Goldman Sachs CEO David Solomon: What Startup Founders Get Wrong About the CEO Job

Introduction

David Solomon: Goldman Sachs has been around for 155 years.

Brian Halligan: Yeah.

David Solomon: And there’s been a lot said about Goldman Sachs’s culture. And Goldman Sachs’s culture is unique, but I would also say it’s constantly changing, and you better be working at defining what you want it to be and constantly reshaping it and amplifying what you think really matters. The general ethos of the firm is if you build trust with clients, if you take a long-term view, if you do the right thing, good things will happen. And I’ve watched that in my career and I believe it deeply.

Brian Halligan: Okay, this is a special episode with David Solomon, the CEO of Goldman Sachs, an incredible company, been around 150 years. Just a terrific person and a terrific company. We get into a whole bunch of topics. One was decision making, and in particular you get something going and it’s kind of wobbling. When do you double down and when do you pull away? And he recently has had a whopper decision where they had a consumer partnership with Apple, and they recently basically walked away from that partnership. And so we get behind the scenes on that decision. I think it was pretty interesting.

He credits culture a lot with why they’ve been around for 150 years, have had a ton of CEOs. And it’s really thrived. He’s really thrived in the job. And we get into culture. Culture is a big reason why HubSpot’s only 19 years has been successful as well. I hope you like the episode. David is very sharp. He joined the company, it had a $40-billion market cap, I believe, and now it’s something like $160-billion less than a decade later. So he’s very, very good and very thoughtful. Hope you enjoy it.

Main Conversation

Brian Halligan: Thanks for joining us.

David Solomon: Thank you for having me.

Brian Halligan: When I was a CEO, I really admired Steve Jobs. I tried to emulate him. I kind of really studied him and followed his playbook. And it largely served me pretty well. Who’s your Steve Jobs?

David Solomon: That’s a great question. You know, I’d start by saying that Steve was obviously extraordinary in context of what he did, although I don’t know that most public company CEOs could model Steve and get away with it in today’s world. But he was extraordinary in terms of his focus, his vision for what he thought really mattered. I’ve thought a lot about this, because I’ve been asked similar questions over the years and I don’t have a Steve Jobs. But one of the things …

Brian Halligan: Who’s on, like, your Mount Rushmore?

David Solomon: Well, I mean I mentioned some people right now that I watch, and I think enormously—I mentioned Satya Nadella, and one of the things I’ve learned from him on my own journey as a CEO is he’s an incredibly empathetic leader. And it’s hard to move an organization and also exhibit empathy. I’ve watched some of what Satya has done in that context, because I think he leads with an enormous amount of empathy, besides the fact that he’s a great strategic thinker and a whole bunch of other things. He’s done an extraordinary job with Microsoft.

But then you can also pick and choose people that at times have led extraordinary transformations. His journey is a different one at this point for a variety of reasons, but there was a period of time where I was really watching the way Bob Iger was transforming Disney. And, you know, it was a difficult transformation. And so I’ve tried to pick out things that are going on with different CEOs and constantly say, “What can I learn?” One of the great advantages I have in my job is part of my job is to travel around and spend time with CEOs.

Brian Halligan: [laughs] Interesting people.

David Solomon: You get with interesting people. So you get to ask them, you know, why are you doing this? Why did you do this? How did this work? So I get a lot of private time with CEOs to really reflect, and that’s helped me a lot in my own journey as a CEO.

Brian Halligan: You’ve worked for some legends: Lloyd Blankfein, Hank Paulson. Did they mentor or coach you? Is there things you took from them that were incredibly valuable, that all of us can learn from?

David Solomon: I learned a lot from both of them. And you learned different—they had different skills, they had different personalities, they did different things. Lloyd was an incredible risk manager, incredible risk manager. And he had an incredible ability to really sweat and worry about the things that had a small probability of happening. But boy oh boy, the fact that he was that way when we went into the financial crisis, you know, he was two steps ahead of a lot of other bank CEOs, and I think was really extraordinary as a risk manager in that context.

You know, Hank, Hank was driven. He had a great nose for client relationships and how to get things done. And Hank also had an incredible compass. And one of the things that I …

Brian Halligan: What do you mean by that?

David Solomon: We all need a compass in these jobs, and you want that compass pointing north. And one of the complicated things about being a CEO is there are a whole lot of things that are constantly banging on you, trying to knock your compass off of north. And sometimes it takes enormous resilience and determination to keep that compass—keep it pointed in the direction that you know is right while there’s a lot of noise or agita.

Brian Halligan: Yeah.

David Solomon: And, you know, one of the things I learned from Hank—and I just remember sitting in a meeting with him, you know, early on when I was at Goldman Sachs, and somebody was suggesting something and there was a lot of momentum for it and he just said, “Well, we’re not going to do that.”

Brian Halligan: Okay.

David Solomon: And it was completely against kind of the consensus of the room. And he was being a CEO, because he thought it was wrong. He said, “We’re not gonna do that.” And so I think you can learn from a lot of people. I had a great mentor who wasn’t a CEO, who actually, if you would frame the question around who’s the most important mentor you’ve had in your career, was a gentleman named Richie Metrick, who I worked for at Bear Stearns in the 1990s, and then the CFO of Interstate Bakeries. He’d been a lawyer. He was also just intuitively one of the smartest people I’ve ever met in my career, and I’ve met a lot of smart people. But he had a profound impact on teaching me at a time when I was in my late 20s and my early 30s, and I was kind of rising up in an organization relatively quickly. He really taught me to be self reflective and really understand strengths and weaknesses, and be pretty hard on myself about things that I had to change if I wanted to advance. He forced me to look at myself at a time where I had less maturity, less of an ability to really—I was just going, and he forced me to pause and really think about myself and how I can make myself better. And he had a profound, profound impact on me.

Brian Halligan: Okay, interesting. It’s a little bit fashionable in Silicon Valley these days that people are saying you get a much better return on your investment by investing in your strengths and making them stronger versus fixing your weaknesses, and you should just hire around your weaknesses. Any reaction to that?

David Solomon: I think to be successful over a very, very long career where you’re going to be in leadership positions and ultimately rise up to lead a big organization—and by the way, it’s very different from a founder leads an organization because they created it and they anoint themselves founder. It’s theirs.

Brian Halligan: Yes.

David Solomon: You know, rising up to lead a 150-year-old organization like Goldman Sachs, you better have a lot of strengths.

Brian Halligan: [laughs] Right.

David Solomon: You better be working on your weaknesses. Because if you’re not doing all of the above—first of all, it’s a random walk to begin with because there’s so many talented people. And one of the things I’ve always talked about is serendipity and timing. And I think serendipity and timing have a lot to do with who winds up in the CEO jobs in these organizations. But I think you better be working on the whole package if you want to put yourself into the ring and have a chance to come out of the ring.

Brian Halligan: Got it. Another kind of something floating in the air in Silicon Valley is founders really hiring for slope versus experience. So the very young, very intelligent high-slope person, versus someone who’s sort of been there and done that. And you talked earlier about just smart. And it reminds me—I’m a Boston sports fan, and the Boston Celtics have an announcer named Tommy Heinsohn. And Tommy Heinsohn, very opinionated announcer, he was really good. And the Celtics had, like, a backup backup center who was very low skill, but was giant. And I remember Heinsohn saying, “You know, he may not have a lot of skill, but you can’t teach seven feet.”

David Solomon: [laughs]

Brian Halligan: And I kind of think the same with smart. You can’t teach smart. So how much is it about smart versus experience? I kind of think you guys are famous for hiring very bright young people and moving them up.

David Solomon: As an organization, we’re extraordinarily lucky that we have so many incredibly bright people that are interested in working and spending time at Goldman Sachs. But, you know, I’m in the camp of smart enough.

Brian Halligan: Okay.

David Solomon: You have to be smart enough, but the smartest person in the world without a whole package of other things, is not going to navigate Goldman Sachs well, not going to be successful in Goldman Sachs over the long run. The human elements, the ability to connect, resilience, determination, striving for excellence, you know, things that matter, you know, everywhere. It’s interesting when you talk—you know, you live in a founder world, I live in an established company world. I deal with founders as clients. But, you know, it’s this concept of slope versus experience. I live in a world where experience is worth a lot. I live in a world—if you sit around the management committee table at Goldman Sachs, the level of experience and the judgment that comes from that experience is extraordinary.

Brian Halligan: Underrated in your mind.

David Solomon: And hugely underrated. And by the way, hugely necessary and a big differentiator for the firm.

Brian Halligan: Okay.

David Solomon: You can’t teach experience.

Brian Halligan: No.

David Solomon: That doesn’t mean somebody without experience can’t do very, very well.

Brian Halligan: You mean, someone can’t watch this podcast and then run Goldman Sachs? They’re not going to be able to do it?

David Solomon: There are a lot of people that can run Goldman Sachs, and maybe if they do, they’ll have less bumps and bruises than I do. But experience matters in these big organizations. And when it matters, it doesn’t matter when things are going well. It matters when the bumps come. And you’ve got to make difficult judgments. And making those judgments, they’re not 90-10 judgments, they’re 51-49 judgments.

Brian Halligan: Yeah. No easy decisions at the CEO desk.

David Solomon: By the way, if it’s an easy decision, it doesn’t make it to my desk. One of the things I’ve realized is I don’t have to make a lot of decisions.

Brian Halligan: What’s the best of two shitty options?

David Solomon: Yeah, that is oftentimes what CEOs face.

Brian Halligan: Yeah. Okay, a lot of people listening are VP of such and such in XYZ scale-up company, and they want to be CEO of a company someday. You were kind of hired from the outside, you rose up to CEO. Advice to those folks who are on that kind of track who want to be—not found a company but become a CEO. And I think in tech, a lot of companies are getting older, and a lot of founders are going to step aside in the next few years, and a new generation will kind of come up and take over them. Advice for those folks. What was a younger David thinking about back then?

David Solomon: Well, I think one of the things is interesting, when I was—you know, I joined Goldman Sachs at 37. I had actually worked early in my career at Drexel Burnham. And then Drexel Burnham went out of business and I wound up at Bear Stearns. And I did very well at Bear Stearns. I rose up into a relatively senior position at Bear Stearns in my mid-30s. And when I joined Goldman Sachs, I certainly did not aspire to be the CEO of Goldman Sachs. You know, I aspired to practice the trade of investment banking, be super successful at it, impact the organization.

Brian Halligan: Yeah.

David Solomon: I decided that I was a big organization person.

Brian Halligan: Okay. What do you mean by that?

David Solomon: I loved—you know, there’s a dynamic in a large organization, the resources, the access, the platform that I found very, very appealing. And the leadership opportunity, you know, in big platforms, I found that very, very appealing. So I was leading, you know, in my 30s at Bear Stearns. But then at Goldman Sachs, you know, I was managing hundreds and hundreds of people, very quickly, thousands of people. And I really enjoyed that. I enjoyed the platform, I enjoyed being a part of an institution. It wasn’t about me, it was about, you know, stewarding.

Brian Halligan: Yeah.

David Solomon: Stewarding the institution. I really enjoyed that. But I never—my goal wasn’t to be the CEO of Goldman Sachs. In fact, in some ways I’m the unlikely CEO.

Brian Halligan: Okay.

David Solomon: I came from the outside. I was never—you know, you can go back and you can look, there are lots of articles, you know, the dark horse candidate this, the unlikely—I mean, a lot of it’s serendipity, a lot of it’s luck, but it wasn’t my principal goal. Now at the same time, I just told you that I liked leading people, and so I knew I was developing skills that gave me the possibility of leading a organization. But what I was focused on was developing skills and seeing where the road took me, not kind of pointing to a seat and saying, “How do I get to that seat?” And so my advice to people that really want to run a big enterprise is you’ve got to do a lot of different things. So one of the great benefits that I got at Goldman Sachs is I did a lot of different things.

Brian Halligan: They moved you around.

David Solomon: They moved me around. And, you know, I was running off credit trading when I joined the firm.

Brian Halligan: Yeah.

David Solomon: And then Hank Paulson came and said to me, “You’re going to go run equity capital markets.” And I said, “Well, I really like this job.” And he said, “No, you’re going to go do this.”

Brian Halligan: Yeah.

David Solomon: And so it was a completely different thing.

Brian Halligan: And you think startups should do that? They’ve got a high-potential person move—even though they’re great and moving the needle of what they are doing, shouldn’t they have a rotation type [inaudible]?

David Solomon: It’s harder in a startup.

Brian Halligan: Yeah.

David Solomon: Okay? It’s harder in a startup because you have a limited number of people do—again, big enterprises and platforms, this is one of the things that’s really attractive about working at a big enterprise like Goldman Sachs. You can move around and do a lot of things. In a startup that’s trying to scale in a business, you don’t have that same luxury. The organization can’t be as patient to some degree. So they really are different things. But if you want to lead, if you want to really lead people and lead big parts of organizations or ultimately lead an organization, I think you’ve got to try to do a variety of different things and really gain experience.

Brian Halligan: Do you think failure is important along that road?

David Solomon: I think failure is important for everyone, because there’s no one …

Brian Halligan: Where in Goldman do you feel like, “Man, I fell on my face on the way.”

David Solomon: I mean, I fell on my face so many times. I mean, so many times that I can tell you crazy stories about really learning what it is to be responsible for things. Goldman Sachs is a very competitive place. We compete to a very high standard. I mean, here’s a small anecdotal story. I had flown over to Ireland to play golf for three days with a group of guys I went to college with, because it was the year when we all turned 40. And I had just started running the equity capital markets business at Goldman Sachs. And when we got over there and that night we’re having dinner, and this is—cell phones existed, but it wasn’t the same constant text and everybody in touch. But I checked my message after dinner, so it would have been 10:30 at night. So it’s going to be 5:30 in New York.

We had missed a $2-billion equity deal for Accenture, and people were going apoplectic as how it could happen, because we had led their IPO a year earlier and we missed this $2-billion equity deal. And you know what? My area, I was responsible, I was figuring out how to get myself back to New York. I was back in the office the next morning dealing with it. And, you know, you learn from those things, okay? Because the world was like, “Okay, you’re in charge. How could this happen on your watch?”

Now I tell the story now, it’s 25 years later, it’s one deal. But that ethos of competing to that level of excellence, that level of accountability, those are things that have really made Goldman Sachs what it is over a long period of time. And if you want to lead in that organization, you know, when things don’t go right, you have to run to them and you have to jump on them.

And so I mean, that’s happened so many different times in my career. Different ways, different things, bad judgments on people, chose the wrong people, had to correct.

Brian Halligan: Mm-hmm.

David Solomon: By the way, one of the most difficult decisions I made was for us to step away from some of the consumer business that we had started.

Brian Halligan: Yeah, let’s talk about that.

David Solomon: Yeah.

Brian Halligan: I don’t think that was your bet.

David Solomon: Well, I didn’t start it. I didn’t start it.

Brian Halligan: Can you roll back the history a little bit?

David Solomon: Sure.

Brian Halligan: The thing that I find interesting about it after running HubSpot is like, you’ve got your core businesses, they’re going great. It’s like—and they’re big markets, and you’re deep in the markets. Should we just triple down on that, or should we take a risk and do something new is one question in my head. I always wrestle that. The second question is okay, we did that bet. It’s going okay. If we just put enough resource on it, it would work. And so the decision to go into it, I think, is interesting. And the decision, I’m sure you doubled down a couple times about the decision to step away. That’s fascinating to me.

David Solomon: Well, there are a couple things. I mean, it’s a complex story, as these things always are, and there’s a press narrative around it.

Brian Halligan: What’s the real narrative?

David Solomon: Well, the reason that we—there are a number of reasons why we decided to move into the business, but a big reason we decided to look at the business was to start to build a deposit platform, because the firm was the largest wholesale funder in the world. And there are a lot of things that you want to be the largest in the world. Wholesale funder as a financial institution is not one of them.

Brian Halligan: Okay. [laughs]

David Solomon: So deposits represent a much more stable base. And because we hadn’t grown up as a bank, we did not have a deposit platform. And digitization was allowing the concept of digital deposits. And so the original idea was we’ll build a digital deposit platform and we’ll make some consumer loans and we’ll see what we can create out of it.

Brian Halligan: And was this bubbling under the surface for a year, 10 years?

David Solomon: No. No, there was a very famous meeting out on the east end of Long Island at Gary Cohn’s house, who was the president, with a group of the senior leaders.

Brian Halligan: And were you there?

David Solomon: I was there brainstorming around growth ideas that would move the firm forward. This was surfaced by a couple of other people—not me, a couple other people there—I was running investment banking at the time. And Lloyd decided that he wanted to do it. And then shortly after we started that, Apple approached us as to whether or not we wanted to look at partnering with them on a credit card. And I think there, the thought process was one of the largest, most important companies in the world. You know, if you’re going to do this, it’s a very interesting partner, very interesting tech partner. And so a decision was made that we’d go down that road and we’d try to do it. And one of the reasons we were attracted to Apple is Apple wanted to do it differently.

Brian Halligan: Hold on, let me stop you there. You’re in Long Island, you’re having that discussion. A couple guys present it. And was there a lot of debate around it? How does Goldman make a decision like that? Is it consensus? Were there a bunch of people in the room saying this is crazy?

David Solomon: There was a lot of debate, a lot of people offering opinions, but ultimately the decision to launch the deposit platform and start the small lending business that we called Marcus, ultimately it was Lloyd’s call.

Brian Halligan: Okay. And was it contrarian to what the room generally wanted?

David Solomon: No, it wasn’t contrarian. Although there were people like, “Why would we do this?” But I think the deposit thing was a really important strategic decision, and I think that was right.

Brian Halligan: And then how did you decide—you didn’t have any experience in that—who to give that opportunity to as opposed to acquiring in the space?

David Solomon: Here’s where I think—you know, and this is all hindsight. You know, and hindsight’s very easy, obviously, because with hindsight, you know, you’re going to be mostly right.

Brian Halligan: [laughs]

David Solomon: I think one of the big mistakes we made—and this is a little bit culture and I’ve tried to evolve this a little bit—the firm always operated as we did new things and we grew the firm, that we’ve got lots of smart people and we can figure it out. It was very insular. There was never a view that let’s go get real expertise from the outside. Now that evolved a little bit. By the way, that’s one of the reasons why I wound up at the firm, because I had an expertise that wasn’t an expertise that was heavily embedded in the firm. But I think with hindsight, we would have been better if we really wanted strategically to be in that business to buy a more established platform instead of starting from scratch.

Now what’s also lost in the story and the narrative is we built some very, very good things. First of all, the deposit platform is very big and very successful, and the firm has enormous benefits from the fact that we have this digital deposit platform. Enormous benefits. And that’s worth a lot, a lot of money.

Brian Halligan: Yeah.

David Solomon: And it’s very important for the firm’s funding and the way the firm is competitively positioned. The credit card platform with Apple is an extraordinary product and service. And, you know, while it’s out in the world that we’re not going to be a long term holder of that, it’s something that we built with Apple that is really terrific. It’s a great product, it’s a great service and it’s really working now.

So what prompted the decision? The decision was prompted by the fact that the regulatory environment had significantly changed. We and other financial institutions were dealing with regulatory changes, and it became very hard to organically scale that to a place that you could really make it work. The firm was feeling some pressure, because it was a tough time after the Russian invasion of Ukraine and asset prices in 2022. We had a lot of regulatory pressure. And, you know, a group of us in the senior leadership said, “This is not working. We can make it work, but it’s going to be very, very hard. But it’s small, and it’s distracting us from the things that can really create significant market cap and value.” And so we made the tough decision to park it.

Brian Halligan: It was a tough call.

David Solomon: It was a tough call.

Brian Halligan: But it’s also a very—a lot of attention on it, unfortunately, for such a small thing.

David Solomon: I mean, if you really go back and think about it, you know, the firm was doing well.

Brian Halligan: Yeah.

David Solomon: And this was less than five percent of the firm’s revenues. And it was getting attention as though it was 40 percent of the firm’s revenues and 40 percent of the firm’s capital. But that affected the decision, because it was distracting from the progress we were making in other things. You know, in the long run, it may or may not have been, in the broad breadth of what Goldman Sachs will become over the next 50 years, the right decision, but it was definitely the right decision for that time. And it helped clarify the focus of the firm and get the attention back onto all the good things the firm was doing. And I think we’ve benefited enormously in the last few years from that.

Brian Halligan: You just talked about that decision. Like, CEOs face that type of decision all the time of should we double down or should we just pull the Band-Aid off and pull out? Was that bubbling for a couple months, a couple years? Was there another group saying, “Hey, we just need to double down and get the right people and it’s going to work.” Can you just kind of take us in the room and take us inside your—it was a very tough call you made.

David Solomon: You know, one of the things about Goldman Sachs, Goldman Sachs have been a partnership for 130 years. And I think one of the things that as a leadership team we’re most proud of over the last seven years is that we’ve really kind of completed the journey to really getting the leadership, the broad leadership, the partnership—because we still have this concept of partnership—really focused on delivering for shareholders. And we’re fully making the transition from kind of being a public company, but still operating more like a distributed partnership, versus now really being a public company and really working for the whole of the company.

And that was a tough thing to manage, so whenever there are headwinds at Goldman Sachs, people get very critical of anything that’s not working, because they see it as affecting them very directly. I think we’re in a better place in terms of how we operate around that all. But there was a lot of pressure from people in the organization that thought that it was going to cost them money in the short term, but that really wasn’t weighing. What was weighing was the fact that I still think there was a belief—I knew I had a belief that with a much longer-term lens we were doing something that could be very interesting and really give the firm another leg of growth. But I knew that it was going to be very rough to get there given both the regulatory environment and the current market environment, just where the culture of the firm felt.

And so, you know, went and talked to the board, and the board’s initial response was “No, no, no, no, no.”

Brian Halligan: Okay.

David Solomon: Yeah. No, no, no, no, no. And, you know, we talked about it and we worked through it.

Brian Halligan: One meeting, or is this over a while?

David Solomon: Over a few months.

Brian Halligan: I see.

David Solomon: Over a few months. I mean, it was over multiple board meetings, but it was over a few months. But I look back at decisions I’ve had to make. That was—in some ways that was the hardest decision. In other ways, as a team, we did the work, and we talked about it and it became an easier decision, because it became clear this was going to be the right thing for the firm at this time.

Brian Halligan: Okay. I work with a lot of these hot AI startups, and they all want to partner with whoever—with OpenAI, with Apple, with SAP, with you name it. My company partnered with Google and Salesforce. You partnered with Apple. Advice on dancing with giants?

David Solomon: Well, you know, Apple obviously is a bigger company than Goldman Sachs. Goldman Sachs is no peanut start-up.

Brian Halligan: [laughs]

David Solomon: And so I would say …

Brian Halligan: But big company partnerships are tough.

[CROSSTALK]

David Solomon: That’s exactly what was going on. I would say it was more of a peer relationship. But partnerships between companies are tough, and what I would say to accelerating or scaling up young companies that want to partner with these big platforms, most partnerships don’t work. And there better be really compelling glue to that partnership or chances of it working are low. I mean, you and I know partnerships are hard. Partnerships are very hard. Organizations have different cultures, different expectations, and partnerships are very, very hard. Now that doesn’t mean there aren’t some great partnerships, but to have them really work, you’ve got to have really good alignment of incentives, of purpose, of incentives, and a governance structure that can assure that the—for lack of a better term, the friction in each organization doesn’t make it harder for that partnership to move forward.

Brian Halligan: Okay, I’m just going to go back. A minute ago you talked about solving for shareholders. And I talk to founders, and some founders—like, there’s three constituents you can solve for. You really double down on the shareholders or really double down the employees or really double down on your customers. Where’s sort of Goldman’s energy? Where’s your energy on that? And I’m not going to let you off the hook and say all three. [laughs]

David Solomon: Well, you don’t have to let me off the hook, but I’ll talk about a couple of things in the way I think about it.

Brian Halligan: Okay.

David Solomon: So first of all, for any business, if you don’t have a product or service that you’re selling to somebody that is value add, you don’t have a business, okay? So let’s just start with whether it’s clients or it’s customers or it’s …

Brian Halligan: Fine.

David Solomon: So what is true north for Goldman Sachs? True north for Goldman Sachs is client. You know, we know.

Brian Halligan: It sounds like investors have a loud voice.

David Solomon: Well, investors do have a loud voice. We’ll come to that in a second. But just if I finish this thought, client-centricity is true north. It’s one of the firm’s four core values.

Brian Halligan: Okay.

David Solomon: Client service, partnership, integrity, excellence. Four core values. But client service, client-centricity is kind of true north. And the general ethos of the firm is if you build trust with clients, if you take a long-term view, if you do the right thing, good things will happen. It’s a long game. Good things will happen. And I’ve watched that in my career, and I believe it deeply, really deeply. Now if good things happen with clients and our business, good things happen for shareholders. And you can’t be confused. If you are not delivering for shareholders, you’re not going to be able to do good things for clients. Because what do we deliver? What do we deliver to clients? We deliver people, capital and technology, and we marry those things together. And if you’re not performing for shareholders, your ability to have the resources and the capability to be really good for your clients gets limited.

Now here’s the tricky thing in our business. We have to have extraordinary people in our business to be able to do any of this for shareholders or for clients. So I don’t want to go back to you’re not going to let me do it, but I need to deliver for all three. And it’s almost like as a leadership team, it’s kind of like we’re conducting an orchestra, and we’ve got to conduct the orchestra between clients, people, shareholders, and we’ve got to make it all sound beautiful. And at the moment, we’re going through a period where it really does sound beautiful, and I kind of like that. But I’ve also been through other periods where it kind of sounded like something was out of tune, and then you got to figure out how to get it back into balance.

Brian Halligan: Okay. Speaking of orchestras, like, I had an old boss that used to say we’re not an orchestra, we’re a jazz band. And I work with all these founders that they’re in 40-person companies going to 400, going to 4,000, going to 40,000. And everything slows down as they get bigger, and man, they complain about it. And they always ask me, like, “Brian, how do I keep the speed and the intensity and the missionary zeal as we go from 40 to 400 to 4,000?” You seem to be moving pretty briskly for a 40,000-person org. Advice for these founders?

David Solomon: Well, one of the things that’s just interesting is I’m not scaling an organization from 4,000 to 40,000 to 400,000. I inherited—I stepped into my role with an organization that had about 36 or 38,000 people. And today, I’m in the eighth year of my tenure, just started the eighth year of my tenure and we have 48 or 49,000. So we’ve had nice growth, but the bigger thing is that we’ve taken the revenues from $34 billion kind of on average where they were in the last decade to kind of $55 to $60 billion.

Brian Halligan: And I think the market cap’s for 4 or 5x.

David Solomon: Yeah, we’ve taken the market cap from $60, $70 billion to $250 billion. So we’ve done a really nice job at growing the firm. You know, our firm scales. There are businesses on our firm that scale with people, but there are a lot of businesses that scale with capital. And so one of the things I think we got really right that really helped our market shares, particularly in our core business, is we put more financial resources, we scaled more capital into the business and decided we were going to lean into providing more resources which generated more return.

On this point, though, of nimbleness, you know, this all gets to culture. And one of the things that I think—Goldman Sachs has been around for 155 years. And there’s been a lot said about Goldman Sachs’s culture. And Goldman Sachs’s culture is unique, but I would also say it’s constantly changing.

Brian Halligan: Is that an intentional change or is it bottom-up changing?

David Solomon: It’s both. I mean, it’s both. But here’s the thing. You better be working at defining what you want it to be, and constantly reshaping it and amplifying what you think really matters. And I’ll give you an example of something we did that I think just shows you how we think about this and why it’s so important. COVID was awful for everybody, was awful for businesses, particularly awful for our business. Think about our business. We have 49,000 people, 50 percent of them are in their 20s. It is an apprenticeship culture. They’re coming to the firm to spend time with people, and all of a sudden the whole ecosystem is off in a different—it’s like we were on Earth, now we’re on Mars.

Brian Halligan: Right.

David Solomon: Okay? And so in that context, it frayed at our culture. And there was a lot going on during that period of time. It was frayed in everybody’s culture. But as soon as we got to a point which was like, okay, we’re going to go move forward, as a leadership team, we said we have to kind of reinvest and reinvigorate our culture. And here’s what we decided to do. We said we’re going to make a big investment in this. So there are 450 Goldman Sachs partners. We said we are going to take the time to send—during the course of a year, ultimately took us 15 months. We’re going to send all the partners off in groups of 25 off-site for two days to talk about the culture, what’s important in the culture, and what their responsibility is to steward that culture and reinvigorate it. And I committed to have a three-hour, four-hour dinner with every single one of those cohorts over 15 months.

Brian Halligan: Okay. How much weight did you gain during that time?

David Solomon: I tried to eat very little. But the point is, think about it. The most senior people of the firm all going away in cohorts of 25 to spend two days together. So offline for two days. The CEO committing to do 20 dinners, okay? It was a big commitment. But you know what? We came out of that, and the firm was aligned on what mattered culturally.

Brian Halligan: Okay.

David Solomon: And there were some changes and there were some nuanced things. You know, still foundational values, but it was a kick in the pants to everybody, “Hey, we own this. We have to steward it, we have to figure out in the new world that we’re in how do we make this really exceptional so that all the things that make Goldman Sachs exceptional continue to be?” And so one of the things that’s just interesting when I talk to founders and startups, they talk about their cultures, okay? And the first thing going on in my mind is that’s great, but the company’s been around for seven years. Okay, how do you find a culture in a company that’s been around for seven years? How are you putting your mark on what it’s going to be? What’s it going to be at fifteen years versus seven? It’s a very different thing when you don’t have, you know, that foundation. But culture in all organizations requires commitment, investment, focus. You know, that matters in all: big, small, growing, scaling, established.

Brian Halligan: You know, one or two things that came out of all those dinners in that big confab that were like, this is what our culture is and this is what our culture isn’t. Were there a couple of things that you’re like, “This really changed it.”?

David Solomon: I think a re-kind of underwriting of what it meant to hold the organization to a standard of excellence.

Brian Halligan: I see. You felt that was slipping?

David Solomon: You know, it slipped. If you think about what was going on in 2020, ’21, ’22, I mean, you’re saying, “You know what? I can do anything from home that I can do from the office.” Okay. It’s not the same level of excellence as where do I show up today, how do I bring people along, how do I be committed? It’s just different, at least in our business. I’m not going to say—but in our business.

And so really re-underwriting that level of excellence, and also getting people to really rethink—there is no perfection, okay? But, you know, excellence is something that you can choose. And really re-underwriting that in the culture, I think, was something that came out of this. The other thing that came out of it as an exercise, which wasn’t really about defining the culture, but I think helps a lot, is it really allowed us as a leadership team and allowed me as the CEO to re-underwrite the strategy and the way we wanted to communicate around the strategy, and really get the whole leadership of the organization 450 strong, a hundred percent on board with where we were going. And when you get a big organization, you get the top 450 people all aligned on strategically where you’re going, boy, you get a lot of output.

Brian Halligan: I think it’s absolutely fascinating how long you folks have been around and thrived. It’s very rare. My company’s 19 years old, super proud of it. I’d like to be around in 150—well, not me, but I’d like the company to be around in 155 years. What advice would you give me? What advice would you give founders like me?

David Solomon: I think it’s the wrong lens.

Brian Halligan: Okay.

David Solomon: And look, it’s interesting. If you go back to companies that were founded, you know, in the middle of the 19th century, there aren’t that many left.

Brian Halligan: No.

David Solomon: Okay? And by the way, companies founded now, you know, 100 years from now, there won’t be that many left. I think that it’s a random walk to create a 100-year-old company. And in the distribution, the world changes, the competitive landscape changes. The goal should be to build the best business you can, the best company you can, and as long as you’re doing that, you’re really adding value to your clients, your customers, you know, you’re adding value. Opportunities will emerge that will allow you to go further, further and further. And you never know where it will wind up. But the world changes. I mean, go look, go take …

Brian Halligan: You guys change, though. The world changed, you changed. Is there something about the culture? Like, you pivot.

David Solomon: We pivot.

Brian Halligan: You pivot at huge scale.

David Solomon: We’ve pivoted at a huge scale. The history of Goldman Sachs is littered with moments where the firm came this close to going out of business.

Brian Halligan: Okay, I didn’t know that.

David Solomon: I mean, you can go back to 1929. But not just the crash. During the crash, there was actually something called the Goldman Sachs Trading Corporation, which was a public entity that we’d owned that basically plummeted, and it almost took the firm—almost took the firm down. We were the commercial paper underwriter for Penn Central when Penn Central went bankrupt in the 1970s. And that almost took the firm down.

Brian Halligan: But just back to the question. You have pivoted at scale, and I see startups pivoting, but once they get to scale, they kind of stay heavy on the rails. They don’t pivot when stuff comes. Like, for example, you’ve pivoted pretty hard in AI. You’ve leaned in very hard on it. For a large company, you were pretty early on that train.

David Solomon: I think we’re good at figuring out how technology can make us better at what we do. But here’s the thing I think you have to be focused on. What do we do? We are, in my humble opinion, the best investment bank in the world. We run one of the two best trading businesses in the world. And the combination of kind of investment banking and trading, that’s what Goldman Sachs is. We are the best in the world at it, in my humble opinion. Certainly nobody would dispute that we’re not one of the best in the world at that. And as long as we’re really good at that and we continue to win at that and that’s something that the world needs, you can perpetuate if you make the right decisions and the right pivots.

We also have become fifth-, sixth-, seventh- depending on how you look at it, largest active asset manager in the world. We supervise $3.3, $3.4 trillion, and that business is growing. We said publicly we’re going to grow at high single digits. We’re growing it better than that. We’ve got an extraordinary wealth franchise. And that business, we have a right to win. And we’re a leader. And so ultimately to really sustain you’ve got to really deliver value and you’ve got to have leading franchises, you have to have scale and you have a right to win. And the reason that …

Brian Halligan: A lot of big banks 20 years ago are gone. You’re not. Yes, you have a right to win, but there was a bunch of pivots and a bunch of bets, and through three different CEOs, what is it?

David Solomon: You know, the culture’s contributed, the quality of the people’s contributed, the brand built over a long period of time.

Brian Halligan: Is there a risk-seeking mentality inside the firm?

David Solomon: We have a great risk management culture inside the firm. Look, the reason that lots of financial institutions go away is not because they have a risk-taking culture, maybe it’s because they don’t have a risk-management culture. So they make mistakes, and financial firms are levered and they get into trouble. Decisions around over decades, things we would do, wouldn’t do. When the world goes left, we think left is we go slower. You don’t have to be first in financial services.

Brian Halligan: I think second mover advantage is underrated.

David Solomon: Yeah.

Brian Halligan: Succession planning. I’m sure there were some folks that didn’t work out, but it seems like Goldman’s very good at that. And I think a lot of tech companies are going to have to go through it. What are they doing right? Like, the last three seem like—you seem like of a winner of a succession planning output. What are they doing?

David Solomon: I think one of the things that’s interesting about Goldman Sachs is the senior leadership at Goldman Sachs is an extraordinary group of people. I sit around the small table, whether it’s the management committee, which is a slightly bigger table, or even with the closest group of senior leaders at the firm. And I’m in awe at how smart and talented and capable and committed and extraordinary, you know, that group of people. So let’s just start by the fact that there were lots of people that could have run Goldman Sachs. This goes back to the serendipity point. You know, Lloyd Blankfein got sick in 2015, and he decided that he was going to deal with his treatment and continue to run the firm and then come back. There are people who would have gotten sick and said, “You know what? I’m sick. I’m going to step away.” Okay? Had he stepped away, I wouldn’t be CEO. At that point, the firm probably would’ve make Gary Cohn the CEO, because Gary was the president of the firm at that point in time. So serendipity and luck. If the succession had happened in 2013 or 2014 or 2015, it wouldn’t have been me. When it happened, it happened in 2018.

Brian Halligan: Did the board interview you and several other people? And was there a rigorous process?

David Solomon: The board knows the senior leadership really well.

Brian Halligan: Already knows.

David Solomon: The board knows the senior leadership really well. And ours is a firm where there are lots of people that can run the firm. Ultimately, there’s got to be a decision. And look, I think succession is, you know, very, very important. And one of the things I’m proud of is that we have a very stable senior leadership team at the firm right now. We’ve been working together and executing, you know, on this plan over the last seven years. And I think it’s one of the reasons why we’re making really good progress.

Brian Halligan: Okay, back to a point you made. You’re an apprenticeship culture. You hire tons of young folks who are smart. My son’s in business school now, and everyone in his class wants to work for you. What’s going to happen 10 years from now with AI and that apprenticeship culture and bringing all these folks in? Do you think it changes? Like, where’s your head at on that?

David Solomon: I think there’s always change at the margin, but I think the substance of who we are and what we are and what we do, and the fact that we need lots of very bright people interacting together, building trust, I don’t think that changes.

And here’s the analogy I give you—and I’ve been talking about this for a number of years, and so there’s some people that will listen to this and will say, “I’ve heard David say this before.” When I started in 1984, one of my first assignments was to go do a common stock comparison comparing five regional banks and how their stock had traded for five years.

That was a big assignment. How’d you go do that? You went to the library. What was the only data source that existed in the world that had the closing stock price for every stock that traded for every single day? Back issues of the Wall Street Journal. So you went to the library, you went to the microfiche, and you took out on microfiche, back issues of the Wall Street Journal. You did all the work to go through all the old issues of the Journal and find the specific stock prices. You took out green-lined graph paper and you plotted the graph. You then took it to a Xerox machine and copied it, and then you went to your client and you showed them this. And they said, “Wow, thank you for helping us understand this.” It took—I mean, I don’t know, it took four to six hours to do the work to do it.

Technology has constantly made super productive people more productive, more capable. I see this the same way. Now of course, technology also replaces certain jobs a hundred percent. We don’t have a lot of toll collectors anymore. But that doesn’t mean when you get into the things that we do, which is a lot about trust, personal relationships, advice at the center of a lot of what we do, these become tools that enhance, speed up and allow us to do it even in a broader context. We’re still going to need a lot of people to do it.

Brian Halligan: Okay.

David Solomon: And they’re just—they will be trained with skills …

Brian Halligan: I like your optimism.

David Solomon: … with different skills in different ways. And of course, you know, let’s take one that I just think is obvious, okay? All companies have massive financial reporting and accounting functions. The operational processes for that are going to be different, and they’re going to have a different number of people associated with them. But that doesn’t mean that you’re not going to have people in other ways. I mean, for me, I’m excited about what this technology does, because we’re looking at how we can reimagine processes that actually free up the capacity for us to invest in more people for our businesses that actually scale with people, because we’re somewhat limited, we’ve got to deliver returns every year. We can’t scale as quickly as we want or as fast as we want. So I think it’s an unbelievable opportunity. It’s accelerating certain things that are very cool. But I also don’t think it’s fundamentally changing the core of what we do and how we do it. It just makes it a very powerful tool for very productive people.

Brian Halligan: Okay, I’m going to ask you one more question that your team told me not to ask, so we can cut it out.

David Solomon: You can ask me anything.

Brian Halligan: I thought it was super cool that you were a CEO DJ. Like, it elevated your brand in this one consumer’s mind. In Goldman’s brand. It seemed like—I just thought it was fucking cool. It seemed like you got talked out of that.

David Solomon: Well, a couple of things. First of all, I mean, I have to go back and tell my team. It’s not me telling my team I don’t want to talk about this. It’s for some reason, people on my team thinking that we shouldn’t talk about this.

Brian Halligan: That’s not it. You stopped doing it.

David Solomon: I stopped doing it publicly.

Brian Halligan: Yeah.

David Solomon: I still do it.

Brian Halligan: It seemed like people were complaining that you were doing it, too.

David Solomon: You know, what happened at the beginning in the first few years, you know, I was doing it eight to ten times a year publicly. I was giving money to charity every time I did it. It’s not as though I was doing it every weekend or something. But it’s a hobby, it’s a passion. I really enjoy it. It’s creative. And when everything was going right, it was great. In 2022, when the firm started having some speed bumps because the environment changed and we were wrestling with some of the stuff around consumer …

Brian Halligan: You caught some flak.

David Solomon: I caught some flak. And by the way, I thought I was going to catch some flak if things weren’t perfect, but boy, I caught a lot more flak than I thought I would. And by the way, I caught a lot of flak on a lot of stuff, not just the fact that I DJed occasionally. And so I kind of reached the conclusion this is becoming a distraction. And look, I think it’s unfortunate, because nobody cares that I do lots of other things with my free time. They really shouldn’t care about this. I still do it privately, and I’ll do it publicly again because I really enjoy it.

Brian Halligan: I think it’s super cool.

David Solomon: It’s a great creative outlet, and I feel lucky that I’ve had the opportunity to do it.

Brian Halligan: I think you’re cool.

David Solomon: Hardly.

Brian Halligan: I think you’re a great steward for the company. They’re lucky to have you. I want to congratulate you on all your success, and thanks for coming on the pod.

David Solomon: Well, thank you for having me. I really enjoyed it. Happy to be with you.

Brian Halligan: All right. A pleasure.

David Solomon: Thanks a lot.

Closing Thoughts

Brian Halligan: Okay. Hope you liked that. He’s very sharp. Just my take on his vibe is very polished, very articulate, very CEOish. And it’s a similar vibe to other professional CEOs I’ve interviewed. Like, Nikesh at Palo Alto is also like this. And I don’t know you well, but I bet you could use a little polish yourself. So maybe watching him you’ll learn a few tips.

Well, I ask everybody on these pods, like, what’s important when you’re hiring people. And he likes to say you want them smart enough, they don’t have to be rocket scientists, but kind of smart enough. But he really values judgment and experience. Most startups don’t. I look at HubSpot. Like, half our exec team is kind of homegrown and half is hired from the outside. I don’t know if that’s the right ratio, but his is a lot of kind of been-there-done-that people. I think that’s pretty interesting the way he thinks about it.

We talked a lot about decisions. We talked about the Apple decisions. And to me it’s just like, you’re always choosing as a CEO between two shitty decisions. No easy decisions ever reach your desk. And to me that’s just life in the big city. You’ve got a lot of that and get used to it.

Okay. I liked the segment on his Apple decision. They made a bet on the consumer business and a big partnership in Apple, and it reminded me of a book a guy named Seth Godin wrote a long time ago. And on the cover of the book was something called the Dip. It’s a line and there’s a dip and then it comes across. And when you’re heading down the dip on a new project like they were, you don’t know if you’re about to hit the bottom and come up the other side. You don’t know if it just keeps going down.

In his case, he was like, “I think it’s going to keep going down. We’re going to kill it.” That’s very hard to do. We have lots of these inside of HubSpot over the years where project’s going okay, we funded it pretty well. And the people inside that project are like, “Just give us six more months and give us some more money and we’re going to get through the dip and it’s going to rip,” versus just killing it. And we tend to give it a lifeline. And I think more often than not we should say no to those things.

Anyway, those are kind of my thoughts on decision making: say no more often and kill stuff more often. I think people aren’t disciplined enough about that. Those big partnerships are hard, and people always want to partner with the giant in their industry, and the life expectancy of those partnerships are pretty low. A few tips on kind of dancing with elephants. The first is, if you’re going to do a partnership, you need to make sure your incentives are really well aligned. And you need to make sure, like, if we do this, your P&L is moving and their P&L is moving in the correct direction. Because if the spreadsheets aren’t moving, there’s no point really in doing it.

And the third is you kind of need to know the CEO. The CEOs need to be committed, because as you go through annual budgeting cycles, partnerships can get defunded. So if the CEOs are connected, that helps a lot. If you’re entering into a big giant partnership, try to get those things right. 

Okay, I asked him, you want your company around for 150 years, what’s your advice? First of all, he credited luck quite a bit, but he largely credited culture. And I’ll tell you my journey with culture at HubSpot. When we first started the company, call it the first three years, my co-founder and I were like, “Culture’s BS. Don’t even bring it up. Like, let’s not talk about it.” And then I joined a CEO group, and one of the CEOs in the CEO group was Colin Angle. He was iRobot, made the Roomba of vacuum cleaners. And I remember I sat down next to him at that first—It was a CEO group meeting. and it was my first one. I didn’t know how it worked, but they have a topic for the whole day. And the topic on my first meeting was culture. And I thought, “Oh, shit.”

And so we went through the whole morning, and I was talking with Colin at lunch, and Colin says, “You know, you don’t seem to like this topic much.” Like, “Nah, I think it’s a waste of time.” And he says to me, “You know, Brian, culture is how people make decisions when you’re not in the room. Culture is how you really scale.” Yeah. I kinda dug in. Colin says it’s true. I’m in.

And I go back to the office the next day, and my co-founder says, “Well, how was the meeting? How’s Colin?” And I said, “It was great. I loved it.” He goes, “What did you talk about?” “We talked about culture.” “Oh, that’s too bad. Wasted time.” I said, “No, Dharmesh. Culture is how people make decisions when you’re not in the room. Culture is how you really scale your company.” And in a very weak moment, he agreed to be our culture czar.

And we did two things on culture that really worked. One was we started measuring net promoter scores of our employees, and we’ve been doing that for 19 years. Really useful metric. And the other is we basically design the culture, we design the relationship between the company and the employee. And we built a deck called our “culture code.” And the way we thought about it was we have a product that we sell to our customers. It has to be unique and really valuable, and it pulls customers in. Our second product we sell to our employees. Has to be unique and really valuable to pull those employees in. So we spent a lot of time on it, and it’s part of HubSpot’s secret sauce is our culture code, and the way we kind of think about that. So I would encourage you folks to do that. If you want to be around for 150 years, think a lot about culture.

I like the way he talked about serendipity in there. And I think that matters. There’s a book by Jim Collins on why amazingly successful companies fail. And if you look at, like, the top 100 most successful companies in the world, you know, even 25 years ago to today, man, it’s just totally changed. So, like, there’s a lot of disruption that happens. And Jim Collins studied these companies that stumbled, and he’s got this whole kind of ladder of things that go wrong, but the first step on the ladder is hubris born of success. And he talks about these companies falling into the trap, and he’s got a great quote, and it goes, “Those who fail to acknowledge the role luck may have played in their success and thereby overestimate their own merit and capabilities will have succumbed to hubris.” I wish all of you to avoid that hubris trap, and I’ll see you all on the next episode of Long Strange Trip.