Why I Left Goldman Sachs: A Wall Street Story (5 page)

By the end of the summer, there were three or four interns going after that one spot in New Markets Sales, and everybody was highly qualified. During the time I spent with Rudy’s group and afterward, there was an odd dance going on. It’s a little like a mating ritual, a tactical game that’s integral to the internship. Both you and the group you want to work for have to show interest in each other—but not too much interest. They don’t want to tell you (because they can’t) that they’re definitely going to hire you. And you don’t want to tell them you’re definitely going to accept their offer if they make one, because you’re always encouraged to have a Plan B. Unfortunately, I was so drawn to New Markets Sales that I’m not even sure I had a Plan B.

The dance continued. I kept finding ways to spend time around, and to do things for, Rudy and his little crew. Finally, by week eight, the VP running the New Markets desk told Rudy, “Take Greg out for dinner”—a request that I think was a mixture of “Give him the final vetting” and “Give him the sense that we’re interested in having him come work for us.”

The dance heated up. I knew what was going on, and I was excited. This was what I wanted. It was South Africa, it was Israel. The desk seemed like a great starting point for my career: With just five people, it felt manageable. I knew I would get on well with the group; they got on well with one another. Plus, Rudy and I had clicked right away. The more I learned about business, the more I realized that everything was about personalities, and Rudy’s and mine just meshed.

On the evening he and I went out for dinner, I was a little surprised at how casual the whole occasion was. I’m not sure what I was expecting. First, we stopped to pick up Rudy’s dry cleaning. He dropped it off at his walkup at Sixty-Second and Lex. Then he said, “Why don’t we get some sushi.”

Today, twelve years later, sushi is my favorite food. At the time, though, I had never summoned up the guts to eat raw fish. I was a little hesitant. “Try it,” Rudy said. “You’re going to like it.” A few pieces of yellowtail sashimi later, I started warming up to it.

I was a little bit nervous, but it was a good kind of nervousness. Rudy asked me about myself and my background—this was clearly the vetting part—but mainly it just felt like casual dinner conversation over sushi and Sapporo beer. We talked about the other members of Rudy’s team, and then I could tell it was my move. Another intricacy of the dance: the interns had been warned early in the summer never to assume somebody you wanted to work for knew you wanted it. If you really want something, we were counseled, say so, in no uncertain terms.
When
to say so was the whole question. Now was the time. I decided not to hold back. I said that I really wanted to work with New Markets. Rudy smiled.

The last night of the summer program, about fifteen interns, a few women included, went on an extracurricular outing to Scores, the New York strip club that Howard Stern made famous on his radio show. We were all having fun drinking and enjoying the scenery, until I saw an intern I knew, an Asian guy named Jon, waving at me from the club’s VIP section. (Jon, a man of refined tastes, had boasted throughout the summer how many times he’d eaten at Le Bernardin and Daniel, two of New York’s finest restaurants; like Adam, he would also later go on to manage billions of dollars at a hedge fund.) Another intern, a Persian pal of mine, and I walked up to the rope blocking the entrance to the VIP lounge, and Jon waved the two of us past the bouncer. This was exciting stuff. After what seemed like about five minutes of dances from a few blond bombshells, my Persian buddy and I were informed that we each owed $750. Seven hundred and fifty dollars! I certainly didn’t have that kind of money to throw around—it would have been a significant portion of my total net worth. With dark looks and muttered threats, the bouncer escorted my friend and me out the back door. I remember thinking that we were very lucky not to have been beaten up on the pavement behind the club.

Minor misadventures notwithstanding, the summer had ended well. I knew that I wanted to work for Goldman Sachs, but did Goldman Sachs want me? When you leave for the summer, there’s a protocol: the firm does not guarantee you anything. You have to wait a few weeks to find out your fate. I felt I had about an 85 percent chance of getting an offer. I went in to work on the last day and said goodbye and thanked everyone I had met. I made sure to say goodbye to my intern manager, a VP named Mike—he would probably be the guy who would call to say whether I’d gotten a job.

“Thanks for everything, Mike,” I said.

“You did a great job, Greg. We’ll let you know,” he told me.

I turned around, feeling hopeful.

“Oh, one more thing,” Mike added. “Next time you go out for a big night on the town, make sure you bring enough cash.” He had a wry smile on his face.

News travels fast on Wall Street.

At Goldman Sachs, passing the Series 7 exam the first time you take it is not optional; it is expected. The Series 7 is your first big test on Wall Street, a rite of passage that allows you to start calling clients and being useful. The exam is six hours long, and the material is about the thickness of two large encyclopedias, a daunting volume of information to master. Early on a Tuesday morning in September, I got in a cab outside my apartment on Chambers Street and headed uptown to take my shot at glory. It was a beautiful morning: bright, crisp, cloudless. But the beauty around me was in stark contrast to how I felt: very nervous and not at all ready.

My stomach was churning as I sat in the back of the Yellow Cab taking me to the testing center, at One Penn Plaza in Midtown. The early-morning sun was too bright, beaming like a giant searchlight down each Manhattan block we crossed. I couldn’t help listening to a story on the taxi’s radio about Michael Jordan’s possible return to basketball, to play with the Washington Wizards.
Why?
I thought.
He had retired from the Bulls at the top of his game. At the top of THE game. There’s nowhere to go but down.

My path was just beginning. I’d gotten the magic call from Goldman Sachs about two weeks after my summer internship ended, in late August of 2000. I had gone home to South Africa to visit my family for two weeks before I started my senior year. Goldman Sachs generously paid for your ticket home, no matter where in the world that was: a nice perk of the internship. Because of the six-hour time difference between New York and Johannesburg, I was anxiously awaiting Goldman’s call at all hours of the night and day. But the frustrating part was I had no idea when the call was going to come. And if I didn’t hear from them, did that mean I wouldn’t be getting a job offer?

Then, at around 5:00
P.M.
Johannesburg time one Thursday evening, the phone rang—and the news was all good. “We are very excited to offer you a full-time job at Goldman Sachs,” the woman in HR said warmly. She apologized that Mike, the program manager who had found out about my Scores episode, was not able to jump on the call but said that he was very excited for me. He couldn’t have been nearly as excited as I was. This was the golden ticket, a dream job for anyone who wanted to start a career on Wall Street. Goldman Sachs was the best of the best—the “Rolls-Royce of investment banks,” as one of my Johannesburg friends had put it. I humbly played it down when he said that, but I knew it to be true. I felt incredibly proud that I had competed with some of the toughest, smartest people in the world, on one of the biggest stages in the world, and had succeeded.

“Will you be accepting your analyst offer in New Markets Sales on the wire?” the HR woman inquired. In Wall Street terminology, “on the wire” means “immediately.” But I’m not an on-the-wire guy: I’ve always been cautious and deliberate. In school, if I finished a test twenty minutes early, I’d spend the extra time checking and rechecking my answers. And now I decided that I wanted to take the three to four weeks the firm had offered me to consider my decision fully, even though I was virtually certain I would ultimately accept. I later learned that this rubbed a lot of people the wrong way. Wall Street likes instant gratification and gratitude. They want to know
now
, and they want a big thank-you.

It was great to know so early what I’d be doing after graduation, at a point when many of my peers were still agonizing over where they were going to work. That was a big benefit of the Goldman internship. It gave you a taste of whether you actually liked Wall Street, and liked the firm. It gave you the opportunity to show your merit over a ten-week period, as opposed to relying on a thirty-minute interview to persuade someone to hire you.

Graduating from college was bittersweet. I’d loved my four years at Stanford, felt privileged to have attended on scholarship, and was sad to be leaving. My mind had been opened to things I would never have thought of in Johannesburg. I had made close, lifelong friends, and now we were being dispersed all around the country.

I had studied hard enough, but had managed to have fun, too. In my senior year, I was the social manager of Casa Italiana—in theory, a place for Italian majors or minors to immerse themselves in Italian language and culture; in actuality, thanks to its location smack in the middle of campus, a great place for parties, with the best chef at Stanford. I had a $2,000-per-quarter budget to throw parties for the whole school, and I threw them. We had a Jazz Night, a Sake Night, a Karaoke Night…

I didn’t have any classes before noon my whole senior year. I would often think,
This is so funny—in just a few months my alarm is going to be going off every morning at 5:00
A.M.
How the hell am I going to wake up?
I was on that college schedule of staying up till all hours and sometimes sleeping through lunch. It was great while it lasted.

Graduation weekend was a special time. My mom flew over from Johannesburg; my cousins came in from Chicago, as did my aunt from Florida. The day my mother arrived, we were attending a small graduation barbecue when, suddenly, a motorcade of three black SUVs pulled up and Chelsea Clinton, whom I’d known in passing from my freshman dorm, stepped out along with her dad (out of office just a few months) and Hillary. We all got to chat with the Clintons and shake their hands, and they posed for an endless series of pictures with overeager moms and dads, who seemed to have forgotten that the Clintons were proud parents, too. Bill and Hillary were beaming with happiness for Chelsea. I was always impressed by how nice and composed Chelsea was—even during the soap opera going on at the White House during our freshman year.

The graduation speaker for the Class of 2001 was Carly Fiorina, a Stanford grad and the CEO of Hewlett-Packard. The first woman to lead a Fortune 20 company, she had been named “The Most Powerful Woman in Business” by
Fortune
magazine a few years earlier. That day, she gave a very poignant speech, comparing her life to a novel that she had edited down, page by page, until she had distilled it into a one-page essence. She recommended that we all go through a similar process in the course of our lives. Her speech had a powerful impact on me, and I have reread it many times over the years. A few of my friends and I snagged front-row seats at the commencement address and were captured in a candid photograph that ended up featured prominently in our Class of 2001 yearbook. All five of us keep a framed copy of that picture somewhere, wherever we happen to live in the world. In it, I am looking optimistically into the distance. That is really how I felt. I was still in my opening pages, sad about closing that early chapter, but excited to move on to the next one. The idea of living in New York, being independent, and earning a living appealed to me enormously. When I graduated from Stanford, I had less than $3,000 in my bank account.

Goldman Sachs underwrites a house-hunting trip for new hires—it even pays for a real estate broker—so, in May, I flew to New York to look around for a place with my friend Adam and a friend of his. I struck out. I was trying hard to persuade the two of them to live on the Upper West Side, because of the great Jewish scene there: I thought it would be a good place to meet Jewish girls, plus there were dozens of synagogues, and of course Barney Greengrass (“The Sturgeon King”), on Amsterdam at Eighty-Sixth Street, had the best smoked salmon and potato latkes in New York.

But Adam and his friend wanted to live in Union Square, because of the trendy downtown feel. We kept going back and forth, and we couldn’t find anything. I returned to Palo Alto with nothing in hand, having wasted my Goldman-financed house-hunting trip. Adam would end up finding an apartment by himself, in Murray Hill. When I came back to New York for the Goldman training program in late June, a Bangladeshi friend who’d been an intern with me the previous summer (but who ended up at Morgan Stanley) kindly agreed to let me sleep on a blow-up mattress in his apartment at Sixty-Second Street and First Avenue until I found a place.

On the first day of the training program, I met JF, a French Canadian guy who was a former national-level water polo player from Montreal and a ladies’ man—and who spoke barely a word of English. Goldman had taken a leap of faith and hired him despite the language barrier, impressed by his determination and his ability to learn quickly. Their gamble would pay off: he proved to be an absolute killer at picking stocks (so good, in fact, that some of the senior VPs started using his ideas for their own clients when JF was only a few weeks into the job). JF loved nothing more than analyzing balance sheets and income statements and coming up with the best possible recommendations for his clients. While most of us were trying to figure out how to take the plastic wrapping off our Series 7 study manuals, JF was doing bottom-up analysis and looking at candlestick charts to determine whether his stock picks were going to break out of their range. His two weaknesses were extreme impatience and a short temper, which he sometimes didn’t control properly at work. JF had a buddy from Montreal who was working as an accountant at KPMG, and the three of us decided to get a place together.

And not just any place. A real estate broker told us about Tribeca Pointe—a very new building at the time, and one of the tallest apartment buildings in the Financial District. It stood forty-three stories high at the corner of Chambers Street and the West Side Highway, right by the Hudson River, and it had amazing views of the water and Manhattan, especially from the upper stories. A two-bedroom apartment was available on the fortieth floor, the broker told us. The rent was $3,750 a month, very pricey for two beginning Goldman analysts—we were earning a base salary of $55,000 a year to start (about $750 a week after taxes)—but it might just work if we split it three ways.

But there were only two bedrooms.

The more we thought about it, though, the more hypnotic the idea of living on the fortieth floor of this magnificent building seemed. We thought it would be hugely impressive to friends and visitors; we hoped the spectacular views would mesmerize girls as well. When the broker told us that for a mere $1,000, a Russian contractor the broker used could build a temporary wall between the apartment’s open-plan kitchen and living/dining room, creating another small bedroom (a practice we would later learn was very common among young Wall Streeters setting up shop in pricey Manhattan), the three of us decided to take the plunge and open our checkbooks. So, on August 1, 2001, we moved into 41 River Terrace, Apartment 4004. That Sunday, my roommates and I took drinks and cigars up to the roof-deck on the forty-third floor and toasted ourselves as we soaked in the glorious panorama of the harbor and the nearby twin towers of the World Trade Center. We’d paid a ton, but it felt worth every penny. (And we had plenty of company: we would soon find out that the River Terrace buildings were practically high-rise dorms for Wall Street foot soldiers.)

Meanwhile, the hard work of preparing to work at Goldman Sachs had begun.

Yet, this was a very different Goldman Sachs from the firm I had left at the end of my internship. No more fruit platters; no more GS-branded T-shirts, flip-flops, and other paraphernalia. The tech bubble that had been pumping nitrous oxide onto the trading floor the previous summer had popped in early 2001: companies that had been valued in the billions were now trading for pennies on the dollar. The economy was entering its first recession of the twenty-first century. Three people from the New Markets Sales desk, 60 percent of its staff, had been let go.

Only one person was left besides Rudy: an aggressive Slovakian who was a junior analyst like me, except a year older. Her English was only so-so, and she spoke very fast and very loud, perhaps thinking it would make her better understood. The Beast hadn’t hired her, but he was stuck with her for the time being. She had already passed her Series 7 exam. In some ways she tried to coach me on a few things, but in other ways she tried to leave me in her dust—if I showed up for work at 5:30
A.M.
, she showed up at 5:29—but since I wasn’t allowed to answer the phone yet, she didn’t have much to worry about.

Rudy needed me to hit the ground running. However, to be legally allowed even to speak to clients, not to mention execute trades, I had to pass my Series 7—and the Series 63, a deceptively shorter but actually harder regulatory test. There was a lot of studying to do, and the tests were all memorization.

While my team wanted me chained to my desk, the firm wanted me in class learning about municipal bond regulations for the Series 7. And then there was the expectation that you would nail the exam the first time. Your test results become very public knowledge at the firm the moment they come in. There’s even some semi-serious betting action on the floor on how various trainees are going to do. To fail either of the exams is extremely humiliating. This is an insane amount of pressure for a new kid on Wall Street.

The prep course for the Series 7 exam was a solid week of sitting in a conference room from 9:00 to 5:00 and being lectured on the most mind-numbing material: What are the laws around selling corporate bonds to a pension fund? What are the requirements for opening a new trading account for a mutual fund? The Investment Company Act of 1940—what was it? When was the SEC created? There were a few practical aspects to the material, such as methods for calculating hedging costs, but the joke on Wall Street was that this was information that, for the most part, you’d never again use, or even think about, for the rest of your career. You had to pass that exam so you could check that regulatory box that said you’d studied it. It was brutal; you had to drink gallons of coffee just to stay awake. As I sit here writing about it twelve years later, I can remember almost none of the specific material the exam covered.

After work and on weekends, I used to take my Sony CD Walkman up to the forty-third-floor roof-deck of my apartment building and, for five and six hours at a time, sit at a table in the small clubhouse listening to
Sinatra Reprise: The Very Good Years
while I studied securities regulation. I would put the CD on repeat and listen to it over and over again—I’ve always found this to be a helpful technique for getting a studying rhythm. I must have listened to “Summer Wind” and “It Was a Very Good Year” a thousand times. I still love those songs. I’ll always associate them with the Series 7 and my early days in New York.