Goldman Sachs CEO David Solomon: What Startup Founders Get Wrong About the CEO Job

Goldman Sachs has been around for 155 years and there's been a lot said about Goldman Sachs's culture and Goldman Sachs's culture is unique. But I would also say it's constantly changing >> and you better be working at defining what you want it to be and constantly reshaping it and amplifying what you think really matters. The general ethos of the firm is if you build trust with clients, if you take a long-term view, If you do the right thing, good things will happen. And I I've watched that in my career and I believe it deeply. [music]

[music] Okay, this is a special episode with David Solomon, the CEO of Goldman Sachs, an incredible company, been around 150 years, just a terrific person in a terrific company. We get into a whole bunch of topics. One was decision-m and in particular, you've got something Going, it's kind of wobbling. When do you double down and when do you pull away? and he's he recently has had a Whopper decision where they had a consumer partnership with Apple and they recently basically walked away from that partnership and so we get behind the scenes on that decision. I

think it was pretty interesting. He credits culture a lot with why they've been around for 150 years. I've had a ton of CEOs and it's really thrived. He's really thrived in The job and we get into culture. Culture is a big reason why HubSpot's only 19 years has been successful as well. I hope you like the episode. David is very sharp. Uh I he joined the company. It had a 40 billion market cap I believe and now it's something like 160 billion less than a decade later. So he's very very good and very thoughtful. Hope

you enjoy it. Thanks for joining us. >> Thank you for having me. >> Um when I was a CEO, I really admired Steve Jobs. Um I tried to emulate him. I kind of really studied him and followed his playbook and it largely served me pretty well. Who's your Steve Jobs? >> That's a great question. I, you know, I'd start by saying that, you know, Steve was obvious obviously extraordinary in the context of what he did. >> Although I don't know that most public company CEOs could model Steve and get away with it In uh in

today's in today's world. But he was extraordinary in terms of his his his his focus, you know, his vision for what he thought really mattered. I don't I've thought a lot about this because I've been asked similar questions, you know, over the years. And I I don't have a Steve Jobs. >> One of the things on your Mount Rushmore. >> Well, I mean there there that you know, I mentioned, you know, some people right Now that I, you know, I watch and I I I think enormously high. I mentioned Satia um Nadella and you know

one of the things I've learned from him in my own journey as a CEO is he's an incredibly empathetic leader >> and you know it's hard you know to move an organization and also exhibit empathy >> um and um and so I've you know I've watched some of what Sati has done you know in that context because um you know I think I think he leads with an Enormous amount of empathy besides the fact that he's a great strategic thinker and a whole bunch of other things. >> Um he's done an extraordinary job with uh

with Microsoft >> but then you also you know you can also you know pick and choose you know people that you know at times have led extraordinary transformations. you know his his journey is a different one at this point for a variety of reasons but there was a period of time Where I was really watching the way Bob Iger was transforming Disney and you know it was a difficult transformation and so I've tried to pick out things that are going on with different CEOs and constantly say what can I learn one of the great advantages

I have in my job is part of my job is to travel around and spend time with CEOs >> interesting people >> so you get with interesting people so You get ask them, you know, why you doing this? Why'd you do this? How did this work? So, I get a lot of private time with with CEOs to really reflect and that's helped me a lot in my own my own journey as a CEO. >> You've worked for some legends, uh, Lloyd Blankfine, Hank Pollson. Did they mentor or coach you? Is there things you took from

them that were incredibly valuable that all of us can learn from? >> I learned a lot from both of them. And You learned different. They they they had different skills. They had different personalities. into different things. Lloyd was an incredible risk manager, an incredible risk manager, and he had a he had an incredible ability to really sweat and worry about the things that had a small probability of happening. But boy oh boy, the fact that he was that way when we went into the financial crisis, you know, he was two steps ahead a lot of

other uh a lot of other bank CEOs and I think was really extraordinary as a risk manager in that context. >> [clears throat] >> You know, Hank Hank was Hank was driven. He had a great nose for client relationships and how to get things done. And Hank also, you know, Hank had an incredible compass. And you know, one of the things that I definitely >> What do you mean by that? >> He believe he we all need a compass, you Know, in these [clears throat] jobs and you want that compass pointing north. And one of

the complicated things about being a CEO is there are a whole lot of things that are constantly banging on you trying to knock your compass off of north. And sometimes it takes enormous, you know, resilience and determination to keep that compass keep it pointed in the direction that you know is right while there's a lot of noise or agida. And you know, one of the things I Learned from Hank and I [clears throat] just remember I remember sitting in a meeting with him, you know, early on when I was at Goldman Sachs and somebody was

suggesting something and there was a lot of momentum for it and he just said, "Well, we're not going to do that." >> Okay. >> And it was completely against it was completely against kind of the consensus of the room and he was he was being a CEO because he thought it was wrong. He Said, "We're not going to do that." >> And so I you know I think it's um I think you can learn from a lot of people. I had a great mentor who wasn't a CEO who actually you know if you would if

you would frame the question around who's the most important mentor >> you've had in your career was a gentleman named Richie Metric okay >> who I worked for at Bear Sterns in the 1990s been the CFO of Interstate Bakeries he'd been a lawyer >> he was also just intuitively one of the smartest people I've ever met in my career and I've met a lot of smart people but he had a profound impact on teaching me at a time when I was in my late 20s and my early 30s and I was kind of rising up

in an organization relatively quickly. He really taught me to be self-reflective and really understand strengths and weaknesses >> and you know be pretty hard on myself about things that I had to change >> if I wanted to advance. He forced me to look at myself at a time where I had, you know, less maturity, less of an ability to really I was just going >> and he for forced me to pause and really think about myself and how I could make myself better. And he had a profound had a profound impact on me. >> Okay.

Interesting. There's it's a little bit fashionable in Silicon Valley these days that people are saying you got a much better return on your investment by Investing in your strengths and making them stronger versus fixing your weaknesses and you should just hire around your weaknesses. Any reaction to that? I I think to be successful over a very very long career where you're going to be in leadership positions and ultimately rise up to lead a big organization. And by the way, it's very different from a founder leads an organization because they created it. >> Yes. >> And

they anoint themselves founder. It's theirs. >> Yes. you know, rising up to lead a 150-y old organization like Goldman Sachs, >> you better have a lot of strengths, you better be working on your weaknesses, okay? >> Because if you're not doing all of the above, first of all, it's a random walk to begin with because there's so many talented people. And you know, one of The things I've always talked about is serendipity and timing. >> Um, and I think serendipity and timing have a lot to do with who winds up in the in the CEO

jobs in these in these organizations. Um, but I think you better be working on the, you know, the whole package if you want to put yourself into the ring and have a chance to, uh, to come out of the ring. Got it. >> To come to come out of the ring. >> Another kind of something floating in the air in Silicon Valley is founders really hiring for slope versus experience. So, the very young, very intelligent, high slope person versus someone who's sort of been there and done that. Um, and you talked earlier about about just

smart and and I it reminds me um I'm a Boston sports fan and the in the Boston Celtics have an announcer named Tommy Heinson [snorts] and Tommy Heinson very announcer. He was Really good. And the Celtics had like a backup backup center who was very low skill but was giant. And I remember Heinstein saying, you know, he may not have a lot of skill, but you can't teach seven feet. And I kind of think the same with smart. You can't teach smart. So, how much is it about smart versus experience? I kind of think you

guys are famous for hiring very bright young people and moving them up. We're we're as an organization, we're Extraordinarily lucky that we have so many incredibly bright people that are interested in working and spending time at Goldman Sachs. But, >> you know, I'm I'm in the camp of smart enough. >> Okay. Um, you have to be smart enough, but the smartest person in the world without a whole package of other things not going to navigate Goldman Sachs well. Not going to be successful in Goldman Sachs, you know, over the over the, um, over the long

run. >> You know, the human elements, um, the ability to connect, resilience, >> determination, striving for excellence, you know, things that matter, you know, everywhere. It's interesting when you talk, you know, you live in a founder world. >> I live in an established company world and I deal with founders as clients. But, >> you know, it's um, you know, this this this concept of of slope versus experience. I live in a world where experience is worth a lot. I live in a world, if you sit around the management committee table at Goldman Sachs, >> the

level of experience and the judgment that comes from that experience is extraordinary. underrated in your mind. >> And and hugely underrated. And by the way, hugely necessary kind of big Differentiator for the firm. >> Okay. >> Um you can't you can't teach experience. >> No, >> that doesn't mean somebody without experience can't do very very well. But it's you know it's >> I mean someone can't watch this podcast and then run Goldman Sachs and not be able to do it. >> Well, a lot of people there are a lot of people that can run Goldman

Sachs and Maybe if they do they'll have less bumps and bruises than I do. But um >> you know experience experience matters in these big organizations and when it matters it doesn't matter when things are going well. >> It matters when the bumps come. >> Yeah. >> Um and you know you've got to make difficult judgments and and making those judgments and and they're not they're not 9010 judgments. They're 5149 Judgments. >> No easy decisions at the CEO desk. >> By the way, if it's an easy decision, it doesn't make it to my desk. One

of the things I've realized is I don't have to make a lot of decisions. >> What's the best of two shitty options? >> Yeah. where that is that is oftentimes what CEOs face. >> Yeah. >> Okay. A lot of people listening are VP of such and such in XYZ scaleup company And they want to be CEO of a company someday. Um you were kind of hired from the outside, you rose up to CEO. Advice to those folks who are on that kind of track who want to be not found a company but become a CEO.

And I think basic in tech a lot of companies are getting older and a lot of founders are going to step aside in the next few years and a new generation will kind of come up and take over them. Advice for those folks. What was a younger David thinking about Back then? >> Well, I think I think one of the things that's interesting when I was you know I joined Goldman Sachs at 37. I had I had actually I had worked early in my career at Drexel Burnham and then Drexel Bernham went out of business

and I wound up at Bear Sterns and I did very well at Beer Sterns. I rose up into a relatively senior position at Bear Sterns in my mid30s. And when I joined Goldman Sachs, I Certainly did not aspire to be the CEO of Goldman Sachs. You know, I aspired to to practice the trade of investment banking, be super successful at it, impact the organization. >> Yeah. >> I I decided that I was a big organization person. >> Okay. >> Um, >> what do you mean by that? >> I I loved, you know, there's a dynamic

In a large organization. the resources, the access, the platform that I found very very appealing and the leadership opportunity, you know, in big platforms. I found that very very appealing. So I was leading, you know, in my 30s at Bear Stories, but then at Goldman Sachs, you know, I was managing hundreds and hundreds of people. Yeah. Um, very quickly, thousands of people. [snorts] >> Um, and I really I enjoyed that. I enjoyed the platform. I enjoyed being a Part of an institution. It wasn't about me. It was about, you know, stewarding >> Yeah. >> stewarding

the institution. I really I really enjoyed that. >> But I never, my goal wasn't to be the CEO of Goldman Sachs. In fact, I I >> in some ways I'm the unlikely CEO. Okay. >> Um I came from the outside. I was never, you know, you can go back and you can look at some articles, you know, the dark horse candidate this the unlike. I Mean, a lot of it serendipity, a lot of it's luck, but it wasn't it wasn't my principal goal. Now, at the same time, I just told you that I liked leading

people. And so, I knew I was developing skills that gave me the possibility of leading a organization. But what I was focused on was developing skills and seeing where the road took me, not kind of pointing to a seat and saying, "How do I get to that seat?" >> Yeah. >> Um, and so my advice to people that really want to run a big enterprise, Yeah. is you've got to do a lot of different things. So, one of the great benefits that I got at Goldman Sachs is I did a lot of different things. >>

They moved you around. >> They moved me around and I, you know, I was I was running all of credit trading when I joined the firm. Yeah. >> And then Hank Paulson came and said to me, "You're going to go run equity Capital markets." And I said, "Well, I really like this job." And he said, "No, you're going to go do this." >> Yeah. >> Um, and so it was it was a completely different thing. >> Do you think startups should do that? They've got a high potential person move even though they're great in moving

the needle in what they are doing. Should they have rotation type? >> It's harder. It's harder. It's harder in A startup. >> Yeah. >> Okay. It's harder in a startup because you you have you have a limited number of people do again big enterprises and platforms. This is one of the things that's really attractive about working at a big enterprise like Goldman Sachs. You can move around and do a lot of things. Yeah. >> And a startup that's trying to scale in a business, >> you know, you don't you don't have that same luxury. you

you can't you can't the organization can't be as patient you know to some degree so they they really are they really are different things but if you want to lead if you want to really lead people and lead big parts of organizations or ultimately lead an organization >> I think you've got to try to do a variety of different things and really gain experience >> do you think failure is important along that road >> I I think failure is important for everyone because you know there's there's no one >> do you feel like man I

fell on my face on the way >> I I mean I fell on my you know, so many times. I mean, so many times and I I can tell you, you know, crazy stories about being, you know, really learning what it is, you know, to Be responsible things. Goldman Sachs is a very competitive place. We compete to a very high standard. I I mean, here's a small, you know, anecdotal story. It was uh I I was over I had flown over to Ireland to play golf for three days with a group of guys I went

to college with because it was the year when we all turned 40. >> And I had just started running the equity capital markets business at Goldman Sachs. And when I when you know We got over there um and that night we're having dinner and this is you know cell phones existed but it wasn't the same constant text and everybody in touch but I checked my message after dinner so it would have been uh you know 10:30 at night so it's going to be 5:30 in New York. We had missed a $2 billion equity deal for

uh for Accenture and people were going apoplelectic as how it could happen because we had led their IPO, you Know, a year earlier and we missed this $2 billion equity deal. >> And you know what, my area, I was responsible. I was figuring out how to get myself back to New York. I was back in the office the next morning dealing with it. And it's, you know, that's you learn from those things. Yeah. Okay. Because the world was like, "Okay, you're in charge. How could this happen on your watch? Now I tell the story now

it's 25 years later it's one deal but That ethos of competing to that level of excellence that level of accountability those are things that have really made Goldman Sachs what it is over a long period of time and if you want to lead in that organization >> you know you have to when when things don't go right you have to run to them and you have to jump on them and so I mean that's happened so many different times in my career different ways different things >> bad judgments on people chose the wrong people had

to correct Mhm. >> By the way, I mean, one of the most difficult decisions I made was for us to step away from some of the consumer business that we had started. >> Yeah, let's talk about that. >> Yeah. Um, >> that I don't think that was your bet. >> Well, I didn't I didn't start it. I, you know, I I didn't start it. The the the Theision roll back the history a little bit. So, it's >> Sure. >> The thing that I find interesting about it after running HubSpot is like you've got your core

businesses. They're going great. It's like and they're big markets and you're you're deep in the markets. Should we just triple down on that or should we take a risk and do something new is one question in my head I always Wrestle that. The second question is okay we did that bet. It's going okay if we just put enough resource on it would work. And so the decision to go into it I think is interesting. And the decision, I'm sure you doubled down a couple times about the decision to step away. That's fascinating to me. >>

Well, there there are a couple things. I mean, it's it's it's a complex story as these things always are. And and >> you know, there's a there's a press Narrative around it that >> what's the real narrative? >> Well, the reason that we the reason that we there are a number of reasons why we decided to move into the business, but a big reason we decided to look at the business was to start to build a deposit platform. >> Yeah. because the firm was the largest wholesale funer in the world and there are a lot

of things that you want to be the largest in the world. Wholesale Funer as a financial institution is not one of them. >> Okay. >> Okay. [laughter] >> So, you know, deposits represent, you know, a much more stable base and because we hadn't grown up as a bank. We did not have a deposit platform and digitization was allowing the concept of digital deposits. And so the original idea was we'll build a digital deposit platform and we'll we'll make some Consumer loans and we'll see what we can create out of it. >> Was this bubbling under

the surface for a year 10 years? >> No, there was there was there was a very famous meeting out in the east end of Long Island at Gary Cohen's house who was the president with a group of the senior leaders brainstorm. Yeah. Brainstorming around growth ideas that would move the firm forward. This was this was surfaced by by a couple of Other people. not me, a couple other people there. I was running investment banking at the time and Lloyd decided that that he wanted to do it and then shortly after we started that [snorts] um

Apple approached us as to whether or not we wanted to look at partnering with them on a credit card and I think you know there the thought process was one of the largest most important companies in the world you know if you're going to do this very interesting partner very Interesting tech partner and so a decision was made that we'd go down that road we'd try to do it And one of the reasons we were attracted to Apple is Apple wanted to do it differently. >> Hold on, let me stop you there. You're you're in

Long Island. You're having that discussion. A couple guys present it. >> And was there a lot of debate around it? How does Goldman make a decision like that? Is it is it consensus? Were there A bunch of people in the room said, "Hey, this is crazy." There was a lot of debate and there were a lot of people offering opinions, but ultimately >> the decision to launch the the deposit platform and um and start the small lending business that we called Marcus ultimately was Lloyd's call. >> Okay. >> Yeah. And that's >> and was it

contrarian to what the room generally wanted? >> No, it wasn't it wasn't contrary although there were people like why would we do this? But I I think the deposit thing was a really important strategic decision. I think that was right. And then how did you decide you didn't have any experience in that who to give that opportunity to as opposed to acquiring in the space? Here's here's where I think, you know, and this is all hindsight, you know, and hindsight's very easy, obviously, because with Hindsight, you know, you're going to be mostly right. >> Mostly

>> I think [laughter] I think one of the um I think one of the big mistakes we made, this is a little bit culture, and I've I've tried to evolve this a little bit. The firm always operated as we did new things and we grew the firm that we've got lots of smart people and we can figure it out. It was very insular. There was never a View that you know let's go get real expertise from the outside. >> Now that evolved a little bit by the way that's one of the reasons why I wound

up at the firm >> um because I had an expertise that there wasn't there wasn't it wasn't expertise that was heavily embedded in the firm. Um but um but I think with hindsight we would have been better if we really wanted strategically to be in that business to Buy a more established platform instead of starting from scratch. Now what's also lost in the story and the narrative is we built some very very good things. First of all the deposit platform is very big and very successful and the firm is enormous benefits from the fact that

we have this digital deposit platform. Enormous benefits and that's worth a lot a lot of money. Yeah. >> Um and it's very important for the firm's funding and the way the firm is Competitively positioned. credit card platform with Apple is an extraordinary product and service. And you know, while it's it's out in the world that we're not going to be a long-term Yeah. >> you know, holder of that, it's something that we built with Apple. Yeah. >> That is really terrific. It's the And it's it's a great product. It's a great service and it's really

working now. So, what prompted the decision? The decision Was prompted by the fact that the regulatory environment had significantly changed. We and other financial institutions were dealing with regulatory changes and it became very hard to organically scale that to a place I see >> that you could really make it work. >> The firm was feeling some pressure because it was a tough time after the Russian invasion of Ukraine and asset prices in 2022. We had a lot of Regulatory pressure and you know a group of us in the senior leadership said this is not working.

We can make it work, but it's going to be very, very hard. But it's small and it's distracting us from the things that can really create significant market cap and value. And so we made the tough decision to park it. It was a tough call. But there's also a very a lot of attention on it, unfortunately, for such a small thing. >> I mean, if you if you really go back and think about it, you know, the firm was doing well. >> Yeah. And this was less than 5% of the firm's revenues. >> And it

was getting attention as though it was 40% of the firm's revenues and 40% of the firm's capital. >> But that affected the decision because it was distracting from the progress we were making in other things. >> You know, in the long run, it may or may Not have been in the broad breath of what Goldman Sachs will become over the next 50 years the right decision, but it was definitely the right decision for that time. and it helped clarify the focus of the firm and get the attention back on to all the good things the

firm was doing. And I think we've benefited enormously the last few years, you know, from that. >> You just talk about that decision like CEOs face that type of decision all the Time of like should we double down or should we just pull the band-aid off and pull out? Um was that bubbling for a couple months, a couple years? Was there another group saying, "Hey, we just need to double down and get the right people. is going to work. Can you just kind of take us in the room and take us inside your It was

a very tough call you made. >> You know, one of the things about Goldman Sachs, Goldman Sachs has been a partnership for 140 years. And I think One of the things that you know that as a leadership team we're most proud of over the last over the last seven years um is that we've really kind of completed the journey to really getting the leadership the broad leadership the partnership because we still have this concept of partnership >> really focused >> on delivering for shareholders and we're fully making the transition from kind of being a public

company but still Operating more like a distributed partnership ship versus now really being a public company and really working for the whole of the company >> and um you know that that that was a tough thing to manage. So when whenever you know whenever there are headwinds at Goldman Sachs people get very critical of anything that's not working because they see it as affecting them. >> Yeah. >> You know very directly. I think we're in a better place in terms of how you know we operate around that all but there was a lot of pressure

from people in the organization that thought that it was going to cost you know them money in the short term >> but that that really wasn't weighing what was what was weighing was the fact that I still think there was a belief I knew I had a belief that with a much longer term lens we were doing something That could be very interesting and really give the firm another leg of growth. >> Yeah. >> But I knew that it was going to be very rough to get there given both the regulatory environment and the current

market environment and just where kind of the >> the culture of the firm felt. And so, you know, went and talked to the board and the board's initial response was no, No, no, no, no. Okay. >> Yeah. No, no, no, no, no. >> And, you know, we we talked about it and we worked through it over >> one meeting or is this over >> over a few months? I see. >> Over a few months. I mean, I, you know, I was over multiple board meetings, but it was over, it was over a few months, >>

but um, you know, I look back at decisions I've had to make. That was in some ways that was the hardest Decision. In other ways, as as a team we did the work and we talked about it, it became an easier decision because it became clear this was going to be the right thing for the firm at this time. >> Okay. A lot of start I work with a lot of these hot AI startups and they all want to partner with whoever with open AI with Apple with SAP with you name it. My company partnered

with Google and Salesforce you partner with Apple. Um advice on dancing with giants. >> Well, you know Apple obviously is a bigger company than Goldman Sachs. Goldman Sachs is no peanut startup. Um, and so I would say >> but big companies I would say partners would say there was more I that's that's exactly where I was go. I would say it was more of a peer relationship >> but partnerships between companies are tough. >> And you know what I would say to you know accelerating or scaling up young Companies that want to partner with these

you know these big platforms you know most partnerships don't work. >> Yeah. And there better be really compelling, you know, glue to that partnership or, you know, chances of it working or low. I mean, the you and I know, I mean, you partnerships are hard. Yeah, >> partnerships are very hard. Organizations have different cultures, different expectations, and partnerships Are very, very hard. Now, that doesn't mean there aren't some great partnerships. Um, but to have them really work, you've got to have really good alignment of incentives, of purpose, of incentives, >> and a governance structure that

can assure that the, for lack of a better term, the friction in each organization doesn't doesn't make it harder for those for that partnership to move forward. >> I'm just going to go back a minute ago. You talked about solving for shareholders and I I talked to founders and some founders like there's three constituents that you can solve for. You really double down on the shareholders or really double down the employees or really double down on your customers. Where does where's sort of Goldman's energy? Um where's your energy on that? I'm not gonna let you

off the hook and say all three. Well, I I you don't have To you don't have to let me off the hook, but I'll I'll talk about a couple of things of the way I think about it. >> Okay? >> So, first of all, for any business, >> okay, if you don't have a product or service that you're selling to somebody that is value ad, you don't have a business. >> Okay? So, let's just start with whether it's clients or it's customers or it's fine, >> you know. So, what is true north for Goldman Sachs?

True North for Goldman Sachs is client. You know, we know >> it sounds like investors have a loud voice. >> Well, investors do have a loud voice. We'll come to that in a second. But just if I if I finish this if I finish this thought, >> you know, client centricity is true north. It's one of the firm's four core Values. >> Okay. >> Client service, partnership, integrity, excellence, four core values. But client service, client centricity is kind of true north. And the general ethos of the firm is if you build trust with clients, if

you take a long-term view, if you do the right thing, >> good things will happen. >> It's a long game, good things will Happen. And I I've watched that in my career and I believe it deeply. >> Really deeply. Now, if good things happen with clients and our business, good things happen for shareholders. And you can't be confused. If you are not delivering for shareholders, you're not going to be able to do good things for clients because what do we deliver? What do we deliver to clients? We devote people, capital, and technology. And we marry

those things together. And you Know, if you're not performing for shareholders, your ability to have the resources and the capability to be really good for your clients gets limited. >> Now, here's the tricky thing. In our business, we have to have extraordinary people in our business to be able to do any of this for shareholders or for clients. So, I don't want to go back to you're not going to let me do it, but I need to I need I need to I need to Deliver for all three. Okay. And it's almost like it's almost

like as a leadership team, it's kind of like we're conducting an orchestra, and we've got to, you know, conduct the orchestra between, you know, clients, people, shareholders, and we've got to make it all sound beautiful. And and at the moment, we're going through a period where it really does sound beautiful, and I kind of like that. But I've also been through other periods where it kind Of sounded like something was out of tune. And then you've got to you got to figure out how to get back into balance. >> Okay, speaking of orchestras, like I

had an old boss that used to say, "We're not an orchestra, we're a jazz band." Um, and I work with all these founders that they're in 40 person companies going to 400, going to 4,000, going to 40,000. And they're it slows everything slows down as they get bigger. And man, they complain about it. Uh, and they always Ask me like, "Brian, how do I how do I keep the speed and the intensity and the missionary zeal as we go from 40 to 400 to 4,000?" You seem to be moving pretty briskly for a 40,000 person

or advice for these founders. >> Well, one of the things that's just interesting is I'm not scaling an organization from 4,000 to 40,000 to 400,000. you know, I inherited I I I stepped into my role with an organization that had about 36 or 38,000 People. And today, you know, I'm I'm in the eighth year of my tenure, just started the eth year of my tenure, >> and we have, you know, 48 or 49,000. >> So, we've had nice growth. >> But, you know, the bigger thing is that we've taken the revenues from 34 billion kind

of on average where they were in the last decade to kind of 55 to 60 billion. And I think the market cap's four or 5x. >> Yeah, we've taken the market cap from 60 70 billion to 250 billion. So, we've done we've done a really >> we've done a really nice job at growing the firm. >> You know, the firm our firm scales there. There are businesses in our firm that scale with people, but there are a lot of businesses that scale with capital. And so, you know, one of the things I think we got

really right that really helped our market shares, particularly in our core business, is we Put more financial resources. We scaled more capital into the business and decided we were going to lean into providing more resources which generated, you know, more more return. I on this point though of of nimleness, you know, this all gets to culture and and and you know, one of the things that I think Goldman Sachs has been around for 155 years and there's been a lot said about Goldman Sachs's culture and Goldman Sachs's culture is unique, but I Would also say

it's constantly changing. >> And the most >> is that an intentional change or is it bottomup changing? >> It's it's both. I mean, it's both. But but here's the thing. you better be working at defining what you want it to be and constantly reshaping it and amplifying what you think really matters. And you know, I'll give you an example >> of something we did that I think just Shows you how we think about this and why it's it's so so important. Co was awful for everybody, was awful for businesses, particularly awful for our business. Think

about our business. We have 49,000 people. 50% of them are in their 20s. It is an apprenticeship culture. They're coming to the firm to spend time with people and all of a sudden the whole ecosystem is like often a different it's it's like you know we were we were on Earth now We're on Mars. Right. Okay. >> Right. >> And so you know in that in that context it frayed at our culture and there was a lot going on during that period of time was fraying at everybody's culture. But as soon as we got to

a point which was like okay we're going to go move forward as a leadership team we said we have to kind of reinvest and reinvigorate our culture and here's what we decided to do. We said we're going to make a big Investment in this. So there are 450 Goldman Sachs partners. We said we are going to take the time to send during the course of a year. It ultimately took us 15 months. We're going to send all the partners off in groups of 25 offsite for two days to talk about the culture, what's important in

the culture, and what their responsibility is to steward that culture. Okay. And reinvigorate it. And I committed to have a three-hour, four-h hour dinner with every single one Of those cohorts over 15 months. >> Okay. How much weight did you gain during that time? >> I, you know, I tried to eat very little. And uh but but the point is, think about it. the most senior people of the firm. >> Yeah. >> All going away in cohorts of 25 to spend two days together. So offline for two days. The CEO committing to do 20 dinners.

>> Okay. >> It was a big commitment. You know what? We came out of that and the firm was aligned on what mattered culturally. Okay. >> And there were some changes and there were some, you know, nuance things, you know, still foundational values, but it was a kick in the pants to everybody. Hey, we own this. We have to steward it. We have to feel figure out in the new world that we're in how do we make this really exceptional so that all the Things that make Goldman Sachs exceptional continue to be. And so one

of the things that's just interesting when I when I talk to founders and startups they talk about their cultures. >> Okay. And the first thing going on in my mind is that's great but the company's been around for seven years. Okay. >> How do how do you find a culture in a company that's been around for seven years? How are you putting your mark on what it's going to be? What's it going To be at 15 years versus seven? It's a very different thing >> when you don't have you know that foundation but culture in

all organizations requires commitment investment focus you know that that matters in all big small growing scaling established >> you know one or two things that came out of all those dinners in that big confab that were like we're this is what our culture is and this is where our culture Isn't where there a couple of things that you're like this really changed Um I you know I think I think you know a recind of underwriting of what it meant to hold the organization to a standard of excellence. I see >> that that >> you felt

that was slipping. >> You know, it it slipped. If you think about what was going on in 2020, 21,22. I mean, here's >> saying, you know what, I can do anything From home that I can do from the office. Okay, it's not the same level of excellence as where do I show up today? How do I bring people along? How do I be committed? >> It's just different >> at least in our business. I'm not going to say in our business. So, you know, really re-underwriting that level of excellence and also getting people to really

rethink, you know, there is no perfection. >> Okay. But, you know, excellence is something that you can choose. >> Okay. >> And really re-underwriting that in the culture I think was something that came out of this. The other thing that came out of it as an exercise which wasn't really about defining the culture but I think helps a lot is it really allowed us as a leadership team and allowed me as the CEO to reunderwite the strategy and the way we wanted to communicate Around the strategy and really get the whole leadership of the organization

450 strong 100% on board with where we were going. And when you get a big organization, you get the top 450 people all aligned on strategically where you're going, boy, you get a lot of output. >> I think it's absolutely fascinating how long you folks have been around and and thrived. It's very rare. Uh my company's 19 years old, super proud of it. I'd Like to be around in 150 not me, but I'd like the company to be around in 155 years. What advice would you give me? What advice would you give founders like me?

>> I I think it's the wrong I think it's the wrong lens. Okay. >> Okay. I I And look, it's interesting if you go back to companies that were founded, you know, in the middle of the 19th century, there aren't that many left. No. >> Okay. And >> by the way, companies founded now, you know, 100 years from now, there won't be that many left. >> I think that it's a random walk to create a hundred-y old company. >> And in the distribution, the world changes, the competitive landscape changes. Um, the goal should be to

build the best business you can, the best company you can. And as long as you're doing that, you're really adding value To your clients, your customers, you know, you're adding value, opportunities will emerge that will allow you to go further, further, and further >> and you never know where it will wind up. But the world changes. I mean, go look, go take >> You guys change though. The world change, you change. Is there something about the culture >> like you pivot? >> We pivot. You pivoted huge scale. >> We've we've pivoted at huge scale. Um

>> you know the history of Goldman Sachs is littered with moments where the firm came this close to going out of business. >> You can go back to 19 I mean I you can go back to 1929 of course >> there was there was but not just the crash during the crash there was actually something called the Goldman Sachs Trading Corporation which was a public entity that we know that Basically plummeted and almost took the firm you know almost took the firm down. Um, pen, we were the commercial paper underwriter for Penn Central when Pen

Central went bankrupt in the 1970s and that almost took the firm down. But just back to the question, you have pivoted at scale and I see startups pivoting but once they get to scale, they kind of stay heavy on the rails. They don't pivot when stuff comes. Tell me like for example, you pivoted pretty hard in AI. You've leaned in very hard on it. Um, you for a large company, you were pretty early on that train. I think we're good at figuring out how technology can make us better at what we do. But here's the

here's here's the thing I think you have to be focused on. What do we do? We are, in my humble opinion, the best investment bank in the world. >> Yes, >> we run one of the two best trading Businesses in the world. And the combination of kind of investment banking and trading, that's what Goldman Sachs is. We are the best in the world at it in my humble opinion. Yeah. >> Um certainly nobody would dispute that we're not one of the best in the world at that. And as long as we're really good at that

and we continue to win at that and that's something that the world needs, you know, you can perpetuate if you make the right decisions and the Right pivots. We also have become fifth, sixth, seventh, depending on how you look at it, largest active asset manager in the world. We supervised 3.3.4 trillion dollars and that business is growing. We we said publicly we're going to grow at high single high single digits. We're growing it better than that. We've got an extraordinary wealth franchise and that business, you know, we have a right to win >> and we're

a leader. And so, you know, Ultimately to really sustain, you've got to really deliver value and you've got to have leading franchises. You have to have scale and you have a right to win. And the reason that that most business >> 20 years ago are gone. You're not. Yes, you have a right to win, but there was a bunch of pivots and a bunch of bets and through three different CEOs. What is it? >> You know, it's the culture's contributed, the quality of the people's Contributed, the brand built over a long period of time. >>

Is there a risking mentality inside the firm? >> We have a great we have a great risk takingaking. We have a great riskmanagement culture inside the firm. The reason that most that lots of financial institutions go away is not because they have a risk-taking culture or maybe it's because they don't have a risk management culture. So they make Mistakes and you know financial firms are levered and they they get they get into uh they get into trouble. >> Yeah. >> You know decisions decisions around over decades things we would do wouldn't do. When the world

goes left you know we think left is we go slower. >> Yeah. >> Um you don't have to be first >> in financial services. I think even second mover advantage is underrated. >> Yeah. >> Um succession planning. >> I'm sure there were some folks that didn't work out, but it seems like Goldman's very good at that. And I think a lot of tech companies are going to have to go through it. What did they were what are they doing right? Like you you're the last three seem like you seem like I'm a winner of a

succession planning output. Um what are they doing? I think one of the things that's Interesting about Goldman Sachs is there are ext the senior leadership at Goldman Sachs is an extraordinary group of people. I sit around, you know, the small table, whether it's the management committee, which is a slightly bigger table >> or even with, you know, the the closest group of of senior leaders at the firm and I'm in awe at how smart and talented and capable and committed and um extraordinary, you know, that group of People is. So, let's just start by the

fact there were lots of people that could have run Goldman Sachs. goes back to the serendipity point. >> You know, >> Lloyd Blankfine got sick in 2015 >> and he decided that he was going to deal with his treatment and continue to run the firm and then come back. There are people who would have gotten sick and said, "You know what? I'm sick. I'm going to step away." Okay. Had he Stepped away, I wouldn't be CEO. At that point, the firm probably would make Gary Con the CEO. So, because Gary was the, you know, the

president of the firm at that point in time. So, you know, serendipity and luck. If the succession had happened in 2013 or 2014 or 2015, it wouldn't have been me. But it happened, it happened in 2018. >> Did the board interview you and several other people and was there a rigorous process? >> The board the board knows the senior leadership really well. The board knows the senior leadership really well and ours is a firm where there are lots of people that can run the firm. >> Um, ultimately there's got to be a decision. >> Um,

and look, I think succession is very, >> you know, very, very important. And one of the things I'm proud of is that we have a very stable senior leadership Team at the firm right now. We've been working together and executing, you know, on this plan over the last seven years. And I think it's one of the reasons why we're making really good progress. >> Okay. Back to a point you made. You're you're apprenticeship culture. You hire tons of young folks who are smart. My son's in business school now and everyone in his class wants to

work for you. What's going to happen 10 years from now with AI and that apprenticeship culture and bringing all these folks in? Do you think it changes? Like what's your where's your head at on that? >> I I think there's always change at the margin, but I think the substance of who we are and what we are and what we do and the fact that we need lots of very bright people interacting together. Yeah. >> Building trust. >> Um I don't think that changes. And here's here's the analogy I give you. And I've been talking

about this for a number of years. And so um you know there's some people that will listen to this will say I've heard David you know say this before. When I started in 1984 >> one of my first assignments was to go do a common stock comparison. >> Okay. >> Comparing five regional banks and how their stock had traded for five years. That was a big assignment. How'd you go do that? You went to the library. What was the only data source that existed in the world that had the closing stock price for every stock

that traded for every single day? Back issues of the Wall Street Journal. So you went to the library, you went to the microfich and you took out on microfich back issues of the Wall Street Journal. You did all the work to go through all the old issues of the journal and find the specific stock Prices. You took out green line graph paper and you plotted the graph. You then took it to a Xerox machine and copied it. And then you went to your client and you showed them this and they said, "Wow, thank you for

helping us understand this." It took, I mean, I don't know, it took four to six hours to do the work to do it. Technology has constantly made super productive people more productive, more capable. I see this the same way. Now, of course, Technology also replaces certain jobs 100%. We don't have a lot of toll collectors. No, >> you know, anymore. >> But that doesn't mean when you get into the things that we do, which is a lot about trust, personal relationships, um, advice, you know, at the center of a lot of what we we do.

These become tools that enhance, speed up, and allow us to do it even in a broader context. We're Still going to need a lot of people to do it. Okay? and they're just they will be trained with different skills with different skills in different you know in in different ways and of course >> you know I I you know let's let's take one that I just I just think is is obvious >> okay all companies have massive financial reporting and accounting functions >> the operational Processes for that are going to be different and they're going

to have a different number of people associated with them but that doesn't mean that you're not going to have people in other ways. I mean, you know, for me, I'm excited about what this technology does because we're looking at how we can reimagine processes that actually free up the capacity for us to invest in more people for our businesses that actually scale with people >> because we're somewhat limited. We've got to deliver returns every year. We can't scale as quickly as we want or as fast as we want. So, I think it's an unbelievable opportunity.

It's accelerating certain things that are very cool, but I also don't think it's fundamentally changing the core of what we do and how we do it. It just makes it, you know, more it's a very powerful tool for very productive people. >> Okay, I'm going to ask you one more Question that your team told me not to ask, [laughter] so we can cut it out. >> You can ask me anything. >> Uh, I thought it was super cool that you were a CEO DJ. like it it elevated your brand in this one consumer's mind and

Goldman's brand. It seemed like I just thought it was [ __ ] cool. It seemed like you got talked out of that. Um >> well, a couple of things. First of all, I mean I I I I have to go back and tell My team it's not me telling my team I don't want to talk about this. It's for some reason, you know, people on my team thinking that we shouldn't talk about this. And um >> that's not Do you stop doing it? >> I stopped doing it publicly. Yeah, >> I still do it. >>

It seemed like people were complaining that you were doing doing what happened, you know, what happened at at the beginning of the first few years. >> Yeah. >> Um, you know, I wasn't, you know, I was doing it eight to 10 times a year publicly. It's not I was giving money to charity every time I did it. It's not it's not as though I was doing it every weekend or something, but >> it's a hobby. It's a passion. I really enjoy it. It's creative. >> Yeah. >> And when everything was going right, it was great.

in 2022 when the firm started Having some speed bumps because the environment changed and we were wrestling with some of this stuff around consumer. >> So, you caught some flack. >> I caught some flack and and by the way, I thought I was going to catch some flak if things weren't perfect, but boy, I caught a lot more flack than than I thought I would. And by the way, I caught a lot of flack on a lot of stuff, not just the fact that I DJed Occasionally. >> Um, and so I kind of reached the

conclusion this is becoming a distraction. M >> and look, I I think it's unfortunate because nobody cares that I do lots of other things with my free time. They really shouldn't care about this. >> I still do it privately and I'll do it publicly again because I really enjoy it and and it's a great it's a great creative outlet and I feel lucky that I've had the opportunity to do it. >> I I think you're cool. >> Hardly. >> I think you're a great steward for the company. They're lucky to have you. I want to

congratulate you on all your success and thanks for coming on the podcast. >> Well, thank you for having me. I really enjoyed it. Good to be with you. >> Pleasure. Thanks a lot. >> Okay. Hope you like that. He's very Sharp. Um just my take on his vibe is very polished, very articulate, very [clears throat] CEOish, and it's a similar vibe to other professional CEOs I've interviewed like Nikesh at Powalto. Um is also like this. Um and I don't know you well, but I bet you could use a little polish yourself. So maybe watching him,

you'll learn a few tips. Well, I ask everybody on these pods like what's important when you're hiring people. And he he likes to say you want Them smart enough. They don't have to be rocket science, but kind of smart enough. But he really values judgment and experience. Most startups don't. Um I look at HubSpot like half our exec team is kind of homegrown and half is hire from the outside. I don't know if that's the right ratio, but his is a lot of kind of been there, done that people. I think that's pretty interesting the

way he thinks about it. We talk a lot about decisions. We talk about the Apple Decisions. And to me, it's just like you're always choosing as a CEO between two shitty decisions. No easy decisions ever reach your desk. And to me, that's just life in the big city. You've got a lot of that and get used to it. Okay. I like the segment on his Apple decision. Uh they made a bet on the consumer business and a big partnership in Apple. And there's it reminded me of a book a guy named Seth Goden wrote a

long time ago and on the cover of the book was Something called the dip. It's a line and there's a dip and then it comes across. And when you're heading down the dip on a new project like they were, you don't know if you're about to hit the bottom and come up the other side. You don't know if it just keeps going down. In his case, he was like, I think it's going to keep going down. We're going to kill it. That's very hard to do. We have lots of these inside of HubSpot over the

years where project's going okay. We Funded it pretty well and the people inside that project are like just give us six more months and give us some more money and we're going to get through the dip and it's going to rip. Um versus just killing it. And we tend to to give it a lifeline. And I think more often than not, we should say no to those things. Anyway, those are kind of my thoughts on decision-m. say no more often and kill stuff more often. Uh I think people aren't Disciplined enough about that. Those big

partnerships are hard. Um and people always want to partner with the giant in their industry and the life expectancy of those partnerships are pretty low. Um a few tips on kind of dancing with elephants. Uh the first is if you're going to do a partnership, you need to make sure your incentives are really well aligned. And you need to make sure like if we do this, your P&L is moving and their P&L Is moving in the correct direction because if the spreadsheets aren't moving, there's no point really in doing it. And the third is you

kind of need to know the CEO. The CEOs need to be committed because as you go through annual budgeting cycles, partnerships can get defunded. So if the CEOs are connected, that helps a lot. Those are if you're entering into a big giant partnership, try to get those things right. Okay. Asked him, you want your Company around for 150 years. What's your advice? First of all, he credited luck quite a bit, but he largely credited culture. And I'll tell you my journey with culture at HubSpot. When we first started the company called the first three years,

my co-founder and I were like, "Culture is BS. Don't even bring it up. can't like let's not talk about it. And then I joined a CEO group and one of the CEOs in the CEO group was Colin Engel. He made the he was iO Vacuum cleaners and I remember I sat down next to him at that at first it was a CEO group meeting and it was my first one. I didn't know how it worked but they have a topic for the whole day and the topic on my first meeting was culture ship. And so

we went through the whole morning and I was talking with Colin at lunch and Colin says, you know, you don't seem to like this topic much. I'm like, nah, I think it's a waste of time. And he says to me, you know, Brian, culture is how people make decisions when you're not in a room. Culture is how you really scale. Yeah, good. I'm dug in. Colin says it's true. I'm I'm in. And I go back to the office the next day and my co-founder um says, "Well, how was the meeting? How's Colin?" And I said,

"It was great. I loved it." What'd you talk about? We talked about culture. Oh, that's too bad. Waste of Time. He said, "No, Darmsh. Culture is how people make decisions when you're not in the room. Culture is how you really scale your company." And in a very weak moment, he agreed to be our culture sar. And we did two things on culture that really worked. One was we started measuring net promoter scores of our employees. And we've been doing that for 19 years. Really useful metric. And the other is we we basically designed the culture.

We designed the Relationship between the company and and the employee and we built a deck called our culture code. And the way we thought about it was we have a product that we sell to our customers. It has to be unique and really valuable and it pulls customers in. Our second product we sell to our employees has to be unique and really valuable to pull those employees in. So we spend a lot of time on it and it's part of HubSpot's secret sauce is our culture code and the way we kind of Think about that.

So I would I would encourage you folks to do that. If you want to be around for 150 years, think a lot about culture. I like the way he talked about serendipity in there and I think that matters. There's a book by Jim Collins on why amazingly successful companies fail. And if you look at like the the top 100 most successful companies in the world, you know, even 25 years ago to today, man, it's just totally changed. So like there's a lot Of disruption that happens. And Jim Collins studied these companies that stumble. And he's

got this whole kind of ladder of things that go wrong, but the first step on the ladder is hubris born of success. And he talks about these companies falling into the trap. He's got a great quote and [music] it goes, "Those who fail to acknowledge the role luck may have played in their success and thereby overestimate their own merit and capabilities will have succumbed to Hubris." I wish all of you to avoid that hubris trap and I'll see you all on the next episode of Long Strange Trek. [music]