“150 years of Golman has been a story of evolution“
Goldman Sachs’ success, they believe, is based on three main factors: the quality of their people, the quality of their culture, and the quality of their strategy. To compete in a global market, all three factors had a part to play.
Globalization had a massive impact on how the firm operated. In the late 80’s and early 90’s, the year the Cold War came to an end, the Berlin Wall was dropped, the Tiananmen Square protests, and essentially, the World Wide Web was created. All these changes presented new opportunities for GS.
Establishing the firm on a global standpoint was going to cost a lot, but it was recognized as an opportunity that would cement the GS brand as a powerhouse not only in the US, but all over the globe as well. They moved into London first, setting up in one of the world’s most prominent financial markets. Deregulation in this city and New York also helped. They worked on mergers specifically, and bridge privatizations.
As a matter of fact, the firm was almost blacklisted by the Bank of England because of envious competitors and skepticism over their methods, but they were granted permission to operate, and it proved to be successful for all parties involved. They were selected to be the US Advisors to the British Government, assisting them with privatizations.
From the UK, they went on to Germany, Scandinavia, France, Italy, and eventually the rest of Europe. The success in England set a platform for takeoff, so to speak. With globalization, the firm also boosted its ethnic and cultural diversity. It no longer was just an American firm ran and operated by Americans. Setting up offices in different continents helped them diversify.
The stock market crash of October 1987 (Black Monday) was one of the biggest challenges the firm faced during this time. John Weinberg stood by the firm despite the losses. It showed the firm’s resilience and essentially helped them in the long run. In 1984, John Whitehead stepped down to become Deputy Secretary of State under Ronald Reagan. Weinberg retired in 1990. They were succeeded by Robert Rubin & Stephen Friedman, who together brought fresh a strategic focus, focusing on adapting to change. By the time Weinberg and Whitehead we’re leaving, they were already in senior management positions.
Friedman worked mainly on the mergers & acquisitions business, while Rubin pioneered in terms of how the firm traded, and back office operations. It was a dynamic evolutionary time for the firm, and with the pair at the helm, the firm thrived. Rubin brought in Fischer Black, who brought in a scientific and quantitative aspect to how the firm mitigated risks. This approach was central to how Rubin approached risk, compared to Gus Levy, he was a real “risk-trader.” At such a dynamic time, such a trader proved to pay off.
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Wenguss Khan 