In Search Of Excellence - David Solomon: From Flipping Burgers at McDonald’s to CEO of Goldman Sachs | E38

Episode Date: December 6, 2022

David Solomon is the CEO and Chairman of Goldman Sachs, the second-largest investment bank in the world – but this position was far from handed to him. As a teen and young adult, David raked leaves, babysat, flipped burgers at McDonald’s, and worked at a summer camp, learning the importance of work ethic and perseverance early on.David’s career trajectory had its highs and lows just like any other, but his hard work, resilience, and self-awareness led him to become a leader for over 43,000 employees at a firm that manages $1.5 trillion in assets.In this episode, Randall and David discuss the importance of adaptability and persistent effort amidst challenges, the characteristics of leaders, how success and work-life balance are defined, and much more.Topics Include:-       How consistent difficulties create resilience-       David’s advice for dealing with limiting and frustrating bosses-       Whether or not luck and timing impact success-       Defining success-       The 3 most important aspects of leadership-       The connection between time management, preparation, and accomplishments-       The characteristics of a Goldman Sachs employee-       How to establish your work-life balance-       The biggest lesson David has learned-       And more…David Solomon is the CEO and chairman of The Goldman Sachs Group, Inc. Last year alone, Goldman Sachs managed $1.5 trillion in assets, had $60 billion in revenue, and employed 43,900 employees.David began his career with the firm in 1999 as a partner, soon becoming the Global Head of the Financing Group. In 2006, he was named the joint head of the investment banking division, where he doubled profit margins over the next decade. He later served as president and COO of the firm before succeeding Lloyd Blankfein as CEO in 2018.In addition to his work at Goldman Sachs, David is the chairman of the Board of Trustees of Hamilton College, serves on the Board of Trustees of New York-Presbyterian Hospital, and serves on the Robin Hood Foundation, New York City’s largest poverty-fighting organization.Resources Mentioned:Memos from the Chairman, by Alan C. GreenbergSponsors:Sandee | Bliss: BeachesWant to Connect? Reach out to us online!Website | Instagram | LinkedIn

Success in life is trying to find a way to enjoy the ride. Everyone's really in a hurry to know what's next and what the next job is and where they're gonna get to. 30, 40 years ago, there wasn't that same kind of pressure, there wasn't that same intensity. My grandmother, and I've told this story many times, gave me a great piece of advice. She said, don't be in a hurry.

Patience, commitment, taking a longer-term view opens up doors and opportunities. But if you're always in a hurry to see what's next, you might miss sometimes what's right in front of you. Welcome to A Search of Excellence, which is about our quest for greatness and our desire to be the very best we can be, to learn, educate, and motivate ourselves to live up to our highest potential. It's about planning for excellence and how we achieve excellence through incredibly hard work, dedication, and perseverance. It's about believing in ourselves and the ability to overcome the many obstacles we all face on our way there. Achieving excellence is our goal and it's never easy to do. We all have different

backgrounds, personalities, and surroundings. We all have different routes on how we hope and want to get there. My guest today is David Solomon. David is the CEO and chairman of Goldman Sachs, which is widely considered the most prominent financial institution in the world. At the end of last year, it managed $1.5 trillion in assets, earned $60 billion in revenues, and had net income of $21.6 billion, and had 43,900 employees around the world. David is also the chairman of the Board of Trustees of Hamilton College, and serves on the Robin Hood Foundation, a nonprofit that was created in 1998, and has raised and spent $3 billion to fight poverty in New York City.

David, it's a pleasure to have you on my show. Welcome to In Search of Excellence. Thank you, Randy. I'm delighted to be with you today. I always start my podcast with our family, because from the moment we're born, our family helped shape our personality, our values, and the preparation for our future. You were born into a Jewish family in Hartsdale, New York, but grew up in Scottsdale, one of three boys.

Your dad was an executive vice president at Walden Press, a small publishing company based in New York City. Your mom, Sandra, worked at Burke Rehabilitation Center in White Plains selling hearing aids. What were your parents like and what kind of values did they instill in you? Well, first thing I'd just say is that I miss my parents. Both, unfortunately, are no longer with us and both passed in their 70s, which is way, way too soon. My parents came from, I think what was at the time, very typical middle-class backgrounds. My mother came from Northeastern Pennsylvania. Her father worked

in a family optical business, kind of retail optical business. And my father's father, my father grew up in Westchester County, also in Scarsdale. And his father did a series of things. He was an entrepreneur. He had a t-shirt business. He worked on Wall Street in the 60s and 70s when he was a little bit older. But I think both my parents came from close-knit families, a real focus on both working hard and enjoying life. And both brought their own personalities to my upbringing. My brothers, I had two younger brothers. We were a close family. It wasn't always a straight line. There were ups and downs. But generally speaking, my mother, I think, really instilled a sense of work ethic, commitment, sacrifice, focus, dedication to anything that you

really wanted to achieve at a high level at. And my father brought a real love of life and appreciation of people and appreciation for spending time with people and for enjoying some of the great moments in life that come from either one-on-one or group interactions with people. He just loved life and he loved spending time with people. We're going to talk about some of the things you did in college in a minute, but before we do, I want to talk about your childhood. What were you like as a kid? Were you popular? Were you a leader back then, or did you grow into being a leader later in life? I think it's very hard to look back and say, were you popular? I had friends. And as you know, in high school and elementary school, things are cliquish. People kind of have their groups of friends. I had a great group of friends in high school. I was a good student, but I was not an extraordinary student. I felt like I had to

work hard to keep up sometimes. I played some sports. I always had a job in high school. I worked at a Baskin-Robbins ice cream store, scooping ice cream. My senior year, I also worked at a McDonald's flipping hamburgers. I did babysitting. I shoveled snow. I raked leaves. So there was always a sense of, you know, how can I do something or find a way to make a little bit of extra money? You know, I played some sports, but was a very, very mediocre athlete, but went to a small high school and was able to participate. I was the president of the student government my senior year in high school. I don't know if that's leadership or popularity, but I was silly

enough with a group of friends to put together a ticket and run for that. I wouldn't call it a prestigious position, but certainly a position to try to be involved and try to actively participate. I'd say I was just very active and very involved at high school, you know, at all levels, socially, academically, extracurricular-wise. You know, I had a lot going on, a lot on my plate. I think education is one of the most important ingredients to our success. You went to Edgemont Junior Senior High School, and then went to Hamilton College in Clinton, New York,

where you graduated with a BA in political science and government. You had a number of interests in college. of the classroom. You played rugby and were the chair of your fraternity, Alpha Delta Phi. In the classroom, you took a lot of history classes, American history in particular. Back then in the 1980s, Hamilton didn't have a structured distribution requirements across a curriculum the way that many schools did and still do today. Instead, it had three requirements. First, you had to take writing as a freshman. Second, you had to take public speaking also as a freshman. And third, you had to either run around the track or swim a bunch of laps in the pool and prove that you could actually physically function. Let's talk about the second one, public speaking, and what you can learn from that. You said that when you graduated from Hamilton,

there was one skill in particular that helped you immensely, and it's one that you've worked on in your career and which you've thought about a lot over the years and is something that separates leaders and the way people succeed in organizations. In search of excellence on a scale of 1 to 10,000, how important is our ability to communicate clearly with others? And what's your advice to those who have already graduated from college who can't take a class on this or to those who didn't go to college and have already graduated from college, who can't take a class on this, or to those who didn't go to college and have already started their careers? I appreciate the question, although I'm not sure that I really know how to put it in a context of a scale of 1 to 10,000, but I would say communication skills, both written and oral, in life are super important, both professionally and personally. The ability to communicate, the ability to impact,

to influence, I think those are things that are hugely important, certainly in a professional career. And I've spoken publicly about this and have urged young people to take public speaking and to learn how to speak publicly, to be comfortable, to be comfortable in your skin, and really find a way to communicate your thoughts and your ideas very, very clearly. I think it's very important. It was something that was a part of a Hamilton curriculum and a Hamilton education, and I'm happy that it was. It was unusual at the time to go to a college that didn't have more structured distribution

requirements. I think at the end of the day, if you looked at my transcript, I took a relatively diverse group of classes across what would have certainly met a broad set of distribution requirements. But I think that some of the focus on both written and oral communication was core and embedded in Hamilton's curriculum more broadly. And today, as you said, I chair the board of Hamilton, and that still is a very, very important part of a Hamilton College education. It's certainly something, I think, that distinguishes the school from a number of other schools that it would be peered against. I want to talk about two of the odd jobs you had in

college and focus on one in particular. You worked at a summer camp during two of your summers, one before you graduated college and in the summer after your freshman year in college. During another summer, you worked at a Merrill Lynch brokerage office in New York City where your main job was to cold call clients and ask them to open an account. You had a zip code list and had to make 100 cold calls a day. You cold called for eight weeks, which meant you made 500 calls a week or 4,000 calls in total. It was agonizing. And after the first week, you went home and told your dad that you couldn't do this for the entire summer. And he said, yes, you can, that you committed to it, so you need to finish it. And he said to you that you needed to find a way to make it into a game to make it more exciting. Out of the 4,000 calls over

eight weeks, you got two meetings. That's the hit rate of 0.0005, which equates to five one-hundredths of one percent. Of these two meetings, one opened an account, a success rate of 0.00025, which equated 2.5 one hundredths of one percent. Similar to you, I had an internship at Merrill Lynch. Mine was part of a senior high school project. I didn't do any cold calling there, but I did a lot of it two summers later when I worked at a company called Mural Stone Construction for eight weeks. I was given a phone book, a telephone, and a desk and would call 100 people a day on a phone where my boss would listen and where I could ask people in lower income neighborhoods in Detroit if they needed home improvements. Most of the people I called were old and lonely and they were happy

to be speaking to someone on the phone. I had the same exact success rate, one sale, which resulted in a commission check of $1,300, which I still have a copy of. Going back to your two meetings in the one account, as incredible as this is, your boss told you that the end result was highly successful. Do you remember who opened that account, the size of the account, and how much you were paid for that? And the game you developed to make this somewhat fathomable? And in search of excellence, how important is it to develop and have cold calling skills, which most people hate to do, and to keep coming after it despite the nonstop rejection when people hang up on you or be rude to you or even swear at you and call

you names? Well, first of all, I think the point you made that the world has changed a lot at that point in time, there were a lot of people that I got on the phone that would talk to me. The world is different today. I don't think that this kind of cold calling works the same way today, but I think you make an interesting point. What I take away from the experience is not so much what the hit rate was. I had never done that math myself, although that math is quite obvious. I think the interesting thing about it is the experience of having to get comfortable picking up the phone, calling someone, and trying to figure out how to get them to talk

to you. And I think it's a valuable skill. I'm glad I did it. I think the difficulty of doing that over and over and over and over again throughout a day required a good amount of resilience, persistence, and it was something that was really important. I think the advice my dad gave me, that, look, you signed up for this and you got to finish it, was really good advice. I think that carries through to a lot of things. Not all things are easy. Not all things are going to be as productive as you'd like them to be. But at the same point, if you take something on, you really have a responsibility to try to complete it, to try to finish it. I do not remember the name of the person who opened up the account.

I do remember the name of the Merrill Lynch broker who I was working for. His name was Mark Pollard. I was not paid anything. It was a summer internship. It was a non-paid summer internship. If I was paid, I was paid a very, very small stipend, and there was no commission attached to opening an account. It was really the experience of being in that office and learning a little bit about how that business worked. I will say the following summer, I went back to working at the summer camp. And so it was an interesting experience, but I think I like being outdoors. I spent the rest of my summers during college outdoors working at a summer camp. So maybe that reflects a little bit on the nature of how I felt

about that experience. I just came back from Parents Weekend at Wisconsin. My daughter is a junior there. And people were asking, oh, what are you up to now, Randy? I said, oh, I have this podcast. Oh, who are some of your guests? So I mentioned this podcast was coming up. And I can't remember the name of the parent. But she said she went to the same summer camp with you.

And she recently saw you there at some kind of reunion. Maybe your kids go there or something like that. Well, it's a little bit more than that. This is a summer camp that I went to up in New Hampshire. It's actually a summer camp my father and his brother went to. My brothers went. About 20 years ago, the family that had owned it for 75 years did not have a third generation to run the camp. I bought it with someone I went to camp with. He runs it. He runs a great business. His name is Richard Woodstein. He runs it. He runs a great business. His name is Richard Woodstein. And he runs an absolutely fabulous summer camp for over 400 boys and girls, general summer camp. And it's been a real wonderful passion investment because I was

much more interested in perpetuating something that had been super important to my family, to me. My kids have spent time there. My kids have worked there. It's something that runs deep in my family, and I'm really happy that I've had an opportunity to perpetuate to some degree. This episode of In Search of Excellence is brought to you by Sandy.com, S-A-N-D-E-E.com. We are a Yelp for beaches and have created the world's most comprehensive beach resource by cataloging more than 100 categories of information for every beach in the world, more than 100,000 beaches in 212 countries. Sandy.com provides beach goers around the world with detailed, comprehensive, and easy-to-use information to help them plan their perfect beach getaway at home and abroad, and to make sure you're never disappointed by a beach

visit again. Plan the perfect beach trip today by visiting sandy.com. That's www.sandee.com. The link is in our show notes. Stay sandy, my friends. When you went to college, you didn't go there with the goal of going into the financial world. Your parents, particularly your mom, had a view that a nice Jewish boy who grew up in Westchester would go to medical school and become a doctor. You didn't want to do that. You were an economics major and a history minor and thought you'd go to law school. Before we get into your first job after you graduated, I want to go back to the 60s, 70s, and early 80s and the history of finance a little bit. Back then, the stock market had gone nowhere for a long period of time, and finance businesses were small niche businesses. But in

the early 80s, a number of financial institutions started offering these amazing two-year training programs, and they were paying people what was then a lot of money. When you graduated in 1984, you applied to Goldman Sachs for a two-year position, you interviewed and were rejected, and you applied to a number of other jobs, and you were rejected from those too. With the rejections piling up, you applied for a job at a commercial bank named the Irvine Trust Company, a bank that started in 1851 and which was later bought by the Bank of New York, Mellon. You really had no idea what a commercial bank did back then. It wasn't necessarily to be as sophisticated and knowledgeable when you went for a job interview as you do now. At the time, the most prominent thing about the Irvine Trust was its address, number one, Wall Street. You wound up getting that job and

you were super pumped to pay $22,500 a year, which seemed like a monstrous amount of money coming out of college. Not only was the money great, you could live in New York City with a few of your college buddies, at the same time also get a financial education. So you get hired there, which had a one-year training program, which for you was really like going to business school. After a year there, you started applying to business schools to get a master's. And while you're there applying to business schools, you met a headhunter at a cocktail party named Gary Goldstein, who had and still has a recruiting firm called the Whitney Group. The two of you talked for 20 minutes, and then he said he wanted

you to meet someone in LA who worked at an investment bank named Drexel Burnham. There was a guy there named Mike Milken, who had invented something called junk bonds, which were essentially high-yield bonds that were being issued by companies with low credit ratings. Mike had created a new business, financing them and selling them, and the business was exploding. Because junk bonds dealt with the credit of companies and you had formal credit trading at a bank, and because Mike liked liberal arts people because they had great communication

skills and could sell and talk about the securities, he gave you an offer as a salesman, a job which paid you more than double what you could make after going back to business school. You talked to your dad about it, and he encouraged you to give it a try. It was a hot firm at the moment, which didn't mean it would be hot forever. But if it didn't work out after a couple of years, you could go back to business school. For our listeners and viewers who are unfamiliar with Mike Milken, I think he's probably the most influential and important, if not the most influential and important person to finance in the last 100 years. We're going to talk about Bear Stearns next, but before we do, can you tell us about the culture and entrepreneurial environment at Drexel, the impact it had on you as a 25-year-old,

and its ultimate bankruptcy at the height of its power and influence? Sure. I mean, I can talk a little bit about it. And the story, as you tell it, is broadly true. I did an interview with Mike Milken. I was hired by a guy who was in New York, who was also another liberal arts guy who went to Middlebury, a guy named Ted Virtue, who was running a commercial paper desk in New York that was below investment grade junk commercial paper. Kind of hard to imagine because it's a product that doesn't exist today, I think, for all the right reasons. But it was a super entrepreneurial environment. You were given an awful lot of latitude and an awful lot of rope as a young

employee there to work with clients very, very directly. The firm was on a very, very hot growth trajectory because it was innovating in finance in a very significant way. Now, it also ran into very significant regulatory problems, also legal problems. Ultimately, Drexel Burnham went out of business in 1990, in February of 1990. But the experience there definitely allowed me to learn very quickly, to be extremely entrepreneurial. I kind of caught the finance bug there. I would say it was a place where I really decided that I liked trying to understand businesses, think about how businesses worked. I had a knack for trying to figure out what was compelling about a business and to talk about that with people. I had an ability to sell, or so I discovered through that experience. And with that, I learned an awful lot over a period of about four and a half years that

I worked there before. Unfortunately, Drexel went out of business. I'd say it was a formative experience, a good experience, a different experience than going back to school. I won't say that I have regrets for not going to business school, but I certainly missed what would have been a very valuable experience had I gone back to business school. I think the opportunity at that stage of your life to go learn, but also to meet a new network of people would have been very enhancing too. It obviously all worked out okay, but it was definitely an entrepreneurial, fast-paced, very flat organization. And that both had benefits. And by the way, I think it's part of the reason that ultimately the organization didn't survive. After Drexel failed, you went to Salomon Brothers

with six of your Drexel colleagues. You were all miserable there. And within a year, six of you left. And two of the six of you, including you, went to Bear Stearns, which at the time was one of the most prominent firms on Wall Street. At the time, Bear Stearns was trying to build their junk bond business, which was perfect for you.

You built a big business there and rose quickly through the ranks. Four years after you got there, Bear named you co-head of investment banking and put you on a 10-person management committee, which meant you were among the top 10 people running the firm. You were only 33 years old. You love the culture, the people, and the work you were doing, and you plan on staying there forever. But in 1997, you were working for a business tycoon named Sheldon Edelson and competing with a team of bankers from Goldman Sachs for $1.2

billion financing to build a Venetian hotel in Las Vegas, you wound up as co-leads with the Goldman team. You co-headed the Bear Stearns team while a guy named John Winkle Reed, who later became co-president of Goldman and is now the CEO of TPG, led the Goldman team along with Steve Mnuchin, who most people know as Treasury Secretary under President Trump. Winkle read like you, and in January 1999, after an elaborate closing dinner for the casino deal at a resort in Cancun, you and John flew back to New York together. During the flight, he said, you should really come to Goldman Sachs. And you told him, I really don't think I want to do that. But he persisted and invited you to dinner and told you why you should come to Goldman. He also offered you a partnership, something the firm almost never did,

to an outsider who hadn't had his or her entire career there. You still weren't convinced and weren't dying to work there. So they're giving you the full court press. And while that's happening, you had a bad conversation with Jimmy Cain, who was then the longtime CEO of Bear Stearns. You wanted to grow your business at Bear and hire a senior banker from Merrill Lynch, who needed Bear to match the unvested shares he would lose if he left Merrill. Cain needed to sign off on it and wouldn't do it, and you were not too happy about it. That same day, Winkle Reed called and asked you if you were coming to Goldman Sachs. At that point, you agreed to meet the firm's leadership team, and you were impressed. You consulted with Lloyd Blankfein, who you knew socially from the Hamptons. And finally,

after a dinner with John Thornton, who was the co-president of Goldman at the time, and after wrestling with the decision for two months and losing 15 pounds, you told your wife, I'm going to Goldman Sachs. You went to Goldman because you thought it was the greatest financial firm in the world and because it was putting you in a position that offered you a lot of runway to do things on a broader scale. It turned out to be a really good decision for you for a lot of reasons, not the least of which was because Burr Stearns went bankrupt nine years later. We're going to talk about your career progression at Goldman in a minute. But before we do, I want to freeze frame it here and talk about the job market today. We're living in a much different world than we were back in 1999 when you joined Goldman.

There are a lot more opportunities than ever before, which means it's super easy to jump ship and go to a new company. But many things have also remained the same since 1999. Similar to your experience with John Kane, many of us have had jobs or currently have jobs where we were or are frustrated because our bosses aren't doing what we think is the right thing to build our businesses or are in situations where our boss is keeping us from growing professionally or achieving our personal goals. What's your advice to those who are similar in these situations? Should we stay the course and work through it, or should we leave to find another job opportunity where the grass may be greener with the keywords maybe? You said a lot there. I'd highlight a few things that I just think are important to think about. First of all, I had lots of opportunities to do different things while I worked at Bear

Stearns. And most of them I said no to. The reason that I got engaged in a discussion with Goldman Sachs wasn't because I was unhappy at Bear Stearns. It was because Goldman Sachs was really a very, very special institution. I had aspired to work at Goldman Sachs when I was younger. I had been declining the opportunity. And to some degree, work at Goldman Sachs when I was younger. I had been declining the opportunity. And to some degree, working for Goldman Sachs, if you were working in finance, seemed a little bit like playing for the Yankees. And I really felt like this was one of the great firms in the world. It was on a trajectory where it was investing in really growing a true global footprint and a true global firm at a time when these firms were all starting

to look much more broadly than just in the United States. You have to realize through the 1990s, these were really relatively small firms. They were much more localized, much less global, but the world was clearly globalizing and that was a big opportunity in finance. I was really attracted to the firm. I was attracted to the quality of the people at the firm. I was attracted to the culture of collaboration at the firm. And so it was the strength of that firm and its franchise as a strength of Goldman Sachs that got me interested, not that everything wasn't perfect at Bear Stearns. Everything, by the way, has not been perfect over my 23 years at Goldman Sachs. And I assure you that anybody listening to this that has a job would

probably say that everything's not perfect at their job either. And so my advice around this is go slowly. It's a marathon. It's not a sprint. I kind of use the filter that if you're happy a majority of the time, that's a pretty good deal. And jobs are work. Working with people is complicated. And those that succeed over the medium and the longer term do it because they're patient. They succeed because they're persistent. They succeed because they're flexible. They succeed because they're self-aware. And they take time to understand their own shortcomings and to look in the mirror and try to find ways to adjust.

And they're also adaptable. time to understand their own shortcomings and to look in the mirror and try to find ways to adjust. They're also adaptable. I think one of the big mistakes a lot of people can make is something starts to get tough and they throw up their hands and they choose to step out and they think they're going to go someplace else and it's going to be easier. I think one of the best things you can do is to actually have the experience of working through something that's not fun, that is painful, that is tough. It makes you more resilient. No matter what you do next, you'll probably have a better chance of being more successful at it. Thanks for listening to part one of my amazing conversation with David Solomon, the incredible CEO of Goldman Sachs. Be sure to tune in next week for part two of my awesome conversation with David.