Well, the world was on the edge of its seat.
Finally, this week, with the publication of former Goldman exec Greg Smith’s “tell-all” book about Goldman Sachs, the world was going to learn what really went on inside the global money factory that everyone loves to hate.
For example, some people surmised, the world might learn about:
- The opulent lounges and conference rooms in which Dr. Evil-like Goldman execs concocted the swindles designed to part suckers (clients) from their money
- The stories of grotesque Caligulan excess: Piles of $100 bills set on fire at parties for the amusement of guests, maybe, or nightly coke-and-sex fests in the boardrooms, or pinatas shaped like clients stuffed with money hanging from the trading floor ceilings
- Spectacular details about the screwing and fleecing of clients and the gigantic bonuses that are then awarded for such spectacularly profitable behaviour
- The tales of how a handful of brave, honest executives tried to do the right thing and were therefore summarily demoted or dismissed
- A outrageous cast of characters like those who populated the best book about Wall Street ever written–Liar’s Poker–including The Human Piranha, The Opportunist, et al.
- A greedy battlefield of a world, as in Liar’s Poker, where rabid traders ran around challenging each other to games, smoking cigars, clipping each others’ ties in half, throwing phones, eating vast tubs of guacamole at their desks, and ripping each other’s faces off
- And so on.
After all, these are the details that we should expect to hear about a firm that is apparently so rotten to its core that a long-tenured (and low level) executive felt the need to resign by publishing an outraged editorial in the New York Times.
So the book’s finally here.
And what have we learned?
According to most of the reviews, we’ve learned that:
- Greg Smith once sat in a hot tub with a girl who didn’t have a shirt on
- Goldman’s CEO, Lloyd Blankfein, once “air-dried” after a shower or swim or something.
That either of these details seemed worth noting, I fear, tells us all we need to know about the rest of the details in the book.
- Executives start early and work hard
- Jobs are occasionally stressful
- Bosses sometimes make demands that frustrate or upset underlings
- Politics plays a role in promotions and pay
- Some executives occasionally say things in the heat of battle that, later, out of context, seem disrespectful or rude
In other words, the book seems to describe a company that is just like most successful organisations.
I worked on Wall Street for a decade. When I first got there, I was expecting to see the scenes and characters from Liar’s Poker. The reality was–and is–far more mundane.
Yes, people on Wall Street get paid 10x-100x as much as people in other industries. Yes, people on Wall Street often live large relative to people in industries with normal compensation. Yes, the gigantic pots of money that Wall Street divvies up every year attract competitive types. Yes, Wall Street firms are political. Yes, people on Wall Street occasionally screw up and hurt their clients. Yes, especially in bull markets, Wall Street occasionally gets giddy and stupid, as a result, makes idiotic mistakes. Yes, the focus on an annual “scorecard” of huge bonuses encourages short-term thinking that often damages or needless risks long-term value. Yes, Wall Street needs to step back and understand how it is perceived by the rest of the world and change its attitude accordingly.
But, overall, the deep dark truth about Wall Street is this:
- Most people are good people who care about their clients and try hard to do well by them.
- Some people are venal or incompetent or reckless.
- The density of the latter people as a percentage of all the people is no higher than it is in any other industry.
Based on the initial reviews of Greg Smith’s book, it sounds as though that is very much the Wall Street he experienced.
And if Smith is expecting the next industry he works in to be any different, he’s going to have another epiphany coming. Especially when he realises how little other industries pay relative to Wall Street–and, thereby, how fortunate people are to work on Wall Street. And especially when he realises that the firm he just quit in disgust is, on balance, one of the best-run, most professional, and most consistently successful corporations on earth.
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