7 Harvard Business School Students With Experience At Goldman Sachs Respond To Greg Smith's Letter

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Harvard Commencement 2004*This post originally appeared on The Harbus, written by Jehan deFonseka.

Last week, Greg Smith resigned as head of the Goldman Sachs U.S. derivatives business in Europe, the Middle East, and Africa, and wrote an op-ed in the New York Times describing the Goldman Sachs environment as “toxic and destructive”.

The Harbus asked every HBS student who had prior work experience at Goldman Sachs to volunteer their feedback regarding Smith’s op-ed.  Below is every single unedited response in the order they were received by us. 

These are the opinions of individual HBS students who worked at Goldman Sachs, and should not be assumed as representative of views of The Harbus or the student body as a whole.  

Response #1: Greg was right, clients are nothing to Goldman

Response 1 Greg Was Right Clients Are Nothing To Goldman

Having worked for GS for several years, I thought Greg’s comments were spot on. Although “muppets” was not the term I’ve ever heard, it was clear from day 1 that the way we structured deals was designed to make the most money for the firm, not to promote the interest of the client. In fact, I can’t think of a single time or an internal meeting when anyone present referred to doing what’s best for the client. If anyone were to do that,  he or she would without doubt come across as hopelessly naïve.

This was one of the reasons I chose to leave GS and the industry in general.

Source: The Harbus



Response #2: Trading and I-banking have different cultures...

Response 2 Trading And I Banking Have Different Cultures

Firstly, whilst it is healthy to express discontent, he is doing so in a childish and unproductive way. The downside is to hurt the firm’s reputation without fixing any problems. He should have been expressing his frustration over the last 10 years and speak accordingly to senior leadership. The fact he was promoted means he likely kept quiet to stay on the promotion track, and is now leaving us with words of wisdoms whilst he has 12 years of bonuses under his belt.

Secondly, I agree that there is a two-tiered culture in Goldman Sachs. Most of HBS students will come from the Investment banking division where culture matters much more. I have sat on meetings where MDs were berated by partners for being too aggressive in valuations, leverage proposals or synergies on certain deals. There is also a strong understanding that pitchbooks may have some questionable estimates, but executed deals are 100% by the book. I cannot speak for the trading culture, but from hearsay i understand it to be much more aggressive and arrogant.

Source: The Harbus



Response #3: My colleagues at Goldman were good apples

Response 3 My Colleagues At Goldman Were Good Apples

My summer-associate internship in banking at Goldman was my first time working in finance, so I am not sure how much of what I saw and experienced was particular to my group, to the firm, or is generalizable to Wall Street at large. Notwithstanding that disclaimer, I share this:

I worked with some exceptionally smart and talented people, a few of whom went to great lengths to make me feel welcome, to lend me a hand when I needed one, and to offer a peek at what it would be like to build a career at the firm. These colleagues were true professionals, and would be the first on my list if I were ever in need of investment-banking services. Greg Smith’s op-ed fails to properly acknowledge the existence of these good apples, whom I suspect can be found at most every level and in most every corner of the firm.

But important parts of Smith’s op-ed ring true – there are plenty of bad apples. It seemed to me that many of my colleagues had difficulty placing themselves in the shoes of our clients — or worse, didn’t even try to — and it was not at all clear to me that they were “long-term greedy,” a description for which Goldman is famous. In one particularly memorable case, a full-time associate and I were implicitly encouraged by an MD to ensure that our quantitative analysis found a particular financial product to be the most beneficial to our client — regardless of the actual benefit, it was the product that would generate the most revenue for our group. This exercise involved at least a half-dozen assumptions, so our analysis was defensible, but I believe our client was savvy enough to suspect our biases, and it must have eroded his opinion of our work and character, at least incrementally. Experiences like this contributed to my decision to turn down a full-time offer to return.

Source: The Harbus



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