Synopses & Reviews
The jury is still out on what the future of Goldman Sachs will look like, but no one can argue that the 139 year old firm has been (and, if Warren Buffett has his way, will be) the dominant investment banker and dealer on Wall Street. What does Buffett see that we on the outside do not? Itas all about the people.
Charles D. Ellis has written a landmark book that couldnat come at a better time. The Partnership: The Making of Goldman Sachs is the colorful and fascinating story of Goldmanas rise to power through many life-threatening changes in markets, competition, and regulation. It tells the personal history of the men and women who built the worldas leading financial powerhouse from a firm that was disgraced and nearly destroyed in 1929, limped along as a break-even operation through the Depression and WWII, and, with only one special service and one improbable banker, began the rise that, in half a century, took Goldman Sachs to global leadership.
A conversation with Charles Ellis:
*Is Goldman Sachs really a lot better than other firms at managing risk?
The big difference is in the cumulative power of many asmalla details. The difference in the speed, accuracy, and extent of communication inside the firm; the difference in intensity, focus, and disciplined toughness of the men and women hand selected to work there and real difference in recruiting, training, and compensation. All add up to a decisive advantage in management. Leaders and co-leaders manage Goldmanas many business units with rigor and drive; risk management is the envy of other banks; and coordination is powerful across business units and markets around the world.
As every Olympic athlete knows, such small differences make all the difference between gold, silver or bronze a or no medal at all. In the current, very difficult test, Goldman Sachs has come in 1st a again.
*Goldman Sachs is often described as the best managed Wall Street firm. Is that true?
Yes, it is true. Goldman Sachs is the best managed aWall Streeta firm a and the best led. Management is why Goldman Sachs is consistently rated the best firm to work for and gets top ratings from clients all over the world. Superior management is why the firm earns more profit, develops more effective people, has made itself the market leader in the U.S., U.K, Germany, France, China, Japan, and in most major lines of banking business. No other firm comes close.
One of the things you will learn in The Partnership is just how Goldman succeeded in making themselves different from any other Wall Street firm. They learned early on that in order to survive, they had to not only make money, but create a culture that was universal, that demanded absolutely loyalty and, most importantly, act as one organism.
*Why does Goldman Sachs put so much weight on its aculturea?
Goldman Sachs culture works. In the complex, fast-changing, global, 24/7 securities business almost all the important decisions are made in highly specific and complex settings under great time pressure. These decisions cannot be made by headquarters and they cannot be deferred. They must be made locally by local market and business experts thousands of times every day.
Rules wonat work. If rules were written for every type of decision in all those different businesses in all the worldas different markets in all the different cultures, theresulting Rule Book would be far too large and complex to read or use.
Culture a its way of working a is the universal astem cella that enables Goldman Sachs to operate so forcefully in so many different national markets and in so many different businesses.
*With all its different business activities all over the world, doesnat Goldman Sachs have problems with conflicts of interest?
Yes The firm certainly has many, many conflicts of interest. While it could take a defensive approach and try to avoid or minimize those risks of conflicts, the firm believes the more realistic and effective approach is to recognize those risks, be candid about them with clients and counterparties, and actively manage the conflicts. The firm strives to deal with each of them in such thoughtful and effective ways that clients and customers will know Goldman Sachs can be trusted to manage conflicts better than any other firm.
This is, of course, an assumption of enormous responsibility a particularly on the scale on which Goldman Sachs operates a so it raises the obvious next question: Who will watch the watcher?
The inside story of one of the world?s most powerful financial Institutions
Now with a new foreword and final chapter, The Partnership chronicles the most important periods in Goldman Sachs?s history and the individuals who built one of the world?s largest investment banks. Charles D. Ellis, who worked as a strategy consultant to Goldman Sachs for more than thirty years, reveals the secrets behind the firm?s continued success through many life-threatening changes. Disgraced and nearly destroyed in 1929, Goldman Sachs limped along as a break-even operation through the Depression and WWII. But with only one special service and one improbable banker, it began the stage-by-stage rise that took the firm to global leadership, even in the face of the world-wide credit crisis.
With unparalleled access to the firm's enigmatic leadership, Ellis, a strategy consultant to Goldman Sachs for more than 30 years, reveals the secrets behind the firm's continued success through many life-threatening changes.
About the Author
Charles D. Ellis is a consultant to large institutional investors and government agencies. For thirty years he was managing partner of Greenwich Associates, an international business strategy consulting firm he founded that serves virtually all the leading financial service organizations around the world. Ellis earned his M.B.A. from Harvard University and his Ph.D. from New York University. He has taught investment management courses at Harvard and Yale and is the author of twelve books, mostly on investing, and has written nearly one hundred articles for business and professional magazines. Ellis has served on the boards of Harvard Business School and Phillips Exeter Academy. A past trustee of Yale University and Chair of its investment committee, he is trustee of Robert Wood Johnson Foundation, director of Vanguard, and chair of the Whitehead Institute of Biomedical Research and consults on investing with major institutions in Asia, Europe, and North America.