Goldman Sachs

Goldman Sachs. A name that evokes images of Wall Street power brokers and billion-dollar deals. But it didn't start that way.

In 1869, Marcus Goldman arrived in New York City. An immigrant from Bavaria, he had little more than ambition and a knack for business. He opened a one-room office next to a coal chute in Lower Manhattan. His business? Buying and selling promissory notes.

"I saw an opportunity," Goldman would later recall. "Banks weren't meeting the needs of small merchants. I could."

It was a humble beginning. Goldman pushed his cart up and down the streets, building relationships with local shopkeepers. He evaluated their creditworthiness and acted as an intermediary with banks. Trust was his currency.

The spark came when Goldman realized he could scale this model. In 1882, he brought in his son-in-law Samuel Sachs. Goldman Sachs was born.

But Wall Street was a tough place for newcomers. Especially Jewish immigrants. The firm faced skepticism and outright discrimination. They persevered.

"We had to be twice as good," Sachs said. "So we were."

The turning point came in 1906. Henry Goldman, Marcus's son, convinced Sears, Roebuck and Company to go public. It was a massive deal. Goldman Sachs had arrived.

Success bred success. The firm pioneered the use of financial innovations like commercial paper. They underwrote IPOs for F.W. Woolworth and Continental Can. By 1929, they were a powerhouse.

Then came the crash. The Great Depression hit Goldman Sachs hard. There were accusations of insider trading and market manipulation. The firm's reputation was in tatters.

Enter Sidney Weinberg. A former janitor's assistant who rose to become senior partner. He rebuilt Goldman Sachs from the ground up. His mantra?

"Our assets walk out the door every evening. We have to make sure they come back."

Weinberg's leadership transformed Goldman Sachs. They expanded into new areas like mergers and acquisitions. They cultivated deep relationships with corporate America. By the 1950s, Goldman Sachs was the go-to firm for big deals.

But the real test came in 2008. The financial crisis threatened to bring down the entire system. Goldman Sachs was in the crosshairs.

"We faced a choice," said Lloyd Blankfein, then CEO. "Adapt or die."

They adapted. Goldman Sachs became a bank holding company. They took government funds (which they quickly repaid). They overhauled their risk management practices.

Today, Goldman Sachs is a global financial giant. Net revenues of ~$50 billion. They manage over $2.7 trillion in assets. From a one-room office to a skyscraper on West Street.

But at its core, Goldman Sachs remains true to Marcus Goldman's original vision. As CEO David Solomon puts it:

"We're still in the business of helping our clients grow and succeed. The scale has changed. The principles haven't."

Lessons

Lesson 1: Build a culture of excellence, not just profit. Goldman Sachs didn't become a powerhouse by chasing quick wins. They cultivated a culture where being the best was the standard. This isn't about motivational posters. It's about hiring people who are obsessed with being great and giving them the resources to do it. As former CEO Lloyd Blankfein put it, "We bring in people who are very smart, who have a lot of potential, who are highly motivated, and who are willing to work very hard." This culture becomes a moat. It's hard to replicate.

Lesson 2: Talent is everything. Pay whatever it takes. Goldman doesn't just hire smart people. They hire the smartest people and pay them extremely well. This isn't charity. It's strategy. By having the best talent, they can tackle the most complex problems and win the most lucrative deals. As one former executive put it, "We're not in the business of paying people fairly. We're in the business of paying people more than anyone else to get the best."

Lesson 3: Information is power. Build systems to harness it. Goldman's success isn't just about individual brilliance. It's about creating systems to gather, analyze, and act on information faster than anyone else. Their risk management systems are legendary. Their ability to spot market trends is unparalleled. This isn't by accident. It's by design. As Marty Chavez, former CIO, said, "We're a technology company that happens to be in the financial services business."

Lesson 4: Client relationships are your moat. Goldman's client relationships are deep and long-lasting. They're not just transactional. They're strategic partners. This gives them insight into client needs and market trends that competitors can't match. It also creates a barrier to entry. As one client put it, "Goldman doesn't just execute trades. They understand our business better than we do sometimes."

Lesson 5: Adapt or die, but don't lose your core. Goldman has reinvented itself multiple times. From a small commercial paper business to a global financial giant. From a partnership to a public company. From pure investment banking to consumer finance. But through all these changes, they've maintained their core identity of excellence and client service. As John Waldron, President and COO, noted, "We're always looking to evolve, but we never lose sight of who we are at our core."

Speeches and Interviews

• Dominique Laboureix's speech at Goldman Sachs: 28th Financials Conference
• Watch CNBC's full interview with Goldman Sachs CEO David Solomon

Book Recommendations

• 21 books Goldman Sachs executives say you should be reading right now
• Popular Goldman Sachs Recommended Reading Books - Goodreads
• 10 Books Goldman Sachs Executives Say You Must Read This Year

Further Readings

• Goldman Sachs Research
• Goldman Sachs Insights Articles
• Goldman Sachs at 150 - Company History
• Excerpts of Clinton's Paid Speeches to Goldman Sachs Leaked
• Goldman Sachs Recommended Reading List (PDF)