Interview, Fireside Chat
Lessons from Lloyd: Advice to Our Summer Interns
- David Solomon joined Goldman Sachs 35 years ago following the firm's acquisition of the commodities trading firm J. Aaron, after initially rejecting multiple job offers including Goldman's.
- His early career involved practicing tax law and tax litigation at a New York and Los Angeles law firm, a decision made after graduating from Harvard and law school; he left the legal field after observing high attrition rates and peers moving to Wall Street.
- The trading floor environment in the early 1980s was characterized by manual processes, including rotary phones, manual drawing of currency symbols (e.g., the sterling sign), and extensive secondhand smoke, contrasting sharply with today's digital infrastructure.
- Solomon serves as an ambassador for the firm on public policy issues where Goldman possesses recognized expertise, such as budget debates and debt ceilings, while avoiding commentary on areas outside the firm's competency, like FDA drug approvals.
- He advocates for corporate policies supporting employee well-being and mobility, citing marriage equality as a critical factor for visa processing and healthcare benefits for non-married partners.
- Solomon has utilized social media, specifically Twitter, as a tool for communication, noting that he has "skirted the ridge of danger" without crossing into inappropriate territory during his first month of active use.
- The firm views the movement of employees into government roles, such as Gary Cohn and Steven Mnuchin joining the administration, as a validation of the firm's training and contributions rather than a loss, despite past criticisms of "Goldman Sachs as Government Sachs."
- Goldman Sachs has launched a consumer lending business utilizing algorithmic risk management and FICO scores, representing a deliberate, slow expansion into the consumer sector despite having no prior branch or credit card operations in that space.
- The consumer lending strategy leverages the firm's balance sheet strength and 80% existing competency in portfolio risk management, aiming to ensure credit returns match the firm's historical standards for getting money back.
- Global economic growth is assessed as steady, with the US stabilizing around 2% growth and Europe showing unexpected resilience post-Brexit, particularly under the influence of Macron's leadership in France.
- Solomon identifies the prolonged nature of the current economic cycle (approaching eight years) and the absence of a consolidating correction as the primary source of current market anxiety.
- Historical context is provided regarding the 1980s, where the inability to transact in floating currencies like the sterling required manual intervention, whereas today's currency systems are free-floating.
- Solomon's personal background includes working at 13 years old selling hot dogs at Yankee Stadium, where he earned a 13% commission on 40-cent items, illustrating an early, albeit unintentional, exposure to risk and commission-based work.
- He recommends that business professionals remain well-rounded by engaging in diverse interests and humanities, arguing that being interesting to others is a prerequisite for long-term success alongside technical knowledge.
- Solomon emphasizes the "small world" nature of the finance industry, noting that reputations are formed through early career interactions and that peers from one's entry-level positions frequently become significant figures globally.
- Recent reading interests include Graham Allison's book on the "Thucydides Trap," which analyzes the historical difficulties inherent in an incumbent power confronting a rising power, specifically regarding US-China relations.