Goldman Sachs Rejected Him. Years Later, He Ran the Place | Lloyd Blankfein

Harley Finkelstein (00:00:01):
Let's go. Fire. That's a top one. That is one of the most interesting conversations he and I have ever had. Unbelievable. This is a guy who grew up in the housing projects in Brooklyn. Somehow at 16 years old, goes to Harvard on a full scholarship, navigates his way through Harvard then law school. And again, this is not someone who has his major plan. He's kind of just trying to figure it out, like us, a little bit anxious, a little bit unsure, but cares a lot. He's very thoughtful, always thinking about strategy and navigates himself into a small commodity trading firm, trading gold,

(00:00:40):
Backdoors his way in to the most prestigious firm on Wall Street. And within like a decade becomes the CEO, one of the most powerful legendary firms in the planet and has to navigate through the great financial crisis. One of the things I loved about this interview is he talks about the different culture shocks he had where he constantly felt like an outsider. Even when we walk into the elevator, he's like, "I didn't know I was short until I went to Harvard. Everyone was much taller." Well, I also didn't really know I was short until I went to a big public high school in America and I was like, "Whoa, everyone's much taller than me. " He was constantly trying to figure out this culture shock. He said a couple times, he's like, "Well, they had this code, but I didn't know what the code was.

(00:01:18):
And I had to figure out what the code was. And that goes for Harvard, that goes for Wall Street." He is not the traditional CEO of a legendary bank, but he figured it out. Yeah. And the other thing I loved also we talked about is something that you and I struggle with, but also we talk about a lot, which is this anxiety that we all have as Jewish entrepreneurs. Frankly, just Jewish people that were always kind of waiting for the shoe to drop and what's the worst case scenario. And we don't call it this, but he articulates it well as sort of risk management. I

David Segal (00:01:48):
Mean, he's the consummate leader. What I took away was, first of all, he has one of the most incredible combinations of intelligence and emotional intelligence

Harley Finkelstein (00:01:55):
That I've ever seen. His IQEQ ratio is off the

David Segal (00:01:58):
Chain. And I mean, he drops these snippets of wisdom. I mean, this is a man who led ... He led a room of 40 potential CEOs. Any one of them could have been CEO. These are the greatest executives in the world. And he was the top executives amongst top executives. And he led them through not only a difficult time, but an existential time.

Harley Finkelstein (00:02:20):
And there were a couple of them too, right? He talked about 94. He talks about 98. Talks to 2001, and then obviously the 2008 global financial crisis. He has this line that I keep thinking of, which is like, when you have no choice, there is no problem. Right? No choice, no problem. That's kind of how we live. But

David Segal (00:02:36):
He almost convinces himself of it.

Harley Finkelstein (00:02:38):
He actually has choices. Well, he convinces himself that he had no choice. And he also talks about the fact that that actually could be an advantage. Yeah. But those of us that don't have legacy families where we can go to any school we want or connections on Wall Street, but actually we all may be at an advantage if we don't have those things. This was a favorite. I mean, this was an incredible episode. We had a ton of fun. We had so much fun. We laughed. We went into deep detail about it. The jokes kept going. Ladies and gentlemen, Lloyd Blankfield.

Lloyd Blankfein (00:03:11):
Let's go. Start it from the bottom now the whole team here. Started from the bottom now we're here.

Speaker 4 (00:03:17):
Start in front of bottom now my whole team, man. Start at front and bottom, now we're here. Started from the bottom, now the whole team.

Lloyd Blankfein (00:03:30):
One of my media advisor, Warren Buffett, once told me that he never did interviews that would be edited. He only did live broadcasts.

Harley Finkelstein (00:03:39):
Oh, that's cool. Why?

Lloyd Blankfein (00:03:41):
Because in the live thing, he knows what he's doing and he knows the impression at least he's trying to create. Anybody could do anything to whomever they want with editing. You know that.

Harley Finkelstein (00:03:50):
Yeah. That's right. I will tell you though that I will probably ask you for introduction to someone who you're friends with in a couple months from now to do the show as well. So your experience here has to be incredible. Otherwise, you're going to say

Lloyd Blankfein (00:04:01):
No to me. Yeah. I might say no to you anyway.

Speaker 4 (00:04:02):
You mig say no to me anyways, but that's true. Oh, you're

Lloyd Blankfein (00:04:05):
Not going to tell

Harley Finkelstein (00:04:05):
Me now?

David Segal (00:04:06):
He doesn't need you because- You're going to mar my- This is going to be the best interview you've ever done.

Harley Finkelstein (00:04:10):
We've literally had guests get- I swear everyone said that to us. Yeah, everybody. And it's actually, they're like, "This is the greatest interview ever to end. This greatest

Lloyd Blankfein (00:04:17):
." I'm telling you, with you having said that, it would have to be so far ahead of number two before I would say it to you that this was the best.

Harley Finkelstein (00:04:26):
It's a high bar. Hold that though. I want to talk

Lloyd Blankfein (00:04:27):
About Seymour. I would say that the snacks aren't so good.

Harley Finkelstein (00:04:31):
It's not my office. We're just bold in this office. I will complain to the Kushners about this. I want to talk

Lloyd Blankfein (00:04:37):
About- Of course you could have brought in Snacks. You didn't be your office.

Harley Finkelstein (00:04:41):
There's no advertisers. Manas Shivitz asked us if they could advertise here. We said no. We fund this ourselves. We're a guy with humble roots now.You grew up in Lyndon

Lloyd Blankfein (00:04:56):
Houses projects. In the depth of our poverty, my mom would offer Danish to whoever came to the door. So it's like- That should be the name of your new book. My mom offered Danish. I wasn't asking for caviar.

Harley Finkelstein (00:05:10):
I want to start with that. I want to start up a blanche your mom and see where you were dad. Sure. You grew up in Brooklyn in frankly, housing projects. Lyndon House is very well known housing projects now. Notorious. Notorious. And well before you became valedictorian, champion swimmer and all the other stuff you did professionally, I want to talk about what you guys talked about at the dinner

Lloyd Blankfein (00:05:28):
Table. I'm still stuck on champion swimmer. I was hardly a champion as

Harley Finkelstein (00:05:31):
Well. Well, you were a

Lloyd Blankfein (00:05:32):
Swimmer. Swamp. Yes, I swam.

Harley Finkelstein (00:05:33):
You have swim. Jewish champion

Lloyd Blankfein (00:05:35):
Swimmers. In my neighborhood.

Harley Finkelstein (00:05:38):
You didn't drown. It's like that jump.

Lloyd Blankfein (00:05:42):
I could tell you all the great basketball players and football players that came from my neighborhood. It didn't produce great swimmers. In the projects of Brooklyn.

Harley Finkelstein (00:05:49):
What'd you guys talk about at the dinner table? Did you guys have a shabbat dinner? Was that a thing in your house?

Lloyd Blankfein (00:05:54):
No. My dad had two jobs, one of which was working nights at the post office, a nail sorter. So he worked nights. I barely saw my dad. I feel bad about that because I don't have a lot of memories of having conversations with them. I tell this to my kids all the time. One day, you might want to talk to me, so stop and talk to me because I wish I'd spent more time talking to my dad, but he was working. And when he wasn't working, he was sleeping.

Speaker 4 (00:06:21):
And

Lloyd Blankfein (00:06:22):
It was a small house, so he had to be quiet. So we were always aware, always aware of him being ... And had to adjust him being around, but really never engaging that much. And then when he retired, they moved to Yokoboca number four and whatever it was called.

Harley Finkelstein (00:06:35):
Boca Vista.

Lloyd Blankfein (00:06:37):
In what they would call Boca Raton or Palm Beach, except it wasn't. It was like 200 miles in land.

Harley Finkelstein (00:06:45):
It

Lloyd Blankfein (00:06:45):
Was Deerfield. Yes. It was 200 miles in land, but they didn't. So I didn't see him that much.

Harley Finkelstein (00:06:53):
So obviously- Also,

Lloyd Blankfein (00:06:54):
I left home early because-

Harley Finkelstein (00:06:55):
Succeed.

Lloyd Blankfein (00:06:56):
Yes. Not because of the recognition of my brilliance, but rather because of the public schools in New York.

Harley Finkelstein (00:07:04):
You were able to skip eighth grade, I think.

Lloyd Blankfein (00:07:06):
You could automatically, almost automatically skip eighth grade.

Harley Finkelstein (00:07:09):
Why?

Lloyd Blankfein (00:07:09):
Because they had a two-year program.That was set in. But what would seem extraordinary, was not part of the protocol, is that at some point you ran through your courses, the requirements. New York has regents. If you took all your regents and you passed it, you could continue to go to school, but you met all the requirements you didn't have to. I got there a year earlier than I left when I was 15 and I kind of red-shirted

Speaker 4 (00:07:35):
Because

Lloyd Blankfein (00:07:36):
What I was really trying to do is I was really trying to get into an out of town school.That was my- Did

Harley Finkelstein (00:07:42):
That mean Harvard at that point or

Lloyd Blankfein (00:07:44):
Not even.

Harley Finkelstein (00:07:46):
It's something not here.

Lloyd Blankfein (00:07:47):
I would otherwise have gone to Brooklyn College or Queens College, which looked good because Queens was better than Brooklyn. And then I started having aspirations to a state school, and now that gets to the complication of paying for it and living away, not living at home. And then later I had aspirations for private school. And I thought I was going to go to a state school. And then I went to college night at Midwood High School, which was ... I went to Jefferson High School, but- So it

Harley Finkelstein (00:08:24):
Wasn't even your school's college?

Lloyd Blankfein (00:08:25):
No, I don't think we had a college night.

Harley Finkelstein (00:08:27):
So you found a school with a college night.

Lloyd Blankfein (00:08:28):
We had a penitentiary night

Harley Finkelstein (00:08:31):
Or

Lloyd Blankfein (00:08:31):
Something at our- Which jail are you going

Harley Finkelstein (00:08:35):
To end up in? We'll tell all about the food situation at the jail.

Lloyd Blankfein (00:08:38):
Yeah. And I went to a booth for ... There were Ivy League schools there and I went there and I collected applications. And actually, the guy who was there representing the school, I thought it was a real guy. For all I know, he might've been 19 years old or something. He might've been a student from there, but they had Boothman. I took an application and I think I must have filled out the applications like ... I'd love to get a copy of it if they ever had it on microfilm or something like that. I think I filled it out like you'd fill out a landing card on a plane, ask a question and write the answer. So these essay questions, I was just doing it and I got accepted to some, didn't get accepted to all, but I got accepted to Harvard. Was

Harley Finkelstein (00:09:25):
That surprising?

Lloyd Blankfein (00:09:26):
Yeah.

Harley Finkelstein (00:09:27):
Okay. Were you have parents?

Lloyd Blankfein (00:09:28):
Surprised

Harley Finkelstein (00:09:29):
Everyone around. Were your grades good?

Lloyd Blankfein (00:09:32):
My grades were good. I had a reflection of, again, the background reflection. So my board scores were ... And again, in those days they were called achievement tests. I don't know what they're called now. I took my SATs in the morning and my achievement tests in the afternoon because you did that. Now I know how it's really done because my kids went through this and with tutors and all

Speaker 4 (00:09:59):
These things. You take

Lloyd Blankfein (00:10:00):
Courses. And you game it and you can count this score and count. We didn't know about those things. So I had near perfect scores in math

(00:10:10):
And very poor in a verbal. I guess it was called verbal because I hadn't read a book. And I'm more of a verbal person than a mathy person. I mean, I'm good intuitively in math. I had to have been for my job, otherwise I wouldn't have done well in my job, but I'm not trained in it, but I did very well in math aptitude and very poor and verbal skills. And so it was easy. If I were looking at it, you could have made a case for taking them or a case for not taking. It would've been easy either way. And some people went on.

David Segal (00:10:45):
And Lloyd, was it a typical Jewish family household like mom wanted you to be a doctor? What was education? What was the messaging around education?

Harley Finkelstein (00:10:52):
I mean, your great-grandfather was a Schmutza guy, right? You come from not exactly a professional line of-

Lloyd Blankfein (00:11:00):
No, no one had gone ... I know it's typical for my background and neighborhood. And I'm still friends with people that I grew up with, did well, but well was ... I never met anybody that had ... None of the parents had suits or went to bed. Yeah.

Harley Finkelstein (00:11:21):
We read actually a story that the only person knew with a suit was your rabbly.

Lloyd Blankfein (00:11:23):
Yeah, had a rabbi. Rabbi

Harley Finkelstein (00:11:24):
Who had a suit.

Lloyd Blankfein (00:11:25):
Yes, which I associated with that.

Harley Finkelstein (00:11:27):
Right. So if you have a suit, you must be a rabbi. That

Lloyd Blankfein (00:11:28):
Fast. I think some of the teachers may have had suits.

David Segal (00:11:32):
So it wasn't education, education, education. That wasn't the messaging you got.

Lloyd Blankfein (00:11:37):
My mother worked, my father worked nights. It was sort of on our own. The most important person in my life growing up was my older sister, was nine years older than me who didn't have ... Net net, I can't say. I hope she had a happy ... My sister passed away, but she had a tough life, got married at 19, had a baby at 20, had divorced at 21, back in the house with the kid. It wasn't easy. In a small apartment, very small apartment. My grandmother lived with us. She slept in the living room. I shared a room with my grandmother, my sister gave ... Wow. You shared a room with your grandmother. I did until I went to college. Well, originally when my sister left-

Harley Finkelstein (00:12:18):
I'd been a teenage boy and sharing a room with your grandmother. I

Lloyd Blankfein (00:12:22):
Mean,

Harley Finkelstein (00:12:22):
That's motivating to get out of the house.

Lloyd Blankfein (00:12:25):
It was. Yeah,

Harley Finkelstein (00:12:26):
Of course.

Lloyd Blankfein (00:12:26):
It was. And I think ... Now I don't want to say, look, in my life being involved in a global industry, I've met people who've walked across deserts and worked their way into Oxford and ended up in the same places that you ended up in or I ended up with in doing other things. So I'm not going to win a hardship contest. And at the time, frankly, I didn't think of it as hardships. I mean, I'm in a context. I grew up in the projects. Everyone around me was kind of very similar. Now, the neighborhood started to disintegrate and we were sort of the last ... There was a lot of upward mobility at that and we forgot to mobilize. So we were there for a long time. My parents ... When I left to go to college from the projects, by then, a lot of the people who I'd started high school with had, their families had moved to-

Harley Finkelstein (00:13:29):
A nicer place.

Lloyd Blankfein (00:13:31):
One of the nicer places. Co-op city in the Bronx

Harley Finkelstein (00:13:34):
Was

Lloyd Blankfein (00:13:34):
A big place.

Harley Finkelstein (00:13:34):
Yeah. They weren't sharing a room with the grandmother anymore.

Lloyd Blankfein (00:13:36):
Left Rack City. But it wasn't like ... I didn't know about these things. I didn't know how people live. So you get into Harvard.

David Segal (00:13:42):
I mean, it's Harvard, and there's such a contrast between the way you're describing your upbringing. What does grandma and Sis say about this?

Lloyd Blankfein (00:13:49):
Well, it was kind of shocking. And I think my parents ... I'm trying to remember what I thought at the time they thought, but now looking back, being older now, looking back, what they thought, it must have been kind of scary. I mean, there was some concern about paying for it, but it's a need blind. So they offered me full everything. Again, not because of scholarship, but because of need, which I had. And they tried to be helpful in the way ... Look, they took me to ... I had never gone up to ... I had never seen it. It was only after I got accepted that I went up with my sister. She took me up on a Greyhound bus. And my sister never went to college. In fact, she had a general diploma. I'm sorry. It was called a-

Harley Finkelstein (00:14:35):
Like a GED? No.

Lloyd Blankfein (00:14:37):
She went through high school, but they routed you. There was academic or there was an academic path or I forget what they called. It was some euphemism. It may have been called business or something, but it was really teaching, typing, and stenography.

Harley Finkelstein (00:14:50):
Okay. Like a trade kind of thing.

Lloyd Blankfein (00:14:51):
Yes. So she took that program, but she was nice to ... We went on a Greyhound to Boston told no one we were going up there or anything. Got off the bus, went to Harvard, didn't know what it was.

Harley Finkelstein (00:15:02):
Sorry, let's back up. Went

Lloyd Blankfein (00:15:02):
To the statue of John Harvard, and then essentially went home.

Harley Finkelstein (00:15:06):
So you're at Harvard, you've now got in, you're 16 years old. I mean, this must have been such a different world for you.

Lloyd Blankfein (00:15:14):
Yeah. Well, first of all, none of us knew ... I remember thinking back, do you remember the book that everybody reads in high school, a separate piece, and those kids are in prep school? When you read that book, you must have known what a prep school. I didn't know what a prep school was. I thought a prep school was what you went to after high school and before college

Harley Finkelstein (00:15:36):
For better

Lloyd Blankfein (00:15:36):
Prep ...

Harley Finkelstein (00:15:37):
I went to South Florida Public School, but I knew people that went to a prep school. So at least I knew what that was. You didn't even know that world.

Lloyd Blankfein (00:15:43):
We didn't know it. And it was kind of innocent. None of this was bad. I mean, I don't feel bad about it. I feel kind of ... I'm detachchromen. I'm looking at it, but my parents took me to the mail shop, M-A-L, not male as a moment my father did for a living, but male as in gender, the mail shop on Ralph Avenue in Brooklyn. Pursuit? Literally for ... And I'm not kidding, I Google this to go back and it's really true. They used to advertise and to give two sports jackets, three pairs of slacks,

Harley Finkelstein (00:16:16):
A shirt. A shirt, 16 outfits out of this

Lloyd Blankfein (00:16:19):
Thing. And transistor radio for $99. And it was really ... I mean, go Google it. Mailshop. What

Harley Finkelstein (00:16:26):
Was the radio for? Just the bonus of ... The Toyota cereal box.

Lloyd Blankfein (00:16:31):
So this is like ... I started in 1971. So this is really the last fumes of the '60s on campuses. Think of what was going on at the Harvard. They shut down Harvard in 1969. Those kids are still there. They was still- The smoke is still kind of waffling there a little bit. Eargassing people. As a fresh ... I go up to Harvard and from the mail shop, I literally go up my ... I bring up my wardrobe, which included a double breasted rust colored sports jacket and powder blue slacks, which is what the salesman at the mail shop- Thought would

Harley Finkelstein (00:17:14):
Look nice.

Lloyd Blankfein (00:17:16):
Is what people are wearing to colleges. I get there. And my roommates who are from the floor is from top prep schools are dressed in loincloths and I'm coming in looking like a lounge-

Harley Finkelstein (00:17:35):
You're like the monopoly man

Lloyd Blankfein (00:17:36):
Almost.Like a lounge act or something like that. So it was, and they could have been ... It was tough. And I was from Mars and they were taking ... My course ... The kids from public schools always start slow and then they accelerate. So I was taking Math 1A, which was calculus and they were taking, I remember this, Math 55, which was a graduate course in math because they had gone through that. And so they knew all this stuff. They pick up my homework and say," Look at this Bay Ha ha ha. "Why do you say the kids in public school end up doing better later? I assert that it was said to me, and so it may have been said to me just to make me feel better at the time, but I think statistically they can look at who comes in and how people perform in their careers and go out.

(00:18:30):
So I wouldn't give it as testimony, but I had heard, and if it's true, I can understand why. Because the people who get themselves there from public school, they're not necessarily higher. They're the people who kind of hacked their way through 10,000 other kids who might've wanted to do

David Segal (00:18:55):
That

Lloyd Blankfein (00:18:56):
Where the kids who

Harley Finkelstein (00:18:56):
Went- Yeah, it wasn't destined for them. They had to really work at that.

David Segal (00:18:59):
Well, but at the same time, I'm reminded, listen to your story, they reminded this concept of Exodus, very Jewish concept, this concept of Exodus and arrival. The Exodus, everybody focuses on the Exodus. Poor kid growing up, rough neighborhood, you're on the rise, but then you have to arrive. You get to Harvard, you are in a different world for your kids.

Lloyd Blankfein (00:19:19):
Well, it's bad and you have to go to judge, but I mean, look, it's the heartiest salmon that make it back.

(00:19:26):
By the way, I'll fast forward. And I've had another parallel to that. I look at the people when we're recruiting at Goldman and we recruit all these ... We take in three or 4,000 people a year out of school in our vast empire. And so it gives you an opportunity to say, now my president is Gary Cone who went to American University, my successor was doing awful ... Well, went to Hamilton and my CFO went to Rutgers. Wow. They didn't go to Harvard. Goldman didn't want us. We went to public school. By the way, Goldman didn't want me either because- We'll get there.

Harley Finkelstein (00:20:10):
We'll get to how

Lloyd Blankfein (00:20:10):
You got there. I got acquired into Goldman, but I look at that and I said ... And so I've evolved this thought. I don't know if it's right or not, but I'm thinking to myself, gee, if you go in, the average is going to be higher at these great schools, which are very, very hard to get into and very hard thresholds. And the average person may be higher and certainly the bottom quartile is going to be a lot higher. But if you're going to look at the tippy-tippy top of Harvard or the tippy-tippy top of the University of Minnesota where you're the top of 50,000 as opposed to the top of 1,600, and you've gone through that, I would say that having gone through that, they're at least as good, maybe better.

Harley Finkelstein (00:20:59):
Maybe better.

Lloyd Blankfein (00:20:59):
And plus they have the history and the background to be that person. And

Harley Finkelstein (00:21:02):
Probably more grit, probably a little more life experience potentially.

Lloyd Blankfein (00:21:05):
I would say statistically, you're swimming upstream against a much bigger current, whereas if you go to Choate or Phil- Middlebury. Or you're going to Andover. The current's going with you.

Harley Finkelstein (00:21:18):
Yeah. I mean, basically it is difficult not to go from Andover to Harvard. You have to do something

Lloyd Blankfein (00:21:23):
That- I don't want to minimize. It's not difficult because people get disappointed that they don't get in, but you're not swimming against the Tide, you're swimming with it.

Harley Finkelstein (00:21:31):
How was the Harvard experience generally? I mean, after year one, did you find your kind of footing? I mean, Eric wants to talk about, there was almost like a secret code there that you didn't know, but eventually, did you kind of figure it out?

Lloyd Blankfein (00:21:42):
Every year it gets better in my memory. Probably not in actuality. Yeah, in your head. It gets better. In my head, it gets better. It's very funny. A lot of my friends from Harvard, I'd say most of my friends from Harvard, I didn't meet at Harvard. I met doing alumni events post Harvard and like Zelig, I'd been drawn into people's memories and we talk about the good time we went here or there.

Harley Finkelstein (00:22:06):
Interesting.

Lloyd Blankfein (00:22:06):
And I go along with it and I said, yes, that was really a lot of fun.

Harley Finkelstein (00:22:08):
Yeah, you weren't there.

Lloyd Blankfein (00:22:09):
Remind me again what we did because I wasn't there. It was still very stratified. I imagine it's that way today, but however it is today, it was more so in the early '70s. And

David Segal (00:22:23):
What was it like going back home as you started to apply?

Harley Finkelstein (00:22:26):
Summer breaks, for example. It must have been a bit of a honor man. It must've been a bit of a mindfuck that here I'm Harvard, now I'm going back to ...

Lloyd Blankfein (00:22:34):
Yeah. And in a way, maybe different than when you think. If I think about it now, I'm sort of embarrassed at myself because of course I was in that world, but really not of the world I went to. I was an observer of it and I would like my friends back home to think it. Today I wouldn't want them to think it. I'd want to be accessible to them, not make myself inaccessible by imagining some moat, but I was a little screwed up and young and I would go back and I dress and I came back the first ... When I got to Harvard, the first thing I did was I bought a Lacoste shirt and a sweater that I put over it and probably looked at at least-

Harley Finkelstein (00:23:17):
Tied around your neck.

Lloyd Blankfein (00:23:20):
Zorro version of ...

Harley Finkelstein (00:23:22):
Lloyd, yeah.

Lloyd Blankfein (00:23:23):
Yeah. I didn't wear the sweater because the second thing I did after I got my sweater is not being well versed in how to take care of myself. I naturally washed it in a washing machine, put it in a dryer, and it looked like Mickey Mouse's sweater after that.

David Segal (00:23:36):
You started calling your friends old sons of bitches? Yes.

Lloyd Blankfein (00:23:39):
No, I called them old sport. Yes. Like Jay Gatsby. It wasn't that bad because I didn't think of it. Had I thought of that, I might've done it. But the point was is I would be embarrassed to watch myself because I did that, but really I didn't quite fit there and I didn't quite fit in the other place. It was kind of bad. I was kind of looking kind of probably jerky and talking about how great it was, even though I wasn't thinking it was that great.

Harley Finkelstein (00:24:12):
Yeah. At this time, were your parents like, "Okay, Lloyd, we're so proud of you. You're the first in the family."

Lloyd Blankfein (00:24:17):
No, I think they were kind of apprehensive. Look, I think, again, thinking now as an adult at my age now and with kids, they were undoubtedly very happy and proud, but very nervous about the different direction and the differences and somebody that ... And was I engaging in the right way? I didn't help that process by acting a little bit full of myself or having gone, made full of themselves as maybe too much, but-

Harley Finkelstein (00:24:47):
You had a bit of a swagger.

Lloyd Blankfein (00:24:49):
Well, trying to project my belonging in that other place, which of course I didn't. And so I was a little bit off to each of the places I was going to in those days. I wasn't the well-adjusted person you see-

David Segal (00:25:01):
Well, that's actually my question. ...

Lloyd Blankfein (00:25:02):
Before you today.

David Segal (00:25:03):
When did that sort of melt away for

Lloyd Blankfein (00:25:05):
You? A couple of years

Speaker 4 (00:25:08):
Ago.

Lloyd Blankfein (00:25:11):
I'm sort of in the second quartile of getting to the right place. Look, in the long run, these are ... I talk sometimes about so- and-so has overcome the burden of great wealth. And it sounds like when people hear that, it sounds funny to them. And I mean it to be kind of funny, but it's not- It's

Harley Finkelstein (00:25:35):
Funny. It's only kind of funny. We think about that too as well. There is a burden. And that's back to the kid thing, right? The grit that all three of us are public school kids. I didn't grow up in a house like you did, but a public school kid. There is something that comes from that. There is a certain chip on your shoulder that is very valuable career, business, entrepreneurship, running a big company that

Lloyd Blankfein (00:25:58):
Our kids don't have. Yeah. Importantly, when my chip was at its biggest, my brick on my shoulder, I didn't think about, gee, I have a chip on my shoulder.That's the

Harley Finkelstein (00:26:07):
Thing about the chip on the shoulder.

Lloyd Blankfein (00:26:08):
Right. I'm just thinking I'm living, but it's very motivating. So it's like my first job out of law school, out of school. I was very attracted to firms that paid you more money because I needed the money. I had going to repay loans. I wanted to live and have an apartment, and I didn't have to source my motivation. I just had to be able to affect it and to execute. If you grow up wealthier, you not only have to execute, you have to source your motivation. I'm faced with that every day. I'm retired. I get up. Some days I get up and say, "God, it's so great. Nothing in my calendar. What should I do today?" And sometimes it takes me till dinnertime to figure out what I was going to do with the day that has now over.

Harley Finkelstein (00:27:05):
Why did you go to law school? I mean, that seems relative to what we said about your parents and not necessarily pushing that sort of career track, why law school after college?

Lloyd Blankfein (00:27:13):
I think it was a couple of reasons. One, it's kind of in those days, maybe even today, it felt like an extension of liberal arts. It felt like I didn't know what I wanted to do. Maybe today somebody would go, my background or my kids' background would go to business school in the same way. But then it was going to law school and then you thought, gee, that's a useful thing for anything you might want to do in your life, ignoring for the moment that takes three years of pain to get through. And cost. And cost instead of earning and cost, but an extension of liberal arts. And then I think there was also a suggestion that had been given to me early in school, I was pretty glib in classes and I would argue with the teachers and I tended to engage with the teachers more sometimes than the students.

(00:28:05):
And so- and-so used to refer to ... One of my teachers always called me a Philadelphia lawyer, I guess going back to the Zenger trial or something, Philadelphia lawyer had some meaning. And so it was always in my head that I might be a lawyer and I went to law school. And

Harley Finkelstein (00:28:22):
You have some suits also already in your closet. So law school would've been perfect for

David Segal (00:28:25):
You. Yeah. Going back to this ambition and this internal motivation and having a bit of a triple-

Lloyd Blankfein (00:28:30):
By the way, you can rub the two arms of the suit together and make a fire. It was like that.

David Segal (00:28:36):
Sometimes I can be off-putting, right? You're right that if you grow up with wealth, you have to find your ambition and you had yours. But often that, you're talking about the chip on your shoulders, often that can be just too much over the top for those around you. And you're obviously a guy who's led and inspired all these people. What was the moment for you where you realized how to channel that in the appropriate way?

Lloyd Blankfein (00:28:57):
Channel the ... I just think I had embedded in me. I'm not the most ambitious. Look, even now, I'm not trying to Mac kill everything. We can talk about that also, what's the meaning of life? What are you supposed to do after you've accomplished certain goals and stuff? Should you keep on going till you drop dead in your chair? I just think I always ... In golf sometimes, I'm a lousy golfer and I don't know why I use metaphors from golf, but sometimes- You told

Harley Finkelstein (00:29:32):
Me you're spending more time playing golf now than ever.

Lloyd Blankfein (00:29:34):
Yeah, but more than ever is not a lot.

Harley Finkelstein (00:29:35):
Okay.

Lloyd Blankfein (00:29:36):
But if you're trying to put the ball 30 feet, you look at a target five feet away because that's when you feel a vision. I would say I wasn't thinking about where the hole was 30 feet away. I was just looking at a target that was three feet away or five feet away. What was that target for me when I was growing up was going to an out of town college. When I was going to law school, it was- Getting Good job. Getting a job and paying off student loans and helping my family if I could, but otherwise becoming a real person. Whatever that was. And so I've always been like that. I don't look- Too far ahead. Too far ahead. I mean, that doesn't mean it doesn't occur to me, but I try to have targets that are closer in in the general direction of too far ahead.

Harley Finkelstein (00:30:32):
When you finished law school, you went to go work at a law firm.You didn't last that long at the law firm?

Lloyd Blankfein (00:30:37):
I lasted four and a half years. Four and

Harley Finkelstein (00:30:38):
A half years, which I mean, I guess- Pretty typical. I lasted 10 years, excuse me, 10 months at the law firm until I rage quit. I went to law school to become a better entrepreneur. I actually thought law school was better fitting school for entrepreneurship than business school was from.

Lloyd Blankfein (00:30:52):
I went to law school to be a lawyer. I thought I'd be amazing. It wasn't like I was driven to be a lawyer. Philadelphia lawyer.

Harley Finkelstein (00:30:57):
But I thought I'd be a lawyer. So you last four and a half years of this firm, are you enjoying the work? Is it gratifying or is it- No, I hated it. Okay. It's a paycheck.

Lloyd Blankfein (00:31:06):
And I went into more of an esoterteric tax law corporate tax- So

Harley Finkelstein (00:31:13):
It wasn't M&A or it wasn't that type of deal making?

Lloyd Blankfein (00:31:16):
No, that was a very narrow field those days. And by the way, the tax lawyer would be on an MA. There wasn't a specific M&A specialty in those days. There was corporate tax, a lot of documentary.

Harley Finkelstein (00:31:29):
Okay. So you lasted four and a half years. That's a real lawyer.

Lloyd Blankfein (00:31:33):
Tax law is to corporate law. We got a

Harley Finkelstein (00:31:38):
Golf balance coming in here. Yeah.

Lloyd Blankfein (00:31:43):
No.Like a structural engineer is to an architect.

Harley Finkelstein (00:31:47):
Right. Okay.

Lloyd Blankfein (00:31:48):
Tax lawyer is like a structural engineer. Got

Harley Finkelstein (00:31:50):
It. Yeah. Make sure the building doesn't fall.

Lloyd Blankfein (00:31:51):
You're doing a lot of different projects and you're not doing the whole project, but you're doing a various part to make sure the building doesn't fall on. And there's somebody else who's running that whole project for that company and that deal. That would be the corporate lawyer. And so it's very esoteric, very narrowly focused. And I did it because it was hard. And I did it because I thought it was a marketable ... I'm thinking I have to make a living after this. And I did that. And what got me to leave, and I was doing well in my firm.

David Segal (00:32:19):
Are you married with kids at this point?

Lloyd Blankfein (00:32:20):
No, I got married. I got engaged. I quit my job in the law firm, got engaged and put a down payment on an apartment in the same week. Wow.

David Segal (00:32:31):
Well, that's a big risk.

Lloyd Blankfein (00:32:37):
And I mean, that's another story. My then, who became my fiance who was now still my wife after 42 years, cried, when I left the law firm.

Harley Finkelstein (00:32:48):
Sure. Why?

Lloyd Blankfein (00:32:49):
Well, I was doing pretty well in the firm. I was looked like I was on track for tenure. And

Harley Finkelstein (00:32:57):
You're making money, real money at

Lloyd Blankfein (00:32:58):
This point. Yeah, I was making a living. I mean, I wasn't spending any money, but things were going in. I could see where things were going to be. And the real reason, I'd say the most influential thing was there were other people doing what I was doing. Now I had a personality for it. I was good with clients and I was good at seeing the big picture even though it was a narrow field and it was good at engagement. I did some litigation, tax litigation and contested matters. I was naturally good at that. But the people around, and there was one person in particular who was so much better at it and really liked it. In those days before the internet, cases would come off, and you'd know this having been through law school, but maybe you went so much later than me, you didn't even have this.

(00:33:51):
You'd always have to check cases to see that something you were relying on wasn't overruled.

Harley Finkelstein (00:33:55):
Yeah, you still have to do it now. Now it's all done by AI. Right.

Lloyd Blankfein (00:33:57):
So now it's done. Yeah. So now

Harley Finkelstein (00:33:59):
It's- It was less nexus for us.

Lloyd Blankfein (00:34:00):
It was all automated. Correct. It's all automated. But in those days, you literally had to go to books and look up references to this case and actually look at them and make sure it said something nice about them, not something mean about the case. And you spend a lot of law time with that kind of drudgery and doing that. And the advanced case, they were called advance sheets. So the new cases would come out so that you could see what new opinions were occurring in spaces that you were working on and things like that. And I used to dread when they'd come. Because it may hurt your entire- And no, I'd have to look at that. You have to read

David Segal (00:34:40):
It.

Lloyd Blankfein (00:34:41):
And someone inevitably the next day is like, so did you read the news? And the guy next to me, it was like he was waiting for the Wells Fargo wagon to come in the music. And he was jumping up and, "Oh my God." It's coming. It's the day. Maybe it'll come tomorrow. The precedent's coming. I said, "He's so much better than me now." And those lines are never going to cross. They're only going to diverge more. So I said, "I have to get to something that I like better." So gold

Harley Finkelstein (00:35:08):
Trading was what you liked better? I mean, Jaron Company was ... How did that happen?

Lloyd Blankfein (00:35:13):
Well,

Harley Finkelstein (00:35:14):
I select- Tax law to

Lloyd Blankfein (00:35:17):
Trading money. I selected Jay Aaron from the vast expanse of job. Oh,

Harley Finkelstein (00:35:26):
Okay. The job

David Segal (00:35:27):
I was offered.

Harley Finkelstein (00:35:27):
Okay. Who's offered me a job? I'll go there.

David Segal (00:35:29):
The Harvard firms didn't come calling this time, did they?

Harley Finkelstein (00:35:32):
No. Yeah. I went in case or Skadden, I don't think was-

Lloyd Blankfein (00:35:35):
No, no. I knew I wasn't going to go to another law firm because I was doing well enough at this line. And Goldman Sachs probably wouldn't have hired you.

(00:35:40):
They didn't. They didn't. You applied. I applied to ... I remember interviewing through a headhunter and headhunters are in the business of churning people. Sure, of course. And so I liked it. It was the first ... Say, "You're really terrific. You're wonderful. You're great at everything like that. " And so I said, "I'm going with this guy." And so the headhunter was who sent me on an interview. I remember he sent me to Morgan Stanley. I remember Dean Witter separate from Morgan Stanley at that point because I said, "I don't want to go to another law firm, but I would go into something different." So they thought finance and naturally that person must have been thinking about investment banking because that's a natural nexus from law to investment banking, not trading per se, and sent me also to Goldman where I didn't make it out of the HR department.

Harley Finkelstein (00:36:28):
Wow. This is unbelievable, Lloyd, that given your career that Goldman didn't even let you out of the HR department, nevermind.

Lloyd Blankfein (00:36:35):
Well, I wouldn't have let me out of the HR department either. So it's a feather in their cap. But I didn't know anything. And I didn't know that in that realm, people went in to apply for jobs and they studied for weeks or months before so that there was no question about the job they didn't know already. Got it.

David Segal (00:36:54):
And I

Lloyd Blankfein (00:36:54):
Didn't know anything. I learned about what Goldman did. It was like an office building that you went up and you know how you go up in Macy's and then there's a marquee on top that it lights up on the floors and it says sportswear, intimate appower, laundry. This is

Harley Finkelstein (00:37:12):
More M&A trade.

Lloyd Blankfein (00:37:13):
This one said oil and gas and private placements. Wait,

Harley Finkelstein (00:37:20):
I know Goldman

Lloyd Blankfein (00:37:21):
Does. And I'm looking at these things and I don't know what these things are. And I go in there and obviously I don't remember the interview per se. I just remember the ride up in the elevator and getting rejected. And then-

Harley Finkelstein (00:37:32):
So Lloyd Life gets rejected from Goldman Sachs.

Lloyd Blankfein (00:37:35):
And in fairness to you, that haphazard kind of approach worked for Harvard. And then I sends me to another place to interview at a commodity trading firm that I'd never heard of called J Arend Company.

Harley Finkelstein (00:37:48):
Which was not well known or was well known at the time?

Lloyd Blankfein (00:37:50):
Wasn't known by me in the-

Harley Finkelstein (00:37:52):
But in that industry, was it a-

Lloyd Blankfein (00:37:56):
Yes, in that industry, but it's a very narrow in the ... If you're going to have a continuum of prestige in finance, commodity trading at that point would have been something between the messenger and the food server.

Harley Finkelstein (00:38:15):
Okay, got it.

Lloyd Blankfein (00:38:18):
There would be investment banking and then even on the trading side, it would be equity trading, even fixed income trading. If you ever read Pondfire of the Vanities, you'd see that was in relatively low esteem until of course the 80s and 90s when that became much more lucrative and the federal, the debt ballooned and that became a much bigger market than even the equities market and the opportunity. But in those days, so I got a job. I found out afterwards ... Did

Harley Finkelstein (00:38:44):
You know what commodities were?

Lloyd Blankfein (00:38:46):
No, but they didn't care.

Harley Finkelstein (00:38:47):
Okay.

Lloyd Blankfein (00:38:47):
My interview- Yeah,

Harley Finkelstein (00:38:48):
Why did they want you?

Lloyd Blankfein (00:38:49):
Well, it's

Harley Finkelstein (00:38:50):
Charisma, of course.

Lloyd Blankfein (00:38:53):
It turns out that they had a concept, the metaphor they used for that and appropriately was mud down for a firm that traded gold was mud down a sleus. They would hire 20 people out of ... And they liked people from law firms, younger people who'd been out for a while, could have been a consulting firm, and they'd bring them in and after a year, two would be left. So mud down to sluice, they would be looking for nuggets. I remember my entire interview- They

David Segal (00:39:24):
Bought an index fund.

Lloyd Blankfein (00:39:25):
There was a trading room and people shout ... It wasn't like you're not in Kansas anymore. Dorothy was like a trading floor and people were shouting. Today you go into a trading room, you can hear a pin drop.

Harley Finkelstein (00:39:33):
Yeah, of course. It's all electronic.

Lloyd Blankfein (00:39:34):
People are dealing with each other electronically. Not

Harley Finkelstein (00:39:37):
Even in the room anymore.

Lloyd Blankfein (00:39:39):
To the person sitting next to them even ... And here you're shout, you're screaming at the person sitting next to you. You're having a conversation to somebody who's like an acre away. Yeah, yeah. Was that exciting to you? Yeah. The energy's fun. In fact, the whole interview, the guy who was the partner, the head trader at that point asked me, "Do you think you could work?" He called me College Boy. He hadn't gone to college because this was a commodity.

Harley Finkelstein (00:40:06):
You were the Harvard college boy, five-year lawyer. This

Lloyd Blankfein (00:40:09):
Was a college. He didn't even know. A good college boy. Sent him by a headhunter. I don't even know that he even read the resume, but he said, "College board, do you think you could work in this kind of place?" And I said, "Work in it. " When I was growing up, I came home to it every night.

Harley Finkelstein (00:40:25):
Interesting. Just all the yelling and shouting and Jewish home. It's funny. The analogy between a Jewish home where everyone's yelling at each other, but we're just talking and then obviously trading for

Lloyd Blankfein (00:40:36):
It. And I used to go, everyone says, get to September, they said, "What are you doing for Russia China Home Kipper?" And I said, "Oh, the holler days." My house too. When

Harley Finkelstein (00:40:51):
Everyone

Lloyd Blankfein (00:40:51):
Would get together and holler each other.

Harley Finkelstein (00:40:53):
Yeah, yeah, of

Lloyd Blankfein (00:40:53):
Course. Have a nice holiday. So you're

Harley Finkelstein (00:40:56):
At Jaron and you got there. Did you like it?

Lloyd Blankfein (00:40:59):
No, scared to death.

Harley Finkelstein (00:41:01):
Okay.

Lloyd Blankfein (00:41:02):
I've been scared to death a lot. No, it's good. It's a theme. But you do it anyway. Yeah. Well, no choice, no problem. That's right. No choice, no problem. Elaborate on that. Well, I had no choice. So you could just stand there and you can-

David Segal (00:41:19):
But you did have a choice here. At this point in your life, you have a choice.

Lloyd Blankfein (00:41:21):
No, I quit my law firm. Moving forward, I burnt the bridges and-

Harley Finkelstein (00:41:26):
You got engaged.

Lloyd Blankfein (00:41:28):
I got engaged and I was going to make ... And by the way, I didn't know. Now I know where that stands and what Goldman is like and what other parts of it. To me, that was 100% of the financial world at that point. I didn't have an experience. Community trading gold.

David Segal (00:41:45):
I'd never been anywhere else. And back to your golf analogy. You're not thinking 30 feet from the hole, you're five feet.

Lloyd Blankfein (00:41:51):
I'm trying to figure out how to do it. And you had to do a lot of ... There's a lot of multiplication division adding and subtracting that one you have to do in your head when you're doing this stuff. It was a trading floor. It was like a market maker. So it wasn't just people stroking their beards and investing and making a decision. And once every five days you make a move in the market.

Harley Finkelstein (00:42:17):
And it's basis points.

Lloyd Blankfein (00:42:19):
This is constant and you're also ... And it's easy to make a mistake. It's easy when you're conveying what you did with somebody on the outside and when you want to tell, and nothing's being entered electronically. It's all being written, somebody's taking notes, literally writing things down. It's easy to say somebody sells to you and you say, "I sold." No, you didn't sell, you bought. And you could get things backwards. And if you enter in, all the positions would be off. I'll just simplify it by saying the opportunity and the likelihood of making mistakes is very high and mistakes could cost money, always cost money.

(00:43:01):
And so you had a deal with that. So there was a lot of terror associated with it. And the other part of it was boredom because in that world, I was used to being, as a lawyer, working my way up, I was basically working seven days a week, 12 hours a day. And when I wasn't at the office working about it, I was taking a shower thinking about it, about what I had to do. And were you always behind and you can always make your things better. There, people worked while the exchange was open and the exchange closed to 3:00. After 3:00, people left and had nothing to do and I didn't know what to do. I mean, I wasn't used to that and I kind of didn't like it. And I'm trying to think of ways of having ... I started reading books on commodity training on how to pricing, which is ridiculous because you pick that up.

Harley Finkelstein (00:43:46):
Doing it.

Lloyd Blankfein (00:43:47):
Doing it and from experience, but I was trying to make myself better at it. And over time, I got better at it.

Harley Finkelstein (00:43:55):
And then somehow in 1981, this commodity trading firm, Jaron, gets acquired by Golden Staff.

Lloyd Blankfein (00:44:02):
That's about the time I joined. So when I started interviewing, I was

Harley Finkelstein (00:44:05):
Interviewed. Sorry, you joined Jaron and it got acquired shortly thereafter.

Lloyd Blankfein (00:44:09):
I think it even got acquired while I was engaged in the conversation, but they didn't move in the same building. You wouldn't have known it for several years. So here happenstance,

Harley Finkelstein (00:44:17):
Right? But you described it as you got to Goldman through back door. Yes. That's unbelievable that you didn't

Lloyd Blankfein (00:44:22):
Know- I got hired by Jay Aaron. Jay Aaron at that point would have been for a month-

Harley Finkelstein (00:44:29):
Working on that deal.

Lloyd Blankfein (00:44:30):
May have even been acquired by

Harley Finkelstein (00:44:32):
Goldman.

Lloyd Blankfein (00:44:34):
I didn't even know.

Harley Finkelstein (00:44:35):
At what point do you- And it was irrelevant. Yeah, it didn't matter. What point do you figure that out though?

Lloyd Blankfein (00:44:39):
Oh, it took a couple of years. And

Harley Finkelstein (00:44:40):
Then what's your feeling

Lloyd Blankfein (00:44:41):
About it? Because it was a separate building and-

Harley Finkelstein (00:44:45):
And the brand was still J Aaron.

Lloyd Blankfein (00:44:47):
And we answered the phone J Aaron. It was only J Aaron. And every once in a while, even a couple of years later, somebody would say, "Oh, a couple of guys from Goldman are coming to the floor, so pretend they look busy." I'm not kidding. So people would put phones against their ear and listen to a dial tone.

Harley Finkelstein (00:45:05):
Years later as a CEO, you're like, "Stop making that. " I'm seeing it all. I've seen this game. I know how this works. I used to play this guy.

David Segal (00:45:12):
Your big win there, I believe, was this $100 million deal that you do, which at the time was huge. Talk to us about that.

Lloyd Blankfein (00:45:21):
At an earlier stage, I actually ... I mean, a couple of people from Goldman sort of ... Aaron did well for a while and then stopped doing well because I mean, this is ancient history at this time, but there was a very bull market in precious metals. And that was ... Aaron's did commodities, but their big commodity, too big was coffee and precious metals. And those are the most important markets where they made all their money. There was in the highly inflationary late '70s, continuing to the early '80s, the gold market soared. In fact, on an inflation adjusted basis, now gold is at its highs. I don't know when people are going to be watching this, but it just on an inflation basis, after 30 years, 40 years, past that,

(00:46:11):
Just now. But it was a big market. And so Aaron was making a lot of money. And then when that ... And it was something where the Hunt family was cornering the silver market, ancient history, but you can Google it, look it up. It's very interesting. And that made for a very bull market and precious metals. And then when that collapsed, it stayed collapsed for about the next 25 years. And so it got very quiet and stopped making money. And that's when Goldman got very interested in sorting out Jay Aaron and figuring out what else they could do.

Harley Finkelstein (00:46:41):
So what happens with you at this point? You end

Lloyd Blankfein (00:46:42):
Up- Me, I'm actually ... If there was meetings to be had with Goldman people to go over and learn something of, let's say, trying to distribute some of Jay Aaron's products like gold investing and things like that via the Goldman Network. They would send me. First of all, I was expendable. I wasn't integral to operations because I was learning my way in and I was junior, so they could spare me. And the second one I think was going on also is my background and resume made me look, at least on paper, like more of a Goldman guy.

David Segal (00:47:18):
Harvard- Right. Send college boy. Yeah, yeah.

Lloyd Blankfein (00:47:20):
Like more of a Goldman guy. And so-

Harley Finkelstein (00:47:22):
Blank fire. Yeah, good Jewish boy.

Lloyd Blankfein (00:47:24):
So even the guys from Aaron, they had a little chip on their shoulder versus Goldman because what Goldman conveys today, it conveyed then. And this was a streedy commodity trading firm. And those guys did very well and probably made a lot of money selling their interest to Goldman at that time and maybe were envied by even the Goldman time. But over time, the Goldman guys were rangier. And as the markets changed away from what the narrow part of the market that Aaron was good at, those guys didn't necessarily change with it. Got it.

Harley Finkelstein (00:47:56):
What was the culture at Goldman this time? Was it like somebody that Dave and I heard about Goldman, dress British, think Yiddish. Was that Goldman at that point?

Lloyd Blankfein (00:48:05):
I couldn't have even told you. You didn't even know. I was an outsider looking in. I would say-

Harley Finkelstein (00:48:09):
Because you admired the firm.

Lloyd Blankfein (00:48:11):
Yes. Admired it a lot. Very, very, very, very rigorous about everything, only hired from the best schools, training program, which I avoided, of course, obviously came in laterally through acquisition, but people were very conscious of what class they came in and who was in the training program with them. It was really like, in some ways, like a law firm in that way. And partners were very, very exalted status who there's a partnership. Now, they did what everybody did. The partners, if you looked at what they did, they did what everybody did. They worked harder and were good at it, but everybody knew who they were and you gave them a wide berth. So it was very hierarchical in that sense, but at the same time, the management was in the middle of the floor, you can engage. I'd say the other thing I learned about Goldman was that notwithstanding that, anybody with a good idea or who asks for help in doing something can get it from anybody else.

(00:49:21):
So you knew the status was hierarchical in terms of the different categories of people, but the most important hierarchy was competence. You knew who could do things and who couldn't. And those people-

Harley Finkelstein (00:49:39):
Even if they weren't partners.

Lloyd Blankfein (00:49:40):
Even if they weren't partners and those people had status. So you knew five years before a person could be a partner- You knew who- They'd be a partner. You knew that guy was going to be a partner.

Harley Finkelstein (00:49:52):
And everybody would know it. It sounds like a meritocracy.

Lloyd Blankfein (00:49:54):
Yes,

Harley Finkelstein (00:49:55):
Totally. Which was not the case in the law firm, which was all about tenure.

Lloyd Blankfein (00:49:59):
No, I think it was a meritocracy, and then you got tenure. Yes. But it was how the tenure decisions were made.

David Segal (00:50:05):
It's almost both. And once we see you have merit, let's see if you stick around and we'll give it ...

Lloyd Blankfein (00:50:10):
But there was all merit, but this was really merit. And what I also learned is it wasn't a secret. It wasn't, oh, this guy has a high opinion of that guy. Everyone

Harley Finkelstein (00:50:19):
Knew.

Lloyd Blankfein (00:50:20):
But I don't see it. Everybody saw the same stuff. There'd be people you'd go to to get the question answered. Got it. And I remember when I was sort of given more responsibilities, even at Aaron, when Aaron started to get Goldmanized, because they moved a couple of Goldman people down to Aaron and who started to Golmanize it, I remember being asked to, when I had no title, and I guess at Goldman, I would've been an analyst.

Speaker 4 (00:50:52):
It

Lloyd Blankfein (00:50:54):
Wasn't a thing. Or maybe an associate wasn't a vice president, which is also a junior. This is like McDonald's where the lowest one is.

Harley Finkelstein (00:51:01):
Where the lowest size is a government. I always found that fascinating where, and it's very different and titles are very, very different, but I also find fascinating that like a Goldman, a VP was not entry level, but it wasn't anywhere close to apartment.

Lloyd Blankfein (00:51:12):
No, I say it's like McDonald's where you want to order a soda and the smallest one is large. It goes up from there.

Harley Finkelstein (00:51:18):
That's right.

Lloyd Blankfein (00:51:19):
Yeah. So it's like ...

Harley Finkelstein (00:51:20):
I mean, I guess it was from a recruiting perspective, that's why they did it. It made people feel-

Lloyd Blankfein (00:51:24):
No, just that they held with the US government. So it's their decision to have only one vice president. Goldman decides 6,000. Yeah. That's just their biggest

David Segal (00:51:32):
Thing. So you're at JR and it's getting

Lloyd Blankfein (00:51:33):
Goldmanized. So what I was going to say about that, the title is when I didn't have a title, but then ... So I was going to run some new operation there and there were some people there that were already in it and they were going to now report to me. And those people were vice presidents by virtue of their tenure. And I had no title. And at one point I asked for a title and my then boss, the guy who hired me said, Call yourself Contessa. That's a title. It's like, shut up

David Segal (00:52:01):
On this boy.

Lloyd Blankfein (00:52:01):
Yes, exactly. That was the whole attitude. So I found out there that it didn't matter whether I had a title and they had a lower title.

Harley Finkelstein (00:52:10):
Competency.

Lloyd Blankfein (00:52:10):
Yes.

Harley Finkelstein (00:52:11):
Competency.

Lloyd Blankfein (00:52:12):
If you could do it. And remember, in this conversation, I had this conversation many times in my career where I had ambiguous roles and ambiguous titles and it was ambiguous organization chart. And I would give somebody an instruction and they would say to me, and really this literally happened more than once, a few times, "Do I report to you? Do I have to listen to you? " And I always had the same answer, which was, "I'm not sure myself, but it's your

Harley Finkelstein (00:52:44):
Risk." Wow. Brilliant. It's actually the perfect way to put it because then they're not really sure. You're not really saying you must, but

Lloyd Blankfein (00:52:52):
It's

Harley Finkelstein (00:52:53):
Like don't listen to me at your parent.

Lloyd Blankfein (00:52:55):
Yeah. It's your risk. I don't know myself, but it's your risk if it turns out you should have.

Harley Finkelstein (00:53:01):
Wow.

Lloyd Blankfein (00:53:01):
So that's going to say it's your risk. How do you become partner Goldman?

Harley Finkelstein (00:53:04):
How did you become partner at Goldman? Because you became partner in Goldman, I think

Lloyd Blankfein (00:53:09):
In 88. Yeah. So that was also another thing that I was happily deprived of, which is the tension of making partner all those years and working towards it.

Harley Finkelstein (00:53:18):
You didn't care?

Lloyd Blankfein (00:53:19):
Oh, I would have cared if I thought it was available. Aaron was really treated as a separate firm. They made five partners from the old Jay Aaron company, partners of Goldman Sachs at the time. And over time, they had gotten paid out and they started leaving and there were a couple left from old Jay Aaron. But that merger happened in 1982. And as you note, I became a partner of Goldman at the end of 88 for the 89 year. That was really seven years. My first seven years there, no one made a partner and it didn't occur to me that anybody would. And so when these processes were going on, I was kind of oblivious to it because I wasn't in that. We were living at ... For the longest time, we were at separate 160 Water Street and Goldman was at 55 Broad Street in 1985.

(00:54:14):
I think we moved into the same building, but separate floors, separate elevator bank. We really talked about going over to Goldman. We didn't say us.

Speaker 4 (00:54:22):
Yes.

Lloyd Blankfein (00:54:23):
And we answered the phone, just Aaron. Jay Aaron. And so I wasn't in the mix. And then that 1988 year, they made four of the important up and comers at J Aaron Partners at Goldman. And that was very new to me because ... And I didn't know the other people in the ... Presumably, and I know it, the other people in that class, and Goldman makes partners every two year still to this day.

Harley Finkelstein (00:54:46):
Every two years.

Lloyd Blankfein (00:54:47):
Yeah, because if they did it every year, the firm would do nothing else.

David Segal (00:54:49):
And it'd be

Harley Finkelstein (00:54:50):
Partner

David Segal (00:54:50):
Meetings all the time. How'd you earn it? I mean, was it this hundred million dollar deal that showed that you had the confidence?

Lloyd Blankfein (00:54:55):
Well, there wasn't one thing specific, but I think I distinct ... In those ... I did a finance. When your clients are in the gold market, you tend to dealing with ... I mean, the producers are in Russia and South Africa. And so I used to go to Russia and South Africa when you talk to the producing side and your clients are in Riyadh or Switzerland or South America. Those are the people who are the buyers of that type or central banks in Eastern Europe. And so those were the haunts. And in having a conversation, I won't make this complicated, but in having a conversation with some of the counterparts I was dealing with in Saudi Arabia, one of their problems was to figure out how to invest money in a conservative way that we would normally associate with the interest rate markets, but they couldn't, at that point, at least some of them observed the kosher and couldn't take interest as such.

(00:55:58):
So what they were trying to do is create instruments or investment that were structured in a way that would be so protected that they had fixed income characteristics, but that look, the returns could be characterized as investments.

Harley Finkelstein (00:56:14):
Not interest.

Lloyd Blankfein (00:56:15):
Not for tax purposes, but for- But

Harley Finkelstein (00:56:16):
For moral purposes. Well,

Lloyd Blankfein (00:56:17):
For moral purposes-

Harley Finkelstein (00:56:18):
Religious purpose, I guess.

Lloyd Blankfein (00:56:19):
And for religious purposes. And by the way, and there was a clearing authority.

Harley Finkelstein (00:56:24):
Yes.

Lloyd Blankfein (00:56:24):
There were people who would opine as to whether this made it or not. And so again, for-

Harley Finkelstein (00:56:29):
Was that a religious figure who actually did that?

Lloyd Blankfein (00:56:31):
Yeah. Oh yeah. It's incredible. No, whether something passed ... Yes, everyone had-

Harley Finkelstein (00:56:35):
Whether or not it's interest or it's capital appreciation.

Lloyd Blankfein (00:56:39):
Look, you can go to Crown Heights and people will ask for opinions on whether this is ... Yeah.

Harley Finkelstein (00:56:45):
I guess the Jews are doing it also.

Lloyd Blankfein (00:56:47):
Yes, of course. Everybody, whether this is compliant or not, a new technology comes up. So what did you do? It doesn't say in the ... Where in the Bible does it say you can't turn on electric lights on Shabbat. So somebody

Harley Finkelstein (00:56:58):
Somewhere along the line,

Lloyd Blankfein (00:56:59):
Analogize that to fire. Yeah.

Harley Finkelstein (00:57:01):
Wait till they figured out the Shabbat Goy thing or the Shabbat elevator thing, which to me is still a ... We have a whole episode of all the hacks that we've created. We're not turning on the lights, but if I say the lights are off and someone turns it on for me, no problem.

Lloyd Blankfein (00:57:13):
I remember being in the Hebrew school and the teacher lecturing us on going ... It was going to be Hanukkah, and she didn't want anybody using electric lights. There's electric Hong Kong, which is what my parents and everybody did because he didn't exactly ...

Speaker 4 (00:57:32):
Weren't

Lloyd Blankfein (00:57:33):
Going to have fire in our apartment. And I remember saying, "Why can't you use electricity? If electricity is enough like fire so that you can't turn on a light bulb on Saturday, why isn't enough like fire so that you can light your shop as candles?" She broke their brain, I'm sure. And then they said- We don't know.

David Segal (00:57:53):
Stop being so disruptive. Shut up and repeat the ...

Lloyd Blankfein (00:57:57):
Say

David Segal (00:57:57):
The shmah.

Lloyd Blankfein (00:57:58):
And say the shama. So the

David Segal (00:58:00):
Saudis need fixed income, but they can't call it that. You have something

Lloyd Blankfein (00:58:02):
Like that. By the way, it was 100% analogous to what investors in the US would do to try to turn what otherwise would be interest into a capital gain, a long-term capital gain. For tax purposes though. For tax purposes.

Harley Finkelstein (00:58:17):
Yes.

Lloyd Blankfein (00:58:18):
And this was done for Halaka purposes.

Harley Finkelstein (00:58:21):
Okay. So you're like, "Okay, I can connect these dots."

Lloyd Blankfein (00:58:23):
And so I did it. And it's a cash and carrier. I could explain it with cash and carriers, but it's basically a financing transaction, but it has characteristics and it had enough characteristics of investment and it had to have some elements of risk in it and risk was ... And so we bought for the people who want to invest the money, all of let's say the S&P 500, which was a new contract at the time where you could do size. And so to buy that, they put in cash to buy all the stocks. And then so they buy that and then they sell the futures forward in effect by buying the cash and selling the futures forward. So in a year, you'll get the cash back when you go and do that. And presumably having all 500 stocks is a good hedge for the S&P 500 futures contract.

(00:59:16):
That was in effect, lending money to the exchange, and then they got a very high rate of return. And in those highly speculative times, it would be like five or 7% off of the interest rate, the risk-free interest rate, maybe even more. So

David Segal (00:59:34):
Man, it's ridiculous. Did you think that up in the shower? It's incredibly creative. And most people think of finances as much more.

Lloyd Blankfein (00:59:39):
I think cash and carry I didn't invent, but what happened was there was a new contract at that time called the S&P, the spies, which now people take for granted, but that was new and that was finally being done in a size and with inefficiencies that allowed this. So you could do a large amount and there was a lot of ... You'd have to buy the whole S&P 500 Sell the S&P 500 forward in the form of a future. Don't forget, when you're buying it upfront, you're giving the cash. When the contract settles on the back end-

Harley Finkelstein (01:00:10):
You get stock.

Lloyd Blankfein (01:00:12):
You get in effect, you're getting stock, but it gets delivered in cash. And so you get it back. So it's affect lending it to the market. Now who's on the other side of that transaction? Who's borrowing it?

Harley Finkelstein (01:00:22):
You don't know. Therefore-

Lloyd Blankfein (01:00:23):
You don't know who they are, but they're speculators. And in those days, people were speculating because with those contracts, you got a lot of leverage on the market. So people were insensitive to what embedded interest rate was. And they were just taking speculative positions on the S&P by putting down 5% margin and you can control 20 times the position. So they were paying relatively high interest rates to the counterparts on the other side who were supplying it. And this is a little bit complicated, but if you set it over five times, you'd get it.

(01:00:57):
And that was a lending transaction. And they wanted to do ... The amounts that were relevant to them were in a hundred million dollar increments. That was a huge transaction in the equity markets in those days, especially for that contract. And I brought in an order to do that. Now, in order to do that, you had to work through certain things. So under their ruling that they had that would permit this kind of transaction to be compliant, to make it Islamically correct, they couldn't invest in stocks that were too associated with gold mining or with interest lending. So they decided that you couldn't have banks and you couldn't have spirits companies. So Anheuser-Busch didn't work. Wow. And so that left 15 companies out of the S&P 500, which created some tracking risk, which created some risk, but not too much.

Speaker 4 (01:01:50):
Wow.

Lloyd Blankfein (01:01:50):
Because it was still largely a big enough pool. So those things got worked out. And

Harley Finkelstein (01:01:56):
Goldman saw that as being

Lloyd Blankfein (01:01:57):
Incredibly great. I went to the big boss and I said," I have this transaction and this is a credit to the firm. "He said," Oh, go work with this guy who was a very senior guy in the equity division who knew about how to do these. And I worked with that guy and the guy not only gave me the time of day, gave me all his time and we worked through it together and it got done. So when I said before, it was hierarchical, it was hierarchical in that you knew who was who, but those membranes were very permeable based upon capability and success.

David Segal (01:02:29):
Just a sec. I mean, beyond the complexities and the brilliance and creativity around how you actually structured this, you're a Jewish kid in Riyadh trying to convince these, build trust with these people to be able to work this in a way that's acceptable to them. And that's somewhat subjective. How did you build that trust across cultures like that?

Lloyd Blankfein (01:02:47):
First of all, and we can have a whole sociological conversation about what these things are. I would say that when you travel, and again, it's hard for me to distinguish back then things were a little ... 40 years ago, it wasn't as developed as it is today. The tectonic plates had moved as close together as they are today, but the powerful merchant families in all these countries, their kids went to Colorado State and Boston College, and a lot of these went to school in America. So the top level of these are us. And you could have conversations and later on I would. I'd go there and we'd talk about the crazies in their area and they're like us and they have ... Our interests are pretty aligned. Amazing.

David Segal (01:03:46):
Is that worldwide?

Lloyd Blankfein (01:03:48):
I would say there's differences, but in those countries which are, let's say where their interest in them is based upon the accumulate on their trade and have a merchant cast, that family group, the older parents, like in the case of Saudi, the older people, they grew up without shoes and everything. And after 1974, and the boycott and everything, and when they rested Aramco and made it Saudi, people got very well. So there was a real break for them where it went from being ... I mean, you know what Dubai looks like today.

Harley Finkelstein (01:04:32):
Yeah. If you go back 30 years or 40 years,

Lloyd Blankfein (01:04:34):
It was- But if you go back to the '60s, that waterfront-

Harley Finkelstein (01:04:39):
Is not there.

Lloyd Blankfein (01:04:40):
Is not there. I know. I think it's unbelievable. That's crazy. Pearl divers and smugglers. And so smugglers of silver into India was a gateway. And the wealth that was spawned, but also they got lucky. The vision of those people, they laid ... I mean, we're jumping around here, but they laid the steel and the foundations for a great city when most people didn't think there was any prayer to have anything there.

Harley Finkelstein (01:05:11):
Yeah. There were some thoughtfulness. There was some vision to that thing.

Lloyd Blankfein (01:05:14):
Huge.

Harley Finkelstein (01:05:14):
Yeah.

Lloyd Blankfein (01:05:15):
Huge.

Harley Finkelstein (01:05:15):
And so then working with someone from Wall Street was actually very appealing to them because-

Lloyd Blankfein (01:05:20):
Appealing and easy to do, and they thought the way you did, and they went to school across the river from where you went to school very often. And so that wasn't as problem. But it was mixed and their people weren't. The tougher place, so those are the places where you had a stratified ... You went there based upon a merchant class that really could concentrate the wealth of the country in one place and those are the people you can do business with. And then there was a whole mass of people that you never engaged with that were there and you saw them on your way in from the airport and back out to the airport. That was that. The more complex places that you went to were the places where you engaged with them because of the government and the sovereign wealth, where the people of the upper echelons were the same.

(01:06:04):
And so if you went to Russia, those guys you dealt with were Russians. They went their way-

Harley Finkelstein (01:06:10):
They weren't going to Colorado states.

Lloyd Blankfein (01:06:12):
No, that's right. They went up to the same thing in China. They weren't there because their families packed them off for their education. They didn't go to Eaton.

David Segal (01:06:23):
Right. There's no how about those red socks.

Lloyd Blankfein (01:06:24):
What? No,

David Segal (01:06:25):
How about those Red

Lloyd Blankfein (01:06:26):
Sox? So it's very interesting. When you went to the government's ones and the ones where they were ... And I guess they wouldn't even regard that as a meritocracy of a kind, those people tended to stay more foreign, whereas the one that you think of the most foreign people had an echelon, a tier that you could very well bond with who acted and thought like you did.

Harley Finkelstein (01:06:51):
I want to go back to ... So you make partner here, this amazing deal. This is in 88. Well,

Lloyd Blankfein (01:06:55):
But that deal happened in a lot of other

Harley Finkelstein (01:06:57):
Things. And you basically, based again back to that sort of meritocracy point about Goldman, Goldman obviously saw something in you and that particular cohort in 88, you became partner. Was it pre-partner or post-partner? Did your life change entirely at that point or was it subtle?

Lloyd Blankfein (01:07:16):
It had to have. I mean ... Can

Harley Finkelstein (01:07:22):
You imagine? Did you believe, you probably called your mom and said, Mom, I just became, if her mother was around at this point and said, mom, I'm speaking partner

Lloyd Blankfein (01:07:29):
Sachs. No, of course. But look, when I got to Harvard, I was very happy to tell people that I went to Harvard. I was dying for them to ask me. And if they didn't ask me, I'd find ways of getting into

David Segal (01:07:39):
This. By the way, everybody who goes to Harvard

Lloyd Blankfein (01:07:41):
Does the same

David Segal (01:07:41):
Thing. Of course. David's wife went to Harvard. If she was here, you know by her

Lloyd Blankfein (01:07:47):
Secretary. I said that too. I met somebody the other day and I didn't realize it, but the guy was a road scholar. I said, "You're the first road scholar I met that didn't tell me.

David Segal (01:07:57):
" Well, back when I was a road scholar.

Lloyd Blankfein (01:07:58):
So of course, and becoming a partner was just like that. But when I got to Harvard, I felt that

Harley Finkelstein (01:08:06):
Way,

Lloyd Blankfein (01:08:07):
But of course my overriding thing is, "Oh my

Harley Finkelstein (01:08:08):
God." I know. At Harvard, what the hell am I

Lloyd Blankfein (01:08:10):
Going to do? I'm going to get thrown out of Harvard. Am I going to get

Harley Finkelstein (01:08:12):
There?

Lloyd Blankfein (01:08:13):
When I made Harvard, a partner at Goldman, the first thing I said is, "What is the average tenure of the Harvard of a partner? Will I make it that long as a partner here?" So I was trying to make them not fire me as a partner, not regret that they made me partner, and that's what I thought about. By the way, that's always what I thought about my whole life. And I've been telling you, you're destined for, you'd be happy ... I'm happy with that. It's not like I'm sad, but I never was rapturous about my position. I always worried that A, I got it by mistake. I may not have deserved it. And B, I didn't want to lose it. And C, I wanted to justify

Harley Finkelstein (01:08:57):
Them having

Lloyd Blankfein (01:08:58):
Given it. And that's always what I thought about. Well,

Harley Finkelstein (01:09:00):
I'll give you a little dirty secret, which is that the people that have sat where you're sitting for Big Shot, we ask all of them, "When did you know that you made it? " And they all kind of say, "I'm not really sure I've made it yet." And these are people that have all, in our eyes, I think in a global macro sense, have made it. There is this sort of scarcity kind of mentality that we all have, whether it's the Jewish issue or it's the multi-generational trauma that we all, my grandpa, Holocaust survivors, that I'm still worried, do I have enough? Am I doing enough? Am I going to lose this thing? There's often not a sense of abundance that comes with success.

Lloyd Blankfein (01:09:38):
Sure. And then what is making it and what is success also? Does it make a difference when you have ... I'll let your imagination decide what X is, whether you have 5X or 50X when 5X is more than you could have spent in your entire life

Harley Finkelstein (01:09:53):
Anyway. I mean, we joke with that all the time that the magic number thing is such a stupid thing because-

Lloyd Blankfein (01:09:58):
Or success, having children that still talk to you. Or having

Harley Finkelstein (01:10:02):
Your health.

Lloyd Blankfein (01:10:04):
Well, having your health could often be out of your control, but whether your kids talk to you, you might think at the end of your life was in your control. That's

Speaker 4 (01:10:10):
Right.

Lloyd Blankfein (01:10:11):
Or whether your third wife talks to you and your second wife

Harley Finkelstein (01:10:17):
Gets- Luckily for you and- We're still on our first wives, but as you're

Lloyd Blankfein (01:10:20):
Kind of going

Harley Finkelstein (01:10:21):
Through this sort of-

Lloyd Blankfein (01:10:22):
And what is it all about anyway? Are you supposed to ... I remember when I stopped working at Goldman, I said, "Oh, well, I should teach." And I had whatever the lowest rank of instructor is at the Harvard Business School, I settled on that title because it came with the least responsibility. And it was a little Covidy outside.

Harley Finkelstein (01:10:41):
Associate professor or visiting professor or something like that.

Lloyd Blankfein (01:10:43):
It was not even like that. It didn't have the word professor.

Harley Finkelstein (01:10:46):
Oh no. Okay. I dn't feel

Lloyd Blankfein (01:10:47):
Like we're going to have you back in 10 years you can be Dean. No, they often was, "Would you like to teach a course?" No. Would you like to co-teach a course? No.

Harley Finkelstein (01:10:54):
Okay.

Lloyd Blankfein (01:10:54):
Would you like to have fixed appearances? Keep going.

Harley Finkelstein (01:10:57):
You going in

Lloyd Blankfein (01:10:58):
The right direction.

Harley Finkelstein (01:10:58):
Yes. Guest lecturer.

Lloyd Blankfein (01:10:59):
Yes. Would you like to be a lecturer so somebody could call up?

Harley Finkelstein (01:11:02):
Yes. Okay, good.

Lloyd Blankfein (01:11:03):
And you decide at the last minute whether you do it or not. It's

Harley Finkelstein (01:11:05):
A CNBC contributor.

Lloyd Blankfein (01:11:07):
Yes, exactly. That sounds right. That sounds like the one. And so that's the one I took. And I remember the few times I did that, I said, "Why am I doing this, teaching them what I already know? I want to go out and learn stuff."

(01:11:21):
And so for me, I want to learn physics. I want to learn cosmology. I want to learn the physics of large things, the physics of small things. And now you could do this stuff. You can listen to lectures on Audible and tape. And I do a lot of that. And I'm saying, so what's it about? Now you should give back. And some people could do ... I retired seven years, that's a long time, and I was 64, and still pretty peppy. I feel pretty peppy now. And I just really, I was CEO for almost 13 years at that point, and it was good. And I loved my job, and I loved engaging with the people, and I loved it, but I'd gone through cycles, financial, all this.

Harley Finkelstein (01:12:07):
Went through 2008.

David Segal (01:12:08):
We haven't talked about that. Yada, yada, yada. The whole US economy

Lloyd Blankfein (01:12:11):
Almost collapsed. But we had the crisis of the century every four or five years, so we weren't going to run everything. We got used to them. But it's like, what's it all about? Dude, I want to really go and take one more trip to Singapore or to Australia so that we would have, instead of a 68.7% chance of getting this piece of business, I can raise it to 74.9% by virtue of showing up and showing my commitment by taking that long flight and going back and being part of the pitch and going out and learning the details and things like that. Was that satisfying at that point? Yeah. In other words, just sustaining. And by the way, I have some admiration for people who do that to the end of their days. Well,

David Segal (01:13:00):
You did that. I mean, the irony is that had you have had that attitude 20 years prior, you wouldn't be Lloyd Blanket. Well,

Lloyd Blankfein (01:13:07):
I did it for a very long time, but then it got to a point where I had to think, "What I really want to do is I really want to learn about this and I want to learn

Harley Finkelstein (01:13:15):
That. " Is that how you knew when it was the right time to retire? Is that when you sort of felt, okay, I'm 64, I'm interested in other things now.

Lloyd Blankfein (01:13:22):
I would say the last seven or eight years of my tenure was dealing with the existential part of the financial crisis, like surviving and making sure you risk managed it. And the prior ... And for several years, we had to deal with the reputational part of it for having survived it too well. That's right. And why did you do it? And then all the pressure put on banks and Goldman in particular for doing this and dealing with regulators and kind of working through the aftermath of the financial crisis and the law that were changed and the regulations that were behind the laws and the application of the regulations were very complicated and difficult. And when that had abated finally was I thought, gee, most of the people who leave these jobs get carried out on a gurney. I

Harley Finkelstein (01:14:12):
Don't know that.

Lloyd Blankfein (01:14:13):
And I'd done this for a very long time. I was a very long ... For that industry, I was a very long serving CEO. A quarter of the time, I miss it a lot and 75% of the time I'm just relieved. I'm not getting ... When I finish this meeting, I'm not getting on a plane and I'm flying to Frankfurt.

Harley Finkelstein (01:14:31):
Or Singapore. So let's go backwards though. So you were one of the longest serving CEOs of Golden, but also frankly on Walsh-

Lloyd Blankfein (01:14:38):
And I assure you it seemed longer.

Harley Finkelstein (01:14:40):
I'm certain of that. Can you explain how you go from making partner in 88 to becoming the CEO of Goldman Sachs? Because I think that it's one thing to become part of. There are lots, not lots, but there are a number of partners. Yeah,

Lloyd Blankfein (01:14:54):
I would say it would not-

Harley Finkelstein (01:14:55):
Well, what was the thing? What was that journey like?

Lloyd Blankfein (01:14:57):
Pulse was the CO for you. It would not have been predicted and it was twisted. Look, anytime you get to a place, you could look back to where you started and see a straight line. The question is, if you just look from where you're starting and looking out, there's an infinite number of possibilities, could have been infinite, a lot of odd things. Look, in the last step, if Hank Paulson hadn't been elected treasury secretary-

Harley Finkelstein (01:15:23):
He would still be CEO.

Lloyd Blankfein (01:15:24):
He would've been CEO for eight more years and they would've gone- You would've missed your window. I would've missed the window for that. So there's a lot of stuff like that. But basically a lot of things happened that resulted in this outcome. It wouldn't have been foreseeable. It wasn't even foreseeable at the end. For my last 25 years at the firm, I was always in the last job I could have until they created another job that hadn't existed before. So there was one of the many crises of the century happened in 1994, and that was the year. That was actually the worst, probably possibly the worst time for Goldman.

Harley Finkelstein (01:16:03):
Worse in 2008.

Lloyd Blankfein (01:16:04):
2008, we were already much bigger, bigger balance sheet.

Harley Finkelstein (01:16:07):
Yeah. Tell us about 94.

Lloyd Blankfein (01:16:09):
It was a crisis that we shared with everyone in banking, and we were better than all of them. So

(01:16:15):
If the federal government ended up having to do things and we got swept along with it, but we were much better positioned than anybody. So it wasn't like we were the last ... We weren't the slow hiker. If the bear's chasing you, just mak sure you're happy. We were the fastest hiker in the forest. In 94 was a year in which the Europeans raised interest rates, something like 600 basis points in the US eventually followed in a very, very short amount of time. And it discombobulated markets and people were overextended. It was highly leveraged. And the same conditions that persist, but it didn't really affect everybody evenly. It was very disproportionately a Goldman problem and a couple of others, but it was mostly a Goldman problem. Whenever you are alone in a problem, it's much worse than if you have company here. That's not hard to appreciate.

(01:17:09):
And so 94 was a year. And also other things were different. Goldman Sachs was a general partnership, which meant all the partners had general unlimited liability. So when they were looking at losses, not just of their income and not just of their capital, but their homes,

(01:17:24):
People's homes.

Harley Finkelstein (01:17:25):
Everyone's on the line.

Lloyd Blankfein (01:17:26):
Wow. And so in those days, that sort of kept you very focused

David Segal (01:17:31):
And

Lloyd Blankfein (01:17:32):
Some missed those days.

David Segal (01:17:32):
Is it still like that today?

Lloyd Blankfein (01:17:34):
People are focused. No, it's not that government. No general partnership. It's not a partnership. It's a government. And in between, it became a limited partner where your capital is at risk, but not your homes. And so they try to do it. And you can't run a firm that way. Also, capitalism permanent, if a partner retires, they came in out. Well, 1994 was a big crisis at Goldman because of those big losses and the only way a partner could immunize themselves against further losses is by stepping out of the general partnership. So something- Leave it. Like a third of the partners left.

Harley Finkelstein (01:18:04):
Oh my God. So business is hard and you have granular investing

Lloyd Blankfein (01:18:08):
Leave. Including the head of the firm that year left. And so there was a lot of battlefield promotions, including the person that ran my division. So when he left, myself and this other person got elevated to be battlefield promotions. We weren't well known to the Goldman people. I still call them the Goldman people, weren't well known to the Goldman people, but we got elevated as division heads

(01:18:32):
Earlier. And then that started work. And then the Aaron Division, in an effort to find new business enterprises, started to do more than just commodities, was doing foreign exchange, which had commodity-like elements to it. It was traded on an exchange. There was arbitrage between the exchange and the cash market. When you're trading foreign exchange and long-dated foreign exchange, it starts to look like non-dollar bonds. So he started doing that. Non-dollar bonds start to look like regular US bonds. So we started dabbling with that because there was interest rate risk to hedge and we started doing it. And all of a sudden the JRN divisions businesses started to grow into the fixed income divisions businesses, and they were border skirmishes, which at Goldman, it's very genteel in that way. And you sort things out, and we're all one firm. We eat off the same plate, a lot of metaphors for the collegiality of Goldman, which is generally ... But sometimes that collegiality is forced by people with automatic rifles that stand over and keep guard to make sure that you naturally competitive people get along at the edge of a bayonet if you have to, but you guys are going to get along.

(01:19:38):
And that was the position that we were in, the fixed income. And in that 1994 people and in the immediate aftermath of that, became the head of Jay Aaron. J. Aaron started to overlap in the fixed income. And so by the middle, late nineties, merged the J. Aaron and the fixed income divisions into something called FIC, fixed income, currency and

Harley Finkelstein (01:20:00):
Commodities. And also finally, Jaron is now really part of Goldman Sachs. And that

Lloyd Blankfein (01:20:04):
Becomes really part of the firm because the fixed income division

Harley Finkelstein (01:20:07):
Is real-

Lloyd Blankfein (01:20:08):
Is real Goldman Sachs. And so I think at that time, Goldman had five partner ... Aaron had five partners. The fixed income division probably had 35 and something, merger of equals. And so we went in. And so I became the co-head with the then head of fixed income. And again, we got along so well that it was decided I should move to London and separate us because it was different philosophies and different risk profiles, different feeling about how to do things. And he-

David Segal (01:20:40):
We're not worried about ... I mean, you just described the scenario where half these partners.

Lloyd Blankfein (01:20:44):
The way you say a boot, you think you're a Canadian.

David Segal (01:20:48):
So these partners, they're running away from the firm. They don't want the personal liability. You're a partner at this point.

Lloyd Blankfein (01:20:54):
Yeah, I'm kind of a nerve by it myself.

David Segal (01:20:56):
Yeah. So you go home and you're like ...

Lloyd Blankfein (01:20:59):
Exactly. To me, it was never money. To me, that money was my capital account. You couldn't touch it. It was in there. I wouldn't have wanted to touch it. I didn't want anything I would use it for. I was a worker. I mean, I just cared about my job.

Harley Finkelstein (01:21:16):
Was that the dynamic you always had with your wife, which was like she was ride or die. She knows what she signed up for.

Lloyd Blankfein (01:21:23):
My wife went to- Parent for what? 45 years, you said? Yeah. She went to Georgetown Law. She was an associate in a law firm, worked her way up, then went to the corporation council in New York City. She was still at the same- You were both working

Speaker 4 (01:21:34):
Really

Lloyd Blankfein (01:21:35):
Hard. Yeah, we were professional types. We cared. We had an apartment. We kept getting bigger apartments. In 1988, we bought a starter house in the Hamptons. And so we had the bourgeois life. Oh

Harley Finkelstein (01:21:50):
Yeah. The year he makes partner, he buys the starthouse in Hamptons.

David Segal (01:21:52):
Well, actually

Harley Finkelstein (01:21:53):
Before. Of course. Poetic. It's

David Segal (01:21:55):
Perfect. I mean, there's something I'm dying to know. Your CEO, you talk about 2008 as a common problem and you kind of minimize the impact. But I mean, we were alive for this. This was a big deal. You have 40,000 people work for you are glued to CNN right now. Are you talking about the- Now I'm on 2008. I'm jumping ahead.

Lloyd Blankfein (01:22:11):
Probably CNBC, but I get-

David Segal (01:22:12):
CNBC, CNN, whatever. But I mean, I remember that time. Yeah, I did too. Yeah, I'm sure you do. So you have these 40,000 people and your customers are pulling money out. It is a free for all. What do you do? I mean, this is an immense moment of leadership, which you clearly rose to the occasion. What are you thinking?

Lloyd Blankfein (01:22:33):
Well, you're thinking at all times, this is my responsibility. I own this. And I did. I owned it and I felt like I owned it. And guess what? The entire world thought I owned it. So you're just living. You're not going to the index of some book on management and figuring out what to do.

Harley Finkelstein (01:22:54):
And you've already been through a couple of these,

Lloyd Blankfein (01:22:55):
Not

Harley Finkelstein (01:22:56):
As large as that, but 94 was hard.

Lloyd Blankfein (01:22:58):
94 was that. 98 was long-term capital. 2001. The collapse of the tech market. I don't want to deflate you, but that was a little thing at the

Harley Finkelstein (01:23:07):
Time. Yeah. Yeah. Okay. Well, I was- I

David Segal (01:23:10):
Was

Harley Finkelstein (01:23:11):
16.time.

David Segal (01:23:12):
2008 had a different feel to it. It wasn't to your- Did it? Did it have a different feel? Yeah.

Lloyd Blankfein (01:23:17):
2008, what took on ... And again, it was slow, just like the 1929 was, it happened in increments. It was only this part of the market. It was only the subprime market. Then it was subprime pulse all day. Then it was just the mortgage market, that it was mortgage and credit, then it was every asset in the world. Went down in value and then nobody knew what anything was worth. So everything was paralyzed. Nobody knew the credit worthiness of anybody else. So if there are normal financial flows, you buy something from me, you give me the cash, I owe that cash from someone else, he owes that cash to someone else and there's a whole chain of payments that get made. But if you didn't know who was solvent, you wanted to get paid before you let your money release. If everybody is waiting to get paid before anybody releases money, no money fails.

(01:24:07):
Nothing happens. And the only balance sheet big enough in the world to get things to unclog that is for the government to stay in and said, "I will make sure for the next three days all payments get ... " And then everything just goes.

(01:24:17):
And it turns out that everybody can make payment, but nobody knows that for sure because it's just ... And that's what happened. It was a real seizure. And that's when it's called systemic. That's what systemic risk is, is when the whole system gets completely frozen and that happened then. And then there's bankruptcy, which means that your liabilities are greater than your assets, but there's insolvency, which means you can't meet your obligations as they arise. So you could have wealth and assets that are worth something, but if you owe $5 million on this day- No liquidity. And you have no liquidity and no one will lend against your asset.

David Segal (01:24:55):
You're up the creek.

Lloyd Blankfein (01:24:57):
You're insolvent. And so you're similarly filing. And so that's what happened. So that's why sometimes you have these insolvencies and yet the trustee and bankruptcy manages to pay everybody out in whole because they were insolvent. By the way, that's in financial institutions, that's always the case. You go out of business because you're insolvent. And then of course, as soon as they sought out the financial crisis, all those assets spring off value. And that's why people who do distress debt trading make money because as soon as the distress goes away, usually those assets are worth more.

David Segal (01:25:28):
Yeah.

Lloyd Blankfein (01:25:29):
What do you

David Segal (01:25:29):
Tell the team though?

Lloyd Blankfein (01:25:31):
Well, I was telling the team, we're going to get through this. By the way, large, you mostly do get through things. And even if I thought at moments that we might not get through it, I- You believe it. I believed it. And I communicated like crazy. I was on I Dave almost every day, certainly three times a week, I would send blast voicemails out to the entire firm.

Harley Finkelstein (01:26:00):
That's you did? You did voicemail?

Lloyd Blankfein (01:26:01):
Yeah.

Harley Finkelstein (01:26:02):
You wanted them to hear your tone, I guess,

Lloyd Blankfein (01:26:04):
Right? Yeah. And your voice? And my voicemails would always start out with, I'm in Paris and I've just been taken on tour, met with 30 clients and all are ... I have nothing but admiration for the firm and it's how it's dealing with this, with the crisis. And I know that life is not easy for them. And then I would go into where we were at the level at which you can give a message to the whole firm. But the important thing that you're conveying is I'm out and about doing my job.

Harley Finkelstein (01:26:38):
And you should be too.

Lloyd Blankfein (01:26:39):
And you should be too. And I would say to people, I know everyone's nervous and people were glued and wanted to watch the screen

(01:26:48):
And they had little boxes in the corner of CNBC with our stock price and of other firms. And I just said, look, you're all ... Obviously everybody is concerned, but let's make a deal. If you want to help the firm do your jobs, do it better than you've ever done it before, call your clients. If we're in distress, they're in more distress. And I will tell you, I only need 1% of the firm or less to work on Goldman Sachs as a client of itself and our own situation. I need 99% of you to go out and show we're not being hurt, we're doing our job, we're keeping our commitments to our clients and we're effective and we're not discombobulated by this. If you want to show, that would be a very good thing to demonstrate. And it would be a very good thing for your future with your clients.

(01:27:39):
If you show up now for them in their moment of need, will you please do that for me?

Harley Finkelstein (01:27:45):
You'll build loyalty for life in those moments.

Lloyd Blankfein (01:27:47):
And I don't need you in this other thing. And in return for that, I'll send out ... I'll let you know what's going on. You won't be more of a deficit of information as a result of you doing your real jobs. And in turn, I'm going to be doing my real job too. And I'm going to be out and about. And I kept my schedule, kept it was the time I was supposed to fly to Tokyo, I flew to Tokyo if I was- You

Harley Finkelstein (01:28:13):
Didn't miss any of it.

Lloyd Blankfein (01:28:14):
No. No, I didn't. If the government made me go in-

Harley Finkelstein (01:28:17):
Yeah, that's a different story. Can you talk just on the government side? I mean, obviously now the very famous phone call that you made to Warren Buffett, who I believe is a friend of yours now, can you talk a bit about what that was like, you to call Warren and ask him to take a stake in Goldman Sachs?

Lloyd Blankfein (01:28:31):
At that point ...

Harley Finkelstein (01:28:34):
Why Warren? Why was he the ... I mean, obviously he had had money, but you could have called other people with money. There

Lloyd Blankfein (01:28:39):
Was a reason- Actually, at that point, he called me because we were looking for ... Well, first of all, maybe just get to the Warren Buffett point. After we did a transaction with Warren on his terms, which were very ... At the time he did it, they were very good terms for us and very generous to himself, but very generous to us too. It was totally appropriate at that time. It was better than fair. We would've done it for better terms for him. And then right after that, when he did it and all of a sudden with his ... In addition to him, other people, it's just money. He's money plus validation. And other people came up to us, "Gee, I would've done that trade. Why didn't you offer it to me? " I said, "Well, with you, it's just money."

Harley Finkelstein (01:29:23):
Yeah, you wanted validation too.

Lloyd Blankfein (01:29:24):
With him, it's valid. And by the way, the money he- You're

Harley Finkelstein (01:29:27):
Calling it validation, but I mean, what you're realistic is credibility.

Lloyd Blankfein (01:29:30):
Yeah, credibility. He has a

Harley Finkelstein (01:29:31):
Brand that has a signal. In primitive.

Lloyd Blankfein (01:29:35):
And anything you want to say, it's the same thing. It was he wouldn't do this and he's wise and he doesn't do this for fun and he must have looked it and had good warmth feelings for us. And he was right. By the way, the money he invested in us was a preferred stock issue that I don't think was good regulatory capital. It wasn't. It It wasn't even, it wasn't equity. We never had the equity markets close to us. We went to the equity market to raise $5 billion and we were offered 20. We ended up taking six just to do it. But we had a problem because banks, including some of the banks that went under, investment banks that went under, were standing on tables telling everybody how solvent and firm they were and they weren't. We were. And it occurred to me that if I got jumped on a table like they did and asserted it, it would look very weak.

Harley Finkelstein (01:30:33):
Buffet, it would change the dynamic.

Lloyd Blankfein (01:30:35):
It would change that. And the other things we did is we started with people who we worried that they were worried about our credit. We put money in their banks. So I called up a couple of them and I said, "We're going to need you to make payments. I'm going to send over a couple of billion dollars and just keep it with you. " Because it's one thing to say you have liquidity. Wow.

Harley Finkelstein (01:30:55):
But you actually show

Lloyd Blankfein (01:30:56):
It. It's incredible. And so we did that. By the way, that's not to say that it wouldn't have gone downhill. No, no, that's right. Everyone would have got ... In other words, everyone would have. It was just a question of when. If it thrumbs up and nobody's paying you

(01:31:10):
And you have obligations to be paid that you were waiting to get paid on obligation from A so that you, B, could pay C and A never pays you, you're going to default to C. Everybody would. Every industrial company would have. And that's why the government ultimately came in and needed to scotch and made everybody do it. But it was a dangerous situation. We had to work ourselves. And the fact that we were better than most, at the end of the day, no, it wouldn't have mattered. I said to, at the time, if you're sitting on the beach and you have an Olympic swimmer sitting on the beach and a six-year-old girl with water wings sitting on the beach and the tsunami hits, they're both going to drown.

Harley Finkelstein (01:31:52):
Yes.

Lloyd Blankfein (01:31:53):
Didn't matter them. One was an Olympic swimmer.

Harley Finkelstein (01:31:54):
You're

Lloyd Blankfein (01:31:55):
Both going to drown. At water that's moving 500 miles an hour with debris. And so that's where it was. So I could expound how terrifically positioned we were, and that's honest. And I can also honestly say that it was too big a risk than I wanted of a bad outcome than I would have wanted to go to sleep with at night. And so it was for the government. And so something had to be done. And like in those James Bond movies where he diffuses the bomb when it has seven ... When it goes down- He sniffs the wire. When he can't decide between the red and the blue

David Segal (01:32:35):
One,

Lloyd Blankfein (01:32:35):
And he snips the wire with 007 left on the countdown clock in every James Bond movie that you saw, nobody will know that he saved the world. And so the people in the government now that are getting excoriated for having intervened in the market and done that stuff and getting killed for it have said, of course they're going to get killed for it because the contrapositive is never known. That's right. No one will ever know what would have happened. Luckily,

Harley Finkelstein (01:33:00):
What's never known.

Lloyd Blankfein (01:33:01):
Luckily. And so those poor people who may have saved ... The person who saves the world never gets credit for saving the world. Why? Because the world's saved.

David Segal (01:33:08):
So

Lloyd Blankfein (01:33:08):
Warden calls you. Most people think- No, no,

David Segal (01:33:11):
No.

Lloyd Blankfein (01:33:12):
We had engaged with him. We had called around, called him. He declined, partly because he has his own reasons. And my good relationship is such that I don't ask him to explain himself to me.

(01:33:28):
But I kind of knew. He had bad brush with Solomon Brothers once upon a time. He never liked those. And he said that he was quite public about that. He was very close. He had a very good relationship with Goldman. I'm not running any risk in saying that. He was out in his book. He visited in the biography, written about him. His father was a small town broker and actually served in Congress, but was a small town broker. Went and visited his big firm broker, Sydney Weinberg, the head of Goldman Sachs in 1930, brought little nine-year-old Warren with him because he was going to see the 1939 world there. And so Sydney Weinberg and Warren Buffett spent 45 minutes together. And that was a big deal for Warren. It's amazing

Harley Finkelstein (01:34:11):
What Citi in the 30s.

Lloyd Blankfein (01:34:12):
I'm sure it was a big deal for Sydney Wineburg too. A huge improvement. That's right. We probably got as much out of nine-year-old. But anyway, so at that point, he knew he had to have known that we would've had interest, but at that point he reconnected with our person who was very engaged with him also. And that person called me, said, Warren, just fall back there. He's willing to do it. This was after a stop. And could you call ... Warren was looking for you when you land. And I was on my way. I flew. I remember flying to Washington for something, always flying to Washington in handcuffs. Whenever

David Segal (01:34:47):
You get cold. Whenever

Lloyd Blankfein (01:34:48):
You get

David Segal (01:34:48):
Cold.You had moved on from this. The Warren idea was out of your mind. It

Lloyd Blankfein (01:34:51):
Was out of my mind. No. It was out of my mind. And then he called up and said, no, we could do this and blah, blah, blah. And you're going through this. And I remember the whole conversation. I said, "That's terrific." And he said, "We should price this, the warrants at the end of the day based upon the close of the market." And I said, "That's fine." And I said, I remember the whole conversation was like, from his point of view, he was done. And from my point of view, and I said, "Warren, we'll just do this at the end of the day." And I said, "Well, Warren, why don't I go through with you all the things I'm nervous about with respect to the firm? Just tell you all my concerns and Walls."

Harley Finkelstein (01:35:30):
Is that you being transparent?

Lloyd Blankfein (01:35:31):
Yeah. Okay.

Harley Finkelstein (01:35:32):
Yeah.

Lloyd Blankfein (01:35:33):
And he said, "You don't have to do that. " And I said, "Warren, maybe it's the old securities lawyer in me that makes me want to tell you all these things so I can remember having said it to you. " And he said-

Harley Finkelstein (01:35:48):
They're risk factors.

Lloyd Blankfein (01:35:49):
Yes. So he said, "I'm actually going to take my kid to- " Dairy Queen. To Dairy Queen out now. So he said, "Why don't you worry enough for the both of us?"

Harley Finkelstein (01:36:05):
I love

Lloyd Blankfein (01:36:05):
It. And then I think I had one more round where I was trying to convince him-

Harley Finkelstein (01:36:09):
To let you tell him the

Lloyd Blankfein (01:36:10):
Risk. To let him tell him this stuff. And I think eventually I had my CFO call up his CFO, have a conversation. I think that, but he said, "Lloyd, when you get right down to it, we're buying these preferred shares. It's $5 billion." And he's Berkshire, that's not even a hurricane on the East Coast.

Harley Finkelstein (01:36:33):
It reminds me of that. Yeah, of course, because Hurricane EastCoast actually hurts the insurance business.

Lloyd Blankfein (01:36:37):
No, he probably has $5 billion in payouts. So it's like an extra hurricane on the East Coast if we lose all the money. And the fact is it wasn't a lot of money for him. Our balance sheet at that point is a trillion dollars.

Harley Finkelstein (01:36:52):
But it was a signal and it was the perfect signal at the perfect-

Lloyd Blankfein (01:36:55):
No, it was good to have done. And we ended up doing an equity raise, which went better and it was a validation. And yes, yes, it was a big positive, but we were braced, prepared, braced to go on without it, and we did. So anyway-

David Segal (01:37:17):
It's like your Goldman saying where you're like, "Don't tell me what you think is going to happen. Tell me what could go wrong."

Lloyd Blankfein (01:37:23):
Well, it's like I said, I wax about risk management and generally we're big risk takers in the firm and we often intentionally,

David Segal (01:37:31):
Often when

Lloyd Blankfein (01:37:32):
Somebody gives us a risk that we ... We're like Berkshire, they price ... Warren said the best thing he can have is when he has to insure a cargo and the plane's already in the air. What do you want to

Speaker 4 (01:37:49):
Do?

Lloyd Blankfein (01:37:50):
And so for me, we are risk takers and risk managers and they're different things. Risk, you sit around a table, what do you think is going to happen? This is a good deal. I think this is that. These are the odds. These are the probabilities. This is what could go wrong. When we get into risk management mode, I don't want to hear what people think are going to happen. I want to know what could possibly happen because people are always wrong

Speaker 4 (01:38:12):
In their

Lloyd Blankfein (01:38:12):
Assessment. And by the way, if something happens, it doesn't matter if it was a one in a thousand chance or 10

Harley Finkelstein (01:38:17):
Happens. It makes a difference. How much do you think your ability to assess risk at a very quick velocity has to do with actually your background almost to what you said to Warren as being an ex-

Lloyd Blankfein (01:38:28):
Securities lawyer? I don't know if it was securities lawyer helped. Look, it helps that I'm a generally anxious person. Yeah.

David Segal (01:38:34):
That's true.

Lloyd Blankfein (01:38:35):
Actually,

David Segal (01:38:35):
My mind, Warren hung up the phone and was like, "Jews." Yeah. His

Harley Finkelstein (01:38:38):
Views are so anxious. I'm so worried about everything. But if you kind of think back about this whole story, we talked about your father's night shift and that hard work that you saw there. You talked about the culture shock that you saw at places like Harvard, for example, and actually Goldman initially. One of the themes that keeps coming up, Lloyd, is that there is sort of this, I don't know if anxious is the right word, but there is a certain level of uncertainty and not almost, it isn't ignorance as bliss, but it's like you didn't actually know exactly what is going to happen, but you were kind of prepared for it in your own way. I mean, how much of this- Look, I envy people.

Lloyd Blankfein (01:39:16):
Our president can go to sleep at night with X number of cases against him. 15 people want to ... You can run through the game. Totally agree.

Harley Finkelstein (01:39:27):
I could never sleep away.

Lloyd Blankfein (01:39:29):
Never. And if you look at his life before he ended politics, he was near bankruptcy. I have a meeting tomorrow with the creditors. If they push the wrong button, if they push this button, I'm okay. If they push that button, I'm bankrupt. Yeah.

Harley Finkelstein (01:39:41):
I am be those people too. That's not us.

Lloyd Blankfein (01:39:43):
And I'm saying it's not me. Yeah. It's not me. Maybe it's like a-

Harley Finkelstein (01:39:48):
Is it genetic?

Lloyd Blankfein (01:39:49):
Maybe it's like Tasaks.

Harley Finkelstein (01:39:50):
Yeah, what is it? Jews. We're just like- Yeah,

Lloyd Blankfein (01:39:53):
Maybe it's like taste acts.

Harley Finkelstein (01:39:55):
Or is it frankly multi-generations of trauma?

Lloyd Blankfein (01:39:59):
Well, maybe it's multi-generation of waiting for the Kasaks to knock on the door or their equivalence in Persia to knock on the door. So in any case, it's like that. Maybe I'm not too many generations with people like stuffing liquid assets in their coat pockets and getting on a ship.

Harley Finkelstein (01:40:19):
My father still keeps cash around when I ask him why, he doesn't always tell me, but I know exactly why.

David Segal (01:40:24):
Oh, I mean, only the paranoids survive in my mind.

Harley Finkelstein (01:40:27):
And actually, all of us here sitting in this room, we were the ones that survived all these things. My wife also- Right, exactly.

Lloyd Blankfein (01:40:34):
We keep cash and I said, "At the point at which you are that desperate, do you realize that that's not going to be worth it? "

David Segal (01:40:39):
I said, "Fishing

Lloyd Blankfein (01:40:40):
Runs." It's going to be like that last scene of the Titanic

Harley Finkelstein (01:40:44):
That

David Segal (01:40:44):
Was throwing

Harley Finkelstein (01:40:45):
Money.

Lloyd Blankfein (01:40:45):
At the guy, what good is that? It excuses

Harley Finkelstein (01:40:47):
Me.

Lloyd Blankfein (01:40:47):
Yeah. What good is that going to do? But yeah, paranoia. I mean, it's almost a cliche. Paranoia's healthy in that, but I was in a risk business. I was a good guy. Look, horses for courses. I would love to have been CEO in a much more serene time and enjoyed the benefit of that. I was actually, for the sake of the firm, I was probably well suited for the risk environment and the workout of the risk. Paranoid

Harley Finkelstein (01:41:15):
CEO with volatile markets.

Lloyd Blankfein (01:41:18):
I mean, one should always match up well. When you have, again, the balance sheet of Goldman must be twice as big even now, and there's nothing that could go wrong anywhere in the world that doesn't affect you when you are that involved in all those businesses. And then when you have the influence of a Goldman, there's nothing that could go wrong where someone isn't accusing you of doing it, of being responsible for the thing that go wrong because either you had an influence on the process leading up to, or you could have, and why didn't you intervene? And so one way or another, you get caught up in a lot of stuff. And so when the phone would ring at a time of the day when it shouldn't have rung, like I'm sleep, it rings at five o'clock in the morning, I know it's not going to be good news.

David Segal (01:42:07):
Yeah. Well, David Rubinstein was a guest on this podcast as well. And I read a quote where you and him are talking and you're like, "Look, if you're not the founder, you're like, I didn't start this thing. I got to leave it better than when I showed up." Sure. So as you're now at a point in your life where you can reflect back on this, what do you think the biggest mark you made on Goldman was?

Lloyd Blankfein (01:42:28):
Well, I think it was, I never would've picked it to be there during that period, but in hindsight, given that the firm got it through it, that's certainly the proudest I could be of what I'm the most proud of is having got it through that period and coming out as Goldman. In other words, we weren't Merrill Lynch becoming part of Bank of America. We didn't have to subordinate the organization. We didn't abandon our risk taking and become like, let's say a Lazard who's just in this activity. In other words, we came out of it as Goldman Sachs. We kept our people intact. We kept our culture intact through a period people, it's 25 years since the ... It's 25 years when the firm went public in like 81, so it's well more than it's almost 40 years now. It was then 20 ... Now it's almost 40 years and we still have partnership elections.

(01:43:28):
It hasn't been a partnership for 40 years. If people call themselves partners, the external world thinks of them as partners, the process is partner-like. It's still done collegially. We pay people in the firm people get paid based upon how the firm as a whole does with how their individual contribution matters, but also how the firm as a whole does. I would say the cultural elements of Goldman, a lot of information about the firm is shared with the 400 and something partners, which wouldn't happen in a normal company. Information gets shared. You call on people to make contributions to subordinate their short-term interest, to make the platform greater, which they can then exploit for their individual. All the things that are characteristics of the Goldman culture, which were premised on a partnership ideal, sharing the outcomes, sharing information, socializing changes in the firm instead of dictating it from on top, engaging with people and where people you're engaging with feel empowered to go back at you seven times and argue with you and maybe influence you in a different direction and put that off.

(01:44:30):
All these different things that you associate with partnership as opposed to a hierarchical corporate form had been preserved almost 40 years after Goldman stopped being a partnership.

(01:44:45):
Well, not almost 40 years. I guess it's a little over 25 years. It's

Harley Finkelstein (01:44:48):
An incredible thing. And not just that, but I think actually from a reputational perspective, it's probably stronger than ever. The legacy that you sort of left there has sort of continued.

Lloyd Blankfein (01:44:57):
Well, we can all sit here and decide because the thing about reputation is reputation is engaged by the people in the firm. It's gauged by the people who respond to the firm. So you're in a better position to define the reputation of the firm than I have. I'm prejudiced. But the answer is- I think that's true. I think that's true. Goldman still recruits and retains. People still want to start. Even people who have no intention of being on Wall Street for more than a few years,

(01:45:24):
Start their experience. And even if you want to go to an alternative firm or private equity, people start at Goldman Sachs for get training, that still persists. So I would say that's what I'm proudest of. And that was no foregone conclusion. And that was certainly challenged during the global financial crisis. And the official sector worked very hard to do what it thought was the right thing to do, reign in risk taking, reign in all the things that made Goldman a special place. You need risk takers like Goldman to be in the market, and we managed to preserve that. And that was challenging.

Harley Finkelstein (01:46:06):
We got to let you go as we promised we would. Last question we have though for you is this, you talked about paranoia. We talked a little bit the Jewish anxiety. One thing that I want to know is, at this stage of your career, you've been retired now for seven years, approximately. Can David and I hope that one day that gets toned down for our own careers? I mean, you've had this story. I mean, you're Lloyd Blankfield, you've done it better than anyone. And Dave and I, you look at your career with great admiration.

Lloyd Blankfein (01:46:37):
Make

Harley Finkelstein (01:46:37):
It

Lloyd Blankfein (01:46:38):
Easier. I remember once being on stage, following as a speaker, one of our great presidents who is famous for great speaking style, and as he's going down and I'm going up, he goes to me and he goes, "How was that? "

Harley Finkelstein (01:46:58):
Wow.

Lloyd Blankfein (01:46:59):
And I'm thinking, wow.

Harley Finkelstein (01:47:01):
Yeah. He's asking, he doesn't know, he's unsure.

Lloyd Blankfein (01:47:05):
Or he wanted the ratification-

Harley Finkelstein (01:47:08):
Or he still needs recognition.

Lloyd Blankfein (01:47:09):
He wanted me, his mood was going to be improved by

Harley Finkelstein (01:47:14):
One person. Oh no, but Lloyd, what you're insinuating then is- We're screwed. The answer is no, that we're always like this. In fact, the more success you have, it just doesn't

Lloyd Blankfein (01:47:22):
Work. As always, my general response to a yes or no question is to demonstrate the answer as opposed to dictate

Speaker 4 (01:47:29):
It.

Lloyd Blankfein (01:47:29):
So my answer to you is you're pretty baked at this point and you'll have it doesn't mean you can't steal yourself towards a different direction, but you'll never shed yourself. He's not telling us what he thinks. He's telling us what can go wrong. And I would

Harley Finkelstein (01:47:47):
Say- Yeah, mindfulness for Jews is not really a

Lloyd Blankfein (01:47:49):
Popular word. And I would say, you have to look at it and get comfortable. You're not going to change yourself. You're going to get comfortable with yourself. And so you're going to look back and said those things, the things that may be blocking me to really enjoy that Ferrari I bought instead of worrying that it's going to get scratched and those things, why doesn't that guy worry about it? I don't know. I don't

Harley Finkelstein (01:48:14):
Know. I envy that guy.

Lloyd Blankfein (01:48:17):
I envy that guy too. And then your comfort has to come from saying, not to quote that great philosopher Popeye, but I am what I am, what I am, boop, boop.

Speaker 4 (01:48:28):
Yeah, I think that's right.

Lloyd Blankfein (01:48:29):
I am what I am what I am and that's who you are and that's what you got here and it's not so bad. And even if you don't like it, the hell with you. Too bad, doesn't matter anyway. I stuck with it.

Harley Finkelstein (01:48:40):
Yeah. Lloyd, thank you for this is awesome. I really appreciate your time. Thank you so much. Hope this is fun for you as well.

Lloyd Blankfein (01:48:44):
Yes.

Harley Finkelstein (01:48:45):
And I promise I get you out by

Lloyd Blankfein (01:48:46):
2:30. It was the 17th best.