Solomon has steered the bank to blowout profits and a record stock price. But with partners quitting and burnout soaring, some insiders say the executive’s hard-charging style has come at a cost.
Every summer when he was running Goldman Sachs’ investment banking division, David Solomon assembled his top lieutenants for two days of off-site meetings.
The gatherings served as a forum for executives, in the language of house renovation, to strip the business down to its studs.
As executives began to rebuild, Solomon cast a critical eye, said a person familiar with many of the reviews. What could be improved? Who’s doing it better? What stands in the way of success? How can incremental profit be squeezed?
While valuable, the process could be intense. Solomon brought a sharp and demanding eye to the task, and executives knew they needed to bring data, metrics, and cold, hard logic to bear in answering their boss’ inquiries, the person said. When Solomon took over as Goldman’s CEO in October 2018, he brought the same approach to the entire company.
“David reviews businesses with a dispassionate, clinical eye,” said Jim Esposito, the cohead of Goldman’s investment banking division. “There are no sacred cows.”
On paper, it’s working spectacularly. Goldman smashed analysts’ expectations and set a revenue record in the first quarter, its stock soared to an all-time high of more than $356, and its ambitious plan to slash $1.3 billion in costs is on track. Wall Street analysts are singing Solomon’s praises, as are investors who laud the transparency Solomon has brought to Goldman’s operations.
But Goldman’s top ranks have seen almost unprecedented turnover, with six members of the management committee exiting over the past year. Among them were two Goldman lifers — Eric Lane and Gregg Lemkau, a potential CEO successor — whose departures stunned Solomon.
Meanwhile, junior bankers were so overworked that they put together not one but two presentations to express their unhappiness to management, and engineers in a consumer division that Goldman has spent billions to build have quit in droves. The CEO has also dashed the hopes of those who have enjoyed working from home, saying in February that it was an “aberration” that needed fixing.
The drumbeat of news has led current and former employees, and some analysts, to wonder if there is a downside to Solomon’s intensity — which people who have worked with him described in even stronger terms: abrasive, blunt, direct, gruff, hard-edged, and tough.
Some go further, dubbing Solomon’s management efforts the “General Electrification of Goldman Sachs,” after what they perceived to be a shift away from the individual talent Goldman was known for and toward a more monolithic, less dynamic corporation. In other words, these people said, Solomon’s drive to milk more profits out of Goldman may be squeezing out the intangibles that make Goldman special.
Jake Siewert, a Goldman spokesperson who has announced his own exit, said the partner departures were unrelated to who’s running the firm — and that they were running at a pace “almost identical” to past cycles. He pushed back against the broader characterizations of management, saying that Solomon is no different from other corporate executives who demand results.
“David’s management style is pretty simple: Ask a lot of questions, work with teams to set realistic goals, and then hold people accountable for results,” Siewert said. “His commonsense approach helped make Goldman’s investment bank division the best in the world. He’s taken that same approach to the whole firm, and it’s working.”
Solomon wasn’t born into a Wall Street family, and he learned the trade at one of the most confrontational places in the business. In 1986, he joined Drexel Burnham Lambert, the leveraged-buyout pioneer founded by the junk-bond king Michael Milken and renowned for its rapacious culture.
Milken, thought to be an inspiration for Michael Douglas’ character in the film “Wall Street,” “was notorious for driving his people pretty hard,” said Charles Peabody, an analyst at Portales Partners. Peabody winced at Milken’s reputation for challenging subordinates, even as he marveled at the man’s ability to grasp intricate deal details. “There is some spillover influence there,” he said.
After Solomon left Drexel in the early 1990s, he spent several years on the bare-knuckle trading floor at Bear Stearns before joining Goldman as a partner in 1999, just after its conversion from a partnership to a public company. At Goldman, Solomon earned a reputation for being an exacting manager, sharp-elbowed and favoring an inner circle of confidants, said a former partner who worked with him closely. He was tapped to co-lead the investment banking division in 2006.
A decade later — after Lloyd Blankfein made Solomon and Harvey Schwartz, the CFO at the time, copresidents in late 2016 — Solomon softened his image. He talked up efforts to bring more women into the firm, and eventually played up his DJ and kitesurfing hobbies. (He initially locked his Instagram page and tried to apologize to Blankfein when The New York Times broke the DJ news, one person said.)
Siewert said Solomon’s “advocacy for diversity” and belief in pursuing outside interests dated back decades.
Regardless, the horse race ended 16 months later with Solomon being crowned the sole president, and the presumptive successor.
When he took over as CEO, Solomon moved quickly to put distance between the publicly traded bank and its history as a partnership. He formulated a fresh strategy — Blankfein had taken a more passive approach, choosing to wait for the return of favorable markets to boost the fixed-income trading division’s fortunes — and began to shrink the partnership, which had grown from about 220 when the company went public to about 500 under Blankfein. It now numbers around 400, and some expect it to shrink further.
Solomon also embarked on a series of firsts that began to strip away Goldman’s mystique in favor of modern corporate-management practices. Solomon became the first CEO to speak regularly on earnings calls, the first to host an investor day, and the first to institute three-year plans.
Some of the changes irked the old guard, but made investors happy, such as the increase in transparency. And others, people said, alienated the talented staff that Solomon ought to be trying to keep. While Solomon’s style may feel abrasive to some, the firm’s financial performance makes it unlikely that his management style is going to change — if anything, he may lean into it even harder, whether his employees like it or not.
In mid-April, Solomon climbed the stairs to the stage in the firm’s auditorium to present first-quarter earnings. The slides for the presentation weren’t initially on the screen, so Solomon, appearing annoyed, began to read from his notes, said someone who witnessed the presentation. When the slides finally appeared, they weren’t synced with Solomon’s remarks. And when the CEO asked to move to the next slide, and it, too, wasn’t the right one, he became agitated and began barking out commands.
The incident showed a side of Solomon that many inside Goldman’s 200 West Street headquarters have come to recognize: Solomon, one partner said, “comes at you with a hard point of view.” (Catch him out of the office, like at the Wednesday-night dinner parties he hosts at the $13.5 million SoHo penthouse loft he bought in 2018, and he’s a different person, three people said.)
If you are just BS-ing him, it won’t go well.Marc Nachmann, Goldman Sachs
His approach, people said, can instantly put subordinates on the defensive. Many people feared bringing him bad news. Two people described Solomon as serious, as hard on himself as he is critical of others, and lacking Blankfein’s jocularity, which, they said, sometimes lightened the mood. Like Blankfein, Solomon may pepper executives with questions to explain themselves after they’ve lost business, one person said.
Supporters said it’s refreshing to be confronted by Solomon, because you always know where you stand. One partner changed the way she spoke to him, choosing to lead with quick takeaways and asking for patience to complete the briefing before he makes a decision. Another said he’s learned to admit that he doesn’t know an answer instead of offering a half-baked idea. A third said he’s learned that nothing is too sacred, and that emotional appeals die a quiet death.
The CEO, they said, doesn’t stand for nonsense, has a nose for when an executive is trying to dodge the question, and can be swayed by data and metrics.
“If you are just BS-ing him, it won’t go well,” said Marc Nachmann, the cohead of the global markets division. “You either have a thoughtful answer, or if you haven’t thought about it, you are better off saying, ‘Good point, let me come back to you.’ Trying to talk yourself out of the situation with no knowledge never works out well with David.”
Others put it more starkly: Solomon has a short fuse and a tendency to view employees as expendable.
That has come through in how he’s handled changes to the Federation — the nickname for the compliance, legal, and risk departments that have often kept Goldman out of trouble, according to a former partner who worked in one of those departments.
He has blocked their path to the partnership by favoring revenue producers; has brought in outsiders to run legal, human resources, engineering, and a new marketing team; and has moved many jobs out of the New York area to lower-cost locations such as Dallas and Salt Lake City.
When Goldman communicated compensation to employees earlier this year, the message that some in the Federation heard was that they’d never have a better compensation year than last year, and that they should consider their pay topped out, said a person familiar with the conversations. Not surprisingly, many people left, including respected managing directors.
Solomon, said a person who knows him well, values the institution and the brand, but not any single employee — unless that person is in a tight circle of executives that he respects.
A member of that circle, Stephanie Cohen, said there’s been intense debate over the future direction of the firm, and that people are free to leave if they don’t agree with it. Solomon views the firm’s ability to attract talent as second to none, “an amazing talent machine,” she said.
“Intellectual debate is alive and well at Goldman Sachs,” said Cohen, the cohead of Goldman’s consumer and wealth management division. “You have to be open to this idea that there’s going to be different points of view in the organization. And some people will decide that they disagree and may decide to leave for those reasons. But that’s natural.”
Steven Chubak, an analyst at Wolfe Research, said he’d have to see more of an impact on Goldman’s financial performance before becoming worried about turnover. “We haven’t seen any signs that these exits are resulting in business-level disruptions or any market-share loss,” Chubak said. He added that Goldman has weathered concerns about attrition at other points in its history.
One person said that his experience with Solomon led him to conclude that the CEO is constantly judging people in terms of whether they’re worthwhile to him at that moment. He has no use for people unless they are delivering something to him of value, an exhausting prospect for those who work closest to him, the person said.
“If you are working with him all the time, you have to constantly be worthwhile,” the person said. “People just aren’t.”
Few areas have lost Solomon more credibility internally than his stance on working from home. The CEO has repeatedly tried to encourage partners to return to the office, and he’s made public comments that showed him to be potentially out of touch with his employee base.
In one interview, at an analyst conference in February where he talked about the threat to the firm’s culture, Solomon said working from home was an “aberration.” One person described those comments as an unforced error.
His perspective actually goes back to last year. In the summer of 2020, Solomon spent months encouraging partners to come into the office, in some cases inviting them to lunch as a way to encourage their physical presence, an executive said. That push gained steam when a Goldman analyst approached him at the popular Montauk seafood restaurant Duryea’s.
As co-head of investment banking, Solomon had instituted protected Saturdays for junior bankers, and as CEO, played up his outside hobbies as a way to connect with younger employees. Walking up to him on a Friday afternoon, the analyst introduced herself and pointed out her colleagues having a beer at a nearby table. This time, though, Solomon was annoyed, and as Bloomberg reported, talked about it for weeks afterward.
As Labor Day approached, Solomon and Laurence Stein, Goldman’s chief administrative officer, began urging partners to return to the office, said a person with knowledge of Solomon’s push. Stein met with the chief operating officers of the global markets and investment banking divisions almost daily to advance the agenda, the person said. Those efforts soon slowed in mid-September when two members of Goldman’s New York staff tested positive for COVID-19.
Nonetheless, Solomon’s perspective didn’t change, three people said. They added that he’d gone into the office almost every day throughout the pandemic, often walking 20 minutes along tree-lined and cobblestoned streets from his place in SoHo.
“David may be the only CEO in America who has gone to the office almost every day during the pandemic,” Nachmann said. “You have to start with that. David led by example in part because he felt it was his obligation, like a captain on a ship.”
The CEO, unmarried and with adult children, may not have understood how much better life had become for many of his dealmakers and top executives, who traded daily commutes from the suburbs or hectic travel schedules for extra time to spend with their families, one person said. Or he didn’t care.
If people say, ‘What could David be better at?’ Empathy.
In some ways, Solomon’s pandemic experience is based on data, but of the sensory kind: It was easy to prove that he was working since he was going to the office every day, but much less so when others were working from home. It didn’t help Solomon’s position when colleagues noticed that he’d been taking the corporate jet to the Bahamas on the weekends, one person said.
“Everyone has their own style,” a former partner said. “If people say, ‘What could David be better at?’ Empathy.”
Siewert disputed that characterization. Solomon, he said, gave employees an extra 10 days of family leave for COVID-19 reasons, extended parental leave, increased access to childcare offerings, and offered free telemedicine services, including mindfulness and yoga.
“David recognizes the immense burden that many families faced over the past year as they dealt with blurred boundaries between work and home,” he said.
A month before Solomon grew agitated in Goldman’s auditorium, he showed another emotion on the same stage.
On March 10, Solomon and about a dozen people, mostly partners, had assembled in Goldman’s ground-level auditorium for a presentation to launch the firm’s latest diversity effort, dubbed “1 Million Black Women.” Broadcasting to employees around the world, Goldman pledged $10 billion in direct investment to narrow the funding gap for businesses owned by Black women.
After a panel discussion among a group of Goldman’s Black female partners — Margaret Anadu, Asahi Pompey, Gizelle George-Joseph, Joyce Brayboy, and Lisa Opoku — and the airing of a short film produced by Reginald Hudlin, a former Black Entertainment Television executive, Solomon was scheduled to answer questions from employees.
When the video ended, Solomon didn’t stand up, said two people, one of whom was in attendance and another who watched the broadcast. When he finally ascended the stairs to the stage, Solomon tried multiple times to open the Q&A only to choke back tears, they added. Finally, the CEO gained his composure and the show went on.
The announcement was the latest in a string of external diversity initiatives championed by the CEO. The company started an investment fund for women-owned businesses, promised to hire equal men and women into its 2022 analyst class, and instituted a rule that it won’t take a company public unless there’s at least one board member from a diverse background.
Internally, Goldman has struggled to keep Black leaders, spurring worries that it isn’t doing enough to retain them, one person said. At least three of the firm’s few Black partners recently left, the head of diversity resigned for a competitor, and the company published data showing that only 49 of more than 1,500 senior managers were Black.
Siewert, the spokesperson, said the market for talent is as competitive as it’s ever been. “In the decade he ran banking, David championed initiatives for a more diverse workforce and helped recruit the first ever analyst class that was evenly balanced between women and men,” Siewert said. “He’s brought that same commitment to the whole firm and has set aggressive targets to boost recruiting and retention of women and minorities.”
Among the long-held conventions that Solomon has challenged is the firm’s partnership, a holdover from its 130-year history as a privately held firm. He’s shrunk it, and aims to make a greater percentage of it focused on those who bring in revenue, as opposed to so-called back-office functions such as compliance, legal, and risk.
Solomon’s supporters said a smaller group is a more exclusive group, and that he’s taking steps to strengthen it. Sometime in the past few years, the firm’s partnership committee commissioned a study of how to solidify Goldman’s partnership, and Solomon has made many of their recommended changes, the person said.
He’s made it easier for partners to get a slice of the fees the bank earns on the investment funds Goldman manages on behalf of third parties, a perk that most banks can’t offer. Another recommendation, the person said, was to make it smaller. And a third was to make the partner meetings annual rather than biannual, with a big soiree one year and meetings on the off year, the person said.
Nonetheless, two former partners said, a rift has opened between the firm’s current and former partners, suggesting that Solomon has brought more of a “you’re with us or against us” mentality.
According to Goldman lore, it was Blankfein who embraced the firm’s alumni network as a captive group of potential clients. It was Blankfein, one of them said, who instituted the annual ex-partners meeting that’s usually held in December at one of the upscale hotels in Manhattan, such as the Pierre or the Conrad.
Goldman under Solomon, they said, seemed to be taking more of an antagonistic approach. More than one partner has griped about the sniping and chatter coming from outside the firm. And when Sumit Rajpal, a former partner in the merchant bank, went out to raise money for a new fund, Goldman uncharacteristically refused to help him find seed money or investors.
“This is another indication they will go after their own,” one person said.
Another person who is close to Solomon disputed the characterization of Solomon’s tone with former partners. The person said the CEO has broadened the alumni network by ending an informal blacklist that Blankfein kept and by repeatedly meeting, virtually, with network members throughout the pandemic. Even people such as Rajpal, the person said, are still allowed to remain in the network and receive updates via email.
Ultimately, Solomon is looking ahead, not behind, and relentlessly pressing his people to deliver results, said Cohen, a member of Solomon’s executive circle.
“David wants to debate, wants to be challenged, and is focused on where the world is headed and how we can best serve clients, shareholders, in terms of where the world is going,” she said. “I find David to be very direct, very transparent, and he pushes me and others to get to the right answer for the long term.”
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