Goldman Sachs has been around for 155 years and there's been a lot said about Goldman Sachs's culture and Goldman Sachs's culture is unique. But I would also say it's constantly changing and you better be working at defining what you want it to be and constantly reshaping it and amplifying what you think really matters. The general ethos of the firm is if you build trust with clients, if you take a long-term view, if you do the right thing, good things will happen. And I've watched that in my career and I believe it deeply.
Okay, this is a special episode with David Solomon, the CEO of Goldman Sachs, an incredible company, been around 150 years, just a terrific person in a terrific company. We get into a whole bunch of topics. One was decision-making and in particular, you've got something going, it's kind of wobbling. When do you double down and when do you pull away? And he recently has had a whopper decision where they had a consumer partnership with Apple and they recently basically walked away from that partnership and so we get behind the scenes on that decision. I think it was pretty interesting. He credits culture a lot with why they've been around for 150 years. I've had a ton of CEOs and it's really thrived. He's really thrived in the job and we get into culture. Culture is a big reason why HubSpot's only 19 years has been successful as well. I hope you like the episode. David is very sharp. He joined the company. It had a 40 billion market cap I believe and now it's something like 160 billion less than a decade later. So he's very very good and very thoughtful. Hope you enjoy it. Thanks for joining us.
When I was a CEO, I really admired Steve Jobs. I tried to emulate him. I kind of really studied him and followed his playbook and it largely served me pretty well. Who's your Steve Jobs?
That's a great question. I'd start by saying that Steve was obviously extraordinary in the context of what he did. Although I don't know that most public company CEOs could model Steve and get away with it in today's world. But he was extraordinary in terms of his focus, his vision for what he thought really mattered. I've thought a lot about this because I've been asked similar questions over the years. And I don't have a Steve Jobs.
One of the things on your Mount Rushmore.
Well, I mean, there are some people right now that I watch and I think enormously highly of. I mentioned Satya Nadella. One of the things I've learned from him in my own journey as a CEO is he's an incredibly empathetic leader. It's hard to move an organization and also exhibit empathy. I've watched some of what Satya has done in that context because I think he leads with an enormous amount of empathy besides the fact that he's a great strategic thinker and a whole bunch of other things. He's done an extraordinary job with Microsoft. But then you can also pick and choose people that at times have led extraordinary transformations. Bob Iger's journey is a different one at this point for a variety of reasons, but there was a period of time where I was really watching the way Bob Iger was transforming Disney. It was a difficult transformation. I've tried to pick out things that are going on with different CEOs and constantly say what can I learn. One of the great advantages I have in my job is part of my job is to travel around and spend time with CEOs and interesting people. So you get to ask them, why are you doing this? Why did you do this? How did this work? So I get a lot of private time with CEOs to really reflect and that's helped me a lot in my own journey as a CEO.
You've worked for some legends, Lloyd Blankfein, Hank Paulson. Did they mentor or coach you? Are there things you took from them that were incredibly valuable that all of us can learn from?
I learned a lot from both of them. And you learn different things. They had different skills, different personalities. Lloyd was an incredible risk manager. He had an incredible ability to really sweat and worry about the things that had a small probability of happening. But the fact that he was that way when we went into the financial crisis, he was two steps ahead of a lot of other bank CEOs and I think was really extraordinary as a risk manager in that context. Hank was driven. He had a great nose for client relationships and how to get things done. And Hank also had an incredible compass.
What do you mean by that?
He believed we all need a compass in these jobs and you want that compass pointing north. One of the complicated things about being a CEO is there are a whole lot of things that are constantly banging on you trying to knock your compass off of north. Sometimes it takes enormous resilience and determination to keep that compass pointed in the direction that you know is right while there's a lot of noise. One of the things I learned from Hank, I remember sitting in a meeting with him early on when I was at Goldman Sachs and somebody was suggesting something and there was a lot of momentum for it and he just said, 'Well, we're not going to do that.' It was completely against the consensus of the room and he was being a CEO because he thought it was wrong. I think you can learn from a lot of people. I had a great mentor who wasn't a CEO. If you would frame the question around who's the most important mentor you've had in your career, it was a gentleman named Richie Metrick, who I worked for at Bear Stearns in the 1990s. He'd been the CFO of Interstate Bakeries, he'd been a lawyer. He was also just intuitively one of the smartest people I've ever met in my career. He had a profound impact on teaching me at a time when I was in my late 20s and early 30s and I was rising up in an organization relatively quickly. He really taught me to be self-reflective and really understand strengths and weaknesses, and to be pretty hard on myself about things that I had to change if I wanted to advance. He forced me to look at myself at a time where I had less maturity, less of an ability to really pause. He forced me to pause and really think about myself and how I could make myself better. He had a profound impact on me.
Okay. Interesting. There's a little bit fashionable in Silicon Valley these days that people are saying you get a much better return on your investment by investing in your strengths and making them stronger versus fixing your weaknesses and you should just hire around your weaknesses. Any reaction to that?
I think to be successful over a very long career where you're going to be in leadership positions and ultimately rise up to lead a big organization, and by the way, it's very different from a founder who leads an organization because they created it and they anoint themselves founder, it's theirs. Rising up to lead a 150-year-old organization like Goldman Sachs, you better have a lot of strengths, you better be working on your weaknesses. Because if you're not doing all of the above, first of all, it's a random walk to begin with because there are so many talented people. One of the things I've always talked about is serendipity and timing. I think serendipity and timing have a lot to do with who winds up in the CEO jobs in these organizations. But I think you better be working on the whole package if you want to put yourself into the ring and have a chance to come out of the ring.
Another kind of something floating in the air in Silicon Valley is founders really hiring for slope versus experience. The very young, very intelligent, high slope person versus someone who's sort of been there and done that. You talked earlier about smart. I'm a Boston sports fan and the Boston Celtics have an announcer named Tommy Heinsohn. He was really good. The Celtics had a backup backup center who was very low skill but was giant. I remember Heinsohn saying, you know, he may not have a lot of skill, but you can't teach seven feet. I kind of think the same with smart. You can't teach smart. So how much is it about smart versus experience? I kind of think you guys are famous for hiring very bright young people and moving them up.
We're as an organization extraordinarily lucky that we have so many incredibly bright people that are interested in working and spending time at Goldman Sachs. But I'm in the camp of smart enough. You have to be smart enough, but the smartest person in the world without a whole package of other things is not going to navigate Goldman Sachs well. Not going to be successful in Goldman Sachs over the long run. The human elements, the ability to connect, resilience, determination, striving for excellence, things that matter everywhere. It's interesting when you talk, you live in a founder world. I live in an established company world and I deal with founders as clients. But this concept of slope versus experience, I live in a world where experience is worth a lot. If you sit around the management committee table at Goldman Sachs, the level of experience and the judgment that comes from that experience is extraordinary.
And hugely underrated. And by the way, hugely necessary, a big differentiator for the firm. You can't teach experience. That doesn't mean somebody without experience can't do very well. But someone can't watch this podcast and then run Goldman Sachs and be able to do it.
Well, a lot of people there are a lot of people that can run Goldman Sachs and maybe if they do they'll have less bumps and bruises than I do.
Experience matters in these big organizations. It doesn't matter when things are going well. It matters when the bumps come. You've got to make difficult judgments and they're not 90-10 judgments. They're 51-49 judgments.
No easy decisions at the CEO desk.
By the way, if it's an easy decision, it doesn't make it to my desk. One of the things I've realized is I don't have to make a lot of decisions.
What's the best of two shitty options?
Yeah, that is oftentimes what CEOs face.
Okay. A lot of people listening are VP of such and such in XYZ scaleup company and they want to be CEO of a company someday. You were kind of hired from the outside, you rose up to CEO. Advice to those folks who are on that track who want to not found a company but become a CEO. I think in tech a lot of companies are getting older and a lot of founders are going to step aside in the next few years and a new generation will come up and take over. Advice for those folks. What was a younger David thinking about back then?
Well, I think one of the things that's interesting, when I joined Goldman Sachs at 37, I had actually worked early in my career at Drexel Burnham and then Drexel went out of business and I wound up at Bear Stearns and I did very well at Bear Stearns. I rose up into a relatively senior position at Bear Stearns in my mid-30s. When I joined Goldman Sachs, I certainly did not aspire to be the CEO of Goldman Sachs. I aspired to practice the trade of investment banking, be super successful at it, impact the organization. I decided that I was a big organization person.
What do you mean by that?
I loved the dynamic in a large organization, the resources, the access, the platform that I found very appealing and the leadership opportunity in big platforms. I found that very appealing. So I was leading in my 30s at Bear Stearns, but then at Goldman Sachs, I was managing hundreds and hundreds of people very quickly, thousands of people. I really enjoyed that. I enjoyed the platform. I enjoyed being a part of an institution. It wasn't about me. It was about stewarding the institution. I really enjoyed that. But I never, my goal wasn't to be the CEO of Goldman Sachs. In some ways I'm the unlikely CEO. I came from the outside. You can go back and look at some articles, the dark horse candidate, the unlikely. A lot of it is serendipity, a lot of it is luck, but it wasn't my principal goal. At the same time, I just told you that I liked leading people. So I knew I was developing skills that gave me the possibility of leading an organization. But what I was focused on was developing skills and seeing where the road took me, not pointing to a seat and saying, 'How do I get to that seat?' My advice to people that really want to run a big enterprise is you've got to do a lot of different things. One of the great benefits that I got at Goldman Sachs is I did a lot of different things.
They moved me around. I was running all of credit trading when I joined the firm. And then Hank Paulson came and said to me, 'You're going to go run equity capital markets.' And I said, 'Well, I really like this job.' And he said, 'No, you're going to go do this.' It was a completely different thing.
Do you think startups should do that? They've got a high potential person, move them even though they're great in moving the needle in what they are doing. Should they have rotation type?
It's harder. It's harder in a startup because you have a limited number of people. Big enterprises and platforms, this is one of the things that's really attractive about working at a big enterprise like Goldman Sachs. You can move around and do a lot of things. A startup that's trying to scale in a business doesn't have that same luxury. The organization can't be as patient to some degree. They really are different things. But if you want to lead people and lead big parts of organizations or ultimately lead an organization, I think you've got to try to do a variety of different things and really gain experience.
Do you think failure is important along that road?
I think failure is important for everyone because there's no one...
Do you feel like, man, I fell on my face on the way?
I fell on my face so many times. I can tell you crazy stories about really learning what it is to be responsible for things. Goldman Sachs is a very competitive place. We compete to a very high standard. Here's a small anecdotal story. I had flown over to Ireland to play golf for three days with a group of guys I went to college with because it was the year when we all turned 40. I had just started running the equity capital markets business at Goldman Sachs. When we got over there, that night we're having dinner, I checked my message after dinner, it would have been 10:30 at night, so 5:30 in New York. We had missed a $2 billion equity deal for Accenture and people were going apoplectic as to how it could happen because we had led their IPO a year earlier and we missed this $2 billion equity deal. My area, I was responsible. I was figuring out how to get myself back to New York. I was back in the office the next morning dealing with it. You learn from those things. Because the world was like, 'Okay, you're in charge. How could this happen on your watch?' I tell the story now, 25 years later, it's one deal, but that ethos of competing to that level of excellence, that level of accountability, those are things that have really made Goldman Sachs what it is over a long period of time. If you want to lead in that organization, when things don't go right, you have to run to them and jump on them. That's happened so many different times in my career in different ways, bad judgments on people, chose the wrong people, had to correct. By the way, one of the most difficult decisions I made was for us to step away from some of the consumer business that we had started.
Yeah, let's talk about that.
I don't think that was your bet.
Well, I didn't start it. To roll back the history a little bit...
Sure.
The thing that I find interesting about it after running HubSpot is like you've got your core businesses. They're going great. They're big markets and you're deep in the markets. Should we just triple down on that or should we take a risk and do something new is one question I always wrestle with. The second question is okay we did that bet. It's going okay. If we just put enough resource on it, it would work. The decision to go into it I think is interesting. And the decision, I'm sure you doubled down a couple times, about the decision to step away. That's fascinating to me.
Well, there are a couple things. It's a complex story as these things always are. There's a press narrative around it.
What's the real narrative?
The reason we decided to move into the business, a big reason we decided to look at the business was to start to build a deposit platform. The firm was the largest wholesale funder in the world and there are a lot of things that you want to be the largest in the world. Wholesale funding as a financial institution is not one of them. Deposits represent a much more stable base and because we hadn't grown up as a bank, we did not have a deposit platform and digitization was allowing the concept of digital deposits. The original idea was we'll build a digital deposit platform and we'll make some consumer loans and we'll see what we can create out of it.
Was this bubbling under the surface for a year, 10 years?
No, there was a very famous meeting out in the east end of Long Island at Gary Cohn's house who was the president with a group of the senior leaders brainstorming around growth ideas that would move the firm forward. This was surfaced by a couple of other people, not me. I was running investment banking at the time and Lloyd decided that he wanted to do it. Shortly after we started that, Apple approached us as to whether or not we wanted to look at partnering with them on a credit card. The thought process was one of the largest most important companies in the world, if you're going to do this, a very interesting partner, a very interesting tech partner. A decision was made that we'd go down that road. One of the reasons we were attracted to Apple is Apple wanted to do it differently.
Hold on, let me stop you there. You're in Long Island. You're having that discussion. A couple guys present it. Was there a lot of debate around it? How does Goldman make a decision like that? Is it consensus? Were there a bunch of people in the room said, 'Hey, this is crazy.'
There was a lot of debate and there were a lot of people offering opinions, but ultimately the decision to launch the deposit platform and start the small lending business that we called Marcus was Lloyd's call.
