early 30s, you know as you move through life with your cohort at Goldman Sachs with the other people at Goldman Sachs, it's hard for you to believe but you're going to be the group that in 30 years or even less are going to be running everything. By the way, that happens at Goldman Sachs. A lot of the people work at Goldman Sachs for 5 years, 10 years, 20 years and they go off and they run big private equity firms. They go into government. You know, we had three secretaries of the treasury. I try to tell people how you behave and the reputation you get with other young people in this firm are going to stick with you for your professional life. People are going to remember how you are and especially how people perform in the difficult times and the crisis times.
So what traits are overrated in ambitious people and which underrated traits actually correlate with lasting success do you think?
Look any talent that you have can be used. You can steer yourself in the direction of your strongest points. There are people who are very mathy, very quantitative, people who are very verbal, the quantity people. If I had to say what do people get wrong in my opinion versus what's better, right? I'd say people of this generation and you know I can include you in that maybe even well even younger than you I would say. People who starting out getting out of school or going into school are being told by a lot of places to just focus on tech or focus on, you know, there's people who encourage other kids not to get a general education not to get a liberal arts education but focus and some people are encouraged not even to drop out of college or not to go to college I think that's a big mistake. I am, I believe that in your younger educational years in university, that's to make yourself a well-rounded person to learn. We don't know the way the economy is going to evolve. We're living on the cusp of great technological changes. Who knows what jobs are going to be important? What are going to be taken over by AI? Won't be. What new things are going to be created? The point is not to be overly focused when you're young. Make yourself learn literature, learn history, because history tells you that things don't stay the same, but cycles repeat. Not exactly the same, but as the saying goes, history doesn't repeat, but it rhymes. That we go through, we've gone through bubbles before, whether it was the dotcom bubbles, we've gone through stressful times. When I was growing, we've gone through polarized times. When I was growing up in the Vietnam era, there was as much polarization between Democrats and Republicans and young people and old people more than today. But if you don't know that, you think this is the biggest crisis we've ever lived through. But it's not. We've gotten through these things before. So learning liberal arts is good for you as a person, but it's also good for your commercial life because it makes you more resilient, more flexible, more willing to embrace change if you are broad and not unduly focused on what's good today. And also good for your commercial life is it makes you a more interesting person. I don't care what AI goes, people are still going to have to deal with other people. And people want to deal with people who are more interesting. And to make yourself overly narrow is another way of saying you're making yourself less interesting to other people. And so I think one of the mistakes that people make is to overly specialize and to promote just a technical education in what you think today will be your career. And I think that's a mistake. I think liberal arts and when you become an analyst at Goldman Sachs or a new hire at McKinsey or a interning firm, plenty of time to learn the details of your career in your industry, but your younger era and your college years are for a general education.
You know, you have to deal with people. Even if AI has this transformative power, you still have to deal with people and you, like you said, people want to deal with people who are good with people. So, let's talk a little bit about the partnership culture at Goldman Sachs that you are very proud of. Um, so when you were building your leadership team, what was the number one quality you looked for?
Let's assume that everybody's bright enough and ambitious enough and works hard enough otherwise they wouldn't be there. Well, I think an important virtue is curiosity. Wanting to know things. People who aren't just in their immediate job, but are looking to their left, looking to their right, and want to understand what everybody else is doing, and has opinions about what everybody else is doing. You want people with big ears and big eyes that see the things around them, that ask questions because they're curious. I like people who want to learn and who are curious because you always have to learn. I, you know, even when you have the top job, you really have to learn because you can't do every job in the firm. You have to be able to ask good questions and get to the point.
So, does that culture change when it's under pressure?
Well, I think it responds really well when it's under pressure because people aren't just thinking about my job and have I done it. People feel responsible for the whole and they also feel again like owners you can't walk away from it. In all the crises that hit the market and some of the crises just hit Goldman Sachs along the way, people didn't quit they stayed and wanted to double it. They wanted to know how they could help. They felt again owners and by the way when people have left the firm and I think Goldman is famous for this. It's a very valuable network. The alumni of the firm who again become very powerful influential people away from their firm in their post career, there are people who've left the firm 10 years ago 15 years ago 20 years they still identify as ex-Goldman and it's important to them and so yeah the firm nurtures that because it's very good for the overall success and influence of Goldman Sachs to have people who leave the firm and still care about it in a very big way. By the way, it goes both ways. We expect them to care about the firm and the firm still cares about them. So if they need things in their later career even when they're gone, we let ex-partners invest along with the firm and take care of them. We have lots of retired partners meetings and lots of advice giving and people who used to work at the firm continue to have access to a lot of the resources of the firm. That's a very important thing. Not many firms do it that way.
So tell us about the big ones and how you navigated through them and how you know in spite of everything that happened, like the tsunami of things, right? how Goldman was less affected by it compared to other institutions.
We had issues and we had some issues that other people didn't have. But when you say the crisis, just to give people background, you know, there was the stock market crash in '87 and the sovereign wealth in 1990 and 1994 when interest rates were raised in Europe and long-term capital in '98 and the tech bubble bursting and the Asian financial crisis and the global financial crisis, these things kept coming along and the big one obviously was the global financial crisis in which Goldman did reasonably well. We did not lose, we were very unusual in not losing money mostly because we were very, you know, we were big risk takers going in but we hedged ourselves pretty well. We didn't make money but we didn't lose money which was a very big achievement at that time when other institutions in our space like Lehman Brothers and Bear Stearns and Merrill Lynch stopped existing. And yet we got through that and without major losses.
