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 Why I am Leaving Goldman Sachs
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Posted on 03-14-12 9:26 AM     Reply [Subscribe]
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This is a powerful article on the culture of business thesedays. Instead of focusing on the client businesses focus on themselves. Which become especially wrong when you're in the business of investing money for others. You are supposed to be working for the clients by investing their money for their profits.




OP-ED CONTRIBUTOR

Why I Am Leaving Goldman Sachs


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

Related

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.


 
Posted on 03-14-12 1:45 PM     [Snapshot: 218]     Reply [Subscribe]
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Goldman is heading towards the path of Enron. Goldman had a big hand on economic collapse; yet only Lehman and few others suffered the consequences. The high power lobbyists that Goldman has employed will one day implode and it will fall Enron style if they don't straighten up their act.
 
Posted on 03-14-12 1:58 PM     [Snapshot: 239]     Reply [Subscribe]
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dude, do you even know how enron collapsed ?
 
Posted on 03-14-12 2:17 PM     [Snapshot: 261]     Reply [Subscribe]
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hahahaha kiddo....u r funny...little knowledge is dangerous dude !!!
 
Posted on 03-14-12 2:46 PM     [Snapshot: 317]     Reply [Subscribe]
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I have no idea whatsoever of how they collapsed and I don't even have a little knowledge.

I thought I'd come up with a lengthy justification, but then realized it's not worth it. You dismissed a theory with one liner statement and are now professing the knowledge here.

If you are really serious about your question(s), let's start the debate. Tell me what part you didn't get and I will explain. But first you gotta tell me that you have at least a "little knowledge" about this subject and I will come up with my rebuttal.
 
Posted on 03-14-12 3:02 PM     [Snapshot: 317]     Reply [Subscribe]
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hmmm...

Disgruntled employee.. I bet the man (Executive Director) earned enough for rest of his life, or can pretty much invest on his own the right way, and get moving. It's unfortunate for GS, or any firm for that matter, when employees like him leave with prejudice, bashing out on the workplace that embraced them throughout the time.

Oh, and some interesting comments out there ---

1 hour ago ( 2:22 PM)
Check the timing when Goldman started hiring h1b visa workers. I guess these things happen when you hire the 3rd worlds brightest and best. Things that only occurr in the 3rd world, are now common here.

http://www.huffingtonpost.com/2012/03/14/greg-smith-goldman-sachs-new-york-times_n_1344538.html?ref=media

~@~


 
Posted on 03-14-12 3:17 PM     [Snapshot: 371]     Reply [Subscribe]
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ENRON AND GOLDMAN PARALLEL


First of all how did Enron collapse?

Shady accounting practice, questionable reporting of assets and cashflow, complicated financial model (with shielding SPEs) with high risk offshore account all led to inflated stock price of the corporation, which later fizzled as it had to. Investor’s confidence waned and SEC probed an investigation. This all led to Enron’s demise.


That’s the straight up story. But, what’s the root cause? What are the similarities that I talk about here?


To begin with, Goldman Sachs, like Enron has a very powerful lobby. If you even have a little interest in financial market, you might have heard about how Goldman is lobbying to exempt half of swaps books. They are basically trying to stay outside the Dodd-Frank regulations. Enron employed similar tactics through out its operation. With power, comes arrogance; Enron thought that since they have all the powerful politicians and regulators in their pocket, they can manipulate any kind of reporting. I don’t know if you are aware how they used to manipulate California’s energy; just a small example. What’s Goldman doing? There are few accounting discrepancies we know that they have instituted. In 2009, they altered their year-end reporting dates so that one cannot easily compare past quarter results. This is just one accounting practice that was caught; google and you will find numerous other issues.

Now, to the root cause. Enron didn’t collapse just because they hid some accounting practice. The culture was the root cause behind their failure; the profit-only culture; they accepted inflation and illegal practices to focus on their bottom line. This is what the author of the article is claiming here. Goldman sold high-risk derivatives that they knew would fail, to their customer; that’s down right criminal act. SEC fined them $550M for subprime mortgage CDO “fraud.” Focus shifted from a good operation+customer loyalty+profit to profit only. That’s what caused Enron to fail; too much focus on profit w/o much consideration to anything else. Goldman is heading that way.


If you don’t see any parallel, then I have nothing to say. Also, if you want to refute anybody’s claim, come up with a coherent and intelligent argument.

 
Posted on 03-14-12 4:49 PM     [Snapshot: 441]     Reply [Subscribe]
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Nice Insight kiddo. Little Knowledge I guess IS dangerous after all.!!!

 
Posted on 03-14-12 5:18 PM     [Snapshot: 476]     Reply [Subscribe]
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O! Kiddo-man lal,  Goldman su kha? 

 
Posted on 03-14-12 6:09 PM     [Snapshot: 568]     Reply [Subscribe]
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.

Last edited: 14-Mar-12 07:41 PM

 
Posted on 03-15-12 3:33 PM     [Snapshot: 957]     Reply [Subscribe]
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Maybe this will put things into perspective :)

http://www.thedailymash.co.uk/index.php?option=com_content&task=view&id=5007&Itemid=81

Why I am leaving the Empire, by Darth Vader

14-03-12

TODAY is my last day at the Empire.

Image
'I no longer have the pride, or the belief'
After almost 12 years, first as a summer intern, then in the Death Star and now in London, I believe I have worked here long enough to understand the trajectory of its culture, its people and its massive, genocidal space machines. 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, throttling people with your mind continues to be sidelined in the way the firm operates and thinks about making people dead.

The Empire is one of the galaxy's largest and most important oppressive regimes and it is too integral to galactic murder to continue to act this way. The firm has veered so far from the place I joined right out of Yoda College that I can no longer in good conscience point menacingly and say that I identify with what it stands for.

For more than a decade I recruited and mentored candidates, some of whom were my secret children, through our gruelling interview process. In 2006 I managed the summer intern program in detecting strange disturbances in the Force for the 80 younglings who made the cut.

I knew it was time to leave when I realised I could no longer speak to these students inside their heads and tell them what a great place this was to work.

How did we get here? The Empire changed the way it thought about leadership. Leadership used to be about ideas, setting an example and killing your former mentor with a light sabre. Today, if you make enough money you will be promoted into a position of influence, even if you have a disturbing lack of faith.

What are three quick ways to become a leader? a) Execute on the firm's 'axes', which is Empire-speak for persuading your clients to invest in 'prime-quality' residential building plots on Alderaan that don't exist and have not existed since we blew it up. b) 'Hunt Elephants'. In English: get your clients - some of whom are sophisticated, and some of whom aren't - to tempt their friends to Cloud City and then betray them. c) Hand over rebel smugglers to an incredibly fat gangster.

When I was a first-year analyst I didn't know where the bathroom was, or how to tie my shoelaces telepathically. I was taught to be concerned with learning the ropes, finding out what a protocol droid was and putting my helmet on properly
so people could not see my badly damaged head.

My proudest moments in life - the pod race, being lured over to the Dark Side and winning a bronze medal for mind control ping-pong at the Midi-Chlorian Games - known as the Jedi Olympics - have all come through hard work, with no shortcuts.

The Empire today has become too much about shortcuts and not enough about remote strangulation. It just doesn’t feel right to me anymore.

I hope this can be a wake-up call. Make killing people in terrifying and unstoppable ways the focal point of your business again. Without it you will not exist. Weed out the morally bankrupt people, no matter how much non-existent Alderaan real estate they sell. And get the culture right again, so people want to make millions of voices cry out in terror before being suddenly silenced.

 
Posted on 03-15-12 4:13 PM     [Snapshot: 996]     Reply [Subscribe]
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Kiddo,
Are u serious? Enron. Do you know what the hell is Enron?
 
Posted on 03-15-12 7:38 PM     [Snapshot: 1112]     Reply [Subscribe]
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Posted on 03-17-12 6:48 PM     [Snapshot: 1282]     Reply [Subscribe]
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....interesting.
 


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