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- [00:02]
Ann Berry
Hear that?
- [00:02]
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- [00:18]
Lloyd Blankfein
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- [00:30]
Ann Berry
Distributor for Friday, March 6th it's Brewmarkets Daily and I'm Ann Berry. Well, I started my career at Goldman Sachs and spent nearly 12 years there, for most of which time Lloyd Blankfein was CEO. And so I absolutely tore through his newly released memoir Streetwise Getting to and Through Goldman Sachs, in which much was eerily familiar, like quotations from the almost daily voicemails that he would send to employees during the 2008 financial crisis when I was sitting there, of which started with the words this is Lloyd. Yet much in the book was new news too, including a window into the chameleon like characteristics that he took on and came from growing up in the projects of New York to then moving through Harvard and to Wall Street. Well, it's a terrific read as a human interest story. It's funny, it's blunt, and it's also a bit of a primer on the art and science of risk management in one of the world's most powerful financial institutions. So we were delighted to welcome Lloyd to the show for a wide ranging conversation on who steps up in times of crisis. If two co CEOs or founder control of public companies can work if he thinks gold is a meme stock, he did, after all, start his Wall street career in gold sales. He gets candid on crypto, if government should buy stakes in public companies, and so much more. So stay with us for that conversation with Lloyd Blankvine. But first, a word from our sponsor, Charles Schwab. Trading at Schwab is powered by Ameritrade, bringing you an expanding library of education with even more ways to sharpen your trading skills. Access new online courses, insightful webcasts, articles, engaging videos and more, all curated just for traders.
- [02:02]
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- [02:14]
Ann Berry
with Lloyd Blankvine former CEO and chairman of Goldman SACHS so, Lloyd, we're going to get started. I have, I tore through your book this weekend. Here it is, Streetwise getting to and through Goldman Sachs and you can see it's absolutely filled, filled with lots of sticky notes as I took, took notes and wrote down ideas while reading it. And Lloyd, I was at Goldman Sachs. You were my CEO. I was there from 2008 to 2016 in New York and I was, I was there earlier and there was one structure at Goldman that always struck me even more after I left, which is the prevalence of co heads and you had co chief operating officers but you were the sole CEO, you did it alone. And I want to ask you, if you could do it all over again, would you have made the same choice or would you have had a partner at the top as well?
- [03:05]
Lloyd Blankfein
You know, there's a lot of benefits to having cos if everything works well. If everything works well, it's one plus one equals three. If everyone think works poorly, it's like one plus one equals a half. Most of the time Goldman has been lucky, but not always. We've had dysfunctional partners, we've had fabulous partnerships and we've had dysfunctional even at the top of the firm. I could have, if the ball had bounced a little bit differently, I could have been a co head with somebody who was there with me. He'd left just before Hank got appointed, got appointed to the treasury and so I was there by myself. I will tell you, life is much easier when you operate by yourself and sometimes you have, as I said, sometimes you have a better result but not always. It does give you more range and, and in a firm like Goldman Sachs, which is sort of bifurcated at times, you know, it all meets at the top but there's a strong trading, investing, a principal part of the firm and then an advisory merchant bank and some, sometimes the cultures of those things are different and so sometimes, often it's helpful to have two, except when they're fighting with each other.
- [04:11]
Ann Berry
So when I take a look at public companies now and you having been in that seat, you see companies like Spotify that sort of anointed co presidents who've now gone up together and then our co CEOs, Oracle's done this. Do you look at those and have an opinion on it or do you just sort of assume that the culture is going to accommodate it?
- [04:28]
Lloyd Blankfein
It depends. You use the right word. It depends on the. It depends on the culture at Goldman. They made. Look, the whole nature of Goldman, you know, Goldman Sachs, you know, said CEO, but really I operated kind of like a senior partner, you know, Goldman. My tenure, midway through my tenure was the ipo. So I spent half my time in a private company, private partnership, half my time as a public company. And they're very different and the leadership is very different. CEO lightning bolts come from your fingertips and command and control. Hierarchical. In a partnership, your senior employees are your co owners of the business. There's an expectation that they have big ears, they listen to what's going. They don't just do their job. They care about everybody's job because they get compensated based on the how the whole firm is doing. They demand and expect to get a lot of information about the whole firm. And they demand to be consulted when you're making changes, it slows life down to some extent. But you get a better, more stable organization where everybody lives like an owner. So Goldman Sachs kind of trains people for that. And if people can't work collegially in a partnership, they, they have very nice lives, but often out of the firm. And you have a lot of private equity firms and hedge funds and people all over distributed Goldman Sachs alumni who may not regret leaving Goldman Sachs and Goldman Sachs may not regret their leaving even though they've done spectacularly well. But they weren't necessarily the kind of people who could subordinate their ego and work in a partnership kind of culture. We make people partners at a very early stage of their careers. And so you kind of grow up with co heads.
- [06:11]
Ann Berry
Very often the partnership translated into something that was also powerful from a different perspective. Lloyd which is the partners had majority ownership in those early days of Goldman Sachs as a public company. Now can we just relate that to a thread that we see today? A lot of, particularly the tech companies that have been going public have seen their founders maintain effective control through voting control. And they've actually received a lot of criticism for that being the case. You've seen where it's worked. Do you have an opinion on where it might not?
- [06:43]
Lloyd Blankfein
You know, it's very funny. I was asked this question once at an event that the New York Times was sponsoring. And the speaker asked me about this because we had just done, we just done the ipo. The IPO for what, you know, was in Facebook and is now Meta.
- [06:57]
Ann Berry
Right, exactly.
- [06:57]
Lloyd Blankfein
And they asked me that very question about wasn't that counter to corporate democracy to have super voting shares? And I said, you mean like the New York Times, the Salzburg fan?
- [07:08]
Ann Berry
Yeah, you talk about that in your book. Yes, yes.
- [07:10]
Lloyd Blankfein
And it was a, it was a, it was a touche. I think one of the things we're seeing now with this generation of Titans. Yeah, unlike the Titan, let's say in the, in the, in a prior age where you had the Morgans and the Carnegie's, these guys are not retiring at a young age. They're committed to their business. They're rich way beyond even on an inflation adjusted basis and yet they're still competitive, still trying to grow and by the way, risking the majority. They not only have voting control, they have their wealth tied up in these companies. They're putting their money where their mouth is. I'm grateful that these guys are leading the charge in technology. They're deferring the point at which they dedicate themselves to philanthropy and leave their current jobs. I'm glad that Elon Musk is making those spaceships land in tandem. I'm glad they're making a commitment to AI and they're killing each other. They're killing themselves to compete with each other. I think the US and frankly the world is better off. And at least for the moment, I'm not minding that they're controlling the company. Now what happens in the next generation when you've gone through the leaders who built their businesses, who are very capable and highly motivated, if they leave voting control to their children and their children's children, that may well be a different matter. I think that this super voting shares should expire, should not persist in the next generation.
- [08:48]
Ann Berry
And it's interesting just to link that too to another phenomenon that you refer to in the book, Lloyd, and that's we have seen fewer public companies and one of the reasons for that has been valuations have been sustained in private markets. The capital there has gotten bigger. Another reason has been that for those founders with choice, some of them are saying it's too much work to be a public company. I don't want to be held accountable with the short termism that you see there. What do you think?
- [09:10]
Lloyd Blankfein
It's not even just being accountable. It is quite burdensome.
- [09:13]
Ann Berry
Look,
- [09:15]
Lloyd Blankfein
every problem that's ever arisen in the financial markets in the last century has resulted in another level of regulation and bureaucracy designed to make sure that thing never happens again. And there's been a lot of wax buildup in terms of the burdens of public ownership, shareholder meetings, but you know, nothing wrong with talking to your shareholders. But you go to a board meeting and the CEO can't be present in the room for this conversation because it is so specific and so burdensome with so many controls built in, all of which had a cause at some point or another. And yet the accumulation of all that has raised it to the level where companies strive to stay private as long as they can. And because of the liquidity of the private markets, they've been able to stay private a lot longer. And I understand it. I don't think it's good for the world that that pertains because the public markets do. Somewhere buried in all that excessive regulation is a core of good regulation. It would be good to see the private markets be more transparent and more available to the regular investing public. So we lose a lot of that by making going public and the aftermath so much more burdensome. So I think the current regulators are trying to get back to that place. Not to eliminate regulation, but to get it back to a more sensible place.
- [10:54]
Ann Berry
You know, I interviewed Bill Gurley and one of the things he said was these companies staying private for longer has led to the industrialization of things like venture capital. And what it's enabled these bigger funds to do is basically go to LPs and get a lock on huge amounts of capital by saying this is the only way you're going to get access to these businesses. Do you think that there is a way to sort of break this Gordian knot so that we do see more of these companies motivated to go public but without seeing a scale back in regulation that could perhaps have really negative repercussions in the sense that we don't have the answers that we need?
- [11:30]
Lloyd Blankfein
It's way overdue. When you look at the complexity of our regulatory system, the cftc, look at them trying to regulate Bitcoin, is it a commodity, is it a security? Everybody, everybody has a position. The number of regulators that regulate banks and then add 50 state regulatory frameworks around it. It's quite burdensome. I think it could be time for an overhaul of the system. Not to just to make a sensible regulatory scheme, maybe combine the SEC and the CFTC and the OCC and the whole Alphabet soup collection of organizations and make a super regulator or, or two or three and not currently what we have today. And there's a huge opportunity, but it's a big undertaking and we're dealing in a polarized world where in the United States it's very hard to get any kind of regulation. So you end up just adding another layer every time you want to accomplish something without repealing the prior 38 layers that pre existed. So I think an examination of the whole is appropriate.
- [12:37]
Ann Berry
Well, there's also the question, by the
- [12:38]
Lloyd Blankfein
way, and he's right there has been girly. As a result of that, we do have a lot of private equity and one of the things is it makes certain investments inaccessible to, to a lot of people. And it also means that the investments that people are allowed to make remain pretty opaque to the investors because they don't have quite the same disclosure requirements in the private world.
- [13:03]
Ann Berry
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- [13:15]
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- [13:23]
Ann Berry
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- [13:37]
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- [13:47]
Ann Berry
back to my conversation with Lloyd Blankfein, former CEO and chairman of Goldman Sachs. One of the challenges that has been articulated around regulators is that they're just not paid very well. And so the best talent able to keep up with what's going on in the markets isn't necessarily going into government service.
- [14:04]
Lloyd Blankfein
You mean the regulators.
- [14:06]
Ann Berry
Correct. What do you think of that?
- [14:08]
Lloyd Blankfein
You know, I think, I think that's right. But there's very little, you know, there'll be very little opportunity for the legislator, legislators, forget about the regulators who report to the legislators. Legislators, you can, you, you know, if they try to give themselves a cost of living raise, if they haven't raised their own compensation for 20 years, it's a, it's a political dynamite for them to try to do that for himself. I think a very good system and it's hard to make the analogy because it's such a very successful country but very small and you can do different things there. But Singapore, I remember and I may not be current in this, but I remember at one time the senior officials, the prime minister of Singapore, by statute gets paid the average of the top three corporate salaries in the country. What a sensible thing to do if you want to attract the better thing. In some countries you get, you know, in some countries I was always, I was always impressed that France always got terrific with the People who would go to a couple of special, special schools, but. And they would go into public service and by the way, not make as much money and work 10 times harder than anyone else. And I always thought, look, I don't admire France for everything, but I admire them for this. And that's because in France there's a different kind of currency. There's a prestige of public office which is highly prestigious. The U.S. it's not necessarily, it's not necessarily the case. I think it would be, but it's not. Look, we could talk about it. It's not going to happen.
- [15:37]
Ann Berry
Well, let's talk about it because there's
- [15:38]
Lloyd Blankfein
just no, there's no op for people who have to face the electorate. There's no, there's no appetite on their part. They may be a. There may be a wish that they could get paid more, but nobody wants to go ahead and vote himself a raise and then go back and ask to be re elected.
- [15:56]
Ann Berry
Let's talk about talent in perhaps unlikely places. And let's talk about your own path, Lloyd. And so one of the things that really stuck with me, you grew up in the projects in New York. I too grew up in government subsidized housing in London.
- [16:08]
Lloyd Blankfein
It was very unlike council housing.
- [16:11]
Ann Berry
Close to it. Trust housing. Yeah. And so when I got to Goldman Sachs out of college, I felt like I'd won the lottery. Right. I had an opportunity that was unbelievable. And you talk about your path. There's one thing in your book that really struck me when you became CEO of Goldman Sachs. The New York Times wrote, Mr. Blankfein does not appear to have, at least not yet, the statesmanlike aura that has been associated in the past with Goldman's leaders. Talk to me about what the perception of you that that kind of comment articulates has done to inform how you identify talent and how do you cut through? I remember one of the criteria that's often talked about in board meetings is picking someone with quot executive presence. Right. How do you cut through that? How do you make your own decisions?
- [16:57]
Lloyd Blankfein
Yes. I wasn't always the polished person you see before you today. No, I came. You know, it's very funny because I did go because, you know, there is a kind of social mobility in the United States, obviously, which by the way, to some extent I. Because don't forget, I recruited talent in the UK and very often in the UK you'd find somebody who grew up in council housing, went to Oxford or Cambridge and just was oppressed by it. I mean, it just, they never Quite mingled in it. And here there's kind of a reverse snobbery. Yes, where the people who came to these fine universities on scholarship, they felt they'd earned their position. And whereas other people, you know, they were kind of legacy babies and they were just, they were just handed their position. There was kind of almost a reverse snobbery in this country that you don't find, that you don't find everywhere else, which is, I think is, you know, kind of, you know, helps support a kind of mobility. You can get through these great schools and emerge without a chip on your shoulder because you don't necessarily get abused
- [17:55]
Ann Berry
in the process, but you still have a chip on your shoulder. You talk about it in the book you say that you carry.
- [17:59]
Lloyd Blankfein
I had it because again, I came from even a rung lower and I talk about this. And by the way, things have changed. In my day, when you were on scholarship, you know, you had a, you know, the school made it possible for you to go, they gave you a scholarship, but they calculated that you would be expected to contribute to your education by work, by a summer job, loans to some extent and a term time job. They don't do that today. That's also evolved. And so they'll give you a higher fellowship, a bigger scholarship so you don't have to do all those things. But at my time I also had to serve in the dining halls and serve my roommates who had gone to private school. And I didn't find that particularly character building. But it did fuel a chip and maybe it was advantageous in the long run. But I was aware of it. Even at Goldman Sachs, my successors, the people around me, they weren't all Ivy Leaguers. In fact, my predecessors went to state schools. My number two, Gary Cohn American University, the current CEO, went to a smaller school in upstate Hamilton, a smaller school in upstate New York. These are all fine places, but it's not what you would think. And when you look at the people who make their way through the system, I always thought the best thing about going to Harvard was you didn't have to carry a mystique about what it meant to go to Harvard. I knew that these are the same people and the biggest and the best state schools, the best people in those schools are every bit as good. If you're at the top of a 30,000 student campus, you're going to be pretty terrific. Maybe the average in the finer schools are high, but the top of these schools, when I was at Goldman and knowing this, I insisted that we go out and recruit at the local cuny, City University of New York schools, which again attracted a lot of first generation immigrants. Hugely motivated, very smart. There are people who were the children of people who immigrated from the former Soviet Union. Their parents were nuclear scientists who couldn't get a job in the United here in the US because they weren't licensed or they didn't. Their language skills weren't up to par and their kids were going through the public schools and they were brilliant. And so we hired a lot of those people. By the way, in the UK when I was starting out, a lot of the people who went to Oxford and Cambridge went to firms like Morgan Grenfell and Schroeder's and the kind of the, dare I say, the classier British merchant
- [20:45]
Ann Berry
banks, the fancier British merchant banks.
- [20:49]
Lloyd Blankfein
And we ended up hiring a lot of the barrow boys who had worked their way up. And so too, same thing happened in Japan as well. And we did very well by that. And it was when everything opened up and became a little bit more democratized that we started to find that we had more competition for talent.
- [21:09]
Ann Berry
Let's talk about how talent gets trained today, Lloyd, because one, there are many things you talk about in the book. One of them is risk management. We'll come back to that. And the attention to detail that helped you catch when things were maybe going to go awry. It was pretty important. And you talk a lot about how there were daily marked markets. You made sure that you and your team were trained to look at that data to make sure that you are spotting any aberrations. So let me ask you a question for young people today, growing up in the AI world, which in many ways is a silent world, right? You don't have the sort of talking that you had on the trading floor, the yelling on the trading floor. How do young people, how can they go about building the intuition, the instinct that comes from years of actually doing the, doing the AI now shortcuts
- [21:59]
Lloyd Blankfein
it will have. Look, we've gone through 10,000 years of technological change and we always found. And you always find, I would add another thing that was easier in my time and that's more difficult. It's not just the fact that there's not a hubbub and noise and talk to and people. You know, trading room used to be a very loud and active place and now people are communicating digitally to the person sitting next to them. And but another thing is that you don't see the process. If you push a button and an algorithm is making 5000 calculations, how do you hear that? Something is wrong? You used to be in a big trading room with a cacophony of noise. If somebody said something backwards or the wrong price. People who had been fighting with their spouses, arguing with each other, shouting across the room, the whole every. You could hear a pin drop the next second because through that discordant sounds, you heard something that was wrong. And everybody stopped and stared. Today, it's everything goes by button. There's a total inability to exercise that kind of apply intuition. But that is going to. I think it is. To my mind, it's more difficult because I grew up in that world. I'm assuming that the way people wrung their hands and said, how will we. I remember when I started college, you weren't allowed to use a calculator in my science classes, because if you used a calculator, how would you ever learn how to use a slide rule? People listening to this are wondering, what's a slide rule?
- [23:36]
Ann Berry
It's an advocate, almost to those who
- [23:39]
Lloyd Blankfein
are listening or something. A mechanical device that would help in calculation. Well, guess what? You know, if you don't know how to make your own soap or butter, how will you ever learn how to do that? Well, guess what? People won't have to learn how to do those things, and they'll learn other things, and they won't spend three hours a day proofreading stuff where you could just push a button. I'm not sure I am rooted in that world where I responded to things that I've heard orally. I learned how to do calculations in my head because I would have to. You know, that was my way of checking on it. But guess what? Kids don't need to know how to use slide rules, and people are allowed to use calculators in class. And I'm sure that because they can't use a calculator, they don't understand a logarithmic scale quite as well as I had to. But I don't think their lives. I think their lives are still enriched in other ways.
- [24:32]
Ann Berry
All right, I hear that you're a tech optimist. From that perspective then, Lloyd, that's my takeaway from that.
- [24:36]
Lloyd Blankfein
I'm an optimist about evolution and progress and, by the way, efficiency.
- [24:43]
Ann Berry
Yes.
- [24:44]
Lloyd Blankfein
If we get more productive, everyone's ringing their hands in the States now we're going to lose all these jobs of people doing things that don't need to be done because AI will do it. And I point out that the beginning of the 20th century, more than half the country was in this country was involved in agriculture. Guess what? We had full employment for a long time without half the country being involved in farming. They found other things to do.
- [25:09]
Ann Berry
Well, let's shift gears a little bit Lloyd and let's talk about if you don't mind the, the great financial crisis. I was, I came out of business school in 2008. So I joined right to you know, when it was very tough. Goldman difficult timing. And one of the things I remember very vividly and I did for folks who are listening, Goldman Sachs at least at the time had a real culture of communicating through voicemail, right. We wouldn't just get a blitzed email. The CEO in this case, Lloyd, it was. You would send out voicemails starting this is Lloyd with an update in what was. What was going on in the firm during the crisis. You talk in the book Lloyd, about folks really demonstrating their character that when times are tough you see people step up, you see people not able to cope with the pressure. And I want to ask you about two particular instances. The first is Warren Buffett in the epitome of the my word is my bond sort of behavior injected $5 billion into Goldman Sachs talk if you don't mind about the way that he did it and what he did not insist on having from you as he was doing it.
- [26:15]
Lloyd Blankfein
You know Warren, who's terrific and so terrific that some, you know there are jealous types out there that find some fault with him. But it's totally unwarranted to have that view of Warren, if you don't mind me saying it that way. He was terrific and he actually had a very. Which I was flattered by. He always had a very good attitude towards Goldman Sachs. And it stemmed back to his childhood when as a nine year old his father was a small town broker in Nebraska and brought him to meet Sidney Weinberg who was like. Because Goldman Sachs was an important banker in his father's life. And I could just imagine the conversation between nine year old Warren and the then head of Goldman Sachs and the. Because his father brought him to the 1939 World's Fair. But Warren, we had asked him a while ago because we were looking for you're always raising capital and he was an obvious person to go to. And then he declined and then we stopped asking him. And then as we got further and deeper into the crisis and I think he must have sensed that there would be a reaction and that Goldman Sachs, I hope he thought that Goldman Sachs would do particularly well, you know, better than the peers at that point offered to invest again, $5 billion. And it wasn't really an equity investment. It was a preferred share, which is kind of loan like more than it is equity like. But he did it. But it was much more important as a validation and perimeter of Goldman because he carried so much weight. In fact, other people, the terms he got, some people thought were relatively favorable. And I pointed out that with other people it would have just been money. But with, but with Warren, it carried his reputation with him. So it was very, very valuable and important to us. And he had almost no. And it was very casual, very rg. Aw, shucks. I said, you know, Warren, I'd really like to tell you everything I'm worried about. And he said, no, no, no, it's okay. And I said, warren, the old security lawyer in me makes me want to tell you things that I'm worried about. I said, lloyd, you worry enough for the both of us. And that it kept going on and on. And then he put me in my place and he said, Lloyd, it's only $5 billion for Berkshire Hathaway, which is a big insurance company. That's not even a bad storm on the East Coast. So it wasn't very much. And by the way, it wasn't very much to us either. It was more of a signaling. And he did that and he said he had one requirement from us, and that is that the senior. Most people in the company not sell their shares because with his loan to us, he took back warrants. So some equity position. We weren't, we, we shouldn't sell any of our shares until he had sold his, which we readily agreed to. We weren't in the share selling business at that point. And we went on and I asked him at the end of the process, I asked him how he'd like to document that. And he said, well, I don't need a document. I have, you know, we, we, we, we have each other's words, which is appropriate. And by the way, not a surprise to me that he said it that way. I would have done the same thing.
- [29:15]
Ann Berry
Well, Warren Buffett, I think, is so iconic, he falls in that category. Historically, we'd say a great man, right? Someone who could really move the needle, move sentiment, create coalitions. And there was another moment in your book, Lloyd, where you talk about in the depths of the crisis, Hank Paulson and Tim Geithner basically get you and other leaders of the top banks into a, quote, windowless conference room on the ground floor of the New York Fed. I threw back, I love history to JP Morgan literally locking bankers in his library in the depths of a crisis at the turn of the century and saying, go figure it out. Hank Paulson could do it. Tim Geithner could do it, JP Morgan could do it. Warren Buffett has his own version of being able to do it. If another crisis happened today, who are the great men or great people with the same gravitas and influence you can force?
- [30:05]
Lloyd Blankfein
You know, they are there. You just don't know who they are until you. Until it rises with, you know, remember, did the times make the man the man time? You know, but for World War II, would we haven't have known the greatness of Churchill, who was in the wilderness and treated, you know, it was a historic history person, you know, was treated quite badly and quite. In his imitation. His reputation had been in tatters.
- [30:28]
Ann Berry
Well, he'd failed terribly in some ways, but in many ways, in some ways.
- [30:31]
Lloyd Blankfein
And of course, you know, in, you know, World War, you know, he didn't come out of World War I with a great reputation, but yet, you know, and so they exist in all these things, people. But I think, don't bury the other point, which is you really don't find out who's who until you get into that cauldron of that pressure situation. We have people at Goldman who were, let's say, manly men and great athletes, Division 1 athletes, Olympians, and some of them under pressure, were hyperventilating in a corner. And then we had some people who didn't look like they could walk up a whole flight of stairs unaided. And they were, they were, they were terrific. And by the way, we had a lot more of the latter than the former. And so that, you know, which is why we did. Why we did well. But I think, and I also talk to the firm and one of the reasons why we do voicemail more than blast emails to people and like, and I think my predecessor, I'm sorry, my successor still does that. He kind of embodies all this as well. You know, I think tone matters and how you say things matter and there are things that you read and they come across quite dry and then you communicate and you can make people, you know, it's a little bit like a. It's a little bit like a flight attendant on a plane going through turbulence. You can say all the words, but I'm looking at, I'm looking at that person's face and if she devolves into panic, so will I. And if she looks serene, so am I. And I think you can tell you can tell a lot. And what I did in those voicemails, what I wasn't saying, because everybody at that time saying, we're fine, we're fine. When they went, when they obviously weren't fine, I was sending voicemails. I said, I just got off a plane in France, meeting with my clients. We did this deal, we did that deal. I was basically showing, you know, life is going ahead during that crisis. And that's my recommendation to anybody going through crisis. You don't need everybody in the firm standing there staring at the tv, watching your stock ticker or watching the headlines. If you wanted to help the firm, I needed 98% of the people there to just do their jobs better than they had done it before, help secure the reputation of the firm as someone, you know. Getting back to the analogy of a flight attendant, first put, you know, when the oxygen masks come down, put it on yourself first, fix yourself quickly, and then tend to your kids, because you're not going to help your kids if you pass out. And so we had to take a moment, fix ourselves. But I only needed a few people to help do that. I needed everybody else to go put the. Put the oxygen mask on your kids, go help out, go help everybody else. So that when you come out of this, we come out of this with a better reputation than when we went in.
- [33:17]
Ann Berry
Well, let's talk about watching the ticker, Lloyd. Let's. Let's pivot a little bit. You are trading the markets these days on your own account for fun. And I heard you say in a recent, sometimes fun, sometimes fun. Well, you said in a recent interview that you're all in on risk assets, so give us a little bit more than that. What are your sort of specific sectors that are getting you most excited in the public markets these days?
- [33:37]
Lloyd Blankfein
Well, I do like, you know, there's sort of a, you know, I follow things, so I invest in them, but I also invest in things, so it forces me to follow them. And so I find myself investing in technology things, which has the forcing function of making me. Am I doing it because I'm interested in it, or do I develop an interest in it because I have a commitment to it? And the answer is both. And so I do that. I also have been investing in a lot of energy assets because the cure for low prices is low prices. And we've had low prices in energy for a long time, which means companies have. Haven't invested. And there's always a cycle in energy. We're seeing that right now, you know, as this as we're speaking, you know, the war is going on. I'm not sure how much longer it'll last, but at least while we're talking, that's going on. And those prices spiked again, as they tend to. You know, if you people ask me, what should you study to do well on Wall Street? Now, obviously, everybody's expected, you know, technology, engineering, economics. I'd say the best preparation for almost anything is you should have a very good grounding in history, because history doesn't repeat, but we know that it rhymes. And you know, and it doesn't, you lose complacency. Because when things are going super well, you should be prepared for that cycle to shift. And by the way, when things are going poorly, that's. That's also a cycle that shifts. And so you have to think of. You have to think of that all the time. And I think a study of history trains you for that. To know. To know that things always seem to come out of nowhere.
- [35:17]
Ann Berry
Speaking of things that seem to come out of nowhere, Lloyd, can I just ask you where you think we are in the gold cycle? We've had some people come on say they think it's a meme stock. You started your career at J. Aaron. Really? Yeah.
- [35:27]
Lloyd Blankfein
It sounds a gold dealer.
- [35:28]
Ann Berry
Yeah. Come on, come on. What does the ex gold dealer in you say?
- [35:31]
Lloyd Blankfein
I am not. Maybe I was too close to it. I am not a gold bug. And the only thing that impresses me and why I think gold. Gold is elevated in my view, because I think crypto is so much less important and should be less important than that. In other words, gold has moved up to me because I have a new bet, noir, which is crypto, which I think does not has. I never thought it would, and it hasn't to this moment accomplished really any of its stated objectives and what it's purported to be helpful to. It has not been a good medium of exchange. It has not been a particularly good store of value given its volatility. And it's not been kind of a stable buoy in an otherwise stormy sea because that behaved like a risk asset where even gold went up when people were looking for that safe harbor. And bitcoin just behaved like another risk asset that went down with other risk assets. So I, you know, again, maybe I'm just too old, but I'm not. And by the way, I know that there's a lot of things in life that I don't know and that I get wrong and I'm probably wrong about this, but if bitcoin goes to a million dollars. It's going to get there without me.
- [36:47]
Ann Berry
Well, here's the last question for you, Lloyd. And it's sort of brings these two things together. You've said in your book, quote, I would love to be mayor provided I didn't have to run for it. So that I took that as an expression of interest in public service. And what this administration has been doing is taking a pretty active role in the public markets. Things like the Pentagon stake in MP materials. Do they need an elder statesman like a Lloyd Blank vine to pick a name at random to come in and help?
- [37:15]
Lloyd Blankfein
I think anybody could benefit from an elder statesman like Lloyd.
- [37:18]
Ann Berry
There we go. But I mean, even let's say it's not a formalized US sovereign wealth fund, there's clearly a desire for this administration to start gathering stakes or continue gathering stakes in public companies. Would something like that interest you to do?
- [37:33]
Lloyd Blankfein
I'd always be interested in the right kind of public service. Who wouldn't? Five of my last six predecessors were either Secretary of Treasury or Senate. Went to the Senate and government. I came out, you know, at a different time. I left in the end game of Trump 1. I'm not sure my globalist politics aligned with that administration. But I think one has to be cautious. There are appropriate moments where the government has to participate. I mean, we wouldn't have electrified the country. It was no one's interest to spend that kind of money. And so the United States government had to do that. There are things that for national security, for orphan drugs, for supply chains, where if the government didn't do it, no commercial entity would have the incentive to doing it. And that's appropriate. But I don't think we should have a kind of the US could otherwise intervene in commercial things just because it has some prediction about where the future is going. I think Vice President Al Gore would have laid the information superhighway, all that fiber in the ground five seconds before the cloud and the Internet was developed. I think one of the strengths of our system is that we have not a centralized decision maker guessing the future, but millions of decision makers at the coal face of what's going on. And they get some things right and they do more and they get something wrong. They build the wrong thing in the wrong place and they don't pay fees to the bank. The bank takes it over, plows it over and builds a Walmart on the same grounds. We identify opportunities, but more importantly, we identify our mistakes quicker than anything else. In centrally planned China, how many roads, airports and housing developments are in the wrong place and underused, they may stay on that country's balance sheet forever until one day there's a reckoning here that doesn't happen. We have to confront our mistakes. That confrontational is painful, but at the end of the day, we recycle those investments into other more useful things. And that's a strength in the system. So there's a role for the government, but it should be highly limited in the commercial sphere.
- [39:53]
Ann Berry
And what I heard there, or what I heard you not say is refuting that there could be a role for Lloyd Blankfein in a governmental position at some point in the future.
- [40:02]
Lloyd Blankfein
Well, I don't, you know, something I don't come close to saying never. I think, I think, you know, people with time in their hands and experience and have something to contribute should make that contribution. We're all, me in particular, I got through a lot of my, I got through my early life on scholarship and the philanthropy of people that I could never meet and never say thank you to. So if you didn't, if you didn't in turn pay things forward or make a contribution to those places that were so good for you in your early life, of course you should do that.
- [40:34]
Ann Berry
Lloyd Blankfein, former CEO of Goldman Sachs and author of Streetwise. Congratulations on the new book. Thank you for joining us.
- [40:39]
Lloyd Blankfein
Well, thank you very much.
- [40:42]
Ann Berry
Well, huge thanks to Lloyd Blankvine for joining us. Great conversation. Again, do check out that book. That's it for today's Brew Markets Daily.
- [40:48]
Sponsor/Advertisement Voice
Brew Markets Daily is hosted by Anne Barry and produced by Jean Cotau Tarka, Belle Teef and Emily Millarn. Our technical director is Uchenewa Ogu. Jim Orzo is our audio engineer booking by A.B. silver. And the president of Morning Brew Inc. Is Devin Emery.
- [41:00]
Ann Berry
Have a fantastic weekend and we will see you back here on Monday, same time, same place.