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Joe Weisenthal
For a nice antidote to the breathless reporting on Goldman Sachs (GS) -- you know, vampire squids, market manipulation, etc. -- do check out Heidi Moore's piece over at The Big Money:
The basic rule of Goldman culture is that the company manages its people exactly the opposite of how every other Wall Street firm does. It's not that Goldman doesn't have its egos—it surely does—but as a matter of management, the firm also has several safeguards in place to keep rampant egos from destroying decision-making. Another thing that makes Goldman different from other firms is not that all Goldman bankers agree but that they are free—and, in fact, encouraged—to disagree. Anyone who has read accounts of Goldman's knockdown, drag-out fights over going public will understand this, as will anyone who has read two great books about Goldman: The Partnership and The Culture of Success. The firm's management committee meetings are, by all accounts, rambunctious affairs full of disagreement. John Thain once presented a case for Goldman's IPO to the management committee, and several of his fellow partners disagreed. Thain's reply to his vehement colleagues, according to Bloomberg: "Would it hurt you to suck up to me once in a while?" CFO David Viniar is a dragonlike protector of the firm's balance sheet, known to shoot down trading ideas and expansion plans day in and day out. Viniar's default answer, according to Goldman bankers, is "No," and he is known for his even-handed rejection of expensive schemes.
The difference is that Goldman Sachs bankers can disagree only before decisions are made; once all opinions are solicited, consensus is reached, and decisions are made, the decision is one made by the firm, on behalf of everyone, and it's final. Mostly, other Wall Street firms—from partnerships to giant investment banks—are hotbeds of infighting, and you need only talk to a few bankers before you find evidence that they undermine management decisions, subvert prominent colleagues, or openly ignore one another. Even worse, at many firms, bankers or traders will attempt to hide information about bad deals or trades until they can "fix" them and preserve year-end bonuses, as Brian Hunter was alleged to have done at Amaranth. At Goldman, management is like the Godfather: They want the bad news first. And daily. On a Wall Street where bankers are known to be terrible managers, Goldman also starts training its bankers to be managers early. Every Goldman banker has to do at least a year as chief of staff for one group or another. The firm usually shifts successful people among several areas to make sure they get a well-rounded view of the firm's businesses. At one point, Henry Paulson ran not only investment banking but also corporate and real estate banking.
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