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Why I Am Leaving Goldman Sachs

nytimes.com

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Re: Why I Am Leaving Goldman Sachs

#121

Post by dkarl »

baggachipz wrote: post #89
pradocchia wrote: post #66

Earlier quoted context omitted.

> The gentleman era of investment banking is largely mythical. There was a qualitative change after the banks went public. The old partnerships were inherently more prudent. And that's where the old culture came from. The new corporate structure rewards any risk-taking where losses lag gains by a year or more. So the culture changes.

I really think being publicly-traded companies is the root of the problem here. When a company goes public, it adopts one (and only one) goal: Maximize shareholder value. When that's the priority, it naturally follows that the sharks take over the waters. This is not a tough leap of logic, and it's repeated in corporate culture constantly. We need a famous person to quote it succinctly so that it is enshrined as a co…

I once worked for a guy who was considering incorporating his two-person company. His investors were mostly family and professional contacts. One day he was talking about how it would limit his decision-making because of his obligation to always do what was most profitable for the shareholders. He was potentially facing a choice between selling out to a much larger company or staying independent so he could develop the company into the kind of business he always wanted to run. He and his partner had a controlling stake, but theoretically, if their investors wanted him to sell but he refused, they could sue him for damages, breach of fiduciary trust or what-not. Or so he said. I asked him, "If there was a perfectly legal, but morally reprehensible way to make a lot of money for your shareholders, and you were aware of it but didn't take advantage of it, could they sue you for damages?" He didn't think so, but he couldn't explain to me the legal difference between his moral judgment and his lifestyle preference for one kind of business over another. I'm still intrigued by the question.

To make the situation more dramatic, suppose a company disposed of a thousand barrels of toxic waste every month, and the board of directors found out that the perfectly legal method by which they were disposing of the waste was horrifically environmentally damaging but exposed the company to no possible liability. Could they choose to dispose of the waste in a much more expensive way? What if it meant cancelling a dividend? What if it meant bankrupting the company -- could they be sued then?

Re: Why I Am Leaving Goldman Sachs

#122

Post by cma »

bhousel wrote: post #47
nostrademons wrote: post #19

Earlier quoted context omitted.

Currently work at Google, obviously speaking for myself and not my employer. In my experience - yes, this moral decay is a necessary part of the current corporate world. Or any corporate world. Or really, any world without the possibility of failure baked into it. I've seen a lot of idiotic decisions made at Google, many of which have been complained about on Hacker News, many more of which are hidden causes of thing…

I really think that you're completely missing the point in defending Google and maybe Goldman Sachs by saying that their decisions are ok because they are made rationally. Rationality is emotionless and mechanical. It's about making a reasonable decision based on whatever information is available to you. However, rational decisions do not involve morals, culture, or feelings. This is exactly what companies like Googl…

The guy never made a moral criticism that wasn't immediately followed by "plus it will end up costing the bottom line in the long run".

Re: Why I Am Leaving Goldman Sachs

#123

Post by necubi »

byrneseyeview wrote: post #92

Goldman has a kind of hilarious understated response, in which they note that this guy was a VP (there are thousands of VPs at Goldman) and that the group he managed consisted of him and him alone. Plus, this was a bad year for bonuses. Nothing like a slow career and a dwindling bank account to make you aware of how morally imperative it is that you switch careers! The people I know at Goldman are generally bright an…

According to the NYTimes byline, he is a "Goldman Sachs executive director and head of the firm’s United States equity derivatives business in Europe, the Middle East and Africa."

That doesn't sound like a lowly VP.

It's rubbish that he has nothing to lose: coming out so publicly against your former employer never looks good on a resume. And Goldman can respond in the tradition of politicians facing similar stories: by using surrogates.

Re: Why I Am Leaving Goldman Sachs

#124

Post by byrneseyeview »

byrneseyeview wrote: post #92

Goldman has a kind of hilarious understated response, in which they note that this guy was a VP (there are thousands of VPs at Goldman) and that the group he managed consisted of him and him alone. Plus, this was a bad year for bonuses. Nothing like a slow career and a dwindling bank account to make you aware of how morally imperative it is that you switch careers! The people I know at Goldman are generally bright an…

Mirabile Dictu!

http://online.wsj.com/article/SB1000142405270230469280457728...

When Goldman doled out annual bonuses earlier this year, Mr. Smith's small payment became a point of friction, according to people familiar with the matter. Mr. Smith hadn't previously voiced his concerns about Goldman to his managers, according to people familiar with the matter.

Occam's Razor says that the NYT was masterfully trolled.

Re: Why I Am Leaving Goldman Sachs

#125

Post by wcgortel »

illumin8 wrote: post #120
byrneseyeview wrote: post #92

Goldman has a kind of hilarious understated response, in which they note that this guy was a VP (there are thousands of VPs at Goldman) and that the group he managed consisted of him and him alone. Plus, this was a bad year for bonuses. Nothing like a slow career and a dwindling bank account to make you aware of how morally imperative it is that you switch careers! The people I know at Goldman are generally bright an…

Managing $1T in client assets doesn't sound like a job for a lowly VP. Your comment is mostly an ad-hominem attack against the author because he may or may not have received a smaller bonus this year.

Fair point, but I'll note that Mr. Smith didn't manage $1T, rather he had clients who had an asset base at that level. That could mean "manage" but could also mean "I have spoken to people who manage."

Re: Why I Am Leaving Goldman Sachs

#126

Post by jpdoctor »

TheFuture wrote: post #116
jpdoctor wrote: post #93

Earlier quoted context omitted.

> My bigger concern is how involved GS is with our government. I agree: This deserves a great deal more attention. Hell, just the Henry Paulson tax giveaway should have caused civil unrest.

"tax" giveaway? It's all borrowed money anyway, not actual tax revenue. Drop in the bucket compared with the rest of the federal budget, and most of it was paid back.

> It's all borrowed money anyway, not actual tax revenue.

Huh? How is forgiven taxes not tax revenue?

http://www.marketwatch.com/story/paulson-files-to-sell-500-m...

If Hank paid the taxes anyway, I can't imagine that scumbag would have done so without major PR and fanfare.

Re: Why I Am Leaving Goldman Sachs

#127

Post by overpaid »

yummyfajitas wrote: post #117
danssig wrote: post #73

Earlier quoted context omitted.

That Forbes article is a great one. Personally I think now that the cat is out of the bag, we should start to see things changing at the executive level (though it's going to take years). For a long time, many of us have speculated that CEOs were overpaid but suggesting this was met with claims of being "anti-capitalist" and other such nonsense. Now thanks to the Forbes article and the book it's talking about, we can…

Could you define what you mean by "overpaid"? Is it merely a complaint that CEOs are paid more than you wish they were, or something else? Meanwhile the rest of us produce vastly more than, say, 20 years ago, yet wages remain mostly flat. This claim betrays a misunderstanding of how productivity is measured, and how workers are compensated for their productivity (i.e., comp is wages + benefits, not wages). Wages + be…

There are many people who believe that CEO compensation has skyrocketed not because CEO value has skyrocketed, but because of a lack of downward pressure on their compensation packages.

CEO compensation has to get approved by a board made up of other executives. As such, these board members have every incentive to lean towards granting generous raises, and virtually no incentive towards toeing a hard line.

This problem is exacerbated by the universal belief that every CEO is above average. As such, every CEO can say "we all agree I'm in the top quartile of CEOs, right?", and everyone will agree, and then he'll get a pay package that's top 10-25%.

And then, because CEO tenures are shrinking, this cycle will repeat, often, in a cycle that has absolutely nothing to do with the value created for shareholders, and absolutely everything to do with executive compensation schemes having gone off the rails.

Re: Why I Am Leaving Goldman Sachs

#128

Post by RockyMcNuts »

lix2333 wrote: post #114
byrneseyeview wrote: post #92

Goldman has a kind of hilarious understated response, in which they note that this guy was a VP (there are thousands of VPs at Goldman) and that the group he managed consisted of him and him alone. Plus, this was a bad year for bonuses. Nothing like a slow career and a dwindling bank account to make you aware of how morally imperative it is that you switch careers! The people I know at Goldman are generally bright an…

I thought this guy was an "executive director"? I think a lowly VP writing something like this wouldn't make nearly the splash he is making right now. A story like this is a nightmare to GS though. They've always prided themselves on valuing their reputation above all else and this is yet another shot to what they want to be seen as. However, it is important to realize that the public's perception of GS is different…

even if he was executive director, still not senior, more midlevel.

hierarchy is - management committee > partner managing director > managing director > executive director > vice president > associate > analyst

managing director is where you would be running a business, sort of like making general in the army, there are about 1700 of them. And the partners are the true senior managers and where real authority in the firm starts. Title inflation FTW.

He might have trouble eating lunch in this town without changing his name LOL. Best bet might be to write and try to be the next Michael Lewis (Liar's Poker, Moneyball, The Blind Side, contributes to Bloomberg and Vanity Fair, didn't turn out too bad for him.)

[edited Peter -> Michael]

Re: Why I Am Leaving Goldman Sachs

#129

Post by create_account »

byrneseyeview wrote: post #124
byrneseyeview wrote: post #92

Goldman has a kind of hilarious understated response, in which they note that this guy was a VP (there are thousands of VPs at Goldman) and that the group he managed consisted of him and him alone. Plus, this was a bad year for bonuses. Nothing like a slow career and a dwindling bank account to make you aware of how morally imperative it is that you switch careers! The people I know at Goldman are generally bright an…

Mirabile Dictu! http://online.wsj.com/article/SB1000142405270230469280457728... When Goldman doled out annual bonuses earlier this year, Mr. Smith's small payment became a point of friction, according to people familiar with the matter. Mr. Smith hadn't previously voiced his concerns about Goldman to his managers, according to people familiar with the matter. Occam's Razor says that the NYT was masterfully trolled.

He effectively blacklists himself from any future job in finance (and therefore ends his career) just because he doesn't like his bonus?

So no, it's not Occam's Razor: if he were merely unhappy with his bonus, he would call another i-bank and move on.

BTW, I notice you're always quick to defend the big money status quo around here (you were against net neutrality a while back, IIRC).

What's in it for you, as a mere SEO "consultant"?

Are you paid to post these talking points, or do you really believe what you say?

Re: Why I Am Leaving Goldman Sachs

#130

Post by jonnathanson »

steve8918 wrote: post #49

It's interesting how the tone of this article is almost exactly the same as the one about the Microsoft employee that recently quit Google. Something happens to companies as they get larger, where the culture of a company starts dying from a death-by-a-thousand-cuts, and then they start promoting the wrong people into upper management that seem to really poison a very good company culture. It sounds like Goldman Sach…

I think your last paragraph aptly explains it all. A fish rots from the head down. If we take a broad and intangible concept like "culture" and reduce it to its mechanical workings, we see that it's usually the net result of everyone's incentives. If people at the top are setting perverse incentives, then their lieutenants will meet those incentives, and on down to their lieutenants, and so forth. Those at the bottom of the ladder will model the behaviors of those they're seeing get ahead. And one day, when they're moving up, they'll carry out the behaviors they've been conditioned to exhibit.

The other tricky thing about culture is that it's a lot like trust: very hard to earn, very easy to squander. Once lost, it's difficult -- sometimes impossible -- to recover.

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