There are a few lessons in there for a few tech companies as well I think. If your customers don't trust you then they will leave. OR not begin using you in the first place.
However big you are supporting your customers and being contactable when there are problems is an essential cost of business.
I know a lot of people who have left Goldman, etc. in the past few months, specifically for tech jobs. It's because 2011 bonuses were utter crap. (and it is toxic I'm sure, but the $ was the main thing)
Also several have said they'd apply to YC (they have money, but not startup industry connections, or at least not current ones). Remember, the deadline is March 28th...
I'm pretty sure that after working for Goldman, you don't go work for another large bank, you go work for the Goldman of another field. Otherwise it would be like going from MLB to a farm team -- not an upward move.
Many of the sentiments expressed by the author are shared by developers and other technical staff working in the finance industry. In places like London and New York, finance has, for a long time, managed to get the best technical staff by paying the highest wages even if the work is less interesting. This has been detrimental to other industries in the same regions. As morale declines in finance firms, however, this is changing.
For a long time finance has been the place where the most interesting tech was going on (not to say there isn't a lot of boring bog standard stuff as well).
It's an industry where many firms have had to develop their own network transport layers, database engines, languages, etc. Where machine learning and big data have been standard practice for over a decade. Where understanding complexity and concurrency theory are important, and designing lock-free algorithms can be a daily activity. There's very few areas of core CS that aren't used in investment banks.
I'm wondering if any of that work has been made available, eg. as an open source project? There's a standard practice among tech/web companies to share innovation on the infrastructural level, but I cannot name one example of a bank innovating openly in that way. Perhaps they do publish academic papers about their innovations?
Im not sure about publishing of papers on innovations but there is constant work going on to improve the database systems and few people I know have come up with software programs to check the bankruptcy!
I've been contracting in the finance industry in London for seven years (at four firms) and although financial companies are some of the biggest users of open-source software, it's almost unheard of for firms to contribute back to open-source projects. There are a few progressive companies but unfortunately I've not worked at any of them.
Many firms have a strict policy of disallowing any source (open or not) from leaving company premises. Email servers and proxy filters have detectors that will raise an alert if source code is emailed or sent out over HTTP. It's easily a sackable offence and this discourages developers from contributing changes back to open-source: there are simply too many hurdles to jump through in order to do it.
Given your experience, what would you say are the top 5 techs that are being used in this area in London? I was looking at the job market a while back but it's not very transparent. How do you best go about finding a job of this kind?
But the real influence of banking is driving the development of stuff like RDMA over Infiniband, which eventually makes its way into other industries. Everything that "web companies" know (and take for granted) about scalability, performance, resilience, security etc etc comes from either investment banking or pr0n.
But obviously a lot of it remains behind closed doors, but there certainly some of that sort of thing going on.
Some of it also happens indirectly, for example a bank might design an improvement to the Linux kernel but because they want to remain covered by their support contract with say RedHat they might supply to the patch to RedHat and RedHat will then verify it and merge it into their core release and submit it back upstream, but it would have RedHat's name on it rather than the originating bank who might want to remain anonymous.
In most large finance companies though, it's also true that a lot of the less-exciting back office development work is being done by software developers who are overqualified for the roles but attracted by high wages.
I see more and more of these exodus posts from various companies. The one static thing I seem to be able to pinpoint between them, is that as companies grow larger - more management is needed. As the management grows in a company the modus operandi shifts from product to bottom line. While interesting, it seems that this is just inevitable with most companies growth.
I keep thinking about this article and the recent Google one as well. And I wonder, is this sort of moral decay necessarily part of the current corporate world? Is it possible, over the long run, to have a tech firm, or any other firm, that empowers employees to do what is best for everyone and to hell with the rules? Or is this merely a matter of a few good leaders who get it, and everyone else eventually overcoming them?
When I worked at Microsoft in Product Support Services, our general director "got it" and encouraged us to break any rule if it helped the customer out, so long as we did so reasonably responsibly, something I took him up on to the point it seriously annoyed my direct manager. He left, and the group I worked with ended up getting shipped off to India. And given more recent discussions with Microsoft customer service, the question of "how do we deliver quality customer service" has become far less important.
I guess my musings lead me to the thinking that being good requires a level of confidence that is easy to lose as an organization, and that as it is lost, the organization can turn toxic fast. But we can't succeed all the time. We will face huge challenges. So how do we resist the urge to turn and focus only on the immediate challenge, whether a competitor or the bottom line?
Currently work at Google, obviously speaking for myself and not my employer.
In my experience - yes, this moral decay is a necessary part of the current corporate world. Or any corporate world. Or really, any world without the possibility of failure baked into it.
I've seen a lot of idiotic decisions made at Google, many of which have been complained about on Hacker News, many more of which are hidden causes of things that are complained about on Hacker News. In every case, when I looked at the chain of decisions that led to things being the way they are, every single decision was rational, given the information that all participants had at the time. There's no vast conspiracy dedicated to turning Google evil, no influx of incompetent new PMs & designers. Some of the most questionable decisions have come straight from old timers like Marissa, or even from Larry Page.
Instead, it's an information problem. Running any enterprise the size of Google or Goldman Sachs requires trading off many competing factors. To make the tradeoff, someone has to keep all that information in their head at once. There's no other way to balance competing demands; if you keep only part of the information in your head, your decision will be biased towards the part that you've loaded into your brain. If you try to spread decision making across multiple people, the decisions will be biased towards the part that the person who screams the loudest can hold in his head (which is usually a smaller subset than optimal; it takes mental effort to scream loudly).
I often see mystified posters on HN wondering why Google did something or other, and a good amount of the time, I know (but can't say) exactly why we did it. The userbase does not have all the information. Unfortunately, they don't care that they don't have all the information; they want Google to work as expected, and the fact that there may be internal systems that don't quite behave according to their mental model is irrelevant. And so the fact that decision makers make decisions based on information that users can't have becomes a liability in this case, biasing them away from what's "good" for the user.
I remember Paul Buchheit writing here, several years ago, "A system's participants don't have to be rational for the system itself to be rational", referring to market economies. I'd posit that the inverse also holds: a system with completely rational participants can still be irrational, if information flow between participants is not organized in a rational way.
Completely agree on the effect you are describing. I've encountered it, too. I think it can be easily countered through regularly context switching, though. That is, switching your thinking over to that of an end user.
I am not denying that corporate culture takes on a life of its own, and that the system's rationality and the participants are not closely linked.
What I am asking is whether great places to work inevitable decay as the company gets large, and if that is the case, what is the point of a startup? Why not seek to make an idea that scales down rather than scales up? Is it all about personal wealth? But for those of us who want to build great businesses, in every sense of the word 'great,' how do we get around this problem?
I have my own ideas but they are largely untested.....
Presumably it has something to do with external stakeholders. The more influence they get, the more they can drive the company towards short-termism and potential destruction. You either need an incisive leader, or a bootstrapped business.
What I am asking is whether great places to work inevitable decay as the company gets large
Odds are you will definitely lose that personal connection as you go from working for "the owner" to working for a manager that reports to a VP that reports to the CEO that reports to the Board that reports to the shareholders.
But what I've seen in a lot of these "leaving" posts isn't quite that... It's more of a "the king has no clothes" epiphany: They go to work at a place thinking it's a thing-in-itself then wake up one day and realize how the sausage is being made.
So GOOG isn't a post-grad research lab: It's a company that sells ads.
So GS isn't the equivalent of a fee only financial planner.
They never were more than that.. only the people involved thought they were something more.
I served as a VP & President for a small non-profit club.
Two takeaways:
1) You don't really have any power. You need to lead by example and empower other people rather than command.
2) The personality required to establish a project is often different than the personalities required to keep it going.
But on top of that, I wonder how much management could be eliminated. Management is, in most businesses, fundamentally a communication infrastructure. How much of it can be replaced through implementing IT through was that work for FOSS projects?
My thinking is to have a relatively small group of high level managers, a group of project managers, and an HR department, and eliminate all middle management. I think teams should have rotating leadership but coordination should take place in ways which include both the upper management and folks on the floor directly using things like email lists.
Maybe this is a pipe dream. But maybe it can be made to work.....
Rotating/randomize leadership is called "sortition" and it has been known since Roman Empire times as a solution to the corruption and inefficiency problems of hierarchy and representative democracy.
It also solves the problem of bizarre distortion when you need to choose a winner among 100 qualified candidates -- better to pick one well rounded winner at random than to choose purely based on metrics that promote "teaching to the test".
At least at Google, middle management doesn't exist to run projects. They exist to provide career guidance, ensure people are happy, and keep them from leaving for Facebook.
This is a task that doesn't scale, because it requires knowing your reports well enough, as a person, that you understand their career goals, their likes & dislikes, their strengths & weaknesses, etc. so you can steer them into the right role. It's the tech lead's job to manage the (engineering half of) the project, and the tech lead frequently doesn't manage any of the people involved. I've found that managers can rarely manage more than 20 people effectively, and usually drop off sharply in effectiveness after 8-10 people.
Open source projects don't face this limitation, because your way of ensuring that everyone's happy is to assume that everyone who's not happy has quit. I suppose some big companies do this too - Yahoo seems to be trying out this strategy right now - but it really doesn't go over well with the public at large, and it wastes a lot of effort spent investing in new employees.
I believe that such "decay" processes are inevitable in the long run, following organizational growth as time goes by. Maybe in the advanced management theory someone has yet to formulate the laws/principles of corporate thermodynamics. (This is not my original thought, I've read it somewhere but can't remember the source).
On a more practical grounds, a few seeming counter examples:
- Virgin Group is a highly decentralized conglomerate of 300+ businesses all over the world and each of them is mostly autonomous (Though when you think of Virgin Group there is only one personality springing in mind - that of Richard Branson)
- Well, Apple, of course.. Though some say Apple of the 2000's after Steve Job's return is a different company entirely (in most of the aspects but those concerning mainly legal formalities around the corporate entity, its registration details, and logo design principles).
P.S.
So the point of a startup to a business is that of a birth and early childhood to a human.
Businesses (as functional organizations) and humans (as living beings) have ultimately the same fate in the end, though the time-scales differ.
I really think that you're completely missing the point in defending Google and maybe Goldman Sachs by saying that their decisions are ok because they are made rationally.
Rationality is emotionless and mechanical. It's about making a reasonable decision based on whatever information is available to you. However, rational decisions do not involve morals, culture, or feelings. This is exactly what companies like Google and Goldman Sachs are being criticized for.
When game theory is baked into your corporate culture, this is what you get. The company starts an inevitable slide from "Do No Evil" into "Make the Best Decision You Can With the Information You Have".
If I look down into my wallet and see no money there, and I'm hungry for lunch, and I decide to steal some money from a little old lady, that may be a perfectly rational decision to make. An outside observer may say I'm being evil, but they don't have a complete information picture about how hungry I am, or how long the line at the ATM is, or that everyone else is eating lunch so I have a duty to my shareholders to do the same.
Rationality doesn't necessarily exclude "morals, culture, or feelings". That would imply that having a rational discussion about culture, e.g. anthropology, is impossible.
Gus Levy, a former senior Goldman partner, coined the firm's then philosophy of being "long-term greedy". Taking image, "headline risk" in finance parlance, impact on recruiting, etc. into account is part of rational decision making.
What makes a seemingly terrible decision rational is usually that the time-frame invoked is too short. If a decision looks rational in the long-term but conflicts with our value system it generally means that our value system needs to be re-evaluated.
>Rationality doesn't necessarily exclude "morals, culture, or feelings". That would imply that having a rational discussion about culture, e.g. anthropology, is impossible.
No I am not implying that the process of making rational decisions has anything to do with the process for holding rational discussions about stuff (the stuff may be rational or not).
You miss the point, which is that good intentions are not transitive. It it not enough that a series of acts be individually kind. The interfaces between the acts must provide end-to-end kindness, or the results may well be ghastly. In giant projects this is a hard problem to deal with.
Rationality can serve whatever values you have. You can rationally optimize the amount of love, happiness, and fuzzy puppies in the world if you want to. You can also rationally strive to keep a company efficient and non-evil. But the bigger it gets, the harder that gets, modulo economies of scale.
Agreed. At certain scales, it no longer makes sense to give primary mover status to humans within institutions. It is important to realize that there are several mechanisms within institutions that alter the values they serve. It makes more sense to treat them as black boxes and reason about outcomes rather than intentions.
> If I look down into my wallet and see no money there, and I'm hungry for lunch, and I decide to steal some money from a little old lady, that may be a perfectly rational decision to make.
And that reasoning is the very definition of the term unethical.
Rational decisions correctly apply information and resources to optimize values that the decider cares about. (meta level: you can also be rational in deciding how much effort to allocate to MAKING a particular decision - deliberating or gathering more info).
Those values can include morals, culture, and feelings.
> Unfortunately, they don't care that they don't have all the information; they want Google to work as expected,
OTOH, if they had all the information, they might set new expectations. Essentially you are describing a corporation that is failing to communicate properly.
Most decisions are made under incomplete information. So the principles that guide you in uncertainty are very important. I think it's quite rational to select principles that guide you well even under uncertainty, even if their immediate conclusions don't seem maximizing. Likewise it's rational to use principles that will be comprehensible to those observing you, so they can predict your behavior and retain trust in your decisions.
To the parent post question, of avoiding deterioration of institutional culture from such principles there are two answers. Best is to align corporate equity interests with long-term interests, which are generally customer interests. That generally means not going public, as stock market attention to short-term interests is a constant distraction from long-term interests. Failing that, be lead by a mutant like Buffett or Jobs, who understand the long-term interests and have the authority to ignore the short-term to get long. But the availability of mutants is unpredictable and it's really best to get the capital structured properly.
And I wonder, is this sort of moral decay necessarily part of the current corporate world?
by construction:
The documentary is critical of the modern-day corporation, considering its legal status as a class of person and evaluating its behaviour towards society and the world at large as a psychiatrist might evaluate an ordinary person. [...] corporations are systematically compelled to behave with the DSM-IV's symptoms of psychopathy
> And I wonder, is this sort of moral decay necessarily part of the current corporate world?
I think it's as mundane as simple, Darwinian selective pressure. The ruthless ones perform better[1]. The people who have ethical constraints, or who consider the long-term, find themselves under-performing by comparison. They can choose to either mimic this destructive behavior or get marginalized as they are seen as ineffective and stubborn.
So basically, ethical behavior is unstable, and having one sociopath on a team will tend to make others act the same way. It's not exactly inevitable, but it's the natural tendency. If you want to stop it from happening, you have to work very hard and be very diligent.
[1] Or rather, they perform better in more visible ways, i.e. by more objective metrics and over a shorter time period.
One hypothesis could be that all organizations go through waves of growth and success which then impact the subsequent talent they attract.
In other words, the most recent wave of talent that Greg Smith talks about is more interested in being associated with the Goldman brand, rather than the genuinely possessing the underlying desire to be world class bankers.
Also, perhaps this happened years ago and now its too late because those B players are now running the show.
But if you lift the curtain behind that statement, what they really care about is their own success.
>"... if we serve our clients well, our own success will follow."
Then a few lines below, they essentially define what success looks like for them and say that profitability critical to achieve those goals. It seems like that profits are a more direct way to achieve "success" for them.
> "Profitability is critical to achieving superior returns, building our capital, and attracting and keeping our best people"
This should serve as a reminder that you can talk, talk, and talk some more, but ultimately, you need to "walk the walk" for your words to carry a significant impact.
Way to leave in style, good for him. I hope it gives the firm the wake up call it needs.
I left a couple of years ago after a three year stint. It was partly out of the boredom of babysitting a legacy platform that had little future, but mostly because the department's role devolved into getting away with doing the minimum for clients to justify our fees.
No matter how well GS pays, despite the relatively poor bonuses, it's not going to be possible to attract and retain the kind of staff they need. I wonder how many other nerds sit at their desks and catch a minute's respite by daydreaming of building something great? If they're lucky enough to have the freedom and enough of a financial cushion to take the leap I highly recommend it. I've not been happier since.
So he thinks Goldman was honorable back when he was young and had no idea what was going on. Bullshit. I happen to know of some shady Goldman credit swaps from the 90s that my municipality has been trying to get out of. I'm sure there is plenty of other garbage that went on back then too. You don't hire a bunch of mostly young male type-A personalities and wave million dollar bonuses in their faces and not expect questionable deals.
>mostly young male type-A personalities...wave million dollar bonuses in their face
This also characterises hackers and Silicon Valley. There are some really good people on Wall Street just as there are some real turds in Silicon Valley.
If you go back into Goldman Sachs's history it was a venerable firm with a storied past of forsaking short-term profit for the client, i.e. being long-term greedy instead of short-term greedy (quoting a GS executive from the 1970s). It started changing in the 1980s and completed its transformation after its IPO.
"there are some real turds in Silicon Valley", understatement of the year. Gimme some time, I'll eventually rant about this on my way out the door too.
I found this a bit strange as well and initially thought the article to be some kind of a spoof. I don't know a thing about investment banking but I have never, ever in my life read anything positive about the prevalent cultures at these firms.
I was an esoteric derivatives trader at an investment bank making money off clueless clients. We actualy prided ourselves, as a prop desk, on not being client facing. I went in expecting to parse global markets for inefficiency while pioneering the frontiers of 21st century finance. As time went on I found that the firm was content with mediocrity (as it could survive by simply existing in its role) and had no time for risky business like thinking.
You delude yourself into thinking you're inherently superior, a "Master of the Universe", even as you have never been able to explain to your mother what you do. Sooner or later you realise your colleagues are smart but terrifically insecure human beings, valuing their roles for who association with the firm's name makes them rather than what they actually do. Thus hierarchy is strictly enforced and innovation rages furiously in quaint, safe areas, e.g. introducing "new" leveraged/inverse hedged swaps, while ignoring fundamental assumptions, e.g. the trading floor should be siloed by product.
The bureaucracy and technical debt, combined with constant turnover in the under-paid operations and IT staff, mean that gaining understanding of the firm's as a whole as of no less than a quarter ago is a Herculean undertaking. And it's worse when you talk about the sales traders - none of them understand their product (they don't need to - the client's the one taking the risk), it's a miracle if they know a few shortcuts in Excel, and every one of them has an opinion on how xyz company (or country) should re-structure without having read a single term sheet or prospectus.
Luckily, there are start-ups that are raging equally furiously but with un-paralleled agility towards the financial sector. Alas, we'll have to find a new slot-in role a la consulting, investment banking, and sales & trading for insecure college graduates without hard skill sets to plump.
Note on recruiting
I've seen some comments tacitly saying Messr Smith should have known what he was getting into when he signed up for the job.
I was recruited by a very charismatic and values-driven MD when I was 19. Our desk merged with the rest of the firm's shitty culture when he was fired for being too ambitious. I didn't join for the six-figure salary - I turned down other offers that paid more at the time. There are lots of other people I know, brighter than I am, who were similarly drawn to the thought of a dynamic work-day filled with brilliant, ambitious people all working to solve difficult problems (that could be a tech company's recruiting ad...). Maybe I should have been more clairvoyant, but in the end what drives people to finance and what drives people to tech isn't all that dissimilar - the unique cultures change like to unlike from there.
Great story, thanks for sharing. I spent last summer at a hedge fund and found myself dangerously close to becoming one of the prototypical insecure college graduates you so aptly describe.
It really is remarkable the delusions of graduation that emanate from a desk with even the most paltry of P&L's for the week. I'm excited to see what might come of the furious yet agile rage directed towards the financial sector. Square and the like seem to have the credit card companies on their heels but revolution in IB still seems distant. Then again, agility and innovation are often underestimated.
What kind of work will you be doing? I'm in a similar situation (M&A side though), and I'm not sure what kind of value I could bring to a tech firm without the coding skills that are needed in a early stage startup.
Big tech companies are buying up startups left and right. I am guessing they have some ex-M&A guys on staff (Note: The OP said that he was moving to tech, not necessarily a startup)
Simplest answer: a tech deal team - Google, for example, has one internally.
Abstracted a little, capital markets start-ups. You could add value by hybridising Silicon Valley and New York.
Go any further, e.g. to a Pinterest, and I don't know. Maybe there is a business development role? I'd guess you'd be throwing away a lot of your existing value at that point.
Forecasting, pricing and marketing analytics roles are all good transitions. Lots of excel still necessary - all you really need to learn is some SQL and maybe R/SAS.
To me, that's just reallocating resources. Any efficient system of capitalism will see that happening.
However IPO's with unreasonable valuations, and investments greater than what's needed is a pretty good sign of bubble. So i'll let linkedin, and facebook make me scared of a bubble. Not to mention the startup Color.
Some pointless pedantry: There is no singular title "Messr", because "Messrs" as the plural of "Mr" comes from the French "Messieurs".
The French singular is "Monsieur", which is abbreviated as simply "M".
It's probably all true, but the piece reads like an extended resume. If only I could get NY Times to let me rant about how ethical I am and what trillion-dollar clients I advised.
I agree with you but if you are at his level, you don't really need a resume anymore. Financial industry is all about who you know and from what I can see, he is very well connected.
FYI Executive Director at GS means the same thing as VP, which sounds much more impressive than it actually is. There are literally thousands of them. To put it another way, ED is a level up from Analyst. The real cheese begins at Managing Director -- which is the first level you don't reach through seniority, but through "skill" (or politicking!).
"Greg Smith is resigning today as a Goldman Sachs executive director and head of the firm’s United States equity derivatives business in Europe, the Middle East and Africa."
I could be wrong, but I don't think the number of positions heading business units across continents is that large.
If you're going to write a piece about leaving a firm, you need to establish why your opinion is more important to your readers than the opinions issued as inevitable rebuttals to this piece. That is purpose of including his resume.
I have ranted for a long time about the corruption at Goldman Sachs, mostly to deaf ears. :) This is the tip of the iceberg, as far as I am concerned. My bigger concern is how involved GS is with our government.
As it turns out, the human race is extremely intelligent and wherever there is an opportunity to make money (corrupt or not), people are probably doing it. I would call it a conspiracy theory, if it were not occurring in plain site. Exactly which Americans approved of the multibillion dollar bailout, show of hands?
If you disagree with me, that is cool - just leave a comment telling me why. If you think my comment is irrelevant for some reason, also let me know why.
"tax" giveaway? It's all borrowed money anyway, not actual tax revenue. Drop in the bucket compared with the rest of the federal budget, and most of it was paid back.
'It changed man. The culture wasn't the same as when I joined five years ago.'
These 'I said GOODBYE SIR!'s are interesting, but I'm not sure how much reliable information can be gleaned from them. What ever happened to not 'burning your bridges'?
I agree with your sentiment, but not with the "burning your bridges" part. Seems like the fear of burning your bridges keeps many people from speaking frankly about what's happening in the corporate world. And that's important nowadays because as they say, politicians don't run the world, Goldman Sachs does.
Yes, given the cynicism which seems to have developed there, it seems like only a matter of time before some GS employee decides to leak embarrassing information as part of an insider trading scheme.
It's good to take them with a pinch of salt, just as you take what your girlfriend say about her ex with a pinch of salt. That said, after the salt has been applied you are still left with some useful information.
The gentleman era of investment banking is largely mythical. There was a long period where they were notably less scummy and cutthroat than other investment banks (compare: Salomon Brothers in the 1980s) but they were always an investment bank.
The most visible (to a young person) sign of a bank's character is how it treats its employees. The 90+ hour weeks and terrible conditions in the "analyst" program (the term has nothing to do with analysis; it means "whale-shit") are not a new invention; that goes back to the 1980s. Before that, banking was dominated by the Mad Men culture: the hours weren't long but the politics was just as malicious.
>The most visible (to a young person) sign of a bank's character is how it treats its employees
Character in a limited sense, but I don't know how much that translates into client satisfaction. Foxconn, Apple, and Disneyland come to mind.
As a trader I officially had a 50 hour week. I stayed for 70+ hours because I found the work I was doing, at least initially, interesting (I was generally the last trader on the desk to go home). Specifically regarding investment bankers, yes they work very long hours, but the analysts there generally see the time as financial boot camp. Besides, the staff senior to them are no less workaholic.
Some start-ups have their employees working 90+ hours. This isn't because they're evil but because they have limited resources, a lot of work, and the people there are amazingly passionate about what they're doing.
Some start-ups have their employees working 90+ hours. This isn't because they're evil but because they have limited resources, a lot of work, and the people there are amazingly passionate about what they're doing.
Limited resources. That's why the long hours are not a sign of evil in startups but are one in banking. Banks could easily hire more people. Startups generally hire good people as soon as they can.
Whether they could is debatable given that many of them are aggressively trying to raise capital, even if it means laying off workers to cut costs. But let's assume they can.
That doesn't mean they should. Most bankers I knew were much more upset about losing their week-end beer fridge or a $5 reduction in their daily meal allowance than they were about putting in a few more hours. You have to remember that most analysts see their 2 years as an apprenticeship or finance boot camp - they want all the experience they can get so they have a gilded resume at the end of it.
I still don't see a good argument for judging firms where highly compensated employees with plenty of options work long hours, particularly when, as in banking, their tangible skill-set is relatively low.
Whether they could is debatable given that many of them are aggressively trying to raise capital, even if it means laying off workers to cut costs.
They could always, you know, stop paying million-dollar salaries to people with no skills other than office politics. I know this sounds radical, but it would free up some of the money.
Most bankers I knew were much more upset about losing their week-end beer fridge or a $5 reduction in their daily meal allowance than they were about putting in a few more hours.
I'm not talking about "a few more". I'm talking about the difference between 40-50 (sustainable, safe, sane) and 80-120.
In most companies, a 5:00 pm work drop with 6 hours of work due next morning would be taken as a sign of dysfunctional process. It might happen occasionally, such as during a production crisis, but it wouldn't be an everyday event. Bankers like to hire naive college kids because they don't know their rights and don't know that these kinds of late-day work drops are a textbook example of bad process.
they want all the experience they can get so they have a gilded resume at the end of it.
You and I both know that the "experience" most analysts are getting isn't very useful or interesting-- not enough to merit working 100+ hours per week. Checking pitchbooks at 1:30 am? Downloading 600 corporate logos? Do you really think people learn much doing this kind of grunt work that a high-schooler could do?
They just want the name on the resume and the automatic acceptance at a top business school, because for whatever reason B-schools still believe people actually get something useful about being an investment bank's peon for two years.
"particularly when, as in banking, their tangible skill-set is relatively low"
This is incredible. You're the third person I know from the financial industry who has admitted that they have no transferable skills. And I don't know too many people from the financial industry.
These are the captains of industry, dictating how billion dollar corporations that make real stuff should be run. Jesus Christ we're so fucked.
> The gentleman era of investment banking is largely mythical.
There was a qualitative change after the banks went public. The old partnerships were inherently more prudent. And that's where the old culture came from. The new corporate structure rewards any risk-taking where losses lag gains by a year or more. So the culture changes.
> There was a qualitative change after the banks went public.
Many investment bankers knew they were selling crap at insane valuations during the internet bubble. Hell, the first time I saw IB's taking advantage of mass mania was the junk bonds era and Michael Milken.
Those guys have had the culture of taking advantage of clients for a very long time. It might be argued that the author of the OP article is just a slow learner... But I give him major props on teaching what he learned.
I really think being publicly-traded companies is the root of the problem here. When a company goes public, it adopts one (and only one) goal: Maximize shareholder value. When that's the priority, it naturally follows that the sharks take over the waters. This is not a tough leap of logic, and it's repeated in corporate culture constantly. We need a famous person to quote it succinctly so that it is enshrined as a colloquial law.
I once worked for a guy who was considering incorporating his two-person company. His investors were mostly family and professional contacts. One day he was talking about how it would limit his decision-making because of his obligation to always do what was most profitable for the shareholders. He was potentially facing a choice between selling out to a much larger company or staying independent so he could develop the company into the kind of business he always wanted to run. He and his partner had a controlling stake, but theoretically, if their investors wanted him to sell but he refused, they could sue him for damages, breach of fiduciary trust or what-not. Or so he said. I asked him, "If there was a perfectly legal, but morally reprehensible way to make a lot of money for your shareholders, and you were aware of it but didn't take advantage of it, could they sue you for damages?" He didn't think so, but he couldn't explain to me the legal difference between his moral judgment and his lifestyle preference for one kind of business over another. I'm still intrigued by the question.
To make the situation more dramatic, suppose a company disposed of a thousand barrels of toxic waste every month, and the board of directors found out that the perfectly legal method by which they were disposing of the waste was horrifically environmentally damaging but exposed the company to no possible liability. Could they choose to dispose of the waste in a much more expensive way? What if it meant cancelling a dividend? What if it meant bankrupting the company -- could they be sued then?
I think the whole "fiduciary duty" argument is mostly used by assholes as an excuse for being assholes. Managers of corporations have wide latitude to do as they see fit. Successful shareholder lawsuits of this type are extremely rare.
It was enough to scare him away from incorporation while there was talk of an offer to buy the company. The customer that was going to make the offer would have replaced him in his business role, limited him to research, and shut down all the work that wasn't relevant to the one product of ours that they used, but they were going to give all the investors a very significant profit. He didn't care because he thought the company could be much bigger than the buyer wanted it to be, and also possibly because he was already wealthy and enjoyed being the boss much more than he needed the money. When I ponder that last part I guess it's possible that his worries about getting sued reflected a guilty conscience more than a real legal risk.
it's hard to sell common sense values and mores without dropping hints and lines about who you associate with and how awesome you are.
in all seriousness though, he probably saw this as a golden moment to build his personal brand, gain some media exposure, and leverage that exposure and brand building into another job offer, a writing gig, or a TV gig. consider it a golden parachute moment.
It's interesting how the tone of this article is almost exactly the same as the one about the Microsoft employee that recently quit Google.
Something happens to companies as they get larger, where the culture of a company starts dying from a death-by-a-thousand-cuts, and then they start promoting the wrong people into upper management that seem to really poison a very good company culture. It sounds like Goldman Sachs is one of these companies.
The irony is that I think the shift in mentality came from Wall Street itself pushing the idea of "maximizing shareholder value", in the 80s. This lead to a bunch of financially positive but culturally negative (some would say sociopathic) decisions, such as closing plants that were profitable, but weren't profitable enough. I think Michael Moore had a movie on this called "The Big One".
Forbes has an article on this, calling it "The Dumbest Idea in the World":
I read the biography on Goldman Sachs, and I don't doubt for one second that there was a historic culture that most of the employees were fiercely proud of. But as the author mentioned, a few mistaken promotions into power and the whole culture of a company can change through death by a thousand cuts. No doubt the same thing is happening at all large companies that started off with great roots. I saw this occur at Yahoo, where completely idiotic decisions were made in order to preserve revenues so that managers' bonuses were left in tact.
Is this something that can be avoided? I'm not sure... corporate culture starts at the top and works its way down. It's something that must be demonstrated by the leaders of the company at every level, and it filters down to the lowest ranks. So if you have a company with strong leadership, then I think it can be staved off for a while, but it requires a relentless focus.
> Something happens to companies as they get larger...
I think promotion happens. When you're a fresh grad right out-of-college and the Managing Director says "client is our #1 priority", you take it to heart. That's your new mantra now. Nine years later, when the same Director, now promoted to the Board says the same line, you groan inside because you know exactly how often he calls his clients muppets. Slowly you begin to feel that the company is no longer the same wonderful, inspirational place of work that you signed up for.
Positions of power at any company, non-profit, government, or political organizations are not filled with do-gooders who want to give everyone a hug. They are filled with thick-skinned, ambitious, practical people who have learnt to say the right things at the right time. So if you're a junior exec., you will hear inspirational BS. As you join their ranks, you will hear their real thoughts. If the latter disgust you, it clearly means you aren't fit to join their ranks, not because of any lack of skills on your part but rather the difference in how you view the world.
To me all these execs leaving companies and saying "it's so different now" just means they all grew up and realized they didn't like what they signed up for. It's no different than couples splitting because "we grew apart." I highly recommend people quitting if things aren't working out ( http://chir.ag/200804242130 ) but I do not recommend airing out the dirty laundry, especially when no laws were broken because you're just scaring off the next company you intend to work for.
None of my above comments were in reference to anything at GS/Google/MS specifically. Facebook will start charging for integration some day too and some Dropbox exec will joke in company meetings about all the stupid people who save personal photos on their servers. People are people and companies are companies.
Predatory loan usually refers to taking advantage of someone who doesn't know what they are getting themselves into. Are you saying that Greece lacks the financial knowledge to understand what they are signing?
It's called being wet behind the ears. Most people in that situation simply don't realize how much they don't know. And guess what you aren't going to be able to read about it and know either. You will find it out through life experience.
The upside is you aren't jaded and you will try things that older people will avoid because of their wisdom and experience.
It might be that things never change and all attempts to bring back the good ol' culture are just reactionary, but that doesn't mean people shouldn't speak up when they feel disgusted by what's going on around them.
Fear(s) motivate(s) people pretty well to do just about anything, including to keep silent (as you recommend), but I'm glad that people are brave enough, or stupid enough, to say what they think is right, even in the face of such fears. It might also turn out that the people who agree with the dissenters outnumber the powerful incumbents who they oppose.
I agree with your point that part of the cause is getting more senior and actually watching the lies. But I don't accept that we should condone that behavior.
Full disclosure: I left Micosoft last year after I long debated the trade offs of starting my career over. I was a "top performer" and Microsoft makes a point of telling the many people like me to stick around for all sorts of reasons. Deferred compensation. Trajectory. Influence. Etc.
But then I actually got into the VP's circle and didn't like what I saw. This smooth-talking, confident leader within Office was some kind of sociopath. He and his comrades snickered after a middle manager announced he would put the blame on someone for failing to deliver a major feature. I was confused when it happened. Like one big inside joke, that would be my initiation.
This feature was promised three years ago to the previous President of the division, and it turned out to be a top priority for the incoming president. Well, the middle manager miscalculated and let it slip. We've all done this to some degree-- answer an email late, forget to deliver on a request -- it's part of being an engineer working with people. But the middle manager had done it at a big scale and was wrong.
Rather than admit it because that would end his career (as I'll explain in a minute), he threw someone else under the bus. He asked this senior PM to take the project over. Rather than give her support, he decided to undermine her. He had people give copious amounts of negative feedback on her specs, held back people from working with her, and lied about progress to management. He was setting her up to fail so he could swoop in and deliver it after she failed without the wrath of being late. We've all seen managers excuse being late because of low performers. The VP and his manager needed to construct a low performer. And all he had to do was signal to the herd to stay away from her with all the negative feedback.
The hell they put her through so they could save their asses. And the fucking snicker. She was a warm, smart, expert in this feature and had she been allowed to work she would have outdone the middle manager. But the middle manager was ambitious. And the VP seemed to like watching people destroy their lives. And he liked loyalty. He knew if he could get dirt on his managers he would keep them for a long time.
I try to be a good person. I try to be honest. I try to stand up for people. But I couldn't help her. For a year I gave as much moral support as I could without the inner circle knowing. But the politics were too thick and toxic to touch. I watched her nervous breakdown. And then I knew I had to leave. Maybe it really was this one bad team. But this was the rising star VP. If this is how he succeeded then the others VPs would have to eventually. And the middle manager was his replacement.
So, I got a different job. I took 3 months to travel in Europe to wash off the filth. And I checked in with my friend, and am pleased to hear that she has landed on her feet and is doing much better. At my current job the people argue about -- gasp -- the customer. What a difference.
But I am still angry that evil people -- the VP, the middle managers -- are allowed to continue. I don't agree we're supposed to be quiet. Food critics used to be afraid of giving bad reviews because they wouldn't be allowed to keep their jobs (in local markets unless you were someone politics would prevail). Now we have Yelp. Really bad restaurants should have a hard time of hiding. I wish there was something like that for managers and companies without blowback. I wish there was a way to give feedback on LinkedIn. The middle manager's profile is really funny to read. Apparently he runs all of big data at Microsoft. From Office. As a middle manager.
Anyway, my point is there is opportunity to expose evil people and good people in their careers. We should find a way to do it safely. People should have an incentive to be good.
"Now we have Yelp. Really bad restaurants should have a hard time of hiding. I wish there was something like that for managers and companies without blowback. I wish there was a way to give feedback on LinkedIn."
We are working on this very issue right now -www.feedbackninja.com - coming soon!
> I try to be a good person. I try to be honest. I try to stand up for people. But I couldn't help her. For a year I gave as much moral support as I could without the inner circle knowing. But the politics were too thick and toxic to touch.
You "could not" help her? That's not exactly true, is it? It's just that if you had, there would have been negative consequences for yourself, and so, you didn't.
> You "could not" help her? That's not exactly true, is it? It's just that if you had, there would have been negative consequences for yourself, and so, you didn't.
I think the question isn't so much whether he could have tried to help her, as whether it would have done any good. The end result might well have been no improvement in her situation and a drastic worsening of his. In other words, negative consequences for him without any compensating positive consequences for her. In that situation, I'm not sure I would see much point in openly intervening.
Perhaps the positive consequence could be the simple matter of having done something because it is right.
Perhaps he could look back on that period of time and reflect that, rather than watch it happen, he took action. Even if it accomplished nothing, he could at least say "I saw something wrong and I worked to right it."
What can he say now? "I saw something wrong, watched it happen, and vacationed in Europe until I felt better."
One of these is morally praiseworthy. The other is not.
There is a lot of gray with this story. One IC vs many middle managers and a VP will never turn out well for the IC, especially at Microsoft. I don't know what I could have done. To whom would I have sounded the alarm?
What I did: "I told my manager," "realized it's a systemic problem," "I was a friend to someone who needed one," "I helped her leave and get her next job," and "I quit."
I made lemonade and enjoyed time in Europe. But I don't think there was a choice to fight.
I'd say helping her leave and get her next job was the best thing you could have done for her.
Even if someone had solved this particular crisis, it sounds like she wasn't going to thrive in this political environment anyway. At that point, leaving is the best choice and, all too often, people don't see that.
That Forbes article is a great one. Personally I think now that the cat is out of the bag, we should start to see things changing at the executive level (though it's going to take years).
For a long time, many of us have speculated that CEOs were overpaid but suggesting this was met with claims of being "anti-capitalist" and other such nonsense. Now thanks to the Forbes article and the book it's talking about, we can demonstrate that CEOs are * clearly* overpaid. Their own pay has gone up, while company performance per salary dollar has gone down. Meanwhile the rest of us produce vastly more than, say, 20 years ago, yet wages remain mostly flat.
Could you define what you mean by "overpaid"? Is it merely a complaint that CEOs are paid more than you wish they were, or something else?
Meanwhile the rest of us produce vastly more than, say, 20 years ago, yet wages remain mostly flat.
This claim betrays a misunderstanding of how productivity is measured, and how workers are compensated for their productivity (i.e., comp is wages + benefits, not wages).
And productivity can easily go up due to factors unrelated to workers. E.g., if a company replaces workers with robots, the measured productivity (total production / # of employees) of the remainder will go up. Is this a reason to increase their pay?
There are many people who believe that CEO compensation has skyrocketed not because CEO value has skyrocketed, but because of a lack of downward pressure on their compensation packages.
CEO compensation has to get approved by a board made up of other executives. As such, these board members have every incentive to lean towards granting generous raises, and virtually no incentive towards toeing a hard line.
This problem is exacerbated by the universal belief that every CEO is above average. As such, every CEO can say "we all agree I'm in the top quartile of CEOs, right?", and everyone will agree, and then he'll get a pay package that's top 10-25%.
And then, because CEO tenures are shrinking, this cycle will repeat, often, in a cycle that has absolutely nothing to do with the value created for shareholders, and absolutely everything to do with executive compensation schemes having gone off the rails.
Yeah, except he didn't say compensation was flat. He said wages were flat. The fact that we have a higher percentage of our compensation tied up in the skyrocketing cost of health care only underscores his point.
I wasn't disagreeing that CPI-adjusted wages are flat, I was pointing out that there is no reason for CPI-adjusted wages to be related to productivity.
Wages are related to creation of value, which itself is related to productivity. By what logic would productivity go through the roof but CEOs realize the gains of it?
You can try to claim that's simply the market value of getting a CEO, but this doesn't hold up: CEO salary-to-revenue has decreased. We're paying more and getting worse performance. Further, your argument depends on efficient markets which don't pass the common sense test and has been shown to be an N!=NP problem.
You find productivity goes up due to robots, who should get the higher pay? The CEO? If so, why? Or should prices be lowered? It is completely disingenuous to argue over on "deserves" economic surplus, the whole point is that surplus is in excess of everyone's contribution, so social and power factors come into the forefront in determining the distribution.
I already did. We can now prove that revenue has actually decreased per dollar paid to a CEO. One might say that that that is because salaries have gone up, but for everyone else wages have stayed mostly flat. So by what possible logic would CEOs now make more money for accomplishing less? And why wouldn't these same factors apply to anyone else?
>This claim betrays a misunderstanding of how productivity is measured
I understand the theories of how it's supposed to work just fine, thank you. In theory, if I can accomplish more than those before me I should make more because I'm creating more value. In my career I've made an uncountable number of jobs unnecessary through automation. But did I capture any of this productivity boost? No, the executives took it all.
The system is broken because CEOs have been gaming it ever since this idiotic "Shareholder value" focus came about. Everyone has known this deep down for years and now we're finally starting to prove it concretely. To me it's going to be funny watching so-called "experts" explain why they spent decades preaching nonsense about CEO pay being correct as it's systematically shown to be a product of system exploitation.
We can now prove that revenue has actually decreased per dollar paid to a CEO...CEOs now make more money for accomplishing less?
Your metric is a ratio and it does not prove that CEO's accomplish less.
For example, suppose a CEO doubles revenues (did you mean profit?) from $1B to $2B and their pay increases from $10M to $30M. They have accomplished more, but revenue/pay has gone down.
In my career I've made an uncountable number of jobs unnecessary through automation. But did I capture any of this productivity boost?
Most likely. Pay for programmers has skyrocketed, unlike pay for ordinary workers.
Besides, the productivity of the few people you failed to replace has also gone up. If you make 8/10 jobs redundant, should the pay of the remaining 2 increase commensurately with their drastically increased productivity?
EconTalk interviewed Kaplan about this very subject. His research shows that CEO's pay has _not_ risen faster than any other "highly skilled labor", such as doctors, lawyers, etc. If you listen to the podcast, it is a very convincing set of data backing up his conclusion.
Instead, hedge fund managers are the ones that have absolutely rocketed out of the stratosphere in terms of inflating pay.
I'm afraid you've been tricked. CEOs used to make 40-70 times as much as the average worker. Now it can be hundreds of times. All the while, revenue per dollar of CEO salary has gone down. The cat is out of the bag. Everyone who defends the status quot in regards to CEO pay is either benefiting from it (and wishes to continue) of suffering from Stockholm syndrome.
I would strongly advise reading Machiavelli's Discourses on Livy on the subject of emergent culture in sovereign institutions.
These companies are small empires in their own right, creating a lasting and prosperous empire is an monumental undertaking where chasing fads has little effect.
In business circles I find Bosch and IBM to be prime examples of quality in this regard.
"Something happens to companies as they get larger, where the culture of a company starts dying from a death-by-a-thousand-cuts, ..."
Goldman (or Google) is no where near death. But Goldman is still in crisis mode. The primary focus now is profit margin. making money for you and your clients isn't the point any longer. It's your position that matters. But Goldman, used to award your bonus not just based on your position. They used to survey your clients. And their opinion mattered. Not sure if they still do this. I haven't worked in Wall Street since 1996.
And Goldman isn't the only firm in this position, by the way.
And Google is sort of in the same place. FB scares the hell out of them. And instead of innovating (and taking risks) they copy.
Google and Goldman are blinded now. They can't see beyond their own models.
> Something happens to companies as they get larger
They went public. My gf is a senior manager at GS (200+ drones in her department). When the company went public the partners could easily cash out. Without as much skin in the game, they could squeeze as much profit (aka bonus) from GS without worrying about the long-term viability. Also, hedge funds are now a more lucrative place to work for many people. So if GS doesn't pay, then a hedge fund will. Another thing is that prop trading made vastly more money than IBanking for the last decade, which changed who got promoted and rewarded. Finally, the company grew very rapidly in the last 10 years and much of it's culture got diluted with all the new people. It's not a bad place, it's just a normal IBank now.
I agree that going public hurts companies but not because the partners/founders can cash out. At least in the tech world once a company reaches a certain size, it seems as though founders can liquidate a large portion of their stock pre-IPO; Mark Zuckerberg doesn't need to worry about Facebook's IPO in order to get rich. Rather, I feel that having a somewhat-arbitrary, short-term indicator in the form of stock price is what hurts public companies and their culture much more than the loss of its leaders.
What you say is IMO correct. But, I think there is something more fundamental. A company cannot function to full potential when beholden to 2 masters - customer and investor - with opposing needs. The customer wants the best product/service possible; the investor wants the maximum ROI.
I think your last paragraph aptly explains it all. A fish rots from the head down. If we take a broad and intangible concept like "culture" and reduce it to its mechanical workings, we see that it's usually the net result of everyone's incentives. If people at the top are setting perverse incentives, then their lieutenants will meet those incentives, and on down to their lieutenants, and so forth. Those at the bottom of the ladder will model the behaviors of those they're seeing get ahead. And one day, when they're moving up, they'll carry out the behaviors they've been conditioned to exhibit.
The other tricky thing about culture is that it's a lot like trust: very hard to earn, very easy to squander. Once lost, it's difficult -- sometimes impossible -- to recover.
It's a little hyperbolic to compare Goldman Sachs culture to Google culture. Little has changed as far as I can tell about Google culture internally. People still care about the same things, management for the most part, still cares about the same things, and all of these public assertions that G+ is an all consuming diversion to the detriment of everything else is a gross hyperbole.
Googlers are not sitting around making fun of their users, joking about them, giving them funny nicknames.
With these types of rants, it is hard to derive truth from fiction. Once a narrative is set up, everyone starts to keep feeding into it. It's easy to believe the worst about Goldman, so everything said "fits" and makes it believable. My own biases make it more likely to believe in stories of greedy people selling snake oil.
Still, one should be skeptical and avoid piling on.
"financially positive but culturally negative (some would say sociopathic) decisions, such as closing plants that were profitable, but weren't profitable enough."
This is something that is inherent in a certain type of investor and Wall Street and you see it in YC as well as VC firms and (startup) angel investors.
While you might be able to get a local businessman on Main st. to believe in your idea which is profitable (but not sexy and not "billion dollar") that will probably make both of you money, you won't get anyone in the de facto startup community to take you seriously. They won't give you money unless you are shooting for the stars.
Goldman survived for 140 years without promotion problems. My personal theory is these problems - corporate profit before clients, short-term gains, lack of long-term vision - is a symptom of our current culture and, more broadly, the shifting information landscape. 100 years ago, few people even knew what the DOW index was, let alone followed it daily.
Funnily enough, the Dow was a relatively unimportant indicator until the Great Depression, when the media seized upon it as something to watch on a daily basis. It was originally intended not to be checked more than a few times a month, and only as a brief snapshot of the economy.
It's importance in popular media and culture is vastly overblown. The rising and falling of the Dow on a daily basis is basically worthless from an economic point of view - it's just noise.
"It's interesting how the tone of this article is almost exactly the same as the one about the Microsoft employee that recently quit Google."
An interesting difference, though, is the Goldman-Sachs employee sees a problem with focusing on short-term gains, while the Google employee sees a mistake in a long-term bet (that Google can compete successfully with Facebook in the social realm).
This is indicative of the shift of power within GS from investment banking to the trading side of operations. That shift itself is based on who is generating the most profits. Seems that trading and investment banking maybe ideologically opposing forces, from a client interest standpoint. So to remove conflicts of interest they should divest of one or the other and decide who they want to be.
Exactly what I came over here to say. If there's been a change, it has to be something like the cynicism at GS having grown so overt that they can't pay some of their institutional drones enough to ignore it.
To be fair, I think many of the people who were employed at Goldman Sachs three generations ago are no longer with the firm, so it's hard to judge GS based on that.
I find it somewhat ironic that a 12-year finance veteran is preaching about integrity and resigning through an op-ed piece in the Times.
While it feels good to recognize the eroding integrity of the industry (assuming it existed in the first place); I don't think this messenger is praiseworthy. Reeks of self-righteousness to me... and somehow I'm certain he'll be starting his own fund in the coming months.
Funny side note: Michael Lewis said that he wrote that as more of a warning. He was astounded (and a little horrified) to find out it was being used as a how-to.
Supposedly it's at least partially true (as in featuring real people really saying these things) but my source for this is this blogger that says so, so...
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[ 3.1 ms ] story [ 240 ms ] threadHowever big you are supporting your customers and being contactable when there are problems is an essential cost of business.
>specifically for tech jobs
Which kind of tech jobs? For banks, or something unrelated?
I think sample size is 4 at GS, maybe 10 elsewhere.
I'm pretty sure that after working for Goldman, you don't go work for another large bank, you go work for the Goldman of another field. Otherwise it would be like going from MLB to a farm team -- not an upward move.
It's an industry where many firms have had to develop their own network transport layers, database engines, languages, etc. Where machine learning and big data have been standard practice for over a decade. Where understanding complexity and concurrency theory are important, and designing lock-free algorithms can be a daily activity. There's very few areas of core CS that aren't used in investment banks.
Many firms have a strict policy of disallowing any source (open or not) from leaving company premises. Email servers and proxy filters have detectors that will raise an alert if source code is emailed or sent out over HTTP. It's easily a sackable offence and this discourages developers from contributing changes back to open-source: there are simply too many hurdles to jump through in order to do it.
But the real influence of banking is driving the development of stuff like RDMA over Infiniband, which eventually makes its way into other industries. Everything that "web companies" know (and take for granted) about scalability, performance, resilience, security etc etc comes from either investment banking or pr0n.
https://www.openadaptor.org/
But obviously a lot of it remains behind closed doors, but there certainly some of that sort of thing going on.
Some of it also happens indirectly, for example a bank might design an improvement to the Linux kernel but because they want to remain covered by their support contract with say RedHat they might supply to the patch to RedHat and RedHat will then verify it and merge it into their core release and submit it back upstream, but it would have RedHat's name on it rather than the originating bank who might want to remain anonymous.
https://ocaml.janestreet.com/
In most large finance companies though, it's also true that a lot of the less-exciting back office development work is being done by software developers who are overqualified for the roles but attracted by high wages.
When I worked at Microsoft in Product Support Services, our general director "got it" and encouraged us to break any rule if it helped the customer out, so long as we did so reasonably responsibly, something I took him up on to the point it seriously annoyed my direct manager. He left, and the group I worked with ended up getting shipped off to India. And given more recent discussions with Microsoft customer service, the question of "how do we deliver quality customer service" has become far less important.
I guess my musings lead me to the thinking that being good requires a level of confidence that is easy to lose as an organization, and that as it is lost, the organization can turn toxic fast. But we can't succeed all the time. We will face huge challenges. So how do we resist the urge to turn and focus only on the immediate challenge, whether a competitor or the bottom line?
In my experience - yes, this moral decay is a necessary part of the current corporate world. Or any corporate world. Or really, any world without the possibility of failure baked into it.
I've seen a lot of idiotic decisions made at Google, many of which have been complained about on Hacker News, many more of which are hidden causes of things that are complained about on Hacker News. In every case, when I looked at the chain of decisions that led to things being the way they are, every single decision was rational, given the information that all participants had at the time. There's no vast conspiracy dedicated to turning Google evil, no influx of incompetent new PMs & designers. Some of the most questionable decisions have come straight from old timers like Marissa, or even from Larry Page.
Instead, it's an information problem. Running any enterprise the size of Google or Goldman Sachs requires trading off many competing factors. To make the tradeoff, someone has to keep all that information in their head at once. There's no other way to balance competing demands; if you keep only part of the information in your head, your decision will be biased towards the part that you've loaded into your brain. If you try to spread decision making across multiple people, the decisions will be biased towards the part that the person who screams the loudest can hold in his head (which is usually a smaller subset than optimal; it takes mental effort to scream loudly).
I often see mystified posters on HN wondering why Google did something or other, and a good amount of the time, I know (but can't say) exactly why we did it. The userbase does not have all the information. Unfortunately, they don't care that they don't have all the information; they want Google to work as expected, and the fact that there may be internal systems that don't quite behave according to their mental model is irrelevant. And so the fact that decision makers make decisions based on information that users can't have becomes a liability in this case, biasing them away from what's "good" for the user.
I remember Paul Buchheit writing here, several years ago, "A system's participants don't have to be rational for the system itself to be rational", referring to market economies. I'd posit that the inverse also holds: a system with completely rational participants can still be irrational, if information flow between participants is not organized in a rational way.
What I am asking is whether great places to work inevitable decay as the company gets large, and if that is the case, what is the point of a startup? Why not seek to make an idea that scales down rather than scales up? Is it all about personal wealth? But for those of us who want to build great businesses, in every sense of the word 'great,' how do we get around this problem?
I have my own ideas but they are largely untested.....
Odds are you will definitely lose that personal connection as you go from working for "the owner" to working for a manager that reports to a VP that reports to the CEO that reports to the Board that reports to the shareholders.
But what I've seen in a lot of these "leaving" posts isn't quite that... It's more of a "the king has no clothes" epiphany: They go to work at a place thinking it's a thing-in-itself then wake up one day and realize how the sausage is being made.
So GOOG isn't a post-grad research lab: It's a company that sells ads. So GS isn't the equivalent of a fee only financial planner.
They never were more than that.. only the people involved thought they were something more.
Two takeaways:
1) You don't really have any power. You need to lead by example and empower other people rather than command. 2) The personality required to establish a project is often different than the personalities required to keep it going.
My thinking is to have a relatively small group of high level managers, a group of project managers, and an HR department, and eliminate all middle management. I think teams should have rotating leadership but coordination should take place in ways which include both the upper management and folks on the floor directly using things like email lists.
Maybe this is a pipe dream. But maybe it can be made to work.....
This is a task that doesn't scale, because it requires knowing your reports well enough, as a person, that you understand their career goals, their likes & dislikes, their strengths & weaknesses, etc. so you can steer them into the right role. It's the tech lead's job to manage the (engineering half of) the project, and the tech lead frequently doesn't manage any of the people involved. I've found that managers can rarely manage more than 20 people effectively, and usually drop off sharply in effectiveness after 8-10 people.
Open source projects don't face this limitation, because your way of ensuring that everyone's happy is to assume that everyone who's not happy has quit. I suppose some big companies do this too - Yahoo seems to be trying out this strategy right now - but it really doesn't go over well with the public at large, and it wastes a lot of effort spent investing in new employees.
I believe that such "decay" processes are inevitable in the long run, following organizational growth as time goes by. Maybe in the advanced management theory someone has yet to formulate the laws/principles of corporate thermodynamics. (This is not my original thought, I've read it somewhere but can't remember the source).
On a more practical grounds, a few seeming counter examples:
- Virgin Group is a highly decentralized conglomerate of 300+ businesses all over the world and each of them is mostly autonomous (Though when you think of Virgin Group there is only one personality springing in mind - that of Richard Branson)
- Well, Apple, of course.. Though some say Apple of the 2000's after Steve Job's return is a different company entirely (in most of the aspects but those concerning mainly legal formalities around the corporate entity, its registration details, and logo design principles).
P.S.
So the point of a startup to a business is that of a birth and early childhood to a human.
Businesses (as functional organizations) and humans (as living beings) have ultimately the same fate in the end, though the time-scales differ.
Rationality is emotionless and mechanical. It's about making a reasonable decision based on whatever information is available to you. However, rational decisions do not involve morals, culture, or feelings. This is exactly what companies like Google and Goldman Sachs are being criticized for.
When game theory is baked into your corporate culture, this is what you get. The company starts an inevitable slide from "Do No Evil" into "Make the Best Decision You Can With the Information You Have".
If I look down into my wallet and see no money there, and I'm hungry for lunch, and I decide to steal some money from a little old lady, that may be a perfectly rational decision to make. An outside observer may say I'm being evil, but they don't have a complete information picture about how hungry I am, or how long the line at the ATM is, or that everyone else is eating lunch so I have a duty to my shareholders to do the same.
Gus Levy, a former senior Goldman partner, coined the firm's then philosophy of being "long-term greedy". Taking image, "headline risk" in finance parlance, impact on recruiting, etc. into account is part of rational decision making.
What makes a seemingly terrible decision rational is usually that the time-frame invoked is too short. If a decision looks rational in the long-term but conflicts with our value system it generally means that our value system needs to be re-evaluated.
No I am not implying that the process of making rational decisions has anything to do with the process for holding rational discussions about stuff (the stuff may be rational or not).
And that reasoning is the very definition of the term unethical.
See https://en.wikipedia.org/wiki/Ethics
Those values can include morals, culture, and feelings.
http://tvtropes.org/pmwiki/pmwiki.php/Main/StrawVulcan
http://www.cs.utexas.edu/~EWD/transcriptions/EWD11xx/EWD1175... (search for 'buxton index')
OTOH, if they had all the information, they might set new expectations. Essentially you are describing a corporation that is failing to communicate properly.
To the parent post question, of avoiding deterioration of institutional culture from such principles there are two answers. Best is to align corporate equity interests with long-term interests, which are generally customer interests. That generally means not going public, as stock market attention to short-term interests is a constant distraction from long-term interests. Failing that, be lead by a mutant like Buffett or Jobs, who understand the long-term interests and have the authority to ignore the short-term to get long. But the availability of mutants is unpredictable and it's really best to get the capital structured properly.
by construction:
The documentary is critical of the modern-day corporation, considering its legal status as a class of person and evaluating its behaviour towards society and the world at large as a psychiatrist might evaluate an ordinary person. [...] corporations are systematically compelled to behave with the DSM-IV's symptoms of psychopathy
http://en.wikipedia.org/wiki/The_Corporation_%28film%29
I think it's as mundane as simple, Darwinian selective pressure. The ruthless ones perform better[1]. The people who have ethical constraints, or who consider the long-term, find themselves under-performing by comparison. They can choose to either mimic this destructive behavior or get marginalized as they are seen as ineffective and stubborn.
So basically, ethical behavior is unstable, and having one sociopath on a team will tend to make others act the same way. It's not exactly inevitable, but it's the natural tendency. If you want to stop it from happening, you have to work very hard and be very diligent.
[1] Or rather, they perform better in more visible ways, i.e. by more objective metrics and over a shorter time period.
In other words, the most recent wave of talent that Greg Smith talks about is more interested in being associated with the Goldman brand, rather than the genuinely possessing the underlying desire to be world class bankers.
Also, perhaps this happened years ago and now its too late because those B players are now running the show.
Our Clients' Interests Always Come First
http://www.goldmansachs.com/who-we-are/business-standards/bu...
>"... if we serve our clients well, our own success will follow."
Then a few lines below, they essentially define what success looks like for them and say that profitability critical to achieve those goals. It seems like that profits are a more direct way to achieve "success" for them.
> "Profitability is critical to achieving superior returns, building our capital, and attracting and keeping our best people"
This should serve as a reminder that you can talk, talk, and talk some more, but ultimately, you need to "walk the walk" for your words to carry a significant impact.
I left a couple of years ago after a three year stint. It was partly out of the boredom of babysitting a legacy platform that had little future, but mostly because the department's role devolved into getting away with doing the minimum for clients to justify our fees.
No matter how well GS pays, despite the relatively poor bonuses, it's not going to be possible to attract and retain the kind of staff they need. I wonder how many other nerds sit at their desks and catch a minute's respite by daydreaming of building something great? If they're lucky enough to have the freedom and enough of a financial cushion to take the leap I highly recommend it. I've not been happier since.
This also characterises hackers and Silicon Valley. There are some really good people on Wall Street just as there are some real turds in Silicon Valley.
If you go back into Goldman Sachs's history it was a venerable firm with a storied past of forsaking short-term profit for the client, i.e. being long-term greedy instead of short-term greedy (quoting a GS executive from the 1970s). It started changing in the 1980s and completed its transformation after its IPO.
Values aren't a function of sex or ambition.
You delude yourself into thinking you're inherently superior, a "Master of the Universe", even as you have never been able to explain to your mother what you do. Sooner or later you realise your colleagues are smart but terrifically insecure human beings, valuing their roles for who association with the firm's name makes them rather than what they actually do. Thus hierarchy is strictly enforced and innovation rages furiously in quaint, safe areas, e.g. introducing "new" leveraged/inverse hedged swaps, while ignoring fundamental assumptions, e.g. the trading floor should be siloed by product.
The bureaucracy and technical debt, combined with constant turnover in the under-paid operations and IT staff, mean that gaining understanding of the firm's as a whole as of no less than a quarter ago is a Herculean undertaking. And it's worse when you talk about the sales traders - none of them understand their product (they don't need to - the client's the one taking the risk), it's a miracle if they know a few shortcuts in Excel, and every one of them has an opinion on how xyz company (or country) should re-structure without having read a single term sheet or prospectus.
Luckily, there are start-ups that are raging equally furiously but with un-paralleled agility towards the financial sector. Alas, we'll have to find a new slot-in role a la consulting, investment banking, and sales & trading for insecure college graduates without hard skill sets to plump.
Note on recruiting
I've seen some comments tacitly saying Messr Smith should have known what he was getting into when he signed up for the job.
I was recruited by a very charismatic and values-driven MD when I was 19. Our desk merged with the rest of the firm's shitty culture when he was fired for being too ambitious. I didn't join for the six-figure salary - I turned down other offers that paid more at the time. There are lots of other people I know, brighter than I am, who were similarly drawn to the thought of a dynamic work-day filled with brilliant, ambitious people all working to solve difficult problems (that could be a tech company's recruiting ad...). Maybe I should have been more clairvoyant, but in the end what drives people to finance and what drives people to tech isn't all that dissimilar - the unique cultures change like to unlike from there.
Abstracted a little, capital markets start-ups. You could add value by hybridising Silicon Valley and New York.
Go any further, e.g. to a Pinterest, and I don't know. Maybe there is a business development role? I'd guess you'd be throwing away a lot of your existing value at that point.
Call people. Most are very willing to help.
The chemists and high school teachers turned ninja hax0r can't be far off. Someone please warn me so I can short XLK.
However IPO's with unreasonable valuations, and investments greater than what's needed is a pretty good sign of bubble. So i'll let linkedin, and facebook make me scared of a bubble. Not to mention the startup Color.
That's when I knew we were in a bubble.
http://www.urbandictionary.com/define.php?term=messr
"Mr." is English for Mister "M." is French for Monsieur.
I've seen this mistake made even in letters from banks and mobile phone companies. I cringe every time I see it.
I could be wrong, but I don't think the number of positions heading business units across continents is that large.
There are a few thousand of Vp's but there are also what, 25K staff.
http://www.nytimes.com/2008/10/19/business/19gold.html?pagew...
As it turns out, the human race is extremely intelligent and wherever there is an opportunity to make money (corrupt or not), people are probably doing it. I would call it a conspiracy theory, if it were not occurring in plain site. Exactly which Americans approved of the multibillion dollar bailout, show of hands?
http://www.reddit.com/help/reddiquette
If you disagree with me, that is cool - just leave a comment telling me why. If you think my comment is irrelevant for some reason, also let me know why.
Edit: More appropriately -- http://ycombinator.com/newsguidelines.html
I agree: This deserves a great deal more attention.
Hell, just the Henry Paulson tax giveaway should have caused civil unrest.
Huh? How is forgiven taxes not tax revenue?
http://www.marketwatch.com/story/paulson-files-to-sell-500-m...
If Hank paid the taxes anyway, I can't imagine that scumbag would have done so without major PR and fanfare.
... and interestingly, not "for" our clients.
'It changed man. The culture wasn't the same as when I joined five years ago.'
These 'I said GOODBYE SIR!'s are interesting, but I'm not sure how much reliable information can be gleaned from them. What ever happened to not 'burning your bridges'?
This is a resumé.
Looking forward to wikileaks bank-leaks.
The most visible (to a young person) sign of a bank's character is how it treats its employees. The 90+ hour weeks and terrible conditions in the "analyst" program (the term has nothing to do with analysis; it means "whale-shit") are not a new invention; that goes back to the 1980s. Before that, banking was dominated by the Mad Men culture: the hours weren't long but the politics was just as malicious.
Character in a limited sense, but I don't know how much that translates into client satisfaction. Foxconn, Apple, and Disneyland come to mind.
As a trader I officially had a 50 hour week. I stayed for 70+ hours because I found the work I was doing, at least initially, interesting (I was generally the last trader on the desk to go home). Specifically regarding investment bankers, yes they work very long hours, but the analysts there generally see the time as financial boot camp. Besides, the staff senior to them are no less workaholic.
Some start-ups have their employees working 90+ hours. This isn't because they're evil but because they have limited resources, a lot of work, and the people there are amazingly passionate about what they're doing.
Limited resources. That's why the long hours are not a sign of evil in startups but are one in banking. Banks could easily hire more people. Startups generally hire good people as soon as they can.
That doesn't mean they should. Most bankers I knew were much more upset about losing their week-end beer fridge or a $5 reduction in their daily meal allowance than they were about putting in a few more hours. You have to remember that most analysts see their 2 years as an apprenticeship or finance boot camp - they want all the experience they can get so they have a gilded resume at the end of it.
I still don't see a good argument for judging firms where highly compensated employees with plenty of options work long hours, particularly when, as in banking, their tangible skill-set is relatively low.
They could always, you know, stop paying million-dollar salaries to people with no skills other than office politics. I know this sounds radical, but it would free up some of the money.
Most bankers I knew were much more upset about losing their week-end beer fridge or a $5 reduction in their daily meal allowance than they were about putting in a few more hours.
I'm not talking about "a few more". I'm talking about the difference between 40-50 (sustainable, safe, sane) and 80-120.
In most companies, a 5:00 pm work drop with 6 hours of work due next morning would be taken as a sign of dysfunctional process. It might happen occasionally, such as during a production crisis, but it wouldn't be an everyday event. Bankers like to hire naive college kids because they don't know their rights and don't know that these kinds of late-day work drops are a textbook example of bad process.
they want all the experience they can get so they have a gilded resume at the end of it.
You and I both know that the "experience" most analysts are getting isn't very useful or interesting-- not enough to merit working 100+ hours per week. Checking pitchbooks at 1:30 am? Downloading 600 corporate logos? Do you really think people learn much doing this kind of grunt work that a high-schooler could do?
They just want the name on the resume and the automatic acceptance at a top business school, because for whatever reason B-schools still believe people actually get something useful about being an investment bank's peon for two years.
This is incredible. You're the third person I know from the financial industry who has admitted that they have no transferable skills. And I don't know too many people from the financial industry.
These are the captains of industry, dictating how billion dollar corporations that make real stuff should be run. Jesus Christ we're so fucked.
There was a qualitative change after the banks went public. The old partnerships were inherently more prudent. And that's where the old culture came from. The new corporate structure rewards any risk-taking where losses lag gains by a year or more. So the culture changes.
Many investment bankers knew they were selling crap at insane valuations during the internet bubble. Hell, the first time I saw IB's taking advantage of mass mania was the junk bonds era and Michael Milken.
Those guys have had the culture of taking advantage of clients for a very long time. It might be argued that the author of the OP article is just a slow learner... But I give him major props on teaching what he learned.
To make the situation more dramatic, suppose a company disposed of a thousand barrels of toxic waste every month, and the board of directors found out that the perfectly legal method by which they were disposing of the waste was horrifically environmentally damaging but exposed the company to no possible liability. Could they choose to dispose of the waste in a much more expensive way? What if it meant cancelling a dividend? What if it meant bankrupting the company -- could they be sued then?
Any lawyers here with knowlege on responsibilities of the management team to the shareholders ?
in all seriousness though, he probably saw this as a golden moment to build his personal brand, gain some media exposure, and leverage that exposure and brand building into another job offer, a writing gig, or a TV gig. consider it a golden parachute moment.
But as the ancients implied, one who testifies of themself is not trustworthy. :-/
Something happens to companies as they get larger, where the culture of a company starts dying from a death-by-a-thousand-cuts, and then they start promoting the wrong people into upper management that seem to really poison a very good company culture. It sounds like Goldman Sachs is one of these companies.
The irony is that I think the shift in mentality came from Wall Street itself pushing the idea of "maximizing shareholder value", in the 80s. This lead to a bunch of financially positive but culturally negative (some would say sociopathic) decisions, such as closing plants that were profitable, but weren't profitable enough. I think Michael Moore had a movie on this called "The Big One".
Forbes has an article on this, calling it "The Dumbest Idea in the World":
http://www.forbes.com/sites/stevedenning/2011/11/28/maximizi...
I read the biography on Goldman Sachs, and I don't doubt for one second that there was a historic culture that most of the employees were fiercely proud of. But as the author mentioned, a few mistaken promotions into power and the whole culture of a company can change through death by a thousand cuts. No doubt the same thing is happening at all large companies that started off with great roots. I saw this occur at Yahoo, where completely idiotic decisions were made in order to preserve revenues so that managers' bonuses were left in tact.
Is this something that can be avoided? I'm not sure... corporate culture starts at the top and works its way down. It's something that must be demonstrated by the leaders of the company at every level, and it filters down to the lowest ranks. So if you have a company with strong leadership, then I think it can be staved off for a while, but it requires a relentless focus.
I think promotion happens. When you're a fresh grad right out-of-college and the Managing Director says "client is our #1 priority", you take it to heart. That's your new mantra now. Nine years later, when the same Director, now promoted to the Board says the same line, you groan inside because you know exactly how often he calls his clients muppets. Slowly you begin to feel that the company is no longer the same wonderful, inspirational place of work that you signed up for.
Positions of power at any company, non-profit, government, or political organizations are not filled with do-gooders who want to give everyone a hug. They are filled with thick-skinned, ambitious, practical people who have learnt to say the right things at the right time. So if you're a junior exec., you will hear inspirational BS. As you join their ranks, you will hear their real thoughts. If the latter disgust you, it clearly means you aren't fit to join their ranks, not because of any lack of skills on your part but rather the difference in how you view the world.
To me all these execs leaving companies and saying "it's so different now" just means they all grew up and realized they didn't like what they signed up for. It's no different than couples splitting because "we grew apart." I highly recommend people quitting if things aren't working out ( http://chir.ag/200804242130 ) but I do not recommend airing out the dirty laundry, especially when no laws were broken because you're just scaring off the next company you intend to work for.
None of my above comments were in reference to anything at GS/Google/MS specifically. Facebook will start charging for integration some day too and some Dropbox exec will joke in company meetings about all the stupid people who save personal photos on their servers. People are people and companies are companies.
Predatory loan usually refers to taking advantage of someone who doesn't know what they are getting themselves into. Are you saying that Greece lacks the financial knowledge to understand what they are signing?
Greece wasn't innocent in this, but it's pretty obvious that Goldman took advantage of them.
It's called being wet behind the ears. Most people in that situation simply don't realize how much they don't know. And guess what you aren't going to be able to read about it and know either. You will find it out through life experience.
The upside is you aren't jaded and you will try things that older people will avoid because of their wisdom and experience.
Fear(s) motivate(s) people pretty well to do just about anything, including to keep silent (as you recommend), but I'm glad that people are brave enough, or stupid enough, to say what they think is right, even in the face of such fears. It might also turn out that the people who agree with the dissenters outnumber the powerful incumbents who they oppose.
Full disclosure: I left Micosoft last year after I long debated the trade offs of starting my career over. I was a "top performer" and Microsoft makes a point of telling the many people like me to stick around for all sorts of reasons. Deferred compensation. Trajectory. Influence. Etc.
But then I actually got into the VP's circle and didn't like what I saw. This smooth-talking, confident leader within Office was some kind of sociopath. He and his comrades snickered after a middle manager announced he would put the blame on someone for failing to deliver a major feature. I was confused when it happened. Like one big inside joke, that would be my initiation.
This feature was promised three years ago to the previous President of the division, and it turned out to be a top priority for the incoming president. Well, the middle manager miscalculated and let it slip. We've all done this to some degree-- answer an email late, forget to deliver on a request -- it's part of being an engineer working with people. But the middle manager had done it at a big scale and was wrong.
Rather than admit it because that would end his career (as I'll explain in a minute), he threw someone else under the bus. He asked this senior PM to take the project over. Rather than give her support, he decided to undermine her. He had people give copious amounts of negative feedback on her specs, held back people from working with her, and lied about progress to management. He was setting her up to fail so he could swoop in and deliver it after she failed without the wrath of being late. We've all seen managers excuse being late because of low performers. The VP and his manager needed to construct a low performer. And all he had to do was signal to the herd to stay away from her with all the negative feedback.
The hell they put her through so they could save their asses. And the fucking snicker. She was a warm, smart, expert in this feature and had she been allowed to work she would have outdone the middle manager. But the middle manager was ambitious. And the VP seemed to like watching people destroy their lives. And he liked loyalty. He knew if he could get dirt on his managers he would keep them for a long time.
I try to be a good person. I try to be honest. I try to stand up for people. But I couldn't help her. For a year I gave as much moral support as I could without the inner circle knowing. But the politics were too thick and toxic to touch. I watched her nervous breakdown. And then I knew I had to leave. Maybe it really was this one bad team. But this was the rising star VP. If this is how he succeeded then the others VPs would have to eventually. And the middle manager was his replacement.
So, I got a different job. I took 3 months to travel in Europe to wash off the filth. And I checked in with my friend, and am pleased to hear that she has landed on her feet and is doing much better. At my current job the people argue about -- gasp -- the customer. What a difference.
But I am still angry that evil people -- the VP, the middle managers -- are allowed to continue. I don't agree we're supposed to be quiet. Food critics used to be afraid of giving bad reviews because they wouldn't be allowed to keep their jobs (in local markets unless you were someone politics would prevail). Now we have Yelp. Really bad restaurants should have a hard time of hiding. I wish there was something like that for managers and companies without blowback. I wish there was a way to give feedback on LinkedIn. The middle manager's profile is really funny to read. Apparently he runs all of big data at Microsoft. From Office. As a middle manager.
Anyway, my point is there is opportunity to expose evil people and good people in their careers. We should find a way to do it safely. People should have an incentive to be good.
EDIT: grammar mistakes
We are working on this very issue right now -www.feedbackninja.com - coming soon!
You "could not" help her? That's not exactly true, is it? It's just that if you had, there would have been negative consequences for yourself, and so, you didn't.
Thanks for the interesting story though.
I think the question isn't so much whether he could have tried to help her, as whether it would have done any good. The end result might well have been no improvement in her situation and a drastic worsening of his. In other words, negative consequences for him without any compensating positive consequences for her. In that situation, I'm not sure I would see much point in openly intervening.
Perhaps he could look back on that period of time and reflect that, rather than watch it happen, he took action. Even if it accomplished nothing, he could at least say "I saw something wrong and I worked to right it."
What can he say now? "I saw something wrong, watched it happen, and vacationed in Europe until I felt better."
One of these is morally praiseworthy. The other is not.
What I did: "I told my manager," "realized it's a systemic problem," "I was a friend to someone who needed one," "I helped her leave and get her next job," and "I quit."
I made lemonade and enjoyed time in Europe. But I don't think there was a choice to fight.
Even if someone had solved this particular crisis, it sounds like she wasn't going to thrive in this political environment anyway. At that point, leaving is the best choice and, all too often, people don't see that.
How about letting her know what was up, thus preventing several months of intense stress and anguish followed by the eventual burn-out?
She deserved to know she was being used as some sleazy douchebag's pawn in his games of office-politics.
The OP claims he tries to be a good person and do what's right. Well, actions speak louder than words.
For a long time, many of us have speculated that CEOs were overpaid but suggesting this was met with claims of being "anti-capitalist" and other such nonsense. Now thanks to the Forbes article and the book it's talking about, we can demonstrate that CEOs are * clearly* overpaid. Their own pay has gone up, while company performance per salary dollar has gone down. Meanwhile the rest of us produce vastly more than, say, 20 years ago, yet wages remain mostly flat.
Meanwhile the rest of us produce vastly more than, say, 20 years ago, yet wages remain mostly flat.
This claim betrays a misunderstanding of how productivity is measured, and how workers are compensated for their productivity (i.e., comp is wages + benefits, not wages).
Wages + benefits is not flat. http://www.minneapolisfed.org/publications_papers/pub_displa...
And productivity can easily go up due to factors unrelated to workers. E.g., if a company replaces workers with robots, the measured productivity (total production / # of employees) of the remainder will go up. Is this a reason to increase their pay?
CEO compensation has to get approved by a board made up of other executives. As such, these board members have every incentive to lean towards granting generous raises, and virtually no incentive towards toeing a hard line.
This problem is exacerbated by the universal belief that every CEO is above average. As such, every CEO can say "we all agree I'm in the top quartile of CEOs, right?", and everyone will agree, and then he'll get a pay package that's top 10-25%.
And then, because CEO tenures are shrinking, this cycle will repeat, often, in a cycle that has absolutely nothing to do with the value created for shareholders, and absolutely everything to do with executive compensation schemes having gone off the rails.
You can try to claim that's simply the market value of getting a CEO, but this doesn't hold up: CEO salary-to-revenue has decreased. We're paying more and getting worse performance. Further, your argument depends on efficient markets which don't pass the common sense test and has been shown to be an N!=NP problem.
I already did. We can now prove that revenue has actually decreased per dollar paid to a CEO. One might say that that that is because salaries have gone up, but for everyone else wages have stayed mostly flat. So by what possible logic would CEOs now make more money for accomplishing less? And why wouldn't these same factors apply to anyone else?
>This claim betrays a misunderstanding of how productivity is measured
I understand the theories of how it's supposed to work just fine, thank you. In theory, if I can accomplish more than those before me I should make more because I'm creating more value. In my career I've made an uncountable number of jobs unnecessary through automation. But did I capture any of this productivity boost? No, the executives took it all.
The system is broken because CEOs have been gaming it ever since this idiotic "Shareholder value" focus came about. Everyone has known this deep down for years and now we're finally starting to prove it concretely. To me it's going to be funny watching so-called "experts" explain why they spent decades preaching nonsense about CEO pay being correct as it's systematically shown to be a product of system exploitation.
Your metric is a ratio and it does not prove that CEO's accomplish less.
For example, suppose a CEO doubles revenues (did you mean profit?) from $1B to $2B and their pay increases from $10M to $30M. They have accomplished more, but revenue/pay has gone down.
In my career I've made an uncountable number of jobs unnecessary through automation. But did I capture any of this productivity boost?
Most likely. Pay for programmers has skyrocketed, unlike pay for ordinary workers.
Besides, the productivity of the few people you failed to replace has also gone up. If you make 8/10 jobs redundant, should the pay of the remaining 2 increase commensurately with their drastically increased productivity?
http://www.econtalk.org/archives/2011/11/kaplan_on_the_i.htm...
EconTalk interviewed Kaplan about this very subject. His research shows that CEO's pay has _not_ risen faster than any other "highly skilled labor", such as doctors, lawyers, etc. If you listen to the podcast, it is a very convincing set of data backing up his conclusion.
Instead, hedge fund managers are the ones that have absolutely rocketed out of the stratosphere in terms of inflating pay.
These companies are small empires in their own right, creating a lasting and prosperous empire is an monumental undertaking where chasing fads has little effect.
In business circles I find Bosch and IBM to be prime examples of quality in this regard.
Goldman (or Google) is no where near death. But Goldman is still in crisis mode. The primary focus now is profit margin. making money for you and your clients isn't the point any longer. It's your position that matters. But Goldman, used to award your bonus not just based on your position. They used to survey your clients. And their opinion mattered. Not sure if they still do this. I haven't worked in Wall Street since 1996.
And Goldman isn't the only firm in this position, by the way.
And Google is sort of in the same place. FB scares the hell out of them. And instead of innovating (and taking risks) they copy.
Google and Goldman are blinded now. They can't see beyond their own models.
They went public. My gf is a senior manager at GS (200+ drones in her department). When the company went public the partners could easily cash out. Without as much skin in the game, they could squeeze as much profit (aka bonus) from GS without worrying about the long-term viability. Also, hedge funds are now a more lucrative place to work for many people. So if GS doesn't pay, then a hedge fund will. Another thing is that prop trading made vastly more money than IBanking for the last decade, which changed who got promoted and rewarded. Finally, the company grew very rapidly in the last 10 years and much of it's culture got diluted with all the new people. It's not a bad place, it's just a normal IBank now.
The other tricky thing about culture is that it's a lot like trust: very hard to earn, very easy to squander. Once lost, it's difficult -- sometimes impossible -- to recover.
Googlers are not sitting around making fun of their users, joking about them, giving them funny nicknames.
With these types of rants, it is hard to derive truth from fiction. Once a narrative is set up, everyone starts to keep feeding into it. It's easy to believe the worst about Goldman, so everything said "fits" and makes it believable. My own biases make it more likely to believe in stories of greedy people selling snake oil.
Still, one should be skeptical and avoid piling on.
This is something that is inherent in a certain type of investor and Wall Street and you see it in YC as well as VC firms and (startup) angel investors.
While you might be able to get a local businessman on Main st. to believe in your idea which is profitable (but not sexy and not "billion dollar") that will probably make both of you money, you won't get anyone in the de facto startup community to take you seriously. They won't give you money unless you are shooting for the stars.
It's importance in popular media and culture is vastly overblown. The rising and falling of the Dow on a daily basis is basically worthless from an economic point of view - it's just noise.
An interesting difference, though, is the Goldman-Sachs employee sees a problem with focusing on short-term gains, while the Google employee sees a mistake in a long-term bet (that Google can compete successfully with Facebook in the social realm).
While it feels good to recognize the eroding integrity of the industry (assuming it existed in the first place); I don't think this messenger is praiseworthy. Reeks of self-righteousness to me... and somehow I'm certain he'll be starting his own fund in the coming months.
Funny side note: Michael Lewis said that he wrote that as more of a warning. He was astounded (and a little horrified) to find out it was being used as a how-to.
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