Why I Left Goldman Sachs: A Wall Street Story (7 page)

I remember saying to my friend Kris, “The world has changed for good now. I wish we could go back to the way it was before yesterday morning.” It was as though we’d been in the midst of a sweet dream and now we’d woken up in a nightmare, and there was nothing we could do to change it. I remember thinking,
I wish time would just pass
, and
When is the world going to seem normal again?

It would take a long time.

My first day back at work was Monday, September 17, 2001. Because I still hadn’t managed to get back into my apartment, I had crashed at Kris’s for a couple days, stayed at the hotel Goldman provided (the Beekman, on First Avenue, at Forty-Ninth Street) for a night, then moved to another friend’s place, across the Hudson River, in Jersey City. I could have stayed at the Beekman longer, but Goldman had offered a further cash stipend in lieu of my using the hotel, and I had less than $7,500 in my bank account. I knew times ahead were going to be tough, so I decided to take the money.

I got on the PATH train from Jersey City very early that morning, before 5:30. I had used Goldman Sachs’s money to buy a new wardrobe at Banana Republic, but I was unshaven and groggy. After all that had been going on in the world, it felt strange to be going to work. Once I got to the building, I called my friend Mark Mulroney to see if he could meet me on a different floor from ours with the electric razor I kept in my desk drawer. (At the time, I preferred an electric over a razor blade.) For my first day back, I wanted to look respectable.

On September 17 the markets had one of their worst days on record—the S&P 500 (the benchmark most commonly used by investors on Wall Street) was down 5 percent, and the Dow was off 7 percent. Strangely, though, this day didn’t feel like a panic or a crash. Investors were actually very satisfied with how orderly the markets were. The NYSE and the NASDAQ opened efficiently, the bond markets were operating, and commodities were being traded in the pits of the Chicago and New York Mercantile Exchanges. It was a good day. People had predicted far worse chaos and panic, and America showed that it was open for business. I was proud.

I was also proud of how Goldman Sachs had worked round the clock to make sure that our technology and operations were working and that our clients could trade smoothly. Goldman also played an instrumental role in ensuring that the NYSE was able to open as quickly as it did: less than a week after the worst terrorist attack ever to take place on American soil.

When my roommates and I finally moved back into our apartment, two weeks after the attacks, the rubble of the World Trade Center, just four blocks south of us, was still smoking. The air was filled with a burning smell that wouldn’t go away. It was a smell I had never experienced before—a combination of burned steel, burned plastic, burned bodies—and it was terrible. Crews with cranes and earthmovers were working day and night to clear the site, trucking the debris to barges docked nearby on the Hudson, practically at the foot of our building. They worked for months, around the clock; the noise never stopped.

It was hard to live down there. We thought about moving out. I still ask myself why we didn’t just get the hell out of there immediately. But our world was upside down, we were just starting our careers on Wall Street, and we were trying to move forward as best we could.

The first weeks back at work were challenging on a number of levels. For one thing, people were clearly in shock and not themselves. For another, whatever had been bad about the economy during the post-tech bubble and pre-9/11 was much worse afterward. The markets started tanking; clients were worried. Emerging markets (the group I was in) were turbulent. The markets were punishing us. We were the area everyone feared would go into a recession.

All this, plus we newbies were going to have to retake the Series 7, one month later.

September 11 had put into perspective what was important and what wasn’t, and part of me wanted to think,
It’s just a stupid test
. In reality, though, passing it was vital to my getting my career started on the right foot—to getting it started, period. There’s only so long you can take coffee orders and make photocopies. At the same time, it was extremely challenging to go back and hit the books. Paranoia in the city, and at the firm, was high in the wake of the attacks. Would the other shoe drop? We prayed not. One colleague never came back to work after 9/11. She never even set foot in the office. We were just too close to the burning rubble and the trauma. It had been too much for her.

People at work were freaked out, but I was moved by how everybody pulled together and supported one another—and our clients. The overriding message was “Now is the time we differentiate ourselves. This is where Goldman Sachs becomes Goldman Sachs. Let’s be ultra-attentive to our clients; let’s help them get back on their feet, even if it doesn’t benefit us immediately. Because that’s what the clients are going to remember.”

The message was classic Goldman Sachs, and the reason it could be proclaimed so strongly is because the old guard was still there. Many of the pre-IPO partners were still in place. This was early in Hank Paulson’s tenure as sole CEO; he had recently forced out Jon Corzine. (Corzine, who had been a vocal advocate in the decision of the firm to go public, would go on to become governor of New Jersey, a U.S. senator, and then the CEO of MF Global, a futures brokerage that went bankrupt after using client funds to cover trading losses.) Paulson’s letter to shareholders in the 2001 Annual Report, released soon after 9/11, reemphasized the firm’s core values of integrity and commitment to clients. The company also established a relief fund for people and organizations affected by the attacks; Goldman employees contributed $5.5 million, which the firm matched.

That was the macro. In the trenches, I was trying to learn my job during that crazy period. Every morning at 5:30, we first-year analysts would crowd into the copy room, our first interaction of the day, all of us competing to use the photocopying machine first because we had to make big stacks of copies to hand out to the senior people on our team by the time they arrived at 6:00. We were copying research reports on the stocks that Goldman analysts covered; we were summarizing the stories in the
Wall Street Journal
and on Bloomberg that would be relevant to the day’s trading. The idea behind aggregating and curating these data into summary form was to make the senior people’s jobs a bit easier, to save them from having to wade through the material themselves.

My little claim to fame as a junior analyst sprang from an observation I’d made soon after arriving at the firm. Anytime a company reported earnings, everyone on the trading desk wanted to have the numbers at his fingertips—was this earnings figure a good number or a bad number? When I got to Goldman, I noticed that everybody was scrambling to find the research reports, to see what the numbers were. So I came up with the idea of writing a simple five-line e-mail before the earnings came out, and I sent it to all the sales traders and traders on the forty-ninth floor. It read something like “This morning, Apple is releasing its earnings. This is what we expect; this is what it did last quarter; this is how many iMacs it sold; this is how many we predict it will sell.” It was like a little cheat sheet that all the traders had in front of them ahead of time.

This was the kind of thing a junior analyst could do before passing the Series 7. It may seem silly and small, but when people saw you doing it, they thought,
This guy is resourceful. He’s trying to think of ways to help us.

Another part of my day consisted of learning how to leave good voice mails for clients. This was my apprenticeship, the way I learned how to talk about stocks. Every day, I would practice getting the form down: the voice mail had to be no longer than ninety seconds, and it had to hit four or five key points for the day. What were the big market-moving events? What did the client need to know? What was our view? I learned by listening to a master of the art: Rudy. The reason my rabbi was called the Beast was because he could bang these calls out to more clients than anyone else, always with enthusiasm and thorough market knowledge.

The Beast had a reason for delivering these mini-reports by voice mail instead of e-mail: he felt that the tone of his voice could convey exactly the right emphasis on any given point. Later on in my career, frankly, I started thinking voice mails were stupid. When a client receives a hundred of them in a morning, what are the odds he’s going to listen to yours? And in any case, once I started getting to know my clients well, my relationship with them became good enough that they would pick up my call when they saw my number on their Caller ID.

The wagering action on how we first-years would do on the Series 7 definitely ratcheted down a few notches after September 11. Nobody on the trading floor was in an especially feisty mood. Nor was I. Having gotten a glimpse of how hard the test was, I buckled down even more in my studying, to the point where I was scoring 82 and 83 on the practice exams. But it was very difficult finding the motivation to study during this period.

A month after the attacks, the Series 7 test takers went back to One Penn Plaza. Same elevator. Same seventeenth-floor waiting room. Same staff monitoring the test. Same floor-to-ceiling window I’d looked through to see the North Tower on fire. It was a surreal experience. But I was far more prepared for the exam than I’d been the previous time. In a way, I thought then and still think now, it didn’t seem very compassionate of Goldman to make us take the test again just a month later. But realistically, there was nothing to be done about it. Our passing it was a practical necessity.

And when I hit the key for my results after I’d clicked on my final answer, there was good news: I’d scored an 86. I was ready to be a sales trader.

Now all I needed were clients.

Gradually, as Rudy developed more faith in me, he started to give me a few of my own. On Wall Street they call them “practice clients”—there isn’t much upside for the firm in any interaction with them, but there’s not much downside, either. The ideal scenario is when there are junior people on both sides of the call, both trying to learn their way.

In the meantime, my Slovak counterpart seemed to be trying to raise her game. Whenever the phones rang—it was typically the first-year analyst’s job to answer phones—she would always try to hit the line first. If I left ten voice mails for clients, she’d leave twelve. It all felt very strange to me: we were both on the same track, and again, I was not a threat to her in any respect.

Or maybe I was.

The previous summer, the firm had taken a Turkish telecommunications company public, and Rudy had needed someone to shepherd the CEO on a visit to some of the big hedge funds and mutual funds that were our clients. He looked me up and down and said, “Springbok, you’re going to do this trip.” Nicknames were important at Goldman Sachs, and the Beast had honored me with a good one: the springbok is the swift gazelle that’s a kind of national mascot in South Africa, the symbol for the country’s rugby team.

So there I was, just out of college, and there was this head of a billion-dollar corporation, and it was just the two of us, traveling in California and Texas, with me carrying his bag. He was a slick guy, with slicked-back hair, and you could tell that in his native Turkey he was a big shot. He could have kicked up a fuss about having some junior analyst assigned to him. But I think he felt a bit intimidated by being in America. For one thing, he barely spoke any English. (I spoke even less Turkish.) He had never been to San Francisco or San Diego or San Antonio, the three cities on our itinerary. Oddly enough for someone who’d been in the United States for only four years, I knew a lot more about what was going on than he did.

At first I wasn’t sure how much I should speak in the client meetings. Should I keep quiet? Should I kick off each meeting with a few words about the Turkish company? But I soon discovered that the Turkish CEO was grateful for all the help I could give him. And I was learning more every day.

That trip brought a small triumph of another kind: after a day of meetings in San Francisco, I got to return to Stanford and see old friends—not just as an alum but as a Goldman Sachs employee. I was proud to tell people that I was in town on business. Amazingly, it was also the weekend of the Big Game, and we defeated Cal Berkeley, our football archrival, for the seventh consecutive time, 35 to 28. (This winning streak would be reversed horribly in the years to come.) Rudy knew he had done me a solid by sending me on that trip, and I appreciated it.

I went on a couple of other business trips that fall. Rudy used to joke that he was sending me to all these less-than-exotic places such as San Antonio and Dallas because he didn’t want to go himself. But I was thrilled to go. When he said, “Springbok, you’re off to Columbus, Ohio,” I didn’t roll my eyes. It was a chance to learn more about my adopted homeland. (Did you know that both Wendy’s and Victoria’s Secret are based in Columbus? I got a kick out of going to visit the very first Wendy’s.) On every business trip, even after I was stationed in London and the firm sent me to Dubai or Frankfurt or Paris, I would try to take a few hours in the evening to find a nice restaurant and sample some of the local culture, even if it made me more tired the next day.

I loved traveling on business and representing Goldman Sachs. It was one of the big benefits of being on such a small team. My French Canadian roommate was on the Canadian Equity Sales team, which had fifteen people. He was not getting sent on business trips at such an early stage. I felt very lucky. The road miles I logged were putting me ahead of the curve for beginning analysts and giving me exposure to lots of clients. The extra experience got me that much closer to an important milestone.

Your first trade on Wall Street is a big deal, and mine was a proud moment for me, even though it netted the firm a grand total of $600—probably less than Goldman Sachs spent on soap dispenser refills on any given day. A mutual fund client whom I had been calling daily for about six weeks finally decided to pay me for my efforts and pulled the trigger on buying 500
little
shares of South African Breweries (SAB). (When you use the term
little
next to a quantity of shares, it indicates that you actually mean only 500, not 500,000, as a trader would assume without such clarification.) But to Rudy’s credit, he recognized the significance of the moment, and decided to make a big deal of it.