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The Man Who Quit Goldman Sachs and Wrote a Tell-All Book Gets Trashed by Corporate Media

Wall Street hates Greg Smith for telling the world of rampant abuse in one of its most prestigious firms.

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It’s been nearly 30 years since I worked at Goldman, but even back then, Goldman was quite explicit about the lengths it went to to build and reinforce its “culture,” and from everything I can tell, it has if anything gotten more extreme since then. For instance, it still puts recruits through far more interviews than other firms do, which helps screen not just for “fit” but also for how badly they want the job (most sane people would lose patience with the process). Goldman then, and I believe still, prefers younger MBAs (as in those with less rather than more work experience) because it likes to “shape” people.

Even though the investment banking industry is famous for requiring that staffers be willing to put in punishing hours, in my era, Goldman was unique on the Street in thinking it was perfectly normal to ask people to reschedule their wedding if it conflicted with a deal timetable. I did a summer at Salomon, and Salomon people didn’t socialize much outside of work, while at Goldman, there was quiet pressure to; junior Goldmanites were encouraged to get their summer “shares” in the same area frequented by other Goldman employees. To give an idea of how insular Goldman was then: of all the married non-secretarial women, the only women who were not married to Goldman men had come to the firm married.

The firm enforced behavior on far more levels than other firms: dress code, communication (both frequency, which was one of the firm’s strengths, but also mode: a sort of PC-ness about giving credit, not being openly political or self-promoting, not denegrating competitors or clients). The firm was dead serious about preferring people who hewed tightly to the Goldman cultural ideal. Guys who drove fast cars, got divorced and were a bit too flashy would not be promoted as quickly as guys who were somewhat less big producers but were complaint Goldman soldiers (yes, I can name exceptions to that pattern, but they were far fewer than you’d see anywhere else on the Street).

The firm was Machiavellian in its organizational design. In investment banking, it had product specialists (corporate finance, meaning stock and bond underwriting, M&A, real estate) and salesmen who covered clients and sold all products to them (Hank Paulson came out of that corporate calling group, called Investment Banking Services). The party line was that this promoted expertise and made sure there was consistent attention to corporate clients and prospects. That no doubt was true, but I doubt this was the operative truth. This structure also circumvented the way big producers normally had leverage over a firm, that if push came to shove, they could leave and take clients with them. If you have one person who has the relationship dependent on other people executing the business, neither group can readily leave with clients. Similarly, in my day (and it has changed since then) people were hired into a department and people very very rarely switched departments; the internal PR was that (again) it was to promote expertise. Again, the operative truth was that Goldman went to great lengths to keep politics to a bare minimum, recognizing how it diverted energy from making money for the firm. Having partners poach on other departments for talent would be enormously divisive, so best to make that an exceptional event.

Goldman people then genuinely believe Goldman was the best place to work; leaving was seen as a fall from grace. I knew very successful individuals who departed after I did, and were 6-10 years into their careers, and each said virtually the same thing, verbatim: that it took them two years to get over the idea that leaving Goldman meant they had taken a big career step down (and objectively, none of them had).