Morning Coffee: David Solomon's difficult weekend. Barefoot banker is hiring
After the past weekend, it's difficult not to conclude that there are some people out there who don't like David Solomon, the man who's spent the past five years as CEO of Goldman Sachs. Solomon's problems with the business of Goldman Sachs are well known, but the weekend articles went beyond Goldman's problems with consumer banking and the slump in M&A revenues. This was a well-briefed attack on David Solomon, the person.
Among the accusations in the articles in NY Mag and the NY Times: that Solomon can be a bully, to whom people are too scared to deliver bad news for fear of being shot as messengers - that he's a "tough guy with a short fuse;" that he puts his own interests before those of Goldman Sachs; that Goldman's historic culture of encouraging everyone in the firm to communicate and to go to the bosses for help is being dismantled. At the same time, a May letter surfaced from students at Hamilton College, Solomon's alma mater, accusing him of "blatant ignorance" and disrespect following a conversation with students about divesting fossil fuel investments in which Solomon allegedly claimed that he did more in a week than they would do in their lives to tackle climate change, and intimated that they were all recipients of financial aid.
What to make of it? Solomon isn't commenting personally. Goldman spokesman Tony Fratto is speaking for him and Fratto says Solomon "did not and would not say things to offend" the students at Hamilton. While Solomon is "direct and focused on results," so are Goldman's clients and that his communication style within the firm itself is not a problem, says Fratton. The NY Times quotes Solomon's supporters, who say he's a “genuinely heartfelt, moral, high-quality human being” and that there is "just a lot of second-guessing and jealousy,” of which Solomon has fallen victim.
Who are Solomon's enemies? Goldman Sachs has 400 partners, only a fraction of whom at best have come forward. The NY Times says it spoke to 19 people with "knowledge of Mr. Solomon’s travails," but didn't say who. Solomon's detractors include former Goldman Sachs CEO Lloyd Blankfein, whom the NYT says called Solomon in a funk about the Goldman share price and who offered to return in an advisory capacity, before briefing the NYT's contacts on that conversation. The NYT's sources seem likely to include the circa 90 partners who've left since Solomon arrived. Their disgruntlement has been catalyzed by the share price, which is down 2% this year despite a 14% rise at JPMorgan; Blankfein himself reportedly said he was losing patience with Solomon's strategy after the stock he still holds in the firm declined by $50m.
However, although the strategic struggles of Goldman's consumer business, with which Solomon allied himself, are difficult to refute, some of the accusations concerning Solomon's personality failings are less clear. Despite his apparent willingness to berate people, the NYT says that when Solomon was given a list of all the Goldman people briefing against him, he declined to take action for fear of making matters worse, saying "it's not that easy." He's championed women and protections for junior bankers' time off; in 2021 he moved his desk into Goldman's Sky Lobby to be closer to the people. He's trying.
He's also different. Both the NYT and NYMag also reflect Solomon's status as a maverick within Goldman: he didn't rise through the ranks, but joined as a "lateral" and can never be allowed to forget that by Goldman lifers; he DJs rather than playing golf. He's an isolated figure at the top; there are intimations that his former wife didn't like the amount he worked - which many people in finance will empathize with.
Do his detractors matter to Solomon's future? Not necessarily. Sources in the firm say he's likely to survive. Writing on Wall Street Oasis, some junior bankers and banker-pretenders constituting the next generation are voicing their support. Solomon is a "non-target hardo" who "grinded and hustled his way to the pinnacle of finance" says one admirer. "DJ DSOL is the leader of all non-target hardos, proving to the world that grinding can take you wherever you want. And all the old school Wharton educated partners can do is cry about this total chad being a bully," he adds.
Separately, if you're looking for a slightly different experience among the big names in finance, then Bloomberg reports that Rajeev Misra is hiring 20 people for his investment vehicle, One Investment Management. Misra, who previously worked for Deutsche Bank and SoftBank's Vision Fund, has been subject to his own accusations of being a challenge to work with, but he also has his upsides - including a seeming willingness to tolerate people going barefoot in the office.
Meanwhile...
Senior partners at the accounting firm BDO USA are in line for a big windfall after the arrangement of a $1.3bn debt deal with Apollo Global Management which will be used to finance an employee-owned vehicle. (Financial Times)
Bridgewater president and CTO, Igor Tsyganskiy is leaving for Microsoft to focus on cybersecurity. (Business Insider)
FTX founder Sam Bankman Fried had his bail revoked after sharing Caroline Ellison's diaries in an alleged incidence of witness intimidation. “Something that someone who is in a relationship would be unlikely to share with anybody, still less The New York Times, except . . . to frighten” the author. (Financial Times)
Credit Suisse retail investors and former employees are challenging its takeover by UBS, saying that the SFr3bn UBS paid for Credit Suisse was a fraction of its book value. (Financial Times)
How one hedge fund manager writes prompts for ChatGPT: "As a knowledgeable stock market analyst with expertise similar to Warren Buffett, your task is to analyze the given data and provide recommendations for the top 10 stocks to invest in...." (Business Insider)
Fintech firms aren't offering graduate schemes because training graduates is too time-consuming. (Fintech Times)
Techniques for improving sleep: wear socks in bed; the brain interprets warm skin as a signal that it’s okay to doze off. (NY Times)
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