David Solomon: Stop Rushing. How Patience and Long-Term Thinking Wins in the Marketplace | E39
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You're listening to part two of my awesome conversation with David Solomon, the incredible CEO of Goldman Sachs. If you haven't listened to part one yet, please be sure to tune into that. Without further ado, here's part two of my awesome conversation with David. So you're 37 and you joined Goldman as a partner to run their leverage finance group. And over the next 12 years, as Winkle Reed mentored you, you kept getting promoted. You ran Goldman's financing businesses. And in 2006, you were named co-head of investment banking, where you oversaw thousands of bankers

In the 10 years you ran the investment bank, profit margins nearly doubled, and the division share of Goldman's revenue rose to 22% from 11%, which was critically important to Goldman because it's trading profits that slowed after the global financial crisis. After 10 years of running the investment bank, you were eventually named co-president-in-chief, co-president,

COO, along with a guy named Harvey Schwartz, who is a little ahead of you in the race to succeed, CEO Lloyd Blankfein. Can you tell us about the day when Lloyd unexpectedly called you into his office, what he told you, and what you thought when you got back to your office and plopped down in your chair? And in search of excellence, how important is luck and timing in our success? And what should we be telling ourselves when we're competing with incredibly talented colleagues for promotions?

where in some cases our goals of running a huge company has what I call a very low probability outcome.

Well, I was very lucky during my time at Goldman Sachs to be mentored by a number of people. I mean, John Winklewood was one, Lloyd Blankfein was another, but there were many others who mentored me and guided me. I never expected that I'd wind up being the CEO of Goldman Sachs. It certainly seemed unlikely that an outsider would come to the firm and would rise up through the ranks to become the CEO. But it became clear probably sometime around 2015, 2016, that

There was a possibility that I would be one of the people that would be considered when Lloyd chose to retire, but it still didn't seem likely even in that lens. And as you said, when I was promoted to co-president, it was clear Harvey Schwartz had been the CFO. He had more exposure to the board. It seemed likely that Harvey might be the next CEO.

I do think that timing matters in all these things. Lloyd wound up leading the firm for 13 years. Had he led the firm for seven or eight years, I wouldn't have been the CEO. By the way, Harvey wouldn't have been competing at that point to be the CEO either. It would have been some other people that at that point in time had risen to positions where they were the likely candidates to the degree there needed to be succession. So I think timing matters. I think you've got to work hard

You've got to be committed. I think you can't want it too much because a lot of it is luck and timing and it might not go your way. But I always look through the lens that I was really enjoying my work at Goldman Sachs. I really enjoyed the people that I work with. I was constantly learning. And I always felt that if we reached a day where it was my time to retire from Goldman Sachs and move on, that the experience that I had there would give me plenty of opportunities to do other things, to run other businesses.

I was never really in a hurry. I let it play out and it happened to play out in a way where it worked. But you went back to your office and you told them, let me think about this for a minute. I don't think you told them, high five, I'm doing this. That's not correct. If somebody told you that, that's not correct. Lloyd called me into his office and I was surprised. He simply said to me, you know, I've decided that you're going to be the successor. There'll be a period of time. We haven't sorted that all out.

but I've made a decision, the board's made a decision, and I'm going to let Harvey know that we've made that decision sometime in the near future. And I was quite excited about that. And I went back into my office and my first reaction was, oh my goodness, I just was told I'm going to have this job. And then my second reaction was, oh my goodness, I was just told I'm going to have this job. I think you go from excitement to a little bit of fear

And then you've got to settle in and think about the responsibility that you've just decided to take on. But no, I didn't say I needed to think about it. There was no thinking about it. I was excited and ready to take it on, although I must say, very honestly, a little bit fearful that I was taking on a big responsibility to this organization.

It's been around for 150 years. And my job is to steward it, make it stronger. And I take that responsibility very seriously. And I know during that day in February of 2018, when Lloyd said that to me, I knew that I was taking on that responsibility and it was a big one.

I do a lot of mentoring and coaching, some of which stems from my summer internship program where I get to work with 35 incredibly talented students every summer. Over the years, I've mentored hundreds of students and young professionals. There's a common thing among many of them. They're very anxious about their futures. You said that there's a shifting nature on how young people think about work, and they're much more focused today on what's next. What's your advice to them? And what's your advice to the billions of people out there who don't know what they want to do with their careers or even their lives?

I don't know that I'm great at giving life advice, but professionally, well, I give some life advice too. I mean, I think it's happy. You know, life is challenging. Life is difficult. And all of us, no matter who we are or what it seems from the outside, we all face challenges, personal challenges, family challenges, sometimes health challenges, challenges with children, et cetera. And so it's a journey. Life is a journey. There are going to be ups and downs. There are going to be highs and lows.

I think part of success in life is trying to find a way to enjoy the ride and not being so worried about the destination. And I think it's the same thing with a career. Everyone's really in a hurry to know what's next and what the next job is and where they're going to get to. 30, 40 years ago, when I was starting out, there wasn't that same kind of pressure. There wasn't that same intensity. My grandmother, and I've told the story many times, when I was in my 20s, gave me a great piece of advice. She said, don't be in a hurry.

And I think it's good advice. I think patience, commitment, taking a longer term view opens up doors and opportunities over time. But if you're always in a hurry to see what's next, you might miss sometimes what's right in front of you.

Let's talk about leadership. You do something called a talk series at Goldman where you bring in outside speakers. And a few years ago, you brought in General Stanley McChrystal, who had just written a book on leadership called Find. In his book, General McChrystal puts forward the thesis that we have a view of leaders and we put leaders up on a pedestal and view them in a certain way. But like all of us, leaders are just human beings and they're fallible. Leaders get a bunch of things right and they get a bunch of things wrong and they're not always great at what they do. Lead

Leaders also have myths about them, and these myths evolve over time. In your view, what are the three to five most important characteristics of being a leader? And in search of excellence, how important is leadership to our success? I think success is a big word, and people define success very differently. Success for one person is very different than success for another. If you take on a job where you're responsible for people, either a small group of people or a large group of people,

then you probably require some leadership skills to help move that organization, that business, that platform, whatever it is forward. I think there are lots of different leadership styles that can be hugely effective, but I think there are some common threads. You have to be willing to formulate a vision and express that vision to the people that are with you, that are part of the enterprise or the entity that you're trying to move forward.

You have to listen. You have to welcome disparate points of views, diverse points of views, diverse perspectives, and listen so that you can learn. People have to see you listening. People have to see you changing, adapting, adjusting your point of view. You also need to, I think, be empathetic. And I think one of the things that the pandemic certainly has shown us, given the stress and strain that it put on all of us in so many different ways, is how important empathy is in leadership.

and really understanding at different times what people might be going through personally and how it meshes with what they're doing professionally. I think those are a handful of things that all leaders have to think about. Success is a different story. People look for success in different ways. And some people want to lead and some people want to follow. Both are good paths. And we all need to define success around our own happiness and our own fulfillment in life as we go through that journey.

I want to talk about another ingredient of success, which is one of my favorite topics, the importance of preparation on our path to excellence. One of the main ingredients of my success that got me to where I am today is that I'm always the most prepared person in the room.

How important has preparation been to your success? And going a step further, how important has extreme preparation been to your success? I'm talking about going way above and beyond what would normally be considered great preparation, the kind of preparation that you may spend a week or a month on for a single event or meeting. And can you give us an example of how extreme preparation has been a crucial ingredient of your success? Well, at first, I just, you know, amplify what you said. I think preparation matters.

There are different levels of preparation that are required for different things. I'm not sure that I know extreme preparation as a term, as a scientific term or defined term, but there are certain things that I prepare much more fully for, I prepare longer for, that the firm prepares more fully for than others.

And, you know, I think it depends. For a client meeting, if I'm going to go meet with a client, I'll do a certain amount of preparation. But certainly when we have an earnings call, I'll do a lot more preparation for that earnings call than I'll do for an individual client meeting. Now, I have four earnings calls a year and I have over 400 client meetings a year. So, yeah.

You can't necessarily expect to have the same preparation that you'd have for an earnings call for every one of those 400 client meetings. You probably wouldn't have time for all the client meetings or all the earnings calls if you put it in that context. So different things require different levels of preparation. That's a judgment everybody's got to make in the context of how they ensure that they're performing with a level of excellence that they want to see in the context of the responsibilities they're taking on.

On the topic of extreme preparation, I'm writing a book right now with that title. And the thesis is that extreme preparation helps you achieve faster results, results that would not have been possible without it. So I'm going to brand the term, hopefully. I'm hoping it'll be interesting to see if you brand the term. I think it's an interesting term and I'll be interested to read the book. I think preparation matters a lot, but I think there's different levels of preparation for different tasks, for different assignments, for different projects.

for different jobs. And I think one of the things that's super important to be successful in almost any job is time management. The one thing that we can't get more of is time. And we have lots of things that pull on our time. And so I think one of the areas where you need to have really good judgment is how you choose to use your time and how you choose to prepare becomes a component of

an allocation of time and the leverage that you get around being able to do more or accomplish more. And so I'll be interested to see how you think about that and how you balance that. I'm going to send you a book and I'd love a quote if you like the book.

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Let's talk about the importance of getting past our challenges, which we all have. In the 2008 financial crisis, the Justice Department accused Goldman of misleading investors about a series of bonds. Goldman paid a $550 million fine to settle the criminal investigation. In 2012 and 13, Goldman helped sell $6.5 billion in bonds for Malaysia. After the money was raised, Malaysia's prime minister at the time, Najib Razak, along with a guy named John Lowe, stole a significant amount of the money from those bond sales as well as money from that fund.

Around $700 million ended up in the prime minister's bank account. He was later convicted for his abuse of power, was sentenced to 12 years in prison, and Goldman settled the criminal investigation to the actions of two rogue bakers who had accepted bribes. The Justice Department's investigation also accused Goldman of ignoring warning signs of fraud in the pursuit of fees, fees in the amount of $600 million. The scandal cost Goldman more than $4 billion to resolve.

What were you telling yourself during these challenges and in search of excellence? How important is transparency and taking responsibility for our actions to our success? Well, I think one of the things that was important here was that

As a leader of the firm, it was important for me to stand up and take responsibility and make sure we put it behind us. We unfortunately had two people who worked at the firm who broke the law. That's completely unacceptable. Does not fit with our values in any way, shape, and form. We have four core values, one of which is integrity. Obviously, having people break the law is completely unacceptable. And so we tried to take responsibility, put it behind us, and move forward. And we did that a couple of years ago.

Let's talk about the importance of those around us and our path to excellence. You can't build a great company without a great team. And I want to talk about the type of people you hire.

The secret sauce of Goldman Sachs is your people. And if you want to work there, good luck to you. It's harder to get a job at Goldman Sachs than it is to get into Harvard. Much harder, actually. It's been reported that around 350,000 people apply to Goldman each year, a number which includes summer internships. And that of these 350,000 applicants, you hire fewer than 10,000, less than 3%. You hire the smartest of the smartest, the best of the best from the most highly ranked colleges and universities, not only in the United States, but from around the world.

You said that you want to hire a diverse group of people with unusual profiles and not only people with finance backgrounds or finance majors. You've also said that you place a lot of emphasis on face-to-face job interviews with a big emphasis on character and being the sort of interesting person that people want to hang out with.

And I want to compare these criteria with some of the criteria used by your former firm, Bear Stearns. And to do that, we need to go back and talk about a guy named Ace Greenberg, one of the great icons of Wall Street, who ran Bear Stearns for 24 years and was CEO when you joined. In 1996, he wrote an awesome book called Memos from the Chairman, which was a collection of memos that he'd sent to various employees at Bear Stearns over his long career. These memos became famous on Wall Street, and on October 16th, 1987,

He wrote one to all managing directors. There were five bullet points in the memo, and the first one was hire PSDs, which stands for poor, smart, and a deep desire to get rich. Then he goes on to write, please do not infer from this that we are prejudiced against people who possess other almost worthless degrees. That's one way to do it. Hire people on the basis of their drive and hunger instead of the grades or the schools where they go to. In my 28 years in the workforce,

To me, it doesn't matter where you went to school or what your GPA is there. We've hired interns and people from Harvard and Stanford with 4.0s with ridiculously impressive majors who are among the worst interns or people that we've ever hired. We've had interns from employees from schools like Biola or Southeastern Oklahoma State who have run circles around them. I'll give a big shout out here to Matt Hickerson, who killed it in our summer internship program last summer, and who will be joining us this May after he graduates from Biola.

A huge number of my former interns have applied for summer internships at Goldman. I'm proud to say that we've had seven or eight join Goldman throughout the years. The best intern we've ever had by many miles is currently a junior at Middlebury College named Dylan Taylor, who is working in your leverage finance group next summer, and who may replace you as CEO in 15 years if you're still there and if you're lucky enough to keep them there. You said that Goldman, to get hired, you don't have to major in finance, but you do need five things. You need grit. You

You need to talk about failure. You don't have to be afraid to show the emotion. You have to mention your quirky hobbies, and you don't need to be afraid to talk about work-life balance. But you don't mention grades. What's your view on the importance of grades versus PSDs? Are GPAs in any way correlated with success? And would you ever hire someone from Biola or southeastern Oklahoma State?

So you said a lot there. You also said, I said certain things about the hiring criteria. I'm not sure, sir, that I said those things the way you said them. So I'm not sure where that's coming from or where you read that. But the firm is blessed with an incredible talent ecosystem and a great reputation. I think one of the reasons we have a great reputation is because of the quality of our people. And people, young people want to come here. They want to work. They want to learn. And so we're blessed with a very, very diverse group of people from all over the world that applies to work at the firm every year, as you highlighted.

We hire people from over 200 schools. We would hire people that we thought were talented, that were motivated, that had proven that they had accomplished things, both academically and individually, from any school in the world. We would not hire from a particular school. And so we hire from all different kinds of schools all over. I think 25, 30 years ago, we hired from a much narrower collection of schools. But we're looking for people that have been successful, that have accomplished things, that have shown

that they want to work hard, that they want to learn, that they want to grow. And it's a combination of skills, both intellect, you need a certain amount of intellect to succeed and to compete at a place like Goldman Sachs, but you also need a certain amount of EQ. So you need IQ and EQ. And I think we think about both of those. And we think about people that we think will fit culturally. We value our culture and the strength of our culture very well. We talk a lot about our foundational values of client service, of partnership,

of excellence, of integrity, really to try to find people that we think, you know, appreciate, will strive to, you know, to live by those values. And all of that goes into the hire equation. But obviously, given we hire thousands of people a year, there are thousands of people here that are involved in interviewing and hiring people. But it's a very, very diverse and dispersed process.

Let's talk about fun and work-life balance. You've always believed that having a wide range of outside interests leads to a balanced life and makes for a better career, which is something you've regularly preached to younger employees at Goldman and is something for which you have led by example. For starters, you're very active. You cycle, spin, run, ski, golf, scuba dive, hike, and kite surf, which you learned at a kite surfing boot camp in North Carolina coast. You do yoga with your daughter. You're at the gym every morning at 6 a.m. with your trainer. You used to DJ for fun at parties and at festivals.

which humanize you with your employees, but you also have 43,900 employees around the world to manage, serve on a bunch of boards and run one of the most important financial institutions in the world. What's the right balance here? Can we be a successful professional, a great parent, give back to our community, mentor others, and also have fun? Absolutely. But I think there are different stages of life and there are different times for everything in the journey that we all go on.

You're out of school, you're in your 20s. I think it's really important to put yourself in a place where you can learn, work hard, be very focused. Most people in their young 20s coming out of school aren't married. They don't have the responsibilities of a family. They haven't made those kinds of commitments at that point in time. And so it's a great time to be focused on learning, growing. And I think always you have to have hobbies, interests, things you pursue that take the stress off. And you've got to find a balance to that.

You start a family, you get to a point in your life where you're raising children and you're working hard. Well, then there's not going to be a lot of time for a lot of the other things if you're trying to both raise your family and also excel in your career. A lot of the things that I've done in the last 15 years when my kids have been grown and older, my kids are now 30 and 28. When my kids were in elementary school and high school, I was very focused on my family and I was very focused on work.

I didn't have as much time to do as many of these things. Did I try to stay in shape? Yes. Did I have outside interests and things I was interested in? Yes. But no, I didn't have as much flexible time then because my flexible time first and foremost went to my family. As your kids get older and you get to a different stage in life, you have

more latitude and more room to pursue other things. But it's different for everyone. Everyone's on a different journey. These things get prioritized. Some people come into a career, they work very hard, and then they take a break or they step out of the career for a period of time. There's no right path. There's no right way. But I think for all of us, you've got to find a way to prioritize the things that are important. And you've got to find a way to do things that you're interested in that bring you joy.

For some people, that might be very monodimensional. For others like me, it's multidimensional. Everybody's got to find the right way to balance that. Before we finish today, I want to go ahead and ask some more open-ended questions. I call this part of my podcast, Fill in the Blank to Excellence. You ready to play? Sure. When I started my career, I wish I had known. I wish I had known how quickly I would get old. The biggest lesson I've learned in my life is? The biggest lesson that I've learned in my life is to really understand and appreciate

how important the people that you love are, how special it is to have them. And you don't know what's going to happen. You don't know what the journey is. And so cherish the time you have with the people you love. My number one professional goal is? Well, at the moment, my number one professional goal is to be a good steward of Goldman Sachs. And I'm in the fifth year of my tenure, and I want to be a good steward of Goldman Sachs. I want to deliver for our shareholders. I want to deliver for our people.

But I want to make sure that this firm continues to contribute to the communities that we're lucky enough to operate in. My number one personal goal is? To be happy. My biggest regret is? I don't have a lot of regrets. Life is an adventure. It's a journey. You make choices. You take different turns. And I think it's better to look at all the decisions, embrace them, try to learn from them, but not go back and regret things that have happened. I think it's better to look through the windshield as opposed to through the rearview mirror.

The one person in the world that I admire the most is? My father. The one question you wish I'd asked you is? I think you covered a lot. You obviously did your homework really well, Randy, because you've got everything, things that I've said, things that others have said about me that have been attributed to me. You've kind of got it all wrapped in. So I don't think there's anything you didn't ask about.

I've been incredibly lucky to have amazing guests on my podcast. I've had a lot of people ask me how I've been able to do this. I've told a few people that you are going to be a guest on my show. And the first question everyone asked me is, did I know you? And I told them, sort of, but not really with an emphasis on the not really part. So I want to share the story now. We met back in 1996 when I was working at Sun America as the assistant to the chairman. Eli Broad was my boss. I was relatively new at the company.

He sent me to New York to meet our leadership team there who ran a broker-dealer network. Before I went, I sent a cold letter to Ace Greenberg telling him that I'd be there and wanted to come by and say hello. And Ace says, sure, would love to. And I went to see him. And I still remember he had this massive baseball bat sitting in the corner of his office.

You and I met at some point that day, and you invited me to your apartment that night for dinner for a small get-together you were having, which was incredibly thoughtful of you. In the 26 years since, I've emailed you three times, twice to recommend two of my summer interns, and once six months ago, reminding you how we met, which I'm 10 million percent sure you have no recollection of, asking if you'd be on my show. You wrote back in less than an hour saying you would love to, for which I'm very grateful, and which says a tremendous amount about the type of person you are.

I've been a huge fan of yours for a very long time. I've admired you for a long time. You've been a phenomenal role model. You've inspired millions of people with your success, your humility, and your philanthropy. I'm very grateful for your time today. Thank you very much for sharing your story with us.

Randy, I am blown away by the amount of preparation you did for this podcast. It really was an extraordinary amount. You seem to find anything and everything that was ever written and said about me. I appreciate that preparation. I do remember meeting you back at Bear Stearns, and I try to answer most of the emails that are sent to me personally. I can't say that I get to 100% these days, but I certainly try with people that I've been connected to throughout my life. So thank you very much.

Appreciate you. I hope to see you soon. I appreciate you. Congratulations again. Good to see you. Thank you for your team as well. Appreciate it. Thank you. Appreciate it. Bye-bye.