What Happened to Goldman Sachs: An Insider's Story of Organizational Drift and Its Unintended Consequences

What Happened to Goldman Sachs: An Insider's Story of Organizational Drift and Its Unintended Consequences

Steven G. Mandis

Language: English

Pages: 400

ISBN: 1422194191

Format: PDF / Kindle (mobi) / ePub


This is the story of the slow evolution of Goldman Sachs—addressing why and how the firm changed from an ethical standard to a legal one as it grew to be a leading global corporation.

In What Happened to Goldman Sachs, Steven G. Mandis uncovers the forces behind what he calls Goldman’s “organizational drift.” Drawing from his firsthand experience; sociological research; analysis of SEC, congressional, and other filings; and a wide array of interviews with former clients, detractors, and current and former partners, Mandis uncovers the pressures that forced Goldman to slowly drift away from the very principles on which its reputation was built.

Mandis evaluates what made Goldman Sachs so successful in the first place, how it responded to pressures to grow, why it moved away from the values and partnership culture that sustained it for so many years, what forces accelerated this drift, and why insiders can’t—or won’t—recognize this crucial change.

Combining insightful analysis with engaging storytelling, Mandis has written an insider’s history that offers invaluable perspectives to business leaders interested in understanding and managing organizational drift in their own firms.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

asset management company with an existing hedge fund that already had approximately twenty people and $2 billion in assets under management. Shortly after, several Goldman investment professionals joined me. Less than four years later, I had helped expand the firm to 120 people and $12 billion in assets under management.28 I was the chief investment officer and helped manage and oversee over $5 billion, about half of the firm’s assets, through multiple vehicles focused on the United States and

primary intent is the socialization of new members. During my training, various Goldman executives came and spoke about the Goldman history and their departments. Junior people gave talks about their jobs and explained how to be successful at Goldman. There were group dinners and cocktail parties. We learned specifics that would help us in our day-to-day jobs, such as Excel spreadsheet-modeling skills, but it was also a way for new people to gain exposure to various people and departments that

with some $58 billion in net income over the same time period. The very year (2010) Goldman paid the largest fine in SEC history at the time ($550 million), the firm made almost $8 billion. Fines are almost like an expense that Goldman attempts to minimize but cannot avoid.3 However, many current partners also did generally admit that “mistakes” seem to be happening with greater frequency. Some suggested this might be attributed not to a change in behavior but to changes in the laws and in

that Goldman has an unbelievable ability to source and develop these investment opportunities. But many of them require a dialogue, an explanation, analysis, and expertise. He said it was unclear to him in many instances when Goldman was acting as a broker/agent or principal, even when giving “advice.” But he clarified Goldman was doing nothing that the other banks were not doing too; it is just that Goldman’s principal investing is much larger so it does raise more questions. And he felt the

considerations not directly associated with their higher purpose, and that blindness might be, at least in part, behind Blankfein’s subconscious choice of words in referring to the firm doing “God’s work,” as well as Goldman’s failure to see the larger picture (including believing that its network in public service is a disadvantage), and its inability to immediately grasp the public outrage at its conduct during the financial crisis. The belief in serving a higher purpose is implicit in the way

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