Why I am leaving Goldman Sachs

As soon as I saw this Op-Ed I cheered. Finally someone else like me who quits publically but with a much bigger bang than my resignation from Datascope. This guy had the balls to do it in the New York Times and is taking down the most powerful investment bank with him. Now that's leadership! Here is his resignation letter in full:

TODAY is my last day at Goldman Sachs. After almost 12 years at the firm — first as a summer intern while at Stanford, then in New York for 10 years, and now in London — I believe I have worked here long enough to understand the trajectory of its culture, its people and its identity. And I can honestly say that the environment now is as toxic and destructive as I have ever seen it.

To put the problem in the simplest terms, the interests of the client continue to be sidelined in the way the firm operates and thinks about making money. Goldman Sachs is one of the world’s largest and most important investment banks and it is too integral to global finance to continue to act this way. The firm has veered so far from the place I joined right out of college that I can no longer in good conscience say that I identify with what it stands for.

It might sound surprising to a skeptical public, but culture was always a vital part of Goldman Sachs’s success. It revolved around teamwork, integrity, a spirit of humility, and always doing right by our clients. The culture was the secret sauce that made this place great and allowed us to earn our clients’ trust for 143 years. It wasn’t just about making money; this alone will not sustain a firm for so long. It had something to do with pride and belief in the organization. I am sad to say that I look around today and see virtually no trace of the culture that made me love working for this firm for many years. I no longer have the pride, or the belief.

But this was not always the case. For more than a decade I recruited and mentored candidates through our grueling interview process. I was selected as one of 10 people (out of a firm of more than 30,000) to appear on our recruiting video, which is played on every college campus we visit around the world. In 2006 I managed the summer intern program in sales and trading in New York for the 80 college students who made the cut, out of the thousands who applied.

I knew it was time to leave when I realized I could no longer look students in the eye and tell them what a great place this was to work.

When the history books are written about Goldman Sachs, they may reflect that the current chief executive officer, Lloyd C. Blankfein, and the president, Gary D. Cohn, lost hold of the firm’s culture on their watch. I truly believe that this decline in the firm’s moral fiber represents the single most serious threat to its long-run survival.

Over the course of my career I have had the privilege of advising two of the largest hedge funds on the planet, five of the largest asset managers in the United States, and three of the most prominent sovereign wealth funds in the Middle East and Asia. My clients have a total asset base of more than a trillion dollars. I have always taken a lot of pride in advising my clients to do what I believe is right for them, even if it means less money for the firm. This view is becoming increasingly unpopular at Goldman Sachs. Another sign that it was time to leave.

How did we get here?

Dignity for the dead

Hiroko Masuike/The New York Times

Atsushi Chiba used Buddhist rituals in caring for nearly 1,000 bodies in Kamaishi. “It's a way to comfort the living,” he said.

Here's another example of the quiet leadership that took place during and after the Japanese tsunami.
One undertaker, Atsushi Chiba cared for almost 1,000 bodies in Kamaishi. Mr. Chiba, in his early 70s, raced to the temporary morgue on the day after the tsunami to look for friends and family, but was struck by the state of the mounting number of bodies there. Most were still clad in muddy clothes and wrapped in plastic, their rigid limbs jutting out and faces bruised by debris and contorted in agony.

“I thought that if the bodies were left this way, the families who came to claim them wouldn’t be able to bear it,” Mr. Chiba said Thursday in an interview. “Yes, they are dead. But in Japan, we treat the dead with respect, as if they are still alive. It’s a way to comfort the living.”

Mr. Chiba set to work. He became a fixture at the morgue, speaking to the bodies as he prepared them for viewing and then cremation. “You must be so cold and lonely, but your family is going to come for you soon so you’d better think of what you’re going to say to them when they arrive,” he recalled saying.

He also taught city workers at the morgue how to soothe limbs tense with rigor mortis, getting down on his knees and gently massaging them so the bodies looked less contorted. When the relatives of a middle-aged victim sobbed that her corpse looked gaunt, Mr. Chiba asked for some makeup and applied rouge and blush.

Mr. Chiba’s attempts to honor the dead quickly caught on. City workers put together old school desks to make a Buddhist altar. They lay the bodies of couples and of family members together. Each time a body was carried out, workers lined up with heads bowed to pay their last respects.

And at Mr. Chiba’s urging, Kamaishi became one of the only hard-hit communities to cremate all of its dead as called for by Japanese custom, enlisting the help of crematoriums as far as Akita, over 100 miles away.

In all, 888 of Kamaishi’s approximately 40,000 residents are known to have died; 158 more are listed as missing and presumed dead.

The priest, Enou Shibasaki, from the Senjuin Temple in the hills overlooking Kamaishi, remembers the change that came over the makeshift morgue as Mr. Chiba and other city workers tended to the bodies.

“Whether you are religious or not, mourning for the dead is a fundamental need,” Mr. Shibasaki said. “Mourning starts by taking care of the body. It’s the last you see of your loved one, and you want to remember them as beautiful as they were in life.”

Read the details of this story in a recent NY Times article

Here's a great slideshow with the faces of the tsunami:

If you were impressed with the graphics put together showing the before and after photos of the destruction caused by the tsunami,

this next graphic shows the progress that has been made repairing the damage. Click on this link to see. 

Polls define leadership style nowadays



Obama aides in Chicago
Daniel Borris NY Times

 According to a recent article Obama has a 'Chief Scientist' who specializes in consumer behavior, and an “Analytics Department” monitoring voter trends. All in an attempt to get a few extra percentage points in the upcoming election. They sift through Facebook, test various messages sent to different profiles of Internet users to see which get the best responses in terms of commitments of money or time. Seems like they do everything but what used to matter in an election.

Remember when leaders used to stand up for what they believed and gather a following based on them and move into elections based on those beliefs? Then the people would vote and we'd get a referendum on what really matters in America. Freeing slaves, Prohibition, Civil Rights, Supply-side economics. Whatever happened to those days?

The Republicans are not much better, with Romney switching his views on abortion to match the voter's wishes. I'm sure he'll exit the Republican primaries becoming more moderate again.

Who out there has the courage to stand by his/her convictions and put them to the test in front of the electorate? If there are any, they seem to be encouraged by their aides to take the weasely way out. Too bad. Elections are getting to be a lot less fun nowadays.

Two different leaders on this season of 'Survivor'

Two very different leaders have emerged on this season of Survivor. On the men's team, the biggest misfit of them all, Colton, self-described gay, country-club Republican, has banded together the rest of the 'misfits' (his description of those who were not muscle-bound) into a strong alliance of five.

Look at the way Colton introduces himself:

At first, it seemed that Colton would be the first voted out. When the teams found out it would be men vs. women, he was devastated and kept on wandering over to the women's camp to chat and whine about needing the immunity idol. Shortly after Sabrina gave him one, he became so annoying the ladies had to ask him to leave. But Colton used the power of this idol to forge his alliance and proceeded to lord it over the rest of the men's tribe.

He would sit on his throne and summon his boys, casting judgement on them and wielding his power with impunity. Click on the link to this video to see the way he acts in camp and at tribal council. It makes me sick.

Meanwhile, Sabrina, a 33 year-old teacher, was elevated by the rest of her women's team to the leadership position. Look at her intro:

Her leadership style is much calmer. When two of her tribe argue, she intervenes, calms them down and gets them to move on and focus on their common enemy. Rather than voting to get rid of whoever she doesn't like, she moves to get rid of the one who is causing the most havoc in camp.

The big surprise is the way Colton's tribe follows this jerk. Even to the point of giving up tribal immunity so that he can vote off someone he doesn't like. It helps that you have nuts like Tarzan on there who wants to vote off Lief because he told Bill he was off next (even though this was perfectly obvious). And Lief decides to go meekly to a tribal council where he could be voted off rather than standing up for himself. Why?

The only possible reason is that a winning Survivor strategy is to align yourself with someone totally evil who gets rid of everyone else for you, then allows you to defeat them in the final vote. We can call that the Russell Hantz strategy. Unfortunately there is no correlation to this in real life. Aligning yourself with a dictator until democracy comes around only results in you going down with the dictator at the end.

I'll leave you with this scene from the first episode:

Plowing Snow by hand

I've often had to shovel snow off my driveway and tried to do it the way snowplows work but with no success. The snow falls off the back or piles up on the sides and generally I revert to bending, scooping and throwing the snow until I hurt my back. Then I send my sons out to do it.

This man has invented a way to do it properly. Check out the Shove it shovel.

With two hands you get the ability to push and angle the snow away from you, just the way a snow-plow would do it.

Here's the man's website.

He invented it while watching his son move big piles of snow using a conventional snowplow blade on the front of a truck. Meanwhile, Burke was clearing a walkway with the classic, straight-edge snow shovel — scooping, lifting, turning and throwing.

"Just looking at that snowplow, I thought, 'Why not make one of these that looks like a snowplow?' " Burke recalled. "Just to avoid coming home crooked at night from all the twisting."

So he began tinkering.
What he came up with puts the shovel blade on a pivot and gives the user two handles — one to push, one to steer. With one of the handles and the pivot, the user can turn the blade to the side at any angle desired, just like a snowplow, then use the other handle to push snow down the walk and to the side, keeping the blade on the ground.
Check out the video:

"I was actually kind of surprised that no one had come up with it before," Burke said.

The second part of this story is the struggle he went through to get a patent on his idea. Read an excerpt from the Denver Post article describing his travails:

Burke figured he ought to at least seek prot

Thirtieth excerpt from 'Twelve Towers'



Gwilym asked for a responsible person for each sub-task.

 Now that the men were no longer grumbling about their gambling losses, Gwilym expected lifted spirits. While this was true the first few days, pretty soon fights between the team-members seemed to get even worse, and many had to be broken up by Gwilym. They were arguing about the different tasks they were supposed to be doing. Gwilym surmised that removing Tarrant as a common enemy had surfaced these inter-team rivalries. He called a team meeting.

“Gentlemen! We are all working together to build a grand structure. We know what we have to do and how we are to do it. What are we arguing about?”

“’E’s supposed to ’ook the stones to the foundation afore Oi can build on ’em but ’e won’t do it!” accused one of the men, pointing at another.

“Oo said that were moi job?” retorted the one accused.

“You’re the lead mason, of course it’s your job!” replied the first.

More men started pointing fingers at others and a general uproar ensued. Gwilym listened carefully until the shouting drowned out the words and then he stood. He said nothing, but those looking at him quieted down and those not, noticing that others had quieted, looked around and shut up at seeing Gwilym. Finally only one pair of men was left arguing.

“You keep throwin’ your stone scraps off to the side instead of bringin’ them to me for moi road!”

“Well oi’m not yer bloody servant! Get the scraps yerself!” At that the two men noticed Gwilym looking at them and felt the eyes of the rest of the men. They both blushed and quieted down.

Gwilym thought for a moment and then spoke. “Do we agree that this book shows the way the tower should be built?” Reluctant nods of heads affirmed this.

“It tells us WHY, WHERE, HOW we are building it and WHAT we are building, right?” More heads nodded.

“But what it doesn’t tell us is WHO does what, right?”

This question was greeted with enthusiastic agreement; all the men shouting over each other how this question of WHO did WHAT was affecting their work.

“Alright then, nobody does any more work today until we figure it out.”

Gwilym placed the project book in the center of the table and opened it to the defined tasks and pointed to the first one. “This task is done. See how I’ve placed a check mark next to it?” The men nodded.

“So are all these tasks.” He showed a series of tasks, all accompanied by check marks. “Here is the next task that must be done. One of you must do it. It says, ‘Level foundation.’ Who, in this room, will take responsibility for that task?”

No one said a word. The men had been used to not volunteering for work since that only meant more work for them at the same pay.

“I need two things for every task: some materials and somebody to do something with those materials. Both are resources. What I’m trying to do now is estimate resources needed to complete each task. And for that I need you to step up and take responsibility that you will be that resource.”

Gwilym looked hard at Joseph. “Isn’t that your job, Joseph?”

“Aye, it be moi job a’roit. But ain’t it your ’sponsibility?”

“The entire project is my responsibility. But I cannot be responsible for all of these tasks. I’m not a master foundation builder like you, Joseph. Only you know when it is level and strong. You’re the one who told us we had to add piles into the river and add more rock to make it strong. So I ask again, who is responsible for leveling the foundation?”

“That be me,” Joseph admitted.

“Then I will write your name next to that task. Is that alright?”

“Aye”

“Good. The next task says: ‘Create notch templates.’ That’s my responsibility so I’ll place my name next to that task.” Gwilym signed his name.

“Now then, the next task says: ‘Cut first logs to length.’ Who is

Earned Value Case Study

Using the Earned Value method of monitoring and controlling budget as described in the previous post, I have had almost entirely positive experiences with my clients. One experience didn't start out so positive.

Our project was to validate a computer system. We proposed the project carefully, using past information but making some assumptions based on information given us by our client. One of these assumptions was that the requirements document was in good enough shape for us to write a functional specification. As always, we made these assumptions visible as part of the proposal. (I'll have to write a separate post about the importance of doing this but you'll see how it helped in this case study.)

When we started the project, we found that the specification couldn't be started because the requirements document was in no shape to use as a starting point. We would have to rewrite this and then move to the specification. This meant more time spent on the project and more money.

So, when I showed up at the first status meeting with the earned value numbers, I shocked the client by predicting that the project would end two weeks late and cost an extra $10,000. They were livid!
"You're one week into the project and already you're two weeks behind schedule and $10,000 over budget!" was their response.

They were used to vendors keeping quiet about the overages and schedule delays until the project was almost over and then asking for the extra time and money. My boss was angry at me also because, frankly, that was the way he was used to doing business and he had warned me that being open with the customers was a bad idea. He was afraid we'd be fired from the project.

I met with the customer and explained the situation. I told them it was a good thing to find this problem early because they had the power to do something about it now. By explaining the cause of the overage and delay, I gave them three choices on how to proceed:

1. Continue as we were going. We would rewrite the requirements, then the specification and continue the project. The project would cost an extra $10,000 and take an extra two weeks.
2. They could rewrite the requirements document while we stepped away from the project, then return to restart. This would take at least 2 weeks (the client was super busy) but would cost no extra money.
3. We would rewrite the requirements but the client would take over some of the later tasks (when their workload had diminished) to recoup the $10,000. This would cost them no money or schedule but would take some of their people's time later.

My client was amazed. They were given options on what mattered most to them: time, money or internal resources. They chose option 3 and the project finished on time and on budget. They confided with me later that they were so appreciative of the transparency of our methodology and their ability to influence the course of the project; something they had never experienced with any other vendor. The customer is loyal to us to this day.