Books : The Partnership: The Making of Goldman Sachs
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Binding: Hardcover
Dewey Decimal Number: 332.660973
EAN: 9781594201899
ISBN: 1594201897
Label: Penguin Press HC, The
Manufacturer: Penguin Press HC, The
Number Of Items: 1
Number Of Pages: 752
Publication Date: October 07, 2008
Publisher: Penguin Press HC, The
Sales Rank: 2374
Studio: Penguin Press HC, The
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Editorial Review:
Product Description:
The jury is still out on what the future of Goldman Sachs will look like, but no one can argue that the 139 year old firm has been (and, if Warren Buffett has his way, will be) the dominant investment banker and dealer on Wall Street. What does Buffett see that we on the outside do not? It’s all about the people.
Charles D. Ellis has written a landmark book that couldn’t come at a better time. The Partnership: The Making of Goldman Sachs is the colorful and fascinating story of Goldman’s rise to power through many life-threatening changes in markets, competition, and regulation. It tells the personal history of the men and women who built the world’s leading financial powerhouse from a firm that was disgraced and nearly destroyed in 1929, limped along as a break-even operation through the Depression and WWII, and, with only one special service and one improbable banker, began the rise that, in half a century, took Goldman Sachs to global leadership.
A conversation with Charles Ellis:
* Is Goldman Sachs really a lot better than other firms at managing risk?
The big difference is in the cumulative power of many “small” details. The difference in the speed, accuracy, and extent of communication inside the firm; the difference in intensity, focus, and disciplined toughness of the men and women hand selected to work there and real difference in recruiting, training, and compensation. All add up to a decisive advantage in management. Leaders and co-leaders manage Goldman’s many business units with rigor and drive; risk management is the envy of other banks; and coordination is powerful across business units and markets around the world.
As every Olympic athlete knows, such small differences make all the difference between gold, silver or bronze – or no medal at all. In the current, very difficult test, Goldman Sachs has come in 1st – again.
* Goldman Sachs is often described as the best managed Wall Street firm. Is that true?
Yes, it is true. Goldman Sachs is the best managed “Wall Street” firm – and the best led. Management is why Goldman Sachs is consistently rated the best firm to work for and gets top ratings from clients all over the world. Superior management is why the firm earns more profit, develops more effective people, has made itself the market leader in the U.S., U.K, Germany, France, China, Japan, and in most major lines of banking business. No other firm comes close.
One of the things you will learn in The Partnership is just how Goldman succeeded in making themselves different from any other Wall Street firm. They learned early on that in order to survive, they had to not only make money, but create a culture that was universal, that demanded absolutely loyalty and, most importantly, act as one organism.
* Why does Goldman Sachs put so much weight on its “culture”?
Goldman Sachs culture works. In the complex, fast-changing, global, 24/7 securities business almost all the important decisions are made in highly specific and complex settings under great time pressure. These decisions cannot be made by headquarters and they cannot be deferred. They must be made locally by local market and business experts thousands of times every day.
Rules won’t work. If rules were written for every type of decision in all those different businesses in all the world’s different markets in all the different cultures, the resulting Rule Book would be far too large and complex to read or use.
Culture – its way of working – is the universal “stem cell” that enables Goldman Sachs to operate so forcefully in so many different national markets and in so many different businesses.
* With all its different business activities all over the world, doesn’t Goldman Sachs have problems with conflicts of interest?
Yes! The firm certainly has many, many conflicts of interest. While it could take a defensive approach and try to avoid or minimize those risks of conflicts, the firm believes the more realistic and effective approach is to recognize those risks, be candid about them with clients and counterparties, and actively manage the conflicts. The firm strives to deal with each of them in such thoughtful and effective ways that clients and customers will know Goldman Sachs can be trusted to manage conflicts better than any other firm.
This is, of course, an assumption of enormous responsibility – particularly on the scale on which Goldman Sachs operates – so it raises the obvious next question: Who will watch the watcher?
Average Rating: 
Rating:  -
As a person outside of the financial industry, I found the book to reveal an interesting glimpse into the history of the most venerated firm in Wall Street, from its humble inception to the present days. Along the way, you find glimpses of strong personalities that shine through the anonymity of team-oriented culture and also tragedies (e.g., the mishandled prosecution of Bob Freeman). A fascinating book.
Rating:  -
It's disappointing that the book is poorly written and poorly edited. There is much interesting information about the history of the firm but, because of various writing and editing deficiencies, the book is hard to read. For example, the writer starts mentioning a person as though we know who they yet there is no previous mention of him. He starts talking about Henry Goldman as though we know who is, yet no where is it mentioned that he is Marcus Goldman's son. Many sentences are so eliptical that one has to read them two or three times to understand what the writer intended. In addition, decades of time pass in the story and we get little information about what happened during that period. Many of these problems would have been helped with good editing. Sorry this important story is not better told.
Rating: -
Goldman Sachs has been one of the most successful firms on Wall Street. The top five, GS, Morgan Stanley, Merrill Lynch, Lehman Brothers, Bear Stearns fell like the domino theory, one by one.
Merrill Lynch was sold to Bank America, Lehman and Bear went bankrupted. Morgan Stanley just sold 20% to Mitsubishi UFJ Japan. GS stock price is 114, way down from all time high 250.
C. D. Ellis told the success story as an insider. There was little coverage on the failure, or causes of failure. The piece on the power struggle between Paulson and Corzine is a great read. Paulson cashed out with $280 million, Corzine did the same about $250 million.
Now that the great bailout was voted yes. All Paulson's friends are getting paid from the US government:
1. Citigroup, 25 bn
2. JPMorganChase, 25 bn
3. Wells Fargo (bought Wachovia), 25 bn
4. Bank America, 15 bn
5. Goldman Sachs, 10 bn
6. Merrill Lynch, 10 bn
7. Morgan Stanley, 10 bn
8. Bank of New York, 3 bn
9. State Street, 2 bn
Will it help US economy? God only knows.
Goldman's CEO Lloyed Blankfein sold short to make $55 million in 2007. He bought a condo for $18 bn. Guess what, real estate is down now. All the short sellers are making a killing shorting GS.
Unless SEC changed its rules, American middle class are the ones that are holding the empty bag.
Rating:  -
Why does Goldman Sachs still have a $40 billion market capitalization while Lehman and Bear Stearns have become extinct? Charles Ellis answers that question and more in his latest book, The Partnership, as well as giving the reader an insider's view of what gave Goldman Sachs such an advantage. Like McKinsey & Company in consulting, Goldman Sachs walks the talk in hiring the right people and creating a culture that rewards long-term success.
This book takes an honest look at some of Goldman Sachs' missteps along the way, such as Long Term Capital Management, but also the considerable focus and discipline demonstrated in avoiding the easy short-term buck that seems to consistently blow up in our faces. Need I say more than AAA rated insured sub-prime derivative instruments?
It remains to be seen what the impact of the current financial crisis will be on Goldman Sachs. Regardless, this book shows why the death of investment banking may be a bit premature.
Charlie Ellis writes in his usual substantive yet engaging style. If you're looking for a great read with some very useful takeaways, I highly recommend reading this book.
Rating: -
In his massive history of Goldman Sachs (over 700+ pages), Mr. Ellis gives a glowing and comprehensive history of the the investment bank. He writes as the insider he is (a former consultant to the firm) and is not as critical of Goldman Sachs as he could be. Founded nearly 150 years ago, he traces the firm's roots and growth, its downturns (the Depressions and the 1970's) and it re-intervention of itself repeatedly. The financial carnage of the past month is not covered obviously, but Goldman Sachs new survival has its origin in its 2007 decision to get out of the mortage business before the current crisis.
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