Lloyd Blankfein on Risk, Crisis, and Leadership

Summary

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Podcast Summary: “Lloyd Blankfein on Risk, Crisis, and Leadership”

The a16z Show — Andreessen Horowitz
Aired: May 12, 2026
Guest: Lloyd Blankfein (former CEO, Goldman Sachs)
Host: David Haber (a16z General Partner)

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Episode Overview

This episode features a wide-ranging, candid conversation with Lloyd Blankfein, former CEO of Goldman Sachs, on the dynamics of risk, crisis management, leadership, and institutional culture. Drawing from decades at Goldman—through seismic events like the 2008 financial crisis—Blankfein unpacks lessons in decision-making under uncertainty, managing through technological and financial transformation, and how to build organizations that endure through turmoil. The conversation also delves into technology’s impact on finance, the importance of partnership culture, and Blankfein’s advice for today’s tech and business leaders.

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Key Discussion Points & Insights

1. Risk, Reward, and the Art of Crisis Management

• Multi-Faceted Risk Roles:

  • “Anybody who's investing, you know, you're doing two things. You're trying to make money for yourselves and your clients... and you're also trying to be a risk manager, and you have to do both.” (Lloyd Blankfein, 00:00)

• Contingency Over Prediction:

  • Most of risk management is not about predicting the future, but about contingency planning:
    • “Most of what we do with respect to risk is not so much predicting. It's a lot of contingency plan.” (Blankfein, 00:13)
  • “If you were so prescient, tell me what happens next.” (Blankfein, 19:51)

• Calm Under Pressure:

  • Blankfein described remaining calm during a crisis, including the famous “finish your salad” moment. His approach: disarm tension, focus on execution.
  • “My normal resting state is to not be resting... I tend to be a little bit wound all the time and I don't get especially wound in crisis. In fact, things slow down for me.” (Blankfein, 03:48)

[Memorable Moment - 02:55]

“The important thing is just to get people to do their jobs and just don't be frozen and don't submit to the chaos.”

2. Lessons in Leadership and Selecting for Resilience

• Crisis Reveals Character:

  • “Find people who've already gone through a crisis... when somebody's gone through a crisis, I think that's your best bet.” (Blankfein, 05:42)

• Advice on Choosing Board Members:

  • Not appearances, but tested experience under duress, predicts competence in a crisis.

• Non-Hierarchical Approach:

  • Blankfein socialized decisions, gathered input widely, and made himself approachable—especially to juniors (17:26, 29:53):
  • “If a junior guy was telling me something and three people up the letterhead told me the same thing, I would sit and listen.”

• True Leadership:

  “You want them to appreciate you. You want them to feel they're going to be better by partnering with—by following your flag, and not someone else's.” (54:17)

3. Institutional Culture: Partnership DNA in a Public World

• Origins and Upbringing:
  • Blankfein shares how modest beginnings (public housing in Brooklyn, first airplane ride for Harvard interview) shaped his humility and ambition (07:00).
• Goldman’s Partnership Culture:
  • Emphasized the “co-ownership” mentality and socializing major decisions—key to institutional stability and fostering long-term alignment.
  • “Partners own the firm... Their fortunes rest on the success of the whole enterprise, not just their narrow silo.” (27:47)
• Carrying Culture Forward:
  • Even after going public, mechanisms like partnership elections, compensation based on firm-wide performance, and strong alumni support maintained the internal culture.
  • “We have partnership elections, we pay people based upon how the whole firm does.” (31:51)

[Notable Quote - 31:30]

“It's crazy to expect a kind of loyalty if you don't show loyalty. It's crazy to expect commitment if you don't show commitment.” (Blankfein)

4. Risk Management as a Competitive Advantage

• Proactive, Relentless Contingency:
  • Mark-to-market discipline as both a risk management and early-warning system.
  • “We marked things to market rigorously, religiously. And other people didn't.” (47:13)
• Taking (and Controlling) Losses:
  • “It's very important not to treat somebody who's wrong like they're stupid... The big fault of risk management or bosses...is they let after acquired information seep into their judgment of what they would have done at the time.” (18:22)
• Managing Incentives:
  • Leadership must balance rewarding both top performers and those in “doldrums” to retain talent, mute cycles, and avoid purely transactional culture (37:29).

5. Technology, Transformation, and Institutional Inertia

• Technology Arms Race in Finance:

  • Winner-take-all market dynamics; technology as enabler for speed/capacity—but also driver of new forms of risk.
  • “If you had a risk execution system...you wanted your computers a half a block closer to the exchange than everybody else's. Because the milliseconds mattered.” (22:03)

• Cultural Gap: Valley vs. Wall Street:

  • In finance, technology errors are existential; iterating via public “mistakes” (à la early tech startups) is not an option.
  • “We weren't allowed to do that. We had to be right. We had to run things 50 times and had to be perfect the last 49 times before we could go that way.” (23:30)

• Enduring Systems:

  • Goldman's modular risk system (SecDB) has lasted ~30 years, a rare example of durable “systems of record.” (26:13)

6. The Financial Crisis: Surviving—and Being Targeted

• Crisis Navigation:
  • “Risk management culture...maybe that stemmed from the fact that we were a partnership legally. We had unlimited liability. There's nothing that focuses your attention better...” (45:43)
• Commitment to Honoring Obligations:
  • Emphasized the importance of long-term relationships over short-term transactional gains.
    • “Commitments are in the past and relationships are in the future.” (49:49)
• Public Perception and Reputation Management:
  • Goldman’s lack of consumer-facing business made it a lightning rod for public and political backlash post-crisis.
  • Nature abhors a vacuum: “We had a whole PR department to yelp our name out of the paper. Turns out we were too important, too influential, too big to be anonymous...” (55:54)

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Tech, AI, and the Future: Excitement & Caution

1. Tech Sector’s Newfound Social Responsibility

• Parallel to Finance:

  • AI labs and big tech will inherit public flak in the same way banks did post-2008. The lesson: proactively explain your value and role before a crisis hits.

• Advice to Tech Leaders:

  • “You perform a super important function... It's time to explain that... Before people decide you misstep, you want to have a counter argument.” (57:28-58:20)

2. AI: Promise, Risks, and Lessons from History

• Is this time different?

  • “Things don't never repeat, but often they rhyme... Is this like electricity? The internet? Could this be a bigger deal? I don't know. I don't think anybody knows.” (58:38)
  • Conviction signaled by founders risking their own capital (not just professional managers with others' money).

• Structural Risks:

  • Technical: Unintended consequences and leverage (i.e., software can do 70,000 transactions in a flash).
  • Reliability: Unlike humans, you often can’t “test” AI’s reasoning or intent.
  • Societal: Regulatory and governmental response may be necessary “not because it's smarter than us and is going to turn us into pets, but because we don't have the ability to test whether it's right or not.” (61:56)

[Notable Quote - 65:02]

“You're not going to unlearn stuff... I don't have to identify [the positives]... I'm not mournful of the opportunities. I'm apprehensive about it and I think it should get a lot of focus. But... you're not going to unlearn it. So don't waste any time thinking about it.”

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Enduring Career & Life Advice

• Range & Curiosity:
  • “People should make themselves complete people. Your early life is for becoming a complete person...grasp a range of activities for your own sake, to make you appreciative of things and also for your commercial life.” (66:55)
• Importance of Humanities & History:
  • “Learning history, you know, it's a good thing to know that we've lived through times like this before. Everybody talks about, oh my God, it's never been this bad... If our parents could get through that, we should get through this.” (68:38)
• Leadership Style:
  • “Be the person that other people want to deal with. Not just for short-term gain, but for making their lives and careers better.”
• On Opportunity:
  • “Opportunities live between fields of expertise...I like living at over the edge of cliffs and over your horizon of what you could see about the future.” (69:33)

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Memorable Quotes & Timestamps

| Timestamp | Quote | Speaker | |-----------|-------|---------| | 00:00 | “You're trying to make money for yourselves and your clients... and you're also trying to be a risk manager, and you have to do both.” | Lloyd Blankfein | | 03:48 | “My normal resting state is to not be resting...I don't get especially wound in crisis. In fact, things slow down for me.” | Lloyd Blankfein | | 05:42 | “Find people who've already gone through a crisis... that's your best bet.” | Lloyd Blankfein | | 19:51 | “If you were so prescient, tell me what happens next.” | Lloyd Blankfein | | 27:47 | “Partners own the firm...Their fortunes rest on the success of the whole enterprise, not just their narrow silo.” | Lloyd Blankfein | | 31:30 | “It's crazy to expect a kind of loyalty if you don't show loyalty. It's crazy to expect commitment if you don't show commitment.” | Lloyd Blankfein | | 47:13 | “We marked things to market rigorously, religiously. And other people didn't.” | Lloyd Blankfein | | 49:49 | “Commitments are in the past and relationships are in the future. Go out and make sure that our clients know we're still good.” | Lloyd Blankfein | | 54:17 | “You want them to appreciate you. You want them to feel they're going to be better by partnering with—by following your flag, and not someone else's.” | Lloyd Blankfein | | 57:28 | “Businesses wouldn't exist today...but for Goldman Sachs taking a risk in some ways. The invisible hand that links people with capital with people who need capital. ... That's a very important function in the world. Guess what? It's time to explain that.” | Lloyd Blankfein | | 58:38 | “Things don't never repeat, but often they rhyme...Is this like electricity, you know, the electrification of the country? ... Could this be a bigger deal? I don't know. I don't think anybody knows.” | Lloyd Blankfein | | 65:02 | “You're not going to unlearn stuff...So don't waste any time thinking about it.” | Lloyd Blankfein | | 66:55 | “People should make themselves complete people. Your early life is for becoming a complete person...” | Lloyd Blankfein |

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Timestamps for Key Segments

• 00:00–04:30 Risk Management Fundamentals & Crisis Stories
• 06:00–09:15 Upbringing, Ambition, Early Experiences
• 09:15–13:00 Goldman’s DNA, Jay Aaron Acquisition, Culture
• 14:47–18:20 How to Manage Losses, Decision-Making Under Fog
• 22:03–27:14 Technology Transformation in Finance
• 27:14–34:42 Partnership Culture, IPO Transition, Culture Maintenance
• 39:21–45:11 Leadership Philosophy, Internal Mobility
• 45:11–54:17 The Financial Crisis: Survival, Mark-to-Market, Reputation
• 54:31–58:20 Tech Industry’s Coming Reckoning, Advice on PR & Social Roles
• 58:20–65:02 AI, Bubble Risk, Societal Impact, Regulatory Challenges
• 66:38–71:25 Career Advice for the Next Generation

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Final Thoughts

Blankfein brings a nuanced view: Success in unpredictable environments isn’t about clairvoyance, but preparation, robust culture, humility, and acting decisively while others freeze. He cautions both financial and technology leaders to recognize their influence, proactively manage their reputation, and nurture cultures that endure—emphasizing both technical excellence and human connection. His parting advice: cultivate range, invest in your growth as a whole person, and never underestimate the arc of history—or your own legacy.

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Transcript

[Lloyd Blankfein]

Anybody who's investing, you know, you're doing two things. You're trying to make money for yourselves and your clients. And so you're trying to get out there and take risk. And you're also trying to be a risk manager, and you have to do both.

[David Haber]

I think it was your quote that it's like, if you're so good at predicting the future, tell me what's going

[Lloyd Blankfein]

to happen next once the present turns into the past. Everybody's a genius. Most of what we do with respect to risk is not so much predicting. It's a lot of contingency plan.

[David Haber]

We are on the precipice of some of the largest IPOs ever. What are risks that you think are

[Lloyd Blankfein]

underappreciated before this technological age? Not just AI, but in general. Could you have had a mistake that could cost billions of dollars? Not really. But now you can leave a piece of software, could go out and do 70,000 transactions. The leverage in these things is themselves a pretty problem. Not because it's smarter than us and it's going to turn us into pets, but because we don't have the ability to test whether it's right or not.

[Podcast Host/Narrator]

What does it take to lead through a crisis? Most organizations are built for normal conditions, but the real test comes when uncertainty is highest, when information is incomplete, and when decisions have to be made quickly without knowing how things will play out in those moments. Success isn't about predicting the future. It's about preparation, judgment, and the ability to act while others hesitate. Few people have operated at that level as often as Lloyd Blankfein, leading Goldman Sachs through some of the most volatile periods in modern financial history. A16Z general partner David Haber speaks with Lloyd Blankfein about risk leadership and building institutions that can endure through uncertainty.

[David Haber]

Your tweet, by the way, about the White House Correspondence center was amazing. I think for the good of the timeline, we need you back on Twitter more often.

[Lloyd Blankfein]

I know. You know what? It's a funny thing is you would think that you see something and you're activated to tweet about it. For me, I said, oh, gee, I haven't tweeted for a long time. Let me find something to tweet about. And also being in the risk management business, I always know that everybody keeps doing that, and eventually you get canceled because you do something. You step over some invisible line that nobody knew about. And so I realized that from a risk reward point of view, it's all ego and no real value other than that. But that was saying when you Retired, you'll. You grasp at straws.

[David Haber]

Why not? I mean, it was like 10 million views later or something. It was amazing.

[Lloyd Blankfein]

I went to. I remember when I was doing his. What's his name? From Twitter, you know, I said, when I retired, I am freed from the restraints that I had because, you know, I did this at Goldman.

[David Haber]

Yeah.

[Lloyd Blankfein]

And I realized that I was playing a dangerous game because I was being snarky with the President and I had all those back and forths totally with Sanders and Elizabeth Warren.

[David Haber]

The other thing I was curious to ask you, you're obviously like famous for being commoner pressure and risk manager, but it was reported that like during the active shooter, like you lean over to the person next to you, you're like, you're going to finish that. That salad. Is that, Is that a real.

[Lloyd Blankfein]

No, that was. Yeah, that was real. But it wasn't like I was hungry. I saw every, you know, I always used in moments of crisis like that, always tried to be disarming.

[David Haber]

Sure.

[Lloyd Blankfein]

And by the way, it was very sensible to duck down under the desk. I mean, it was a line realized we were pretty close up and I was just. It wasn't that thoughtful on my part. It was just that it was like being in a movie and I was like enjoying watching it. Totally. And you had all these guys who were wearing tuxedos. Suddenly they had pistols in their hand and there were guys in full tactical gear and they all ran in and they all were on the stage with their guns, facing outward, of course, because that's where the threat would have come from. Then I, you know, suddenly, you know, guy tugs at my leg and he said, you really should get down. And I said, you're really right. I said, this is like when I get into an airplane. This is another time that I'm glad I'm short. But I was watching it and then I saw what everybody was doing and I didn't see a lot of panic. I didn't see any panic, really. And the people under there, which was a sensible thing to do.

[David Haber]

Yeah.

[Lloyd Blankfein]

But again, to break the moment I looked down and they said, by the way, are you going to finish your salad? And as amazing I was, you know, it was kind of funny at the time.

[David Haber]

Ice in the veins, I don't know. Well, were you always even killed as a kid?

[Lloyd Blankfein]

Yes. Somebody said, gomen, you're very good in a crisis, and that's why you go out of your way to create them just so you can give you an opportunity to be good in a crisis. I Would say that my normal resting state is to not be resting. So I tend to be a little bit wound all the time and I don't get especially wound in crisis. In fact, things slow down for me. I'm used to seeing things like that. They're in slow motion and I become very sensitive to what the people around me are thinking and trying to get them more. Most of the time, like at Goldman and in most of life in a crisis time, the really important thing is just to get people to do their jobs and just don't be frozen and don't submit to the chaos.

[David Haber]

Do you think that was like a Nate or was there something from your childhood that sort of helped kind of breed that temperament?

[Lloyd Blankfein]

I don't know. I wouldn't have predicted that about myself. But I've now gone through. We had the crisis of the century roughly every four or five years and it's always that way. But it doesn't mean I like crises and I wouldn't go out of my way to volunteer to be in one. It's just that when it happens, I generally have confidence. I'm not trying to tempt the fates. If I'm gonna get discombobulated, everyone is gonna get discombobulated before me. And so I've done that. And by the way, that taught me a lot about the people that you need to rely on because you can't really tell. I mean, not to coin a phrase, but you can't tell a book by its color. And I went through, and maybe this is outta sequence, but I went through the financial crisis and we had people and thinking one in particular who was great athlete, terrific guy, real man's man, did rodeos on the weekend and he was terrible. And here I am, the co president

[David Haber]

of the firm, here I am trying

[Lloyd Blankfein]

to teach people how to me trying to say you have to breathe. And then there were people who didn't look like they could walk up a whole flight of stairs. And they were really good. And so just people you just don't know. And that's why I mean my advice when you pick board members.

[David Haber]

Yep.

[Lloyd Blankfein]

And by this is a very. I'm turning something that's generic into a very narrow things. I think a good place to go is find people who've already gone through a crisis because to me, people who look like and sound like they'll get through it. I'm not sure how much of a correlation there is to the reality of it, but when somebody's gone through a crisis, I think that's Your best bet?

[David Haber]

Totally. I definitely want to spend some time on the financial crisis because obviously it was such a defining kind of period, but maybe to go backwards sometime. Obviously you had a very modest upbringing. I was curious, like, what role did living near New York City or Manhattan, maybe more specifically, play in sort of like creating ambition or for me, you know, I didn't grow up in the projects, but I grew up very modestly as well. And where'd you grow up? In South San Diego, in cho, like 10 minutes from Mexico. Mom was a public school teacher. Dad worked in retail in Mexico, very far from Cambridge and Harvard. Really changed my life.

[Lloyd Blankfein]

Right, Your dad had to get through the border to get to Mexico every day. Did they give him a tough time at the border?

[David Haber]

He had a motorcycle, so it was

[Lloyd Blankfein]

a little bit easier. See, they put shoes on to.

[David Haber]

Exactly. Harvard definitely changed my perspective on what's possible. Now we say I learned more from my peers than I did from my classes. I'm just curious if you had a similar experience.

[Lloyd Blankfein]

I would say that I grew up with Manhattan looming in the distance. I think I probably. When I was. Before I went to college, I probably went into Manhattan three times or something like that. And I think twice was to the Radio City Music Hall Christmas show.

[David Haber]

Yep.

[Lloyd Blankfein]

And I know once of them was an interview to go to Harvard, and that was a big deal. We might as well have been 5,000 miles away from it. Because I grew up in public housing. It was. This won't mean anything to you. It was a two fair zone. You had to take a bus to the subway to get to the city. Probably took a long time to get there. I grew up in public housing, nycha, where I think there's a gradation of incomes that you can have. There's different levels of public housing, and I think if you made more than $90 a week, you couldn't live in that particular building. So since then, I've met people who've walked across deserts, people who grew up in war zones. So I don't want to compare stories because a lot of people had tougher stories than that. But I didn't know a lot, and so I didn't have the burden of high expectations. And that's a funny way of putting it. But I did label the first chapter kind of advantages as opposed to burdens, because I realize now, now that I'm on the other side of the ledger, I understand just what a burden high expectations can be on people. I did not suffer from that, but I also didn't know what was going on in the world and I'd never traveled, I'd never been on an airplane for sure. So anyway, when I went up, I saw Harvard. It was the first time I really traveled. My sister took me up so it was more of a culture shock. I went to a high school that was a failing high school. I don't think I'd read a book. My board scores, I mean I'm a pretty verbal person. My verbal scores were very low. My math scores were like almost perfect. I think it was kind of like a 790. And what I was burning to do, the extent of my ambition was to go to an out of town college and that was it.

[David Haber]

Amazing to get out of Brooklyn totally. Maybe just to transition a bit to Goldman. One of the things I've always found kind of remarkable about the firm's history is that it wasn't a business built through a series of bank mergers. Right, right. Unlike many of its peers, J.P. morgan, B of A et cetera, it was really a business at least from my vantage point built brick by brick that kind of generations of entrepreneurial partners raising their hands, going off and building Europe or the merchant banking business or.

[Lloyd Blankfein]

Right. Even the retail. Yeah, that started. That went in a different direction after I left. That was an outgrowth of the merchant bank totally nurturing a business. And then somebody said gee, we shouldn't be just a private equity firm here. We should be a strategic. Our own strategic. And that's how that. Yes, that's how it was done.

[David Haber]

The one notable exception, maybe from an inner anacrow story was the acquisition of Jaron.

[Lloyd Blankfein]

Yeah.

[David Haber]

And I know you have I think the 45th anniversary dinner.

[Lloyd Blankfein]

I think so, yes.

[David Haber]

I guess. Did people at the time think that they would have such a big impact on a firm or maybe.

[Lloyd Blankfein]

Well, I was an acquiree so I don't know what they thought at the time. I subsequently found out what they felt about and it was a disaster. And it was a little bit like Columbus trying to find the Indies and instead finds America. Turned out okay, but for different reasons. They discovered something, but not what they intended to discover. So they ended up getting a bit of an entrepreneurial culture that they didn't know were buying. But certainly at the time this was in the early 80s, it was a moment of high inflation. That inflation and the manifestation was higher commodity prices, precious metals, gold had only been recently freed up to be able to be owned by individuals. We'd been on the gold standard that evolved. It's hard to transport back to that time but the business of JJ. Aaron and company was kind of a sleepy business, except it erupted in a positive way at the end of. Before Volcker came in and clamped down on inflation, highly inflationary period. And of course, the savvy streety guys at J. Aaron extrapolated the value of the firm at the peaky, peaky part of its thing and sold itself to Goldman. At the same time, dlj, which was an investment bank at that time, bought Ackley and Salomon Brothers and Fiber got together. So it was in the air that the Wall street firms needed a commodity arm and they and Goldman Sachs got Jay Aaron. Now, Jay Aaron had a, you know, kind of a different culture. It was, you know, if to the extent that this is kind of law, all lost now because all these firms have kind of blended and you wouldn't know the difference. But at the time, Goldman was kind of an our crowd kind of a firm. It was a Jewishy kind of firm. So was Jay Aaron, but very different.

[David Haber]

Interesting.

[Lloyd Blankfein]

Goman was, was kind of like, you know, was kind of a, you know, the upper echelon. An upper echelon crowd. And Jay Aaron was more of a kind of a streety guys. Yeah. Goldman recruited from the Ivy League.

[Podcast Host/Narrator]

Yep.

[Lloyd Blankfein]

And, and, you know, people with MBAs, and Jay Aaron just recruited people. And the first, the entry level job for most of the life of Jay Aaron was the best job to get, was the driver for one of the, for one of the traders and literally. And it was kind of almost like mafia, like in a way. And that's how you rose in the organization by that. And, and I had been. I had gone through college, went to law school, took myself and my loans into a law firm and worked there for about four or five years. And like a lot of other people at that time, wasn't doing. I was doing pretty. I was doing well at the law firm, but it wasn't necessarily for me in the long term, like a lot of people. And I looked for jobs I knew nothing about. I interviewed it a lot in being in New York. What. What do you go into when you're done with. You go to. You become a consultant or, you know, go to Wall Street. I said, I'll go to Wall street and, you know, give, you know, there I go. I will bestow myself on them. They should be so grateful to have me. I knew nothing about it. And of course I got a job now. Nowhere.

[David Haber]

Yep.

[Lloyd Blankfein]

And the only place I got a job or including, by the way, Goldman. Yep. Where I didn't get a job and the only place that offered me a job was J. Aaron and Company, the small commodity trading firm that I had never heard of. And they hired me as a. A precious metals salesperson. And right around that time they were acquired at by Goldman, which is how I got into Goldman.

[David Haber]

Amazing. And. And was that where you kind of learned to be a risk manager? I mean, that, that's like one of your most famous kind of qualities. But I don't know. Maybe. I don't know. I don't think much of our audience probably has a good understanding for what kind of trading in the 80s or 90s kind of look like either a Jaren or a.

[Lloyd Blankfein]

It hasn't shifted. You know, the vehicles have changed the thing. But the, you know, the kind of judgments and the perspective that you believe, I think, look, you know, we were at Goldman and anybody who's doing this business and yourselves, you know, anybody who's investing, you know, you're doing two things. You're trying to make money for yourselves and for your, you know, your investors and your clients. And so you're trying to get out there and take risk. And you're also trying to be a risk manager, which is, you know, you look, you know, it's almost like you bifurcate yourself and say, are we too. I know we want to take risks, but let's go into risk management mode and let's consider, are we diversified enough? Are we overly committed to this? Are we managing it well? And that's kind of a different head that you have to bring. Yeah, so. And you have to do both, you know, and by the way, we get challenged on both sides. Sometimes things go badly and you have to, you know, and people, you know, the pleasure pain principles work and people don't want to take risks. But yes, we're paid to take risks, so you have to take risks. So what do you want to do? And you have to exhort people and sometimes shame people into taking more risk. And sometimes you have to get them. Okay, we're not talking about what risk we want to take. Let's go over our portfolio. I'm sure you do portfolio risk and saying, where are we overly exposed? Yeah, where are, what contingency plans would we have if X, Y or Z or W or G happens? What can we do today to mitigate the adverse consequences if any of those things happen? And when you go around the table for those meetings, you're not so much interested in what people think about the future, where things will go. You just want to know, forget about what you Think the likelihood, improbability of something happening is what will you do if it does happen? And what can you do today to mitigate the consequences of that in advance at a very low cost today? You know, buying insurance is very expensive

[David Haber]

when everybody needs it.

[Lloyd Blankfein]

When everybody needs it. And when the. And then when the problem is dramatic, when the, when the hurricane is coming and it's on its way, it's very expensive to buy insurance for your oceanfront property.

[David Haber]

Totally.

[Lloyd Blankfein]

But, you know, in the middle of winter, when it's the furthest thing from your mind, it's a lot cheaper. And so what can you do? And so we did both those roads. I'd say what I might have had a. An orientation towards was the risk management part, because, you know, I could. I could find the cloud around any silver lining. You know, my wife, you know, yells at me, I'll walk. You know, she'll buy something new, and I'll notice, isn't that a chip, you know, on the lower part of something like that? I think my wiring was always to be a little bit fatalistic, a little bit nervous and a little bit looking for stuff, you know, that could go wrong. And. But it turns out that I had a kind of an appetite for risk. Not. Yeah, then that's a little bit different than saying I was good at risk taking. But I didn't. I could live. I could live with. In a. In a risky situation. I didn't, you know, I didn't shrivel up. I can, you know, on that. So, you know, I ended up having to do both things. But, you know, we have a lot of risk takers.

[David Haber]

Yep.

[Lloyd Blankfein]

And I would say that the biggest challenge for management is the risk management side, which is really getting people to refrain from risk, which is about a third of the time when you're in that business. And by the way, not the most important part, but probably the bulk of the time is getting people to take more risk when they don't want to.

[David Haber]

Totally. Because we think about that a lot

[Lloyd Blankfein]

here, too, because you get, you know, you get singed.

[David Haber]

Right.

[Lloyd Blankfein]

And you don't want to do it. But we're paid to put, you know, to put out money totally in the right place. And so you just can't, you know, you can't be, you know, you can't be afraid.

[David Haber]

This was. I, you know, I spoke to Ashok kind of leading up to this conversation. He said maybe a few things.

[Lloyd Blankfein]

One was, from his perspective, Ashok is the head of trading at Goldman Sachs a long time at this point.

[David Haber]

Head of And I think one of your mentees, or at least that's how he.

[Lloyd Blankfein]

I'm honored by that. But yes, I always think of myself more as a tormentor than a mentor.

[David Haber]

He said some amazing things, which I want to come back to. But he said one of the maybe cultural thumbprints from his perspective that maybe JRM left on the firm was a culture mark to market. Um, one of the other things he said was you were a manager that understood losses, so you weren't afraid of them. You would often, to your point, kind of encourage people to lean, to lean in. The other thing was he said you, you were incredibly good at gathering information from the organization that you were. You were both very approachable. So people wanted to come to you. And then often when you were doing maybe an audit of a division, you wouldn't just speak to the head of division, you'd speak to like the number two.

[Lloyd Blankfein]

I did, but I don't want to undermine. But I always did. I. On that score, I tried to make it so that everybody felt comfortable talking to me. One thing I never did, if somebody was calling to tell me something that was bothering them, that they saw an opportunity or a challenge, I never said I already know about it because I never wanted anybody to self censor later and say, oh, he must have heard about it from someone else. If a junior guy was telling me something and three people up the letterhead told me the same thing, I would sit and listen. First of all, you find out a lot about the person who's telling it to you also. So you're not just learning the content of what he's saying. You're learning a lot about the messenger. But secondly, I didn't want anybody to have an excuse to not tell me stuff. So I listened to a lot of redundant facts and circumstances. So I thought about that a lot. And about taking losses. You learned that the first day?

[David Haber]

Sure.

[Lloyd Blankfein]

I mean, of course, everybody. And I'll tell you one other thing that's very important on the law side. People can lose money. You could lose money because somebody's stupid, or you could lose money because somebody's wrong. Smart people are wrong. Totally smart people tend not to do stupid things, but they tend to be wrong. You know, the old saw about the best hitters in baseball make out 2/3 of the time and that kind of stuff. But it's very important when something goes wrong. It's just when something is not right or somebody loses, it's very important not to treat somebody who's wrong like they're Stupid. And people make a mistake because the big fault of risk management or bosses or managers is they let after acquired information seep into their judgment of what they would have done at the time. And that's, you know, you have to be very careful about that when you evaluate people, when you engage with people, you have to show an appreciation of what people have done in the fog which always exists. Because none of us know the future, by the way. Most of us don't even know the present. You know, the present is a mass of things. How. Who can sort that out? But once the, once the present turns into the past, everybody's a genius. Nobody voted, you know, nobody voted for Nixon and everybody got, you know, and yet he won in a landslide. You know, it's like everybody remembers things differently.

[David Haber]

I think it was your quote that it's like, if you're so good at predicting the future, tell me what's going to happen next.

[Lloyd Blankfein]

Yeah. So you know, again, when pundits come up and said, well, I know, I know, I know this or that. So look, when any. Anybody tells me, oh, I knew this, and I said, well, if you were so prescient, tell me what happens next. And I was, oh, well, it was easy then. You know, I don't, you know, and by the way, when somebody's telling me about the certain future.

[David Haber]

Yep.

[Lloyd Blankfein]

I say, you know something? Did you know that we would be doing this today or that the AI. You know, if you didn't know those things, how. Why are you so sure that you know the future? People don't know this stuff. I'd say most of what I bet most of what we do with respect to risk is not so much predicting and not so much forecasting. It's a lot of contingency planning. And if you're a good and you go around the table, what could happen? Don't tell me about the probabilities or the improbability. What could happen? And again, we said this before. What are you going to do about it? But the act of going through that thing makes you so alert and on it. When things get triggered and you so have a plan, you get off the mark so quickly that people think you did anticipate it, but when you really did is you heard the gun go off before anybody else. You know, and I don't know why I use sports analogy. I'm not the best sportsman in the world, but I know that in track and field, if they shoot the gun off, but you leave within a tenth of a second after it, they call A false start because your reaction time is at least a tenth, so you're not allowed to anticipate a start. And they'll call. I said, I want everybody to be called for a false start because they hear the gun so much quicker than anybody else, they get off the mark. And so that's the exercise you can do. Now. Some people are more intuitive, some people see things. But what I really do is, what I really think for most people is that they thought about that. I think X and Y and Z could happen. If this happens, this is what I'm going to do.

[David Haber]

You know, we have a lot of kind of tech entrepreneurs and just tech people in general kind of in our, in our audience. I'm curious, you know, how did you think about technology during your time at Goldman? You know, what role did it play kind of in evolving the firm? I'm sure it changed the markets, business, even, you know, oh my God, we were always.

[Lloyd Blankfein]

The technology was always changing everything. And you know, by the way, and a lot of what we. Not everything, but a lot of things in finance, it's winner take all totally. You know, if you put your, I mean, I'm sure the world has moved on, but even, you know, even a few years ago, if you, you know, if you had a, you know, if you had a, if you had a risk, you know, an execution system that communicated digitally back to the floor of the exchange, you wanted your computers a half a block closer to the exchange than everybody else's. Because the milliseconds mattered. Yeah, not only mattered, it was winner take all. You got everything, you got that, you got the offer or you hit the bid. And other people were left looking at it, you know, looking at your dust for that. So you were always, always competing for the best techn in a winner take all situation. By the way, a lot of life, whether people realize it or not, is winner take all. I can see, I know the opportunity set and the challenges and the anxiety people have about the current thing. And I think obviously I still invest and I still transact in the market. I think about that too. But I would say that no one is a better adopter or pays more, except for obviously the hyperscalers themselves who want to be the providers of the technology. But in terms of use of the technology, you know, the financial area is, you know, wants to be on top of it. And so interesting, by the way, there's a lot of, you end up in a lot of cul de sacs. You'll end up, you know, going down bad Paths because you just don't know.

[David Haber]

Sure.

[Lloyd Blankfein]

And you, and you have to do this. And I know that everybody's talking about is looking for cost savings. But you know, we always had, we always had to do things twice. We had to do the, we had to use the system we were confident in and then simultaneously run the new system we had high hopes for. We didn't have a high level of confidence in our business and as a regulated company that we were, we weren't allowed to have mistakes. By the way, that's another schism between the Valley and finance. So you could be, you know, I looked at, you know, Robinhood, great company, but early on, you know, they declared a kind of. They declared that they had government insured accounts that weren't government insured. They had some slip ups and a lot of apologies get made. You could do that. We weren't allowed to do that. We had to be right. We had to run things 50 times and had to be perfect the last 49 times before we could go that way. So we would always have the plan that we were. The technology that we knew worked inefficient as it was compared to the new and simultaneously run. And when we got confidence in the new system, we implemented that. And then there was a newer system that we were also beta testing at the same time. So technology in the first instance always augmented our costs, never detracted from it. But along. But as we go, as we went from one, you know, from one lily pad to another, things got better and more efficient. But we were always, always, always testing new stuff and always geared towards it and always very anxious about what would happen if somebody trumped us on something. By the way, in addition to execution capabilities and things that go to the efficiency, we also, you know, our risk systems, by the way, we had a huge technological advantage because of what we invested in early on.

[David Haber]

Totally. Yeah. We did a similar podcast with Marty Chavez a couple of years ago and he really credits you for helping kind of drive support or maybe adoption of sexdb kind of, you know, as you took over more parts of the firm, you know, getting everybody to kind of.

[Lloyd Blankfein]

Yeah, I don't know if I desire whether or not, you know, except for blame, I accept anything that comes my way. But we did have very good early stage risk models, by the way. SecDB, which is, you know, which was a kind of a risk management system that we had. And you know, it's kind of modular, whereas other things were kind of rigid. You know, we can always, you know, change things. It was so good and so flexible that I think it's like the system must be between 25 and 30 years old, and the core of it is still implemented. The only thing I know like that. And I once tweeted this out, because the battery. I still have my HP12C calculator.

[David Haber]

Amazing.

[Lloyd Blankfein]

And the battery went out. And I know that battery must have been here for 22 years. I think I own that device for like, 40 years. And I looked at that and I said, you know, I never thought of this before, but what consumer device still tracking after 40 years, not only are people still using, but looks like it could have been designed, you know, last year.

[David Haber]

Totally.

[Lloyd Blankfein]

It's an amazing thing. Well, RSECDB was kind of like that. It was also. But it wasn't a consumer device, but it was good like this. So I have a lot of admiration for some, you know, for design that really, you don't expect design to stand the test of times or fashion doesn't.

[David Haber]

Sure.

[Lloyd Blankfein]

But this, this does. I'm telling you, the original iPhone looks like an old product to me. The HV12C looks pretty good.

[David Haber]

We think a lot about, like, systems of record and their durability. And I think, yeah, secaview was sort of an example of that, certainly at Goldman. You know, one of the things that I think was unique about your career as well is you spent half. Half of your time at the firm kind of pre ipo. Yeah. In a partnership. And half the time, you know, post,

[Lloyd Blankfein]

you know, very, very relevant to your entrepreneurs.

[David Haber]

Totally. And I'm curious, you know, now there's an entire generation of leaders at the firm that didn't know Goldman, you know, pre ipo.

[Lloyd Blankfein]

Right. But they know the culture of Goldman Sachs, which has its roots and is committed to the principles that were evolved from the partnership. And so they may not know it's a partnership, but they know what. How we work. How we work.

[David Haber]

Yeah. I mean, maybe you could describe kind of like, what were those principles kind of pre ipo. And people really credit you also for kind of, you know, carrying that culture forward. Right. Ashok said this as well, which is like, we don't have a partnership, but it still feels like it's a partnership.

[Lloyd Blankfein]

So let me just say the difference is because people aren't alert. And, you know, in a partnership now, we're a big firm, you're dealing with small firms who want to become bid firms, and some of them have become bid firms. But in. There's a really big difference between a partnership culture and a corporate culture. Sometimes by Necessity. And it was really to go public. And I'll tell you, we can go into that direction, but we had to go public. One of the big impediments to going public was the fear that we'd lose our partnership culture. Now what do I mean by partnership culture? Partners own the firm, the employees there, especially the senior partners. The senior people are your co owners of the partnership. To the extent that you're a senior partner, a lot of it is by consent of the government governed. When you're looking at your senior card, they don't just work for you, they're not your subordinates, they're your co owners of their business. They have certain expectations that come from that. For example, their fortunes rest on the success of the whole enterprise, not just their narrow silo. If you work for, you know, if you work for Amazon in the retail area, are you really raising your hand asking questions about aws?

[David Haber]

Totally.

[Lloyd Blankfein]

But if you owned it, you care about the whole. So one thing, they own the whole. They care about the whole. They expect as owners to have a lot of information about the whole. They expect to have influence about the whole. They expect that any sudden moves by the senior partner is we socialize them. They expect to have input into that. They expect the process to be slow enough for them to have that influence and input.

[David Haber]

Yep.

[Lloyd Blankfein]

And you have to have a certain amount of discipline when you're managing that. If you want to perpetuate that. And I'll get to why you want to do that because. And so you have to socialize things and maybe your decision making, maybe lightning bolts don't come from your fingertips, you're trying to make suggestions, maybe you slow things up and hear complaints and maybe you actually don't do things that you want to do or you table it for another time when you could, when, when things could be more revealed.

[David Haber]

I spoke to Esther Stature also kind of leading up to this conversation. She mentioned that, she said one of hallmarks of your leadership was you. It didn't feel like you were very hierarchical. Like when you wanted to make a tough decision, you would, you would at least go socialize it with a bunch of people, you know, gather input.

[Lloyd Blankfein]

I'm thinking about. Well, first of all, generally when you're on top, people want, people want to get in line with you and some. But sometimes they can't. They just think you're wrong. So socializing and talking in advance had the benefit of just enlisting support from people who otherwise might be neutral, who just, you know, just not because they're Sucking up. But just naturally they want to, you know, they want to, they want to compete, you know, they want to. They're pliable, you know. And then, and then you had to honor the fact that they felt like owners. Now why do you care when they feel like owners? Because you get a much more stable organization. They feel attached, they feel committed. Even people who've been there for a few years take that away with them. And people who've been out of the firm for a long time still self identify as ex Goldman. By the way, how we treat, you know, one another examples are part of that kind of ownership. We treat our alumni very specially. Goldman has an alumni office. I put that in an alumni office

[David Haber]

where I spoke to Allison Mass.

[Lloyd Blankfein]

Yeah, Allison Mass is a partner and she runs our alumni office where we do things for people who've been out of the firm for 20 years.

[David Haber]

I was going to ask you about this. Like I was only at the firm for three years, you know, not that long. But I still have a lot of affection for my time at the firm. And it's a weird thing, right? And even people have been out of Goldman for decades. Jim Cramer, you know, you mentioned in the book, like they're so often defined by the.

[Lloyd Blankfein]

Oh no, he goes on T2 like, yeah, he hasn't been in Goldman for 35 years or something like that.

[David Haber]

Where does that come from again?

[Lloyd Blankfein]

It's how, you know, it's a lot of times it's crazy to expect a kind of loyalty if you don't show loyalty. It's crazy to expect commitment if you don't show commitment. I would say leadership. My predecessor did, my successor does. Yeah, the challenge of Goldman Sachs, we had to go. I mean, I can get into this.

[David Haber]

We needed to go public, grow the balance sheet.

[Lloyd Blankfein]

And when they repealed Glass Steagall, once upon a time the lenders were separate from the investment banks and the investors that got repealed. And all of a sudden people gave advice, can now implement the advice by financing it. So we had to, you know, if J.P. morgan was going to become an advisor, we had to become a good lender and a good financier. So it meant that we had to have a bigger balance sheet. Couldn't run that yet on impermanent capital of a partnership. And so we had to go public. But the big anxiety was we'd lose the partnership culture. We went public basically in an instant, legally. But it's taken 25 years to get it done in a way that it wouldn't undermine the partnership culture. So we do Those things that make it partner. Like we have partnership elections, we pay people based upon how the whole firm does. If your area does particularly well, you'll know it in your compensation. The most important thing in compensation is how does the whole firm do. And so you get people who are bankers sourcing investment things for the merchant bank. You have people who, investment bankers who would like us to represent their client on an auction. And there are three other investment bankers who represent three different potential buyers. And you have to pick one and we sort it out together collectively. What's the right place for Goldman Sachs to be? Or maybe we should represent the seller. Or maybe we should be a buyer ourselves.

[David Haber]

Totally.

[Lloyd Blankfein]

How do you decide that? And you explain it and you do it. You let everybody have their say. Now what should we do here? And you convince people that if they throw in with the enterprise as a whole and sacrifice in the short term, they get to use the platform and exploit it for their professional career and their personal career.

[David Haber]

Yep.

[Lloyd Blankfein]

So you gotta get that. You know, it's like I use it as a metaphor, you know, you know the metaphor of the 800 pound gorilla in the jungle gets his way. I'm the 800. But what if you, what if you have 2800 pound gorillas, totally 19 have to say excuse me, after you. And how do you get them to do that? And that's a bit of the art. And we did that. The firm did that over, by the way. There were other things that we had to do in terms of reforming make a public company, in a private company, your company, your partners, presumably everybody cares about making money for their investors and their clients. But as far as you're concerned, you don't care whether you make money smoothly in 5% higher increments every year. You can have three in a 10 year cycle, you can have three fantastic years, make no money for five years and lose money two years totally. And it could work out well. In a private company you care about the e. The earnings. In a public company you care about pe.

[David Haber]

Sure.

[Lloyd Blankfein]

And if you have volatile earnings, your shareholders don't like that, they reward you with a lower multiple or they punish you with a lower multiple.

[David Haber]

And we've seen that even more recently with shifting, you know, off balance sheet into funds and kind of.

[Lloyd Blankfein]

And so I could see over time and you know, Goldman Sachs and we didn't want to lose the risk taking culture at Goldman because. Which is very important, I'll say why in a second. Beyond the fact that it makes money, it's very important. But we shifted a lot of that to off balance sheet vehicles and by the way, means you have to do more of it. Sure, because Instead of earning 100 cent dollars, you're earning 20 cent dollars with lower risk and a higher PE and a higher R return on equity as a result. But that took some time because you didn't want to lose the people who do that totally. Now one of the reasons why it was very important and apparently less important for other firms who don't have those big investing arms is that we were able to approach our clients as partners and not just as supplicants trying to get good brokerage business. So we could, you know, we spoke the same language, we were good. You know, we put, did put our clients first. We would forbear if our clients wanted to do something or we'd partner to them and bring them in. If we sourced opportunities that they wanted, we'd work that out. And it's not always easy to work that out. But we were able to engage with our clients as peers and not merely as supplicants looking for business. And so little more swagger, a little more understanding of what our clients are going through because we're principals also totally, we didn't want to lose that culture, which by the way is not evident in our peers.

[David Haber]

Yep.

[Lloyd Blankfein]

And there are other reasons for that. If you're going to be in an investing business, you know, it's a more volatile P and L and you know, going back to the beginning of the conversation where people get, managers get confused between being wrong and being stooping. At times when the people on the investing side made a lot of money, they wanted to fire the firm and go off and do their own thing. And at times when they lost a lot of money, the firm wanted to disconnect from them. And because they couldn't bear the losses that had been Goldman Sachs in its view and its partnership culture was able to look through those short term things and say look overcycle great business. And the people who ran those businesses stuck it out. Maybe they could have done better here or there, but there were other reasons why they stuck it out and they did.

[David Haber]

I think a lot about kind of firm, a lot of the alignment that you described, even in the shape of our firm, obviously we're much smaller than Goldman Sachs. But I wrote this piece where I drew a distinction between firm over fund. The objective function of a fund is how do I generate the most carry with the fewest people in the shortest amount of time possible. And a firm you have to deliver Exceptional returns, which is a prerequisite for doing that well, but I think the second variable is how do you build sources of compounding competitive advantage? What are your moats again? Orienting around, not just your individual fund, but around and the cold again, you

[Lloyd Blankfein]

have to put your money where your mouth is sometimes how you compensate people totally. And by the way, you can get. People will try to pick off your best people because if you're paying the people who are going through the doldrums better because other people are earning more money, it could be coming at the expense of the people who made more money. And someone will come in and take those. So you have to, you know, there's a, you know, there's a practicality to this thing. So you can't pay everybody the same, you know, through good times and bad times. You have to do it, but you have to mute the effects of the cycle. It doesn't mean people won't leave. And some people are just entrepreneurial and they don't want to be partners and they don't want to subordinate their own interests. And there's a certain kind of person, by the way, there are people who do spectacular in the world have great relationships with Goldman Sachs. But we improve their lives in Goldman Sachs by them separating. Because they just weren't going to be that kind of people. They weren't going to be, you know, they, you know, their platform was subordinate. Again, we weren't asking people to subordinate their egos forever or not, you know, hide themselves or not be, you know, famous or wealthy. We just said that if you subordinate it in the short term or during, at key times in favor of a platform, you can exploit that platform again professionally because the firm would have much more hefty and power and authority. People take Goldman's calls even for our most junior person. And also it's good for your personal life too because away from Goldman saying that, look, I was a partner at Goldman Sachter. I'm not saying this is exclusive to Goldman, but saying your partner, at least people will. The presumption has shifted that you're not a dummy unless you prove you're a dummy as opposed to other people have the presumption you're a dummy unless you tell me why you're smart. Totally. And so we made that, you know, I tried, you know, that that's a positive, that's a positive thing.

[David Haber]

I think you definitely inspired a lot of loyalty during your time, you know, as CEO, I'm sure even before that, I mean, back to the one of the quotes that I heard from Ashok was that, you know, he. He said you often believed in him more than he believed in himself, and that that's been the main driver for why he stayed at the firm so long, despite other more lucrative opportunities along the way, was sort of instilling a confidence in your. In your. I'm just curious how you thought about

[Lloyd Blankfein]

sort of thing, you know, lucrative, but, you know, there's a lot. People make a lot of money. No, yeah, he's done.

[David Haber]

Yeah, he's done. Okay.

[Lloyd Blankfein]

And the increment. But he has a big, you know, he's a substantial guy, as opposed to being a bigger fish in a smaller pond. So, you know, found that, you know, it's attractive. Look, you have to. I think, you know, I think. I think I'm a good judge, you know, of people. I. I like people. I care about them. I empathize with them. I want that. I want to be, you know, not so much liked as appreciated. I wasn't always liked, if you read my reviews, but I was always appreciated. I wanted to make people better. I wanted. I didn't want to juggle for them or tell jokes or be, you know, I wanted them to think that I made them better than they otherwise would have been, that they got a lot out of it. And that's, you know, and. And I really. I really, to the core, care about that. And I think I can read people. But I identify Ashok, by the way. It's not my brilliance for sourcing him. It's his brilliance for being brilliant. I don't want to get confused, but I knew it early. I think one of the things that I had in my time and I tried is that I wasn't a victim of the organization chart. These firms can be very. Goldman Sachs is not very bureaucratic and not very. I remember when I was very, very early in my career, remember I came from left field to Jay Aaron J. Aaron was acquired by Goldman. Aaron wasn't doing very well, but I had this idea I was in the precious metals business. That made me have to deal with people from the Mideast who were investors in gold and that I'm chatting with people on the other side and what are you doing? What do you need? And it turns out that even though they were speculating in precious metals, what they really, really wanted to do was they wanted to be able to invest money and get an interest rate, like predictable return. But under their rules of engagement, you know, their law, they weren't allowed in those days. The real strictly religious Crowd wasn't allowed to take interest. It was usurious. And what they were looking for ways of making in making kinds of investments that would read like an investment. So they were allowed to make investment returns. They just weren't allowed to collect interest, but had the stability and predictability of an interest and what they were doing. And you know, we can go into details or not, I don't want to be complicated here. Cash and carries, what people were doing arbitrages between a spot market and a commodity and the forward market that effectively if you are selling somebody, buying the cash product and selling somebody a forward, in effect you're lending that person money because you're receiving him the risk of the investment. But he doesn't have to put out that much cash. You are the one who's hedging it by buying the commodity and giving him a forward in it. And that has an embedded interest rate to it, but it looks a lot like an investment return. And so in chatting with them, but the markets weren't big enough to do the scale they wanted to do. And that was a few years earlier was when they came out with the s and P500 financial commodities in effect. And those were big, interesting. And so in talking to them, I said, well, Holly, I'm at Goldman Sachs biggest equity trader, blah blah, blah. What if we did this in the equity market, Manhattan, we went out and they bought 500 of the S&P 500 and put out the money in the market and hedged it by selling it in the forward market. Would that give that what was the embedded rate of return? And it was very high because they were the other side of speculators who didn't have the capital. I know this is a little bit complicated, but the short story was I had the idea. I went to the then number two guy in the firm, Bob Ruben Linville, treasury secretary, who, who I never spoke to, was a goman of the whole firm. And I was in the tucked away in the jet, which was in a separate building at the time. We never moved. And he said that could be interesting. He called up that one called up somebody on the equity desk said, work with Lloyd my tie. I didn't even have a title at that point. So I remember I asked when they merged into gome, I said, what's my title? And the guy said, call yourself Contessa if you like. So no title. And he said, so did somebody work me? And they did. And the first order that came in and this was like in back when this was real money was for $100 million worth of this. That was by far the biggest trade ever. And then they was doing anyway. So that's how. And you want to be that way in your organization. And by the way, that's an easier thing in your line of work, where the entrepreneurs are advantaged by their lack of attachment to history and tradition and the old way of doing things where the iconoclast is the, in your business, the iconoclast and the young guy is not only celebrated, they're the, you know, they're the focus.

[David Haber]

Sure.

[Lloyd Blankfein]

And that's. And not so much in bigger organizations. And so we always wanted to achieve. That's another thing to try to be an entrepreneur in a, in an institution.

[David Haber]

Totally. I, maybe I'll transition because I want to get to the financial crisis and a few other questions, maybe more present day. But, you know, Goldman fared obviously incredibly well during the financial crisis, you know, and obviously earned public backlash, I would argue unfairly, you know, as a result.

[Lloyd Blankfein]

Yeah, as what? I agree with that.

[David Haber]

Yeah. Yeah, I figured. What, what do you think helped the firm navigate that period so well, you know, was it risk management technology? The fact you didn't have a big

[Lloyd Blankfein]

consumer business, Risk management, the lack of a big consumer business hurt us in the back end on the reputational side, because people didn't know us. Right. We were a big influential government sac. So I have, you know, people get left. Goldman became very big officials, prime ministers, and by the way, not just in the US overseas as well. And so, but in the beginning, you know, risk management culture. And maybe that stemmed from the fact that we were a partnership legally. We had unlimited liability. There's nothing that focuses your attention better than being up, you know, your partnership. You're investing client money and you're not leveraging your own money. We, you know, you know, at, you know, the partners not only had their capital accounts at risk, they had their homes at risk. I remember when I became a partner, I said, should I be putting, you know, my, you know, should I be putting my house in my wife's name? And it was very funny because then the minister of the interior, this is back when we were partnerships, said, you know, Lloyd, no partner at Goldman Sachs has ever lost money because the firm, you know, because of losses at the firm. But plenty of Goldman Sachs partners have lost money because they put assets in their, in their spouse's name. So that was the one. So. And it was a funny one. But by the way, like a lot of funny lines.

[David Haber]

True, true.

[Lloyd Blankfein]

And so, but it did focus your attention and it made us very, very, totally, totally on it. And risk managers are very attentive to risk. And now one of the. One of the consequences of that concern. We marked things to market rigorously, religiously. And other people didn't.

[David Haber]

Yep.

[Lloyd Blankfein]

They didn't have. Yeah.

[David Haber]

Do you think if the crisis had stemmed in like the private equity ecosystem, which I imagine the firm had a lot more kind of notional exposure to, it would have navigated as well or.

[Lloyd Blankfein]

Yeah, it would have been tougher because it's hard to mark to market now what we did, we also had instruments that were one off. You know, we had a lot of loan commitments related to our M and A. We were the biggest M and A franchise. And so we made commitments those were outstanding. Those were commitments that were, you know, had to be. But we marked them down and made an analogies. And we also had a very separate. I'm gonna say this word, I hate to say, bureaucracy in the firm away from the investors and the traders whose job they were part. They got paid a lot of money to mark those things. And when there was a dispute, we always sided with that side of the house. And we said to the traders, investors, very easy way for you to challenge the marks that you're being given. Go out and sell something, sell a fraction totally, and guess what. And that's what got it. We had. That was. Mark to market is not just a P and L system, it's a risk management system. Because we. That was our early warning that something was amiss here. We had things that were marked, things that were AAA when you went. When we made sell them, the bids vanished and they weren't there. And the bids were much lower and then much lower and then much lower. By the way, I didn't think there was. The market was right. I thought there was a big opportunity to accumulate it. But you. But that would be like fighting with the tides or gravity. It is. That's the market. So guess what? We're going to keep marking it down till you find. Till we mark it to a price where you could sell it. And by the way. And therefore it became easier to sell.

[David Haber]

Sure.

[Lloyd Blankfein]

Because it wasn't like they had big losses. The losses were already embedded in their books.

[David Haber]

Totally.

[Lloyd Blankfein]

Because we marked it to market.

[David Haber]

And to your point, if you're testing the market early, it's cheaper to buy, you know, insurance, I would imagine.

[Lloyd Blankfein]

Exactly. And what we did.

[David Haber]

Right.

[Lloyd Blankfein]

So one of the things, you know, one of the things. And there were a lot of things, you know, we had a lot of exposure on paper to aig but we also had fully hedged plus we had bought credit protection.

[David Haber]

Right.

[Lloyd Blankfein]

But we also had a collateral. So we go, we a single A credit got a, got a collateral agreement with, with AIG aaa. I think we may have been the only ones to do that because we insisted on it and we wouldn't have otherwise transacted with like you had said

[David Haber]

in the book, it was like one of only like five or seven companies in the country that had triple A ratio.

[Lloyd Blankfein]

Right. So who would, who have the temerity to ask them for a margin agreement? But we had the margin agreement so we had their collateral. And so that was you know, because again it was our money, right?

[David Haber]

Totally.

[Lloyd Blankfein]

And so it wasn't like other people's money. It wasn't speculative and they what was

[David Haber]

interesting also like I heard this from Alison which is it was your money but, but you also cared about relationships. She said I'll forget the cast of characters that were in this meeting but I think it was about your kind of LBO financing exposure at the time. And you said look, commitments are in the past and relationships are in the future. Go out and make sure that our clients know we're still good.

[Lloyd Blankfein]

Oh, I have to do it in the financial crisis. I'll get to that. Let me get to that in a second. But we, yes, I mean there was a time we had this loan outstanding to Chrysler. I remember the CEO then at Chrysler calls me up, up and are you going to honor that commitment? And I said yes. And I think it was due at a certain. And he said can you do that now? I said no. I said I'm going to honor it and it's not going to be for more than we committed to and it's not going to be sooner than we commit. I promise you we will honor our commitment but in this market we're not going to do more and we're not going to do it earlier. And we did all of that stuff in the high integrity. Here's another thing that's in your head in an ownership culture it's your reputation, it's your firm. You're going to own that it's open ended. And so we're going to be there when this crisis is over.

[David Haber]

Totally.

[Lloyd Blankfein]

So I worry sometimes about in the alternative space when it's maybe a 15 year old firm but I joined Goldman and Sachs when Goldman and Sachs were already dead. It's an institution by the time I got 150 years old. We're gonna be there for another 150 years. So we're not gonna, we're not gonna honor all our commitments because we have to be in business on the other side of this. That, by the way, I think about that when I'm dealing with someone else.

[David Haber]

Yep.

[Lloyd Blankfein]

Are you gonna stand by this? Are you gonna shut down and open up another. A name, a firm with a different name with three different partners later?

[David Haber]

I mean, I think, I think Goldman coined the phrase like long term greedy. I think that was. But you're right, you know, it's about relationships not being transactional.

[Lloyd Blankfein]

And also, you're gonna go through life. And I would say this to new people in the firm. You know, the dopey people that even for the most junior person, the dopey analyst in your class, roll the clock. You know, you can't imagine this, and believe me looking at you, I can't imagine it either. But your cohort is gonna run for all the important institutions 35 years from now or 30 years from now or 20 years from now. And you're gonna make your reputation with those people. Thirty years from now, believe it or not, are gonna be how they remember you act today in this crisis or regularly. And you must see that yourself. You came up, we were talking about before, people you knew would go in and they could become fixed in your mind at certain things. I said, remember, keep in mind that again, this cohort, that you're a cohort going through this. And I thought about that. In our business, the financial crisis now is old, but let me tell you, there are grudges and memories and good feelings and hard feelings that come out of that that are sticky. And, you know, the important thing is to get people. People will learn that through experience. But one of the things you could do as a leader, mentor, advisor to people is get people to appreciate that without having them go through the experience of it. So you tell them that. One of the things I used to do with people, I said, how many of you go home to your spouse, to your wife or your boyfriend or your girlfriend and talk about your boss? And everybody twitters and say, I do. Everybody else, well, guess what? And they would do this to the people who just got newly promoted. Guess what? The people who report to you are going home to their spouse and every night they're talking about you?

[David Haber]

Totally.

[Lloyd Blankfein]

Do you realize that?

[David Haber]

Totally.

[Lloyd Blankfein]

They don't realize that. You have to think of who you become and you have to have that sense of yourself before you can have an impact on others. You have to Realize that. And so at the end of them, then I would say, what do you want them saying about you? You're not there to be. You can be their friend, but you're not there to be their friend. You can also be their friend. You are there. It's like if you're a military leader, you don't want your commanding officer to be a good juggler or tell you good jokes. You want them to lead you well, worry about your safety and not make you take risk, stupid risks for no purpose. And that's what you want. And if they like you, that's good. But you want them to appreciate you. You want them to feel they're going to be better by partnering with. By following your flag and not someone else's.

[David Haber]

I think it's great advice maybe to transition more to present day, for better or for worse, I think. Or maybe for worse, I would argue. But I think a lot of the technology companies are going to inherit a lot of the public flak that affirms the fact.

[Lloyd Blankfein]

Guaranteed.

[David Haber]

Right? Right. So, I mean, once upon a time

[Lloyd Blankfein]

we were you, we were the investment bank and all these other commercial banks. And then it evolves and now, you know, you're an institution now and there's people who market themselves as a more flexible current.

[David Haber]

Sure.

[Lloyd Blankfein]

Now version, you know, version of what

[David Haber]

you used to be, but even beyond, like our firm, because, you know, but I think like a lot of the AI labs are, you know, they're going to create a lot of change in the world, in our economy.

[Lloyd Blankfein]

Sure.

[David Haber]

And I think there'll be a lot of negative backlash, you know, to them, I guess. What advice do you have for the leaders of an OpenAI or Anthropic or maybe Elon, you know, for how to navigate, you know, through that, for even from a communications perspective?

[Lloyd Blankfein]

Well, I think one of the things, and I learned this the hard way, one of the things that we didn't do is we were a wholesale firm. We didn't have, you know, go get a mortgage from Goldman Sachs, go open a checking account at Goldman Sachs out of your local Goldman Sachs branch. Doesn't exist. So people didn't know us. Institutions knew us, companies knew us, governments knew us. We were the biggest in that world. We didn't advertise ourselves. We had a whole PR department to yelp our name out of the paper. It turns out we were too important, too influential, too big to be anonymous, especially in a crisis, and especially to do, to come out of a crisis as well as we did.

[David Haber]

Yep.

[Lloyd Blankfein]

And so nature Pours a vacuum. And the, you know, and the official sector will pour us. What are we gonna do? Kick the shit out of Lehman Brothers Almost didn't exist anymore. Bear Stearns or how about the big commercials banks that lost $50 billion literally those amounts in the crisis. We were an exam, you know, we were there. And also my predecessor at that point was Secretary of Treasury. And a lot of the government officials there, by the way, doing a great job, were going. And so we were, you know, we were that kind of target. And we had no anchor in the world. They didn't know who we were. We were. And so we were very easy. No reputation. My advice is. And then of course I wasn't necessarily picked for my being so photogenic and being such an outward, you know, person. You know, I was an inside guy that ochre. And then I had to make up for it by getting out. And when you are being defensive and people are trying to kill you, it's not the best time to try to make friends with the public. So I would say before then, and I know that people will think this is a you go driven, you don't want to do it. People are embarrassed to be out. Go out and let people know who you are, know the value of what we do. Businesses wouldn't exist today. Important business but for Goldman Sachs. Taking a risk in some ways. The invisible hand that licks people with capital, with people who need capital. We were early financiers at dark moments. We took, you know, we took mentioned Elon. We took Tesla public before at a time when, and this sounds like a quaint time when companies didn't go public until they made money.

[David Haber]

Sure.

[Lloyd Blankfein]

And that was a big deal at Garmin at that time to go out and do that. And a million, you know, do things like that. This is Microsoft too and other companies like that. That's a very important function in the world. Guess what? It's time to explain that. And you know, you perform a super important function. You're taking risk on entrepreneurs and companies and risks that your predecessors took 15 years ago or manifesting today and decisions you're making gonna manifest in the future. I think there's no being modest and understated carries a lot of disadvantages. And I think you have to explain the role you are in the market so that there's some appreciation what you do. One day if people decide that you misstep, whether you misstepped or not, they may decide that you did. And you wanna have a counter argument to that. And it's Very. You don't wanna be f at the event.

[David Haber]

So I'd love to hear maybe your just broader perspective on AI, you know, and you're a student of history. Like, does this strike you as sort of a similar technology to past product cycles? Is this time different? Like, where are you on the spectrum of excited, scared?

[Lloyd Blankfein]

Generally, things don't never repeat, but often they rhyme. Sure. Is this like electricity, you know, the electrification of the country? Those are very big deals. Internet, very big deals. Could this be a bigger deal? I don't know. I don't think anybody knows. I don't think the people who are driving it, they have opinions that they express, but I don't both. They don't think they know. So we're in the realm of contingency planning. It might be. And one of the observations I'll make is that the people who are the big hyperscalers are firms that are dominated by founding shareholders who are putting their own money where their mouth is. These aren't professional managers making bets on the future with other people's money. This is their own money. This is their own ego. I'm not saying that that necessarily makes them right, but it certainly makes it seem to me that their convictions are very deeply held. And so that's another thing. Will all these technologies, and you could say, talk about AI or anything else, will all these technologies work?

[David Haber]

No.

[Lloyd Blankfein]

Will the people who have technologies that work all succeed? No. The world may not need 10 large language models. Maybe it needs four will be winners and two will be very big winners and the other two will get by and maybe it'll get reduced over time to two, who knows? And so there's forks in the road where people are taking the wrong fork. We don't know. So I would bet, and I think you do too, and obviously you want to have an idea. But there's going to have to be a lot of forgiveness down the road where people are going to come and say, how could you be so stupid? You weren't stupid. With the information available today, you place your stack of chips on more than one possible technology and within the technologies are more than one place. Maybe you can't, because maybe you have to show commitment to one and can't do the different considerations that leech into this. But. But the answer is this is going to be very, very important. Will we go through a tech bubble kind of situation where we'll weed out the stuff that should never have been invested in, never been made? You know, again, in hindsight, you shouldn't have Done it. But at the time in prospect, you didn't know what looked more spectacular than Amazon.

[David Haber]

Sure.

[Lloyd Blankfein]

You know, yeah, forever.

[David Haber]

Forever.

[Lloyd Blankfein]

I mean at the beginning and reinvesting all the money, you know, and that's so there'll be things, there'll be genius pundits and you know, professors will talk about how stupid somebody was because he won't be able to put himself in the shoes without the after acquired information. And I'm sure there's some stupid stuff being done too. And I'm sure you have better visibility on that than things that you pass that you see other people doing. But I have more forgiveness for that because I know that I don't know, but I would be making those bets today. And I know that the people who are making the biggest bets and putting their money where their mouth and their corporate money are themselves principals and not just professional managers.

[David Haber]

You know, again, I know you don't want to predict the future, but you know, we are on the precipice of, I don't know, some of the largest IPOs ever, you know, with, with SpaceX, with, you know, likely OpenAI anthropic, you know, others, others coming. I don't know where, where do you think we are kind of in this cycle or maybe what are risks that you think are underappreciated, you know, kind of in the markets today?

[Lloyd Blankfein]

Oh my gosh, you know, things will work, things will look different. You know, somebody else in a basement is, you know, you know, is, is doing OpenAI7 that nobody else knows about. Just the way, same way. No, nobody, you know, all the stuff that's coming out today of things that happen, I'm reading with interest. I never knew this stuff and nobody else, you know, 10 people knew all that stuff. And so there's always, you know, there's always up upside, surprise. We may be over enthusiastic about the changes. The reliability function, if it's unreliable. And if you're in a business of horseshoes or throwing hand grenades, you don't have to be precise. But if you're running a big institution, you can't make mistakes and numbers really matter. Maybe you have to run things in parallel for a lot longer. And one of the things that Google gave you was a bibliography. You could check one of the, you know, when you get, when you go into some of these large language models, you don't know the thought process. You lose intuition in these things. It used to when I started out in the business, you know, people be shrieking each other, noisy trading rooms, blah, blah, Blah. People be fighting with their wives or their husbands, you know, they were sitting at the desk at the same time. People are transacting. But if somebody said the wrong price or did a trade backwards, bought something when he should have said sold, the whole room would come to a dead stop and you'd hear it. And today you don't have that intuition because everything is whirring behind the scenes and you don't get the trail or the thought process of these things. That's a problem. The leverage in these things is themselves a pretty problem. So before this technological age, not just AI but in general, could you have had a mistake that could cost billions of dollars? Not really. Because your intuition you wouldn't. But now you can leave a piece of software could go out and do 70,000 transactions or even industrially. I think the biggest industrial accident that we ever had was in Bhopal. Terrible. Single digit, thousands of people died. Horrible. But in the atomic age of Fukushima, if the wind had blown in a different direction, it could have been tens of millions of people. So these are risks, these are consequences. People may be loath. One of the big risks are governmental and regulatory and they may be right. We may want to have to regulatorily slow some of these things up. Not because it's smarter than us and it's going to turn us into pets, but because we don't have the ability to test whether it's right or not. And so how do you build reliance on things that fundamentally you can't test and then these things will test each other. Well, what if they're coordinating with, you know, the tests themselves are flawed? You will think of more of this stuff than I do. Because you're a technologist? I'm a user. But I have again there's right to be anxious of it. But you might as well be turning back the tides. I'm going to waste no time in thinking about whether it's good or bad. It's happening.

[David Haber]

Totally.

[Lloyd Blankfein]

And you're not going to unlearn stuff.

[David Haber]

Totally. I know and I remember when we spoke the other day you said, said, you know, I mean it's also, it is scary in many ways but it's also enabler, you know, in, in many positive ways.

[Lloyd Blankfein]

Oh, positives are evident. I'm not talking, you know, I don't have to identify those we know it anything by the way, I'm not against anything. That makes us everybody more leveraged. Yep, we'll find more goods or services to provide. Maybe we'll have more massage therapists. I don't know. Turn back the clock. At the beginning of the 20th century more than half the country was in agriculture.

[David Haber]

Exactly.

[Lloyd Blankfein]

Guess what? Single digit percentages today. People found stuff to do, we'll find stuff to do. And by the way, if we're generating all this wealth because of the leverage, maybe we'll have a three day work week, six hours a day and we can all be poets in the afternoon or hunters or fishermen.

[David Haber]

Read some more history.

[Lloyd Blankfein]

Well, that's the Marxist ideology. That's what he was striving for. But it's funny to quote Marx. But anyway, I am not mournful of the opportunities. I'm apprehensive about it and I think it should get a lot of focus. But I'm not for I was listening to Bernie Sanders wring his hands over there. Oh my God, you know something? I'm for all this stuff. Let's let the official sector get on there, catch up to it. I'm not slowing down. Well, first of all, you can't. You're not going to get people to be stupider than they are or unlearn thing they've already learned. You can wish that atomic that the atom had never been split because maybe the adverse consequences of atomic bombs or worse than the benefits of nuclear power. But guess what? You're not going to unlearn it. So don't waste any time thinking about it.

[David Haber]

Totally. We have a lot of again young people just kind of starting out in their careers, likely listening I guess. What advice do you have for young people that want to have a fulfilling career beyond working hard and maybe becoming good at whatever you choose to do? Anything else you'd.

[Lloyd Blankfein]

Here's one thing I would say to the youngish young people and with all deference to the success of Peter Thiel, I think people should make themselves complete people. I think you should get your early life is for becoming a complete person a range of activities for your own sake to make you appreciative of things and also for your commercial life. Because in the long run you're going to get by and be good and get investors and have the goodwill of your colleagues and your subordinates because you're an interesting person, you're the kind of person that other people want to deal with. And if you make yourself so narrow and exalt your narrow silo, even if you make a lot of money in the first game, your life will be better and your commercial life will be better if you are more and your resilience will be higher. Learning history, you Know, it's a good thing to know that we've lived through times like this before. You know, everybody talks about, oh my God, you've never been this bad, never more polarized in politics. You know, you say, well, we did have a civil war, I guess. Well, that was a long time ago. Well, guess what? I was a sentient human being in the late 60s, young, but still, you know, still aware when the National Guard was shooting people on campuses, it was political, successful political assassinations. And you know, the college age kids were leaving the country and going to Canada to avoid the draft. I would say those were pretty. And by the way, internationally, Russian tanks went into, in 68, went into Czechoslovakia. I would say that was a bit more dangerous. The country during the Cuban Missile crisis was@Defcon2. You know, by the way, the lower numbers are the more sphere. DEFCON 1 is nuclear war and we were at DEFCON 2. So it's very bad that we're fighting a regional war in Iran. We were at DEFCON 2 with the then Soviet Union stopping their ships in international waters on their way because of a blockade of Cuba. I would say that was a more polarized time, a more dangerous. If our parents could get through that, we should get through this. And I think knowing that to me, and I think it should be to everybody else is knowing, knowing that something has been done should give people comfort that it could be done again. And so every time is different, but this is not more extreme.

[David Haber]

I totally agree. I think range is going to be even more important now than ever. And you know, one of my, I've written about this, but it's sort of a, I don't know, life and maybe business philosophy too is that opportunities live between fields of expertise.

[Lloyd Blankfein]

Yeah.

[David Haber]

You know, I like living at over

[Lloyd Blankfein]

the edge of cliffs.

[David Haber]

Totally.

[Lloyd Blankfein]

And over your horizon of what you could see about the future.

[David Haber]

Totally.

[Lloyd Blankfein]

And so learning. Look, when I was growing up, everybody wanted to learn. My predecessor, Hank Paulson, spent so much of his time, as did I, in going to China. Well, at least temporarily. We're not going to be making as many investments in China as we once did. There's not none, but it's not going to be as much or when I was growing up, everybody wanted to learn Japanese because those were the winners in the tech stuff. And I remember a time when Silicon Valley was Route 128 in Boston and there was no Silicon Valley. Silicon Valley. It was the, it was the, it was the, it was around Harvard and mit, not around Stanford. So I would say things change and in order to be resilient, a better person. And also, I hate to minimize this for your own sake.

[David Haber]

Yep.

[Lloyd Blankfein]

Learn humanities, learn history, learn those things. And that's what you're, you know, we're at a point now where most people who are young are going to live to be, you know, they're the, they're going to actually live longer and they seem to be in much more of a rush to be a commerce, to be a success in your kinds of enterprises. And some people will encourage it. I don't think that your only productive years are when you're 18 through 24.

[David Haber]

I totally agree.

[Lloyd Blankfein]

And everyone will learn what you need for your career afterwards. And I think you'll be my humble opinion. But Gantz, this is why interesting. I'm an older guy.

[David Haber]

No, I mean it's back to kind of where we started the conversation. I, you know, I, I don't personally believe people should drop out of school. I, I learned so much from my peers. It changed my life, it changed my perspective, what's possible. And yeah, I think it makes you a more well rounded person too.

[Lloyd Blankfein]

Look, here you are interviewing people from all different walks of life and, and not just, you know, not just, you know, not just tallying, you know, ones and zeros.

[David Haber]

This was awesome. Lloyd. Thank you so much for joining me. Really appreciate it.

[Podcast Host/Narrator]

Thanks for listening to this episode of the A16Z podcast. If you like this episode, be sure to like, comment, subscribe, leave us a rating or review and share it with your friends and family. For more episodes go to YouTube, Apple Podcasts, and Spotify. Follow us on X1 6Z and subscribe to our [e-mail] thanks again for listening and I'll see you in the next next episode. As a reminder, the content here is for informational purposes only, should not be taken as legal, business, tax or investment advice, or be used to evaluate any investment or security, and is not directed at any investors or potential investors in any A16Z fund. Please note that A16Z and its affiliates may also maintain investments in the companies discussed in this podcast. For more details, including a link to our investments, please see a16zone.com forward slash disclosures.